[Federal Register Volume 81, Number 98 (Friday, May 20, 2016)]
[Notices]
[Pages 31984-31986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11876]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77835; File No. SR-NYSEARCA-2016-61]


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

May 16, 2016.
    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 May 2, 2016, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule 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. 
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 
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 May 2, 2016. Specifically, the Exchange 
proposes (i) to increase certain Take Liquidity Fees charged; (ii) to 
modify the Customer and Professional Customer Incentive Program; and 
(iii) to introduce a new qualification for Customer and Professional 
Customer Posting Credit Tiers in Non-Penny Pilot Issues, 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''). Specifically, the Exchange 
proposes to increase the Take Fee charged to Non-Customers from $0.99 
per contract to $1.08 per contract, which is within the range of fees 
charged by competing option exchanges.\4\
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    \4\ See, e.g., NASDAQ Options Market (``NOM'') price list, 
available here, http://www.nasdaqtrader.com/Micro.aspx?id=optionsPricing (charging non-customers a $1.10 per 
contract take liquidity fee in Non-Penny Pilot Issues).
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Customer and Professional Customer Incentive Program (the ``Incentive 
Program'')
    The Exchange is proposing to increase one of the credits available 
under the Incentive Program, which provides OTP Holders and OTP Firms 
(collectively, ``OTPs'') five alternatives to earn

[[Page 31985]]

additional posting credits ranging from $0.01 to $0.04.\5\ 
Specifically, the Exchange proposes to increase from $0.04 to $0.05 the 
additional post credit available to OTPs that achieve at least 1.00% of 
Total Industry Customer equity and ETF option ADV (``TCADV'') from 
Customer and Professional Customer Posted Orders in both Penny Pilot 
and non-Penny Pilot Issues, of which at least 0.25% of TCADV is from 
Customer and Professional Customer Posted Orders in non-Penny Pilot 
Issues. The Exchange believes this increased credit would provide 
additional incentive to direct Customer and Professional Customer order 
flow to the Exchange, which benefits all market participants through 
increased liquidity and enhanced price discovery.
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    \5\ The Exchange proposes to remove the word ``four'' from the 
italicized comment at the bottom of the Incentive Program table to 
make clear that there are currently five alternatives to earn the 
credit. See proposed Fee Schedule, Incentive Program (``OTP Holders 
and OTP Firms may earn one additional Credit from the alternatives 
listed above'').
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Customer and Professional Customer Posting Credit Tiers in Non-Penny 
Pilot Issues (the ``Posting Credit Tiers'')
    Finally, the Exchange also proposes to introduce a new tier to the 
Posting Credit Tiers, which consist of Tier A and Tier B and provide 
for specified credits if specified volume thresholds have been met.\6\ 
The Exchange is proposing to adopt a Tier C which would provide a $0.90 
per contract credit to OTPs that meet or exceed a qualification basis 
of at least 1.50% of TCADV from Customer and Professional Customer 
Posted Orders in all Issues, of which at least 0.40% of TCADV is from 
Customer and Professional Customer Posted Orders in non-Penny Pilot 
Issues. The Exchange believes proposed Tier C would provide additional 
incentive to direct Customer and Professional Customer order flow to 
the Exchange, which benefits all market participants through increased 
liquidity and enhanced price discovery.
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    \6\ The Exchange notes that there is a posting credit of $0.75 
associated with a Base Tier for which there is no volume 
requirement.
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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 Take Fees for Non-Customers 
are reasonable, equitable and not unfairly discriminatory because they 
are competitive with fees charged by other exchanges.\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 credits are designed to attract (and compete for) 
order flow to the Exchange, which provides a greater opportunity for 
trading by all market participants. Moreover, the Exchange believes the 
proposed change does not unfairly discriminate because it applies 
equally to all Non-Customers who are removing liquidity.
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    \9\ See supra n. 4.
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    The Exchange also believes that the proposed increased additional 
credit under the Incentive Program as well as the addition of proposed 
Tier C to the Posting Credit Tiers are reasonable, equitable, and not 
unfairly discriminatory because the incentives would be available to 
all OTPs that execute posted electronic Customer and Professional 
Customer orders on the Exchange on an equal and non-discriminatory 
basis, in particular because they provide alternative means of 
achieving the same [sic] credit. The Exchange believes that providing 
methods for achieving the credits based on posted electronic Customer 
and Professional Customer Executions in both Penny Pilot and non-Penny 
Pilot issues is equitable and not unfairly discriminatory because it 
would continue to result in more OTPs qualifying for the credits and 
therefore reducing their overall transaction costs on the Exchange. 
Moreover, the Exchange believes the proposed modifications would 
provide additional incentives to direct Customer and Professional 
Customer order flow to the Exchange, which benefits all market 
participants through increased liquidity and enhanced price discovery.
    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,\10\ 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 changes would continue to encourage competition, including by 
attracting additional liquidity 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 does not believe that 
the proposed change will impair the ability of any market participants 
or competing order execution venues to maintain their competitive 
standing in the financial markets. Further, the additional credit under 
the Incentive Program as well as the addition of proposed Tier C to the 
Posting Credit Tiers would be available to all similarly situated OTP 
Holders and OTP Firms 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 and may, in fact, encourage 
competition.
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    \10\ 15 U.S.C. 78f(b)(8).
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    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) \11\ of the Act and subparagraph (f)(2) of Rule 
19b-4\12\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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

[[Page 31986]]

the purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings under Section 19(b)(2)(B) \13\ 
of the Act to determine whether the proposed rule change should be 
approved or disapproved.
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    \13\ 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-2016-61 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-NYSEARCA-2016-61. 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-NYSEARCA-2016-61 and should 
be submitted on or before June 10, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-11876 Filed 5-19-16; 8:45 am]
 BILLING CODE 8011-01-P