Document ID: SEC-2013-0042-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange LLC
Posted Date: 2013-01-09T05:00Z

[Federal Register Volume 78, Number 6 (Wednesday, January 9, 2013)]
[Notices]
[Pages 1892-1894]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-00254]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68575; File No. SR-BOX-2012-024]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend the Fee Schedule for Trading on BOX

January 3, 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 December 21, 2012, 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 pursuant to Section 
19(b)(3)(A)(ii) of the

[[Page 1893]]

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 Substance 
of the Proposed Rule Change

    The Exchange is filing with the Securities and Exchange Commission 
(``Commission'') a proposed rule change to amend its Fee Schedule 
relating to the fees assessed by FINRA in connection with use of its 
Central Registration Depository (``CRD System''). While changes to the 
Fee Schedule pursuant to this proposal will be effective upon filing, 
the changes will become operative on January 2, 2013. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Section V of its Fee Schedule to 
reflect a recent fee change made by FINRA,\5\ relating to the CRD 
system.\6\ The fees assessed under Section V are collected and retained 
by FINRA via the CRD system for the registration of associated persons 
of Exchange members that are not also FINRA members. The Exchange 
originally adopted the fees under Section V to mirror the fees assessed 
by FINRA on its members for use of the CRD system in connection with 
the Exchange's participation in Web CRD.\7\ FINRA recently amended the 
fees assessed for use of the CRD system, which will become effective 
January 2, 2013.\8\ The CRD system fees are use-based and there is no 
distinction in the cost incurred by FINRA if the user is a FINRA member 
or a member of an exchange that is not a FINRA member. Accordingly, the 
Exchange is proposing to amend the fees under Section V.B. to mirror 
those assessed by FINRA, which will be implemented concurrently with 
the amended FINRA fees on January 2, 2013.\9\
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    \5\ See Securities Exchange Act Release No. 67247 (June 25, 
2012), 77 FR 38866 (June 29, 2012) (SR-FINRA-2012-030).
    \6\ The CRD system is the central licensing and registration 
system for the U.S. securities industry. The CRD system enables 
individuals and firms seeking registration with multiple states and 
self-regulatory organizations (``SRO'') to do so by submitting a 
single form, fingerprint card and a combined payment of fees to 
FINRA. Through the CRD system, FINRA maintains the qualification, 
employment and disciplinary histories of registered associated 
persons of broker-dealers.
    \7\ See Securities Exchange Act Release No. 66979 (May 14, 2012) 
77 FR 29740 (May 18, 2012) (Notice of Immediate Effectiveness of 
Proposed Rule Change To Adopt the Fee Schedule For Trading on BOX). 
See also, Section 4(b)(3) of Schedule A to the FINRA By-Laws.
    \8\ Supra note 5.
    \9\ The Exchange notes that it is not adopting all of the 
changes made in the FINRA filing. Certain fees and requirements are 
specific to FINRA and the Exchange elected to not adopt them because 
either such fees did not apply to Exchange-only members or such fees 
did not directly cover the costs associated with the use of the CRD 
system. For example, under FINRA Section 4(h) of Schedule A, FINRA 
assesses a fee of $10 per day, up to $300 for each day that a new 
disclosure event or a change in the status of a previously reported 
disclosure event is not timely filed on an initial or amended Form 
U5 or an amended Form U4. This fee provides a financial incentive to 
a FINRA member to file its Forms U4 and U5 timely. The Exchange 
elected to not adopt such a fee applicable to its members that are 
not also FINRA members.
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    In addition to increasing the existing CRD system fees, FINRA 
adopted a disclosure processing fee for each initial or amended Form BD 
that includes the initial reporting, amendment, or certification of one 
or more disclosure events or proceedings.\10\ BOX Options Participants 
use the Form BD to, among other things, report disclosure matters in 
which they or a control affiliate have been involved. Prior to the 
adoption of this fee, FINRA did not have a fee designed to cover the 
costs associated with the review of Form BD, notwithstanding that the 
review is similar to that performed of Options Participants' Forms U4 
and U5. Such reviews include confirming that the matter is properly 
reported; reviewing any documentation submitted and determining whether 
additional documentation is required; conducting any necessary 
independent research; and, depending on the matter reported, analyzing 
whether the event or proceeding subjects the individual or member to a 
statutory disqualification pursuant to Section 3(a)(39) of the Act.\11\ 
FINRA adopted a $110 fee for the review of a Form BD, which mirrors the 
increased fee adopted for the review of Forms U4 and U5. As such, the 
Exchange is amending its Fee Schedule to reflect the $110 disclosure 
processing fee for FINRA's review of disclosure information submitted 
by BOX Options Participants that are not members of FINRA.
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    \10\ Id. [sic]
    \11\ 15 U.S.C. 78c(a)(39).
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    FINRA currently collects a fee of $27.50 to process the first and 
third fingerprint submission by a member, either electronically or via 
a hard copy fingerprint card. And the fee is $13.00 for the second 
fingerprint card submission. FINRA is increasing the processing fee for 
the first and third fingerprint submission to $29.50 if submitted 
electronically, and $44.50 if submitted by a hard copy fingerprint 
card. And the fee collected by FINRA is increasing for the second 
submission, to $15.00 for an electronic submission, and $30.00 for a 
hard copy, respectively. In addition to processing fingerprints 
submitted by members, FINRA also processes fingerprint results where 
the member had fingerprints processed through another SRO. FINRA is 
increasing this fee from $13.00 to $30.00. As a result of these FINRA 
fingerprint processing fee increases, the Exchange also proposes to 
amend its Fee Schedule to reflect these changes.
    The Exchange is proposing that the implementation date of the 
proposed rule change will be January 2, 2013. Specifically, the 
proposed initial/transfer registration, disclosure filing, and 
fingerprint fees would become effective for filings or fingerprints 
submitted on or after January 2, 2013. Lastly, the proposed system 
processing fee would become effective for the 2013 Renewal Program.\12\
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    \12\ As part of FINRA's 2013 Renewal Program, Preliminary 
Renewal Statements reflecting the proposed $45 system processing fee 
will be made available to members in the fourth quarter of 2012.
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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,\13\ in general, and with 
Section 6(b)(4) of the Act \14\ and Section 6(b)(5) of the Act,\15\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among members and issuers and 
other

[[Page 1894]]

persons using any facility or system which the Exchange operates or 
controls, and it does not unfairly discriminate between customers, 
issuers, brokers or dealers. All similarly situated Options 
Participants are subject to the same fee structure, and every firm must 
use the CRD system for registration and disclosure.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4).
    \15\ 15 U.S.C. 78f(b)(5).
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    The change is reasonable because the proposed fees are identical to 
those adopted by FINRA for use of the CRD system for disclosure and the 
registration of associated persons of FINRA members. As FINRA noted in 
amending its fees, it believed the fees are reasonable based on the 
increased costs associated with operating and maintaining the CRD 
system, and listed a number of enhancements made to the CRD system 
since the last fee increase, including: (1) Incorporation of various 
uniform registration form changes; (2) electronic fingerprint 
processing; (3) Web EFTTM, which allows subscribing firms to 
submit batch filings to the CRD system; (4) increases in the number and 
types of reports available through the CRD system; and (5) significant 
changes to BrokerCheck, including making BrokerCheck easier to use and 
expanding the amount of information made available through the system. 
These increased costs are similarly borne by FINRA when a BOX Options 
Participant that is not a member of FINRA uses the CRD system. 
Accordingly, the fees collected for such use should likewise increase 
in lockstep with the fees assessed FINRA members, as is proposed by the 
Exchange.
    The proposed change, like FINRA's proposal, is consistent with an 
equitable allocation of fees because the fees will apply equally to all 
individuals and Options Participants required to report information to 
the CRD system. Thus, those Options Participants that register more 
individuals or submit more filings through the CRD system will 
generally pay more in fees than those that use the CRD system to a 
lesser extent.

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

    FINRA's CRD system is the central licensing and registration system 
for the U.S. securities industry and the proposed change will simply 
provide notice to BOX Options Participants of a FINRA fee change that 
will apply across all registered industry participants. As such, the 
Exchange does not believe that the proposed rule change will impose any 
additional burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.

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 \16\ and Rule 19b-4(f)(2) 
thereunder,\17\ because it establishes or changes a due, fee, or other 
charge applicable only to a member.
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    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \17\ 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 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 Exchange 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-2012-024 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-2012-024. 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 Exchange's principal office. 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-2012-024, and should be 
submitted on or before January 30, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-00254 Filed 1-8-13; 8:45 am]
BILLING CODE 8011-01-P