[Federal Register Volume 77, Number 248 (Thursday, December 27, 2012)]
[Notices]
[Pages 76319-76320]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-31121]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68489; File No. 4-655]


Self-Regulatory Organizations; BOX Options Exchange LLC; Order 
Approving Minor Rule Violation Plan for BOX Options Exchange LLC

December 20, 2012.
    On October 15, 2012, BOX Options Exchange LLC (the ``Exchange'') 
filed with the Securities and Exchange Commission (the ``Commission'') 
a proposed minor rule violation plan (``MRVP'') pursuant to Section 
19(d)(1) of the Securities Exchange Act of 1934 (the ``Act'') \1\ and 
Rule 19d-1(c)(2) thereunder.\2\ The proposed MRVP was published for 
public comment on November 13, 2012.\3\ The Commission received no 
comments on the proposal. This order approves the Exchange's proposed 
MRVP.
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    \1\ 15 U.S.C. 78s(d)(1).
    \2\ 17 CFR 240.19d-1(c)(2).
    \3\ See Securities Exchange Act Release No. 68170 (November 6, 
2012), 77 FR 67722 (``Notice'').
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    The Exchange's MRVP specifies those uncontested minor rule 
violations with sanctions not exceeding $2,500 which would not be 
subject to the provisions of Rule 19d-1(c)(1) of the Act \4\ requiring 
that a self-regulatory organization (``SRO'') promptly file notice with 
the Commission of any final disciplinary action taken with respect to 
any person or organization.\5\ In accordance with Rule 19d-1(c)(2) 
under the Act, the Exchange proposed to designate certain specified 
rule violations as minor rule violations, and requested that it be 
relieved of the prompt reporting requirements regarding such 
violations, provided it gives notice of such violations to the 
Commission on a quarterly basis. The Exchange proposed to include in 
its MRVP the procedures and violations currently included in Exchange 
Rule 12140 (``Imposition of Fines for Minor Rule Violations'').\6\
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    \4\ 17 CFR 240.19d-1(c)(1).
    \5\ The Commission adopted amendments to paragraph (c) of Rule 
19d-1 to allow SROs to submit for Commission approval plans for the 
abbreviated reporting of minor disciplinary infractions. See 
Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR 
23828 (June 8, 1984). Any disciplinary action taken by an SRO 
against any person for violation of a rule of the SRO which has been 
designated as a minor rule violation pursuant to such a plan filed 
with and declared effective by the Commission shall not be 
considered ``final'' for purposes of Section 19(d)(1) of the Act if 
the sanction imposed consists of a fine not exceeding $2,500 and the 
sanctioned person has not sought an adjudication, including a 
hearing, or otherwise exhausted his administrative remedies.
    \6\ On April 27, 2012, the Exchange's application for 
registration as a national securities exchange, including the rules 
governing the Exchange, was approved. See Securities Exchange Act 
Release No. 66871 (April 27, 2012), 77 FR 26323 (May 3, 2012) (File 
No. 10-206).
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    According to the Exchange's proposed MRVP, under Exchange Rule 
12140, the Exchange may impose a fine (not to exceed $2,500) on a 
member or an associated person with respect to any rule violation 
listed in Exchange Rule 12140(d).\7\ The Exchange shall serve the 
person against whom a fine is imposed with a written statement setting 
forth the rule or rules violated, the act or omission constituting each 
such violation, the fine imposed for each such violation, and the date 
by which such fine shall be paid, such determination becomes final or 
such determination must be contested. If the person against whom the 
fine is imposed pays the fine, such payment shall be deemed to be a 
waiver of such person's right to a disciplinary proceeding and any 
review of the matter under the Exchange Rules. Any person against whom 
a fine is imposed may contest the Exchange's determination by filing 
with the Exchange a written answer, at which point the matter shall 
become a disciplinary proceeding.
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    \7\ See Notice, supra note 3. The Commission noted that the list 
of violations set forth in the Notice corrected certain rule 
reference errors that are presently in Exchange Rule 12140. The 
Exchange has informed Commission staff that it will submit a rule 
filing to correct such errors. Id.
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    Upon approval of the plan, the Exchange will provide the Commission 
a quarterly report of actions taken on minor rule violations under the 
plan. The quarterly report will include, among other things: The 
Exchange's internal file number for the case, the name of the 
individual and/or organization, the nature of the violation, the 
specific rule provision violated, the sanction imposed, the number of 
times the rule violation has occurred, and the date of disposition.\8\
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    \8\ The Exchange attached a sample form of the quarterly report 
with its submission to the Commission.
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    The Commission finds that the proposed MRVP is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange. In particular, the 
Commission believes that the proposal is consistent with Section

[[Page 76320]]

6(b)(5) of the Act,\9\ which requires that the rules of an exchange be 
designed to promote just and equitable principles of trade, 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. The Commission also believes that the proposal is 
consistent with Sections 6(b)(1) and 6(b)(6) of the Act,\10\ which 
require that the exchange enforce compliance with, and provide 
appropriate discipline for violations of, Commission and Exchange 
rules. In addition, because the MRVP offers procedural rights to a 
person sanctioned under Exchange Rule 12140, the Commission believes 
that Exchange Rule 12140 provides a fair procedure for the disciplining 
of members and persons associated with members, consistent with 
Sections 6(b)(7) and 6(d)(1) of the Act.\11\
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    \9\ 15 U.S.C. 78f(b)(5).
    \10\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \11\ 15 U.S.C. 78f(b)(7) and 78f(d)(1).
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    Finally, the Commission finds that the proposal is consistent with 
the public interest, the protection of investors, or otherwise in 
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2) 
under the Act,\12\ because the MRVP strengthens the Exchange's ability 
to carry out its oversight and enforcement responsibilities as an SRO 
in cases where full disciplinary proceedings are unsuitable in view of 
the minor nature of the particular violation.
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    \12\ 17 CFR 240.19d-1(c)(2).
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    In approving this proposal, the Commission in no way minimizes the 
importance of compliance with Exchange rules and all other rules 
subject to the imposition of sanctions under Exchange Rule 12140. The 
Commission believes that the violation of an SRO's rules, as well as 
Commission rules, is a serious matter. However, Exchange Rule 12140 
provides a reasonable means of addressing violations that do not rise 
to the level of requiring formal disciplinary proceedings, while 
providing greater flexibility in handling certain violations. The 
Commission expects that the Exchange will continue to conduct 
surveillance with due diligence and make determinations based on its 
findings, on a case-by-case basis, regarding whether a sanction under 
the MRVP is appropriate, or whether a violation requires formal 
disciplinary action.
    It is therefore ordered, pursuant to Rule 19d-1(c)(2) under the 
Act,\13\ that the proposed MRVP for BOX Options Exchange LLC, File No. 
4-655, be, and hereby is, approved and declared effective.
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    \13\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(44).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-31121 Filed 12-26-12; 8:45 am]
BILLING CODE 8011-01-P