Document ID: SEC-2015-0294-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange, LLC
Posted Date: 2015-02-19T05:00Z

[Federal Register Volume 80, Number 33 (Thursday, February 19, 2015)]
[Notices]
[Pages 8913-8916]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-03402]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74267; File No. SR-BOX-2015-009]

Self-Regulatory Organizations; BOX Options Exchange, LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change 
Regarding the Acceptance of the Transfer, by Citadel Securities, LLC 
(``Citadel Securities'') to Its Affiliate, Citadel Securities Principal 
Investments, LLC, of Citadel Securities' Ownership Interest in BOX 
Options Exchange, LLC and BOX Holdings Group, LLC, an Affiliate of the 
Exchange

February 12, 2015.
    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 January 29, 2015, 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 accept the transfer, by Citadel Securities 
LLC (``Citadel Securities'') to its affiliate, Citadel Securities 
Principal Investments LLC, a Delaware limited liability

[[Page 8914]]

company (``CSPI''), of Citadel Securities' ownership interest in the 
Exchange and BOX Holdings Group LLC, an affiliate of the Exchange 
(``BOX Holdings''). 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 Exchange is a limited liability company, organized under the 
laws of the State of Delaware on August 26, 2010. The Exchange's 
charter is a Limited Liability Company Agreement, dated as of May 10, 
2012 (the ``Exchange LLC Agreement''). Citadel Securities is a Member 
of the Exchange.
    BOX Holdings is a limited liability company, organized under the 
laws of the State of Delaware on August 26, 2010. BOX Holdings is the 
sole owner of BOX Market LLC, a facility of the Exchange. The BOX 
Holdings charter is a Limited Liability Company Agreement, dated as of 
May 10, 2012 (the ``Holdings LLC Agreement''). Citadel Securities is a 
Member of the Exchange.
    Citadel Securities is a limited liability company organized under 
the laws of the State of Delaware. Citadel Securities is a wholly-owned 
subsidiary of CLP Holdings Three LLC, a limited liability company 
organized under the laws of the State of Delaware (``Citadel Parent'' 
and, collectively with Citadel Securities and CSPI, ``Citadel''). CSPI, 
like Citadel Securities, is also a wholly-owned subsidiary of Citadel 
Parent.
    Citadel Securities currently holds 6,445 Economic Units and 12,855 
Voting Units of the Exchange, representing 6.455% of the outstanding 
Economic Units and 12.855% of the outstanding Voting Units of the 
Exchange, respectively (the ``Exchange Units''). Citadel Securities 
also currently holds 500 Class A Units of BOX Holdings, representing 
4.203% of the outstanding Units of BOX Holdings (the ``Holdings Units'' 
and, together with the Exchange Units, the ``Citadel Units'').
    Citadel has informed the Exchange that, for its own internal 
business purposes, it desires to restructure its holdings of assets 
including all of the Citadel Units. Accordingly, it is proposed that 
Citadel Securities transfer all of the Citadel Units to CSPI (the 
``Transfer''). After the Transfer, Citadel Parent will remain the sole 
owner of CSPI, the Citadel entity holding the Citadel Units, and CSPI 
will then hold all of the Citadel Units.
    As provided in Section 7.1(c) of the Exchange LLC Agreement, ``a 
Person shall be admitted to the Exchange as an additional or substitute 
Member of the Exchange, if such Person is not already a Member, only 
upon (i) such Person's execution of a counterpart of this Agreement to 
evidence its written acceptance of the terms and provisions of this 
Agreement, and acceptance by the affirmative vote of Members holding a 
majority of the Voting Percentage Interest, which vote may be given or 
withheld in the sole discretion of each such voting Member, (ii) if 
such Person is a transferee, its agreement in writing to its assumption 
of the obligations hereunder of its assignor, and acceptance thereof by 
the affirmative vote of Members holding a majority of the Voting 
Percentage Interest, which vote may be given or withheld in the sole 
discretion of each such voting Member and (iii) if such Person is a 
transferee, a determination by the Board that the Transfer was 
permitted by this Agreement.'' In addition, as provided in Section 18.1 
of the Exchange LLC Agreement, the Exchange LLC Agreement ``may only be 
changed, amended or supplemented by an agreement in writing that is 
approved by the affirmative vote of Members holding at least a majority 
of the Voting Percentage Interest \3\ without the consent of any Member 
or other Person.''
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    \3\ ``Voting Percentage Interest'' as defined in Section 1.1 of 
the Exchange LLC Agreement means, with respect to each Member, ``the 
ratio of the number of Voting Units held by the Member, directly or 
indirectly, of record or beneficially, to the total of all of the 
issued and outstanding Voting Units held by Members, expressed as a 
percentage.''
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    Upon the effectiveness of the Transfer, CSPI proposes to become a 
Member of the Exchange. Accordingly, in connection with the Transfer, 
CSPI will execute an Instrument of Accession to the Exchange LLC 
Agreement substantially in the form set forth in Exhibit 5 hereto (the 
``Exchange Instrument of Accession''). By executing and delivering the 
Exchange Instrument of Accession and obtaining the acceptance and 
approval of Members and the determination of the Board described above, 
CSPI will fulfill the requirements described in Sections 7.1(c) and 
18.1 of the Exchange LLC Agreement in connection with the Transfer. The 
Exchange proposes to replace references to Citadel Securities in the 
Exchange LLC Agreement with references to CSPI in connection with the 
Transfer.
    As provided in Section 7.1(b) of the Holdings LLC Agreement, ``a 
Person shall be admitted to BOX Holdings as an additional or substitute 
Member of BOX Holdings, if such Person is not already a Member, only 
upon (i) such Person's execution of a counterpart of this Agreement to 
evidence its written acceptance of the terms and provisions of this 
Agreement, and acceptance thereof by resolution of the Board, which 
acceptance may be given or withheld in the sole discretion of the 
Board, (ii) if such Person is a transferee, its agreement in writing to 
its assumption of the obligations hereunder of its assignor, and 
acceptance thereof by resolution of the Board, which acceptance may be 
given or withheld in the sole discretion of the Board, (iii) if such 
Person is a transferee, a determination by the Board that the Transfer 
was permitted by this Agreement, and (iv) approval of the Board.'' In 
addition, as provided in Section 18.1 of the Exchange LLC Agreement, 
the Exchange LLC Agreement ``may only be changed, amended or 
supplemented by an agreement in writing that is approved by Directors 
holding a majority of the Total Votes \4\ without the consent of any 
Member or other Person.''
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    \4\ ``Total Votes'' means a total of 100 votes available to be 
voted on any action to be taken by the Board. As provided in Section 
4.3(a) of the Holdings LLC Agreement, each Director ``shall be 
entitled to vote that percentage of the Total Votes equal to the 
quotient obtained by dividing (i) the quotient of (A) the number of 
Units held by the Member that designated such Director (if 
applicable, rounded down to the nearest whole Unit) divided by (B) 
the aggregate number of Units held by all Members that designated 
Directors by (ii) the number of Directors designated by such 
Member.''
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    Upon the effectiveness of the Transfer, CSPI proposes to become a 
Member of BOX Holdings. Accordingly, in connection with the Transfer, 
CSPI will execute an Instrument of Accession to the Holdings LLC 
Agreement substantially in the form set forth in

[[Page 8915]]

Exhibit 5 hereto (the ``Holdings Instrument of Accession''). By 
executing and delivering the Holdings Instrument of Accession and 
obtaining the acceptance, determination and approval of the Board 
described above, CSPI will fulfill the requirements described in 
Sections 7.1(b) and 18.1 of the Holdings LLC Agreement in connection 
with the Transfer. BOX Holdings proposes to replace references to 
Citadel Securities in the Holdings LLC Agreement with references to 
CSPI in connection with the Transfer.
    For the reasons stated above, the Exchange is submitting to the 
Commission the proposed Instruments of Accession to the Exchange LLC 
Agreement and the Holdings LLC Agreement as a rule change.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\5\ in general, and furthers 
the objectives of Section 6(b)(1),\6\ in particular, in that it enables 
the Exchange to be so organized so as to have the capacity to be able 
to carry out the purposes of the Act and to comply, and to enforce 
compliance by its exchange members and persons associated with its 
exchange members, with the provisions of the Act, the rules and 
regulations thereunder, and the rules of the Exchange. The Exchange 
also believes that this filing furthers the objectives of Section 
6(b)(5) of the Act \7\ in that it is designed to facilitate 
transactions in securities, 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 regulating, 
clearing, settling, processing information with respect to, and 
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.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 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.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\ 
Because the 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, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) 
thereunder.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to 
give the Commission written notice of the Exchange's intent to file 
the proposed rule change, along with a brief description and text of 
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 Commission has waived the 5-day 
prefiling requirement in this case.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The Exchange has asked the Commission to waive the 
30-day operative delay because the Transfer is intended to be completed 
in less than 30 days. The Exchange notes that the Commission has 
previously waived the operative delay for similar filings.\11\ Based on 
the foregoing, the Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest.\12\ The Commission hereby grants the Exchange's 
request and designates the proposal operative upon filing.
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    \11\ See Securities Exchange Act Release Nos. 58445 (August 29, 
2008), 73 FR 52434 (September 9, 2008) (SR-BSE-2008-43); 58445A 
(September 10, 2008), 73 FR 53469 (September 16, 2008) (SR-BSE-2008-
43; Correction); 57260 (February 1, 2008), 73 FR 7617 (February 8, 
2008) (SR-BSE-2008-06); 57713 (April 25, 2008), 73 FR 24327 (May 2, 
2008) (SR-BSE-2008-28); and 62400 (June 29, 2010), 75 FR 39299 (July 
8, 2010) (SR-BX-2010-042).
    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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. 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-SR-BOX-2015-009 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-2015-009. 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 the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments

[[Page 8916]]

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-2015-009 and should be 
submitted on or before March 12, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-03402 Filed 2-18-15; 8:45 am]
BILLING CODE 8011-01-P