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 Amend Section IX.C (Trading Floor Participant Fees) and Remove Section IX.D (Trading Floor Booth Space Fee), 47274-47278 [2020-16874]

Download as PDF 47274 Federal Register / Vol. 85, No. 150 / Tuesday, August 4, 2020 / Notices C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: A. By order approve or disapprove such proposed rule change, or B. institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments 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– CboeBYX–2020–021 on the subject line. jbell on DSKJLSW7X2PROD with NOTICES 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–CboeBYX–2020–021. 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 18:14 Aug 03, 2020 Jkt 250001 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.51 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–16876 Filed 8–3–20; 8:45 am] 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: VerDate Sep<11>2014 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–CboeBYX–2020–021, and should be submitted on or before August 25, 2020. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–89422; File No. SR–BOX– 2020–29] 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 Amend Section IX.C (Trading Floor Participant Fees) and Remove Section IX.D (Trading Floor Booth Space Fee) July 29, 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 July 16, 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 51 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). 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. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to modify the Fee Schedule for trading on BOX to amend Section IX.C. (Trading Floor Permit Fees). The Exchange launched the BOX Trading Floor in August 2017 and established the current Trading Floor Permit Fees in conjunction with the launch.5 In February, the Exchange relocated the BOX Trading Floor to a larger trading facility to accommodate increased interest in the Trading Floor. Then, as a precautionary measure to prevent the potential spread of COVID– 19, the Exchange temporarily closed the Trading Floor on March 20, 2020. The Trading Floor reopened on Monday, May 4th, 2020 with social distancing precautions and guidelines in place that have impacted the space availability for Floor Participants. To encourage efficient use of space, BOX believes it is appropriate to amend the Floor Broker Trading Floor Permit Fees to assess fees based on the space utilized by each firm rather than the number of registered 1 15 PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 5 See Securities Exchange Act Release No. 81504 (August 30, 2017), 82 FR 42195 (September 6, 2017) (SR–BOX–2017–28). E:\FR\FM\04AUN1.SGM 04AUN1 Federal Register / Vol. 85, No. 150 / Tuesday, August 4, 2020 / Notices permits that each Participant has on the Trading Floor. The Exchange is also proposing to remove or modify certain terminology in the Trading Floor Permit Fees section to clarify how these fees are assessed, and better reflect how space on the Trading Floor is used by each Participant. First, the Exchange proposes to rename Section IX.C. (Trading Floor Permit Fees) to Trading Floor Participant Fees.6 The Exchange believes that this will clarify that the fees in this section are assessed on the Participant firms and not the registered permit holders that are employed at each firm. The Exchange then proposes to change the language both subsections (a) and (b) from Participant to ‘‘firm’’ to clarify that these fees are assessed on each firm registered to conduct trading on the BOX Trading Floor; rather than the registered trading permit holders approved to trade on behalf of these Participants. The Exchange then proposes to modify the language in this section to clarify how space on the Trading Floor is used. The two types of Floor Participant firms—Floor Brokers and Floor Market Makers—have different business needs and preferences on the Trading Floor. Floor Broker firms utilize space adjacent to the Crowd Area (‘‘booth space’’) akin to private office space where employees of the same firm communicate with customers, receive orders, and coordinate covering the Trading Floor to announce such orders into the Crowd Area.7 A Floor Broker firm has at least one desk, and may combine multiple, contiguous desks into a single booth space adjacent to the Crowd Area. By contrast, Floor Market Making firms operate at the point of sale, which necessitates that their floor space be integrated in the Crowd Area. jbell on DSKJLSW7X2PROD with NOTICES Floor Market Makers The Exchange first proposes to replace the reference to ‘‘booth space’’ with ‘‘podium’’ to more accurately reflect the type of space used by the Floor Market Making firms on the BOX Trading Floor. The Exchange notes that this terminology change will not impact 6 The Exchange notes that the Trading Floor Participants apply in addition to the Participant Fees outlined in Section IX. A (Initiation Fee) and B (Participant Fees). 7 See BOX Rule 100(a)(67). The term ‘‘Trading Floor’’ or ‘‘Options Floor’’ means the physical trading floor of the Exchange located in Chicago. The Trading Floor shall consist of one ‘‘Crowd Area’’ or ‘‘Pit’’ where all option classes will be located. The Crowd Area or Pit shall be marked with specific visible boundaries on the Trading Floor, as determined by the Exchange. A Floor Broker must open outcry an order in the Crowd Area. VerDate Sep<11>2014 18:14 Aug 03, 2020 Jkt 250001 the space currently used by Floor Market Makers; rather it is designed to clarify the differences in how space is used by Floor Market Makers compared to the manner in which space is used by Floor Brokers. A podium is the term used within the industry for the Floor Market Maker work space located in the middle of the Crowd Area, while a booth space is the terminology used for the work space adjacent to the Crowd Area where the Floor Broker firms are located. The Exchange notes that all Market Maker podiums on the BOX Trading Floor are the same size. The Exchange currently charges each Floor Market Making firm $5,500 per month for one booth space and three registered permits on the BOX Trading Floor. Along with replacing the term ‘‘booth space’’ with ‘‘podium,’’ the Exchange proposes to remove the references to three registered permits as the Exchange will no longer assess fees based on the number of registered permits on the Floor. Instead, the Exchange proposes to add language that states the firm will be entitled to an unlimited amount of registered trading permits. Registered trading permits are given to persons employed by or associated with a Floor Broker or Floor Market Maker who are eligible to effect transactions on the Trading Floor as a Floor Market Maker or Floor Broker.8 The Exchange notes that under the proposal a Market Maker will now be able to register an unlimited amount of trading permits for access to the BOX Trading Floor. Each podium will continue to be limited to one registered trading permit holder actively trading at any given time, as is currently the case. Finally, the Exchange proposes to add language to charge Floor Market Makers who wish to have any additional podiums in the Crowd Area $1,500 per podium per month. The Exchange notes that this is the same fee currently assessed on Floor Market Makers who wish to have additional space on the Trading Floor, under current Section IX.D. (Trading Floor Booth Space Fee) which the Exchange plans to remove under this proposal. A Market Maker may elect to have more than one podium to increase their trading opportunities on the BOX Trading Floor. As stated above, a Market Maker podium is limited to one registered trading permit holder actively trading at any given time. Therefore, if the Market Maker would like to have two registered 8 Registered Trading Permit holders are not assessed a Badge Fee. Badge Fees are assessed on persons employed by or associated with a Participant that are not registered to effect transaction on the BOX Trading Floor (see BOX Rule 7630). PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 47275 trading permit holders actively trading at any given time, they are required to have two podiums on the BOX Trading Floor. The Exchange believes that the changes proposed above will have no impact to Floor Marker Maker fees. Each Floor Market Maker currently has one podium on the BOX Trading Floor, and would continue to be charged $5,500 per month for their space. Instead, the proposal now permits an unlimited number of trading permit holders although each podium will continue to accommodate only one trading permit holder at any given time. Floor Brokers The Exchange currently charges each Floor Broker firm $500 per month for three registered permits 9 and one booth space on the Trading Floor. The Exchange proposes to remove the references to three registered permits as the Exchange will no longer assess fees based on the number of registered trading permits on the Floor. Instead, the Exchange proposes to add language that states the firm will be entitled to an unlimited amount of registered trading permits. The Exchange notes that under the proposal a Floor Broker will now be able to register an unlimited amount of trading permits for access to the BOX Trading Floor; however each desk will be limited to one registered trading permit holder actively trading at any given time.10 The Exchange then proposes to establish a flat Floor Broker Trading Floor Participant Fee of $5,000 per month as well as a $5,000 Trading Floor Credit that will be applied if a Floor Broker firm executes a trade on 50% or more of trading days in a given month. For example, for June 2020, in order to avail themselves of the Trading Floor Credit, a Floor Broker must execute a trade on the BOX Trading Floor on at least 11 days of June (22 trading days in June 2020). The Exchange believes this fee/credit structure will encourage Floor Broker firms to more actively participate on the BOX Trading Floor as well as encourage the efficient use of Floor Space. The Exchange believes that most, if not all, of the current Floor Brokers will easily meet this threshold based on trading activity for the six weeks prior to the closure of the BOX Trading Floor on March 20, 2020 and therefore will 9 Id. 10 The Exchange notes that prior to the closure of the Floor in March 2020, Floor Brokers were allowed more than one registered trading permit holder at each desk. However; since reopening the Trading Floor in May 2020 Floor Brokers have been limited to one registered trading permit holder per desk. E:\FR\FM\04AUN1.SGM 04AUN1 jbell on DSKJLSW7X2PROD with NOTICES 47276 Federal Register / Vol. 85, No. 150 / Tuesday, August 4, 2020 / Notices only be charged for the space that each Floor Broker utilizes on the Trading Floor under the proposed Desk Fee as described below. Finally, the Exchange proposes to establish a $350 per month desk fee for Floor Brokers within their booth space, as well as specify that a Floor Broker must have at least one desk. Depending on their business model a Floor Broker may opt to have only one desk in its booth space, or opt for a larger footprint on the Floor and combine several desks into the booth space adjacent to the Crowd Area. The Exchange believes charging per desk will offer flexibility to Floor Broker firms to customize the precise amount of floor space needed, while ensuring that Floor Brokers are charged equitably for the floor space they utilize. The Exchange believes these proposed changes will result in Floor Brokers being charged appropriately for their space on the BOX Trading Floor. Prior to the closure of the BOX Floor in March 2020, Floor Brokers had from one to six permit holders actively trading in their booth space on the BOX Floor at any given time. Under the current fee structure, a Floor Broker firm with one active trading permit holder occupying a booth space on the BOX Trading Floor was charged $500 per month, a Floor Broker firm with four active trading permit holders was charged $1000 per month, and a Floor Broker firm with six active trading permit holders was charged $1000 per month. Under the proposed fee structure, assuming that none of the Floor Brokers change their practices, these same Floor Brokers would be charged between $350 and $2,100 per month. Specifically, a Floor Broker firm with one active trading permit holder occupying one desk would now be charged a Trading Floor Participant Fee of $5,000 per month (with the opportunity to earn a $5,000 per month Trading Floor Credit for a net Trading Floor Participant Fee of $0.00) and $350 per month Desk Fee. Therefore the firm’s monthly anticipated Trading Floor Participant Fee would drop from $500 per month to $350 per month (assuming they qualify for the Trading Floor Credit). The Floor Broker with four active trading permit holders would be charged $1000 per month under the current fee schedule ($500 for the first three registered trading permits and an additional $500 for the one registered trading permit). Under the proposed changes that same Floor Broker firm would be charged a Trading Floor Participant Fee of $5,000 per month with the opportunity to earn a $5,000 VerDate Sep<11>2014 18:14 Aug 03, 2020 Jkt 250001 per month Trading Floor Credit, as well $1,400 per month for the four desks the Floor Broker occupies within its booth space. Therefore the firm’s monthly anticipated Trading Floor Participant Fee would rise from $1000 per month to $1400 per month (assuming they qualify for the Trading Floor Credit). In comparison, the Floor Broker firm with the largest presence would be charged $1000 per month for its six active trading permit holders ($500 for the first three registered trading permits and an additional $500 for the additional three registered trading permits). Under the proposed changes that same Floor Broker firm would be charged a Trading Floor Participant Fee of $5,000 per month with the opportunity to earn a $5,000 per month Trading Floor Credit, as well $2,100 per month for the six desks the Floor Broker occupies within its booth space. This firm would see the largest increase in its Trading Floor Participant Fees, which would rise from $1,000 per month to $2,100 per month. Lastly, the Exchange proposes to delete Section IX.D, Trading Floor Booth Space Fee. With the changes proposed above that will charge Participants based on space utilization, the Exchange believes that a separate Trading Floor Booth Space Fee is no longer appropriate. 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,11 in particular, in that it provides for the equitable allocation of reasonable dues, fees, and other charges among BOX Participants and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers or dealers. First, the Exchange believes the proposal to remove or modify certain terminology in the Section IX.C. of the BOX Fee Schedule (Trading Floor Participant Fees) is reasonable, equitable and not unfairly discriminatory. The changes proposed are meant to clarify how these fees are assessed and better reflect how space on the Trading Floor is used by each Participant; which will alleviate potential confusion and result in a Fee Schedule that is clearer and easier to follow, thereby removing impediments to and perfecting the mechanism of a free and open market and a national market system, and, in general, protecting investors and the public interest. The Exchange also believes the 11 15 PO 00000 U.S.C. 78f(b)(4) and (5). Frm 00117 Fmt 4703 Sfmt 4703 proposed changes are reasonable as they do not impact the fees assessed on Trading Floor Participants. The Exchange believes that the proposed changes to the Floor Market Maker Participant Fees are reasonable, equitable and not unfairly discriminatory. As stated above, the changes proposed will have no impact to Floor Market Maker fees. Instead, the proposed change to include one podium—instead of one booth space— in the Floor Market Maker Trading Floor Participant Fee is reasonable and appropriate as it better reflects the Floor Market Maker’s use of space on the BOX Trading Floor. Further, the change to remove references to three registered permits is reasonable as the Floor Market Makers will continue to be limited to one active registered trading permit on each podium at any given time. Finally, the Exchange believes the proposed additional podium fee of $1,500 per month is reasonable as the Exchange previously assessed a $1,500 per month Trading Floor Booth Space Fee.12 The proposed changes to the Floor Market Maker Participant Fees are equitable and not unfairly discriminatory as they apply equally to all Floor Market Makers on the BOX Trading Floor. The Exchange believes the proposed changes to the Floor Broker Participant Fees are reasonable, equitable and not unfairly discriminatory. The purpose of these changes is to structure Floor Broker Participant fees so that these firms are charged for the space they utilize and are incentivized to use their space efficiently. Floor Brokers utilize their booth space, which could be comprised of one desk or multiple desks, as private office space, out of which they communicate with customers, take orders, and coordinate covering the Trading Floor to announce such orders into the Crowd Area. Thus, the Exchange believes the proposed changes to how it will charge Floor Brokers for space utilized is reasonable and equitable because it is designed to 12 The Exchange notes that this is in line with a similar fee charged at another exchange with a physical trading floor. See Cboe Exchange Inc. (‘‘Cboe’’) Fee Schedule. Cboe charges a $1,250 per month fee for a Non-Standard Booth Rental plus $1.70 per square foot, determined based on the size of the booth. At Cboe, the term ‘‘non-standard booth’’ generally refers to space on the trading floor on the Exchange that is set off from a trading crowd, which may be rented for whatever support, office, back-office, or any other business-related activities for which Cboe members may choose to use. The Exchange notes that the ‘‘non-standard booth’’ at Cboe is similar to the proposed Trading Floor Booth discussed herein, as the additional podium is a general space on the trading floor. See Securities Exchange Release No. 78741 (August 31, 2017), 81 FR 61727 (SR–CBOE–2016–063). E:\FR\FM\04AUN1.SGM 04AUN1 jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 150 / Tuesday, August 4, 2020 / Notices reflect the differing business needs of each Floor Broker while offering the firm some flexibility in setting up their booth space consistent with their particular business models/commercial preferences. Next, the Exchange believes the proposed change to increase the Floor Broker Trading Floor Participant Fee from $500 to $5,000 is reasonable and appropriate as the proposed fee is comparable to other Floor Broker Participant Fees at another exchange with a trading floor.13 Further, the Exchange notes that the purpose of this change, coupled with the Floor Broker Trading Floor Credit discussed above, is to incentivize Floor Participants to actively trade on the BOX Trading Floor and ensure the efficient use of space on the BOX Trading Floor. The Exchange believes that most, if not all, of the current Floor Brokers will easily meet this threshold based on previous trading activity and thus have a net Floor Broker Trading Floor Participant Fee of $0.00 in addition to any applicable desk fee. BOX believes that increasing the Floor Broker Trading Floor Participant Fee, coupled with the Floor Broker Trading Floor Credit—which may offset the Floor Broker Trading Floor Participant Fee entirely (notwithstanding any applicable desk fees)—will incentivize Floor Participants to actively trade on the BOX Trading Floor, and further, makes certain that BOX resources are not spent supporting a firm who is not actively trading on the BOX Trading Floor but is taking up valuable space. The Exchange believes that the proposed increase is equitable and not unfairly discriminatory because it applies to all Floor Brokers on the BOX Trading Floor. The Exchange believes that the proposed Floor Broker Trading Floor Credit is reasonable, equitable, and not unfairly discriminatory. Floor Brokers play a critical role in bringing liquidity to the BOX Trading Floor by acting as an agent on behalf of their retail and institutional customers. As discussed above, the purpose of the credit is to incentivize Floor Brokers to actively trade on the Exchange for a certain number of days in a given month which in turn maximizes the efficient use of space on the BOX Trading Floor. Orders brought to the Trading Floor by Floor Brokers benefit all Floor Participants by providing more trading opportunities, which attracts Market Makers, Customers and other market participants. An increase in activity, in 13 See Nasdaq Phlx Fee Schedule. On Phlx, Floor Brokers are assessed a $4,000 per month flat fee. VerDate Sep<11>2014 18:14 Aug 03, 2020 Jkt 250001 turn, facilities tighter spreads, which may result in corresponding increase in order flow from all market participants. The Exchange notes that another exchange offers Floor Brokers a rebate on their Floor Broker Permit Fee.14 The Exchange believes that the proposed change is equitable and not unfairly discriminatory as all Floor Brokers on the BOX Trading Floor are eligible to receive the Floor Broker Trading Floor Credit. Further, the Exchange believes it is equitable and not unfairly discriminatory to offer a Trading Floor Credit to Floor Brokers and not Floor Market Makers. As discussed above, Floor Brokers act as the agent on behalf of their retail and institutional customers to bring order flow to the BOX Trading Floor. Floor Market Makers then benefit from the access they have to interact with orders which are made available in open outcry on the Trading Floor. Further, in order to obtain the Trading Floor Credit, Floor Brokers must actively trade on 50% or more of the trading days in a given month. The Exchange recognizes the value that Floor Brokers bring to the Trading Floor elsewhere in its Fee Schedule. For example, the Exchange has in place certain fee caps and rebates to the benefit of Floor Brokers, in order to incentivize Floor Brokers to continue bringing their customer order flow to the Floor.15 As such, the Exchange believes that offering Floor Brokers the potential to earn a credit to offset their Trading Floor Participant Fee is reasonable and appropriate. The Exchange believes the proposed Floor Broker Desk Fee is reasonable and appropriate as similar fees are assessed 14 On Cboe, Floor Broker Trading Permit Fees will be eligible for rebates based on the average customer (‘‘C’’) open-outcry contracts executed per day (‘‘ADV’’) over the course of a calendar month in all underlying symbols. The tiered rebates on Cboe are as follows: 0 to 99,999 ADV is 0% reduced from the Permit Fee; 100,000 to 174,999 is 15% reduced from the Permit Fee; and greater than 174,999 is 25% reduced from the Permit Fee. For example, on Cboe, a Floor Broker with 1 permit pays a $7,500 monthly Permit Fee. If that Floor Broker executes more than 174,999 ADV in a given month, the Floor Broker Permit Fee will be discounted by 25%. In total, that Floor Broker would be charged $5,625 ($7,500¥($7,500 × 0.25)) for the Floor Broker Trading Permit. BOX is not proposing a volume based rebate. Under this proposal, BOX is simply seeking for a Floor Broker to execute a trade on 50% of the calendar days in a given month. 15 Specifically, the Exchange currently offers Floor Brokers fee caps on manual transaction fees of $75,000 per month; QOO Order Rebates of $0.075 and $0.05 exclusively for Floor Brokers depending on the type of order executed on the Trading Floor; and finally the Strategy QOO Order Fee Cap and Rebate which allows Floor Brokers the opportunity to receive a $500 rebate for presenting certain Strategy QOO Orders to the Trading Floor. PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 47277 at other exchanges with physical trading floors.16 Further, the Exchange believes that the proposed Floor Broker Desk Fee more equitably allocates fees on the BOX Trading Floor. Prior to the COVID– 19 social distancing precautions and guidelines that impacted the space availability on the Floor, Floor Brokers were assessed fees based on the number of registered trading permits on the BOX Floor. With the current space constraints the Exchange believes it is more equitable to instead assess fees on the space utilized by each Floor Broker. Under the proposed structure a Floor Broker firm utilizing only one desk would be charged less than a Floor Broker firm utilizing three desks. The Floor Broker Desk Fee is also intended to fairly allocate costs related to providing Floor Brokers the space necessary to conduct business on the BOX Trading Floor. Finally, the Exchange believes the proposed Floor Broker Desk Fee is equitable and not unfairly discriminatory as such fee will be applied to all Floor Brokers. Lastly, the Exchange believes the proposed change to delete references to Trading Floor Booth Space Fee is reasonable and appropriate. With the changes proposed above that will charge Participants based on space utilization, this section is no longer necessary. 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 does not believe that the proposed rule changes will impose any burden on intramarket competition because the proposed changes adjust the Trading Floor Permit Fees to instead assess fees based on the space utilized by both Floor Market Makers and Floor Brokers. The Exchange believes that the proposed fees will encourage fair and efficient use of the BOX Trading Floor. 16 The Phlx assessed a similar fee to the one proposed. In 2011, Phlx charged a flat $300 per month fee for Trading/Administrative Booth paid by floor brokers and clearing firms. See SR–Phlx– 2011–181 at https://nasdaqphlx.cchwallstreet.com/ NASDAQPHLX/pdf/phlx-filings/2011/SR-Phlx2011-181.pdf. In 2013, Phlx eliminated the Trading/ Administrative Booth Fees but increased the Floor Facility Fee and assessed this fee to Clerks, Inactive Nominees and Floor Brokers in addition to the previously charged ROTs and individual Specialists. As such, the Exchange believes that the proposed Floor Broker Desk Fee is reasonable and appropriate as a similar fee (Floor Facility Fee) currently exists to cover similar costs on Phlx. See Securities Exchange Act Release No. 69672 (May 30, 2013), 78 FR 33873 (June 5, 2013) (SR–Phlx– 2013–58). See Phlx Fee Schedule Options 7, Section 9A. E:\FR\FM\04AUN1.SGM 04AUN1 47278 Federal Register / Vol. 85, No. 150 / Tuesday, August 4, 2020 / Notices If this result is achieved, the proposed fees may increase both inter-market and intra-market competition by incenting off-Floor participants to direct their orders to the Exchange, which would enhance the quality of quoting and may increase the volume of contracts traded on the Exchange. The Exchange does not believe that the proposed change will impair the ability of any market participants or competing order execution venues to maintain their competitive standing in the financial markets. Further, the proposed Floor Fees would be applied to all similarly situated participants (i.e., Floor Brokers and Floor Market Makers), and, as such, the proposed change would not impose a disparate burden on competition either among or between classes of market participants. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Exchange Act 17 and Rule 19b–4(f)(2) thereunder,18 because it establishes or changes a due, or fee. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend the rule change if it appears to the Commission that the action is necessary or appropriate in the public interest, for the protection of investors, or would otherwise further the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments jbell on DSKJLSW7X2PROD with NOTICES 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: • Send an email to rule-comments@ sec.gov. Please include File Number SR– BOX–2020–29 on the subject line. SECURITIES AND EXCHANGE COMMISSION Paper Comments [Release No. 34–89423; File No. SR–FINRA– 2020–022] • 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–2020–29. 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 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–2020–29, and should be submitted on or before August 25, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–16874 Filed 8–3–20; 8:45 am] BILLING CODE 8011–01–P Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or 17 15 18 17 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). VerDate Sep<11>2014 18:14 Aug 03, 2020 Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Further Extend the Expiration Date of the Temporary Amendments Set Forth in SR–FINRA– 2020–015 July 29, 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 July 27, 2020, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to extend the expiration date of the temporary amendments in SR–FINRA–2020–015 from July 31, 2020, to a date to be specified in a public notice issued by FINRA, which date will be at least two weeks from the date of the notice, and no later than December 31, 2020. The text of the proposed rule change is available on FINRA’s website at https://www.finra.org, at the principal office of FINRA and at the Commission’s Public Reference Room. 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 summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. 1 15 19 17 Jkt 250001 PO 00000 CFR 200.30–3(a)(12). Frm 00119 Fmt 4703 Sfmt 4703 2 17 E:\FR\FM\04AUN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 04AUN1

Agencies

[Federal Register Volume 85, Number 150 (Tuesday, August 4, 2020)]
[Notices]
[Pages 47274-47278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16874]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89422; File No. SR-BOX-2020-29]


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 Amend Section IX.C 
(Trading Floor Participant Fees) and Remove Section IX.D (Trading Floor 
Booth Space Fee)

July 29, 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 July 16, 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).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange is filing with the Securities and Exchange Commission 
(``Commission'') a proposed rule change to amend the Fee Schedule 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.

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

1. Purpose
    The Exchange proposes to modify the Fee Schedule for trading on BOX 
to amend Section IX.C. (Trading Floor Permit Fees). The Exchange 
launched the BOX Trading Floor in August 2017 and established the 
current Trading Floor Permit Fees in conjunction with the launch.\5\ In 
February, the Exchange relocated the BOX Trading Floor to a larger 
trading facility to accommodate increased interest in the Trading 
Floor. Then, as a precautionary measure to prevent the potential spread 
of COVID-19, the Exchange temporarily closed the Trading Floor on March 
20, 2020. The Trading Floor reopened on Monday, May 4th, 2020 with 
social distancing precautions and guidelines in place that have 
impacted the space availability for Floor Participants. To encourage 
efficient use of space, BOX believes it is appropriate to amend the 
Floor Broker Trading Floor Permit Fees to assess fees based on the 
space utilized by each firm rather than the number of registered

[[Page 47275]]

permits that each Participant has on the Trading Floor. The Exchange is 
also proposing to remove or modify certain terminology in the Trading 
Floor Permit Fees section to clarify how these fees are assessed, and 
better reflect how space on the Trading Floor is used by each 
Participant.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 81504 (August 30, 
2017), 82 FR 42195 (September 6, 2017) (SR-BOX-2017-28).
---------------------------------------------------------------------------

    First, the Exchange proposes to rename Section IX.C. (Trading Floor 
Permit Fees) to Trading Floor Participant Fees.\6\ The Exchange 
believes that this will clarify that the fees in this section are 
assessed on the Participant firms and not the registered permit holders 
that are employed at each firm. The Exchange then proposes to change 
the language both subsections (a) and (b) from Participant to ``firm'' 
to clarify that these fees are assessed on each firm registered to 
conduct trading on the BOX Trading Floor; rather than the registered 
trading permit holders approved to trade on behalf of these 
Participants.
---------------------------------------------------------------------------

    \6\ The Exchange notes that the Trading Floor Participants apply 
in addition to the Participant Fees outlined in Section IX. A 
(Initiation Fee) and B (Participant Fees).
---------------------------------------------------------------------------

    The Exchange then proposes to modify the language in this section 
to clarify how space on the Trading Floor is used. The two types of 
Floor Participant firms--Floor Brokers and Floor Market Makers--have 
different business needs and preferences on the Trading Floor. Floor 
Broker firms utilize space adjacent to the Crowd Area (``booth space'') 
akin to private office space where employees of the same firm 
communicate with customers, receive orders, and coordinate covering the 
Trading Floor to announce such orders into the Crowd Area.\7\ A Floor 
Broker firm has at least one desk, and may combine multiple, contiguous 
desks into a single booth space adjacent to the Crowd Area. By 
contrast, Floor Market Making firms operate at the point of sale, which 
necessitates that their floor space be integrated in the Crowd Area.
---------------------------------------------------------------------------

    \7\ See BOX Rule 100(a)(67). The term ``Trading Floor'' or 
``Options Floor'' means the physical trading floor of the Exchange 
located in Chicago. The Trading Floor shall consist of one ``Crowd 
Area'' or ``Pit'' where all option classes will be located. The 
Crowd Area or Pit shall be marked with specific visible boundaries 
on the Trading Floor, as determined by the Exchange. A Floor Broker 
must open outcry an order in the Crowd Area.
---------------------------------------------------------------------------

Floor Market Makers
    The Exchange first proposes to replace the reference to ``booth 
space'' with ``podium'' to more accurately reflect the type of space 
used by the Floor Market Making firms on the BOX Trading Floor. The 
Exchange notes that this terminology change will not impact the space 
currently used by Floor Market Makers; rather it is designed to clarify 
the differences in how space is used by Floor Market Makers compared to 
the manner in which space is used by Floor Brokers. A podium is the 
term used within the industry for the Floor Market Maker work space 
located in the middle of the Crowd Area, while a booth space is the 
terminology used for the work space adjacent to the Crowd Area where 
the Floor Broker firms are located. The Exchange notes that all Market 
Maker podiums on the BOX Trading Floor are the same size.
    The Exchange currently charges each Floor Market Making firm $5,500 
per month for one booth space and three registered permits on the BOX 
Trading Floor. Along with replacing the term ``booth space'' with 
``podium,'' the Exchange proposes to remove the references to three 
registered permits as the Exchange will no longer assess fees based on 
the number of registered permits on the Floor. Instead, the Exchange 
proposes to add language that states the firm will be entitled to an 
unlimited amount of registered trading permits. Registered trading 
permits are given to persons employed by or associated with a Floor 
Broker or Floor Market Maker who are eligible to effect transactions on 
the Trading Floor as a Floor Market Maker or Floor Broker.\8\ The 
Exchange notes that under the proposal a Market Maker will now be able 
to register an unlimited amount of trading permits for access to the 
BOX Trading Floor. Each podium will continue to be limited to one 
registered trading permit holder actively trading at any given time, as 
is currently the case.
---------------------------------------------------------------------------

    \8\ Registered Trading Permit holders are not assessed a Badge 
Fee. Badge Fees are assessed on persons employed by or associated 
with a Participant that are not registered to effect transaction on 
the BOX Trading Floor (see BOX Rule 7630).
---------------------------------------------------------------------------

    Finally, the Exchange proposes to add language to charge Floor 
Market Makers who wish to have any additional podiums in the Crowd Area 
$1,500 per podium per month. The Exchange notes that this is the same 
fee currently assessed on Floor Market Makers who wish to have 
additional space on the Trading Floor, under current Section IX.D. 
(Trading Floor Booth Space Fee) which the Exchange plans to remove 
under this proposal. A Market Maker may elect to have more than one 
podium to increase their trading opportunities on the BOX Trading 
Floor. As stated above, a Market Maker podium is limited to one 
registered trading permit holder actively trading at any given time. 
Therefore, if the Market Maker would like to have two registered 
trading permit holders actively trading at any given time, they are 
required to have two podiums on the BOX Trading Floor.
    The Exchange believes that the changes proposed above will have no 
impact to Floor Marker Maker fees. Each Floor Market Maker currently 
has one podium on the BOX Trading Floor, and would continue to be 
charged $5,500 per month for their space. Instead, the proposal now 
permits an unlimited number of trading permit holders although each 
podium will continue to accommodate only one trading permit holder at 
any given time.
Floor Brokers
    The Exchange currently charges each Floor Broker firm $500 per 
month for three registered permits \9\ and one booth space on the 
Trading Floor. The Exchange proposes to remove the references to three 
registered permits as the Exchange will no longer assess fees based on 
the number of registered trading permits on the Floor. Instead, the 
Exchange proposes to add language that states the firm will be entitled 
to an unlimited amount of registered trading permits. The Exchange 
notes that under the proposal a Floor Broker will now be able to 
register an unlimited amount of trading permits for access to the BOX 
Trading Floor; however each desk will be limited to one registered 
trading permit holder actively trading at any given time.\10\
---------------------------------------------------------------------------

    \9\ Id.
    \10\ The Exchange notes that prior to the closure of the Floor 
in March 2020, Floor Brokers were allowed more than one registered 
trading permit holder at each desk. However; since reopening the 
Trading Floor in May 2020 Floor Brokers have been limited to one 
registered trading permit holder per desk.
---------------------------------------------------------------------------

    The Exchange then proposes to establish a flat Floor Broker Trading 
Floor Participant Fee of $5,000 per month as well as a $5,000 Trading 
Floor Credit that will be applied if a Floor Broker firm executes a 
trade on 50% or more of trading days in a given month. For example, for 
June 2020, in order to avail themselves of the Trading Floor Credit, a 
Floor Broker must execute a trade on the BOX Trading Floor on at least 
11 days of June (22 trading days in June 2020). The Exchange believes 
this fee/credit structure will encourage Floor Broker firms to more 
actively participate on the BOX Trading Floor as well as encourage the 
efficient use of Floor Space. The Exchange believes that most, if not 
all, of the current Floor Brokers will easily meet this threshold based 
on trading activity for the six weeks prior to the closure of the BOX 
Trading Floor on March 20, 2020 and therefore will

[[Page 47276]]

only be charged for the space that each Floor Broker utilizes on the 
Trading Floor under the proposed Desk Fee as described below.
    Finally, the Exchange proposes to establish a $350 per month desk 
fee for Floor Brokers within their booth space, as well as specify that 
a Floor Broker must have at least one desk. Depending on their business 
model a Floor Broker may opt to have only one desk in its booth space, 
or opt for a larger footprint on the Floor and combine several desks 
into the booth space adjacent to the Crowd Area. The Exchange believes 
charging per desk will offer flexibility to Floor Broker firms to 
customize the precise amount of floor space needed, while ensuring that 
Floor Brokers are charged equitably for the floor space they utilize.
    The Exchange believes these proposed changes will result in Floor 
Brokers being charged appropriately for their space on the BOX Trading 
Floor. Prior to the closure of the BOX Floor in March 2020, Floor 
Brokers had from one to six permit holders actively trading in their 
booth space on the BOX Floor at any given time. Under the current fee 
structure, a Floor Broker firm with one active trading permit holder 
occupying a booth space on the BOX Trading Floor was charged $500 per 
month, a Floor Broker firm with four active trading permit holders was 
charged $1000 per month, and a Floor Broker firm with six active 
trading permit holders was charged $1000 per month. Under the proposed 
fee structure, assuming that none of the Floor Brokers change their 
practices, these same Floor Brokers would be charged between $350 and 
$2,100 per month.
    Specifically, a Floor Broker firm with one active trading permit 
holder occupying one desk would now be charged a Trading Floor 
Participant Fee of $5,000 per month (with the opportunity to earn a 
$5,000 per month Trading Floor Credit for a net Trading Floor 
Participant Fee of $0.00) and $350 per month Desk Fee. Therefore the 
firm's monthly anticipated Trading Floor Participant Fee would drop 
from $500 per month to $350 per month (assuming they qualify for the 
Trading Floor Credit).
    The Floor Broker with four active trading permit holders would be 
charged $1000 per month under the current fee schedule ($500 for the 
first three registered trading permits and an additional $500 for the 
one registered trading permit). Under the proposed changes that same 
Floor Broker firm would be charged a Trading Floor Participant Fee of 
$5,000 per month with the opportunity to earn a $5,000 per month 
Trading Floor Credit, as well $1,400 per month for the four desks the 
Floor Broker occupies within its booth space. Therefore the firm's 
monthly anticipated Trading Floor Participant Fee would rise from $1000 
per month to $1400 per month (assuming they qualify for the Trading 
Floor Credit).
    In comparison, the Floor Broker firm with the largest presence 
would be charged $1000 per month for its six active trading permit 
holders ($500 for the first three registered trading permits and an 
additional $500 for the additional three registered trading permits). 
Under the proposed changes that same Floor Broker firm would be charged 
a Trading Floor Participant Fee of $5,000 per month with the 
opportunity to earn a $5,000 per month Trading Floor Credit, as well 
$2,100 per month for the six desks the Floor Broker occupies within its 
booth space. This firm would see the largest increase in its Trading 
Floor Participant Fees, which would rise from $1,000 per month to 
$2,100 per month.
    Lastly, the Exchange proposes to delete Section IX.D, Trading Floor 
Booth Space Fee. With the changes proposed above that will charge 
Participants based on space utilization, the Exchange believes that a 
separate Trading Floor Booth Space Fee is no longer appropriate.
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,\11\ in particular, in that it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among BOX Participants and other persons using its facilities 
and does not unfairly discriminate between customers, issuers, brokers 
or dealers.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    First, the Exchange believes the proposal to remove or modify 
certain terminology in the Section IX.C. of the BOX Fee Schedule 
(Trading Floor Participant Fees) is reasonable, equitable and not 
unfairly discriminatory. The changes proposed are meant to clarify how 
these fees are assessed and better reflect how space on the Trading 
Floor is used by each Participant; which will alleviate potential 
confusion and result in a Fee Schedule that is clearer and easier to 
follow, thereby removing impediments to and perfecting the mechanism of 
a free and open market and a national market system, and, in general, 
protecting investors and the public interest. The Exchange also 
believes the proposed changes are reasonable as they do not impact the 
fees assessed on Trading Floor Participants.
    The Exchange believes that the proposed changes to the Floor Market 
Maker Participant Fees are reasonable, equitable and not unfairly 
discriminatory. As stated above, the changes proposed will have no 
impact to Floor Market Maker fees. Instead, the proposed change to 
include one podium--instead of one booth space--in the Floor Market 
Maker Trading Floor Participant Fee is reasonable and appropriate as it 
better reflects the Floor Market Maker's use of space on the BOX 
Trading Floor. Further, the change to remove references to three 
registered permits is reasonable as the Floor Market Makers will 
continue to be limited to one active registered trading permit on each 
podium at any given time. Finally, the Exchange believes the proposed 
additional podium fee of $1,500 per month is reasonable as the Exchange 
previously assessed a $1,500 per month Trading Floor Booth Space 
Fee.\12\ The proposed changes to the Floor Market Maker Participant 
Fees are equitable and not unfairly discriminatory as they apply 
equally to all Floor Market Makers on the BOX Trading Floor.
---------------------------------------------------------------------------

    \12\ The Exchange notes that this is in line with a similar fee 
charged at another exchange with a physical trading floor. See Cboe 
Exchange Inc. (``Cboe'') Fee Schedule. Cboe charges a $1,250 per 
month fee for a Non-Standard Booth Rental plus $1.70 per square 
foot, determined based on the size of the booth. At Cboe, the term 
``non-standard booth'' generally refers to space on the trading 
floor on the Exchange that is set off from a trading crowd, which 
may be rented for whatever support, office, back-office, or any 
other business-related activities for which Cboe members may choose 
to use. The Exchange notes that the ``non-standard booth'' at Cboe 
is similar to the proposed Trading Floor Booth discussed herein, as 
the additional podium is a general space on the trading floor. See 
Securities Exchange Release No. 78741 (August 31, 2017), 81 FR 61727 
(SR-CBOE-2016-063).
---------------------------------------------------------------------------

    The Exchange believes the proposed changes to the Floor Broker 
Participant Fees are reasonable, equitable and not unfairly 
discriminatory. The purpose of these changes is to structure Floor 
Broker Participant fees so that these firms are charged for the space 
they utilize and are incentivized to use their space efficiently. Floor 
Brokers utilize their booth space, which could be comprised of one desk 
or multiple desks, as private office space, out of which they 
communicate with customers, take orders, and coordinate covering the 
Trading Floor to announce such orders into the Crowd Area. Thus, the 
Exchange believes the proposed changes to how it will charge Floor 
Brokers for space utilized is reasonable and equitable because it is 
designed to

[[Page 47277]]

reflect the differing business needs of each Floor Broker while 
offering the firm some flexibility in setting up their booth space 
consistent with their particular business models/commercial 
preferences.
    Next, the Exchange believes the proposed change to increase the 
Floor Broker Trading Floor Participant Fee from $500 to $5,000 is 
reasonable and appropriate as the proposed fee is comparable to other 
Floor Broker Participant Fees at another exchange with a trading 
floor.\13\ Further, the Exchange notes that the purpose of this change, 
coupled with the Floor Broker Trading Floor Credit discussed above, is 
to incentivize Floor Participants to actively trade on the BOX Trading 
Floor and ensure the efficient use of space on the BOX Trading Floor. 
The Exchange believes that most, if not all, of the current Floor 
Brokers will easily meet this threshold based on previous trading 
activity and thus have a net Floor Broker Trading Floor Participant Fee 
of $0.00 in addition to any applicable desk fee. BOX believes that 
increasing the Floor Broker Trading Floor Participant Fee, coupled with 
the Floor Broker Trading Floor Credit--which may offset the Floor 
Broker Trading Floor Participant Fee entirely (notwithstanding any 
applicable desk fees)--will incentivize Floor Participants to actively 
trade on the BOX Trading Floor, and further, makes certain that BOX 
resources are not spent supporting a firm who is not actively trading 
on the BOX Trading Floor but is taking up valuable space. The Exchange 
believes that the proposed increase is equitable and not unfairly 
discriminatory because it applies to all Floor Brokers on the BOX 
Trading Floor.
---------------------------------------------------------------------------

    \13\ See Nasdaq Phlx Fee Schedule. On Phlx, Floor Brokers are 
assessed a $4,000 per month flat fee.
---------------------------------------------------------------------------

    The Exchange believes that the proposed Floor Broker Trading Floor 
Credit is reasonable, equitable, and not unfairly discriminatory. Floor 
Brokers play a critical role in bringing liquidity to the BOX Trading 
Floor by acting as an agent on behalf of their retail and institutional 
customers. As discussed above, the purpose of the credit is to 
incentivize Floor Brokers to actively trade on the Exchange for a 
certain number of days in a given month which in turn maximizes the 
efficient use of space on the BOX Trading Floor. Orders brought to the 
Trading Floor by Floor Brokers benefit all Floor Participants by 
providing more trading opportunities, which attracts Market Makers, 
Customers and other market participants. An increase in activity, in 
turn, facilities tighter spreads, which may result in corresponding 
increase in order flow from all market participants. The Exchange notes 
that another exchange offers Floor Brokers a rebate on their Floor 
Broker Permit Fee.\14\ The Exchange believes that the proposed change 
is equitable and not unfairly discriminatory as all Floor Brokers on 
the BOX Trading Floor are eligible to receive the Floor Broker Trading 
Floor Credit. Further, the Exchange believes it is equitable and not 
unfairly discriminatory to offer a Trading Floor Credit to Floor 
Brokers and not Floor Market Makers. As discussed above, Floor Brokers 
act as the agent on behalf of their retail and institutional customers 
to bring order flow to the BOX Trading Floor. Floor Market Makers then 
benefit from the access they have to interact with orders which are 
made available in open outcry on the Trading Floor. Further, in order 
to obtain the Trading Floor Credit, Floor Brokers must actively trade 
on 50% or more of the trading days in a given month.
---------------------------------------------------------------------------

    \14\ On Cboe, Floor Broker Trading Permit Fees will be eligible 
for rebates based on the average customer (``C'') open-outcry 
contracts executed per day (``ADV'') over the course of a calendar 
month in all underlying symbols. The tiered rebates on Cboe are as 
follows: 0 to 99,999 ADV is 0% reduced from the Permit Fee; 100,000 
to 174,999 is 15% reduced from the Permit Fee; and greater than 
174,999 is 25% reduced from the Permit Fee. For example, on Cboe, a 
Floor Broker with 1 permit pays a $7,500 monthly Permit Fee. If that 
Floor Broker executes more than 174,999 ADV in a given month, the 
Floor Broker Permit Fee will be discounted by 25%. In total, that 
Floor Broker would be charged $5,625 ($7,500-($7,500 x 0.25)) for 
the Floor Broker Trading Permit. BOX is not proposing a volume based 
rebate. Under this proposal, BOX is simply seeking for a Floor 
Broker to execute a trade on 50% of the calendar days in a given 
month.
---------------------------------------------------------------------------

    The Exchange recognizes the value that Floor Brokers bring to the 
Trading Floor elsewhere in its Fee Schedule. For example, the Exchange 
has in place certain fee caps and rebates to the benefit of Floor 
Brokers, in order to incentivize Floor Brokers to continue bringing 
their customer order flow to the Floor.\15\ As such, the Exchange 
believes that offering Floor Brokers the potential to earn a credit to 
offset their Trading Floor Participant Fee is reasonable and 
appropriate.
---------------------------------------------------------------------------

    \15\ Specifically, the Exchange currently offers Floor Brokers 
fee caps on manual transaction fees of $75,000 per month; QOO Order 
Rebates of $0.075 and $0.05 exclusively for Floor Brokers depending 
on the type of order executed on the Trading Floor; and finally the 
Strategy QOO Order Fee Cap and Rebate which allows Floor Brokers the 
opportunity to receive a $500 rebate for presenting certain Strategy 
QOO Orders to the Trading Floor.
---------------------------------------------------------------------------

    The Exchange believes the proposed Floor Broker Desk Fee is 
reasonable and appropriate as similar fees are assessed at other 
exchanges with physical trading floors.\16\ Further, the Exchange 
believes that the proposed Floor Broker Desk Fee more equitably 
allocates fees on the BOX Trading Floor. Prior to the COVID-19 social 
distancing precautions and guidelines that impacted the space 
availability on the Floor, Floor Brokers were assessed fees based on 
the number of registered trading permits on the BOX Floor. With the 
current space constraints the Exchange believes it is more equitable to 
instead assess fees on the space utilized by each Floor Broker. Under 
the proposed structure a Floor Broker firm utilizing only one desk 
would be charged less than a Floor Broker firm utilizing three desks. 
The Floor Broker Desk Fee is also intended to fairly allocate costs 
related to providing Floor Brokers the space necessary to conduct 
business on the BOX Trading Floor. Finally, the Exchange believes the 
proposed Floor Broker Desk Fee is equitable and not unfairly 
discriminatory as such fee will be applied to all Floor Brokers.
---------------------------------------------------------------------------

    \16\ The Phlx assessed a similar fee to the one proposed. In 
2011, Phlx charged a flat $300 per month fee for Trading/
Administrative Booth paid by floor brokers and clearing firms. See 
SR-Phlx-2011-181 at https://nasdaqphlx.cchwallstreet.com/NASDAQPHLX/pdf/phlx-filings/2011/SR-Phlx-2011-181.pdf. In 2013, Phlx eliminated 
the Trading/Administrative Booth Fees but increased the Floor 
Facility Fee and assessed this fee to Clerks, Inactive Nominees and 
Floor Brokers in addition to the previously charged ROTs and 
individual Specialists. As such, the Exchange believes that the 
proposed Floor Broker Desk Fee is reasonable and appropriate as a 
similar fee (Floor Facility Fee) currently exists to cover similar 
costs on Phlx. See Securities Exchange Act Release No. 69672 (May 
30, 2013), 78 FR 33873 (June 5, 2013) (SR-Phlx-2013-58). See Phlx 
Fee Schedule Options 7, Section 9A.
---------------------------------------------------------------------------

    Lastly, the Exchange believes the proposed change to delete 
references to Trading Floor Booth Space Fee is reasonable and 
appropriate. With the changes proposed above that will charge 
Participants based on space utilization, this section is no longer 
necessary.

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 does not believe 
that the proposed rule changes will impose any burden on intramarket 
competition because the proposed changes adjust the Trading Floor 
Permit Fees to instead assess fees based on the space utilized by both 
Floor Market Makers and Floor Brokers. The Exchange believes that the 
proposed fees will encourage fair and efficient use of the BOX Trading 
Floor.

[[Page 47278]]

If this result is achieved, the proposed fees may increase both inter-
market and intra-market competition by incenting off-Floor participants 
to direct their orders to the Exchange, which would enhance the quality 
of quoting and may increase the volume of contracts traded on the 
Exchange.
    The Exchange does not believe that the proposed change will impair 
the ability of any market participants or competing order execution 
venues to maintain their competitive standing in the financial markets. 
Further, the proposed Floor Fees would be applied to all similarly 
situated participants (i.e., Floor Brokers and Floor Market Makers), 
and, as such, the proposed change would not impose a disparate burden 
on competition either among or between classes of market participants.

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

    No written comments were either solicited or received.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Exchange Act \17\ and Rule 19b-4(f)(2) 
thereunder,\18\ because it establishes or changes a due, or fee.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \18\ 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-2020-29 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-2020-29. 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 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-2020-29, and should be submitted on 
or before August 25, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-16874 Filed 8-3-20; 8:45 am]
BILLING CODE 8011-01-P
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