[Federal Register Volume 81, Number 31 (Wednesday, February 17, 2016)]
[Notices]
[Pages 8107-8109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-03129]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77106; File No. SR-NYSEMKT-2016-18]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Change Modifying the NYSE Amex
Options Fee Schedule
February 10, 2016.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 1, 2016, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the 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\ 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 modify the NYSE Amex Options Fee Schedule
(``Fee Schedule''). The Exchange proposes to implement the fee change
effective February 1, 2016. The proposed 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 purpose of this filing is to amend sections I. E. and G. of the
Fee Schedule \3\ to adjust fees and credits payable, effective on
February 1, 2016.
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\3\ See Fee Schedule, sections I.E. (Amex Customer Engagement
(``ACE'') Program--Standard Options) and I.G. (CUBE Auction Fees &
Credits), available here, https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf.
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Proposed Changes to ACE Program
Section I.E. of the Fee Schedule describes the Exchange's ACE
Program, which features five tiers expressed as a percentage of total
industry Customer equity and Exchange Traded Fund (``ETF'') option
average daily volume \4\ and provides two alternative methods through
which Order Flow Providers may receive per contract credits for
Electronic Customer volume that the OFP, as agent, submits to the
Exchange.
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\4\ The volume thresholds are based on an NYSE Amex Options
Market Makers' [sic] 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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The Exchange proposes to modify the ACE Program by increasing
certain of the credits available for Tiers 2, 3 and 4 as illustrated in
the table below, with proposed additions appearing in italics and
proposed deletions appearing in brackets:
* * * * *
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ACE Program--standard options Credits payable on customer volume only
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Total Electronic
ADV (of which 20%
or greater of the
Customer electronic minimum qualifying 1 Year 3 Year
Tier ADV as a % of volume for each Customer enhanced enhanced
industry customer Tier must be volume customer customer
equity and ETF Customer) as a % credits volume volume
options ADV of Industry credits credits
Customer Equity
and ETF Options
ADV
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1......... 0.00% to 0.60%..... OR......... N/A............... $0.00 $0.00 $0.00
2......... > 0.60% to 0.80% or ........... N/A............... [($0.14)] [($0.15)] ($0.16)
>= 0.35% over ($0.16) ($0.16)
October 2015
volumes.
3......... > 0.80% to 1.25%... ........... 1.50% to 2.50% of [($0.14)] [($0.16)] [($0.18)]
which 20% or ($0.17) ($0.18) ($0.19)
greater of 1.50%
must be Customer.
4......... > 1.25% to 1.75%... ........... > 2.50% to 3.50% [($0.17)] ($0.19) ($0.21)
of which 20% or ($0.18)
greater of 2.50%
must be Customer.
5......... > 1.75%............ > 3.50% of which ($0.19) ($0.21) ($0.23)
20% or greater of
3.5% must be
Customer.
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The proposed amendments to the ACE Program are designed to enhance
the rebates, which the Exchange believes would attract more volume and
liquidity to the Exchange to the benefit of Exchange participants
through increased opportunities to trade as well as enhancing price
discovery.
Proposed Changes to CUBE Pricing
Section I.G. of the Fee Schedule sets forth the rates for per
contract fees and credits for executions associated with a CUBE
Auction. The Exchange is proposing to reduce rates for RFR Response
fees and Initiating Credits and Rebates. Specifically, the Exchange
proposes to reduce RFR Response fees for Non-Customers to $0.12, down
from $0.60 for symbols in the Penny Pilot and down from $0.95 for
symbols not in the Penny Pilot. The Exchange also proposes to reduce
Initiating Participant credits and rebates to $0.05 down from $0.35 for
symbols in the Penny Pilot, $0.70 for symbols not in the Penny Pilot
and down from $0.12 for the ACE Initiating Participant Rebate.
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The proposed changes are designed to address concerns expressed to
the Exchange by Market Makers about ``imposing oversized transaction
fees on market makers (MMs) when they compete with the facilitation
side to pre-matched auction crosses,'' including the CUBE Auction.\5\
Specifically, the Market Makers claim that this so-called ``break-up
fee'' is ``designed to hamper traders (primarily MMs) from competing on
auction crosses.''\6\ The Exchange believes the proposed changes to
CUBE pricing, particularly the reduction in the RFR Response Fee
addresses the concerns raised and, as a result, may attract greater
volume and liquidity to the Exchange, which would improve its overall
competitiveness and strengthen its market quality for all market
participants. The Exchange notes that the proposed changes would also
provide the concerned Market Makers to have a platform on which they
can provide proof of concept.
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\5\ See Letter from Gerald D. O'Connell, CRO, Susquehanna
International Group, LLP; John Kinahan, CEO, Group One Trading, LP;
Daniel Overmyer, Head of Compliance, IMC Financial Markets LLC;
Edward Haravon, Chief Operating Officer, SpotTrad1ng L.L.C.; Frank
Bednarz, President, CTC, L.L.C.; Kurt Eckert, Principal, Wolverine
Trading LLC; and Sebastiaan KoeHng, CEO, Optiver US, LLC to
Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange
Commission, dated October 13, 2014, available at, http://www.sec.gov/comments/sr-nysemkt-2014-52/nysemkt201452-1.pdf.
\6\ See id. at 1.
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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 that the proposed amendments to the ACE
Program are reasonable, equitable and not unfairly discriminatory
because they would enhance the incentives to Order Flow Providers to
transact Customer orders on the Exchange, which would benefit all
market participants by providing more trading opportunities and tighter
spreads, even to those market participants that do not participate in
the ACE Program. Additionally, the Exchange believes the proposed
changes to the ACE Program are consistent with the Act because they may
attract greater volume and liquidity to the Exchange, which would
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 believes that the proposed changes to
CUBE Auction fees are reasonable, equitable and not unfairly
discriminatory. First, the proposed reductions to both the Initiating
Participant Credits (for all issues) as well as the fees associated
with RFR Responses that participate in the CUBE are reasonable,
equitable and non-discriminatory because they apply equally to all ATP
Holders that choose to participate in the CUBE, and access to the
Exchange is offered on terms that are not unfairly discriminatory.
The Exchange likewise believes the proposed reduction of the ACE
Initiating Participant Credit is reasonable, equitable and not unfairly
discriminatory for the following reasons. First, the ACE Initiating
Participant Rebate is based on the amount of business transacted on the
Exchange and is designed to attract more volume and liquidity to the
Exchange generally, and to CUBE Auctions specifically, which would
benefit all market participants (including those that do not
participate in the ACE Program) through increased opportunities to
trade at potentially improved prices as well as enhancing price
discovery. Furthermore, the Exchange notes that the ACE Initiating
Participant Rebate is equitable and not unfairly discriminatory because
it would continue to incentivize ATP Holders to transact Customer
orders on the Exchange and an increase in Customer order flow would
bring greater volume and liquidity to the Exchange. Increased volume to
the Exchange benefits all market participants by providing more trading
opportunities and tighter spreads, even to those market participants
that do not participate in the ACE Program.
Finally, the Exchange believes the proposed changes are consistent
with the Act because to the extent the modifications permit the
Exchange to continue to attract greater volume and liquidity, the
proposed change would improve the Exchange's overall competitiveness
and strengthen its market quality for all market participants.
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,\9\ the Exchange does
not believe that the proposed rule change would impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. To the contrary, the proposed changes to CUBE
pricing are designed to address concerns raised by Market Makers that
so-called ``break-up fees'' imposed in price improvement auctions like
CUBE are anti-competitive. To that end, the Exchange believes the
proposed amendments to CUBE Auction pricing are pro-competitive as the
fees and credits are designed to incentivize increases in volume and
liquidity to the Exchange, which would benefit all of Exchange
participants through increased opportunities to trade as well as
enhancing price discovery.
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\9\ 15 U.S.C. 78f(b)(8).
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Further, the Exchange believes the proposed amendments to the ACE
Program are pro-competitive as the proposed increased rebates may
encourage OFPs to direct Customer order flow to the Exchange and any
resulting increase in volume and liquidity to the Exchange would
benefit all of Exchange participants through increased opportunities to
trade as well as enhancing price discovery.
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) \10\ of the Act and subparagraph (f)(2) of Rule
19b-4 \11\ thereunder, because it establishes a due,
[[Page 8109]]
fee, or other charge imposed by the Exchange.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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) \12\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\12\ 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-NYSEMKT-2016-18 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-2016-18. 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 the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; 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-2016-18, and should
be submitted on or before March 9, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
Brent J. Fields,
Secretary.
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\13\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-03129 Filed 2-16-16; 8:45 am]
BILLING CODE 8011-01-P