Document ID: SEC-2013-0951-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange LLC
Posted Date: 2013-05-22T04:00Z

[Federal Register Volume 78, Number 99 (Wednesday, May 22, 2013)]
[Notices]
[Pages 30357-30362]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-12169]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69599; File No. SR-BOX-2013-28]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Create a New Fee Structure for Complex Orders on the BOX Market LLC 
Options Facility

May 16, 2013.
    Pursuant to Section 19(b)(1) under the Securities Exchange Act of 
1934 (the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on May 16, 2013, BOX Options Exchange LLC (the ``Exchange'') 
filed with the Securities and Exchange Commission (the ``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

[[Page 30358]]

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 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 
create a new fee structure for Complex Orders on the BOX Market LLC 
(``BOX'') options facility. Changes to the fee schedule pursuant to 
this proposal will be effective upon filing. 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, Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule for trading on BOX 
to create a new fee structure for Complex Orders. The Exchange recently 
amended its rules related to trading Complex Orders \5\ on BOX. In 
particular, the Exchange amended the BOX Rules to facilitate 
interaction on a continuous and real-time basis among orders on BOX, 
consisting of Complex Orders on the Complex Order Book \6\ and interest 
on the BOX Book.\7\ The Exchange is submitting this filing to describe 
the fees that are applicable to Complex Order transactions.
---------------------------------------------------------------------------

    \5\ ``Complex Order'' is defined as ``any order involving the 
simultaneous purchase and/or sale of two or more different options 
series in the same underlying security, for the same account, in a 
ratio that is equal to or greater than one-to-three (.333) and less 
than or equal to three-to-one (3.00) and for the purpose of 
executing a particular investment strategy.'' See Securities Release 
No. 69419 (April 19, 2013), 78 FR 24449 (April 25, 2013) (SR-BOX-
2013-01).
    \6\ ``Complex Order Book'' is defined as ``the electronic book 
of Complex Orders maintained by the BOX Trading Host.'' See proposed 
Rule 7240(a)(6).
    \7\ ``BOX Book'' (also the ``Central Order Book'') is defined as 
``the electronic book of orders on each single series of options 
maintained by the BOX Trading Host.'' See proposed Rule 100(a)(10).
---------------------------------------------------------------------------

    First, the Exchange proposes to establish a new section (Section 
III. Complex Order Transaction Fees) in the BOX Fee Schedule to detail 
the fee and credit structure for Complex Order executions (the 
``Complex Order Fees''). The remaining sections of the Fee Schedule 
(Eligible Orders Routed to an Away Exchange, Technology Fees, and 
Regulatory Fees) will be renumbered accordingly.
    The Exchange then proposes to specify that the Complex Order Fees 
will be applied per contract per leg to all executions of Complex 
Orders. Executions of Complex Orders will not be subject to Sections I 
(Exchange Fees) and II (Liquidity Fees and Credits), and Complex Orders 
for Mini Options orders will be assessed 1/10th of the otherwise 
applicable Complex Order Fees.
    The Exchange also proposes to count all Complex Order transactions 
by Market Makers toward their monthly average daily volume ``ADV'' as 
outlined in Section I.B. (Exchange Fees). BOX currently gives volume 
incentives for standard transaction fees to Market Makers that, on a 
daily basis, trade an average daily volume, as calculated at the end of 
the month, of more than 5,000 contracts on BOX. The Exchange notes that 
the Options Regulatory Fee outlined in Section V (Regulatory Fees) will 
apply to Complex Order Fees.\8\
---------------------------------------------------------------------------

    \8\ The Options Regulatory Fee is assessed to each BOX Options 
Participant for all options transactions executed or cleared by the 
BOX Options Participant that are cleared by The Options Clearing 
Corporation (OCC) in the customer range regardless of the exchange 
on which the transaction occurs.
---------------------------------------------------------------------------

    The Exchange then proposes that Complex Order Fees will be 
determined according to whether the Complex Order executes against 
orders on the BOX Book or against another Complex Order and according 
to the account types of the Participant submitting the Complex Order 
and the contra party.
Complex Orders Executed Against Orders on the BOX Book
    In proposed Section III.A, Complex Orders Executed Against Orders 
on the BOX Book, the Exchange proposes to adopt a fee or credit based 
on the Participant's Account Type.\9\ This fee structure will apply 
when a Complex Order executes against an order on the BOX Book. In 
these transactions the Exchange proposes to credit $0.35 per contract 
per leg for Complex Orders executed by Public Customers, assess a fee 
of $0.45 per contract per leg for Complex Orders executed by 
Professional Customers and Broker Dealers, and assess a fee of $0.40 
per contract per leg for Complex Orders executed by Market Makers.
---------------------------------------------------------------------------

    \9\ See BOX Rule 100 Series for definitions of each Participant 
Account Type.
---------------------------------------------------------------------------

    For example, if a Professional Customer's Complex Order A+B 
executes against orders on the BOX Book, the Professional Customer will 
be charged $0.90 ($0.45 for A, plus $0.45 for B). A Public Customer 
executing Complex Order A+B will receive a credit of $0.70 ($0.35 for 
A, plus $0.35 for B).
Complex Orders Executed Against Other Complex Orders
    In proposed Section III.B, Complex Orders Executed Against Other 
Complex Orders, the Exchange proposes to adopt a fee or credit based on 
the Participant's account type and the contra party's account type. In 
these transactions, Complex Orders in penny pilot classes will be 
assessed a lower fee than those in non-penny pilot classes. This fee 
structure will apply when a Complex Order executes against another 
Complex Order on the Complex Order Book.
    Specifically, the Exchange proposes to assess a distinct fee or 
credit, on a per contract per leg basis, for Complex Orders executed 
against another Complex Order on the Complex Order Book by each of 
Public Customers, Professional Customers, Broker Dealers and Market 
Makers depending upon the contra order account type in the transaction.
    The Exchange proposes the fees and credits set forth in the table 
below (and included in proposed Section III.B) when Complex Orders 
execute against other Complex Orders on the Complex Order Book:

[[Page 30359]]

----------------------------------------------------------------------------------------------------------------
                                                                                    Penny pilot      Non-Penny
                Account type                             Contra party                 classes      pilot classes
----------------------------------------------------------------------------------------------------------------
Public Customer............................  Public Customer....................           $0.00           $0.00
                                             Professional Customer/Broker Dealer/         (0.35)          (0.70)
                                              Market Maker.
Professional Customer......................  Public Customer....................            0.45            0.80
                                             Professional Customer/Broker Dealer/           0.20            0.40
                                              Market Maker.
Broker Dealer..............................  Public Customer....................            0.45            0.80
                                             Professional Customer/Broker Dealer/           0.20            0.40
                                              Market Maker.
Market Maker...............................  Public Customer....................            0.40            0.75
                                             Professional Customer/Broker Dealer/           0.10            0.20
                                              Market Maker.
----------------------------------------------------------------------------------------------------------------

    For example, if a Professional Customer's Complex Order A+B in a 
penny pilot class executes against a Public Customer's Complex Order on 
the Complex Order Book, the Professional Customer will be charged $0.90 
($0.45 for A, plus $0.45 for B) and the Public Customer will receive a 
$0.70 credit ($0.35 for A, plus $0.35 for B). To expand upon this 
example, if the Professional Customer's same Complex Order is executed 
against a Market Maker's Complex Order on the Complex Order Book, the 
Professional Customer will be charged $0.40 ($0.20 for A, plus $0.20 
for B) and the Market Maker will be charged $0.20 ($0.10 for A, plus 
$0.10 for B).
Orders on BOX Book Executed Against Complex Orders
    In proposed Section III.C, Orders on BOX Book Executed Against 
Complex Orders, the Exchange proposes to clarify that orders on the BOX 
Book that execute against Complex Orders will be treated as standard 
orders for purposes of the Fee Schedule and continue to be subject to 
Sections I (Exchange Fees) and II (Liquidity Fees and Credits).
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\10\ in general, and Sections 
6(b)(4) and 6(b)(5) of the Act,\11\ 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed Complex Order Fees are 
reasonable, equitable and non-discriminatory. In particular, the 
proposed Complex Order Fees will allow the Exchange to be competitive 
with other exchanges and to apply fees and credits in a manner that is 
equitable among all BOX Participants. The Exchange operates within a 
highly competitive market in which market participants can readily 
direct order flow to any other competing exchange if they determine 
fees at a particular exchange to be excessive. The proposed Complex 
Order Fees are intended to attract Complex Orders to the Exchange by 
offering market participants incentives to submit their Complex Orders 
to the Exchange. The Exchange believes it is appropriate to provide 
incentives for market participants to submit Complex Orders, resulting 
in greater liquidity and ultimately benefiting all Participants trading 
on the Exchange.
    The Exchange believes that exempting Complex Orders from Section I 
(Exchange Fees) and Section II (Liquidity Fees and Credits) is 
reasonable, equitable and not unfairly discriminatory. The proposed 
Complex Order Fees are meant to take the place of Exchange Fees for 
Complex Order transactions. The Exchange's Liquidity Fees and Credits 
are intended to attract order flow to the Exchange by offering 
incentives to all market participants to submit orders to the Exchange 
and the Exchange believes that the proposed Complex Order fee structure 
will provided appropriate incentives to encourage Participants to 
submit Complex Orders. The Exchange believes that exempting Complex 
Orders from liquidity fees and credits is reasonable compared to the 
similar fees and credits offered by the other exchanges. The Exchange 
believes exempting Complex Orders from liquidity fees and credits is 
not unfairly discriminatory as the exemption of Complex Order 
transactions from exchange fees and liquidity fees and credits applies 
equally to all Participants on the Exchange.
    The Exchange proposes Complex Order Fees in Mini Options at a rate 
that is 1/10th the rate of the otherwise applicable Complex Order Fees 
outlined above. The Exchange believes the proposed Complex Order Fees 
applicable to Mini Options are reasonable and equitable in light of the 
fact that Mini Options have a smaller exercise and assignment value, 1/
10th that of a standard option contract. Therefore, assessing 1/10th of 
the otherwise applicable Complex Order Fees is appropriate for Complex 
Orders involving Mini Options. Furthermore, Mini Options have been 
approved for trading at several other competing exchanges and market 
participants can readily direct their Complex Order flow to any these 
exchanges if they determine the Exchange's Complex Order Mini Option 
fees to be excessive.
    The Exchange also believes it is reasonable, equitable and not 
unfairly discriminatory to include Complex Order transaction volume in 
each Market Maker's ADV calculation because doing so will provide the 
Market Maker with an opportunity to qualify for discounted fees and, 
therefore, further incentivize these essential Participants to trade 
more order flow on the Exchange, which the Exchange believes will 
ultimately benefit all Participants trading on BOX.
    Increased Market Maker order flow will also benefit all market 
participants by deepening the BOX liquidity pool, supporting the 
quality of price discovery, promoting market transparency and improving 
investor protection. The Exchange believes that including Complex Order 
transaction volume in the ADV calculation will provide additional 
incentive for Market Makers to increase Complex Order volume on BOX. 
Increased Complex Order volume increases potential revenue to BOX, 
allowing the Exchange to spread its administrative and infrastructure 
costs over a greater number of transactions, which could lead to lower 
costs per transaction. The Exchange believes that the volume based 
discounts for Market Makers are equitable because they are open to all 
Market Makers on an equal basis and provide discounts that are 
reasonably related to the value to an exchange's market quality 
associated with higher levels of market activity, such as higher levels 
of liquidity provision and introduction of higher volumes of orders 
into the price and volume discovery processes.
    With regard to the proposed Complex Order Fees that will be 
determined

[[Page 30360]]

according to whether the Complex Order executes against orders on the 
BOX Book or against another Complex Order and according to the account 
types of the Participant submitting the Complex Order and the contra 
party, the Exchange believes this fee structure is reasonable, 
equitable and non-discriminatory. The Complex Order Fees are 
competitive with the Complex Order fee structures in place on other 
exchanges. Specifically the Exchange is proposing to adopt Complex 
Order Fees similar to the model used by the NYSE Arca, Inc. (``NYSE 
Arca'') that varies the Complex Order fees and credits depending on 
where the Complex Order executes, and the contra party account type 
that the Complex Order interacts with.\12\ This model was adopted by 
NYSE Arca in 2012 \13\ and has been accepted by both the Commission and 
the industry. For example, a Public Customer executing a Complex Order 
on NYSE Arca will be charged $0.45 per contract per leg for penny pilot 
issues or $0.82 per contract per leg for non-penny pilot issues if that 
order executes on the regular order book. However, if the same Complex 
Order executes against a Complex Order on the exchange's Complex Order 
Book from a non-Public Customer (Professional Customer, Broker Dealer 
or Market Maker), the Customer will receive a $0.39 credit per contract 
per leg for penny pilot issues and a $0.75 credit per contract per leg 
for non-penny pilot issues. The result of this structure is that a NYSE 
Arca member does not know the fee it will be charged when submitting a 
Complex Order. Therefore, the member must recognize that it could be 
charged the highest applicable fee on the exchange's schedule, which 
may, instead, be lowered or changed to a credit depending how its 
Complex Order interacts.
---------------------------------------------------------------------------

    \12\ See NYSE Arca Options Schedule of Fees as of May 1, 2013, 
available at http://globalderivatives.nyx.com/sites/globalderivatives.nyx.com/files/nyse_arca_options_fee_schedule__050113.pdf.
    \13\ See Securities Release No. 68405 (December 11, 2012), 77 FR 
74719 (December 17, 2012) (SR-NYSEArca-2012-137).
---------------------------------------------------------------------------

    The Exchange believes that the proposed Complex Order Fee model is 
reasonable because a Public Customer submitting Complex Orders on BOX 
will recognize that it will not pay a fee for these transactions. 
Depending on where and with whom the Complex Order executes, the Public 
Customer may receive an additional benefit for submitting the order. 
Likewise, a Professional Customer or Broker Dealer submitting Complex 
Orders will recognize that it will not be charged more than $0.45 in 
penny pilot issues and $0.80 in non-penny pilot issues. The same is 
true for Market Makers, who will recognize that their maximum charge 
when submitting a Complex Order will be $0.40 in penny pilot issues and 
$0.75 in non-penny pilot issues.
    The Exchange believes it is reasonable and equitable to assess 
Complex Order Fees based upon issue type, where the Complex Order 
executes, the account type of the Participant submitting the Complex 
Order and the contra party account type. The Exchange's Complex Order 
Fees must be competitive with other exchanges to attract order flow, 
execute orders and grow its market. The Exchange believes the proposed 
Complex Order Fees are competitive with both Arca and ISE.\14\ The 
Exchange notes that submitting Complex Orders to BOX is entirely 
voluntary and that several other competing exchanges possess similar 
Complex Order functionalities, including Arca. Participants can 
therefore choose what type of order to submit to BOX, or direct their 
Complex Order flow to any other exchange if they determine the proposed 
Complex Order fee structure to be unreasonable.
---------------------------------------------------------------------------

    \14\ See International Securities Exchange Schedule of Fees as 
of April 1, 2013, available at http://www.ise.com/assets/documents/OptionsExchange/legal/fee/fee_schedule.pdf.
---------------------------------------------------------------------------

    The Exchange believes it is reasonable and equitable to provide 
credits for Public Customer Complex Orders and to charge fees to 
Professional Customers, Broker Dealers and Market Makers when their 
Complex Orders execute on the BOX Book. The Exchange believes that the 
proposed $0.35 credit for Public Customers, $0.45 fee for Professional 
Customers and Broker Dealers, and $0.40 fee for Market Makers strikes 
an appropriate balance between the fees charged for standard orders and 
the proposed Complex Order Fees. The Complex Order Fees will continue 
to encourage Participants to execute Complex Orders by ensuring that 
they receive similar incentives regardless of where their Complex Order 
executes. The Exchange believes this will help attract Complex Order 
flow to the Exchange and create increased liquidity, which will 
ultimately benefit all Participants trading on BOX. The proposed fees 
and credits are also competitive with the fees and credits offered for 
similar transactions on at least one other exchange.\15\
---------------------------------------------------------------------------

    \15\ For Complex Orders that interact with the regular order 
book, Arca charges Public Customers $0.45 or $0.82 (depending on 
issue), and charges Broker Dealers $0.48 or $0.87 (depending on 
issue).
---------------------------------------------------------------------------

    The Exchange believes providing a credit to Public Customers for 
Complex Orders that execute against orders on the BOX Book is equitable 
and non-discriminatory. The securities markets generally, and BOX in 
particular, have historically aimed to improve markets for investors 
and develop various features within the market structure for customer 
benefit. Accordingly, the Exchange believes that providing a credit for 
Public Customer Complex Order transactions is appropriate and not 
unfairly discriminatory. Public Customers are less sophisticated than 
other Participants and the credit will help to attract a high level of 
Public Customer order flow to the Complex Order Book and create 
liquidity, which the Exchange believes will ultimately benefit all 
Participants trading on BOX.
    The Exchange also believes it is equitable and not unfairly 
discriminatory for BOX Market Makers to be assessed lower fees than 
Professional Customers and Broker Dealers for Complex Orders that 
execute against orders on the BOX Book because of the significant 
contributions to overall market quality that Market Makers provide. 
Specifically, Market Makers can provide higher volumes of liquidity and 
lowering their Complex Order fees will help attract a higher level of 
Market Maker order flow to the Complex Order Book and create liquidity, 
which the Exchange believes will ultimately benefit all Participants 
trading on BOX. As such, the Exchange believes it is appropriate that 
Market Makers be charged lower Complex Order transaction fees. Market 
Makers also have additional obligations that are not applicable to 
Professional Customers and Broker Dealers.
    As stated above, the Exchange believes that the Complex Order Fees 
proposed for Complex Orders that execute against other Complex Orders 
are reasonable and equitable. The proposed credits and fees are 
competitive with the credits offered for similar transactions on at 
least one other exchange.\16\
---------------------------------------------------------------------------

    \16\ See supra, notes 12 and 14.
---------------------------------------------------------------------------

    The Exchange also believes it is reasonable to charge Professional 
Customers, Broker Dealers, and Market Makers less for executions in 
penny pilot issues because these classes are typically the more 
actively traded and assessing lower fees will further incentivize 
Complex Order transaction in penny pilot issues on the Exchange, 
ultimately benefiting all Participants trading on BOX. The Complex 
Order Fees are competitive with the fees and credits offered for 
similar transactions

[[Page 30361]]

on at least one other exchange.\17\ Additionally, the Exchange believes 
it is reasonable to give a greater credit to Public Customers in 
Complex Order transactions involving non-penny pilot issues. These 
classes have wider spreads and are less actively traded; and giving a 
larger credit will further incentivize Public Customers to trade in 
these classes. The proposed Public Customer credits are competitive 
with the credits offered for similar transactions on at least one other 
exchange.\18\
---------------------------------------------------------------------------

    \17\ The ISE assesses Professional Customers and Broker Dealers 
$0.40 for Complex Order transactions in Penny Names and $.84 for 
Complex Order transactions in non-Penny Names.
    \18\ At the lowest volume tier level, the ISE gives Public 
Customers a $0.33 credit for Complex Order transactions in Penny 
Names, and a $0.66 credit for Complex Order transactions in non-
Penny Names.
---------------------------------------------------------------------------

    The Exchange believes that it is equitable and not unfairly 
discriminatory to exempt Public Customers from Complex Order fees when 
executing against another Public Customer's Complex Order and provide a 
credit when the same order executes against other Participant's Complex 
Orders. As stated above, BOX has historically tried to develop features 
within the market structure for the benefit of the customer. As such, 
the Exchange believes that exempting and crediting Public Customer 
Complex Order transactions is appropriate and not unfairly 
discriminatory. Public Customers are less sophisticated than other 
Participants and the Exchange believes exempting and crediting Public 
Customer Complex Order transactions will help to attract a high level 
of Public Customer order flow to the Complex Order Book and create 
liquidity, which will ultimately benefit all Participants trading on 
BOX. In addition, the proposed fees and credits are competitive with 
the Complex Order fees and credits on at least one other exchange.\19\
---------------------------------------------------------------------------

    \19\ The ISE exempts Public Customers Complex Orders from fees 
when trading against another Public Customer, and gives Public 
Customers a $0.33 to $0.66 credit when trading against non-Public 
Customers, depending on volume tier.
---------------------------------------------------------------------------

    Further, the Exchange believes that the proposed Complex Order Fees 
for Professional Customers, Broker Dealers, and Market Makers 
interacting with other Complex Orders are equitable, reasonable and not 
unfairly discriminatory. Professional Customers, while Public Customers 
by virtue of not being Broker Dealers, generally engage in trading 
activity more similar to Broker Dealer proprietary trading accounts 
(more than 390 standard orders per day on average). The Exchange 
believes the relative activity of Professional Customers will be 
similar for Complex Orders, and the higher level of trading activity 
will draw a greater amount of BOX system resources than that of non-
professional, Public Customers. Because this higher level of trading 
activity will result in greater ongoing operational costs, the Exchange 
aims to recover its costs by assessing Professional Customers and 
Broker Dealers a market competitive fee for Complex Order transactions.
    Finally, the Exchange believes it is reasonable, equitable and non-
discriminatory to give Public Customers a higher credit when their 
Complex Orders execute against a non-Public Customer on the Complex 
Order Book and, accordingly, charge non-Public Customers a higher fee 
when their Complex Order executes against a Public Customer on the 
Complex Order Book. The Exchange, and the securities market generally, 
aims to improve markets by developing features for the benefit of its 
customers. Similar to the payment for order flow and other pricing 
models that have been adopted by the Exchange and other exchanges to 
attract Public Customer order flow, the Exchange increases fees to non-
Public Customers in order to provide incentives for Public Customers. 
The Exchange believes that providing incentives for Complex Order 
transactions by Public Customers is reasonable and, ultimately, will 
benefit all Participants trading on the Exchange by attracting Public 
Customer order flow. Accordingly, the Exchange believes that this fee 
differential is appropriate and not unfairly discriminatory.
    The Exchange also believes it is equitable and not unfairly 
discriminatory for BOX Market Makers to be assessed lower Complex Order 
Fees than Professional Customers and Broker Dealers. As discussed 
above, Market Makers provide significant contributions to market 
quality and have additional obligations that Professional Customers and 
Broker Dealers do not.
    The Exchange believes that the proposed Complex Order Fees will 
keep the Exchange competitive with other exchanges and will be applied 
in an equitable manner among all BOX Participants. The Exchange 
believes the proposed Complex Order Fees are fair and reasonable and 
competitive with fees in place on other exchanges. Further, the 
Exchange believes that the competitive marketplace impacts the fees 
proposed for BOX.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the Complex Order Fees will neither 
impose burdens on competition among various Exchange Participants nor 
impose any burden on competition among exchanges in the listed options 
marketplace, not necessary or appropriate in furtherance of the 
purposes of the Act. The proposed change is designed to create an 
appropriate fee structure for Complex Orders on the Exchange.
    The Exchange believes that adopting Complex Order Fees will not 
impose a burden on competition among various Exchange Participants. BOX 
currently assesses distinct standard contract Exchange fees for 
different account and transaction types. The Exchange believes that 
applying a fee structure that is determined by whether the Complex 
Order executes against orders on the BOX Book or against other Complex 
Orders, and according to the account types of the Participant 
submitting the Complex Order and the contra party, will result in 
Participants being charged appropriately for these transactions. 
Submitting a Complex Order is entirely voluntary and Participants can 
determine which type of order they wish to submit, if any, to the 
Exchange.
    Further, the Exchange believes that this proposal will enhance 
competition between exchanges because it is designed to allow the 
Exchange to better compete with other exchanges for Complex Order flow. 
In this regard, Complex Orders are a new order type being introduced by 
the Exchange and BOX is unable to absolutely determine the impact that 
the Complex Order Fees proposed herein will have on trading. That said, 
however, the Exchange believes that the proposed Complex Order Fees 
would not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.
    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing exchanges. In such an environment, the Exchange must 
continually review, and consider adjusting, its fees and credits to 
remain competitive with other exchanges. For the reasons described 
above, the Exchange believes that the proposed rule change reflects 
this competitive environment.

[[Page 30362]]

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 \20\ and Rule 19b-4(f)(2) 
thereunder,\21\ because it establishes or changes a due, fee, or other 
charge applicable only to a member.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \21\ 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-2013-28 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-2013-28. 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 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-2013-28 and should be 
submitted on or before June 12, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-12169 Filed 5-21-13; 8:45 am]
BILLING CODE 8011-01-P