[Federal Register Volume 89, Number 17 (Thursday, January 25, 2024)]
[Notices]
[Pages 5052-5054]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01392]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99400; File No. SR-BOX-2024-04]


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 Decrease 
Certain Electronic Non-Auction Transaction Fees

January 19, 2024.
    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 January 12, 2024, BOX Exchange LLC (``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I, II, and III 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)(2) 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\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the 
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 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 Section IV.A (Non-Auction 
Transactions) of the BOX Fee Schedule. The Exchange proposes to 
decrease Professional Customer and Broker Dealer maker fees on 
transactions in Penny Interval Classes and SPY where the contra party 
is a Public Customer.
    In Section IV.A of the BOX Fee Schedule, fees and credits for 
electronic Non-Auction Transactions are assessed depending on three 
factors: (i) the account type of the Participant submitting the order; 
(ii) whether the Participant is a liquidity provider or liquidity 
taker; and (iii) the account type of the contra party. Currently, when 
a Professional Customer or Broker Dealer

[[Page 5053]]

Penny Interval Class or SPY order is a liquidity maker contra to a 
Public Customer, the Professional Customer or Broker Dealer is assessed 
a fee of $0.60. The Exchange now proposes to decrease Professional 
Customer and Broker Dealer maker fees on Penny Interval Classes and SPY 
electronic Non-Auction Transactions contra to a Public Customer. 
Accordingly, when a Professional Customer or Broker Dealer order in a 
Penny Interval Class or SPY is a liquidity maker contra to a Public 
Customer, the Professional Customer or Broker Dealer will be assessed a 
fee of $0.50.
    The Exchange notes that the proposed fees are comparable in amount 
with the fees at several other exchanges.\5\ The Exchange believes that 
the proposed changes are reasonable and competitive when compared to 
other exchanges and that the changes will attract order flow, thus 
improving the markets on BOX to the benefit of all Participants.
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    \5\ See e.g., NYSE American LLC Options Fee Schedule, Section I 
(``Options Transaction Fees and Credits'' applicable to Penny for 
Broker-Dealer and Professional Customer of $0.50); Cboe EDGX 
Exchange, Inc. Fee Schedule (``Transaction Fees'' applicable to 
Penny Program Securities for Away Market Maker, Broker Dealer, and 
Professional of $0.48); Miami International Securities Exchange, LLC 
Fee Schedule (``Transaction Fees'' applicable to Penny Classes for 
Public Customer that is Not a Priority Customer, Non-MIAX Market 
Maker, and Non-Member Broker-Dealer of $0.47).
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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,\6\ 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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    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange notes that it operates in a highly competitive 
environment. Indeed, there are currently 17 registered options 
exchanges that trade options. Based on publicly available information, 
no single options exchange has more than 17% of the market share and 
currently the Exchange represents only approximately 7% of the market 
share.\7\ 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.'' \8\ As stated 
above, the Exchange operates in a highly competitive market in which 
market participants can readily direct order flow to competing venues 
if they deem fee levels at a particular venue to be excessive or 
incentives to be insufficient. The proposed fee changes reflect a 
competitive pricing structure designed to attract Professional Customer 
and Broker Dealer electronic non-auction order flow to BOX.
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    \7\ See Cboe Global Markets U.S. Options Market Month-to-Date 
Volume Summary (December 13, 2023), available at https://markets.cboe.com/us/options/market_statistics/.
    \8\ 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 electronic Non-Auction 
Transaction fees for Professional Customer and Broker Dealer Penny 
Interval Class and SPY transactions contra to Public Customers are 
reasonable as the proposed fees are comparable to similar transaction 
fees assessed at other exchanges.\9\ The Exchange further believes that 
the proposed Professional Customer and Broker Dealer Penny Interval 
Class and SPY transaction fees will attract order flow because the 
reduced fees will be competitive with other exchanges. The Exchange 
notes that other exchanges assess fees between $0.47 and $0.50 for 
Professional Customer and Broker Dealer transactions in Penny Interval 
Classes, including SPY.\10\
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    \9\ See supra note 5.
    \10\ Id.
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    The Exchange believes that assessing Professional Customers and 
Broker Dealers $0.50 for Penny Interval Class and SPY electronic Non-
Auction Transactions contra to Public Customers is equitable and not 
unfairly discriminatory. The Exchange notes that Market Maker maker 
fees assessed for Penny Interval Classes contra to Public Customers for 
electronic Non-Auction Transactions are $0.50 and Market Maker maker 
fees assessed for SPY contra to Public Customers for electronic Non-
Auction Transactions are $0.00. Thus, Professional Customer, Broker 
Dealer, and Market Maker maker fees in Penny Interval Classes contra to 
Public Customers for electronic Non-Auction Transactions will be the 
same.
    The Exchange notes that Professional Customer and Broker Dealer 
maker fees for Penny Interval Classes and SPY contra to Public 
Customers for electronic Non-Auction Transactions will remain higher 
than Public Customer transactions where the contra party is another 
Public Customer. The securities markets generally, and BOX in 
particular, have historically aimed to improve markets for investors 
and develop various features within the market structure for Public 
Customer benefit. Accordingly, the Exchange believes that charging a 
lower fee for Public Customers compared to other account types on BOX 
is appropriate and not unfairly discriminatory. The Exchange believes 
that charging a lower fee for Public Customers will attract a high 
level of Public Customer order flow and create liquidity which will 
ultimately benefit all Participants trading on BOX.
    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow and discontinue or reduce use of certain categories of 
products in response to fee changes. Accordingly, competitive forces 
constrain options exchange transaction fees. Stated differently, 
changes to exchange transaction fees can have a direct effect on the 
ability of an exchange to compete for order flow. The Exchange believes 
the proposed changes are a reasonable attempt to effectively compete 
for electronic non-auction Professional Customer and Broker Dealer 
orders. The Exchange believes that the proposed change may incentivize 
Professional Customer and Broker Dealer order flow and, in turn, may 
make BOX a more competitive venue for order execution to the benefit of 
all Participants. Finally, the Exchange believes the proposed changes 
are consistent with the Act because, to the extent the modifications 
permit the Exchange to continue to attract greater volume and 
liquidity, the proposed changes would improve BOX's overall 
competitiveness and strengthen market quality for all market 
participants.

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 Exchange believes the proposed changes to Professional Customer 
and Broker Dealer maker fees for Penny Interval Classes and SPY contra 
to Public Customers in the electronic Non-Auction Transactions fee 
structure will not impose a burden on intramarket competition as BOX 
believes that the changes will result in Professional Customers and 
Broker Dealers being charged appropriately for their Penny Interval 
Class and SPY maker

[[Page 5054]]

transactions contra to Public Customers. The proposed change would 
apply to all similarly situated market participants and, accordingly, 
the proposed change would not impose a disparate burden on competition 
among Participants on BOX. The proposed change is designed to compete 
with other options exchanges and to attract order flow. The Exchange 
notes that Public Customer fees remain lower than Professional 
Customer, Broker Dealer, and certain Market Maker fees because BOX has 
historically aimed to improve markets for investors and develop various 
features within the market structure for Public Customer benefit.\11\ 
The Exchange believes further the proposed changes to Professional 
Customer and Broker Dealer Penny Interval Class and SPY maker fees 
contra to Public Customers in the electronic Non-Auction Transactions 
fee structure will not impose a burden on intermarket competition. The 
Exchange notes that the Non-Auction Transaction fee structure as a 
whole, including the proposed change, is designed to be competitive 
with other options exchanges and to attract order flow. The Exchange 
believes the electronic Non-Auction Transactions fee structure, 
including the proposed change, will remain competitive with other 
options exchanges.\12\
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    \11\ The Exchange notes that Public Customer fees remain lower 
than Market Maker fees, with the exception of Market Maker maker 
fees contra to Non-Public Customers for electronic Non-Auction 
Transactions, as well as Market Maker maker fees contra to Public 
Customers assessed in SPY for electronic Non-Auction Transactions. 
Similar to Public Customers, Market Makers are assessed no fee for 
the above transactions.
    \12\ See supra note 5.
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    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such an environment, the Exchange must continually 
review, and consider adjusting, its fees and rebates to remain 
competitive with other exchanges. Because competitors are free to 
modify their own fees and rebates in response, and because market 
participants may readily adjust their order routing practices, the 
Exchange believes that the degree to which fee or rebate changes in 
this market may impose any burden on competition is extremely limited. 
For the reasons described above, the Exchange believes that the 
proposed rule change will encourage intermarket competition.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Exchange Act \13\ and Rule 19b-4(f)(2) 
thereunder,\14\ because it establishes or changes a due, or fee.
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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend the rule 
change if it appears to the Commission that the action is necessary or 
appropriate in the public interest, for the protection of investors, or 
would otherwise further 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 numberSR-BOX-2024-04 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-2024-04. 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-2024-04 and should be 
submitted on or before February 15, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-01392 Filed 1-24-24; 8:45 am]
BILLING CODE 8011-01-P