Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Clarify That Multi-Leg Qualified Open Outcry Orders Are Permitted on the BOX Trading Floor, 3265-3267 [2019-01728]
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Federal Register / Vol. 84, No. 28 / Monday, February 11, 2019 / Notices
registered under the Exchange Act, to
sell shares to Funds of Funds beyond
the limits of section 12(d)(1)(B) of the
Act. The application’s terms and
conditions are designed to, among other
things, help prevent any potential (i)
undue influence over a Fund through
control or voting power, or in
connection with certain services,
transactions, and underwritings, (ii)
excessive layering of fees, and (iii)
overly complex fund structures, which
are the concerns underlying the limits
in sections 12(d)(1)(A) and (B) of the
Act.
8. Applicants request an exemption
from sections 17(a)(1) and 17(a)(2) of the
Act to permit persons that are Affiliated
Persons, or Second Tier Affiliates, of the
Funds, solely by virtue of certain
ownership interests, to effectuate
purchases and redemptions in-kind. The
deposit procedures for in-kind
purchases of Creation Units and the
redemption procedures for in-kind
redemptions of Creation Units will be
the same for all purchases and
redemptions, and Deposit Instruments
and Redemption Instruments will be
valued in the same manner as those
investment positions currently held by
the Funds. Applicants also seek relief
from the prohibitions on affiliated
transactions in section 17(a) to permit a
Fund to sell its shares to and redeem its
shares from a Fund of Funds, and to
engage in the accompanying in-kind
transactions with the Fund of Funds.3
The purchase of Creation Units by a
Fund of Funds directly from a Fund will
be accomplished in accordance with the
policies of the Fund of Funds and will
be based on the NAVs of the Funds.
9. Applicants also request relief to
permit a Feeder Fund to acquire shares
of another registered investment
company managed by the Adviser
having substantially the same
investment objectives as the Feeder
Fund (‘‘Master Fund’’) beyond the
limitations in section 12(d)(1)(A) and
permit the Master Fund, and any
principal underwriter for the Master
Fund, to sell shares of the Master Fund
to the Feeder Fund beyond the
limitations in section 12(d)(1)(B).
10. Section 6(c) of the Act permits the
Commission to exempt any persons or
transactions from any provision of the
3 The requested relief would apply to direct sales
of shares in Creation Units by a Fund to a Fund of
Funds and redemptions of those shares. Applicants,
moreover, are not seeking relief from section 17(a)
for, and the requested relief will not apply to,
transactions where a Fund could be deemed an
Affiliated Person, or a Second-Tier Affiliate, of a
Fund of Funds because an Adviser or an entity
controlling, controlled by or under common control
with an Adviser provides investment advisory
services to that Fund of Funds.
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Act if such exemption is necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities, or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Section 17(b) of the Act authorizes the
Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (a) the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (b) the
proposed transaction is consistent with
the policies of each registered
investment company involved; and (c)
the proposed transaction is consistent
with the general purposes of the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–01887 Filed 2–8–19; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–85052; File No. SR–BOX–
2019–01]
Self-Regulatory Organizations; BOX
Exchange LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Clarify That Multi-Leg
Qualified Open Outcry Orders Are
Permitted on the BOX Trading Floor
February 5, 2019.
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 January
30, 2019, 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
change from interested persons.
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00129
Fmt 4703
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to make
multi-leg QOO Orders available on the
BOX Trading Floor. 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
SECURITIES AND EXCHANGE
COMMISSION
1 15
3265
In August 2017, the Securities and
Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) approved the
Exchange’s proposal to adopt rules for
an open outcry trading floor.3 Among
the approved rules was BOX Rule
7600(a)(4) which stated that ‘‘QOO
Orders may be multi-leg orders up to
four (4) legs, including Complex Orders
as defined in Rule 7240(a)(5) and tied to
hedge orders as defined in IM–7600–
2.’’ 4 The Exchange notes that while this
3 See Securities Exchange Act Release No. 81292
(August 2, 2017), 82 FR 37144 (August 8, 2017)
(Order Approving a Proposed Rule Change, as
Modified by Amendment Nos. 1 and 2, To Adopt
Rules for an Open-Outcry Trading Floor).
4 The Exchange notes it recently amended this
rule to provide the ability for the Exchange to
determine the applicable number of legs for a
Complex QOO Order. See Securities Exchange Act
Release No. 84340 (October 2, 2018), 83 FR 50718
(October 9, 2018) (Notice of Filing and Immediate
Effectiveness SR–BOX–2018–30). In this filing, the
Exchange stated that only orders that meet the
definition of a Complex Order are allowed to trade
on the BOX Trading Floor. The Exchange now
proposes, due to technology enhancements, to make
such multi-leg QOO Orders that do not meet the
definition of a Complex Order available on the BOX
Trading Floor. Upon approval, multi-leg QOO
orders that are entered into the system will be
accepted and executed pursuant to Rule 7600(c).
The Exchange notes that Complex Order priority
provisions do not apply to multi-leg QOO Orders.
Continued
Sfmt 4703
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Federal Register / Vol. 84, No. 28 / Monday, February 11, 2019 / Notices
rule currently allows for multi-leg QOO
Orders that do not meet the definition
of a Complex Order 5 to trade on the
BOX Trading Floor, such multi-leg QOO
Orders are not currently traded. Due to
technology enhancements, the Exchange
now proposes to make these multi-leg
QOO Orders available on the BOX
Trading Floor.6 As such, the Exchange
proposes to add rule text that states that
the priority rules for Complex Orders
contained in Rule 7240(b)(2) and (3) do
not apply to multi-leg QOO orders that
are not Complex Orders (‘‘multi-leg
QOO Orders’’). Multi-leg QOO Orders
must involve the simultaneous purchase
and/or sale of two or more different
options series in the same underlying
security, for the same account, and for
the purpose of executing a particular
investment strategy.7 Each component
series of a multi-leg QOO order must be
executed at a price that is equal to or
better than the NBBO for that series
subject to the exceptions of Rule
15010(b). Each component series of a
multi-leg QOO order (1) may not trade
through any equal or better priced
Public Customer bids or offers on the
BOX book for that series or any nonPublic Customer bids or offers on the
BOX book for that series that are ranked
ahead of or equal to better priced Public
Customer bids or offers, and (2) may not
trade through any non-Public Customer
bids or offers for that series on the BOX
Multi-leg QOO Orders are treated like single-leg
QOO Orders with respect to execution and priority.
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. See BOX Rule 7240(a)(7).
6 The Exchange notes that NYSE Arca Inc.
(‘‘NYSE Arca’’) currently allows multi-leg orders to
trade on their trading floor. While NYSE Arca does
not specifically provide in their rulebook that
multi-leg orders (that do not meet the definition of
a Complex Order) may trade on the trading floor,
NYSE Arca distributed a regulatory bulletin which
detailed the rules of priority and order protection
in open outcry including multi-leg orders on the
trading floor. Specifically, the bulletin states, ‘‘OTP
Holders are reminded that orders involving
multiple legs that do not meet the definition of a
Complex Order, as defined in Rule 6.62(e) . . . do
not have priority over equal priced priority interest
in the Consolidated Book.’’ See NYSE Arca Options
RB–16–04. Given this language, the Exchange
believes that multi-leg orders that do not meet the
definition of a Complex Order are currently
permitted on the NYSE Arca trading floor. As such,
the Exchange does not believe the proposed
clarification is novel; especially since current BOX
rules already allow for such orders to be traded on
the Trading Floor. The purpose of this filing is to
advise market participants that multi-leg QOO
Orders will now be allowed to trade on the Trading
Floor due to recent technological enhancements.
7 The Exchange notes multi-leg QOO Orders are
the same as Complex QOO Orders except for the
ratio restrictions.
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book that are priced better than the
proposed execution price.8
The Exchange notes that the system
will enforce the execution and priority
provisions in the proposed change. As
such, multi-leg QOO Orders will not be
allowed to take advantage of the
Complex Order priority provisions in
BOX Rule 7240(b)(2) and (3).
The Exchange anticipates this
enhanced functionality to be available
in the first quarter of 2019. The
Exchange will distribute an
Informational Circular at least two
weeks before the implementation date.
2. Statutory Basis
The Exchange believes that the
proposal is consistent with the
requirements of Section 6(b) of the Act,9
in general, and Section 6(b)(5) of the
Act,10 in particular, in that it is designed
to promote just and equitable principles
of trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general to protect
investors and the public interest. The
Exchange believes that the proposed
change discussed herein protects
investors and the public interest as it
will reduce any potential confusion
regarding multi-leg QOO Orders on the
BOX Trading Floor. Further, the
Exchange notes that similar
functionality exists on another options
exchange with a trading floor.11 Also,
the Exchange believes the proposed
change promotes just and equitable
principles of trade and removes
impediments to and perfects the
mechanism of a free and open market
and a national system because it mirrors
the current functionality for single leg
orders on the Trading Floor. Lastly, the
Exchange believes the proposed change
is consistent with the Act because it is
simply advising Participants of the
technological enhancement. Further, the
functionality is available to all Floor
Participants.
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 that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that proposed
clarification will promote competition
by making the enhanced functionality
8 The
Exchange notes that similar functionality
exists at NYSE Arca with respect to execution and
priority for single leg orders on their trading floor.
See NYSE Arca Rule 6.47–O(a)(3).
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
11 See supra note 6.
PO 00000
Frm 00130
Fmt 4703
Sfmt 4703
available to market participants. The
Exchange notes that similar
functionality already exists on another
trading floor.12 As such, the Exchange
does not believe that the proposed rule
change will impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the 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, it has
become effective pursuant to 19(b)(3)(A)
of the Act 13 and Rule 19b–4(f)(6) 14
thereunder.
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
12 Id.
13 15
U.S.C. 78s(b)(3)(A).
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.
14 17
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Federal Register / Vol. 84, No. 28 / Monday, February 11, 2019 / Notices
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BOX–2019–01 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–2019–01. 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 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–BOX–2019–01 and should
be submitted on or before March 4,
2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–01728 Filed 2–8–19; 8:45 am]
BILLING CODE 8011–01–P
15 17
CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33370; 812–14966]
Yleana Advisors, LLC and Yleana Trust
February 6, 2019.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of an application for an order
under section 6(c) of the Investment
Company Act of 1940 (the ‘‘Act’’) for an
exemption from sections 2(a)(32),
5(a)(1), 22(d), and 22(e) of the Act and
rule 22c–1 under the Act, under
sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and
17(a)(2) of the Act, and under section
12(d)(1)(J) of the Act for an exemption
from sections 12(d)(1)(A) and
12(d)(1)(B) of the Act. The requested
order would permit (a) activelymanaged series of certain open-end
management investment companies
(‘‘Funds’’) to issue shares redeemable in
large aggregations only (‘‘Creation
Units’’); (b) secondary market
transactions in Fund shares to occur at
negotiated market prices rather than at
net asset value (‘‘NAV’’); (c) certain
Funds to pay redemption proceeds,
under certain circumstances, more than
seven days after the tender of shares for
redemption; (d) certain affiliated
persons of a Fund to deposit securities
into, and receive securities from, the
Fund in connection with the purchase
and redemption of Creation Units; (e)
certain registered management
investment companies and unit
investment trusts outside of the same
group of investment companies as the
Funds (‘‘Funds of Funds’’) to acquire
shares of the Funds; (f) certain Funds
(‘‘Feeder Funds’’) to create and redeem
Creation Units in-kind in a masterfeeder structure; and (g) the Funds to
issue shares in less than Creation Unit
size to investors participating in a
distribution reinvestment program.
Applicants: Yleana Advisors, LLC (the
‘‘Initial Adviser’’), a Delaware limited
liability company registered as an
investment adviser under the
Investment Advisers Act of 1940, and
Yleana Trust (the ‘‘Trust’’), a Delaware
statutory trust registered under the Act
as an open-end management investment
company with multiple series.
Filing Dates: The application was
filed on October 16, 2018, and amended
on December 31, 2018 and January 31,
2019.
Hearing or Notification of Hearing: An
order granting the requested relief will
be issued unless the Commission orders
PO 00000
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Fmt 4703
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3267
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on March 4, 2019, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit, or for lawyers, a certificate of
service. Pursuant to rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
bearing upon the desirability of a
hearing on the matter, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Commission’s Secretary.
ADDRESSES: Secretary, Securities and
Exchange Commission, 100 F Street, NE,
Washington, DC 20549–1090;
Applicants: Allison M. Fumai, Esq. and
Stuart M. Strauss, Esq., Dechert LLP,
1095 Avenue of the Americas, New
York, New York 10036.
FOR FURTHER INFORMATION CONTACT: Jill
Corrigan, Senior Counsel, at (202) 551–
8929, or Parisa Haghshenas, Branch
Chief, at (202) 551–6723 (Division of
Investment Management, Chief
Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
website by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Summary of the Application
1. Applicants request an order that
would allow Funds to operate as
actively-managed exchange traded
funds (‘‘ETFs’’).1 Fund shares will be
purchased and redeemed at their NAV
in Creation Units only (other than
pursuant to a distribution reinvestment
program described in the application).
All orders to purchase Creation Units
and all redemption requests will be
1 Applicants request that the order apply to the
new series of the Company described in the
application, as well as to additional series of the
Company and any other open-end management
investment company or series thereof that currently
exist or that may be created in the future (each,
included in the term ‘‘Fund’’), each of which will
operate as an actively-managed ETF. Any Fund will
(a) be advised by MFAM or an entity controlling,
controlled by, or under common control with
MFAM (each such entity and any successor thereto
is included in the term ‘‘Adviser’’) and (b) comply
with the terms and conditions of the application.
For purposes of the requested Order, the term
‘‘successor’’ is limited to an entity that results from
a reorganization into another jurisdiction or a
change in the type of business organization.
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]]>Agencies
[Federal Register Volume 84, Number 28 (Monday, February 11, 2019)]
[Notices]
[Pages 3265-3267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-01728]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85052; File No. SR-BOX-2019-01]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Clarify That
Multi-Leg Qualified Open Outcry Orders Are Permitted on the BOX Trading
Floor
February 5, 2019.
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 January 30, 2019, 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 change
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to make multi-leg QOO Orders available on the
BOX Trading Floor. 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
In August 2017, the Securities and Exchange Commission (``SEC'' or
``Commission'') approved the Exchange's proposal to adopt rules for an
open outcry trading floor.\3\ Among the approved rules was BOX Rule
7600(a)(4) which stated that ``QOO Orders may be multi-leg orders up to
four (4) legs, including Complex Orders as defined in Rule 7240(a)(5)
and tied to hedge orders as defined in IM-7600-2.'' \4\ The Exchange
notes that while this
[[Page 3266]]
rule currently allows for multi-leg QOO Orders that do not meet the
definition of a Complex Order \5\ to trade on the BOX Trading Floor,
such multi-leg QOO Orders are not currently traded. Due to technology
enhancements, the Exchange now proposes to make these multi-leg QOO
Orders available on the BOX Trading Floor.\6\ As such, the Exchange
proposes to add rule text that states that the priority rules for
Complex Orders contained in Rule 7240(b)(2) and (3) do not apply to
multi-leg QOO orders that are not Complex Orders (``multi-leg QOO
Orders''). Multi-leg QOO Orders must involve the simultaneous purchase
and/or sale of two or more different options series in the same
underlying security, for the same account, and for the purpose of
executing a particular investment strategy.\7\ Each component series of
a multi-leg QOO order must be executed at a price that is equal to or
better than the NBBO for that series subject to the exceptions of Rule
15010(b). Each component series of a multi-leg QOO order (1) may not
trade through any equal or better priced Public Customer bids or offers
on the BOX book for that series or any non-Public Customer bids or
offers on the BOX book for that series that are ranked ahead of or
equal to better priced Public Customer bids or offers, and (2) may not
trade through any non-Public Customer bids or offers for that series on
the BOX book that are priced better than the proposed execution
price.\8\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 81292 (August 2,
2017), 82 FR 37144 (August 8, 2017) (Order Approving a Proposed Rule
Change, as Modified by Amendment Nos. 1 and 2, To Adopt Rules for an
Open-Outcry Trading Floor).
\4\ The Exchange notes it recently amended this rule to provide
the ability for the Exchange to determine the applicable number of
legs for a Complex QOO Order. See Securities Exchange Act Release
No. 84340 (October 2, 2018), 83 FR 50718 (October 9, 2018) (Notice
of Filing and Immediate Effectiveness SR-BOX-2018-30). In this
filing, the Exchange stated that only orders that meet the
definition of a Complex Order are allowed to trade on the BOX
Trading Floor. The Exchange now proposes, due to technology
enhancements, to make such multi-leg QOO Orders that do not meet the
definition of a Complex Order available on the BOX Trading Floor.
Upon approval, multi-leg QOO orders that are entered into the system
will be accepted and executed pursuant to Rule 7600(c). The Exchange
notes that Complex Order priority provisions do not apply to multi-
leg QOO Orders. Multi-leg QOO Orders are treated like single-leg QOO
Orders with respect to execution and priority.
\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. See BOX Rule 7240(a)(7).
\6\ The Exchange notes that NYSE Arca Inc. (``NYSE Arca'')
currently allows multi-leg orders to trade on their trading floor.
While NYSE Arca does not specifically provide in their rulebook that
multi-leg orders (that do not meet the definition of a Complex
Order) may trade on the trading floor, NYSE Arca distributed a
regulatory bulletin which detailed the rules of priority and order
protection in open outcry including multi-leg orders on the trading
floor. Specifically, the bulletin states, ``OTP Holders are reminded
that orders involving multiple legs that do not meet the definition
of a Complex Order, as defined in Rule 6.62(e) . . . do not have
priority over equal priced priority interest in the Consolidated
Book.'' See NYSE Arca Options RB-16-04. Given this language, the
Exchange believes that multi-leg orders that do not meet the
definition of a Complex Order are currently permitted on the NYSE
Arca trading floor. As such, the Exchange does not believe the
proposed clarification is novel; especially since current BOX rules
already allow for such orders to be traded on the Trading Floor. The
purpose of this filing is to advise market participants that multi-
leg QOO Orders will now be allowed to trade on the Trading Floor due
to recent technological enhancements.
\7\ The Exchange notes multi-leg QOO Orders are the same as
Complex QOO Orders except for the ratio restrictions.
\8\ The Exchange notes that similar functionality exists at NYSE
Arca with respect to execution and priority for single leg orders on
their trading floor. See NYSE Arca Rule 6.47-O(a)(3).
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The Exchange notes that the system will enforce the execution and
priority provisions in the proposed change. As such, multi-leg QOO
Orders will not be allowed to take advantage of the Complex Order
priority provisions in BOX Rule 7240(b)(2) and (3).
The Exchange anticipates this enhanced functionality to be
available in the first quarter of 2019. The Exchange will distribute an
Informational Circular at least two weeks before the implementation
date.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\9\ in general, and Section
6(b)(5) of the Act,\10\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest. The Exchange believes that the proposed change discussed
herein protects investors and the public interest as it will reduce any
potential confusion regarding multi-leg QOO Orders on the BOX Trading
Floor. Further, the Exchange notes that similar functionality exists on
another options exchange with a trading floor.\11\ Also, the Exchange
believes the proposed change promotes just and equitable principles of
trade and removes impediments to and perfects the mechanism of a free
and open market and a national system because it mirrors the current
functionality for single leg orders on the Trading Floor. Lastly, the
Exchange believes the proposed change is consistent with the Act
because it is simply advising Participants of the technological
enhancement. Further, the functionality is available to all Floor
Participants.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ See supra note 6.
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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 that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
proposed clarification will promote competition by making the enhanced
functionality available to market participants. The Exchange notes that
similar functionality already exists on another trading floor.\12\ As
such, 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.
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\12\ Id.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the 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, it has become effective
pursuant to 19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) \14\
thereunder.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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.
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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
[[Page 3267]]
Send an email to rule-comments@sec.gov. Please include
File Number SR-BOX-2019-01 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-2019-01. 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 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-BOX-2019-01 and should be submitted on
or before March 4, 2019.
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\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-01728 Filed 2-8-19; 8:45 am]
BILLING CODE 8011-01-P
