[Federal Register Volume 89, Number 137 (Wednesday, July 17, 2024)]
[Notices]
[Pages 58212-58215]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15675]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100505; File No. SR-BOX-2024-17]


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'')

July 11, 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 July 1, 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

[[Page 58213]]

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 include FLEX Open Outcry (``FOO'') volume toward the Qualified 
Contingent Cross (``QCC'') Growth Rebate.\5\
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    \5\ The Exchange recently established transaction fees and 
rebates applicable to the FOO Order type on the BOX Trading Floor. 
See Securities Exchange Act Release No. 100396 (June 21, 2024), 89 
FR 53693 (June 27, 2024) (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).
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    Currently, BOX offers a QCC Rebate and a QCC Growth Rebate.\6\ 
Specifically, a QCC Rebate is paid to the Participant that entered the 
order into the BOX system when at least one party to the QCC 
transaction is a Broker Dealer or Market Maker. The Participant 
receives a per contract rebate on QCC transactions according to the 
tier achieved. Volume thresholds are calculated on a monthly basis by 
totaling the Participant's QCC Agency Order volume on BOX. When only 
one side of the QCC transaction is a Broker Dealer or Market Maker, 
Rebate 1 applies. When both parties to the QCC transaction are a Broker 
Dealer or Market Maker, Rebate 2 applies. The Exchange notes that the 
QCC Rebate is intended to incentivize the sending of QCC Orders to BOX.
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    \6\ See BOX Fee Schedule Section IV.D.1.
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    The QCC Rebate tier structure is as follows:

----------------------------------------------------------------------------------------------------------------
                                             QCC agency order volume on BOX     Rebate 1 (per     Rebate 2 (per
                   Tier                                (per month)                contract)         contract)
----------------------------------------------------------------------------------------------------------------
1.........................................  0 to 749,999 contracts..........           ($0.14)           ($0.22)
2.........................................  1,000,000[sic] to 1,499,999                 (0.16)            (0.25)
                                             contracts.
3.........................................  1,500,000+ contracts............            (0.17)            (0.27)
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    Additionally, the QCC Growth Rebate allows Participant's to qualify 
for the rebates listed in Tier 3 of the QCC Rebate if a Participant's 
QCC Agency Order volume on BOX achieves Tier 2 of the QCC Rebate in the 
month AND the Participant's total QCC volume combined with total 
Qualified Open Outcry (``QOO'') volume exceeds 5 million contracts per 
month. Strategy QOO Orders and Strategy QCC Orders are not counted 
toward the QCC Growth Rebate volume.\7\
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    \7\ See BOX Fee Schedule Section IV.D.1.b.
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    The Exchange now proposes that FOO volume be counted toward the QCC 
Growth Rebate. Specifically, the Exchange proposes that if a 
Participant's QCC Agency Order volume on BOX achieves Tier 2 of the QCC 
Rebate in the month AND the Participant's total QCC volume combined 
with total QOO and FOO volume exceeds 5 million contracts per month, 
then the Participant will qualify for the rebates listed in Tier 3 of 
the QCC Rebate (``QCC Growth Rebate qualifications''). Strategy QOO 
Orders, Strategy FOO Orders, and Strategy QCC Orders will not be 
counted toward the QCC Growth Rebate volume. Further, Participants are 
entitled to one QCC Rebate in a given month, which would be the greater 
of the QCC Rebate in Section IV.D.1.a, or the QCC Growth Rebate 
detailed in Section IV.D.1.b, but not both.
    The Exchange notes that a similar rebate currently exists at 
another options exchange.\8\ Further, the Exchange believes that the 
proposal will encourage Participants to send increased QCC, FOO, and 
QOO order flow to BOX in order to achieve a higher rebate.
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    \8\ See NYSE American LLC (``NYSE American'') Fee Schedule 
(Section I.F.QCC Fees & Credits). Although the NYSE American Fee 
Schedule does not reference FLEX options, the Exchange believes that 
FLEX options are included in the Section I.F.QCC Fees & Credits 
calculation of manual billable sides, which provides a QCC Billable 
Bonus Rebate. The Exchange notes that the structure and rebates 
differ, however, the concept of combining manual billable (including 
FLEX options) and QCC billable volume to determine rebates is 
similar to the proposal.
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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,\9\ 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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    \9\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange's proposal to include FOO volume toward the QCC Growth 
Rebate is reasonable because this rebate will provide additional 
incentives for BOX Participants to engage in substantial amounts of 
trading activity which would serve to bring additional open outcry 
liquidity to the Trading Floor and QCC order flow to BOX's electronic 
market.
    As discussed above, the Exchange notes that a similar QCC rebate 
currently exists at another exchange.\10\ The Exchange believes that 
the proposed QCC Growth Rebate qualifications are reasonable because 
they offer Participants an additional opportunity to achieve a higher 
QCC rebate. Additionally, the Exchange's proposal to include FOO volume 
toward the QCC Growth Rebate is equitable and not unfairly 
discriminatory because any

[[Page 58214]]

Participant may qualify for this rebate.\11\ All BOX Participants may 
enter order flow to obtain a QCC Growth Rebate.
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    \10\ See supra note 8.
    \11\ The Exchange notes that all BOX Participants may transact 
options business electronically or on the BOX Trading Floor with a 
registered Trading Permit. The Exchange notes further that any 
market participant may send an order to a BOX Floor Broker for 
execution on BOX's Trading Floor.
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    The Exchange believes the proposal will create an incentive for 
Participants to bring liquidity to BOX--both electronically and on the 
Trading Floor. The Exchange believes that if the proposed incentive is 
effective, then an ensuing increase in trading activity on BOX will 
improve the quality of the market to the benefit of all market 
participants. Further, to the extent this proposal attracts new 
Participant volume to BOX, all market participants should benefit 
through increased liquidity and more trading opportunities. The 
Exchange believes this proposal is designed to increase participation 
on BOX and reward those Participants for the unique role they play in 
ensuring a robust market.
    The Exchange's exclusion of QCC, FOO, and QOO strategy transactions 
is reasonable as Strategy QCC transactions are not currently assessed a 
fee and Strategy QOO and Strategy FOO transactions are subject to the 
fee caps and rebates detailed in Section V.D of the BOX Fee Schedule. 
The Exchange also notes that other exchanges exclude strategy 
transactions from certain rebates.\12\ Further, the exclusion of 
strategy transactions from the QCC Growth Rebate is equitable and not 
unfairly discriminatory as this exclusion will be uniformly applied to 
all Participant types.
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    \12\ See Nasdaq PHLX LLC (``Nasdaq PHLX'') Rules, Section 6.B. 
FLEX Transaction Fees (providing that 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.). The Exchange notes that Nasdaq PHLX Options 7, 
Section 4 includes QCC Rebates which are inapplicable to Section 6.B 
FLEX Transaction Fees by its terms. See also NYSE American Fee 
Schedule (Section III.E.1.Floor Broker Incentive and Rebate 
Programs). The Exchange notes that NYSE American's Manual Billable 
Rebate Program does not include volume calculated to achieve the 
Strategy Execution Fee Cap, regardless of whether the cap is 
achieved.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
    The proposal does not impose an undue burden on intermarket 
competition. The Exchange believes its proposal remains competitive 
with other options markets and will offer market participants with 
another choice of where to transact its business. 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 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 changes in this market 
may impose any burden on competition is extremely limited.
    The Exchange believes that the QCC Growth Rebate as amended will 
encourage market participants to send greater amounts of QCC orders, 
FOO Orders, and QOO Orders to BOX for execution in order to obtain 
greater rebates and lower their costs. Further, the proposed QCC Growth 
Rebate should incentivize a greater amount of floor transactions on 
BOX, thereby allowing BOX to compete more effectively with other 
options floor models. The Exchange believes that the additional 
liquidity will enhance the quality of BOX's market and increase certain 
trading opportunities on BOX's Trading Floor.
    The Exchange believes that its proposal will not place any category 
of market participant at a competitive disadvantage and therefore does 
not impose an undue burden on intra-market competition. The Exchange 
notes that any market participant may send an order to a BOX Floor 
Broker for execution on BOX's Trading Floor.
    The Exchange's exclusion of FOO strategy transactions from the 
volume counted toward the QCC Growth Rebate does not impose an undue 
burden on competition as the exclusion will be uniformly applied to all 
Participant types.

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 number SR-BOX-2024-17 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-2024-17. 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

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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-2024-17 and should be 
submitted on or before August 7, 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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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-15675 Filed 7-16-24; 8:45 am]
BILLING CODE 8011-01-P