Notice2024-09332
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 (“BOX”)
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
May 1, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 89 Issue 85 (Wednesday, May 1, 2024)</title>
</head>
<body><pre>
[Federal Register Volume 89, Number 85 (Wednesday, May 1, 2024)]
[Notices]
[Pages 35266-35269]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-09332]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100026; File No. SR-BOX-2024-10]
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 (``BOX'')
April 25, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on April 11, 2024, BOX Exchange LLC (the ``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
[[Page 35267]]
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of 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 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 VI.A, Complex Order
Transaction Fees, of the BOX Fee Schedule, to establish a separate
category within the fee structure for fees and rebates on Complex Order
transactions for options overlying the Standard and Poor's Depositary
Receipts Trust (``SPY''), the INVESCO QQQ Trust\SM\, Series 1
(``QQQ''), and iShares Russell 2000 Index Fund (``IWM''). The Exchange
notes that the fees for SPY, QQQ, and IWM in Section VI.A will remain
the same as those currently assessed. The Exchange also proposes to
amend the fees in Section VI.B to change how certain Complex Orders are
assessed within the fee structure, specifically each leg of Public
Customer Complex Orders in SPY, QQQ, and IWM that executes against the
BOX Book \5\ instead of the Complex Order Book.\6\
---------------------------------------------------------------------------
\5\ The term ``Central Order Book'' or ``BOX Book'' means the
electronic book of orders on each single option series maintained by
the BOX Trading Host. See BOX Rule 100(a)(10).
\6\ The term ``Complex Order Book'' means the electronic book of
Complex Orders maintained by the BOX Trading Host. See BOX Rule
7240(a)(8).
---------------------------------------------------------------------------
Currently, in Section VI of the BOX Fee Schedule, fees and credits
for Complex Order transactions in Penny Interval Classes and Non-Penny
Interval Classes 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. The Exchange proposes to assess
separate fees for SPY, QQQ, and IWM Complex Order Transaction Fees in
Section VI.A of the Fee Schedule. The Exchange notes that it is not
changing the amount of the fees currently assessed for these
transactions but is simply carving out SPY, QQQ, and IWM into a
separate category within the fee structure.
As proposed, the SPY, QQQ, and IWM fees will continue to be the
same as the current fees assessed to transactions in Penny Interval
Classes. Specifically, when a Public Customer SPY, QQQ, or IWM Complex
Order interacts with a Public Customer, the Exchange will not assess a
fee or offer a rebate. When a Public Customer SPY, QQQ, or IWM Complex
Order interacts with a non-Public Customer, the Exchange will offer a
rebate of $0.50. Further, when a Professional Customer or Broker Dealer
SPY, QQQ, or IWM Complex Order interacts with a Public Customer Complex
Order, the Exchange proposes to assess a $0.50 fee when making
liquidity or a $0.50 fee when taking liquidity. When a Professional
Customer or Broker Dealer SPY, QQQ, or IWM Complex Order interacts with
a Professional Customer, Broker Dealer, or Market Maker Complex Order,
the Exchange proposes to offer a rebate of $0.30 for making liquidity
or to assess a fee of $0.50 for taking liquidity. When a Market Maker
SPY, QQQ, or IWM Complex Order interacts with a Public Customer Complex
Order, the Exchange proposes to assess $0.50 when making liquidity or
$0.50 when taking liquidity. When a Market Maker SPY, QQQ, or IWM
Complex Order interacts with a Professional Customer, Broker Dealer, or
Market Maker Complex Order, the Exchange proposes to offer a rebate of
$0.30 when making liquidity or to assess a fee of $0.50 when taking
liquidity. The Exchange again notes that these fees are currently
assessed to SPY, QQQ, and IWM transactions today as SPY, QQQ, and IWM
are Penny Interval Classes.\7\
---------------------------------------------------------------------------
\7\ See BOX Options Notice 2024-015 available at Notice-2024-
015-Penny-Program-Class-Removals.pdf (<a href="http://boxexchange.com">boxexchange.com</a>).
---------------------------------------------------------------------------
The proposed fee structure for SPY, QQQ, and IWM Complex Order
transactions will be as follows:
----------------------------------------------------------------------------------------------------------------
SPY, QQQ, and IWM
Account type Contra party -------------------------------
Maker Taker
----------------------------------------------------------------------------------------------------------------
Public Customer............................... Public Customer................. $0.00 $0.00
Professional Customer/Broker (0.50) (0.50)
Dealer.
Market Maker.................... (0.50) (0.50)
Professional Customer or Broker Dealer........ Public Customer................. 0.50 0.50
Professional Customer/Broker (0.30) 0.50
Dealer.
Market Maker.................... (0.30) 0.50
Market Maker.................................. Public Customer................. 0.50 0.50
Professional Customer/Broker (0.30) 0.50
Dealer.
Market Maker.................... (0.30) 0.50
----------------------------------------------------------------------------------------------------------------
For example, under the proposal, if a Public Customer submitted a
SPY order to the Complex Order Book (making liquidity), the Public
Customer would be provided a rebate of $0.50 if the order interacted
with a Market Maker's SPY order and the Market Maker (taking liquidity)
would be charged $0.50.
In addition to the above changes to Section VI.A of the Fee
Schedule, the Exchange now proposes to amend the fees in Section VI.B
to change how
[[Page 35268]]
certain Complex Orders are assessed within the fee structure. By way of
background, a Participant may enter a Complex Order with the intent of
that order executing against another Complex Order on the Complex Order
Book, however, Complex Orders will execute against Complex Orders only
after bids and offers at the same net price on the BOX Book for the
individual legs have been executed.\8\ Currently, under the BOX Fee
Schedule, each leg of a Complex Order executed against the BOX Book
will be treated as a standard order for purposes of the Fee Schedule
and is subject to Section IV (Electronic Transaction Fees). The
Exchange now proposes to assess $0.00 for Public Customer Complex
Orders in SPY, QQQ, and IWM executed against the BOX Book.
Specifically, the Exchange proposes to amend Section VI.B as follows:
---------------------------------------------------------------------------
\8\ See BOX Rule 7240(b)(3)(i).
``Each order on the BOX Book executed against a Complex Order
and each leg of a Complex Order executed against the BOX Book will
be treated as a standard order for purposes of the Fee Schedule and
subject to Section IV.A (Electronic Transaction Fees for Non-Auction
Transactions), except that each leg of a Public Customer Complex
Order in SPY, QQQ, and IWM executed against the BOX Book will be
---------------------------------------------------------------------------
assessed $0.00.''
For example, if a SPY, QQQ, or IWM Public Customer Complex Order
interacts with the BOX Book, the legs are currently assessed $0.10 for
taking liquidity against Professional Customers, Broker Dealers, and
Market Makers.\9\ The proposed change would effectively decrease the
fee assessed in this case from $0.10 to $0.00.
---------------------------------------------------------------------------
\9\ See BOX Fee Schedule, Section IV.A (Non-Auction
Transactions).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange's proposal to establish a separate category within the
fee structure for SPY, QQQ, and IWM Complex Order transactions is
reasonable, equitable, and not unfairly discriminatory because pricing
by symbol is a common practice on many U.S. options exchanges as a
means to incentivize order flow to be sent to an exchange for execution
in the most actively traded options classes. The Exchange notes that it
currently assesses separate fees and rebates for SPY, QQQ, and IWM Non-
Auction Transactions.\11\ The Exchange also notes that SPY, QQQ, and
IWM are among the most actively traded options \12\ and therefore the
Exchange believes that creating a separate category within the fee
structure for these classes is appropriate to more effectively attract
order flow to BOX. The Exchange again notes that it is not changing the
amount of the fees currently assessed for SPY, QQQ, and IWM Complex
Order Transaction Fees in Section VI.A of the Fee Schedule, but is
simply carving out SPY, QQQ, and IWM into a separate category within
the fee structure. As proposed, the SPY, QQQ, and IWM fees will
continue to be the same as the current fees assessed to transactions in
Penny Interval Classes.
---------------------------------------------------------------------------
\11\ See BOX Fee Schedule, Section IV.A (Non-Auction
Transactions).
\12\ See <a href="https://www.optionseducation.org/toolsoptionquotes/today-s-most-active-options">https://www.optionseducation.org/toolsoptionquotes/today-s-most-active-options</a> (providing a daily list of the most
active options by type).
---------------------------------------------------------------------------
Additionally, the Exchange believes the proposed change to amend
the fees in Section VI.B to change how each leg of a Public Customer
Complex Order in SPY, QQQ, and IWM that executes against the BOX Book
is assessed within the fee structure is reasonable because it is
designed to incentivize Public Customer Complex order flow.
Specifically, when a Complex Order interacts with the BOX Book, the
orders in the BOX Book are assessed electronic transaction fees for
non-auction transactions.\13\ Currently, in the case of a Public
Customer Complex Order interacting with the BOX Book, the legs are
assessed $0.00 for making liquidity against all account types, $0.00
for taking liquidity against another Public Customer, and $0.10 for
taking liquidity against Professional Customers, Broker Dealers, and
Market Makers. The proposed change would effectively decrease the fee
assessed in the latter case from $0.10 to $0.00. Further, the Exchange
believes it is equitable and not unfairly discriminatory that Public
Customers be charged lower fees than Professional Customers, Broker
Dealers, and Market Makers on BOX. The Exchange believes it promotes
the best interests of investors to have lower transaction costs for
Public Customers and will attract Public Customer order flow. The
Exchange believes further that increased opportunities to interact with
Public Customer order flow benefits all market participants. As such,
the industry in general and the Exchange in particular have
historically created fee structures to benefit Public Customers because
increased Public Customer order flow benefits all market participants.
---------------------------------------------------------------------------
\13\ See BOX Fee Schedule Section VI.B.
---------------------------------------------------------------------------
The Exchange notes that the BOX Fee Schedule, including Section VI
(Complex Order Transaction Fees), assesses fees and credits according
to the account type of the Participant originating the order and the
contra party.\14\ The result of this structure is that a Participant
does not know the fee it will be charged when submitting certain
orders. Specifically, Participants who submit a Complex Order to BOX
may not know ahead of time whether their Complex Order will interact
with the Complex Order Book or the BOX Book. As a result, Participants
must recognize when submitting a Complex Order to BOX that they could
be assessed a range of fees or rebates and must expect the highest
applicable fee or lowest applicable rebate such that fees(rebates) may
be higher(lower) than their expectations. The Exchange notes that under
the proposal, SPY, QQQ, and IWM Public Customer Complex Orders will not
be assessed a fee regardless of whether the Complex Order executes in
the Complex Order Book or the BOX Book. Further, the Exchange believes
the proposed changes are equitable and not unfairly discriminatory as
the proposed fee structure will apply uniformly to all Participants.
---------------------------------------------------------------------------
\14\ See BOX Fee Schedule Sections IV.A (Electronic Non-Auction
Transactions) and VI.A (Complex Order Transaction Fees).
---------------------------------------------------------------------------
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 proposal does not impose an undue burden on intermarket
competition. The Exchange believes its proposal to decrease fees for
SPY, QQQ, and IWM Public Customer Complex Orders that execute against
the BOX Book will allow BOX to compete with other options markets. The
Exchange notes that it operates in a highly competitive market in which
market participants can readily favor competing venues if they deem fee
levels at a particular venue to be excessive, or rebate opportunities
available at other venues to be more favorable. In such an environment,
the Exchange must continually adjust its fees and rebates to remain
competitive with other exchanges. Because competitors are free to
modify their own fees and rebates in
[[Page 35269]]
response, and because market participants may readily adjust their
order routing practices, the Exchange believes that the degree to which
fee changes in this market may impose any burden on competition is
extremely limited.
The Exchange believes that the proposed changes do not impose an
undue burden on intra-market competition because the proposal will not
place any category of market participant at a competitive disadvantage.
Specifically, the Exchange believes that assessing no fees to the legs
of SPY, IWM, or QQQ Public Customer Complex Orders that trade against
the BOX Book does not impose an undue burden on intra-market
competition because the proposed change is designed to attract Public
Customer order flow which increases the number of executions on BOX,
thus benefiting all market participants. The Exchange believes further
that separating SPY, IWM, and QQQ Complex Order transaction fees from
Penny Interval Classes does not impose an undue burden on competition
because the proposal changes the structure of the Fee Schedule but does
not change the fees assessed or rebates offered.
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.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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#2f5d5a434a024c4042424a415b5c6f5c4a4c01484059"><span class="__cf_email__" data-cfemail="c3b1b6afa6eea0acaeaea6adb7b083b0a6a0eda4acb5">[email protected]</span></a>. Please include
file number SR-BOX-2024-10 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-2024-10. 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-2024-10 and should be
submitted on or before May 22, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------
\17\ 17 CFR 200.30-3(a)(12).
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-09332 Filed 4-30-24; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on May 1, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.