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 the BOX Options Market LLC Facility (“BOX”), 58212-58215 [2024-15675]
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Federal Register / Vol. 89, No. 137 / Wednesday, July 17, 2024 / Notices
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–
CboeEDGX–2024–041 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.
ddrumheller on DSK120RN23PROD with NOTICES1
All submissions should refer to file
number SR–CboeEDGX–2024–041. 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–CboeEDGX–2024–041 and should be
submitted on or before August 7, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024–15667 Filed 7–16–24; 8:45 am]
BILLING CODE 8011–01–P
31 17
CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100495; File No. 4–820]
Options Price Reporting Authority;
Notice of Designation of a Longer
Period for Commission Action on a
Proposed Amendment To Modify
Section 5.2(c)(iii) of the OPRA Plan
Relating to Dissemination of Exchange
Proprietary Data Information
July 11, 2024.
On November 8, 2023, the Cboe BZX
Exchange, Inc. (‘‘BZX Options’’), Cboe
Exchange, Inc. (‘‘Cboe Options’’), Cboe
C2 Exchange, Inc. (‘‘C2 Options’’), and
Cboe EDGX Exchange, Inc. (‘‘EDGX
Options’’) (collectively, the ‘‘Sponsors’’
or ‘‘Cboe’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
a proposed amendment to the Plan for
Reporting of Consolidated Options Last
Sale Reports and Quotation Information
(‘‘OPRA Plan’’). The proposed
amendment was published for comment
in the Federal Register on January 22,
2024.1
On April 19, 2024, the Commission
instituted proceedings pursuant to Rule
608(b)(2)(i) of Regulation NMS 2 under
the Exchange Act to determine whether
to approve or disapprove the proposed
amendment or to approve the proposed
amendment with any changes or subject
to any conditions the Commission
deems necessary or appropriate after
considering public comment.3 Rule
608(b)(2)(i) of Regulation NMS provides
that such proceedings shall be
concluded within 180 days of the date
of publication of notice of the plan or
amendment and that the time for
conclusion of such proceedings may be
extended for up to 60 days (up to 240
days from the date of publication of
notice of the plan or amendment) if the
Commission determines that a longer
period is appropriate and publishes the
reasons for such determination or the
1 See Options Price Reporting Authority; Notice
of Filing of Proposed Amendment to Modify
Section 5.2(c)(iii) of the OPRA Plan Relating to
Dissemination of Exchange Proprietary Data
Information, Securities Exchange Act Release No.
99345 (Jan. 16, 2024), 89 FR 3963 (Jan. 22, 2024)
(‘‘Notice’’). Comments received in response to the
Notice can be found on the Commission’s website
at https://www.sec.gov/comments/4-820/4-820.htm.
2 17 CFR 242.608(b)(2)(i).
3 See Options Price Reporting Authority; Order
Instituting Proceedings to Determine Whether to
Approve or Disapprove a Proposed Amendment To
Modify Section 5.2(c)(iii) of the OPRA Plan Relating
to Dissemination of Exchange Proprietary Data
Information, Securities Exchange Act Release No.
99994 (Apr. 19, 2024), 89 FR 31785 (Apr. 25, 2024).
Comments received in response to the Order
Instituting Proceedings can be found on the
Commission’s website at https://www.sec.gov/
comments/4-820/4-820.htm.
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plan participants consent to a longer
period.4 The 180th day after publication
of the Notice for the proposed
amendment is July 20, 2024. The
Commission is extending this 180-day
period.
The Commission finds that it is
appropriate to designate a longer period
within which to conclude proceedings
regarding the proposed amendment so
that it has sufficient time to consider the
proposed amendment and the
comments received. Accordingly,
pursuant to Rule 608(b)(2)(i) of
Regulation NMS,5 the Commission
designates September 18, 2024, as the
date by which the Commission shall
conclude the proceedings to determine
whether to approve or disapprove the
proposed amendment or to approve the
proposed amendment with any changes
or subject to any conditions the
Commission deems necessary or
appropriate (File No. 4–820).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024–15666 Filed 7–16–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100505; File No. SR–BOX–
2024–17]
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 the BOX
Options Market LLC Facility (‘‘BOX’’)
July 11, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 1,
2024, BOX Exchange LLC (the
‘‘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
4 See
17 CFR 242.608(b)(2)(i).
5 Id.
6 17
CFR 200.30–3(a)(85).
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).
1 15
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Federal Register / Vol. 89, No. 137 / Wednesday, July 17, 2024 / Notices
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.
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 Terms of 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. 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://
rules.boxexchange.com/rulefilings.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
ddrumheller on DSK120RN23PROD with NOTICES1
1. Purpose
The Exchange proposes to amend the
Fee Schedule for trading on BOX to
include FLEX Open Outcry (‘‘FOO’’)
volume toward the Qualified Contingent
Cross (‘‘QCC’’) Growth Rebate.5
Currently, BOX offers a QCC Rebate
and a QCC Growth Rebate.6 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. When only one
side of the QCC transaction is a Broker
Dealer or Market Maker, Rebate 1
applies. When both parties to the QCC
transaction are a Broker Dealer or
Market Maker, Rebate 2 applies. The
Exchange notes that the QCC Rebate is
intended to incentivize the sending of
QCC Orders to BOX.
The QCC Rebate tier structure is as
follows:
Tier
QCC agency order volume on BOX
(per month)
1 .............................
2 .............................
3 .............................
0 to 749,999 contracts ................................................................................................
1,000,000[sic] to 1,499,999 contracts .........................................................................
1,500,000+ contracts ...................................................................................................
Additionally, the QCC Growth Rebate
allows Participant’s to qualify for the
rebates listed in Tier 3 of the QCC
Rebate 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 Qualified Open
Outcry (‘‘QOO’’) volume exceeds 5
million contracts per month. Strategy
QOO Orders and Strategy QCC Orders
are not counted toward the QCC Growth
Rebate volume.7
The Exchange now proposes that FOO
volume be counted toward the QCC
Growth Rebate. 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 and
FOO volume exceeds 5 million
contracts per month, then the
Participant will qualify for the rebates
listed in Tier 3 of the QCC Rebate (‘‘QCC
Growth Rebate qualifications’’). Strategy
5 The Exchange recently established transaction
fees and rebates applicable to the FOO Order type
on the BOX Trading Floor. See Securities Exchange
Act Release No. 100396 (June 21, 2024), 89 FR
53693 (June 27, 2024) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change
to Amend the Fee Schedule for Trading on the BOX
Options Market LLC Facility).
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Rebate 1
(per contract)
QOO Orders, Strategy FOO Orders, and
Strategy QCC Orders will not be
counted toward the QCC Growth Rebate
volume. Further, Participants are
entitled to one QCC Rebate in a given
month, which would be the greater of
the QCC Rebate in Section IV.D.1.a, or
the QCC Growth Rebate detailed in
Section IV.D.1.b, but not both.
The Exchange notes that a similar
rebate currently exists at another
options exchange.8 Further, the
Exchange believes that the proposal will
encourage Participants to send
increased QCC, FOO, and QOO order
flow to BOX in order to achieve a higher
rebate.
2. Statutory Basis
The Exchange believes that the
proposal is consistent with the
requirements of Section 6(b) of the Act,
in general, and Section 6(b)(4) and
6(b)(5)of the Act,9 in particular, in that
it provides for the equitable allocation
of reasonable dues, fees, and other
BOX Fee Schedule Section IV.D.1.
BOX Fee Schedule Section IV.D.1.b.
8 See NYSE American LLC (‘‘NYSE American’’)
Fee Schedule (Section I.F.QCC Fees & Credits).
Although the NYSE American Fee Schedule does
not reference FLEX options, the Exchange believes
that FLEX options are included in the Section
I.F.QCC Fees & Credits calculation of manual
PO 00000
6 See
7 See
Frm 00112
Fmt 4703
Sfmt 4703
58213
($0.14)
(0.16)
(0.17)
Rebate 2
(per contract)
($0.22)
(0.25)
(0.27)
charges among BOX Participants and
other persons using its facilities and
does not unfairly discriminate between
customers, issuers, brokers or dealers.
The Exchange’s proposal to include
FOO volume toward the QCC Growth
Rebate is reasonable because this rebate
will provide additional incentives for
BOX Participants to engage in
substantial amounts of trading activity
which would serve to bring additional
open outcry liquidity to the Trading
Floor and QCC order flow to BOX’s
electronic market.
As discussed above, the Exchange
notes that a similar QCC rebate
currently exists at another exchange.10
The Exchange believes that the
proposed QCC Growth Rebate
qualifications are reasonable because
they offer Participants an additional
opportunity to achieve a higher QCC
rebate. Additionally, the Exchange’s
proposal to include FOO volume toward
the QCC Growth Rebate is equitable and
not unfairly discriminatory because any
billable sides, which provides a QCC Billable Bonus
Rebate. The Exchange notes that the structure and
rebates differ, however, the concept of combining
manual billable (including FLEX options) and QCC
billable volume to determine rebates is similar to
the proposal.
9 15 U.S.C. 78f(b)(4) and (5).
10 See supra note 8.
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Federal Register / Vol. 89, No. 137 / Wednesday, July 17, 2024 / Notices
Participant may qualify for this rebate.11
All BOX Participants may enter order
flow to obtain a QCC Growth Rebate.
The Exchange believes the proposal
will create an incentive for Participants
to bring liquidity to BOX—both
electronically and on the Trading Floor.
The Exchange believes that if the
proposed incentive is effective, then an
ensuing increase in trading activity on
BOX will improve the quality of the
market to the benefit of all market
participants. Further, to the extent this
proposal attracts new Participant
volume to BOX, all market participants
should benefit through increased
liquidity and more trading
opportunities. The Exchange believes
this proposal is designed to increase
participation on BOX and reward those
Participants for the unique role they
play in ensuring a robust market.
The Exchange’s exclusion of QCC,
FOO, and QOO strategy transactions is
reasonable as Strategy QCC transactions
are not currently assessed a fee and
Strategy QOO and Strategy FOO
transactions are subject to the fee caps
and rebates detailed in Section V.D of
the BOX Fee Schedule. The Exchange
also notes that other exchanges exclude
strategy transactions from certain
rebates.12 Further, the exclusion of
strategy transactions from the QCC
Growth Rebate is equitable and not
unfairly discriminatory as this exclusion
will be uniformly applied to all
Participant types.
ddrumheller on DSK120RN23PROD with NOTICES1
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 proposal does not impose an
undue burden on intermarket
competition. The Exchange believes its
11 The Exchange notes that all BOX Participants
may transact options business electronically or on
the BOX Trading Floor with a registered Trading
Permit. The Exchange notes further that any market
participant may send an order to a BOX Floor
Broker for execution on BOX’s Trading Floor.
12 See Nasdaq PHLX LLC (‘‘Nasdaq PHLX’’)
Rules, Section 6.B. FLEX Transaction Fees
(providing that the Monthly Firm Fee Cap, Monthly
Market Maker Cap, Strategy Caps and the Options
Surcharge in BKX, described in Options 7, Section
4 will apply to this Section 6.B. No other fees
described in Options 7, Section 4 will apply to this
Section 6.B.). The Exchange notes that Nasdaq
PHLX Options 7, Section 4 includes QCC Rebates
which are inapplicable to Section 6.B FLEX
Transaction Fees by its terms. See also NYSE
American Fee Schedule (Section III.E.1.Floor
Broker Incentive and Rebate Programs). The
Exchange notes that NYSE American’s Manual
Billable Rebate Program does not include volume
calculated to achieve the Strategy Execution Fee
Cap, regardless of whether the cap is achieved.
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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 Exchange believes that the QCC
Growth Rebate as amended will
encourage market participants to send
greater amounts of QCC orders, FOO
Orders, and QOO Orders to BOX for
execution in order to obtain greater
rebates and lower their costs. Further,
the proposed QCC Growth Rebate
should incentivize a greater amount of
floor transactions on BOX, thereby
allowing BOX to compete more
effectively with other options floor
models. The Exchange believes that the
additional liquidity will enhance the
quality of BOX’s market and increase
certain trading opportunities on BOX’s
Trading Floor.
The Exchange believes that its
proposal will not place any category of
market participant at a competitive
disadvantage and therefore does not
impose an undue burden on intramarket competition. The Exchange
notes that any market participant may
send an order to a BOX Floor Broker for
execution on BOX’s Trading Floor.
The Exchange’s exclusion of FOO
strategy transactions from the volume
counted toward the QCC Growth Rebate
does not impose an undue burden on
competition as the exclusion will be
uniformly applied to all Participant
types.
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
PO 00000
Frm 00113
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19(b)(3)(A)(ii) of the Exchange Act 13
and Rule 19b–4(f)(2) thereunder,14
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–2024–17 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–2024–17. 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
13 15
14 17
E:\FR\FM\17JYN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
17JYN1
Federal Register / Vol. 89, No. 137 / Wednesday, July 17, 2024 / Notices
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–2024–17 and should be
submitted on or before August 7, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
J. Matthew DeLesDernier,
Deputy Secretary.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100506; File No. SR–
NYSEARCA–2024–58]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the NYSE Arca
Equities Fees and Charges
July 11, 2024.
ddrumheller on DSK120RN23PROD with NOTICES1
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 1,
2024, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by the Exchange. 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
NYSE Arca Equities Fees and Charges
(‘‘Fee Schedule’’) to expand the
application of providing an additional
calculation for purposes of determining
whether an ETP Holder qualifies for fees
and credits that pertain to providing
liquidity. The Exchange proposes to
implement the fee change effective July
1, 2024. The proposed rule change is
available on the Exchange’s website at
www.nyse.com, at the principal office of
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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 those 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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2024–15675 Filed 7–16–24; 8:45 am]
15 17
the Exchange, and at the Commission’s
Public Reference Room.
1. Purpose
The Exchange proposes to amend the
Fee Schedule to expand the application
of providing an additional calculation
for purposes of determining whether an
ETP Holder qualifies for fees and credits
that pertain to providing liquidity. More
specifically, the proposed additional
calculation would apply to the
following pricing tier in Section VII. of
the Fee Schedule: Tape B Tiers.3 The
Exchange proposes to implement the fee
change effective July 1, 2024.
Background
The Exchange operates in a highly
competitive market. The Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, the
Commission highlighted the importance
of market forces in determining prices
and SRO revenues and, also, recognized
that current regulation of the market
system ‘‘has been remarkably successful
in promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 4
While Regulation NMS has enhanced
competition, it has also fostered a
‘‘fragmented’’ market structure where
trading in a single stock can occur
across multiple trading centers. When
multiple trading centers compete for
order flow in the same stock, the
Commission has recognized that ‘‘such
3 Tape B Tiers refers to Tiers 1 through 3 and the
Step Up tiers under the Tape B Tiers pricing tier
table on the Fee Schedule.
4 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(File No. S7–10–04) (Final Rule) (‘‘Regulation
NMS’’).
PO 00000
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58215
competition can lead to the
fragmentation of order flow in that
stock.’’ 5 Indeed, equity trading is
currently dispersed across 16
exchanges,6 numerous alternative
trading systems,7 and broker-dealer
internalizers and wholesalers, all
competing for order flow. Based on
publicly available information, no single
exchange currently has more than 20%
market share.8 Therefore, no exchange
possesses significant pricing power in
the execution of equity order flow. More
specifically, the Exchange currently has
less than 12% market share of executed
volume of equities trading.9
The Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can move order flow, or discontinue or
reduce use of certain categories of
products. While it is not possible to
know a firm’s reason for shifting order
flow, the Exchange believes that one
such reason is because of fee changes at
any of the registered exchanges or nonexchange venues to which the firm
routes order flow. Accordingly,
competitive forces compel the Exchange
to use exchange transaction fees and
credits because market participants can
readily trade on competing venues if
they deem pricing levels at those other
venues to be more favorable.
Proposed Rule Change
The Exchange currently provides ETP
Holders with various tiered credits for
executing orders that add liquidity to
the Exchange and charges them various
fees for executing orders that remove
liquidity from the Exchange, as set forth
in Section VII. of the Fee Schedule,
titled ‘‘Tier Rates—Round Lots and Odd
Lots. The fees and credits enumerated in
Section VII. apply to all securities
priced at $1 or more that are executed
on the Exchange. ETP Holders may
qualify for tiers of discounted fees and
premium credits based, in part, upon
the volume of their activities on the
Exchange as a percentage of total
‘‘Consolidated Average Daily Volume’’
or ‘‘CADV.’’
5 See Securities Exchange Act Release No. 61358,
75 FR 3594, 3597 (January 21, 2010) (File No. S7–
02–10) (Concept Release on Equity Market
Structure).
6 See Cboe U.S Equities Market Volume
Summary, available at https://markets.cboe.com/us/
equities/market_share.
7 See FINRA ATS Transparency Data, available at
https://otctransparency.finra.org/otctransparency/
AtsIssueData. A list of alternative trading systems
registered with the Commission is available at
https://www.sec.gov/foia/docs/atslist.htm.
8 See Cboe Global Markets U.S. Equities Market
Volume Summary, available at https://
markets.cboe.com/us/equities/market_share/.
9 See id.
E:\FR\FM\17JYN1.SGM
17JYN1
]]>Agencies
[Federal Register Volume 89, Number 137 (Wednesday, July 17, 2024)]
[Notices]
[Pages 58212-58215]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15675]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100505; File No. SR-BOX-2024-17]
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 the BOX Options Market LLC Facility (``BOX'')
July 11, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 1, 2024, BOX Exchange LLC (the ``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
[[Page 58213]]
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\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 Terms of 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. 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://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 include FLEX Open Outcry (``FOO'') volume toward the Qualified
Contingent Cross (``QCC'') Growth Rebate.\5\
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\5\ The Exchange recently established transaction fees and
rebates applicable to the FOO Order type on the BOX Trading Floor.
See Securities Exchange Act Release No. 100396 (June 21, 2024), 89
FR 53693 (June 27, 2024) (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change to Amend the Fee Schedule
for Trading on the BOX Options Market LLC Facility).
---------------------------------------------------------------------------
Currently, BOX offers a QCC Rebate and a QCC Growth Rebate.\6\
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. When only
one side of the QCC transaction is a Broker Dealer or Market Maker,
Rebate 1 applies. When both parties to the QCC transaction are a Broker
Dealer or Market Maker, Rebate 2 applies. The Exchange notes that the
QCC Rebate is intended to incentivize the sending of QCC Orders to BOX.
---------------------------------------------------------------------------
\6\ See BOX Fee Schedule Section IV.D.1.
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The QCC Rebate tier structure is as follows:
----------------------------------------------------------------------------------------------------------------
QCC agency order volume on BOX Rebate 1 (per Rebate 2 (per
Tier (per month) contract) contract)
----------------------------------------------------------------------------------------------------------------
1......................................... 0 to 749,999 contracts.......... ($0.14) ($0.22)
2......................................... 1,000,000[sic] to 1,499,999 (0.16) (0.25)
contracts.
3......................................... 1,500,000+ contracts............ (0.17) (0.27)
----------------------------------------------------------------------------------------------------------------
Additionally, the QCC Growth Rebate allows Participant's to qualify
for the rebates listed in Tier 3 of the QCC Rebate 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
Qualified Open Outcry (``QOO'') volume exceeds 5 million contracts per
month. Strategy QOO Orders and Strategy QCC Orders are not counted
toward the QCC Growth Rebate volume.\7\
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\7\ See BOX Fee Schedule Section IV.D.1.b.
---------------------------------------------------------------------------
The Exchange now proposes that FOO volume be counted toward the QCC
Growth Rebate. 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 and FOO volume exceeds 5 million contracts per month,
then the Participant will qualify for the rebates listed in Tier 3 of
the QCC Rebate (``QCC Growth Rebate qualifications''). Strategy QOO
Orders, Strategy FOO Orders, and Strategy QCC Orders will not be
counted toward the QCC Growth Rebate volume. Further, Participants are
entitled to one QCC Rebate in a given month, which would be the greater
of the QCC Rebate in Section IV.D.1.a, or the QCC Growth Rebate
detailed in Section IV.D.1.b, but not both.
The Exchange notes that a similar rebate currently exists at
another options exchange.\8\ Further, the Exchange believes that the
proposal will encourage Participants to send increased QCC, FOO, and
QOO order flow to BOX in order to achieve a higher rebate.
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\8\ See NYSE American LLC (``NYSE American'') Fee Schedule
(Section I.F.QCC Fees & Credits). Although the NYSE American Fee
Schedule does not reference FLEX options, the Exchange believes that
FLEX options are included in the Section I.F.QCC Fees & Credits
calculation of manual billable sides, which provides a QCC Billable
Bonus Rebate. The Exchange notes that the structure and rebates
differ, however, the concept of combining manual billable (including
FLEX options) and QCC billable volume to determine rebates is
similar to the proposal.
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2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act, in general, and Section
6(b)(4) and 6(b)(5)of the Act,\9\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees, and other
charges among BOX Participants and other persons using its facilities
and does not unfairly discriminate between customers, issuers, brokers
or dealers.
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\9\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange's proposal to include FOO volume toward the QCC Growth
Rebate is reasonable because this rebate will provide additional
incentives for BOX Participants to engage in substantial amounts of
trading activity which would serve to bring additional open outcry
liquidity to the Trading Floor and QCC order flow to BOX's electronic
market.
As discussed above, the Exchange notes that a similar QCC rebate
currently exists at another exchange.\10\ The Exchange believes that
the proposed QCC Growth Rebate qualifications are reasonable because
they offer Participants an additional opportunity to achieve a higher
QCC rebate. Additionally, the Exchange's proposal to include FOO volume
toward the QCC Growth Rebate is equitable and not unfairly
discriminatory because any
[[Page 58214]]
Participant may qualify for this rebate.\11\ All BOX Participants may
enter order flow to obtain a QCC Growth Rebate.
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\10\ See supra note 8.
\11\ The Exchange notes that all BOX Participants may transact
options business electronically or on the BOX Trading Floor with a
registered Trading Permit. The Exchange notes further that any
market participant may send an order to a BOX Floor Broker for
execution on BOX's Trading Floor.
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The Exchange believes the proposal will create an incentive for
Participants to bring liquidity to BOX--both electronically and on the
Trading Floor. The Exchange believes that if the proposed incentive is
effective, then an ensuing increase in trading activity on BOX will
improve the quality of the market to the benefit of all market
participants. Further, to the extent this proposal attracts new
Participant volume to BOX, all market participants should benefit
through increased liquidity and more trading opportunities. The
Exchange believes this proposal is designed to increase participation
on BOX and reward those Participants for the unique role they play in
ensuring a robust market.
The Exchange's exclusion of QCC, FOO, and QOO strategy transactions
is reasonable as Strategy QCC transactions are not currently assessed a
fee and Strategy QOO and Strategy FOO transactions are subject to the
fee caps and rebates detailed in Section V.D of the BOX Fee Schedule.
The Exchange also notes that other exchanges exclude strategy
transactions from certain rebates.\12\ Further, the exclusion of
strategy transactions from the QCC Growth Rebate is equitable and not
unfairly discriminatory as this exclusion will be uniformly applied to
all Participant types.
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\12\ See Nasdaq PHLX LLC (``Nasdaq PHLX'') Rules, Section 6.B.
FLEX Transaction Fees (providing that the Monthly Firm Fee Cap,
Monthly Market Maker Cap, Strategy Caps and the Options Surcharge in
BKX, described in Options 7, Section 4 will apply to this Section
6.B. No other fees described in Options 7, Section 4 will apply to
this Section 6.B.). The Exchange notes that Nasdaq PHLX Options 7,
Section 4 includes QCC Rebates which are inapplicable to Section 6.B
FLEX Transaction Fees by its terms. See also NYSE American Fee
Schedule (Section III.E.1.Floor Broker Incentive and Rebate
Programs). The Exchange notes that NYSE American's Manual Billable
Rebate Program does not include volume calculated to achieve the
Strategy Execution Fee Cap, regardless of whether the cap is
achieved.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
The proposal does not impose an undue burden on intermarket
competition. The Exchange believes 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 Exchange believes that the QCC Growth Rebate as amended will
encourage market participants to send greater amounts of QCC orders,
FOO Orders, and QOO Orders to BOX for execution in order to obtain
greater rebates and lower their costs. Further, the proposed QCC Growth
Rebate should incentivize a greater amount of floor transactions on
BOX, thereby allowing BOX to compete more effectively with other
options floor models. The Exchange believes that the additional
liquidity will enhance the quality of BOX's market and increase certain
trading opportunities on BOX's Trading Floor.
The Exchange believes that its proposal will not place any category
of market participant at a competitive disadvantage and therefore does
not impose an undue burden on intra-market competition. The Exchange
notes that any market participant may send an order to a BOX Floor
Broker for execution on BOX's Trading Floor.
The Exchange's exclusion of FOO strategy transactions from the
volume counted toward the QCC Growth Rebate does not impose an undue
burden on competition as the exclusion will be uniformly applied to all
Participant types.
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 \13\ and Rule 19b-4(f)(2)
thereunder,\14\ because it establishes or changes a due, or fee.
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\13\ 15 U.S.C. 78s(b)(3)(A)(ii).
\14\ 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-2024-17 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-2024-17. 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
[[Page 58215]]
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-2024-17 and should be
submitted on or before August 7, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-15675 Filed 7-16-24; 8:45 am]
BILLING CODE 8011-01-P
