Document ID: SEC-2016-0519-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange LLC
Posted Date: 2016-03-24T04:00Z

[Federal Register Volume 81, Number 57 (Thursday, March 24, 2016)]
[Notices]
[Pages 15772-15773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-06636]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77403; File No. SR-BOX-2016-12]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Comply With the Requirements of the Amended and Restated Limited 
Liability Company Agreement of BOX Holdings, and To Permit Certain 
Ownership Changes Pursuant Thereto

March 18, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 11, 2016, BOX Options Exchange LLC (the ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the self-regulatory organization. The Commission 
is publishing this notice to solicit comments on the proposed rule from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to comply with the requirements of the 
Amended and Restated Limited Liability Company Agreement of BOX 
Holdings, and to permit certain ownership changes pursuant thereto. The 
text of the proposed rule change is available from the principal office 
of the Exchange, at the Commission's Public Reference Room and also on 
the Exchange's Internet Web site at http://boxexchange.com.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in Sections A, B, and C below, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    BOX Holdings is a limited liability company, organized under the 
laws of the State of Delaware on August 26, 2010. BOX Holdings is the 
sole owner of BOX Market LLC, a facility of the Exchange (``BOX 
Market''). IB Exchange Corp (``IB'') became a Member of Holdings on May 
10, 2012 with an ownership percentage of 20.1%, comprised of 2,125 
Class A Units and 265 Class B Units. The purpose of this filing is to 
provide notice that IB's economic interest in BOX Holdings will surpass 
a 5% aggregate ownership threshold. IB's voting power with respect to 
BOX Holdings remains unchanged and is limited to 20%.
    In January 2015, BOX Holdings launched a program available to all 
Participants (the ``VPR Program'') pursuant to which Participants on 
BOX Market that subscribe to the VPR Program (``Subscribers'') receive 
additional equity units of BOX Holdings (``Class C Units'') by 
providing order flow to BOX Market.\3\ Under the VPR Program, a 
Subscribers' ownership of Class C Units may increase or decrease on a 
quarterly basis.
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    \3\ See Securities Exchange Act Release Nos. 74171 (January 29, 
2015), 80 FR 6153 (February 4, 2015) (SR-BOX-2015-05);75766 (August 
27, 2015), 80 FR 40100 (July 13, 2015) (SR-BOX-2015-22)(Order 
Approving the VPR Program); 74114 (January 22, 2015), 80 FR 4611 
(January 28, 2015) (SR-BOX-2015-03); and 74576 (March 25, 2015), 80 
FR 17122 (March 31, 2015) (SR-BOX-2015-16).
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    Section 7.4(f) of the Holdings LLC Agreement provides that a rule 
filing pursuant to Section 19 of the Exchange Act is required with 
respect to certain transactions that result in the acquisition and 
holding by a person of an aggregate ownership interest in BOX Holdings 
which meets or crosses the threshold level of 20% or any successive 5% 
level.\4\ As of December 31, 2015, as a Subscriber to the VPR Program, 
IB earned the right to receive additional 25.5 Class C Units which, 
combined with IB's already held Class A, B and C Units, will result in 
IB's aggregate ownership interest increasing from 24.97% to 25.08 and 
thereby crossing a threshold level of 25%. These additional 25.5 Class 
C Units, to which IB is entitled under the VPR Program, are being held 
in escrow pending the effectiveness of this rule filing.
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    \4\ Section 7.4(f) of the Holdings LLC Agreement provides that, 
``the parties agree that the following Transfers are subject to the 
rule filing process pursuant to Section 19 of the Exchange Act: any 
Transfer that results in the acquisition and holding by any Person, 
alone or together with its Related Persons, of an aggregate 
Percentage Interest level which meets or crosses the threshold level 
of 20% or any successive 5% Percentage Interest level (i.e., 25%, 
30%, etc.).''
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    The change in IB's ownership percentage will not alter the voting 
power of IB in BOX Holdings. Pursuant to Section 7.4(h) of the Holdings 
LLC Agreement,\5\ IB was, and will continue to be, limited to 20% 
voting power with respect to BOX Holdings because it is a Participant 
on BOX Market. IB will receive the economic benefit intended by the VPR 
Program but no additional power or control of BOX Holdings will accrue 
to IB as a result.
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    \5\ Section 7.4(h) of the Holdings LLC Agreement provides that, 
``In the event that a Member, or any Related Person of such Member, 
is approved by the Exchange as a BOX Options Participant pursuant to 
the Exchange Rules, and such Member owns more than 20% of the Units, 
alone or together with any Related Person of such Member (Units 
owned in excess of 20% being referred to as ``Excess Units''), the 
Member and its designated Directors shall have no voting rights 
whatsoever with respect to any action relating to BOX Holdings nor 
shall the Member or its designated Directors, if any, be entitled to 
give any proxy in relation to a vote of the Members, in each case 
solely with respect to the Excess Units held by such Member; 
provided, however, that whether or not such Member or its designated 
Directors, if any, otherwise participates in a meeting in person or 
by proxy, such Member's Excess Units shall be counted for quorum 
purposes and shall be voted by the person presiding over quorum and 
vote matters in the same proportion as the Units held by the other 
Members are voted (including any abstentions from voting).''
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    Additionally, the effectiveness of this rule filing will not affect 
the ownership or control of the Exchange, including its capitalization, 
board of directors, voting or control over BOX Market. All ownership 
limits relating to the Exchange will continue to be strictly respected.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\6\ in general, and furthers 
the objectives of Section 6(b)(1),\7\ in particular, in that it

[[Page 15773]]

enables the Exchange to be so organized so as to have the capacity to 
be able to carry out the purposes of the Act and to comply, and to 
enforce compliance by its exchange members and persons associated with 
its exchange members, with the provisions of the Act, the rules and 
regulations thereunder, and the rules of the Exchange. The proposal is 
consistent with, and is required to comply with, the requirements of 
the Holdings LLC Agreement and the VPR Program. The Exchange also 
believes that this filing furthers the objectives of Section 6(b)(5) of 
the Act \8\ in that it is designed to facilitate transactions in 
securities, to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and in general, to protect investors and the public interest.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(1).
    \8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) 
thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Commission deems this requirement to have been met.
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative delay. The 
Exchange noted that the transfer is intended to be completed in less 
than 30 days. The Commission believes that waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest, as it will allow the transfer of Units to which IB is 
entitled under the VPR Program to take place without further delay. 
Accordingly, the Commission designates the proposed rule change to be 
operative upon filing.\13\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-BOX-2016-12 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-BOX-2016-12. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions.
    You should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-BOX-2016-12, 
and should be submitted on or before April 14, 2016.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-06636 Filed 3-23-16; 8:45 am]
BILLING CODE 8011-01-P