Document ID: SEC-2018-0840-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange LLC
Posted Date: 2018-05-31T04:00Z

[Federal Register Volume 83, Number 105 (Thursday, May 31, 2018)]
[Notices]
[Pages 25074-25076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-11607]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83317; File No. SR-BOX-2018-17]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing of Proposed Rule Change To Amend Rules 7150 and 7245

May 24, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on May 14, 2018, 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 
change 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend Rules 7150 and 7245. 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://boxoptions.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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rules 7150 (Price Improvement Period 
(``PIP'')) and 7245 (Complex Price Improvement Period (``COPIP'')) to 
provide additional information in the respective auction notifications. 
Specifically, the Exchange is proposing to provide the account type of 
the PIP Order \3\ and COPIP Order \4\ as part of the auction 
broadcast.\5\
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    \3\ A PIP Order is an order that is executed entirely via the 
Price Improvement Period (``PIP''). See Rule 7150(f).
    \4\ A COPIP Orders is a Complex Order that is executed via the 
Complex Order Price Improvement Period (``COPIP''). See Rule 
7245(f).
    \5\ BOX has the following account types: Public Customer, 
Professional Customer, Broker Dealer, Market Maker and Away Market 
Maker. See RC-2014-05A for more details.
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    The system commences a PIP and COPIP Auction by broadcasting a 
message via the High Speed Vendor Feed (``HSVF'').\6\ Currently, the 
broadcast: (1) States that a Primary Improvement Order \7\ has been 
processed; (2) contains information concerning series,\8\ size, start 
price, and side of market; and (3) states when the auction will 
conclude. The Exchange is now proposing that, in addition to the above 
information, the broadcast will include the account type of the PIP and 
COPIP Order.\9\ The Exchange notes that other option exchanges provide 
account type information for orders on their electronic book as part of 
their data feeds.\10\
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    \6\ See Rules 7150(f) and 7245(f).
    \7\ A Primary Improvement Order is a contra side order equal to 
the full size of the PIP or COPIP Order. See Rules 7150(f) and 
7245(f).
    \8\ For a COPIP, the strategy identifier is broadcasted.
    \9\ See proposed changes to Rules 7150(f) and 7245(f).
    \10\ See Securities Exchange Act Release No. 74759 (April 17, 
2015), 80 FR 22749 (Notice of Filing and Immediate Effectiveness SR-
MIAX-2015-28). The MIAX Order Feed provides, among other things, the 
origin of each order for the entire order book to its users. The 
Exchange notes there are certain differences between the proposal 
and the MIAX Order Feed. Specifically, the Exchange is only 
proposing to provide the account type for PIP and COPIP Orders while 
MIAX provides the account type of each order for the entire order 
book, but not for auctions. The Exchange believes this is a minor 
difference because both exchanges are providing the same information 
(i.e., account type) with BOX providing it to a limited subset of 
orders where MIAX is not providing such information. Further, as 
expressed in the proposal, the Exchange does not believe that the 
proposed information will have a material impact on the 
participation during the PIP and COPIP auctions. Therefore, the 
Exchange believes it is reasonable and consistent with the Act to 
provide the proposed information for PIP and COPIP Orders. See also 
Securities Exchange Act Release No. 66993 (May 15, 2012), 77 FR 
30043 (Notice of Filing and Immediate Effectiveness SR-PHLX-2012-
63).

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[[Page 25075]]

    The HSVF provides data to enhance the ability of subscribers to 
analyze market conditions and to create and test trading models and 
analytical strategies. In response to Participant feedback, the 
Exchange is exploring the feasibility of adding information (i.e. 
account type) that market participants can use to gain comprehensive 
insight into the trading activity on the Exchange as well as additional 
transparency with regard to orders submitted to the Exchange. The 
Exchange is proposing to first include the account type of the PIP and 
COPIP Order into the PIP Broadcast because such a change can be 
implemented quickly.\11\ The Exchange believes that providing the 
proposed information is important as it will provide additional 
transparency to market participants so they may have greater insight 
into the order flow on the Exchange.
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    \11\ The Exchange notes that including the account type of all 
orders on the BOX Book would take substantially longer to implement. 
The Exchange believes that providing the account type for PIP and 
COPIP Orders can be implemented in a short time frame and will allow 
the Exchange to assess whether such information would be beneficial 
in BOX's HSVF.
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    The Exchange does not believe the proposed change will have a 
material impact on competition. Specifically, the Exchange does not 
believe that the proposed change will have a noticeable impact on 
competition or the level of responses during an auction. The Exchange 
believes that Participants will ultimately make a determination on 
whether to respond to the auction based on price, size, current quote 
and market conditions. The proposed information will provide additional 
transparency to Participants; however, it should not materially affect 
participation during the auctions. As such, the Exchange believes the 
proposed change is not unfairly discriminatory.\12\
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    \12\ The Exchange notes that PIP and COPIP Orders are entered 
into the system with a contra-side order guaranteeing the full size 
of the PIP or COPIP Order. Therefore, the PIP and COPIP Order is 
fully guaranteed and will always receive a full execution once 
submitted to the system.
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    The Exchange anticipates implementing the proposed change during 
the third quarter of 2018, pending approval of this filing. The 
Exchange will provide at least two weeks notification to Participants 
of the exact implementation date via Circular.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \13\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \14\ in particular, in that it is designed to 
promote just and equitable principles of trade, 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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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
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    In particular, the Exchange believes the proposed rule change is 
designed to remove impediments to and perfect the mechanisms of a free 
and open market and a national market system by providing additional 
information and insight to Participants. Further, the Exchange believes 
that the proposed change will enhance Participants' ability to make 
more informed and timely trading decisions. Additionally, as set forth 
above, the Exchange believes that the proposed change is reasonable and 
appropriate as another options exchange disseminates account type 
information on orders.\15\
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    \15\ See supra note 10.
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    The Exchange believes the proposed change is not unfairly 
discriminatory because the proposed information will be available to 
all subscribers of the HSVF. As such, the Exchange does not believe the 
proposed change will have an adverse impact on any market participant. 
Additionally, as explained above, the Exchange does not believe the 
proposed change will have a material impact on competition during the 
auctions.

B. Self-Regulatory Organization's Statement on Burden on Competition

    This proposed change will give market participants greater 
information on which to base their trading strategies. As such, 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. As discussed above, other option exchanges 
include account type information in their data feeds. Additionally, the 
Exchange does not believe that the proposed change will have a material 
impact on competition during the auction.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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 [email protected]. Please include 
File Number SR-BOX-2018-17 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BOX-2018-17. 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 (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

[[Page 25076]]

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 10:00 a.m. and 3:00 p.m. Copies of 
such filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change. Persons submitting comments are cautioned that we do 
not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-BOX-
2018-17, and should be submitted on or before June 21, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-11607 Filed 5-30-18; 8:45 am]
 BILLING CODE 8011-01-P