Self-Regulatory Organizations; BOX Options Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule on the BOX Market, LLC Options Facility, 29114-29118 [2015-12173]
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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–C2–
2015–010, and should be submitted on
or before June 10, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–12144 Filed 5–19–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–74957; File No. SR–BOX–
2015–17]
Self-Regulatory Organizations; BOX
Options Exchange, LLC; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Amend
the Fee Schedule on the BOX Market,
LLC Options Facility
mstockstill on DSK4VPTVN1PROD with NOTICES
May 13, 2015.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b-4 thereunder,2
notice is hereby given that on April 30,
2015, BOX Options Exchange LLC (the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘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
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
25 17
CFR 200.30–3(a)(12).
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).
1 15
VerDate Sep<11>2014
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solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange is filing with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
to amend the Fee Schedule on the BOX
Market LLC (‘‘BOX’’) options facility.
While changes to the fee schedule
pursuant to this proposal will be
effective upon filing, the changes will
become operative on May 1, 2015. 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 https://
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
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to make a
number of changes to Section I of the
BOX Fee Schedule (Exchange Fees).
Non-Auction Transactions
First, the Exchange proposes to
amend certain fees and credits in the
pricing model outlined in Section I.A.
(Non-Auction Transactions).5 In this
section, fees and credits are assessed
depending on upon three factors: (i) The
account type of the Participant
submitting the order; (ii) whether the
Participant is a liquidity provider or
liquidity taker; and (iii) the account type
of the contra party. Non-Auction
Transactions in Penny Pilot Classes are
assessed different fees or credits than
Non-Auction Transactions in NonPenny Pilot Classes. The Exchange
5 Non-Auction Transactions are those transactions
executed on the BOX Book.
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recently adopted this pricing model 6
and now proposes to amend certain fees
and credits in this section.
Specifically, the Exchange proposes to
lower the Maker and Taker credits for
Public Customers interacting with
Professional Customers/Broker Dealers
or Market Makers in both Penny Pilot
and Non-Penny Pilot Classes. Here, the
Exchange proposes to lower the credit
Public Customers receive when
interacting with Professional Customers,
Broker Dealers or Market Makers,
regardless of whether they are adding or
removing liquidity to $0.10 from $0.22
(Penny Pilot Classes) and to $0.45 from
$0.57 (Non-Penny Pilot Classes).
The Exchange also proposes to raise
the Maker and Taker fees for
Professional Customers or Broker
Dealers in both Penny Pilot and NonPenny Pilot Classes. Specifically, when
a Professional Customer or Broker
Dealer interacts with a Public Customer
in a Penny Pilot Class, the Exchange
proposes to raise this fee to $0.60 from
$0.55 (making liquidity) and to $0.64
from $0.59 (taking liquidity). For NonPenny Pilot Classes the Exchange
proposes to raise the fees in this same
type of interaction to $0.95 from $0.90
(making liquidity) and to $0.99 from
$0.94 (taking liquidity). For when a
Professional Customer or Broker Dealer
interacts with another Professional
Customer or Broker Dealer in Penny
Pilot Classes, the Exchange proposes to
raise these fees to $0.25 from $0.20
(making liquidity) and to $0.40 from
$0.35 (taking liquidity). For Non-Penny
Pilot Classes the Exchange proposes to
raise the fees in this same type of
interaction to $0.35 from $0.30 (making
liquidity) and to $0.40 from $0.35
(taking liquidity). For when a
Professional Customer or Broker Dealer
interacts with a Market Maker in Penny
Pilot Classes, the Exchange proposes to
raise these fees to $0.25 from $0.20
(making liquidity) and to $0.44 from
$0.39 (taking liquidity). For Non-Penny
Pilot Classes the Exchange proposes to
raise the fees in this same type of
interaction to $0.35 from $0.30 (making
liquidity) and $0.44 from $0.39 (taking
liquidity).
Finally, the Exchange proposes to
lower fees to $0.00 from $0.10 for
Market Makers interacting with other
Market Makers in both Penny Pilot
Classes and Non-Penny Pilot Classes.
These transactions will remain
exempt from the Liquidity Fees and
Credits outlined in Section II of the BOX
6 See Securities Exchange Act Release No. 73547
(November 6, 2014), 79 FR 67520 (November 13,
2014)(Notice of Filing and Immediate Effectiveness
of SR–BOX–2014–25).
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Fee Schedule. The revised fee structure
for Non-Auction Transactions will be as
follows:
Penny pilot classes
Account type
Contra party
Public Customer ................................................................
Public Customer ................................................
Professional Customer/Broker Dealer ...............
Market Maker ....................................................
Public Customer ................................................
Professional Customer/Broker Dealer ...............
Market Maker ....................................................
Public Customer ................................................
Professional Customer/Broker Dealer ...............
Market Maker ....................................................
Professional Customer or Broker Dealer ..........................
Market Maker ....................................................................
For example, if a Public Customer
submitted an order to the BOX Book in
a Penny Pilot Class (making liquidity),
the Public Customer would now be
credited $0.10 if the order interacted
with a Market Maker’s order and the
Market Maker (taking liquidity) would
be charged $0.55. To expand on this
example, if the Market Maker instead
submitted an order to the BOX Book in
a Penny Pilot Class (making liquidity),
the Market Maker would be charged
$0.51 if the order interacted with a
Public Customer’s order and the Public
Customer (taking liquidity) would again
be credited $0.10.
In Section I.A.1., the Tiered Volume
Rebate for Non-Auction Transactions,
the Exchange gives a per contract rebate
to Market Makers and Public Customers
based on their average daily volume
(‘‘ADV’’) considering all transactions
executed on BOX by the Market Maker
or Public Customer, respectively, as
calculated at the end of each month.
Specifically, the Exchange proposes to
adjust the volume tiers and contract
rebates in the Market Maker Monthly
ADV section, as well certain contract
rebates in the Public Customer Monthly
ADV section. The new per contract
rebate for Market Makers and Public
Customers in Non-Auction Transactions
as set forth in Section I.A.1. of the BOX
Fee Schedule will now be as follows:
Market maker monthly ADV
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40,001 contracts and greater
25,001 contracts to 40,000
contracts ............................
10,001 contracts to 25,000
contracts ............................
1 contract to 10,000 contracts .................................
Public customer monthly
ADV
35,001 contracts and greater
15,001 contracts to 35,000
contracts ............................
5,001 contracts to 15,000
contracts ............................
1 contract to 5,000 contracts
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23:50 May 19, 2015
Per contract
rebate
Maker fee/
credit
Auction Transactions
The Exchange then proposes to
amend Section I.B. (Auction
Transactions)7 and establish separate
fees for Facilitation and Solicitation
Orders.8 The Exchange currently
assesses per contract execution fee on
all Primary Improvement Orders,
Solicitation Orders and Facilitation
Orders in Section I.B.1. based upon the
Initiating Participant’s monthly average
daily volume (ADV) in the total contract
quantity submitted for these orders.
These fees range from $0.25 to $0.03 per
contract depending on the ADV.
The Exchange now proposes to adopt
a flat $0.25 fee for Facilitation and
Solicitation Orders 9 and remove these
Orders from the tiered fee schedule for
Initiating Participants. The Exchange
also proposes to specify that the fees for
these Orders will be capped at $25,000
per month.
With this, the Exchange then proposes
to amend the language in the Section
I.B.1. tiered fee schedule to remove all
references to the Facilitation and
Solicitation Orders and specify that the
tiered fee schedule will now only be
applicable to Initiating Participants
submitting Primary Improvement
Orders through the PIP. Additionally,
each Initiating Participant’s monthly
ADV will now only be based on the total
contract quantity of Primary
Improvement Orders submitted to the
PIP as calculated at the end of each
month.
($0.10)
Other
Finally, the Exchange is proposing to
($0.03) make additional non-substantive
changes to the Fee Schedule.
($0.05)
$0.00
Per contract
rebate
($0.22)
($0.12)
($0.06)
$0.00
Jkt 235001
7 Auction Transactions are those transactions
executed through the Price Improvement Period
(‘‘PIP’’), the Complex Order Price Improvement
Period (‘‘COPIP’’), the Solicitation Auction
mechanism, and the Facilitation Auction
mechanism.
8 Facilitation and Solicitation Orders are the
matching contra orders submitted on the opposite
side of the Agency Order.
9 Public Customers are unable to submit
Facilitation and Solicitation Orders on BOX.
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$0.00
($0.10)
($0.10)
$0.60
$0.25
$0.25
$0.51
$0.00
$0.00
Taker fee/
credit
$0.00
($0.10)
($0.10)
$0.64
$0.40
$0.44
$0.55
$0.05
$0.29
Non-penny pilot classes
Maker fee/
credit
$0.00
($0.45)
($0.45)
$0.95
$0.35
$0.35
$0.85
$0.00
$0.00
Taker fee/
credit
$0.00
($0.45)
($0.45)
$0.99
$0.40
$0.44
$0.90
$0.10
$0.29
Specifically, the Exchange is
renumbering certain footnotes, headings
and internal references to accommodate
the above proposed changes to the Fee
Schedule.
2. Statutory Basis
The Exchange believes that the
proposal is consistent with the
requirements of Section 6(b) of the Act,
in general, and Section 6(b)(4) and
6(b)(5)of the Act,10 in particular, in that
it provides for the equitable allocation
of reasonable dues, fees, and other
charges among BOX Participants and
other persons using its facilities and
does not unfairly discriminate between
customers, issuers, brokers or dealers.
The proposed changes will allow the
Exchange to be competitive with other
exchanges and to apply fees and credits
in a manner that is equitable among all
BOX Participants. Further, the Exchange
operates within a highly competitive
market in which market participants can
readily direct order flow to any other
competing exchange if they determine
fees at a particular exchange to be
excessive.
Exchange Fees
Non-Auction Transactions
The Exchange believes amending the
Non-Auction Transaction fees and
credits is reasonable, equitable and not
unfairly discriminatory. The fee
structure for Non-Auction Transactions
has been well received by Participants
and the industry since it was adopted
last year,11 and the Exchange believes it
is now appropriate to adjust certain fees
and credits. The proposed fee structure
is intended to attract order flow to the
Exchange by offering all market
participants incentives to submit their
Non-Auction orders to the Exchange.
The practice of providing additional
incentives to increase order flow is, and
has been, a common practice in the
10 15
U.S.C. 78f(b)(4) and (5).
supra, note 6.
11 See
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mstockstill on DSK4VPTVN1PROD with NOTICES
options markets.12 Further, the
Exchange believes it is appropriate to
provide incentives for market
participants which will result in greater
liquidity and ultimately benefit all
Participants trading on the Exchange.
The Exchange also believes it is
equitable, reasonable and not unfairly
discriminatory to assess fees and credits
according to the account type of the
Participant originating the order and the
contra party. This fee structure has been
in place on the Exchange since last year
and the Exchange is simply adjusting
certain fees and credits within the
structure.13 The result of this structure
is that a Participant does not know the
fee it will be charged when submitting
certain orders. Therefore, the Participant
must recognize that it could be charged
the highest applicable fee on the
Exchange’s schedule, which may,
instead, be lowered or changed to a
credit depending upon how the order
interacts.
The Exchange believes that the
proposed fees and credits for Public
Customers in Non-Auction Transactions
are reasonable. Under the proposed fee
structure Public Customers will either
pay a Maker fee of $0.00 (when
interacting with another Public
Customer) or receive a Maker/Taker
credit of $0.10 for Penny Pilot classes
and $0.45 for Non-Penny Pilot classes
when interacting with a Professional
Customer, Broker Dealer or Market
Maker. The Exchange believes the
credits listed above are reasonable as
they are in line with the current fees
assessed by other competing
exchanges.14
12 See BATS Exchange, Inc. (‘‘BATS’’) BATS
Options Exchange Fee Schedule ‘‘Standard Rates’’;
Chicago Board Options Exchange, Inc. (‘‘CBOE’’)
Fee Schedule ‘‘Volume Incentive Program’’ (page 4);
ISE Gemini, LLC (‘‘Gemini’’) Schedule of Fees,
Section I. Regular Order Fees and Rebates ‘‘Penny
Symbols and SPY, and Non-Penny Symbols’’ (page
4); Miami International Securities Exchange, LLC
(‘‘MIAX’’) Fee Schedule Section I(a)(i) ‘‘Market
Maker Transaction Fees’’ and ‘‘Market Maker
Sliding Scale’’, and Section I(a)(iii) ‘‘Priority
Customer Rebate Program’’; NASDAQ OMX BX,
Inc. (‘‘BX Options’’) Chapter XV, Section 2 BX
Options Market—Fees and Rebates; NASDAQ OMX
PHLX,(‘‘PHLX’’), Pricing Schedule Section B,
‘‘Customer Rebate Program’’; NASDAQ Stock
Market LLC (‘‘NOM’’) Chapter XV, Section 2
NASDAQ Options Market—Fees and Rebates; NYSE
Amex, Inc. (‘‘AMEX’’) Fee Schedule Section I.C.
NYSE Amex Options Market Maker Sliding Scale—
Electronic; and NYSE Arca, Inc (‘‘Arca’’) Options
Fees and Charges, ‘‘Customer and Professional
Customer Monthly Posting Credit Tiers and
Qualifications for Executions in Penny Pilot
Issues’’(page 4).
13 See supra, note 6.
14 Many U.S. Options Exchanges do not
differentiate their fees between auction and nonauction transactions. However, Public Customers
are charged anywhere from $0.00 to $0.85 within
the following options exchange fee schedules. See
NASDAQ OMX BX (‘‘BX’’) Options Pricing, Chapter
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Jkt 235001
The Exchange believes it is
reasonable, equitable and not unfairly
discriminatory to give Public Customers
a credit when their orders execute
against a non-Public Customer and,
accordingly, charge non-Public
Customers a higher fee when their
orders execute against a Public
Customer. The securities markets
generally, and BOX in particular, have
historically aimed to improve markets
for investors and develop various
features within the market structure for
Public Customer benefit. Similar to the
payment for order flow and other
pricing models that have been adopted
by the Exchange and other exchanges to
attract Public Customer order flow, the
Exchange increases fees to non-Public
Customers in order to provide
incentives for Public Customers. The
Exchange believes that providing
incentives for Non-Auction
Transactions by Public Customers is
reasonable and, ultimately, will benefit
all Participants trading on the Exchange
by attracting Public Customer order
flow.
The Exchange believes that charging
Professional Customers and Broker
Dealers higher fees than Public
Customers for Non-Auction
Transactions is equitable and not
unfairly discriminatory. Professional
Customers, while Public Customers by
virtue of not being Broker Dealers,
generally engage in trading activity
more similar to Broker Dealer
proprietary trading accounts. The
Exchange believes that the higher level
of trading activity from these
Participants will draw a greater amount
of BOX system resources, which the
Exchange aims to recover its costs by
assessing Professional Customers and
Broker Dealers higher fees for
transactions.
The Exchange also believes it is
equitable and not unfairly
discriminatory for BOX Market Makers
to be assessed lower fees than
Professional Customers and Broker
Dealers for Non-Auction Transactions
because of the significant contributions
to overall market quality that Market
Makers provide. Specifically, Market
Makers can provide higher volumes of
liquidity and lowering their fees will
help attract a higher level of Market
Maker order flow to the BOX Book and
create liquidity, which the Exchange
believes will ultimately benefit all
Participants trading on BOX.
The Exchange believes that the
proposed fees and credits for
XV, Sec. 2; NYSE Arca Options (‘‘Arca’’) Fees and
Charges page 3; International Securities Exchange
(‘‘ISE’’) Schedule of Fees, Section I.
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Professional Customers, Broker Dealers
and Market Makers in Non-Auction
Transactions are reasonable. Under the
proposed fee structure, a Professional
Customer or Broker Dealer making
liquidity and interacting with a
Professional Customer, Broker Dealer or
Market Marker will either be charged a
fee of $0.25 for Penny Pilot Classes or
$0.35 for Non-Penny Pilot Classes. If the
Professional Customer or Broker Dealer
is instead taking liquidity in either
Penny Pilot or Non-Penny Pilot Classes,
it will be charged $0.40 if it interacts
with a Professional Customer or Broker
Dealer and $0.44 if it interacts with a
Market Maker. The Exchange believes
the fees listed above are reasonable as
they are in line with the current fees
assessed by other competing
exchanges.15
Similarly, in the proposed fee
structure a Market Maker making
liquidity in both Penny Pilot and NonPenny Pilot Classes will now always be
charged a fee of $0.00 for interacting
with a Professional Customer/Broker
Dealer or Market Maker. The Exchange
believes the fees listed above are
reasonable as they are in line with what
is currently charged by the industry.16
The Exchange believes it is
reasonable, equitable and not unfairly
discriminatory for Professional
Customers and Broker Dealers to be
charged higher fees for both making and
taking liquidity when interacting with
Public Customers. A Professional
Customer or Broker Dealer interacting
with a Public Customer will now be
charged a $0.60 Maker fee or $0.64
Taker fee for Penny Pilot Classes and a
$0.95 Maker fee or $0.99 Taker fee for
Non-Penny Pilot Classes. The Exchange
believes they are reasonable as they are
in line when compared to similar fees
in the options industry.17 Further, as
stated above, the Exchange believes
charging a higher fee for interactions
with a Public Customer is equitable and
not unfairly discriminatory because it
allows the Exchange to incentivize
Public Customer order flow by offering
credits to Public Customers in NonAuction Transactions. The Exchange
believes that providing incentives for
Non-Auction Transactions by Public
Customers will benefit all Participants
trading on the Exchange by attracting
this Public Customer order flow.
15 Id. Professional Customer and Broker Dealers
are charged anywhere from $0.10 to $0.94 within
the option exchange fee schedules referenced
above.
16 See supra, note 13 [sic]. The general range for
Market Maker fees is between $0.10 and $0.92
within the fee schedules referenced above.
17 See supra, note 14.
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The Exchange believes it is
reasonable, equitable and not unfairly
discriminatory for Professional
Customers, Broker Dealers and Market
Makers to be charged a higher fee for
orders removing liquidity when
compared to the fee they receive for
orders that add liquidity. Charging a
lower fee for orders that add liquidity
will promote liquidity on the Exchange
and ultimately benefit all participants
on BOX. Further, the concept of
incentivizing orders that add liquidity
over orders that remove liquidity is
commonly accepted within the industry
as part of the ‘‘Make/Take’’ liquidity
model.18
The Exchange believes it is equitable
and not unfairly discriminatory to
charge the Professional Customer or
Broker Dealer more for taking liquidity
against a Market Maker than they are
charged for taking liquidity against
other Professional Customers or Broker
Dealers. As stated above, the Exchange
proposes to provide certain incentives
to Market Makers because of the high
volumes of liquidity they can provide
and increasing fees for Professional
Customers and Broker Dealers taking
liquidity will allow the Exchange to
offer these incentives, ultimately
benefiting all Participants trading on
BOX.
Finally, the Exchange also believes it
is reasonable to charge Professional
Customers and Broker Dealers less for
certain executions in Penny Pilot issues
compared to Non-Penny Pilot issues
because these classes are typically more
actively traded; assessing lower fees will
further incentivize order flow in Penny
Pilot issues on the Exchange, ultimately
benefiting all Participants trading on
BOX. Additionally, the Exchange
believes it is reasonable to give a greater
credit to Public Customers for NonAuction Transactions in Non-Penny
Pilot issues as compared to Penny Pilot
issues. Since these classes have wider
spreads and are less actively traded,
giving a larger credit will further
incentivize Public Customers to trade in
these classes, ultimately benefitting all
Participants trading on BOX.
Tiered Volume Rebate for Non-Auction
Transactions
BOX believes it is reasonable,
equitable and not unfairly
discriminatory to adjust the tiered
volume based rebates for Market Makers
and Public Customers in all NonAuction Transactions. The volume
thresholds and applicable rebates are
18 The ‘‘Make/Take’’ model is currently used by
the International Securities Exchange LLC (‘‘ISE’)
and NASDAQ OMX PHLX LLC (‘‘PHLX’’).
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Jkt 235001
meant to incentivize Public Customers
and Market Makers to direct order flow
to the Exchange to obtain the benefit of
the rebate, which will in turn benefit all
market participants by increasing
liquidity on the Exchange. Other
exchanges employ similar incentive
programs; 19 and the Exchange believes
that the proposed changes to the volume
thresholds and rebates are reasonable
and competitive when compared to
incentive structures at other exchanges.
The Exchange continues to believe it
is equitable and not unfairly
discriminatory to only have these rebate
structures for Public Customers and
Market Makers in Non-Auction
transactions. The practice of
incentivizing increased Public Customer
order flow is common in the options
markets. With this proposal, Public
Customers benefit from the opportunity
to obtain a higher rebate. Further,
Market Makers can provide high
volumes of liquidity and lowering their
Non-Auction Transaction fees will
potentially help attract a higher level of
Market Maker order flow and create
liquidity, which the Exchange believes
will ultimately benefit all Participants
trading on BOX.
Auction Transactions
The Exchange believes that
establishing a flat $0.25 fee for all
Facilitation and Solicitation Orders is
reasonable, equitable and not unfairly
discriminatory. While the proposal will
potentially raise the fees for certain
Participants submitting Facilitation and
Solicitation Orders, the Exchange
believes the fee is reasonable as it is
equal to highest fee that Participants are
currently charged for these Orders
under the volume based tier schedule in
Section I.B.1., and will also be capped
at $25,000 for each Participant per
month. Further, the fee cap will act as
a volume based discount for any
Participants who meet the cap each
month. The Exchange believes the fee
cap is reasonable as it is lower than
similar fee caps at other options
exchanges.20 Finally, the Exchange
19 See Section B of the PHLX Pricing Schedule
entitled ‘‘Customer Rebate Program;’’ ISE Gemini’s
Qualifying Tier Thresholds (page 6 of the ISE
Gemini Fee Schedule); and CBOE’s Volume
Incentive Program (VIP). CBOE’s Volume Incentive
Program (‘‘VIP’’) pays certain tiered rebates to
Trading Permit Holders for electronically executed
multiply-listed option orders which include AIM
orders. Note that some of these exchanges base
these rebate programs on the percentage of total
national Public Customer volume traded on their
respective exchanges, which the Exchange is not
proposing to do.
20 See Section H of the ISE Fee Schedule
‘‘Crossing Fee Caps.’’ Transactions that are part of
the origination or contra side of a Crossing Order
(contracts that are submitted as part of a
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29117
believes that a $0.25 fee for Facilitation
and Solicitation Orders is equitable and
not unfairly discriminatory as all
Participants will be charged the same
fee with the exception of Public
Customers, who are not able to submit
these Orders in the BOX trading system.
Finally, the Exchange believes that
removing references to Facilitation and
Solicitation Orders in the Tiered Fee
Schedule in Section I.B.1. is reasonable,
equitable and not unfairly
discriminatory. The Exchange believes
it is reasonable because Facilitation and
Solicitation Orders will no longer be
charged according to this section of the
fee schedule, and therefore it is
appropriate to both remove these
references and specify that the monthly
ADV will be now only be based on the
total Primary Improvement Order
contract quantity submitted to the PIP as
calculated at the end of the month. The
Exchange believes it is equitable and not
unfairly discriminatory to remove these
references as they apply equally to all
Participants on BOX.
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 Exchange believes that the
proposed adjustments to fees and
rebates in the Non-Auction Transactions
fee structure will not impose a burden
on competition among various Exchange
Participants. Rather, BOX believes that
the changes will result in the
Participants being charged appropriately
for these transactions and are designed
to enhance competition in Non-Auction
transactions on BOX. Submitting an
order is entirely voluntary and
Participants can determine which type
of order they wish to submit, if any, to
the Exchange. Further, the Exchange
believes that this proposal will enhance
competition between exchanges because
it is designed to allow the Exchange to
better compete with other exchanges for
order flow.
The Exchange believes that adopting
a flat fee for Facilitation and Solicitation
Orders will not impose a burden on
competition because all Participants
will be affected to the same extent, with
the exception of Public Customers who
cannot submit these Orders in the BOX
trading system.
Finally, the Exchange notes that it
operates in a highly competitive market
in which market participants can
Facilitation, Solicitation, PIM, Block or QCC order)
are capped at $75,000 per month.
E:\FR\FM\20MYN1.SGM
20MYN1
29118
Federal Register / Vol. 80, No. 97 / Wednesday, May 20, 2015 / Notices
readily favor competing exchanges. In
such an environment, the Exchange
must continually review, and consider
adjusting, its fees and credits to remain
competitive with other exchanges. For
the reasons described above, the
Exchange believes that the proposed
rule change reflects this competitive
environment.
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 21
and Rule 19b–4(f)(2) thereunder,22
because it establishes or changes a due,
or fee.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend the rule change if
it appears to the Commission that the
action is necessary or appropriate in the
public interest, for the protection of
investors, or would otherwise further
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BOX–2015–17 on the subject line.
mstockstill on DSK4VPTVN1PROD with NOTICES
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
21 15
22 17
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
VerDate Sep<11>2014
23:50 May 19, 2015
All submissions should refer to File
Number SR–BOX–2015–17. 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 (https://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–
2015–17, and should be submitted on or
before June 10, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–12173 Filed 5–19–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–74962; File No. SR–BX–
2015–026]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Update the
Public Disclosure of Sources of Data
BX Utilizes
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on May 6,
2015, NASDAQ OMX BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I and II,
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to update the
public disclosure of the sources of data
that BX utilizes when performing (1)
order handling and execution; (2) order
routing; and (3) related compliance
processes.
The text of the proposed rule change
is below. Proposed new language is
italicized; proposed deletions are
bracketed.
*
*
*
*
*
4759. Data Feeds Utilized
[BX shall publicly disclose the
proprietary and network processor feeds
utilized by the System for the handling,
routing, and execution of orders, as well
as for the regulatory compliance
processes related to those functions.
This information shall be displayed on
www.nasdaqtrader.com, and it shall be
updated promptly each time BX
determines to add, subtract, or
otherwise modify a data source.]
The BX System utilizes the below
proprietary and network processor feeds
utilized by the System for the handling,
routing, and execution of orders, as well
as for the regulatory compliance
processes related to those functions. The
Secondary Source of data is utilized
only in emergency market conditions
and only until those emergency
conditions are resolved.
May 14, 2015.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
1 15
23 17
Jkt 235001
PO 00000
CFR 200.30–3(a)(12).
Frm 00190
Fmt 4703
Sfmt 4703
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
E:\FR\FM\20MYN1.SGM
20MYN1
]]>Agencies
[Federal Register Volume 80, Number 97 (Wednesday, May 20, 2015)]
[Notices]
[Pages 29114-29118]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12173]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74957; File No. SR-BOX-2015-17]
Self-Regulatory Organizations; BOX Options Exchange, LLC; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend the Fee Schedule on the BOX Market, LLC Options Facility
May 13, 2015.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on April 30, 2015, BOX Options Exchange LLC (the ``Exchange'')
filed with the Securities and Exchange Commission (``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 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.
---------------------------------------------------------------------------
\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).*COM057*
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change to amend the Fee Schedule on
the BOX Market LLC (``BOX'') options facility. While changes to the fee
schedule pursuant to this proposal will be effective upon filing, the
changes will become operative on May 1, 2015. 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 https://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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to make a number of changes to Section I of
the BOX Fee Schedule (Exchange Fees).
Non-Auction Transactions
First, the Exchange proposes to amend certain fees and credits in
the pricing model outlined in Section I.A. (Non-Auction
Transactions).\5\ In this section, fees and credits are assessed
depending on upon three factors: (i) The account type of the
Participant submitting the order; (ii) whether the Participant is a
liquidity provider or liquidity taker; and (iii) the account type of
the contra party. Non-Auction Transactions in Penny Pilot Classes are
assessed different fees or credits than Non-Auction Transactions in
Non-Penny Pilot Classes. The Exchange recently adopted this pricing
model \6\ and now proposes to amend certain fees and credits in this
section.
---------------------------------------------------------------------------
\5\ Non-Auction Transactions are those transactions executed on
the BOX Book.
\6\ See Securities Exchange Act Release No. 73547 (November 6,
2014), 79 FR 67520 (November 13, 2014)(Notice of Filing and
Immediate Effectiveness of SR-BOX-2014-25).
---------------------------------------------------------------------------
Specifically, the Exchange proposes to lower the Maker and Taker
credits for Public Customers interacting with Professional Customers/
Broker Dealers or Market Makers in both Penny Pilot and Non-Penny Pilot
Classes. Here, the Exchange proposes to lower the credit Public
Customers receive when interacting with Professional Customers, Broker
Dealers or Market Makers, regardless of whether they are adding or
removing liquidity to $0.10 from $0.22 (Penny Pilot Classes) and to
$0.45 from $0.57 (Non-Penny Pilot Classes).
The Exchange also proposes to raise the Maker and Taker fees for
Professional Customers or Broker Dealers in both Penny Pilot and Non-
Penny Pilot Classes. Specifically, when a Professional Customer or
Broker Dealer interacts with a Public Customer in a Penny Pilot Class,
the Exchange proposes to raise this fee to $0.60 from $0.55 (making
liquidity) and to $0.64 from $0.59 (taking liquidity). For Non-Penny
Pilot Classes the Exchange proposes to raise the fees in this same type
of interaction to $0.95 from $0.90 (making liquidity) and to $0.99 from
$0.94 (taking liquidity). For when a Professional Customer or Broker
Dealer interacts with another Professional Customer or Broker Dealer in
Penny Pilot Classes, the Exchange proposes to raise these fees to $0.25
from $0.20 (making liquidity) and to $0.40 from $0.35 (taking
liquidity). For Non-Penny Pilot Classes the Exchange proposes to raise
the fees in this same type of interaction to $0.35 from $0.30 (making
liquidity) and to $0.40 from $0.35 (taking liquidity). For when a
Professional Customer or Broker Dealer interacts with a Market Maker in
Penny Pilot Classes, the Exchange proposes to raise these fees to $0.25
from $0.20 (making liquidity) and to $0.44 from $0.39 (taking
liquidity). For Non-Penny Pilot Classes the Exchange proposes to raise
the fees in this same type of interaction to $0.35 from $0.30 (making
liquidity) and $0.44 from $0.39 (taking liquidity).
Finally, the Exchange proposes to lower fees to $0.00 from $0.10
for Market Makers interacting with other Market Makers in both Penny
Pilot Classes and Non-Penny Pilot Classes.
These transactions will remain exempt from the Liquidity Fees and
Credits outlined in Section II of the BOX
[[Page 29115]]
Fee Schedule. The revised fee structure for Non-Auction Transactions
will be as follows:
----------------------------------------------------------------------------------------------------------------
Penny pilot classes Non-penny pilot classes
---------------------------------------------------
Account type Contra party Maker fee/ Taker fee/ Maker fee/ Taker fee/
credit credit credit credit
----------------------------------------------------------------------------------------------------------------
Public Customer..................... Public Customer....... $0.00 $0.00 $0.00 $0.00
Professional Customer/ ($0.10) ($0.10) ($0.45) ($0.45)
Broker Dealer.
Market Maker.......... ($0.10) ($0.10) ($0.45) ($0.45)
Professional Customer or Broker Public Customer....... $0.60 $0.64 $0.95 $0.99
Dealer.
Professional Customer/ $0.25 $0.40 $0.35 $0.40
Broker Dealer.
Market Maker.......... $0.25 $0.44 $0.35 $0.44
Market Maker........................ Public Customer....... $0.51 $0.55 $0.85 $0.90
Professional Customer/ $0.00 $0.05 $0.00 $0.10
Broker Dealer.
Market Maker.......... $0.00 $0.29 $0.00 $0.29
----------------------------------------------------------------------------------------------------------------
For example, if a Public Customer submitted an order to the BOX
Book in a Penny Pilot Class (making liquidity), the Public Customer
would now be credited $0.10 if the order interacted with a Market
Maker's order and the Market Maker (taking liquidity) would be charged
$0.55. To expand on this example, if the Market Maker instead submitted
an order to the BOX Book in a Penny Pilot Class (making liquidity), the
Market Maker would be charged $0.51 if the order interacted with a
Public Customer's order and the Public Customer (taking liquidity)
would again be credited $0.10.
In Section I.A.1., the Tiered Volume Rebate for Non-Auction
Transactions, the Exchange gives a per contract rebate to Market Makers
and Public Customers based on their average daily volume (``ADV'')
considering all transactions executed on BOX by the Market Maker or
Public Customer, respectively, as calculated at the end of each month.
Specifically, the Exchange proposes to adjust the volume tiers and
contract rebates in the Market Maker Monthly ADV section, as well
certain contract rebates in the Public Customer Monthly ADV section.
The new per contract rebate for Market Makers and Public Customers in
Non-Auction Transactions as set forth in Section I.A.1. of the BOX Fee
Schedule will now be as follows:
------------------------------------------------------------------------
Per contract
Market maker monthly ADV rebate
------------------------------------------------------------------------
40,001 contracts and greater............................ ($0.10)
25,001 contracts to 40,000 contracts.................... ($0.05)
10,001 contracts to 25,000 contracts.................... ($0.03)
1 contract to 10,000 contracts.......................... $0.00
------------------------------------------------------------------------
------------------------------------------------------------------------
Per contract
Public customer monthly ADV rebate
------------------------------------------------------------------------
35,001 contracts and greater............................ ($0.22)
15,001 contracts to 35,000 contracts.................... ($0.12)
5,001 contracts to 15,000 contracts..................... ($0.06)
1 contract to 5,000 contracts........................... $0.00
------------------------------------------------------------------------
Auction Transactions
The Exchange then proposes to amend Section I.B. (Auction
Transactions)\7\ and establish separate fees for Facilitation and
Solicitation Orders.\8\ The Exchange currently assesses per contract
execution fee on all Primary Improvement Orders, Solicitation Orders
and Facilitation Orders in Section I.B.1. based upon the Initiating
Participant's monthly average daily volume (ADV) in the total contract
quantity submitted for these orders. These fees range from $0.25 to
$0.03 per contract depending on the ADV.
---------------------------------------------------------------------------
\7\ Auction Transactions are those transactions executed through
the Price Improvement Period (``PIP''), the Complex Order Price
Improvement Period (``COPIP''), the Solicitation Auction mechanism,
and the Facilitation Auction mechanism.
\8\ Facilitation and Solicitation Orders are the matching contra
orders submitted on the opposite side of the Agency Order.
---------------------------------------------------------------------------
The Exchange now proposes to adopt a flat $0.25 fee for
Facilitation and Solicitation Orders \9\ and remove these Orders from
the tiered fee schedule for Initiating Participants. The Exchange also
proposes to specify that the fees for these Orders will be capped at
$25,000 per month.
---------------------------------------------------------------------------
\9\ Public Customers are unable to submit Facilitation and
Solicitation Orders on BOX.
---------------------------------------------------------------------------
With this, the Exchange then proposes to amend the language in the
Section I.B.1. tiered fee schedule to remove all references to the
Facilitation and Solicitation Orders and specify that the tiered fee
schedule will now only be applicable to Initiating Participants
submitting Primary Improvement Orders through the PIP. Additionally,
each Initiating Participant's monthly ADV will now only be based on the
total contract quantity of Primary Improvement Orders submitted to the
PIP as calculated at the end of each month.
Other
Finally, the Exchange is proposing to make additional non-
substantive changes to the Fee Schedule. Specifically, the Exchange is
renumbering certain footnotes, headings and internal references to
accommodate the above proposed changes to the Fee Schedule.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act, in general, and Section
6(b)(4) and 6(b)(5)of the Act,\10\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees, and other
charges among BOX Participants and other persons using its facilities
and does not unfairly discriminate between customers, issuers, brokers
or dealers. The proposed changes will allow the Exchange to be
competitive with other exchanges and to apply fees and credits in a
manner that is equitable among all BOX Participants. Further, the
Exchange operates within a highly competitive market in which market
participants can readily direct order flow to any other competing
exchange if they determine fees at a particular exchange to be
excessive.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
Exchange Fees
Non-Auction Transactions
The Exchange believes amending the Non-Auction Transaction fees and
credits is reasonable, equitable and not unfairly discriminatory. The
fee structure for Non-Auction Transactions has been well received by
Participants and the industry since it was adopted last year,\11\ and
the Exchange believes it is now appropriate to adjust certain fees and
credits. The proposed fee structure is intended to attract order flow
to the Exchange by offering all market participants incentives to
submit their Non-Auction orders to the Exchange. The practice of
providing additional incentives to increase order flow is, and has
been, a common practice in the
[[Page 29116]]
options markets.\12\ Further, the Exchange believes it is appropriate
to provide incentives for market participants which will result in
greater liquidity and ultimately benefit all Participants trading on
the Exchange.
---------------------------------------------------------------------------
\11\ See supra, note 6.
\12\ See BATS Exchange, Inc. (``BATS'') BATS Options Exchange
Fee Schedule ``Standard Rates''; Chicago Board Options Exchange,
Inc. (``CBOE'') Fee Schedule ``Volume Incentive Program'' (page 4);
ISE Gemini, LLC (``Gemini'') Schedule of Fees, Section I. Regular
Order Fees and Rebates ``Penny Symbols and SPY, and Non-Penny
Symbols'' (page 4); Miami International Securities Exchange, LLC
(``MIAX'') Fee Schedule Section I(a)(i) ``Market Maker Transaction
Fees'' and ``Market Maker Sliding Scale'', and Section I(a)(iii)
``Priority Customer Rebate Program''; NASDAQ OMX BX, Inc. (``BX
Options'') Chapter XV, Section 2 BX Options Market--Fees and
Rebates; NASDAQ OMX PHLX,(``PHLX''), Pricing Schedule Section B,
``Customer Rebate Program''; NASDAQ Stock Market LLC (``NOM'')
Chapter XV, Section 2 NASDAQ Options Market--Fees and Rebates; NYSE
Amex, Inc. (``AMEX'') Fee Schedule Section I.C. NYSE Amex Options
Market Maker Sliding Scale--Electronic; and NYSE Arca, Inc
(``Arca'') Options Fees and Charges, ``Customer and Professional
Customer Monthly Posting Credit Tiers and Qualifications for
Executions in Penny Pilot Issues''(page 4).
---------------------------------------------------------------------------
The Exchange also believes it is equitable, reasonable and not
unfairly discriminatory to assess fees and credits according to the
account type of the Participant originating the order and the contra
party. This fee structure has been in place on the Exchange since last
year and the Exchange is simply adjusting certain fees and credits
within the structure.\13\ The result of this structure is that a
Participant does not know the fee it will be charged when submitting
certain orders. Therefore, the Participant must recognize that it could
be charged the highest applicable fee on the Exchange's schedule, which
may, instead, be lowered or changed to a credit depending upon how the
order interacts.
---------------------------------------------------------------------------
\13\ See supra, note 6.
---------------------------------------------------------------------------
The Exchange believes that the proposed fees and credits for Public
Customers in Non-Auction Transactions are reasonable. Under the
proposed fee structure Public Customers will either pay a Maker fee of
$0.00 (when interacting with another Public Customer) or receive a
Maker/Taker credit of $0.10 for Penny Pilot classes and $0.45 for Non-
Penny Pilot classes when interacting with a Professional Customer,
Broker Dealer or Market Maker. The Exchange believes the credits listed
above are reasonable as they are in line with the current fees assessed
by other competing exchanges.\14\
---------------------------------------------------------------------------
\14\ Many U.S. Options Exchanges do not differentiate their fees
between auction and non-auction transactions. However, Public
Customers are charged anywhere from $0.00 to $0.85 within the
following options exchange fee schedules. See NASDAQ OMX BX (``BX'')
Options Pricing, Chapter XV, Sec. 2; NYSE Arca Options (``Arca'')
Fees and Charges page 3; International Securities Exchange (``ISE'')
Schedule of Fees, Section I.
---------------------------------------------------------------------------
The Exchange believes it is reasonable, equitable and not unfairly
discriminatory to give Public Customers a credit when their orders
execute against a non-Public Customer and, accordingly, charge non-
Public Customers a higher fee when their orders execute against a
Public Customer. The securities markets generally, and BOX in
particular, have historically aimed to improve markets for investors
and develop various features within the market structure for Public
Customer benefit. Similar to the payment for order flow and other
pricing models that have been adopted by the Exchange and other
exchanges to attract Public Customer order flow, the Exchange increases
fees to non-Public Customers in order to provide incentives for Public
Customers. The Exchange believes that providing incentives for Non-
Auction Transactions by Public Customers is reasonable and, ultimately,
will benefit all Participants trading on the Exchange by attracting
Public Customer order flow.
The Exchange believes that charging Professional Customers and
Broker Dealers higher fees than Public Customers for Non-Auction
Transactions is equitable and not unfairly discriminatory. Professional
Customers, while Public Customers by virtue of not being Broker
Dealers, generally engage in trading activity more similar to Broker
Dealer proprietary trading accounts. The Exchange believes that the
higher level of trading activity from these Participants will draw a
greater amount of BOX system resources, which the Exchange aims to
recover its costs by assessing Professional Customers and Broker
Dealers higher fees for transactions.
The Exchange also believes it is equitable and not unfairly
discriminatory for BOX Market Makers to be assessed lower fees than
Professional Customers and Broker Dealers for Non-Auction Transactions
because of the significant contributions to overall market quality that
Market Makers provide. Specifically, Market Makers can provide higher
volumes of liquidity and lowering their fees will help attract a higher
level of Market Maker order flow to the BOX Book and create liquidity,
which the Exchange believes will ultimately benefit all Participants
trading on BOX.
The Exchange believes that the proposed fees and credits for
Professional Customers, Broker Dealers and Market Makers in Non-Auction
Transactions are reasonable. Under the proposed fee structure, a
Professional Customer or Broker Dealer making liquidity and interacting
with a Professional Customer, Broker Dealer or Market Marker will
either be charged a fee of $0.25 for Penny Pilot Classes or $0.35 for
Non-Penny Pilot Classes. If the Professional Customer or Broker Dealer
is instead taking liquidity in either Penny Pilot or Non-Penny Pilot
Classes, it will be charged $0.40 if it interacts with a Professional
Customer or Broker Dealer and $0.44 if it interacts with a Market
Maker. The Exchange believes the fees listed above are reasonable as
they are in line with the current fees assessed by other competing
exchanges.\15\
---------------------------------------------------------------------------
\15\ Id. Professional Customer and Broker Dealers are charged
anywhere from $0.10 to $0.94 within the option exchange fee
schedules referenced above.
---------------------------------------------------------------------------
Similarly, in the proposed fee structure a Market Maker making
liquidity in both Penny Pilot and Non-Penny Pilot Classes will now
always be charged a fee of $0.00 for interacting with a Professional
Customer/Broker Dealer or Market Maker. The Exchange believes the fees
listed above are reasonable as they are in line with what is currently
charged by the industry.\16\
---------------------------------------------------------------------------
\16\ See supra, note 13 [sic]. The general range for Market
Maker fees is between $0.10 and $0.92 within the fee schedules
referenced above.
---------------------------------------------------------------------------
The Exchange believes it is reasonable, equitable and not unfairly
discriminatory for Professional Customers and Broker Dealers to be
charged higher fees for both making and taking liquidity when
interacting with Public Customers. A Professional Customer or Broker
Dealer interacting with a Public Customer will now be charged a $0.60
Maker fee or $0.64 Taker fee for Penny Pilot Classes and a $0.95 Maker
fee or $0.99 Taker fee for Non-Penny Pilot Classes. The Exchange
believes they are reasonable as they are in line when compared to
similar fees in the options industry.\17\ Further, as stated above, the
Exchange believes charging a higher fee for interactions with a Public
Customer is equitable and not unfairly discriminatory because it allows
the Exchange to incentivize Public Customer order flow by offering
credits to Public Customers in Non-Auction Transactions. The Exchange
believes that providing incentives for Non-Auction Transactions by
Public Customers will benefit all Participants trading on the Exchange
by attracting this Public Customer order flow.
---------------------------------------------------------------------------
\17\ See supra, note 14.
---------------------------------------------------------------------------
[[Page 29117]]
The Exchange believes it is reasonable, equitable and not unfairly
discriminatory for Professional Customers, Broker Dealers and Market
Makers to be charged a higher fee for orders removing liquidity when
compared to the fee they receive for orders that add liquidity.
Charging a lower fee for orders that add liquidity will promote
liquidity on the Exchange and ultimately benefit all participants on
BOX. Further, the concept of incentivizing orders that add liquidity
over orders that remove liquidity is commonly accepted within the
industry as part of the ``Make/Take'' liquidity model.\18\
---------------------------------------------------------------------------
\18\ The ``Make/Take'' model is currently used by the
International Securities Exchange LLC (``ISE') and NASDAQ OMX PHLX
LLC (``PHLX'').
---------------------------------------------------------------------------
The Exchange believes it is equitable and not unfairly
discriminatory to charge the Professional Customer or Broker Dealer
more for taking liquidity against a Market Maker than they are charged
for taking liquidity against other Professional Customers or Broker
Dealers. As stated above, the Exchange proposes to provide certain
incentives to Market Makers because of the high volumes of liquidity
they can provide and increasing fees for Professional Customers and
Broker Dealers taking liquidity will allow the Exchange to offer these
incentives, ultimately benefiting all Participants trading on BOX.
Finally, the Exchange also believes it is reasonable to charge
Professional Customers and Broker Dealers less for certain executions
in Penny Pilot issues compared to Non-Penny Pilot issues because these
classes are typically more actively traded; assessing lower fees will
further incentivize order flow in Penny Pilot issues on the Exchange,
ultimately benefiting all Participants trading on BOX. Additionally,
the Exchange believes it is reasonable to give a greater credit to
Public Customers for Non-Auction Transactions in Non-Penny Pilot issues
as compared to Penny Pilot issues. Since these classes have wider
spreads and are less actively traded, giving a larger credit will
further incentivize Public Customers to trade in these classes,
ultimately benefitting all Participants trading on BOX.
Tiered Volume Rebate for Non-Auction Transactions
BOX believes it is reasonable, equitable and not unfairly
discriminatory to adjust the tiered volume based rebates for Market
Makers and Public Customers in all Non-Auction Transactions. The volume
thresholds and applicable rebates are meant to incentivize Public
Customers and Market Makers to direct order flow to the Exchange to
obtain the benefit of the rebate, which will in turn benefit all market
participants by increasing liquidity on the Exchange. Other exchanges
employ similar incentive programs; \19\ and the Exchange believes that
the proposed changes to the volume thresholds and rebates are
reasonable and competitive when compared to incentive structures at
other exchanges.
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\19\ See Section B of the PHLX Pricing Schedule entitled
``Customer Rebate Program;'' ISE Gemini's Qualifying Tier Thresholds
(page 6 of the ISE Gemini Fee Schedule); and CBOE's Volume Incentive
Program (VIP). CBOE's Volume Incentive Program (``VIP'') pays
certain tiered rebates to Trading Permit Holders for electronically
executed multiply-listed option orders which include AIM orders.
Note that some of these exchanges base these rebate programs on the
percentage of total national Public Customer volume traded on their
respective exchanges, which the Exchange is not proposing to do.
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The Exchange continues to believe it is equitable and not unfairly
discriminatory to only have these rebate structures for Public
Customers and Market Makers in Non-Auction transactions. The practice
of incentivizing increased Public Customer order flow is common in the
options markets. With this proposal, Public Customers benefit from the
opportunity to obtain a higher rebate. Further, Market Makers can
provide high volumes of liquidity and lowering their Non-Auction
Transaction fees will potentially help attract a higher level of Market
Maker order flow and create liquidity, which the Exchange believes will
ultimately benefit all Participants trading on BOX.
Auction Transactions
The Exchange believes that establishing a flat $0.25 fee for all
Facilitation and Solicitation Orders is reasonable, equitable and not
unfairly discriminatory. While the proposal will potentially raise the
fees for certain Participants submitting Facilitation and Solicitation
Orders, the Exchange believes the fee is reasonable as it is equal to
highest fee that Participants are currently charged for these Orders
under the volume based tier schedule in Section I.B.1., and will also
be capped at $25,000 for each Participant per month. Further, the fee
cap will act as a volume based discount for any Participants who meet
the cap each month. The Exchange believes the fee cap is reasonable as
it is lower than similar fee caps at other options exchanges.\20\
Finally, the Exchange believes that a $0.25 fee for Facilitation and
Solicitation Orders is equitable and not unfairly discriminatory as all
Participants will be charged the same fee with the exception of Public
Customers, who are not able to submit these Orders in the BOX trading
system.
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\20\ See Section H of the ISE Fee Schedule ``Crossing Fee
Caps.'' Transactions that are part of the origination or contra side
of a Crossing Order (contracts that are submitted as part of a
Facilitation, Solicitation, PIM, Block or QCC order) are capped at
$75,000 per month.
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Finally, the Exchange believes that removing references to
Facilitation and Solicitation Orders in the Tiered Fee Schedule in
Section I.B.1. is reasonable, equitable and not unfairly
discriminatory. The Exchange believes it is reasonable because
Facilitation and Solicitation Orders will no longer be charged
according to this section of the fee schedule, and therefore it is
appropriate to both remove these references and specify that the
monthly ADV will be now only be based on the total Primary Improvement
Order contract quantity submitted to the PIP as calculated at the end
of the month. The Exchange believes it is equitable and not unfairly
discriminatory to remove these references as they apply equally to all
Participants on BOX.
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 Exchange believes that the proposed adjustments to fees and
rebates in the Non-Auction Transactions fee structure will not impose a
burden on competition among various Exchange Participants. Rather, BOX
believes that the changes will result in the Participants being charged
appropriately for these transactions and are designed to enhance
competition in Non-Auction transactions on BOX. Submitting an order is
entirely voluntary and Participants can determine which type of order
they wish to submit, if any, to the Exchange. Further, the Exchange
believes that this proposal will enhance competition between exchanges
because it is designed to allow the Exchange to better compete with
other exchanges for order flow.
The Exchange believes that adopting a flat fee for Facilitation and
Solicitation Orders will not impose a burden on competition because all
Participants will be affected to the same extent, with the exception of
Public Customers who cannot submit these Orders in the BOX trading
system.
Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can
[[Page 29118]]
readily favor competing exchanges. In such an environment, the Exchange
must continually review, and consider adjusting, its fees and credits
to remain competitive with other exchanges. For the reasons described
above, the Exchange believes that the proposed rule change reflects
this competitive environment.
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 \21\ and Rule 19b-4(f)(2)
thereunder,\22\ because it establishes or changes a due, or fee.
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\21\ 15 U.S.C. 78s(b)(3)(A)(ii).
\22\ 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 the rule
change if it appears to the Commission that the action is necessary or
appropriate in the public interest, for the protection of investors, or
would otherwise further 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BOX-2015-17 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-2015-17. 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 (https://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-2015-17, and should be
submitted on or before June 10, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-12173 Filed 5-19-15; 8:45 am]
BILLING CODE 8011-01-P
