[Federal Register Volume 78, Number 113 (Wednesday, June 12, 2013)]
[Notices]
[Pages 35338-35340]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-13882]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69711; File No. SR-BOX-2013-29]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
BOX Rule 8050 to Lower the Minimum Quoting Requirement for Market 
Makers Quoting in Jumbo SPY Options

June 6, 2013.
    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 May 31, 2013, BOX Options Exchange LLC (``BOX'' or ``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. 78s(b)(1).
    \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 Rule 8050 to lower the minimum 
quoting requirement for Market Makers quoting in Jumbo SPY Options. 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 Web site at http://boxexchange.com.

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
    On May 10, 2013 the Exchange began listing and trading option 
contracts overlying 1,000 SPDR[supreg] S&P 500[supreg] exchange-traded 
fund shares (``SPY''),\3\ or (``Jumbo SPY Options'').\4\ Whereas 
standard options contracts represent a deliverable of 100 shares of an 
underlying security, this product represents 1,000 SPY shares. Except 
for the difference in the number of deliverable shares, Jumbo SPY 
Options have the same terms and contract characteristics as regular-
sized options contracts (``standard options''), including exercise 
style. Accordingly, the Commission noted in the approval order that the 
Exchange's rules that apply to the trading of standard options would 
apply to Jumbo SPY Options as

[[Page 35339]]

well.\5\ The Exchange proposes to amend BOX Rule 8050 to lower the 
minimum quoting requirement for Market Makers quoting in Jumbo SPY 
Options.
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    \3\ ``SPDR[supreg],'' ``Standard & Poor's[supreg],'' 
``S&P[supreg],'' ``S&P 500[supreg],'' and ``Standard & Poor's 500'' 
are registered trademarks of Standard & Poor's Financial Services 
LLC. The SPY ETF represents ownership in the SPDR S&P 500 Trust, a 
unit investment trust that generally corresponds to the price and 
yield performance of the SPDR S&P 500 Index.
    \4\ See Securities Exchange Act Release No. 34-69511 (May 3, 
2013), 78 FR 27271 (May 9, 2013) (Order Approving SR-BOX-2013-06).
    \5\ Id.
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    Currently, the Exchange requires that a Market Maker's bid and 
offer for a series of options contracts shall be accompanied by the 
number of contracts at that price the Market Maker is willing to buy 
from or sell to Customers. Every Market Maker bid or offer must have an 
initial size of at least ten (10) contracts.\6\ The Exchange proposes 
to lower the Market Maker bid or offer initial size requirement for 
Jumbo SPY options to 1/10th of the current requirement. Specifically, 
the Exchange proposes to make the required minimum number of contracts 
for a Market Maker's bid or offer in Jumbo SPY Options one (1) 
contract.
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    \6\ BOX Rule 8050(b).
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    The Exchange believes it is appropriate to adjust the Market Maker 
quoting requirement for Jumbo SPY Options so it is scaled based upon 
the total number of shares of the underlying security instead of the 
total number of options contracts. Under the proposed rule change a 
Market Maker would be required to quote at least ten (10) contracts for 
standard options that represent a total of 1,000 shares of the 
underlying security. For Jumbo SPY Options the Market Maker would only 
be required to quote at least one (1) contract, but this would still 
represent a total of 1,000 shares of the underlying security. The 
Exchange believes that modifying the quotation requirement for Jumbo 
SPY Options will encourage Market Maker quoting in this new product and 
lead to increased liquidity.
    The Exchange notes that a minimum quoting requirement of one (1) 
contract is not novel and certain exchanges have a minimum quoting 
requirement of one (1) contract for all classes.\7\ Further, the 
Exchange believes that having different quotation requirements for 
Jumbo SPY Options than those required for standard options on SPY would 
not lead to investor confusion and will instead increase liquidity in 
this new product, therefore enabling market participants to trade Jumbo 
SPY Options with greater precision.
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    \7\ See NASDAQ OMX BX Rule Chapter VII, Sec. 6 (Market Maker 
Quotations).
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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''),\8\ in general, and Section 6(b)(5) of the Act,\9\ 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. The proposed rule change will assure that standard 
options and Jumbo SPY Options will have an equivalent Market Maker 
quoting requirement in terms of shares on the underlying security. The 
Exchange believes that investors and other market participants will 
benefit from this proposed rule change because it establishes a lower 
quoting requirement for Jumbo SPY Options, which will increase the 
overall liquidity in this new product.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    Finally, the Exchange believes that the proposed rule change is not 
designed to permit unfair discrimination among market participants as 
all Market Makers may quote Jumbo SPY Options once they are appointed 
to this options class.

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. Specifically, the Exchange 
believes that investors will benefit from the increased liquidity of 
Jumbo SPY Options. Quoting in Jumbo SPY Options is entirely voluntary 
and Market Makers can determine if they would like to trade in this new 
product. The Exchange believes this proposed rule change is necessary 
to establish equivalent Market Maker quoting requirements for Jumbo SPY 
Options, a new options product.

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

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this filing, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, the proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) 
thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its intent to file the proposed rule change, 
along with a brief description and text of 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 fulfilled this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The Exchange requests that the Commission waive 
the 30-day operative delay so that the proposed rule change may become 
immediately operative. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest.\12\ The Exchange began trading Jumbo SPY Options on 
May 10, 2013, and waiver of the operative delay will allow the Exchange 
to implement its proposal without delay. For these reasons, the 
Commission designates the proposed rule change as operative upon 
filing.
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    \12\ 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.

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

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or

[[Page 35340]]

     Send an email to [email protected]. Please include 
File Number SR-BOX-2013-29 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BOX-2013-29. 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 Web site (http://www.sec.gov/rules/sro.shtml). 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 Web site 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 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-BOX-2013-29 and should be 
submitted on or before July 3, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-13882 Filed 6-11-13; 8:45 am]
BILLING CODE 8011-01-P