[Federal Register Volume 83, Number 244 (Thursday, December 20, 2018)]
[Notices]
[Pages 65381-65385]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27512]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84823; File No. SR-BOX-2018-37]


Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
of a Proposed Rule Change To Amend the Fee Schedule on the BOX Market 
LLC (``BOX'') Options Facility To Establish BOX Connectivity Fees for 
Participants and Non-Participants Who Connect to the BOX Network; 
Suspension of and Order Instituting Proceedings To Determine Whether To 
Approve or Disapprove the Proposed Rule Change

December 14, 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 November 30, 2018, BOX Exchange LLC (``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') a proposed rule 
change as described in Item II below, which Item has been prepared by 
the Exchange. The Exchange filed the proposed rule change pursuant to 
Section 19(b)(3)(A)(ii) of the Act,\3\ and Rule 19b-4(f)(2) 
thereunder.\4\ The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons and is, 
pursuant to Section 19(b)(3)(C) of the Act, hereby: (i) Temporarily 
suspending the proposed rule change; and (ii) instituting proceedings 
to determine whether to approve or disapprove the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing with the Securities and Exchange Commission 
(``Commission'') a proposed rule change to amend the Fee Schedule on 
the BOX Market LLC (``BOX'') options facility. The fees became 
operative on December 1, 2018. 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://boxexchange.com.

II. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    In its filing with the Commission, the Exchange 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 Exchange 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 Section VI. (Technology Fees) of the 
BOX Fee Schedule to establish BOX Connectivity Fees for Participants 
and non-Participants who connect to the BOX network. Connectivity fees 
will be based upon the amount of bandwidth that will be used by the 
Participant or non-Participant. Further, BOX Participants or non-
Participants connected as of the last trading day of each calendar 
month will be charged the applicable Connectivity Fee for that month. 
The Connectivity Fees will be as follows:

------------------------------------------------------------------------
              Connection type                       Monthly fees
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Non-10 Gb Connection......................  $1,000 per connection
10 Gb Connection..........................  $5,000 per connection
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    The Exchange also proposes to amend certain language and numbering 
in Section VI.A to reflect the changes discussed above. Specifically, 
BOX proposes to add the title ``Third Party Connectivity Fees'' under 
Section VI.A. Further, the Exchange proposes to add Section VI.A.2, 
which details the proposed BOX Connectivity Fees discussed above.
    Participants and non-Participants with ten (10) Gigabit (``Gb'') 
connections will be charged a monthly fee of $5,000 per connection. 
Participants and non-Participants with non-10 Gb connections will be 
charged a monthly fee of $1,000 per connection. The Exchange notes that 
another exchange in the industry has similar connectivity fees \5\ and 
that several other exchanges

[[Page 65382]]

charge higher connectivity fees.\6\ The Exchange also notes that 
certain fees will continue to be assessed by the datacenters and will 
be billed directly to the market participant.
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    \5\ See Miami International Securities Exchange LLC (``MIAX'') 
Fee Schedule. MIAX charges its Members and non-Members a monthly fee 
of $1,100 for each 1 Gigabit connection and $5,500 for each 10 
Gigabit connection to MIAX's Primary/Secondary Facility. The 
Exchange notes a minor difference between MIAX's connectivity fees 
and BOX's proposal. MIAX prorates their connectivity fees when a 
Member makes a change to their connectivity (by adding or deleting 
connections). BOX notes that, like the Exchange's Port Fees and HSVF 
Fees, Participants or non-Participants connected as of the last 
trading day of each calendar month will be charged the applicable 
Connectivity Fee for that month.
    \6\ See infra note 12.
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    Next, the Exchange is amending Section VI.C. High Speed Vendor Feed 
(``HSVF'') of the Fee Schedule. Specifically, BOX is proposing to 
delete Section VI.C. and reclassify the HSVF Connection as a Port Fee. 
The Exchange believes this reclassification is more accurate, as HSVF 
subscription is not dependent on a physical connection to the Exchange. 
Instead, subscribers must be credentialed by BOX to receive the HSVF. 
The HSVF Fee will remain unchanged; BOX will assess a HSVF Port Fee of 
$1,500 per month \7\ for each month a Participant or non-Participant is 
credentialed to use the HSVF Port. The Exchange notes that another 
exchange has a similar classification and charges similar fees.\8\
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    \7\ The Exchange notes that with the proposed change discussed 
herein, Participants and non-Participants credentialed to use the 
HSVF Port who also have physical connections to the BOX system will 
be charged for both the HSVF monthly fee and the applicable amount 
for their physical connections to BOX. For example, if non-
Participant X is credentialed to use the HSVF Port and has three (3) 
physical non-10Gb connections to BOX, non-Participant X will be 
charged $1500 for the monthly HSVF Port Fee and $3000 for the three 
non-10Gb physical connections to BOX.
    \8\ See Cboe Data Services, LLC. (``Cboe CDS'') Fee Schedule. 
Cboe CDS charges its Customers that receive data through a direct 
connection to CDS or through a connection to CDS provided by an 
extranet provider $500 per port per month. Cboe CDS's port fee 
applies to receipt of any Cboe Options data feed but is only 
assessed once per data port. In addition to the data port fee, Cboe 
Exchange Inc. (``Cboe'') charges connectivity fees based on the 
bandwidth used to connect to the Exchange to receive such data. See 
Cboe Fee Schedule.
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    The Exchange initially filed the proposed fees on July 19, 2018, 
designating the proposed fees effective July 1, 2018 [sic]. The 
proposed rule change was published for comment in the Federal Register 
on August 2, 2018.\9\ The Commission received one comment letter on the 
proposal.\10\ The proposed fees remained in effect until they were 
temporarily suspended pursuant to a suspension order (the ``Suspension 
Order'') issued by the Division of Trading and Markets, which also 
instituted proceedings to determine whether to approve or disapprove 
the proposed rule change.\11\ The Commission subsequently received one 
further comment letter on the proposed rule change, supporting the 
decision to suspend and institute proceedings on the proposed fee 
change.\12\
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    \9\ See Securities Exchange Act Release No. 83728 (July 27, 
2018), 83 FR 37853 (August 2, 2018) (SR-BOX-2018-24).
    \10\ See Letter from Tyler Gellasch, Executive Director, The 
Healthy Markets Association, to Brent J. Fields, Secretary, 
Commission, dated August 23, 2018 (``Healthy Markets Letter'').
    \11\ See Securities Exchange Act Release No. 34-84168 (September 
17, 2018).
    \12\ See Letter from Theodore R. Lazo, Managing Director and 
Associate General Counsel, and Ellen Greene, Managing Director, 
Financial Services Operations, Securities Industry and Financial 
Markets Association, dated October 15, 2018.
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    In response to the Suspension Order, the Exchange timely filed a 
Notice of Intention to Petition for Review \13\ and Petition for Review 
to vacate the Division's Order,\14\ which stayed the Division's 
suspension of the filing. On November 16, 2018 the Commission granted 
the Exchange's Petition for Review but discontinued the automatic 
stay.\15\
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    \13\ See Letter from Amir Tayrani, Partner, Gibson, Dunn & 
Crutcher LLP, dated September 19, 2018.
    \14\ See Petition for Review of Order Temporarily Suspending BOX 
Exchange LLC's Proposal to Amend the Fee Schedule on BOX Market LLC, 
dated September 26, 2018.
    \15\ See Securities Exchange Act Release No. 84614. Order 
Granting Petition for Review and Scheduling Filing of Statements, 
dated November 16, 2018. Separately, the Securities Industry and 
Financial Markets Association filed an application under Section 
19(d) of the Exchange Act challenging the Exchange's proposed fees 
as alleged prohibitions or limitations on access. See In re 
Securities Industry and Financial Markets Association, Admin. Proc. 
File No. 3-18680 (Aug. 24, 2018). The Commission thereafter remanded 
that denial-of-access proceeding to the Exchange while 
``express[ing] no view regarding the merits'' and emphasizing that 
it was ``not set[ting] aside the challenged rule change[ ].'' In re 
Applications of SIFMA & Bloomberg, Exchange Act Rel. No. 84433, at 2 
(Oct. 16, 2018) (``Remand Order''), available at https://www.sec.gov/litigation/opinions/2018/34-84433.pdf. The Division's 
Suspension Order is inconsistent with the Commission's intent in the 
Remand Order to leave the challenged fees in place during the 
pendency of the remand proceedings and singles out the Exchange for 
disparate treatment because it means that the Exchange--unlike every 
other exchange whose rule changes were the subject of the Remand 
Order--is not permitted to continue charging the challenged fees 
during the remand proceedings.
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    The Healthy Markets and SIFMA Comment Letters (collectively, the 
``Comment Letters'') argued that the Exchange did not provide 
sufficient information in its filing to support a finding that the 
proposal is consistent with the Act. Specifically, the Comment Letters 
objected to the Exchange's reliance on the fees of other exchanges to 
demonstrate that its fee increases are consistent with the Act. In 
addition, the Comment Letters argued that the Exchange did not offer 
any details to support its basis for asserting that the proposed fees 
are consistent with the Act. The Exchange is now re-filing the proposed 
fees and is also providing additional detail regarding the basis for 
the proposed fees. The proposed rule change is immediately effective 
upon filing with the Commission pursuant to Section 19(b)(3)(A) of the 
Act.
    The Exchange has always offered various bandwidth choices for 
physical connectivity to the Exchange for Participants and non-
Participants to access the Exchange's trading platforms, market data, 
test systems and disaster recovery facilities. These physical 
connections consist of 10Gb and non-10Gb connections, where the 10Gb 
connection provides for faster processing of messages sent to it in 
comparison to the non-10Gb connection. While the Exchange has not 
charged for physical connectivity before, the Exchange believes that it 
is reasonable and appropriate to begin charging for this physical 
connectivity to partially offset the costs associated with maintaining 
and enhancing a state-of-the-art exchange network infrastructure in the 
U.S. options industry. There are significant costs associated with 
various projects and initiatives to improve overall network performance 
and stability, as well as costs paid to the third-party data center for 
space rental, power used, etc. The Exchange notes that unlike other 
options exchanges, the Exchange does not own and operate its own data 
center and therefore cannot control data center costs.
    The Exchange also notes that all other options exchanges charge for 
similar physical connectivity,\16\ and by

[[Page 65383]]

suspending the Exchange's initial fee filing the Division has placed 
the Exchange at a competitive disadvantage within the U.S. options 
industry. Without these fees to partially offset the costs associated 
with maintaining and enhancing a state-of-the-art exchange network 
infrastructure in the US options industry, the Exchange may not be able 
to make the planned enhancements to its infrastructure.
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    \16\ In addition to the MIAX connectivity fees cited above, 
Nasdaq PHLX LLC (``Phlx''), The Nasdaq Stock Market LLC 
(``Nasdaq''), NYSE Arca, Inc. (``Arca''), NYSE American LLC (``NYSE 
American''), Nasdaq ISE, LLC (``ISE''), Cboe Exchange, Inc. 
(``Cboe''), Cboe BZX Exchange, Inc. (``CboeBZX''), Cboe EDGX 
Exchange, Inc. (``CboeEDGX'') and Cboe C2 Exchange, Inc. (``C2'') 
all offer a type of 10Gb and non-10Gb connectivity alternative to 
their participants. See Phlx, and ISE Rules, General Equity and 
Options Rules, General 8, Section 1(b). Phlx and ISE each charge a 
monthly fee of $2,500 for each 1Gb connection, $10,000 for each 10Gb 
connection and $15,000 for each 10Gb Ultra connection, which is the 
equivalent of the Exchange's 10Gb ULL connection. See also Nasdaq 
Price List--Trading Connectivity. Nasdaq charges a monthly fee of 
$7,500 for each 10Gb direct connection to Nasdaq and $2,500 for each 
direct connection that supports up to 1Gb. See also NYSE American 
Fee Schedule, Section V.B, and Arca Fees and Charges, Co-Location 
Fees. NYSE American and Arca each charge a monthly fee of $5,000 for 
each 1Gb circuit, $14,000 for each 10Gb circuit and $22,000 for each 
10Gb LX circuit, which is the equivalent of the Exchange's 10Gb ULL 
connection. See also Cboe, CboeBZX, CboeEDGX and C2 Fee Schedules. 
Cboe charges monthly quoting and order entry bandwidth packet fees. 
Specifically, Cboe charges $1,600 for the 1st through 5th packet, 
$800 for the 6th through 8th packet, $400 for the 9th through 13th 
packet and $200 for the 14th packet and each additional packet. 
CboeBZX, CboeEDGX and C2 each charge a monthly fee of $2,500 for 
each 1Gb connection and $7,500 for each 10Gb connection.
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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, in general, and Section 
6(b)(4) and 6(b)(5) of the Act,\17\ in particular, in that it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among BOX Participants and other persons using its facilities 
and does not unfairly discriminate between customers, issuers, brokers 
or dealers.
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    \17\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed Connectivity Fees in 
general constitute an equitable allocation of fees, and are not 
unfairly discriminatory, because they allow the Exchange to recover 
costs associated with offering access through the network connections. 
The proposed Connectivity Fees are also expected to offset the costs 
both the Exchange and BOX incur in maintaining and implementing ongoing 
improvements to the trading systems, including connectivity costs, 
costs incurred on software and hardware enhancements and resources 
dedicated to software development, quality assurance, and technology 
support. The Exchange believes that its proposed fees are reasonable in 
that they are comparable to those charged by another exchange and lower 
than those charged by several other exchanges. Further, the Exchange 
believes that the proposed Connectivity Fees are not unfairly 
discriminatory as they are assessed to all market participants who wish 
to connect to the BOX network.
    The Exchange believes that the proposed HSVF Port Fee is reasonable 
as it is similar to fees assessed at another exchange in the 
industry.\18\ Further, the Exchange believes that charging Participants 
and non-Participants for both the HSVF monthly fee and applicable 
physical connection fees as outlined in the example above is reasonable 
as it is in line with another exchange in the industry.\19\ Further, 
the Exchange believes that the proposed change is equitable and not 
unfairly discriminatory because it allows the Exchange to recoup 
ongoing expenditures made by the Exchange in order to offer such 
services to Participants and non-Participants.
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    \18\ See supra note 8.
    \19\ Id.
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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. Unilateral action by the 
Exchange in establishing fees for services provided to its Participants 
and others using its facilities will not have an impact on competition. 
As a small exchange in the already highly competitive environment for 
options trading, the Exchange does not have the market power necessary 
to set prices for services that are unreasonable or unfairly 
discriminatory in violation of the Exchange Act. The Exchange's 
proposed fees, as described herein, are comparable to and generally 
lower than fees charged by other options exchanges for the same or 
similar services. Lastly, the Exchange believes the proposed change 
will not impose a burden on intramarket competition as the proposed 
fees are applicable to all Participants and others using its facilities 
that connect to BOX.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Suspension of the Proposed Rule Change

    Pursuant to Section 19(b)(3)(C) of the Act,\20\ at any time within 
60 days of the date of filing of a proposed rule change pursuant to 
Section 19(b)(1) of the Act,\21\ the Commission summarily may 
temporarily suspend the change in the rules of a self-regulatory 
organization (``SRO'') 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. 
As discussed below, the Commission believes a temporary suspension of 
the proposed rule change is necessary and appropriate to allow for 
additional analysis of the proposed rule change's consistency with the 
Act and the rules thereunder.
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    \20\ 15 U.S.C. 78s(b)(3)(C).
    \21\ 15 U.S.C. 78s(b)(1).
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    Identical fee changes to those proposed herein were originally 
filed on July 19, 2018. That proposal, BOX-2018-24, was published for 
comment in the Federal Register on August 2, 2018.\22\ The Commission 
received one comment letter on that proposal.\23\ On September 17, 
2018, pursuant to Section 19(b)(3)(C) of the Act, the Commission: (1) 
Temporarily suspended the proposed rule change; and (2) instituted 
proceedings to determine whether to approve or disapprove the 
proposal.\24\ The Commission received one additional comment letter on 
that proposal in response to the Order Instituting Proceedings.\25\ On 
September 19, 2018, pursuant to Rule 430 of the Commission's Rules of 
Practice,\26\ the Exchange filed a notice of intention to petition for 
review of the Order Instituting Proceedings and, on September 26, 2018, 
the Exchange filed a petition for review of the Order Instituting 
Proceedings.\27\ On November 16, 2018, the Commission granted the 
Exchange's Petition and discontinued the automatic stay of delegated 
action.\28\ In addition, the Commission ordered that any party or other 
person could file a statement in support or in opposition to the action 
made by delegated authority provided such statement was filed on or 
before December 10, 2018.\29\ The Commission received two such 
statements from the Exchange.\30\ The instant filing proposes identical 
fees and raises similar concerns as to whether they are consistent with 
the Act.\31\
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    \22\ See supra note 9, and accompanying text.
    \23\ See supra note 10.
    \24\ See Securities Exchange Act Release No. 84168 (September 
17, 2018), 83 FR 47947 (September 21, 2018) (``Order Instituting 
Proceedings'').
    \25\ See supra note 12.
    \26\ 17 CFR 201.430.
    \27\ See supra notes 13-14, and accompanying text. Pursuant to 
Rule 431(e) of the Commission's Rules of Practice, a notice of 
intention to petition for review results in an automatic stay of the 
action by delegated authority. 17 CFR 201.431(e).
    \28\ See supra note 15, and accompanying text.
    \29\ See Securities Exchange Act Release No. 84614 (November 16, 
2018), 83 FR 59432 (November 23, 2018).
    \30\ See letters to Brent J. Fields, Secretary, Commission, from 
Lisa J. Fall, President, BOX, dated December 7, 2018, and Amir C. 
Tayrani, Gibson, Dunn & Crutcher LLP, dated December 10, 2018.
    \31\ See Order Instituting Proceedings, supra note 24.
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    When exchanges file their proposed rule changes with the 
Commission, including fee filings like the Exchange's present proposal, 
they are required to provide a statement supporting the proposal's 
basis under the Act and the rules and regulations thereunder applicable 
to the exchange.\32\ The

[[Page 65384]]

instructions to Form 19b-4, on which exchanges file their proposed rule 
changes, specify that such statement ``should be sufficiently detailed 
and specific to support a finding that the proposed rule change is 
consistent with [those] requirements.'' \33\
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    \32\ See 17 CFR 240.19b-4 (Item 3 entitled ``Self-Regulatory 
Organization's Statement of the Purpose of, and Statutory Basis for, 
the Proposed Rule Change'').
    \33\ Id.
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    Among other things, exchange proposed rule changes are subject to 
Section 6 of the Act, including Sections 6(b)(4), (5), and (8), which 
requires the rules of an exchange to (1) provide for the equitable 
allocation of reasonable fees among members, issuers, and other persons 
using the exchange's facilities; \34\ (2) perfect the mechanism of a 
free and open market and a national market system, protect investors 
and the public interest, and not be designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers; \35\ 
and (3) not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.\36\
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    \34\ 15 U.S.C. 78f(b)(4).
    \35\ 15 U.S.C. 78f(b)(5).
    \36\ 15 U.S.C. 78f(b)(8).
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    In temporarily suspending the Exchange's fee change, the Commission 
intends to further consider whether the proposed fees to connect to the 
Exchange are consistent with the statutory requirements applicable to a 
national securities exchange under the Act. In particular, the 
Commission will consider whether the proposed rule change satisfies the 
standards under the Act and the rules thereunder requiring, among other 
things, that an exchange's rules provide for the equitable allocation 
of reasonable fees among members, issuers, and other persons using its 
facilities; not permit unfair discrimination between customers, 
issuers, brokers or dealers; and do not impose any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act.\37\
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    \37\ See 15 U.S.C. 78f(b)(4), (5), and (8), respectively.
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    Therefore, the Commission finds that it is appropriate in the 
public interest, for the protection of investors, and otherwise in 
furtherance of the purposes of the Act, to temporarily suspend the 
proposed rule change.\38\
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    \38\ For purposes of temporarily suspending the proposed rule 
change, 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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IV. Proceedings To Determine Whether To Approve or Disapprove the 
Proposed Rule Change

    The Commission is instituting proceedings pursuant to Sections 
19(b)(3)(C) \39\ and 19(b)(2)(B) of the Act \40\ to determine whether 
the proposed rule change should be approved or disapproved. Institution 
of proceedings does not indicate that the Commission has reached any 
conclusions with respect to any of the issues involved. Rather, the 
Commission seeks and encourages interested persons to provide 
additional comment on the proposed rule change to inform the 
Commission's analysis of whether to disapprove the proposed rule 
change.
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    \39\ 15 U.S.C. 78s(b)(3)(C). Once the Commission temporarily 
suspends a proposed rule change, Section 19(b)(3)(C) of the Act 
requires that the Commission institute proceedings under Section 
19(b)(2)(B) to determine whether a proposed rule change should be 
approved or disapproved.
    \40\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act,\41\ the Commission is 
providing notice of the grounds for possible disapproval under 
consideration:
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    \41\ 15 U.S.C. 78s(b)(2)(B).
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     Section 6(b)(4) of the Act, which requires that the rules 
of a national securities exchange ``provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and issuers and other persons using its facilities,'' \42\
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    \42\ 15 U.S.C. 78f(b)(4).
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     Section 6(b)(5) of the Act, which requires, among other 
things, that the rules of a national securities exchange be designed to 
``perfect the mechanism of a free and open market and a national market 
system'' and ``protect investors and the public interest,'' and not be 
``designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers,'' \43\ and
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    \43\ 15 U.S.C. 78f(b)(5).
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     Section 6(b)(8) of the Act, which requires that the rules 
of a national securities exchange ``not impose any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of [the Act].'' \44\
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    \44\ 15 U.S.C. 78f(b)(8).
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    As noted above, the proposal imposes new fees for physical 
connections to the Exchange. The Exchange states that these fees would 
partially offset costs associated with maintaining and enhancing this 
technology.\45\ In the instant filing the Exchange states that its 
associated costs relate to costs paid to the Exchange's third-party 
data center and costs associated with projects and initiatives designed 
to improve overall network performance and stability.\46\ The Exchange 
also states that these fees are expected to offset costs of maintaining 
and implementing ongoing improvements to BOX's trading systems, 
including connectivity costs, costs incurred on software and hardware 
enhancements, and resources dedicated to software development, quality 
assurance, and technology support.\47\
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    \45\ See supra Section II.A.1.
    \46\ See id.
    \47\ See supra Section II.A.2.
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    Under the Commission's Rules of Practice, the ``burden to 
demonstrate that a proposed rule change is consistent with the [Act] 
and the rules and regulations issued thereunder . . . is on the [SRO] 
that proposed the rule change.'' \48\ The description of a proposed 
rule change, its purpose and operation, its effect, and a legal 
analysis of its consistency with applicable requirements must all be 
sufficiently detailed and specific to support an affirmative Commission 
finding,\49\ and any failure of an SRO to provide this information may 
result in the Commission not having a sufficient basis to make an 
affirmative finding that a proposed rule change is consistent with the 
Act and the applicable rules and regulations.\50\
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    \48\ Rule 700(b)(3), Commission Rules of Practice, 17 CFR 
201.700(b)(3).
    \49\ See id.
    \50\ See id.
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    The Commission is instituting proceedings to allow for additional 
consideration and comment on the issues raised herein, including as to 
whether the proposed fees are consistent with the Act, and 
specifically, with its requirements that exchange fees be reasonable 
and equitably allocated; be designed to perfect the mechanism of a free 
and open market and the national market system, protect investors and 
the public interest, and not be unfairly discriminatory; or not impose 
an unnecessary or inappropriate burden on competition.\51\
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    \51\ See 15 U.S.C. 78f(b)(4), (5), and (8).
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V. Commission's Solicitation of Comments

    The Commission requests written views, data, and arguments with 
respect to the concerns identified above as well as any other relevant 
concerns. Such comments should be submitted by January 10, 2019. 
Rebuttal comments should be submitted by January 24, 2019. Although 
there do not appear to be any issues relevant to approval or 
disapproval which would be facilitated by an oral presentation of 
views, data, and arguments, the Commission will consider, pursuant to 
Rule 19b-4, any request for an opportunity to make an oral 
presentation.\52\
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    \52\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by an SRO. See Securities 
Acts Amendments of 1975, Report of the Senate Committee on Banking, 
Housing and Urban Affairs to Accompany S. 249, S. Rep. No. 75, 94th 
Cong., 1st Sess. 30 (1975).

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[[Page 65385]]

    The Commission asks that commenters address the sufficiency and 
merit of the Exchange's statements in support of the proposal, in 
addition to any other comments they may wish to submit about the 
proposed rule change. Interested persons are invited to submit written 
data, views, and arguments concerning the proposed rule change, 
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-2018-37 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE, 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BOX-2018-37. 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-2018-37 and should be submitted on 
or before January 10, 2019. Rebuttal comments should be submitted by 
January 24, 2019.

VI. Conclusion

    IT IS THEREFORE ORDERED, pursuant to Section 19(b)(3)(C) of the 
Act,\53\ that File
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    \53\ 15 U.S.C. 78s(b)(3)(C).
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    Number SR-BOX-2018-37 be and hereby is, temporarily suspended. In 
addition, the Commission is instituting proceedings to determine 
whether the proposed rule change should be approved or disapproved.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\54\
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    \54\ 17 CFR 200.30-3(a)(12), (57), and (58).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27512 Filed 12-19-18; 8:45 am]
 BILLING CODE 8011-01-P