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, 8481-8484 [2017-01611]

Download as PDF Federal Register / Vol. 82, No. 15 / Wednesday, January 25, 2017 / Notices Commission, and all written communications relating to the proposed rule changes between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the CHX. 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 No. SR–CHX–2017– 01 and should be submitted on or before February 15, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–01607 Filed 1–24–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–79832; File No. SR–BOX– 2017–01] 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 January 18, 2017. mstockstill on DSK3G9T082PROD with NOTICES 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 January 5, 2017, 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. 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 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 January 9, 2017. 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 http:// 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 Section III (Complex Order Transaction Fees) to specify that all Complex Order transactions executed through the Exchange’s auction mechanisms will be subject to Section I (Exchange Fees) and II (Liquidity Fees and Credits) of the BOX Fee Schedule. The Exchange recently amended its rules to permit Complex Order 5 transactions to execute 3 15 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). 5 As defined in Rule 7240(a)(5), the term ‘‘Complex Order’’ means any order involving the 19 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. VerDate Sep<11>2014 20:29 Jan 24, 2017 4 17 Jkt 241001 PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 8481 through the Solicitation Auction mechanism 6 and the Exchange is submitting this filing to clarify the fees that are applicable to these transactions. Generally, Complex Order transactions are subject to the fees and credits set forth in Section III (Complex Order Transaction Fees) of the BOX Fee Schedule while transactions executed through the Facilitation and Solicitation auction mechanisms are subject to Sections I (Exchange Fees) and II (Liquidity Fees and Credits). The Exchange proposes to add language that clarifies that Complex Order transactions executed through Auction Mechanisms 7 will be subject to Sections I (Exchange Fees) and II (Liquidity Fees and Credits). Under Section I (Exchange Fees), the Exchange proposes the following fees for Complex Order transactions executed through the Solicitation auction mechanism. For Agency Orders 8 and Solicitation Orders, Professional Customers, Broker Dealers and Market Makers will be charged $0.15 in Penny and Non-Penny Pilot Classes, and Public Customers will not be charged. For Responses in the Solicitation Auction, all account types will be charged $0.25 for Penny Pilot Classes and $0.40 for Non-Penny Pilot Classes. The Exchange then proposes to treat Complex Order transactions executed through the Solicitation mechanism in the same manner as single legged Solicitation transactions for liquidity fees and credits, which are applied in addition to any applicable exchange fees as described in Section I of the Fee Schedule. The fee structure for liquidity fees and credits for Complex Orders executed through the Solicitation mechanisms will be as follows: simultaneous purchase and/or sale of two or more different options series in the same underlying security, for the same account, in a ratio that is equal to or greater than one-to-three (.333) and less than or equal to three-to-one (3.00) and for the purpose of executing a particular investment strategy. 6 See Securities [sic] Release No. 79557 (December 14, 2016), 81 FR 92919 (December 20, 2016) (Notice of Filing and Immediate Effectiveness SR–BOX–2016–57). 7 BOX’s auction mechanisms include the Price Improvement Period (‘‘PIP’’), Complex Order Price Improvement Period (‘‘COPIP’’), Facilitation Auction and Solicitation Auction. 8 An Agency Order is the block-size order that an Order Flow Provider ‘‘OFP’’ seeks to facilitate as agent through the Facilitation Auction or Solicitation Auction mechanism. E:\FR\FM\25JAN1.SGM 25JAN1 8482 Federal Register / Vol. 82, No. 15 / Wednesday, January 25, 2017 / Notices Fee for adding liquidity (all account types) Facilitation and solicitation transactions Non-Penny Pilot Classes ................................................................................................................. Penny Pilot Classes ......................................................................................................................... Complex Order transactions executed through the Solicitation mechanism will be assessed a ‘‘removal’’ credit only if the Agency Order does not trade with their contra order. Responses to Complex Order transactions executed through the Solicitation mechanism shall be charged the ‘‘add’’ fee. Finally, the Exchange is proposing to make additional non-substantive changes to the Fee Schedule. Specifically, the Exchange is renumbering certain footnotes to accommodate the above proposed changes to the Fee Schedule. mstockstill on DSK3G9T082PROD with NOTICES 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. The Exchange believes that the proposal to specify that Complex Order transactions executed through the Exchange’s Auction Mechanisms are subject to fees and credits in Sections I (Exchange Fees) and II (Liquidity Fees and Credits) is reasonable, equitable and not unfairly discriminatory. The new ability for Complex Order transactions to execute through the Solicitation Auction mechanism is similar to Complex Orders executing through the COPIP and Facilitation Auction mechanisms. As such, the Exchange believes it is reasonable for the fees for Complex Orders executed through the Solicitation mechanism to mimic the current COPIP and Facilitation mechanism transaction fees.10 In the BOX Fee Schedule, COPIP transactions are not subject to Section III (Complex Order Transactions) and are instead treated the same as PIP transactions. Similarly, Complex Order Facilitation 9 15 U.S.C. 78f(b)(4) and (5). Securities Exchange Release Nos. 71312 (January 15, 2014), 79 FR 3649 (January 22, 2014) (SR–BOX–2014–01); 78827 (September 13, 2016), 81 FR 64218 (September 19, 2016) (SR–BOX–2016– 42); where the Exchange established fees for Complex Orders submitted to the PIP and the Facilitation Mechanisms in the BOX Fee Schedule, respectively. 10 See VerDate Sep<11>2014 20:29 Jan 24, 2017 Jkt 241001 Auction transactions are not subject to Section III (Complex Order Transactions) and are instead treated the same as single-legged Facilitation transactions in Section I. The Exchange believes the proposed fees will allow the Exchange to be competitive with other exchanges and to apply fees and credits in a manner that is equitable among all BOX Participants. The proposed fees are intended to attract Complex Orders to the Exchange by offering market participants incentives to submit their Complex Orders through the Exchange’s Solicitation auction mechanism. The Exchange believes it is appropriate to provide incentives for market participants to submit orders to the auction mechanisms, resulting in greater liquidity and ultimately benefiting all Participants trading on the Exchange. Exchange Fees Currently, for Facilitation Orders, the Exchange assesses a $0.15 per contract fee for Professional Customers, Broker Dealers and Market Makers in Penny and Non-Penny Pilot Classes and does not assess a fee for Public Customers. The Exchange proposes to assess the same fees for Solicitation Orders. The Exchange believes that charging Professional Customers and Broker Dealers and Market Makers more than Public Customers for 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. Currently, for Responses in the Facilitation Auction mechanism, the Exchange assesses a $0.25 fee in Penny Pilot Classes and a $0.40 fee in NonPenny Pilot Classes, regardless of account type. The Exchange proposes to assess the same fees for Responses in the Solicitation Auction mechanism. The Exchange believes it is reasonable, equitable and not unfairly discriminatory to charge higher PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 $0.75 $0.25 Credit for removing liquidity (all account types) (0.75) (0.25) exchange fees for responders to Complex Orders in the Solicitation auction than for initiators of these orders. Moreover, the higher fees for responders to Complex Orders are similar with fees charged by another options exchange.11 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 where fees for initiating Crossing Orders range from $0.20 and $0.25. Further, the Exchange believes its proposed fees for Responses in the Solicitation Auction mechanism are reasonable as they are identical to the fees charged for Complex Orders executed through the Facilitation auction mechanism on the Exchange. The Exchange also notes that the proposed fees for Responses to Solicitation Orders are not unfairly discriminatory because they apply equally to all Participants. The Exchange believes it is reasonable to establish different fees for 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. Liquidity Fees and Credits The Exchange believes the proposed liquidity fees and credits for Complex Orders executed through the Solicitation auction mechanism are equitable and not unfairly discriminatory. Specifically, the Exchange believes the liquidity fees and credits fee structure aims to attract order flow to the Solicitation mechanism, potentially providing greater liquidity within the overall BOX Market to the benefit of all BOX market participants. The Exchange notes that the proposed fees and credits for Complex Order transactions executed through the Solicitation mechanism offset one another in any particular transaction. 11 See International Securities Exchange (‘‘ISE’’) Fee Schedule Section I available at https:// www.ise.com/assets/documents/OptionsExchange/ legal/fee/ISE_fee_schedule.pdf. E:\FR\FM\25JAN1.SGM 25JAN1 Federal Register / Vol. 82, No. 15 / Wednesday, January 25, 2017 / Notices mstockstill on DSK3G9T082PROD with NOTICES The result is that BOX will collect a fee from Participants that add liquidity on BOX and credit another Participant an equal amount for removing liquidity. Stated otherwise, the collection of these liquidity fees will not directly result in revenue to BOX, but will simply allow BOX to provide the credit incentive to Participants in order to attract order flow. The Exchange believes it is appropriate to provide incentives to market participants to direct order flow to remove liquidity from BOX, similar to various and widely-used, exchangesponsored payment for order flow programs. Further, the Exchange believes that fees for adding liquidity on BOX will not deter Participants from seeking to add liquidity to the BOX market so that they may interact with those participants seeking to remove liquidity. The Exchange continues to believe it is reasonable to establish different fees and credits for 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 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 NonPenny Pilot issues on the Exchange, ultimately benefitting all Participants trading on BOX. Further, the Exchange continues to believe it is reasonable, equitable and not unfairly discriminatory to only assess liquidity fees and credits on Agency Orders that do not trade with their contra order, and the Responses to these Orders. As stated above, liquidity fees and credits are meant to incentivize order flow, and the Exchange believes incentives are not necessary for internalized orders in these mechanisms that only trade against their contra order. Additionally, other Exchanges also make this distinction in their Solicitation auction mechanism.12 Finally, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing exchanges. In 12 See ISE Schedule of Fees at http:// www.ise.com/assets/documents/OptionsExchange/ legal/fee/ISE_fee_schedule.pdf. Under the ISE Fee Schedule, in the equivalent of Penny Pilot Classes, the initiator receives a ‘‘break-up’’ rebate only for contracts that are submitted to the Facilitation and Solicitation mechanisms that do not trade with their contra order. The responder fee for these Orders is only applied to any contracts for which the rebate is provided. VerDate Sep<11>2014 20:29 Jan 24, 2017 Jkt 241001 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. 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 proposed change is designed to provide greater specificity and precision within the Fee Schedule with respect to the fees that will be applicable to Complex Order transactions executed through the Exchange’s Solicitation auction mechanism. The Exchange believes that adopting these fees will not impose a burden on competition among various Exchange Participants. The proposed fees are meant to mimic the fees currently assessed for Complex Orders executed through the Facilitation auction mechanism. Submitting an order through an auction mechanism is entirely voluntary and Participants can determine which type of order they wish to submit, if any, to the Exchange. Further, the Exchange believes that the proposed fees will enhance competition between exchanges because it is designed to allow the Exchange to better compete with other exchanges for Complex Order flow. In this regard, the new feature which allows Complex Order transactions to execute through the Solicitation mechanism is being introduced by the Exchange and BOX is unable to absolutely determine the impact that the proposed fees proposed herein will have on trading. That said, however, the Exchange believes that the proposed fees would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others 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 13 13 15 PO 00000 U.S.C. 78s(b)(3)(A)(ii). Frm 00088 Fmt 4703 Sfmt 4703 8483 and Rule 19b–4(f)(2) thereunder,14 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– BOX–2017–01 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–2017–01. 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 (http://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 14 17 E:\FR\FM\25JAN1.SGM CFR 240.19b–4(f)(2). 25JAN1 8484 Federal Register / Vol. 82, No. 15 / Wednesday, January 25, 2017 / Notices 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– 2017–01, and should be submitted on or before February 15, 2017. (Catalog of Federal Domestic Assistance Number 59008) For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Eduardo A. Aleman, Assistant Secretary. Data Collection Available for Public Comments DEPARTMENT OF STATE 60 Day Notice and request for comments. [Public Notice 9860] [FR Doc. 2017–01611 Filed 1–24–17; 8:45 am] SUMMARY: BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #14911 and #14912] North Carolina Disaster Number NC– 00081 U.S. Small Business Administration. AGENCY: ACTION: Amendment 15. This is an amendment of the Presidential declaration of a major disaster for the State of North Carolina (FEMA–4285–DR), dated 10/10/2016. Incident: Hurricane Matthew. Incident Period: 10/04/2016 through 10/24/2016. Effective Date: 01/09/2017. Physical Loan Application Deadline Date: 01/23/2017. EIDL Loan Application Deadline Date: 07/10/2017. SUMMARY: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. ADDRESSES: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416. FOR FURTHER INFORMATION CONTACT: The notice of the President’s major disaster declaration for the State of NORTH CAROLINA, dated 10/10/2016 is hereby amended to extend the deadline for filing applications for physical damages as a result of this disaster to 01/23/2017. All other information in the original declaration remains unchanged. mstockstill on DSK3G9T082PROD with NOTICES SUPPLEMENTARY INFORMATION: 15 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 20:29 Jan 24, 2017 Jkt 241001 Cynthia G. Pitts, Acting Associate Administrator, for Disaster Assistance. Form Number: 2301. Annual Responses: 25. Annual Burden: 175. [FR Doc. 2017–01584 Filed 1–24–17; 8:45 am] Curtis Rich. Management Analyst. BILLING CODE 8025–01–P [FR Doc. 2017–01585 Filed 1–24–17; 8:45 am] BILLING CODE P SMALL BUSINESS ADMINISTRATION ACTION: In accordance with the Paperwork Reduction Act of 1995, this notice announces the Small Business Administration’s intentions to request approval on a new and/or currently approved information collection. DATES: Submit comments on or before March 27, 2017. ADDRESSES: Send all comments regarding whether this information collection is necessary for the proper performance of the function of the agency, whether the burden estimates are accurate, and if there are ways to minimize the estimated burden and enhance the quality of the collections, to Jamie Davenport, Supervisory Financial Analyst, Office of Economic Opportunity, Small Business Administration, 409 3rd Street, 8th Floor, Washington, DC 20416. FOR FURTHER INFORMATION CONTACT: Jamie Davenport, Supervisory Financial Analyst, 202–207–7516 jamie.davenport@sba.gov. Curtis B. Rich, Management Analyst, 202–205– 7030 curtis.rich@sba.gov. SUPPLEMENTARY INFORMATION: This revised information collection is submitted to SBA by lenders that are applying for participation in SBA’s Community Advantage Pilot Program. SBA uses the information to evaluate the lenders’ eligibility and qualifications for participation in the pilot program. Solicitation of Public Comments SBA is requesting comments on (a) Whether the collection of information is necessary for the agency to properly perform its functions; (b) whether the burden estimates are accurate; (c) whether there are ways to minimize the burden, including through the use of automated techniques or other forms of information technology; and (d) whether there are ways to enhance the quality, utility, and clarity of the information. Title: ‘‘Community Advantage Lender Participation Application’’. Description of Respondents: SBA Lenders. PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 Notice of Determinations; Culturally Significant Objects Imported for Exhibition Determinations: ‘‘Degas, Impressionism and the Paris Millinery Trade’’ Exhibition Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), E.O. 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, et seq.; 22 U.S.C. 6501 note, et seq.), Delegation of Authority No. 234 of October 1, 1999, Delegation of Authority No. 236–3 of August 28, 2000 (and, as appropriate, Delegation of Authority No. 257–1 of December 11, 2015), I hereby determine that the objects to be included in the exhibition ‘‘Degas, Impressionism and the Paris Millinery Trade,’’ imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are imported pursuant to loan agreements with the foreign owners or custodians. I also determine that the exhibition or display of the exhibit objects at the Saint Louis Art Museum, St. Louis, Missouri, from on or about February 12, 2017, until on or about May 7, 2017, at the Corporation of the Fine Arts Museums ⎢ Fine Arts Museums of San Francisco: Legion of Honor, San Francisco, California, from on or about June 24, 2017, until on or about September 24, 2017, and at possible additional exhibitions or venues yet to be determined, is in the national interest. I have ordered that Public Notice of these Determinations be published in the Federal Register. SUMMARY: For further information, including a list of the imported objects, contact the Office of Public Diplomacy and Public Affairs in the Office of the Legal Adviser, U.S. Department of State (telephone: 202– 632–6471; email: section2459@ state.gov). The mailing address is U.S. FOR FURTHER INFORMATION CONTACT: E:\FR\FM\25JAN1.SGM 25JAN1

Agencies

[Federal Register Volume 82, Number 15 (Wednesday, January 25, 2017)]
[Notices]
[Pages 8481-8484]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01611]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79832; File No. SR-BOX-2017-01]


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

January 18, 2017.
    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 January 5, 2017, 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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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 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 January 9, 2017. 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 http://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 Section III (Complex Order 
Transaction Fees) to specify that all Complex Order transactions 
executed through the Exchange's auction mechanisms will be subject to 
Section I (Exchange Fees) and II (Liquidity Fees and Credits) of the 
BOX Fee Schedule. The Exchange recently amended its rules to permit 
Complex Order \5\ transactions to execute through the Solicitation 
Auction mechanism \6\ and the Exchange is submitting this filing to 
clarify the fees that are applicable to these transactions.
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    \5\ As defined in Rule 7240(a)(5), the term ``Complex Order'' 
means any order involving the simultaneous purchase and/or sale of 
two or more different options series in the same underlying 
security, for the same account, in a ratio that is equal to or 
greater than one-to-three (.333) and less than or equal to three-to-
one (3.00) and for the purpose of executing a particular investment 
strategy.
    \6\ See Securities [sic] Release No. 79557 (December 14, 2016), 
81 FR 92919 (December 20, 2016) (Notice of Filing and Immediate 
Effectiveness SR-BOX-2016-57).
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    Generally, Complex Order transactions are subject to the fees and 
credits set forth in Section III (Complex Order Transaction Fees) of 
the BOX Fee Schedule while transactions executed through the 
Facilitation and Solicitation auction mechanisms are subject to 
Sections I (Exchange Fees) and II (Liquidity Fees and Credits). The 
Exchange proposes to add language that clarifies that Complex Order 
transactions executed through Auction Mechanisms \7\ will be subject to 
Sections I (Exchange Fees) and II (Liquidity Fees and Credits).
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    \7\ BOX's auction mechanisms include the Price Improvement 
Period (``PIP''), Complex Order Price Improvement Period 
(``COPIP''), Facilitation Auction and Solicitation Auction.
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    Under Section I (Exchange Fees), the Exchange proposes the 
following fees for Complex Order transactions executed through the 
Solicitation auction mechanism. For Agency Orders \8\ and Solicitation 
Orders, Professional Customers, Broker Dealers and Market Makers will 
be charged $0.15 in Penny and Non-Penny Pilot Classes, and Public 
Customers will not be charged. For Responses in the Solicitation 
Auction, all account types will be charged $0.25 for Penny Pilot 
Classes and $0.40 for Non-Penny Pilot Classes.
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    \8\ An Agency Order is the block-size order that an Order Flow 
Provider ``OFP'' seeks to facilitate as agent through the 
Facilitation Auction or Solicitation Auction mechanism.
---------------------------------------------------------------------------

    The Exchange then proposes to treat Complex Order transactions 
executed through the Solicitation mechanism in the same manner as 
single legged Solicitation transactions for liquidity fees and credits, 
which are applied in addition to any applicable exchange fees as 
described in Section I of the Fee Schedule. The fee structure for 
liquidity fees and credits for Complex Orders executed through the 
Solicitation mechanisms will be as follows:

[[Page 8482]]



------------------------------------------------------------------------
                                 Fee for adding     Credit for  removing
      Facilitation and           liquidity  (all       liquidity  (all
  solicitation transactions      account types)        account types)
------------------------------------------------------------------------
Non-Penny Pilot Classes.....                 $0.75                (0.75)
Penny Pilot Classes.........                 $0.25                (0.25)
------------------------------------------------------------------------

    Complex Order transactions executed through the Solicitation 
mechanism will be assessed a ``removal'' credit only if the Agency 
Order does not trade with their contra order. Responses to Complex 
Order transactions executed through the Solicitation mechanism shall be 
charged the ``add'' fee.
    Finally, the Exchange is proposing to make additional non-
substantive changes to the Fee Schedule. Specifically, the Exchange is 
renumbering certain footnotes to accommodate the above proposed changes 
to the Fee Schedule.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act, in general, and Section 
6(b)(4) and 6(b)(5)of the Act,\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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposal to specify that Complex 
Order transactions executed through the Exchange's Auction Mechanisms 
are subject to fees and credits in Sections I (Exchange Fees) and II 
(Liquidity Fees and Credits) is reasonable, equitable and not unfairly 
discriminatory. The new ability for Complex Order transactions to 
execute through the Solicitation Auction mechanism is similar to 
Complex Orders executing through the COPIP and Facilitation Auction 
mechanisms. As such, the Exchange believes it is reasonable for the 
fees for Complex Orders executed through the Solicitation mechanism to 
mimic the current COPIP and Facilitation mechanism transaction 
fees.\10\ In the BOX Fee Schedule, COPIP transactions are not subject 
to Section III (Complex Order Transactions) and are instead treated the 
same as PIP transactions. Similarly, Complex Order Facilitation Auction 
transactions are not subject to Section III (Complex Order 
Transactions) and are instead treated the same as single-legged 
Facilitation transactions in Section I. The Exchange believes the 
proposed fees will allow the Exchange to be competitive with other 
exchanges and to apply fees and credits in a manner that is equitable 
among all BOX Participants. The proposed fees are intended to attract 
Complex Orders to the Exchange by offering market participants 
incentives to submit their Complex Orders through the Exchange's 
Solicitation auction mechanism. The Exchange believes it is appropriate 
to provide incentives for market participants to submit orders to the 
auction mechanisms, resulting in greater liquidity and ultimately 
benefiting all Participants trading on the Exchange.
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    \10\ See Securities Exchange Release Nos. 71312 (January 15, 
2014), 79 FR 3649 (January 22, 2014) (SR-BOX-2014-01); 78827 
(September 13, 2016), 81 FR 64218 (September 19, 2016) (SR-BOX-2016-
42); where the Exchange established fees for Complex Orders 
submitted to the PIP and the Facilitation Mechanisms in the BOX Fee 
Schedule, respectively.
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Exchange Fees
    Currently, for Facilitation Orders, the Exchange assesses a $0.15 
per contract fee for Professional Customers, Broker Dealers and Market 
Makers in Penny and Non-Penny Pilot Classes and does not assess a fee 
for Public Customers. The Exchange proposes to assess the same fees for 
Solicitation Orders. The Exchange believes that charging Professional 
Customers and Broker Dealers and Market Makers more than Public 
Customers for 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.
    Currently, for Responses in the Facilitation Auction mechanism, the 
Exchange assesses a $0.25 fee in Penny Pilot Classes and a $0.40 fee in 
Non-Penny Pilot Classes, regardless of account type. The Exchange 
proposes to assess the same fees for Responses in the Solicitation 
Auction mechanism. The Exchange believes it is reasonable, equitable 
and not unfairly discriminatory to charge higher exchange fees for 
responders to Complex Orders in the Solicitation auction than for 
initiators of these orders. Moreover, the higher fees for responders to 
Complex Orders are similar with fees charged by another options 
exchange.\11\ 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 where fees for initiating Crossing Orders range 
from $0.20 and $0.25. Further, the Exchange believes its proposed fees 
for Responses in the Solicitation Auction mechanism are reasonable as 
they are identical to the fees charged for Complex Orders executed 
through the Facilitation auction mechanism on the Exchange. The 
Exchange also notes that the proposed fees for Responses to 
Solicitation Orders are not unfairly discriminatory because they apply 
equally to all Participants.
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    \11\ See International Securities Exchange (``ISE'') Fee 
Schedule Section I available at https://www.ise.com/assets/documents/OptionsExchange/legal/fee/ISE_fee_schedule.pdf.
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    The Exchange believes it is reasonable to establish different fees 
for 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.
Liquidity Fees and Credits
    The Exchange believes the proposed liquidity fees and credits for 
Complex Orders executed through the Solicitation auction mechanism are 
equitable and not unfairly discriminatory. Specifically, the Exchange 
believes the liquidity fees and credits fee structure aims to attract 
order flow to the Solicitation mechanism, potentially providing greater 
liquidity within the overall BOX Market to the benefit of all BOX 
market participants. The Exchange notes that the proposed fees and 
credits for Complex Order transactions executed through the 
Solicitation mechanism offset one another in any particular 
transaction.

[[Page 8483]]

The result is that BOX will collect a fee from Participants that add 
liquidity on BOX and credit another Participant an equal amount for 
removing liquidity. Stated otherwise, the collection of these liquidity 
fees will not directly result in revenue to BOX, but will simply allow 
BOX to provide the credit incentive to Participants in order to attract 
order flow. The Exchange believes it is appropriate to provide 
incentives to market participants to direct order flow to remove 
liquidity from BOX, similar to various and widely-used, exchange-
sponsored payment for order flow programs. Further, the Exchange 
believes that fees for adding liquidity on BOX will not deter 
Participants from seeking to add liquidity to the BOX market so that 
they may interact with those participants seeking to remove liquidity.
    The Exchange continues to believe it is reasonable to establish 
different fees and credits for 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 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.
    Further, the Exchange continues to believe it is reasonable, 
equitable and not unfairly discriminatory to only assess liquidity fees 
and credits on Agency Orders that do not trade with their contra order, 
and the Responses to these Orders. As stated above, liquidity fees and 
credits are meant to incentivize order flow, and the Exchange believes 
incentives are not necessary for internalized orders in these 
mechanisms that only trade against their contra order. Additionally, 
other Exchanges also make this distinction in their Solicitation 
auction mechanism.\12\
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    \12\ See ISE Schedule of Fees at http://www.ise.com/assets/documents/OptionsExchange/legal/fee/ISE_fee_schedule.pdf. Under the 
ISE Fee Schedule, in the equivalent of Penny Pilot Classes, the 
initiator receives a ``break-up'' rebate only for contracts that are 
submitted to the Facilitation and Solicitation mechanisms that do 
not trade with their contra order. The responder fee for these 
Orders is only applied to any contracts for which the rebate is 
provided.
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    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.

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 proposed change is designed 
to provide greater specificity and precision within the Fee Schedule 
with respect to the fees that will be applicable to Complex Order 
transactions executed through the Exchange's Solicitation auction 
mechanism.
    The Exchange believes that adopting these fees will not impose a 
burden on competition among various Exchange Participants. The proposed 
fees are meant to mimic the fees currently assessed for Complex Orders 
executed through the Facilitation auction mechanism. Submitting an 
order through an auction mechanism is entirely voluntary and 
Participants can determine which type of order they wish to submit, if 
any, to the Exchange.
    Further, the Exchange believes that the proposed fees will enhance 
competition between exchanges because it is designed to allow the 
Exchange to better compete with other exchanges for Complex Order flow. 
In this regard, the new feature which allows Complex Order transactions 
to execute through the Solicitation mechanism is being introduced by 
the Exchange and BOX is unable to absolutely determine the impact that 
the proposed fees proposed herein will have on trading. That said, 
however, the Exchange believes that the proposed fees would not impose 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

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

    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 \13\ and Rule 19b-4(f)(2) 
thereunder,\14\ because it establishes or changes a due, or fee.
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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-BOX-2017-01 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-2017-01. 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 (http://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

[[Page 8484]]

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-2017-01, and should be 
submitted on or before February 15, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-01611 Filed 1-24-17; 8:45 am]
 BILLING CODE 8011-01-P