Document ID: SEC-2019-0828-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Exchange, LLC
Posted Date: 2019-06-12T04:00Z

[Federal Register Volume 84, Number 113 (Wednesday, June 12, 2019)]
[Notices]
[Pages 27388-27390]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-12343]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86053; File No. SR-BOX-2019-20]

Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 
7260 by Extending the Penny Pilot Program Through December 31, 2019

June 6, 2019.
    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 3, 2019, BOX 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 amend Rule 7260 by extending the Penny 
Pilot Program through December 31, 2019. The text of the proposed rule 
change is

[[Page 27389]]

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 extend the effective time period of the 
Penny Pilot Program that is currently scheduled to expire on June 30, 
2019, until December 31, 2019.\3\ The Penny Pilot Program permits 
certain classes to be quoted in penny increments. The minimum price 
variation for all classes included in the Penny Pilot Program, except 
for PowerShares QQQ Trust (``QQQQ'')[supreg], SPDR S&P 500 Exchange 
Traded Funds (``SPY''), and iShares Russell 2000 Index Funds (``IWM''), 
will continue to be $0.01 for all quotations in options series that are 
quoted at less than $3 per contract and $0.05 for all quotations in 
options series that are quoted at $3 per contract or greater. QQQQ, 
SPY, and IWM will continue to be quoted in $0.01 increments for all 
options series.
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    \3\ The Penny Pilot Program has been in effect on the Exchange 
since its inception in May 2012. See Securities Exchange Act Release 
Nos. 66871 (April 27, 2012), 77 FR 26323 (May 3, 2012) (File No.10-
206, In the Matter of the Application of BOX Options Exchange LLC 
for Registration as a National Securities Exchange Findings, 
Opinion, and Order of the Commission), 67328 (June 29, 2012), 77 FR 
40123 (July 6, 2012) (SR-BOX-2012-007), 68425 (December 13, 2012), 
77 FR 75234 (December 19, 2013) (SR-BOX-2012-021), 69789 (June 18, 
2013), 78 FR 37854 (June 24, 2013) (SR-BOX-2013-31), 71056 (December 
12, 2013), 78 FR 76691 (December 18, 2013) (SR-BOX-2013-56), 72348 
(June 9, 2014), 79 FR 33976 (June 13, 2014) (SR-BOX-2014-17), 73822 
(December 11, 2014), 79 FR 75606 (December 18, 2014) (SR-BOX-2014-
29), 75295 (June 25, 2015), 80 FR 37690 (July 1, 2015) (SR-BOX-2015-
23), 78172 (June 28, 2016), 81 FR 43325 (July 1, 2016) (SR-BOX-2016-
24), 79429 (November 30, 2016), 81 FR 87991 (December 6, 2016) (SR-
BOX-2016-55), 80828 (May 31, 2017), 82 FR 26175 (June 6, 2017) (SR-
BOX-2017-18), 82353 (December 19, 2017) 82 FR 61087 (December 26, 
2017) (SR-BOX-2017-37), and 83500 (June 22, 2018), 83 FR 30471 (June 
28, 2018) (SR-BOX-2018-23), and 84869 (December 19, 2018), 83 FR 
66806 (December 27, 2018) (SR-BOX-2018-38). The extension of the 
effective date is the only change to the Penny Pilot Program being 
proposed at this time.
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    The Exchange may replace any Pilot Program classes that have been 
delisted on the second trading day in the first month of each quarter. 
The Exchange notes that the replacement classes will be selected based 
on trading activity in the previous six months. The Exchange will 
employ the same parameters to prospective replacement classes as 
approved and applicable under the Pilot Program, including excluding 
high-priced underlying securities. The Exchange will distribute a 
Regulatory Circular notifying Participants which replacement classes 
shall be included in the Penny Pilot Program.
    BOX is specifically authorized to act jointly with the other 
options exchanges participating in the Pilot Program in identifying any 
replacement class.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\4\ in general, and Section 
6(b)(5) of the Act,\5\ in particular, in that it is designed 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 facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general protect investors 
and the public interest.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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    In particular, the proposed rule change, which extends the Penny 
Pilot until December 31, 2019, will enable public customers and other 
market participants to express their true prices to buy and sell 
options for the benefit of all market participants. This is consistent 
with the Act.

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. To the contrary, this proposal 
is pro-competitive because it allows Penny Pilot issues to continue 
trading on the Exchange. Moreover, the Exchange believes that the 
proposed rule change will allow for further analysis of the Pilot and a 
determination of how the Pilot should be structured in the future; and 
will serve to promote regulatory clarity and consistency, thereby 
reducing burdens on the marketplace and facilitating investor 
protection. The Pilot is an industry wide initiative supported by all 
other option exchanges. The Exchange believes that extending the Pilot 
will allow for continued competition between market participants on the 
Exchange trading similar products as their counterparts on other 
exchanges, while at the same time allowing the Exchange to continue to 
compete for order flow with other exchanges in option issues trading as 
part of the Pilot.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \6\ and Rule 19b-4(f)(6) \7\ thereunder. Because 
the foregoing 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 after the date of the filing, 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 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) 
\9\ thereunder.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6).
    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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 Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally 
does not become operative prior to 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\11\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that

[[Page 27390]]

the proposal may become operative immediately upon filing. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because doing so will allow the Pilot Program to continue without 
interruption in a manner that is consistent with the Commission's prior 
approval of the extension and expansion of the Pilot Program.\12\ 
Accordingly, the Commission designates the proposed rule change as 
operative upon filing with the Commission.\13\
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ See Securities Exchange Release No. 61061 (November 24, 
2009), 74 FR 62857 (December 1, 2009) (SR-NYSEArca-2009-44).
    \13\ For purposes only of waiving the operative delay for this 
proposal, the Commission has 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-2019-20 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-2019-20. 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 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, on official business days 
between the hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street 
NE, Washington, DC 20549. 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-2019-20 and should be 
submitted on or before July 3, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-12343 Filed 6-11-19; 8:45 am]
 BILLING CODE 8011-01-P