
[Federal Register Volume 79, Number 242 (Wednesday, December 17, 2014)]
[Notices]
[Pages 75211-75213]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-29621]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73831; File No. SR-BOX-2014-27]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Interpretive Material to Rule 7150 (Price Improvement Period 
``PIP'') and Interpretive Material to Rule 7245 (Complex Order Price 
Improvement Period ``COPIP'') To Extend the Pilot Period That Permit 
the Exchange To Have No Minimum Size Requirement for Orders Entered 
Into the PIP and COPIP Until July 18, 2015

December 12, 2014.
    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 December 5, 2014, BOX Options Exchange LLC (``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Interpretive Material to Rule 7150 
(Price Improvement Period ``PIP'') and Interpretive Material to Rule 
7245 (Complex Order Price Improvement Period ``COPIP'') to extend the 
pilot programs that permit the Exchange to have no minimum size 
requirement for orders entered into the PIP (``PIP Pilot Program'') and 
COPIP (``COPIP Pilot Program''). 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 
Web site at http://boxexchange.com.

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

    In its filing with the Commission, the 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

[[Page 75212]]

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.

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 extend the PIP and 
COPIP Pilot Programs for an additional seven months or until the date 
on which the pilot programs are approved on a permanent basis, 
whichever is earlier. The PIP and COPIP Pilot Programs allow the 
Exchange to have no minimum size requirement for orders entered into 
the PIP \3\ and the COPIP.\4\ The Exchange has committed to provide 
certain data to the Commission during the PIP and COPIP Pilot 
Programs.\5\ The proposed rule change retains the text of IM-7150-1 to 
Rule 7150 and IM-7245-1 to Rule 7245; and seeks to extend the operation 
of the PIP and COPIP Pilot Programs until July 18, 2015.
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    \3\ The PIP Pilot Program is currently set to expire on December 
18, 2014. See Securities Exchange Act Release Nos. 66871 (April 27, 
2012) 77 FR 26323 (May 3, 2012) (File No.10-206, In the Matter of 
the Application of BOX Options Exchange LLC for Registration as a 
National Securities Exchange Findings, Opinion, and Order of the 
Commission), 67255 (June 26, 2012) 77 FR 39315 (July 2, 2013) (SR-
BOX-2012-009) (Notice of Filing and Immediate Effectiveness of a 
Proposal To Extend a Pilot Program That Permits BOX to Have No 
Minimum Size Requirement for Orders Entered Into the Price 
Improvement Period), 69846 (June 25, 2013) 78 FR 39365 (July 1, 
2013) (SR-BOX-2013-33) (Notice of Filing and Immediate Effectiveness 
of a Proposal To Extend a Pilot Program That Permits BOX to Have No 
Minimum Size Requirement for Orders Entered Into the Price 
Improvement Period), 72545 (July 7, 2014) 79 FR 40182 (July 11, 
2014) (SR-BOX-2014-19) (Notice of Filing and Immediate Effectiveness 
of a Proposed Rule Change to amend Interpretive Material to Rule 
7150 (Price Improvement Period ``PIP'') and Interpretive Material to 
Rule 7245 (Complex Order Price Improvement Period ``COPIP''), and 
73314 (October 7, 2014) 79 FR 61682 (October 14, 2014) (SR-BOX-2014-
23) (Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change To Extend the Pilot Programs That Permit the Exchange To Have 
No Minimum Size Requirement for Orders Entered Into the PIP (``PIP 
Pilot Program'') and COPIP (``COPIP Pilot Program'') Until December 
18, 2014).
    \4\ The COPIP Pilot Program is currently set to expire on 
December 18, 2014. See Securities Exchange Act Release Nos. 71148 
(December 19, 2013) 78 FR 78437 (December 26, 2013) (Notice of 
Filing of Amendment Nos. 1 and 2 and Order Granting Accelerated 
Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1 
and 2, to Permit Complex Orders to Participate in Price Improvement 
Periods), 72545 (July 7, 2014) 79 FR 40182 (July 11, 2014) (SR-BOX-
2014-19) (Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change to amend Interpretive Material to Rule 7150 (Price 
Improvement Period ``PIP'') and Interpretive Material to Rule 7245 
(Complex Order Price Improvement Period ``COPIP''), and 73314 
(October 7, 2014) 79 FR 61682 (October 14, 2014) (SR-BOX-2014-23) 
(Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change To Extend the Pilot Programs That Permit the Exchange To Have 
No Minimum Size Requirement for Orders Entered Into the PIP (``PIP 
Pilot Program'') and COPIP (``COPIP Pilot Program'') Until December 
18, 2014).
    \5\ See supra note 3 at 26334 and note 4 at 78441.
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    The Exchange notes that the PIP and COPIP Pilot Programs permit 
Participants to trade with their customer orders that are less than 50 
contracts. In particular, any order entered into the PIP is guaranteed 
an execution at the end of the auction at a price at least equal to the 
national best bid or offer. Any order entered into the COPIP is 
guaranteed an execution at the end of the auction at a price at least 
equal to or better than the cNBBO,\6\ cBBO \7\ and BBO on the Complex 
Order Book for the Strategy at the time of commencement. In further 
support of this proposed rule change, the Exchange will submit to the 
Commission monthly a PIP Pilot Program Report and a COPIP Pilot Program 
Report, offering detailed data from, and analysis of, the PIP Pilot 
Program and COPIP Pilot Program.
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    \6\ As defined in BOX Rule 7240(a)(3), the term ``cNBBO'' means 
the best net bid and offer price for a Complex Order Strategy based 
on the NBBO for the individual options components of such Strategy.
    \7\ As defined in BOX Rule 7240(a)(1), the term ``cBBO'' means 
the best net bid and offer price for a Complex Order Strategy based 
on the BBO on the BOX Book for the individual options components of 
such Strategy.
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    The Exchange believes that, by extending the expiration of the PIP 
and COPIP Pilot Programs, the proposed rule change will allow for 
further analysis of the PIP and COPIP Pilot Programs and a 
determination of how the PIP and COPIP Pilot Programs shall be 
structured in the future.
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 Act,\9\ in particular, in that it is designed to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism for a free and open market and a national market 
system and, in general, to protect investors and the public interest. 
The Exchange believes that the data demonstrates that there is 
sufficient investor interest and demand to extend the PIP and COPIP 
Pilot Programs for an additional seven months or until the date on 
which the pilot programs are approved on a permanent basis, whichever 
is earlier. The Exchange represents that the PIP and COPIP Pilot 
Programs are designed to create tighter markets and ensure that each 
order receives the best possible price.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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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. Specifically, the Exchange 
believes that, by extending the expiration of the PIP and COPIP Pilot 
Programs, the proposed rule change will allow for further analysis of 
the PIP and COPIP Pilot Programs and a determination of how the PIP and 
COPIP Pilot Programs shall be structured in the future. In doing so, 
the proposed rule change will also serve to promote regulatory clarity 
and consistency, thereby reducing burdens on the marketplace and 
facilitating investor protection.

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 foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) \11\ thereunder 
because the proposal does not: (i) Significantly affect the protection 
of investors or the public interest; (ii) impose any significant burden 
on competition; and (iii) by its terms, become operative for 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.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-

[[Page 75213]]

4(f)(6)(iii) \13\ permits the Commission to designate a shorter time if 
such action is consistent with the protection of investors and the 
public interest. The Exchange has requested that the Commission waive 
the 30-day operative delay period so the pilot programs can continue 
without interruption. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest, as it will allow the pilot programs to continue 
uninterrupted, thereby avoiding any potential investor confusion that 
could result from a temporary interruption in the pilot programs. For 
these reasons, the Commission designates the proposed rule change to be 
operative on December 18, 2014.\14\
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    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the 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.\15\
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    \15\ 15 U.S.C. 78s(b)(3)(C).
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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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-BOX-2014-27 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-2014-27. 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 Web site (http://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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-BOX-2014-27 and should be 
submitted on or before January 7, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29621 Filed 12-16-14; 8:45 am]
BILLING CODE 8011-01-P


