Document ID: SEC-2013-0651-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange LLC
Posted Date: 2013-04-05T04:00Z

[Federal Register Volume 78, Number 66 (Friday, April 5, 2013)]
[Notices]
[Pages 20706-20708]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-07940]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69259; File No. SR-BOX-2013-17]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rule 12140 (Imposition of Fines for Minor Rule Violations)

March 29, 2013.
    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 March 22, 2013, BOX Options Exchange LLC (the ``Exchange'' or 
``BOX'') 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 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 12140 (Imposition of Fines for 
Minor Rule Violations) to correct certain cross references, clarify the 
calculation and review periods applicable to certain violations, and 
amend the sanction amounts for trade-through violations. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 12140 (Imposition of Fines for 
Minor Rule Violations) to correct certain cross references, clarify the 
calculation and review periods applicable to certain violations, and 
amend the sanction amounts for trade-through violations.
    Exchange Rule 12140 provides that in lieu of commencing a 
disciplinary proceeding, the Exchange may, subject to the certain 
requirements set forth in the Rule, impose a fine, not to exceed 
$5,000, on any Options Participant, or person associated with or 
employed by an Options Participant, with respect to any Rule violation 
listed in Rule 12140(d). Any fine imposed pursuant to this Rule that 
(i) does not exceed $2,500 and (ii) is not contested, shall be reported 
on a periodic basis, except as may otherwise be required by Rule 19d-1 
under the Act or by any other regulatory authority. Further, the Rule 
provides that any person against whom a fine is imposed under the Rule 
shall be served with a written statement setting forth (i) the Rule(s) 
allegedly violated; (ii) the act or omission constituting each such 
violation; (iii) the fine imposed for each violation; and (iv) the date 
by which such determination becomes final and such fine must be paid or 
contested as provided below, which date shall be not less than thirty 
(30) calendar days after the date of service of such written statement.
    First, the Exchange proposes to amend Rule 12140(b) to change the 
date that a determination becomes final and the fine must be paid or 
contested from thirty to twenty-five (25) calendar days after the date 
of service of the written notice of an alleged violation. This change 
is meant to bring the final determination time period in line with the 
time period to file an answer under Rule 12050. With this change a 
Participant will have twenty-five (25) days to file an answer, after 
which the determination will become final and the fine must be paid or 
contested.
    Next, the Exchange proposes to amend Rule 12140(d)(1) to clarify 
that violations of the Positions Limit Rule will be progressive for the 
number of cumulative violations within any rolling 24-month period.
    The Exchange also proposes to amend Rule 12140(d)(2) to clarify the 
time period that may be subject to penalty for late focus reports will 
be 1-30 calendar days, 31 to 60 days, 61-90 days and over 90 days.
    The Exchange proposes to amend Rule 12140(d)(5), (6), (11), and 
(12) to add and correct citations to Rule 8040(a)(7), 8050(e), 8030(e), 
and 8050(c)(2)-(4) regarding Market Maker obligations. Additionally 
proposed amendments to Rule 12140(d)(6) clarify the review period for 
calculating violations of a Market Maker's quoting obligations, and 
specify additional sanctions that may apply to Market Maker violations 
of their quoting obligations for consecutive business days within the 
review period.
    The Exchange proposes to add to Rule 12140(d)(8) specific 
references to Rules 2020, 2040, and 2050 regarding a firm's obligation 
to timely file amendments to Form U-4, Form U-5, and Form BD. 
Additionally, the Exchange proposes to specify that a fourth violation, 
or any violation thereafter, may result in formal disciplinary action 
against a firm.
    The Exchange proposes to add to Rule 12140(d)(9) specific 
references to the rule provisions related to Contrary Exercise Advice 
(Rule 9000(c)-(e), 9000(g), and 9000(h)).
    The Exchange proposes to amend Rule 12140(d)(10) to add and correct 
citations to Rule 15020 regarding Locked and Crossed Market Violations.
    Finally, the Exchange proposes to amend Rule 12140(d)(13) regarding 
Trade-Through Violations. The

[[Page 20707]]

Exchange proposes to add and correct citations to Rule 15010 regarding 
trade-throughs, and to clarify that for purposes of calculating the 
number of violations during a period subject to sanctions, a violation 
shall occur when an Options Participant engages in a pattern or 
practice of trading through better prices available on other exchanges. 
In addition, the Exchange proposes to extend the period of time used in 
calculating the number of trade-through violations from a twelve-month 
rolling period to a twenty-four month rolling period, and increase the 
sanction amounts that an Options Participant will be subject to under 
this rule. An initial trade-through violation will now have a sanction 
of $500, the second violation will have a sanction of $1,000, the third 
violation will have a sanction of $2,500, and any subsequent violations 
will be have a sanction of $5,000 or Formal Disciplinary Action. These 
changes are based on the rules of the Chicago Board Option Exchange, 
Inc. (``CBOE'').\3\.
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    \3\ See CBOE Rule 17.50(g)(12).
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 2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Securities Exchange Act of 1934 
(the ``Act''),\4\ in general, and Section 6(b)(5) of the Act,\5\ in 
particular, in that it is designed 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 for a 
free and open market and a national market system and, in general, to 
protect investors and the public interest. In particular, the Exchange 
believes the proposed change is consistent with Section 6(b) of the 
Act, which further requires that the Exchange enforce compliance with, 
and provide appropriate discipline for violations of, Commission and 
Exchange rules. Finally, the Exchange believes that the proposal is 
consistent with the public interest, the protection of investors, or 
otherwise in furtherance of the purposes of the Act, because Rule 12140 
strengthens the Exchange's ability to carry out its oversight and 
enforcement responsibilities as an SRO in cases where full disciplinary 
proceedings may be unsuitable in view of the minor nature of the 
particular violation.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Because the proposed rule change does not impose any new or 
additional burden on BOX Options Participants, and only corrects and 
clarifies certain information in Rule 12140 with regard to the Exchange 
Minor Rule Violation Plan, 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

    This proposed rule change is filed for immediate effectiveness 
pursuant to paragraph (A) of section 19(b)(3) of the Exchange Act \6\ 
and Rule 19b-4(f)(6) thereunder.\7\ The Exchange asserts that this 
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.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6).
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    Because the proposed rule change does not impose any new or 
additional burden on BOX Options Participants, and only corrects and 
clarifies certain information in Rule 12140 with regard to the Exchange 
Minor Rule Violation Plan, the Exchange believes this rule filing 
qualifies as a ``non-controversial'' rule change under Rule 19b-4(f)(6) 
of the Act and requests that the Commission make the proposed change 
effective and operative upon filing. \8\
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    \8\ As required under Rule 19b-4(f)(6)(iii), the Exchange 
provided the Commission with written notice of its intent to file 
the proposed rule change along with a brief description and the 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.
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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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-BOX-2013-17 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BOX-2013-17. 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 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-

[[Page 20708]]

2013-17 and should be submitted on or before April 26, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-07940 Filed 4-4-13; 8:45 am]
BILLING CODE 8011-01-P