Document ID: SEC-2018-0596-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange, LLC
Posted Date: 2018-04-16T04:00Z

[Federal Register Volume 83, Number 73 (Monday, April 16, 2018)]
[Notices]
[Pages 16405-16407]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-07810]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83028; File No. SR-BOX-2018-11]

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 
To Amend the Strategy QOO Order Fee Cap

April 10, 2018.
    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 28, 2018, 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.
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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 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 
amend the Fee Schedule [sic] 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 2, 2018. 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 website 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

[[Page 16406]]

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 make a number of changes to the manual 
transaction fees for certain strategy Qualified Open Outcry (``QOO'') 
Orders under Section II.D. ``Strategy QOO Order Fee Cap'' of the BOX 
Fee Schedule. Specifically, the Exchange proposes to raise the fee cap 
for all reversal, conversion, jelly roll, and box spread strategies \5\ 
executed on the same trading day from $700 to $1,000. Additionally, the 
Exchange proposes to include all strategies, regardless of option 
class, that execute in the same day to this proposed $1,000 fee cap. 
Lastly, the Exchange proposes to remove the $25,000 per month per 
Participant cap for QOO Order fees in combined strategies.
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    \5\ A ``reversal strategy'' is established by combining a short 
security position with a short put and a long call position that 
shares the same strike and expiration. A ``conversion strategy'' is 
established by combining a long position in the underlying security 
with a long put and a short call position that shares the same 
strike and expiration. A ``jelly roll strategy'' is created by 
entering into two separate positions simultaneously. One position 
involves buying a put and selling a call with the same strike price 
and expiration. The second position involves selling a put and 
buying a call, with the same strike price, but with a different 
expiration from the first position. A ``box spread strategy'' is a 
strategy that synthesizes long and short stock positions to create a 
profit. Specifically, a long call and short put at one strike is 
combined with a short call and long put at a different strike to 
create synthetic long and synthetic short stock positions, 
respectively. These definitions are identical to the terms defined 
in the Chicago Board Options Exchange, Inc. (``CBOE'') Fee Schedule; 
NYSE American Options Fee Schedule ``(``NYSE'') and Phlx Pricing 
Schedule (``PHLX''), Strategy Caps on Multiply Listed Options Fees.
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    The intent of the above changes is to increase order flow to 
certain strategy QOO Orders on the BOX Trading Floor, which will 
benefit all market participants. The Exchange notes that these changes 
will apply equally to all Participants, regardless of Participant type 
or the size of the Participant.
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,\6\ 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)(4) and (5).
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    The Exchange believes raising the fee cap to $1,000 for reversal, 
conversion, jelly roll, and box spread strategies executed on the same 
trading day is reasonable and appropriate. The fee cap is designed to 
incentivize order flow in certain QOO Strategy Orders, and the Exchange 
believes that the increased fee cap, coupled with the other changes 
discussed herein, will result in increased participation in these types 
of orders on the BOX Trading Floor. As such, the Exchange believes that 
increased participation on the Trading Floor will result in increased 
liquidity on the BOX Floor which will benefit all market participants. 
Further, the Exchange believes that the proposed fee cap is not 
unfairly discriminatory as all Participants are subject to the cap, 
regardless of account type.
    The Exchange believes that subjecting all strategies, regardless of 
option class, to the proposed $1,000 daily fee cap is reasonable and 
appropriate. As stated above, the Strategy QOO Fee Cap is designed to 
incentivize order flow to the BOX Trading Floor. The Exchange believes 
that removing the ``same options class'' qualification will further 
result in increased participation and order flow in these types of 
orders. As such, the Exchange believes that the proposed change will 
result in increased liquidity on BOX which will benefit all market 
participants. Further, the Exchange believes the proposed change is not 
unfairly discriminatory because it will apply to all Participants, 
regardless of account type.
    Lastly, the Exchange believes that eliminating the monthly cap of 
$25,000 per Participant is appropriate. The Exchange notes that once 
Participants are subject to the proposed daily fee cap of $1,000 
regardless of option class, the current monthly fee cap of $25,000 is 
not necessary. For example, in the month of March, if a Participant 
traded the applicable strategies to achieve the proposed $1,000 daily 
fee cap on each trading day, the Participant would only be charged 
$21,000 total (21 trading days in March multiplied by the proposed 
$1,000 fee cap) and could never reach the $25,000 cap. As such, the 
Exchange believes that the $25,000 monthly fee cap for combined 
strategies is unnecessary and proposes to remove the monthly fee cap 
from the BOX Fee Schedule.

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 does not believe 
that the proposed change burdens competition and will instead help 
promote competition by continuing to provide incentives for market 
participants to submit strategy orders to the BOX Trading Floor. 
Further, the Exchange does not believe that the proposed changes will 
impose an undue burden on intra-market competition because all Floor 
Participants are subject to the proposed changes, regardless of account 
type.

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 \7\ and Rule 19b-4(f)(2) 
thereunder,\8\ because it establishes or changes a due, or fee.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 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

[[Page 16407]]

     Send an email to [email protected]. Please include 
File Number SR-BOX-2018-11 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-2018-11. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-BOX-2018-11, and should be submitted on 
or before May 7, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-07810 Filed 4-13-18; 8:45 am]
BILLING CODE 8011-01-P