Notice2023-05446
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7110 (Order Entry) and Rule 7130 (Execution and Price/Time Priority) Regarding Availability of Identity of Options Participants
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
March 17, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 52 (Friday, March 17, 2023)</title>
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[Federal Register Volume 88, Number 52 (Friday, March 17, 2023)]
[Notices]
[Pages 16465-16467]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-05446]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97127; File No. SR-BOX-2023-08]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7110
(Order Entry) and Rule 7130 (Execution and Price/Time Priority)
Regarding Availability of Identity of Options Participants
March 13, 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 March 1, 2023, BOX Exchange LLC (``BOX'' or ``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 BOX. 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 BOX Rule 7110 (Order Entry) and Rule
7130 (Execution and Price/Time Priority) to codify in the BOX Rulebook
when the identity of Options Participants is available. 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 Exchange proposes to amend Rule 7110 (Order Entry) and Rule
7130 (Execution and Price/Time Priority) to codify in the BOX Rulebook
when the identity of Options Participants is available. Specifically,
the Exchange is proposing to codify in the BOX Rulebook that the contra
party Options Participants identification number (``Participant ID'')
is available to all Participants in their post trade execution reports.
The Exchange notes that other exchanges also provide such contra party
information.\3\
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\3\ Cboe Exchange, Inc. (``Cboe Options'') Rule 6.2, Cboe BZX
Exchange, Inc. (``BZX Options'') Rule 21.10, Cboe C2 Exchange, Inc.
(``C2 Options'') Rule 6.2, and Cboe EDGX Exchange, Inc. (``EDGX
Options'') Rule 21.10 provide for the inclusion of the contra party
executing firm ID within transaction reports. The NYSE Pillar
Gateway FIX Protocol Specification details the provision of contra
party Firm Identifier information. See NYSE Pillar Gateway FIX
Protocol Specification, available at: <a href="https://www.nyse.com/publicdocs/nyse/NYSE_Pillar_Options_Gateway_FIX_Protocol_Specification.pdf">https://www.nyse.com/publicdocs/nyse/NYSE_Pillar_Options_Gateway_FIX_Protocol_Specification.pdf</a>. It is
also the Exchange's understanding from discussions with market
participants that additional exchanges provide similar post-trade
information.
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Current Rule 7110(f) provides that the identity of Options
Participants who submit orders to the Trading Host will remain
anonymous to market participants at all times, except orders submitted
through the Directed Order process, certain exposed orders as set forth
in 7130(b)(3)(iii), during error resolution or through the normal
clearing process as set forth in Rule 7130. The Exchange proposes to
amend Rule 7110 to codify that the contra party Options Participant ID
is provided on the execution reports that are sent to each Participant
that is party to a trade. Specifically, the Exchange is proposing to
amend the language within 7110(f) to provide that after execution, the
identity of Options Participants is available during error resolution,
through the normal clearing process as set forth in Rule 7130, and on
the execution reports sent to each Participant that is party to a
trade. As part of the proposed change,
[[Page 16466]]
the Exchange is reorganizing Rule 7110(f) so that the situations when
Participant information is available post execution are grouped
together, which are the situations stated above.
The Exchange is also proposing to add language within Rule 7130 to
cite back to the proposed exemption within Rule 7110(f) to make it
clear that, for each trade, contra party details will be made available
after the trade is executed to Options Participants that were party to
the trade through the normal clearing process and as otherwise provided
within Rule 7110(f).
The Exchange currently sends out execution reports containing
contra party information, and the Exchange believes codifying this
information in the Rules will provide more transparency to market
participants regarding these execution reports. The proposed rule
change is consistent with current Exchange and options industry
practices including the fact that clearing information available
through The Options Clearing Corporation (``OCC'') provides contra
party information. As indicated above, the Exchange believes that the
proposed rule change is consistent with current rules and practices in
place at other options exchanges.\4\
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\4\ Id.
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2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Securities Exchange Act of 1934
(the ``Act''),\5\ in general, and Section 6(b)(5) of the Act,\6\ in
particular, in that 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, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general to protect investors and the
public interest. In particular, the Exchange currently sends out post
trade execution reports containing contra party information, and the
Exchange believes that codifying this information in the Rules will
provide more transparency to market participants regarding these
execution reports which will remove impediments to and perfect the
mechanism of a free and open market and a national market system.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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The Exchange believes the proposal will serve to promote just and
equitable principles of trade, remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general protect investors and the public interest because it will
benefit investors by providing more transparency on when the identity
of Options Participants is available and clarifying what is provided
within these execution reports. The Exchange currently provides such
contra party Options Participant IDs within execution reports and
believes that aligning its rules with current practices will benefit
investors by providing more transparency to market participants
regarding what is provided within these execution reports.
Based on the foregoing, the Exchange believes the proposed changes
to Rule 7110 and Rule 7130 are consistent with Section 6(b)(5) of the
Act \7\ in particular, in that they are designed to foster cooperation
and coordination with persons engaged in clearing, settling, processing
information with respect to, and facilitating transactions in
securities. In summary, the proposal will help protect free and open
market by codifying in the BOX Rulebook that the contra party Options
Participant ID is available to all Participants in their post trade
execution reports. The Exchange notes that this contra party
information is also available on other options exchanges.\8\
Additionally, the proposal would not permit unfair discrimination
because the contra party Options Participant ID is already available to
all Participants in their post trade execution reports and the Exchange
is merely proposing to codify this into the BOX Rulebook.
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\7\ 15 U.S.C. 78f(b)(5).
\8\ See supra, note 3.
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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. In this regard and as indicated
above, the Exchange notes that the proposed rule change is
substantially similar to the rules and practices of other options
exchanges.\9\
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\9\ Id.
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The proposed rule change is intended to codify in the BOX Rulebook
that the contra party Options Participant ID is available to all
Participants in their post trade execution. The Exchange began
providing this contra party information for Participants within
execution reports in response to Participant interest and requests for
such information. The Exchange does not believe that the proposed rule
change will impose any burden on intermarket competition, as the rule
change is only intended to codify in the BOX Rulebook that the contra
party Options Participant ID is available to all Participants in their
post trade execution reports. The Exchange believes that this proposal
is consistent with the rules and practices in place at other options
exchanges.\10\ Additionally, the clearing information available through
the OCC provides contra party information.
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\10\ Id.
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The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition, as the rule change seeks
to codify in the BOX Rulebook that contra party information is included
within execution reports, which are provided to all Participants.
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)(iii) of the Act \11\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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 does
not become operative prior to 30 days after the date of filing. Rule
19b-4(f)(6)(iii), however, permits the Commission to designate a
shorter time if such action is consistent with the protection of
investors and the public interest. BOX requested that the Commission
waive the operative delay to permit BOX to codify within its Rulebook
the inclusion of contra party information in execution reports, which
BOX represents is consistent with current Exchange and option industry
practices. The
[[Page 16467]]
Commission believes that waiver of the operative delay is consistent
with the protection of investors and the public interest as the
proposed rule change does not raise new or novel issues. Accordingly,
the Commission hereby waives the operative delay and designates the
proposal operative upon filing.\13\
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\13\ 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. 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: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act.
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#6a181f060f47090507070f041e192a190f09440d051c"><span class="__cf_email__" data-cfemail="3f4d4a535a125c5052525a514b4c7f4c5a5c11585049">[email protected]</span></a>. Please include
File Number SR-BOX-2023-08 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-2023-08. 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 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-2023-08, and should be submitted on
or before April 7, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-05446 Filed 3-16-23; 8:45 am]
BILLING CODE 8011-01-P
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