Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule on the BOX Market LLC (“BOX”) Options Facility To Change the Fees and Credits for Facilitation and Solicitation Transactions, 64250-64253 [2016-22421]
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64250
Federal Register / Vol. 81, No. 181 / Monday, September 19, 2016 / Notices
critical role by guaranteeing the NonPublic Customer PIP or COPIP Order an
execution at the NBBO or at a better
price, and is subject to market risk while
the Non-Public Customer PIP Order or
COPIP Order is exposed to other BOX
Participants for the price improvement
opportunity. Therefore, the Exchange
believes for Non-Public Customer PIP
and COPIP Orders it is equitable and not
unfairly discriminatory to instead
provide the liquidity credit to the
Initiating Participant’s Primary
Improvement Order so that the Initiating
Participant will continue to submit NonPublic Customer PIP or COPIP Orders to
the PIP and COPIP. Further, the
Exchange believes that the proposed
change will have no impact on
competition in the PIP or COPIP, as
Responders will continue to be charged
the same liquidity fee.
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. Specifically,
the Exchange believes that amending
where the liquidity credit is applied in
Non-Public Customer PIP and COPIP
Transactions will not impose a burden
on competition among various Exchange
Participants. The Exchange believes that
the proposed changes will result in
these Participants being credited
appropriately for these transactions.
Finally, the Exchange notes that it
operates in a highly competitive market
in which market participants can
readily favor competing exchanges. In
such an environment, the Exchange
must continually review, and consider
adjusting, its fees and credits to remain
competitive with other exchanges. For
the reasons described above, the
Exchange believes that the proposed
rule change reflects this competitive
environment.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
mstockstill on DSK3G9T082PROD with NOTICES
No written comments were either
solicited or received.
allocation privileges upon conclusion of the PIP or
COPIP for up to forty percent (40%) of the
remaining size of the PIP or COPIP Order after
Public Customer orders are satisfied. If only one
competing order matches the Initiating Participant’s
Single-Priced Primary Improvement Order at the
final price level, then the Initiating Participant may
retain priority for up to fifty percent (50%) of the
remaining size of the PIP or COPIP Order after
Public Customer orders are satisfied.
VerDate Sep<11>2014
21:47 Sep 16, 2016
Jkt 238001
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Exchange Act 9 and
Rule 19b–4(f)(2) thereunder,10 because
it establishes or changes a due, or fee.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend the rule change if
it appears to the Commission that the
action is necessary or appropriate in the
public interest, for the protection of
investors, or would otherwise further
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BOX–2016–44 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–2016–44. 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
9 15
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
10 17
PO 00000
Frm 00125
Fmt 4703
Sfmt 4703
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–BOX–
2016–44, and should be submitted on or
before October 11, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–22423 Filed 9–16–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78828; File No. SR–BOX–
2016–43]
Self-Regulatory Organizations; BOX
Options Exchange LLC; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Amend
the Fee Schedule on the BOX Market
LLC (‘‘BOX’’) Options Facility To
Change the Fees and Credits for
Facilitation and Solicitation
Transactions
September 13, 2016.
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 August
31, 2016, BOX Options Exchange LLC
(the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Exchange filed the proposed rule change
pursuant to Section 19(b)(3)(A)(ii) of the
Act,3 and Rule 19b–4(f)(2) thereunder,4
which renders the proposal effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
1 15
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I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange is filing with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
to amend the Fee Schedule to make a
number of changes to the fees and
credits for Facilitation and Solicitation
Transactions on the BOX Market LLC
(‘‘BOX’’) options facility. While changes
to the fee schedule pursuant to this
proposal will be effective upon filing,
the changes will become operative on
September 1, 2016. The text of the
proposed rule change is available from
the principal office of the Exchange, at
the Commission’s Public Reference
Room and also on the Exchange’s
Internet Web site at https://
boxexchange.com.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Fee Schedule for trading on BOX to
make a number of changes to the fees
and credits for Facilitation and
Solicitation Transactions.5
Exchange Fees
The Exchange proposes to remodel
the fee structure for Facilitation and
Solicitation Transactions. Currently,
Facilitation and Solicitation
transactions are assessed per contract
fees based upon account type and
whether the order is a: (i) Agency
Order; 6 (ii) Facilitation Order or
Solicitation Order; 7 or (iii) Response in
the Solicitation or Facilitation Auction
Mechanisms.
First, the Exchange proposes to
restructure the Facilitation and
Agency order
Account type
Penny pilot
classes
mstockstill on DSK3G9T082PROD with NOTICES
Public Customer .......................................
Professional Customer or Broker Dealer
Market Maker ...........................................
Facilitation order or
solicitation order
Non-penny
pilot classes
$0.00
0.15
0.15
Penny pilot
classes
$0.00
0.15
0.15
Liquidity Fees and Credits
5 Transactions executed through the Solicitation
Auction mechanism and Facilitation Auction
mechanism.
6 An Agency Order is a block-size order that an
Order Flow Provider seeks to facilitate as agent
through the Facilitation Auction or Solicitation
Auction mechanism. Agency Orders can be
submitted by all BOX account types.
7 Facilitation and Solicitation Orders are the
matching contra orders submitted on the opposite
side of the Agency Order.
21:47 Sep 16, 2016
Jkt 238001
The Exchange then proposes to
amend Section II.B. of the BOX Fee
Schedule, (Liquidity Fees and Credits
for Facilitation and Solicitation
Transactions). Specifically, the
Exchange proposes to decrease the fees
and credits for Facilitation and
Solicitation transactions in both Penny
and Non-Penny Pilot Classes. The
Exchange proposes to decrease the fees
for adding liquidity in Facilitation and
Solicitation transactions to $0.75 from
$0.95 in Non-Penny Pilot Classes, and to
$0.25 from $0.40 in Penny Pilot Classes.
The Exchange also proposes to decrease
the credits for removing liquidity in
Facilitation and Solicitation
PO 00000
Frm 00126
Fmt 4703
Sfmt 4703
Responses in the solicitation
or facilitation auction
mechanisms
Non-penny
pilot classes
$0.00
0.15
0.15
Next, the Exchange proposes to
establish Section I.C.1, Facilitation and
Solicitation Transaction Rebate which
will provide a $0.10 per contract rebate
to Agency Orders executed through the
Facilitation and Solicitation Auction
Mechanisms where at least one party is
a Non-Public Customer. For example, a
Public Customer Agency Order that
executes against a Non-Public Customer
Order through the Facilitation Auction
mechanism would receive a $0.10
rebate. Further, a Public Customer
Agency Order that executes against a
Public Customer Order through the
Facilitation Auction mechanism would
not receive a rebate.
VerDate Sep<11>2014
Solicitation Transactions fee schedule to
differentiate between fees assessed in
Penny and Non-Penny Pilot Classes.
The Exchange then proposes to adjust
certain fees throughout the Facilitation
and Solicitation Transactions fee
structure. Specifically, the Exchange
proposes to increase the fees assessed
for Non-Public Customers 8 for Agency
Orders and Facilitation and Solicitation
Orders to $0.15 from $0.00. Public
Customer fees for Agency Orders and
Facilitation and Solicitation Orders will
remain at $0.00. The Exchange then
proposes to adjust the fees assessed for
Responses in the Solicitation or
Facilitation Auction Mechanisms.
Specifically, the Exchange proposes to
assess a $0.25 fee in Penny Pilot Classes
and a $0.40 fee in Non-Penny Pilot
Classes, regardless of account type.
Under the current fee structure, Public
Customers are assessed $0.15, Broker
Dealers and Professional Customers are
assessed $0.27 and Market Makers are
assessed $0.20 for Responses in the
Solicitation or Facilitation Auction
Mechanisms.
The proposed Facilitation and
Solicitation Transactions fee structure
will be as follows:
Penny pilot
classes
$0.00
0.15
0.15
$0.25
0.25
0.25
Non-penny
pilot classes
$0.40
0.40
0.40
transactions. Specifically, the Exchange
proposes to decrease the credit to $0.75
from $1.00 in Non-Penny Pilot Classes,
and $0.25 from $0.45 in Penny Pilot
Classes.
2. Statutory Basis
The Exchange believes that the
proposal is consistent with the
requirements of Section 6(b) of the Act,
in general, and Section 6(b)(4) and
6(b)(5) of the Act,9 in particular, in that
it provides for the equitable allocation
of reasonable dues, fees, and other
charges among BOX Participants and
other persons using its facilities and
does not unfairly discriminate between
customers, issuers, brokers or dealers.
8 Non-Public Customers are defined within the
BOX Fee Schedule as Professional Customers,
Broker Dealers and Market Makers.
9 15 U.S.C. 78f(b)(4) and (5).
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mstockstill on DSK3G9T082PROD with NOTICES
Exchange Fees
The Exchange believes that
remodeling the fee structure for
Facilitation and Solicitation
Transactions is reasonable, equitable
and not unfairly discriminatory. In
particular, the proposed revisions will
allow the Exchange to apply separate
fees for certain transactions in Penny
and Non-Penny Pilot Classes, a
distinction that is made in many other
sections of the BOX Fee Schedule,
including Section I.A (Non-Auction
Transactions) and Section III.A (All
Complex Orders).
The Exchange also believes the
proposed fees for Non-Public Customers
for Agency Orders and Facilitation and
Solicitation Orders in Penny or NonPenny Pilot Classes are reasonable,
equitable and not unfairly
discriminatory. Professional Customers
and Broker Dealers and Market Makers
are not currently charged for Agency
Orders and Facilitation and Solicitation
Orders. The proposal increases the fees
for all Non-Public Customers to $0.15
for both Agency Orders and Facilitation
and Solicitation Orders in Penny and
Non-Penny Pilot Classes. The Exchange
believes these fees are reasonable as
they are in line with another exchange
in the industry.10 For example, at the
ISE, the fee for both the initiating order
and contra order in a Crossing Order 11
is $0.20 for Market Makers, Broker
Dealers and Professional Customers, and
$0.00 for Public Customers in Penny
Pilot Classes. In Non-Penny Pilot
Classes, the fees for the initiating order
and contra order in a Crossing Order is
$0.20 for Professional Customers and
Broker Dealers, $0.25 for Market Makers
and $0.00 for Public Customers.
The Exchange believes that charging
Professional Customers and Broker
Dealers and Market Makers more than
Public Customers for Agency Orders
and Facilitation and Solicitation Orders
is reasonable, equitable and not unfairly
discriminatory. The securities markets
generally, and BOX in particular, have
historically aimed to improve markets
for investors and develop various
features within the market structure for
Public Customer benefit. The Exchange
believes that charging lower fees to
Public Customers in Facilitation and
Solicitation transactions is reasonable
and, ultimately, will benefit all
10 See International Securities Exchange (‘‘ISE’’)
Fee Schedule Section I available at https://
www.ise.com/assets/documents/OptionsExchange/
legal/fee/ISE_fee_schedule.pdf.
11 Under the ISE Fee Schedule Crossing Orders
are any orders executed in the Exchange’s auction
mechanisms, including the Facilitation and
Solicitation mechanisms.
VerDate Sep<11>2014
21:47 Sep 16, 2016
Jkt 238001
Participants trading on the Exchange by
attracting Public Customer order flow.
The Exchange also believes the
proposed fees for Responses in the
Solicitation or Facilitation Auction
Mechanisms in Penny and Non-Penny
Pilot Classes are reasonable, and
equitable. The proposal changes the fees
to $0.25 and $0.40 in Penny and NonPenny Pilot Classes, respectively,
regardless of account type. Moreover,
the proposed fees are competitive with
fees charged by another options
exchange.12 For example, at the ISE, fees
for Responses to Crossing Orders are
$0.50, regardless of Participant type, in
both Penny and Non-Penny Pilot
Classes. The Exchange also notes that
the proposed fees for Responses to
Facilitation or Solicitation Orders are
not unfairly discriminatory because they
apply equally to all Participants.
The Exchange believes it is reasonable
to establish different fees for Facilitation
and Solicitation transactions in Penny
Pilot Classes compared to transactions
in Non-Penny Pilot Classes. The
Exchange makes this distinction
throughout the BOX Fee Schedule,
including the Exchange Fees for PIP and
COPIP Transactions. The Exchange
believes it is reasonable to establish
higher fees for Non-Penny Pilot Classes
because these Classes are typically less
actively traded and have wider spreads.
The Exchange also believes that
establishing a $0.10 per contract rebate
to Agency Orders executed through the
Facilitation and Solicitation Auction
Mechanisms where at least one party is
a Non-Public Customer is reasonable,
equitable and not unfairly
discriminatory. The Exchange believes
that it is reasonable and equitable to
provide the opportunity to receive a
rebate to incentivize Participants to
direct Facilitation and Solicitation order
flow to the Exchange, which will result
[sic] ultimately benefit all Participant
[sic] trading on the Exchange. The
Exchange believes it is reasonable and
appropriate that ‘‘Public Customer to
Public Customer’’ transactions do not
receive the proposed rebate, as these
orders are never assessed Facilitation
and Solicitation transaction fees and
therefore should not also receive the
benefit of the rebate. Further, the
Exchange believes that the rebate is
reasonable and equitable because other
exchanges offer a similar distinction in
Facilitation and Solicitation rebates.13
12 See
supra note 10.
the ISE Fee Schedule, Section IV.A. (QCC
and Solicitation Rebates). ISE offers a per contract
rebate for agency orders in its Facilitation and
Solicitation Auction Mechanisms. A higher rebate
is given to Non-Customer to Customer Facilitation
and Solicitation Transactions ($0.00 to $0.11
13 See
PO 00000
Frm 00127
Fmt 4703
Sfmt 4703
Finally, the Exchange believes that the
proposed changes are not unfairly
discriminatory because the rebate would
be uniformly applied to all Agency
Orders where at least one party is a
Non-Public Customer.
Liquidity Fees and Credits
The Exchange believes that lowering
the liquidity fees and rebates for
Facilitation and Solicitation
transactions is reasonable and equitable.
Under the proposed change the fee for
adding liquidity will be lowered to
$0.75 from $0.95 (Non-Penny Pilot
Class) and to $0.25 from $0.40 (Penny
Pilot Class). Accordingly, the credit for
removing liquidity will be lowered to
$0.75 from $1.00 (Non-Penny Pilot
Class) and to $0.25 from $0.45 (Penny
Pilot Class). The Exchange also notes
that the proposed liquidity fees and
credits for Facilitation or Solicitation
transactions are not unfairly
discriminatory because they apply
equally to all Participants.
BOX believes that the changes to
Facilitation and Solicitation transaction
liquidity fees and credits are equitable
and not unfairly discriminatory in that
they apply to all categories of
participants and across all account
types. The Exchange notes that liquidity
fees and credits on BOX are meant to
offset one another in any particular
transaction. The liquidity fees and
credits do not directly result in revenue
to BOX, but will simply allow BOX to
provide the credit incentive to
Participants to attract order flow. The
Exchange believes it is appropriate to
provide incentives to market
participants to use the Facilitation and
Solicitation auction mechanisms,
because doing so may result in greater
liquidity on BOX which would benefit
all market participants. Further, the
Exchange believes that the proposed
changes are reasonable as they are in
line with another exchange in the
industry.14
Finally, the Exchange believes it is
reasonable to establish different fees and
credits for Facilitation and Solicitation
transactions in Penny Pilot Classes
compared to transactions in Non-Penny
Pilot Classes. The Exchange makes this
distinction throughout the BOX Fee
depending on volume) than Customer to Customer
Facilitation and Solicitation Transactions ($0.00 to
$0.03 depending on volume). See also Chicago
Board Options Exchange (‘‘CBOE’’) Fee Schedule,
QCC Rate Table available at https://www.cboe.com/
publish/feeschedule/CBOEFeeSchedule.pdf. CBOE
offers a per contract $0.10 credit for the equivalent
of Facilitation and Solicitation transactions that
occur between Non-Customer to Customer
executions; however, no credit is offered for
Customer to Customer executions.
14 Id.
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mstockstill on DSK3G9T082PROD with NOTICES
Schedule, including the liquidity fees
and credits for PIP and COPIP
Transactions. The Exchange believes it
is reasonable to establish higher fees
and credits for Non-Penny Pilot Classes
because these Classes are typically less
actively traded and have wider spreads.
The Exchange believes that offering a
higher rebate will incentivize order flow
in Non-Penny Pilot issues on the
Exchange, ultimately benefitting all
Participants trading on BOX.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
The Exchange believes that the
proposed adjustments to the Facilitation
and Solicitation Transaction fees will
not impose a burden on competition
among various Exchange Participants.
Rather, BOX believes that the changes
will result in the Participants being
charged appropriately for their
Facilitation and Solicitation
Transactions and are designed to
enhance competition in these auction
mechanisms. Submitting an order is
entirely voluntary and Participants can
determine which type of order they
wish to submit, if any, to the Exchange.
The Exchange believes that the
proposed rebate for Facilitation and
Solicitation transactions will not impose
a burden on competition among various
Exchange Participants. The Exchange
believes the proposed rebate is attractive
to market participants and is similar to
rebates offered by other exchanges.15
Further, the Exchange does not believe
that the proposed rule change to not
offer a rebate for ‘‘Public Customer to
Public Customer’’ transactions will
burden intramarket competition because
although ‘‘Public Customer to Public
Customer’’ transactions will not receive
a rebate, these transactions are not
assessed Facilitation and Solicitation
transaction fees (unlike Non- ‘‘Customer
to Customer’’ Facilitation and
Solicitation transactions). The Exchange
does not believe that the proposed rule
changes will impose any burden on
intermarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act because the
proposed rule change applies only to
BOX and because other Exchanges have
similar exclusions.16
The Exchange also believes that
amending the proposed liquidity fees
15 See supra note 13. CBOE does not offer a rebate
(credit) for Customer to Customer executions.
16 Id.
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21:47 Sep 16, 2016
Jkt 238001
and credits for Facilitation and
Solicitation Transactions will not
impose a burden on competition among
various Exchange Participants. The
Exchange believes that the proposed
changes will result with these
Participants being charged or credited
appropriately for these transactions.
Finally, the Exchange notes that it
operates in a highly competitive market
in which market participants can
readily favor competing exchanges. In
such an environment, the Exchange
must continually review, and consider
adjusting, its fees and credits to remain
competitive with other exchanges. For
the reasons described above, the
Exchange believes that the proposed
rule change reflects this competitive
environment.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Exchange Act 17
and Rule 19b–4(f)(2) thereunder,18
because it establishes or changes a due,
or fee.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend the rule change if
it appears to the Commission that the
action is necessary or appropriate in the
public interest, for the protection of
investors, or would otherwise further
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BOX–2016–43 on the subject line.
17 15
18 17
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
Frm 00128
Fmt 4703
Sfmt 4703
64253
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–2016–43. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–BOX–
2016–43, and should be submitted on or
before October 11, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–22421 Filed 9–16–16; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
Council on Underserved Communities
Advisory Board: Meeting
U.S. Small Business
Administration (SBA).
ACTION: Notice of open Federal Advisory
Committee meetings.
AGENCY:
The SBA is issuing this notice
to announce the location, date, time and
agenda for the initial meeting of the
SUMMARY:
19 17
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CFR 200.30–3(a)(12).
19SEN1
]]>Agencies
[Federal Register Volume 81, Number 181 (Monday, September 19, 2016)]
[Notices]
[Pages 64250-64253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22421]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78828; File No. SR-BOX-2016-43]
Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend the Fee Schedule on the BOX Market LLC (``BOX'') Options Facility
To Change the Fees and Credits for Facilitation and Solicitation
Transactions
September 13, 2016.
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 August 31, 2016, BOX Options Exchange LLC (the ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Exchange filed the
proposed rule change pursuant to Section 19(b)(3)(A)(ii) of the Act,\3\
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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[[Page 64251]]
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change to amend the Fee Schedule to
make a number of changes to the fees and credits for Facilitation and
Solicitation Transactions on the BOX Market LLC (``BOX'') options
facility. While changes to the fee schedule pursuant to this proposal
will be effective upon filing, the changes will become operative on
September 1, 2016. The text of the proposed rule change is available
from the principal office of the Exchange, at the Commission's Public
Reference Room and also on the Exchange's Internet Web site at https://boxexchange.com.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Fee Schedule for trading on BOX
to make a number of changes to the fees and credits for Facilitation
and Solicitation Transactions.\5\
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\5\ Transactions executed through the Solicitation Auction
mechanism and Facilitation Auction mechanism.
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Exchange Fees
The Exchange proposes to remodel the fee structure for Facilitation
and Solicitation Transactions. Currently, Facilitation and Solicitation
transactions are assessed per contract fees based upon account type and
whether the order is a: (i) Agency Order; \6\ (ii) Facilitation Order
or Solicitation Order; \7\ or (iii) Response in the Solicitation or
Facilitation Auction Mechanisms.
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\6\ An Agency Order is a block-size order that an Order Flow
Provider seeks to facilitate as agent through the Facilitation
Auction or Solicitation Auction mechanism. Agency Orders can be
submitted by all BOX account types.
\7\ Facilitation and Solicitation Orders are the matching contra
orders submitted on the opposite side of the Agency Order.
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First, the Exchange proposes to restructure the Facilitation and
Solicitation Transactions fee schedule to differentiate between fees
assessed in Penny and Non-Penny Pilot Classes. The Exchange then
proposes to adjust certain fees throughout the Facilitation and
Solicitation Transactions fee structure. Specifically, the Exchange
proposes to increase the fees assessed for Non-Public Customers \8\ for
Agency Orders and Facilitation and Solicitation Orders to $0.15 from
$0.00. Public Customer fees for Agency Orders and Facilitation and
Solicitation Orders will remain at $0.00. The Exchange then proposes to
adjust the fees assessed for Responses in the Solicitation or
Facilitation Auction Mechanisms. Specifically, the Exchange proposes to
assess a $0.25 fee in Penny Pilot Classes and a $0.40 fee in Non-Penny
Pilot Classes, regardless of account type. Under the current fee
structure, Public Customers are assessed $0.15, Broker Dealers and
Professional Customers are assessed $0.27 and Market Makers are
assessed $0.20 for Responses in the Solicitation or Facilitation
Auction Mechanisms.
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\8\ Non-Public Customers are defined within the BOX Fee Schedule
as Professional Customers, Broker Dealers and Market Makers.
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The proposed Facilitation and Solicitation Transactions fee
structure will be as follows:
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Agency order Facilitation order or Responses in the solicitation
-------------------------------- solicitation order or facilitation auction
-------------------------------- mechanisms
Account type Penny pilot Non-penny -------------------------------
classes pilot classes Penny pilot Non-penny Penny pilot Non-penny
classes pilot classes classes pilot classes
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Public Customer......................................... $0.00 $0.00 $0.00 $0.00 $0.25 $0.40
Professional Customer or Broker Dealer.................. 0.15 0.15 0.15 0.15 0.25 0.40
Market Maker............................................ 0.15 0.15 0.15 0.15 0.25 0.40
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Next, the Exchange proposes to establish Section I.C.1,
Facilitation and Solicitation Transaction Rebate which will provide a
$0.10 per contract rebate to Agency Orders executed through the
Facilitation and Solicitation Auction Mechanisms where at least one
party is a Non-Public Customer. For example, a Public Customer Agency
Order that executes against a Non-Public Customer Order through the
Facilitation Auction mechanism would receive a $0.10 rebate. Further, a
Public Customer Agency Order that executes against a Public Customer
Order through the Facilitation Auction mechanism would not receive a
rebate.
Liquidity Fees and Credits
The Exchange then proposes to amend Section II.B. of the BOX Fee
Schedule, (Liquidity Fees and Credits for Facilitation and Solicitation
Transactions). Specifically, the Exchange proposes to decrease the fees
and credits for Facilitation and Solicitation transactions in both
Penny and Non-Penny Pilot Classes. The Exchange proposes to decrease
the fees for adding liquidity in Facilitation and Solicitation
transactions to $0.75 from $0.95 in Non-Penny Pilot Classes, and to
$0.25 from $0.40 in Penny Pilot Classes. The Exchange also proposes to
decrease the credits for removing liquidity in Facilitation and
Solicitation transactions. Specifically, the Exchange proposes to
decrease the credit to $0.75 from $1.00 in Non-Penny Pilot Classes, and
$0.25 from $0.45 in Penny Pilot Classes.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act, in general, and Section
6(b)(4) and 6(b)(5) of the Act,\9\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees, and other
charges among BOX Participants and other persons using its facilities
and does not unfairly discriminate between customers, issuers, brokers
or dealers.
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\9\ 15 U.S.C. 78f(b)(4) and (5).
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[[Page 64252]]
Exchange Fees
The Exchange believes that remodeling the fee structure for
Facilitation and Solicitation Transactions is reasonable, equitable and
not unfairly discriminatory. In particular, the proposed revisions will
allow the Exchange to apply separate fees for certain transactions in
Penny and Non-Penny Pilot Classes, a distinction that is made in many
other sections of the BOX Fee Schedule, including Section I.A (Non-
Auction Transactions) and Section III.A (All Complex Orders).
The Exchange also believes the proposed fees for Non-Public
Customers for Agency Orders and Facilitation and Solicitation Orders in
Penny or Non-Penny Pilot Classes are reasonable, equitable and not
unfairly discriminatory. Professional Customers and Broker Dealers and
Market Makers are not currently charged for Agency Orders and
Facilitation and Solicitation Orders. The proposal increases the fees
for all Non-Public Customers to $0.15 for both Agency Orders and
Facilitation and Solicitation Orders in Penny and Non-Penny Pilot
Classes. The Exchange believes these fees are reasonable as they are in
line with another exchange in the industry.\10\ For example, at the
ISE, the fee for both the initiating order and contra order in a
Crossing Order \11\ is $0.20 for Market Makers, Broker Dealers and
Professional Customers, and $0.00 for Public Customers in Penny Pilot
Classes. In Non-Penny Pilot Classes, the fees for the initiating order
and contra order in a Crossing Order is $0.20 for Professional
Customers and Broker Dealers, $0.25 for Market Makers and $0.00 for
Public Customers.
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\10\ See International Securities Exchange (``ISE'') Fee
Schedule Section I available at https://www.ise.com/assets/documents/OptionsExchange/legal/fee/ISE_fee_schedule.pdf.
\11\ Under the ISE Fee Schedule Crossing Orders are any orders
executed in the Exchange's auction mechanisms, including the
Facilitation and Solicitation mechanisms.
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The Exchange believes that charging Professional Customers and
Broker Dealers and Market Makers more than Public Customers for Agency
Orders and Facilitation and Solicitation Orders is reasonable,
equitable and not unfairly discriminatory. The securities markets
generally, and BOX in particular, have historically aimed to improve
markets for investors and develop various features within the market
structure for Public Customer benefit. The Exchange believes that
charging lower fees to Public Customers in Facilitation and
Solicitation transactions is reasonable and, ultimately, will benefit
all Participants trading on the Exchange by attracting Public Customer
order flow.
The Exchange also believes the proposed fees for Responses in the
Solicitation or Facilitation Auction Mechanisms in Penny and Non-Penny
Pilot Classes are reasonable, and equitable. The proposal changes the
fees to $0.25 and $0.40 in Penny and Non-Penny Pilot Classes,
respectively, regardless of account type. Moreover, the proposed fees
are competitive with fees charged by another options exchange.\12\ For
example, at the ISE, fees for Responses to Crossing Orders are $0.50,
regardless of Participant type, in both Penny and Non-Penny Pilot
Classes. The Exchange also notes that the proposed fees for Responses
to Facilitation or Solicitation Orders are not unfairly discriminatory
because they apply equally to all Participants.
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\12\ See supra note 10.
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The Exchange believes it is reasonable to establish different fees
for Facilitation and Solicitation transactions in Penny Pilot Classes
compared to transactions in Non-Penny Pilot Classes. The Exchange makes
this distinction throughout the BOX Fee Schedule, including the
Exchange Fees for PIP and COPIP Transactions. The Exchange believes it
is reasonable to establish higher fees for Non-Penny Pilot Classes
because these Classes are typically less actively traded and have wider
spreads.
The Exchange also believes that establishing a $0.10 per contract
rebate to Agency Orders executed through the Facilitation and
Solicitation Auction Mechanisms where at least one party is a Non-
Public Customer is reasonable, equitable and not unfairly
discriminatory. The Exchange believes that it is reasonable and
equitable to provide the opportunity to receive a rebate to incentivize
Participants to direct Facilitation and Solicitation order flow to the
Exchange, which will result [sic] ultimately benefit all Participant
[sic] trading on the Exchange. The Exchange believes it is reasonable
and appropriate that ``Public Customer to Public Customer''
transactions do not receive the proposed rebate, as these orders are
never assessed Facilitation and Solicitation transaction fees and
therefore should not also receive the benefit of the rebate. Further,
the Exchange believes that the rebate is reasonable and equitable
because other exchanges offer a similar distinction in Facilitation and
Solicitation rebates.\13\ Finally, the Exchange believes that the
proposed changes are not unfairly discriminatory because the rebate
would be uniformly applied to all Agency Orders where at least one
party is a Non-Public Customer.
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\13\ See the ISE Fee Schedule, Section IV.A. (QCC and
Solicitation Rebates). ISE offers a per contract rebate for agency
orders in its Facilitation and Solicitation Auction Mechanisms. A
higher rebate is given to Non-Customer to Customer Facilitation and
Solicitation Transactions ($0.00 to $0.11 depending on volume) than
Customer to Customer Facilitation and Solicitation Transactions
($0.00 to $0.03 depending on volume). See also Chicago Board Options
Exchange (``CBOE'') Fee Schedule, QCC Rate Table available at https://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf. CBOE offers a
per contract $0.10 credit for the equivalent of Facilitation and
Solicitation transactions that occur between Non-Customer to
Customer executions; however, no credit is offered for Customer to
Customer executions.
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Liquidity Fees and Credits
The Exchange believes that lowering the liquidity fees and rebates
for Facilitation and Solicitation transactions is reasonable and
equitable. Under the proposed change the fee for adding liquidity will
be lowered to $0.75 from $0.95 (Non-Penny Pilot Class) and to $0.25
from $0.40 (Penny Pilot Class). Accordingly, the credit for removing
liquidity will be lowered to $0.75 from $1.00 (Non-Penny Pilot Class)
and to $0.25 from $0.45 (Penny Pilot Class). The Exchange also notes
that the proposed liquidity fees and credits for Facilitation or
Solicitation transactions are not unfairly discriminatory because they
apply equally to all Participants.
BOX believes that the changes to Facilitation and Solicitation
transaction liquidity fees and credits are equitable and not unfairly
discriminatory in that they apply to all categories of participants and
across all account types. The Exchange notes that liquidity fees and
credits on BOX are meant to offset one another in any particular
transaction. The liquidity fees and credits do not directly result in
revenue to BOX, but will simply allow BOX to provide the credit
incentive to Participants to attract order flow. The Exchange believes
it is appropriate to provide incentives to market participants to use
the Facilitation and Solicitation auction mechanisms, because doing so
may result in greater liquidity on BOX which would benefit all market
participants. Further, the Exchange believes that the proposed changes
are reasonable as they are in line with another exchange in the
industry.\14\
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\14\ Id.
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Finally, the Exchange believes it is reasonable to establish
different fees and credits for Facilitation and Solicitation
transactions in Penny Pilot Classes compared to transactions in Non-
Penny Pilot Classes. The Exchange makes this distinction throughout the
BOX Fee
[[Page 64253]]
Schedule, including the liquidity fees and credits for PIP and COPIP
Transactions. The Exchange believes it is reasonable to establish
higher fees and credits for Non-Penny Pilot Classes because these
Classes are typically less actively traded and have wider spreads. The
Exchange believes that offering a higher rebate will incentivize order
flow in Non-Penny Pilot issues on the Exchange, ultimately benefitting
all Participants trading on BOX.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange believes that the proposed adjustments to the
Facilitation and Solicitation Transaction fees will not impose a burden
on competition among various Exchange Participants. Rather, BOX
believes that the changes will result in the Participants being charged
appropriately for their Facilitation and Solicitation Transactions and
are designed to enhance competition in these auction mechanisms.
Submitting an order is entirely voluntary and Participants can
determine which type of order they wish to submit, if any, to the
Exchange.
The Exchange believes that the proposed rebate for Facilitation and
Solicitation transactions will not impose a burden on competition among
various Exchange Participants. The Exchange believes the proposed
rebate is attractive to market participants and is similar to rebates
offered by other exchanges.\15\ Further, the Exchange does not believe
that the proposed rule change to not offer a rebate for ``Public
Customer to Public Customer'' transactions will burden intramarket
competition because although ``Public Customer to Public Customer''
transactions will not receive a rebate, these transactions are not
assessed Facilitation and Solicitation transaction fees (unlike Non-
``Customer to Customer'' Facilitation and Solicitation transactions).
The Exchange does not believe that the proposed rule changes will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed rule change applies only to BOX and because other Exchanges
have similar exclusions.\16\
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\15\ See supra note 13. CBOE does not offer a rebate (credit)
for Customer to Customer executions.
\16\ Id.
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The Exchange also believes that amending the proposed liquidity
fees and credits for Facilitation and Solicitation Transactions will
not impose a burden on competition among various Exchange Participants.
The Exchange believes that the proposed changes will result with these
Participants being charged or credited appropriately for these
transactions.
Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing exchanges. In such an environment, the Exchange must
continually review, and consider adjusting, its fees and credits to
remain competitive with other exchanges. For the reasons described
above, the Exchange believes that the proposed rule change reflects
this competitive environment.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Exchange Act \17\ and Rule 19b-4(f)(2)
thereunder,\18\ because it establishes or changes a due, or fee.
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\17\ 15 U.S.C. 78s(b)(3)(A)(ii).
\18\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend the rule
change if it appears to the Commission that the action is necessary or
appropriate in the public interest, for the protection of investors, or
would otherwise further the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BOX-2016-43 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-2016-43. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BOX-2016-43, and should be
submitted on or before October 11, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-22421 Filed 9-16-16; 8:45 am]
BILLING CODE 8011-01-P
