Notice2023-20805
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 the Language and Process Related to the Options Regulatory Fee
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
September 26, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 185 (Tuesday, September 26, 2023)</title>
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[Federal Register Volume 88, Number 185 (Tuesday, September 26, 2023)]
[Notices]
[Pages 66100-66103]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-20805]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98446; File No. SR-BOX-2023-24]
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
the Language and Process Related to the Options Regulatory Fee
September 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 September 13, 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 Exchange filed the proposed rule change
pursuant to section 19(b)(3)(A)(ii) 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
[[Page 66101]]
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)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change to amend the language and
processes relating to the Options Regulatory Fee (``ORF'') 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="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 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, to harmonize the
language and processes relating to the Options Regulatory Fee (``ORF'')
with the language and processes used by other options exchanges.\5\ By
way of background, the ORF is designed to recover a material portion of
the costs to the Exchange of the supervision and regulation of
Participant customer options business, including performing routine
surveillances, investigations, examinations, financial monitoring, as
well as policy, rulemaking, interpretive and enforcement activities.
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\5\ See Securities and Exchange Act Release No. 34-98108 (August
10, 2023), 88 FR 55809 (August 16, 2023) (SR-CboeEDGX-2023-054)
(Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change to Amend its Fee Schedule Related to the Options Regulatory
Fee).
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The revenue generated from the ORF, when combined with all of the
Exchange's other regulatory fees and fines, covers a material portion,
but not all, of the Exchange's regulatory costs.
The Exchange monitors the amount of revenue collected from the ORF
to ensure that it, in combination with its other regulatory fees and
fines, does not exceed the Exchange's total regulatory costs. The
Exchange monitors its regulatory costs and revenues at a minimum on a
semi-annual basis. If the Exchange determines regulatory revenues
exceed or are insufficient to cover a material portion of its
regulatory costs, the Exchange will adjust the ORF by submitting a fee
change filing to the Securities and Exchange Commission (the
``Commission''). The Exchange notifies Participants of adjustments to
the ORF via an Informational Circular. Currently, the Exchange provides
Participants with such notice at least 30 calendar days prior to the
effective date of the change. The Options Regulatory Fee section of the
Fee Schedule sets forth the details and description of how and when the
ORF is assessed. For example, the Fee Schedule explicitly specifies
that the Exchange may only increase or decrease the ORF semi-annually,
and any such fee change will be effective on the first business day of
February or August. The Fee Schedule further states that the Exchange
will notify Participants of any change in the amount of the fee at
least 30 calendar days prior to the effective date of the change.
The Exchange proposes to update the Fee Schedule language relating
to the timing of ORF changes. Particularly, the Exchange proposes to
eliminate the strict requirement that the ORF may only be modified on
the first business day of February or August, and also the explicit
requirement that it must provide at least 30 calendar days prior to the
effective date. The Exchange first proposes to eliminate the
requirement that ORF may only be modified on the first business day of
February or August to afford the Exchange increased flexibility in
amending the ORF. As noted above, the ORF is based in part on options
transactions volume, and as such the amount of ORF collected is
variable. If options transactions reported to OCC in a given month
increase, the ORF collected from Participants may increase as well.
Similarly, if options transactions reported to OCC in a given month
decrease, the ORF collected from Participants may decrease as well.
Accordingly, the Exchange monitors the amount of ORF collected to
ensure that it does not exceed the Exchange's total regulatory costs.
If the Exchange determines the amount of ORF collected exceeds costs
over an extended period, the proposed rule change allows the Exchange
to adjust the ORF by submitting a fee change filing to the Commission
in a month other than just February or August. Although the Exchange
proposes to eliminate the explicit language in the Fee Schedule that
provides the Exchange will adjust the ORF only semi-annually, and only
on the first business day of February or August, it would continue to
monitor its regulatory costs and revenues at a minimum on a semi-annual
basis and submit a proposed rule change for each modification of the
ORF as needed. The Exchange also proposes to eliminate the explicit
language in the Fee Schedule that it will notify participants of any
change in the amount of the fee at least 30 calendar days prior to the
effective date of the change. Although the Exchange proposes to
eliminate this language from the Fee Schedule, it notes that it will
endeavor to notify Participants of any planned change to the ORF by
Exchange Informational Circular at least 30 calendar days prior to the
effective date of such change. The Exchange believes this proposed
change also provides the Exchange additional flexibility. For example,
the Exchange often provides fee change notices on the first business
day of the month. It may be the case that such date is less than 30
days from the effective date of proposed change (e.g., if the Exchange
wished to amend the ORF, effective, August 1, 2023, the Exchange would
not have met the 30-day notice requirement if it had announced on the
first business day of July, as it has been historic practice, since the
first business day falls on July 3, 2023). As such, the proposed rule
changes provides added flexibility while still committing to provide
notice on the timing of any changes to the ORF and ensuring that
Participants are prepared to configure their systems to properly
account for the ORF.
The Exchange notes that the proposed changes result in ORF
processes and Fee Schedule language that aligns with other options
exchanges.\6\ Particularly, although typically the practice, other
options exchanges are not limited to only adjusting ORF to only the
first business day of August or February.\7\ Moreover, another options
exchange recently amended their fees to allow for flexibility to adjust
ORF during months other than February or August.\8\ The Exchange notes
that other options exchanges do not explicitly provide in
[[Page 66102]]
their fees schedules that it will provide notice at least 30 calendar
days in advance of any ORF change.\9\ Other exchanges have represented
in various ORF fee filings that they endeavor to notify members of any
planned change to the ORF by Exchange notice at least 30 calendar days
prior to the effective date of such change, just as the Exchange
represents here.\10\ The Exchange believes the proposed change provides
uniformity across options exchanges and reduces potential confusion. It
also provides the Exchange added flexibility as to when modifications
to the ORF may occur.
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\6\ See Cboe Exchange, Inc. Fees Schedule and Cboe C2 Exchange,
Inc. Options Fees Schedule.
\7\ Id.
\8\ See e.g., Securities Exchange Act Release No. 96373 (October
13, 2022), 87 FR 73376 (November 29, 2022) (SR-NYSEAMER-2022-52).
\9\ See Cboe Exchange, Inc. Fees Schedule and Cboe C2 Exchange,
Inc. Options Fees Schedule.
\10\ See e.g., Securities Exchange Act Release No. 92597 (August
6, 2021), 86 FR 44451 (August 12, 2021 (SR-CBOE-2021-044). See also
Securities Exchange Act Release No. 92596 (August 6, 2021), 86 FR
44461 (August 12, 2021 (SR-C2-2021-012).
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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''),\11\ in general, and section 6(b)(5) of the Act,\12\ 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 believes the proposed
changes to the Fee Schedule with respect to how ORF is assessed and
collected are appropriate as it provides the Exchange more flexibility
in its assessment of ORF based on its periodic monitoring of ORF rates.
The Exchange also represents that it will continue to monitor its
regulatory costs and revenues at a minimum on a semi-annual basis, just
as it, and other options exchanges do today. The Exchange believes that
the proposed elimination of language specifying that the Exchange may
only increase or decrease the ORF on the first business day February or
August is reasonable because it is designed to afford the Exchange
increased flexibility in making necessary adjustments to the ORF, as
the Exchange is required to monitor the amount collected from the ORF
to ensure that it, in combination with its other regulatory fees and
fines, does not exceed total regulatory costs. The Exchange also
represents that it will endeavor to provide notice of any changes at
least 30 days in advance of the effective date of such change, thereby
providing Participants with adequate time to make any necessary
adjustments to accommodate any proposed changes. Taking out the strict
requirements from the Fee Schedule, however, will provide the Exchange
flexibility in modifying ORF and being able to adjust ORF even if it
doesn't meet the strict 30-day deadline in event extenuating
circumstances prevent the Exchange from meeting this deadline or in the
event such notice is a day or two less than 30 days due to when the
first business days of the month fall. For example, as noted above, the
Exchange often provides fee change notices on the first business day of
the month. It may be the case that such date is less than 30 days from
the effective date of proposed change (e.g., if the Exchange wished to
amend the ORF, effective, August 1, 2023, the Exchange would not have
met the 30-day notice requirement if it had announced on the first
business day of July, as it has been historic practice, since the first
business day falls on July 3, 2023).
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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The Exchange believes the proposed rule changes are reasonable,
equitable and not unfairly discriminatory because they conform to the
process and Fee Schedule language used by other options exchanges,
thereby providing consistency across the options exchanges and reducing
potential confusion. The proposed changes also apply uniformly to all
Participants subject to ORF. As noted above, another options exchange
is also not confined to making ORF changes on the first business day of
February or August.\13\
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\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
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 rule change is substantially similar
in all material respects to a proposal recently submitted by Cboe EDGX
Exchange, Inc. (``EDGX'').\14\ This proposal does not create an
unnecessary or inappropriate inter-market burden on competition because
it merely amends the Fee Schedule to modify the timing and notice
requirements relating to the modification of the ORF and conforms to
the timing and notice requirements used by other options exchanges
within their fee schedules.\15\ Further, ORF is a regulatory fee that
supports regulation in furtherance of the purposes of the Act. The
Exchange is obligated to ensure that the amount of regulatory revenue
collected from the ORF, in combination with its other regulatory fees
and fines, does not exceed regulatory costs and the proposed rule
change does not seek to change that.
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\14\ See supra note 5.
\15\ Id.
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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
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 after the date of the filing, or such
shorter time as the Commission may designate if consistent with the
protection of investors and the public interest, it has become
effective pursuant to section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6) \17\ thereunder.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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, 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) \18\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\19\ 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 proposed
rule change may become operative upon filing. The Exchange is
requesting the waiver because it will allow the Exchange more
flexibility with respect to the timing of changes to its ORF and allow
the Exchange to mirror similar provisions already in place on other
exchanges. Finally, the Exchange states that the proposed change would
not introduce any novel regulatory issues. For these reasons, and
because the proposed rule change does not raise any
[[Page 66103]]
novel legal or regulatory issues, the Commission believes that waiving
the 30-day operative delay is consistent with the protection of
investors and the public interest. Therefore, the Commission hereby
waives the 30-day operative delay and designates the proposal operative
upon filing.\20\
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\18\ 17 CFR 240.19b-4(f)(6).
\19\ 17 CFR 240.19b-4(f)(6)(iii).
\20\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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 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 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="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#9ceee9f0f9b1fff3f1f1f9f2e8efdceff9ffb2fbf3ea"><span class="__cf_email__" data-cfemail="6311160f064e000c0e0e060d1710231006004d040c15">[email protected]</span></a>. Please include
file number SR-BOX-2023-24 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-2023-24. 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-2023-24 and should be
submitted on or before October 17, 2023.
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\21\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-20805 Filed 9-25-23; 8:45 am]
BILLING CODE 8011-01-P
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