Document ID: SEC-2012-2033-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange LLC
Posted Date: 2012-12-11T05:00Z

[Federal Register Volume 77, Number 238 (Tuesday, December 11, 2012)]
[Notices]
[Pages 73729-73731]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29856]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68361; File No. SR-BOX-2012-020]

 Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposal To Expand the Short 
Term Options Series Program

December 5, 2012.
    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 December 4, 2012, 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 Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    BOX Options Exchange LLC (the ``Exchange'') proposes to amend 
interpretive material to Rule 5050 and to Rule 6090 to expand the Short 
Term Option Series Program. The text of the proposed rule change is 
available from the principal office of the Exchange, on the Exchange's 
Internet Web site at http://boxexchange.com, and at the Commission's 
Public Reference Room.

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 IM-5050-6 to Rule 5050 and IM-6090-2 
to Rule 6090 to provide for the ability to open up to five consecutive 
expirations under the Short Term Option Series Program (``Weeklys 
Program'') for trading on BOX, to allow for the Exchange to delist 
certain series in the Weeklys Program that do not have open interest 
and to expand the number of series in the Weeklys Program under limited 
circumstances when there are no series at least 10% but not more than 
30% away from the current price of the underlying security.\3\
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    \3\ The Exchange adopted the Weeklys Program on a permanent 
basis on July 15, 2010. See Securities Exchange Act Release No. 
62505 (July 15, 2010), 75 FR 42792 (July 22, 2010) (SR-BX-2010-047).
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    Currently, BOX may select up to 30 currently listed option classes 
on which Short Term Option Series (``STOS'') may be opened in the 
Weeklys Program and BOX may also match any option classes that are 
selected by other securities exchanges that employ a similar program 
under their respective rules.\4\ For each option class eligible for 
participation in the Weeklys Program, the Exchange may open up to 30 
STOS for each expiration date in that class.
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    \4\ See Securities Exchange Act Release No. 65773 (November 17, 
2011), 76 FR 72490 (November 23, 2011) (SR-BX-2011-075). See also, 
Exchange IM-5050-6(b)(1) and note that currently, BOX may open Short 
Term Options Series that expire on the Friday of the following 
business week.
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    This proposal seeks to allow the Exchange to open STOS for up to 
five consecutive week expirations. The Exchange intends to add a 
maximum of five consecutive week expirations under the Weeklys Program; 
however it will not add a STOS expiration in the same week that a 
monthly options series expires or, in the case of Quarterly Option 
Series, on an expiration that coincides with an expiration of Quarterly 
Option Series on the same class. In other words, the total number of 
consecutive expirations will be five, including any existing monthly or 
quarterly expirations.\5\
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    \5\ For example, if quarterly options expire week 1 and monthly 
options expire week 3 from now, the proposal would allow the 
following expirations: week 1 quarterly, week 2 STOS, week 3 
monthly, week 4 STOS, and week 5 STOS. If quarterly options expire 
week 3 and monthly options expire week 5, the following expirations 
would be allowed: week 1 STOS, week 2 STOS, week 3 quarterly, week 4 
STOS, and week 5 monthly.
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    The Exchange notes that the Weeklys Program has been well-received 
by market participants, in particular by retail investors. The Exchange 
believes that the current proposed revision to the Weeklys Program will 
permit the Exchange to meet increased demand from BOX market 
participants and provide them with the ability to hedge in a greater 
number of option classes and series.
    With regard to the impact of this proposal on system capacity, the 
Exchange has analyzed its capacity and represents that it and the 
Options Price Reporting Authority have the necessary systems capacity 
to handle the potential additional traffic associated with trading of 
an expanded number of expirations that participate in the Weeklys 
Program.
    In addition, the Exchange is proposing to add new language to IM-
5050-6(b) and IM-6090-2(b) to allow the Exchange, in the event that the 
underlying security has moved such that there are no series that are at 
least 10% above or below the current price of the underlying security, 
to delist series with no open interest in both the call and the put 
series having a: (i) Strike higher than the highest strike price with 
open interest in the put and/or call series for a given expiration 
month; and (ii) strike lower than the lowest strike price with open 
interest in the put and/or the call series for a given expiration 
month, so as to list series that are at least 10% but not more than 30% 
above or below the current price of the underlying security. Further, 
in the event that all existing series have open interest and there are 
no series at least 10% above or below the current price of the 
underlying security, the Exchange may list additional series, in excess 
of the 30 allowed currently under IM-5050-6(b) and IM-6090-2(b) that 
are at least 10% and not more than 30% above or below the current price 
of the underlying security. This change is

[[Page 73730]]

being proposed notwithstanding the current cap of 30 series per class 
under the Weeklys Program.
    The Exchange believes that it is important to allow investors to 
roll existing option positions. Ensuring that there are always series 
at least 10% but not more than 30% above or below the current price of 
the underlying security will allow investors the flexibility they need 
to roll existing positions.
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 Section 
6(b)(5) of the Act,\7\ in particular, in that it is designed to promote 
just and equitable principles of trade, remove impediments to and 
perfect the mechanisms 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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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that expanding the Weeklys Program will 
result in a continuing benefit to investors by giving them more 
flexibility to closely tailor their investment decisions and hedging 
decisions in a greater number of securities.
    The Exchange also believes that expanding the Weeklys Program will 
provide the investing public and other market participants with 
additional opportunities to hedge their investment thus allowing these 
investors to better manage their risk exposure. While the expansion of 
the Weeklys Program will generate additional quote traffic, the 
Exchange does not believe that this increased traffic will become 
unmanageable since the proposal remains limited to a fixed number of 
expirations.
    The Exchange believes that the ability to delist series with no 
open interest in both the call and the put series will benefit 
investors by devoting the current cap in the number of series to those 
series that are more closely tailored to the investment decisions and 
hedging decisions of investors.

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 proposal is a competitive filing and 
believes this proposed rule change is necessary to permit fair 
competition among the options exchanges.

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

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not 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 \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). 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 
Exchange has satisfied this requirement.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiver of the operative 
delay is consistent with the protection of investors and the public 
interest because the proposal is substantially similar to those of 
other exchanges that have been approved by the Commission and permit 
such exchanges to open up to five consecutive expirations under their 
respective STOS Programs as well as allow for the exchanges to delist 
any series in the STOS Programs that do not have open interest and 
expand the number of series per class permitted in the STOS Programs 
under limited circumstances.\10\ Therefore, the Commission designates 
the proposal operative upon filing.\11\
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    \10\ See Securities Exchange Act Release Nos. 68190 (November 8, 
2012) (SR-NYSEArca-2012-95); 68191 (November 8, 2012) (SR-NYSEMKT-
2012-42).
    \11\ 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 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-2012-020 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-2012-020. 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 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-2012-020 and should be 
submitted on or before January 2, 2013.

[[Page 73731]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-29856 Filed 12-10-12; 8:45 am]
BILLING CODE 8011-01-P