Notice2023-20304
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule for Trading on the BOX Options Market LLC Facility To Amend Certain Qualification Thresholds of Section IV.A.1 (Tiered Volume Rebate for Non-Auction Transactions)
Primary source
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Published
September 20, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 181 (Wednesday, September 20, 2023)</title>
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[Federal Register Volume 88, Number 181 (Wednesday, September 20, 2023)]
[Notices]
[Pages 64936-64939]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-20304]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98385; File No. SR-BOX-2023-23]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee
Schedule for Trading on the BOX Options Market LLC Facility To Amend
Certain Qualification Thresholds of Section IV.A.1 (Tiered Volume
Rebate for Non-Auction Transactions)
September 14, 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 September 1, 2023, 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.
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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\ 17 CFR 240.19b-4(f)(2).
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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
amend certain qualification thresholds of Section IV.A.1, (Tiered
Volume Rebate for Non-Auction Transactions) on the BOX Options Market
LLC (``BOX'') options 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 <a href="http://boxexchange.com">http://boxexchange.com</a>.
[[Page 64937]]
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 certain qualification thresholds of Section IV.A.1, (Tiered
Volume Rebate for Non-Auction Transactions).
Currently, Public Customers \5\ receive a per contract rebate for
Electronic Non-Auction Transactions according to the Tier achieved by
the Public Customer as provided in the Percentage Thresholds of
National Customer Volume in Multiply-Listed Options Classes table in
Section IV.A.1 of the BOX Fee Schedule. Percentage thresholds are
calculated on a monthly basis by totaling the Public Customer's
executed Auction and Non-Auction transaction volume on BOX, relative to
the total national Customer volume in multiply-listed options classes.
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\5\ The Exchange notes that Public Customers do not initiate
transactions on BOX directly. BOX Participants initiate electronic
Non-Auction Transactions on behalf of Public Customers and these BOX
Participants are assessed fees or provided rebates by the Exchange
for such transactions.
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The Exchange notes that Non-Auction Transactions where a Public
Customer order interacts with another Public Customer order are exempt
from a per contract rebate. However, these transactions still count
toward the Public Customer's monthly volume on BOX. The current
thresholds and rebates are as follows:
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Per contract rebate
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Percentage thresholds of national Penny Interval Classes Non-Penny Interval SPY
Tier customer volume in multiply-listed -------------------------- Classes -------------------------
options classes (monthly) --------------------------
Maker Taker Maker Taker Maker Taker
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1..................................... 0.000%-0.129%..................... $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2..................................... 0.130%-0.339%..................... (0.05) (0.15) (0.15) (0.27) (0.05) 0.00
3..................................... 0.340%-0.549%..................... (0.10) (0.20) (0.30) (0.32) (0.10) 0.00
4..................................... 0.550% and Above.................. (0.27) (0.27) (0.60) (0.40) (0.27) 0.00
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The Exchange now proposes to raise the percentage thresholds within
the Percentage Thresholds of National Customer Volume in Multiply-
Listed Options Classes table. The proposed rebate structure is as
follows:
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Per contract rebate
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Percentage thresholds of national Penny Interval Classes Non-Penny Interval SPY
Tier customer volume in multiply-listed -------------------------- Classes -------------------------
options classes (monthly) --------------------------
Maker Taker Maker Taker Maker Taker
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1..................................... 0.000%-0.249%..................... $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2..................................... 0.250%-0.499%..................... (0.05) (0.15) (0.15) (0.27) (0.05) 0.00
3..................................... 0.500%-0.749%..................... (0.10) (0.20) (0.30) (0.32) (0.10) 0.00
4..................................... 0.750% and Above.................. (0.27) (0.27) (0.60) (0.40) (0.27) 0.00
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The Exchange notes that the percentage thresholds in Tiers 1
through 4 will be adjusted, however the rebate amounts will not change.
For example, the Tier 2 rebates remain at $0.05 for Makers in Penny
Interval Classes and $0.15 for Takers in Penny Interval Classes, but
will require 0.250%-0.499% of national customer volume in multiply-
listed options classes for Public Customers to qualify for the rebate.
Similarly, the Tier 3 rebates remain at $0.10 for Makers in Penny
Interval Classes and $0.20 for Takers in Penny Interval Classes, and
the Tier 4 rebates in Penny Interval Classes remain at $0.27 but the
thresholds required to qualify for those rebates will be 0.500%-0.749%
and 0.750% and above of national customer volume in multiply-listed
options classes, respectively.
Although, the new volume thresholds will require greater volumes to
qualify for such rebates, the Exchange believes that Public Customers
will still benefit from the opportunity to obtain a rebate for their
transactions.\6\ The Exchange recently reviewed its Tiered Volume
Rebate structure for Non-Auction Transactions and determined that
raising the percentage thresholds is appropriate at this time. The
Exchange has not modified these volume thresholds since November of
2015 \7\ and the current rebate amounts have been in place since June
of 2018.\8\ Further, the Exchange believes that the proposed volume
tiers remain competitive with other exchanges \9\ and notes that Public
Customers may receive a rebate and will continue to pay no fees
[[Page 64938]]
for Electronic Non-Auction transactions on BOX.
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\6\ The Exchange notes that BOX Participants collect rebates on
behalf of Public Customers and have independent fee arrangements
with such Public Customers by which rebates provided by BOX would be
taken into account.
\7\ See Securities Exchange Act Release No. 76447 (November 16,
2015), 80 FR 72758 (November 20, 2015) (SR-BOX-2015-36).
\8\ See Securities Exchange Act Release No. 83396 (June 8,
2018), 83 FR 27807 (June 14, 2018) (SR-BOX-2018-21).
\9\ See infra note 11.
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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, in general, and Section
6(b)(4) and 6(b)(5) of the Act,\10\ 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.
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\10\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes it is reasonable, equitable and not unfairly
discriminatory to adjust certain percentage thresholds in the volume-
based thresholds for Public Customers in Electronic Non-Auction
Transactions. The volume-based thresholds and applicable rebates are
designed to incentivize Public Customers to direct order flow to the
Exchange to obtain the benefit of the rebate, which will in turn
benefit all market participants by increasing liquidity on the
Exchange. While the Exchange proposes to increase the volume
thresholds, thus requiring greater volumes to qualify for rebates, the
Exchange believes that Public Customers will still benefit from the
opportunity to obtain a rebate. The Exchange notes that other exchanges
employ similar incentive programs; and the Exchange believes that the
proposed changes to the volume based rebate thresholds are reasonable
and competitive when compared to incentive structures at other
exchanges.\11\ In particular, Nasdaq PHLX's Customer Rebate Program has
five tiers where Tier 1 is 0.00%-0.60% and Tier 5 is above 2.50% of
national customer volume in multiply-listed equity and Exchange-Traded
Fund (``ETF'') options with rebates that range from $0.00 to $0.21.\12\
Additionally, CBOE's Volume Incentive Program has five tiers where Tier
1 is 0%-0.75% and Tier 5 is above 4.00% of national customer volume in
all underlying symbols excluding certain index symbols, Nanos, and FLEX
Micros with rebates that range from $0.00 to $0.15.\13\ The Exchange is
proposing four tiers where Tier 1 is 0.000%-0.249% and Tier 4 is 0.750%
and above with rebates that range from $0.00 to $0.27 for Penny
Interval Classes. Thus, the Exchange believes that comparable rebates
can still be attained on BOX, under the Exchange's proposed thresholds,
at lower volumes than on CBOE or Nasdaq PHLX.
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\11\ See Nasdaq PHLX LLC (``Nasdaq PHLX'') Options 7, Section 2
(Customer Rebate Program) and Cboe Exchange, Inc. (``CBOE'') Fee
Schedule (Volume Incentive Program). The Exchange notes that these
programs use different tier structures, volume calculations, and
rebate amounts, however, their rebate programs operate similarly to
BOX's.
\12\ These rebates are referred to in Nasdaq PHLX Options 7,
Section 2 as Category A rebates. The Exchange believes that Category
A rebates and the volume used to determine which tiers are attained
are comparable to BOX's Tiered Volume Rebate for Non-Auction
Transactions (Percentage Thresholds of National Customer Volume in
Multiply-Listed Options Classes) with the exception that Nasdaq PHLX
excludes volume associated with electronic QCC Orders. The Exchange
also notes that SPY is rebated under Nasdaq PHLX Options 7, Section
3.
\13\ These rebates are for simple, Non-AIM transactions in the
CBOE Fee Schedule, VIP. The Exchange believes that simple, Non-AIM
transactions and the volume used to determine which tiers are
attained are comparable to BOX's Tiered Volume Rebate for Non-
Auction Transactions (Percentage Thresholds of National Customer
Volume in Multiply-Listed Options Classes).
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The proposed changes to the thresholds in Tiers 1 through 4 are
equitable and not unfairly discriminatory as they are available to all
BOX Participants that initiate electronic Non-Auction Transactions on
the behalf of Public Customers, and Participants may choose whether or
not to take advantage of the percentage thresholds and their applicable
rebates on BOX.
The Exchange continues to believe it is equitable and not unfairly
discriminatory to have these rebate structures for Public Customers in
Electronic Non-Auction Transactions. The securities markets generally,
and BOX in particular, have historically aimed to improve markets for
investors and develop various features within the market structure for
Public Customer benefit. Accordingly, the Exchange believes that
providing a rebate structure for Public Customers is appropriate and
not unfairly discriminatory. Based on its review of competitor
exchanges, the Exchange believes that the proposed rebate thresholds,
although more difficult to obtain, will not disincentivize BOX
Participants from sending Public Customer order flow to BOX. Rather,
the Exchange believes that the proposed rebates will continue to help
attract a high level of Public Customer order flow to the BOX Book and
create liquidity, which the Exchange believes will ultimately benefit
all Participants trading on BOX.
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 believes that amending the proposed rebate structure
for Public Customer Electronic Non-Auction Transactions will not impose
a burden on competition among various Participants. The Exchange
believes that the proposed changes will result in Public Customers
being rebated appropriately for these transactions. The Exchange notes
that it operates in a highly competitive market in which market
participants can readily favor competing exchanges. In such an
environment, the Exchange must continually review, and consider
adjusting, its fees and credits to remain competitive with other
exchanges. Because competitors are free to modify their own fees and
rebates in response, and because market participants may readily adjust
their order routing practices, the Exchange believes that the degree to
which fee or rebate changes in this market may impose any burden on
competition is extremely limited. The Exchange notes that other
exchanges provide programs to incentivize customer order flow and that
the proposed changes to the volume thresholds remain competitive when
compared to incentive structures at other exchanges.\14\ For the
reasons described above, the Exchange believes that the proposed rule
change reflects this competitive environment.
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\14\ See supra note 11.
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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 \15\ and Rule 19b-4(f)(2)
thereunder,\16\ because it establishes or changes a due, or fee.
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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 17 CFR 240.19b-4(f)(2).
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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.
[[Page 64939]]
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#deacabb2bbf3bdb1b3b3bbb0aaad9eadbbbdf0b9b1a8"><span class="__cf_email__" data-cfemail="2f5d5a434a024c4042424a415b5c6f5c4a4c01484059">[email protected]</span></a>. Please include
file number SR-BOX-2023-23 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-2023-23. 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-2023-23 and should be
submitted on or before October 11, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-20304 Filed 9-19-23; 8:45 am]
BILLING CODE 8011-01-P
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