Document ID: SEC-2023-0652-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Exchange, LLC
Posted Date: 2023-06-21T04:00Z

[Federal Register Volume 88, Number 118 (Wednesday, June 21, 2023)]
[Notices]
[Pages 40358-40360]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-13105]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97723; File No. SR-BOX-2023-16]

Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee 
Schedule for Trading on the BOX Options Market LLC Facility To Offer 
Ad-Hoc Historical Requests for the Intraday Open-Close Data Report and 
Adopt Fees for This Data

June 14, 2023.
    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 June 12, 2023, BOX Exchange LLC (``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared by the Exchange. The Exchange filed the proposed rule 
change pursuant to section 19(b)(3)(A)(ii) of the Act,\3\ and Rule 19b-
4(f)(2) thereunder,\4\ which renders the proposal effective upon filing 
with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange is filing with the Securities and Exchange Commission 
(``Commission'') a proposed rule change to amend the Fee Schedule to 
amend the Fee Schedule [sic] on the BOX Options Market LLC (``BOX'') 
options facility to offer ad-hoc historical requests for the Intraday 
Open-Close Data Report and adopt fees for this data. 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 website 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 Exchange 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 Exchange 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange recently adopted a new data product on BOX known as 
the Intraday Open-Close Data Report.\5\ When the Exchange established 
the Intraday Open-Close Data Report data, it did not include ad-hoc 
requests for the Intraday Open-Close historical data. Since 
establishing the Intraday Open-Close Data Report, Participants and non-
Participants have expressed interest in ad-hoc historical requests for 
the Intraday Open-Close Data Report. As such, the Exchange now proposes 
to offer ad-hoc historical requests for the Intraday Open-Close Data 
Report and adopt fees for this data. Specifically, the Exchange 
proposes to assess a $1,000 fee per request per month for the 
historical data.
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    \5\ See Securities Exchange Act Release No. 97174 (March 21, 
2023), 88 FR 18201 (March 27, 2023) (SR-BOX-2023-09).
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    Similar to the ad-hoc requests for the End-of-Day Open Close Data 
Report, ad-hoc requests for the Intraday Open-Close Data Report can be 
for any number of months beginning with January 2018 for which the data 
is available.\6\ The proposed fee will apply to both Participants and 
non-Participants. The Exchange notes that another exchange provides 
similar data that may be purchased on an ad-hoc basis and is similarly 
priced.\7\
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    \6\ For example, a Participant or non-Participant that requests 
historical Intraday Open-Close Data for the months of January 2018 
and February 2018, would be assessed a total of $2,000. Participants 
and non-Participants are permitted to make ad-hoc requests for any 
number of days within a month for the Intraday Open-Close Data 
Report. For example, a Participant or non-Participant may make an 
ad-hoc request for the Intraday Open-Close Data Report from May 1st 
to May 20th. The accounting will be prorated based on the number of 
trading days in the month versus the number of trading days 
received. The Participant or non-Participant will be charged for the 
request on a prorated basis. The Exchange is proposing to allow ad-
hoc requests for the Intraday Open-Close Data Report for any month 
starting January 2018, as this is what is currently offered for End-
of-Day historical data requests. The Exchange notes that it may make 
historical data prior to January 2018 available in the future and 
that such historical data would be available to all Participants or 
non-Participants.
    \7\ See Miami International Securities Exchange, LLC (``MIAX'') 
Fee Schedule. MIAX assesses $1,000 per request per month for the 
Intra-Day Ad-Hoc Request for historical data.
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    By way of background, the Exchange currently offers the Intraday 
Open-Close Data Report to Participants and non-Participants, which is a 
volume summary file for trading activity on BOX. The Exchange notes 
that the file contains proprietary BOX trade data and does not include 
trade data from any other exchanges. It is also a historical data 
product and not a real time data feed. The Intraday Open-Close Data 
Report is produced and updated every 10 minutes during the trading day. 
Data is captured in ``snapshots'' taken every 10 minutes throughout the 
trading day and available to subscribers within five minutes of the 
conclusion of each 10-minute period. Each update will represent 
combined data captured from the current ``snapshot'' and all previous 
``snapshots'' and thus will provide open-close data on an aggregate 
basis. The Intraday Open-Close Data Report aggregates the volume by 
origin (Public Customer, Professional Customer, Broker Dealer, and 
Market Maker), buying/selling, and opening/closing criteria. Public 
Customer and Professional Customer volume is further broken down into 
trade size buckets (less than 100 contracts, 100-199 contracts, greater 
than 199 contracts). Ad-hoc requests for Intraday Open-Close Data 
Report will provide the same information for a requested historical 
time period for any number of months beginning with January 2018.\8\
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    \8\ The historical monthly reports of the Intraday Open-Close 
Data Report will contain all series in an underlying security if the 
security had volume on BOX during that month. The Intraday Open-
Close Data Report file format specifications can be found at 
www.boxoptions.com.
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    This product is offered to Participants on a completely voluntary 
basis in that the Exchange is not required by any rule or regulation to 
make this data available and potential subscribers may purchase the 
Intraday Open-Close Data Report or

[[Page 40359]]

make ad-hoc requests for the Intraday Open-Close Data Report only if 
they voluntarily choose to do so. It is a business decision of each 
potential subscriber whether to subscribe to the Intraday Open-Close 
Data Report and/or make ad-hoc requests for the Intraday Open-Close 
Data Report.
    The Exchange also proposes to make a clarifying change to the End-
of-Day Ad-hoc Request (historical data) section of the BOX Fee 
Schedule. Specifically, the Exchange proposes to add that mid-month 
requests for End-of Day historical data will be prorated based on the 
number of trading days in the month versus the number of trading days 
received. The Exchange notes that it is not proposing to change an 
existing practice, as this is how mid-month requests for End-of-Day 
historical data are currently processed. The Exchange believes this 
will add transparency and clarity to the Fee Schedule with respect to 
how fees are assessed for End-of-Day Ad-hoc Requests.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of section 6(b) of the Act,\9\ in general, and section 
6(b)(4) and 6(b)(5) of the Act,\10\ in particular, in that it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among BOX Participants and other persons using its facilities 
and does not unfairly discriminate between customers, issuers, brokers 
or dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange also believes that its proposed changes to its Fee 
Schedule concerning fees for the Intraday Ad-hoc Open-Close Data Report 
is consistent with section 6(b) of the Act,\11\ in general, and 
furthers the objectives of section 6(b)(4) of the Act,\12\ in 
particular, in that it is an equitable allocation of dues, fees and 
other charges among its Participants and other recipients of Exchange 
data.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
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    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations (``SROs'') and broker-dealers increased authority and 
flexibility to offer new and unique market data to the public. It was 
believed that this authority would expand the amount of data available 
to consumers, and also spur innovation and competition for the 
provision of market data. Particularly, the Intraday Open-Close Data 
Report further broadens the availability of U.S. option market data to 
investors consistent with the principles of Regulation NMS. The data 
product also promotes increased transparency through the dissemination 
of the Intraday Ad-hoc Open-Close Data Report. Particularly, 
information regarding opening and closing activity across different 
option series during the trading day may indicate investor sentiment, 
which may allow market participants to make better informed trading 
decisions throughout the day. Subscribers to the data may also be able 
to enhance their ability to analyze option trade and volume data and 
create and test trading models and analytical strategies. The Exchange 
believes the Intraday Open-Close Data Report provides a valuable tool 
that subscribers can use to gain comprehensive insight into the trading 
activity in a particular series, but also emphasizes such data is not 
necessary for trading and completely optional. Moreover, another 
exchange offers a similar data product.\13\ This proposal seeks to 
respond to Participant requests for ad-hoc Intraday Open-Close data and 
adopt a fee of $1,000 per request per month for such requests.
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    \13\ See supra note 7.
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    The Exchange operates in a highly competitive environment. Indeed, 
there are currently 16 registered options exchanges that trade options. 
Based on publicly available information, for the month of March 2023, 
no single options exchange had more than approximately 16% of the 
equity options market share and the Exchange represented only 
approximately 6.19% of the equity options market share for the month of 
May 2023.\14\ The Commission has repeatedly expressed its preference 
for competition over regulatory intervention in determining prices, 
products, and services in the securities markets. Particularly, in 
Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \15\ Making 
similar data products available to market participants fosters 
competition in the marketplace, and constrains the ability of exchanges 
to charge supra-competitive fees. In the event that a market 
participant views one exchange's data product as more or less 
attractive than the competition they can and do switch between similar 
products.
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    \14\ See Cboe Global Markets U.S. Options Market Month-to-Date 
Volume Summary (May 5, 2023), available at https://markets.cboe.com/us/options/market_statistics/.
    \15\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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    The Exchange believes the proposed fee is reasonable as the 
proposed fee is similar to a fee currently assessed by another exchange 
that provides a similar data product.\16\ Further, the Exchange notes 
that an ad-hoc request for the Intraday Day Open-Close Data Report is 
entirely optional and if a market participant views another exchange's 
data as more attractive than the proposed Intraday Open-Close data 
product, then such market participant can choose not to purchase BOX's 
data and instead purchase another exchange's data product, which offer 
similar data points, albeit based on that other market's trading 
activity.
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    \16\ See supra note 7.
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    The Exchange also believes that its proposal to respond to market 
participant requests and adopt fees for ad-hoc requests for the 
Intraday Open-Close Data Report is reasonable as this would further 
support the current offering of the Intraday Open-Close Data Report 
that is designed to aid investors by providing insight into trading on 
BOX. The proposed ad-hoc requests for Intraday Open-Close Data Report 
would provide interested options market participants with valuable 
information about opening and closing transactions executed on BOX, 
similar to other historical trade data products offered by competing 
options exchanges. In turn, this data would assist market participants 
in gauging investor sentiment and trading activity, resulting in 
potentially better-informed trading decisions. As noted above, users 
may also use such data to create and test trading models and analytical 
strategies.
    Providing market data, such as the Intraday Open-Close Data Report, 
is also a means by which exchanges compete to attract business. 
Subscribers that receive the Intraday Open-Close Data Report in 
response to an ad hoc request, may use such data to evaluate the 
usefulness of BOX's Intraday Open-Close Data Report and decide, based 
on that data, whether to subscribe to the Intraday Open-Close Data 
Report on a monthly basis. To the extent that the Exchange is 
successful in attracting subscribers for the Intraday Open-Close Data 
Report through this proposal, it may earn trading revenues and further 
enhance the value of its data products. If the market deems the 
proposal to be unfair or inequitable, firms can diminish or discontinue 
their use of the data and/or avail themselves

[[Page 40360]]

of similar products offered by other exchanges.\17\
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    \17\ Id.
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    The Exchange believes the proposed fee is equitable and not 
unfairly discriminatory as the fee would apply equally to all users who 
choose to purchase the historical data. The Exchange's proposed fee 
would not differentiate between subscribers that purchase the ad-hoc 
Intraday Open-Close Data Report and is set at a modest level that would 
allow any interested Participant or non-Participant to purchase such 
data based on their business needs.
    The Exchange reiterates that the decision as to whether or not to 
purchase the ad-hoc Intraday Open-Close Data Report is entirely 
optional for all potential subscribers. Indeed, no market participant 
is required to purchase the ad-hoc Intraday Open-Close Data Report, and 
the Exchange is not required to make the ad-hoc Intraday Open-Close 
Data Report available to all investors. Rather, the Exchange is 
voluntarily making the ad-hoc Intraday Open-Close Data Report 
available, as requested by customers, and market participants may 
choose to receive (and pay for) this data based on their own business 
needs. Potential purchasers may request the data at any time if they 
believe it to be valuable or may decline to purchase such data.
    Lastly, the Exchange believes that the proposed change to the End-
of-Day Ad-Hoc request is reasonable and appropriate as the added 
language will provide clarity and transparency with respect to mid-
month requests for this End-of-Day Ad-hoc Requests.

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. Rather, the Exchange believes 
that the proposal will promote competition by permitting the Exchange 
to sell a data product similar to those offered by another competitor 
options exchange.\18\ The Exchange also does not believe the proposed 
fees would cause any unnecessary or in appropriate burden on 
intermarket competition as other exchanges are free to introduce their 
own comparable data product and lower their prices to better compete 
with the Exchange's offering. The Exchange does not believe the 
proposed rule change would cause any unnecessary or inappropriate 
burden on intramarket competition. Particularly, the proposed fee 
applies uniformly to any purchaser, in that it does not differentiate 
between subscribers that purchase Intraday Open-Close Data Report. The 
proposed fees are set at a modest level that would allow any interested 
Participant or non-Participant to purchase such data based on their 
business needs.
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    \18\ Id.
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    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such an environment, the Exchange must continually 
review, and consider adjusting, its fees to remain competitive with 
other exchanges. For the reasons described above, the Exchange believes 
that the proposed rule change reflects this competitive environment.

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

    No written comments were either solicited or received.

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

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A)(ii) of the Exchange Act \19\ and Rule 19b-4(f)(2) 
thereunder,\20\ because it establishes or changes a due, or fee.
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    \19\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \20\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend the rule 
change if it appears to the Commission that the action is necessary or 
appropriate in the public interest, for the protection of investors, or 
would otherwise further 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-BOX-2023-16 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-2023-16. 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 website (https://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 website 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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-BOX-2023-16 and should be 
submitted on or before July 12, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-13105 Filed 6-20-23; 8:45 am]
BILLING CODE 8011-01-P