Notice2025-21984
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend BOX Rule 5030 (Withdrawal of Approval of Underlying Securities) To Adopt an Exception for Opening Transactions by Market Makers To Accommodate Closing Transactions of Other Market Participants
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
December 5, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 232 (Friday, December 5, 2025)</title>
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[Federal Register Volume 90, Number 232 (Friday, December 5, 2025)]
[Notices]
[Pages 56214-56216]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-21984]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104288; File No. SR-BOX-2025-31]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend BOX Rule
5030 (Withdrawal of Approval of Underlying Securities) To Adopt an
Exception for Opening Transactions by Market Makers To Accommodate
Closing Transactions of Other Market Participants
December 2, 2025.
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 November 20, 2025, 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 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. 78a.
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend BOX Rule 5030 (Withdrawal of
Approval of Underlying Securities) to adopt an exception for opening
transactions by Market Makers to accommodate closing transactions of
other market participants. The text of the proposed rule change is
available from the principal office of the Exchange, 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 self-regulatory organization
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 self-regulatory organization
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 BOX Rule 5030 (Withdrawal of
Approval of Underlying Securities) to adopt an exception for opening
transactions by Market Makers to accommodate closing transactions of
other market participants. The Exchange believes that this proposed
exception, to allow Market Makers to facilitate closing transactions of
market participants, would help market participants close positions in
classes that will be delisted by the Exchange, which helps to protect
investors and the public interest. The Exchange believes that
permitting such opening transactions by Market Makers would enhance
investor protection and further maintain fair and orderly markets. The
Exchange notes that the proposed exception in Rule 5030 is consistent
with the listing rules of other options exchanges.\3\
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\3\ See Cboe Exchange, Inc.(``Cboe'') Rule 4.4. (Withdrawal of
Approval of Underlying Securities); Miami International Securities
Exchange, LLC (``MIAX'') Rule 403 (Withdrawal of Approval of
Underlying Securities); MIAX PEARL, LLC (``PEARL'') Rule 403
(Withdrawal of Approval of Underlying Securities); MIAX Sapphire,
LLC (``Sapphire'') Rule 403 (Withdrawal of Approval of Underlying
Securities); and Nasdaq ISE, LLC (``ISE'') Options 4, Section 4
(Withdrawal of Approval of Underlying Securities). See also
Securities Exchange Act Release Nos. 48142 (July 9, 2003), 68 FR
42150 (July 16, 2003) (SR-CBOE-2002-36); and 60879 (October 26,
2009), 74 FR 56252 (October 30, 2009) (SR-PHLX-2009-90); and 62216
(June 3, 2010), 75 FR 32977 (June 10, 2010) (SR-ISE-2010-51).
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Background
Generally, Rule 5030 is designed to protect investors and maintain
orderly markets by establishing criteria for when an underlying
security no longer meets the Exchange's listing standards. Rule 5030
provides a mechanism to withdraw approval for securities that no longer
meet the Exchange's listing standards, while allowing for limited
exceptions to maintain liquidity.
Currently, whenever the Exchange determines that an underlying
security previously approved for BOX Transactions \4\ does not meet the
then current requirements for continuance of such approval or for any
other reason should no longer be approved, the Exchange will not open
for trading any additional series of options of the class covering that
underlying security and may prohibit any opening purchase transactions
in series of options of that class previously opened. Provided,
however, that where exceptional circumstances have caused an underlying
security not to comply with the Exchange's current approval maintenance
requirements regarding number of publicly held shares, number of
shareholders, trading volume or market price, the Exchange may, in the
interest of maintaining a fair and orderly market or for the protection
of investors, determine to continue to open additional series of
options contracts of the class covering that underlying security.
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\4\ See BOX Rule 100(a)(8). The term ``BOX Transaction'' means a
transaction involving an options contract that is effected on or
through BOX or its facilities or systems.
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Proposal
The Exchange is now proposing to amend Rule 5030 to adopt an
exception for certain opening transactions by Market Makers.
Specifically, the Exchange is proposing to add language providing that
opening transactions by Market Makers executed to accommodate closing
transactions of other market participants may be permitted. Under
proposed Rule 5030, a Participant that is acting as a Market Maker may
enter into an opening transaction in order to facilitate closing
transactions of another market participant in option series that are
restricted to closing-only transactions. Allowing Market Makers to
enter into opening transactions to facilitate closing transactions of
other market participants will help market participants close positions
in classes that will be delisted by the Exchange, which helps to
protect
[[Page 56215]]
investors and the public interest. The Exchange believes that
permitting such opening transactions by Market Makers is consistent
with and further supports a Market Maker's duty to maintain fair and
orderly markets under Rule 8040. The Exchange also notes, that pursuant
to Rule 5030, where exceptional circumstances have caused an underlying
security not to comply with the Exchange's current approval maintenance
requirements, regarding number of publicly held shares or publicly held
principal amount, number of shareholders, trading volume or market
price, the Exchange, in the interest of maintaining a fair and orderly
market or for the protection of investors, may determine to continue to
open additional series of option contracts of the class covering that
underlying security.\5\
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\5\ See Rule 5030.
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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''),\6\ in general, and Section 6(b)(5) of the Act,\7\ 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.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes that the proposal to adopt an
exception for opening transactions by Market Makers to accommodate
closing transactions of other market participants will remove
impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, protect investors because the
proposal to permit Market Makers to enter into opening transactions to
facilitate closing transactions of other market participants will help
market participants close positions in classes that will be delisted by
the Exchange, which helps to protect investors and the public interest.
The Exchange believes that permitting such opening transactions by
Market Makers further supports fair and orderly markets. Currently, in
Rule 5030, whenever the Exchange determines that an underlying security
previously approved for BOX Transactions does not meet the then current
requirements for continuance of such approval or for any other reason
should no longer be approved, the Exchange will not open for trading
any additional series of options of the class covering that underlying
security and may prohibit any opening purchase transactions in series
of options of that class previously opened. Current Rule 5030, also
provides, however, that, in certain exceptional circumstances, the
Exchange may, in the interest of maintaining a fair and orderly market
or for the protection of investors, determine to continue to open
additional series of options contracts of the class covering that
underlying security. The Exchange believes that the exception proposed
herein is consistent with the Act and protects investors and the public
interest because permitting Market Makers to submit certain opening
transactions will help market participants close positions in classes
that will be delisted by the Exchange. The Exchange believes further
that permitting such opening transactions by Market Makers is in the
interest of all market participants and is consistent with and further
supports a Market Maker's duty to maintain fair and orderly markets
under Rule 8040. The Exchange does not believe that the proposed rule
change will adversely affect the quality of the Exchange's markets or
lead to a material decrease in liquidity.
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, this proposed change is to conform Rule 5030 to similar
provisions in listing rules of other options exchanges.\8\
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\8\ See Cboe Rule 4.4. (Withdrawal of Approval of Underlying
Securities); MIAX Rule 403 (Withdrawal of Approval of Underlying
Securities); PEARL Rule 403 (Withdrawal of Approval of Underlying
Securities); Sapphire Rule 403 (Withdrawal of Approval of Underlying
Securities); ISE Options 4, Section 4 (Withdrawal of Approval of
Underlying Securities).
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The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition as the proposed changes to
Rule 5030 will apply equally to all Market Makers. Allowing Market
Makers to enter into opening transactions to facilitate closing
transactions of other market participants will help close positions in
classes that will be delisted by the Exchange, which helps to protect
investors and the public interest and does not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. The Exchange also does not believe that the
proposed rule change will impose any burden on intermarket competition
that is not necessary or appropriate in furtherance of the purposes of
the Act, as, the proposed rule change is consistent with the existing
rules of other options exchanges.\9\
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\9\ Id.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
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 from the date on which it was filed, or such shorter time as
the Commission may designate, it has become effective pursuant to
Section 19(b)(3)(A) of the Act \12\ and subparagraph (f)(6) of Rule
19b-4 thereunder.\13\
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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 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 the pre-filing requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \14\ under the
Act does not normally become operative prior to 30 days after the date
of the filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the
Commission may designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay so
that the proposal may become operative immediately upon filing. The
Exchange states that waiver of the operative delay is consistent with
the protection of investors and the public
[[Page 56216]]
interest because it will allow the exception to permit Market Makers to
facilitate closing transaction of other market participants in classes
that will be delisted by the Exchange to be implemented without delay.
The Exchange further notes that the proposed change is consistent with
the rules of other options exchanges.\16\ The Commission does not
believe the proposal raises any new or novel regulatory issues.
Therefore, the Commission believes that waiver of the 30-day operative
delay is consistent with the protection of investors and the public
interest. Accordingly, the Commission hereby waives the 30-day
operative delay and designates the proposed rule change as operative
upon filing.\17\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ See supra note 8.
\17\ 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#d5a7a0b9b0f8b6bab8b8b0bba1a695a6b0b6fbb2baa3"><span class="__cf_email__" data-cfemail="5321263f367e303c3e3e363d2720132036307d343c25">[email protected]</span></a>. Please include
file number SR-BOX-2025-31 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-2025-31. 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 filing 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-2025-31 and should be submitted on
or before December 26, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-21984 Filed 12-4-25; 8:45 am]
BILLING CODE 8011-01-P
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