Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Pilot Program That Suspends Certain Obvious Error Provisions During Limit Up-Limit Down States in Securities That Underlie Options Traded on the Exchange, 19695-19697 [2014-07885]

Download as PDF Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Notices 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. available publicly. All submissions should refer to File Number SR– NYSEMKT–2014–31 and should be submitted on or before April 30, 2014. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 Kevin M. O’Neill, Deputy Secretary. In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. [FR Doc. 2014–07952 Filed 4–8–14; 8:45 am] BILLING CODE 8011–01–P 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– NYSEMKT–2014–31 on the subject line. TKELLEY on DSK3SPTVN1PROD with NOTICES 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: Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Pilot Program That Suspends Certain Obvious Error Provisions During Limit Up-Limit Down States in Securities That Underlie Options Traded on the Exchange 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–NYSEMKT–2014–31. 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 VerDate Mar<15>2010 17:54 Apr 08, 2014 Jkt 232001 19695 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71855; File No. SR–BOX– 2014–12] April 3, 2014. 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 2, 2014, 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 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 Interpretive Material 1 to Rule 7080 to extend, through February 20, 2015, the pilot program that suspends certain obvious error provisions during limit up-limit down states in securities that underlie options traded on the Exchange. 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. 28 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to extend through February 20, 2015 the pilot that permits the Exchange to suspend certain provisions in BOX Rule 7170 (Obvious and Catastrophic Errors) during limit up-limit down states in securities that underlie options traded on the Exchange (‘‘Pilot’’). The Pilot is currently scheduled to expire on April 8, 2014.3 The Pilot allows the Exchange to exclude transactions executed during a Limit State or Straddle State from provisions in BOX Rule 7170. This does not include Rule 7170(e) and (f), which specify when a trade resulting from an erroneous print or quote in the underlying security may be adjusted or busted. The remaining provisions in BOX Rule 7170 provide a process by which a transaction may be busted or adjusted when the execution price of a transaction deviates from the option’s theoretical price by a certain amount. Under these provisions, the theoretical price is the national best bid price for the option with respect to a sell order and the national best offer for the option with respect to a buy order.4 During a Limit State or Straddle State, options prices may deviate substantially from those available prior to or following the limit state. Consequently, the Exchange 3 See Securities Exchange Act Release No. 69368 (April 12, 2013) 78 FR 23323 (April 18, 2013) (SR– BOX–2013–20). 4 Rule 7170 provides that if there are no quotes from other options exchanges for comparison purposes, the theoretical price will be determined by designated personnel in the MRC. However, given that options market makers and other industry professionals will have difficulty pricing options during Limit States and Straddle States, the Exchange does not believe it would be reasonable for BOX personnel to derive theoretical prices to be applied to transactions executed during such unusual market conditions. E:\FR\FM\09APN1.SGM 09APN1 19696 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Notices TKELLEY on DSK3SPTVN1PROD with NOTICES believed that these provisions would be impracticable given the lack of a reliable national best bid or offer in the options market during Limit States and Straddle States, and could produce undesirable effects. The Exchange proposes to extend the operation of this Pilot to analyze the impact of the Limit and Straddle States.5 The Exchange will also continue to evaluate whether adopting a provision for reviewing trades on its own motion during Limit and Straddle States is necessary and appropriate. Additionally, the Exchange represents that it will conduct its own analysis concerning the elimination of the obvious error rule during Limit and Straddle States and agrees to provide the Commission with relevant data to assess the impact of the Pilot. As part of its analysis, the Exchange will evaluate (1) the options market quality during Limit and Straddle States, (2) assess the character of incoming order flow and transactions during Limit and Straddle States, and (3) review any complaints from members and their customers concerning executions during Limit and Straddle States. The Exchange also agrees to provide to the Commission data requested to evaluate the impact of the elimination of the obvious error rule, including data relevant to assessing the various analyses noted above. Specifically, the Exchange agrees to provide the following data to the Commission to help evaluate the impact of the Pilot. By September 30, 2014 the Exchange shall provide an assessment that evaluates the statistical and economic impact of Limit and Straddle States on liquidity and market quality in the options markets; and assess whether the lack of obvious error rules in effect during the Straddle and Limit States is problematic. On a monthly basis, the Exchange shall provide both the Commission and public a dataset containing the data for each Straddle and Limit State in optionable stocks.6 5 During the Pilot, the Exchange will provide the Commission with data regarding how the Limit and Straddle States affect the quality of the options market. 6 The dataset will include the options for each underlying security that reaches a limit or straddle state and has at least one (1) trade on the Exchange during the straddle or limit state. For each of those options affected the data record will contain the stock symbol, option symbol, time at the start of the straddle or limit state, an indicator for whether it is a straddle or limit state. For activity on the Exchange the data record will contain the executed volume, time-weighted quoted bid-ask spread, timeweighted average quoted depth at the bid, timeweighted average quoted depth at the offer, high execution price, low execution price, number of trades for which a request for review for error was received during straddle or limit states, an indicator VerDate Mar<15>2010 17:54 Apr 08, 2014 Jkt 232001 Further, the Exchange will provide the Commission a historical dataset from the beginning of the Pilot at the Exchange’s earliest convenience.7 2. Statutory Basis The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act,8 in general, and Section 6(b)(5) of the Act,9 in particular, in that it is designed to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism for a free and open market and a national market system and, in general, to protect investors and the public interest. In particular, the proposed extension will allow the Pilot to remain in effect until the end of the pilot period of the Plan to Address Extraordinary Market Volatility (‘‘Plan’’).10 The Exchange believes that it continues to be necessary and appropriate in the interest of promoting fair and orderly markets to exclude transactions executed during a Limit State or Straddle State from the provision of BOX Rule 7170. Specifically the Exchange believes the application of the current rule will be impracticable given the lack of a reliable national best bid or offer in the options market during Limit States and Straddle States, and that the resulting actions (i.e., busted trades or adjusted prices) may not be appropriate given market conditions. B. Self-Regulatory Organization’s Statement on Burden on Competition Because the proposed rule change does not impose any new or additional burden on BOX Options Participants, and only extends the current Pilot, the Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or variable for whether those options outlined above have a price change exceeding 30% during the underlying stock’s straddle or limit state compared to the last available option price as reported by OPRA before the start of the straddle or limit state (1 if observe 30% and 0 otherwise), and another indicator variable for whether the option price within five minutes of the underlying stock leaving straddle or limit state (or halt if applicable) is 30% away from the price before the start of the straddle or limit state. 7 Id. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(5). 10 See Securities Exchange Act Release No. 71649 (March 5, 2014), 79 FR 13696 (March 11, 2014) (Joint Industry Plan; Notice of Filing of the Seventh Amendment to the National Market System Plan to Address Extraordinary Market Volatility). PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate 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 The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange stated that waiver of this requirement is consistent with the protection of investors and the public interest because it will permit the Pilot, scheduled to end on April 8, 2014, to continue without interruption. The Exchange also stated that it believes the proposal is necessary and appropriate to assure a fair and orderly market during Limit States and Straddle States. For these reasons, the Commission believes that the proposed rule change presents no novel issues and that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission designates the proposed rule change to be 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 11 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6)(iii). As required under Rule 19b–4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. 13 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 12 17 E:\FR\FM\09APN1.SGM 09APN1 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Notices 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 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–2014–12 on the subject line. TKELLEY on DSK3SPTVN1PROD with NOTICES Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–BOX–2014–12. 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–BOX– 17:54 Apr 08, 2014 Jkt 232001 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–07885 Filed 4–8–14; 8:45 am] BILLING CODE 8011–01–P 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: VerDate Mar<15>2010 2014–12 and should be submitted on or before April 30, 2014. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71859; File No. SR–CBOE– 2014–029] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change To Enhance the Exchange Audit Trail April 3, 2014. 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 March 27, 2014, Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange 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 the Substance of the Proposed Rule Change The Exchange proposes to enhance its audit trail by adding an additional element to existing Rules 6.73 (Responsibility of Floor Brokers) and 7.12 (PAR Official). The text of the proposed rule change is provided below. (additions are italicized; deletions are [bracketed]) * * * * * Chicago Board Options Exchange, Incorporated Rules * * * * * Rule 6.73. Responsibilities of Floor Brokers (a)–(c) No changes. . . . Interpretations and Policies: .01–.04 No changes. .05 Representation. Pursuant to Rule 6.73(a), a Floor Broker’s representation of an order shall require the Floor 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 19697 Broker to electronically record the time the order is initially represented in the trading crowd via Exchange-approved functionality. * * * * * Rule 7.12. PAR Official (a) No change. (b) The PAR Official shall be responsible for the following obligations with respect to the classes of options assigned to him/her: (i)–(iv) No change. (v) A PAR Official shall electronically record the time an order is initially represented by the PAR Official in the trading crowd. * * * * * The text of the proposed rule change is also available on the Exchange’s Web site (https://www.cboe.com/AboutCBOE/ CBOELegalRegulatoryHome.aspx), at the Exchange’s Office of the Secretary, 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 is proposing to add a new interpretation and policy to Rule 6.73 and new language to Rule 7.12(b). The proposed change will require Floor Brokers and PAR Officials to electronically capture the time in which orders are initially verbally presented in the Exchange’s trading crowd via a ‘‘Represent Button’’ which will be located on PAR workstations and other Exchange-approved devices including, i.e. Floor Broker Workstation (‘‘FBW’’) and PULSe.3 This will enhance the 3 The Exchange notes that there are currently other devices utilized on the Exchange’s trading floor, but these devices are not utilized to represent orders in Exchange trading crowds and will not be required to have this functionality. E:\FR\FM\09APN1.SGM 09APN1

Agencies

[Federal Register Volume 79, Number 68 (Wednesday, April 9, 2014)]
[Notices]
[Pages 19695-19697]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-07885]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71855; File No. SR-BOX-2014-12]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Extend the Pilot Program That Suspends Certain Obvious Error Provisions 
During Limit Up-Limit Down States in Securities That Underlie Options 
Traded on the Exchange

April 3, 2014.
    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 2, 2014, 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 Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Interpretive Material 1 to Rule 7080 
to extend, through February 20, 2015, the pilot program that suspends 
certain obvious error provisions during limit up-limit down states in 
securities that underlie options traded on the Exchange. 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 self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in Sections A, B, and C below, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to extend through February 20, 2015 the pilot 
that permits the Exchange to suspend certain provisions in BOX Rule 
7170 (Obvious and Catastrophic Errors) during limit up-limit down 
states in securities that underlie options traded on the Exchange 
(``Pilot''). The Pilot is currently scheduled to expire on April 8, 
2014.\3\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 69368 (April 12, 
2013) 78 FR 23323 (April 18, 2013) (SR-BOX-2013-20).
---------------------------------------------------------------------------

    The Pilot allows the Exchange to exclude transactions executed 
during a Limit State or Straddle State from provisions in BOX Rule 
7170. This does not include Rule 7170(e) and (f), which specify when a 
trade resulting from an erroneous print or quote in the underlying 
security may be adjusted or busted.
    The remaining provisions in BOX Rule 7170 provide a process by 
which a transaction may be busted or adjusted when the execution price 
of a transaction deviates from the option's theoretical price by a 
certain amount. Under these provisions, the theoretical price is the 
national best bid price for the option with respect to a sell order and 
the national best offer for the option with respect to a buy order.\4\ 
During a Limit State or Straddle State, options prices may deviate 
substantially from those available prior to or following the limit 
state. Consequently, the Exchange

[[Page 19696]]

believed that these provisions would be impracticable given the lack of 
a reliable national best bid or offer in the options market during 
Limit States and Straddle States, and could produce undesirable 
effects.
---------------------------------------------------------------------------

    \4\ Rule 7170 provides that if there are no quotes from other 
options exchanges for comparison purposes, the theoretical price 
will be determined by designated personnel in the MRC. However, 
given that options market makers and other industry professionals 
will have difficulty pricing options during Limit States and 
Straddle States, the Exchange does not believe it would be 
reasonable for BOX personnel to derive theoretical prices to be 
applied to transactions executed during such unusual market 
conditions.
---------------------------------------------------------------------------

    The Exchange proposes to extend the operation of this Pilot to 
analyze the impact of the Limit and Straddle States.\5\ The Exchange 
will also continue to evaluate whether adopting a provision for 
reviewing trades on its own motion during Limit and Straddle States is 
necessary and appropriate.
---------------------------------------------------------------------------

    \5\ During the Pilot, the Exchange will provide the Commission 
with data regarding how the Limit and Straddle States affect the 
quality of the options market.
---------------------------------------------------------------------------

    Additionally, the Exchange represents that it will conduct its own 
analysis concerning the elimination of the obvious error rule during 
Limit and Straddle States and agrees to provide the Commission with 
relevant data to assess the impact of the Pilot. As part of its 
analysis, the Exchange will evaluate (1) the options market quality 
during Limit and Straddle States, (2) assess the character of incoming 
order flow and transactions during Limit and Straddle States, and (3) 
review any complaints from members and their customers concerning 
executions during Limit and Straddle States. The Exchange also agrees 
to provide to the Commission data requested to evaluate the impact of 
the elimination of the obvious error rule, including data relevant to 
assessing the various analyses noted above.
    Specifically, the Exchange agrees to provide the following data to 
the Commission to help evaluate the impact of the Pilot. By September 
30, 2014 the Exchange shall provide an assessment that evaluates the 
statistical and economic impact of Limit and Straddle States on 
liquidity and market quality in the options markets; and assess whether 
the lack of obvious error rules in effect during the Straddle and Limit 
States is problematic. On a monthly basis, the Exchange shall provide 
both the Commission and public a dataset containing the data for each 
Straddle and Limit State in optionable stocks.\6\ Further, the Exchange 
will provide the Commission a historical dataset from the beginning of 
the Pilot at the Exchange's earliest convenience.\7\
---------------------------------------------------------------------------

    \6\ The dataset will include the options for each underlying 
security that reaches a limit or straddle state and has at least one 
(1) trade on the Exchange during the straddle or limit state. For 
each of those options affected the data record will contain the 
stock symbol, option symbol, time at the start of the straddle or 
limit state, an indicator for whether it is a straddle or limit 
state. For activity on the Exchange the data record will contain the 
executed volume, time-weighted quoted bid-ask spread, time-weighted 
average quoted depth at the bid, time-weighted average quoted depth 
at the offer, high execution price, low execution price, number of 
trades for which a request for review for error was received during 
straddle or limit states, an indicator variable for whether those 
options outlined above have a price change exceeding 30% during the 
underlying stock's straddle or limit state compared to the last 
available option price as reported by OPRA before the start of the 
straddle or limit state (1 if observe 30% and 0 otherwise), and 
another indicator variable for whether the option price within five 
minutes of the underlying stock leaving straddle or limit state (or 
halt if applicable) is 30% away from the price before the start of 
the straddle or limit state.
    \7\ Id.
---------------------------------------------------------------------------

 2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\8\ in general, and Section 
6(b)(5) of the Act,\9\ in particular, in that it is designed to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism for a free and open market and a national market 
system and, in general, to protect investors and the public interest. 
In particular, the proposed extension will allow the Pilot to remain in 
effect until the end of the pilot period of the Plan to Address 
Extraordinary Market Volatility (``Plan'').\10\ The Exchange believes 
that it continues to be necessary and appropriate in the interest of 
promoting fair and orderly markets to exclude transactions executed 
during a Limit State or Straddle State from the provision of BOX Rule 
7170. Specifically the Exchange believes the application of the current 
rule will be impracticable given the lack of a reliable national best 
bid or offer in the options market during Limit States and Straddle 
States, and that the resulting actions (i.e., busted trades or adjusted 
prices) may not be appropriate given market conditions.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ See Securities Exchange Act Release No. 71649 (March 5, 
2014), 79 FR 13696 (March 11, 2014) (Joint Industry Plan; Notice of 
Filing of the Seventh Amendment to the National Market System Plan 
to Address Extraordinary Market Volatility).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    Because the proposed rule change does not impose any new or 
additional burden on BOX Options Participants, and only extends the 
current Pilot, the Exchange does not believe that the proposed rule 
change will impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate 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\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6)(iii). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
---------------------------------------------------------------------------

    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. The Exchange stated that waiver of this requirement is 
consistent with the protection of investors and the public interest 
because it will permit the Pilot, scheduled to end on April 8, 2014, to 
continue without interruption. The Exchange also stated that it 
believes the proposal is necessary and appropriate to assure a fair and 
orderly market during Limit States and Straddle States. For these 
reasons, the Commission believes that the proposed rule change presents 
no novel issues and that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Therefore, the Commission designates the proposed rule change to be 
operative upon filing.\13\
---------------------------------------------------------------------------

    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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

[[Page 19697]]

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-2014-12 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-BOX-2014-12. 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-BOX-2014-12 and should be 
submitted on or before April 30, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-07885 Filed 4-8-14; 8:45 am]
BILLING CODE 8011-01-P
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