[Federal Register Volume 89, Number 124 (Thursday, June 27, 2024)]
[Notices]
[Pages 53693-53698]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-14065]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100396; File No. SR-BOX-2024-15]


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 (``BOX'')

June 21, 2024.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on June 13, 2024, BOX Exchange LLC (the ``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 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 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 for trading on BOX 
to establish fees and rebates for the FLEX Open Outcry (``FOO'') Order 
type on the BOX Trading Floor.
    The Exchange represented in its filing with the Securities and 
Exchange Commission (``SEC'' or the ``Commission'') to establish FOO 
Orders that, ``the Exchange has not yet determined the fees for FOO 
transactions executed on the Trading Floor. Prior to commencing trading 
of the FOO Order type on the Trading Floor, the Exchange intends to 
submit a proposed rule change to the Commission setting forth the 
proposed fees.'' \5\ The Exchange now proposes to

[[Page 53694]]

establish transaction fees and rebates that will be applicable to the 
FOO Order type on the BOX Trading Floor.
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    \5\ See Securities Exchange Act Release No. 100156 (May 15, 
2024), 89 FR 44721 (May 21, 2024) (Notice of Filing of Amendment No. 
3 and Order Granting Accelerated Approval of a Proposed Rule Change, 
as Modified by Amendment No. 3, to Adopt Rules to Govern FLEX Equity 
Options and a New Order Type to Trade FLEX Equity Options on the BOX 
Trading Floor).
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    FLEX Equity Options are options with flexible terms such that 
Participants \6\ can customize expiration date, exercise price, and 
exercise style. FLEX Equity Options are subject to Rule 5055 and are 
traded as FLEX Open Outcry (``FOO'') Orders on the BOX Trading Floor 
under Rule 7605. As such, the Exchange is now proposing to establish 
fees and rebates for FOO Orders on the BOX Trading Floor.
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    \6\ The term ``Participant'' means a firm, or organization that 
is registered with the Exchange pursuant to the Rule 2000 Series for 
purposes of participating in trading on a facility of the Exchange 
and includes an ``Options Participant'' and ``BSTX Participant.'' 
See BOX Rule 100(a)(42).
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    First, the Exchange proposes to include FOO Orders in current 
Section V.A, to update the title to reflect this addition, and to 
assess FOO Order manual transaction fees based on account type. The 
Exchange notes that the proposed fees for FOO Orders are identical to 
the fees currently assessed to Qualified Open Outcry (``QOO'') Orders 
on the BOX Trading Floor. For Public Customers, the Exchange proposes 
to assess a $0.00 per contract fee for FOO manual transactions in Penny 
and Non-Penny Pilot Classes. For Professional Customers, the Exchange 
proposes to assess a $0.10 per contract fee for FOO manual transactions 
in Penny and Non-Penny Pilot Classes. For Broker Dealers and Market 
Makers, the Exchange proposes to assess a $0.25 and $0.35, 
respectively, per contract fee for manual transactions in Penny and 
Non-Penny Pilot classes. Additionally, the Exchange proposes to assess 
a $0.00 per contract fee for Broker Dealers Facilitating a Public 
Customer in FOO transactions in Penny and Non-Penny Pilot Classes.\7\ 
The Exchange notes that other exchanges with physical trading floors 
assess identical fees for FLEX orders and non-FLEX orders executed on 
their respective exchanges.\8\
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    \7\ For example, if a Floor Broker presents a FOO Order on the 
Trading Floor where the initiating side is a Public Customer and the 
contra side is the Broker Dealer guaranteeing the full size of the 
order, the Public Customer will be assessed a $0.00 per contract fee 
on the initiating side and the Broker Dealer will be assessed a 
$0.00 per contract fee for the contra-side.
    \8\ See Cboe Exchange, Inc. (``Cboe'') Fee Schedule (Rate 
Table--All Products Excluding Underlying List A, Manual Transaction 
Fees for Equity, ETN, and ETF Options by Capacity). The Exchange 
notes that Cboe assesses different fees for specific types of FLEX 
options products that BOX does not list. The Exchange believes that 
FLEX options on CBOE comparable to FLEX Equity Options on BOX are 
assessed the fees for Equity, ETN, and ETF Options such that CBOE 
assesses the same fees for FLEX and non-FLEX options. See also NYSE 
American LLC (``NYSE American'') Fee Schedule (Section I. Options 
Transaction Fees and Credits, Rate Per Contract Manual Transactions 
by Participant) and NYSE Arca, Inc. (``NYSE Arca'') Fee Schedule 
(Trade-Related Charges for Standard Options) (Standard Options in 
this context refers to options that are not mini-options contracts, 
see Securities Exchange Act Release No. 69246 (March 27, 2013), 78 
FR 19784 (April 2, 2013) (SR-NYSEArca-2013-25) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Modifying the NYSE 
Arca Options Fee Schedule To Establish Fees for Mini-Options 
Contracts)). The Exchange believes that NYSE American and NYSE Arca 
FLEX options are assessed ``Rates for Options transactions'' and 
``Transaction Fee for Manual Executions,'' respectively, such that 
NYSE American and NYSE Arca assess the same fees for FLEX and non-
FLEX options. See, e.g., Securities Exchange Act Release No. 71015 
(December 6, 2013), 78 FR 75642 (December 12, 2013) (SR-NYSEMKT-
2013-98) (including FLEX Option transactions in the strategy 
execution fee cap and noting that FLEX Options are not 
differentiated for purposes of other pricing categories within the 
Fee Schedule).
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    Next, the Exchange proposes to include FOO Orders in current 
Section V.C (``QOO Order Rebate'') and change the title of the section 
to reflect this addition. The Exchange proposes that Floor Brokers will 
receive a $0.075 per contract rebate for all Broker Dealer and Market 
Maker FOO Orders presented on the Trading Floor and $0.05 per contract 
rebate for all Professional Customer FOO Orders presented on the 
Trading Floor. The rebate will not apply to Public Customer executions, 
executions subject to Section V.D, or Broker Dealer executions where 
the Broker Dealer is facilitating a Public Customer. The Exchange notes 
that the proposed rebates are identical to the rebates that are 
currently applied to QOO Orders on the BOX Trading Floor. The Exchange 
notes further that another exchange offers rebates for FLEX option 
transactions.\9\
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    \9\ See NYSE American Fee Schedule (Floor Broker Fixed Cost 
Prepayment Incentive Program (the ``FB Prepay Program''). The 
Exchange believes that the NYSE American FB Prepay Program is 
applicable to FLEX options, such that NYSE American offers the same 
rebates to both FLEX and non-FLEX options. See, e.g., Securities 
Exchange Act Release No. 71015 (December 6, 2013), 78 FR 75642 
(December 12, 2013) (SR-NYSEMKT-2013-98) (including FLEX Option 
transactions in the strategy execution fee cap and noting that FLEX 
Options are not differentiated for purposes of other pricing 
categories within the Fee Schedule).
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    Lastly, the Exchange proposes to include FOO Orders in current 
Section V.D. (``Strategy QOO Order Fee Cap and Rebate'') and update the 
title to reflect this addition.\10\ The Exchange proposes that the 
manual transaction fees for certain Strategy FOO Orders will be capped 
on a daily basis: Short stock interest, long stock interest, merger, 
reversal, conversion, jelly roll, and box spread strategies \11\ 
executed on the same trading day will be capped at $500 per day per 
customer. Further, the Exchange proposes that on each trading day, 
Floor Brokers are eligible to receive a $500 rebate per customer for 
presenting Strategy FOO Orders other than dividend strategies on the 
Trading Floor. The rebate will be applied once the $500 fee cap, per 
customer, for all short stock interest, long stock interest, merger, 
reversal, conversion, jelly roll, and box spread strategies is met.\12\ 
The Exchange notes that an identical fee cap and rebate currently 
exists for these Strategy QOO Orders on the BOX Trading Floor. The 
Exchange notes that Strategy QOO Orders and Strategy FOO Orders will 
not be counted together in order to satisfy the respective fee 
caps.\13\ The Exchange notes that other

[[Page 53695]]

exchanges include FLEX options in Strategy Caps.\14\
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    \10\ The Exchange also notes that it is making certain 
clarifying changes throughout Section V.D in order to include the 
addition of the FOO Order type.
    \11\ A ``short stock interest strategy'' is defined as a 
transaction done to achieve a short stock interest arbitrage 
involving the purchase, sale, and exercise of in-the-money options 
of the same class. A ``long stock interest strategy'' is defined as 
a transaction done to achieve long stock involving the purchase, 
sale, and exercise of in-the-money options of the same class. A 
``merger strategy'' is defined as transactions done to achieve a 
merger arbitrage involving the purchase, sale and exercise of 
options of the same class and expiration date, each executed prior 
to the date on which shareholders of record are required to elect 
their respective form of consideration, i.e., cash or stock. A 
``reversal strategy'' is established by combining a short security 
position with a short put and a long call position that shares the 
same strike and expiration. A ``conversion strategy'' is established 
by combining a long position in the underlying security with a long 
put and a short call position that shares the same strike and 
expiration. A ``jelly roll strategy'' is created by entering into 
two separate positions simultaneously. One position involves buying 
a put and selling a call with the same strike price and expiration. 
The second position involves selling a put and buying a call, with 
the same strike price, but with a different expiration from the 
first position. A ``box spread strategy'' is a strategy that 
synthesizes long and short stock positions to create a profit. 
Specifically, a long call and short put at one strike is combined 
with a short call and long put at a different strike to create 
synthetic long and synthetic short stock positions, respectively.
    \12\ For example, when Customer A sends box spread Strategy FOO 
Orders to Floor Broker 1 on the Trading Floor, Customer A's fees for 
these orders will be capped at $500 per day. If Customer A reaches 
the $500 fee cap, Floor Broker 1, who entered these orders on behalf 
of Customer A into the BOX system, will receive the $500 rebate. 
Customer B may also send box spread Strategy FOO Orders to Floor 
Broker 1 for execution on the BOX Trading Floor. Customer B's fees 
for these orders will also be capped at $500 per day and Floor 
Broker 1, who entered these orders, will receive the $500 rebate if 
Customer B reaches the $500 daily fee cap.
    \13\ For example, Customer A may send both box spread Strategy 
FOO Orders and box spread Strategy QOO Orders to Floor Broker 1 on 
the Trading Floor; however, the FOO Order fees and QOO Order fees 
will be capped separately from each other resulting in a $500 fee 
cap for FOO Orders and a $500 fee cap for QOO Orders.
    \14\ See Nasdaq Phlx Rules Options 7, Section 6.B (FLEX 
Transaction Fees) (``The Monthly Firm Fee Cap, Monthly Market Maker 
Cap, Strategy Caps and the Options Surcharge in BKX, described in 
Options 7, Section 4 will apply to this Section 6.B. No other fees 
described in Options 7, Section 4 will apply to this Section 6.B.'') 
and Securities Exchange Act Release No. 71015 (December 6, 2013), 78 
FR 75642 (December 12, 2013) (SR-NYSEMKT-2013-98) (Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the 
NYSE Amex Options Fee Schedule To Include FLEX Option Transactions 
in the Strategy Execution Fee Cap). The Exchange notes that strategy 
fee caps are applicable to FLEX and non-FLEX options on Nasdaq Phlx 
and NYSE American.
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    Further, the Exchange proposes that manual transaction fees for FOO 
Order dividend strategies \15\ will be capped on both a daily and 
monthly basis: Dividend strategy FOO Orders executed on the same 
trading day in the same options class will be capped at $1,000 per day 
per customer. The Exchange also proposes that on each trading day, 
Floor Brokers are eligible to receive a $500 rebate per customer for 
presenting dividend strategy FOO Orders on the Trading Floor. For 
dividend strategy FOO Orders, this Floor Broker rebate of $500 will be 
applied per customer once the $1,000 fee cap is met. Further, the 
Exchange proposes that dividend strategy FOO Orders executed in the 
same month will be capped at $65,000 per month per customer. Lastly, 
the Exchange proposes that Floor Brokers will not be eligible to 
receive a $500 daily rebate per customer for presenting dividend 
strategy FOO Orders once the monthly cap is met. The Exchange notes 
that an identical fee cap and rebate currently exists for dividend 
strategy QOO Orders on the BOX Trading Floor. The Exchange notes that 
dividend strategy QOO Orders and dividend strategy FOO Orders will not 
be counted together in order to satisfy the respective fee caps. The 
Exchange also notes that other exchanges include FLEX options in 
Strategy Caps.\16\
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    \15\ A ``dividend strategy'' is defined as a transaction done to 
achieve a dividend arbitrage involving the purchase, sale and 
exercise of in-the-money options of the same class, executed the 
first business day prior to the date on which the underlying stock 
goes ex-dividend.
    \16\ See supra note 14.
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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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FOO Order Fees
    The Exchange believes the proposed fees for FOO Orders on the BOX 
Trading Floor are reasonable as they are similar to the FLEX order fees 
currently assessed on other trading floors.\18\ The proposed fees are 
designed to attract order flow and to compete with other options 
exchanges. Participants are under no obligation to trade on BOX and may 
execute FLEX transactions on another exchange. The Exchange also notes 
that the proposed FOO Order fees are identical to the fees currently 
assessed to QOO Orders on the BOX Trading Floor.\19\ The Exchange 
believes that charging identical fees for QOO Orders and FOO Orders is 
appropriate because both QOO Orders and FOO Orders are solely traded on 
the BOX Trading Floor and each order type is represented and processed 
similarly by Floor Brokers and BOX's system. As proposed, the fees for 
all manual transactions on the BOX Trading Floor will be the same, 
which will simplify the BOX Fee Schedule and reduce investor confusion 
with regard to what fees will be assessed for transactions executed on 
the BOX Trading Floor.
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    \18\ See supra note 8.
    \19\ The Exchange notes that the current QOO Order fees have 
been in place since 2021. See Securities Exchange Act Release No. 
92238 (June 23, 2021), 86 FR 34290 (June 29, 2021) (SR-BOX-2021-15) 
(Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change To Amend the Fee Schedule on the BOX Options Market LLC 
Facility).
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    Further, the Exchange believes it is equitable and not unfairly 
discriminatory that Public Customers be charged lower fees for FLEX 
transactions than Professional Customers, Broker Dealers, and Market 
Makers on BOX. 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 customer benefit. As 
such, the Exchange believes that not assessing a fee for Public 
Customer FLEX transactions is appropriate, equitable and not unfairly 
discriminatory. The Exchange believes it promotes the best interests of 
investors to have lower transaction costs for Public Customers, and 
having no fee for FOO Orders will attract Public Customer order flow to 
the BOX Trading Floor. The Exchange believes further that Public 
Customer order flow is attractive to other Participants and that 
greater opportunities to interact with Public Customer order flow will 
benefit other Participants. As such, the industry in general and the 
Exchange in particular have historically created fee structures to 
benefit Public Customers because increased Public Customer order flow 
benefits all market participants.
    The Exchange believes the proposed fees for Broker Dealer FLEX 
transactions are equitable as they will be assessed to all Broker 
Dealers on the BOX Trading Floor. Further, the Exchange believes the 
proposed fees for Broker Dealer FLEX transactions is not unfairly 
discriminatory given that the proposed rates (and resulting disparities 
between Broker Dealers and other account types) are identical to fees 
currently assessed at other options exchanges for FLEX 
transactions.\20\
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    \20\ See supra note 8.
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    The Exchange believes that not charging a Broker Dealer 
facilitating a Public Customer is reasonable because it will encourage 
Broker Dealers to facilitate Public Customer orders through the Trading 
Floor and increase participation in open outcry, which will in turn 
promote increased executions on the Exchange which will benefit all BOX 
Participants.
    The Exchange believes it is equitable and not unfairly 
discriminatory to assess Professional Customers lower fees for FLEX 
transactions than Broker Dealers and Market Makers because, by 
definition, Professional Customers are a different type of market 
participant. Specifically, Professional Customers are not brokers or 
dealers in securities; they are persons (or entities) that place more 
than 390 orders per day on average for their own beneficial account. 
The Exchange notes that assessing lower fees for Professional Customers 
compared to Broker Dealers and Market Makers is not novel as BOX 
currently assesses lower fees for Professional Customers than Broker 
Dealers and Market Makers for QOO transactions on the BOX Trading 
Floor.
    The Exchange believes the proposed fees for Market Maker FLEX 
transactions are equitable as they will be assessed to all Market 
Makers on the BOX Trading Floor. Further, the Exchange believes the 
proposed fees for Market Maker FLEX transactions is not unfairly 
discriminatory given that the proposed rates (and resulting disparities 
between Market Makers and other account types) are identical to fees 
currently assessed at other options exchanges for FLEX 
transactions.\21\
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    \21\ See supra note 8.
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FOO Order Rebate
    The Exchange believes that the proposed $0.075 and $0.05 FOO Order

[[Page 53696]]

rebates for Floor Brokers are reasonable, equitable and not unfairly 
discriminatory. As proposed, Floor Brokers will receive a $0.075 per 
contract rebate for all Broker Dealer and Market Maker FOO Orders 
presented on the Trading Floor and $0.05 per contract rebate for all 
Professional Customer FOO Orders presented on the Trading Floor. The 
proposed rebates are identical to the rebates currently applied to QOO 
Orders on the BOX Trading Floor. The Exchange believes that offering 
identical rebates for QOO Orders and FOO Orders is appropriate because 
both QOO Orders and FOO Orders are solely traded on the BOX Trading 
Floor and each order type is represented and processed similarly by 
Floor Brokers and BOX's system. As proposed, the rebates for all manual 
transactions on the BOX Trading Floor will be the same, which will 
simplify the BOX Fee Schedule and reduce investor confusion with regard 
to what rebates will be offered for transactions executed on the BOX 
Trading Floor.
    The Exchange notes that it does not offer a front-end for order 
entry on the Trading Floor, unlike some competing exchanges. As such, 
the Exchange believes it is necessary from a competitive standpoint to 
offer this rebate to the executing Floor Broker on a FOO order. The 
Exchange notes that Participants have two possible means of bringing 
orders to BOX's Trading Floor for possible execution: (1) they can 
invest in the technology, systems and personnel to participate on the 
Trading Floor and deliver the order to the Exchange matching engines 
for validation and execution; or (2) they can utilize the services of 
another Participant acting as a Floor Broker. The Exchange believes 
that offering the proposed rebates will allow Floor Brokers to price 
their services at a level that would enable them to attract FOO order 
flow from participants who would otherwise utilize the front-end order 
entry mechanism offered by BOX's competitors instead of incurring the 
cost in time and resources to install and develop their own internal 
systems to deliver FOO Orders directly to the Exchange system.
    Further, the Exchange believes to the extent that the rebate allows 
Floor Brokers to attract FOO Orders; they will gain increased 
opportunities to interact with the parties to the FOO Orders for 
potential participation in other trades on BOX. This will in turn, 
increase order flow to BOX and benefit other Participants through the 
additional trading opportunities and increased liquidity on the Trading 
Floor that could occur as a result.
    The Exchange believes it is equitable and not unfairly 
discriminatory to only apply the rebate to Floor Brokers and not to 
Floor Market Makers. Floor Market Makers only represent their own 
interest on the Trading Floor and therefore do not need a similar 
incentive. Further, the Exchange believes it is equitable and not 
unfairly discriminatory to not apply the rebate to Public Customers or 
Broker Dealers where the Broker Dealer is facilitating a Public 
Customer, as these executions are not assessed a fee for their FOO 
Orders. Additionally, the Exchange believes it is equitable and not 
unfairly discriminatory to not apply the rebate to executions subject 
to Section V.D (Strategy QOO Order Fee Cap and Rebate \22\) because 
Strategy FOO Orders will be subject to different fee caps and rebates. 
As such, these orders do not need a similar incentive.
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    \22\ The title of Section V.D ``Strategy QOO Order Fee Cap and 
Rebate'' is proposed, infra, to become ``Strategy QOO Order Fee Cap 
and Rebate & Strategy FOO Order Fee Cap and Rebate'' to reflect the 
proposal for Section V.D to be applicable to both QOO Orders and FOO 
Orders, separately.
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    The Exchange again notes that the proposed Floor Broker rebates are 
identical to rebates currently offered for QOO Orders on the BOX 
Trading Floor. The Exchange believes that establishing identical 
rebates for Floor Brokers will simplify the BOX Fee Schedule and 
increase transparency with regard to what types of rebates are offered 
for manual transactions on the BOX Trading Floor.
Strategy FOO Order Fee Cap and Rebate
    The Exchange believes the proposed fee cap for certain Strategy FOO 
Orders (short stock interest, long stock interest, merger, reversal, 
conversion, jelly roll, and box spread strategies) is reasonable and 
appropriate. The proposed fee cap is identical to the fee cap currently 
in place for QOO Orders on the BOX Trading Floor. The Exchange believes 
that an identical fee cap for QOO Orders and FOO Orders is appropriate 
because both QOO Orders and FOO Orders are solely traded on the BOX 
Trading Floor and each order type is represented and processed 
similarly by Floor Brokers and BOX's system. As proposed, the fee caps 
for all manual transactions on the BOX Trading Floor will be the same, 
which will simplify the BOX Fee Schedule and reduce investor confusion 
with regard to what fee caps are applicable for transactions executed 
on the BOX Trading Floor. Further, the Exchange notes that other 
exchanges apply similar strategy fee caps for FLEX transactions.\23\ 
The Exchange believes the proposed fee cap is equitable and not 
unfairly discriminatory because it provides incentives for all 
Participants to submit certain strategy orders to the BOX Trading 
Floor, which brings increased liquidity and order flow to the floor for 
the benefit of all market participants.
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    \23\ See supra note 14.
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    The Exchange believes that the proposed rebate for presenting 
Strategy FOO Orders (other than dividend strategy FOO Orders) is 
reasonable, equitable, and not unfairly discriminatory. The Exchange 
believes the proposed rebate is reasonable as an identical rebate is 
currently assessed to these Strategy QOO Orders on the Trading Floor. 
The Exchange believes that offering identical rebates for QOO Orders 
and FOO Orders is appropriate because both QOO Orders and FOO Orders 
are solely traded on the BOX Trading Floor and each order type is 
represented and processed similarly by Floor Brokers and BOX's system. 
As proposed, the rebates for all manual transactions on the BOX Trading 
Floor will be the same, which will simplify the BOX Fee Schedule and 
reduce investor confusion with regard to what rebates will be offered 
for transactions executed on the BOX Trading Floor. Further, the 
Exchange believes that offering the proposed rebate will allow Floor 
Brokers to price their services at a level that would enable them to 
attract Strategy FOO order flow to the BOX Trading Floor. As such, the 
Exchange believes that the proposed rebate is reasonable.
    The Exchange believes that the proposed rebate is equitable and not 
unfairly discriminatory as the rebate is available to all Floor 
Brokers.\24\ Further, the Exchange believes that applying the proposed 
rebate to Floor Brokers and not to Floor Market Makers is equitable and 
not unfairly discriminatory as Floor Market Makers only represent their 
own interest on the Trading Floor and therefore do not need a similar 
incentive. As discussed herein, Floor Brokers serve an important 
function in facilitating the execution of orders via open outcry for 
customers who do not have their own technology, systems and personnel 
to participate on the BOX Trading Floor. As such, the Exchange believes 
that offering the proposed rebate will allow Floor Brokers to price 
their services at a level that would enable them to attract Strategy 
FOO

[[Page 53697]]

order flow from participants who would otherwise utilize other front-
end order entry mechanisms offered by BOX's competitors instead of 
incurring the cost in time and resources to install and develop their 
own internal systems to deliver Strategy FOO Orders directly to BOX's 
system.
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    \24\ The Exchange notes that no Floor Broker shall effect any 
transaction in FLEX Equity Options unless a Letter of Authorization 
has been issued by a clearing member organization and filed with the 
Exchange specifically accepting responsibility for the clearance of 
FLEX Equity Option transactions of the Floor Broker. See BOX Rule 
5055(l).
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    The Exchange believes the proposed daily and monthly fee caps for 
dividend strategy FOO Orders are reasonable and appropriate. The 
proposed fee caps are identical to the fee caps currently in place for 
dividend strategy QOO Orders on the BOX Trading Floor. The Exchange 
believes that identical fee caps for QOO Orders and FOO Orders is 
appropriate because both QOO Orders and FOO Orders are solely traded on 
the BOX Trading Floor and each order type is represented and processed 
similarly by Floor Brokers and BOX's system. As proposed, the fee caps 
for all manual transactions on the BOX Trading Floor will be the same, 
which will simplify the BOX Fee Schedule and reduce investor confusion 
with regard to what fee caps will be applicable for transactions 
executed on the BOX Trading Floor. Further, the Exchange notes that 
other exchanges apply a similar dividend strategy fee cap for FLEX 
transactions.\25\ The Exchange believes the proposed fee cap is 
equitable and not unfairly discriminatory because it provides 
incentives for all Participants to submit dividend strategy FOO Orders 
to the BOX Trading Floor, which brings increased liquidity and order 
flow to the floor for the benefit of all market participants.
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    \25\ See supra note 14.
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    The Exchange believes that the proposed rebate for presenting 
dividend strategy FOO Orders is reasonable, equitable, and not unfairly 
discriminatory. The Exchange believes the proposed rebate is reasonable 
as an identical rebate is currently provided to dividend strategy QOO 
Orders on the Trading Floor. The Exchange believes that offering 
identical rebates for QOO Orders and FOO Orders is appropriate because 
both QOO Orders and FOO Orders are solely traded on the BOX Trading 
Floor and each order type is represented and processed similarly by 
Floor Brokers and BOX's system. As proposed, the rebates for all manual 
transactions on the BOX Trading Floor will be the same, which will 
simplify the BOX Fee Schedule and reduce investor confusion with regard 
to what rebates will be offered for transactions executed on the BOX 
Trading Floor. Further, the Exchange believes that offering the 
proposed rebate will allow Floor Brokers to price their services at a 
level that would enable them to attract dividend strategy FOO order 
flow to the BOX Trading Floor. As such, the Exchange believes that the 
proposed rebate is reasonable.
    The Exchange believes that the proposed rebate for dividend 
strategy FOO Orders is equitable and not unfairly discriminatory as the 
rebate is available to all Floor Brokers. Further, the Exchange 
believes that applying the proposed rebate to Floor Brokers and not to 
Floor Market Makers is equitable and not unfairly discriminatory as 
Floor Market Makers only represent their own interest on the Trading 
Floor and therefore do not need a similar incentive.

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 notes that it 
operates in a highly competitive market in which market participants 
can readily favor competing venues if they deem fee levels at a 
particular venue to be excessive, or rebate opportunities available at 
other venues to be more favorable. In such an environment, the Exchange 
must continually adjust its fees to remain competitive with other 
exchanges. Because competitors are free to modify their own fees in 
response, the Exchange believes that the degree to which fee changes in 
this market may impose any burden on competition is limited. For the 
reasons discussed above, the Exchange believes that the proposed 
changes do not impose an undue burden on competition.
    The Exchange does not believe that the proposed FOO Order fees will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the Act because, as noted herein, other 
exchanges currently assess identical fees for FLEX and non-FLEX 
transactions on their trading floors. Further, the Exchange believes 
that the proposed FOO Order fees could promote competition between BOX 
and other execution venues, including those that currently offer 
identical or similar fees.
    The Exchange does not believe that offering a rebate to Floor 
Brokers for FOO Orders presented to the Trading Floor will impose an 
undue burden on intramarket competition because all Floor Brokers are 
eligible to transact FOO Orders and receive a rebate. Further, the 
Exchange believes that the proposed rebates will promote competition by 
allowing Floor Brokers to competitively price their services and for 
BOX to remain competitive with other exchanges that offer front-end 
order entry on their trading floors.
    Lastly, the Exchange does not believe the proposed fee caps for 
Strategy FOO Orders and dividend strategy FOO Orders on the BOX Trading 
Floor will impose an undue burden on intramarket competition because 
all Floor Participants are eligible for the fee caps. Further, the 
Exchange believes that the proposed fee caps will promote competition 
by allowing the Exchange to remain competitive with other exchanges 
with open outcry trading floors. Further, the Exchange does not believe 
that offering a rebate to Floor Brokers will impose an undue burden on 
intramarket competition because all Floor Brokers are eligible to 
transact Strategy FOO Orders and dividend strategy FOO Orders and 
receive a rebate. Further, as discussed above, the Exchange believes 
that applying the proposed rebates to Floor Brokers and not to Floor 
Market Makers is appropriate as Floor Market Makers only represent 
their own interest on the Trading Floor and therefore do not need 
similar incentives. Lastly, the Exchange believes that the proposed 
rebates will promote competition by allowing Floor Brokers to 
competitively price their services and for BOX to remain competitive 
with other exchanges with trading floors.
    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. For the reasons described above, the 
Exchange believes that the proposed rule change reflects this 
competitive environment.

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 \26\ and Rule 19b-4(f)(2) 
thereunder,\27\

[[Page 53698]]

because it establishes or changes a due, or fee.
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    \26\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \27\ 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 number SR-BOX-2024-15 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-2024-15. 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-2024-15 and should be 
submitted on or before July 18, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
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    \28\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-14065 Filed 6-26-24; 8:45 am]
BILLING CODE 8011-01-P