Document ID: SEC-2018-1540-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Exchange, LLC
Posted Date: 2018-10-05T04:00Z

[Federal Register Volume 83, Number 194 (Friday, October 5, 2018)]
[Notices]
[Pages 50422-50425]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21683]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84323; File No. SR-BOX-2018-33]

Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee 
Schedule on the BOX Options Market LLC Facility To Revise Certain 
Qualification Thresholds and Fees in Sections I.B.1, Primary 
Improvement Order, and I.B.2, BOX Volume Rebate

October 1, 2018.
    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 September 20, 2018, BOX 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 on 
the BOX Market LLC (``BOX'') options facility. Changes to the fee 
schedule pursuant to this proposal will be effective upon filing. 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

[[Page 50423]]

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 on BOX. 
Specifically, the Exchange proposes to revise certain qualification 
thresholds and fees in Sections I.B.1 of the BOX Fee Schedule, Primary 
Improvement Order and I.B.2 of the BOX Fee Schedule, the BOX Volume 
Rebate (``BVR'').
Primary Improvement Order
    Under the tiered fee schedule for Primary Improvement Orders, the 
Exchange assesses a per contract execution fee to all Primary 
Improvement Order executions where the corresponding PIP or COPIP Order 
is from the account of a Public Customer. Percentage thresholds are 
calculated on a monthly basis by totaling the Initiating Participant's 
Primary Improvement Order volume submitted to BOX, relative to the 
total national Customer volume in multiply-listed options classes. The 
current tiered fee schedule for Primary Improvement Orders is as 
follows:

------------------------------------------------------------------------
                                  Percentage thresholds
                                   of national customer    Per contract
              Tier                 volume in multiply-       fee  (all
                                  listed options classes      account
                                        (monthly)             types)
------------------------------------------------------------------------
1..............................  0.000%-0.079%..........           $0.25
2..............................  0.080%-0.159%..........            0.20
3..............................  0.160%-0.499%..........            0.12
4..............................  0.500% and Above.......            0.02
------------------------------------------------------------------------

    The Exchange proposes to adjust the percentage thresholds in Tiers 
1 through 4. Additionally, the Exchange proposes to decrease the fees 
associated with Tiers 2 and 3 from $0.20 to $0.12 and $0.12 to $0.07, 
respectively. The new tiered fee schedule for Primary Improvement 
Orders will be as follows:

------------------------------------------------------------------------
                                  Percentage thresholds
                                   of national customer    Per contract
              Tier                 volume in multiply-       fee  (all
                                  listed options classes      account
                                        (monthly)             types)
------------------------------------------------------------------------
1..............................  0.000%-0.049%..........           $0.25
2..............................  0.050%-0.129%..........            0.12
3..............................  0.130%-0.449%..........            0.07
4..............................  0.450% and Above.......            0.02
------------------------------------------------------------------------

BVR
    Next, the Exchange proposes to adjust certain percentage thresholds 
and fees within the BVR. Under the BVR, the Exchange offers a tiered 
per contract rebate for all Public Customer PIP Orders and COPIP Orders 
of 250 and under contracts that do not trade solely with their contra 
order. Percentage thresholds are calculated on a monthly basis by 
totaling the Participant's PIP and COPIP volume submitted to BOX, 
relative to the total national Customer volume in multiply-listed 
options classes. The current fee schedule for all Public Customer PIP 
and COPIP Order of 250 and under contracts that do not trade solely 
with their contra order is as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                     Per contract rebate  (all
                                              Percentage thresholds of national           account  types)
                    Tier                      customer volume in multiply-listed -------------------------------
                                                  options classes  (monthly)            PIP            COPIP
----------------------------------------------------------------------------------------------------------------
1..........................................  0.000% to 0.159%...................         ($0.00)         ($0.00)
2..........................................  0.160% to 0.339%...................          (0.02)          (0.02)
3..........................................  0.340% to 0.499%...................          (0.04)          (0.04)
4..........................................  0.500% and Above...................          (0.11)          (0.08)
----------------------------------------------------------------------------------------------------------------

    The Exchange proposes to adjust the percentage thresholds in Tiers 
1 through 4. Additionally, the Exchange proposes to increase the per 
contract rebates in Tier 2, Tier 3 and Tier 4. Specifically, the 
Exchange proposes to increase the per contract rebate for Tier 2 to 
$0.05 from $0.02 for PIP and COPIP Orders. Further, the Exchange 
proposes to increase the rebates in Tier 3 to $0.08 from $0.04 for PIP 
and COPIP Orders. Lastly, the Exchange is proposing to increase the per 
contract rebate for COPIP Orders in Tier 4 to $0.11 from $0.08. The new 
fee schedule for all Public Customer PIP and COPIP Orders of 250 and 
under contracts that do not trade solely with their contra order will 
be as follows:

[[Page 50424]]

----------------------------------------------------------------------------------------------------------------
                                                                                     Per contract rebate  (all
                                              Percentage thresholds of national           account  types)
                    Tier                      customer volume in multiply-listed -------------------------------
                                                  options classes  (monthly)            PIP            COPIP
----------------------------------------------------------------------------------------------------------------
1..........................................  0.000% to 0.049%...................         ($0.00)         ($0.00)
2..........................................  0.050% to 0.299%...................          (0.05)          (0.05)
3..........................................  0.300% to 0.449%...................          (0.08)          (0.08)
4..........................................  0.450% and Above...................          (0.11)          (0.11)
----------------------------------------------------------------------------------------------------------------

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.
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    \5\ 15 U.S.C. 78f(b)(4) and (5).
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    BOX believes it is reasonable, equitable and not unfairly 
discriminatory to adjust the volume based thresholds and fees within 
the BOX Fee Schedule. The volume thresholds with their tiered fees and 
rebates are meant to incentivize Participants to direct order flow to 
the Exchange to obtain the benefit of the lower fee or higher rebate, 
which in turn benefits all market participants by increasing liquidity 
on the Exchange.
    The Exchange believes the proposed amendments to the Primary 
Improvement Order volume based thresholds are reasonable, equitable and 
not unfairly discriminatory. The proposed changes to the thresholds in 
Tiers 1 through 4 are equitable and not unfairly discriminatory as they 
are available to all BOX Participants that initiate Auction 
Transactions on the behalf of Public Customers, and Participants may 
choose whether or not to take advantage of the percentage thresholds 
and their applicable discounted fees. Further, the Exchange believes 
that the proposed changes to the thresholds in Tiers 1 through 4 are 
reasonable and competitive as they are intended to allow more 
Participants to qualify for the higher tiers, which the Exchange 
believes will incentivize Participants to direct order flow to the 
Exchange, in turn benefiting all market participants on the Exchange. 
The Exchange believes that the proposed amendments to the fees 
associated with Tiers 2 and 3 \6\ are reasonable and appropriate, as 
this Tiered Fee Schedule is in place to provide incentives to BOX 
Participants to submit their Public Customer Orders into the PIP for 
potential price improvement. These reduced fees combined with the lower 
threshold levels are meant to incentivize more Participants to submit 
Price Improvement Orders to the Exchange, which the Exchange believes 
will further incentivize Participants to direct order flow to the 
Exchange, in turn benefiting all market participants on the Exchange. 
The Exchange believes that the proposed thresholds and fees remain 
competitive when compared to the auction transaction fees on other 
exchanges.\7\
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    \6\ The Exchange notes that the fees in Tiers 1 and 4 are not 
being changed.
    \7\ Comparative fees at other exchanges range from $0.02 to 
$0.20. See Section IV of the Phlx Pricing Schedule entitled ``PIXL 
Pricing''; Nasdaq ISE LLC (``ISE'') Schedule of Fees, Section I. 
Regular Order Fees and Rebates ``Select Symbols.''
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    The Exchange also believes the proposed amendments to the BVR in 
Section I.B.2 of the BOX Fee Schedule are reasonable, equitable and not 
unfairly discriminatory. The BVR was adopted to attract Public Customer 
order flow to the Exchange by offering these Participants incentives to 
submit their Public Customer PIP and COPIP Orders to the Exchange and 
the Exchange believes it is appropriate to now amend the BVR. The 
Exchange believes it is equitable and not unfairly discriminatory to 
amend the BVR, as all Participants have the ability to qualify for a 
rebate, and rebates are provided equally to qualifying Participants. 
Other exchanges employ similar incentive programs; \8\ and the Exchange 
believes that the proposed changes to the volume thresholds and fees 
are reasonable and competitive when compared to incentive structures at 
other exchanges. Finally, the Exchange believes it is reasonable and 
appropriate to continue to provide incentives for Public Customers, 
which will result in greater liquidity and ultimately benefit all 
Participants trading on the Exchange.
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    \8\ See Section B of the Nasdaq Phlx LLC Pricing Schedule 
entitled ``Customer Rebate Program'' and Cboe Exchange Inc. 
(``Cboe'') Volume Incentive Program (VIP).
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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. The Exchange is simply 
proposing to amend certain percentage thresholds and fees for Auction 
Transaction fees and rebates in the BOX Fee Schedule. The Exchange 
believes that the volume based rebates and fees increase intermarket 
and intramarket competition by incenting Participants to direct their 
order flow to the exchange, which benefits all participants by 
providing more trading opportunities and improves competition on the 
Exchange.

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 \9\ and Rule 19b-4(f)(2) 
thereunder,\10\ because it establishes or changes a due, or fee.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 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.

[[Page 50425]]

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-2018-33 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-2018-33. 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, 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-2018-33, and should be submitted on 
or before October 26, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-21683 Filed 10-4-18; 8:45 am]
 BILLING CODE 8011-01-P