[Federal Register Volume 85, Number 2 (Friday, January 3, 2020)]
[Notices]
[Pages 345-357]
[FR Doc No: 2019-28412]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87868; File No. SR-BOX-2019-37]

Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
of a Proposed Rule Change in Connection With the Proposed Commencement
of Operations of Boston Security Token Exchange LLC as a Facility of
the Exchange

December 30, 2019.
    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 December 18, 2019, 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 self-regulatory organization. The Commission
is publishing this notice to solicit comments on the proposed rule from
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is submitting this Proposed Rule Change to the
Commission in connection with the proposed commencement of operations
of BSTX. In this Proposed Rule Change, the proposed Amended and
Restated Limited Liability Company Agreement of the Company dated
January 29, 2019 (the ``LLC Agreement''), is attached as Exhibit 5A
hereto [sic]. 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 http://boxoptions.com.

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 self-regulatory organization
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 self-regulatory organization
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 is submitting this Proposed Rule Change to the
Commission in connection with the proposed commencement of operations
of BSTX. The Exchange proposes to establish BSTX as a facility, as that
term is defined in Section 3(a)(2) of the Act,\3\ of the Exchange.\4\
BSTX would be a facility of the Exchange that will operate a market for
the trading of digital security tokens. BSTX would operate a fully
automated, price/time priority execution system for the trading of
``security tokens,'' which would be equity securities that meet BSTX
listing standards and for which ancillary records of ownership would be
able to be created and maintained using distributed ledger (or
``blockchain'') technology. The security tokens would qualify as NMS
stocks pursuant to Regulation NMS.\5\ All transactions in security
tokens would clear and settle in accordance with the rules, policies
and procedures of registered clearing agencies.
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    \3\ 15 U.S.C. 78c(a)(2).
    \4\ Approval for the BSTX facility is being sought by the
Exchange through a separate proposed rule change with the
Commission. See Securities Exchange Act Release No. 87287 October
11, 2019, 84 FR 56022 October 18, 2019 (``BSTX Rulebook Proposal'').
The Exchange also currently plans to separately propose certain
other rule changes with the Commission designed to provide
sufficient flexibility for there to be multiple facilities under the
Exchange's regulatory authority. Currently, there is only one
facility of the Exchange, BOX Options Market LLC.
    \5\ 17 CFR 242.600 through 613.
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    BSTX is owned jointly by BOX Digital, a Delaware limited liability
company and a subsidiary of BOX Holdings Group LLC, and tZERO Group,
Inc., a Delaware corporation and an affiliate of Overstock.com, Inc.
BSTX is an affiliate of the Exchange and, when it commences trading
operations, will be subject to regulatory oversight by the Exchange. In
addition, the Exchange will enter into a facility agreement with BSTX
(the ``Facility Agreement'') pursuant to which the Exchange will
regulate the Company as a facility of the Exchange. The Exchange's
powers and authority under the Facility Agreement ensure that the
Exchange has full regulatory control over BSTX, which is designed to
prevent any owner of BSTX from exercising undue influence over the
regulated activities of the Company. The Exchange will also provide
certain business services to the Company such as providing human
resources and office technology support pursuant to an administrative
services agreement between the Exchange and BSTX.
    The LLC Agreement is the source of governance and operating
authority for the Company and, therefore, functions in a similar manner
as articles of incorporation and bylaws would function for a
corporation. The Exchange is submitting a separate filing to establish
rules relating to trading on BSTX.\6\ The Exchange is also submitting
another separate filing to introduce structural changes to the Exchange
to accommodate regulation of BSTX in addition to the Exchange's
existing facility. With the addition of BSTX as an Exchange facility,
BSTX Participants \7\ will have the same representation, rights and
responsibilities as Participants on the Exchange's other facility.
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    \6\ See BSTX Rulebook Proposal.
    \7\ A BSTX Participant is a firm or organization that is
registered with the Exchange pursuant to Exchange Rules for the
purposes of participating on the BSTX Market as an order flow
provider or market maker. See Section 1.1, LLC Agreement.
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    The Exchange currently operates BOX Options Market LLC (``BOX
Options''), which is a facility of the Exchange, as that term is
defined in Section 3(a)(2) of the Act. The proposed LLC Agreement
provisions are generally the same as the provisions of the BOX Options
LLC Agreement or, where indicated herein, are the same as provisions of
the BOX Holdings LLC Agreement.\8\ Currently, BOX Holdings has nine
separate, unaffiliated owners. BOX Holdings owns 100% of BOX Options so
BOX Holdings is essentially the alter ego of

BOX Options. By contrast, the Company has two separate, unaffiliated
owners, BOX Digital and tZERO, each of which owns 50% of the Company.
Ownership diverges for BOX Options directly above BOX Holdings in its
ownership structure and ownership diverges for the Company directly
above the Company in its ownership structure. Therefore, as discussed
below, when comparing various provisions in the LLC Agreement, some
provisions are more appropriately compared with the BOX Holdings LLC
Agreement, particularly with respect to ownership issues. The Exchange
believes that governance consistent with established provisions that
have already received Commission approval harmonizes rules and
practices across the Exchange's facilities, which may foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, consistent with Section
6(b)(5) of the Act.\9\
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    \8\ The Exchange notes, as further described in the Proposed
Rule Change, that certain provisions of the BOX Holdings LLC and BOX
Options LLC Agreements are not included in the LLC Agreement because
they are not applicable. For example, certain provisions in the BOX
Holdings LLC Agreement that are related to different ownership
classes are not present in the LLC Agreement because BSTX has only
one class of ownership. See, e.g., Sections 4.1, 4.4, 4.13 and 7 of
the BOX Holding LLC Agreement.
    \9\ 15 U.S.C. 78f(b)(5).
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Structure of the Company
    In the discussion below, the Exchange describes provisions in the
LLC Agreement related to the structure of the Company, highlighting
areas that vary in comparison to the BOX Options LLC Agreement and/or
BOX Holdings LLC Agreement and provides the statutory basis for such
variation.
    As a limited liability company, ownership of the Company is
represented by limited liability company interests in the Company
(``Interests''). The duly admitted holders of Interests are referred to
as the members of the Company (``Members''). The Interests represent
equity interests in the Company and entitle the duly admitted holders
thereof to participate in the Company's allocations and distributions.
Currently, BOX Digital and tZERO are the Company's Members and each own
50% of the Interests.
    BOX Digital is a subsidiary of BOX Holdings and an affiliate of the
Exchange and, therefore, the Company will be an affiliate of the
Exchange. BOX Holdings owns 98% of BOX Digital and 2% of BOX Digital is
held by Lisa Fall. BOX Holdings already owns one subsidiary that is an
existing facility of the Exchange. The existing facility--BOX Options--
operates a market for trading option contracts on U.S. equities. BOX
Holdings is the parent company for both BOX Digital and BOX Options.
BOX Holdings has nine separate, unaffiliated owners, including MX US 2,
Inc., a wholly owned, indirect subsidiary of TMX Group Limited
(``TMX''), which holds 41.33% of the outstanding units of BOX Holdings
and IB Exchange Corp., which holds 22.01% of the outstanding units of
BOX Holdings. The other seven owners of BOX Holdings, Citadel
Securities Principal Investments LLC, Citigroup Financial Products
Inc., UBS Americas Inc., CSFB Next Fund Inc., LabMorgan Corp.,
Wolverine Trading, LLC and Aragon Solutions Ltd, each hold less than
17% of the outstanding units of BOX Holdings.
    Medici Ventures, Inc. (``Medici''), a Delaware corporation, owns
80.07% of the outstanding shares of tZERO, Joseph Cammarata holds 7.53%
and each of the following owns less than 3% of the outstanding shares
of tZERO: Todd Tobacco, Newer Ventures LLC, Schalk Steyn, Raj Karkara,
Alec Wilkins, Dohi Ang, Brian Capuano, Trent Larson, Eric Fish, Kristen
Anne Bagley, Kirstie Dougherty, SpeedRoute Technologies Inc., Tommy
McSherry, Rob Collucci, John Gilchrist, John Paul DeVito, Jimmy
Ambrose, Jason Heckler, Max Melmed, Alex Vlastakis, Olalekan Abebefe,
Samson Arubuola, Ryan Mitchell, Zachary Wilezol, Anthony Bove, Ralph
Daiuto, Rob Christiansen, Amanda Gervase, Derek Tobacco, Steve Bailey
and Dinosaur Financial. Overstock.com, Inc. (``Overstock''), a publicly
held corporation organized under the laws of the state of Delaware,
owns 100% of the outstanding shares of Medici. Therefore, both tZERO
and the Company are affiliates of Overstock.
    Pursuant to Section 7.4(g)(ii) of the LLC Agreement, any
Controlling Person \10\ is required to become a party to the LLC
Agreement and abide by its provisions, to the same extent and as if
they were members. Related Persons that are otherwise Controlling
Persons are not required to become parties to the LLC Agreement if they
are only under common control of an upstream owner but are not in the
upstream ownership chain above a Company owner because they will not
have the ability to exert any control over the Company. BOX Holdings,
Medici and Overstock are indirect owners of the Company. Overstock owns
100% of Medici Ventures, Inc., which owns more than 80% of tZERO Group,
Inc., which owns 50% of BSTX. Medici and Overstock will be required to
become parties to the Company's LLC Agreement by executing an
instrument of accession substantially in the form attached hereto as
Exhibit 5B [sic] and abide by its provisions, to the same extent and as
if they were members, because they are Controlling Persons of the
Company. Similarly, BOX Digital, BOX Holdings, MX US 2, Inc., MX US 1,
Inc., Bourse de Montreal Inc. and TMX Group Limited will also each be
required to become parties to the LLC Agreement by executing an
instrument of accession and abide by its provisions to the same extent
and as if they were members because they are Controlling Persons of the
Company. TMX Group Limited owns 100% of Bourse de Montreal Inc., which
owns 100% of MX US 1, Inc., which owns 100% of MX US 2, Inc., which
owns more than 40% of BOX Holdings. BOX Holdings owns 98% of BOX
Digital, which owns 50% of BSTX.
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    \10\ A ``Controlling Person'' is defined as ``a Person who,
alone or together with any Related Persons of such Person, holds a
Controlling Interest in a Member.'' See Section 7.4(g)(v)(B), LLC
Agreement. A ``Controlling Interest'' is defined as ``the direct or
indirect ownership of 25% or more of the total voting power of all
equity securities of a Member (other than voting rights solely with
respect to matters affecting the rights, preferences, or privileges
of a particular class of equity securities), by any Person, alone or
together with any Related Persons of such Person.'' See Section
7.4(g)(v)(A), LLC Agreement. A ``Related Person'' is defined as
``with respect to any Person: (A) Any Affiliate of such Person; (B)
any other Person with which such first Person has any agreement,
arrangement or understanding (whether or not in writing) to act
together for the purpose of acquiring, voting, holding or disposing
of Interests; (C) in the case of a Person that is a company,
corporation or similar entity, any executive officer (as defined
under Rule 3b-7 under the [Act]) or director of such Person and, in
the case of a Person that is a partnership or limited liability
company, any general partner, managing member or manager of such
Person, as applicable; (D) in the case of any BSTX Participant who
is at the same time a broker-dealer, any Person that is associated
with the BSTX Participant (as determined using the definition of
``person associated with a member'' as defined under Section
3(a)(21) of the [Act]); (E) in the case of a Person that is a
natural person and a BSTX Participant, any broker or dealer that is
also a BSTX Participant with which such Person is associated; (F) in
the case of a Person that is a natural person, any relative or
spouse of such Person, or any relative of such spouse who has the
same home as such Person or who is a director or officer of the
Exchange or any of its parents or subsidiaries; (G) in the case of a
Person that is an executive officer (as defined under Rule 3b-7
under the [Act]) or a director of a company, corporation or similar
entity, such company, corporation or entity, as applicable; and (H)
in the case of a Person that is a general partner, managing member
or manager of a partnership or limited liability company, such
partnership or limited liability company, as applicable.''
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    Any BSTX Participant that holds, directly or indirectly, more than
20% of the Company will have its voting power capped at 20% pursuant to
Section 7.4(h) of the LLC Agreement, a limitation designed to prevent a
market participant from exerting undue influence on an Exchange
facility.\11\ Related Persons will be grouped together when applying
these limits. The Exchange believes the proposed

voting cap provision is consistent with the Act, including Section
6(b)(1), which requires, in part, an exchange to be so organized and
have the capacity to carry out the purposes of the Act.\12\ In
particular, the voting cap is designed to minimize the ability of a
BSTX Participant to improperly interfere with or restrict the ability
of the Exchange to effectively carry out its regulatory oversight
responsibilities under the Act.
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    \11\ LLC Agreement Section 7.4(h) is based on Section 7.4(h) of
the BOX Holdings LLC Agreement.
    \12\ 15 U.S.C. 78f(b)(1).
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    The SEC will be required to be notified if an owner exceeds 5%, 10%
or 15% ownership in the Company pursuant to Section 7.4(e) of the LLC
Agreement.\13\ Further, rule filings are required when an owner crosses
above 20% or any subsequent 5% increment, pursuant to Section 7.4(f) of
the LLC Agreement.\14\ Related Persons are grouped together when
applying these limits. These are the same provisions as are contained
in the BOX Holdings LLC Agreement. The Exchange believes the proposed
notification provisions are consistent with the Act, including Section
6(b)(1), which requires, in part, an exchange to be so organized and
have the capacity to carry out the purposes of the Act. In particular,
SEC notification of ownership interests exceeding certain percentage
thresholds can help improve the Commission's ability to effectively
monitor and surveil for potential undue influence and control over the
operation of the Exchange.
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    \13\ LLC Agreement Section 7.4(e) is based on Section 7.4(e) of
the BOX Holdings LLC Agreement.
    \14\ LLC Agreement Section 7.4(f) is based on Section 7.4(f) of
the BOX Holdings LLC Agreement.
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    The Exchange notes that existing ownership limits applicable to
owners of the Exchange, the entity that will have regulatory oversight
of BSTX, are not changing.\15\ The Exchange believes the existing
ownership limits will help to ensure the independence of the Exchange's
regulatory oversight of BSTX and facilitate the ability of the Exchange
to carry out its regulatory responsibilities and operate in a manner
consistent with the Act, and are appropriate and consistent with the
requirements of the Act, particularly with Section 6(b)(1), which
requires, in part, an exchange be so organized and have the capacity to
carry out the purposes of the Act.\16\
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    \15\ See Securities Exchange Act Release No. 34-66871 (April 27,
2012) 77 FR 26323 (May 3, 2012) (Order granting approval of BOX
Exchange).
    \16\ 15 U.S.C. 78f(b)(1).
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    The Company does not have the same ownership as BOX Options or BOX
Holdings; therefore, the Members of the Company differ from those of
BOX Options and BOX Holdings. The Exchange believes that the structure
of the Company will promote just and equitable principles of trade,
and, in general, protect investors and the public interest, consistent
with Section 6(b)(5) of the Act.\17\
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    \17\ 15 U.S.C. 78f(b)(5).
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Term and Termination
    In the discussion below, the Exchange describes provisions in the
LLC Agreement related to the term and termination of the Company,
highlighting areas that vary in comparison to the BOX Options LLC
Agreement and/or BOX Holdings LLC Agreement and provides the statutory
basis for such variation.
    Pursuant to Section 2.3 of the LLC Agreement, the Company will have
a perpetual legal existence unless it is sooner dissolved as a result
of an event specified in the Delaware Limited Liability Company Act, as
amended and in effect from time to time, and any successor statute (the
``LLC Act'') or by agreement of the Members. The term is the same as
the provision in the BOX Options LLC Agreement,\18\ but also provides
that the Company can be dissolved by agreement of the Members. In
addition, Section 10.1 of the LLC Agreement provides that the Company
shall be dissolved upon (i) the election to dissolve the Company made
by the Board pursuant to Section 4.4(b)(v) of the LLC Agreement; (ii)
the entry of a decree of judicial dissolution under Sec.  18-802 of the
LLC Act; (iii) the resignation, expulsion, bankruptcy or dissolution of
the last remaining Member, or the occurrence of any other event which
terminates the continued membership of the last remaining Member in the
Company, unless the business of the Company is continued without
dissolution in accordance with the LLC Act; or (iv) the occurrence of
any other event that causes the dissolution of a limited liability
company under the LLC Act unless the Company is continued without
dissolution in accordance with the LLC Act. The dissolution events are
generally the same as those in the BOX Options LLC Agreement; \19\
however, the Company may also be dissolved by the affirmative vote of
Members holding a majority of all of the then outstanding Percentage
Interests \20\ (excluding any Percentage Interests held directly or
indirectly by tZERO and its Affiliates from the numerator and the
denominator for such calculation) taken within 180 calendar days after
the occurrence of any ``Trigger Event'' as such term is defined in the
IP License and Services Agreement entered into by and between tZERO and
the Company (the ``LSA'') and described in more detail below.\21\ The
Exchange believes that the addition of such dissolution events will
promote just and equitable principles of trade, and, in general,
protect investors and the public interest, consistent with Section
6(b)(5) of the Act.\22\
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    \18\ See BOX Options LLC Agreement Section 2.3.
    \19\ See BOX Options LLC Agreement Section 8.1.
    \20\ ``Percentage Interests'' are defined as ``with respect to a
Member, such Member's Interests expressed as a percentage of all
outstanding Interests.'' See Section 1.1, LLC Agreement.
    \21\ The LSA defines a ``Trigger Event'' as meaning ``any of the
following events: (a) A material breach by tZERO of any of its
obligations under this LSA (being either a single event which is a
material breach or a series of breaches which taken together are a
material breach) which material breach or failure is not cured by
tZERO within 90 days after Company gives written notice of such
breach or failure to tZERO hereunder, except for Critical Functions
in which case the cure period shall be 10 days; (b) any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under
any bankruptcy or insolvency Law or any non-frivolous dissolution or
liquidation proceedings commenced by or against tZERO; and if such
case or proceeding is not commenced by tZERO, it is acquiesced by
tZERO in or remains undismissed for 30 days; (c) tZERO ceasing
active operation of its business without a successor or
discontinuing any of the Base Services; (d) tZERO becomes judicially
declared insolvent or admits in writing its inability to pay its
debts as they become due; or (e) tZERO applies for or consents to
the appointment of a trustee, receiver or other custodian for tZERO,
or makes a general assignment for the benefit of its creditors.''
    \22\ 15 U.S.C. 78f(b)(5).
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    Upon the occurrence of any of the events set forth in Section
10.1(a) of the LLC Agreement, the Company will be dissolved and
terminated in accordance with the provisions of Article 10 of the LLC
Agreement.
Governance of the Company
    In the discussion below, the Exchange describes provisions in the
LLC Agreement related to the governance of the Company, highlighting
areas that vary in comparison to the BOX Options LLC Agreement and/or
BOX Holdings LLC Agreement and provides the statutory basis for such
variation.
    Section 4.1 of the LLC Agreement establishes a board of directors
of the Company (the ``Board of Directors'' or the ``Board'') to manage
the development, operations, business and affairs of the Company
without the need for any approval of the Members or any other person.
Section 4.10 of the LLC Agreement provides that, except and only to the
extent expressly provided for in the LLC Agreement and the Related
Agreements and as delegated by the Board of Directors to committees of
the Board of Directors or to duly appointed Officers or agents of the
Company, neither a Member nor any other Person other than the Board of
Directors shall

be an agent of Company or have any right, power or authority to
transact any business in the name of the Company or to act for or on
behalf of or to bind the Company. Section 4.12(a) of the LLC Agreement
provides that each of the Members and the Directors, Officers,
employees and agents of the Company (a) shall give due regard to the
preservation of the independence of the self-regulatory function of the
Exchange and to its obligations to investors and the general public and
shall not take any actions which would interfere with the effectuation
of decisions by the board of directors of the Exchange relating to its
regulatory functions (including disciplinary matters) or which would
interfere with the Exchange's ability to carry out its responsibilities
under the Act; (b) comply with the federal securities laws and the
rules and regulations promulgated thereunder; and (c) cooperate with
the Exchange pursuant to its regulatory authority and with the SEC.
Section 3.2 of the LLC Agreement provides that the Exchange will (a)
act as the SEC-approved SRO for the BSTX Market, (b) have regulatory
responsibility for the activities of the BSTX Market and provide
regulatory services to the Company pursuant to the Facility Agreement.
These are the same provisions that are contained in the BOX Options LLC
Agreement.\23\ These provisions ensure that the Exchange has full
regulatory control over BSTX, which is designed to prevent any owner of
BSTX from exercising undue influence over the regulated activities of
the Company.
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    \23\ See BOX Options LLC Agreement Sections 4.1, 4.10, 4.12, and
3.2.
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    Section 4.1 of the LLC Agreement provides that the Board will
consist of six (6) directors (each a ``Director''), comprised of two
(2) Directors appointed by BOX Digital, two (2) Directors appointed by
tZERO (together with the BOX Digital Directors, each a ``Member
Director''), one (1) Director (the ``Independent Director'') appointed
by the unanimous vote of all of the then serving Member Directors, and
one (1) non-voting Director (the ``Regulatory Director'') appointed by
the Exchange. As long as the Company is a facility of the Exchange
pursuant to Section 3(a)(2) of the Act, the Exchange will have the
right to appoint a Regulatory Director to serve as a Director. The
Regulatory Director must be a member of the senior management of the
regulation staff of the Exchange. By comparison, the board of directors
of BOX Options is the same as BOX Holdings because it is a wholly-owned
subsidiary of BOX Holdings. The remaining structure of the Board of
Directors for the Company differs from that of BOX Holdings because the
ownership of the Company differs from that of BOX Holdings, which has
no owners with 50% or greater ownership. The Company has an Independent
Director to avoid either Member from controlling or creating deadlock
on the Board. However, the presence of a Regulatory Director selected
by the Exchange on the Board is identical to the longstanding practice
at the Exchange's other facility, BOX Options. The Exchange believes
that the proposed board structure, and in particular, the inclusion of
the proposed Independent Director and Regulatory Director, will promote
just and equitable principles of trade, foster cooperation and
coordination with persons engaged in regulating, clearing, settling and
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general,
protect investors and the public interest, consistent with Section
6(b)(5) of the Act.\24\ Further, the Exchange believes that inclusion
of the Regulatory Director on the BSTX Board would also be consistent
with Section 6(b)(1) of the Act. This is because the Regulatory
Director is required to be someone who is a member of the senior
management of the regulation staff of the Exchange and is therefore a
person who is knowledgeable of the rules of the Exchange and the
regulations applicable to it and, in turn, is someone who would be well
positioned to help ensure the Exchange, including in the operation of
any facilities, continues to be so organized and has the capacity to
carry out the purposes of the Act, including to prevent inequitable and
unfair practices.
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    \24\ 15 U.S.C. 78f(b)(5).
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    Section 4.3 of the LLC Agreement provides that the Board will meet
as often as it deems necessary, but at least four (4) times per
year.\25\ Meetings of the Board or any committee thereof may be
conducted in person or by telephone or in any other manner agreed to by
the Board or, respectively, by the members of a committee. Any of the
Directors or the Exchange may call a meeting of the Board upon fourteen
(14) calendar days prior written notice. In any case where the
convening of a meeting of Directors is a matter of urgency, notice of
the meeting may be given not less than forty-eight (48) hours before
the meeting is to be held. No notice of a meeting shall be necessary
when all Directors are present. The attendance of at least a majority
of all the Directors shall constitute a quorum for purposes of any
meeting of the Board. Except as may otherwise be provided by the LLC
Agreement, each of the Directors will be entitled to one vote on any
action to be taken by the Board, except that the Regulatory Director
shall not vote on any action to be taken by the Board or any committee,
the CEO (if a Director) shall not be entitled to vote on matters
relating to the CEO's powers, compensation or performance, and a
Director shall not be entitled to vote on any matter pertaining to that
Director's removal from office. A Director may vote the votes allocated
to another Director (or group of Directors) pursuant to a written
proxy. Except as otherwise provided by the LLC Agreement, any action to
be taken by the Board shall be considered effective only if approved by
at least a majority of the votes entitled to be voted on that action.
Meetings of the Board may be attended by other representatives of the
Members, the Exchange and other persons related to the Company as the
Board may approve. Any action required or permitted to be taken at a
meeting of the Board or any committee thereof may be taken without a
meeting if written consents, setting forth the action so taken, are
executed by the members of the Board or committee, as the case may be,
representing the minimum number of votes that would be necessary to
authorize or to take that action at a meeting at which all members of
the Board or committee, as the case may be, permitted to vote were
present and voted. The Board will determine procedures relating to the
recording of minutes of its meetings. The Exchange believes that the
proposed board structure will promote just and equitable principles of
trade, foster cooperation and coordination with persons engaged in
regulating, clearing, settling and processing information with respect
to, and facilitating transactions in securities, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general, protect investors and the public
interest, consistent with Section 6(b)(5) of the Act.\26\
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    \25\ LLC Agreement Section 4.3 is based on Section 4.3 of the
BOX Options LLC Agreement.
    \26\ 15 U.S.C. 78f(b)(5).
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    Pursuant to Section 4.4 of the LLC Agreement, no action with
respect to any major action (each a ``Major Action''), will be
effective unless approved by the Board, including the affirmative vote
of all then serving Member Directors, in each case acting at

a meeting. A vacancy on the Board will not prevent approval of a Major
Action. No other Member votes are required for a Major Action. For
purposes of the LLC Agreement, ``Major Action'' means any of the
following: (i) A merger or consolidation of the Company with any other
entity or the sale by the Company of any material portion of its
assets; (ii) entry by the Company into any line of business other than
the business outlined in Article 3 of the LLC Agreement; (iii)
conversion of the Company from a Delaware limited liability company
into any other type of entity; (iv) except as expressly contemplated by
the LLC Agreement and then existing Related Agreements, entering into
any agreement, commitment, or transaction with any Member or any of its
Affiliates other than transactions or agreements upon commercially
reasonable terms that are no less favorable to the Company than the
Company would obtain in a comparable arms-length transaction or
agreement with a third party; (v) to the fullest extent permitted by
law, taking any action (except pursuant to a vote of the Members
pursuant to Section 10.1(a)(ii) of the LLC Agreement to effect the
voluntary, or which would precipitate an involuntary, dissolution or
winding up of the Company; (vi) operating the BSTX Market utilizing any
other software system, other than the BSTX trading system, except as
otherwise provided in the LSA or to the extent otherwise required by
the Exchange to fulfill its regulatory functions or responsibilities or
to oversee the BSTX Market as determined by the board of the Exchange;
(vii) operating the BSTX Market utilizing any other regulatory services
provider other than the Exchange, except as otherwise provided in the
Facility Agreement or to the extent otherwise required by the Exchange
to fulfill its regulatory functions or responsibilities or to oversee
the BSTX Market as determined by the board of the Exchange; (viii)
entering into any partnership, joint venture or other similar joint
business undertaking; (ix) making any fundamental change in the market
structure of the Company from that contemplated by the Members as of
the date of the LLC Agreement, except to the extent otherwise required
by the Exchange to fulfill its regulatory functions or responsibilities
or to oversee the BSTX Market as determined by the board of the
Exchange; (x) issuing any new Interests pursuant to Section 7.6 of the
LLC Agreement or admitting additional or substitute Members pursuant to
Section 7.1(b); (xi) altering the provisions for Board membership
applicable to any Member, except to the extent otherwise required by
the Exchange to fulfill its regulatory functions or responsibilities or
to oversee the BSTX Market as determined by the board of the Exchange;
and (xii) altering the definition of or requirements for approving a
Major Action, except to the extent otherwise required by the Exchange
to fulfill its regulatory functions or responsibilities or to oversee
the BSTX Market as determined by the Board of the Exchange. The Major
Action events are generally the same as those in the BOX Options LLC
Agreement and BOX Holdings LLC Agreement \27\ with the exception of
deletions to references to BOX Options affiliates and owners and to
include cross references to other provisions of the LLC Agreement;
however, the Company's LLC Agreement also provides that a Major Action
also includes provisions (viii), (x), and (xi) as described above. The
Exchange believes that such events should be deemed Major Actions for
commercial fairness. The Exchange believes that deeming the above
referenced events as Major Actions will promote just and equitable
principles of trade, foster cooperation and coordination with persons
engaged in regulating, clearing, settling and processing information
with respect to, and facilitating transactions in securities, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, protect investors and the
public interest, consistent with Section 6(b)(5) of the Act.\28\
---------------------------------------------------------------------------

    \27\ See Section 4.4 of the BOX Options LLC Agreement and
Section 4.4 of the BOX Holdings LLC Agreement.
    \28\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Pursuant to Section 4.1(b) of the LLC Agreement, a Member Director
may be removed by the Member entitled to appoint that Member Director,
with or without cause. The Independent Director may be removed by a
majority vote of the then serving Member Directors, with or without
cause. Any Member Director or Independent Director may be removed by
the Board if the Board determines, in good faith, that the Director has
violated any provision of the LLC Agreement or any federal or state
securities law or that such action is necessary or appropriate in the
public interest or for the protection of investors. A Director shall
not participate in any vote regarding that Director's removal. The
Company shall promptly notify the Exchange in writing of the
commencement or cessation of service of a Member Director or
Independent Director. Like BOX Options, Directors may be removed by the
Board for reasons related to protection of investors and the owners
with rights to appoint a Member Director have power to remove and
replace their respective designees. The removal provisions for the
Company's Independent Director differ from those of BOX Options and BOX
Holdings because those entities do not have an Independent Director.
The Exchange believes that the proposed removal provisions will promote
just and equitable principles of trade, foster cooperation and
coordination with persons engaged in regulating, clearing, settling and
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general,
protect investors and the public interest, consistent with Section
6(b)(5) of the Act. Further, the Exchange believes that the ability for
Member Directors and Independent Directors to be removed from the Board
in the circumstances described above would be consistent with Section
6(b)(1) of the Act.\29\ This is because removal of such Directors who
have violated the LLC Agreement or federal or state laws would help
ensure that the Exchange, including in its operation of facilities, is
so organized and has the capacity to be able to carry out the purposes
of the Act, including the prevention of inequitable and unfair
practices.
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    Section 4.1(c) of the LLC Agreement provides that, if a vacancy is
created on the Board as a result of the death, disability, retirement,
resignation or removal (with or without cause) of a Member Director or
otherwise there shall exist or occur any vacancy on the Board, the
Member whose designee created the vacancy will fill that vacancy by
written notice to the Company. Each Member shall promptly fill
vacancies on the Board, and the Board shall consider the advisability
of taking further action until the vacancies are filled. The vacancy
provisions are not in the BOX Options LLC Agreement; however, the
Exchange believes that providing for contingencies in the event of a
vacancy are important to avoid business disruption and, therefore, this
proposal will foster cooperation and coordination with persons engaged
in regulating, clearing, settling, processing information with respect
to, and facilitating transactions in securities,

consistent with Section 6(b)(5) of the Act.\30\ Further, the Exchange
believes that filling Director vacancies, as described above, would
provide a predetermined and transparent manner for filling Director
vacancies and therefore help avoid business disruptions at BSTX. The
Exchange believes that this, in turn, would be consistent with Section
6(b)(1) of the Act \31\ because it would help ensure that the Exchange,
including in the operation of facilities, is so organized and has the
capacity to be able carry out the purposes of the Act, including to
remove impediments to and perfect the mechanisms of a national market
system for securities.
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78f(b)(5).
    \31\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    Section 4.1(d) of the LLC Agreement provides that the Regulatory
Director may be removed (a) by the Exchange, with or without cause, (b)
by the Board if the Board determines, in good faith, that the
Regulatory Director has violated any provision of the LLC Agreement or
any federal or state securities law, or (c) by the Board if the Board
determines, in good faith, that the Regulatory Director does not meet
the requirements of a Regulatory Director as set forth in the LLC
Agreement. If the Regulatory Director ceases to serve for any reason,
the Exchange shall appoint a new Regulatory Director in accordance with
the requirements in the LLC Agreement. The removal provisions in the
Company's LLC Agreement are substantially the same as those in the BOX
Options LLC Agreement.\32\
---------------------------------------------------------------------------

    \32\ See Section 4.1(d) of the BOX Options LLC Agreement.
---------------------------------------------------------------------------

    Section 4.12(b) of the LLC Agreement provides that the Company and
its Members shall comply with the federal securities laws and the rules
and regulations promulgated thereunder and shall cooperate with the SEC
and the Exchange pursuant to and to the extent of their respective
regulatory authority. The Directors, Officers, employees and agents of
the Company, by virtue of their acceptance of such position, shall
comply with the federal securities laws and the rules and regulations
promulgated thereunder and shall be deemed to agree to cooperate with
the SEC and the Exchange in respect of the SEC's oversight
responsibilities regarding the Exchange, and the Company shall take
reasonable steps necessary to cause its Directors, Officers, employees
and agents to so cooperate. These provisions in the LLC Agreement are
the same as those in the BOX Options LLC Agreement and BOX Holdings LLC
Agreement.\33\
---------------------------------------------------------------------------

    \33\ See Section 4.12(b) of the BOX Options LLC Agreement and
Section 4.12(b) of the BOX Holdings LLC Agreement.
---------------------------------------------------------------------------

    Section 3.2(a)(ii) of the LLC Agreement provides that the Exchange
shall receive notice of planned or proposed changes to the Company (but
not including changes relating solely to one or more of the following:
Marketing, administrative matters, personnel matters, social or team
building events, meetings of the Members, communication with the
Members, finance, location and timing of Board meetings, market
research, real property, equipment, furnishings, personal property,
intellectual property, insurance, contracts unrelated to the operation
of the BSTX Market and de minimis items (``Non-Market Matters'') or the
BSTX Market (including, but not limited to the BSTX trading system)
which will require an affirmative approval by the Exchange prior to
implementation, not inconsistent with the LLC Agreement. Planned
changes include, without limitation: (a) Planned or proposed changes to
the BSTX trading system; (b) the sale by the Company of any material
portion of its assets; (c) taking any action to effect a voluntary, or
which would precipitate an involuntary, dissolution or winding up of
the Company; or (d) obtaining regulatory services from a regulatory
services provider other than the Exchange. Procedures for requesting
and approving changes shall be established by the mutual agreement of
the Company and the Exchange. These provisions in the LLC Agreement are
the same as those in the BOX Options LLC Agreement.\34\
---------------------------------------------------------------------------

    \34\ See Section 3.2(a)(ii) of the BOX Options LLC Agreement.
---------------------------------------------------------------------------

    Section 3.2(a)(iii) of the LLC Agreement provides that in the event
that the Exchange, in its sole discretion, determines that the proposed
or planned changes to the Company or the BSTX Market (including, but
not limited to, the BSTX trading system) set forth in Section
3.2(a)(ii) of the LLC Agreement could cause a Regulatory Deficiency if
implemented, the Exchange may direct the Company, subject to approval
of the Exchange Board of Directors, to modify the proposal as necessary
to ensure that it does not cause a Regulatory Deficiency. The Company
will not implement the proposed change until it, and any required
modifications, are approved by the Exchange Board of Directors. The
costs of modifications undertaken shall be paid by the Company. These
provisions in the LLC Agreement are the same as those in the BOX
Options LLC Agreement.\35\ These provisions ensure the Exchange
maintains full regulatory control and authority over BSTX while it
operates as a facility of the Exchange. The Exchange believes this
provision helps guarantee the Exchange's ability to fulfill its
regulatory responsibilities and operate in a manner consistent with the
Act, in particular with Section 6(b)(1), which requires, in part, an
exchange to be so organized and have the capacity to carry out the
purposes of the Act.\36\
---------------------------------------------------------------------------

    \35\ See Section 3.2(a)(iii) of the BOX Options LLC Agreement.
    \36\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    Section 3.2(a)(iv) of the LLC Agreement provides that in the event
that the Exchange, in its sole discretion, determines that a Regulatory
Deficiency exists or is planned, the Exchange may direct the Company,
subject to approval of the Exchange board of directors, to undertake
such modifications to the Company (but not to include Non-Market
Matters) or the BSTX Market (including, but not limited to, the BSTX
trading system), as are necessary or appropriate to eliminate or
prevent the Regulatory Deficiency and allow the Exchange to perform and
fulfill its regulatory responsibilities under the Act.\37\ The costs
and modifications undertaken shall be paid by the Company. These
provisions in the LLC Agreement are substantially the same as those in
the BOX Options LLC Agreement, with the exception of a reference to an
agreement that is not applicable to the Company.\38\
---------------------------------------------------------------------------

    \37\ As discussed above, the Exchange will appoint a Regulatory
Director who may, among other things, serve as a Director of any
regulatory committee(s). Such individual will also have insight and
access to important information related to the Company; for example,
while the Regulatory Director may not serve as a Director on Board
committees other than authorized regulatory committees, the
Regulatory Director nevertheless shall (A) have the right to attend
all meetings of the Board and committees thereof; (B) receive
equivalent notice of meetings as other Directors; and (C) receive a
copy of the meeting materials provided to other Directors, including
agendas, action items and minutes for all meetings. (See LLC
Agreement Sec.  4.2(c).)
    \38\ See Section 3.2(a)(iv) of the BOX Options LLC Agreement.
---------------------------------------------------------------------------

Regulatory Funds
    Pursuant to Section 9 of the Facility Agreement, the Company will
agree that the Exchange has the right to receive all fees, fines and
disgorgements imposed upon BSTX Participants with respect to the
Company's trading system (``Regulatory Funds'') and all market data
fees, tape and other revenues (``Non-regulatory Funds''). All
Regulatory Funds and Non-regulatory Funds collected by the Exchange
with

respect to the Company may be used by the Exchange for regulatory
purposes, which will be determined in the sole discretion of the
Exchange. To the extent the Company incurs costs and expenses for
regulatory purposes, the Exchange may reimburse the Company using
Regulatory Funds. In the event the Exchange, at any time, determines
that it does not hold sufficient funds to meet all regulatory purposes,
the Company will reimburse the Exchange for any such additional costs
and expenses. All Regulatory Funds collected by the Exchange will be
retained by the Exchange and not transferred to the Company. Non-
regulatory funds collected by the Exchange may be transferred to the
Company after the Exchange makes adequate provision for all regulatory
purposes. These provisions ensure that the Exchange has full control
over BSTX with respect to its regulated functions and is designed to
prevent any owner of BSTX from exercising undue influence over the
regulated activities of the Company.
Capital Contributions and Distributions
    In the discussion below, the Exchange describes provisions in the
LLC Agreement related to capital contributions and distributions by the
Company, highlighting areas that vary in comparison to the BOX Options
LLC Agreement and/or BOX Holdings LLC Agreement and provides the
statutory basis for such variation.
    Pursuant to Section 6.1 of the LLC Agreement, the Members have
contributed to the Company initial capital contributions which are
reflected on the books and records of the Company. No interest will be
paid on any capital contribution to the Company. No Member will have
any personal liability for the repayment of the capital contribution of
any Member, and no Member will have any obligation to fund any deficit
in its Capital Account. Each Member waived any right to partition the
property of the Company or to commence an action seeking dissolution of
the Company under the LLC Act. These provisions are substantially the
same as those in the BOX Holdings LLC Agreement.\39\
---------------------------------------------------------------------------

    \39\ See Section 6.1 of the BOX Holdings LLC Agreement.
---------------------------------------------------------------------------

    Under Section 6.2 of the LLC Agreement, the Board, in its sole
discretion, will determine the capital needs of the Company. If at any
time the Board determines that additional capital is required in the
interests of the Company, additional working capital shall be raised in
such manner as determined by a vote of the Board, including the
affirmative vote of at least one Member Director appointed by each
Member, but the Board will not have the power to require the Members to
make any additional capital contributions. These provisions in the LLC
Agreement are substantially the same as those in the BOX Options LLC
Agreement, with the exception of the requirement for at least one
Member Director appointed by each Member to affirmatively vote on the
manner to raise additional working capital.\40\ The Exchange believes
that this added provision exists for purposes of commercial fairness
and is necessary due to the ownership structure of the Company and that
it will foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect to,
and facilitating transactions in securities, consistent with Section
6(b)(5) of the Act.\41\
---------------------------------------------------------------------------

    \40\ See Section 6.2 of the BOX Options LLC Agreement.
    \41\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Pursuant to Section 8.1 of the LLC Agreement, if at any time and
from time to time the Board determines that the Company has cash that
is not required for the operations of the Company, the payment of
liabilities or expenses of the Company, or the setting aside of
reserves to meet the anticipated cash needs of the Company
(``Distributable Cash''), then the Company shall make cash
distributions to its Members in the following manner and priority:
First, the Company shall make tax distributions (``Tax Distributions'')
to the Members to cover each Member's estimated income tax for that
period (or in the event that Distributable Cash is less than the total
of all such Tax Amounts, the Company shall distribute the Distributable
Cash in proportion to such Tax Amounts). All tax distributions to a
Member will be treated as advances against any subsequent distributions
to be made to that Member. Subsequent distributions made to the Member
shall be adjusted so that when aggregated with all prior distributions
to the Member pursuant to those provisions, and with all prior Tax
Distributions to the Member, the amount distributed will be equal, as
nearly as possible, to the aggregate amount that would have been
distributable to that Member pursuant to the LLC Agreement if the LLC
Agreement contained no provision for Tax Distributions; second, when,
as and if declared by the Board, the Company shall make cash
distributions to each of the Members pro rata in accordance with that
Member's respective Interests, expressed as a percentage of all
outstanding Interests (``Percentage Interest''). Since the Company does
not have the same ownership as BOX Options, the distribution provisions
in the LLC Agreement differ from the BOX Options LLC Agreement and BOX
Holdings LLC Agreement. These provisions relate to tax and accounting
rules to which the Company is subject, due to its ownership structure.
As such, these provisions are standard or not novel for a similarly
situated commercial business registered as a limited liability company
under the laws of the state of Delaware.
    Section 8.2 of the LLC Agreement provides that the Company, and the
Board on behalf of the Company, shall not make a distribution to any
Member on account of its Interest in the Company if, and to the extent,
such distribution would violate the LLC Act or other applicable law.
This provision in the LLC Agreement is the same as the provision in the
BOX Options LLC Agreement and BOX Holdings LLC Agreement.\42\
---------------------------------------------------------------------------

    \42\ See Section 7.1 of the BOX Options LLC Agreement and
Section 8.2 of the BOX Holdings LLC Agreement.
---------------------------------------------------------------------------

    Section 9.1 of the LLC Agreement provides that all profits, losses
and credits of the Company (for both accounting and tax purposes) for
each fiscal year shall be allocated to the Members from time to time
(but no less often than once annually and before making any
distribution to the Members) pro rata among the Members based on that
Member's respective Percentage Interest, subject to limitations,
offsets, chargebacks, deductions and revaluations. Since the Company
does not have the same ownership as BOX Options, the allocation of
profits and losses provisions in the LLC Agreement differ from the BOX
Options LLC Agreement. These provisions relate to tax and accounting
rules to which the Company is subject, due to its ownership structure.
As such, these provisions are standard or not novel for a similarly
situated commercial business registered as a limited liability company
under the laws of the state of Delaware.
    Under Section 9.9 of the LLC Agreement, any profits or losses
resulting from a liquidation, merger or consolidation of the Company,
the sale of substantially all the assets of the Company in one or a
series of related transactions, or any similar event (and, if
necessary, specific items of gross income, gain, loss or deduction
incurred by the Company in the fiscal year of the transaction(s)) shall
be allocated among the Members so that after those allocations and the
allocations required

pursuant to capital account adjustments, and immediately before the
making of any liquidating distributions to the Members, the Members'
Capital Accounts equal, as nearly as possible, the amounts of the
respective distributions to which they are entitled in a winding up.
Since the Company does not have the same ownership as BOX Options, the
termination and special allocation provisions in the LLC Agreement
differ from the BOX Options LLC Agreement. These provisions relate to
tax and accounting rules to which the Company is subject, due to its
ownership structure. As such, these provisions are standard or not
novel for a similarly situated commercial business registered as a
limited liability company under the laws of the state of Delaware.
    Pursuant to Section 10.2 of the LLC Agreement, the assets of the
Company in winding up shall be applied or distributed as follows:
First, to creditors of the Company, including Members who are
creditors, to the extent otherwise permitted by law, whether by payment
or the making of reasonable provisions for the payment thereof, and
including any contingent, conditional and unmatured liabilities of the
Company, taking into account the relative priorities thereof; second,
to the Members and former Members in satisfaction of liabilities under
the LLC Act for distributions to those Members and former Members; and
third, to the Members in proportion to their respective Percentage
Interests. A reasonable reserve for contingent, conditional and
unmatured liabilities in connection with the winding up of the business
of the Company shall be retained by the Company until the winding up is
completed or the reserve is otherwise deemed no longer necessary by the
liquidator. These provisions are substantially the same as those in the
BOX Holdings LLC Agreement, with the exception of certain provisions
that were not included in the LLC Agreement because they are
inapplicable to the Company's structure.\43\
---------------------------------------------------------------------------

    \43\ See Section 10.2 of the BOX Holdings LLC
Agreement.HD3>Intellectual Property
---------------------------------------------------------------------------

    In the discussion below, the Exchange describes provisions in the
LLC Agreement related to intellectual property of the Company,
highlighting areas that vary in comparison to the BOX Options LLC
Agreement and/or BOX Holdings LLC Agreement and provides the statutory
basis for such variation.
    Pursuant to Section 3.2(b) of the LLC Agreement, tZERO will provide
to the Company the intellectual property license and services necessary
to operate the BSTX trading system as set forth in the LSA and will
make the necessary arrangements with any applicable third parties which
will permit the Company to be an authorized sublicensee of any required
third-party software necessary for Trading on the BSTX trading system.
The intellectual property provisions in the LLC Agreement are similar
to those in the BOX Options LLC Agreement, but contain certain
differences reflecting the license and services of tZERO pursuant to
the LSA rather than the software and technology provided by MX pursuant
to the TOSA in connection with the BOX Options LLC Agreement.\44\
---------------------------------------------------------------------------

    \44\ See Article 13 of the BOX Options LLC Agreement.
---------------------------------------------------------------------------

    Under the LSA, tZERO will provide the Company and the Exchange with
a perpetual, fully paid up, royalty-free license to use its
intellectual property comprising the BSTX trading system. In addition,
the LSA provides that tZERO will provide services to the Company,
including services related to implementing, administering, maintaining,
supporting, hosting, developing, testing and securing the trading
system. These services to be provided by tZERO relate to the
specialized trading system operated by BSTX and are separate from any
administrative or office technology services provided to BSTX by the
Exchange discussed above.
    Pursuant to the LSA, tZERO retains its ownership of the BSTX
trading system and tZERO's trademarks and service marks; provided,
however, that the Company will own deliverables, enhancements and other
technology that are developed or created by tZERO for the Company,
including any related documentation and intellectual property.
Non-Competition
    In the discussion below, the Exchange describes provisions in the
LLC Agreement related to non-competition, highlighting areas that vary
in comparison to the BOX Options LLC Agreement and/or BOX Holdings LLC
Agreement and provides the statutory basis for such variation.
    Section 16.1 of the LLC Agreement provides that, for so long as it
holds, directly or indirectly, a combined Percentage Interest in the
Company of five percent (5%) or more, a Member will not hold or invest
in more than five percent (5%) of, or participate in the creation and/
or operation of, any U.S. based market for the secondary trading of
security tokens or in any person engaged in the creation and/or
operation of any U.S. based market for the secondary trading of
security tokens. The non-competition provision is substantially the
same as the non-competition provision in the BOX Holdings LLC
Agreement.\45\
---------------------------------------------------------------------------

    \45\ See Section 16.1 of the BOX Holdings LLC Agreement.
---------------------------------------------------------------------------

Changes in Ownership of the Company
    In the discussion below, the Exchange describes provisions in the
LLC Agreement related to changes in ownership of the Company,
highlighting areas that vary in comparison to the BOX Options LLC
Agreement and/or BOX Holdings LLC Agreement and provides the statutory
basis for such variation.
    Section 7.1(a) of the LLC Agreement provides that no person will
directly or indirectly, whether voluntarily, involuntarily, by
operation of law or otherwise, dispose of, sell, alienate, assign,
exchange, participate, subparticipate, encumber, or otherwise transfer
in any manner (each, a ``Transfer'') its Interests unless prior to that
Transfer the transferee is approved by a vote of the Board. To be
eligible for Board approval, a proposed transferee must be of high
professional and financial standing, be able to carry out its duties as
a Member hereunder, if admitted as a Member, and be under no regulatory
or governmental bar or disqualification. Notwithstanding the foregoing,
registration as a broker-dealer or self-regulatory organization is not
required to be eligible for Board approval. However, the following will
not be included in the definition of ``Transfer'' transfers among
Members, transfers to any person directly or indirectly owning,
controlling or holding with power to vote all of the outstanding voting
securities of and equity or beneficial interests in that Member, or
transfers to any person that is a wholly owned Affiliate of a
transferring Member. A holder of Interests will provide prior written
notice to the Exchange of any proposed Transfer. Any Transfer which
violates the Transfer restrictions in the LLC Agreement will be void
and ineffectual and will not bind or be recognized by the Company.
    Section 7.1(b) of the LLC Agreement establishes that a person will
be admitted to the Company as an additional or substitute Member of the
Company only upon that person's execution of a counterpart of the LLC
Agreement to evidence its written acceptance of the terms and
provisions

of the LLC Agreement, and acceptance thereof by resolution of the
Board, which acceptance may be given or withheld in the sole discretion
of the Board; if that person is a transferee, its agreement in writing
to its assumption of the obligations under the LLC Agreement of its
assignor, and acceptance thereof by resolution of the Board; if that
person is a transferee, a determination by the Board that the Transfer
was permitted by the LLC Agreement; and approval of the Board. Whether
or not a transferee who acquired any Interests has accepted in writing
the terms and provisions of the LLC Agreement and assumed in writing
the obligations hereunder of its predecessor in interest, that
transferee will be deemed, by the acquisition of those Interests, to
have agreed to be subject to and bound by all the obligations of the
LLC Agreement with the same effect and to the same extent as any
predecessor in interest of that transferee. Pursuant to Section 7.1(c)
of the LLC Agreement, all costs incurred by the Company in connection
with the admission of a substituted Member will be paid by the
transferor Member. The transfer provisions in Section 7.1 of the LLC
Agreement are not contained in the BOX Options LLC Agreement; however,
the Exchange notes that the provisions of Section 7.1 are substantially
based on provisions in the BOX Holdings Group LLC Agreement.\46\
---------------------------------------------------------------------------

    \46\ See Section 7.1 of the BOX Holdings LLC Agreement.
---------------------------------------------------------------------------

    Pursuant to Section 7.2 of the LLC Agreement, the Company will have
a right of first refusal if a Member desires to Transfer its Interests,
and obtains a bona fide offer therefor from a third-party transferee.
Further, Section 7.3 of the LLC Agreement provides that, if the Company
does not elect to exercise its right of first refusal, the non-
transferring Member(s) next have a right of first refusal. The
provisions in Sections 7.2 and 7.3 of the LLC Agreement are
substantially based on provisions found in the BOX Holdings LLC
Agreement, with certain variations to account for differences in
corporate and ownership structure.\47\ The Exchange believes that such
variations are necessary to ensure proper application of the LLC
Agreement's provisions to the Company, which serve to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, consistent with Section 6(b)(5) of the
Act.\48\ Further, the Exchange believes that the variations in Sections
7.2 and 7.3 of the LLC Agreement that tailor those provisions to the
corporate and ownership structure of BSTX would help ensure that
persons subject to the Exchange's jurisdiction are able to navigate and
more readily understand the LLC Agreement. The Exchange believes that
this, in turn, would be consistent with Section 6(b)(1) of the Act \49\
because it would help ensure that the Exchange, including in its
operation of facilities, is so organized and has the capacity to be
able to carry out the purposes of the Act.
---------------------------------------------------------------------------

    \47\ See Sections 7.2 and 7.3 of the BOX Holdings LLC Agreement.
    \48\ 15 U.S.C. 78f(b)(5).
    \49\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    Pursuant to Section 7.4 of the LLC Agreement, no Transfer may occur
if the Transfer could cause a termination of the Company, could cause a
termination of the Company's status as a partnership or cause the
Company to be treated as a publicly traded partnership for federal
income tax purposes, is prohibited by any securities laws, is
prohibited by the LLC Agreement, or is to a minor or incompetent
person.
    Section 7.4(e) of the LLC Agreement requires that a Member will
provide the Company with written notice fourteen (14) days prior, and
the Company will provide the Commission and the Exchange with written
notice ten (10) days prior, to the closing date of any acquisition that
results in that Member's Percentage Interest, alone or together with
any related person of that Member, meeting or crossing the threshold
level of 5% or the successive 5% Percentage Interest levels of 10% and
15%. Any person that, either alone or together with its related
persons, owns, directly or indirectly, of record or beneficially, five
percent (5%) or more of the then outstanding Interests will,
immediately upon acquiring knowledge of its ownership of five percent
(5%) or more of the then outstanding Interests, give the Company
written notice of that ownership. In addition, Section 7.4(f) of the
LLC Agreement provides that any Transfer that results in the
acquisition and holding by any person, alone or together with its
related persons, of an aggregate Percentage Interest level which meets
or crosses the threshold level of 20% or any successive 5% Percentage
Interest level (i.e., 25%, 30%, etc.) is also subject to the rule
filing process pursuant to Section 19 of the Act.
    Under Section 7.4(g) of the LLC Agreement, unless it does not
directly or indirectly hold any interest in a Member, a Controlling
Person (as defined below) of a Member will be required to execute an
amendment to the LLC Agreement upon establishing a Controlling Interest
(as defined below) in any Member that, alone or together with any
related persons of that Member, holds a Percentage Interest in the
Company equal to or greater than 20%. This amendment will be
substantially in the form of the instrument of accession attached as
Exhibit 5B hereto [sic] and provide that the Controlling Person will
agree to become a party to the LLC Agreement and to abide by all of its
provisions, to the same extent and as if they were members. These
amendments to the LLC Agreement will be subject to the rule filing
process pursuant to Section 19 of the Act. The rights and privileges,
including all voting rights, of the Member in whom a Controlling
Interest is held, directly or indirectly, under the LLC Agreement and
the LLC Act will be suspended until the amendment has become effective
pursuant to Section 19 of the Act or the Controlling Person no longer
holds, directly or indirectly, a Controlling Interest in the
Member.\50\ As a result, any new Member or other direct or indirect
owner of an equity interest in BSTX, whether by transfer of such equity
interest from an existing owner or otherwise, will be subject to the
same requirements as all other Members, namely that it will be required
to execute an instrument of accession to the LLC Agreement and be
subject to the rule filing process if the new Member holds, directly or
indirectly, a Controlling Interest in BSTX.
---------------------------------------------------------------------------

    \50\ See supra note 10.
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    In accordance with Section 7.4(h) of the LLC Agreement, if a
Member, or any related person of that Member, is approved by the
Exchange as a BSTX Participant pursuant to the Exchange Rules, and that
Member's Percentage Interest is greater than 20%, alone or together
with any Related Person of that Member, the voting rights of the Member
and its appointed Member Directors will be limited to 20%; provided,
however, that the Member's full Percentage Interest will be counted for
quorum purposes and the portion greater than 20% will be voted by the
person presiding over quorum and vote matters in the same proportion as
the Interests held by the other Members are voted. The Exchange notes
that Section 7.4 of the Company's LLC Agreement is identical in
substance to provisions of the BOX Holdings LLC Agreement.\51\
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    \51\ See Section 7.4 of the BOX Holdings LLC Agreement.
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    In addition to the provisions discussed above, Section 5 of the LLC
Agreement includes provisions that relate to changes in ownership of
the Company. Because BOX Options is

wholly-owned by BOX Holdings, the LLC Agreement differs from the BOX
Options LLC Agreement. Under Section 5.5 of the LLC Agreement, a Member
will cease to be a Member of the Company upon the Bankruptcy or the
involuntary dissolution of that Member. Further, Section 5.8 of the LLC
Agreement allows the Board, by unanimous vote and after appropriate
notice and opportunity for hearing, to suspend or terminate a Member's
voting privileges or membership in the Company for three potential
reasons: (i) In the event the Board determines in good faith that such
Member is subject to a ``statutory disqualification,'' as defined in
Section 3(a)(39) of the Act; (ii) in the event the Board determines in
good faith that such Member has violated a material provision of this
Agreement, or any federal or state securities law; or (iii) in the
event the Board determines in good faith that such action is necessary
or appropriate in the public interest or for the protection of
investors. The Exchange believes that limiting the ability to
participate in the Company for Members who may act in contravention of
legal or ethical standards may promote just and equitable principles of
trade, and, in general, protects investors and the public interest,
consistent with Section 6(b)(5) of the Act.\52\ Further, the Exchange
believes that the ability to suspend or terminate a Member's voting
privileges or membership in the Company as described above would be
consistent with Section 6(b)(1) of the Act.\53\ This is because such
measures in respect of Members who act in contravention of legal or
ethical standards would help ensure that the Exchange, including in its
operation of facilities, is so organized and has the capacity to be
able to carry out the purposes of the Act, including the prevention of
inequitable and unfair practices.
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    \52\ 15 U.S.C. 78f(b)(5).
    \53\ 15 U.S.C. 78f(b)(1).
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    Finally, the Exchange notes that Section 18.1 of the Company's LLC
Agreement provides that amendments to the LLC Agreement must be
approved by the Board, including one Member Director appointed by each
of BOX Digital and tZERO, as the sole members of the Company, and any
amendment of a provision specific to a Member or the Exchange requires
the consent of that party. In addition, the Company shall provide
prompt notice to the Exchange of any amendment, modification, waiver or
supplement to this Agreement formally presented to the Board for
approval and the Exchange shall review each such amendment,
modification, waiver or supplement and, if such amendment is required,
under Section 19 of the Act and the rules promulgated thereunder, to be
filed with, or filed with and approved by, the SEC before such
amendment may be effective, then such amendment shall not be effective
until filed with, or filed with and approved by, the SEC, as the case
may be.\54\ These provisions are similar to provisions in the BOX
Holdings LLC Agreement but differ in details related to the different
ownership structure of the Company.\55\
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    \54\ A proposed rule change can also become effective by
operation of law. See 15 U.S.C. 78s(b)(2).
    \55\ See Section 18.1 of the BOX Holdings LLC Agreement.
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Regulation of the Company
    In the discussion below, the Exchange describes provisions in the
LLC Agreement related to regulation of the Company, highlighting areas
that vary in comparison to the BOX Options LLC Agreement and/or BOX
Holdings LLC Agreement and provides the statutory basis for such
variation.
    Generally, Section 3.2 of the LLC Agreement, which is identical in
substance to a provision in the BOX Options LLC Agreement, provides
that the Exchange has authority to act as the SRO for the Company, will
provide the regulatory framework for the BSTX Market and will have
regulatory responsibility for the activities of the BSTX Market.\56\ In
addition, the Exchange will provide regulatory services to the Company
pursuant to the Facility Agreement. Nothing in the LLC Agreement shall
be construed to prevent the Exchange from allowing the Company to
perform activities that support the regulatory framework for the BSTX
Market, subject to oversight by the Exchange. This provision ensures
that the Exchange has full regulatory control over BSTX, which is
designed to prevent any owner of BSTX from exercising undue influence
over the regulated activities of the Company.
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    \56\ See Section 3.2 of the BOX Options LLC Agreement.
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    Section 15 of the LLC Agreement deals with how the Company will
govern the handling of confidential information, as it relates to the
securities regulations and otherwise. All of the provisions in Section
15 of the LLC Agreement are substantively similar to provisions in the
BOX Options LLC Agreement, except where noted below.\57\ Under Sections
15.1 and 15.2(a) of the LLC Agreement, subject to certain exceptions
set forth below, no Member will make any public disclosures concerning
the LLC Agreement without the prior approval of the Company. Each
Member and the Exchange may only use confidential information of the
Company in connection with the activities contemplated by the LLC
Agreement and other written agreements and pursuant to the Act and the
rules and regulations thereunder. Furthermore, Section 15.4 of the LLC
Agreement provides that representatives of the parties will meet to
institute confidentiality procedures and discuss confidentiality and
disclosure issues.
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    \57\ See Article 12 of the BOX Options LLC Agreement.
---------------------------------------------------------------------------

    Pursuant to Section 15.2(b) of the LLC Agreement, each of the
Members and the Exchange may disclose confidential information of the
Company only to its respective directors, officers, employees and
agents who have a reasonable need to know the information. Also, such
individuals may disclose confidential information of the Company to the
extent required by applicable securities or other laws, a court or
securities regulators, including the Commission and the Exchange.
    Section 15.3 of the LLC Agreement requires that each Member and the
Exchange will hold all non-public information concerning the other
Members or the Exchange in strict confidence, unless disclosure to an
applicable regulatory authority is necessary or appropriate or unless
compelled to disclose by judicial or administrative process or required
by law. If a Member or the Exchange is compelled to disclose any Member
Information in connection with any necessary regulatory approval or by
judicial or administrative process, it will promptly notify the
disclosing party to allow the disclosing party to seek a protective
order.
    Pursuant to Section 15.5 of the LLC Agreement, nothing in the LLC
Agreement will be interpreted as to limit or impede the rights of the
Commission, pursuant to the federal securities laws and rules and
regulations thereunder, and the Exchange to access and examine
applicable confidential information pursuant to the federal securities
laws and the rules and regulations thereunder, or to limit or impede
the ability of any directors, officers, employees or agents of the
Company and any directors, officers, employees or agents of the Members
to disclose that confidential information to the Commission or the
Exchange. This is substantially the same provision that is contained in
the BOX Options LLC Agreement, except that it also provides

that the SEC can access and examine Confidential Information, pursuant
to the federal securities laws and rules and regulations
thereunder.\58\
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    \58\ See Section 12.5 of the BOX Options LLC Agreement.
---------------------------------------------------------------------------

    Under Section 15.6 of the LLC Agreement, confidential information
of the Company or the Exchange pertaining to regulatory matters
(including but not limited to disciplinary matters, trading data,
trading practices and audit information) will not be made available to
any persons other than to the Company's Directors, officers, employees
and agents that have a reasonable need to know the contents thereof;
will be retained in confidence by the Company and the Directors,
officers, employees and agents of the Company; and will not be used for
any non-regulatory purpose. Nothing in the LLC Agreement will be
interpreted as to limit or impede the rights of the Commission and the
Exchange to access and examine that confidential information pursuant
to the federal securities laws and the rules and regulations
thereunder, or to limit or impede the ability of any Directors,
officers, employees and agents of the Company to disclose that
confidential information to the Commission or the Exchange.
    Finally, Section 18.8 of the LLC Agreement establishes that the
Company will not operate as a facility of the Exchange until this rule
filing is effective. Upon effectiveness, the Commission and the
Exchange will then have regulatory oversight responsibilities with
respect to the Company and references in the LLC Agreement to the
Exchange, the Commission, any regulation or oversight of the Company by
the Commission or the Exchange, and any participation in the affairs of
the Company by the Commission or the Exchange, will take effect. The
execution of the LLC Agreement by the Exchange will not be required
until the approval is obtained, at which time the Exchange will become
a party to the LLC Agreement. This provision is not included in the BOX
Options LLC Agreement because it would not be applicable. By not
operating the Company until this rule filing is effective, the Exchange
believes it is fostering cooperation and coordination with persons
engaged in regulating (e.g., the Commission), clearing, settling,
processing information with respect to, and facilitating transactions
in securities, consistent with Section 6(b)(5) of the Act.\59\
---------------------------------------------------------------------------

    \59\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Regulatory Jurisdiction Over Members
    In the discussion below, the Exchange describes provisions in the
LLC Agreement related to regulatory jurisdiction over members by the
Company, highlighting areas that vary in comparison to the BOX Options
LLC Agreement and/or BOX Holdings LLC Agreement and provides the
statutory basis for such variation.
    Pursuant to Section 11.1 of the LLC Agreement, which is similar in
substance to a provision in the BOX Holdings LLC Agreement, the Board
will cause to be entered in appropriate books, kept at the Company's
principal place of business, all transactions of or relating to the
Company.\60\ Each Member will have the right to inspect and copy those
books and records, excluding regulatory and disciplinary information.
The Board will not have the right to keep confidential from the Members
any information that the Board would otherwise be permitted to keep
confidential pursuant to Sec.  18-305(c) of the LLC Act, except for
information required by law or by agreement with any third party to be
kept confidential. The Company's independent auditor will be an
independent public accounting firm selected by the Board. To the extent
related to the operation or administration of the Exchange or the BSTX
Market, all books and records of the Company and its Members will be
maintained at a location within the United States, the books, records,
premises, directors, officers, employees and agents of the Company and
its Members will be deemed to be the books, records, premises,
directors, officers, employees and agents of the Exchange for the
purposes of, and subject to oversight pursuant to, the Act, and the
books and records of the Company and its Members will be subject at all
times to inspection and copying by the Commission and the Exchange.
---------------------------------------------------------------------------

    \60\ See Section 11.1 of the BOX Holdings LLC Agreement.
---------------------------------------------------------------------------

    Under Section 18.6(a) of the LLC Agreement, to the extent they are
related to Company activities, the books, records, premises, officers,
directors, agents, and employees of the Member will be deemed to be the
books, records, premises, officers, directors, agents, and employees of
the Exchange for the purpose of and subject to oversight pursuant to
the Act. Further, pursuant to Section 18.6(b) of the LLC Agreement, the
Company, the Members and the officers, directors, employees and agents
of each, by virtue of their acceptance of those positions, will be
deemed to irrevocably submit to the jurisdiction of the U.S. federal
courts, the Commission and the Exchange for purposes of any suit,
action or proceeding pursuant to U.S. federal securities laws, the
rules or regulations thereunder, arising out of, or relating to,
activities of the Exchange and the Company, and Delaware state courts
for any matter relating to the organization or internal affairs of the
Company, and will be deemed to waive, and agree not to assert by way of
motion, as a defense or otherwise in any suit, action or proceeding,
any claims that they are not personally subject to the jurisdiction of
the U.S. federal courts, the Commission, the Exchange or Delaware state
courts, as applicable, that the suit, action or proceeding is an
inconvenient forum or that the venue of the suit, action or proceeding
is improper, or that the subject matter hereof may not be enforced in
or by those courts or agencies. The Company, the Members and the
officers, directors, employees and agents of each, by virtue of their
acceptance of those positions, also agree that they will maintain an
agent in the United States for the service of process of a claim
arising out of, or relating to, the activities of the Exchange and the
Company. These provisions are substantially similar to provisions of
the BOX Options LLC Agreement.\61\
---------------------------------------------------------------------------

    \61\ See Section 14.6 of the BOX Options LLC Agreement.
---------------------------------------------------------------------------

    Pursuant to Section 18.6(c) of the LLC Agreement, with respect to
obligations under the LLC Agreement related to confidentiality
regulation, jurisdiction and books and records, the Company, the
Exchange and each Member will ensure that directors, officers and
employees of the Company, the Exchange and each Member consent in
writing to the applicability of the applicable provisions to the extent
related to the operation or administration of the Exchange or the BSTX
Market. This provision is substantially the same as the provision
contained in the BOX Options LLC Agreement, with the exception of the
deletion of a reference to privacy rules in Canada, which are not
applicable to the current Members of the Company.\62\ The Exchange
believes that allowing only applicable laws to be referenced in the LLC
Agreement helps to ensure that proper legal standards apply to the
Company, which may foster cooperation and coordination with persons
engaged in regulating transactions in securities, consistent with
Section 6(b)(5) of the Act.\63\ Further, the Exchange believes that
basing the provisions described

above on the BOX Options LLC Agreement but omitting terms that are not
applicable would help ensure that persons subject to the Exchange's
jurisdiction are able to navigate and more readily understand the LLC
Agreement. The Exchange believes that this, in turn, would be
consistent with Section 6(b)(1) of the Act \64\ because it would help
ensure that the Exchange, including in its operation of facilities, is
so organized and has the capacity to be able to carry out the purposes
of the Act.
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    \62\ See Section 14.6(c) of the BOX Options LLC Agreement.
    \63\ 15 U.S.C. 78f(b)(5).
    \64\ 15 U.S.C. 78f(b)(1).
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Amendments to LLC Agreement
    In the discussion below, the Exchange describes provisions in the
LLC Agreement related to amendments to the LLC Agreement, highlighting
areas that vary in comparison to the BOX Options LLC Agreement and/or
BOX Holdings LLC Agreement and provides the statutory basis for such
variation.
    Section 18.1 of the LLC Agreement, which is substantially similar
to a provision in the BOX Holdings LLC Agreement,\65\ provides that the
LLC Agreement may only be amended by an agreement in writing approved
by the Board, including at least one Member Director appointed by each
Member, without the consent of any Member or other person. In addition,
any terms specific to any Member or to the Exchange may not be altered
or adversely affect that Member or the Exchange without the prior
written consent of that Member or the Exchange as applicable. The
Company will provide prompt notice to the Exchange of any amendment,
modification, waiver or supplement to the LLC Agreement formally
presented to the Board for approval and the Exchange will review each
amendment, modification, waiver or supplement and, if that amendment is
required, under Section 19 of the Act and the rules promulgated
thereunder, to be filed with, or filed with and approved by, the
Commission before that amendment may be effective, then that amendment
will not be effective until filed with, or filed with and approved by,
the Commission, as the case may be. If the Exchange ceases to be the
SRO authority of the Company, the Exchange will no longer be a party to
the LLC Agreement and thereafter the provisions of the LLC Agreement
will not apply to the Exchange except for the provisions referenced in
Section 18.12 which will survive.
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    \65\ See Section 18.1 of the BOX Holdings LLC Agreement.
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Additional Provisions
    As previous mentioned, BSTX is a Delaware limited liability
company. As such, the LLC Agreement contains numerous provisions that
are standard or not novel for a similarly situated commercial business
registered as a limited liability company under the laws of the state
of Delaware.\66\ The Exchange believes that these provisions are
consistent with Section 6(b)(1) of the Act \67\ because they are
consistent with corporate governance practices, generally, and they
would help ensure that the Exchange, including in its operation of
facilities, is so organized and has the capacity to be able to carry
out the purposes of the Act.
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    \66\ See LLC Agreement Sections 2.1, 2.2, 2.4, 2.5, 2.6, 2.7,
3.1, 4.2, 4.5, 4.6, 4.7, 4.8, 4.9, 4.11, 5.1, 5.2, 5.3, 5.4, 5.6,
5.7, 6.3, 6.4, 6.5, 7.5, 7.6, 7.7, 8.3, 9.2, 9.3, 9.4, 9.5, 9.6,
9.7, 9.8, 10.3, 10.4, 11.2, 11.3, 11.4, 11.5, 11.6, 12, 13.1, 14,
16.2, 17, 18.2, 18.3, 18.4, 18.5, 18.7, 18.9, 18.10, 18.11, and
18.12.
    \67\ 15 U.S.C. 78f(b)(1).
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2. Statutory Basis
    In addition to the sections above that discuss variations from the
BOX Options LLC Agreement and/or BOX Holdings LLC Agreement and their
associated statutory bases, the Exchange believes that the proposal is
consistent with the requirements of Section 6(b) of the Act,\68\ in
general, and furthers the objectives of Section 6(b)(1),\69\ in
particular, in that it enables the Exchange to be so organized so as to
have the capacity to be able to carry out the purposes of the Act and
to comply, and to enforce compliance by its exchange members and
persons associated with its exchange members, with the provisions of
the Act, the rules and regulations thereunder, and the rules of the
Exchange. The Exchange also believes that this filing furthers the
objectives of Section 6(b)(5) of the Act \70\ in that it is designed to
facilitate transactions in securities, to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and in general, to
protect investors and the public interest.
---------------------------------------------------------------------------

    \68\ 15 U.S.C. 78f(b).
    \69\ 15 U.S.C. 78f(b)(5).
    \70\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received comments on the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-BOX-2019-37 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-2019-37. 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 (http://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 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-BOX-2019-37 and should be submitted on
or before January 24, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\71\
 J. Matthew DeLesDernier,
Assistant Secretary.

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    \71\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2019-28412 Filed 1-2-20; 8:45 am]
 BILLING CODE 8011-01-P