Document ID: SEC-2023-0693-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Exchange LLC
Posted Date: 2023-06-29T04:00Z

[Federal Register Volume 88, Number 124 (Thursday, June 29, 2023)]
[Notices]
[Pages 42123-42126]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-13795]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97794; File No. SR-BOX-2023-17]

Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 
7660 (Communications and Equipment)

June 23, 2023.
    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 June 12, 2023, BOX 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 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 amend Rule 7660 (Communications and 
Equipment). 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 https://rules.boxexchange.com/rulefilings.

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 amend Rule 7660 to 
modernize and clarify the scope of the recordkeeping obligations for 
Floor Participants \3\ relating to communication devices. Specifically, 
the Exchange is proposing to amend Rule 7660 to: (1) codify that the 
registration requirement is only applicable to any communication device 
to be used for business purposes; and (2) explicitly provide that Floor 
Participants must maintain records of the use of any communication 
devices on the Trading Floor.\4\
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    \3\ The term ``Floor Participant'' means Floor Brokers as 
defined in Rule 7540 and Floor Market Makers as defined in Rule 
8510(b). See BOX Rule 100(a)(26).
    \4\ The term ``Trading Floor'' or ``Options Floor'' means the 
physical trading floor of the Exchange located in Chicago. The 
Trading Floor shall consist of one ``Crowd Area'' or ``Pit'' where 
all option classes will be located. The Crowd Area or Pit shall be 
marked with specific visible boundaries on the Trading Floor, as 
determined by the Exchange. A Floor Broker must open outcry an order 
in the Crowd Area. See BOX Rule 100(a)(68).
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    Rule 7660, which applies to the use of electronic communication 
devices on the Trading Floor, was adopted in 2017

[[Page 42124]]

with the establishment of the BOX Trading Floor. The Exchange is now 
proposing to update and modernize Rule 7660(k).
    Currently Rule 7660(f) provides that Floor Participants must 
register, prior to use, any new communication device to be used on the 
Trading Floor. Each device registered with the Exchange must be 
registered by category of user. If there is a change in the category of 
any user, the device must be re-registered with the Exchange. At the 
time of registration, Floor Participant representatives must sign a 
statement that they are aware of and understand the rules and 
procedures governing the use of communication devices on the Options 
Floor. The Exchange is proposing to update Rule 7660(f) to codify that 
the registration requirement is only applicable to communication 
devices to be used for business purposes. Specifically, the Exchange is 
proposing to amend Rule 7660(f) to state: ``Floor Participants must 
register, prior to use, any new communication device to be used for 
business purposes on the Trading Floor. Each device registered with the 
Exchange must be registered by category of user. If there is a change 
in the category of any user, the device must be re-registered with the 
Exchange. At the time of registration, Floor Participant 
representatives must sign a statement that they are aware of and 
understand the rules and procedures governing the use of communication 
devices on the Options Floor.''
    The proposed updates to Rule 7660(f) are intended to codify an 
existing requirement that Floor Participants must register, prior to 
use, any new communication device to be used for business purposes on 
the Trading Floor. The Exchange is proposing this additional language 
to clarify that the registration requirement is only applicable to 
communication devices to be used for business purposes. This 
requirement is already reflected on the BOX Communication Device 
Registration Form and the Exchange is not proposing to change the 
existing practice. The Exchange is looking to codify this existing 
requirement into the Rulebook to provide additional clarity to Floor 
Participants. The Exchange believes that this proposed change will help 
provide greater clarity to the existing practices on the Trading Floor 
and may reduce the potential for confusion regarding the requirements 
relating to communication devices on the Trading Floor.
    The Exchange notes that proposed Rule 7660(f) is similar in 
relevant part to an existing rule governing recordkeeping on the 
trading floor at another exchange.\5\
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    \5\ See Cboe Exchange, Inc. (``Cboe'') Rule 5.81(a). The 
registration requirements relating to communication devices and 
equipment on the trading floor at Cboe explicitly provides that 
prior to use, all communication devices for business purposes must 
be registered with the exchange. Proposed Rule 7660(f) states: Floor 
Participants must register, prior to use, any new communication 
device to be used for business purposes on the Trading Floor. Each 
device registered with the Exchange must be registered by category 
of user. If there is a change in the category of any user, the 
device must be re-registered with the Exchange. At the time of 
registration, Floor Participant representatives must sign a 
statement that they are aware of and understand the rules and 
procedures governing the use of communication devices on the Options 
Floor. Cboe Rule 5.81(a) states: (a) Subject to the requirements of 
this Rule, Trading Permit Holders may use any communication device 
(e.g., any hardware or software related to a phone, system, or other 
device, including an instant messaging system, email system, or 
similar device) on the trading floor and in any trading crowd of the 
Exchange. Prior to using a communications device for business 
purposes on the trading floor of the Exchange, Trading Permit 
Holders must register the communications device by identifying (in a 
form and manner prescribed by the Exchange) the hardware (i.e., 
headset, cellular telephone, tablet, or other similar hardware).
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    Currently, Rule 7660(k) provides that Floor Participants must 
maintain their cellular or cordless telephone records, including logs 
of calls placed, for a period of not less than three years, the first 
two in an easily accessible place. The Exchange reserves the right to 
inspect and/or examine such telephone records. The Exchange is 
proposing to modernize Rule 7660(k) to make it clear that the 
recordkeeping obligations are applicable to any registered 
communication devices and not limited to telephone records. 
Specifically, the Exchange is proposing to update Rule 7660(k) to 
state: ``Floor Participants must maintain records of the use of 
telephones and all other registered communication devices, including, 
but not limited to, logs of calls, emails, and chats, for a period of 
not less than three years, the first two in an easily accessible place. 
The Exchange reserves the right to inspect and/or examine such 
records.''
    The proposed updates to Rule 7660(k) are intended to modernize and 
clarify that the recordkeeping obligations are applicable to all 
registered communication devices and that records of Floor 
Participant's use of any communication devices, including, but not 
limited to, emails and chats, are also required to be maintained. The 
Exchange believes that this proposed change will help with the 
Exchange's surveillance function. Additionally, the Exchange has 
notified all Participants that their record keeping obligations apply 
to all communication devices and extend to chats and emails by 
Regulatory Notice.\6\
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    \6\ See Exchange Notice 2023-11. Available at: https://boxexchange.com/assets/Communications-and-Equipment-Notice_2.28.2023.pdf.
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    The Exchange notes that proposed Rule 7660(k) is similar in 
relevant part to an existing rule governing recordkeeping on the 
trading floor at another exchange \7\ and to an existing Exchange 
recordkeeping rule.\8\
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    \7\ See Cboe Rule 5.81(g). The recordkeeping obligations 
relating to communication devices and equipment on the trading floor 
at Cboe explicitly covers all communication devices and includes 
emails and chats as well. Proposed Rule 7660(k) states: Floor 
Participants must maintain records of the use of telephones and all 
other registered communication devices, including, but not limited 
to, logs of calls, emails, and chats, for a period of not less than 
three years, the first two in an easily accessible place. The 
Exchange reserves the right to inspect and/or examine such records. 
Cboe Rule 5.81(g) states: Trading Permit Holders must maintain 
records of the use of communication devices, including, but not 
limited to, (1) logs of calls placed, (2) emails, and (3) chats, for 
a period of not less than three years, the first two years in an 
easily accessible place. The Exchange reserves the right to inspect 
such records pursuant to Rule 13.2.
    \8\ See BOX Rule 7670(a)(1)(G).
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\9\ in general, and Section 
6(b)(5) of the Act,\10\ in particular, in that it is designed to 
promote just and equitable principles of trade and to protect investors 
and the public interest.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the rule change will promote just and 
equitable principles of trade by making the rules clearer and easier to 
use. The Exchange is proposing to update Rule 7660(f) to codify the 
requirement that Floor Participants must register, prior to use, any 
new communication device to be used for business purposes on the 
Trading Floor. The Exchange is proposing this additional language to 
clarify that the registration requirement is only applicable to 
communication devices to be used for business purposes. As noted above, 
the proposed amendment to 7660(f) is an effort to codify an existing 
Exchange practice that is detailed in the BOX Communication Device 
Policy and is similar in relevant part to a provision governing the 
registration of devices in the communications and equipment rules at 
another exchange.\11\ The Exchange believes that this proposed update 
to codify the requirement to register all communication devices that to 
be used for a business purpose on the Trading Floor will help provide 
greater

[[Page 42125]]

clarity into existing practices on the Trading Floor and may reduce the 
potential for confusion regarding the requirements relating to 
communication devices on the Trading Floor. As such, the Exchange 
believes that the proposed changes to codify this existing registration 
requirement in Rule 7660(f) is in the public interest, and therefore, 
consistent with the Act.
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    \11\ See supra note 5.
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    The Exchange is also proposing to modernize Rule 7660(k) to amend 
the records retention requirement for telephone records to explicitly 
provide that, the recordkeeping obligations are applicable to all 
registered communication devices and that records of Floor 
Participant's use of any communication devices, including, but not 
limited to, emails and chats are also required to be maintained for a 
period of not less than three years, the first two in an easily 
accessible place. As noted above, these proposed amendments are similar 
in relevant part to a provision governing recordkeeping in the 
communications and equipment rules at another exchange \12\ and to an 
existing Exchange recordkeeping rule.\13\ The Exchange believes that 
this modernization and clarification of the scope of the recordkeeping 
requirements under Rule 7660(k), will help with the Exchange's 
surveillance function and make the Rule clearer for Participants. As 
such, the Exchange believes that the proposed changes to modernize and 
clarify Rule 7660(k) is in the public interest, and therefore, 
consistent with the Act.
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    \12\ See supra note 7.
    \13\ See supra note 8.
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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 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. The 
Exchange believes that the proposed change will not impose a burden on 
intermarket or intramarket competition, as the proposed change applies 
equally to all market participants. While the Exchange does not believe 
that the proposed non-controversial change is a burden on competition, 
or is competitive in nature, the Exchange believes that proposed 
updates to codify an existing practice and provide for clearer, 
modernized recordkeeping obligations will benefit market participants. 
The Exchange also notes that the proposed updates to 7660(f) are 
similar in relevant part to an existing provision governing 
communication device registration in the communications and equipment 
rules at another options exchange \14\ and that the proposed updates to 
7660(k) are similar in relevant part to an existing provision governing 
recordkeeping in the communications and equipment rules at another 
options exchange \15\ and to an existing Exchange recordkeeping 
rule.\16\ As such, 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.
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    \14\ See supra note 5.
    \15\ See supra note 7.
    \16\ See supra note 8.
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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 \17\ and Rule 19b-4(f)(6) thereunder.\18\ 
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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \19\ and Rule 19b-
4(f)(6)(iii) thereunder.\20\
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    \17\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 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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    A proposed rule change filed under Rule 19b-4(f)(6) \21\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\22\ the Commission 
may 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 so that the proposal 
may become operative immediately upon filing. As discussed above, the 
Exchange states that this proposed update to 7660(f) to codify the 
existing requirement to register all communication devices to be used 
for a business purpose on the Trading Floor will help provide greater 
clarity into existing practices on the Trading Floor and may reduce the 
potential for confusion regarding the requirements relating to 
communication devices on the Trading Floor. The Exchange believes that 
the waiver of the operative delay will protect investors by allowing 
the Exchange to quickly codify existing practices and to modernize and 
clarify the scope of the recordkeeping requirements under Rule 7660(k). 
The Commission believes that waiver of the operative delay is 
consistent with the protection of investors and the public interest 
because it will allow the Exchange to immediately codify an existing 
practice within Rule 7660(f) and amend Rule 7660(k) to modernize the 
requirements applicable to communication devices. Accordingly, the 
Commission hereby waives the 30-day operative delay and designates the 
proposal operative upon filing.\23\
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    \21\ 17 CFR 240.19b-4(f)(6).
    \22\ 17 CFR 240.19b-4(f)(6)(iii).
    \23\ 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 this 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 under 
Section 19(b)(2)(B) \24\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \24\ 15 U.S.C. 78s(b)(2)(B).
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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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-BOX-2023-17 on the subject line.

[[Page 42126]]

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-2023-17. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-BOX-2023-17 and should be 
submitted on or before July 20, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 2023-13795 Filed 6-28-23; 8:45 am]
BILLING CODE 8011-01-P