Document ID: SEC-2023-0306-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Exchange, LLC
Posted Date: 2023-03-17T04:00Z

[Federal Register Volume 88, Number 52 (Friday, March 17, 2023)]
[Notices]
[Pages 16465-16467]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05446]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97127; File No. SR-BOX-2023-08]

Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7110 
(Order Entry) and Rule 7130 (Execution and Price/Time Priority) 
Regarding Availability of Identity of Options Participants

March 13, 2023.
    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 March 1, 2023, BOX Exchange LLC (``BOX'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I and II below, which Items have been 
prepared by BOX. 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 BOX Rule 7110 (Order Entry) and Rule 
7130 (Execution and Price/Time Priority) to codify in the BOX Rulebook 
when the identity of Options Participants is available. 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 https://rules.boxexchange.com/rulefilings.

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 7110 (Order Entry) and Rule 
7130 (Execution and Price/Time Priority) to codify in the BOX Rulebook 
when the identity of Options Participants is available. Specifically, 
the Exchange is proposing to codify in the BOX Rulebook that the contra 
party Options Participants identification number (``Participant ID'') 
is available to all Participants in their post trade execution reports. 
The Exchange notes that other exchanges also provide such contra party 
information.\3\
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    \3\ Cboe Exchange, Inc. (``Cboe Options'') Rule 6.2, Cboe BZX 
Exchange, Inc. (``BZX Options'') Rule 21.10, Cboe C2 Exchange, Inc. 
(``C2 Options'') Rule 6.2, and Cboe EDGX Exchange, Inc. (``EDGX 
Options'') Rule 21.10 provide for the inclusion of the contra party 
executing firm ID within transaction reports. The NYSE Pillar 
Gateway FIX Protocol Specification details the provision of contra 
party Firm Identifier information. See NYSE Pillar Gateway FIX 
Protocol Specification, available at: https://www.nyse.com/publicdocs/nyse/NYSE_Pillar_Options_Gateway_FIX_Protocol_Specification.pdf. It is 
also the Exchange's understanding from discussions with market 
participants that additional exchanges provide similar post-trade 
information.
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    Current Rule 7110(f) provides that the identity of Options 
Participants who submit orders to the Trading Host will remain 
anonymous to market participants at all times, except orders submitted 
through the Directed Order process, certain exposed orders as set forth 
in 7130(b)(3)(iii), during error resolution or through the normal 
clearing process as set forth in Rule 7130. The Exchange proposes to 
amend Rule 7110 to codify that the contra party Options Participant ID 
is provided on the execution reports that are sent to each Participant 
that is party to a trade. Specifically, the Exchange is proposing to 
amend the language within 7110(f) to provide that after execution, the 
identity of Options Participants is available during error resolution, 
through the normal clearing process as set forth in Rule 7130, and on 
the execution reports sent to each Participant that is party to a 
trade. As part of the proposed change,

[[Page 16466]]

the Exchange is reorganizing Rule 7110(f) so that the situations when 
Participant information is available post execution are grouped 
together, which are the situations stated above.
    The Exchange is also proposing to add language within Rule 7130 to 
cite back to the proposed exemption within Rule 7110(f) to make it 
clear that, for each trade, contra party details will be made available 
after the trade is executed to Options Participants that were party to 
the trade through the normal clearing process and as otherwise provided 
within Rule 7110(f).
    The Exchange currently sends out execution reports containing 
contra party information, and the Exchange believes codifying this 
information in the Rules will provide more transparency to market 
participants regarding these execution reports. The proposed rule 
change is consistent with current Exchange and options industry 
practices including the fact that clearing information available 
through The Options Clearing Corporation (``OCC'') provides contra 
party information. As indicated above, the Exchange believes that the 
proposed rule change is consistent with current rules and practices in 
place at other options exchanges.\4\
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    \4\ Id.
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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''),\5\ in general, and Section 6(b)(5) of the Act,\6\ in 
particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general to protect investors and the 
public interest. In particular, the Exchange currently sends out post 
trade execution reports containing contra party information, and the 
Exchange believes that codifying this information in the Rules will 
provide more transparency to market participants regarding these 
execution reports which will remove impediments to and perfect the 
mechanism of a free and open market and a national market system.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposal will serve to promote just and 
equitable principles of trade, remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general protect investors and the public interest because it will 
benefit investors by providing more transparency on when the identity 
of Options Participants is available and clarifying what is provided 
within these execution reports. The Exchange currently provides such 
contra party Options Participant IDs within execution reports and 
believes that aligning its rules with current practices will benefit 
investors by providing more transparency to market participants 
regarding what is provided within these execution reports.
    Based on the foregoing, the Exchange believes the proposed changes 
to Rule 7110 and Rule 7130 are consistent with Section 6(b)(5) of the 
Act \7\ in particular, in that they are designed to foster cooperation 
and coordination with persons engaged in clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities. In summary, the proposal will help protect free and open 
market by codifying in the BOX Rulebook that the contra party Options 
Participant ID is available to all Participants in their post trade 
execution reports. The Exchange notes that this contra party 
information is also available on other options exchanges.\8\ 
Additionally, the proposal would not permit unfair discrimination 
because the contra party Options Participant ID is already available to 
all Participants in their post trade execution reports and the Exchange 
is merely proposing to codify this into the BOX Rulebook.
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    \7\ 15 U.S.C. 78f(b)(5).
    \8\ See supra, note 3.
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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. In this regard and as indicated 
above, the Exchange notes that the proposed rule change is 
substantially similar to the rules and practices of other options 
exchanges.\9\
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    \9\ Id.
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    The proposed rule change is intended to codify in the BOX Rulebook 
that the contra party Options Participant ID is available to all 
Participants in their post trade execution. The Exchange began 
providing this contra party information for Participants within 
execution reports in response to Participant interest and requests for 
such information. The Exchange does not believe that the proposed rule 
change will impose any burden on intermarket competition, as the rule 
change is only intended to codify in the BOX Rulebook that the contra 
party Options Participant ID is available to all Participants in their 
post trade execution reports. The Exchange believes that this proposal 
is consistent with the rules and practices in place at other options 
exchanges.\10\ Additionally, the clearing information available through 
the OCC provides contra party information.
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    \10\ Id.
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    The Exchange does not believe that the proposed rule change will 
impose any burden on intramarket competition, as the rule change seeks 
to codify in the BOX Rulebook that contra party information is included 
within execution reports, which are provided to all Participants.

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

    Because the foregoing 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 from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \11\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of filing. Rule 
19b-4(f)(6)(iii), however, permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. BOX requested that the Commission 
waive the operative delay to permit BOX to codify within its Rulebook 
the inclusion of contra party information in execution reports, which 
BOX represents is consistent with current Exchange and option industry 
practices. The

[[Page 16467]]

Commission believes that waiver of the operative delay is consistent 
with the protection of investors and the public interest as the 
proposed rule change does not raise new or novel issues. Accordingly, 
the Commission hereby waives the operative delay and designates the 
proposal operative upon filing.\13\
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    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act.

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 [email protected]. Please include 
File Number SR-BOX-2023-08 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-2023-08. 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 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. 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-2023-08, and should be submitted on 
or before April 7, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-05446 Filed 3-16-23; 8:45 am]
BILLING CODE 8011-01-P