[Federal Register Volume 83, Number 105 (Thursday, May 31, 2018)]
[Notices]
[Pages 25079-25081]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-11608]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83318; File No. SR-BOX-2018-18]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing of Proposed Rule Change To Adopt IM-7130-1 to Rule 7130

May 24, 2018.
    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 16, 2018, 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 self-regulatory organization. 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 adopt IM-7130-1 to Rule 7130. 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 http://boxoptions.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 Exchange proposes to adopt IM-7130-1 to Rule 7130 to provide 
that the Exchange may make available certain

[[Page 25080]]

BOX Book \3\ information to Participants upon request. Specifically, 
Participants may inquire with the Exchange as to the amount of any 
priority interest on the BOX Book.\4\ This information is for advisory 
purposes only and will be provided on a best efforts basis verbally.\5\ 
For the purposes of the proposed rule, ``priority interest'' is the 
number of Public Customer contracts and Non-Public Customer contracts 
that are ranked ahead of such Public Customer contracts at a given 
price for a specific option class. Floor Brokers may inquire with an 
Options Exchange Official or his or her designee. All other 
Participants may contact the MOC.\6\
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    \3\ The term ``BOX Book'' means the electronic book of orders on 
each single option series maintained by the BOX Trading Host. See 
Rule 100(a)(10).
    \4\ The proposed change is similar to the floor procedures of 
NYSE Arca (``Arca''). See Arca Regulatory Bulletin RB-16-04 
(February 19, 2016). Floor Brokers on NYSE Arca may inquire at with 
the Trading Official at the post to the amount of any priority 
interest on NYSE Arca's electronic book. The Exchange notes that 
there are a few minor differences between the floor procedure of 
NYSE Arca and the proposed rule. Specifically, the Exchange is 
proposing to make the proposed information available to all 
Participants, not only Floor Brokers. The Exchange believes this 
difference is reasonable because the Exchange is providing the 
information to all Participants and therefore the Exchange is not 
discriminating against any type of Participant. Further, the 
proposed rule provides additional clarity and specificity as to how 
the information is provided and what is included. The Exchange 
believes this difference is reasonable because the Exchange is 
providing greater clarity to Participants which removes the 
potential for any confusion. Additionally, the MIAX Order Feed 
offers similar information to subscribers of the data feed. 
Specifically, the MIAX Order Feed provides real-time data including 
the limit price, origin, and side of each order for the entire order 
book to its users. See Securities Exchange Act Release No. 74759 
(April 17, 2018), 82 FR 22749 (April 23, 2015)(SR-MIAX-2015-28). The 
Exchange notes that there are a few differences between the proposal 
and the MIAX Order Feed. First, the MIAX Order Feed provides the 
limit price, origin, and size of every order on the entire order 
book while the Exchange is proposing to only provide the amount of 
priority interest. The Exchange believes this is a reasonable 
difference because the Exchange is providing a limited amount of 
relevant information to Participants executing orders. Specifically, 
as explained in greater detail below, the proposed information is 
useful for Floor Brokers executing QOO Orders from the Trading 
Floor. Additionally, given the manual nature of providing the 
proposed information, it is reasonable to limit the quantity of 
information provided to Participants. Second, the MIAX Order Feed is 
a continuous data feed while the Exchange is proposing to provide 
the information verbally in response to one off requests. The 
Exchange believes that this difference is reasonable because it 
allows the Exchange to provide a limited amount of information in an 
efficient manner without using substantial Exchange resources.
    \5\ An Options Exchange Official will provide the requested 
information when doing so does not interfere with their regulatory 
responsibilities. Further, the BOX Book is continuously being 
updated through the actions of other market participants; therefore, 
there is no guarantee that the information provided will remain 
accurate once verbally communicated.
    \6\ The term ``Market Operations Center'' or ``MOC'' means the 
BOX Market Operations Center, which provides market support for 
Options Participants during the trading day. See Rule 100(a)(32).
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    The Exchange is proposing to offer this information at no cost to 
Participants. The process of providing the requested information to 
Participants is manual in nature.\7\ An Options Exchange Official or 
his or her designee, or the MOC, may provide this information to 
Participants upon request. The Exchange notes that any information will 
be provided on an anonymous basis.
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    \7\ Participants must request this information each time; the 
Exchange will not provide continuous updated information.
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    The proposed change will provide additional visibility to the BOX 
Book for Participants looking to execute orders on the Exchange. For 
example, a Floor Broker sourcing liquidity could use this information 
as another means for probing the market. Specifically, since the 
initiating side \8\ of a Qualified Open Outcry Order (``QOO Order'') 
\9\ will match with Public Customer Orders on the BOX Book and any 
other orders or quotes ranked ahead of such Public Customer Orders at 
the execution price first,\10\ this information is a valuable piece in 
understanding the total liquidity available. By providing the amount of 
priority interest on the BOX Book to a Floor Broker, the Floor Broker 
will be able to determine the number of contracts on the BOX Book that 
will be able to match with the initiating side. Further, this will 
provide certainty to the Floor Broker of the number of contracts that 
must be located from additional liquidity sources in order to execute a 
QOO Order. Additionally, knowing the amount of priority interest will 
provide a Floor Broker with the number of contracts that the Floor 
Broker must sweep in order to execute a QOO Order when there is resting 
Public Customer interest at the execution price of the QOO Order.\11\ 
Other Participants may also find this information useful in determining 
the composition of liquidity on the Exchange's Book.
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    \8\ A QOO Order has two sides; the initiating side and the 
contra-side. The initiating side is the order which must be filled 
in its entirety. The contra-side must guarantee the full size of the 
initiating side of the QOO Order and may provide a book sweep size 
as provided in Rule 7600(h). See Rule 7600(a)(1).
    \9\ A QOO Order is a two-sided order that is used by Floor 
Brokers to execute transactions from the Trading Floor. See Rule 
7600.
    \10\ See Rule 7600(d)(2).
    \11\ The executing Floor Broker could send an order to clear out 
the priority interest or use the book sweep size feature as provided 
in Rule 7600(h). The Exchange notes that the book sweep size feature 
will only help the Floor Broker clear priority interest on the 
contra-side of the QOO Order because the initiating side of a QOO 
Order must be executed in its entirety.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \12\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \13\ in particular, in that it is 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. In particular, the Exchange believes the proposed rule change 
is consistent with the offerings of other options exchanges.\14\
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ See supra note 4.
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    The Exchange believes that the proposed change removes impediments 
to and perfects the mechanisms of a free and open market and a national 
market system and, in general, protects investors and the public 
interest by providing increased transparency to Participants. The 
Exchange believes the proposed change will enhance a Floor Broker's 
ability to execute QOO Orders, leading to increased executions on the 
Exchange. The Exchange believes the proposed change will lead to 
increased interaction with the BOX Book because Floor Brokers will be 
aware of the amount of liquidity available on the BOX Book that may 
interact with their QOO Order and may choose to use such liquidity when 
executing orders from the Trading Floor or use a separate order to 
sweep that interest. As such, the proposed change has the potential to 
provide more liquidity on the Exchange to the benefit of all market 
participants. Additionally, the Exchange believes that the proposed 
change will be a valuable tool for all Participants probing the market 
by providing greater clarity on the composition and availability of 
liquidity. As such, the Exchange believes that the proposed change will 
benefit all market participants because it will provide the opportunity 
for increased BOX Book interaction.
    The Exchange believes that providing the proposed information is 
fair, reasonable and not unfairly discriminatory. The proposed 
information is available to all Participants regardless of whether the 
Participant accesses the Exchange electronically or has a presence on 
the Trading Floor.

[[Page 25081]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed change would allow the Exchange to provide 
Participants with certain information. As discussed above, the proposed 
change aligns the rules of the Exchange with the floor procedures and 
rules of other options exchanges \15\ and will allow the Exchange to 
compete with these other options exchanges. The Exchange believes it 
will help Participants at the Exchange to compete for executions 
against market participants at other exchanges by providing an 
additional tool to the Participants on BOX. This, in turn, helps the 
Exchange compete against other exchanges in a deeply competitive 
landscape. As such, 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
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    \15\ See supra note 4.
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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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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-2018-18 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-2018-18. 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 (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 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 10:00 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-BOX-2018-18 and should be submitted on 
or before June 21, 2018.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-11608 Filed 5-30-18; 8:45 am]
 BILLING CODE 8011-01-P