[Federal Register Volume 80, Number 15 (Friday, January 23, 2015)]
[Notices]
[Pages 3701-3713]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-01072]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74086; File No. SR-NYSEMKT-2015-04]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending the NYSE Amex 
Options Fee Schedule

January 16, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on January 14, 2015, NYSE MKT LLC (the ``Exchange'' or ``NYSE 
MKT'') filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 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 proposes to amend the NYSE Amex Options Fee Schedule 
(``Fee Schedule'') to: (1) Make certain changes to transaction fees for 
Standard Options; (2) provide a discount to NYSE Amex Options Market 
Makers for transaction fees based on a sliding volume scale; (3) offer 
to NYSE Amex Options Market Makers the opportunity to prepay a portion 
of certain transaction fees; (4) eliminate the Order Flow Provider 
(``OFP'') Electronic average daily volume (``ADV'') Tiers as well as 
the Customer Electronic Complex Order ADV Tiers and replace them with a 
new Amex Customer Engagement Program, which would provide credits 
payable to an OFP for certain Electronic Customer volume; and (5) 
reformat and reorganize the Fee Schedule. The Exchange proposes to 
implement the changes on January 2, 2015. The text of the proposed rule 
change is available on the Exchange's Web site at www.nyse.com, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

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 those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to: (1) Make certain changes to transaction 
fees for Standard Options; (2) provide a discount to NYSE Amex Options 
Market Makers for transaction fees based on a sliding volume scale; (3) 
offer to NYSE Amex Options Market Makers the opportunity to prepay a 
portion of certain transaction fees; (4) eliminate the OFP Electronic 
ADV Tiers as well as the Customer Electronic Complex Order ADV Tiers 
and replace them with a new Amex Customer Engagement Program, which 
would provide credits payable to an OFP solely for certain Electronic 
Customer volume; and (5) reformat and reorganize the Fee Schedule. The 
Exchange proposes to implement the changes on January 2, 2015.
    As a general matter, the Exchange notes that it has proposed to 
reorganize certain content within and reorder certain sections of the 
current Fee Schedule. For example, as will be discussed further below, 
the Exchange has proposed to eliminate Endnotes and instead include 
notes relevant to each Section within that Section, often using the 
text that is contained in the current Endnotes within each new Section. 
If the Exchange revises any text in the Endnotes when moving it to 
notes within relevant Sections, including for non-substantive reasons, 
we will explain in more detail below. The Exchange believes this 
structure will make the Fee Schedule easier to comprehend.
    The Exchange describes below each of the sections, together with 
any changes, in the proposed Fee Schedule.
Table of Contents, Preface, Definitions and Terms
    The Exchange proposes to amend its Fee Schedule by adding a Table 
of Contents, using numbered and lettered headings and subheadings that 
list the various transaction fees and credits offered by the Exchange. 
The Exchange believes that including a Table of Contents would make the 
Fee Schedule easier to navigate and assist market participants in 
locating fees and/or credits related to those transactions in which 
they may be most interested.
    Following the Table of Contents, the Exchange proposes to add a 
Preface that includes information about the Exchange's billing and 
rounding practices and that sets forth key terms and definitions. 
First, the Exchange proposes to include information about Billing 
Disputes, as the first part of the Preface. The current Fee Schedule 
describes how the Exchange handles Billing Disputes under ``NYSE Amex 
Options General,'' \4\ and this description will be incorporated into 
the proposed Preface verbatim.
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    \4\ This information appears at the end of the current Fee 
Schedule, right before the Endnotes.
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    Second, the Exchange proposes to add a description of its rounding 
practices. Specifically, the Exchange proposes to include the following 
language.
    Any per contract fees that are less than $0.01 will be handled in 
the following manner. All volume for the month will be summed and the 
applicable rate applied. In those cases where a fractional cent occurs, 
the Exchange will round up to the nearest whole cent for purposes of 
computing the invoice. For example, if the monthly volume is 3,001 
contracts and the applicable rate is $0.055 per contract,

[[Page 3702]]

the result is $165.055 which will be rounded to $165.06 in computing 
the invoiced amount.
    The Exchange believes that including this information in the Fee 
Schedule would better inform Exchange members about how the Exchange 
bills them for transactions executed on the Exchange.
    Next, the Exchange proposes to add a new section that sets forth 
Key Terms and Definitions to make clear to members the meaning of 
certain terms used throughout the Fee Schedule. The Exchange believes 
this proposed change would make the Fee Schedule more comprehensive, 
thereby better informing members. Unless otherwise noted below, the 
proposed Key Terms and Definitions are non-substantive as they have 
been excerpted from the rules of the Exchange.\5\
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    \5\ See proposed Fee Schedule, Key Terms and Definitions; see, 
e.g., Rule 900.2NY (Definitions).
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    The Exchange proposes to add a definition of Affiliate, which 
incorporates the ``Affiliate'' standard in Endnote 12 of the current 
Fee Schedule. The proposed definition of ``Affiliate'' states, in part, 
that the Exchange ``will apply a 70% common ownership test'' to 
determine affiliation for purposes of aggregating routing and market 
making activity. Although Endnote 12 relates solely to a determination 
of affiliation for purposes of Excessive Bandwidth Fees, the Exchange 
proposes to apply the Affiliate definition (i.e., 70% common ownership) 
more broadly in the proposed Fee Schedule.\6\ The Exchange notes that 
this proposed definition of Affiliate is consistent with that of other 
options exchanges, and at least two other options exchanges apply a 75% 
common ownership threshold for affiliation and that there is at least 
one other exchange that does not specify the level of common ownership 
or common control required in order to have the activity of affiliates 
aggregated for purposes of the fee schedule.\7\
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    \6\ The Exchange proposes to import the balance of the 
information contained in current Endnote 12 into Section II 
(``Monthly Excessive Bandwidth Utilization Fees'') of the proposed 
Fee Schedule as discussed below.
    \7\ See, e.g., NASDAQ OMX PHLX LLC (``PHLX'') fee schedule, 
available here, http://www.nasdaqtrader.com/Micro.aspx?id=PHLXPricing (defining the term ``Common Ownership'' as 
meaning ``members or member organizations under 75% common ownership 
or control''); see also The Chicago Board Options Exchange, Inc. 
(``CBOE'') fee schedule, available here, http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf (defining ``affiliate'' as 
``having at least 75% common ownership'' between the two entities in 
question); see also BATS BZX Exchange (``BATS'') fee schedule, 
available here, http://cdn.batstrading.com/resources/regulation/rule_book/BZX_Fee_Schedule.pdf (defining the term ``ADAV'' to 
specify, ``a Member may aggregate ADAV or ADV with other Members 
that control, are controlled by, or are under common control with 
such Member'').
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    The Exchange has proposed to add a ``Non-Customer'' definition for 
purposes of the proposed Fee Schedule. The definition of ``Non-
Customer'' would be any market participant that is not a Customer. 
Because the definition of Customer in proposed Fee Schedule would be 
any individual or organization that is not a Broker-Dealer and is not a 
Professional Customer, as defined in Rule 900.2NY(18)(A), a Non-
Customer would be defined as any individual or organization that is 
either a Broker-Dealer or Professional Customer.
    In addition, the Exchange proposes to add the definition of 
Standard Option contracts, which it defines as any option other than a 
Mini Option contract, as described in Rule 901, Commentary .01.
    The Exchange notes that the other proposed Key Terms and 
Definitions are non-substantive. Specifically, the proposed definitions 
related to the CUBE Auction--CUBE Order, Contra Order, and Initiating 
Participant--are taken directly from the CUBE Auction fee filing and 
are, therefore, non-substantive proposed changes.\8\ Also, the proposed 
addition of the terms Electronic and Manual to differentiate these 
types of transactions on the Exchange are non-substantive as this 
information can be found in Exchange rules, as well as in the current 
Fee Schedule. Specifically, Rule 900.2NY(29) explains that Floor Market 
Maker quotations may be entered ``(A) manually, by public outcry, and 
(B) electronically through an auto-quoting device.'' Similarly, Endnote 
6 to the current Fee Schedule states that ``Manual trades are those 
trades executed in open outcry.'' Further, the Exchange notes that 
there are references to Manual and Electronic transactions throughout 
the current (and proposed) Fee Schedule. Thus, the Exchange believes it 
would be logical to add these definitions to explain these transaction 
types to market participants.
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    \8\ See Securities Exchange Act Release No. 72469 (June 25, 
2014), 79 FR 37380 (July 1, 2014) (NYSE-MKT-2014-52).
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    Finally, the Exchange also proposes non-substantive additions to 
the Key Terms and Definitions by importing the information from current 
Endnotes 6 and 14, which contain the definitions of Firm Proprietary, 
Firm Facilitation and Non-NYSE Market Maker, respectively (with slight 
stylistic wording changes to these definitions). In particular, the 
Exchange proposes to simplify the term ``Firm Proprietary'' to ``Firm'' 
throughout the proposed Fee Schedule. The proposed definition of 
``Firm'' includes information from current Endnote 6 together with the 
definition from Rule 900.2NY(28).\9\
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    \9\ In addition, the Exchange proposes to import the balance of 
the information contained in current Endnote 6 into Section I.I 
(``Firm Monthly Fee Cap'') of the proposed Fee Schedule as discussed 
below.
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    Except as otherwise indicated above, the Exchange believes the 
addition of this Key Terms and Definitions section is a non-substantive 
addition that will aid its members in navigating and understanding 
certain terms consistently used through the Fee Schedule.
Section I. Options Transactions Fees and Credits
A. Rates for Standard Option Contracts Transactions--Electronic and 
Manual
    The current Fee Schedule sets forth the rates for Standard Option 
\10\ contracts in a table under ``NYSE Amex Options: Trade-Related 
Charges for Standard Options.'' \11\ The Exchange proposes to set forth 
the per contract rate Electronic and Manual transactions in Standard 
Options under new Section I.A. in a table (with related notes to 
immediately follow).\12\
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    \10\ Where applicable, capitalized terms used herein have the 
meanings set forth in the proposed Fee Schedule in the Key Terms and 
Definitions section.
    \11\ In the current Fee Schedule, the table of fees for Standard 
Options includes several Endnotes. The information contained in 
Endnote 5 will be discussed in this Section and again in proposed 
Section I.C. (NYSE Amex Market Maker Sliding Scale). As noted above, 
existing Endnotes 6 and 14 describe the terms Firm Proprietary, Firm 
Facilitation, and Non-NYSE Market Maker, respectively, and the 
Exchange proposes the non-substantive change of relocating these 
terms to the Key Terms and Definitions section of the proposed Fee 
Schedule, although Firm Proprietary has been simplified to Firm; the 
proposed definition of Firm includes information from Endnote 6 
together with the definition from Rule 900.2NY(28).
    \12\ The Exchange will describe the proposed notes after 
discussing the distinctions between the fees.
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    With the following exceptions, the Exchange is not proposing to 
change the rates for Standard Option contracts:
     The Exchange proposes a new rate of $0.23 per contract for 
e-Specialists, Specialists, Directed Options Market Makers (``DOMMs''), 
and NYSE Amex Options Market Makers for Electronic transactions in 
Standard Option contracts.\13\ This rate is competitive with rates 
being charged on other

[[Page 3703]]

exchanges.\14\ The new base rate of $0.23 per contract represents an 
increase in fees charged to market participants. Under the current Fee 
Schedule, each market participant is charged a per contract fee for 
Electronic transactions (described below), which rate is subject to a 
three-cent per contract discount if the market participant trades 
50,000 contracts ADV or greater for each day of the month. Thus, the 
current undiscounted per contract charges for Standard Options are as 
follows: Specialists and e-Specialists are charged $0.13 per contract; 
DOMMs are charged $0.18 per contract, and NYSE Amex Options Market 
Makers--Non Directed are charged $0.20 per contract. Although this 
proposal represents an increase across the board in the per contract 
rate charged for Electronic transactions, as noted above, the proposed 
rate is consistent with other exchanges. Further, the Exchange proposes 
to afford these market participants an opportunity to pay lower per 
contract rates for their Electronic executions under the proposed 
Sliding Scale, as discussed in Section I.C. below.
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    \13\ In adopting the new $0.23 base rate for Electronic 
transactions for e-Specialists, Specialists, DOMMs, and NYSE Amex 
Options Market Makers--Non Directed, the Exchange will no longer 
offer differentiated pricing for the Electronic transactions of 
these participants. Thus, these participants will be collectively 
referred to as ``NYSE Amex Options Market Makers'' for purposes of 
the proposed Fee Schedule and will be subject to the same rates for 
Electronic transactions.
    \14\ See, e.g., CBOE fee schedule, available here, http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf (the 
``Liquidity Provider Sliding Scale''); PHLX fee schedule, available 
here, http://www.nasdaqtrader.com/Micro.aspx?id=PHLXPricing (per the 
``Multiply Listed Options Fees,'' charging Specialists and Market 
Makers $0.22 or $0.25 per contract for Penny and Non-Penny 
electronic transactions); Boston Options Exchange LLC (``BOX'') fee 
schedule, available here, http://boxexchange.com/assets/BOX_Fee_Schedule.pdf (per Section IA--Non Auction Transaction Fees, 
charging Marker Makers a variable rate between $0.00 and $0.90 per 
contract depending upon whether they are making or taking liquidity 
and which participant type counterparty (e.g., Customer, Firm, 
etc.).
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     In conjunction with the proposed base rate change, the 
Exchange proposes to eliminate the three-cent per contract discount 
(noted above) for e-Specialists, Specialists, DOMMs, and NYSE Amex 
Options Market Makers that execute 50,000 or more contracts ADV for 
each day of the month. For example, under the current Fee Schedule, a 
Specialist or e-Specialist that does not execute more than 50,000 
contracts ADV is charged $0.13 per contract, but if they meet the 
volume threshold they are charged only $0.10 per contract. The Exchange 
undiscounted rate of $0.13 per contract for Specialists and e-
Specialists and $0.20 per contract for NYSE Amex Options Market Makers 
would continue to apply to these members' Manual transactions in 
Standard Option contracts.\15\ Current Endnote 5 describes the 
calculation used in determining whether a Specialist, e-Specialist, 
DOMM or NYSE Amex Options Market Maker has reached the 50,000 contract 
ADV threshold, which calculation excludes volumes from Mini Options and 
CUBE Auctions. In conjunction with eliminating the discount associated 
with achieving the 50,000 contract ADV threshold, the Exchange also 
proposes to eliminate the portions of current Endnote 5 relating to the 
50,000 contract ADV threshold.
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    \15\ DOMMs do not execute Manual transactions.
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     The Exchange is also proposing to eliminate the $0.10 per 
contract charge for SPY Electronic Complex executions for NYSE Amex 
Options Market Makers. The Exchange proposes that these transactions 
will be charged the same rate as any other Electronic Standard Option 
transaction by a NYSE Amex Market Maker going forward.
     Finally, the Exchange proposes to eliminate the $350,000 
per month fee cap on NYSE Amex Options Market Makers, and the 
associated service fees of $0.01 per contract for volumes in excess of 
3,500,000 contracts or the $0.10 per contract service fee for Complex 
volumes as described in Endnote 5 to the current Fee Schedule. Endnote 
5 to the current Fee Schedule contains a description of the manner in 
which the $350,000 per month fee cap works and also includes a 
description of the application of the $0.01 per contract service fee 
for all Specialist, e-Specialist and Market Maker volume executed in 
excess of 3,500,000 contracts per month, as well as the exception for 
the execution of an Electronic Complex Order, in which case the 
incremental service fee is $0.10 per contract. Current Endnote 5 also 
describes transactions that are excluded from ADV volume calculations, 
such as Mini Options contract charges and executions resulting from 
CUBE Auctions. As the $350,000 per month fee cap is being eliminated, 
the Exchange also proposes to eliminate those portions of Endnote 5 
relating to the $350,000 per month fee cap. Consequently, in 
conjunction with the changes described in the bullet above, the 
Exchange proposes to eliminate Endnote 5 to the current Fee Schedule 
its entirety.
    In addition, immediately following the proposed fee table, there 
are four notes designed to amplify certain information in the table in 
Section I.A. The first, second, and fourth notes refer to fees and/or 
credits that may apply and which will be discussed in greater detail 
below in Sections I.K. (Royalty Fees), I.C. (NYSE Amex Options Market 
Maker Sliding Scale), and I.I. (Firm Monthly Fee Cap), respectively. 
The third note relates to Marketing Charges and is related to the 
column ``Marketing Charges Per Contract for Electronic Transactions.''
    The third note contains the same information that appears on the 
current Fee Schedule under ``Marketing Charge,'' \16\ together with the 
two associated Endnotes 9 and 10.\17\ The Exchange proposes to include 
information about the assessment and distribution of the Marketing 
Charges in the third note to the table of transaction fees for Standard 
Options contracts, which lists the Marketing Charges per contract for 
Electronic transactions. In addition, the Exchange is proposing to make 
changes to the language in the current Fee Schedule under ``Marketing 
Charges'' and in Endnotes 9 and 10. As proposed to be included in the 
third note, the proposed description of the manner in which the 
Marketing Charges are assessed and distributed would be clearer than in 
the current Fee Schedule. The Exchange is not, however, proposing to 
make any substantive changes to the manner in which Marketing Charges 
are assessed or distributed. Specifically, NYSE Amex Options Market 
Makers who are counterparties to an Electronic Trade with a Customer 
would continue to be assessed a Marketing Charge. The Exchange is 
proposing to remove the statement that Marketing Charges will not be 
assessed against executed QCC or CUBE orders because the table in which 
proposed note 3 appears only relates to Standard Options contracts. 
Further, the pool of monies resulting from the collection of Marketing 
Charges on Electronic non-Directed Orders would continue to be 
controlled by the Specialist or e-Specialist with superior volume 
performance over previous quarter. An ATP Holder that submits an 
Electronic non-Directed Order would continue to be able to designate a 
any NYSE Amex Options Market Maker to control Marketing Charges 
collected in connection with such non-Directed Order. And, Marketing 
Charges on Electronic Directed Orders would continue to be controlled 
by the NYSE Amex Options Market Maker to which the order was directed. 
In all cases, the Exchange would continue to distribute any monies to 
payment accepting firms as directed by the appropriate NYSE Amex 
Options Market Maker.
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    \16\ The Marketing Charge entry is found right below the ``Limit 
on Strategy Executions'' [sic] section in the current Fee Schedule, 
which comes after the heading ``NYSE Amex Options: Trade-Related 
Charges for Mini Options.''
    \17\ The Exchange notes that while it has imported the 
information from current Endnotes 9 and 10, the language has been 
streamlined to make the text more concise and comprehensible.

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[[Page 3704]]

    Finally, the Exchange proposes a non-substantive change with 
respect to the proposed table in Section I.A. The proposed table has 
separate columns for transaction type (Electronic v. Manual) and 
``Marketing Charges Per Contract for Electronic Transactions as well as 
separate rows to distinguish between whether the option is for a Penny 
or Non-Penny option.\18\ The Exchange believes that the re-formatted 
table provides the same information but in a manner that is easier to 
navigate.
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    \18\ ``Penny'' option and ``Non-Penny'' option would be defined 
in the proposed new ``Key Terms and Definitions'' section.
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Section I.B. Rates for Mini Option Contracts Transactions--Electronic 
and Manual
    The current Fee Schedule sets forth the rates for Mini Option 
contracts in a table under ``NYSE Amex Options: Trade-Related Charges 
for Mini Options.'' \19\ The Exchange proposes to include the per 
contract rate for Electronic and Manual transactions in Mini Options 
under new Section I.B. in a table (with a related note to immediately 
follow).\20\ The Exchange is not proposing any change to the rates 
charged for Mini Options. The Exchange is proposing two non-substantive 
changes to the presentation of charges related to Mini Options. First, 
the Exchange proposes to omit the fees and credits for QCC trades 
involving Mini Options from the table and to instead relocate this 
information to Section I.F. (QCC Fees & Credits). The Exchange believes 
it is logical to include all QCC-related fees and credits for Standard 
and Mini Options in one place on the Fee Schedule and believes that 
this change would aid participants in QCC trades in locating 
information relating to these transactions. Second, the Exchange 
proposes to delete the column for fees applicable to ``Electronic 
Complex Order Executions'' in Mini Options from the table of charges 
for Mini Options as it appears in the current Fee Schedule \21\ because 
the rates for simple (or single-legged) executions and Complex (or 
multi-legged) executions is (and will remain) the same and therefore 
this separate column is not needed. The Exchange believes eliminating 
this superfluous column will add clarity to the Fee Schedule.
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    \19\ The current table of fees for Mini Options includes several 
Endnotes. The Exchange proposes to move the information discussed in 
current Endnote 17 to proposed Section I.E. (Amex Customer 
Engagement Program), which is discussed below. As noted above, supra 
n. 11, current Endnote 6 describes the term Firm and this term is 
now included in the proposed Fee Schedule in the Key Terms and 
Definitions section.
    \20\ Note 1 to the proposed table relates to Marketing Charges, 
which, as noted in Section I.A. above, is information that was 
imported directly from the current Fee Schedule, with changes as 
noted herein (see supra n. 17), and therefore represents a non-
substantive change.
    \21\ See Current Fee Schedule, ``NYSE Amex Options: Trade-
Related Charges for Mini Options.''
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Section I.C. NYSE Amex Options Market Maker Sliding Scale--Electronic
    The Exchange is proposing to provide a discount to NYSE Amex 
Options Market Makers \22\ for transaction fees based on a sliding 
volume scale. This proposed Sliding Scale discount is designed to 
replace the $350,000 per month fee cap, and related $0.01 per contract 
service fee for all NYSE Amex Options Market Maker volume executed in 
excess of 3,500,000 contracts per month, except for the execution of an 
Electronic Complex Order, in which case the incremental service fee is 
$0.10. The proposed sliding scale is also designed to replace the 
50,000 contract ADV threshold which results in a $0.03 per contract 
discount for NYSE Amex Options Market Makers, which, as discussed in 
Section I.A. above, the Exchange proposes to eliminate.\23\
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    \22\ See supra n. 13.
    \23\ The current $350,000 per month fee cap is found in Endnote 
5 of the current Fee Schedule, which also describes the $0.01 and 
$0.10 service fee for single leg and complex volumes in excess of 
the cap.
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    The proposed Sliding Scale discount in the table in Section 1.C. 
would apply to Electronic transactions in Standard Options by NYSE Amex 
Options Market Makers. An NYSE Amex Options Market Maker that has 
monthly volume on the Exchange of less than 0.10% of total industry 
Customer equity and exchange traded fund (``ETF'') options volume \24\ 
would be charged the proposed base rate of $0.23, as discussed above. 
The Exchange proposes to offer these same market participants a 
reduction of this per contract rate upon reaching certain volume 
thresholds as shown in the table below. The rates shown are applicable 
to monthly volume within a given tier such that the lower per contract 
rate applies only to volume levels within that higher tier. For 
example, assume that an NYSE Amex Options Market Maker achieves monthly 
volume of 6,000,000 contracts Electronically at a time when total 
industry Customer equity and ETF Option volume in the same month is 
252,000,000 contracts. Under the proposed Sliding Scale, this Market 
Maker would pay $0.23 per contract on the first 252,000 contracts (Tier 
1); $0.20 per contract on contracts 252,001 through 1,512,000 (Tier 2); 
$0.10 per contract on contracts 1,512,001 through 3,150,000 (Tier 3), 
$0.08 per contract on contracts 3,150,001 through 3,528,000 (Tier 4), 
$0.05 per contract on contracts 3,528,001 through 4,410,000 (Tier 5), 
$0.03 per contract on contracts 4,410,001 through 5,040,000 (Tier 6), 
and $0.02 per contract on contracts 5,040,001 through 6,000,000 (Tier 
7).\25\ The Exchange believes this change will enable it to compete 
more effectively with other options exchanges that offer similar 
pricing.\26\
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    \24\ The volume thresholds are based on an NYSE Amex Options 
Market Makers' volume transacted Electronically as a percentage of 
total industry Customer equity and ETF options volumes as reported 
by the Options Clearing Corporation (the ``OCC''). Total industry 
Customer equity and ETF option volume is comprised of those equity 
and ETF contracts that clear in the Customer account type at OCC and 
does not include contracts that clear in either the Firm or Market 
Maker account type at OCC or contracts overlying a security other 
than an equity or ETF security. See OCC Monthly Statistics Reports, 
available here, http://www.theocc.com/webapps/monthly-volume-reports.
    \25\ In calculating an NYSE Amex Options Market Maker Electronic 
volumes, the Exchange proposes to exclude any volumes attributable 
to Mini Options, QCC trades, CUBE Auctions, and Strategy Execution 
Fee Caps, as these transactions are subject to separate pricing 
described in proposed Fee Schedule Sections I.B., I.F., I.G., and 
I.J, respectively.
    \26\ See, e.g., CBOE fee schedule, available here, http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf (the 
``Liquidity Provider Sliding Scale''); BOX fee schedule, available 
here, http://boxexchange.com/assets/BOX_Fee_Schedule.pdf (the 
``Tiered Volume Rebate for Market Makers''); MIAX fee schedule, 
available here, http://www.miaxoptions.com/sites/default/files/MIAX_Options_Fee_Schedule_12012014.pdf (``Market Maker Sliding 
Scale'').

  Proposed Table Showing Sliding Scale of Market Maker Fees--Electronic
------------------------------------------------------------------------
                           Market maker monthly electronic
          Tier           volume as a % of industry customer    Rate per
                            equity and ETF option volume       contract
------------------------------------------------------------------------
1                        0.00% to 0.10%....................        $0.23
2                        >0.10% to 0.60%...................         0.20
3                        >0.60% to 1.25%...................         0.10
4                        >1.25% to 1.40%...................         0.08
5                        >1.40% to 1.75%...................         0.05
6                        >1.75% to 2.00%...................         0.03
7                        >2.00%............................         0.02
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Section I.D. Prepayment Program
    The Exchange is proposing to offer prepayment programs to NYSE Amex 
Options Market Makers. The proposed Prepayment Program would allow a 
NYSE Amex Options Market Makers the option to commit to either a 1-year 
or 3-year term (the ``1 Year Prepayment Program'' or ``3 Year 
Prepayment Program,'' respectively) under which it could prepay a 
portion of the charges it

[[Page 3705]]

incurs under proposed Sections I.C., I.G., or III.A. of the Fee 
Schedule.\27\ The 1 Year Prepayment Program would require an upfront 
payment of $4 million, payable by January 30, 2015. The 3 Year 
Prepayment Program would require a commitment of $9 million, payable in 
three equal, annual installments of $3 million, with the first payment 
due by January 30, 2015, the second payment due by January 29, 2016 and 
the final payment due by January 31, 2017. Any NYSE Amex Options Market 
Maker that elects to participate in either of the Prepayment Programs 
would qualify its Affiliated OFP to be eligible to receive the enhanced 
credit(s) under the Amex Customer Engagement (``ACE'') Program 
(described below) in proposed Section I.E. of the Fee Schedule.
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    \27\ The Exchange will apply the prepayment as a credit against 
charges incurred under Section I.C., I.G., or III.A. of the Fee 
Schedule. Once the prepayment credit has been exhausted, the 
Exchange will invoice the NYSE Amex Options Market Maker at the 
appropriate rates under Section I.C., I.G., or III.A. In the event 
that the NYSE Amex Options Market Maker does not conduct sufficient 
activity to exhaust the entirety of their prepayment credit within 
the calendar year, there will be no refunds issued for any unused 
portion of their prepayment credit.
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    To participate in the 1 Year or 3 Year Prepayment Programs, 
interested NYSE Amex Options Market Makers would have to notify the 
Exchange in writing no later than January 15, 2015 indicating to which 
prepayment term they are committing.\28\ The 3 Year Prepayment Program 
would not be available after January 15, 2015. However, NYSE Amex 
Options Market Maker firms could opt into the 1 Year Prepayment Program 
for 2016 or 2017 by sending an email to the Exchange by 4:00 p.m. ET on 
the last business day in December of either 2015 or 2016, provided the 
Exchange continues to offer the 1 Year Prepayment Program at that time.
---------------------------------------------------------------------------

    \28\ The NYSE Amex Market Maker would be required to send an 
email to the Exchange at [email protected]. The email to 
enroll in the Prepayment Program must originate from an officer of 
the NYSE Amex Options Market Maker firm and, except as provided for 
below, represents a binding commitment for the 1- or 3-year term to 
which the NYSE Amex Options Market Making firm commits, requiring 
payment according to the schedule described above.
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    The Exchange is proposing to allow NYSE Amex Options Market Makers 
in the 3 Year Prepayment Program to ``opt out'' under certain 
circumstances, thereby relieving the Market Maker of any remaining 
payment obligations.\29\ NYSE Amex Options Market Makers would be 
permitted to ``opt out'' only if:
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    \29\ To effectuate early termination, an NYSE Amex Options 
Market Making firm must send an email to [email protected] 
requesting to opt out. The opt out request must be submitted by 4:00 
p.m. ET at least five business days preceding the date(s) on which 
payment is due for any year(s) for which the NYSE Amex Options 
Market Maker wishes to opt out. Specifically, to opt out for 2016, 
the request must be submitted by 4:00 p.m. ET on January 22, 2016 
and to opt out for 2017, the request must be submitted by 4:00pm ET 
on January 24, 2017. Anytime a NYSE Amex Options Market Making firm 
opts out, they would also forfeit the ability for an OFP Affiliate 
to earn the enhanced credit(s) described below in proposed Section 
I.E. for any subsequent year(s) in which they have opted out. Opting 
out does not entitle a NYSE Amex Options Market Making firm to any 
refund of monies already paid under the Prepayment Program, but only 
relieves them of the obligation to make remaining payments, if any, 
if they opted into the 3 Year Prepayment Program.

1. NYSE Amex Options equity and ETF options market share over any 
consecutive 3-month period during 2015 falls below 7.5% of total equity 
options and ETF options volume; \30\ or
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    \30\ Market share is determined based on cleared volumes 
statistics for both equity and ETF options volumes as reported by 
the OCC. See OCC Monthly Statistics Reports, available here, http://www.theocc.com/webapps/monthly-volume-reports (including for equity 
options and ETF options volume, subtotaled by exchange, along with 
OCC total industry volume). Relying on OCC data, the Exchange will 
compute market share by using NYSE Amex Options total equity and ETF 
option volumes for the most recent, prior three-months as the 
numerator and OCC equity and ETF option volumes (across all options 
markets) for the same three months as the denominator. Any time this 
calculation yields a result less than 7.5% during 2015 or 7.0% 
during 2016, rounding to the nearest tenth (i.e., one place to the 
right of the decimal) and using standard rounding by Microsoft 
Excel[supreg], a NYSE Options Market Maker in the 3 Year Prepayment 
Program would be eligible to opt out.
---------------------------------------------------------------------------

2. NYSE Amex Options equity and ETF options market share over any 
consecutive 3-month period during 2016 falls below 7.0% of total equity 
options and ETF options volume; or
3. the Exchange reduces the transaction fees in Tiers 1 through 6 in 
Section I.C. by 70% or more compared to the rates as of January 2, 
2015; \31\ or
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    \31\ For example, as previously described in proposed Section 
I.C., a NYSE Amex Options Market Maker will be charged for 
Electronic transactions according to the Sliding Scale. In the 
example set forth above in the description of Section I.C., the NYSE 
Amex Options Market Maker that transacted 6,000,000 contracts in a 
month with industry Customer equity and ETF option volume of 
252,000,000 contracts would qualify for the rates inclusive of Tiers 
1 through 7. Tier 7 covers volumes in excess of 2.00% of industry 
Customer equity and ETF option volume and is an infinite Tier with 
no upper bound on volume. Therefore, in calculating the 70% 
reduction in fees charged under Section I.C., the Exchange will only 
consider fees for transactions charged under Tiers 1 through 6. 
Anytime the aggregate fees charged for all of the volumes associated 
with Tiers 1 through 6 are reduced by 70% or more when compared with 
the aggregate fees charged for all of the volumes for Tiers 1 
through 6 as of January 2, 2015, a NYSE Amex Options Market Maker 
would be eligible to opt out.
     The amount of volume represented by Tiers 1 to 6 will likely 
change from month to month, as those tiers are expressed as a 
percentage of total monthly industry Customer equity option and ETF 
option volume. In the initial example, Tiers 1 to 6 represent volume 
of 5,040,000 contracts (2% of 252,000,000), which would cost each 
NYSE Amex Options Market Maker transacting 5,040,000 contracts 
$567,000. If the Exchange were to reduce the cost to trade 5,040,000 
contracts (in a month when total industry Customer equity option and 
ETF option volume was 252,000,000 contracts) by at least 70% or 
$396,900, then a valid opt out opportunity would exist.
     Continuing the example, if, in a subsequent month, total 
industry Customer and equity option and ETF option volume is 
200,000,000 contracts, Tiers 1 to 6 would represent contract volume 
of 4,000,000 contracts (2% of 200,000,000). Under the Sliding Scale 
in effect as of January 2, 2015, any NYSE Amex Options Market Maker 
would have been charged $450,000 to transact 4,000,000 during a 
month in which total industry Customer equity option and ETF option 
volume is 200,000,000. If the Exchange were to reduce the cost to 
trade 4,000,000 contracts (in a month when total industry Customer 
equity option and ETF option volume was 200,000,000 contracts) by at 
least 70% or $315,000, then a valid opt out opportunity would exist.
---------------------------------------------------------------------------

4. the Exchange reduces each and every fee in Section I.G. charged to 
NYSE Amex Options Market Makers by 70% or more compared to the rates as 
of January 2, 2015; \32\ or
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    \32\ As of January 2, 2015, a NYSE Amex Options Market Maker 
transacting in CUBE Auctions would pay the rates assessed to Non-
Customers, which includes a CUBE Order Fee of $0.20, a Contra Order 
Fee of $0.05, and a RFR Response Fee of $0.55 for Penny Pilot and 
$0.90 for Non-Penny Pilot. A 70% reduction in each and every one of 
these rates would be required in order for that Market Maker to be 
eligible to opt out.
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5. as of January 4, 2016 or January 3, 2017 there are fewer than 4 
participants in the 1 Year and 3 Year Prepayment Programs combined.\33\

    \33\ Upon request, the Exchange will provide any participant a 
count of the total participants in the 1 Year and 3 Year Prepayment 
Programs combined, as of either January 4, 2016 or January 3, 2017. 
Should there be fewer than 4 participants in the 1 Year and 3 Year 
Prepayment Programs combined, an NYSE Amex Options Market Maker in 
the 3 Year Prepayment Program may opt out. Under no circumstances 
will the identity of any participant in either the 1 Year or the 3 
Year Prepayment Program be disclosed to any other participant.
---------------------------------------------------------------------------

    Once opted out of the 3 Year Prepayment Program, a Market Making 
firm cannot opt back into the 3 year Prepayment Program, but may opt 
into the 1 Year Prepayment Program provided they email the Exchange by 
the last business day of December of 2015 or 2016, and provided that 
the Exchange continues to offer the 1 Year Prepayment Program at that 
time.
    The Exchange believes the proposed Prepayment Programs will enable 
it to compete more effectively with other options exchanges that offer 
similar programs.\34\
---------------------------------------------------------------------------

    \34\ See, e.g., CBOE fee schedule, available here, http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf (the 
``Liquidity Provider Sliding Scale''); see also Securities Exchange 
Act Release No. 70498 (September 25, 2013), 78 FR 60348 (October 1, 
2013) (SR-MIAX-2013-43) (immediate effectiveness of program allowing 
participating members to prepay certain transaction fees).

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[[Page 3706]]

Section I.E. Amex Customer Engagement (``ACE'') Program--Standard 
Options
    The current Fee Schedule includes OFP Electronic ADV Tiers (Tiers 
1A and Tier 1B) as well as Customer Electronic Complex Order ADV Tiers 
(collectively, the ``Tiers'') and rebates per contract for certain 
Electronic equity and ETF options volume under ``NYSE Amex Options: 
Trade-Related Rebates or Subsidies for Standard Options.'' \35\ Current 
Endnote 17 provides information about how an OFP qualifies to meet the 
criteria set forth in the Tiers. The Exchange is proposing to eliminate 
the existing Tiers and related Endnote 17 and to instead adopt the Amex 
Customer Engagement (``ACE'') Program.
---------------------------------------------------------------------------

    \35\ On the current Fee Schedule this is the second to last 
section right before ``NYSE Options: General.''
---------------------------------------------------------------------------

    Under the current Fee Schedule, OFPs earn rebates based on 
achieving certain volume thresholds. The current Customer Electronic 
Complex Order ADV Tiers are fixed tiers based on set numerical ranges. 
For example, Tier 1 is a volume threshold of 35,000 to 49,999 
contracts--paying a rebate of $0.04 per contract; Tier 2 is a volume 
threshold of 50,000 to 69,999--paying a rebate of $0.06 per contract; 
Tier 3 is a volume threshold of 70,000 to 109,999--paying a rebate of 
$0.08 per contract; and Tier 4 is a volume threshold of 110,000 and 
greater--paying a rebate of $0.10 per contract.
    The proposed ACE Program likewise features four tiers. However, the 
proposed tiers would be expressed as a percentage of total industry 
Customer equity and ETF option ADV.\36\ The Exchange believes that 
expressing the tiers as a percentage rather than a fixed numerical 
range would be more easily understood by market participants given the 
widespread use of this metric among other exchanges.\37\ The current 
OFP ADV Tier 1A and Tier 1B are more similar to the structure of the 
proposed ACE Program as these tiers are expressed as a percentage of 
total industry Customer equity and ETF option volume, as opposed to 
being based on fixed numerical ranges.
---------------------------------------------------------------------------

    \36\ In calculating ADV, the Exchange will utilize monthly 
reports published by the OCC for equity options and ETF options that 
show cleared volume by account type. See OCC Monthly Statistics 
Reports, available here, http://www.theocc.com/webapps/monthly-volume-reports (including for equity options and ETF options volume, 
subtotaled by exchange, along with OCC total industry volume). The 
Exchange will calculate the total OCC volume for equity and ETF 
options that cleared in the Customer account type and divide this 
total by the number of trading days for that month (i.e., any day 
the Exchange is open for business). For example, in a month having 
21 trading days where there were 252,000,000 equity option and ETF 
option contracts that cleared in the Customer account type, the 
calculated ADV would be 12,000,000.
    \37\ See, e.g., MIAX fee schedule, available here, http://www.miaxoptions.com/sites/default/files/MIAX_Options_Fee_Schedule_12012014.pdf (offering Priority Customer 
Rebate Program that features tiers based on a Percentage Thresholds 
of National Customer Volume in Multiply-Listed Options Classes 
Listed on MIAX); CBOE fee schedule, available here, http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf (offering a 
Volume Incentive Program that features tiers based on Percentage 
Thresholds of National Customer Volume in All Underlying Symbols 
(with certain exclusions)); and PHLX fee schedule, available here, 
http://www.nasdaqtrader.com/Micro.aspx?id=PHLXPricing (offering a 
Customer Rebate Program based on Percentage Thresholds of National 
Customer Volume in Multiply-Listed Equity and ETF Options Classes, 
excluding SPY Options).
---------------------------------------------------------------------------

    As proposed, the ACE Program would offer the potential to earn a 
higher per contract credit for Customer volumes than is possible under 
any of the existing Tiers, due in part to the proposed ability of an 
OFP to aggregate its volume with any affiliates under the ACE Program. 
For example, the proposed credits under the ACE Program would range 
from $0.13 for qualifying volumes that reach Tier 2, to as high as 
$0.20 per contract for qualifying volumes that reach Tier 4 for those 
OFPs that have an Affiliated NYSE Amex Options Market Maker 
participating in the 3 Year Prepayment Program previously 
described.\38\ Specifically, the proposed ACE Program would consist of 
a four-tiered schedule of per contract credits payable to an OFP solely 
for Electronic Customer volume that the OFP, as agent, submits to the 
Exchange.\39\ The ACE Program would offer the following two methods for 
OFPs to receive credits:
---------------------------------------------------------------------------

    \38\ By contrast, the highest credit possible under the Customer 
Electronic Complex ADV Tiers is $0.10 per contract and the highest 
credit under Tier 1A or Tier 1B of the OFP ADV Tiers is $0.06 per 
contract.
    \39\ Electronic Customer volume is volume executed 
electronically through the Exchange System, on behalf of an 
individual or organization that is not a Broker-Dealer and who does 
not meet the definition of a Professional Customer.
---------------------------------------------------------------------------

    1. By calculating, on a monthly basis, the average daily Customer 
contract volume an OFP executes Electronically on the Exchange as a 
percentage of total industry Customer equity and ETF options ADV; \40\ 
or
---------------------------------------------------------------------------

    \40\ See supra n. 36.
---------------------------------------------------------------------------

    2. By calculating, on a monthly basis, the average daily contract 
volume an OFP executes Electronically in all participant types (i.e., 
Customer, Firm, Broker-Dealer, NYSE Amex Options Market Maker, Non-NYSE 
Amex Options Market Maker, and Professional Customer) on the Exchange, 
as a percentage of total industry Customer equity and ETF options 
ADV,\41\ of which at least 20% must be Customer volume executed 
Electronically.
---------------------------------------------------------------------------

    \41\ Id.
---------------------------------------------------------------------------

    Upon reaching a higher tier, an OFP would receive for all eligible 
Customer volume the per contract credit associated with the highest 
tier achieved, retroactive to the first contract traded each month, 
regardless of which of the two calculation methods the OFP qualifies 
under. In the event that an OFP is eligible for credits under both 
calculation methods, the OFP would benefit from whichever criterion 
results in the highest per contract credit for all the OFP's eligible 
ADV. For example, if an OFP's Customer Electronic ADV is 1.51% of total 
industry Customer equity and ETF option ADV, it would receive the Tier 
3 credits for each qualifying Customer Standard Option contract the OFP 
executes, as agent. Alternatively, if an OFP has total Electronic ADV 
which falls into Tier 3 (1.50% to 3.50% of total industry customer 
equity and ETF option ADV), of which 20% or more is Customer volume, 
the OFP will be eligible to earn the Tier 3 credits for their eligible 
Customer volumes. The tiers and associated per contract credits that 
apply to Electronic transactions are shown in the table below.

[[Page 3707]]



                                           Proposed Table Showing Amex Customer Engagement Program--Electronic
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       ACE program--standard options                       Credits payable on customer volume only
                                        ----------------------------------------------------------------------------------------------------------------
                                                                          Total electronic ADV (of
                  Tier                    Customer electronic ADV        which 20% or greater must                     1 year enhanced   3 year enhanced
                                             as a % of industry      OR    be customer) as a % of    Customer volume   customer volume   customer volume
                                          customer equity and ETF         industry customer equity       credits           credits           credits
                                                options ADV                 and ETF options ADV
--------------------------------------------------------------------------------------------------------------------------------------------------------
1......................................  0.00% to 0.75%...........  ...  N/A......................           $0.00             $0.00             $0.00
2......................................  >0.75% to 1.00%..........  ...  N/A......................           (0.13)            (0.13)            (0.13)
3......................................  >1.00% to 2.00%..........  ...  1.50% to 3.50%...........           (0.14)            (0.16)            (0.18)
4......................................  >2.00%...................  ...  >3.50%...................           (0.14)            (0.16)            (0.20)
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In calculating an OFP's Electronic volume for purposes of 
determining which tier of credits (if any) the OFP may be eligible, the 
Exchange would:
     Exclude any volume resulting from Mini Options and QCC 
trades as these transactions are subject to separate fees and/or 
credits (discussed in Sections I.B. and I.F.);
     Exclude any volume attributable to orders routed away in 
connection with the Options Order Protection and Locked/Crossed Market 
Plan referenced in Rule 991NY;
     Include any volume from CUBE Auction executions; \42\
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    \42\ Though included in an OFP's Electronic volume calculation, 
contracts executed in CUBE Auctions would not be eligible to earn 
any credits under the proposed ACE Program, as there are separate 
credits paid for certain CUBE Auction volumes. See Section I. G. 
below.
---------------------------------------------------------------------------

     Include any Electronic volume of Affiliates of the OFP, 
such as when an OFP has an Affiliated NYSE Amex Options Market Making 
firm, provided proper notice has been given to the Exchange; \43\
---------------------------------------------------------------------------

    \43\ In order to have an Affiliate's trading activity included 
with its own, an OFP must email the Exchange at 
[email protected] with such request and provide the Exchange 
with a list of the OFP's Affiliated entities. The Exchange defines 
an ``Affiliate'', or person ``affiliated'' with a specific person, 
as ``a person that directly or indirectly through one or more 
intermediaries, has a 70% common ownership with, the person 
specified.'' See proposed Fee Schedule, Key Terms and Definitions.
---------------------------------------------------------------------------

     Any day the Exchange is open, regardless of length, will 
count as a full day when calculating ADV.
    The Exchange notes that the credits shown under the ``1 Year 
Enhanced Customer Volume Credits'' and the ``3 Year Enhanced Customer 
Volume Credits'' are only available to those OFPs that have an 
Affiliated NYSE Amex Options Market Making firm that has committed to 
either the 1 Year Prepayment Program or the 3 Year Prepayment Program, 
as described in proposed Section I.D.\44\
---------------------------------------------------------------------------

    \44\ Thus, if a NYSE Amex Options Market Making firm that has 
committed to the 3 Year Prepayment Program opts out before 4 p.m. ET 
on January 22, 2016, the OFP Affiliated with that NYSE Amex Options 
Market Maker will be ineligible to earn the 3 Year Enhanced Customer 
Volume Credits for their activity during any part of calendar years 
2016 or 2017. If, however, the same firm were to subsequently opt 
into a 1 Year Prepayment Program, its OFP Affiliate would be 
eligible to earn the 1 Year Enhanced Customer Volume Credits for the 
calendar year in which the firm opted in.
---------------------------------------------------------------------------

    The proposed ACE Program is designed to simplify the existing 
rebate programs (by combining the current Customer Electronic Complex 
ADV Tiers with the current OFP ADV Tiers), while also remaining 
competitive with rebate programs offered on other exchanges.\45\ At the 
same time, the Exchange believes the proposed ACE Program would attract 
more volume and liquidity to the Exchange, which will benefit all 
Exchange participants through increased opportunities to trade as well 
as enhancing price discovery.
---------------------------------------------------------------------------

    \45\ See supra n. 37. See e.g., CBOE fee schedule, available 
here, http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf 
(the ``Volume Incentive Program'', pays rebates as high as $0.17 per 
contract for complex volumes under tier 4); PHLX fee schedule, 
available here, http://www.nasdaqtrader.com/Micro.aspx?id=PHLXPricing (``Customer Rebate Program'', Program pays 
rebates as high as $0.19 per contract under tier 5 for Category B 
rebates); MIAX fee schedule, available here, http://www.miaxoptions.com/sites/default/files/MIAX_Options_Fee_Schedule_12102014.pdf (``Priority Customer Rebate 
Program'', pays rebates as high as $0.20 per contract in Select 
Symbols, under tier 5).
---------------------------------------------------------------------------

Section I.F. QCC Fees & Credits--Standard and Mini Options
    The current fees for Qualified Contingent Cross trades are set 
forth in a table under ``NYSE Amex Options: Qualified Contingent Cross 
(``QCC'') Fees.'' The Exchange proposes to modify its QCC fees and 
credits and reformat the table in the Fee Schedule under Section I. F.
    The Exchange proposes to eliminate the discounted rate per contract 
for e-Specialists and Specialists that transact 50,000 contracts or 
more ADV.\46\ Consequently, e-Specialists and Specialists that receive 
an execution as part of a QCC trade would be charged the rate for a 
Standard Options Manual transaction, or $0.13 per contract.
---------------------------------------------------------------------------

    \46\ As previously discussed, the Exchange proposes to eliminate 
Endnote 5. See discussion in Section I.A.
---------------------------------------------------------------------------

    The Exchange also proposes non-substantive changes to the current 
table illustrating QCC pricing. Specifically, as noted in Section I.B. 
above, the Exchange proposes to incorporate the information regarding 
the fees and credits for QCC trades involving Mini Options into the 
existing table for QCC transactions so that all information regarding 
QCC transactions are in one place and also to include the information 
from existing Endnote 15 regarding Floor Brokers as note 1 to 
immediately follow the table, with slight stylistic, non-substantive 
textual changes.
Section I.G. CUBE Auction Fees & Credits--Standard Options
    The current Fee Schedule sets forth a table of the fees associated 
with executions in a CUBE Auction under ``NYSE Amex Options: CUBE 
Auction Fees.'' \47\ The Exchange is not proposing any substantive 
change to the fees for contracts executed in CUBE Auctions for Standard 
Options, but the Exchange is moving the existing CUBE Auction Rebates 
found under ``NYSE Amex Options: Trade-Related Rebates or Subsidies for 
Standard Options'' to this section so all CUBE related fees and credits 
are located in one place.
---------------------------------------------------------------------------

    \47\ On the current Fee Schedule, this section immediately 
follows ``NYSE Amex Options: Qualified Contingent Cross (``QCC'') 
Fees.''
---------------------------------------------------------------------------

    The Exchange also proposes to add introductory language, taken from 
the existing CUBE Auction Rebates, to precede this table, which states, 
in relevant part, ``Credits are payable to the Initiating Participant 
for each contract in an order paired with a CUBE Order that does not 
trade with the CUBE Order because it is replaced in the auction. The 
table below shows the credits payable to the Initiating Participant for 
executions associated with a CUBE Auction.'' \48\ The Exchange believes 
that this proposed language would add clarity to the Fee Schedule and 
aid in

[[Page 3708]]

market participants' comprehension as to how fees and credits are 
applied in CUBE Auctions.
---------------------------------------------------------------------------

    \48\ See proposed Section I.G. of the Fee Schedule.
---------------------------------------------------------------------------

Section I.H. Market Access and Connectivity (``MAC'') Subsidy
    The current Fee Schedule includes the MAC Subsidy under ``NYSE Amex 
Options: Trade-Related Rebates or Subsidies for Standard Options.'' In 
connection with its reorganization of the Fee Schedule, the Exchange is 
proposing to move the description and schedule of the MAC Subsidy to 
Section I.H. of the Fee Schedule. The Exchange is not proposing any 
substantive changes to the MAC Subsidy.
Section I.I. Firm Monthly Fee Cap
    In connection with its reorganization of the Fee Schedule, the 
Exchange is proposing to move the description of the Firm Monthly Fee 
Cap from Endnote 6 to Section I.I. of the Fee Schedule. The current Fee 
Schedule sets forth the Firm Monthly Fee cap in Endnote 6. The Exchange 
is not proposing any substantive changes to this Fee Cap, but has made 
some stylistic changes to the text that previously appeared in Endnote 
6, including streamlining the text so that it is more clear and 
concise.
Section I.J. Strategy Execution Fee Cap
    The current Fee Schedule includes information about the proposed 
Strategy Execution Fee Cap under ``Limits on Option Strategy 
Executions.'' \49\
---------------------------------------------------------------------------

    \49\ This section appears in the current Fee Schedule 
immediately below the Routing Surcharge and immediately above the 
Marketing Charge.
---------------------------------------------------------------------------

    The Exchange is not proposing any substantive changes for the 
Strategy Execution Fee Cap. The Exchange is proposing several non-
substantive changes, including incorporating the information from the 
related Endnotes 8 (a)-(e) into the section, as well as making some 
stylistic changes to the text, including streamlining the text so that 
it is more clear and concise.
Section I.K. Royalty Fees
    In connection with its reorganization of the Fee Schedule, the 
Exchange is proposing to move the description of Royalty Fees, together 
with related information in Endnote 11, to Section I.K. of the Fee 
Schedule. The current Fee Schedule sets forth the Royalty Fees assessed 
by the Exchange under a heading of the same name.\50\ The Exchange is 
not proposing any substantive changes to its Royalty Fees; rather it is 
proposing to modify the table that illustrates the applicable per 
contract rate for each participant type by incorporating text currently 
referenced in Endnote 11.
---------------------------------------------------------------------------

    \50\ This section appears in the current Fee Schedule 
immediately below the Marketing Charge.
---------------------------------------------------------------------------

Section I.L. Routing Surcharge
    The Exchange is not proposing any changes with respect to the 
existing Routing Surcharge or related information in Endnote 7. The 
only non-substantive change that affects proposed Section I.L. relates 
to the re-ordering and reorganization of the Fee Schedule as a whole.
Section II. Monthly Excessive Bandwidth Utilization Fees
    In connection with its reorganization of the Fee Schedule, the 
Exchange is proposing to move the description of order to trade ratio 
fees and message to contract traded ratio fees, together with 
referenced information in Endnote 12, to Section II. Proposed Section 
II would have two Subparts. Subpart A would set forth the monthly 
charge for order to trade ratios that exceed certain levels. Subpart B 
would set forth the fees assessed by the Exchange to ATP Holders per 
message that exceed certain ratios of messages to contracts traded.
    The current Fee Schedule includes these fees under ``NYSE Options: 
Excessive Bandwidth Utilization Fees.'' Endnote 12 is referenced in 
applying these fees. The Exchange is not proposing any substantive 
changes to these fees. The only non-substantive changes the Exchange is 
proposing are some stylistic changes to the text, including 
streamlining the text so that it is more clear and concise.
Section III.A. Monthly ATP Fees
    The current Fee Schedule sets forth the monthly fees for trading 
permits (``ATPs'') under ``NYSE Options: General Options and Trading 
Permits (ATP) Fees, ATP Trading Participants Rights.'' In connection 
with its reorganization of the Fee Schedule, the Exchange is proposing 
to move the description of these fees to Section III.A. The Exchange 
does not propose any substantive changes to these fees, but is 
proposing to provide the fee information in table format, which the 
Exchange believes will make the information easier to digest and aid in 
the goal of enhancing the overall comprehensibility of the proposed Fee 
Schedule. The Exchange is also proposing to include details of how the 
``Bottom 45%'' \51\ of issues traded is calculated for purposes of the 
application of certain monthly fees to NYSE Amex Options Floor Market 
Makers in the text prior to the fee table. This information is 
currently in the Fee Schedule, but appears after the ATP fees.
---------------------------------------------------------------------------

    \51\ See Securities Exchange Act Release No. 67764 (August 31, 
2012), 77 FR 55254 (September 7, 2012) (SR-NYSEMKT-2012-44).
---------------------------------------------------------------------------

Section III.B. Floor Access Fee
    In connection with its reorganization of the Fee Schedule, the 
Exchange is proposing to move the Floor Access Fee description to 
Section III.B. The current Fee Schedule sets forth this fee under 
``NYSE Options: General Options and Trading Permits (ATP) Fees, ATP 
Trading Participants Rights, Floor Access Fee.'' The Exchange does not 
propose any substantive changes to this information. The only non-
substantive changes that affects this section relates to the 
capitalization of ``Floor,'' as it is now a defined term in the 
proposed Key Terms and Definitions.\52\
---------------------------------------------------------------------------

    \52\ The Exchange defines ``Floor'' or ``Trading Floor'' as 
``the options trading floor located at 11 Wall Street, New York, 
NY.'' See proposed Fee Schedule, Key Terms and Definitions.
---------------------------------------------------------------------------

Section III.C. e-Specialist, DOMM and Specialist Monthly Rights Fees
    In connection with its reorganization of the Fee Schedule, the 
Exchange is proposing to move the e-Specialist, DOMM and Specialist 
Monthly Rights Fees to Section III.C. The current Fee Schedule sets 
forth these fees under ``NYSE Options: General Options and Trading 
Permits (ATP) Fees, Specialist/e-Specialist/DOMM Rights Fee,'' and 
related Endnote 1. The Exchange is not proposing any substantive 
changes to these fees. The Exchange proposes the non-substantive 
formatting change of incorporating the information that is in Endnote 1 
as introductory text to this section, with slight stylistic changes to 
the text for streamlining and consistency purposes. The Exchange also 
proposes to include note 1 to the fee table in this section regarding 
the ``grandfathering'' of certain options issues after mid-2012, the 
text of which is consistent with the language is the asterisk in the 
current Fee Schedule.
Section III.D. NYSE Amex Options Market Maker Monthly Premium Product 
Fee
    In connection with its reorganization of the Fee Schedule, the 
Exchange is proposing to move the NYSE Amex Options Market Maker 
Monthly Premium Product Fee to Section III.D. The current Fee Schedule 
includes the fees in a one-row table entitled ``Premium Product Issue 
List--Monthly NYSE Amex Options Market Maker Participation Fee.'' The 
Exchange does not propose any substantive changes to these fees. The 
only change the Exchange proposes is to put the fees in table format, 
which the Exchange

[[Page 3709]]

believe will make the information easier to digest and aid in the goal 
of enhancing the overall comprehensibility of the proposed Fee 
Schedule.
Section IV. Monthly Floor Communication, Connectivity, Equipment and 
Booth or Podia Fees
    In connection with its reorganization of the Fee Schedule, the 
Exchange is proposing to move the description of Floor Communication, 
Connectivity, Equipment and Booth or Podia monthly fees to Section IV. 
Currently, these fees are set forth under ``NYSE Amex Options: Floor 
and Equipment Fees'' and ``NYSE Amex Options: Connectivity Charges.'' 
The Exchange is not proposing any changes to these fees. The Exchange 
is proposing to show these fees in table format, which the Exchange 
believes would make the information easier to digest and aid in the 
goal of enhancing the overall comprehensibility of the proposed Fee 
Schedule. The Exchange notes that the two ``Connectivity'' charges from 
the existing Fee Schedule are represented as the second and third 
charges in the proposed table (i.e., Login and Transport charges).
Section V. Technology & System Access Fees
A. Port Fees and B. Co-Location Fees
    In connection with its reorganization of the Fee Schedule, the 
Exchange is proposing to move the fees of Ports and Co-Location 
services to Section V of the Fee Schedule. The current Fee Schedule 
includes these fees in a table entitled ``Port Fees'' and a series of 
tables following the heading ``Co-Location Fees.'' The Exchange is not 
proposing any changes to its Port and Co-Location Fees. The Exchange is 
proposing to include the text from the asterisks in as language 
preceding the respective tables for port and co-location fees.
Section VI. Report Fees
    In connection with its reorganization of the Fee Schedule, the 
Exchange is proposing to move the fees for reports to Section VI of the 
Fee Schedule. The current Fee Schedule includes these fees under 
``Report Fees.'' The Exchange is not proposing any changes to these 
fees.
Section VII. Regulatory Fees
A. Options Regulatory Fee and B. Other Regulatory Fees
    The current Fee Schedule includes this information under 
``Regulatory Fees.'' The Exchange is not proposing any substantive 
changes to this section of the Fee Schedule and there are no related 
Endnotes. The only non-substantive change that affects this section 
relates to the reordering and reorganization of the Fee Schedule as a 
whole.
Section VIII. Service Fees
A. Post-Trade Adjustments
    The current Fee Schedule includes this information under ``Service 
Fees.'' The Exchange is not proposing any substantive changes to this 
section of the Fee Schedule and there are no related Endnotes. The only 
non-substantive change that affects this section relates to the 
reordering and reorganization of the Fee Schedule as a whole.
Elimination of the Specialist Options Issue Transfer Fee
    Finally, the Exchange presently charges a fee of $100 per issue for 
each option a Specialist transfers to another NYSE Amex Options Market 
Making firm that is acting as a Specialist. The fee is charged to the 
transferor. At this time the Exchange is proposing to eliminate this 
fee because the Exchange believes this fee may operate as a 
disincentive against the transfer of options. Typically, option issues 
are transferred as a result of a firm re-organizing or exiting the 
Specialist business. In such instances, the Exchange would prefer that 
the options be transferred as opposed to delisted so that other 
Exchange participants may continue to trade the option in question.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Securities Exchange Act of 1934 (the 
``Act''),\53\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\54\ in particular, because it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among its members, issuers and other persons using its 
facilities and does not unfairly discriminate between customers, 
issuers, brokers or dealers.
---------------------------------------------------------------------------

    \53\ 15 U.S.C. 78f(b).
    \54\ 15 U.S.C. 78f(b)(4) and 78f(b)(5).
---------------------------------------------------------------------------

Non-Substantive Changes
    The Exchange believes that the non-substantive changes to the Fee 
Schedule, which include re-formatting, reorganization (including adding 
a Table of Contents section), importing text from the current Fee 
Schedule and streamlining certain text, is reasonable, equitable and 
not unfairly discriminatory because the changes are designed to make 
the Fee Schedule more logical and comprehensive and, therefore, easier 
for market participants to navigate and digest, which is in the public 
interest.
Substantive Changes
    The Exchange believes that adopting the Preface and Key Terms and 
Definitions sections in the proposed Fee Schedule is reasonable, 
equitable and not unfairly discriminatory because the changes are 
designed to enable market participants to better understand how the 
Exchange defines various transactions and market participants as well 
as how the Exchange imposes fees and credits on each market 
participants, which should make the overall Fee Schedule more 
transparent and comprehensive to the benefit of the investing public.
    The Exchange believes that adopting a base rate of $0.23 per 
contract for NYSE Amex Market Maker Electronic transactions is 
reasonable, equitable and not unfairly discriminatory for the following 
reasons. First, the proposed change applies equally to all NYSE Amex 
Options Market Makers. Second, the proposed rate falls within the range 
of fees charged to market makers on other exchanges.\55\ For example, 
the base rate for market makers in equity options on the CBOE is also 
$0.23.\56\ The Exchange notes that the newly proposed base rate is an 
increase in the rate(s) charged to each of Specialists, e-Specialists, 
DOMMs and NYSE Amex Options Market Makers (regardless of whether each 
is trading more or less than 50,000 contracts ADV) and, while this 
proposed base rate increase would not impact other Exchange 
participants directly, the Exchange believes the rate increase would 
have an indirect benefit on other market participants. For example, 
some proceeds from this increase would fund the credits made available 
under the ACE Program. Because the ACE Program is designed to attract 
more volume and liquidity to the Exchange, the Exchange believes this 
rate increase will benefit all Exchange participants through increased 
opportunities to trade as well as enhancing price discovery. For these 
reasons, the Exchange believes that the proposal to adopt a base rate 
of $0.23 per contract for Electronic NYSE Amex Options Market Maker 
transactions is reasonable, equitable and not unfairly discriminatory.
---------------------------------------------------------------------------

    \55\ See supra n. 14.
    \56\ See CBOE fee schedule, available here, http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf (the ``Liquidity Provider 
Sliding Scale'').
---------------------------------------------------------------------------

    The Exchange also believes that eliminating the $0.10 per contract

[[Page 3710]]

charge for SPY Electronic Complex executions for NYSE Amex Options 
Market Makers such that the cost of these Electronic option 
transactions would at times be greater than the flat rate (e.g., as 
much as $0.23 per contract under proposed Section I.A.) or lower (e.g., 
as low as $0.02 per contract under proposed Section I.C.) is 
reasonable, equitable and not unfairly discriminatory because this 
change would simplify the Exchange's pricing structure, which benefits 
investors, and apply equally to all NYSE Amex Options Market Makers.
    The Exchange believes the proposals to eliminate the $350,000 per 
month Market Maker fee cap (``$350K cap'') and the associated $0.01 or 
$0.10 service fees \57\ as well as the $0.03 per contract discount 
offered to NYSE Amex Options Market Makers that transact at least 
50,000 contracts ADV during a month (the ``$0.03 discount'') are 
reasonable, equitable and not unfairly discriminatory because, as 
discussed below, the Exchange proposes to replace these two Exchange-
offered discounts with the NYSE Amex Options Market Maker Sliding 
Scale--Electronic (``Sliding Scale''). The proposed Sliding Scale 
provides the opportunity for NYSE Amex Options Market Makers to earn 
volume-based discounts for transactions on the Exchange, as they do 
today, using a different methodology. The $350K cap is a fixed, ``all 
or nothing'' threshold that enabled Market Makers that hit the cap to 
immediately become eligible to trade for as little as $0.01 per 
contract, whereas Market Makers that did not hit the cap continued to 
either trade at their respective base rates (i.e., Specialist or e-
Specialist rates versus DOMM and Non-DOMM rates) or to trade at their 
base rates discounted by $.03, if that Market Maker achieved at least 
50,000 contract ADV. The Exchange believes the proposed Sliding Scale 
is a fair and reasonable replacement for the current volume discounts 
offered by the Exchange. The Sliding Scale would provide a volume 
discount to NYSE Amex Options Market Makers on a more graduated basis 
than the current fee cap and discounts. The Exchange believes that the 
Sliding Scale methodology for providing volume based discounts is fair 
and reasonable in the same way that the current volume discounts are. 
Further, the proposal is equitable because the elimination of the $350K 
cap, $0.01 or $0.10 service fees, and the $0.03 discount, would apply 
equally to all NYSE Amex Options Market Makers and the Sliding Scale 
would, likewise, apply to NYSE Amex Options Market Makers. In addition, 
as discussed below, the Exchange believes it is fair and reasonable to 
offer the Sliding Scale solely to Market Makers because of the 
heightened obligations imposed on Market Makers, including continuous 
quoting obligations.
---------------------------------------------------------------------------

    \57\ Currently, capped Market Makers pay either an incremental 
service fee of $.01 per contract for volumes over 3,500,000 
contracts per month or $0.10 per contract for Complex volumes upon 
reaching the $350K cap.
---------------------------------------------------------------------------

    The Exchange believes that adopting the Sliding Scale is 
reasonable, equitable and not unfairly discriminatory for the following 
reasons. First, all NYSE Amex Market Makers are eligible to avail 
themselves of the Sliding Scale, which sets forth objective criteria 
for earning lower rates based on reaching stated volume thresholds on 
the Exchange. Second, the Exchange believes it is reasonable and 
appropriate that Market Makers be charged fees on the Exchange that may 
be comparably lower than other market participants in certain 
circumstances when they provide greater volumes of liquidity to the 
market because Market Makers have obligations that other market 
participants do not. In particular, they must maintain active two-sided 
markets in the classes in which they are appointed, and must meet 
certain minimum quoting requirements.\58\ Further the Exchange notes 
that Market Makers are also subject to higher fixed costs, not assessed 
upon other market participants, such as the relatively more expensive 
ATP fees applicable to Market Makers, Rights Fees, and Premium Product 
Fees.\59\
---------------------------------------------------------------------------

    \58\ See, e.g., Rule 925.1NY(c).
    \59\ See proposed Sections III.A.,C. and D., respectively.
---------------------------------------------------------------------------

    In addition, the Sliding Scale is based on the amount of business 
transacted on--and is designed to attract greater volume to--the 
Exchange. The Exchange believes an increase in volume and liquidity 
would benefit all market participants by providing more trading 
opportunities and tighter spreads, even to those market participants 
that are not eligible for the Sliding Scale (i.e., non-NYSE Amex Market 
Makers). Additionally, the Exchange believes the Sliding Scale is 
consistent with the Act because, as described above, the Program is 
designed to bring greater volume and liquidity to the Exchange, which 
will benefit all market participants by providing tighter quoting and 
better prices, all of which perfects the mechanism for a free and open 
market and national market system. In addition, the Exchange also notes 
that several competing option exchanges currently offer a tiered or 
sliding scale to market makers. For example, the CBOE currently offers 
a sliding scale to their market makers that ranges from $0.23 down to 
$0.03 per contract based on volume, which is comparable to the proposed 
Sliding Scale, which ranges from $0.23 down to $0.02 per contract and 
is also based on volume.\60\ Similarly, both the Boston Options 
Exchange LLC (``BOX'') and Miami Securities International Exchange, LLC 
(``MIAX'') offer tiered or sliding scale rates for market makers.\61\ 
For the foregoing reasons, the Exchange believes the proposed adoption 
of the Sliding Scale is reasonable, equitable and not unfairly 
discriminatory.
---------------------------------------------------------------------------

    \60\ See supra n. 56.
    \61\ See BOX fee schedule, available here, http://boxexchange.com/assets/BOX_Fee_Schedule.pdf (``Tiered Volume Rebate 
for Market Makers''); MIAX fee schedule, available here, http://www.miaxoptions.com/sites/default/files/MIAX_Options_Fee_Schedule_12102014.pdf (``Market Maker Sliding 
Scale'').
---------------------------------------------------------------------------

    The Exchange proposal to adopt ``Prepayment Programs'' that allow 
NYSE Amex Options Market Makers to prepay a portion of certain Exchange 
transaction fees or charges (for a one- or three-year period) is also 
reasonable, equitable and not unfairly discriminatory for the following 
reasons. First, the proposal is reasonable, equitable and not unfairly 
discriminatory because all NYSE Amex Options Market Makers may elect to 
participate (or elect not to participate) in either of the Prepayment 
Programs. In addition, the Exchange notes that other options exchanges 
likewise offer Prepayment Programs, available only to market makers. 
For example, under CBOE's Liquidity Provider Sliding Scale, a CBOE 
market maker may be eligible for the lower rates associated with tiers 
3 through 5 by prepaying $2.4 million in fees.\62\ Moreover, similar to 
the proposed Sliding Scale, the Prepayment Programs are designed to 
incent Market Makers to commit to directing their order flow to the 
Exchange, which would benefit all market participants by expanding 
liquidity, providing more trading opportunities and tighter spreads, 
even to those market participants that are not eligible for the 
Programs. Thus, the Exchange believes the Prepayment Programs are 
reasonable, equitable and not unfairly discriminatory to other

[[Page 3711]]

market participants because non-Market Makers and other market 
participants will benefit from the anticipated greater capital 
commitment and resulting liquidity on the Exchange. Additionally, the 
Exchange believes the Prepayment Programs are consistent with the Act 
because they may bring greater volume and liquidity to the Exchange, 
which will benefit all market participants by providing tighter quoting 
and better prices, all of which perfects the mechanism for a free and 
open market and national market system. In addition, the Exchange notes 
that, similar to the Prepayment Programs, at least two other exchanges 
have offered market makers the ability to prepay a portion of their 
transaction fees.\63\
---------------------------------------------------------------------------

    \62\ See CBOE fee schedule, available here, http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf, footnote 10 (a market maker 
may be permitted to pay a pro-rated amount of the $2.4 million if, 
for example, they join the program mid-year).
    \63\ See supra n. 34.
---------------------------------------------------------------------------

    In addition, the Exchange believes it is reasonable, equitable and 
not unfairly discriminatory to allow only Market Makers to prepay 
certain of their Exchange fees in exchange for receiving certain 
benefits because Market Makers have obligations that other market 
participants do not. In particular, they must maintain active two-sided 
markets in the classes in which they are appointed, and must meet 
certain minimum quoting requirements.\64\ Further the Exchange notes 
that Market Makers are also subject to higher fixed costs, not assessed 
upon other market participants, such as the relatively more expensive 
ATP fees applicable to Market Makers, Rights Fees, and Premium Product 
Fees.\65\
---------------------------------------------------------------------------

    \64\ See supra n. 58
    \65\ See supra n. 59.
---------------------------------------------------------------------------

    The Exchange proposal to require NYSE Amex Options Market Makers 
who opt into the 3 Year Prepayment Program to pay $3 million per year 
for 3 years compared to those opting into the 1 Year Prepayment Program 
who will pay $4 million per year is reasonable, equitable and not 
unfairly discriminatory. As explained above, the Prepayment Program is 
a credit against certain Exchange fees and charges. Any activity that 
exceeds the amount of the Prepayment credit will be invoiced at the 
applicable rates in Sections I.C, I.G., or III.A. of the fee schedule. 
As such, all NYSE Amex Options Market Makers (those who do not 
participate in the Prepayment Program, those who participate in the 1 
Year Prepayment Program and those who participate in the 3 Year 
Prepayment Program) will incur the same level of fees and/or charges if 
they conduct the same level of activity. Further, assessing a 
prepayment that is 25% smaller on an annual basis on firms willing to 
commit to the 3 Year Prepayment Program is reasonable, equitable, and 
not unfairly discriminatory because those firms are committing 125% 
more capital and are entering a multi-year arrangement that the 
Exchange believes will increase liquidity (which ultimately will 
provide ATP Holders more opportunities for trading and price 
discovery).
    The Exchange proposal to replace the existing OFP Electronic ADV 
Tiers and Customer Electronic Complex Order ADV Tiers (collectively 
``Tiers'') with the ACE Program is also reasonable, equitable and not 
unfairly discriminatory for the following reasons. First, the ACE 
Program is replacing the Tiers in that both pay a per contract credit 
to qualifying OFPs. The Exchange believes the credits offered under the 
ACE Program are reasonable and appropriate in that they are based on 
the amount of business transacted on the Exchange. Per the ACE Program, 
as discussed above, an OFP may earn enhanced credits if they have an 
Affiliated NYSE Amex Options Market Maker (i.e., the entities share 
``70% common ownership'' \66\) that has committed to either of the 
proposed Prepayment Programs. The Exchange notes that allowing an 
entity to earn an enhanced discount or credit in exchange for 
committing to a prepayment of certain fees is not new or novel.\67\ Nor 
is it new or novel to offer affiliates enhanced discounts or credits 
based on the affiliates' activity, even if conducted in different 
capacities (e.g., market maker volume versus customer volume). Notably 
both the NASDAQ Options Market LLC (``NOM'') and NASDAQ OMX PHLX LLC 
(``PHLX'') offer enhanced credits to Market Makers and PHLX offers 
enhanced credits to affiliates of Marker Makers on certain volumes 
based on an affiliate's activity. NOM aggregates the activity of 
affiliates and makes the availability of higher credits or rebates to 
NOM Market Maker's contingent upon volume conducted by an 
affiliate.\68\ Specifically, NOM offers its Participants a Rebate to 
Add Liquidity In Penny Pilot Options based on monthly volume as set 
forth in a tier structure. Tiers 5 and 6 are available to NOM Market 
Makers that have an affiliate that qualifies for Tier 7 or Tier 8 of 
their Customer and Professional Rebate to Add Liquidity in Penny Pilot 
Options.\69\ In its filing with the Commission, NOM noted its belief 
that ``its proposal to permit Participants under Common Ownership to 
aggregate their volume is reasonable, equitable and not unfairly 
discriminatory because the Exchange would permit all Participants the 
ability to aggregate for purposes of the rebates if certain 
Participants chose to operate under separate entities.'' \70\
---------------------------------------------------------------------------

    \66\ The Exchange defines ``Affiliates'' as ``a person that 
directly or indirectly through one or more intermediaries, has a 70% 
common ownership with, the person specified. See proposed Fee 
Schedule, Key Terms and Definitions.
    \67\ See supra n. 62.
    \68\ See NOM fee schedule, available here, http://www.nasdaqtrader.com/Micro.aspx?id=OptionsPricing
    \69\ See id. (stating that ``[f]or purposes of applying any 
options transaction fee or rebate where the fee assessed, or rebate 
provided, by NOM depends upon the volume of an Options Participant's 
activity, references to an entity (including references to a 
`Options Participant') shall be deemed to include the entity and its 
affiliates that have been approved for aggregation'').
    \70\ See Securities Exchange Act Release No. 69132 (March 13, 
2013), 78 FR 16898, 16902-16903 (March 19, 2013) (SR-NASDAQ-2013-
041) (justifying higher rebate to NOM Market Makers because they 
``add value through continue quotations and the commitment of 
capital'' and this fee structure would incentivize Participants to 
post NOM Market Maker liquidity on NOM).
---------------------------------------------------------------------------

    Similarly, PHLX provides for an enhanced rebate on Customer volumes 
only for those participants that have an affiliated Specialist or 
Market Making firm under ``Common Ownership''.\71\ Specifically, PHLX 
offers a tiered Customer Rebate Program that qualifies either a 
Specialist or Market Maker or its affiliate under Common Ownership to 
an additional rebate provided the Specialist or Market Maker has 
reached the Monthly Market Maker Cap in accordance with PHLX's fee 
schedule.\72\ In its filing with the Commission, PHLX noted its belief 
that this additional rebate was equitable and not unfairly 
discriminatory because, among other reasons, Specialists and Marker 
Makers ``have burdensome quoting obligations,'' to the market that 
others market participants do not; are subject to higher transaction 
costs and incur higher costs related to market making activities; and 
``also serve an important role on the Exchange with regard to order 
interaction and they provide liquidity in the marketplace.'' \73\ Thus, 
PHLX noted that the ``proposed differentiation as between Specialists 
and Market Makers as compared to other market participants recognizes 
the differing contributions made to the trading

[[Page 3712]]

environment on the Exchange by these market participants.''
---------------------------------------------------------------------------

    \71\ See PHLX fee schedule, available here, http://www.nasdaqtrader.com/Micro.aspx?id=PHLXPricing (defining the term 
``Common Ownership'' as meaning ``members or member organizations 
under 75% common ownership or control'').
    \72\ See id. (Section II, Monthly Market Maker Cap). See also 
Securities Exchange Act Release No. 70969 (December 3, 2013), 78 FR 
73906 [sic] (December 9, 2013) (SR-Phlx-2013-114).
    \73\ See Securities Exchange Act Release No. 70969 (December 3, 
2013), 78 FR 73906 [sic], 73908 (December 9, 2013) (SR-Phlx-2013-
114).
---------------------------------------------------------------------------

    Thus, consistent with the rationales articulated by NOM and PHLX 
when justifying similar fee changes implemented on their exchanges, the 
Exchange believes that its proposal to allow affiliated OFP firms 
enhanced credits by having a NYSE Options Market Maker participate in 
one of the Prepayment Programs is reasonable, equitable and not 
unfairly discriminatory. First, as discussed above, unlike other market 
participants, Market Makers have burdensome quoting obligation to the 
market that do not apply to Customers, Professionals Customers, Firms 
and Broker-Dealers.\74\ Market Makers serve an important role on the 
Exchange with regard to order interaction, capital commitment, and the 
provision of liquidity in the marketplace. Additionally, as discussed 
above, Market Makers incur costs unlike other market participants 
including, but not limited to, more expensive ATP fees applicable to 
Market Makers, Rights Fees, and Premium Product Fees and other costs 
associated with market making activities, which results in a higher 
average cost per execution as compared to Firms, Broker-Dealers and 
Professional Customers.\75\ The proposed differentiation as between 
Market Makers as compared to other market participants recognizes the 
differing contributions made to the trading environment on the Exchange 
by these market participants.
---------------------------------------------------------------------------

    \74\ See supra n. 58.
    \75\ See supra n. 59.
---------------------------------------------------------------------------

    The Exchange also believes that allowing firms enhanced credits 
based on the activities of their Affiliates (i.e., by having a NYSE 
Options Market Maker participate in one of the Prepayment Programs) is 
also reasonable, equitable and not unfairly discriminatory for several 
reasons. First, the Exchange believes that OFPs affiliated (i.e., have 
a 70% common ownership) with NYSE Amex Options Market Makers may 
qualify to earn enhanced credits in recognition of their shared 
economic interest, which includes the heightened obligations and costs 
imposed on Market Makers.\76\ OFPs unaffiliated with a NYSE Amex 
Options Market Maker do not share the same type of economic interests 
with a Market Maker that bears higher obligations and costs. Second, 
because each OFP that is not affiliated with a NYSE Amex Options Market 
Maker has the opportunity to establish such an affiliation by several 
means, including but not limited to, a business combination (e.g., 
merger or acquisition) or the establishment of their own market making 
operation, which as a Broker-Dealer, each OFP has the potential to 
establish.
---------------------------------------------------------------------------

    \76\ See supra nn. 58, 59.
---------------------------------------------------------------------------

    In addition, the Exchange believes that the ACE Program will 
encourage OFPs with an Affiliated NYSE Amex Options Market Maker to 
direct order flow to the Exchange (especially Customer orders) in order 
to receive the enhanced volume credits. The Exchange believes that 
incentivizing OFPs to route orders to the Exchange may result in an 
increase in volume and liquidity to the Exchange that would benefit all 
market participants by providing more trading opportunities and tighter 
spreads, even to those market participants that do not participate in 
the Program, including participants other than NYSE Amex Options Market 
Makers, such as Firms, Professional Customers, etc. Additionally, the 
Exchange believes the Program is consistent with the Act because they 
may bring greater volume and liquidity to the Exchange, which will 
benefit all market participants by providing tighter quoting and better 
prices, all of which perfects the mechanism for a free and open market 
and national market system. The Exchange believes that those OFPs that 
do not have an Affiliated NYSE Amex Options Market Maker that has 
committed to a Prepayment Program would benefit from the increased 
order flow that those OFPs with an Affiliated NYSE Amex Options Market 
Maker may be incented to bring to the Exchange. The Exchange notes that 
it is not increasing fees for OFPs nor does it charge a fee for 
Customer transactions. The Exchange believes that by offering OFPs the 
ability to qualify to earn credits on Electronically executed Customer 
volumes, based solely on Customer volumes or on all Electronic volumes, 
the Exchange may experience an increase in the number of orders routed 
to the Exchange for potential execution as OFPs seek to qualify for the 
credits under the ACE Program. This increase in orders routed to the 
Exchange will lead to enhanced price discovery, increased market 
transparency and greater opportunities to trade, which benefits all 
participants on the Exchange, including those who may not be eligible 
to earn the credits under the ACE Program.
    For the above reasons, the Exchange believes the program ACE 
Program is also reasonable, equitable and not unfairly discriminatory.

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 that is not necessary or appropriate 
in furtherance of the purposes of the Act.
    The Exchange acknowledges that the proposed changes relating to 
transaction charges and/or credits, including the Sliding Scale and the 
Prepayment Programs, may increase both intermarket and intramarket 
competition by incenting participants to direct their orders to the 
Exchange, which will enhance the quality of quoting and may increase 
the volume of contracts traded on the Exchange. To the extent that 
there is an additional competitive burden on non-NYSE Amex Market 
Makers, the Exchange believes that this is appropriate because the 
proposal should incent market participants to direct additional order 
flow to the Exchange, and thus provide additional liquidity that 
enhances the quality of its markets and increases the volume of 
contracts traded here. To the extent that this purpose is achieved, all 
of the Exchange's market participants should benefit from the improved 
market liquidity. Enhanced market quality and increased transaction 
volume that results from the anticipated increase in order flow 
directed to the Exchange will benefit all market participants and 
improve competition on the Exchange.
    The Exchange does not believe that offering OFPs affiliated (i.e., 
have a 70% common ownership) with NYSE Options Market Makers the 
ability to qualify to earn enhanced credits would impose any 
unnecessary or inappropriate burden on competition for several reasons. 
First, OFPs that are not affiliated with a market making firm would 
benefit from any increase in volume and liquidity on the Exchange as a 
consequence of the proposed enhanced credits, which would provide 
tighter quoting and better prices to unaffiliated OFPs. The Exchange 
believes that any burden on competition on unaffiliated OFPs would be 
outweighed by this benefit. Second, the Exchange believes it does not 
create an inappropriate burden on competition on unaffiliated OFPs for 
the Exchange to provide affiliated OFPs that share common control and 
shared economic interest with market making firms the ability to 
qualify for enhanced credits because these affiliated OFPs share the 
heighted obligations and fees of their affiliated Market Makers.\77\ 
Moreover,

[[Page 3713]]

the Exchange would permit all OFPs the ability to aggregate for 
purposes of the rebates if certain OFPs chose to operate under separate 
entities.\78\
---------------------------------------------------------------------------

    \77\ See supra nn. 58, 59.
    \78\ See, e.g., Securities Exchange Act Release No. 69132 (March 
13, 2013), 78 FR 16898, 16902-16903 (March 19, 2013) (SR-NASDAQ-
2013-041) (justifying allowing affiliates to aggregate their volume 
to receive rebates because all Participants on the exchange have the 
ability to aggregate if certain Participants chose to operate under 
separate entities).
---------------------------------------------------------------------------

    Given the robust competition for volume among options markets, many 
of which offer the same products, implementing programs to attract 
order flow similar to the ones being proposed in this filing, are 
consistent with the above-mentioned goals of the Act. The Exchange 
notes that it operates in a highly competitive market in which market 
participants can readily favor competing venues. In such an 
environment, the Exchange must continually review, and consider 
adjusting, its fees and credits to remain competitive with other 
exchanges. For the reasons described above, the Exchange believes that 
the proposed rule change reflects this competitive environment.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \79\ of the Act and subparagraph (f)(2) of Rule 
19b-4\80\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \79\ 15 U.S.C. 78s(b)(3)(A).
    \80\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \81\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \81\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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 protected]. Please include 
File Number SR-NYSEMKT-2015-04 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-NYSEMKT-2015-04. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal offices of the Exchange. 
All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-NYSEMKT-2015-
04, and should be submitted on or before February 13, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\82\
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    \82\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-01072 Filed 1-22-15; 8:45 am]
BILLING CODE 8011-01-P