Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule on the BOX Options Market LLC Facility To Establish Section I.C.2 (Strategy Order Facilitation and Solicitation Transactions), 40709-40713 [2020-14492]
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Federal Register / Vol. 85, No. 130 / Tuesday, July 7, 2020 / Notices
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–NYSEArca–2019–96, and
should be submitted on or before July
28, 2020.
V. Accelerated Approval of Proposed
Rule Change, as Modified by
Amendment No. 5
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendment No. 5, prior to
the thirtieth day after the date of
publication of notice of the filing of
Amendment No. 5 in the Federal
Register. In Amendment No. 5, the
Exchange modified the description of
each Fund and conformed the
description of NYSE Arca Rule 8.601–E
to the final rule approved in the Active
Proxy Portfolio Shares Order.52
Amendment No. 5 also provides other
clarifications and additional
information related to the Funds.53 The
changes and additional information in
Amendment No. 5 assist the
Commission in finding that the proposal
is consistent with the Exchange Act.
Accordingly, the Commission finds
good cause, pursuant to Section 19(b)(2)
of the Exchange Act,54 to approve the
proposed rule change, as modified by
Amendment No. 5, on an accelerated
basis.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act 55 that the
proposed rule change (SR–NYSEArc–
2019–96), as modified by Amendment
No. 5, be, and it hereby is, approved on
an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.56
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–14490 Filed 7–6–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89194; File No. SR–BOX–
2020–22]
Self-Regulatory Organizations; BOX
Exchange LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the Fee
Schedule on the BOX Options Market
LLC Facility To Establish Section I.C.2
(Strategy Order Facilitation and
Solicitation Transactions)
June 30, 2020.
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 June 15,
2020, BOX Exchange LLC (‘‘Exchange’’)
54 15
U.S.C. 78s(b)(2).
55 Id.
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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 on the BOX
Options Market LLC (‘‘BOX’’) facility.
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://
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.
56 17
supra note 3.
53 See Amendment No. 5, supra note 12.
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52 See
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3 15
4 17
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U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Fee Schedule for trading on BOX to
establish Section I.C.2 (Strategy Order
Facilitation and Solicitation
Transactions). Specifically, the
Exchange proposes to establish fees and
rebates for Strategy Order Facilitation
and Solicitation transactions which
include the following strategies: Short
Agency order
stock interest strategies, merger
strategies, reversal strategies, conversion
strategies, jelly roll strategies, and box
spread strategies.5 The Strategy Order
Facilitation and Solicitation
transactions will be subject to the
following fees:
Facilitation order or solicitation order
Responses in the solicitation or
facilitation auction mechanisms
Account type
Penny
pilot classes
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Public Customer ...............
Professional Customer .....
Broker Dealer ...................
Market Maker ...................
Non-penny
pilot classes
$0.00
$0.10
$0.25
$0.25
Penny
pilot classes
$0.00
$0.10
$0.25
$0.25
Non-penny
pilot classes
$0.00
$0.10
$0.25
$0.25
Penny
pilot classes
$0.00
$0.10
$0.25
$0.25
$0.25
$0.25
$0.25
$0.25
Non-penny
pilot classes
$0.40
$0.40
$0.40
$0.40
Further, the Exchange proposes that
the fees for these transactions will be
capped at $1,000 per day per customer.
The Exchange proposes that on each
trading day, Participants are eligible to
receive a $500 rebate per customer for
executing the Strategy Orders listed
above through the Facilitation or
Solicitation mechanisms. The rebate
will be applied once the $1,000 fee cap
per customer is met. Further, the rebate
will be paid to the Participant that
entered the order into the BOX system.6
Additionally, the Exchange is proposing
to add clarifying text to Section II.D. of
the Fee Schedule (Strategy QOO Order
Fee Cap and Rebate) to make clear that
the daily cap and rebate is applied on
a per customer basis. The proposed text
does not substantively alter the manner
in which fees are assessed or rebates are
applied, the proposed text merely
updates the Fee Schedule language to
make clear how fees and rebates are
calculated.
The Exchange notes that the proposed
fee structure is similar to what is
currently assessed for these Strategy
Orders executed on the BOX Trading
Floor. Under Section II (Manual
Transactions) of the BOX Fee Schedule,
Broker Dealers and Market Makers
Strategy QOO Orders’ are charged $0.25
for the Strategy QOO Orders and
Professional Customers are charged
$0.10 for their Strategy QOO Orders.
These orders are capped at $1,000 on a
daily basis and Floor Brokers are
eligible for a $500 rebate for presenting
these Strategy QOO Orders on the
Trading Floor once the $1000 fee cap is
met.7
The Exchange is now proposing a
similar fee and rebate structure for
Strategy Orders executed electronically
through the Facilitation or Solicitation
Auction Mechanisms.8 With regard to
the rebate, the Exchange notes that on
the Trading Floor, Floor Brokers who
present such transactions to the Trading
Floor receive the $500 rebate once the
$1,000 fee cap is hit. Here, the Exchange
proposes that when Strategy Orders are
executed electronically through the
Facilitation and Solicitation
mechanisms, the Participant who enters
the order into the BOX system will
receive the $500 rebate (once the $1,000
fee cap is hit).
The Exchange also proposes to amend
Section III (Liquidity Fees and Credits).
Specifically, the Exchange proposes to
amend Section III.B to state that the
transactions in proposed Section I.C.2
(Strategy Order Facilitation and
Solicitation Transactions) are exempt
from the fees and credits detailed in
Section III.B.
Lastly, the Exchange proposes to
renumber footnotes through the fee
schedule in conjunction to the changes
discussed herein.
5 The Exchange notes that the following
definitions for these strategies already exist in the
BOX Fee Schedule. The Exchange is simply moving
the definitions to the proposed section discussed
above. A ‘‘short stock interest strategy’’ is defined
as a transaction done to achieve a short stock
interest arbitrage involving the purchase, sale, and
exercise of in-the-money options of the same class.
A ‘‘merger strategy’’ is defined as transactions done
to achieve a merger arbitrage involving the
purchase, sale and exercise of options of the same
class and expiration date, each executed prior to the
date on which shareholders of record are required
to elect their respective form of consideration, i.e.,
cash or stock. A ‘‘reversal strategy’’ is established
by combining a short security position with a short
put and a long call position that shares the same
strike and expiration. A ‘‘conversion strategy’’ is
established by combining a long position in the
underlying security with a long put and a short call
position that shares the same strike and expiration.
A ‘‘jelly roll strategy’’ is created by entering into
two separate positions simultaneously. One
position involves buying a put and selling a call
with the same strike price and expiration. The
second position involves selling a put and buying
a call, with the same strike price, but with a
different expiration from the first position. A ‘‘box
spread strategy’’ is a strategy that synthesizes long
and short stock positions to create a profit.
Specifically, a long call and short put at one strike
is combined with a short call and long put at a
different strike to create synthetic long and
synthetic short stock positions, respectively. The
Exchange notes that ‘‘dividend strategies’’ are not
eligible for the proposed fees, fee cap and rebate in
the Strategy Facilitation and Solicitation auction
mechanism. Dividend strategies executed through
the Facilitation or Solicitation auction mechanism
will continue to be subject to the fees in Section I.C.
of the BOX Fee Schedule and the rebate in Section
I.C.1.
6 The Exchange notes that with regard to the daily
cap, fees assessed for Strategy QOO Orders
executed on the BOX Trading Floor will be
combined with the fees assessed electronically. For
example, when Customer A sends certain Strategy
QOO Orders to Floor Broker 1 on the Trading Floor,
Customer A’s fees for these orders will be capped
at $1,000 per day. If Customer A reaches the $1,000
Fee Cap, Floor Broker 1, who entered these orders
on behalf of Customer A into the BOX system, will
receive the $500 rebate. Under this proposal, Floor
Broker 1 may execute some or all of these orders
electronically through the Facilitation and
Solicitation mechanisms. If so, Customer A’s fees
for any orders executed through the Facilitation or
Solicitation Mechanisms will be combined with any
orders executed on the BOX Trading Floor with
regard to the daily fee cap.
7 The Exchange notes, as previously mentioned
above, the daily cap and rebate are applied on a per
customer basis.
8 The Exchange notes that Participants are
currently able to send these orders through the
Facilitation and Solicitation mechanisms, however
they are not eligible for the fee cap or rebate that
is provided Strategy QOO Orders on the BOX
Trading Floor. The Exchange believes that
providing the daily fee cap and rebate to electronic
market participants will result in increased order
flow through the Facilitation and Solicitation
mechanisms benefiting all market participants.
9 15 U.S.C. 78f(b)(4) and (5).
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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
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customers, issuers, brokers or dealers.
The Exchange notes that it operates in
a highly competitive market in which
the Exchange must continually reassess
its fees in order to maintain its
competitiveness within the options
exchange industry. The proposed
changes reflect a competitive pricing
structure designed to incentivize market
participants to direct their order flow to
the Exchange.
The Exchange believes establishing
the fee structure for Strategy Order
Facilitation and Solicitation
Transactions is reasonable, equitable
and not unfairly discriminatory. The
Exchange believes that the proposed
fees are reasonable as they are in line
with the fees currently assessed for
Strategy QOO Orders on the BOX
Trading Floor. As discussed herein, the
Exchange is establishing similar fees to
the fees assessed on the Trading Floor
and making the daily fee cap and rebate
for these orders available to market
participants who wish to execute
Strategy Orders electronically, or both
electronically and on the BOX Trading
Floor. The Exchange believes that the
proposed fee structure will incentivize
market participants to submit Strategy
Orders through the Facilitation or
Solicitation mechanisms resulting in
increased liquidity on the Exchange
benefitting all market participants.10
The Exchange believes that the
proposed fees for Strategy Orders
executed through the Facilitation and
Solicitation Mechanisms are reasonable
and appropriate. As discussed above,
the proposed fees are similar to the fees
assessed for Strategy QOO Orders on the
BOX Trading Floor. The Exchange is
simply creating a similar fee structure
for Participants who wish to submit
Strategy Orders electronically through
the Facilitation or Solicitation Auction
Mechanism.
The Exchange believes that excluding
dividend strategies from the proposed
fees, fee cap and rebate is reasonable
and appropriate. The Exchange notes
that this type of order is best suited for
execution on the BOX Trading Floor
and the Exchange does not believe
incentivizing electronic dividend
strategies is necessary.
10 The Exchange notes that there is a larger
responding community electronically versus on the
BOX Trading Floor. The Exchange believes that
establishing fees that are similar to the current floor
fees (including the daily fee cap and rebate) will
result in increased order flow to these mechanisms
resulting in more responses and ultimately more
executions on the Exchange. As discussed herein,
the proposed rebate will be paid to the Participant
who enters the Strategy Orders into the BOX system
where the rebate on the BOX Trading Floor is paid
to the Floor Broker who presented the Strategy
QOO Orders on the Trading Floor.
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The Exchange believes the proposed
$0.25 fees for Agency Orders and
Facilitation or Solicitation Orders for
Broker Dealers and Market Makers and
the proposed $0.10 fee for Agency Order
and Facilitation or Solicitation Orders
for Professional Customers are
reasonable and appropriate as these fees
are currently assessed to Participants on
the BOX Trading Floor for Strategy QOO
Orders.11 Further, the Exchange believes
that charging Professional Customers
and Broker Dealers and Market Makers
more than Public Customers for Agency
Orders and Facilitation and Solicitation
Orders is reasonable, equitable and not
unfairly discriminatory. The securities
markets generally, and BOX in
particular, have historically aimed to
improve markets for investors and
develop various features within the
market structure for Public Customer
benefit. The Exchange believes that
charging no fees to Public Customers for
Strategy Orders in the Facilitation and
Solicitation auction mechanisms is
reasonable and, ultimately, will benefit
all Participants trading on the Exchange
by attracting Public Customer order
flow. Further, the Exchange believes it
is reasonable and appropriate to assess
Professional Customers a lower fee than
Broker Dealers and Market Makers
because it is intended to attract a greater
number of Professional Customer
Strategy Orders to the Exchange. The
Exchange believes the potential
increased volume would create better
trading opportunities that benefit all
market participants. Specifically, greater
volume and liquidity from increased
order flow could create more trading
opportunities and tighter spreads.
Lastly, the Exchange believes the
proposed fees for Professional
Customers is appropriate as the
Exchange is mirroring the fees currently
assessed for Strategy QOO transactions
on the BOX Trading Floor.12
The Exchange also believes the
proposed fees of $0.25 for Penny Pilot
Classes and $0.40 for Non-Penny Pilot
Classes for Responses in the Facilitation
or Solicitation Auction Mechanisms are
reasonable and equitable. The proposed
fees are the same rates currently charged
for each account type for Responses in
BOX’s Facilitation and Solicitation
11 The Exchange notes that Public Customers will
not be assessed a fee for Agency Orders or
Facilitation Orders or Solicitation Orders in the
proposed fee structure. The Exchange believes this
is reasonable as Public Customers are not assessed
fees for these types of transactions on the BOX
Trading Floor and are not assessed fees in the
current Facilitation and Solicitation auction
mechanisms. Further, BOX notes that it recently
filed a fee change to reduce the Professional
Customer QOO Order fee. See SR–BOX–2020–18.
12 Id.
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40711
auction mechanisms for all other
transactions. The Exchange believes it is
reasonable to establish different fees for
Strategy Order Facilitation and
Solicitation transactions in Penny Pilot
Classes compared to transactions in
Non-Penny Pilot Classes. The Exchange
makes this distinction throughout the
BOX Fee Schedule, including the
Exchange fees for PIP and COPIP
Transactions. The Exchange believes it
is reasonable to establish higher fees for
Non-Penny Pilot Classes because these
Classes are typically less actively traded
and have wider spreads.
The Exchange believes the proposed
$1000 fee cap is reasonable as it is in
line with the fee cap that is currently
applied to Strategy QOO Orders on the
BOX Trading Floor. The proposed fee
cap is designed to incentivize order flow
in Strategy Orders, and the Exchange
believes that the proposed fee cap,
coupled with the other changes
discussed herein, will result in
increased participation in Strategy
Orders on BOX. As such, the Exchange
believes the increased order flow in
Strategy Orders will result in increased
liquidity on BOX to the benefit of all
market participants. Further, the
Exchange believes that the proposed fee
cap is equitable and not unfairly
discriminatory because all Participants
are subject to the cap, regardless of
account type.
The Exchange believes the proposed
rebate is reasonable as it is similar in
nature to the rebate that is currently
applied to these types of orders on the
BOX Trading Floor. As discussed
herein, Floor Brokers receive the $500
(once the $1,000 fee cap is hit) for
presenting Strategy QOO Orders on the
Trading Floor. Here, the Exchange
proposes that the Participant who enters
Strategy Orders into the BOX system
will receive the $500 rebate (once the
$1,000 fee cap is hit). Further, the
Exchange believes that offering the
proposed rebate will result in increased
order flow to these auction mechanisms
which, in turn, will benefit all market
participants. The Exchange also believes
the proposed rebate is equitable and not
unfairly discriminatory as the rebate is
available to all Participants who submit
such orders to BOX.
The Exchange believes that
aggregating electronic Strategy Order
fees and Strategy QOO Order fees on the
BOX Trading Floor for purposes of
calculating the proposed fee cap and
rebate is reasonable, equitable and not
unfairly discriminatory. With regard to
the proposed daily fee cap and rebate,
the Exchange believes combining the
electronic transaction fees and manual
transaction fees is not a novel concept.
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On Nasdaq Phlx LLC (‘‘Phlx’’), a volume
based rebate is paid for all qualifying
executed Qualified Contingent Cross
(‘‘QCC’’) Orders including both
electronic and manual transactions.13
Specifically, Phlx applies a tiered rebate
structure ranging from $0.05 to $0.11
per contract for all QCC transaction
volume—electronic and manual.
Further, Phlx applies a Monthly Firm
Fee Cap of $75,000 for all floor option
transaction charges and QCC
Transaction Fees (both electronic and
manual).
The Exchange believes that combining
the electronic and manual transaction
fees as discussed herein will incentivize
market participants to send these types
of Complex Orders to the Exchange,
either electronically and/or manually, to
take advantage of the proposed fee cap
and rebate. The Exchange believes the
proposed cap and rebate will result in
increased order flow which could result
in more executions on the Exchange,
benefitting all market participants. The
Exchange believes this proposed change
is equitable and not unfairly
discriminatory as all Participants are
subject to the proposed daily fee cap
and rebate.14
The Exchange believes that the
proposed non-substantive clarifying
language in Section II.D. of the Fee
Schedule is reasonable and equitable
because the added text is intended to
provide greater clarity to Participants
with regard to how the Exchange
assesses fees and provides rebates. The
Exchange notes that the proposed nonsubstantive clarifying text does not
amend any fee or rebate, nor alter the
manner in which it assesses fees or
calculates rebates.
Lastly, the Exchange believes that the
proposed change to exempt the
proposed Strategy Order Facilitation
and Solicitation transactions from the
liquidity fees and credits detailed in
Section III.B of the BOX Fee Schedule
is reasonable and appropriate as the
proposed fees are intended to mirror the
fees assessed to Strategy QOO Orders on
the BOX Trading Floor. Further,
Liquidity Fees and Credits are meant to
promote order flow to BOX, which the
Exchange believes is no longer
13 See
Phlx Fee Schedule Options 7, Section 4.
this proposal, Participants will have the
ability to execute Strategy QOO Orders on the
Trading Floor (if they are an approved Floor Broker)
or execute the same types of orders through the
Complex Order Facilitation or Solicitation Orders
electronically. The Exchange does not believe a
Participant with a presence on the Trading Floor
and on the electronic market has an unfair
advantage as all market participants have the ability
to become a Floor Participant and extend their
presence on the electronic Exchange and the
physical Trading Floor.
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14 Under
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necessary with the proposed changes
above. Further, the Exchange believes
that this proposed change is equitable
and not unfairly discriminatory because
all Strategy Orders executed through the
Facilitation or Solicitation mechanism
will be exempt from Liquidity Fees and
Credits, regardless of account type.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes the proposed
Complex Order Facilitation and
Solicitation Transaction fees will not
impose a burden on competition among
various Exchange Participants. Rather,
BOX believes that the changes will
result in the Participants being charged
appropriately for Strategy Order
Facilitation and Solicitation
Transactions and are designed to
enhance competition in these auction
mechanisms. Submitting an order is
entirely voluntary and Participants can
determine which type of order they
wish to submit, if any, to the Exchange.
Further, the Exchange does not believe
that capping the fees for Strategy Orders
will impose an undue burden on
competition because all Participants are
eligible for the fee cap. Lastly, the
Exchange does not believe that offering
a rebate to Participants will impose an
undue burden on competition because
all Participants are eligible to transact
Strategy Orders on BOX and receive a
rebate.
In terms of inter-market competition,
the Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees and rebates to remain competitive
with other exchanges. Because
competitors are free to modify their own
fees in response, and because market
participants may readily send their
order flow to competing venues, the
degree to which fee changes in this
market may impose any burden on
competition is extremely limited.
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.
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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 15
and Rule 19b–4(f)(2) thereunder,16
because it establishes or changes a due,
or fee.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend the rule change if
it appears to the Commission that the
action is necessary or appropriate in the
public interest, for the protection of
investors, or would otherwise further
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BOX–2020–22 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–2020–22. 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
15 15
16 17
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U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
07JYN1
Federal Register / Vol. 85, No. 130 / Tuesday, July 7, 2020 / Notices
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 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–2020–22, and should
be submitted on or before July 28, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–14492 Filed 7–6–20; 8:45 am]
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to adopt
temporary Supplementary Material .16
(Temporary Extension of Time to
Complete Office Inspections) under
FINRA Rule 3110 (Supervision) that, in
light of the operational challenges
member firms are facing due to the
outbreak of the coronavirus disease
(COVID–19), would extend the time by
which member firms must complete
their calendar year 2020 inspection
obligations under Rule 3110(c) (Internal
Inspections) to March 31, 2021.4
Below is the text of the proposed rule
change. Proposed new language is in
italics; proposed deletions are in
brackets.
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3000. SUPERVISION AND
RESPONSIBILITIES RELATING TO
ASSOCIATED PERSONS
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BILLING CODE 8011–01–P
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3100. Supervisory Responsibilities
SECURITIES AND EXCHANGE
COMMISSION
*
[Release No. 34–89188; File No. SR–FINRA–
2020–019]
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Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Temporarily Extend
the Time To Complete Office
Inspections Under FINRA Rule 3110
(Supervision)
• • • Supplementary Material:———
.01 through .15 No Change.
.16 Temporary Extension of Time to
Complete Office Inspections. Each
member obligated to complete an
inspection of an office of supervisory
jurisdiction, branch office or nonbranch location in calendar year 2020
pursuant to, as applicable, paragraphs
(c)(1)(A), (B) and (C) under Rule 3110,
shall be deemed to have satisfied such
obligation if the applicable inspection is
completed on or before March 31, 2021.
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jbell on DSKJLSW7X2PROD with NOTICES
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 June 19,
2020, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I and
II below, which Items have been
prepared by FINRA. FINRA has
designated the proposed rule change as
constituting a ‘‘non-controversial’’ rule
change under paragraph (f)(6) of Rule
19b–4 under the Act,3 which renders
the proposal effective upon receipt of
this filing by the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
1 15
VerDate Sep<11>2014
16:59 Jul 06, 2020
Jkt 250001
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3110. Supervision
June 30, 2020.
17 17
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(a) through (f) No Change.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA 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. FINRA has prepared
4 The proposed rule change will automatically
sunset on March 31, 2021. If FINRA seeks to
provide additional temporary relief from the rule
requirement identified in this proposal beyond
March 31, 2021, FINRA will submit a separate rule
filing to further extend the temporary extension of
time.
PO 00000
Frm 00094
Fmt 4703
Sfmt 4703
40713
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
FINRA is closely monitoring the
impact of the COVID–19 pandemic on
member firms, investors, and other
stakeholders. FINRA recognizes that
firms are experiencing operational
challenges with much of their personnel
working from home due to shelter-inplace orders, restrictions on businesses
and social activity imposed in various
states, and adhering to other social
distancing guidelines consistent with
the recommendations of public health
officials.5 FINRA believes that these
ongoing extenuating circumstances
warrant sensible and tailored
accommodations for member firms to
meet their inspection obligations under
Rule 3110(c) for calendar year 2020.
Rule 3110(c) requires on-site
inspections of offices of supervisory
jurisdiction (‘‘OSJs’’) and supervisory
branch offices at least annually (on a
calendar-year basis), non-supervisory
branch offices at least every three years,
and non-branch locations on a regular
periodic schedule, presumed to be every
three years.6 As a result of the
compelling health and welfare concerns
stemming from the COVID–19
pandemic, firms are facing potentially
significant disruptions to their normal
business operations that may include
staff absenteeism, the increased use of
remote offices or telework arrangements,
travel or transportation limitations, and
technology interruptions or slowdowns.
These circumstances make it
impracticable for firms in most cases to
reach and conduct an on-site inspection
of office locations. To provide firms an
opportunity to better manage these
operational challenges and the resources
attendant to fulfilling these supervisory
obligations during these pressing times,
FINRA is proposing to adopt Rule
3110.16 that would extend the time by
which inspections must be completed in
accordance with Rule 3110(c) for
calendar year 2020 to March 31, 2021.7
FINRA emphasizes that this extension
of time does not relieve firms from the
5 See, e.g., Centers for Disease Control and
Prevention, How to Protect Yourself & Others,
https://www.cdc.gov/coronavirus/2019-ncov/
prevent-getting-sick/prevention.html (last visited
June 17, 2020).
6 See Rule 3110(c)(1)(A), (B), and (C). See also
Rule 3110.13 (General Presumption of Three-Year
Limit for Periodic Inspection Schedules).
7 See supra note 4.
E:\FR\FM\07JYN1.SGM
07JYN1
]]>Agencies
[Federal Register Volume 85, Number 130 (Tuesday, July 7, 2020)]
[Notices]
[Pages 40709-40713]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14492]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89194; File No. SR-BOX-2020-22]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee
Schedule on the BOX Options Market LLC Facility To Establish Section
I.C.2 (Strategy Order Facilitation and Solicitation Transactions)
June 30, 2020.
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 June 15, 2020, BOX Exchange LLC (``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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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 on
the BOX Options Market LLC (``BOX'') facility. 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://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.
[[Page 40710]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Fee Schedule for trading on BOX
to establish Section I.C.2 (Strategy Order Facilitation and
Solicitation Transactions). Specifically, the Exchange proposes to
establish fees and rebates for Strategy Order Facilitation and
Solicitation transactions which include the following strategies: Short
stock interest strategies, merger strategies, reversal strategies,
conversion strategies, jelly roll strategies, and box spread
strategies.\5\ The Strategy Order Facilitation and Solicitation
transactions will be subject to the following fees:
---------------------------------------------------------------------------
\5\ The Exchange notes that the following definitions for these
strategies already exist in the BOX Fee Schedule. The Exchange is
simply moving the definitions to the proposed section discussed
above. A ``short stock interest strategy'' is defined as a
transaction done to achieve a short stock interest arbitrage
involving the purchase, sale, and exercise of in-the-money options
of the same class. A ``merger strategy'' is defined as transactions
done to achieve a merger arbitrage involving the purchase, sale and
exercise of options of the same class and expiration date, each
executed prior to the date on which shareholders of record are
required to elect their respective form of consideration, i.e., cash
or stock. A ``reversal strategy'' is established by combining a
short security position with a short put and a long call position
that shares the same strike and expiration. A ``conversion
strategy'' is established by combining a long position in the
underlying security with a long put and a short call position that
shares the same strike and expiration. A ``jelly roll strategy'' is
created by entering into two separate positions simultaneously. One
position involves buying a put and selling a call with the same
strike price and expiration. The second position involves selling a
put and buying a call, with the same strike price, but with a
different expiration from the first position. A ``box spread
strategy'' is a strategy that synthesizes long and short stock
positions to create a profit. Specifically, a long call and short
put at one strike is combined with a short call and long put at a
different strike to create synthetic long and synthetic short stock
positions, respectively. The Exchange notes that ``dividend
strategies'' are not eligible for the proposed fees, fee cap and
rebate in the Strategy Facilitation and Solicitation auction
mechanism. Dividend strategies executed through the Facilitation or
Solicitation auction mechanism will continue to be subject to the
fees in Section I.C. of the BOX Fee Schedule and the rebate in
Section I.C.1.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Agency order Facilitation order or solicitation Responses in the solicitation or
------------------------------------ order facilitation auction mechanisms
Account type -----------------------------------------------------------------------
Penny pilot Non-penny pilot Penny pilot Non-penny pilot Penny pilot Non-penny pilot
classes classes classes classes classes classes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Public Customer............................. $0.00 $0.00 $0.00 $0.00 $0.25 $0.40
Professional Customer....................... $0.10 $0.10 $0.10 $0.10 $0.25 $0.40
Broker Dealer............................... $0.25 $0.25 $0.25 $0.25 $0.25 $0.40
Market Maker................................ $0.25 $0.25 $0.25 $0.25 $0.25 $0.40
--------------------------------------------------------------------------------------------------------------------------------------------------------
Further, the Exchange proposes that the fees for these transactions
will be capped at $1,000 per day per customer. The Exchange proposes
that on each trading day, Participants are eligible to receive a $500
rebate per customer for executing the Strategy Orders listed above
through the Facilitation or Solicitation mechanisms. The rebate will be
applied once the $1,000 fee cap per customer is met. Further, the
rebate will be paid to the Participant that entered the order into the
BOX system.\6\ Additionally, the Exchange is proposing to add
clarifying text to Section II.D. of the Fee Schedule (Strategy QOO
Order Fee Cap and Rebate) to make clear that the daily cap and rebate
is applied on a per customer basis. The proposed text does not
substantively alter the manner in which fees are assessed or rebates
are applied, the proposed text merely updates the Fee Schedule language
to make clear how fees and rebates are calculated.
---------------------------------------------------------------------------
\6\ The Exchange notes that with regard to the daily cap, fees
assessed for Strategy QOO Orders executed on the BOX Trading Floor
will be combined with the fees assessed electronically. For example,
when Customer A sends certain Strategy QOO Orders to Floor Broker 1
on the Trading Floor, Customer A's fees for these orders will be
capped at $1,000 per day. If Customer A reaches the $1,000 Fee Cap,
Floor Broker 1, who entered these orders on behalf of Customer A
into the BOX system, will receive the $500 rebate. Under this
proposal, Floor Broker 1 may execute some or all of these orders
electronically through the Facilitation and Solicitation mechanisms.
If so, Customer A's fees for any orders executed through the
Facilitation or Solicitation Mechanisms will be combined with any
orders executed on the BOX Trading Floor with regard to the daily
fee cap.
---------------------------------------------------------------------------
The Exchange notes that the proposed fee structure is similar to
what is currently assessed for these Strategy Orders executed on the
BOX Trading Floor. Under Section II (Manual Transactions) of the BOX
Fee Schedule, Broker Dealers and Market Makers Strategy QOO Orders' are
charged $0.25 for the Strategy QOO Orders and Professional Customers
are charged $0.10 for their Strategy QOO Orders. These orders are
capped at $1,000 on a daily basis and Floor Brokers are eligible for a
$500 rebate for presenting these Strategy QOO Orders on the Trading
Floor once the $1000 fee cap is met.\7\
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\7\ The Exchange notes, as previously mentioned above, the daily
cap and rebate are applied on a per customer basis.
---------------------------------------------------------------------------
The Exchange is now proposing a similar fee and rebate structure
for Strategy Orders executed electronically through the Facilitation or
Solicitation Auction Mechanisms.\8\ With regard to the rebate, the
Exchange notes that on the Trading Floor, Floor Brokers who present
such transactions to the Trading Floor receive the $500 rebate once the
$1,000 fee cap is hit. Here, the Exchange proposes that when Strategy
Orders are executed electronically through the Facilitation and
Solicitation mechanisms, the Participant who enters the order into the
BOX system will receive the $500 rebate (once the $1,000 fee cap is
hit).
---------------------------------------------------------------------------
\8\ The Exchange notes that Participants are currently able to
send these orders through the Facilitation and Solicitation
mechanisms, however they are not eligible for the fee cap or rebate
that is provided Strategy QOO Orders on the BOX Trading Floor. The
Exchange believes that providing the daily fee cap and rebate to
electronic market participants will result in increased order flow
through the Facilitation and Solicitation mechanisms benefiting all
market participants.
---------------------------------------------------------------------------
The Exchange also proposes to amend Section III (Liquidity Fees and
Credits). Specifically, the Exchange proposes to amend Section III.B to
state that the transactions in proposed Section I.C.2 (Strategy Order
Facilitation and Solicitation Transactions) are exempt from the fees
and credits detailed in Section III.B.
Lastly, the Exchange proposes to renumber footnotes through the fee
schedule in conjunction to the changes discussed herein.
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
[[Page 40711]]
customers, issuers, brokers or dealers. The Exchange notes that it
operates in a highly competitive market in which the Exchange must
continually reassess its fees in order to maintain its competitiveness
within the options exchange industry. The proposed changes reflect a
competitive pricing structure designed to incentivize market
participants to direct their order flow to the Exchange.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange believes establishing the fee structure for Strategy
Order Facilitation and Solicitation Transactions is reasonable,
equitable and not unfairly discriminatory. The Exchange believes that
the proposed fees are reasonable as they are in line with the fees
currently assessed for Strategy QOO Orders on the BOX Trading Floor. As
discussed herein, the Exchange is establishing similar fees to the fees
assessed on the Trading Floor and making the daily fee cap and rebate
for these orders available to market participants who wish to execute
Strategy Orders electronically, or both electronically and on the BOX
Trading Floor. The Exchange believes that the proposed fee structure
will incentivize market participants to submit Strategy Orders through
the Facilitation or Solicitation mechanisms resulting in increased
liquidity on the Exchange benefitting all market participants.\10\ The
Exchange believes that the proposed fees for Strategy Orders executed
through the Facilitation and Solicitation Mechanisms are reasonable and
appropriate. As discussed above, the proposed fees are similar to the
fees assessed for Strategy QOO Orders on the BOX Trading Floor. The
Exchange is simply creating a similar fee structure for Participants
who wish to submit Strategy Orders electronically through the
Facilitation or Solicitation Auction Mechanism.
---------------------------------------------------------------------------
\10\ The Exchange notes that there is a larger responding
community electronically versus on the BOX Trading Floor. The
Exchange believes that establishing fees that are similar to the
current floor fees (including the daily fee cap and rebate) will
result in increased order flow to these mechanisms resulting in more
responses and ultimately more executions on the Exchange. As
discussed herein, the proposed rebate will be paid to the
Participant who enters the Strategy Orders into the BOX system where
the rebate on the BOX Trading Floor is paid to the Floor Broker who
presented the Strategy QOO Orders on the Trading Floor.
---------------------------------------------------------------------------
The Exchange believes that excluding dividend strategies from the
proposed fees, fee cap and rebate is reasonable and appropriate. The
Exchange notes that this type of order is best suited for execution on
the BOX Trading Floor and the Exchange does not believe incentivizing
electronic dividend strategies is necessary.
The Exchange believes the proposed $0.25 fees for Agency Orders and
Facilitation or Solicitation Orders for Broker Dealers and Market
Makers and the proposed $0.10 fee for Agency Order and Facilitation or
Solicitation Orders for Professional Customers are reasonable and
appropriate as these fees are currently assessed to Participants on the
BOX Trading Floor for Strategy QOO Orders.\11\ Further, the Exchange
believes that charging Professional Customers and Broker Dealers and
Market Makers more than Public Customers for Agency Orders and
Facilitation and Solicitation Orders is reasonable, equitable and not
unfairly discriminatory. The securities markets generally, and BOX in
particular, have historically aimed to improve markets for investors
and develop various features within the market structure for Public
Customer benefit. The Exchange believes that charging no fees to Public
Customers for Strategy Orders in the Facilitation and Solicitation
auction mechanisms is reasonable and, ultimately, will benefit all
Participants trading on the Exchange by attracting Public Customer
order flow. Further, the Exchange believes it is reasonable and
appropriate to assess Professional Customers a lower fee than Broker
Dealers and Market Makers because it is intended to attract a greater
number of Professional Customer Strategy Orders to the Exchange. The
Exchange believes the potential increased volume would create better
trading opportunities that benefit all market participants.
Specifically, greater volume and liquidity from increased order flow
could create more trading opportunities and tighter spreads. Lastly,
the Exchange believes the proposed fees for Professional Customers is
appropriate as the Exchange is mirroring the fees currently assessed
for Strategy QOO transactions on the BOX Trading Floor.\12\
---------------------------------------------------------------------------
\11\ The Exchange notes that Public Customers will not be
assessed a fee for Agency Orders or Facilitation Orders or
Solicitation Orders in the proposed fee structure. The Exchange
believes this is reasonable as Public Customers are not assessed
fees for these types of transactions on the BOX Trading Floor and
are not assessed fees in the current Facilitation and Solicitation
auction mechanisms. Further, BOX notes that it recently filed a fee
change to reduce the Professional Customer QOO Order fee. See SR-
BOX-2020-18.
\12\ Id.
---------------------------------------------------------------------------
The Exchange also believes the proposed fees of $0.25 for Penny
Pilot Classes and $0.40 for Non-Penny Pilot Classes for Responses in
the Facilitation or Solicitation Auction Mechanisms are reasonable and
equitable. The proposed fees are the same rates currently charged for
each account type for Responses in BOX's Facilitation and Solicitation
auction mechanisms for all other transactions. The Exchange believes it
is reasonable to establish different fees for Strategy Order
Facilitation and Solicitation transactions in Penny Pilot Classes
compared to transactions in Non-Penny Pilot Classes. The Exchange makes
this distinction throughout the BOX Fee Schedule, including the
Exchange fees for PIP and COPIP Transactions. The Exchange believes it
is reasonable to establish higher fees for Non-Penny Pilot Classes
because these Classes are typically less actively traded and have wider
spreads.
The Exchange believes the proposed $1000 fee cap is reasonable as
it is in line with the fee cap that is currently applied to Strategy
QOO Orders on the BOX Trading Floor. The proposed fee cap is designed
to incentivize order flow in Strategy Orders, and the Exchange believes
that the proposed fee cap, coupled with the other changes discussed
herein, will result in increased participation in Strategy Orders on
BOX. As such, the Exchange believes the increased order flow in
Strategy Orders will result in increased liquidity on BOX to the
benefit of all market participants. Further, the Exchange believes that
the proposed fee cap is equitable and not unfairly discriminatory
because all Participants are subject to the cap, regardless of account
type.
The Exchange believes the proposed rebate is reasonable as it is
similar in nature to the rebate that is currently applied to these
types of orders on the BOX Trading Floor. As discussed herein, Floor
Brokers receive the $500 (once the $1,000 fee cap is hit) for
presenting Strategy QOO Orders on the Trading Floor. Here, the Exchange
proposes that the Participant who enters Strategy Orders into the BOX
system will receive the $500 rebate (once the $1,000 fee cap is hit).
Further, the Exchange believes that offering the proposed rebate will
result in increased order flow to these auction mechanisms which, in
turn, will benefit all market participants. The Exchange also believes
the proposed rebate is equitable and not unfairly discriminatory as the
rebate is available to all Participants who submit such orders to BOX.
The Exchange believes that aggregating electronic Strategy Order
fees and Strategy QOO Order fees on the BOX Trading Floor for purposes
of calculating the proposed fee cap and rebate is reasonable, equitable
and not unfairly discriminatory. With regard to the proposed daily fee
cap and rebate, the Exchange believes combining the electronic
transaction fees and manual transaction fees is not a novel concept.
[[Page 40712]]
On Nasdaq Phlx LLC (``Phlx''), a volume based rebate is paid for all
qualifying executed Qualified Contingent Cross (``QCC'') Orders
including both electronic and manual transactions.\13\ Specifically,
Phlx applies a tiered rebate structure ranging from $0.05 to $0.11 per
contract for all QCC transaction volume--electronic and manual.
Further, Phlx applies a Monthly Firm Fee Cap of $75,000 for all floor
option transaction charges and QCC Transaction Fees (both electronic
and manual).
---------------------------------------------------------------------------
\13\ See Phlx Fee Schedule Options 7, Section 4.
---------------------------------------------------------------------------
The Exchange believes that combining the electronic and manual
transaction fees as discussed herein will incentivize market
participants to send these types of Complex Orders to the Exchange,
either electronically and/or manually, to take advantage of the
proposed fee cap and rebate. The Exchange believes the proposed cap and
rebate will result in increased order flow which could result in more
executions on the Exchange, benefitting all market participants. The
Exchange believes this proposed change is equitable and not unfairly
discriminatory as all Participants are subject to the proposed daily
fee cap and rebate.\14\
---------------------------------------------------------------------------
\14\ Under this proposal, Participants will have the ability to
execute Strategy QOO Orders on the Trading Floor (if they are an
approved Floor Broker) or execute the same types of orders through
the Complex Order Facilitation or Solicitation Orders
electronically. The Exchange does not believe a Participant with a
presence on the Trading Floor and on the electronic market has an
unfair advantage as all market participants have the ability to
become a Floor Participant and extend their presence on the
electronic Exchange and the physical Trading Floor.
---------------------------------------------------------------------------
The Exchange believes that the proposed non-substantive clarifying
language in Section II.D. of the Fee Schedule is reasonable and
equitable because the added text is intended to provide greater clarity
to Participants with regard to how the Exchange assesses fees and
provides rebates. The Exchange notes that the proposed non-substantive
clarifying text does not amend any fee or rebate, nor alter the manner
in which it assesses fees or calculates rebates.
Lastly, the Exchange believes that the proposed change to exempt
the proposed Strategy Order Facilitation and Solicitation transactions
from the liquidity fees and credits detailed in Section III.B of the
BOX Fee Schedule is reasonable and appropriate as the proposed fees are
intended to mirror the fees assessed to Strategy QOO Orders on the BOX
Trading Floor. Further, Liquidity Fees and Credits are meant to promote
order flow to BOX, which the Exchange believes is no longer necessary
with the proposed changes above. Further, the Exchange believes that
this proposed change is equitable and not unfairly discriminatory
because all Strategy Orders executed through the Facilitation or
Solicitation mechanism will be exempt from Liquidity Fees and Credits,
regardless of account type.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange believes the
proposed Complex Order Facilitation and Solicitation Transaction fees
will not impose a burden on competition among various Exchange
Participants. Rather, BOX believes that the changes will result in the
Participants being charged appropriately for Strategy Order
Facilitation and Solicitation Transactions and are designed to enhance
competition in these auction mechanisms. Submitting an order is
entirely voluntary and Participants can determine which type of order
they wish to submit, if any, to the Exchange. Further, the Exchange
does not believe that capping the fees for Strategy Orders will impose
an undue burden on competition because all Participants are eligible
for the fee cap. Lastly, the Exchange does not believe that offering a
rebate to Participants will impose an undue burden on competition
because all Participants are eligible to transact Strategy Orders on
BOX and receive a rebate.
In terms of inter-market competition, the Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive, or rebate opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its fees and rebates to remain competitive with
other exchanges. Because competitors are free to modify their own fees
in response, and because market participants may readily send their
order flow to competing venues, the degree to which fee changes in this
market may impose any burden on competition is extremely limited.
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 \15\ and Rule 19b-4(f)(2)
thereunder,\16\ because it establishes or changes a due, or fee.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend the rule
change if it appears to the Commission that the action is necessary or
appropriate in the public interest, for the protection of investors, or
would otherwise further the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-BOX-2020-22 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-2020-22. 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
[[Page 40713]]
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
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-
2020-22, and should be submitted on or before July 28, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-14492 Filed 7-6-20; 8:45 am]
BILLING CODE 8011-01-P
