Document ID: SEC-2014-1157-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange, LLC
Posted Date: 2014-07-11T04:00Z

[Federal Register Volume 79, Number 133 (Friday, July 11, 2014)]
[Notices]
[Pages 40182-40183]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-16188]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72545; File No. SR-BOX-2014-19]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change to 
amend Interpretive Material to Rule 7150 (Price Improvement Period 
``PIP'') and Interpretive Material to Rule 7245 (Complex Order Price 
Improvement Period ``COPIP'')

July 7, 2014.
    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 July 1, 2014, 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 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 Interpretive Material to Rule 7150 
(Price Improvement Period ``PIP'') and Interpretive Material to Rule 
7245 (Complex Order Price Improvement Period ``COPIP'') to extend the 
pilot programs that permit the Exchange to have no minimum size 
requirement for orders entered into the PIP (``PIP Pilot Program'') and 
COPIP (``COPIP Pilot Program''). 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 purpose of the proposed rule change is to extend the PIP and 
COPIP Pilot Programs for three additional months. The PIP and COPIP 
Pilot Programs allow the Exchange to have no minimum size requirement 
for orders entered into the PIP \3\ and the COPIP.\4\ The Exchange has 
committed to provide certain data to the Commission during the PIP and 
COPIP Pilot Programs.\5\ The proposed rule change retains the text of 
IM-7150-1 to Rule 7150 and IM-7245-1 to Rule 7245; and seeks to extend 
the operation of the PIP and COPIP Pilot Programs until October 18, 
2014.
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    \3\ The Pilot Program is currently set to expire on July 18, 
2014. See Securities Exchange Act Release Nos. 66871 (April 27, 
2012) 77 FR 26323 (May 3, 2012) (File No.10-206, In the Matter of 
the Application of BOX Options Exchange LLC for Registration as a 
National Securities Exchange Findings, Opinion, and Order of the 
Commission), 67255 (June 26, 2012) 77 FR 39315 (July 2, 2013) (SR-
BOX-2012-009) (Notice of Filing and Immediate Effectiveness of a 
Proposal To Extend a Pilot Program That Permits BOX to Have No 
Minimum Size Requirement for Orders Entered Into the Price 
Improvement Period), and 69846 (June 25, 2013) 78 FR 39365 (July 1, 
2013) (SR-BOX-2013-33) (Notice of Filing and Immediate Effectiveness 
of a Proposal To Extend a Pilot Program That Permits BOX to Have No 
Minimum Size Requirement for Orders Entered Into the Price 
Improvement Period).
    \4\ The Pilot Program is currently set to expire on July 18, 
2014. See Securities Exchange Act Release No. 71148 (December 19, 
2013) 78 FR 78437 (December 26, 2013) (Notice of Filing of Amendment 
Nos. 1 and 2 and Order Granting Accelerated Approval of a Proposed 
Rule Change, as Modified by Amendment Nos. 1 and 2, to Permit 
Complex Orders to Participate in Price Improvement Periods).
    \5\ See supra note 3 at 26334 and note 4 at 78441.
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    The Exchange notes that the PIP and COPIP Pilot Programs guarantee 
Participants the right to trade with their customer orders that are 
less than 50 contracts. In particular, any order entered into the PIP 
is guaranteed an execution at the end of the auction at a price at 
least equal to the national best bid or offer. Any order entered into 
the COPIP is guaranteed an execution at the end of the auction at a 
price at least equal to or better than the cNBBO,\6\ cBBO,\7\ and BBO 
on the Complex Order Book for the Strategy at the time of commencement. 
In further support of this proposed rule change, the Exchange will 
submit to the Commission monthly a PIP Pilot Program Report and a COPIP 
Pilot Program Report, offering detailed data from, and analysis of, the 
PIP Pilot Program and COPIP Pilot Program.
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    \6\ As defined in BOX Rule 7240(a)(3), the term ``cNBBO'' means 
the best net bid and offer price for a Complex Order Strategy based 
on the NBBO for the individual options components of such Strategy.
    \7\ As defined in BOX Rule 7240(a)(1), the term ``cBBO'' means 
the best net bid and offer price for a Complex Order Strategy based 
on the BBO on the BOX Book for the individual options components of 
such Strategy.
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    The Exchange believes that, by extending the expiration of the PIP 
and COPIP Pilot Programs, the proposed rule change will allow for 
further analysis of the PIP and COPIP Pilot Programs and a 
determination of how the PIP and COPIP Pilot Programs shall be 
structured in the future.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\8\ in general, and Section 
6(b)(5) of the Act,\9\ in particular, in that it is designed to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism for a free and open market and a national market 
system and, in general, to protect investors and the public interest. 
The Exchange believes that the data demonstrates that there is 
sufficient investor interest and demand to extend the PIP and COPIP 
Pilot Programs for an additional three months. The Exchange represents 
that the PIP and COPIP Pilot Programs are designed to create tighter 
markets and ensure that each order receives the best possible price.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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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 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. Specifically, the Exchange 
believes that, by extending the expiration of the PIP and COPIP

[[Page 40183]]

Pilot Programs, the proposed rule change will allow for further 
analysis of the PIPP and COPIP Pilot Programs and a determination of 
how the PIP and COPIP Pilot Programs shall be structured in the future. 
In doing so, the proposed rule change will also serve to promote 
regulatory clarity and consistency, thereby reducing burdens on the 
marketplace and facilitating investor protection.

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 foregoing 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)(ii) of the Act \10\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
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 met this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii) \13\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange requested 
that the Commission waive the 30-day operative delay. The Exchange 
noted that such waiver will permit the PIP and COPIP Pilot Programs to 
continue without interruption.
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, as 
it will allow the pilot program to continue uninterrupted, thereby 
avoiding any potential investor confusion that could result from a 
temporary interruption in the pilot program. Further, the Commission 
notes that, because the filing was submitted for immediate 
effectiveness on July 1, 2014, the fact that the current rule provision 
does not expire until July 18, 2014 will afford interested parties the 
opportunity to comment on the proposal before the Exchange requires it 
to become operative. For this reason, the Commission designates the 
proposed rule change to be operative on July 18, 2014.\14\
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    \14\ For purposes only of waiving the 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 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.

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-2014-19 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-2014-19. 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-2014-19 and should be 
submitted on or before August 1, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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 Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16188 Filed 7-10-14; 8:45 am]
BILLING CODE 8011-01-P