[Federal Register Volume 84, Number 71 (Friday, April 12, 2019)]
[Notices]
[Pages 15020-15022]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07236]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85553; File No. SR-NYSEAMER-2019-09]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Change To Amend the NYSE
American Options Fee Schedule
April 8, 2019.
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 March 27, 2019, NYSE American LLC (``NYSE American'' or the
``Exchange'') 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 American Options Fee
Schedule (``Fee Schedule''). The Exchange proposes to implement the fee
change effective April 1, 2019. The proposed change is available on the
Exchange's website 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 modify the Fee Schedule to
introduce a Floor Broker Volume Rebate Program (``FB Volume Rebate'')
for Floor Broker organizations (each a ``Floor Broker'').
The Exchange proposes to offer Floor Brokers the opportunity to
qualify for a $5,000 rebate each month that the Floor Broker increases
its Average Daily Volume (``ADV'') by a certain percentage over one of
two benchmarks. Specifically, a Floor Broker may qualify for the FB
Volume Rebate by increasing its contract sides in billable manual ADV
by at least 50% over the greater of:
(i) 20,000 contract sides in billable manual ADV; or
(ii) The Floor Broker's total billable manual ADV in contract sides
during the second half of 2018--i.e., July through December 2018.
As proposed, the Exchange would exclude Customer volume, Firm
Facilitation trades, and QCCs from the calculation of a Floor Broker's
billable manual ADV for purposes of the FB Volume Rebate. In addition,
the Exchange proposes to exclude from the FB Volume Rebate any volume
included in the calculation to achieve the Firm Monthly Fee Cap and the
Strategy Execution Fee Cap, regardless of whether either of these caps
is achieved, because fees on such volume are already capped and
therefore such volume does not increase billable manual volume.
For example, if a Floor Broker achieves 30,000 contract sides
(i.e., an increase of 50% over 20,000--the minimum volume requirement
under the first benchmark), that Floor Broker would qualify for the
monthly $5,000 FB Volume Rebate. However, if that Floor Broker's
billable manual ADV in contract sides during the second half of 2018
was 30,000, that Floor Broker would have to achieve at least 45,000
contract sides (i.e., an increase of 50% over 30,000) to receive the
rebate--as the FB Volume Rebate applies to the ``50% over the greater
of'' the two benchmarks, which in this case would be the Floor Broker's
2018 second half of year volume.
As described above, the Exchange proposes to enumerate which volume
would be excluded from the calculation for the FB Rebate Volume. If not
specifically enumerated, volume would be eligible to be included in the
calculation. For example, Floor Brokers that participate in the Floor
Broker Fixed Cost Prepayment Incentive
[[Page 15021]]
Program (the ``FB Prepay Program'') \4\ may apply the same monthly
contract sides in billable ADV to qualify for both the FB Volume Rebate
and the Percentage Growth Incentive available via the FB Prepay Program
provided the Floor Broker meets the (different) requirements of each
incentive program.\5\
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\4\ See Fee Schedule, Section III.E (Floor Broker Fixed Cost
Prepayment Incentive Program), available here: https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf, (providing that the
Percentage Growth Incentive allows participating Floor Broker's
[sic] to qualify for incrementally larger discounts on prepaid
Eligible Fixed Costs by increasing their ADV during 2019 by
incrementally increasing percentages (i.e., 30%, 65% or 100%,
respectively), above the greater of: (i) 11,000 contract sides in
billable manual ADV; or (ii) 110% of the Floor Broker's total
billable manual ADV in contract sides during the second half of
2017--i.e., July through December 2017).
\5\ Consistent with the Exchange's practice of applying monthly
credits/rebates, the FB Volume Rebate (when achieved) would be paid
monthly on a one-month lag (i.e., if a Floor Broker achieves the
benchmark in May 2019, the $5,000 Rebate will be applied in July
2019); whereas the Percentage Growth Incentive earned in 2019 would
be paid in January 2020. See, e.g., Fee Schedule, Section III.E
(providing that ``[p]articipating Floor Broker organizations that
qualify for the Percentage Growth Incentive will receive their 2019
rebate in January 2020'').
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The Exchange proposes to amend Section III.E of the Fee Schedule to
reflect the FB Volume Rebate by adding a new heading under Section E
entitled ``Floor Broker Programs,'' renumbering current Section III.E
as Section III.E.1 and adding the proposed FB Volume Rebate as proposed
Section III.E.2 to the Fee Schedule.\6\ The proposed FB Volume Rebate
is designed to encourage Floor Brokers to increase their ADV in
billable manual contract sides, regardless of whether the Floor Broker
participates in the FB Prepay Programs [sic], as this should encourage
more manual volume to be directed to the Exchange.
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\6\ The Exchange also proposes to make conforming changes to the
Table of Contents. See proposed Fee Schedule, Table of Contents,
Preface, Section III.E., 1., 2.
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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 proposal to introduce the FB Volume Rebate is reasonable,
equitable and not unfairly discriminatory for the following reasons.
First, the Exchange is offering two alternative means to achieve the
same rebate to ensure that Floor Brokers that are new to the Exchange
(or Floor Brokers that did not execute more than 20,000 ADV in contract
sides in the second half of 2018) could nonetheless be eligible for the
FB Volume Rebate. The Exchange believes that 20,000 ADV is a reasonable
minimum threshold above which a participating Floor Broker would need
to increase volume in order to earn the proposed rebate. For Floor
Brokers that exceeded the 20,000 ADV in the second half of 2018, the
Exchange believes it is reasonable to use each Floor Broker's
historical volume as a benchmark against which to measure future growth
to earn the proposed rebate. Regardless of which benchmark a Floor
Broker's growth is measured against, all Floor Brokers that aim to
achieve the rebate would be required to increase volume executed on the
Exchange. Thus, the proposed change is equitable and not unfairly
discriminatory because it applies to qualifying Floor Brokers equally
and because Floor Brokers serve an important function in facilitating
the execution of orders via open outcry, which as a price-improvement
mechanism, the Exchange wishes to encourage and support.
Moreover, offering incentives to encourage Floor Broker executions
of manual volume is not new or novel as other options exchanges provide
incentives to other specific market participants for achieving volume
levels, including the Percentage Growth Incentive on the Exchange for
Floor Brokers that participated in the FB Prepay Program.\9\ For
example, the Cboe Exchange, Inc. (``Cboe'') offers a $9,000 or $15,000
rebate to Cboe floor brokers that execute an average of 14,000 or
25,0000, respectively, ``customer and/or professional customer and
voluntary professional open-outcry contracts per day over the course of
a calendar month in all underlying symbols,'' with certain enumerated
exclusions.\10\ Like similar offerings on the Exchange and at other
options exchange, the Exchange believes the proposed FB Volume Rebate
would similarly incent Floor Brokers to increase their billable volume
executed in open outcry on the Exchange, which would benefit all market
participants by expanding liquidity and providing more trading
opportunities, even to non-Floor Broker market participants.
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\9\ See supra note 4.
\10\ See Cboe Fee Schedule, footnote 25 (at p. 19), available
here: http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf.
The Exchange notes that, unlike Cboe, it excludes Customer
executions from qualifying volumes, while Cboe specifies excluded
indices and symbols.
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The Exchange believes that the proposed organizational and non-
substantive changes to the rule text to incorporate the proposed FB
Volume Rebate under Section III.E of the Fee Schedule would provide
clarity, transparency and internal consistency to the Fee Schedule
Exchange rules and would to protect investors and the investing public
by making the Exchange rules easier to navigate and comprehend.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act, 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. The Exchange does not believe that the proposed
rule change will impose any burden on intramarket competition that is
not necessary or appropriate in furtherance of the purposes of the Act
because while the proposed change benefits Floor Brokers that reach the
qualifying volume thresholds, Floor Brokers serve an important function
in facilitating the execution of orders via open outcry, which promotes
price discovery on the public markets. The Exchange does not believe
that the proposed rule change will impose any burden on intermarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act because the proposed change only affects trading on
the Exchange. To the extent that the proposed change makes the Exchange
a more attractive marketplace for market participants at other
exchanges, such market participants are welcome to become Exchange
market participants.
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
[[Page 15022]]
subparagraph (f)(2) of Rule 19b-4 \12\ thereunder, because it
establishes a due, fee, or other charge imposed by the Exchange. 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.
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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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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-NYSEAMER-2019-09 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-NYSEAMER-2019-09. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEAMER-2019-09 and should be submitted
on or before May 3, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-07236 Filed 4-11-19; 8:45 am]
BILLING CODE 8011-01-P