Document ID: SEC-2015-0262-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange LLC
Posted Date: 2015-02-12T05:00Z

[Federal Register Volume 80, Number 29 (Thursday, February 12, 2015)]
[Notices]
[Pages 7886-7888]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-02894]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74221; File No. SR-BOX-2015-11]

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 Options Facility

February 6, 2015.
    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 January 30, 2015, 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 on 
the BOX Market LLC (``BOX'') options facility. 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.

[[Page 7887]]

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. 
Specifically, the Exchange proposes to amend the BOX Volume Rebate 
(``BVR'') in Section I.B.2 of the Fee Schedule (Auction Transactions).
    Under the current BVR, the Exchange offers a tiered per contract 
rebate for all PIP Orders and COPIP Orders of 250 contracts and under. 
PIP and COPIP executions of 250 contracts and under are awarded a per 
contract rebate according to the Participant's Monthly Average Daily 
Volume (``ADV'') in PIP and COPIP transactions. Each Participant's 
monthly ADV is based on PIP and COPIP quantity submitted and calculated 
at the end of each month.\5\
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    \5\ For purposes of calculating monthly ADV, BOX will count as a 
half day any day that the market closes early for a holiday 
observance.
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    The current per contract rebate for Participants in PIP and COPIP 
Transactions under the BVR is:

------------------------------------------------------------------------
                                      Per contract rebate (all account
   Monthly ADV in PIP and COPIP                    types)
           transactions            -------------------------------------
                                           PIP               COPIP
------------------------------------------------------------------------
100,001 contracts and greater.....            ($0.17)            ($0.08)
40,001 contracts to 100,000                    (0.14)             (0.06)
 contracts........................
20,001 contracts to 40,000                     (0.07)             (0.04)
 contracts........................
1 contract to 20,000 contracts....             (0.00)             (0.00)
------------------------------------------------------------------------

    The Exchange proposes to adjust the BVR contract threshold and now 
offer the tiered per contract rebate for all PIP Orders and COPIP 
Orders of 100 contracts and under. The quantity submitted will remain 
based on a Participant's monthly ADV as calculated at the end of each 
month.
    Additionally, the Exchange proposes to lower the rebates associated 
with each volume tier. The new BVR set forth in Section I.B.2 of the 
BOX Fee Schedule will be as follows:

------------------------------------------------------------------------
                                      Per contract rebate (all account
   Monthly ADV in PIP and COPIP                    types)
           transactions            -------------------------------------
                                           PIP               COPIP
------------------------------------------------------------------------
100,001 contracts and greater.....            ($0.14)            ($0.06)
40,001 contracts to 100,000                    (0.11)             (0.04)
 contracts........................
20,001 contracts to 40,000                     (0.04)             (0.02)
 contracts........................
1 contract to 20,000 contracts....             (0.00)             (0.00)
------------------------------------------------------------------------

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,\6\ 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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    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes the proposed amendments to the BVR in Section 
I.B.2 are reasonable, equitable and non-discriminatory. The BVR was 
adopted to attract Public Customer order flow to the Exchange by 
offering these Participants incentives to submit their PIP and COPIP 
Orders to the Exchange. Other Exchange [sic] employ similar incentive 
programs.\7\ 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. The Exchange believes providing a rebate to Participants 
that reach a certain volume threshold is equitable and non-
discriminatory as the rebate will apply to all Participants uniformly.
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    \7\ See Section B of the Phlx Pricing Schedule entitled 
``Customer Rebate Program'' and CBOE's Volume Incentive Program 
(VIP). CBOE's Volume Incentive Program (``VIP'') pays certain tiered 
rebates to Trading Permit Holders for electronically executed 
multiply-listed option orders which include AIM orders. Note that 
these exchanges base these rebate programs on the percentage of 
total national Public Customer volume traded on their respective 
exchanges, which the Exchange is not proposing to do.
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    The Exchange believes it is reasonable, equitable and non-
discriminatory to restrict the BVR to PIP and COPIP Orders of 100 
contracts and under. The BVR is intended to incentivize Participants to 
direct Customer order flow to the Exchange, which is typically 
comprised of small order sizes. The Exchange has found that orders of 
more than 100 contracts are typically larger institutional orders. 
Further, these larger orders are encouraged to use the Facilitation and 
Solicitation Auction mechanisms.\8\ The Exchange believes restricting 
the BVR to PIP and COPIP Orders of 100 contracts and under is equitable 
and non-discriminatory as this will apply to all Participants 
uniformly.
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    \8\ The Faciliation [sic] Auction and Solicitation Auction were 
designed to give market participants mechanisms for large block 
orders. See Securities Exchange Act Release No. 65387 (September 23, 
2011), 76 FR 60569 (September 29, 2011) (Order Approving Proposed 
Rule Change of SR-BX-2011-034).
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    The Exchange believes that lowering the rebates associated with 
each volume tier is reasonable and competitive when compared to rebate 
structures at other exchanges.\9\ Once the volume threshold is met, the 
Exchange will continue [sic] pay the rebates on applicable PIP and 
COPIP Orders. The Exchange also believes the proposed rebates are 
equitable and not unfairly discriminatory because Participants are 
eligible to receive a rebate provided they meet both the volume and 
order type requirements. The Exchange believes that applying the rebate 
to PIP and COPIP Orders will continue to provide these Participants 
with an added incentive to transact a greater number of Public Customer 
Orders on the Exchange to the benefit of all market participants.
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    \9\ See supra, note 7.

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[[Page 7888]]

    Finally, the Exchange believes that it is equitable and not 
unfairly discriminatory to continue to provide a higher rebate for PIP 
Orders than COPIP Orders. The rebate is intended to incentivize 
Participants to submit PIP and COPIP Orders to the Exchange and the 
Exchange believes that COPIP Orders do not need the same level of 
incentivization. The Exchange believes the lower COPIP rebate will 
still provide greater liquidity and trading opportunities for all 
market participants.

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 believes the 
proposed fee changes are reasonably designed to enhance competition in 
BOX transactions, particularly auction transactions.
    The proposed rule change modifies the contract threshold and tiered 
rebates awarded to Participants based on their monthly ADV in PIP and 
COPIP. BOX notes that its market model and fees are generally intended 
to benefit retail customers by providing incentives for Participants to 
submit their customer order flow to BOX, and to the PIP and COPIP in 
particular. The Exchange does not believe that the proposed fee change 
burdens competition and will instead help promote competition by 
continuing to providing [sic] incentives for market participants to 
submit customer order flow to BOX and thus, create a greater 
opportunity for retail customers to receive additional price 
improvement.

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 \10\ and Rule 19b-4(f)(2) 
thereunder,\11\ because it establishes or changes a due, or fee.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 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-2015-11 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-2015-11. 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-2015-11, and should be 
submitted on or before March 5, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-02894 Filed 2-18-15; 8:45 am]
BILLING CODE 8011-01-P