Notice2024-15675
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
July 17, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 137 (Wednesday, July 17, 2024)</title>
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[Federal Register Volume 89, Number 137 (Wednesday, July 17, 2024)]
[Notices]
[Pages 58212-58215]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-15675]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100505; File No. SR-BOX-2024-17]
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'')
July 11, 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 July 1, 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
[[Page 58213]]
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 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 the Fee Schedule for trading on BOX
to include FLEX Open Outcry (``FOO'') volume toward the Qualified
Contingent Cross (``QCC'') Growth Rebate.\5\
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\5\ The Exchange recently established transaction fees and
rebates applicable to the FOO Order type on the BOX Trading Floor.
See Securities Exchange Act Release No. 100396 (June 21, 2024), 89
FR 53693 (June 27, 2024) (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).
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Currently, BOX offers a QCC Rebate and a QCC Growth Rebate.\6\
Specifically, a QCC Rebate is paid to the Participant that entered the
order into the BOX system when at least one party to the QCC
transaction is a Broker Dealer or Market Maker. The Participant
receives a per contract rebate on QCC transactions according to the
tier achieved. Volume thresholds are calculated on a monthly basis by
totaling the Participant's QCC Agency Order volume on BOX. When only
one side of the QCC transaction is a Broker Dealer or Market Maker,
Rebate 1 applies. When both parties to the QCC transaction are a Broker
Dealer or Market Maker, Rebate 2 applies. The Exchange notes that the
QCC Rebate is intended to incentivize the sending of QCC Orders to BOX.
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\6\ See BOX Fee Schedule Section IV.D.1.
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The QCC Rebate tier structure is as follows:
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QCC agency order volume on BOX Rebate 1 (per Rebate 2 (per
Tier (per month) contract) contract)
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1......................................... 0 to 749,999 contracts.......... ($0.14) ($0.22)
2......................................... 1,000,000[sic] to 1,499,999 (0.16) (0.25)
contracts.
3......................................... 1,500,000+ contracts............ (0.17) (0.27)
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Additionally, the QCC Growth Rebate allows Participant's to qualify
for the rebates listed in Tier 3 of the QCC Rebate if a Participant's
QCC Agency Order volume on BOX achieves Tier 2 of the QCC Rebate in the
month AND the Participant's total QCC volume combined with total
Qualified Open Outcry (``QOO'') volume exceeds 5 million contracts per
month. Strategy QOO Orders and Strategy QCC Orders are not counted
toward the QCC Growth Rebate volume.\7\
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\7\ See BOX Fee Schedule Section IV.D.1.b.
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The Exchange now proposes that FOO volume be counted toward the QCC
Growth Rebate. Specifically, the Exchange proposes that if a
Participant's QCC Agency Order volume on BOX achieves Tier 2 of the QCC
Rebate in the month AND the Participant's total QCC volume combined
with total QOO and FOO volume exceeds 5 million contracts per month,
then the Participant will qualify for the rebates listed in Tier 3 of
the QCC Rebate (``QCC Growth Rebate qualifications''). Strategy QOO
Orders, Strategy FOO Orders, and Strategy QCC Orders will not be
counted toward the QCC Growth Rebate volume. Further, Participants are
entitled to one QCC Rebate in a given month, which would be the greater
of the QCC Rebate in Section IV.D.1.a, or the QCC Growth Rebate
detailed in Section IV.D.1.b, but not both.
The Exchange notes that a similar rebate currently exists at
another options exchange.\8\ Further, the Exchange believes that the
proposal will encourage Participants to send increased QCC, FOO, and
QOO order flow to BOX in order to achieve a higher rebate.
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\8\ See NYSE American LLC (``NYSE American'') Fee Schedule
(Section I.F.QCC Fees & Credits). Although the NYSE American Fee
Schedule does not reference FLEX options, the Exchange believes that
FLEX options are included in the Section I.F.QCC Fees & Credits
calculation of manual billable sides, which provides a QCC Billable
Bonus Rebate. The Exchange notes that the structure and rebates
differ, however, the concept of combining manual billable (including
FLEX options) and QCC billable volume to determine rebates is
similar to the proposal.
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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,\9\ 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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\9\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposal to include FOO volume toward the QCC Growth
Rebate is reasonable because this rebate will provide additional
incentives for BOX Participants to engage in substantial amounts of
trading activity which would serve to bring additional open outcry
liquidity to the Trading Floor and QCC order flow to BOX's electronic
market.
As discussed above, the Exchange notes that a similar QCC rebate
currently exists at another exchange.\10\ The Exchange believes that
the proposed QCC Growth Rebate qualifications are reasonable because
they offer Participants an additional opportunity to achieve a higher
QCC rebate. Additionally, the Exchange's proposal to include FOO volume
toward the QCC Growth Rebate is equitable and not unfairly
discriminatory because any
[[Page 58214]]
Participant may qualify for this rebate.\11\ All BOX Participants may
enter order flow to obtain a QCC Growth Rebate.
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\10\ See supra note 8.
\11\ The Exchange notes that all BOX Participants may transact
options business electronically or on the BOX Trading Floor with a
registered Trading Permit. The Exchange notes further that any
market participant may send an order to a BOX Floor Broker for
execution on BOX's Trading Floor.
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The Exchange believes the proposal will create an incentive for
Participants to bring liquidity to BOX--both electronically and on the
Trading Floor. The Exchange believes that if the proposed incentive is
effective, then an ensuing increase in trading activity on BOX will
improve the quality of the market to the benefit of all market
participants. Further, to the extent this proposal attracts new
Participant volume to BOX, all market participants should benefit
through increased liquidity and more trading opportunities. The
Exchange believes this proposal is designed to increase participation
on BOX and reward those Participants for the unique role they play in
ensuring a robust market.
The Exchange's exclusion of QCC, FOO, and QOO strategy transactions
is reasonable as Strategy QCC transactions are not currently assessed a
fee and Strategy QOO and Strategy FOO transactions are subject to the
fee caps and rebates detailed in Section V.D of the BOX Fee Schedule.
The Exchange also notes that other exchanges exclude strategy
transactions from certain rebates.\12\ Further, the exclusion of
strategy transactions from the QCC Growth Rebate is equitable and not
unfairly discriminatory as this exclusion will be uniformly applied to
all Participant types.
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\12\ See Nasdaq PHLX LLC (``Nasdaq PHLX'') Rules, Section 6.B.
FLEX Transaction Fees (providing that the Monthly Firm Fee Cap,
Monthly Market Maker Cap, Strategy Caps and the Options Surcharge in
BKX, described in Options 7, Section 4 will apply to this Section
6.B. No other fees described in Options 7, Section 4 will apply to
this Section 6.B.). The Exchange notes that Nasdaq PHLX Options 7,
Section 4 includes QCC Rebates which are inapplicable to Section 6.B
FLEX Transaction Fees by its terms. See also NYSE American Fee
Schedule (Section III.E.1.Floor Broker Incentive and Rebate
Programs). The Exchange notes that NYSE American's Manual Billable
Rebate Program does not include volume calculated to achieve the
Strategy Execution Fee Cap, regardless of whether the cap is
achieved.
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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.
The proposal does not impose an undue burden on intermarket
competition. The Exchange believes its proposal remains competitive
with other options markets and will offer market participants with
another choice of where to transact its business. 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 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 QCC Growth Rebate as amended will
encourage market participants to send greater amounts of QCC orders,
FOO Orders, and QOO Orders to BOX for execution in order to obtain
greater rebates and lower their costs. Further, the proposed QCC Growth
Rebate should incentivize a greater amount of floor transactions on
BOX, thereby allowing BOX to compete more effectively with other
options floor models. The Exchange believes that the additional
liquidity will enhance the quality of BOX's market and increase certain
trading opportunities on BOX's Trading Floor.
The Exchange believes that its proposal will not place any category
of market participant at a competitive disadvantage and therefore does
not impose an undue burden on intra-market competition. The Exchange
notes that any market participant may send an order to a BOX Floor
Broker for execution on BOX's Trading Floor.
The Exchange's exclusion of FOO strategy transactions from the
volume counted toward the QCC Growth Rebate does not impose an undue
burden on competition as the exclusion will be uniformly applied to all
Participant types.
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#99ebecf5fcb4faf6f4f4fcf7edead9eafcfab7fef6ef"><span class="__cf_email__" data-cfemail="ddafa8b1b8f0beb2b0b0b8b3a9ae9daeb8bef3bab2ab">[email protected]</span></a>. Please include
file number SR-BOX-2024-17 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-2024-17. 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
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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-2024-17 and should be
submitted on or before August 7, 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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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-15675 Filed 7-16-24; 8:45 am]
BILLING CODE 8011-01-P
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