Notice2023-01516
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Establish a New Service and Related Fees for Use of the BOX Options Market LLC (“BOX”) Trade Management System
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 26, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 17 (Thursday, January 26, 2023)</title>
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[Federal Register Volume 88, Number 17 (Thursday, January 26, 2023)]
[Notices]
[Pages 5046-5048]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-01516]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96723; File No. SR-BOX-2023-03]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Establish a
New Service and Related Fees for Use of the BOX Options Market LLC
(``BOX'') Trade Management System
January 20, 2023.
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 January 6, 2023, 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 Exchange filed the
proposed rule change pursuant to section 19(b)(3)(A) of the Act,\3\ and
Rule 19b-4(f)(6) 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.
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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\ F17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to establish a new service and related fees
for use of the BOX Options Market LLC (``BOX'') Trade Management
System. 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 <a href="https://rules.boxexchange.com/rulefilings">https://rules.boxexchange.com/rulefilings</a>.
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 establish a new
service and related fees for the use of BOX's Trade Management System
(``TMS'').
TMS is a system licensed by BOX that allows users to query trades,
correct trades, and/or allocate trades to the appropriate accounts and
sub-accounts for clearing (collectively known as ``trade
information''). After a trade is executed, a Participant may need to
update or correct the trade information before the trade is submitted
to the Options Clearing Corporation (``OCC'') for clearing. Currently,
TMS is accessed only by the BOX Market Operations Center (``MOC''). If
a Participant wishes to make any corrections or updates to trade
information, they must contact the MOC or produce a detailed file for
automated processing by BOX.
Participants have requested that BOX allow them to access TMS
directly so that they may correct their trade information themselves
without interacting with the MOC or submitting a detailed file. The
Exchange believes that providing direct access to TMS to Participants
will allow them to more efficiently manage their back office clearing
operations and assist them in providing accurate clearing information
to the OCC. As such, the Exchange now proposes to make TMS available to
BOX Participants, which will allow Participants the ability to correct
certain OCC-required trade information. Specifically, TMS will allow
Participants to correct a trade's account number, sub-account number,
Clearing Member Trade Assignment (``CMTA'') clearing firm, Clearing
Participant Give-Up, quantity, account type, and other information
connected to trades.
The Exchange also proposes to establish a subscription fee of $350
per month, per user for the use of TMS.\5\ The Exchange notes that use
of TMS is completely voluntary and the subscription fee will be charged
to all Participants equally based on the number of users requested. The
Exchange also notes that Participants who do not wish to use TMS will
still be able to make any corrections or updates to trade information
by contacting the MOC or producing a detailed file for automated
processing by BOX.\6\
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\5\ For example, Firm A is a BOX Participant who wishes to
access TMS for two separate users. Under this proposal, Firm A would
be assessed a fee of $700 per month for their use of TMS (two users
at $350 equals $700).
\6\ The Exchange notes that other exchanges charge for
performing certain post-trade adjustments on behalf of permit
holders. See NYSE Arca Options Fees and Charges, Service Fees and
NYSE American Options Fee Schedule, Section VIII (charging $5.00 per
trade adjusted for Post-Trade Adjustments that do not affect the
contractual terms of a trade, the Service Fee would only apply when
the Exchange performs Post-Trade Adjustments on behalf of ATP or OTP
Holders when such Post-Trade Adjustments could otherwise have been
self-executed. ATP or OTP Holders may continue to make these Post-
Trade Adjustments on their own without incurring the Service Fee).
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The Exchange notes that other options exchanges make similar tools
available to firms where the firm, not Exchange personnel, may correct
trade information that is submitted to the OCC.\7\ The Exchange further
notes that another exchange charges its participants a monthly fee per
user for a similar product.\8\
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\7\ See e.g., the Nasdaq Options Maintenance Tool, the Cboe
Options Clearing Editor, the MIAX Member Firm Portal, and the NYSE
Pillar Trade Ops Portal.
\8\ The Nasdaq Stock Market LLC (``Nasdaq'') charges $200 per
month, per user. See Nasdaq Rules Options 7 Pricing Schedule,
Section 6 Nasdaq Options Maintenance Tool.
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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,\9\ in general, and sections
6(b)(4) and section 6(b)(5) of the Act,\10\ in particular, because it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, and to remove impediments to and perfect
the mechanism of a free and open market and a national market system.
The Exchange notes that offering the use of TMS to BOX Participants is
consistent with the Act in that the use of TMS is completely voluntary
and the subscription fees will be imposed on all
[[Page 5047]]
Participants equally based on the number of users requested. Further,
the Exchange believes that the proposed fee discussed herein is
equitable and not unfairly discriminatory because the use of TMS is
voluntary and subscription fees will be charged to all Participants
equally based on the number of users provisioned to use TMS. As noted
above, Participants use of TMS is an optional alternative to the
current processes of (1) requesting transactions to be updated by the
MOC or (2) producing a detailed file for automated processing by BOX.
The Exchange believes that providing TMS to Participants will allow
Participants to more efficiently manage their back office clearing
operations and assist them in providing accurate clearing information
to the OCC. The Exchange notes that trade information in TMS is
specific to each Participant and their trades, allowing them to
conveniently verify, update, and/or correct transaction information as
needed.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4) and (5).
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Further, the Exchange believes that the proposed fee is reasonable
and appropriate as it will cover the costs associated with establishing
the use of TMS for Participants that request it and administering the
service to those Participants. Further, the Exchange notes that the
proposed fee is nominal and is not designed to provide a revenue stream
to BOX but rather to offset the costs associated with allowing
Participants to access and use TMS. Specifically, the Exchange notes
that the proposed fee is intended to cover the costs of establishing
the service, and monitoring and supporting the access and use of TMS by
Participants, among other things. As such, the Exchange believes the
proposed fee is reasonable and appropriate.
As noted herein, Participants have requested this functionality and
each Participant may choose whether the value added is worth the cost
of the subscription. The Exchange believes offering TMS to BOX
Participants is consistent with the Act because TMS provides
Participants with the ability to directly update their transactions, at
their convenience, and immediately verify the results of their
modifications. Using TMS is purely a matter of convenience and is
wholly voluntary by the Participant. The Exchange again notes that
another exchange charges a monthly fee per user for a similar tool.\11\
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\11\ See supra, note 8.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change would allow the Exchange to establish a
new service and related fees for the use of BOX's TMS on a voluntary
basis. The Exchange notes that the subscription fee will be charged to
all Participants equally based on the number of users requested. Any
Participants who do not wish to use TMS will still be able to make any
corrections or updates to trade information by contacting the MOC or
producing a detailed file for automated processing by BOX. Further, the
Exchange notes that another exchange offers a similar service and
charges a monthly fee per user for a similar tool.\12\ As such, the
Exchange does not believe that the proposed rule change will impose any
burden on intermarket or intramarket competition not necessary or
appropriate in furtherance of the purposes of the Act.
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\12\ See supra, note 8.
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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 \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its 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 pursuant to Rule 19b-4(f)(6) under the
Act \15\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \16\ 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.
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
According to the Exchange, providing immediate access to BOX's TMS will
offer BOX Participants the option to more efficiently manage their back
office clearing operations and will assist them in providing accurate
clearing information to the OCC. Moreover, other exchanges offer
similar services to their members. Accordingly, the proposal does not
raise novel issues. For these reasons, the Commission designates that
the proposed rule change to be operative immediately upon filing.\17\
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\17\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. 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. 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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#85f7f0e9e0a8e6eae8e8e0ebf1f6c5f6e0e6abe2eaf3"><span class="__cf_email__" data-cfemail="a7d5d2cbc28ac4c8cacac2c9d3d4e7d4c2c489c0c8d1">[email protected]</span></a>. Please include
File Number SR-BOX-2023-03 on the subject line.
Paper Comments
<bullet> 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-2023-03. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule
[[Page 5048]]
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-
2023-03 and should be submitted on or before February 16, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-01516 Filed 1-25-23; 8:45 am]
BILLING CODE 8011-01-P
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