Document ID: SEC-2016-0646-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange, LLC
Posted Date: 2016-04-14T04:00Z

[Federal Register Volume 81, Number 72 (Thursday, April 14, 2016)]
[Notices]
[Pages 22133-22136]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-08559]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77572; File No. SR-BOX-2016-14]

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 (``BOX'') Options Facility

April 8, 2016.
    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 March 31, 2016, 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

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 to 
revise certain qualification thresholds and fees in Section I.B. of the 
BOX Fee Schedule on the BOX Market LLC (``BOX'') options facility. 
While changes to the fee schedule pursuant to this proposal will be 
effective upon filing, the changes will become operative on April 1, 
2016. 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, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule for trading on BOX. 
Specifically, the Exchange proposes to revise certain qualification 
thresholds and fees in Section I.B. of the BOX Fee Schedule, the Tiered 
Fee Schedule for Initiating Participants and BOX Volume Rebate 
(``BVR'').
    Under the Tiered Fee Schedule for Initiating Participants, the 
Exchange assesses a per contract execution fee to all Primary 
Improvement Order executions initiated by the particular Initiating 
Participant. Percentage thresholds are calculated on a monthly basis by 
totaling the Initiating Participant's Primary Improvement Order volume 
submitted to BOX, relative to the total national Customer volume in 
multiply-listed options classes. The current tiered fee schedule for 
Initiating Participants is as follows:

------------------------------------------------------------------------
                                  Percentage thresholds
                                   of national customer    Per contract
              Tier                 volume in multiply-       fee  (all
                                  listed options classes  account types)
                                        (monthly)
------------------------------------------------------------------------
1..............................  0.000%-0.079%..........           $0.25

[[Page 22134]]

 
2..............................  0.080%-0.159%..........            0.20
3..............................  0.160%-0.339%..........            0.12
4..............................  0.340%-0.849%..........            0.07
5..............................  0.850% and Above.......            0.03
------------------------------------------------------------------------

    The Exchange proposes to adjust the percentage thresholds in Tiers 
3 through 5. Additionally, the Exchange proposes to raise the fee 
associated with Tier 5 from $0.03 to $0.05. The new Tiered Fee Schedule 
for Initiating Participants set forth in Section I.B.1. of the BOX Fee 
Schedule will be as follows:

------------------------------------------------------------------------
                                  Percentage thresholds
                                   of national customer    Per contract
              Tier                 volume in multiply-       fee  (all
                                  listed options classes  account types)
                                        (monthly)
------------------------------------------------------------------------
1..............................  0.000%-0.079%..........           $0.25
2..............................  0.080%-0.159%..........            0.20
3..............................  0.160%-0.499%..........            0.12
4..............................  0.500%-0.999%..........            0.07
5..............................  1.000% and Above.......            0.05
------------------------------------------------------------------------

    Next, the Exchange proposes to revise certain qualification 
thresholds in the BVR. Under the current BVR, the Exchange offers a 
tiered per contract rebate for all PIP Orders and COPIP orders of 100 
contracts and under. Percentage thresholds are calculated on a monthly 
basis by totaling the Participant's PIP and COPIP volume submitted to 
BOX, relative to the total national Customer volume in multiply-listed 
options classes.
    The current per contract rebate for Participants in PIP and COPIP 
Transactions under the BVR is:

----------------------------------------------------------------------------------------------------------------
                                                                                     Per contract rebate  (all
                                              Percentage thresholds of national           account types)
                    Tier                      customer volume in multiply-listed -------------------------------
                                                  options classes  (monthly)            PIP            COPIP
----------------------------------------------------------------------------------------------------------------
1..........................................  0.000% to 0.159%...................         ($0.00)         ($0.00)
2..........................................  0.160% to 0.339%...................         ($0.04)         ($0.02)
3..........................................  0.340% to 0.849%...................         ($0.11)         ($0.04)
4..........................................  0.850% and Above...................         ($0.14)         ($0.06)
----------------------------------------------------------------------------------------------------------------

    The Exchange proposes to adjust the BVR percentage threshold for 
Tier 3 to ``0.340% to 0.99%'' and Tier 4 to ``1.00% and Above.'' The 
quantity submitted will continue to be calculated on a monthly basis by 
totaling the Participant's PIP and COPIP volume submitted to BOX, 
relative to the total national Customer volume in multiply-listed 
options classes.
    The new BVR set forth in Section I.B.2 of the BOX Fee Schedule will 
be as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                     Per contract rebate  (all
                                              Percentage thresholds of national           account types)
                    Tier                      customer volume in multiply-listed -------------------------------
                                                  options classes  (monthly)            PIP            COPIP
----------------------------------------------------------------------------------------------------------------
1..........................................  0.000% to 0.159%...................         ($0.00)         ($0.00)
2..........................................  0.160% to 0.339%...................         ($0.04)         ($0.02)
3..........................................  0.340% to 0.99%....................         ($0.11)         ($0.04)
4..........................................  1.00% and Above....................         ($0.14)         ($0.06)
----------------------------------------------------------------------------------------------------------------

    Lastly, the Exchange is proposing to remove reference and 
information relating to Mini Options, as the Exchange no longer lists 
or trades Mini Options and has no current plans to do so.
    The Exchange added rules relating to the listing of Mini Options 
(options overlying 10 shares of stock) in 2013 \5\ and later changed 
its Fee Schedule to address the treatment of Mini Options, including 
establishing transactions fees for these products.\6\ However, the 
Exchange no longer lists or trades Mini Option series, and has no 
current plans to do so and proposes to strip references, and charges 
related to, Mini Options from the Fee Schedule.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 68771 (January 30, 
2013), 78 FR 8208 (February 5, 2013) (Notice of Filing and Immediate 
Effectiveness SR-BOX-2013-07).
    \6\ See Securities Exchange Act Release No. 69202 (March 21, 
2013), 78 FR 18642 (March 27, 2013) (Notice of Filing and Immediate 
Effectiveness SR-BOX-2013-15).

---------------------------------------------------------------------------

[[Page 22135]]

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,\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.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes the proposed amendments to the Tiered Fee 
Schedule for Initiating Participants in Section I.B.1. of the BOX Fee 
Schedule are reasonable, equitable and non-discriminatory. The reduced 
fees related to trading activity in BOX Auction Transactions are 
available to all BOX Options Participants that initiate Auction 
Transactions, and they may choose whether or not to trade on BOX to 
take advantage of the discounted fees for doing so. The Exchange also 
believes adjusting certain percentage thresholds within the tiers and a 
fee associated with a tier is reasonable and appropriate, as this 
Tiered Fee Schedule is in place to provide incentives to BOX 
Participants to submit their customer order into the PIP for potential 
price improvement. Further, the Exchange believes the proposed 
thresholds and fees remain competitive when compared to the auction 
transaction fees on other exchanges.\8\
---------------------------------------------------------------------------

    \8\ Comparative fees at other exchanges range from $0.05 to 
$0.30. See Section IV of the Phlx Pricing Schedule entitled ``PIXL 
Pricing''; International Securities Exchange (``ISE'') Schedule of 
Fees, Section I. Regular Order Fees and Rebates ``Select Symbols.''
---------------------------------------------------------------------------

    The Exchange also believes the proposed amendments to the BVR in 
Section I.B of the BOX Fee Schedule 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 and the Exchange 
believes it is appropriate to now amend the BVR. The Exchange believes 
it is equitable and not unfairly discriminatory to amend the BVR, as 
all Participants have the ability to qualify for a rebate, and rebates 
are provided equally to qualifying Participants. Finally, 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.
    BOX believes it is reasonable, equitable and not unfairly 
discriminatory to adjust the monthly Percentage Thresholds of National 
Customer Volume in Multiply-Listed Options Classes. The volume 
thresholds and applicable rebates are meant to incentivize Participants 
to direct order flow to the Exchange to obtain the benefit of the 
rebate, which will in turn benefit all market participants by 
increasing liquidity on the Exchange. Other exchanges employ similar 
incentive programs; \9\ and the Exchange believes that the proposed 
changes to the volume thresholds and rebates are reasonable and 
competitive when compared to incentive structures at other exchanges.
---------------------------------------------------------------------------

    \9\ See Section B of the PHLX Pricing Schedule entitled 
``Customer Rebate Program;'' ISE Gemini's Qualifying Tier Thresholds 
(page 6 of the ISE Gemini Fee Schedule); and CBOE's Volume Incentive 
Program (VIP).
---------------------------------------------------------------------------

    Lastly, the Exchange believes the proposed change to remove 
references and information relating to Mini Options from the Fee 
Schedule is reasonable, equitable, and not unfairly discriminatory, as 
the Exchange no longer lists or trades Mini-option series and has no 
intention to do so at this time. Thus, removing outmoded references on 
the Fee Schedule would alleviate potential investor confusion and 
improve the clarity and transparency of the Fee Schedule. The proposed 
change is also reasonable, equitable, and not unfairly discriminatory 
as it applies to 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 is simply 
proposing to revise certain qualification thresholds and fees in the 
Section I.B. of the BOX Fee Schedule. The Exchange believes that the 
volume based rebates and fees increase intermarket and intramarket 
competition by incenting Participants to direct their order flow to the 
exchange, which benefits all participants by providing more trading 
opportunities and improves competition on the Exchange. The Exchange 
also believes the removal of references to Mini Options will not impose 
any burden on competition but will serve to promote regulatory clarity 
and consistency, thereby reducing burdens on the marketplace and 
facilitating investor protection.

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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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-2016-14 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-2016-14. 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

[[Page 22136]]

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-2016-14, and should be 
submitted on or before May 5, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-08559 Filed 4-13-16; 8:45 am]
 BILLING CODE 8011-01-P