Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Temporarily Suspend Certain Exchange Rules Concerning Approval of a New Options Participant, 34438-34441 [2012-14070]
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34438
Federal Register / Vol. 77, No. 112 / Monday, June 11, 2012 / Notices
of the Act 9 and Rule 19b–4(f)(6)(iii)
thereunder.10
A proposed rule change filed under
Rule 19b–4(f)(6) 11 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),12 the
Commission may 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 five-day prefiling requirement and the 30-day
operative delay so that the proposed
rule change may become operative
immediately upon filing. The
Commission notes that the Exchange is
proposing that certain of its rules
relating to membership requirements be
temporarily suspended so that Apex
Clearing can be provisionally approved
as an ISE Member. The proposed relief
does not exempt Apex Clearing from
Exchange rule requirements governing
Members. Apex Clearing would have a
30 calendar day grace period within
which to apply for and be approved
under relevant Exchange rules.
Moreover, the Commission believes that
waiver of the 30-day operative delay is
appropriate to ensure a smooth
transition of PFSI operations to Apex
Clearing. In particular, given the
rapidity with which events have
developed, waiver of the 30-day
operative delay is necessary to avoid
significant disruption to PFSI’s existing
customers and the market generally.
Therefore, the Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest and
designates the proposed rule change as
operative upon filing.13
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
9 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6)(iii). 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 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 Commission is
waiving this five-day pre-filing requirement.
11 17 CFR 240.19b–4(f)(6).
12 17 CFR 240.19b–4(f)(6)(iii).
13 For purposes only of waiving the 30-day
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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10 17
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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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–14071 Filed 6–8–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
[Release No. 34–67130; File No. SR–BOX–
2012–006]
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–ISE–2012–51 on the subject
line.
Self-Regulatory Organizations; BOX
Options Exchange LLC; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To
Temporarily Suspend Certain
Exchange Rules Concerning Approval
of a New Options Participant
Paper Comments
June 5, 2012.
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–ISE–2012–51. 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 the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–ISE–
2012–51 and should be submitted on or
before July 2, 2012.
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Pursuant to Section 19(b)(1) under the
Securities Exchange Act of 1934 (the
‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 5,
2012, BOX Options Exchange LLC (the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act,3 and
Rule 19b–4(f)(6) 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
BOX Options Exchange LLC (the
‘‘Exchange’’) is proposing to temporarily
suspend the requirements of Exchange
Rule 2050 and related Exchange rules
concerning the approval of new Options
Participants in order to approve Apex
Clearing Corporation, f/k/a Ridge
Clearing and Outsourcing Solutions,
Inc. (‘‘Apex Clearing’’) as an Options
Participant on BOX Market LLC, an
options trading facility of the Exchange
(‘‘BOX’’), subject to Apex Clearing
complying with Exchange rules for a
new Options Participant within 30
calendar days of the date that Apex
Clearing is provisionally approved as an
Options Participant. The Exchange is
14 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)(iii).
4 17 CFR 240.19b–4(f)(6).
1 15
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Federal Register / Vol. 77, No. 112 / Monday, June 11, 2012 / Notices
also proposing to accept Apex Clearing’s
assumption of all of the existing clearing
agreements and arrangements currently
in effect between Penson Financial
Services Inc. (‘‘PFSI’’) and various other
Options Participants by execution of a
global agreement thereto. A copy of this
filing is available on the Exchange’s
Web site at www.boxexchange.com, at
the Exchange’s principal office, and at
the Commission’s Public Reference
Room.
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.
srobinson on DSK4SPTVN1PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes this rule filing
to temporarily suspend the
requirements of Exchange Rule 2050
and related rules regarding the approval
of BOX Options Participants in order to
immediately approve Apex Clearing as
a BOX Options Participant. The
Exchange proposes this temporary
suspension on an emergency basis to
ensure that Apex Clearing can continue
the clearing operations of PFSI without
unnecessary disruption, which could
have a significant collateral impact to a
number of other Options Participants.
The proposed temporary suspension is
contingent upon Apex having complied
with all Exchange Rules for a new BOX
Options Participant within 30 calendar
days of the date Apex Clearing is
provisionally approved as a BOX
Options Participant pursuant to this
filing.
On May 31, 2012, Apex Clearing
Holdings, LLC (‘‘Apex Holdings’’), Apex
Clearing Solutions, LLC, Broadridge
Financial Solutions, Inc. (‘‘Broadridge’’),
PFSI and Penson Worldwide, Inc.
(‘‘PWI’’) (together, the ‘‘Parties’’)
consummated a transaction resulting in
a change in ownership of Apex
Clearing.5 Broadridge, Apex Holdings,
5 Prior to the Transaction, Apex Clearing’s name
was Ridge Clearing & Outsourcing Solutions, Inc.
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PWI and PFSI each made capital
investments in Apex Holdings, the
holding company parent of Apex
Clearing. PFSI also assigned all of its
U.S. clearing contracts and all customer
and introducing broker proprietary
accounts along with key personnel to
Apex Clearing (the ‘‘Transferring
Accounts’’).6
As a result of the transaction, Apex
Clearing, which is not a BOX Options
Participant, will provide the clearing
and execution services currently
provided to the Transferring Accounts
by PFSI. On May 31, 2012, Apex
Clearing submitted an application for
approval as a BOX Options Participant.
However, because of the expedited
nature of the transaction, Apex Clearing
was unable to fully comply with
Exchange Rule 2050 and related rules
applicable to new BOX Options
Participants. Because of the need for
seamless continuity with respect to the
Transferring Accounts, Apex Clearing
has requested that the Exchange
temporarily suspend its new Options
Participant rules in order to enable
Apex Clearing’s approval as a BOX
Options Participant on an expedited
basis. Pursuant to its request, Apex
Clearing will fully comply with the
Exchange’s new Options Participant
requirements within 30 calendar days
after the provisional approval.
Exchange Rule 2050 requires any
applications for status as an Options
Participant to be made to the Exchange
and to contain such information as may
be required by the Exchange rules.
When a corporate acquisition concerns
an asset transfer only, and not an
acquisition of the corporate entity, BOX
Options Participant status cannot be
transferred to the acquiring entity. The
entity that proposes to continue
acquired business operations of a BOX
Options Participant must be separately
approved as a BOX Options Participant.
Among other things, to be approved
as a BOX Options Participant, the
applicant must provide:
• An agreement for the applicant to
be regulated by the Exchange and
recognize that the Exchange is obligated
to undertake to enforce compliance with
the provisions of the Exchange Rules, its
By-Laws, its interpretations and policies
and with the provisions of the Act and
Prior to the transaction, Ridge Clearing &
Outsourcing Solutions, Inc. contributed its
outsourcing operations and all associated personnel
and systems to its affiliated entity, Broadridge
Securities Processing Solutions, LLC (‘‘BSPS’’)
where it will continue to provide operations
support and outsourcing services to a number of
broker-dealers, including Apex Clearing.
6 See Penson Worldwide, Inc. Form 8–K dated
May 31, 2012.
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34439
regulations thereunder (Exchange Rule
2010).
• A written application with the
name and address of the applicant as
well as an organizational chart and a
description of the applicant’s proposed
activities on BOX.
• A list and descriptive identification
of those persons associated with the
applicant who are its executive officers,
directors, principal shareholders, and
general partners (Exchange Rule
2050(g)).
• An agreement to maintain and make
available to the Exchange such books
and records as may be required to be
maintained by the Commission or the
Exchange Rules (Exchange Rule
2050(a)).
• Such other reasonable information
with respect to the applicant as the
Exchange may require.
In addition, the Exchange reviews
whether the applicant meets federal and
Exchange capital requirements and
whether it has adopted controls and
procedures to comply with Exchange
rules.
Due to the amount of information an
applicant is required to provide and
have completed prior to being approved
as an Options Participant, the approval
process generally takes several weeks to
complete. The length of time varies
based on the timing of the applicant’s
response to requests for information and
documentation.
As proposed, Apex Clearing will
continue the clearing and certain other
operations of PFSI as of June 6, 2012. In
order to avoid interruption of the
services PFSI currently provides to
other BOX Options Participants, the
Exchange believes that Apex Clearing
should be approved immediately as a
BOX Options Participant. The Exchange
notes that Apex Clearing is already a
registered broker dealer and FINRA
member, which are two characteristics
that make Apex Clearing eligible for
becoming a BOX Options Participant.
See Exchange Rule 2020(a).
The Exchange therefore proposes
providing Apex Clearing with a
temporary suspension of Exchange Rule
2050 and other rules related to approval
of status as a BOX Options Participant
and approval of a proposed Options
Participant’s associated persons, and
immediately approving Apex Clearing
as a BOX Options Participant. As
proposed, this temporary suspension is
contingent upon:
• Apex Clearing providing the
Exchange with sufficient information to
confirm that Apex Clearing will meet its
capital requirements as a BOX Options
Participant; and
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Federal Register / Vol. 77, No. 112 / Monday, June 11, 2012 / Notices
• Within 30 calendar days of Apex
Clearing’s approval as a BOX Options
Participant under this proposed filing,
Apex Clearing and its associated
persons will have complied with the
Exchange’s new Options Participant
requirements as set forth in BOX Rules
2000 Series.
As proposed, if Apex Clearing does
not comply with all applicable BOX
Options Participant application
requirements within 30 calendar days of
the effective date of this filing, its status
as an approved BOX Options Participant
will no longer be effective.
In addition, the Exchange proposes to
permit Apex Clearing to assume all
existing clearing agreements and
arrangements currently in effect with
other BOX Options Participants by
execution of global agreements thereto.
Notice of such assumption will be
provided to impacted Options
Participants through issuance of a
Regulatory Circular prior to the effective
date thereof.
srobinson on DSK4SPTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with Section
6(b) 7 of the Securities Exchange Act of
1934 (the ‘‘Act’’), in general, and
furthers the objectives of Section
6(b)(5) 8 in particular in that it is
designed to promote just and equitable
principles of trade, to prevent
fraudulent and manipulative acts, to
remove impediments to and to 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 permitting the expeditious
approval of Apex Clearing as a BOX
Options Participant will avoid
interruption of the services PFSI
currently provides to other BOX
Options Participants. Based on
information and representations
provided by Apex Clearing, a temporary
suspension of certain Exchange rules is
needed based on the expedited nature of
the transaction to enable seamless
continuity with respect to the
transferring accounts. Consequently, the
Exchange believes that temporary
suspension of its requirements for the
applications and approval of new BOX
Options Participants so that Apex
Clearing can be approved immediately
as a BOX Options Participant will help
to foster cooperation and coordination
with persons engaged in facilitating
transactions in securities and is
consistent with the Act.
7 15
8 15
U.S.C. 78f(b).
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 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 written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 9 and Rule
19b–4(f)(6) thereunder.10 Because the
proposed rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 11 and Rule 19b–4(f)(6)(iii)
thereunder.12
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, pursuant
to Rule 19b–4(f)(6)(iii),14 the
Commission may 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 five-day prefiling requirement and the 30-day
operative delay so that the proposed
rule change may become operative
immediately upon filing. The
Commission notes that the Exchange is
proposing that certain of its rules
relating to membership requirements be
temporarily suspended so that Apex
9 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
11 15 U.S.C. 78s(b)(3)(A).
12 17 CFR 240.19b–4(f)(6)(iii). 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 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 Commission is
waiving this five-day pre-filing requirement.
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6)(iii).
10 17
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Clearing can be provisionally approved
as a BOX Options Participant. The
proposed relief does not exempt Apex
Clearing from Exchange rule
requirements governing Options
Participants. Apex Clearing would have
a 30 calendar day grace period within
which to apply for and be approved
under relevant Exchange rules.
Moreover, the Commission believes that
waiver of the 30-day operative delay is
appropriate to ensure a smooth
transition of PFSI operations to Apex
Clearing. In particular, given the
rapidity with which events have
developed, waiver of the 30-day
operative delay is necessary to avoid
significant disruption to PFSI’s existing
customers and the market generally.
Therefore, the Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest and
designates the proposed rule change as
operative upon filing.15
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–BOX–2012–006 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–BOX–2012–006. This file
15 For purposes only of waiving the 30-day
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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Federal Register / Vol. 77, No. 112 / Monday, June 11, 2012 / Notices
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 the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–BOX–
2012–006 and should be submitted on
or before July 2, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–14070 Filed 6–8–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67120; File No. SR–C2–
2012–017]
Self-Regulatory Organizations; C2
Options Exchange, Incorporated;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend the Fees Schedule
srobinson on DSK4SPTVN1PROD with NOTICES
June 5, 2012.
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 June 1,
2012, C2 Options Exchange,
Incorporated (the ‘‘Exchange’’ or ‘‘C2’’)
filed with the Securities and Exchange
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III 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 amend its
Fees Schedule. The text of the proposed
rule change is available on the
Exchange’s Web site (https://
www.c2exchange.com/Legal/), at the
Exchange’s Office of the Secretary, and
at the Commission.
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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fees Schedule with regards to
connectivity fees. C2 recently moved its
trading systems over to the Equinix NY4
facility (‘‘NY4’’). In addition to 1 Gigabit
Ethernet (‘‘1 Gbps’’) network access,
NY4 has capacity to accommodate 10
Gigabit Ethernet (‘‘10 Gbps’’) network
access. The Exchange would like to
make such a connection available to C2
market participants. However, the
equipment and infrastructure necessary
to provide the 10 Gbps connection is
more expensive than that necessary to
provide a 1 Gbps connection. As such,
the Exchange proposes to adopt a $1,000
per month fee for access to a 10 Gbps
Network Access Port ($2,000 for
Sponsored Users), and to clarify on the
Fees Schedule that the connection
currently being provided for $500 per
month ($1,000 for Sponsored Users) is
for a 1 Gbps connection to a Network
Access Port. C2 market participants will
be able to elect to connect to C2’s
trading system via either a 1 Gbps or 10
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34441
Gbps Network Access port. Regardless
of which is chosen, the Network Access
Port fee will be assessed for each port
that provides direct access to C2’s
trading system. The Exchange currently
charges a different rate for regular access
and Sponsored User access, and merely
proposes to increase the rates in equal
proportion.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.3 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 4 requirements that the rules of
an exchange be designed to promote just
and equitable principles of trade, to
prevent fraudulent and manipulative
acts, to remove impediments to and to
perfect the mechanism for a free and
open market and a national market
system, and, in general, to protect
investors and the public interest, and
with Section 6(b)(4) of the Act,5 which
provides that Exchange rules may
provide for the equitable allocation of
reasonable dues, fees, and other charges
among its Trading Permit Holders and
other persons using its facilities.
Assessing a higher fee for 10 Gbps
connectivity than for 1 Gbps
connectivity is reasonable because 10
Gbps connectivity is more robust than 1
Gbps connectivity, and is equitable and
not unfairly discriminatory because 10
Gbps connectivity requires more costly
equipment and maintenance, and the
Exchange must recoup the costs related
to providing 10 Gbps connectivity.
Further, C2 market participants may
still elect for the less-expensive 1 Gbps
connectivity. Finally, the amount of the
fee for 10 Gbps connectivity is less than
the amount of the fees for 10 Gbps
connectivity assessed by other
exchanges.6
Assessing higher fees for Sponsored
Users is equitable and not unfairly
discriminatory because Sponsored Users
are able to access the Exchange and use
the equipment provided without
purchasing a trading permit. As such,
Trading Permit Holders who have
purchased a trading permit will have a
3 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
5 15 U.S.C. 78f(b)(4).
6 See New York Stock Exchange Price List, page
13, which lists monthly prices of $12,000–61,500
for different types of 10 Gbps connectivity (along
with initial charges of $10,000–50,000) and
International Securities Exchange Schedule of Fees,
page 9, which lists a low-latency Ethernet network
access fee of $7,000 per month.
4 15
E:\FR\FM\11JNN1.SGM
11JNN1
]]>Agencies
[Federal Register Volume 77, Number 112 (Monday, June 11, 2012)]
[Notices]
[Pages 34438-34441]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14070]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67130; File No. SR-BOX-2012-006]
Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Temporarily Suspend Certain Exchange Rules Concerning Approval of a New
Options Participant
June 5, 2012.
Pursuant to Section 19(b)(1) under the Securities Exchange Act of
1934 (the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby
given that on June 5, 2012, BOX Options Exchange LLC (the ``Exchange'')
filed with the Securities and Exchange Commission (the ``Commission'')
the proposed rule change as described in Items I and II below, which
Items have been prepared by the Exchange. The Exchange filed the
proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the
Act,\3\ and Rule 19b-4(f)(6) 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
BOX Options Exchange LLC (the ``Exchange'') is proposing to
temporarily suspend the requirements of Exchange Rule 2050 and related
Exchange rules concerning the approval of new Options Participants in
order to approve Apex Clearing Corporation, f/k/a Ridge Clearing and
Outsourcing Solutions, Inc. (``Apex Clearing'') as an Options
Participant on BOX Market LLC, an options trading facility of the
Exchange (``BOX''), subject to Apex Clearing complying with Exchange
rules for a new Options Participant within 30 calendar days of the date
that Apex Clearing is provisionally approved as an Options Participant.
The Exchange is
[[Page 34439]]
also proposing to accept Apex Clearing's assumption of all of the
existing clearing agreements and arrangements currently in effect
between Penson Financial Services Inc. (``PFSI'') and various other
Options Participants by execution of a global agreement thereto. A copy
of this filing is available on the Exchange's Web site at
www.boxexchange.com, at the Exchange's principal office, and at the
Commission's Public Reference Room.
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 this rule filing to temporarily suspend the
requirements of Exchange Rule 2050 and related rules regarding the
approval of BOX Options Participants in order to immediately approve
Apex Clearing as a BOX Options Participant. The Exchange proposes this
temporary suspension on an emergency basis to ensure that Apex Clearing
can continue the clearing operations of PFSI without unnecessary
disruption, which could have a significant collateral impact to a
number of other Options Participants. The proposed temporary suspension
is contingent upon Apex having complied with all Exchange Rules for a
new BOX Options Participant within 30 calendar days of the date Apex
Clearing is provisionally approved as a BOX Options Participant
pursuant to this filing.
On May 31, 2012, Apex Clearing Holdings, LLC (``Apex Holdings''),
Apex Clearing Solutions, LLC, Broadridge Financial Solutions, Inc.
(``Broadridge''), PFSI and Penson Worldwide, Inc. (``PWI'') (together,
the ``Parties'') consummated a transaction resulting in a change in
ownership of Apex Clearing.\5\ Broadridge, Apex Holdings, PWI and PFSI
each made capital investments in Apex Holdings, the holding company
parent of Apex Clearing. PFSI also assigned all of its U.S. clearing
contracts and all customer and introducing broker proprietary accounts
along with key personnel to Apex Clearing (the ``Transferring
Accounts'').\6\
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\5\ Prior to the Transaction, Apex Clearing's name was Ridge
Clearing & Outsourcing Solutions, Inc. Prior to the transaction,
Ridge Clearing & Outsourcing Solutions, Inc. contributed its
outsourcing operations and all associated personnel and systems to
its affiliated entity, Broadridge Securities Processing Solutions,
LLC (``BSPS'') where it will continue to provide operations support
and outsourcing services to a number of broker-dealers, including
Apex Clearing.
\6\ See Penson Worldwide, Inc. Form 8-K dated May 31, 2012.
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As a result of the transaction, Apex Clearing, which is not a BOX
Options Participant, will provide the clearing and execution services
currently provided to the Transferring Accounts by PFSI. On May 31,
2012, Apex Clearing submitted an application for approval as a BOX
Options Participant. However, because of the expedited nature of the
transaction, Apex Clearing was unable to fully comply with Exchange
Rule 2050 and related rules applicable to new BOX Options Participants.
Because of the need for seamless continuity with respect to the
Transferring Accounts, Apex Clearing has requested that the Exchange
temporarily suspend its new Options Participant rules in order to
enable Apex Clearing's approval as a BOX Options Participant on an
expedited basis. Pursuant to its request, Apex Clearing will fully
comply with the Exchange's new Options Participant requirements within
30 calendar days after the provisional approval.
Exchange Rule 2050 requires any applications for status as an
Options Participant to be made to the Exchange and to contain such
information as may be required by the Exchange rules. When a corporate
acquisition concerns an asset transfer only, and not an acquisition of
the corporate entity, BOX Options Participant status cannot be
transferred to the acquiring entity. The entity that proposes to
continue acquired business operations of a BOX Options Participant must
be separately approved as a BOX Options Participant.
Among other things, to be approved as a BOX Options Participant,
the applicant must provide:
An agreement for the applicant to be regulated by the
Exchange and recognize that the Exchange is obligated to undertake to
enforce compliance with the provisions of the Exchange Rules, its By-
Laws, its interpretations and policies and with the provisions of the
Act and regulations thereunder (Exchange Rule 2010).
A written application with the name and address of the
applicant as well as an organizational chart and a description of the
applicant's proposed activities on BOX.
A list and descriptive identification of those persons
associated with the applicant who are its executive officers,
directors, principal shareholders, and general partners (Exchange Rule
2050(g)).
An agreement to maintain and make available to the
Exchange such books and records as may be required to be maintained by
the Commission or the Exchange Rules (Exchange Rule 2050(a)).
Such other reasonable information with respect to the
applicant as the Exchange may require.
In addition, the Exchange reviews whether the applicant meets
federal and Exchange capital requirements and whether it has adopted
controls and procedures to comply with Exchange rules.
Due to the amount of information an applicant is required to
provide and have completed prior to being approved as an Options
Participant, the approval process generally takes several weeks to
complete. The length of time varies based on the timing of the
applicant's response to requests for information and documentation.
As proposed, Apex Clearing will continue the clearing and certain
other operations of PFSI as of June 6, 2012. In order to avoid
interruption of the services PFSI currently provides to other BOX
Options Participants, the Exchange believes that Apex Clearing should
be approved immediately as a BOX Options Participant. The Exchange
notes that Apex Clearing is already a registered broker dealer and
FINRA member, which are two characteristics that make Apex Clearing
eligible for becoming a BOX Options Participant. See Exchange Rule
2020(a).
The Exchange therefore proposes providing Apex Clearing with a
temporary suspension of Exchange Rule 2050 and other rules related to
approval of status as a BOX Options Participant and approval of a
proposed Options Participant's associated persons, and immediately
approving Apex Clearing as a BOX Options Participant. As proposed, this
temporary suspension is contingent upon:
Apex Clearing providing the Exchange with sufficient
information to confirm that Apex Clearing will meet its capital
requirements as a BOX Options Participant; and
[[Page 34440]]
Within 30 calendar days of Apex Clearing's approval as a
BOX Options Participant under this proposed filing, Apex Clearing and
its associated persons will have complied with the Exchange's new
Options Participant requirements as set forth in BOX Rules 2000 Series.
As proposed, if Apex Clearing does not comply with all applicable
BOX Options Participant application requirements within 30 calendar
days of the effective date of this filing, its status as an approved
BOX Options Participant will no longer be effective.
In addition, the Exchange proposes to permit Apex Clearing to
assume all existing clearing agreements and arrangements currently in
effect with other BOX Options Participants by execution of global
agreements thereto. Notice of such assumption will be provided to
impacted Options Participants through issuance of a Regulatory Circular
prior to the effective date thereof.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) \7\ of the Securities Exchange Act of 1934 (the ``Act''),
in general, and furthers the objectives of Section 6(b)(5) \8\ in
particular in that it is designed to promote just and equitable
principles of trade, to prevent fraudulent and manipulative acts, to
remove impediments to and to 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
permitting the expeditious approval of Apex Clearing as a BOX Options
Participant will avoid interruption of the services PFSI currently
provides to other BOX Options Participants. Based on information and
representations provided by Apex Clearing, a temporary suspension of
certain Exchange rules is needed based on the expedited nature of the
transaction to enable seamless continuity with respect to the
transferring accounts. Consequently, the Exchange believes that
temporary suspension of its requirements for the applications and
approval of new BOX Options Participants so that Apex Clearing can be
approved immediately as a BOX Options Participant will help to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities and is consistent with the Act.
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\7\ 15 U.S.C. 78f(b).
\8\ 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 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 written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6)(iii) thereunder.\12\
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6)(iii). 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 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 Commission is waiving this five-day pre-filing
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, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange has asked the Commission to waive the five-day pre-
filing requirement and the 30-day operative delay so that the proposed
rule change may become operative immediately upon filing. The
Commission notes that the Exchange is proposing that certain of its
rules relating to membership requirements be temporarily suspended so
that Apex Clearing can be provisionally approved as a BOX Options
Participant. The proposed relief does not exempt Apex Clearing from
Exchange rule requirements governing Options Participants. Apex
Clearing would have a 30 calendar day grace period within which to
apply for and be approved under relevant Exchange rules. Moreover, the
Commission believes that waiver of the 30-day operative delay is
appropriate to ensure a smooth transition of PFSI operations to Apex
Clearing. In particular, given the rapidity with which events have
developed, waiver of the 30-day operative delay is necessary to avoid
significant disruption to PFSI's existing customers and the market
generally. Therefore, the Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest and designates the proposed rule change as operative
upon filing.\15\
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\15\ For purposes only of waiving the 30-day 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. 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-2012-006 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BOX-2012-006. This
file
[[Page 34441]]
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 the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BOX-2012-006 and should be
submitted on or before July 2, 2012.
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\16\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14070 Filed 6-8-12; 8:45 am]
BILLING CODE 8011-01-P
