[Federal Register Volume 84, Number 74 (Wednesday, April 17, 2019)]
[Notices]
[Pages 16094-16096]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07704]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85635; File No. SR-BOX-2019-13]


Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Extend the 
Pilot to the Close of Business on October 18, 2019, for Exchange Rule 
IM-7170-1, That Is Linked to the Equity Market Plan To Address 
Extraordinary Market Volatility (the ``Limit Up-Limit Down Plan'' or 
the ``Plan'')

April 12, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 16095]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on April 11, 2019, BOX Exchange LLC (the ``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I and II below, which Items have been 
prepared by the self-regulatory organization. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to extend the pilot to the close of business 
on October 18, 2019, for Exchange Rule IM-7170-1, that is linked to the 
equity market Plan to Address Extraordinary Market Volatility (the 
``Limit Up-Limit Down Plan'' or the ``Plan''). 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 http://boxoptions.com.

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

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

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

1. Purpose
    The purpose of the proposed rule change is to amend Rule IM-7170-1 
to extend the pilot to the close of business on October 18, 2019. This 
change is being proposed in connection with a proposed amendment to the 
Limit Up-Limit Down Plan that would allow the Plan to continue to 
operate on a permanent basis (``Amendment 18'').
    In an attempt to address extraordinary market volatility in NMS 
Stock, and, in particular, events like the severe volatility on May 6, 
2010, U.S. national securities exchanges and the Financial Industry 
Regulatory Authority, Inc. (collectively, ``Participants'') drafted the 
Plan pursuant to Rule 608 of Regulation NMS and under the Act.\3\ On 
May 31, 2012, the Commission approved the Plan, as amended, on a one-
year pilot basis.\4\ Though the Plan was primarily designed for equity 
markets, the Exchange believed it would, indirectly, potentially impact 
the options markets as well. Thus, the Exchange has previously adopted 
and amended Rule IM-7170-1 to ensure the option markets were not harmed 
as a result of the Plan's implementation and has implemented the rule 
on a pilot basis that has coincided with the pilot period for the 
Plan.\5\ Rule IM-7170-1 was adopted to assist the Exchange in managing 
effects stemming from the implementation of the Plan.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 64547 (May 25, 
2011), 76 FR 31647 (June 1, 2011)(File No. 4-631).
    \4\ See Securities and Exchange Act Release No. 67091 (May 31, 
2012) 77 FR 33498 (June 6, 2012).
    \5\ See Securities Exchange Act Release Nos. 34-76233 (October 
22, 2015), 80 FR 66087 (October 28, 2015) (SR-BOX-2015-34) 
(proposing to extend pilot program to coincide with the pilot period 
for the Plan).
---------------------------------------------------------------------------

    The Commission recently published an Amendment 18, which would 
allow the Plan to operate on a permanent, rather than pilot basis.\6\ 
In connection with this change, the Exchange proposes to amend the 
Options Pilots to expire at the close of business on October 18, 2019--
i.e., six months after the expiration of the current pilot period for 
the Plan. Specifically, the Exchange proposes to amend Exchange Rule 
IM-7170-1 to untie the Options Pilot's effectiveness from that of the 
Plan and to extend the Options Pilot's effectiveness to the close of 
business on October 18, 2019. The Exchange understands that the other 
national securities exchanges will also file similar proposals to 
extend their respective pilot programs, the substance of which are 
identical to the proposal.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release Nos. 84843 (December 18, 
2018), 83 FR 66464 (December 26, 2018) (Amendment No. 18 Proposing 
Release).
---------------------------------------------------------------------------

    The Exchange does not propose any additional changes to Exchange 
Rule IM-7170-1. The Exchange believes the benefits to market 
participants from the Options Pilots should continue on a limited six 
month pilot basis after Commission approves the Plan to operate on a 
permanent basis. Assuming the Plan is approved by the Commission to 
operate on a permanent, rather than pilot basis, the Exchange intends 
to assess whether additional changes should also be made to the Options 
Pilots. Extending the Options Pilots for an additional six months 
should provide the Exchange and other national securities exchanges 
additional time to consider further amendments to their rules in light 
of proposed Amendment 18.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\7\ in general, and Section 
6(b)(5) of the Act,\8\ in particular, in that it is designed to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, to promote just and equitable principles of 
trade, and, in general, to protect investors and the public interest 
and not to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange believes that the proposed rule 
change promotes just and equitable principles of trade in that it 
promotes transparency and uniformity across markets concerning rules 
for options markets adopted to coincide with the Plan. The Exchange 
believes that extending the Options Pilots for an additional six months 
would help assure that the rules subject to such Pilots are either 
similarly made permanent, amended or removed, following additional 
discussion and analysis by the Exchange and other national securities 
exchanges. The proposed rule change would also help assure that such 
rules are not immediately eliminated, thus furthering fair and orderly 
markets, the protection of investors and the public interest. Based on 
the foregoing, the Exchange believes the Options Pilots should continue 
to be in effect on a pilot basis while the Exchange and the other 
national securities exchanges consider and develop a permanent proposal 
for such rules.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposal would ensure 
the continued, uninterrupted operation of the Options Pilots while the 
Exchange and other national securities exchanges consider further 
amendments to these rules in light of proposed Amendment 18. The 
Exchange understands that the other national securities exchanges will 
also file similar proposals to extend their respective pilot programs, 
the substance of which are identical to this proposal.

[[Page 16096]]

Thus, the proposed rule change will help to ensure consistency across 
market centers without implicating any competitive issues. As such, 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.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, Rule 19b-4(f)(6)(iii) \12\ 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 asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become effective and operative immediately upon filing. 
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 current Options Pilots to continue uninterrupted, 
without any changes, while the Exchange and the other national 
securities exchanges consider and develop a permanent proposal for 
Options Pilots. For this reason, the Commission hereby waives the 30-
day operative delay requirement and designates the proposed rule change 
as operative upon filing.\13\
---------------------------------------------------------------------------

    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BOX-2019-13 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-2019-13. 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 (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 website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-BOX-2019-13 and should be submitted on 
or before May 8, 2019.
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-07704 Filed 4-16-19; 8:45 am]
BILLING CODE 8011-01-P


