[Federal Register Volume 83, Number 248 (Friday, December 28, 2018)]
[Notices]
[Pages 67443-67445]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28199]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84902; File No. SR-BOX-2018-39]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Rule
7050
December 20, 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 December 19, 2018, BOX 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 7050. 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 purpose of the proposed rule change is to delete Rule 7050
(Minimum Trading Increments) in its entirety and replace it with an
identical rule in place at another option exchange in the industry.
Currently, Rule 7050(a) details the minimum trading increments in place
on the Exchange. In this rule, such minimum increments established by
the Board will be designated as a stated policy, practice, or
interpretation with respect to the administration of this Rule 7050
within the meaning of subparagraph (3)(A) of Section 19(b) of the
Exchange Act and will be filed with the SEC as a rule change for
effectiveness upon filing. Further, the rule goes on to state that
until such time as the Board makes a change in the increments, the
following principles shall apply: (1) If the options contract is
trading at less than $3.00 per option, five (5) cents; (2) if the
options contract is trading at $3.00 per option of higher, ten (10)
cents. The Exchange now proposes to delete 7050(a) in its entirety and
add proposed Rule 7050(a)(1) and (2) which states that unless specified
in another Exchange rule, the following minimum quoting increments
shall apply to options traded on the Exchange: (1) Five cents ($0.05)
for all
[[Page 67444]]
option contracts trading at less than $3 other than those defined in
(3) below; (2) ten cents ($0.10) for all option contracts trading at $3
and above other than those defined in (3) below.\3\
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\3\ The Exchange notes that the current trading increment
principles remain unchanged. The Exchange also notes that the
proposed language is identical to rules at other options exchanges
in the industry.
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The Exchange also notes that current Rule 7050(a)(3) states that if
the options contract is traded pursuant to the procedures of the
Improvement Period in Rule 7150 then one (1) cent. The Exchange
proposes to include this in the deletion of current Rule 7050(a) as the
minimum trading increments for option contracts traded in the
Improvement Period are already addressed in the BOX Rulebook.\4\
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\4\ See BOX Rule 7150(f)(2).
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Further, current Rule 7050(b) through (e) details exceptions to the
minimum trading increments discussed in current Rule 7050(a).
Specifically, current Rule 7050(b) states that notwithstanding
paragraph (a) of this Rule 7050, the Exchange will operate a pilot
program to permit options classes to be quoted and traded in increments
as low as one (1) cent. The Exchange now proposes to delete current
Rule 7050(b) and replace it with proposed Rule 7050(a)(3)which states
that for options contract traded pursuant to the penny pilot as
described in Rule 7260: (A) One cent ($0.01) for all options contracts
in QQQ (PowerShares QQQQ Trust), SPY (SPDR S&P 500 ETF Trust) and IWM
(iShares Russell 2000 Index Fund); (B) one cent ($0.01) for all other
options contracts included in a penny pilot that are trading at less
than $3; (C) five cents ($0.05) for all other option contracts included
in a penny pilot that are trading at or above $3.\5\
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\5\ The Exchange notes that the current minimum increments for
the pilot program remain unchanged.
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Further, current Rules 7050(c) through (e) detail other exceptions
to the minimum trading increments in current Rule 7050(a).
Specifically, 7050(c) states that notwithstanding any other provision
in this Rule 7050, the minimum trading increment for Mini Options shall
be determined in accordance with IM-5050-10(d) to BOX Rule 5050. The
Exchange proposes to delete this provision in its entirety as the
minimum trading increments for Mini Options already exist in another
provision in the BOX Rulebook. Similarly, the Exchange proposes to
delete Rules 7050(d) and (e) for the same reason. The minimum trading
increments for Jumbo SPY options (Rule 7050(d)) and Complex Orders
(Rule 7050(e)) already exist in other provisions in the BOX
Rulebook.\6\
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\6\ The minimum trading increments for Jumbo SPY Options are
located in Rule 5050(e)(4). The minimum trading increments for
Complex Orders are addressed in Rule 7240(b)(1).
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The Exchange also proposes Rule 7050(b) which states that the
minimum trading increment for option contracts traded on the Exchange
will be one cent ($0.01) for all series. The Exchange notes that the
proposed rule discussed herein is identical to rules at other options
exchanges in the industry.\7\
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\7\ See NYSE American, LLC (``NYSE American'') Rule 960NY, NYSE
Arca, LLC (``NYSE Arca'') Rule 6.72-O.
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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,\8\ in general, and Section
6(b)(5) of the Act,\9\ in particular, in that the proposed change 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, by conforming the Exchange's minimum trading increment
rule with rules at other options exchanges in the industry.\10\ The
Exchange believes that the proposed change will provide clarity with
respect to the minimum trading increment rule which removes impediments
to and better provides for a free and open market. Additionally, the
Exchange believes that deleting 7050(c) through (e) will reduce
investor confusion with respect to certain minimum trading increments
on the Exchange as the trading increments for the orders discussed in
7050(c) through (e) are already included in other rules in the BOX
Rulebook. As such, BOX believes the proposed rule change is in the
public interest, and therefore, consistent with the Act.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ See supra note 7.
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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. The proposal merely conforms
the Exchange's minimum trading increment rule to similar rules at other
options exchanges in the industry. The proposed rule change would
provide clarity and reduce any potential confusion with respect to
minimum trading increments on the Exchange. 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.
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 \11\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and the 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 satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \14\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Exchange notes that
the proposed rule change simply seeks to conform the Exchange's minimum
trading increments rule to similar rules at other options exchanges and
raises no new or novel issues. The Commission believes that waiver of
the 30-day operative delay is consistent with the protection of
investors and the public interest. Accordingly, the Commission hereby
waives the operative delay and designates the proposed rule change as
operative upon filing.\15\
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ 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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[[Page 67445]]
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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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-2018-39 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-2018-39. 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-2018-39 and should be submitted on
or before January 18, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2018-28199 Filed 12-27-18; 8:45 am]
BILLING CODE 8011-01-P