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Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing of Proposed Minor Rule Violation Plan

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November 6, 2012.

Pursuant to Section 19(d)(1) of the Securities Exchange Act of 1934 (the “Act”) [1] and Rule 19d-1(c)(2) thereunder,[2] notice is hereby given that on October 15, 2012, BOX Options Exchange LLC (the “Exchange”), filed with the Securities and Exchange Commission (the “Commission”) a proposed minor rule violation plan (“MRVP”) with sanctions not exceeding $2,500 which would not be subject to the provisions of Rule 19d-1(c)(1) of the Act [3] requiring that a self-regulatory organization (“SRO”) promptly file notice with the Commission of any final disciplinary action taken with respect to any person or organization.[4] In accordance with Rule 19d-1(c)(2) under the Act, the Exchange proposed to designate certain specified rule violations as minor rule violations, and requested that it be relieved of the prompt reporting requirements regarding such violations, provided it gives notice of such violations to the Commission on a quarterly basis.

The Exchange proposes to include in its MRVP the procedures and violations currently included in Exchange Rule 12140 (“Imposition of Fines for Minor Rule Violations”).[5]

According to the Exchange's proposed MRVP, under Rule 12140, the Exchange may impose a fine (not to exceed $2,500) on a member or an associated person with respect to any rule violation listed in Rule 12140(d). The Exchange shall serve the person against whom a fine is imposed with a written statement setting forth the rule or rules violated, the act or omission constituting each such violation, the fine imposed for each such violation, and the date by which such fine shall be paid, such determination becomes final or such determination must be contested. If the person against whom the fine is imposed pays the fine, such payment shall be deemed to be a waiver of such person's right to a disciplinary proceeding and any review of the matter under the Exchange Rules. Any person against whom a fine is imposed may contest the Exchange's determination by filing with the Exchange a written answer, at which point the matter shall become a disciplinary proceeding.

The Exchange proposes that, as set forth in Exchange Rule 12140(d), violations of the following rules would be appropriate for disposition under the MRVP: Rule 3120 (Position Limits); Rule 10030 (Focus Reports); Rule 10040 (Requests for Trade Data); Rules 7110(a), 7150(d)-(f), and 8050(a)-(d) (Order Entry); Rule 8040(a)(7) (Quotation Parameters); Rule 8050(e) (Continuous Quotes); Rule 3180 (Mandatory Systems Testing); Rules 2020, 2040, and 2050 related to failure to timely file amendments to Form U4, Form U5, and Form BD; Rule 9000(c)-(e), (g) and (h) (Contrary Exercise Advice); Rule 15020 (Locked and Crossed Markets); Rule 8030(e) (Market Maker Assigned Activity); Rule 8050(c)(2)-(4) (Request for Quote); and Rule 15010(a) (Trade-Through).[6]

Upon approval of the plan, the Exchange will provide the Commission a quarterly report of actions taken on minor rule violations under the plan. The quarterly report will include, among other things: the Exchange's internal file number for the case, the name of the individual and/or organization, the nature of the violation, the specific rule provision violated, the sanction imposed, the number of times the rule violation has occurred, and the date of disposition.[7]

I. Solicitation of Comments

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

Electronic Comments

Paper Comments

  • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File No. 4-655. 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 Web site ( Copies of the submission, all subsequent amendments, all written statements with respect to the proposed MRVP that are filed with the Commission, and all written communications relating to the proposed MRVP 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 Web site 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 10:00 a.m. and 3:00 p.m. Copies of the proposed MRVP also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. 4-655 and should be submitted on or before December 4, 2012.

II. Date of Effectiveness of the Proposed Minor Rule Violation Plan and Timing for Commission Action

Pursuant to Section 19(d)(1) of the Act and Rule 19d-1(c)(2) thereunder,[8] after December 4, 2012, the Commission may, by order, declare the Exchange's proposed MRVP effective if the plan is consistent with the public interest, the protection of investors, or otherwise in furtherance of the purposes of the Act. The Commission in its order may restrict the categories of violations to be designated as minor rule violations and may impose any other terms or conditions to the proposed MRVP, File No. 4-655, and to the period of its effectiveness, which the Commission deems necessary or appropriate in the public interest, for the protection of investors or otherwise in furtherance of the purposes of the Act.

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.[9]

Kevin M. O'Neill,

Deputy Secretary.


4.  The Commission adopted amendments to paragraph (c) of Rule 19d-1 to allow SROs to submit for Commission approval plans for the abbreviated reporting of minor disciplinary infractions. See Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR 23828 (June 8, 1984). Any disciplinary action taken by an SRO against any person for violation of a rule of the SRO which has been designated as a minor rule violation pursuant to such a plan filed with and declared effective by the Commission shall not be considered “final” for purposes of Section 19(d)(1) of the Act if the sanction imposed consists of a fine not exceeding $2,500 and the sanctioned person has not sought an adjudication, including a hearing, or otherwise exhausted his administrative remedies.

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5.  On April 27, 2012, the Exchange's application for registration as a national securities exchange, including the rules governing the Exchange, was approved. See Securities Exchange Act Release No. 66871 (April 27, 2012), 77 FR 26323 (May 3, 2012) (File No. 10-206).

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6.  The Commission notes that the list of violations set forth in this notice corrects certain rule reference errors that are presently in Exchange Rule 12140. The Exchange has informed Commission staff that it will submit a rule filing to correct such errors.

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7.  The Exchange attached a sample form of the quarterly report with its submission to the Commission.

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[FR Doc. 2012-27527 Filed 11-9-12; 8:45 am]