Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Introduce New Risk Protections on the Exchange and Provide Enhancements to Current Risk Protections, 46990-46994 [2016-16974]
Download as PDF
<![CDATA[
46990
Federal Register / Vol. 81, No. 138 / Tuesday, July 19, 2016 / Notices
appropriate in the public interest, and
consistent with the protection of
investors to grant the Trust an
exemption under paragraph (e) of Rule
102 of Regulation M with respect to the
Fund, thus permitting the Fund to
redeem Shares of the Fund during the
continuous offering of such Shares.
Rule 10b–17
Rule 10b–17, with certain exceptions,
requires an issuer of a class of publicly
traded securities to give notice of certain
specified actions (for example, a
dividend distribution) relating to such
class of securities in accordance with
Rule 10b–17(b). Based on the
representations and the facts presented
in the Letter, and subject to the
conditions below, the Commission finds
that it is appropriate in the public
interest, and consistent with the
protection of investors, to grant the
Trust a conditional exemption from
Rule 10b–17 because market
participants will receive timely
notification of the existence and timing
of a pending distribution, and thus the
concerns that the Commission raised in
adopting Rule 10b–17 will not be
implicated.6
mstockstill on DSK3G9T082PROD with NOTICES
Conclusion
IT IS HEREBY ORDERED, pursuant to
Rule 101(d) of Regulation M, that the
Trust, based on the representations and
facts presented in the Letter, is exempt
from the requirements of Rule 101 with
respect to the Fund, thus permitting
persons who may be deemed to be
participating in a distribution of Shares
of the Fund to bid for or purchase such
Shares during their participation in
such distribution.
IT IS FURTHER ORDERED, pursuant
to Rule 102(e) of Regulation M, that the
Trust, based on the representations and
the facts presented in the Letter, is
exempt from the requirements of Rule
102 with respect to the Fund, thus
permitting the Fund to redeem Shares of
the Fund during the continuous offering
of such Shares.
IT IS FURTHER ORDERED, pursuant
to Rule 10b–17(b)(2), that the Trust,
based on the representations and the
facts presented in the Letter and subject
to the conditions below, is exempt from
6 We also note that timely compliance with Rule
10b–17(b)(1)(v)(a) and (b) would be impractical in
light of the Fund’s nature because it is not possible
for the Fund to accurately project ten days in
advance what dividend, if any, would be paid on
a particular record date. Further, the Commission
finds, based upon the representations of the
Requestors in the Letter, that the provision of the
notices as described in the Letter would not
constitute a manipulative or deceptive device or
contrivance comprehended within the purpose of
Rule 10b–17.
VerDate Sep<11>2014
19:39 Jul 18, 2016
Jkt 238001
the requirements of Rule 10b–17 with
respect to the transactions in the Shares
of the Fund.
This exemptive relief is subject to the
following conditions:
• The Trust will comply with Rule
10b–17, except for Rule 10b–
17(b)(1)(v)(a) and (b); and
• The Trust will provide the
information required by Rule 10b–
17(b)(1)(v)(a) and (b) to the Exchange as
soon as practicable before trading begins
on the ex-dividend date, but in no event
later than the time when the Exchange
last accepts information relating to
distributions on the day before the exdividend date.
This exemptive relief is subject to
modification or revocation at any time
the Commission determines that such
action is necessary or appropriate in
furtherance of the purposes of the
Exchange Act. This exemption is based
on the facts presented and the
representations made in the Letter. Any
different facts or representations may
require a different response. Persons
relying upon this exemptive relief shall
discontinue transactions involving the
Shares of the Fund, pending
presentation of the facts for the
Commission’s consideration, in the
event that any material change occurs
with respect to any of the facts or
representations made by the Requestors,
and as is the case with all preceding
letters, particularly with respect to the
close alignment between the market
price of Shares and the Fund’s NAV. In
addition, persons relying on this
exemption are directed to the anti-fraud
and anti-manipulation provisions of the
Exchange Act, particularly Sections 9(a),
10(b), and Rule 10b–5 thereunder.
Responsibility for compliance with
these and any other applicable
provisions of the federal securities laws
must rest with the persons relying on
this exemption. This Order should not
be considered a view with respect to
any other question that the proposed
transactions may raise, including, but
not limited to, the adequacy of the
disclosure concerning, and the
applicability of other federal or state
laws to, the proposed transactions.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Robert W. Errett,
Deputy Secretary.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78312; File No. SR–BOX–
2016–30]
Self-Regulatory Organizations; BOX
Options Exchange LLC; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Introduce
New Risk Protections on the Exchange
and Provide Enhancements to Current
Risk Protections
July 13, 2016.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 1,
2016, BOX Options Exchange LLC (the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to introduce
new risk protections on the Exchange
and provide enhancements to current
risk protections. 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.
[FR Doc. 2016–16999 Filed 7–18–16; 8:45 am]
BILLING CODE 8011–01–P
PO 00000
1 15
7 17
CFR 200.30–3(a)(6) and (9).
Frm 00105
Fmt 4703
Sfmt 4703
2 17
E:\FR\FM\19JYN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
19JYN1
Federal Register / Vol. 81, No. 138 / Tuesday, July 19, 2016 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to introduce new risk
protections on the Exchange and
provide enhancements to current risk
protections designed to aid Participants
in their risk management by
supplementing current protections with
new activity-based protections. In
particular, the Exchange proposes to
introduce new activity-based
protections for orders and quotes,
enhancements to the current protections
available for Market Makers on the
Exchange and provide maximum order
and quote quantity.
Maximum Order and Quote Quantity
The Exchange proposes to adopt Rule
7320 (Maximum Order and Quote
Quantity) to provide an additional risk
protection for orders and quotes entered
on BOX. Specifically, the system will
prevent orders or quotes from executing
or being placed on the BOX Book if the
size of the order or quote exceeds the
size protection designated by the
Participant submitting the order or
quote. The size protection is the
maximum size of an order or quote that
will be accepted by the system and
Participants may designate the size
protection on a class-by-class basis for
non-auction transactions. For auction
transactions, the Participant may
designate a size protection applicable to
all auction types only. For Complex
Orders, if any leg fails the validation,
then the entire Complex Order is
rejected.
In order to provide values for the size
protection, Participants must contact the
MOC.3 Additionally, the Exchange will
provide default values for the size
protection. The most restrictive (i.e., the
smallest value) between the Exchange
default and Participant-provided value
will be used. The Exchange notes that
this is not a novel proposal and another
exchange already has this feature.4
mstockstill on DSK3G9T082PROD with NOTICES
Activity-Based Protections
The Exchange proposes to adopt Rule
7330 (Activity-Based Protections) to
provide new risk protections.
Specifically, the Exchange is proposing
two new risk protections; one will cover
3 The term ‘‘Market Operations Center’’ or ‘‘MOC’’
means the BOX Market Operations Center, which
provides market support for Options Participants
during the trading day. See Rule 100(a)(31).
4 See Miami International Securities Exchange,
LLC (‘‘MIAX’’) Rule 519(b).
VerDate Sep<11>2014
19:39 Jul 18, 2016
Jkt 238001
executed orders and the other will cover
executed orders and quotes.
The Exchange proposes to adopt Rule
7330(a) (Traded Order Protection) to
provide new risk protections for orders
executed by Participants on the
Exchange. The risk protections the
Exchange is proposing are similar to
those already available on BOX for
quotes.5 The proposed risk protection
will maintain a counting program for
each participating Participant.
Specifically, the Exchange shall
maintain traded order counters for: (1)
Maximum number of trades from
orders,6 (2) maximum traded order
volume,7 (3) maximum traded order
value,8 (4) delta maximum order
volume,9 and (5) delta maximum order
value.10 Participants can provide values
for these five counters and for the Time
Interval, as described in further detail
below.
When a Participant’s order is
executed, the system will look back over
a specific period of time to determine
whether the execution will cause the
counters to be incremented.
Specifically, if the difference between
the time of the current trade and the
time of the previous trade from the same
Options Participant identification
number (‘‘Participant ID’’) in the same
class is greater than the Time Interval,11
then the counters will be reset before
adding the current trade to them. If,
however, the difference between the
time of the current trade and the time
of the previous trade from the same
Participant ID in the same class is less
than or equal to the Time Interval, then
the counters will be incremented for the
current trade without resetting them
first. For example, assume the Time
Interval is 2 seconds. If an order for 10
contracts in ABC is received at 10:31:02
and a second order for 50 contracts in
ABC is received at 10:31:03, then the
maximum number of trades counter
would be incremented by 1 for the
second trade and the maximum traded
Rule 8130.
maximum number of trades from orders
counter will keep track of total trades in a class.
7 The maximum traded order volume counter is
designed to count the total volume traded in a class.
8 The maximum traded order value counter is the
absolute dollar value of contracts bought and sold
in a class.
9 The delta maximum order volume is the
absolute value of the net position in a class between
(i) calls purchased and puts sold, and (ii) calls sold
and puts purchased.
10 The delta maximum order value is the absolute
value of the net position in a class between (i) calls
purchased and sold, (ii) puts and calls purchased;
(iii) puts purchased and sold; or (iv) puts and calls
sold.
11 The ‘‘Time Interval’’ is the highest value
between the Exchange default and Participantprovided value.
PO 00000
5 See
6 The
Frm 00106
Fmt 4703
Sfmt 4703
46991
volume counter would be incremented
by 50 from the second trade. If,
however, the second order was not
received until 10:31:05, the system
would reset all counters for ABC since
the time between the second trade and
the previous trade was greater than the
Time Interval. After resetting the
counters for ABC, the system will
increment the maximum number of
trades counter by 1 and the maximum
traded volume by 50 contracts.
When a counter is triggered because it
exceeds the maximum permissible
value, all orders for that Participant ID
in options on that class are cancelled
unless such cancelation is not permitted
under other rules.12 When both the
Exchange and a Participant provide
values (other than zero) for the
parameters, the most restrictive (i.e., the
smallest value for the five counters and
the highest value for the Time Interval)
will be used by the system when
determining if a counter has been
triggered.
The Exchange proposes to adopt Rule
7330(b) (Traded Activity Protection) to
provide enhanced risk protections for
orders and quotes. Specifically, the
Exchange shall maintain traded activity
counters for: (1) Maximum number of
trades,13 (2) maximum traded volume,14
(3) maximum traded value,15 (4) delta
maximum volume,16 and (5) delta
maximum value.17 Participants can
provide values for these five counters
and for the Time Interval, as described
in further detail below. These proposed
counters are similar to those in
proposed Rule 7330(a) with the
exception that the counters in the
12 For a counter triggered for the incoming order
side, action is taken following the trade that
breached the limit. For a counter triggered for the
resting order side, action is taken following the
complete processing of the incoming order. As
mentioned above, if a cancelation is not permitted
under other BOX rules, the orders for that
Participant ID will remain. For example, under BOX
Rule 8050(d), Market Maker bids and offers are firm
for the number of contracts specified in the bid or
offer.
13 The maximum number of trades counter will
keep track of total trades involving orders and/or
quotes in all classes.
14 The maximum traded volume counter is
designed to count the total volume traded involving
orders and/or quotes in all classes.
15 The maximum traded value counter is the
absolute dollar value of contracts bought and sold
in a class from trades involving orders and/or
quotes.
16 The delta maximum volume is the absolute
value of the net position in all classes between (i)
calls purchased and puts sold, and (ii) calls sold
and puts purchased, for trades involving orders
and/or quotes.
17 The delta maximum value is the absolute value
of the net position in all classes between (i) calls
purchased and sold, (ii) puts and calls purchased;
(iii) puts purchased and sold; or (iv) puts and calls
sold, for trades involving orders and/or quotes.
E:\FR\FM\19JYN1.SGM
19JYN1
46992
Federal Register / Vol. 81, No. 138 / Tuesday, July 19, 2016 / Notices
mstockstill on DSK3G9T082PROD with NOTICES
proposed Traded Activity Protection
will count orders and quotes executed
by a Participant, while the Automatic
Order Cancellation only counts
executed orders. Additionally, the
Traded Activity Protection counts trades
for all classes and not on a class-by-class
basis as the Automatic Order
Cancellation provides.
When a Participant’s order and/or
quote is executed, the system will look
back over a specific period of time to
determine whether the execution will
cause the counters to be incremented.
Specifically, if the difference between
the time of the current trade and the
time of the previous trade from the same
Participant ID is greater than the Time
Interval,18 then the counters will be
reset before adding the current trade to
them. If, however, the difference
between the time of the current trade
and the time of the previous trade from
the same Participant ID is less than or
equal to the Time Interval, then the
counters will be incremented for the
current trade.
When a counter is triggered because it
exceeds the maximum permissible
value, all orders and quotes for that
Participant ID in all classes are
cancelled unless such cancelation is not
permitted under other rules.19 When
both the Exchange and a Participant
provide values (other than zero) for the
parameters, the most restrictive (i.e., the
smallest value for the five counters and
the highest value for the Time Interval)
will be used by the system when
determining if a counter has been
triggered. A Participant may also elect
for the system to lock-out the
Participant ID when a counter is
triggered or if the Exchange default
requires a lock-out. When a lock-out is
triggered, the system will prevent that
Participant ID from submitting orders
and/or quotes. Additionally, any request
from that Participant ID to initiate an
auction will be prevented. To submit
orders and/or quotes to the Exchange
after the lock-out is triggered, a
Participant must call the MOC 20
18 The ‘‘Time Interval’’ is the highest value
between the Exchange default and Participantprovided value.
19 For a counter triggered for the incoming order
or quote side, action is taken following the trade
that breached the limit. For a counter triggered for
the resting order or quote side, action is taken
following the complete processing of the incoming
order or quote. As mentioned above, if a cancelation
is not permitted under other BOX rules, the orders
for that Participant ID will remain. For example,
under BOX Rule 8050(d), Market Maker bids and
offers are firm for the number of contracts specified
in the bid or offer.
20 The term ‘‘MOC’’ or ‘‘Market Operations
Center’’ means the BOX Market Operations Center,
which provides market support for Options
Participants during the trading day.
VerDate Sep<11>2014
19:39 Jul 18, 2016
Jkt 238001
directly to unlock the Participant ID.
The Exchange notes that activity-based
protections are not novel and other
exchanges, including BOX, already have
activity-based risk protections.21
Additionally, the Exchange notes that
the unlock feature mentioned above is
not novel, as another exchange already
has a similar feature as well.22
The Activity-based Protections are
available to all Participants and are
enabled when a Participant contacts the
MOC and provides values for the
parameters. The Exchange may also
enable these features and provide
default values for the parameters.
Global Counter
The last new protection mechanism
that the Exchange is proposing is a
Global Counter.23 The Global Counter
will count the number of triggering
events across the Exchange’s protection
mechanisms per Participant ID.
Specifically, under proposed Rule 7340
the system will count the number of
triggering events from the Traded Order
Protection, Traded Activity Protection
and Automatic Quote Cancellation
mechanisms. If the difference between
the time of the current triggering event
and the time of the previous triggering
event from the same Participant ID is
greater than the Global Counter Time
Interval, as described below, then the
Global Counter will be reset before
adding the current triggering event to it.
If, however, the difference between the
time of the current triggering event and
the time of the previous triggering event
from the same Participant ID is less than
or equal to the Global Counter Time
Interval, then the Global Counter will be
incremented without resetting the
Global Counter first.
If multiple counters within the same
category of protection are triggered by
the same trade, the Global Counter will
only be incremented by one. If,
however, multiple counters from
different categories of protection are
triggered by the same trade, the Global
Counter will be incremented by one for
each category of protection, regardless
of the number of counters within the
same category of protection that were
triggered. For example, if the maximum
traded order volume counter for the
Traded Order Protections and the
maximum traded volume for the Trade
Activity Protection are triggered by the
same trade, then the Global Counter will
only be incremented by one.
MIAX Rule 519A and BOX Rule 8130.
MIAX Rule 519A(b). MIAX’s Risk
Protection Monitor will remain engaged until the
member communicates with the exchange’s help
desk to enable the acceptance of new orders.
23 See Proposed Rule 7340 (Global Counter).
PO 00000
21 See
22 See
Frm 00107
Fmt 4703
Sfmt 4703
Participants will be allowed to
provide a limit for the Global Counter
(‘‘Global Limit’’) and the Exchange will
also provide a default value for the
Global Limit. If the Global Counter is
triggered because it has reached or
exceeded the Global Limit, the system
will cancel all orders and/or quotes
belonging to that Participant and the
counter is reset. When determining if
the Global Counter has been triggered,
the system will use the most restrictive
value for the Global Limit (i.e., the
smallest value) between the Exchange
default and Participant-provided limit.
A Participant may also elect for the
system to lock-out the Participant ID
when the Global Counter is triggered or
if the Exchange default requires a lockout. When a lock-out is triggered, the
system will prevent that Participant ID
from submitting orders and/or quotes.
Additionally, any request from that
Participant ID to initiate an auction will
be prevented.
The Global Counter is available to all
Participants and is enabled when a
Participant contacts the MOC and
provides values for the parameters. The
Exchange may also enable this feature
and provide default values for the
parameters. The Exchange notes that the
proposed Global Counter is not novel
and another exchange has a similar
counting program on its exchange.24
Automatic Quote Cancellation
Currently, the Exchange offers
activity-based protections for Market
Makers. Specifically, Rule 8130
(Automatic Quote Cancellation)
provides activity-based protections for a
Market Maker’s quoting activity. The
Automatic Quote Cancellation
mechanism contains numerous
triggering parameters for which a
Market Maker can provide values. The
Exchange is now proposing to amend
the Automatic Quote Cancellation
mechanism by adding an additional
triggering parameter. Specifically, the
Exchange is proposing to add a
parameter that tracks the percentage of
the Market Maker’s quote that is traded.
The Exchange notes that this is not a
novel proposal and another exchange
already has this feature.25 Additionally,
the Exchange is proposing that it may
provide default values for some or all of
the parameters in Rule 8130; however,
any Participant-provided value will
override any Exchange defaults.
Additionally, the Exchange is
proposing to provide clarity on when
the counters will be reset. Specifically,
the counters in Rule 8130 are reset
24 See
25 See
E:\FR\FM\19JYN1.SGM
MIAX Rule 612.02(b).
MIAX Rule 612(b)(1).
19JYN1
Federal Register / Vol. 81, No. 138 / Tuesday, July 19, 2016 / Notices
when (i) the Participant provides an
update to the value of one of the
parameters, (ii) the time interval
between a trade and its previous trade
surpasses the time period, or (iii) the
triggering of any of the time related
counters.
mstockstill on DSK3G9T082PROD with NOTICES
Quote Removal Mechanism Upon
Technical Disconnect
The Exchange is proposing to amend
Rule 8140 to provide that when a
Market Maker is disconnected from the
Trading Host, the Market Maker’s quotes
will be cancelled. As part of this
proposed change, the Exchange is
proposing to remove one of the
triggering parameters currently in Rule
8130. Specifically, the Exchange is
proposing to remove the first triggering
parameter for when a Market Maker
experiences a duration of no technical
connectivity for between one and nine
seconds. The Exchange believes that
this parameter is no longer needed since
the Exchange’s proposed change for
Rule 8140 will cover when a Market
Maker is disconnected.
The Exchange will provide
Participants with notice, via Information
Circular, about the implementation date
of these proposed enhancements to the
protections offered by the Exchange.
Additionally, any changes to any
Exchange provided defaults will be
communicated to Participants via
Information Circular.
2. Statutory Basis
The Exchange believes that the
proposal is consistent with the
requirements of Section 6(b) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),26 in general, and Section 6(b)(5)
of the Act,27 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general to protect investors and the
public interest, by enhancing the risk
protections available to Participants.
The proposed rule filing promotes
policy goals of the Commission which
has encouraged execution venues,
exchange and non-exchange alike, to
enhance risk protection tools and other
mechanisms to decrease risk and
increase stability.
The individual firm benefits of
enhanced risk protections flow
26 15
27 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
VerDate Sep<11>2014
19:39 Jul 18, 2016
Jkt 238001
downstream to counterparties both at
the Exchange and at other options
exchanges, thereby increasing systemic
protections as well. Additionally,
because the Exchange offers these risk
tools to all Participants, the Exchange
believes it will encourage liquidity
generally and remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and protect investors and the
public interest.
These risk protections, as noted
above, will be offered to all Participants
on BOX. The Exchange further
represents that its proposal will operate
consistently with the firm quote
obligations of a broker-dealer pursuant
to Rule 602 of Regulation NMS.
Specifically, for a counter triggered for
the resting order or quote side, action is
taken following the complete processing
of the incoming order or quote.
Additionally, a Market Maker’s
obligation to provide continuous twosided quotes on a daily basis is not
diminished by the removal of such
quotes through one of the risk
protections. A Market Maker will be
required to provide continuous twosided quotes on a daily basis.
The Exchange believes that the
proposed rule change will assist with
the maintenance of a fair and orderly
market by establishing new activitybased risk protections for orders and
quotes. The Exchange believes that
these proposed risk protections, in
addition to the current risk protections
available on the Exchange, will enable
Participants to better manage their risk
when trading on the Exchange. BOX
believes the proposed risk controls will
remove impediments to and perfect the
mechanism of a free and open market by
providing Participants with greater
control over their activity.
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. BOX believes
the proposal will provide market
participants with additional protections
while submitting orders and quotes to
the Exchange. The Exchange does not
believe the proposal will impose a
burden on competition among the
options exchanges, because of vigorous
competition for order flow among the
options exchanges. The Exchange
competes with many other options
exchanges. In this highly competitive
market, market participants can easily
and readily direct order flow to
competing venues. The proposal does
PO 00000
Frm 00108
Fmt 4703
Sfmt 4703
46993
not impose an undue burden on
intramarket competition because all
Participants may avail themselves of the
risk controls on the Exchange.
Additionally, the proposed activitybased protections are similar to those
available on competing exchanges.28 For
these reasons, the Exchange does not
believe this proposal imposes an undue
burden on inter-market competition;
rather, the proposed rule changes will
have no impact on competition.
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
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 29 and Rule
19b–4(f)(6) thereunder.30 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 and Rule 19b–4(f)(6)(iii)
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 31 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),32 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 30-day
operative delay so that the Exchange
may provide Participants with
additional risk protections while trading
on the Exchange without undue delay.
The Commission believes that waiving
the 30-day operative delay is consistent
28 See
supra notes 4, 20 and 22.
U.S.C. 78s(b)(3)(A)(iii).
30 17 CFR 240.19b–4(f)(6). 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.
31 17 CFR 240.19b–4(f)(6).
32 17 CFR 240.19b–4(f)(6)(iii).
29 15
E:\FR\FM\19JYN1.SGM
19JYN1
46994
Federal Register / Vol. 81, No. 138 / Tuesday, July 19, 2016 / Notices
with the protection of investors and the
public interest. Therefore, the
Commission hereby waives the
operative delay and designates the
proposed rule change operative upon
filing.33
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–2016–30 on the
subject line.
mstockstill on DSK3G9T082PROD with NOTICES
Paper Comments
• Send paper comments in triplicate
toecretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BOX–2016–30. 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
33 For purposes only of waiving the operative date
of this proposal, the Commission has considered
the proposed rule’s impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
VerDate Sep<11>2014
19:39 Jul 18, 2016
Jkt 238001
available for Web site viewing and
printing in the Commission’s Public
Reference Room, on official business
days between the hours of 10:00 a.m.
and 3:00 p.m., located at 100 F Street,
NE., Washington, DC 20549. 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–
2016–30 and should be submitted on or
before August 9, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2016–16974 Filed 7–18–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold a Closed Meeting
on Friday, July 22, 2016 at 11:30 a.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
staff members who have an interest in
the matters also may be present.
The General Counsel of the
Commission, or her designee, has
certified that, in her opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)
and 17 CFR 200.402(a)(3), (5), (7), 9(ii)
and (10), permit consideration of the
scheduled matter at the Closed Meeting.
Commissioner Piwowar, as duty
officer, voted to consider the items
listed for the Closed Meeting in closed
session.
The subject matter of the Closed
Meeting will be:
Institution and settlement of injunctive
actions;
Institution and settlement of
administrative proceedings;
Adjudicatory matters;
Opinion; and
Other matters relating to enforcement
proceedings.
PO 00000
34 17
CFR 200.30–3(a)(12).
Frm 00109
Fmt 4703
Sfmt 4703
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact Brent J. Fields from the Office of
the Secretary at (202) 551–5400.
Dated: July 15, 2016.
Brent J. Fields,
Secretary.
[FR Doc. 2016–17168 Filed 7–15–16; 4:15 pm]
BILLING CODE 8011–01–P
OFFICE OF THE UNITED STATES
TRADE REPRESENTATIVE
Request for Public Comments To
Compile the National Trade Estimate
Report on Foreign Trade Barriers
Office of the United States
Trade Representative.
ACTION: Notice.
AGENCY:
Pursuant to section 181 of the
Trade Act of 1974, as amended (19
U.S.C. 2241), the Office of the United
States Trade Representative (USTR) is
required to publish annually the
National Trade Estimate Report on
Foreign Trade Barriers (NTE). With this
notice, the Trade Policy Staff Committee
(TPSC) is requesting interested persons
to submit comments to assist it in
identifying significant barriers to U.S.
exports of goods, services, and U.S.
foreign direct investment for inclusion
in the NTE. The TPSC invites written
comments from the public on issues that
USTR should examine in preparing the
NTE.
Section 1377 of the Omnibus Trade
and Competitiveness Act of 1988 (19
U.S.C. 3106) (‘‘Section 1377’’) requires
the USTR to review annually the
operation and effectiveness of all U.S.
trade agreements regarding
telecommunications products and
services that are in force with respect to
the United States. USTR is collecting
information regarding the trade barriers
pertinent to the conduct of the review
called for in Section 1377 through this
notice.
DATES: Public comments are due not
later than 11:59 p.m., October 27, 2016.
ADDRESSES: Submissions should be
made via the Internet at
www.regulations.gov docket number
USTR 2016–0007. For alternatives to online submissions please contact Yvonne
Jamison (202) 395–3475. The public is
strongly encouraged to file submissions
electronically rather than by facsimile or
mail.
SUMMARY:
E:\FR\FM\19JYN1.SGM
19JYN1
]]>Agencies
[Federal Register Volume 81, Number 138 (Tuesday, July 19, 2016)]
[Notices]
[Pages 46990-46994]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16974]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78312; File No. SR-BOX-2016-30]
Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Introduce New Risk Protections on the Exchange and Provide Enhancements
to Current Risk Protections
July 13, 2016.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 1, 2016, BOX Options Exchange LLC (the ``Exchange'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I and II below, which Items have been
prepared by the self-regulatory organization. The Commission is
publishing this notice to solicit comments on the proposed rule from
interested persons.
---------------------------------------------------------------------------
\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 introduce new risk protections on the
Exchange and provide enhancements to current risk protections. 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.
[[Page 46991]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to introduce new risk
protections on the Exchange and provide enhancements to current risk
protections designed to aid Participants in their risk management by
supplementing current protections with new activity-based protections.
In particular, the Exchange proposes to introduce new activity-based
protections for orders and quotes, enhancements to the current
protections available for Market Makers on the Exchange and provide
maximum order and quote quantity.
Maximum Order and Quote Quantity
The Exchange proposes to adopt Rule 7320 (Maximum Order and Quote
Quantity) to provide an additional risk protection for orders and
quotes entered on BOX. Specifically, the system will prevent orders or
quotes from executing or being placed on the BOX Book if the size of
the order or quote exceeds the size protection designated by the
Participant submitting the order or quote. The size protection is the
maximum size of an order or quote that will be accepted by the system
and Participants may designate the size protection on a class-by-class
basis for non-auction transactions. For auction transactions, the
Participant may designate a size protection applicable to all auction
types only. For Complex Orders, if any leg fails the validation, then
the entire Complex Order is rejected.
In order to provide values for the size protection, Participants
must contact the MOC.\3\ Additionally, the Exchange will provide
default values for the size protection. The most restrictive (i.e., the
smallest value) between the Exchange default and Participant-provided
value will be used. The Exchange notes that this is not a novel
proposal and another exchange already has this feature.\4\
---------------------------------------------------------------------------
\3\ The term ``Market Operations Center'' or ``MOC'' means the
BOX Market Operations Center, which provides market support for
Options Participants during the trading day. See Rule 100(a)(31).
\4\ See Miami International Securities Exchange, LLC (``MIAX'')
Rule 519(b).
---------------------------------------------------------------------------
Activity-Based Protections
The Exchange proposes to adopt Rule 7330 (Activity-Based
Protections) to provide new risk protections. Specifically, the
Exchange is proposing two new risk protections; one will cover executed
orders and the other will cover executed orders and quotes.
The Exchange proposes to adopt Rule 7330(a) (Traded Order
Protection) to provide new risk protections for orders executed by
Participants on the Exchange. The risk protections the Exchange is
proposing are similar to those already available on BOX for quotes.\5\
The proposed risk protection will maintain a counting program for each
participating Participant. Specifically, the Exchange shall maintain
traded order counters for: (1) Maximum number of trades from orders,\6\
(2) maximum traded order volume,\7\ (3) maximum traded order value,\8\
(4) delta maximum order volume,\9\ and (5) delta maximum order
value.\10\ Participants can provide values for these five counters and
for the Time Interval, as described in further detail below.
---------------------------------------------------------------------------
\5\ See Rule 8130.
\6\ The maximum number of trades from orders counter will keep
track of total trades in a class.
\7\ The maximum traded order volume counter is designed to count
the total volume traded in a class.
\8\ The maximum traded order value counter is the absolute
dollar value of contracts bought and sold in a class.
\9\ The delta maximum order volume is the absolute value of the
net position in a class between (i) calls purchased and puts sold,
and (ii) calls sold and puts purchased.
\10\ The delta maximum order value is the absolute value of the
net position in a class between (i) calls purchased and sold, (ii)
puts and calls purchased; (iii) puts purchased and sold; or (iv)
puts and calls sold.
---------------------------------------------------------------------------
When a Participant's order is executed, the system will look back
over a specific period of time to determine whether the execution will
cause the counters to be incremented. Specifically, if the difference
between the time of the current trade and the time of the previous
trade from the same Options Participant identification number
(``Participant ID'') in the same class is greater than the Time
Interval,\11\ then the counters will be reset before adding the current
trade to them. If, however, the difference between the time of the
current trade and the time of the previous trade from the same
Participant ID in the same class is less than or equal to the Time
Interval, then the counters will be incremented for the current trade
without resetting them first. For example, assume the Time Interval is
2 seconds. If an order for 10 contracts in ABC is received at 10:31:02
and a second order for 50 contracts in ABC is received at 10:31:03,
then the maximum number of trades counter would be incremented by 1 for
the second trade and the maximum traded volume counter would be
incremented by 50 from the second trade. If, however, the second order
was not received until 10:31:05, the system would reset all counters
for ABC since the time between the second trade and the previous trade
was greater than the Time Interval. After resetting the counters for
ABC, the system will increment the maximum number of trades counter by
1 and the maximum traded volume by 50 contracts.
---------------------------------------------------------------------------
\11\ The ``Time Interval'' is the highest value between the
Exchange default and Participant-provided value.
---------------------------------------------------------------------------
When a counter is triggered because it exceeds the maximum
permissible value, all orders for that Participant ID in options on
that class are cancelled unless such cancelation is not permitted under
other rules.\12\ When both the Exchange and a Participant provide
values (other than zero) for the parameters, the most restrictive
(i.e., the smallest value for the five counters and the highest value
for the Time Interval) will be used by the system when determining if a
counter has been triggered.
---------------------------------------------------------------------------
\12\ For a counter triggered for the incoming order side, action
is taken following the trade that breached the limit. For a counter
triggered for the resting order side, action is taken following the
complete processing of the incoming order. As mentioned above, if a
cancelation is not permitted under other BOX rules, the orders for
that Participant ID will remain. For example, under BOX Rule
8050(d), Market Maker bids and offers are firm for the number of
contracts specified in the bid or offer.
---------------------------------------------------------------------------
The Exchange proposes to adopt Rule 7330(b) (Traded Activity
Protection) to provide enhanced risk protections for orders and quotes.
Specifically, the Exchange shall maintain traded activity counters for:
(1) Maximum number of trades,\13\ (2) maximum traded volume,\14\ (3)
maximum traded value,\15\ (4) delta maximum volume,\16\ and (5) delta
maximum value.\17\ Participants can provide values for these five
counters and for the Time Interval, as described in further detail
below. These proposed counters are similar to those in proposed Rule
7330(a) with the exception that the counters in the
[[Page 46992]]
proposed Traded Activity Protection will count orders and quotes
executed by a Participant, while the Automatic Order Cancellation only
counts executed orders. Additionally, the Traded Activity Protection
counts trades for all classes and not on a class-by-class basis as the
Automatic Order Cancellation provides.
---------------------------------------------------------------------------
\13\ The maximum number of trades counter will keep track of
total trades involving orders and/or quotes in all classes.
\14\ The maximum traded volume counter is designed to count the
total volume traded involving orders and/or quotes in all classes.
\15\ The maximum traded value counter is the absolute dollar
value of contracts bought and sold in a class from trades involving
orders and/or quotes.
\16\ The delta maximum volume is the absolute value of the net
position in all classes between (i) calls purchased and puts sold,
and (ii) calls sold and puts purchased, for trades involving orders
and/or quotes.
\17\ The delta maximum value is the absolute value of the net
position in all classes between (i) calls purchased and sold, (ii)
puts and calls purchased; (iii) puts purchased and sold; or (iv)
puts and calls sold, for trades involving orders and/or quotes.
---------------------------------------------------------------------------
When a Participant's order and/or quote is executed, the system
will look back over a specific period of time to determine whether the
execution will cause the counters to be incremented. Specifically, if
the difference between the time of the current trade and the time of
the previous trade from the same Participant ID is greater than the
Time Interval,\18\ then the counters will be reset before adding the
current trade to them. If, however, the difference between the time of
the current trade and the time of the previous trade from the same
Participant ID is less than or equal to the Time Interval, then the
counters will be incremented for the current trade.
---------------------------------------------------------------------------
\18\ The ``Time Interval'' is the highest value between the
Exchange default and Participant-provided value.
---------------------------------------------------------------------------
When a counter is triggered because it exceeds the maximum
permissible value, all orders and quotes for that Participant ID in all
classes are cancelled unless such cancelation is not permitted under
other rules.\19\ When both the Exchange and a Participant provide
values (other than zero) for the parameters, the most restrictive
(i.e., the smallest value for the five counters and the highest value
for the Time Interval) will be used by the system when determining if a
counter has been triggered. A Participant may also elect for the system
to lock-out the Participant ID when a counter is triggered or if the
Exchange default requires a lock-out. When a lock-out is triggered, the
system will prevent that Participant ID from submitting orders and/or
quotes. Additionally, any request from that Participant ID to initiate
an auction will be prevented. To submit orders and/or quotes to the
Exchange after the lock-out is triggered, a Participant must call the
MOC \20\ directly to unlock the Participant ID. The Exchange notes that
activity-based protections are not novel and other exchanges, including
BOX, already have activity-based risk protections.\21\ Additionally,
the Exchange notes that the unlock feature mentioned above is not
novel, as another exchange already has a similar feature as well.\22\
---------------------------------------------------------------------------
\19\ For a counter triggered for the incoming order or quote
side, action is taken following the trade that breached the limit.
For a counter triggered for the resting order or quote side, action
is taken following the complete processing of the incoming order or
quote. As mentioned above, if a cancelation is not permitted under
other BOX rules, the orders for that Participant ID will remain. For
example, under BOX Rule 8050(d), Market Maker bids and offers are
firm for the number of contracts specified in the bid or offer.
\20\ The term ``MOC'' or ``Market Operations Center'' means the
BOX Market Operations Center, which provides market support for
Options Participants during the trading day.
\21\ See MIAX Rule 519A and BOX Rule 8130.
\22\ See MIAX Rule 519A(b). MIAX's Risk Protection Monitor will
remain engaged until the member communicates with the exchange's
help desk to enable the acceptance of new orders.
---------------------------------------------------------------------------
The Activity-based Protections are available to all Participants
and are enabled when a Participant contacts the MOC and provides values
for the parameters. The Exchange may also enable these features and
provide default values for the parameters.
Global Counter
The last new protection mechanism that the Exchange is proposing is
a Global Counter.\23\ The Global Counter will count the number of
triggering events across the Exchange's protection mechanisms per
Participant ID. Specifically, under proposed Rule 7340 the system will
count the number of triggering events from the Traded Order Protection,
Traded Activity Protection and Automatic Quote Cancellation mechanisms.
If the difference between the time of the current triggering event and
the time of the previous triggering event from the same Participant ID
is greater than the Global Counter Time Interval, as described below,
then the Global Counter will be reset before adding the current
triggering event to it. If, however, the difference between the time of
the current triggering event and the time of the previous triggering
event from the same Participant ID is less than or equal to the Global
Counter Time Interval, then the Global Counter will be incremented
without resetting the Global Counter first.
---------------------------------------------------------------------------
\23\ See Proposed Rule 7340 (Global Counter).
---------------------------------------------------------------------------
If multiple counters within the same category of protection are
triggered by the same trade, the Global Counter will only be
incremented by one. If, however, multiple counters from different
categories of protection are triggered by the same trade, the Global
Counter will be incremented by one for each category of protection,
regardless of the number of counters within the same category of
protection that were triggered. For example, if the maximum traded
order volume counter for the Traded Order Protections and the maximum
traded volume for the Trade Activity Protection are triggered by the
same trade, then the Global Counter will only be incremented by one.
Participants will be allowed to provide a limit for the Global
Counter (``Global Limit'') and the Exchange will also provide a default
value for the Global Limit. If the Global Counter is triggered because
it has reached or exceeded the Global Limit, the system will cancel all
orders and/or quotes belonging to that Participant and the counter is
reset. When determining if the Global Counter has been triggered, the
system will use the most restrictive value for the Global Limit (i.e.,
the smallest value) between the Exchange default and Participant-
provided limit. A Participant may also elect for the system to lock-out
the Participant ID when the Global Counter is triggered or if the
Exchange default requires a lock-out. When a lock-out is triggered, the
system will prevent that Participant ID from submitting orders and/or
quotes. Additionally, any request from that Participant ID to initiate
an auction will be prevented.
The Global Counter is available to all Participants and is enabled
when a Participant contacts the MOC and provides values for the
parameters. The Exchange may also enable this feature and provide
default values for the parameters. The Exchange notes that the proposed
Global Counter is not novel and another exchange has a similar counting
program on its exchange.\24\
---------------------------------------------------------------------------
\24\ See MIAX Rule 612.02(b).
---------------------------------------------------------------------------
Automatic Quote Cancellation
Currently, the Exchange offers activity-based protections for
Market Makers. Specifically, Rule 8130 (Automatic Quote Cancellation)
provides activity-based protections for a Market Maker's quoting
activity. The Automatic Quote Cancellation mechanism contains numerous
triggering parameters for which a Market Maker can provide values. The
Exchange is now proposing to amend the Automatic Quote Cancellation
mechanism by adding an additional triggering parameter. Specifically,
the Exchange is proposing to add a parameter that tracks the percentage
of the Market Maker's quote that is traded. The Exchange notes that
this is not a novel proposal and another exchange already has this
feature.\25\ Additionally, the Exchange is proposing that it may
provide default values for some or all of the parameters in Rule 8130;
however, any Participant-provided value will override any Exchange
defaults.
---------------------------------------------------------------------------
\25\ See MIAX Rule 612(b)(1).
---------------------------------------------------------------------------
Additionally, the Exchange is proposing to provide clarity on when
the counters will be reset. Specifically, the counters in Rule 8130 are
reset
[[Page 46993]]
when (i) the Participant provides an update to the value of one of the
parameters, (ii) the time interval between a trade and its previous
trade surpasses the time period, or (iii) the triggering of any of the
time related counters.
Quote Removal Mechanism Upon Technical Disconnect
The Exchange is proposing to amend Rule 8140 to provide that when a
Market Maker is disconnected from the Trading Host, the Market Maker's
quotes will be cancelled. As part of this proposed change, the Exchange
is proposing to remove one of the triggering parameters currently in
Rule 8130. Specifically, the Exchange is proposing to remove the first
triggering parameter for when a Market Maker experiences a duration of
no technical connectivity for between one and nine seconds. The
Exchange believes that this parameter is no longer needed since the
Exchange's proposed change for Rule 8140 will cover when a Market Maker
is disconnected.
The Exchange will provide Participants with notice, via Information
Circular, about the implementation date of these proposed enhancements
to the protections offered by the Exchange. Additionally, any changes
to any Exchange provided defaults will be communicated to Participants
via Information Circular.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Securities Exchange Act of 1934
(the ``Act''),\26\ in general, and Section 6(b)(5) of the Act,\27\ in
particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general to protect investors and the
public interest, by enhancing the risk protections available to
Participants. The proposed rule filing promotes policy goals of the
Commission which has encouraged execution venues, exchange and non-
exchange alike, to enhance risk protection tools and other mechanisms
to decrease risk and increase stability.
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78f(b).
\27\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The individual firm benefits of enhanced risk protections flow
downstream to counterparties both at the Exchange and at other options
exchanges, thereby increasing systemic protections as well.
Additionally, because the Exchange offers these risk tools to all
Participants, the Exchange believes it will encourage liquidity
generally and remove impediments to and perfect the mechanism of a free
and open market and a national market system, and protect investors and
the public interest.
These risk protections, as noted above, will be offered to all
Participants on BOX. The Exchange further represents that its proposal
will operate consistently with the firm quote obligations of a broker-
dealer pursuant to Rule 602 of Regulation NMS. Specifically, for a
counter triggered for the resting order or quote side, action is taken
following the complete processing of the incoming order or quote.
Additionally, a Market Maker's obligation to provide continuous two-
sided quotes on a daily basis is not diminished by the removal of such
quotes through one of the risk protections. A Market Maker will be
required to provide continuous two-sided quotes on a daily basis.
The Exchange believes that the proposed rule change will assist
with the maintenance of a fair and orderly market by establishing new
activity-based risk protections for orders and quotes. The Exchange
believes that these proposed risk protections, in addition to the
current risk protections available on the Exchange, will enable
Participants to better manage their risk when trading on the Exchange.
BOX believes the proposed risk controls will remove impediments to and
perfect the mechanism of a free and open market by providing
Participants with greater control over their activity.
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. BOX believes the proposal will
provide market participants with additional protections while
submitting orders and quotes to the Exchange. The Exchange does not
believe the proposal will impose a burden on competition among the
options exchanges, because of vigorous competition for order flow among
the options exchanges. The Exchange competes with many other options
exchanges. In this highly competitive market, market participants can
easily and readily direct order flow to competing venues. The proposal
does not impose an undue burden on intramarket competition because all
Participants may avail themselves of the risk controls on the Exchange.
Additionally, the proposed activity-based protections are similar to
those available on competing exchanges.\28\ For these reasons, the
Exchange does not believe this proposal imposes an undue burden on
inter-market competition; rather, the proposed rule changes will have
no impact on competition.
---------------------------------------------------------------------------
\28\ See supra notes 4, 20 and 22.
---------------------------------------------------------------------------
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \29\ and Rule 19b-4(f)(6) thereunder.\30\
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 and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------
\29\ 15 U.S.C. 78s(b)(3)(A)(iii).
\30\ 17 CFR 240.19b-4(f)(6). 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.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \31\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\32\ 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 30-day operative delay so that the Exchange
may provide Participants with additional risk protections while trading
on the Exchange without undue delay. The Commission believes that
waiving the 30-day operative delay is consistent
[[Page 46994]]
with the protection of investors and the public interest. Therefore,
the Commission hereby waives the operative delay and designates the
proposed rule change operative upon filing.\33\
---------------------------------------------------------------------------
\31\ 17 CFR 240.19b-4(f)(6).
\32\ 17 CFR 240.19b-4(f)(6)(iii).
\33\ For purposes only of waiving the operative date of this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. 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 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-2016-30 on the subject line.
Paper Comments
Send paper comments in triplicate toecretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-BOX-2016-30. 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, on official business days between
the hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street, NE.,
Washington, DC 20549. 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-2016-30 and should be
submitted on or before August 9, 2016.
---------------------------------------------------------------------------
\34\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2016-16974 Filed 7-18-16; 8:45 am]
BILLING CODE 8011-01-P
