Document ID: SEC-2018-1553-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Exchange, LLC
Posted Date: 2018-10-09T04:00Z

[Federal Register Volume 83, Number 195 (Tuesday, October 9, 2018)]
[Notices]
[Pages 50718-50720]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21783]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84340; File No. SR-BOX-2018-30]

Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend BOX Rule 
7600(a)(4) (Qualified Open Outcry Orders--Floor Crossing)

October 2, 2018.
    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 September 20, 2018, 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 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend BOX Rule 7600(a)(4) (Qualified Open 
Outcry Orders--Floor Crossing). 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://boxoptions.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 Rule 7600(a)(4) to provide the 
ability for the Exchange to determine the applicable number of legs for 
a Complex Qualified Open Outcry Orders (``Complex QOO Order'').\3\ 
Currently, Complex QOO Orders are limited to a maximum of four (4) legs 
on the BOX Trading Floor. The Exchange proposes to have the applicable 
number of legs now be determined by the Exchange.\4\ The Exchange notes 
that only orders that meet the definition of a Complex Order \5\ are 
allowed to trade on the BOX Trading Floor.\6\ Any orders that are 
entered into the system as a Complex Order on the BOX Trading Floor 
that do not meet the definition of a Complex Order will be rejected.
---------------------------------------------------------------------------

    \3\ A QOO Order is a two-sided order that is used by Floor 
Brokers to execute transactions from the Trading Floor. See Rule 
7600.
    \4\ The Exchange notes that the number of legs determined by the 
Exchange will apply to all classes. The Exchange also notes that the 
proposal discussed herein is not making any changes to the priority 
rules for Complex Orders.
    \5\ The term ``Complex Order'' means 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 BOX Rule 7240(a)(7).
    \6\ On the Trading Floor, a Floor Broker or such Floor Broker's 
employee shall, contemporaneously upon receipt of an order, and 
prior to announcement of such an order in the trading crowd, record 
all options orders represented by such Floor Broker onto the Floor 
Broker's order entry mechanism. See Rule 7580(e)(1).
---------------------------------------------------------------------------

    The Exchange will inform Participants in advance of any change to 
the number of legs via Informational Circular. The Exchange notes that 
another exchange in the industry has similar rules in place which 
provide flexibility in determining the maximum number of legs for 
complex orders at their respective exchange.\7\
---------------------------------------------------------------------------

    \7\ See Cboe Exchange Inc. (``Cboe'') Rule 6.53.02. Cboe's rule 
states that ``[c]omplex orders of twelve (12) or less must be 
entered on a single order ticket at time of systemization. If 
permitted by the Exchange (which the Exchange will announce by 
Regulatory Circular), complex orders of more than twelve (12) legs 
may be split across multiple order tickets . . .'' BOX believes that 
this is similar to the proposal discussed herein. BOX's reading of 
Cboe's rule suggests that Cboe may determine the applicable number 
of legs for complex orders on their respective trading floor. As 
such, the Exchange believes that the proposed change is similar to 
the Cboe rule cited above. BOX does note, however, that [sic] is not 
proposing a twelve leg maximum but rather that the Exchange be 
responsible for determining the applicable number of legs for 
Complex Orders on the BOX Trading Floor. Further, the Exchange will 
communicate to Participants in advance of any change to the 
applicable number of legs via Informational Circular. See also EDGX 
Exchange, Inc (``EDGX'') Rule 21.20(a)(5). The Exchange notes that 
EDGX is an electronic exchange and as such, its rules apply to 
electronic trading only.

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

[[Page 50719]]

    The Exchange also proposes to correct the location of a misplaced 
comma in Rule 7600(a)(4). Rule 7600(a)(4), as amended, will make clear 
that the cross reference to Rule 7240(a)(5) applies to Complex QOO 
Orders and not multi-leg orders. The Exchange believes that this 
correction will add clarity with regard to Complex QOO Orders traded on 
the BOX Trading Floor.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Securities Exchange Act of 1934 
(the ``Act''),\8\ in general, and Section 6(b)(5) of the Act,\9\ in 
particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, the Exchange believes the proposed rule change, 
which provides the Exchange with greater flexibility in determining the 
maximum number of legs for Complex QOO Orders, will benefit Floor 
Brokers and their customers by providing the potential for increased 
opportunities for executions on the BOX Trading Floor. Further, the 
Exchange believes that the proposed change will provide the potential 
for greater liquidity which should, in turn, benefit and protect 
investors and the public interest through the potential for greater 
volume of orders and executions on the BOX Trading Floor. As discussed 
above, the Exchange notes that another exchange has a similar rule 
which allows for the maximum number of legs for complex orders to be 
determined by the exchange.\10\
---------------------------------------------------------------------------

    \10\ See supra, note 7.
---------------------------------------------------------------------------

    Lastly, the Exchange believes that the proposed change to correct 
the inadvertent error in Rule 7600(a)(4) is reasonable as it will 
provide clarity with respect to QOO Orders on the Exchange.

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. In this regard and as indicated 
above, the Exchange notes that the proposed rule change is similar to 
the rules of another exchange.\11\ The Exchange does not believe the 
proposal will impose any burden on intermarket competition, as the 
proposed rule will allow BOX to compete with other options exchanges in 
the industry. The Exchange notes that it operates in a highly 
competitive market in which market participants can readily direct 
order flow to competing venues who offer similar functionality. Lastly, 
the Exchange believes that the proposed change will not impose a burden 
on intramarket competition as the proposal will apply to all 
Participants that wish to submit Complex Orders on the BOX Trading 
Floor.
---------------------------------------------------------------------------

    \11\ 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, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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.
---------------------------------------------------------------------------

    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 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 [email protected]. Please include 
File Number SR-BOX-2018-30 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-2018-30. 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

[[Page 50720]]

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-2018-30, and should be 
submitted on or before October 30, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-21783 Filed 10-5-18; 8:45 am]
 BILLING CODE 8011-01-P