The Securities and Exchange Commission published notice of BOX’s fee-schedule amendment, filed September 30 and operative October 1. The amendment doubles the Market Maker fee for Qualified Open Outcry (QOO) and FLEX Open Outcry (FOO) orders in Non-Penny Interval Classes, while increasing the enhanced Floor Broker rebate for eligible executions in those classes.

For affected firms, the immediate task is to identify where the changes enter their trading, billing, and commercial arrangements. The broader issue is whether the increased incentive to bring orders to BOX will produce enough additional trading opportunity to support the higher cost imposed on market makers.

What changes and who is affected?

The filing amends Section V of BOX’s fee schedule, which addresses manual transactions on its options facility.

The fee increase and rebate increase apply to different recipients. Market makers pay the increased fee; eligible floor brokers receive the increased rebate. A firm evaluating its costs should therefore avoid treating the five-cent rebate increase as an automatic offset to the fifty-cent fee increase.

The amendment is limited to the specified Non-Penny Interval Class transactions. It does not increase every fee on BOX. The corresponding Market Maker fee in Penny Interval Classes remains $0.50 per contract, and the enhanced Floor Broker rebate in those classes remains $0.20.

Understanding the transaction categories

The notice concerns two open-outcry order categories: QOO, or Qualified Open Outcry, and FOO, or FLEX Open Outcry. It cites BOX Rules 7600 and 7605 for the underlying order mechanisms.

The distinction between the participants matters. Floor Market Makers trade for their own accounts and interact with orders presented on the trading floor. Floor Brokers facilitate order execution on that floor. BOX’s pricing change increases the cost for one participant category while increasing the incentive available to the other.

For implementation, firms should identify affected activity by order category, account classification, and option-class designation. Applying the new fee broadly to all manual trades—or relying on the underlying security alone to determine treatment—could produce incorrect billing or cost estimates.

The enhanced rebate has eligibility limits

The $0.25 enhanced rebate applies to qualifying Floor Broker QOO and FOO executions that trade with a Floor Market Maker in Non-Penny Interval Classes.

The notice retains exclusions for:

• Public Customer executions.

• Executions subject to the strategy QOO/FOO fee-cap-and-rebate provisions.

• Broker Dealer executions facilitating a Public Customer.

The enhanced rebate replaces the otherwise applicable ordinary rebate for a qualifying execution; it is not an additional payment stacked on top of that rebate.

A broker’s projected rebate income should therefore reflect qualifying executions, rather than total floor volume. A higher posted rebate can have a smaller financial effect than expected if a substantial portion of the broker’s activity falls within an exclusion.

What the changes look like in dollars

Consider an illustrative month with 10,000 contracts subject to the affected Market Maker fee. The exchange charge rises from $5,000 to $10,000, an increase of $5,000 before considering other applicable charges, arrangements, or trading economics.

Separately, a Floor Broker with 10,000 contracts qualifying for the enhanced rebate would receive $2,500 instead of $2,000, an increase of $500.

These examples measure the two pricing changes independently. They do not assume that both amounts accrue to the same firm or apply to an identical set of executions. That distinction is essential when translating an exchange filing into a budget, client quote, or profitability model.

Why BOX says the changes are justified

BOX describes both adjustments as driven by business and competitive considerations. It argues that the higher rebate may encourage Floor Brokers to bring more liquidity to the trading floor, expanding execution opportunities. It also argues that its increased Market Maker fee remains competitive with fees charged by other options exchanges operating trading floors.

Those are BOX’s stated expectations. The notice does not establish that additional liquidity will materialize or that market-maker participation will remain unchanged.

From a business perspective, the amendment creates two forces that firms should evaluate together. A larger rebate can make eligible order flow more attractive to a floor broker. A larger transaction fee can make participation more expensive for a market maker. The outcome depends on how participants respond, including whether additional trading opportunities compensate for the increased fee.

Headline fee comparisons alone will not answer that question. A useful assessment should also consider execution quality, available liquidity, fill rates, transaction size, applicable rebates, and any contractual allocation of costs.

The legal framework: reasonable fees and fair allocation

BOX grounds its filing in Exchange Act Sections 6(b)(4) and 6(b)(5), which address reasonable and equitably allocated charges and prohibit unfair discrimination, among other requirements.

The exchange argues that different treatment is justified by the participants’ different roles. In its view, market makers benefit from access to trading-floor orders, while floor-broker rebates support the work of bringing and facilitating open-outcry business.

For legal and compliance teams, the relevant questions extend beyond whether everyone in an account category receives the same rate. They include whether the distinction between categories is justified, whether the charges remain reasonable, and whether the exchange’s competitive arguments are supported by the actual trading environment.

Our practical assessment is that transaction-level evidence would make those questions easier to evaluate. Firms considering a comment could use their own experience to explain how the increase affects participation, how closely alternative venues substitute for BOX, and whether the rebate structure changes available execution opportunities.

Effective upon filing: why the timing matters

BOX submitted the amendment under Exchange Act Section 19(b)(3)(A)(ii) and Rule 19b-4(f)(2), the immediate-effectiveness framework for changes to dues, fees, and other charges. The filing specifies October 1, 2026 as the operative date.

The SEC’s October 14 notice therefore follows the date when the new pricing became operative. Firms should use the operative date when reviewing affected transactions and invoices.

Immediate effectiveness does not mean the SEC has issued a merits approval endorsing BOX’s competitive analysis. The notice explains that the Commission may temporarily suspend the change within 60 days of filing under the stated statutory standards. If it does so, it must institute proceedings to determine whether the change should be approved or disapproved.

This process makes operational monitoring important: a firm may need to implement an exchange’s pricing amendment while the public comment and regulatory review process continues.

Practical steps for affected firms

Map the exposure. Identify QOO and FOO transactions in Non-Penny Interval Classes and confirm the relevant account types. Separate the Market Maker fee analysis from Floor Broker rebate eligibility.

Reconcile October activity. Check that invoices, accruals, and internal fee calculations reflect the October 1 operative date. Verify that excluded transactions have not received the enhanced rebate and that the enhanced rebate has not been added to an ordinary rebate.

Review commercial arrangements. Determine who bears exchange charges and who receives the economic benefit of rebates under existing agreements. If pricing changes flow through to a client, confirm how the agreement handles that adjustment and whether a notice is required.

Revisit venue economics. Compare the full economics of affected trading across available venues. The fee increase is an input into that review; execution outcomes and liquidity remain relevant to the business decision.

Keep a record of the response. Document the activity reviewed, financial effect, system updates, and decisions made. A clear record will also help if subsequent regulatory action requires another change.

These steps are practical considerations arising from the filing, rather than new standalone obligations imposed by this notice.

Comment opportunity and key dates

The linked notice leaves the calendar comment deadline as a placeholder tied to Federal Register publication. The SEC’s current listing also expresses the deadline as 21 days after publication. The October 14 release date should therefore not be used by itself to calculate the deadline.

Comments should reference SR-BOX-2026-20. The notice permits electronic submission through the SEC’s comment form or by email to rule-comments@sec.gov, with the file number in the subject line. Submissions are generally public, so firms should avoid including confidential client or trading information without considering appropriate treatment.

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This blog post is for informational purposes only and is not legal advice. Please consult with a Launch Legal attorney regarding your specific situation.