[Federal Register Volume 85, Number 117 (Wednesday, June 17, 2020)]
[Notices]
[Pages 36647-36649]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-12983]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89043; File No. SR-BOX-2020-18]


Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Section 
II of the Fee Schedule (Manual Transaction Fees) on the BOX Options 
Market LLC Facility

June 11, 2020.
    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 June 1, 2020, 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 to 
the BOX Options Market LLC (``BOX'') 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 http://boxexchange.com.

[[Page 36648]]

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 Section II (Manual Transaction Fees).\5\
---------------------------------------------------------------------------

    \5\ Orders initiated and presented on the Trading Floor in open 
outcry, as opposed to initiated electronically. Manual transactions 
consist of Qualified Open Outcry (``QOO'') Orders. All fees, rebates 
and applicable caps will apply to both sides of the paired QOO 
Order.
---------------------------------------------------------------------------

    The Exchange first proposes to amend QOO Order Fees for 
Professional Customers in Section II.A of the BOX Fee Schedule. 
Specifically, the Exchange proposes to decrease the Professional 
Customer QOO Order Fee in Penny Pilot Classes and Non-Penny Pilot 
Classes from $0.25 per contract to $0.10 per contract. Next, the 
Exchange proposes to amend Section II.C of the BOX Fee Schedule. 
Specifically, the Exchange proposes to reduce the QOO Order Rebate for 
all Professional Customer QOO Orders to $0.05.\6\
---------------------------------------------------------------------------

    \6\ Currently, Floor Brokers receive a $0.075 per contract 
rebate for Professional Customer QOO Orders presented on the Trading 
Floor.
---------------------------------------------------------------------------

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,\7\ 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. The Exchange notes that it operates in a highly competitive 
market in which the Exchange must continually reassess its fees in 
order to maintain its competitiveness within the options exchange 
industry. The proposed rule changes reflect a competitive pricing 
structure designed to incentivize market participants to direct their 
order flow to the Exchange.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes the proposed change to reduce Professional 
Customer QOO Order fees is reasonable, equitable, and not unfairly 
discriminatory because it is intended to attract a greater number of 
Professional Customer QOO orders to the Exchange. The Exchange believes 
the potential increased volume would create better trading 
opportunities that benefit all market participants. Specifically, 
greater volume and liquidity from increased order flow could create 
more trading opportunities and tighter spreads. Further, the Exchange 
believes it is equitable and not unfairly discriminatory to assess 
Professional Customers lower fees for manual transactions than Broker 
Dealers and Market Makers because, by definition, Professional 
Customers are a different type of market participant. Specifically, 
Professional Customers are not brokers or dealers in securities; they 
are persons (or entities) that place more than 390 orders per day on 
average for their own beneficial account. The Exchange notes that 
assessing lower fees for Professional Customers compared to Broker 
Dealers and Market Makers is not novel as BOX currently assesses lower 
fees for Professional Customers than Broker Dealers and Market Makers 
in another part of its Fee Schedule.\8\ Further, the Exchange notes 
that Cboe Exchange Inc. (``Cboe'') currently assesses different fees 
for Professional Customers compared to Broker-Dealers and Market Makers 
for floor transactions.\9\ In addition, the Exchange believes the 
proposed $0.10 fee is reasonable when compared to fees assessed for 
similar transactions for Professional Customers at another 
exchange.\10\ Further, the Exchange believes that the proposed change 
is equitable and not unfairly discriminatory, as the proposed change 
applies to all Professional Customer QOO Orders presented on the 
Trading Floor by Floor Brokers.
---------------------------------------------------------------------------

    \8\ See BOX Fee Schedule Section I.D. Qualified Contingent Cross 
(``QCC'') Transactions. The Exchange notes that Professional 
Customers are charged no fee for QCC transactions where Broker 
Dealers and Market Makers are charged $0.17 for their QCC 
transactions.
    \9\ For manual transactions, Cboe charges $0.12 per contract for 
professional customers (``U'' capacity code); $0.25 per contract for 
Broker-Dealers (``BA'' code); and $0.23 for Market-Makers (``MA'' 
code). See Cboe Fees Schedule ``Options Transaction Fee Per 
Contract; Manual''.
    \10\ Id.
---------------------------------------------------------------------------

    The Exchange believes the proposal to reduce the QOO Order Rebate 
for all Professional Customer QOO transactions is reasonable. 
Specifically, the Exchange believes the proposed $0.05 rebate is 
balanced by the potential increase in Professional Customer volume 
directed toward the Exchange's Floor Brokers who would benefit from a 
rise in rebate opportunities because of the increased volume from 
Professional Customer orders. The Exchange believes that the rebate 
will continue to incentivize Floor Brokers to execute Professional 
Customer QOO Orders on the Trading Floor. The Exchange also notes that 
Floor Brokers will continue to receive a $0.075 per contract rebate on 
all other qualifying QOO Orders presented to the Trading Floor. Lastly, 
the Exchange believes that the proposal to lower the QOO Order Rebate 
for Professional Customer executions is equitable and not unfairly 
discriminatory because the proposed change applies to all Professional 
Customers' QOO Orders presented to the Trading Floor equally.

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 notes that is 
operates in a highly competitive market in which competitors are free 
to modify their own fee schedules. The Exchange believes that the 
proposal to reduce the QOO Order fee for Professional Customers does 
not impose a burden on competition. Although the reduction in QOO Order 
Fees to $0.10 for manual executions only applies to Professional 
Customers, the proposed change is aimed at encouraging increased 
Professional Customer options volume, which may provide greater trading 
opportunities for all market participants. The Exchange believes this 
enhances competition as it is intended to increase the competitiveness 
of BOX by adopting an additional pricing incentive in order to attract 
order flow and incentivize Professional Customer executions on the 
Exchange.
    Further, the Exchange does not believe that reducing the QOO Order 
rebate for Professional Customer executions will impose an undue burden 
on intermarket competition. Several other competing exchanges have open 
outcry trading floors and market participants can readily direct order 
flow to any these venues if they deem BOX's manual transaction fees to 
be excessive, or rebate opportunities available at other venues to be 
more favorable. In such an environment, the Exchange must continually 
adjust its

[[Page 36649]]

fees to remain competitive with other exchanges. The Exchange does not 
believe the proposed rule change to reduce the QOO Order rebate for 
Professional Customer executions would burden intramarket competition 
as it would apply uniformly to all Floor Brokers on the BOX Trading 
Floor. The proposed rule change reflects a competitive pricing 
structure designed to incentivize Professional Customers to direct 
their order flow to the Exchange, which the Exchange believes would 
enhance market quality to the benefit of all Participants.

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 \11\ and Rule 19b-4(f)(2) 
thereunder,\12\ because it establishes or changes a due, or fee.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \12\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-BOX-2020-18 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-2020-18. 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 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. 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-2020-18, and should be submitted on 
or before July 8, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-12983 Filed 6-16-20; 8:45 am]
BILLING CODE 8011-01-P


