Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Response Time Period in the Facilitation and Solicitation Auction Mechanisms, 48274-48277 [2021-18460]

Download as PDF 48274 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices surveillance sharing agreement with a regulated market of significant size related to bitcoin? 24 What are commenters’ views on the Exchange’s assertion in support of such statement that significant liquidity in the spot market and the impact of market orders on the overall price of bitcoin mean that attempting to move the price of bitcoin is costly? 25 What are commenters’ views on the assertion that offering only in-kind creations and redemptions provides unique protections against potential attempts to manipulate the Shares and that the price the Sponsor uses to value the Trust’s bitcoin ‘‘is not particularly important’’? 26 III. Procedure: Request for Written Comments The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal. In particular, the Commission invites the written views of interested persons concerning whether the proposal is consistent with Section 6(b)(5) or any other provision of the Act, and the rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b–4, any request for an opportunity to make an oral presentation.27 Interested persons are invited to submit written data, views, and arguments regarding whether the proposal should be approved or disapproved by September 17, 2021. Any person who wishes to file a rebuttal to any other person’s submission must file that rebuttal by October 1, 2021. 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 24 See id. at 29327 n.51. id. at 29328. 26 See id. 27 Section 19(b)(2) of the Act, as amended by the Securities Act Amendments of 1975, Public Law 94–29 (June 4, 1975), grants the Commission flexibility to determine what type of proceeding— either oral or notice and opportunity for written comments—is appropriate for consideration of a particular proposal by a self-regulatory organization. See Securities Act Amendments of 1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). lotter on DSK11XQN23PROD with NOTICES1 25 See VerDate Sep<11>2014 17:52 Aug 26, 2021 Jkt 253001 • Send an email to rule-comments@ sec.gov. Please include File Number SR– CboeBZX–2021–039 on the subject line. SECURITIES AND EXCHANGE COMMISSION Paper Comments [Release No. 34–92724; File No. SR–BOX– 2021–17] • 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–CboeBZX–2021–039. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–CboeBZX–2021–039 and should be submitted by September 17, 2021. Rebuttal comments should be submitted by October 1, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 Jill M. Peterson, Assistant Secretary. [FR Doc. 2021–18457 Filed 8–26–21; 8:45 am] BILLING CODE 8011–01–P Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Response Time Period in the Facilitation and Solicitation Auction Mechanisms August 23, 2021. 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 August 10, 2021, BOX Exchange LLC (the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the time period allowed for Participant submission of Responses in the Facilitation and Solicitation auction mechanisms from one (1) second to a time period designated by the Exchange of no less than 100 milliseconds and no more than one (1) second. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission’s Public Reference Room and also on the Exchange’s internet website at https:// boxoptions.com. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. 1 15 28 17 PO 00000 CFR 200.30–3(a)(57). Frm 00161 Fmt 4703 Sfmt 4703 2 17 E:\FR\FM\27AUN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 27AUN1 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change lotter on DSK11XQN23PROD with NOTICES1 1. Purpose The purpose of the proposed rule change is to amend the time period allowed for Participant submission of Responses in the Facilitation and Solicitation auction mechanisms from one (1) second to a time period designated by the Exchange of no less than 100 milliseconds and no more than one (1) second.3 Rule 7270 contains the requirements applicable to the execution of orders in the Facilitation 4 and Solicitation 5 Auction Mechanisms. Currently, under the Facilitation and Solicitation auction mechanisms, when the Exchange receives a designated Agency Order for auction processing, a broadcast message will be sent and Options Participants will be given an opportunity to enter Responses with the prices and sizes at which they would be willing to participate in the execution of the Agency Order. Currently, the time given to Options Participants to enter Responses for Facilitation and Solicitation auctions is one (1) second pursuant to IM–7270–4. The Exchange now proposes to amend IM–7270–4 to state that the time given to Options Participants to enter Responses shall be determined by the Exchange and announced through a Regulatory Circular. The time to enter Responses will be no less than 100 milliseconds and no more than one (1) second. The Exchange notes that substantially similar language exists at other options exchanges with similar auction mechanisms.6 3 While the Exchange intends to decrease the time period allowed for Responses, the proposed rule would also allow the Exchange to increase this time period up to one (1) second, which is the time currently allowed for the submission of Responses. See IM–7270–4. 4 BOX’s Facilitation Auction is a process by which an OFP can attempt to execute a transaction wherein the OFP seeks to facilitate a block-size order it represents as agent (‘‘Agency Order’’), and/ or a transaction wherein the OFP solicited interest to execute against an Agency Order. OFPs must be willing to execute the entire size of Agency Orders entered into the Facilitation Auction through the submission of a contra ‘‘Facilitation Order’’. See BOX Rule 7270(a). 5 BOX’s Solicitation Auction is a process by which an OFP can attempt to execute orders of 500 or more contracts it represents as agent (the ‘‘Agency Order’’) against contra orders that it has solicited (‘‘Solicited Order’’). Each Agency Order entered into the Solicitation Auction shall be allor-none. See BOX Rule 7270(b). 6 See Securities Exchange Act Release Nos. 79352 (November 18, 2016), 82 FR 3055 (January 10, 2017) (Order Approving SR–ISE–2016–26, a Proposed Rule Change To Modify the Response Times in the Block Mechanism, Facilitation Mechanism, VerDate Sep<11>2014 17:52 Aug 26, 2021 Jkt 253001 48275 The Exchange believes that proposed rule change could provide more customer orders an opportunity for price improvement because it will reduce the market risk for all Participants executing trades in these mechanisms. Participants that submit orders into such mechanisms to initiate an auction (‘‘Initiating Participants’’) are required to guarantee an execution at the Agency Order price or a better, and are subject to market risk while the order is exposed in the mechanisms to other Participants. While other Participants are subject to market risk, the Initiating Participant is most exposed because the market can move against them during the auction period and they have guaranteed the customer an execution at the Agency Order price or better based on the market prices prior to the commencement of the auction. In today’s fast-paced markets, big price changes can occur in 100 milliseconds or less, leaving the Initiating Participants vulnerable to trading losses due to their choice to seek price improvement for their customer. The Initiating Participant acts in a critical role in the price improvement process and their willingness to guarantee the customer an execution at the Agency Order Price or better is keystone to the customer order gaining the opportunity for price improvement. Therefore, limiting Initiating Participants’ market risk by reducing the exposure time in the mechanisms should increase the likelihood that an Initiating Participant would seek price improvement for its customer by entering such orders into one of the mechanisms. Further, although the Exchange currently plans to reduce the time period allowed for the auction Responses to 100 milliseconds, the Exchange believes that it is appropriate to provide the flexibility to choose a Response period of up to one (1) second as this is consistent with the rules of other options markets.7 The Exchange’s Participants operate electronic systems that enable them to react and respond to orders in a meaningful way in fractions of a second. The Exchange anticipates that its Participants will continue to compete within the proposed auction duration designated by the Exchange. In particular, the Exchange believes the proposed auction Response time will continue to provide Participants with sufficient time to respond to, compete for, and provide price improvement for orders, and will provide investors and other market participants with more timely executions, and reduce their market risk. To substantiate that BOX Participants can receive, process, and communicate a response to an auction broadcast within 100 milliseconds, the Exchange surveyed all Participants that responded to a Facilitation or Solicitation auction in the period beginning January 1, 2021 and ending June 30, 2021. The Exchange received responses from all Participants surveyed, and each Participant confirmed that they can receive, process, and communicate a response back to the Exchange within 100 milliseconds. Accordingly, the Exchange believes that an auction time as low as 100 milliseconds will continue to provide Participants with sufficient time to respond to, compete for, and provide price improvement for orders, and will provide investors and other market participants with more timely executions, and reduce their market risk. With regard to the impact of this proposal on system capacity, the Exchange has analyzed its capacity and represents that it has the necessary systems capacity to handle the potential additional traffic associated with the additional transactions that may occur with the implementation of the proposed reduction in the auction duration to no less than 100 milliseconds. Additionally, the Exchange represents that its systems will be able to sufficiently maintain an audit trail for order and trade information with the reduction in the auction duration. Upon effectiveness of the proposal, the Exchange will issue an Informational Circular to Participants informing them of the implementation date of the reduction of the auction from one (1) second to the auction time designated by the Exchange to allow Participants the opportunity to perform systems changes. This will give Participants an opportunity to make any necessary modifications to coincide with the implementation date. Solicited Order Mechanism, and Price Improvement Mechanism); 76301 (October 29, 2015), 80 FR 68347 (November 4, 2015) (SR–BX–2015–032); 77557 (April 7, 2016), 81 FR 21935 (April 13, 2016) (SR– PHLX–2016–40) and 80570 (May 1, 2017), 82 FR 28369 (June 21, 2017) (SR–MIAX–2017–16). 7 Id. The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act,8 in general, and Section 6(b)(5) of the PO 00000 Frm 00162 Fmt 4703 Sfmt 4703 2. Statutory Basis 8 15 E:\FR\FM\27AUN1.SGM U.S.C. 78f(b). 27AUN1 48276 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices Act,9 in particular, in that it designed to promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general protect investors and the public interest. In particular, the proposed rule change will provide investors with more timely execution of their option orders, while ensuring that there is an adequate exposure of orders in these mechanisms. Additionally, the proposed change will allow more investors the opportunity to receive price improvement through the mechanisms and will reduce market risk for Participants using the mechanisms. Finally, as mentioned above, other exchanges have amended their rules to permit response times consistent with those proposed here—i.e., no less than 100 milliseconds and no more than 1 second.10 As such, the Exchange believes the proposed rule change would help perfect the mechanism for a free and open national market system, and generally help protect investors’ and the public’s interest. The Exchange believes the proposed rule change is not unfairly discriminatory because the auction duration would be the same for all Participants. All Participants in the mechanisms have today, and will continue to have, an equal opportunity to receive the broadcast and respond with their best prices during the auction. Additionally, the Exchange believes the reduction in the auction duration reduces the market risk for all Participants. The reduction in the time period reduces the market risk for the Initiating Participant as well as any Participants providing orders in response to a broadcast. Moreover, based on the feedback the Exchange received from its Participants, the Exchange believes that a reduction in 9 15 U.S.C. 78f(b)(5). supra note 6. The Exchange notes that its Facilitation and Solicitation mechanisms are substantially similar to the Facilitation and Solicitation mechanisms at Nasdaq ISE. The Exchange notes one minor difference. Specifically, ISE’s Solicitation Mechanism does not include a surrender quantity provision where BOX’s Solicitation Mechanism does. The Exchange believes this is a minor difference and will not have a material impact with respect to the proposed response time discussed herein. Further, as discussed above, Nasdaq ISE has identical rule language to that of the proposed language discussed herein. See Securities Exchange Act Release No. 79352 (November 18, 2016), 82 FR 3055 (January 10, 2017) (Order Approving SR–ISE–2016–26, a Proposed Rule Change To Modify the Response Times in the Block Mechanism, Facilitation Mechanism, Solicited Order Mechanism, and Price Improvement Mechanism). As such, the Exchange believes the proposed change does not raise any new or novel issues and should be approved by the Commission. lotter on DSK11XQN23PROD with NOTICES1 10 See VerDate Sep<11>2014 17:52 Aug 26, 2021 Jkt 253001 the auction period to a low of 100 milliseconds would not impair Participants’ ability to compete in the mechanisms. The Exchange believes these results support the assertion that a reduction in the auction duration would not be unfairly discriminatory and would benefit investors. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange believes the proposal is consistent with Section 6(b)(8) of the Act 11 in that it does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change provides the Exchange flexibility in determining potentially shorter durations for Facilitation and Solicitation auctions does not impose an undue burden on intra-market competition as the Exchange believes that allowing for an auction period of no less than 100 milliseconds and no more than 1 second will benefit Participants utilizing the auction mechanisms. The Exchange believes it is in these Participants’ best interest to minimize the Facilitation and Solicitation Auction duration while continuing to allow Participants adequate time to respond electronically. Further, based on the feedback the Exchange received from its Participants, the Exchange believes that a reduction in the auction period to a low of 100 milliseconds would not impair Participants’ ability to compete in the mechanisms. The proposed rule allows Participants to respond quickly at the most favorable price while reducing the risk that the market will move against the response. The Exchange believes that its Participants will be able to compete within a range of no less than 100 milliseconds and no more than 1 second, and that any specific duration within this range is a sufficient amount of time to respond to, compete for, and provide price improvement for orders, and will provide investors and other market participants more timely executions, and reduce their market risk. The Exchange does not believe its proposed rule change will impose an undue burden on inter-market competition as the Exchange notes other exchanges offer similar mechanisms with similar auction durations.12 For all the reasons stated, the Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or 11 15 U.S.C. 78f(b)(8). supra note 6. 12 See PO 00000 Frm 00163 Fmt 4703 Sfmt 4703 appropriate in furtherance of the purposes of the Act, and believes the proposed change will enhance competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 13 and Rule 19b–4(f)(6) thereunder.14 Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 15 and Rule 19b–4(f)(6)(iii) thereunder.16 A proposed rule change filed under Rule 19b–4(f)(6) 17 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),18 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange states that waiver of the operative delay will allow the Exchange to immediately decrease the Response time which would allow Participants to respond quickly at their most favorable price, while reducing the risk that the market will move against the response. The Exchange also notes that other exchanges with similar auction mechanisms permit the same 13 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). 15 15 U.S.C. 78s(b)(3)(A). 16 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange’s intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 17 17 CFR 240.19b–4(f)(6). 18 17 CFR 240.19b–4(f)(6)(iii). 14 17 E:\FR\FM\27AUN1.SGM 27AUN1 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices response time period.19 The Commission believes that the proposed changes do not raise any material new issues that have not been previously considered by the Commission. For this reason, the Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.20 At any time within 60 days of the filing of this proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved. Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–BOX–2021–17, and should be submitted on or before September 17, 2021. 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Jill M. Peterson, Assistant Secretary. lotter on DSK11XQN23PROD with NOTICES1 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–2021–17 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–2021–17. 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 19 See supra note 6. purposed only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 20 For VerDate Sep<11>2014 17:52 Aug 26, 2021 Jkt 253001 [FR Doc. 2021–18460 Filed 8–26–21; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #17110 and #17111; Washington Disaster Number WA–00097] Administrative Declaration of a Disaster for the State of Washington Small Business Administration. Notice. AGENCY: ACTION: This is a notice of an Administrative declaration of a disaster for the State of Washington dated 08/23/ 2021. Incident: Hanover Apartment Complex Fire. Incident Period: 07/10/2021. DATES: Issued on 08/23/2021. Physical Loan Application Deadline Date: 10/22/2021. Economic Injury (EIDL) Loan Application Deadline Date: 05/23/2022. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, SUMMARY: 21 17 PO 00000 CFR 200.30–3(a)(12). Frm 00164 Fmt 4703 Sfmt 4703 48277 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205–6734. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the Administrator’s disaster declaration, applications for disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties: King. Contiguous Counties: Washington: Chelan, Kitsap, Kittitas, Pierce, Snohomish, Yakima. The Interest Rates are: Percent For Physical Damage: Homeowners with Credit Available Elsewhere ...................... Homeowners without Credit Available Elsewhere .............. Businesses with Credit Available Elsewhere ...................... Businesses without Credit Available Elsewhere .............. Non-Profit Organizations with Credit Available Elsewhere ... Non-Profit Organizations without Credit Available Elsewhere ..................................... For Economic Injury: Businesses & Small Agricultural Cooperatives without Credit Available Elsewhere .............. Non-Profit Organizations without Credit Available Elsewhere ..................................... 3.250 1.625 5.760 2.880 2.000 2.000 2.880 2.000 The number assigned to this disaster for physical damage is 17110 5 and for economic injury is 17111 0. The State which received an EIDL Declaration # is Washington. (Catalog of Federal Domestic Assistance Number 59008) Isabella Guzman, Administrator. [FR Doc. 2021–18439 Filed 8–26–21; 8:45 am] BILLING CODE 8026–03–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #17108 and #17109; Louisiana Disaster Number LA–00114] Presidential Declaration of a Major Disaster for Public Assistance Only for the State of Louisiana U.S. Small Business Administration. ACTION: Notice. AGENCY: This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for SUMMARY: E:\FR\FM\27AUN1.SGM 27AUN1

Agencies

[Federal Register Volume 86, Number 164 (Friday, August 27, 2021)]
[Notices]
[Pages 48274-48277]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-18460]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92724; File No. SR-BOX-2021-17]


Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the 
Response Time Period in the Facilitation and Solicitation Auction 
Mechanisms

August 23, 2021.
    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 August 10, 2021, BOX Exchange LLC (the ``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I and II below, which Items have been 
prepared by the self-regulatory organization. The Commission is 
publishing this notice to solicit comments on the proposed rule from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the time period allowed for 
Participant submission of Responses in the Facilitation and 
Solicitation auction mechanisms from one (1) second to a time period 
designated by the Exchange of no less than 100 milliseconds and no more 
than one (1) second. The text of the proposed rule change is available 
from the principal office of the Exchange, at the Commission's Public 
Reference Room and also on the Exchange's internet website at https://boxoptions.com.

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

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

[[Page 48275]]

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

1. Purpose
    The purpose of the proposed rule change is to amend the time period 
allowed for Participant submission of Responses in the Facilitation and 
Solicitation auction mechanisms from one (1) second to a time period 
designated by the Exchange of no less than 100 milliseconds and no more 
than one (1) second.\3\
---------------------------------------------------------------------------

    \3\ While the Exchange intends to decrease the time period 
allowed for Responses, the proposed rule would also allow the 
Exchange to increase this time period up to one (1) second, which is 
the time currently allowed for the submission of Responses. See IM-
7270-4.
---------------------------------------------------------------------------

    Rule 7270 contains the requirements applicable to the execution of 
orders in the Facilitation \4\ and Solicitation \5\ Auction Mechanisms. 
Currently, under the Facilitation and Solicitation auction mechanisms, 
when the Exchange receives a designated Agency Order for auction 
processing, a broadcast message will be sent and Options Participants 
will be given an opportunity to enter Responses with the prices and 
sizes at which they would be willing to participate in the execution of 
the Agency Order. Currently, the time given to Options Participants to 
enter Responses for Facilitation and Solicitation auctions is one (1) 
second pursuant to IM-7270-4. The Exchange now proposes to amend IM-
7270-4 to state that the time given to Options Participants to enter 
Responses shall be determined by the Exchange and announced through a 
Regulatory Circular. The time to enter Responses will be no less than 
100 milliseconds and no more than one (1) second. The Exchange notes 
that substantially similar language exists at other options exchanges 
with similar auction mechanisms.\6\
---------------------------------------------------------------------------

    \4\ BOX's Facilitation Auction is a process by which an OFP can 
attempt to execute a transaction wherein the OFP seeks to facilitate 
a block-size order it represents as agent (``Agency Order''), and/or 
a transaction wherein the OFP solicited interest to execute against 
an Agency Order. OFPs must be willing to execute the entire size of 
Agency Orders entered into the Facilitation Auction through the 
submission of a contra ``Facilitation Order''. See BOX Rule 7270(a).
    \5\ BOX's Solicitation Auction is a process by which an OFP can 
attempt to execute orders of 500 or more contracts it represents as 
agent (the ``Agency Order'') against contra orders that it has 
solicited (``Solicited Order''). Each Agency Order entered into the 
Solicitation Auction shall be all-or-none. See BOX Rule 7270(b).
    \6\ See Securities Exchange Act Release Nos. 79352 (November 18, 
2016), 82 FR 3055 (January 10, 2017) (Order Approving SR-ISE-2016-
26, a Proposed Rule Change To Modify the Response Times in the Block 
Mechanism, Facilitation Mechanism, Solicited Order Mechanism, and 
Price Improvement Mechanism); 76301 (October 29, 2015), 80 FR 68347 
(November 4, 2015) (SR-BX-2015-032); 77557 (April 7, 2016), 81 FR 
21935 (April 13, 2016) (SR-PHLX-2016-40) and 80570 (May 1, 2017), 82 
FR 28369 (June 21, 2017) (SR-MIAX-2017-16).
---------------------------------------------------------------------------

    The Exchange believes that proposed rule change could provide more 
customer orders an opportunity for price improvement because it will 
reduce the market risk for all Participants executing trades in these 
mechanisms. Participants that submit orders into such mechanisms to 
initiate an auction (``Initiating Participants'') are required to 
guarantee an execution at the Agency Order price or a better, and are 
subject to market risk while the order is exposed in the mechanisms to 
other Participants. While other Participants are subject to market 
risk, the Initiating Participant is most exposed because the market can 
move against them during the auction period and they have guaranteed 
the customer an execution at the Agency Order price or better based on 
the market prices prior to the commencement of the auction. In today's 
fast-paced markets, big price changes can occur in 100 milliseconds or 
less, leaving the Initiating Participants vulnerable to trading losses 
due to their choice to seek price improvement for their customer. The 
Initiating Participant acts in a critical role in the price improvement 
process and their willingness to guarantee the customer an execution at 
the Agency Order Price or better is keystone to the customer order 
gaining the opportunity for price improvement. Therefore, limiting 
Initiating Participants' market risk by reducing the exposure time in 
the mechanisms should increase the likelihood that an Initiating 
Participant would seek price improvement for its customer by entering 
such orders into one of the mechanisms.
    Further, although the Exchange currently plans to reduce the time 
period allowed for the auction Responses to 100 milliseconds, the 
Exchange believes that it is appropriate to provide the flexibility to 
choose a Response period of up to one (1) second as this is consistent 
with the rules of other options markets.\7\
---------------------------------------------------------------------------

    \7\ Id.
---------------------------------------------------------------------------

    The Exchange's Participants operate electronic systems that enable 
them to react and respond to orders in a meaningful way in fractions of 
a second. The Exchange anticipates that its Participants will continue 
to compete within the proposed auction duration designated by the 
Exchange. In particular, the Exchange believes the proposed auction 
Response time will continue to provide Participants with sufficient 
time to respond to, compete for, and provide price improvement for 
orders, and will provide investors and other market participants with 
more timely executions, and reduce their market risk.
    To substantiate that BOX Participants can receive, process, and 
communicate a response to an auction broadcast within 100 milliseconds, 
the Exchange surveyed all Participants that responded to a Facilitation 
or Solicitation auction in the period beginning January 1, 2021 and 
ending June 30, 2021. The Exchange received responses from all 
Participants surveyed, and each Participant confirmed that they can 
receive, process, and communicate a response back to the Exchange 
within 100 milliseconds.
    Accordingly, the Exchange believes that an auction time as low as 
100 milliseconds will continue to provide Participants with sufficient 
time to respond to, compete for, and provide price improvement for 
orders, and will provide investors and other market participants with 
more timely executions, and reduce their market risk.
    With regard to the impact of this proposal on system capacity, the 
Exchange has analyzed its capacity and represents that it has the 
necessary systems capacity to handle the potential additional traffic 
associated with the additional transactions that may occur with the 
implementation of the proposed reduction in the auction duration to no 
less than 100 milliseconds. Additionally, the Exchange represents that 
its systems will be able to sufficiently maintain an audit trail for 
order and trade information with the reduction in the auction duration.
    Upon effectiveness of the proposal, the Exchange will issue an 
Informational Circular to Participants informing them of the 
implementation date of the reduction of the auction from one (1) second 
to the auction time designated by the Exchange to allow Participants 
the opportunity to perform systems changes. This will give Participants 
an opportunity to make any necessary modifications to coincide with the 
implementation date.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\8\ in general, and Section 
6(b)(5) of the

[[Page 48276]]

Act,\9\ in particular, in that it designed to promote just and 
equitable principles of trade, remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general protect investors and the public interest.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, the proposed rule change will provide investors with 
more timely execution of their option orders, while ensuring that there 
is an adequate exposure of orders in these mechanisms. Additionally, 
the proposed change will allow more investors the opportunity to 
receive price improvement through the mechanisms and will reduce market 
risk for Participants using the mechanisms. Finally, as mentioned 
above, other exchanges have amended their rules to permit response 
times consistent with those proposed here--i.e., no less than 100 
milliseconds and no more than 1 second.\10\ As such, the Exchange 
believes the proposed rule change would help perfect the mechanism for 
a free and open national market system, and generally help protect 
investors' and the public's interest.
---------------------------------------------------------------------------

    \10\ See supra note 6. The Exchange notes that its Facilitation 
and Solicitation mechanisms are substantially similar to the 
Facilitation and Solicitation mechanisms at Nasdaq ISE. The Exchange 
notes one minor difference. Specifically, ISE's Solicitation 
Mechanism does not include a surrender quantity provision where 
BOX's Solicitation Mechanism does. The Exchange believes this is a 
minor difference and will not have a material impact with respect to 
the proposed response time discussed herein. Further, as discussed 
above, Nasdaq ISE has identical rule language to that of the 
proposed language discussed herein. See Securities Exchange Act 
Release No. 79352 (November 18, 2016), 82 FR 3055 (January 10, 2017) 
(Order Approving SR-ISE-2016-26, a Proposed Rule Change To Modify 
the Response Times in the Block Mechanism, Facilitation Mechanism, 
Solicited Order Mechanism, and Price Improvement Mechanism). As 
such, the Exchange believes the proposed change does not raise any 
new or novel issues and should be approved by the Commission.
---------------------------------------------------------------------------

    The Exchange believes the proposed rule change is not unfairly 
discriminatory because the auction duration would be the same for all 
Participants. All Participants in the mechanisms have today, and will 
continue to have, an equal opportunity to receive the broadcast and 
respond with their best prices during the auction. Additionally, the 
Exchange believes the reduction in the auction duration reduces the 
market risk for all Participants. The reduction in the time period 
reduces the market risk for the Initiating Participant as well as any 
Participants providing orders in response to a broadcast. Moreover, 
based on the feedback the Exchange received from its Participants, the 
Exchange believes that a reduction in the auction period to a low of 
100 milliseconds would not impair Participants' ability to compete in 
the mechanisms. The Exchange believes these results support the 
assertion that a reduction in the auction duration would not be 
unfairly discriminatory and would benefit investors.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes the proposal is consistent with Section 
6(b)(8) of the Act \11\ in that it does not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The proposed rule change provides the Exchange 
flexibility in determining potentially shorter durations for 
Facilitation and Solicitation auctions does not impose an undue burden 
on intra-market competition as the Exchange believes that allowing for 
an auction period of no less than 100 milliseconds and no more than 1 
second will benefit Participants utilizing the auction mechanisms. The 
Exchange believes it is in these Participants' best interest to 
minimize the Facilitation and Solicitation Auction duration while 
continuing to allow Participants adequate time to respond 
electronically. Further, based on the feedback the Exchange received 
from its Participants, the Exchange believes that a reduction in the 
auction period to a low of 100 milliseconds would not impair 
Participants' ability to compete in the mechanisms.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    The proposed rule allows Participants to respond quickly at the 
most favorable price while reducing the risk that the market will move 
against the response. The Exchange believes that its Participants will 
be able to compete within a range of no less than 100 milliseconds and 
no more than 1 second, and that any specific duration within this range 
is a sufficient amount of time to respond to, compete for, and provide 
price improvement for orders, and will provide investors and other 
market participants more timely executions, and reduce their market 
risk.
    The Exchange does not believe its proposed rule change will impose 
an undue burden on inter-market competition as the Exchange notes other 
exchanges offer similar mechanisms with similar auction durations.\12\
---------------------------------------------------------------------------

    \12\ See supra note 6.
---------------------------------------------------------------------------

    For all the reasons stated, 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, and 
believes the proposed change will enhance competition.

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

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

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \15\ and Rule 19b-
4(f)(6)(iii) thereunder.\16\
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange states that 
waiver of the operative delay will allow the Exchange to immediately 
decrease the Response time which would allow Participants to respond 
quickly at their most favorable price, while reducing the risk that the 
market will move against the response. The Exchange also notes that 
other exchanges with similar auction mechanisms permit the same

[[Page 48277]]

response time period.\19\ The Commission believes that the proposed 
changes do not raise any material new issues that have not been 
previously considered by the Commission. For this reason, the 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the 30-day operative delay 
and designates the proposal operative upon filing.\20\
---------------------------------------------------------------------------

    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ See supra note 6.
    \20\ For purposed only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of this proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change 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-2021-17 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-2021-17. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-BOX-2021-17, and should be submitted on 
or before September 17, 2021.
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2021-18460 Filed 8-26-21; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.