Document ID: SEC-2016-1814-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange LLC
Posted Date: 2016-10-11T04:00Z

[Federal Register Volume 81, Number 196 (Tuesday, October 11, 2016)]
[Notices]
[Pages 70214-70216]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-24423]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79038; File No. SR-BOX-2016-47]

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

October 4, 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 September 28, 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 
adopt Participant Fees 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 
October 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 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 establish two Participant Fees; a

[[Page 70215]]

monthly Participant Fee and a one-time Initiation Fee applicable to all 
BOX Participants.
    First, the Exchange proposes to adopt a Participant Fee of $1,500 
per month, applicable to all BOX Participants. Currently, the Exchange 
does not assess BOX Participants a fee to access its options market. 
The Exchange believes the Participant Fee is competitive with fees at 
other option exchanges.\5\
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    \5\ See The Chicago Board Options Exchange, Incorporated's Fees 
Schedule. Per month a Market Maker Trading Permit is $5,500, an SPX 
Tier Appointment is $3,000, a VIX Tier Appointment is $2,000, and an 
Electronic Access Permit is $1,600. See also the International 
Securities Exchange LLC's Schedule of Fees. Per month an Electronic 
Access Member is assessed $500.00 for membership and a market maker 
is assessed from $2,000 to $4,000 per membership depending on the 
type of market maker. See also C2 Options Exchange, Incorporated's 
Fees Schedule. Per month, a market-maker is assessed a $5,000 permit 
fee, an Electronic Access Permit is assessed a $1,000 permit fee. 
See also NYSE Arca, Inc.'s Fee Schedule. Per month, a Clearing Firm 
is assessed a $1,000 per month fee for the first Options Trading 
Permit (``OTP'') and $250 thereafter, and a market maker is assessed 
a permit based on the maximum number of OTPs held by an OTP Firm or 
OTP Holder during a calendar month ranging from $1,000 to $6,000 a 
month.
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    Next, the Exchange proposes to adopt a one-time Initiation Fee of 
$2,500 which will be assessed to all new BOX Participants upon their 
initial connection to the options market, so the Exchange can recoup 
some of the costs associated with processing and preparing technology 
in order for the new BOX Participant to be able to trade on BOX. The 
Exchange's proposed one-time Initiation Fee is similar to and generally 
lower than one time application fees in place at other options 
exchanges.\6\
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    \6\ The Chicago Board Options Exchange, Incorporated (``CBOE'') 
charges $3,000 for an individual applicant and $5,000 for an 
applicant organization and at the International Securities Exchange, 
LLC (``ISE'') charges $7,500 for a Primary Market Maker, $5,500 for 
a Competitive Market Maker and $3,500 for an Electronic Access 
Member.
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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,\7\ 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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    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange's proposal to adopt a BOX Options Participant Fee of 
$1,500 per month is reasonable because the Exchange is seeking to 
recoup costs related to membership administration. The proposed fee is 
competitive with similar fees at other options exchanges.\8\ Lastly, 
the Exchange believes the Participant Fee of $1,500 is equitable and 
not unfairly discriminatory because the Participant Fee will be 
assessed uniformly to each BOX Participant, regardless of Participant 
type.
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    \8\ See supra note 5.
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    The Exchange also believes that its one-time Initiation Fee of 
$2,500 is reasonable, equitable and not unfairly discriminatory. As 
described above, the one-time Initiation Fee is comparable to other 
similar fees in place at other options exchanges and is designed to 
cover costs associated with processing and preparing technology in 
order for a Participant to begin trading on BOX. The Exchange believes 
that the Initiation Fee is equitable and not unfairly discriminatory, 
as it will be assessed uniformly to each new BOX Options Participant, 
regardless of Participant type.

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. In terms of inter-market 
competition, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive, or rebate opportunities available at other venues to be more 
favorable. In such an environment, the Exchange must continually adjust 
its fees to remain competitive with other exchanges and with 
alternative trading systems that have been exempted from compliance 
with the statutory standards applicable to exchanges. Because 
competitors are free to modify their own fees in response and because 
market participants may readily adjust their order routing practices, 
the Exchange believes that the degree to which fee changes in this 
market may impose any burden on competition is extremely limited.
    In terms of intra-market competition, the Exchange's proposal to 
adopt a BOX Options Participant Fee of $1,500 per month and a one-time 
Initiation Fee of $2,500 does not impose an undue burden on competition 
because the Exchange would uniformly assess the same Participant Fees 
to each BOX Options Participant. If the changes proposed herein are 
unattractive to market participants, it is likely that the Exchange 
will lose Participants. Accordingly, the Exchange does not believe that 
the proposed changes will impair the ability of members or competing 
order execution venues to maintain their competitive standing in the 
financial markets.

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. 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-2016-47 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-2016-47. 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

[[Page 70216]]

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-2016-47, and should be submitted on or before 
November 1, 2016.

    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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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-24423 Filed 10-7-16; 8:45 am]
 BILLING CODE 8011-01-P