Notice2023-13795
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 7660 (Communications and Equipment)
Primary source
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Published
June 29, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 124 (Thursday, June 29, 2023)</title>
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[Federal Register Volume 88, Number 124 (Thursday, June 29, 2023)]
[Notices]
[Pages 42123-42126]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-13795]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97794; File No. SR-BOX-2023-17]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Rule
7660 (Communications and Equipment)
June 23, 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 June 12, 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 Exchange. 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 Rule 7660 (Communications and
Equipment). 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 amend Rule 7660 to
modernize and clarify the scope of the recordkeeping obligations for
Floor Participants \3\ relating to communication devices. Specifically,
the Exchange is proposing to amend Rule 7660 to: (1) codify that the
registration requirement is only applicable to any communication device
to be used for business purposes; and (2) explicitly provide that Floor
Participants must maintain records of the use of any communication
devices on the Trading Floor.\4\
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\3\ The term ``Floor Participant'' means Floor Brokers as
defined in Rule 7540 and Floor Market Makers as defined in Rule
8510(b). See BOX Rule 100(a)(26).
\4\ The term ``Trading Floor'' or ``Options Floor'' means the
physical trading floor of the Exchange located in Chicago. The
Trading Floor shall consist of one ``Crowd Area'' or ``Pit'' where
all option classes will be located. The Crowd Area or Pit shall be
marked with specific visible boundaries on the Trading Floor, as
determined by the Exchange. A Floor Broker must open outcry an order
in the Crowd Area. See BOX Rule 100(a)(68).
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Rule 7660, which applies to the use of electronic communication
devices on the Trading Floor, was adopted in 2017
[[Page 42124]]
with the establishment of the BOX Trading Floor. The Exchange is now
proposing to update and modernize Rule 7660(k).
Currently Rule 7660(f) provides that Floor Participants must
register, prior to use, any new communication device to be used on the
Trading Floor. Each device registered with the Exchange must be
registered by category of user. If there is a change in the category of
any user, the device must be re-registered with the Exchange. At the
time of registration, Floor Participant representatives must sign a
statement that they are aware of and understand the rules and
procedures governing the use of communication devices on the Options
Floor. The Exchange is proposing to update Rule 7660(f) to codify that
the registration requirement is only applicable to communication
devices to be used for business purposes. Specifically, the Exchange is
proposing to amend Rule 7660(f) to state: ``Floor Participants must
register, prior to use, any new communication device to be used for
business purposes on the Trading Floor. Each device registered with the
Exchange must be registered by category of user. If there is a change
in the category of any user, the device must be re-registered with the
Exchange. At the time of registration, Floor Participant
representatives must sign a statement that they are aware of and
understand the rules and procedures governing the use of communication
devices on the Options Floor.''
The proposed updates to Rule 7660(f) are intended to codify an
existing requirement that Floor Participants must register, prior to
use, any new communication device to be used for business purposes on
the Trading Floor. The Exchange is proposing this additional language
to clarify that the registration requirement is only applicable to
communication devices to be used for business purposes. This
requirement is already reflected on the BOX Communication Device
Registration Form and the Exchange is not proposing to change the
existing practice. The Exchange is looking to codify this existing
requirement into the Rulebook to provide additional clarity to Floor
Participants. The Exchange believes that this proposed change will help
provide greater clarity to the existing practices on the Trading Floor
and may reduce the potential for confusion regarding the requirements
relating to communication devices on the Trading Floor.
The Exchange notes that proposed Rule 7660(f) is similar in
relevant part to an existing rule governing recordkeeping on the
trading floor at another exchange.\5\
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\5\ See Cboe Exchange, Inc. (``Cboe'') Rule 5.81(a). The
registration requirements relating to communication devices and
equipment on the trading floor at Cboe explicitly provides that
prior to use, all communication devices for business purposes must
be registered with the exchange. Proposed Rule 7660(f) states: Floor
Participants must register, prior to use, any new communication
device to be used for business purposes on the Trading Floor. Each
device registered with the Exchange must be registered by category
of user. If there is a change in the category of any user, the
device must be re-registered with the Exchange. At the time of
registration, Floor Participant representatives must sign a
statement that they are aware of and understand the rules and
procedures governing the use of communication devices on the Options
Floor. Cboe Rule 5.81(a) states: (a) Subject to the requirements of
this Rule, Trading Permit Holders may use any communication device
(e.g., any hardware or software related to a phone, system, or other
device, including an instant messaging system, email system, or
similar device) on the trading floor and in any trading crowd of the
Exchange. Prior to using a communications device for business
purposes on the trading floor of the Exchange, Trading Permit
Holders must register the communications device by identifying (in a
form and manner prescribed by the Exchange) the hardware (i.e.,
headset, cellular telephone, tablet, or other similar hardware).
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Currently, Rule 7660(k) provides that Floor Participants must
maintain their cellular or cordless telephone records, including logs
of calls placed, for a period of not less than three years, the first
two in an easily accessible place. The Exchange reserves the right to
inspect and/or examine such telephone records. The Exchange is
proposing to modernize Rule 7660(k) to make it clear that the
recordkeeping obligations are applicable to any registered
communication devices and not limited to telephone records.
Specifically, the Exchange is proposing to update Rule 7660(k) to
state: ``Floor Participants must maintain records of the use of
telephones and all other registered communication devices, including,
but not limited to, logs of calls, emails, and chats, for a period of
not less than three years, the first two in an easily accessible place.
The Exchange reserves the right to inspect and/or examine such
records.''
The proposed updates to Rule 7660(k) are intended to modernize and
clarify that the recordkeeping obligations are applicable to all
registered communication devices and that records of Floor
Participant's use of any communication devices, including, but not
limited to, emails and chats, are also required to be maintained. The
Exchange believes that this proposed change will help with the
Exchange's surveillance function. Additionally, the Exchange has
notified all Participants that their record keeping obligations apply
to all communication devices and extend to chats and emails by
Regulatory Notice.\6\
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\6\ See Exchange Notice 2023-11. Available at: <a href="https://boxexchange.com/assets/Communications-and-Equipment-Notice_2.28.2023.pdf">https://boxexchange.com/assets/Communications-and-Equipment-Notice_2.28.2023.pdf</a>.
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The Exchange notes that proposed Rule 7660(k) is similar in
relevant part to an existing rule governing recordkeeping on the
trading floor at another exchange \7\ and to an existing Exchange
recordkeeping rule.\8\
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\7\ See Cboe Rule 5.81(g). The recordkeeping obligations
relating to communication devices and equipment on the trading floor
at Cboe explicitly covers all communication devices and includes
emails and chats as well. Proposed Rule 7660(k) states: Floor
Participants must maintain records of the use of telephones and all
other registered communication devices, including, but not limited
to, logs of calls, emails, and chats, for a period of not less than
three years, the first two in an easily accessible place. The
Exchange reserves the right to inspect and/or examine such records.
Cboe Rule 5.81(g) states: Trading Permit Holders must maintain
records of the use of communication devices, including, but not
limited to, (1) logs of calls placed, (2) emails, and (3) chats, for
a period of not less than three years, the first two years in an
easily accessible place. The Exchange reserves the right to inspect
such records pursuant to Rule 13.2.
\8\ See BOX Rule 7670(a)(1)(G).
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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 Section
6(b)(5) of the Act,\10\ in particular, in that it is designed to
promote just and equitable principles of trade and to protect investors
and the public interest.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the rule change will promote just and
equitable principles of trade by making the rules clearer and easier to
use. The Exchange is proposing to update Rule 7660(f) to codify the
requirement that Floor Participants must register, prior to use, any
new communication device to be used for business purposes on the
Trading Floor. The Exchange is proposing this additional language to
clarify that the registration requirement is only applicable to
communication devices to be used for business purposes. As noted above,
the proposed amendment to 7660(f) is an effort to codify an existing
Exchange practice that is detailed in the BOX Communication Device
Policy and is similar in relevant part to a provision governing the
registration of devices in the communications and equipment rules at
another exchange.\11\ The Exchange believes that this proposed update
to codify the requirement to register all communication devices that to
be used for a business purpose on the Trading Floor will help provide
greater
[[Page 42125]]
clarity into existing practices on the Trading Floor and may reduce the
potential for confusion regarding the requirements relating to
communication devices on the Trading Floor. As such, the Exchange
believes that the proposed changes to codify this existing registration
requirement in Rule 7660(f) is in the public interest, and therefore,
consistent with the Act.
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\11\ See supra note 5.
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The Exchange is also proposing to modernize Rule 7660(k) to amend
the records retention requirement for telephone records to explicitly
provide that, the recordkeeping obligations are applicable to all
registered communication devices and that records of Floor
Participant's use of any communication devices, including, but not
limited to, emails and chats are also required to be maintained for a
period of not less than three years, the first two in an easily
accessible place. As noted above, these proposed amendments are similar
in relevant part to a provision governing recordkeeping in the
communications and equipment rules at another exchange \12\ and to an
existing Exchange recordkeeping rule.\13\ The Exchange believes that
this modernization and clarification of the scope of the recordkeeping
requirements under Rule 7660(k), will help with the Exchange's
surveillance function and make the Rule clearer for Participants. As
such, the Exchange believes that the proposed changes to modernize and
clarify Rule 7660(k) is in the public interest, and therefore,
consistent with the Act.
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\12\ See supra note 7.
\13\ See supra note 8.
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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
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. The
Exchange believes that the proposed change will not impose a burden on
intermarket or intramarket competition, as the proposed change applies
equally to all market participants. While the Exchange does not believe
that the proposed non-controversial change is a burden on competition,
or is competitive in nature, the Exchange believes that proposed
updates to codify an existing practice and provide for clearer,
modernized recordkeeping obligations will benefit market participants.
The Exchange also notes that the proposed updates to 7660(f) are
similar in relevant part to an existing provision governing
communication device registration in the communications and equipment
rules at another options exchange \14\ and that the proposed updates to
7660(k) are similar in relevant part to an existing provision governing
recordkeeping in the communications and equipment rules at another
options exchange \15\ and to an existing Exchange recordkeeping
rule.\16\ 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.
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\14\ See supra note 5.
\15\ See supra note 7.
\16\ 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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\
Because the 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 prior to
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, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \19\ and Rule 19b-
4(f)(6)(iii) thereunder.\20\
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\17\ 15 U.S.C. 78s(b)(3)(A)(iii).
\18\ 17 CFR 240.19b-4(f)(6).
\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 17 CFR 240.19b-4(f)(6). 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) \21\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\22\ the Commission
may 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 proposal
may become operative immediately upon filing. As discussed above, the
Exchange states that this proposed update to 7660(f) to codify the
existing requirement to register all communication devices to be used
for a business purpose on the Trading Floor will help provide greater
clarity into existing practices on the Trading Floor and may reduce the
potential for confusion regarding the requirements relating to
communication devices on the Trading Floor. The Exchange believes that
the waiver of the operative delay will protect investors by allowing
the Exchange to quickly codify existing practices and to modernize and
clarify the scope of the recordkeeping requirements under Rule 7660(k).
The Commission believes that waiver of the operative delay is
consistent with the protection of investors and the public interest
because it will allow the Exchange to immediately codify an existing
practice within Rule 7660(f) and amend Rule 7660(k) to modernize the
requirements applicable to communication devices. Accordingly, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative upon filing.\23\
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\21\ 17 CFR 240.19b-4(f)(6).
\22\ 17 CFR 240.19b-4(f)(6)(iii).
\23\ 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 this 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 under
Section 19(b)(2)(B) \24\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\24\ 15 U.S.C. 78s(b)(2)(B).
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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
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#b9cbccd5dc94dad6d4d4dcd7cdcaf9cadcda97ded6cf"><span class="__cf_email__" data-cfemail="e99b9c858cc48a8684848c879d9aa99a8c8ac78e869f">[email protected]</span></a>. Please include
file number SR-BOX-2023-17 on the subject line.
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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-2023-17. 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="https://www.sec.gov/rules/sro.shtml">https://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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-BOX-2023-17 and should be
submitted on or before July 20, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 2023-13795 Filed 6-28-23; 8:45 am]
BILLING CODE 8011-01-P
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