[Federal Register Volume 80, Number 242 (Thursday, December 17, 2015)]
[Notices]
[Pages 78806-78808]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31686]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76627; File No. SR-NYSEArca-2015-118]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE 
Arca Options Fee Schedule

December 11, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on December 1, 2015, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule 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 Arca Options Fee Schedule 
(``Fee Schedule''). The Exchange proposes to implement the fee changes 
effective December 1, 2015. 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.

[[Page 78807]]

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

1. Purpose
    The purpose of this filing is to amend the Fee Schedule in a number 
of different ways, effective December 1, 2015. Specifically, the 
Exchange proposes (i) to increase certain Take Liquidity Fees charged; 
(ii) to introduce an alternative qualification for Market Maker Monthly 
Posting Credit Tiers and Qualifications For Executions in Penny Pilot 
Issues and SPY; and (iii) to modify the Take Fee Discount 
Qualification, as described below.
Transaction Fees for Taking Liquidity
    The Exchange proposes to modify the fees paid by Market Makers, 
Lead Market Makers, Firms and Broker Dealers, and Professional 
Customers (collectively, ``Non-Customers'') for Taking Liquidity in 
non-Penny Pilot Issues (``Take Fees''). Currently, Non-Customers pay 
Take Fees ranging from $0.92 to $0.94 per contract for electronic 
executions, depending on account type. The Exchange proposes to charge 
the same rate to all Non-Customers, and to raise that fee to $0.99 per 
contract, which is within the range of fees charged by competing option 
exchanges.\4\
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    \4\ For example, BOX assesses fees greater than $1.00 to non-
Customers for executions against Public Customer interest in non-
penny pilot options. See BOX Options fee schedule, available here, 
http://boxexchange.com/assets/BOX_Fee_Schedule.pdf.
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    The Exchange also proposes to increase the Take Liquidity Fee for 
Customers in Penny Pilot issues from $0.47 to $0.49, which is within 
the range of fees charged by competing option exchanges.\5\
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    \5\ See, e.g., NASDAQ Options Market (``NOM'') price list, 
available here, http://www.nasdaqtrader.com/Micro.aspx?id=optionsPricing (charging customers a $0.50 take 
liquidity fee in Penny Pilot issues).
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Take Liquidity Discount for Certain Market Participants
    The Exchange proposes modifications to the Discount in Take 
Liquidity Fees for Professional Customer, Market Maker, Firm and Broker 
Dealer Liquidity Removing Orders (the ``Take Fee Discount'') for OTPs. 
Currently, the Take Fee Discount is applied if the OTP achieves one of 
two alternative qualifications, either: At least 1.00% of Total 
Industry Customer equity and exchange traded fund (``ETF'') option 
average daily volume (``ADV'') from Customer and Professional Customer 
Posted Orders in all Issues; or at least 2.00% of Total Industry 
Customer equity and ETF option ADV from Professional Customer, Market 
Maker, Firm, and Broker Dealer Liquidity Removing Orders in all Issues. 
The Take Fee Discount applied to orders meeting either qualification is 
$0.04 in Penny Pilot issues only. The Exchange proposes to reduce the 
Take Fee Discount in Penny Pilot issues to $0.02 and to institute a 
$0.05 Take Fee Discount in non-Penny Pilot issues.
Market Maker Monthly Posting Credit and Qualifications for Executions 
in Penny Pilot Issues and SPY (``Posting Tiers'')
    Finally, the Exchange proposes to add an alternative qualification 
basis to achieve Super Tier II of the Posting Tiers.
    Currently, a Market Maker may qualify for Super Tier II if it 
achieves at least 1.60% of Total Industry Customer equity and ETF 
option ADV from Market Maker orders in all issues, with at least 0.90% 
of Total Industry Customer equity and ETF option ADV from Market Maker 
Posted Orders in Penny Pilot and Non-Penny Pilot Issues.\6\ The 
Exchange proposes that a Market Maker may also qualify for Super Tier 
II it is [sic] achieves at least 1.60% of Total Industry Customer 
equity and ETF option ADV from Customer and Professional Customer 
orders in all issues, with at least 1.20% of Total Industry Customer 
equity and ETF option ADV from Customer and Professional Customer 
Posted Orders in all issues. If a Market Maker achieves either 
qualification basis, it would receive the $0.42 posting credit for 
executions in penny issues or SPY.
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    \6\ The volume thresholds are based on 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.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\8\ 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.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes the proposed Take Fees for Non-Customers are 
reasonable, equitable and not unfairly discriminatory because they are 
competitive with fees charged by other exchanges and are designed to 
attract (and compete for) order flow to the Exchange, which provides a 
greater opportunity for trading by all market participants.\9\ In 
addition, the increased Take Fees are reasonable because the fees would 
generate revenue that would help to support the credits offered for 
posting liquidity, which are available to all market participants. 
Moreover, the Exchange believes the proposed change would not unfairly 
discriminate because it applies equally to all Non-Customers who are 
removing liquidity. The increased Take Fees for Customers in Penny 
Pilot issues are reasonable because the proposed fees would generate 
revenue that would help to support the credits and other incentives 
offered for posting liquidity, and they are not unfairly discriminatory 
because the fees for Customers are still at a rate lower than that 
charged to non-Customers. In addition, the Exchange believes the 
proposed Take Fees for Customers are reasonable, equitable and not 
unfairly discriminatory because they are competitive with fees charged 
by other exchanges and are designed to attract (and compete for) order 
flow to the Exchange, which provides a greater opportunity for trading 
by all market participants.\10\
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    \9\ See supra n. 4.
    \10\ See supra n. 5.
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    The Exchange believes the changes to the Take Fee Discount for Non-
Customers are reasonable, equitable and non-discriminatory because it 
would apply to both Penny Pilot and non-Penny Pilot issues, which would 
incent OTPs to execute large volumes of orders on the Exchange, which 
benefits all market participants through increased liquidity and 
enhanced price discovery. The Exchange believes the Take Fee Discount 
is reasonable, equitable, and not unfairly discriminatory because it 
continues to apply to all participants other than Customers, who pay a 
much lower Take Liquidity Fee, and because it is available to all firms 
that provide Customer and Professional Customer orders. The Exchange 
also notes that the proposed Take Fee Discount is consistent with those 
offered on competing options exchanges.\11\
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    \11\ See, e.g., BATS Options Exchange fee schedule (Non-Customer 
Penny Pilot Take Volume Tiers), available here, http://www.batsoptions.com/support/fee_schedule/.

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[[Page 78808]]

    The Exchange believes that the proposed change to the Posting 
Tiers, specifically adding an alternative basis to achieve Super Tier 
II, is reasonable, equitable and not unfairly discriminatory because it 
would impact all similarly situated OTPs that post electronic Customer 
(and Professional Customer) executions on the Exchange equally, and 
provides a reasonable alternative to qualify for Super Tier II posting 
credit.
    For these reasons, the Exchange believes that the proposal is 
consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\12\ 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. Instead, the Exchange believes that the 
proposed incentive would continue to encourage competition, including 
by attracting additional liquidity and a wider variety of business to 
the Exchange, which would continue to make the Exchange a more 
competitive venue for, among other things, order execution and price 
discovery. The Exchange also believes the proposed fee modifications 
would not impose an undue burden on competition because the changes 
offset an increase in fees for some transactions with a variety of 
means to achieve credits and discounts. The Exchange does not believe 
that the proposed changes would impair the ability of any market 
participants or competing order execution venues to maintain their 
competitive standing in the financial markets.
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    \12\ 15 U.S.C. 78f(b)(8).
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    The increases in Take Liquidity fees would impact all affected 
order types (i.e., Professional Customers, Firm, Broker Dealers) in 
issues at the same rate. The proposed change to Super Tier II is 
designed to attract additional volume, in particular posted electronic 
Customer (and Professional Customer) executions, to the Exchange, which 
would promote price discovery and transparency in the securities 
markets thereby benefitting competition in the industry. As stated 
above, the Exchange believes that the proposed change would impact all 
similarly situated OTPs that post electronic Customer (and Professional 
Customer) executions on the Exchange equally, and as such, the proposed 
change would not impose a disparate burden on competition either among 
or between classes of market participants.
    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) \13\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \14\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(2).
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    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) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \15\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSEArca-2015-118 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549.

All submissions should refer to File Number SR-NYSEArca-2015-118. 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 Section, 100 F Street 
NE., Washington, DC 20549 on official business days between the hours 
of 10:00 a.m. and 3:00 p.m. Copies of the filing will also be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEArca-2015-118 and should 
be submitted on or before January 7, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-31686 Filed 12-16-15; 8:45 am]
 BILLING CODE 8011-01-P