[Federal Register Volume 88, Number 185 (Tuesday, September 26, 2023)]
[Notices]
[Pages 66100-66103]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-20805]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98446; File No. SR-BOX-2023-24]


Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee 
Schedule for Trading on the BOX Options Market LLC Facility To Amend 
the Language and Process Related to the Options Regulatory Fee

September 20, 2023.
    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 September 13, 2023, 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 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)(6) 
thereunder,\4\ which renders the proposal effective upon filing with 
the Commission. The Commission is publishing this notice to

[[Page 66101]]

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\ 17 CFR 240.19b-4(f)(6).
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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 language and 
processes relating to the Options Regulatory Fee (``ORF'') on the BOX 
Options Market LLC (``BOX'') options facility. 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 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 the Fee Schedule, to harmonize the 
language and processes relating to the Options Regulatory Fee (``ORF'') 
with the language and processes used by other options exchanges.\5\ By 
way of background, the ORF is designed to recover a material portion of 
the costs to the Exchange of the supervision and regulation of 
Participant customer options business, including performing routine 
surveillances, investigations, examinations, financial monitoring, as 
well as policy, rulemaking, interpretive and enforcement activities.
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    \5\ See Securities and Exchange Act Release No. 34-98108 (August 
10, 2023), 88 FR 55809 (August 16, 2023) (SR-CboeEDGX-2023-054) 
(Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change to Amend its Fee Schedule Related to the Options Regulatory 
Fee).
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    The revenue generated from the ORF, when combined with all of the 
Exchange's other regulatory fees and fines, covers a material portion, 
but not all, of the Exchange's regulatory costs.
    The Exchange monitors the amount of revenue collected from the ORF 
to ensure that it, in combination with its other regulatory fees and 
fines, does not exceed the Exchange's total regulatory costs. The 
Exchange monitors its regulatory costs and revenues at a minimum on a 
semi-annual basis. If the Exchange determines regulatory revenues 
exceed or are insufficient to cover a material portion of its 
regulatory costs, the Exchange will adjust the ORF by submitting a fee 
change filing to the Securities and Exchange Commission (the 
``Commission''). The Exchange notifies Participants of adjustments to 
the ORF via an Informational Circular. Currently, the Exchange provides 
Participants with such notice at least 30 calendar days prior to the 
effective date of the change. The Options Regulatory Fee section of the 
Fee Schedule sets forth the details and description of how and when the 
ORF is assessed. For example, the Fee Schedule explicitly specifies 
that the Exchange may only increase or decrease the ORF semi-annually, 
and any such fee change will be effective on the first business day of 
February or August. The Fee Schedule further states that the Exchange 
will notify Participants of any change in the amount of the fee at 
least 30 calendar days prior to the effective date of the change.
    The Exchange proposes to update the Fee Schedule language relating 
to the timing of ORF changes. Particularly, the Exchange proposes to 
eliminate the strict requirement that the ORF may only be modified on 
the first business day of February or August, and also the explicit 
requirement that it must provide at least 30 calendar days prior to the 
effective date. The Exchange first proposes to eliminate the 
requirement that ORF may only be modified on the first business day of 
February or August to afford the Exchange increased flexibility in 
amending the ORF. As noted above, the ORF is based in part on options 
transactions volume, and as such the amount of ORF collected is 
variable. If options transactions reported to OCC in a given month 
increase, the ORF collected from Participants may increase as well. 
Similarly, if options transactions reported to OCC in a given month 
decrease, the ORF collected from Participants may decrease as well. 
Accordingly, the Exchange monitors the amount of ORF collected to 
ensure that it does not exceed the Exchange's total regulatory costs. 
If the Exchange determines the amount of ORF collected exceeds costs 
over an extended period, the proposed rule change allows the Exchange 
to adjust the ORF by submitting a fee change filing to the Commission 
in a month other than just February or August. Although the Exchange 
proposes to eliminate the explicit language in the Fee Schedule that 
provides the Exchange will adjust the ORF only semi-annually, and only 
on the first business day of February or August, it would continue to 
monitor its regulatory costs and revenues at a minimum on a semi-annual 
basis and submit a proposed rule change for each modification of the 
ORF as needed. The Exchange also proposes to eliminate the explicit 
language in the Fee Schedule that it will notify participants of any 
change in the amount of the fee at least 30 calendar days prior to the 
effective date of the change. Although the Exchange proposes to 
eliminate this language from the Fee Schedule, it notes that it will 
endeavor to notify Participants of any planned change to the ORF by 
Exchange Informational Circular at least 30 calendar days prior to the 
effective date of such change. The Exchange believes this proposed 
change also provides the Exchange additional flexibility. For example, 
the Exchange often provides fee change notices on the first business 
day of the month. It may be the case that such date is less than 30 
days from the effective date of proposed change (e.g., if the Exchange 
wished to amend the ORF, effective, August 1, 2023, the Exchange would 
not have met the 30-day notice requirement if it had announced on the 
first business day of July, as it has been historic practice, since the 
first business day falls on July 3, 2023). As such, the proposed rule 
changes provides added flexibility while still committing to provide 
notice on the timing of any changes to the ORF and ensuring that 
Participants are prepared to configure their systems to properly 
account for the ORF.
    The Exchange notes that the proposed changes result in ORF 
processes and Fee Schedule language that aligns with other options 
exchanges.\6\ Particularly, although typically the practice, other 
options exchanges are not limited to only adjusting ORF to only the 
first business day of August or February.\7\ Moreover, another options 
exchange recently amended their fees to allow for flexibility to adjust 
ORF during months other than February or August.\8\ The Exchange notes 
that other options exchanges do not explicitly provide in

[[Page 66102]]

their fees schedules that it will provide notice at least 30 calendar 
days in advance of any ORF change.\9\ Other exchanges have represented 
in various ORF fee filings that they endeavor to notify members of any 
planned change to the ORF by Exchange notice at least 30 calendar days 
prior to the effective date of such change, just as the Exchange 
represents here.\10\ The Exchange believes the proposed change provides 
uniformity across options exchanges and reduces potential confusion. It 
also provides the Exchange added flexibility as to when modifications 
to the ORF may occur.
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    \6\ See Cboe Exchange, Inc. Fees Schedule and Cboe C2 Exchange, 
Inc. Options Fees Schedule.
    \7\ Id.
    \8\ See e.g., Securities Exchange Act Release No. 96373 (October 
13, 2022), 87 FR 73376 (November 29, 2022) (SR-NYSEAMER-2022-52).
    \9\ See Cboe Exchange, Inc. Fees Schedule and Cboe C2 Exchange, 
Inc. Options Fees Schedule.
    \10\ See e.g., Securities Exchange Act Release No. 92597 (August 
6, 2021), 86 FR 44451 (August 12, 2021 (SR-CBOE-2021-044). See also 
Securities Exchange Act Release No. 92596 (August 6, 2021), 86 FR 
44461 (August 12, 2021 (SR-C2-2021-012).
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of section 6(b) of the Securities Exchange Act of 1934 
(the ``Act''),\11\ in general, and section 6(b)(5) of the Act,\12\ in 
particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, 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 
changes to the Fee Schedule with respect to how ORF is assessed and 
collected are appropriate as it provides the Exchange more flexibility 
in its assessment of ORF based on its periodic monitoring of ORF rates. 
The Exchange also represents that it will continue to monitor its 
regulatory costs and revenues at a minimum on a semi-annual basis, just 
as it, and other options exchanges do today. The Exchange believes that 
the proposed elimination of language specifying that the Exchange may 
only increase or decrease the ORF on the first business day February or 
August is reasonable because it is designed to afford the Exchange 
increased flexibility in making necessary adjustments to the ORF, as 
the Exchange is required to monitor the amount collected from the ORF 
to ensure that it, in combination with its other regulatory fees and 
fines, does not exceed total regulatory costs. The Exchange also 
represents that it will endeavor to provide notice of any changes at 
least 30 days in advance of the effective date of such change, thereby 
providing Participants with adequate time to make any necessary 
adjustments to accommodate any proposed changes. Taking out the strict 
requirements from the Fee Schedule, however, will provide the Exchange 
flexibility in modifying ORF and being able to adjust ORF even if it 
doesn't meet the strict 30-day deadline in event extenuating 
circumstances prevent the Exchange from meeting this deadline or in the 
event such notice is a day or two less than 30 days due to when the 
first business days of the month fall. For example, as noted above, the 
Exchange often provides fee change notices on the first business day of 
the month. It may be the case that such date is less than 30 days from 
the effective date of proposed change (e.g., if the Exchange wished to 
amend the ORF, effective, August 1, 2023, the Exchange would not have 
met the 30-day notice requirement if it had announced on the first 
business day of July, as it has been historic practice, since the first 
business day falls on July 3, 2023).
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed rule changes are reasonable, 
equitable and not unfairly discriminatory because they conform to the 
process and Fee Schedule language used by other options exchanges, 
thereby providing consistency across the options exchanges and reducing 
potential confusion. The proposed changes also apply uniformly to all 
Participants subject to ORF. As noted above, another options exchange 
is also not confined to making ORF changes on the first business day of 
February or August.\13\
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    \13\ See supra note 8.
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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. In this regard and as indicated 
above, the Exchange notes that the rule change is substantially similar 
in all material respects to a proposal recently submitted by Cboe EDGX 
Exchange, Inc. (``EDGX'').\14\ This proposal does not create an 
unnecessary or inappropriate inter-market burden on competition because 
it merely amends the Fee Schedule to modify the timing and notice 
requirements relating to the modification of the ORF and conforms to 
the timing and notice requirements used by other options exchanges 
within their fee schedules.\15\ Further, ORF is a regulatory fee that 
supports regulation in furtherance of the purposes of the Act. The 
Exchange is obligated to ensure that the amount of regulatory revenue 
collected from the ORF, in combination with its other regulatory fees 
and fines, does not exceed regulatory costs and the proposed rule 
change does not seek to change that.
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    \14\ See supra note 5.
    \15\ Id.
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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. 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 after the date of the filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest, it has become 
effective pursuant to section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6) \17\ thereunder.
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, 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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    A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\19\ the Commission 
may 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 proposed 
rule change may become operative upon filing. The Exchange is 
requesting the waiver because it will allow the Exchange more 
flexibility with respect to the timing of changes to its ORF and allow 
the Exchange to mirror similar provisions already in place on other 
exchanges. Finally, the Exchange states that the proposed change would 
not introduce any novel regulatory issues. For these reasons, and 
because the proposed rule change does not raise any

[[Page 66103]]

novel legal or regulatory issues, the Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. Therefore, the Commission hereby 
waives the 30-day operative delay and designates the proposal operative 
upon filing.\20\
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    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ 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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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-BOX-2023-24 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-2023-24. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-BOX-2023-24 and should be 
submitted on or before October 17, 2023.
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    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-20805 Filed 9-25-23; 8:45 am]
BILLING CODE 8011-01-P