Document ID: SEC-2013-1249-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange LLC
Posted Date: 2013-07-09T04:00Z

[Federal Register Volume 78, Number 131 (Tuesday, July 9, 2013)]
[Notices]
[Pages 41174-41176]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-16381]

[[Page 41174]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69909; File No. SR-BOX-2013-35]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend the Exchange Fee Schedule To Update and Clarify Certain Fees 
Assessed Under Section V (Technology Fees)

July 2, 2013.
    Pursuant to Section 19(b)(1) under the Securities Exchange Act of 
1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on July 1, 2013, BOX Options Exchange LLC (the ``Exchange'') 
filed with the Securities and Exchange Commission (the ``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 Substance 
of the Proposed Rule Change

    The Exchange is filing with the Securities and Exchange Commission 
(``Commission'') a proposed rule change to amend the Exchange Fee 
Schedule to update and clarify certain fees assessed under Section V 
(Technology Fees) 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 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, Proposed Rule Change

 1. Purpose
    The Exchange proposes to amend the Fee Schedule for trading on BOX 
to update and clarify the technology fees that are assessed on market 
participants. The Exchange currently organizes Section V (Technology 
Fees) into two sections; a Point of Presence (``PoP'') Connection Fee 
under Section V.A., and a Back Office Trade Management Software 
(``TMS'') Fee under Section V.B. The Exchange proposes to rename 
Section V.A. ``Connectivity Fees'' and replace the text in Section V.A. 
with text that clarifies how these fees are assessed. Further, the 
Exchange proposes to remove Section V.B. from the BOX Fee Schedule.
    Section V.A, currently titled ``PoP Connection Fee'', was created 
to detail the fees applicable to Participants who connected to the BOX 
market network at PoP sites. These sites are owned and operated by 
third-party external vendors, and the fees listed in this section were 
meant to encompass what fees could be charged based on each 
Participant's particular configuration. These fees could either be 
billed directly to the Participant by the vendor, or passed through to 
the Participant by BOX. Currently, in practice, a vast majority of 
Participants are billed directly by the vendor.
    The Exchange is proposing to rename Section V.A. ``Connectivity 
Fees'' and replace the text in Section V.A. with text that clarifies 
the fees applicable to all market participants that connect to the BOX 
network. Specifically, the Exchange proposes to state that market 
participants are required to connect to the BOX network (including 
cross-connects),\5\ through datacenters owned and operated by third-
party vendors. The Exchange also proposes to state that while BOX does 
not assess Connectivity Fees; these fees are assessed by the 
datacenters and will be billed directly to the market participant. BOX 
will no longer be responsible for passing through any of these fees. 
Connectivity fees can include one-time set-up fees, monthly charges, 
and other fees charged by the third-party vendor in exchange for the 
services provided to the market participant. The Exchange notes that 
this proposal does not change any of the fees currently assessed by 
third party vendors on market participants connecting to BOX, but 
rather clarifies how they will be billed.
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    \5\ A ``cross connect'' occurs when the affected third-party 
system is located at the same datacenter site where BOX systems are 
located, and the third-party connects to BOX through the datacenter.
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    The Exchange then proposes to detail the two datacenters where 
market participants may connect to the BOX network: NY4, owned and 
operated by Equinix; and 65 Broadway, owned and operated by 365 Main; 
and the connectivity fees applicable, depending upon connection type, 
in the table set forth below (and included in the proposed Section 
V.A.).

----------------------------------------------------------------------------------------------------------------
                                                                NY4                         65 Broadway
                                                 ---------------------------------------------------------------
                 Connection Type                  One-time  set-                  One-time  set-
                                                        up            Monthly           up            Monthly
----------------------------------------------------------------------------------------------------------------
POTS............................................            $100             $25             $50             $25
Ethernet........................................             N/A             N/A             250             225
T1..............................................             500             100             N/A             N/A
Cat 5/6.........................................             500             245             250             225
COAX............................................             500             245             250             200
Single & Multi Mode Fiber.......................             500             350             325             500
Extended Cross Connect..........................             850            1000             N/A             N/A
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[[Page 41175]]

    The Exchange believes the proposed changes to Section V.A. will 
more accurately explain the costs of connecting to the Exchange.
    Further, the Exchange is proposing to remove Section V.B. ``Back 
Office Trade Management Software (``TMS'')'' from the Fee Schedule. The 
TMS Software is optional software to which BOX Participants may 
subscribe in order to manage their post trade data. The Exchange 
currently charges a monthly per user fee, depending upon the number of 
users per Participant.
    The Exchange proposes to remove Section V.B. and offer TMS Software 
to all BOX Participants at no cost. The Exchange believes that offering 
TMS Software at no cost will allow more Participants to subscribe to 
the service and therefore will give them the opportunity to better 
manage their trading on the Exchange.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\6\ in general, and Sections 
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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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes it is reasonable, equitable and not unfairly 
discriminatory to clarify that connectivity fees are assessed on all 
market participants that establish connections to BOX through a third-
party and that these fees will be billed directly to the market 
participant. Specifically, the Exchange is proposing to amend the 
connectivity fee section of the Fee Schedule in a way that is similar 
to a comparable section of the Miami International Securities Exchange, 
LLC (``MIAX'').\8\
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    \8\ See MIAX Options Fee Schedule as of June 1, 2013, available 
at http://www.miaxoptions.com/sites/default/files/MIAX_Options_Fee_Schedule_06032013.pdf
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    The Exchange believes that the proposed amendments to Section V.A. 
of the Fee Schedule are reasonable as they do not change any of the 
fees currently assessed by third party vendors on market participants 
connecting to BOX, but rather clarify how these fees will be billed.
    Further, the Exchange believes that the proposed Connectivity Fees 
constitute an equitable allocation of fees, and are not unfairly 
discriminatory, as all similarly situated market participants are 
charged the same amount depending on the services they receive.
    The Exchange believes that the proposed removal of TMS Software 
fees is non-discriminatory because it applies equally to all 
Participants on the Exchange. Further, the Exchange believes that 
offering the TMS Software at no cost will remove impediments to and 
better provide for a free and open market. Moreover, the removal of the 
TMS Software fees is reasonable because it will allow all Participants 
to access the software at no cost.

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 that the 
proposed amendments to the Fee Schedule will not impose a burden on 
competition among various Exchange Participants. The proposed change is 
designed to provide greater specificity and clarity within the Fee 
Schedule and does not place any Participants at a disadvantage compared 
to other Participants. Further, the Exchange does not believe this rule 
change will have an impact on intermarket competition.

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-2013-35 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BOX-2013-35. 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-2013-35 and should be 
submitted on or before July 30, 2013.

[[Page 41176]]

    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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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-16381 Filed 7-8-13; 8:45 am]
BILLING CODE 8011-01-P