[Federal Register Volume 88, Number 58 (Monday, March 27, 2023)]
[Notices]
[Pages 18201-18205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06193]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97174; File No. SR-BOX-2023-09]


Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Introduce a 
New Historical Data Product To Be Known as the Intraday Open-Close Data 
Report and To Adopt Fees for Such Product

March 21, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 18202]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 6, 2023, BOX Exchange LLC (the ``Exchange'' or ``BOX'') 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 Exchange filed the proposed 
rule change pursuant to Section 19(b)(3)(A) of the Act,\3\ and Rule 
19b-4(f)(6) thereunder,\4\ which renders the proposal effective upon 
filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ F17 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 proposes to introduce a new data product to be known 
as the Intraday Open-Close Data Report and to adopt fees for such 
product. The Exchange also proposes to add an academic discount for 
Open-Close Data Report End-of-Day Ad-hoc Requests as well as to clarify 
that the existing free trial is only available for the Open-Close Data 
Report End-of-Day Subscription. 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 https://rules.boxexchange.com/rulefilings.

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 introduce a new data product on BOX to be 
known as the Intraday Open-Close Data Report, which will be available 
for purchase to BOX Participants and non-Participants. The Exchange 
also proposes to adopt fees for the Intraday Open-Close Data Report. 
The Exchange will make the Intraday Open-Close Data Report available 
for purchase to Participants and non-Participants on the BOX website 
(www.boxoptions.com). The Exchange notes that a substantially similar 
product and fees for such product currently exist at other 
exchanges.\5\
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    \5\ See Miami International Securities Exchange, LLC (``MIAX'') 
Fee Schedule and Cboe Exchange, Inc (``Cboe'') Fee Schedule and NYSE 
Arca, Inc (``NYSE Arca'') Fee Schedule. MIAX, Cboe, and NYSE Arca 
all offer intraday open-close reports to market participants. 
Further, MIAX, Cboe, and NYSE Arca charge $2,000 per month for the 
intraday open-close report at their respective exchanges.
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    The Exchange currently offers the Open-Close Data Report End-of-Day 
Subscription and End-of-Day Ad-hoc Request, to Participants and non-
Participants, which is a volume summary file for trading activity on 
BOX. The Exchange notes that the file contains proprietary BOX trade 
data and does not include trade data from any other exchanges. It is 
also a historical data product and not a real time data feed. The Open-
Close Data Report End-of-Day Subscription is distributed at the end of 
each day and aggregates and buckets the volume by origin (Public 
Customer, Professional Customer, Broker Dealer, and Market Maker), 
buying/selling, and opening/closing criteria. Public Customer and 
Professional Customer volume is further broken down into trade size 
buckets (less than 100 contracts, 100-199 contracts, greater than 199 
contracts). The Open-Close Data Report End-of-Day Ad-hoc Request 
provides the same information for a requested historical time period 
for any number of months beginning with January 2018.\6\
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    \6\ See Securities Exchange Act Release No. 93394 (October 21, 
2021), 86 FR 59439 (October 27, 2021) (``adopting Open-Close Data 
Report'').
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    The Exchange now proposes to (1) offer an Intraday Open-Close Data 
Report; (2) assess a fee for the Intraday Open-Close Data Report; (3) 
add an academic discount for Open-Close Data Report End-of-Day Ad-hoc 
Requests; and (4) clarify that the existing free trial only applies to 
the Open-Close Data Report End-of-Day Subscription. The Intraday Open-
Close Data Report would include the aggregated data described above, 
but would be produced and updated every 10 minutes during the trading 
day. Data would be captured in ``snapshots'' taken every 10 minutes 
throughout the trading day and would be available to subscribers within 
five minutes of the conclusion of each 10 minute period. For example, 
subscribers to the Intraday Open-Close Data Report product would 
receive the first calculation of intraday data no later than 9:45 a.m. 
ET, which represents data captured from 9:30 a.m. to 9:40 a.m. 
Subscribers would receive the next update by 9:55 a.m., representing 
the data previously provided aggregated with data captured up to 9:50 
a.m., and so forth. Each update will represent combined data captured 
from the current ``snapshot'' and all previous ``snapshots'' and thus 
will provide open-close data on an aggregate basis. As detailed above, 
the Intraday Open-Close Data Report will aggregate the volume by origin 
(Public Customer, Professional Customer, Broker Dealer, and Market 
Maker), buying/selling, and opening/closing criteria. Public Customer 
and Professional Customer volume is further broken down into trade size 
buckets (less than 100 contracts, 100-199 contracts, greater than 199 
contracts).
    The Exchange believes the proposed Intraday Open-Close Data Report 
may provide helpful trading information regarding investor sentiment 
and may be used to create and test trading models and analytical 
strategies and provides comprehensive insight into trading on BOX. It 
is a completely voluntary product, in that the Exchange is not required 
by any rule or regulation to make this data available and that 
potential subscribers may purchase it only if they voluntarily choose 
to do so. As stated above, other options exchanges offer a similar data 
product.\7\
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    \7\ See supra note 5.
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    The Exchange proposes to provide in its Fee Schedule that 
Participants and non-Participants may purchase the Intraday Open-Close 
Data Report on a subscription basis. The Exchange proposes to assess a 
monthly fee of $1500 for subscribing to the Intraday Open-Close Data 
Report.
    The Exchange also proposes to assess a fee of $500 per request for 
up to a year of data for Open-Close Report End-of-Day Ad-hoc Requests 
by academic purchasers for academic purposes only and not for actual 
securities trading. The Exchange notes that other exchanges provide a 
similar fee for a similar product.\8\
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    \8\ See Cboe C2 Exchange, Inc. (``C2'') Fee Schedule and Nasdaq 
ISE, LLC (``Nasdaq ISE'') Options 7, Section 10A.
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    Lastly, the Exchange proposes to clarify that the existing free 
trial is only available for the Open-Close Data Report End-of-Day 
Subscription and not the Intraday Open-Close Data Report Subscription.

[[Page 18203]]

2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\9\ in general, and Section 
6(b)(5) of the Act,\10\ in particular, in that it is designed to 
prevent fraudulent and manipulative acts and practices, 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 to protect investors and the public interest, and that it is not 
designed to permit unfair discrimination among customers, brokers, or 
dealers. The Exchange also believes that its proposal to adopt fees for 
the Intraday Open-Close Data Report and to adopt an academic discount 
for the Open-Close Data Report End-of-Day Ad-hoc Request is consistent 
with Section 6(b) of the Act in general, and further the objectives of 
Section 6(b)(4) of the Act \11\ in particular, in that it provides for 
an equitable allocation of dues, fees and other charges among its 
members and other recipients of Exchange data.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ 15 U.S.C. 78f(b)(4).
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    The proposed rule change would benefit investors by providing 
access to the Intraday Open-Close Data Report, which may promote better 
informed trading throughout the trading day. Particularly, information 
regarding opening and closing activity across different option series 
during the trading day may indicate investor sentiment, which may allow 
market participants to make better informed trading decisions 
throughout the day. Subscribers to the data may also be able to enhance 
their ability to analyze option trade and volume data and create and 
test trading models and analytical strategies. The Exchange believes 
the Intraday Open-Close Data Report provides a valuable tool that 
subscribers can use to gain comprehensive insight into the trading 
activity in a particular series, but also emphasizes such data is not 
necessary for trading.
    As noted herein, other exchanges currently offer a substantially 
identical data product.\12\ Like the proposed product, the other 
exchanges' market data products provide such data to subscribers 
cumulatively every 10 minutes and within five minutes of the conclusion 
of each 10 minute period.
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    \12\ See supra note 5.
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    The Exchange notes that it operates in a highly competitive 
environment where there are currently 16 registered options exchanges 
that trade options. The Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Particularly, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \13\ Making 
similar data products available to market participants fosters 
competition in the marketplace, and constrains the ability of exchanges 
to charge supracompetitive fees. In the event that a market participant 
views one exchange's data product as more or less attractive than the 
competition they can and do switch between similar products. The 
proposed fees are a result of the competitive environment, as the 
Exchange seeks to adopt fees to attract purchasers of the proposed 
Intraday Open-Close Data Report Subscription.
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    \13\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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    The Exchange believes the proposed fees are reasonable as the 
proposed fees are both modest and similar to the fees assessed by other 
exchanges that provide similar data products.\14\ Proposing fees that 
are excessively higher than established fees for similar data products 
would simply serve to reduce demand for the Exchange's data product, 
which as noted, is entirely optional. Like the Exchange's proposed 
Intraday Open-Close Data Report, other exchanges offer similar data 
products that each provide insight into trading on those markets and 
may likewise aid in assessing investor sentiment. Although each of 
these similar open-close data products provide only proprietary trade 
data and not trade data from other exchanges, it's possible investors 
are still able to gauge overall investor sentiment across different 
option series based on open and closing interest on any one 
exchange.\15\ Similarly, market participants may be able to analyze 
option trade and volume data, and create and test trading models and 
analytical strategies using only intraday open-close data relating to 
trading activity on one or more of the other markets that provide 
similar data products. As such, if a market participant views another 
exchange's intraday open-close data product as more attractive than the 
proposed Intraday Open-Close Data Report, then such market participant 
can merely choose not to purchase the Exchange's Intraday Open-Close 
Data Report and instead purchase another exchange's open-close data 
product, which offers similar data points, albeit based on that other 
market's trading activity.
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    \14\ See supra note 5.
    \15\ The Exchange notes that its proposed Intraday Open-Close 
Data Report does not include data on any exclusive, singly-listed 
option series.
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    The Exchange also believes the proposed fees are reasonable as they 
would support the introduction of a new market data product that is 
designed to aid investors by providing insight into trading on BOX. The 
proposed Intraday Open-Close Data Report would provide options market 
participants with valuable information about opening and closing 
transactions executed on the Exchange, similar to other historical 
trade data products offered by competing options exchanges. In turn, 
this data would assist market participants in gauging investor 
sentiment and trading activity, resulting in potentially better-
informed trading decisions. As noted above, users may also use such 
data to create and test trading models and analytical strategies.
    The Exchange believes the proposed fees are equitable and not 
unfairly discriminatory as the fees would apply equally to all users 
who choose to purchase such data. The Exchange's proposed fees would 
not differentiate between subscribers that purchase Intraday Open-Close 
Data Report and are set at a modest level that would allow any 
interested Participant or non-Participant to purchase such data based 
on their business needs.
    Selling historical market data, such as the Intraday Open-Close 
Data Report, is also a means by which exchanges compete to attract 
business. To the extent that the Exchange is successful in attracting 
subscribers for the Intraday Open-Close Data Report, it may earn 
trading revenues and further enhance the value of its data products. If 
the market deems the proposed fees to be unfair or inequitable, firms 
can diminish or discontinue their use of the data and/or avail 
themselves of similar products offered by other exchanges. The Exchange 
therefore believes that the proposed fees for the Intraday Open-Close 
Data Report reflect the competitive environment and would be properly 
assessed on Participant or non-Participant users.
    The Exchange reiterates that the decision as to whether or not to 
purchase the Intraday Open-Close Data Report is entirely optional for 
all potential subscribers. Indeed, no market participant is required to 
purchase the Intraday Open-Close Data Report, and the Exchange is not 
required to make the Intraday Open-Close Data Report

[[Page 18204]]

available to all investors. Rather, the Exchange is voluntarily making 
the Intraday Open-Close Data Report available, as requested by 
customers, and market participants may choose to receive (and pay for) 
this data based on their own business needs. Potential purchasers may 
request the data at any time if they believe it to be valuable or may 
decline to purchase such data.
    The Exchange believes further that the academic discount of the 
Open-Close Data Report End-of-Day Ad-hoc Request is reasonable because 
academic users are not able to monetize access to the data as they do 
not trade on the data set. The Exchange believes the proposed discount 
will allow for more academic purchasers to purchase an Open-Close Data 
Report End-of-Day Ad-hoc Request, and, as a result, promote research 
and studies of the options industry to the benefit of all market 
participants. The Exchange believes that the proposed discount is 
equitable and not unfairly discriminatory because it will apply equally 
to all academic purchasers for academic purposes only and not for 
actual securities trading. As a result, the Exchange believes the 
proposed discount is equitable and not unfairly discriminatory because 
academic purchasers do not use the data for vocational, commercial or 
other for-profit purposes. The Exchange notes that other exchanges 
offer similar academic discounts.\16\
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    \16\ See supra note 8.
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    Lastly, the Exchange believes that not extending the free trial to 
the Intraday Open-Close Data Report Subscription is reasonable because 
the Open-Close Data Report End-of-Day Subscription, for which there is 
a free trial, provides the same data elements as the Intraday Open-
Close Data Report Subscription only with less frequency. The Exchange 
believes further that clarifying the existing free trial only applies 
to the Open-Close Data Report End-of-Day Subscription is consistent 
with the Act, as it may reduce potential investor or market participant 
confusion regarding the Exchange's fees.

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. In this regard and as indicated 
above, the Exchange notes that similar products and fees are offered at 
other exchanges.\17\ The Exchange believes that the proposal will 
promote competition by permitting the Exchange to introduce and sell a 
data product similar to those offered by other competitor options 
exchanges.\18\ The Exchange is proposing to introduce the Intraday 
Open-Close Data Report in order to keep pace with changes in the 
industry and evolving customer needs and believes this proposed rule 
change would contribute to robust competition among national securities 
exchanges. As noted, at least three other U.S. options exchanges offer 
a market data product that is substantially similar to the Intraday 
Open-Close Data Report product discussed herein. As a result, the 
Exchange believes this proposed rule change permits fair competition 
among national securities exchanges.
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    \17\ See supra note 5.
    \18\ Id.
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    Furthermore, the Exchange operates in a highly competitive 
environment, and its ability to price the proposed data product is 
constrained by competition among exchanges that offer similar data 
products to their customers. As discussed, there are currently a number 
of similar products available to market participants and investors. At 
least three other U.S. options exchanges offer a market data product 
that is substantially similar to the Intraday Open-Close Data Report 
discussed herein, which the Exchange must consider in its pricing 
discipline in order to compete for historical market data purchasers. 
For example, proposing fees that are excessively higher than 
established fees for similar data products would simply serve to reduce 
demand for the Exchange's data product, which as discussed, market 
participants are under no obligation to utilize. In this competitive 
environment, potential purchasers are free to choose which, if any, 
similar product to purchase to satisfy their need for market 
information. As a result, the Exchange believes this proposed rule 
change permits fair competition among national securities exchanges.
    The Exchange also does not believe the proposed fees would cause 
any unnecessary or inappropriate burden on intermarket competition as 
other exchanges are free to introduce their own comparable data product 
and lower their prices to better compete with the Exchange's offering. 
The Exchange does not believe the proposed rule change would cause any 
unnecessary or inappropriate burden on intramarket competition. 
Particularly, the proposed product and fee applies uniformly to any 
purchaser, in that it does not differentiate between subscribers that 
purchase the Intraday Open-Close Data Report. The proposed fees are set 
at a modest level that would allow any interested Participants or non-
Participants to purchase such data based on their business needs.
    The Exchange also does not believe that the proposed academic 
discount will impose any burden on intermarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act 
because the exchanges are not competing for academic purchasers. 
Rather, the Exchange believes that academic purchasers' research and 
publications as a result of access to historical market data benefits 
all market participants. The Exchange notes that other exchanges 
currently offer similar historical data to academic purchasers at a 
discounted price.\19\
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    \19\ See supra note 8.
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    Further, the Exchange does not believe that the proposed academic 
discount will impose any burden on intramarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act 
because academic purchasers do not use the data for vocational, 
commercial or other for-profit purposes. The Exchange notes that all 
academic purchasers are treated equally and all Participants and non-
Participants are treated equally.
    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) of the Act \20\ and Rule 19b-
4(f)(6) thereunder.\21\
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 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 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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[[Page 18205]]

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \22\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \23\ 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 requested that the Commission waive the 30-day operative delay so 
that the proposed rule change may become operative upon filing.
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    \22\ 17 CFR 240.19b-4(f)(6).
    \23\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. As 
other exchanges offer similar products to their members, the proposal 
does not raise new or novel issues. For these reasons, the Commission 
designates that the proposed rule change to be operative immediately 
upon filing.\24\
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    \24\ 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. 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 change 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-2023-09 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-2023-09. 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 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. 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-2023-09 and should be submitted on 
or before April 17, 2023.
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    \25\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-06193 Filed 3-24-23; 8:45 am]
BILLING CODE 8011-01-P