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Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”), and Rule 19b-4 thereunder, notice is hereby given that on August 16, 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, and Rule 19b-4(f)(2) thereunder, 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.
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 to amend the Fee Schedule relating to BOX Connectivity Fees and Port Fees 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 increase BOX Connectivity Fees for 10 gigabit (“Gb”) Connections, Non-10 Gb Connections, Financial Information Exchange (“FIX”) Ports, SOLA® Access Information Language (“SAIL”) Ports, Drop Copy Ports, and High Speed Vendor Feed (“HSVF”) Ports (collectively “Connectivity and Ports”). Specifically, the Exchange proposes to increase its fees for Connectivity and Ports in Sections III.A.2 and III.B of the BOX Fee Schedule.
The Exchange initially filed the proposed pricing change on June 3, 2024 (SR-BOX-2024-13). On June 18, 2024, the Exchange withdrew that filing and submitted SR-BOX-2024-16. The instant filing replaces SR-BOX-2024-16, which was withdrawn on August 16, 2024.
By way of background, a physical connection is utilized by a Participant or non-Participant to connect to BOX at the datacenters where BOX's servers are located. BOX currently assesses the following physical connectivity fees for Participants and non-Participants on a monthly basis: $1,000 per connection for a Non-10 Gb Connection and $5,000 per connection for a 10 Gb Connection. The Exchange proposes to increase the monthly fee for Non-10 Gb Connections from $1,000 to $1,200 per connection and from $5,000 to $6,000 monthly fee for each 10 Gb Connection. The Exchange notes the proposed fee change better enables BOX to continue to maintain and improve its market technology and services and also notes that the proposed fee amount, even as amended, continues to be lower than the amounts assessed by other exchanges for similar connections, except for MEMX where their xNet Physical Connection is $6,000 per month, the same price as proposed for BOX's 10 GB Connection. However, MEMX does not offer a less expensive alternative, while BOX will offer a Non-10 Gb Connection for $1,200 per month.
See Cboe EDGX Exchange, Inc. (“Cboe EDGX”) Options Fee Schedule (assessing $2,500/month for a 1Gb physical port and $8,500/month for a 10Gb physical port). The 1Gb physical port is analogous to the Exchange's Non-10 Gb Connection and the 10Gb physical port is analogous to the Exchange's 10 Gb Connection. See also Cboe Options Fee Schedule (10 Gb Physical Port $7,000 per month and 1 Gb Physical Port $1,500 per month). The 1 Gb Physical Port is analogous to the Exchange's Non-10 Gb Connection and the 10 Gb Physical Port is analogous to the Exchange's 10 Gb Connection. See also Cboe BZX Exchange, Inc. (“Cboe BZX”) Options Fee Schedule (10 Gb physical port $7,500 per month and 1 Gb physical port $2,500 per month). The 1Gb physical port is analogous to the Exchange's Non-10 Gb Connection and the 10Gb physical port is analogous to the Exchange's 10 Gb Connection. The relevant Cboe C2 Exchange, Inc. (“Cboe C2”) fees are the same as Cboe BZX. See Cboe C2 Options Fee Schedule. See also Nasdaq PHLX LLC (“Nasdaq Phlx”) Rules, General 8, Section 1 “Co-Location Services, Connectivity to the Exchange” (Fiber Connection to the Exchange (10Gb Ultra) $15,825 per month and Fiber Connection to the Exchange (1Gb Ultra) $2,638 per month) and Nasdaq BX, Inc. General 8, Section 1 (same) and Nasdaq GEMX, LLC General 8, Section 1 (same) and Nasdaq ISE, LLC General 8, Section 1 (same) and Nasdaq MRX, LLC General 8, Section 1 (same) and Nasdaq Stock Market LLC General 8, Section 1 (same). The 1Gb Ultra is analogous to the Exchange's Non-10 Gb Connection and the 10Gb Ultra is analogous to the Exchange's 10 Gb Connection. See also New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE Chicago Inc., NYSE National, Inc. Connectivity Fee Schedule (10 Gb LX LCN Circuit $22,000 per month and IP Network Access 1 Gb Circuit $2,500 per month). The IP Network Access 1 Gb Circuit is analogous to the Exchange's Non-10 Gb Connection and the 10 Gb LX LCN Circuit is analogous to the Exchange's 10 Gb Connection. See also MIAX Options Fee Schedule, Section 5)a) (Primary/Secondary Facility 10 Gigabit ULL Per Connection $13,500 per month and Primary/Secondary Facility 1 Gigabit Per Connection $1,400 per month) and MIAX Pearl, LLC Options Fee Schedule (same) and MIAX Emerald, LLC Options Fee Schedule (same) and MIAX Sapphire, LLC Options Fee Schedule (same). The 1 Gigabit is analogous to the Exchange's Non-10 Gb Connection and the 10 Gigabit ULL is analogous to the Exchange's 10 Gb Connection. See also MEMX LLC (“MEMX”) Connectivity Fee Schedule (xNet Physical Connection $6,000 per month). The Exchange notes that MEMX only has one type of connection.
Further, BOX currently provides four types of ports, including: (i) the FIX Port, which allows Participants to electronically send orders in all products traded on BOX; (ii) the SAIL Port, which allows Market Makers to submit electronic quotes and orders and other Participants to submit orders to BOX; (iii) the Drop Copy Port, which provides a real-time feed containing trade execution, trade correction, trade cancellation and trade allocation for regular and complex orders on BOX for Participants; and (iv) the HSVF Port, which provides a BOX market data feed for both Participants and non-Participants. The Exchange notes that Participants must connect to a minimum of one port via FIX or SAIL and that there is no minimum or maximum number of ports required for the Drop Copy Port or the HSVF Port.
Current FIX Port fees are as follows:
| FIX ports | BOX monthly port fees |
|---|---|
| 1st FIX Port | $500 per port per month. |
| FIX Ports 2 through 5 | $250 per port per month. |
| Additional FIX Ports over 5 | $150 per port per month. |
| SAIL ports | BOX monthly port fees |
|---|---|
| Market Making | $1,000 per month for all Ports. |
| Order Entry | $500 per month per port (1-5 Ports). $150 per month for each additional Port. |
| FIX ports | BOX monthly port fees |
|---|---|
| 1st FIX Port | $600 per port per month. |
| FIX Ports 2 through 5 | $300 per port per month. |
| Additional FIX Ports over 5 | $180 per port per month. |
| SAIL ports | BOX monthly port fees |
|---|---|
| Market Making | $1,200 per month for all Ports. |
| Order Entry | $600 per month per port (1-5 Ports). $180 per month for each additional Port. |