Document ID: SEC-2013-1800-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange, LLC
Posted Date: 2013-10-22T04:00Z

[Federal Register Volume 78, Number 204 (Tuesday, October 22, 2013)]
[Notices]
[Pages 62860-62862]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-24665]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70672; File No. SR-BOX-2013-47]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend BOX Rule 8040

October 11, 2013.
    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 October 2, 2013, 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 self-regulatory organization. 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.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend BOX Rule 8040 (Obligations of Market 
Makers) to widen [sic] pre-opening

[[Page 62861]]

phase spread differential requirement imposed on Market Makers. 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 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 Exchange proposes to amend BOX Rule 8040(a)(7) (Obligations of 
Market Makers) to widen the pre-opening phase spread differential 
requirement imposed on Market Makers.
    The Exchange recently eliminated the pre-opening quoting 
obligations imposed on BOX Market Makers.\3\ This rule was amended to 
put BOX Market Makers on par with market makers on other options 
exchanges that do not have pre-market continuous quoting obligations. 
In this filing, the Exchange did not adjust the corresponding pre-
opening phase spread differential requirement for Market Makers in Rule 
8040 (a)(7). The purpose of this filing is to remove the narrower pre-
opening phase spread differential requirements imposed on Market Makers 
in Rule 8040(a)(7). Instead, Market Makers who choose to quote in the 
pre-opening phase will be required to quote within the standard bid 
ask-differential of $5. The Exchange believes that the narrower pre-
opening phase spread differential requirements are no longer necessary 
now that Market Makers are not required to quote during the pre-
opening. Additionally, applying the standard bid-ask differential 
requirement to both the pre-opening phase and the continuous trading 
phase will eliminate any potential for confusion about Market Maker 
obligations. Finally, this change could promote Market Maker quoting 
during the pre-opening and, therefore, expedite the opening of all 
options series on the Exchange promptly after the opening of the 
underlying security.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 68412 (December 12, 
2012), 77 FR 74902 (December 18, 2012) (SR-BOX-2012-022) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to 
Eliminate Market Maker Pre-Opening Obligations on BOX).
---------------------------------------------------------------------------

    The Exchange further believes that applying the standard bid-ask 
differential to all phases of trading is appropriate because it will 
more closely align the Exchange's rules with the rules of other option 
exchanges that do not have pre-opening quoting requirements, 
specifically Nasdaq Stock Exchange Options Market (``NOM'').\4\
---------------------------------------------------------------------------

    \4\ See Chapter VII, Section 6 of the NOM Rules.
---------------------------------------------------------------------------

    In addition, the Exchange proposes to remove an exception to the 
standard bid-ask differential requirement in Rule 8040(a)(7)(ii). Rule 
8040(a)(7)(ii) is no longer necessary as the bids and asks for all 
indices are now disseminated to the Exchange by outside service 
providers.\5\
---------------------------------------------------------------------------

    \5\ See IM-6010-1 to BOX Rule 6010.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \7\ in particular, in that it is designed to promote 
just and equitable principles of trade, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general to protect investors and the public interest. 
With this proposal, BOX Maker Makers will no longer be required to 
comply with narrower spread differential requirements if they choose to 
quote in the pre-opening phase. The Exchange believes that removing 
this more burdensome obligation could result in more quoting during the 
pre-opening phase, thereby increasing liquidity on BOX. The Exchange 
also believes it is appropriate to make this amendment to its rules so 
that Participants and investors have a clear and accurate understanding 
of the Market Maker obligations required under the Exchange's rules. By 
removing the rule text, the Exchange is eliminating any potential for 
confusion about Market Maker obligations during the pre-opening phase.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Further, the proposed change conforms BOX's Market Maker 
obligations to the requirements of a competing exchange,\8\ which will 
promote the application of consistent trading practices across markets 
that provide Market Makers with similar benefits.
---------------------------------------------------------------------------

    \8\ See supra, note 4.
---------------------------------------------------------------------------

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, but rather eliminates any 
investor confusion and could increase competition by attracting 
liquidity. In this regard and as indicated above, the Exchange notes 
that the rule change is being proposed as a competitive response to a 
recent filing submitted by NOM.\9\
---------------------------------------------------------------------------

    \9\ Id.
---------------------------------------------------------------------------

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

    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 for 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 \10\ and Rule 19b-4(f)(6) 
thereunder.\11\ At any time within 60 days of the filing of such 
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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
---------------------------------------------------------------------------

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.

[[Page 62862]]

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-2013-47 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-2013-47. 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-2013-47 and should be 
submitted on or before November 12, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

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

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24665 Filed 10-21-13; 8:45 am]
BILLING CODE 8011-01-P