[Federal Register Volume 82, Number 22 (Friday, February 3, 2017)]
[Notices]
[Pages 9265-9267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-02261]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79900; File No. SR-BOX-2017-06]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Rule 7150 (The Price Improvement Period (``PIP''))

January 30, 2017.
    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 January 18, 2017, BOX Options 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 self-regulatory organization. The Commission 
is publishing this notice to solicit comments on the proposed rule 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 7150 (The Price Improvement 
Period (``PIP'')). 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
    The purpose of the proposed rule change is to amend Rule 7150 (The 
Price Improvement Period (``PIP'')) to provide that if at the start of 
the auction the quoted NBBO spread is less than or equal to a $0.01, 
only PIP Orders for less than 50 contracts will be rejected.
    The Exchange recently filed to amend the BOX Rules to make 
permanent the pilot programs that permit the Exchange to have no 
minimum size requirement for orders entered into the PIP (``PIP Pilot 
Program'') and COPIP (``COPIP Pilot Program''), collectively known as 
the (``Programs'').\3\ As part of this filing, BOX also modified the 
requirements for the PIP to specify where the National Best Bid and 
Offer (``NBBO'') spread is less than equal to $0.01, the PIP Order and 
corresponding Primary Improvement Order will be rejected.
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    \3\ See Securities Exchange Act Release No. 79531 (December 12, 
2016), 81 FR 91227 (December 16, 2016) (SR-BOX-2016-58).
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    The Exchange now proposes to modify the requirements of the PIP to 
specify where the NBBO spread is less than or equal to $0.01; only PIP 
Orders for less than 50 contracts will be rejected. This is a 
competitive filing based on the price improvement auction proposed 
rules of the Miami International Securities Exchange, LLC 
(``MIAX'').\4\ Specifically, under MIAX Rule 515A(a)(1)(iii), with 
respect to Agency Orders that have a size of less than 50 contracts, if 
at the receipt of the Agency Order, the NBBO has a bid/ask differential 
of $0.01, the System will reject the Agency Order. Further,

[[Page 9266]]

Agency Orders with a size of under 50 contracts will be accepted and 
processed by the MIAX System when the NBBO bid/ask differential is 
greater than $0.01.
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    \4\ See Securities Exchange Act Release No. 79500 (December 7, 
2016), 81 FR 90030 (December 13, 2016). See also MIAX Rule 
515A.(a)(1)(iii).
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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,\5\ in general, and Section 
6(b)(5) of the Act,\6\ in particular, in that it is designed to promote 
just and equitable principles of trade, remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general protect investors and the public interest.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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    The proposed rule change will allow PIP auctions of 50 or more 
contracts to continue without restriction on NBBO spread. The Exchange 
believes this removes impediments to and better provides for a free and 
open market. As such, BOX believes the proposed rule change is in the 
public interest, and therefore, consistent with the Act. The Exchange 
also notes that the proposal would provide increased opportunities for 
increased price improvements for these types of orders which will 
benefit market participants engaging in the PIP auctions.
    Additionally, as set forth above, the Exchange believes this 
proposed change is reasonable and appropriate as it is based on the 
rules of another exchange.\7\
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    \7\ See supra note 4.
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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. To the contrary, the proposal 
is pro-competitive because it will enable the Exchange to better 
compete with another options exchange that allows PIP Orders of more 
than 50 contracts to trade when the NBBO spread is $0.01 or less.\8\
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    \8\ 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

    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)(iii) of the Act \9\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 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 Commission deems this requirement to have been met.
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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) \11\ permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. In its filing with the Commission, 
the Exchange requests that the Commission waive the 30-day operative 
delay so that the changes can be implemented immediately. The Exchange 
states that waiver of the operative delay is consistent with the 
protection of investors and the public interest because it will promote 
fair competition among the exchanges by allowing the Exchange to adjust 
the PIP rules to provide that if at the start of the auction the quoted 
NBBO spread is less than or equal to a $0.01, only PIP Orders for less 
than 50 contracts will be rejected. The Exchange also states that the 
proposed rule change is substantially similar to the rules in place at 
another options exchange.\12\ For these reasons, the Commission 
believes that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest. Therefore, the 
Commission designates the proposed rule change operative upon 
filing.\13\
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    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ See supra note 4.
    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has 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

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BOX-2017-06 on the subject line.

Paper Comments

     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-2017-06. 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, on official 
business days between the hours of 10:00 a.m. and 3:00 p.m., located at 
100 F Street NE., Washington, DC 20549. Copies of such 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-
2017-06 and should be submitted on or before February 24, 2017.


[[Page 9267]]


    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)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-02261 Filed 2-2-17; 8:45 am]
 BILLING CODE 8011-01-P