Document ID: SEC-2018-2034-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Exchange, LLC
Posted Date: 2018-12-28T05:00Z

[Federal Register Volume 83, Number 248 (Friday, December 28, 2018)]
[Notices]
[Pages 67443-67445]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28199]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84902; File No. SR-BOX-2018-39]

Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 
7050

December 20, 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 December 19, 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 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 Rule 7050. 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 purpose of the proposed rule change is to delete Rule 7050 
(Minimum Trading Increments) in its entirety and replace it with an 
identical rule in place at another option exchange in the industry. 
Currently, Rule 7050(a) details the minimum trading increments in place 
on the Exchange. In this rule, such minimum increments established by 
the Board will be designated as a stated policy, practice, or 
interpretation with respect to the administration of this Rule 7050 
within the meaning of subparagraph (3)(A) of Section 19(b) of the 
Exchange Act and will be filed with the SEC as a rule change for 
effectiveness upon filing. Further, the rule goes on to state that 
until such time as the Board makes a change in the increments, the 
following principles shall apply: (1) If the options contract is 
trading at less than $3.00 per option, five (5) cents; (2) if the 
options contract is trading at $3.00 per option of higher, ten (10) 
cents. The Exchange now proposes to delete 7050(a) in its entirety and 
add proposed Rule 7050(a)(1) and (2) which states that unless specified 
in another Exchange rule, the following minimum quoting increments 
shall apply to options traded on the Exchange: (1) Five cents ($0.05) 
for all

[[Page 67444]]

option contracts trading at less than $3 other than those defined in 
(3) below; (2) ten cents ($0.10) for all option contracts trading at $3 
and above other than those defined in (3) below.\3\
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    \3\ The Exchange notes that the current trading increment 
principles remain unchanged. The Exchange also notes that the 
proposed language is identical to rules at other options exchanges 
in the industry.
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    The Exchange also notes that current Rule 7050(a)(3) states that if 
the options contract is traded pursuant to the procedures of the 
Improvement Period in Rule 7150 then one (1) cent. The Exchange 
proposes to include this in the deletion of current Rule 7050(a) as the 
minimum trading increments for option contracts traded in the 
Improvement Period are already addressed in the BOX Rulebook.\4\
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    \4\ See BOX Rule 7150(f)(2).
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    Further, current Rule 7050(b) through (e) details exceptions to the 
minimum trading increments discussed in current Rule 7050(a). 
Specifically, current Rule 7050(b) states that notwithstanding 
paragraph (a) of this Rule 7050, the Exchange will operate a pilot 
program to permit options classes to be quoted and traded in increments 
as low as one (1) cent. The Exchange now proposes to delete current 
Rule 7050(b) and replace it with proposed Rule 7050(a)(3)which states 
that for options contract traded pursuant to the penny pilot as 
described in Rule 7260: (A) One cent ($0.01) for all options contracts 
in QQQ (PowerShares QQQQ Trust), SPY (SPDR S&P 500 ETF Trust) and IWM 
(iShares Russell 2000 Index Fund); (B) one cent ($0.01) for all other 
options contracts included in a penny pilot that are trading at less 
than $3; (C) five cents ($0.05) for all other option contracts included 
in a penny pilot that are trading at or above $3.\5\
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    \5\ The Exchange notes that the current minimum increments for 
the pilot program remain unchanged.
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    Further, current Rules 7050(c) through (e) detail other exceptions 
to the minimum trading increments in current Rule 7050(a). 
Specifically, 7050(c) states that notwithstanding any other provision 
in this Rule 7050, the minimum trading increment for Mini Options shall 
be determined in accordance with IM-5050-10(d) to BOX Rule 5050. The 
Exchange proposes to delete this provision in its entirety as the 
minimum trading increments for Mini Options already exist in another 
provision in the BOX Rulebook. Similarly, the Exchange proposes to 
delete Rules 7050(d) and (e) for the same reason. The minimum trading 
increments for Jumbo SPY options (Rule 7050(d)) and Complex Orders 
(Rule 7050(e)) already exist in other provisions in the BOX 
Rulebook.\6\
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    \6\ The minimum trading increments for Jumbo SPY Options are 
located in Rule 5050(e)(4). The minimum trading increments for 
Complex Orders are addressed in Rule 7240(b)(1).
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    The Exchange also proposes Rule 7050(b) which states that the 
minimum trading increment for option contracts traded on the Exchange 
will be one cent ($0.01) for all series. The Exchange notes that the 
proposed rule discussed herein is identical to rules at other options 
exchanges in the industry.\7\
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    \7\ See NYSE American, LLC (``NYSE American'') Rule 960NY, NYSE 
Arca, LLC (``NYSE Arca'') Rule 6.72-O.
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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,\8\ in general, and Section 
6(b)(5) of the Act,\9\ in particular, in that the proposed change is 
designed to promote just and equitable principles of trade, remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general protect investors and the 
public interest, by conforming the Exchange's minimum trading increment 
rule with rules at other options exchanges in the industry.\10\ The 
Exchange believes that the proposed change will provide clarity with 
respect to the minimum trading increment rule which removes impediments 
to and better provides for a free and open market. Additionally, the 
Exchange believes that deleting 7050(c) through (e) will reduce 
investor confusion with respect to certain minimum trading increments 
on the Exchange as the trading increments for the orders discussed in 
7050(c) through (e) are already included in other rules in the BOX 
Rulebook. As such, BOX believes the proposed rule change is in the 
public interest, and therefore, consistent with the Act.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ See supra note 7.
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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. The proposal merely conforms 
the Exchange's minimum trading increment rule to similar rules at other 
options exchanges in the industry. The proposed rule change would 
provide clarity and reduce any potential confusion with respect to 
minimum trading increments on the Exchange. As such, 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.

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)(iii) of the Act \11\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
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. The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, Rule 19b-4(f)(6)(iii) \14\ permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange notes that 
the proposed rule change simply seeks to conform the Exchange's minimum 
trading increments rule to similar rules at other options exchanges and 
raises no new or novel issues. The Commission believes that waiver of 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. Accordingly, the Commission hereby 
waives the operative delay and designates the proposed rule change as 
operative upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).

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[[Page 67445]]

    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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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 rule-comments@sec.gov. Please include 
File Number SR-BOX-2018-39 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-2018-39. 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 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. Persons submitting comments are 
cautioned that we do not redact or edit 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-2018-39 and should be submitted on 
or before January 18, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2018-28199 Filed 12-27-18; 8:45 am]
 BILLING CODE 8011-01-P