Document ID: SEC-2016-1345-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange LLC
Posted Date: 2016-08-02T04:00Z

[Federal Register Volume 81, Number 148 (Tuesday, August 2, 2016)]
[Notices]
[Pages 50761-50763]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18206]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78428; File No. SR-BOX-2016-36]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend the Fee Schedule on the BOX Market LLC (``BOX'') Options Facility

July 27, 2016.
    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 July 25, 2016, BOX Options Exchange LLC (the ``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 
adjust the fee assessed in Section IV (Eligible Orders Routed to an 
Away Exchange) on the BOX Market LLC (``BOX'') options facility. While 
changes to the fee schedule pursuant to this proposal will be effective 
upon filing, the changes will become operative on August 1, 2016. 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 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

[[Page 50762]]

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 proposes to amend the Fee Schedule for trading on BOX 
to adjust the fee assessed in Section IV (Eligible Orders Routed to an 
Away Exchange) of the BOX Fee Schedule. Specifically, the Exchange 
proposes to increase the $0.50 per contract routing fee to $0.60.
    Currently, BOX uses third-party broker-dealers to route orders to 
other exchanges and incurs charges for each order routed to and 
executed at an away market, in addition to the transaction fees charged 
by other exchanges. To offset the fees charged to the Exchange for 
orders routed to other exchanges, the Exchange charges a $0.50 per 
contract fee for customer accounts. However, the Exchange charges no 
fee for non-Professional, Public Customer Directed Orders when: (i) 
Less than 45% of a Participants' monthly executions for such orders are 
routed to and executed at an Away Exchange; and (ii) 33% or more of a 
Participants' monthly executions for such orders occur through the PIP. 
In an effort to continue to offer routing services to its Participants 
at prices that approximate the cost to the Exchange, the Exchange is 
proposing to increase the routing fee to $0.60 per contract from $0.50 
per contract for customer accounts.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act, in general, and Section 
6(b)(4) and 6(b)(5)of the Act,\5\ 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. The Exchange notes that it operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues or providers of routing services if they deem fee 
levels to be excessive.
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    \5\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange generally attempts to approximate the cost of routing 
to other options exchanges, including other applicable costs to the 
Exchange for routing. The Exchange believes that the proposed fee 
change which is based on approximate Routing Costs is a reasonable, 
equitable and not unfairly discriminatory approach to pricing. 
Specifically, the Exchange believes that its proposal to moderately 
increase the routing fee is fair, equitable and reasonable because the 
fee is generally an approximation of the cost to the Exchange for 
routing orders to such exchanges. Further, the Exchange believes that 
the proposed fee is reasonable and appropriate as it is in line with 
what is currently charged by the industry.\6\ Accordingly, the Exchange 
believes that the proposed increases [sic] are reasonable, equitable 
and not unfairly discriminatory because they will help the Exchange to 
avoid subsidizing routing to away options exchanges and to continue 
providing quality routing services. The Exchange believes that its fee 
for orders routed to various venues is a reasonable approach to 
pricing, as it provides certainty with respect to execution fees at 
away options exchanges. As a general matter, the Exchange believes that 
the proposed fee will allow it to recoup and cover its costs of 
providing routing services to away exchanges. The Exchange notes that 
routing through the Exchange is voluntary. The Exchange also believes 
that the proposed fee for orders routed to and executed at away options 
exchanges is fair and equitable and not unreasonably discriminatory in 
that it applies equally to all Participants.
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    \6\ See Miami International Securities Exchange LLC (``MIAX'') 
Fee Schedule Section (1)(C) and NASDAQ Options Market (``NOM'') Fees 
and Rebates Section (2)3. On MIAX and NOM, the general range of fees 
for orders routed to away exchanges is between $0.10 and $0.99, with 
the $0.99 fee being assessed to Non-Customers.
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    The Exchange reiterates that it operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels to be excessive or providers 
of routing services if they deem fee levels to be excessive. Finally, 
the Exchange notes that it constantly evaluates its routing fees, 
including profit and loss attributable to routing and would consider 
future adjustments to the proposed fee to the extent it was recouping a 
significant profit or loss from routing to away options exchanges.

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. As it relates to the proposes 
change to the routing fee, the proposes change will assist the Exchange 
in recouping costs for routing orders to other options exchanges on 
behalf of its Participants in a manner that is a better approximation 
of actual costs than is currently in place and that reflects pricing 
changes by various options exchanges as well as increases to other 
Routing Costs incurred by the Exchange. The Exchange also notes that 
Participants may choose to designate their orders as ineligible for 
routing to avoid incurring routing fees.\7\
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    \7\ See BOX Rule 15030 (describing the routing process, which 
requires orders to be designated as eligible for routing).
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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 \8\ and Rule 19b-4(f)(2) 
thereunder,\9\ because it establishes or changes a due, or fee.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-BOX-2016-36 on the subject line.

[[Page 50763]]

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-2016-36. 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 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; 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-2016-36, and should be 
submitted on or before August 23, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-18206 Filed 8-1-16; 8:45 am]
 BILLING CODE 8011-01-P