Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To amend Rule 7260 by Extending the Penny Pilot Program Through June 30, 2019, 66806-66808 [2018-27993]

Download as PDF 66806 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: • 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– NASDAQ–2018–102 on the subject line. Paper Comments khammond on DSK30JT082PROD with NOTICES • 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–NASDAQ–2018–102. 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 website (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 website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NASDAQ–2018–102 and should be submitted on or before January 17, 2019. 17:14 Dec 26, 2018 [FR Doc. 2018–28002 Filed 12–26–18; 8:45 am] Jkt 247001 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 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments VerDate Sep<11>2014 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Brent J. Fields, Secretary. [Release No. 34–84869; File No. SR–BOX– 2018–38] Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To amend Rule 7260 by Extending the Penny Pilot Program Through June 30, 2019 December 19, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on December 18, 2018, BOX Exchange LLC (the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to extend the effective time period of the Penny Pilot Program that is currently scheduled to expire on December 31, 2018, until June 30, 2019. 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 website at https://boxoptions.com. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in 18 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00136 Fmt 4703 Sfmt 4703 1. Purpose The Exchange proposes to extend the effective time period of the Penny Pilot Program that is currently scheduled to expire on December 31, 2018, until June 30, 2019.3 The Penny Pilot Program permits certain classes to be quoted in penny increments. The minimum price variation for all classes included in the Penny Pilot Program, except for PowerShares QQQ Trust (‘‘QQQQ’’)®, SPDR S&P 500 Exchange Traded Funds (‘‘SPY’’), and iShares Russell 2000 Index Funds (‘‘IWM’’), will continue to be $0.01 for all quotations in options series that are quoted at less than $3 per contract and $0.05 for all quotations in options series that are quoted at $3 per contract or greater. QQQQ, SPY, and IWM will continue to be quoted in $0.01 increments for all options series. The Exchange may replace, on a semiannual basis, any Pilot Program classes that have been delisted on the second trading day following January 1, 2019. The Exchange notes that the replacement classes will be selected based on trading activity for the six month period beginning June 1, 2018 and ending November 30, 2018 for the January 2019 replacements. The Exchange will employ the same parameters to prospective replacement classes as approved and applicable under the Pilot Program, including excluding high-priced underlying 3 The Penny Pilot Program has been in effect on the Exchange since its inception in May 2012. See Securities Exchange Act Release Nos. 66871 (April 27, 2012), 77 FR 26323 (May 3, 2012) (File No.10– 206, In the Matter of the Application of BOX Options Exchange LLC for Registration as a National Securities Exchange Findings, Opinion, and Order of the Commission), 67328 (June 29, 2012), 77 FR 40123 (July 6, 2012) (SR–BOX–2012– 007), 68425 (December 13, 2012), 77 FR 75234 (December 19, 2013) (SR–BOX–2012–021), 69789 (June 18, 2013), 78 FR 37854 (June 24, 2013) (SR– BOX–2013–31), 71056 (December 12, 2013), 78 FR 76691 (December 18, 2013) (SR–BOX–2013–56), 72348 (June 9, 2014), 79 FR 33976 (June 13, 2014) (SR–BOX–2014–17), 73822 (December 11, 2014), 79 FR 75606 (December 18, 2014) (SR–BOX–2014–29), 75295 (June 25, 2015), 80 FR 37690 (July 1, 2015)(SR–BOX–2015–23), 78172 (June 28, 2016), 81 FR 43325 (July 1, 2016)(SR–BOX–2016–24), 79429 (November 30, 2016), 81 FR 87991 (December 6, 2016)(SR–BOX–2016–55), 80828 (May 31, 2017), 82 FR 26175 (June 6, 2017) (SR–BOX–2017–18), 82353 (December 19, 2017) 82 FR 61087 (December 26, 2017)(SR–BOX–2017–37), and 83500 (June 22, 2018), 83 FR 30471 (June 28, 2018)(SR–BOX–2018– 23). The extension of the effective date and the revision of the date to replace issues that have been delisted are the only changes to the Penny Pilot Program being proposed at this time. E:\FR\FM\27DEN1.SGM 27DEN1 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices securities. The Exchange will distribute a Regulatory Circular notifying Participants which replacement classes shall be included in the Penny Pilot Program. BOX is specifically authorized to act jointly with the other options exchanges participating in the Pilot Program in identifying any replacement class. khammond on DSK30JT082PROD with NOTICES 2. Statutory Basis The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act,4 in general, and Section 6(b)(5) of the Act,5 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general protect investors and the public interest. In particular, the proposed rule change, which extends the Penny Pilot until June 30, 2019 and changes the date for replacing Penny Pilot issues that were delisted to the second trading day following January 1, 2019, will enable public customers and other market participants to express their true prices to buy and sell options for the benefit of all market participants. This is consistent with the Act. 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. To the contrary, this proposal is procompetitive because it allows Penny Pilot issues to continue trading on the Exchange. Moreover, the Exchange believes that the proposed rule change will allow for further analysis of the Pilot and a determination of how the Pilot should be structured in the future; and will serve to promote regulatory clarity and consistency, thereby reducing burdens on the marketplace and facilitating investor protection. The Pilot is an industry wide initiative supported by all other option exchanges. The Exchange believes that extending the Pilot will allow for continued competition between market participants on the Exchange trading similar products as their counterparts on other exchanges, while at the same 4 15 5 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). VerDate Sep<11>2014 17:14 Dec 26, 2018 Jkt 247001 time allowing the Exchange to continue to compete for order flow with other exchanges in option issues trading as part of the Pilot. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act 6 and Rule 19b– 4(f)(6) 7 thereunder. Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to 19(b)(3)(A) of the Act 8 and Rule 19b–4(f)(6) 9 thereunder. A proposed rule change filed under Rule 19b–4(f)(6) 10 normally does not become operative prior to 30 days after the date of filing. However, pursuant to Rule 19b–4(f)(6)(iii),11 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because doing so will allow the Pilot Program to continue without interruption in a manner that is consistent with the Commission’s prior approval of the extension and expansion of the Pilot Program.12 Accordingly, the 6 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 10 17 CFR 240.19b–4(f)(6). 11 17 CFR 240.19b–4(f)(6)(iii). 12 See Securities Exchange Release No. 61061 (November 24, 2009), 74 FR 62857 (December 1, 2009) (SR–NYSEArca–2009–44). 7 17 PO 00000 Frm 00137 Fmt 4703 Sfmt 4703 66807 Commission designates the proposed rule change as operative upon filing with the Commission.13 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the 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–2018–38 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–2018–38. 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 website (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 website viewing and printing in the Commission’s Public Reference Room, on official business days between the hours of 10:00 a.m. 13 For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). E:\FR\FM\27DEN1.SGM 27DEN1 66808 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices and 3:00 p.m., located at 100 F Street NE, Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–BOX–2018–38 and should be submitted on or before January 17, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Brent J. Fields, Secretary. [FR Doc. 2018–27993 Filed 12–26–18; 8:45 am] SECURITIES AND EXCHANGE COMMISSION 1. Purpose [Release No. 34–84852; File No. SR–CHX– 2018–09] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Decommission the Exchange’s Outbound Routing Service and the Sub-Second Non-Displayed Auction Process December 19, 2018. khammond on DSK30JT082PROD with NOTICES Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on December 12, 2018, the Chicago Stock Exchange, Inc. (‘‘CHX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the rules of the Exchange (‘‘Rules’’) to decommission the Exchange’s outbound routing service and the Sub-second Non-displayed Auction Process CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 17:14 Dec 26, 2018 Jkt 247001 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those 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 parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change BILLING CODE 8011–01–P 14 17 (‘‘SNAP’’). The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 2. Background The Exchange proposes to amend the Rules to decommission the Exchange’s outbound routing service 4 and SNAP.5 Since initial launch of the outbound routing service in May 2015 and SNAP in June 2016, neither product has been frequently or actively utilized by Participants.6 Accordingly, to streamline the Exchange’s product offerings and to reallocate Exchange resources to other initiatives and obligations, the Exchange proposes to decommission the outbound routing service and SNAP as of December 31, 2018 (‘‘Operative Date’’). On the Operative Date, the Exchange’s outbound routing broker-dealer, CHXBD, LLC (‘‘CHXBD’’), will cease business operations and all inbound orders received by the Exchange will be handled Do Not Route.7 Specifically, to the extent an inbound order would trade-through a protected quotation of an away market in violation of Rule 611 of Regulation NMS 8 or impermissibly lock or cross a protected quotation of an 4 See generally CHX Article 19. CHX Article 18, Rules 1 and 1A. The Exchange will submit a separate Rule 19b–4 filing to eliminate fees and credits associated with the outbound routing service and SNAP. 6 See CHX Article 1, Rule 1(s). From January 1, 2018 through November 30, 2018, the Exchange routed away a total of 634 orders and executed 178,682 away shares pursuant to the outbound routing service. Moreover, a total of 60 SNAP auctions that resulted in order executions were initiated since June 2016, 16 of which occurred in 2018. 7 See CHX Article 1, Rule 2(b)(3)(A). 8 17 CFR 242.611. 5 See PO 00000 Frm 00138 Fmt 4703 Sfmt 4703 away market in violation of Rule 610(d) of Regulation NMS,9 the order will either be cancelled back to the order sender or price slid to a permissible price if it is marked CHX Only.10 With respect to SNAP, pursuant to Article 20, Rule 4(b), the Exchange deactivated the Start SNAP,11 Cancel On SNAP,12 and SNAP Auction Only Order (‘‘SNAP AOO’’) 13 order modifiers as of August 16, 2018. As SNAP Cycles 14 can only be initiated upon receipt of a valid Start SNAP order or pursuant to the Exchange’s pro forma review of the SNAP AOO queue,15 the Exchange does not currently conduct any SNAP auctions. Therefore, elimination of the SNAP-related Rules will have no impact on the current operation of the Matching System.16 3. Proposed Rule Change To effect the decommissioning of the outbound routing service and SNAP, the Exchange proposes to amend the Rules as follows: a. Amendments to Article 1 Current Article 1, Rule 1(oo) defines the term ‘‘Routable Order,’’ which are the only orders that may be routed away pursuant to the outbound routing service. The Exchange proposes to amend Article 1, Rule 1(oo) to eliminate ‘‘Routable Order’’ as a defined term and to insert the term ‘‘Reserved’’ in its place. Current Article 1, Rule 1(rr) defines the term ‘‘SNAP Price,’’ which is the single price at which an order will be executed during a SNAP Cycle, and current Article 1, Rule 1(ss) defines ‘‘SNAP Eligible Orders,’’ which are specific orders that are eligible for participation in a SNAP Cycle. The Exchange proposes to amend these Rules to eliminate SNAP Price and SNAP Eligible Orders as defined terms and to insert the term ‘‘Reserved’’ in their place. Current Article 1, Rule 2(a) provides that the general order types described thereunder shall be accepted by the Matching System, subject to the requirements of Article 20, Rule 4. Because the decommissioning of the outbound routing service would result in all orders being non-routable, the 9 17 CFR 242.610(d). CHX Article 1, Rule 2(b)(1)(C); see also amended CHX Article 20, Rules 5 and 6. 11 See CHX Article 1, Rule 2(h)(1). 12 See CHX Article 1, Rule 2(h)(2). 13 See CHX Article 1, Rule 2(h)(3). 14 See CHX Article 1, Rule 1(b). 15 See CHX Article 18, Rules 1A(a) and (b). 16 The Matching System is a ‘‘Trading Facility’’ of the Exchange as defined under CHX Article 1, Rule 1(z). 10 See E:\FR\FM\27DEN1.SGM 27DEN1

Agencies

[Federal Register Volume 83, Number 247 (Thursday, December 27, 2018)]
[Notices]
[Pages 66806-66808]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27993]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84869; File No. SR-BOX-2018-38]


Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To amend Rule 
7260 by Extending the Penny Pilot Program Through June 30, 2019

December 19, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 18, 2018, BOX Exchange LLC (the ``Exchange'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I and II below, which Items have been 
prepared by the self-regulatory organization. The Commission is 
publishing this notice to solicit comments on the proposed rule from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the effective time period of the 
Penny Pilot Program that is currently scheduled to expire on December 
31, 2018, until June 30, 2019. 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 
website at https://boxoptions.com.

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

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in Sections A, B, and C below, of the 
most significant aspects of such statements.

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

1. Purpose
    The Exchange proposes to extend the effective time period of the 
Penny Pilot Program that is currently scheduled to expire on December 
31, 2018, until June 30, 2019.\3\ The Penny Pilot Program permits 
certain classes to be quoted in penny increments. The minimum price 
variation for all classes included in the Penny Pilot Program, except 
for PowerShares QQQ Trust (``QQQQ'')[supreg], SPDR S&P 500 Exchange 
Traded Funds (``SPY''), and iShares Russell 2000 Index Funds (``IWM''), 
will continue to be $0.01 for all quotations in options series that are 
quoted at less than $3 per contract and $0.05 for all quotations in 
options series that are quoted at $3 per contract or greater. QQQQ, 
SPY, and IWM will continue to be quoted in $0.01 increments for all 
options series.
---------------------------------------------------------------------------

    \3\ The Penny Pilot Program has been in effect on the Exchange 
since its inception in May 2012. See Securities Exchange Act Release 
Nos. 66871 (April 27, 2012), 77 FR 26323 (May 3, 2012) (File No.10-
206, In the Matter of the Application of BOX Options Exchange LLC 
for Registration as a National Securities Exchange Findings, 
Opinion, and Order of the Commission), 67328 (June 29, 2012), 77 FR 
40123 (July 6, 2012) (SR-BOX-2012-007), 68425 (December 13, 2012), 
77 FR 75234 (December 19, 2013) (SR-BOX-2012-021), 69789 (June 18, 
2013), 78 FR 37854 (June 24, 2013) (SR-BOX-2013-31), 71056 (December 
12, 2013), 78 FR 76691 (December 18, 2013) (SR-BOX-2013-56), 72348 
(June 9, 2014), 79 FR 33976 (June 13, 2014) (SR-BOX-2014-17), 73822 
(December 11, 2014), 79 FR 75606 (December 18, 2014) (SR-BOX-2014-
29), 75295 (June 25, 2015), 80 FR 37690 (July 1, 2015)(SR-BOX-2015-
23), 78172 (June 28, 2016), 81 FR 43325 (July 1, 2016)(SR-BOX-2016-
24), 79429 (November 30, 2016), 81 FR 87991 (December 6, 2016)(SR-
BOX-2016-55), 80828 (May 31, 2017), 82 FR 26175 (June 6, 2017) (SR-
BOX-2017-18), 82353 (December 19, 2017) 82 FR 61087 (December 26, 
2017)(SR-BOX-2017-37), and 83500 (June 22, 2018), 83 FR 30471 (June 
28, 2018)(SR-BOX-2018-23). The extension of the effective date and 
the revision of the date to replace issues that have been delisted 
are the only changes to the Penny Pilot Program being proposed at 
this time.
---------------------------------------------------------------------------

    The Exchange may replace, on a semi-annual basis, any Pilot Program 
classes that have been delisted on the second trading day following 
January 1, 2019. The Exchange notes that the replacement classes will 
be selected based on trading activity for the six month period 
beginning June 1, 2018 and ending November 30, 2018 for the January 
2019 replacements. The Exchange will employ the same parameters to 
prospective replacement classes as approved and applicable under the 
Pilot Program, including excluding high-priced underlying

[[Page 66807]]

securities. The Exchange will distribute a Regulatory Circular 
notifying Participants which replacement classes shall be included in 
the Penny Pilot Program.
    BOX is specifically authorized to act jointly with the other 
options exchanges participating in the Pilot Program in identifying any 
replacement class.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\4\ in general, and Section 
6(b)(5) of the Act,\5\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general protect investors 
and the public interest.
---------------------------------------------------------------------------

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

    In particular, the proposed rule change, which extends the Penny 
Pilot until June 30, 2019 and changes the date for replacing Penny 
Pilot issues that were delisted to the second trading day following 
January 1, 2019, will enable public customers and other market 
participants to express their true prices to buy and sell options for 
the benefit of all market participants. This is consistent with the 
Act.

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. To the contrary, this proposal 
is pro-competitive because it allows Penny Pilot issues to continue 
trading on the Exchange. Moreover, the Exchange believes that the 
proposed rule change will allow for further analysis of the Pilot and a 
determination of how the Pilot should be structured in the future; and 
will serve to promote regulatory clarity and consistency, thereby 
reducing burdens on the marketplace and facilitating investor 
protection. The Pilot is an industry wide initiative supported by all 
other option exchanges. The Exchange believes that extending the Pilot 
will allow for continued competition between market participants on the 
Exchange trading similar products as their counterparts on other 
exchanges, while at the same time allowing the Exchange to continue to 
compete for order flow with other exchanges in option issues trading as 
part of the Pilot.

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

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

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \6\ and Rule 19b-4(f)(6) \7\ thereunder. Because 
the foregoing proposed rule change does not: (i) Significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days after the date of the filing, or such shorter time as the 
Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) 
\9\ thereunder.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6).
    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally 
does not become operative prior to 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\11\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because doing so will 
allow the Pilot Program to continue without interruption in a manner 
that is consistent with the Commission's prior approval of the 
extension and expansion of the Pilot Program.\12\ Accordingly, the 
Commission designates the proposed rule change as operative upon filing 
with the Commission.\13\
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ See Securities Exchange Release No. 61061 (November 24, 
2009), 74 FR 62857 (December 1, 2009) (SR-NYSEArca-2009-44).
    \13\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-BOX-2018-38 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-2018-38. 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 website (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 website viewing and printing in 
the Commission's Public Reference Room, on official business days 
between the hours of 10:00 a.m.

[[Page 66808]]

and 3:00 p.m., located at 100 F Street NE, Washington, DC 20549. Copies 
of such filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change. Persons submitting comments are cautioned that we do 
not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-BOX-
2018-38 and should be submitted on or before January 17, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2018-27993 Filed 12-26-18; 8:45 am]
 BILLING CODE 8011-01-P
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