Document ID: SEC-2016-1281-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange LLC
Posted Date: 2016-07-22T04:00Z

[Federal Register Volume 81, Number 141 (Friday, July 22, 2016)]
[Notices]
[Pages 47843-47844]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17280]

[[Page 47843]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78353; File No. SR-BOX-2016-32]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Extend the Pilot Programs That Permit the Exchange to Have No Minimum 
Size Requirement for Orders Entered Into the PIP and COPIP

July 18, 2016.
    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 July 11, 2016, BOX Options Exchange LLC (the ``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 the self-regulatory organization. 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 extend the pilot programs that permit the 
Exchange to have no minimum size requirement for orders entered into 
the PIP (``PIP Pilot Program'') and COPIP (``COPIP Pilot Program''). 
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 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 purpose of the proposed rule change is to extend the PIP and 
COPIP Pilot Programs for an additional six months or until the date on 
which the pilot programs are approved on a permanent basis, whichever 
is earlier. The PIP and COPIP Pilot Programs are currently set to 
expire on July 18, 2016. The PIP and COPIP Pilot Programs allow the 
Exchange to have nominimum size requirement for orders entered into the 
PIP \3\ and the COPIP.\4\ The Exchange has been providing certain data 
to the Commission during the PIP and COPIP Pilot Programs. The proposed 
rule change retains the text of IM-7150-1 to Rule 7150 and IM-7245-1 to 
Rule 7245; and seeks to extend the operation of the PIP and COPIP Pilot 
Programs until January 18, 2017.
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    \3\ The PIP Pilot Program is currently set to expire on July 18, 
2016. See Securities Exchange Act Release Nos. 66871 (April 27, 
2012) 77 FR 26323 (May 3, 2012) (File No.10-206, In the Matter of 
the Application of BOX Options Exchange LLC for Registration as a 
National Securities Exchange Findings, Opinion, and Order of the 
Commission), 67255 (June 26, 2012) 77 FR 39315 (July 2, 2013) (SR-
BOX-2012-009) (Notice of Filing and Immediate Effectiveness of a 
Proposal To Extend a Pilot Program That Permits BOX to Have No 
Minimum Size Requirement for Orders Entered Into the Price 
Improvement Period), 69846 (June 25, 2013) 78 FR 39365 (July 1, 
2013) (SR-BOX-2013-33) (Notice of Filing and Immediate Effectiveness 
of a Proposal To Extend a Pilot Program That Permits BOX to Have No 
Minimum Size Requirement for Orders Entered Into the Price 
Improvement Period), 72545 (July 7, 2014) 79 FR 40182 (July 11, 
2014) (SR-BOX-2014-19) (Notice of Filing and Immediate Effectiveness 
of a Proposed Rule Change to amend Interpretive Material to Rule 
7150 (Price Improvement Period ``PIP'') and Interpretive Material to 
Rule 7245 (Complex Order Price Improvement Period ``COPIP'')), 73314 
(October 7, 2014) 79 FR 61682 (October 14, 2014) (SR-BOX-2014-23) 
(Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change To Extend the Pilot Programs That Permit the Exchange To Have 
No Minimum Size Requirement for Orders Entered Into the PIP (``PIP 
Pilot Program'') and COPIP (``COPIP Pilot Program'') Until December 
18, 2014), 73831 (December 12, 2014) 79 FR 75211 (December 17, 2014) 
(SR-BOX-2014-27) (Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend Interpretive Material to Rule 7150 and 
Interpretive Material to Rule 7245 To Extend the Pilot Period That 
Permit the Exchange To Have No Minimum Size Requirement for Orders 
Entered Into the PIP and COPIP Until July 18, 2015), and 75480 (July 
17, 2015) 80 FR 43803 (July 23, 2016) (SR-BOX-2015-27) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to 
Extend the Pilot Programs that Permit the Exchange to Have No 
Minimum Size Requirement for Orders Entered into the PIP and COPIP 
Until July 18, 2016).
    \4\ The COPIP Pilot Program is currently set to expire on July 
18, 2016. See Securities Exchange Act Release Nos. 71148 (December 
19, 2013) 78 FR 78437 (December 26, 2013) (SR-BOX-2014-23) (Notice 
of Filing of Amendment Nos. 1 and 2 and Order Granting Accelerated 
Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1 
and 2, to Permit Complex Orders to Participate in Price Improvement 
Periods), 72545 (July 7, 2014) 79 FR 40182 (July 11, 2014) (SR-BOX-
2014-19) (Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change to amend Interpretive Material to Rule 7150 (Price 
Improvement Period ``PIP'') and Interpretive Material to Rule 7245 
(Complex Order Price Improvement Period ``COPIP'')), 73314 (October 
7, 2014) 79 FR 61682 (October 14, 2014) (SR-BOX-2014-23) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Extend the Pilot Programs That Permit the Exchange To Have No 
Minimum Size Requirement for Orders Entered Into the PIP (``PIP 
Pilot Program'') and COPIP (``COPIP Pilot Program'') Until December 
18, 2014), 73831 (December 12, 2014) 79 FR 75211 (December 17, 2014) 
(SR-BOX-2014-27) (Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend Interpretive Material to Rule 7150 and 
Interpretive Material to Rule 7245 To Extend the Pilot Period That 
Permit the Exchange To Have No Minimum Size Requirement for Orders 
Entered Into the PIP and COPIP Until July 18, 2015), and 75480 (July 
17, 2015) 80 FR 43803 (July 23, 2016) (SR-BOX-2015-27) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to 
Extend the Pilot Programs that Permit the Exchange to Have No 
Minimum Size Requirement for Orders Entered into the PIP and COPIP 
Until July 18, 2016).
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    The Exchange notes that the PIP and COPIP Pilot Programs permit 
Participants to trade with their customer orders that are less than 50 
contracts. In particular, any order entered into the PIP is guaranteed 
an execution at the end of the auction at a price at least equal to the 
national best bid or offer. Any order entered into the COPIP is 
guaranteed an execution at the end of the auction at a price at least 
equal to or better than the cNBBO,\5\ cBBO \6\ and BBO on the Complex 
Order Book for the Strategy at the time of commencement.
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    \5\ As defined in BOX Rule 7240(a)(3), the term ``cNBBO'' means 
the best net bid and offer price for a Complex Order Strategy based 
on the NBBO for the individual options components of such Strategy.
    \6\ As defined in BOX Rule 7240(a)(1), the term ``cBBO'' means 
the best net bid and offer price for a Complex Order Strategy based 
on the BBO on the BOX Book for the individual options components of 
such Strategy.
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    The Exchange believes that extending the pilot period is 
appropriate because it will allow the Exchange the Commission 
additional time to analyze data regarding the PIP and COPIP Pilot 
Programs that the Exchange has committed to provide. As such, the 
Exchange believes that it is appropriate to extend the current 
operation of the Pilot Programs. The Exchange continues to believe that 
there remains meaningful competition for all size orders and there is 
significant price improvement for all orders executed through the PIP 
and COPIP; and that there is an active and liquid market functioning on 
the Exchange outside the PIP and COPIP auctions.

[[Page 47844]]

2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\7\ in general, and Section 
6(b)(5) of the Act,\8\ in particular, in that it is designed to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism for a free and open market and a national market 
system and, in general, to protect investors and the public interest. 
The Exchange believes that the data demonstrates that there is 
sufficient investor interest and demand to extend the PIP and COPIP 
Pilot Programs for an additional six months or until the date on which 
the pilot programs are approved on a permanent basis, whichever is 
earlier. The Exchange represents that the PIP and COPIP Pilot Programs 
are designed to create tighter markets and ensure that each order 
receives the best possible price.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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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. Specifically, the Exchange 
believes that, by extending the expiration of the PIP and COPIP Pilot 
Programs, the proposed rule change will allow additional time to 
analyze data regarding the PIP and COPIP Pilot Programs that the 
Exchange has committed to provide.

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) of the Act \9\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(a).
    \10\ 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) \11\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange requested 
that the Commission waive the 30-day operative delay. The Exchange 
stated that the current PIP and COPIP Pilot Programs are set to expire 
on July 18, 2016. The Exchange stated that a waiver will permit the PIP 
and COPIP Pilot Programs to continue without interruption.
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, as 
it will allow the PIP and COPIP Pilot Programs to continue 
uninterrupted, thereby avoiding any potential investor confusion that 
could result from a temporary interruption in the pilot. Therefore, the 
Commission designates the proposed rule change to be operative on July 
18, 2016.\13\
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    \13\ For purposes only of waiving the 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 necessary or 
appropriate in the public interest, for the protection of investors, or 
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 rule-comments@sec.gov. Please include 
File Number SR-BOX-2016-32 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-2016-32. 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-2016-32 and should be 
submitted on or before August 12, 2016.

    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).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-17280 Filed 7-21-16; 8:45 am]
BILLING CODE 8011-01-P