Notice2024-01392
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 Decrease Certain Electronic Non-Auction Transaction Fees
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 25, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 17 (Thursday, January 25, 2024)</title>
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[Federal Register Volume 89, Number 17 (Thursday, January 25, 2024)]
[Notices]
[Pages 5052-5054]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-01392]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99400; File No. SR-BOX-2024-04]
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 Decrease
Certain Electronic Non-Auction Transaction Fees
January 19, 2024.
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 12, 2024, 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 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 Section IV.A (Non-Auction
Transactions) of the BOX Fee Schedule. The Exchange proposes to
decrease Professional Customer and Broker Dealer maker fees on
transactions in Penny Interval Classes and SPY where the contra party
is a Public Customer.
In Section IV.A of the BOX Fee Schedule, fees and credits for
electronic Non-Auction Transactions are assessed depending on three
factors: (i) the account type of the Participant submitting the order;
(ii) whether the Participant is a liquidity provider or liquidity
taker; and (iii) the account type of the contra party. Currently, when
a Professional Customer or Broker Dealer
[[Page 5053]]
Penny Interval Class or SPY order is a liquidity maker contra to a
Public Customer, the Professional Customer or Broker Dealer is assessed
a fee of $0.60. The Exchange now proposes to decrease Professional
Customer and Broker Dealer maker fees on Penny Interval Classes and SPY
electronic Non-Auction Transactions contra to a Public Customer.
Accordingly, when a Professional Customer or Broker Dealer order in a
Penny Interval Class or SPY is a liquidity maker contra to a Public
Customer, the Professional Customer or Broker Dealer will be assessed a
fee of $0.50.
The Exchange notes that the proposed fees are comparable in amount
with the fees at several other exchanges.\5\ The Exchange believes that
the proposed changes are reasonable and competitive when compared to
other exchanges and that the changes will attract order flow, thus
improving the markets on BOX to the benefit of all Participants.
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\5\ See e.g., NYSE American LLC Options Fee Schedule, Section I
(``Options Transaction Fees and Credits'' applicable to Penny for
Broker-Dealer and Professional Customer of $0.50); Cboe EDGX
Exchange, Inc. Fee Schedule (``Transaction Fees'' applicable to
Penny Program Securities for Away Market Maker, Broker Dealer, and
Professional of $0.48); Miami International Securities Exchange, LLC
Fee Schedule (``Transaction Fees'' applicable to Penny Classes for
Public Customer that is Not a Priority Customer, Non-MIAX Market
Maker, and Non-Member Broker-Dealer of $0.47).
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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,\6\ 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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\6\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange notes that it operates in a highly competitive
environment. Indeed, there are currently 17 registered options
exchanges that trade options. Based on publicly available information,
no single options exchange has more than 17% of the market share and
currently the Exchange represents only approximately 7% of the market
share.\7\ The Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. Particularly, in
Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \8\ As stated
above, the Exchange operates in a highly competitive market in which
market participants can readily direct order flow to competing venues
if they deem fee levels at a particular venue to be excessive or
incentives to be insufficient. The proposed fee changes reflect a
competitive pricing structure designed to attract Professional Customer
and Broker Dealer electronic non-auction order flow to BOX.
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\7\ See Cboe Global Markets U.S. Options Market Month-to-Date
Volume Summary (December 13, 2023), available at <a href="https://markets.cboe.com/us/options/market_statistics/">https://markets.cboe.com/us/options/market_statistics/</a>.
\8\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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The Exchange believes the proposed electronic Non-Auction
Transaction fees for Professional Customer and Broker Dealer Penny
Interval Class and SPY transactions contra to Public Customers are
reasonable as the proposed fees are comparable to similar transaction
fees assessed at other exchanges.\9\ The Exchange further believes that
the proposed Professional Customer and Broker Dealer Penny Interval
Class and SPY transaction fees will attract order flow because the
reduced fees will be competitive with other exchanges. The Exchange
notes that other exchanges assess fees between $0.47 and $0.50 for
Professional Customer and Broker Dealer transactions in Penny Interval
Classes, including SPY.\10\
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\9\ See supra note 5.
\10\ Id.
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The Exchange believes that assessing Professional Customers and
Broker Dealers $0.50 for Penny Interval Class and SPY electronic Non-
Auction Transactions contra to Public Customers is equitable and not
unfairly discriminatory. The Exchange notes that Market Maker maker
fees assessed for Penny Interval Classes contra to Public Customers for
electronic Non-Auction Transactions are $0.50 and Market Maker maker
fees assessed for SPY contra to Public Customers for electronic Non-
Auction Transactions are $0.00. Thus, Professional Customer, Broker
Dealer, and Market Maker maker fees in Penny Interval Classes contra to
Public Customers for electronic Non-Auction Transactions will be the
same.
The Exchange notes that Professional Customer and Broker Dealer
maker fees for Penny Interval Classes and SPY contra to Public
Customers for electronic Non-Auction Transactions will remain higher
than Public Customer transactions where the contra party is another
Public Customer. 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 charging a
lower fee for Public Customers compared to other account types on BOX
is appropriate and not unfairly discriminatory. The Exchange believes
that charging a lower fee for Public Customers will attract a high
level of Public Customer order flow and create liquidity which will
ultimately benefit all Participants trading on BOX.
The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
shift order flow and discontinue or reduce use of certain categories of
products in response to fee changes. Accordingly, competitive forces
constrain options exchange transaction fees. Stated differently,
changes to exchange transaction fees can have a direct effect on the
ability of an exchange to compete for order flow. The Exchange believes
the proposed changes are a reasonable attempt to effectively compete
for electronic non-auction Professional Customer and Broker Dealer
orders. The Exchange believes that the proposed change may incentivize
Professional Customer and Broker Dealer order flow and, in turn, may
make BOX a more competitive venue for order execution to the benefit of
all Participants. Finally, the Exchange believes the proposed changes
are consistent with the Act because, to the extent the modifications
permit the Exchange to continue to attract greater volume and
liquidity, the proposed changes would improve BOX's overall
competitiveness and strengthen market quality for all market
participants.
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 the proposed changes to Professional Customer
and Broker Dealer maker fees for Penny Interval Classes and SPY contra
to Public Customers in the electronic Non-Auction Transactions fee
structure will not impose a burden on intramarket competition as BOX
believes that the changes will result in Professional Customers and
Broker Dealers being charged appropriately for their Penny Interval
Class and SPY maker
[[Page 5054]]
transactions contra to Public Customers. The proposed change would
apply to all similarly situated market participants and, accordingly,
the proposed change would not impose a disparate burden on competition
among Participants on BOX. The proposed change is designed to compete
with other options exchanges and to attract order flow. The Exchange
notes that Public Customer fees remain lower than Professional
Customer, Broker Dealer, and certain Market Maker fees because BOX has
historically aimed to improve markets for investors and develop various
features within the market structure for Public Customer benefit.\11\
The Exchange believes further the proposed changes to Professional
Customer and Broker Dealer Penny Interval Class and SPY maker fees
contra to Public Customers in the electronic Non-Auction Transactions
fee structure will not impose a burden on intermarket competition. The
Exchange notes that the Non-Auction Transaction fee structure as a
whole, including the proposed change, is designed to be competitive
with other options exchanges and to attract order flow. The Exchange
believes the electronic Non-Auction Transactions fee structure,
including the proposed change, will remain competitive with other
options exchanges.\12\
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\11\ The Exchange notes that Public Customer fees remain lower
than Market Maker fees, with the exception of Market Maker maker
fees contra to Non-Public Customers for electronic Non-Auction
Transactions, as well as Market Maker maker fees contra to Public
Customers assessed in SPY for electronic Non-Auction Transactions.
Similar to Public Customers, Market Makers are assessed no fee for
the above transactions.
\12\ See supra note 5.
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Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues. In such an environment, the Exchange must continually
review, and consider adjusting, its fees and rebates 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.
For the reasons described above, the Exchange believes that the
proposed rule change will encourage intermarket competition.
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 \13\ and Rule 19b-4(f)(2)
thereunder,\14\ because it establishes or changes a due, or fee.
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\13\ 15 U.S.C. 78s(b)(3)(A)(ii).
\14\ 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.
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#b6c4c3dad39bd5d9dbdbd3d8c2c5f6c5d3d598d1d9c0"><span class="__cf_email__" data-cfemail="4735322b226a24282a2a222933340734222469202831">[email protected]</span></a>. Please include
file numberSR-BOX-2024-04 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-2024-04. 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-2024-04 and should be
submitted on or before February 15, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-01392 Filed 1-24-24; 8:45 am]
BILLING CODE 8011-01-P
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