Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule for Trading on BOX Options Market Facility To Amend Certain Rebates for Qualified Contingent Cross Transactions, 20259-20261 [2024-05952]
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Federal Register / Vol. 89, No. 56 / Thursday, March 21, 2024 / Notices
lotter on DSK11XQN23PROD with NOTICES1
records that are required to be created:
trade blotters, general ledger, ledgers for
customers and non-customer accounts,
stock record, memoranda of brokerage
orders, memoranda of proprietary
orders, confirmations, accountholder
information, options positions, trial
balances and computation of net capital,
associated person’s employment
application, account equity and margin
calculations under Rule 18a–3,
possession or control requirements for
security-based swap customers,
customer reserve requirements for
security-based swap customers,
unverified transactions, political
contributions, and compliance with
business conduct requirements. The
purpose of requiring stand-alone SBSDs,
stand-alone MSBSPs, bank SBSDs, and
bank MSBSPs to create the records
specified in Rule 18a–5 is to enhance
regulators’ ability to protect investors.
These records and the information
contained therein are used by examiners
and other representatives of the
Commission to determine whether
stand-alone SBSDs, stand-alone
MSBSPs, bank SBSDs, and bank
MSBSPs are in compliance with the
Commission’s anti-fraud and antimanipulation rules, financial
responsibility program, and other laws,
rules, and regulations.
Not all types of records enumerated in
Rule 18a–5 are required to be made by
each of the entities to which Rule 18a–
5 applies. For example, Rule 18a–5
requires thirteen types of records to be
made and kept current by stand-alone
SBSDs and stand-alone MSBSPs.1 Rule
18a–5 also requires three types of
records to be made and kept current by
stand-alone SBSDs.2 Rule 18a–5
requires 10 types of records to be made
and kept current by bank SBSDs and
bank MSBSPs, all of which are limited
to the firm’s business as an SBSD or
MSBSP.3 Further, Rule 18a–5 includes
1 See Rule 18a–5 (paragraph (a)(1) (trade blotters);
paragraph (a)(2) (general ledgers); paragraph (a)(3)
(ledgers of customer and non-customer accounts);
paragraph (a)(4) (stock record); paragraph (a)(5)
(memoranda of proprietary orders); paragraph (a)(6)
(confirmations); paragraph (a)(7) (accountholder
information); paragraph (a)(8) (options positions);
paragraph (a)(9) (trial balances and computation of
net capital); paragraph (a)(10) (associated person’s
application); paragraph (a)(12) (Rule 18a–3
calculations); paragraph (a)(15) (unverified
transactions); paragraph (a)(17) (compliance with
business conduct standards)).
2 See Rule 18a–5 (paragraph (a)(13) (compliance
with Rule 18a–4 possession or control
requirements); paragraph (a)(14) (Rule 18a–4
reserve account computations); and paragraph
(a)(16) (political contributions)).
3 See Rule 18a–5 (paragraph (b)(1) (trade blotters);
paragraph (b)(2) (general ledgers); paragraph (b)(3)
(stock record); paragraph (b)(4) (memoranda of
brokerage orders); paragraph (b)(5) (memoranda of
proprietary orders); paragraph (b)(6)
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paragraphs (b)(9), (b)(10), and (b)(12)
which requires bank SBSDs to make and
keep current various records for
security-based swaps.4
As of November 30, 2023, there are 11
stand-alone SBSDs, zero stand-alone
MSBSPs, 29 bank SBSDs, and zero bank
MSBSPs registered with the
Commission. The Commission estimates
that each recordkeeping provision of
Rule 18a–5 imposes on each firm that is
subject to the provision an initial
burden and an ongoing annual burden.
The total initial industry hour burden
attributable to Rule 18a–5 is estimated
to be 11,060 hours in the first year and
the total industry ongoing hour burden
attributable to Rule 18a–5 is estimated
to be 13,825 hours per year (including
the first year). Over a three-year period,
the total estimated industry burden is
estimated to be 52,535 hours, or about
17,511 hours per year when annualized.
These burdens are recordkeeping
burdens.
In addition, the Commission estimates
that Rule 18a–5 causes a stand-alone
SBSD or stand-alone MSBSP to incur an
initial dollar cost of approximately
$1,000 to purchase recordkeeping
system software and an ongoing dollar
cost of $4,650 per year to provide
adequate physical space and computer
hardware and software for storage. As of
November 30, 2023, there are 11
respondents (11 stand-alone SBSDs and
zero stand-alone MSBSPs), resulting in
an estimated industry-wide initial
burden of $11,000 and an industry-wide
ongoing burden of $51,150 per year.
Over a three-year period, the total
estimated industry burden would be
$164,450, or about $54,817 per year
when annualized.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
The public may view background
documentation for this information
collection at the following website:
www.reginfo.gov. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function. Written comments and
recommendations for the proposed
information collection should be sent by
(confirmations); paragraph (b)(7) accountholder
information); paragraph (b)(8) (associated person’s
application); paragraph (b)(11) (unverified
transactions); and paragraph (b)(13) (compliance
with business conduct requirements)).
4 See Rule 18a–5 (paragraph (b)(9) (possession or
control requirements under Rule 18a–4); paragraph
(b)(10) (customer reserve requirements under Rule
18a–4); and paragraph (b)(12) (political
contributions)).
PO 00000
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20259
April 22, 2024 to (i) www.reginfo.gov/
public/do/PRAMain and (ii) David
Bottom, Director/Chief Information
Officer, Securities and Exchange
Commission, c/o John Pezzullo, 100 F
Street NE, Washington, DC 20549, or by
sending an email to: PRA_Mailbox@
sec.gov.
Dated: March 18, 2024.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–05993 Filed 3–20–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99751; File No. SR–BOX–
2024–06]
Self-Regulatory Organizations; BOX
Exchange LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the Fee
Schedule for Trading on BOX Options
Market Facility To Amend Certain
Rebates for Qualified Contingent
Cross Transactions
March 15, 2024.
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 March 1,
2024, 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.
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’’) options
facility to amend certain rebates for
Qualified Contingent Cross (‘‘QCC’’)
transactions. The text of the proposed
rule change is available from the
principal office of the Exchange, at the
Commission’s Public Reference Room
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
2 17
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Federal Register / Vol. 89, No. 56 / Thursday, March 21, 2024 / Notices
and also on the Exchange’s internet
website at https://rules.boxexchange.
com/rulefilings.
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 amend the
Fee Schedule for trading on BOX to
totaling the Participant’s QCC Agency
Order volume on BOX. The Exchange
notes that the QCC Rebate is intended
to incentivize the sending of more QCC
Orders to BOX.
The Exchange now proposes to amend
the QCC Rebate tiers in Section IV.D.1
of the BOX Fee Schedule. Specifically,
the Exchange proposes to amend the
volume thresholds in Tiers 1, 2, and 3.
For Tier 1, the Exchange proposes to
decrease the volume threshold to 0 to
749,999 contracts from 0 to 999,999
contracts. For Tier 2, the Exchange
proposes to decrease the volume
threshold to 750,000 to 1,499,999
contracts from 1,000,000 to 1,999,999
contracts. For Tier 3, the Exchange
proposes to decrease the volume
threshold to 1,500,000+ contracts from
2,000,000+ contracts.
The proposed QCC Rebate tier
structure will be as follows:
Rebate 1
(per contract)
Tier
QCC agency order volume on BOX (per month)
1 ...............
2 ...............
3 ...............
0 to 749,999 contracts ...........................................................................................................
750,000 to 1,499,999 contracts .............................................................................................
1,500,000+ contracts .............................................................................................................
The Exchange also proposes to amend
the QCC Growth Rebate to account for
the changes discussed above.
Specifically, the Exchange proposes that
if a Participant’s QCC Agency Order
volume on BOX achieves Tier 2 of the
QCC Rebate in the month AND the
Participant’s total QCC volume
combined with total QOO volume
exceeds 5 million (formerly 6 million)
contracts per month, then the
Participant will qualify for the rebates in
Tier 3 of the QCC Rebate. The Exchange
believes that the proposed changes
discussed above will encourage
Participants to send increased QCC and
QOO order flow to BOX in order to
achieve a rebate, which will result in
increased liquidity on BOX to the
benefit of all market participants.
2. Statutory Basis
lotter on DSK11XQN23PROD with NOTICES1
amend certain rebates for Qualified
Contingent Cross (‘‘QCC’’) transactions.
A QCC Order is defined as an
originating order (Agency Order) to buy
or sell at least 1,000 standard option
contracts, or 10,000 mini-option
contracts, that is identified as being part
of a qualified contingent trade, coupled
with a contra side order to buy or sell
an equal number of contracts.5
Currently, BOX assesses $0.20 per
contract to Broker Dealers and Market
Makers for both the Agency Order and
contra order of a QCC transaction.
Public Customers and Professional
Customers are not assessed a QCC
Transaction Fee. Further, rebates are
paid on all qualifying orders pursuant to
Section IV.D.1 of the BOX Fee Schedule.
Specifically, a QCC Rebate is paid to the
Participant that entered the order into
the BOX system when at least one party
to the QCC transaction is a Broker
Dealer or Market Maker. The Participant
receives a per contract rebate on QCC
transactions according to the tier
achieved. Volume thresholds are
calculated on a monthly basis by
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,6 in particular, in that
it provides for the equitable allocation
5 See
6 15
BOX Rule 7110(c)(6).
U.S.C. 78f(b)(4) and (5).
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16:53 Mar 20, 2024
Jkt 262001
($0.14)
(0.16)
(0.17)
Rebate 2
(per contract)
($0.22)
(0.25)
(0.27)
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.
The Exchange believes the proposed
changes to the QCC Rebate tiers are
reasonable because the proposed
changes provide opportunities for
Participants to receive higher rebates for
their QCC Order volume on BOX.
Further, the Exchange believes the
proposed changes to the QCC rebate
tiers are equitable and not unfairly
discriminatory as the proposed rebates
will apply uniformly to the Participants
that reach the applicable tiers.
The Exchange continues to believe
that the proposed rebate structure and
rebate amounts are reasonable as it
provides an incremental incentive for
Participants to strive for the higher tier
levels, which provide increasingly
higher rebates for incrementally more
QCC volume achieved, which the
Exchange believes is a reasonably
designed incentive for Participants to
grow their QCC order flow to receive the
enhanced rebates.
The Exchange believes the proposed
change to the QCC Growth Rebate is
reasonable because this rebate provides
incentives for BOX Participants to
engage in increased trading activity
which would serve to bring additional
open outcry liquidity to the Trading
Floor and additional QCC order flow to
BOX. The Exchange believes the
proposed decrease in total QCC volume
combined with total QOO volume will
encourage Participants to send such
order flow to BOX for the opportunity
to earn the rebate.
The Exchange believes that the
proposed QCC Growth Rebate
qualifications are reasonable because
they offer Participants an opportunity to
achieve a higher QCC rebate.
Additionally, the Exchange believes the
proposed change to the QCC Growth
Rebate is equitable and not unfairly
discriminatory because any Participant
may qualify for this rebate.7
7 The Exchange notes that all BOX Participants
may transact an options business electronically or
on the BOX Trading Floor with a registered Trading
Permit. BOX Participants may transact business on
the Trading Floor through a Floor Broker.
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Federal Register / Vol. 89, No. 56 / Thursday, March 21, 2024 / Notices
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
The Exchange believes the proposal
does not impose an undue burden on
inter-market competition because the
proposed changes to the QCC Rebate
and the QCC Growth Rebate will
promote competition for QCC
transactions. Specifically, the volume
thresholds required to qualify for the
rebates will be reduced, which may
allow Participants access to higher
rebates. The Exchange believes further
its proposal remains competitive with
other options markets and will offer
market participants with another choice
of where to transact its business. The
Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees and rebates to remain competitive
with other exchanges. Because
competitors are free to modify their own
fees and rebates in response, and
because market participants may readily
adjust their order routing practices, the
Exchange believes that the degree to
which fee changes in this market may
impose any burden on competition is
extremely limited.
The proposed changes do not impose
an undue burden on intramarket
competition because the Exchange does
not believe that its proposal will place
any category of market participant at a
competitive disadvantage. The
Exchange believes that the proposed
changes will encourage market
participants to send their QCC orders to
BOX for execution in order to obtain
greater rebates and lower their costs.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
lotter on DSK11XQN23PROD with NOTICES1
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 8 and
Rule 19b–4(f)(2) thereunder,9 because it
establishes or changes a due, or fee.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend the rule change if
it appears to the Commission that the
action is necessary or appropriate in the
public interest, for the protection of
investors, or would otherwise further
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
BOX–2024–06 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–2024–06. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–BOX–2024–06 and should be
submitted on or before April 11, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–05952 Filed 3–20–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99747; File No. SR–ISE–
2024–09]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend its Fees for
Connectivity and Co-Location Services
March 15, 2024.
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 March 1,
2024, Nasdaq ISE, LLC (‘‘ISE’’ or
‘‘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 self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Exchange’s fees for connectivity and colocation services, as described further
below.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/ise/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
8 15
U.S.C. 78s(b)(3)(A)(ii).
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9 17
Jkt 262001
PO 00000
CFR 240.19b–4(f)(2).
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]]>Agencies
[Federal Register Volume 89, Number 56 (Thursday, March 21, 2024)]
[Notices]
[Pages 20259-20261]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-05952]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99751; File No. SR-BOX-2024-06]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee
Schedule for Trading on BOX Options Market Facility To Amend Certain
Rebates for Qualified Contingent Cross Transactions
March 15, 2024.
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 March 1, 2024, BOX Exchange LLC (``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the Exchange. The Exchange filed the proposed rule
change pursuant to Section 19(b)(3)(A)(ii) of the Act,\3\ and Rule 19b-
4(f)(2) thereunder,\4\ which renders the proposal effective upon filing
with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change to amend the Fee Schedule on
the BOX Options Market LLC (``BOX'') options facility to amend certain
rebates for Qualified Contingent Cross (``QCC'') transactions. The text
of the proposed rule change is available from the principal office of
the Exchange, at the Commission's Public Reference Room
[[Page 20260]]
and also on the Exchange's internet website at https://rules.boxexchange.com/rulefilings.
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 amend the Fee Schedule for trading on BOX
to amend certain rebates for Qualified Contingent Cross (``QCC'')
transactions. A QCC Order is defined as an originating order (Agency
Order) to buy or sell at least 1,000 standard option contracts, or
10,000 mini-option contracts, that is identified as being part of a
qualified contingent trade, coupled with a contra side order to buy or
sell an equal number of contracts.\5\
---------------------------------------------------------------------------
\5\ See BOX Rule 7110(c)(6).
---------------------------------------------------------------------------
Currently, BOX assesses $0.20 per contract to Broker Dealers and
Market Makers for both the Agency Order and contra order of a QCC
transaction. Public Customers and Professional Customers are not
assessed a QCC Transaction Fee. Further, rebates are paid on all
qualifying orders pursuant to Section IV.D.1 of the BOX Fee Schedule.
Specifically, a QCC Rebate is paid to the Participant that entered the
order into the BOX system when at least one party to the QCC
transaction is a Broker Dealer or Market Maker. The Participant
receives a per contract rebate on QCC transactions according to the
tier achieved. Volume thresholds are calculated on a monthly basis by
totaling the Participant's QCC Agency Order volume on BOX. The Exchange
notes that the QCC Rebate is intended to incentivize the sending of
more QCC Orders to BOX.
The Exchange now proposes to amend the QCC Rebate tiers in Section
IV.D.1 of the BOX Fee Schedule. Specifically, the Exchange proposes to
amend the volume thresholds in Tiers 1, 2, and 3. For Tier 1, the
Exchange proposes to decrease the volume threshold to 0 to 749,999
contracts from 0 to 999,999 contracts. For Tier 2, the Exchange
proposes to decrease the volume threshold to 750,000 to 1,499,999
contracts from 1,000,000 to 1,999,999 contracts. For Tier 3, the
Exchange proposes to decrease the volume threshold to 1,500,000+
contracts from 2,000,000+ contracts.
The proposed QCC Rebate tier structure will be as follows:
------------------------------------------------------------------------
QCC agency order
Tier volume on BOX Rebate 1 (per Rebate 2 (per
(per month) contract) contract)
------------------------------------------------------------------------
1.............. 0 to 749,999 ($0.14) ($0.22)
contracts.
2.............. 750,000 to (0.16) (0.25)
1,499,999
contracts.
3.............. 1,500,000+ (0.17) (0.27)
contracts.
------------------------------------------------------------------------
The Exchange also proposes to amend the QCC Growth Rebate to
account for the changes discussed above. Specifically, the Exchange
proposes that if a Participant's QCC Agency Order volume on BOX
achieves Tier 2 of the QCC Rebate in the month AND the Participant's
total QCC volume combined with total QOO volume exceeds 5 million
(formerly 6 million) contracts per month, then the Participant will
qualify for the rebates in Tier 3 of the QCC Rebate. The Exchange
believes that the proposed changes discussed above will encourage
Participants to send increased QCC and QOO order flow to BOX in order
to achieve a rebate, which will result in increased liquidity on BOX to
the benefit of all market participants.
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,\6\ 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.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange believes the proposed changes to the QCC Rebate tiers
are reasonable because the proposed changes provide opportunities for
Participants to receive higher rebates for their QCC Order volume on
BOX. Further, the Exchange believes the proposed changes to the QCC
rebate tiers are equitable and not unfairly discriminatory as the
proposed rebates will apply uniformly to the Participants that reach
the applicable tiers.
The Exchange continues to believe that the proposed rebate
structure and rebate amounts are reasonable as it provides an
incremental incentive for Participants to strive for the higher tier
levels, which provide increasingly higher rebates for incrementally
more QCC volume achieved, which the Exchange believes is a reasonably
designed incentive for Participants to grow their QCC order flow to
receive the enhanced rebates.
The Exchange believes the proposed change to the QCC Growth Rebate
is reasonable because this rebate provides incentives for BOX
Participants to engage in increased trading activity which would serve
to bring additional open outcry liquidity to the Trading Floor and
additional QCC order flow to BOX. The Exchange believes the proposed
decrease in total QCC volume combined with total QOO volume will
encourage Participants to send such order flow to BOX for the
opportunity to earn the rebate.
The Exchange believes that the proposed QCC Growth Rebate
qualifications are reasonable because they offer Participants an
opportunity to achieve a higher QCC rebate. Additionally, the Exchange
believes the proposed change to the QCC Growth Rebate is equitable and
not unfairly discriminatory because any Participant may qualify for
this rebate.\7\
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\7\ The Exchange notes that all BOX Participants may transact an
options business electronically or on the BOX Trading Floor with a
registered Trading Permit. BOX Participants may transact business on
the Trading Floor through a Floor Broker.
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[[Page 20261]]
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange believes the proposal does not impose an undue burden
on inter-market competition because the proposed changes to the QCC
Rebate and the QCC Growth Rebate will promote competition for QCC
transactions. Specifically, the volume thresholds required to qualify
for the rebates will be reduced, which may allow Participants access to
higher rebates. The Exchange believes further its proposal remains
competitive with other options markets and will offer market
participants with another choice of where to transact its business. The
Exchange notes that it operates in a highly competitive market in which
market participants can readily favor competing venues if they deem fee
levels at a particular venue to be excessive, or rebate opportunities
available at other venues to be more favorable. In such an environment,
the Exchange must continually adjust its fees and rebates to remain
competitive with other exchanges. Because competitors are free to
modify their own fees and rebates in response, and because market
participants may readily adjust their order routing practices, the
Exchange believes that the degree to which fee changes in this market
may impose any burden on competition is extremely limited.
The proposed changes do not impose an undue burden on intramarket
competition because the Exchange does not believe that its proposal
will place any category of market participant at a competitive
disadvantage. The Exchange believes that the proposed changes will
encourage market participants to send their QCC orders to BOX for
execution in order to obtain greater rebates and lower their costs.
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 \8\ and Rule 19b-4(f)(2)
thereunder,\9\ because it establishes or changes a due, or fee.
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\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
\9\ 17 CFR 240.19b-4(f)(2).
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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-2024-06 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-2024-06. 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-BOX-2024-06 and should be
submitted on or before April 11, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-05952 Filed 3-20-24; 8:45 am]
BILLING CODE 8011-01-P
