[Federal Register Volume 86, Number 111 (Friday, June 11, 2021)]
[Notices]
[Pages 31351-31354]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-12249]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92122; File No. SR-NYSEAMER-2021-30]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify 
the NYSE American Options Fee Schedule

June 7, 2021.
    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 June 2, 2021, NYSE American LLC (``NYSE American'' or 
the ``Exchange'') 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 modify the NYSE American Options Fee 
Schedule (``Fee Schedule'') regarding the charges applicable to Manual 
transactions by NYSE American Options Market Makers, Specialists, and 
e-Specialists. The Exchange proposes to implement the fee change 
effective June 2, 2021.\4\ The proposed rule 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.
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    \4\ The Exchange originally filed to amend the Fee Schedule on 
May 3, 2021 (SR-NYSEAmer-2021-25), then withdrew and refiled on May 
12, 2021 (SR-NYSEAmer-2021-27) and May 21, 2021 (SR-NYSEAmer-2021-
28), which latter filing the Exchange withdrew on June 2, 2021.
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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 Section I.A. of the Fee 
Schedule regarding the charges for Manual transactions by NYSE American 
Options Market Makers, Specialists, and e-Specialists. Currently, NYSE 
American Options Market Makers (``Market Makers'') are charged $0.25 
per contract for Manual transactions; Specialists and e-Specialists 
(collectively, ``Specialists'') are charged $0.18 per contract for 
Manual transactions. The Exchange proposes to modify the rates charged 
for Manual transactions to $0.35 per contract for Market Makers and 
$0.30 per contract for Specialists. The proposed rate for Market Makers 
is competitive and intended to align the Exchange's fees for Manual 
transactions by Market Makers with those charged by other markets.\5\ 
The proposed rate for Specialists would reduce the existing disparity 
between rates charged to Specialists and Market Makers from seven cents 
($0.07) to five ($0.05), which disparity the Exchange believes 
continues to be justified given the additional fees imposed on 
Specialists.\6\
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    \5\ See, e.g., Nasdaq PHLX LLC (``Phlx'') Pricing Schedule, 
available at: https://listingcenter.nasdaq.com/rulebook/phlx/rules/Phlx%20Options%207 (providing $0.35 per contract rate for manual 
transactions by market makers); Cboe Exchange, Inc. (``Cboe'') Fee 
Schedule, available at: https://cdn.cboe.com/resources/membership/Cboe_FeeSchedule.pdf (providing $0.35 per contract rate for manual 
transactions by market makers).
    \6\ See Fee Schedule, Section III.C. (setting forth the Rights 
Fee assessed on each issue in a Specialist's allocation, with rates 
based on the Average National Daily Customer Contracts).
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    The Exchange also proposes to modify Footnote 6 to Section 1.A. of 
the Fee Schedule, which provides that participants in the Prepayment 
Program \7\ will pay reduced rates for Manual transactions. 
Specifically, the Exchange proposes to modify Footnote 6 to clarify 
that Market Makers and Specialists who participate in the Prepayment 
Program will receive a per contract discount on Manual transactions, 
instead of setting forth a specific per contract charge. Currently, 
Footnote 6 provides that Market Makers who participate in the 
Prepayment Program are charged $0.23 per contract for Manual 
transactions (representing a $0.02 discount on the current $0.25 per 
contract rate applicable to Market Makers), and Specialists who 
participate in the Prepayment Program are charged $0.17 per contract 
for Manual transactions (which represents a $0.01 discount on the 
current $0.18 per contract rate applicable to Specialists). The 
Exchange proposes to revise this footnote to specify that Market Makers 
that participate in the Prepayment Program will receive a $0.02 
discount on the per contract rate for Manual transactions, and 
Specialists that participate in the Prepayment Program will receive a 
$0.01 discount on the per contract rate for Manual transactions.\8\ The 
Exchange proposes this modification to the Fee Schedule to clarify the 
nature of the discount available to Market Makers and Specialists who 
participate in the Prepayment Program and to simplify the Fee Schedule 
in the event of any future changes to the rates applicable to Manual 
transactions by Market Makers and/or Specialists.
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    \7\ See Fee Schedule, Section I.D.
    \8\ Based on the proposed $0.35 and $0.30 per contract rates for 
Market Maker and Specialist Manual transactions, respectively, 
Market Makers who participate in the Prepayment Program would, as 
proposed, receive a discounted rate of $0.33 per contract on Manual 
transactions, and Specialists who participate in the Prepayment 
Program would receive a discounted rate of $0.29 per contract on 
Manual transactions.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\10\ 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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposed Rule Change Is Reasonable
    The Exchange operates in a highly competitive market. The 
Commission has repeatedly expressed its preference

[[Page 31352]]

for competition over regulatory intervention in determining prices, 
products, and services in the securities markets. In Regulation NMS, 
the Commission highlighted the importance of market forces in 
determining prices and SRO revenues and, also, recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its broader forms that are most 
important to investors and listed companies.'' \11\
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    \11\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04) (``Reg NMS 
Adopting Release'').
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    There are currently 16 registered options exchanges competing for 
order flow. Based on publicly-available information, and excluding 
index-based options, no single exchange has more than 16% of the market 
share of executed volume of multiply-listed equity and ETF options 
trades.\12\ Therefore, currently no exchange possesses significant 
pricing power in the execution of multiply-listed equity & ETF options 
order flow. More specifically, in March 2021, the Exchange had less 
than 10% market share of executed volume of multiply-listed equity and 
ETF options trades.\13\
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    \12\ The OCC publishes options and futures volume in a variety 
of formats, including daily and monthly volume by exchange, 
available here: https://www.theocc.com/Market-Data/Market-Data-Reports/Volume-and-Open-Interest/Monthly-Weekly-Volume-Statistics.
    \13\ Based on a compilation of OCC data for monthly volume of 
equity-based options and monthly volume of ETF-based options, see 
id., the Exchange's market share in multiply-listed equity and ETF 
options increased slightly from 7.89% for the month of March 2020 to 
8.63% for the month of March 2021.
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow, or discontinue or reduce use of certain categories of 
products, in response to fee changes. Accordingly, competitive forces 
constrain options exchange transaction fees. Stated otherwise, changes 
to exchange transaction fees and rebates can have a direct effect on 
the ability of an exchange to compete for order flow.
    The proposed rule change is designed to bring the Exchange's fees 
for Market Maker Manual transactions into alignment with those charged 
on other markets with Trading Floors. The Exchange believes it is 
reasonable to increase certain fees, similar to fees assessed by 
competing options exchanges for similar transactions, and notes that 
Specialists will continue to be charged lower fees than those assessed 
by competing options exchanges for similar transactions.\14\ The 
Exchange also believes that it is reasonable to continue to offer 
Specialists lower fees than Market Makers for Manual transactions given 
that Specialists are subject to additional monthly Rights Fees.\15\ The 
Exchange believes that the proposed increased charge for Manual 
executions by Market Makers and Specialists but not for other market 
participants is reasonable because the resulting disparity would align 
the Exchange's fees for Manual executions with the fees charged on 
other exchanges.\16\
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    \14\ See supra note 5.
    \15\ See supra note 6.
    \16\ The Exchange does not impose any fee on Manual transactions 
by Customers but does charge $0.25 per contract for Manual 
transactions by Firms, Broker-Dealers and Professional Customers, 
which rates are consistent with fees charged these market 
participants on other exchanges. See, e.g., supra note 5, PHLX 
Pricing Schedule and Cboe Fee Schedule (both exchanges imposing no 
charge for manual transactions by customers and imposing a $0.25 per 
contract rate for manual transactions by firms, broker-dealers and 
professional customers).
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    The Exchange also believes the proposed changes, even though they 
are increased fees, would not discourage Market Makers and Specialists 
from continuing to conduct Manual transactions on the Exchange, 
including because Market Makers and Specialists who participate in the 
Prepayment Program will continue to receive discounted rates on Manual 
transactions and because Specialists will continue to be charged lower 
fees than those assessed by competing options exchanges for similar 
transactions. And, for Market Makers and Specialists that do not 
participate in the Prepayment Program, the Exchange believes that other 
reduced pricing and incentives offer by the Exchange would continue to 
encourage these participants to conduct Manual transactions on the 
Exchange.\17\
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    \17\ See Fee Schedule, Section III.A (regarding ATP fees for 
Floor Market Makers); see also, e.g., Notice of Filing and Immediate 
Effectiveness of Proposed Change to Amend the NYSE American Options 
Fee Schedule, Securities Exchange Act Release No. 90193 (October 15, 
2020), 85 FR 67069 (October 21, 2020) (SR-NYSEAMER-2020-76) 
(reducing the cap on strategy executions from $1,000 to $200 for ATP 
Holders that execute at least 25,000 monthly billable contract sides 
in Strategy Executions) and Fee Schedule, Section I.J (Strategy 
Execution Fee Cap). While the reduction to the cap on Strategy 
Executions is available to all ATP Holders, the Exchange notes that 
Market Makers and Specialists have a time and place advantage by 
virtue of their presence on the Trading Floor to participate in such 
executions and therefore benefit from the reduced cap.
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    The Exchange thus believes that the proposed changes would continue 
to attract volume and liquidity to the Exchange generally and would 
therefore benefit all market participants (including those that do not 
participate in Manual transactions) through increased opportunities to 
trade.
    Finally, to the extent the proposed fees do not discourage Market 
Makers and Specialists from continuing to conduct Manual transactions 
on the Exchange, the Exchange believes the proposed changes would 
continue to improve the Exchange's overall competitiveness and 
strengthen its market quality for all market participants. In the 
backdrop of the competitive environment in which the Exchange operates, 
the proposed rule change is a reasonable attempt by the Exchange to 
maintain its market share relative to its competitors.
The Proposed Rule Change Is an Equitable Allocation of Fees and Rebates
    The Exchange believes the proposed rule change is an equitable 
allocation of its fees and credits. The proposal is based on the type 
of business transacted on the Exchange, and Market Makers and 
Specialists can opt to participate in Manual transactions or not. 
Market Makers and Specialists who participate in the Prepayment Program 
will also continue to receive the same size discount on their 
respective rates for Manual transactions, as modified. The Exchange 
notes that the increased fees for Manual executions by Market Makers 
and Specialists, but not for other market participants, represents an 
equitable allocation of fees given that the proposed fees (and 
resulting disparity) are consistent with fees charged for Manual 
executions by market makers on other exchanges.\18\ The Exchange also 
believes that continuing to offer Specialists lower fees than Market 
Makers is an equitable allocation of fees given that Specialists are 
subject to additional fees set forth in the Exchange's Fee 
Schedule.\19\
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    \18\ See supra notes 5 and 16.
    \19\ See supra note 6.
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    Moreover, even though the proposed changes increase the fees 
applicable to Manual transactions by Market Makers and Specialists, the 
Exchange does not believe they will discourage such transactions on the 
Exchange or the aggregation of such executions at the Exchange as a 
primary execution venue, including because of other reduced fees and 
incentives available to such participants on the Exchange.\20\ To the 
extent that the proposed changes continue to attract Manual 
transactions to the Exchange, this order flow would continue to make 
the Exchange a more competitive venue for, among other things, order 
execution. Thus, the Exchange believes the proposed rule change would 
continue to improve

[[Page 31353]]

market quality for all market participants on the Exchange and, as a 
consequence, continue to attract more order flow to the Exchange, 
thereby improving market-wide quality and price discovery.
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    \20\ See supra note 17.
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The Proposed Rule Change Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory because the proposed modifications would apply to all 
Market Makers and Specialists who execute Manual transactions on the 
Exchange on an equal and non-discriminatory basis. In addition, all 
Market Makers and Specialists who are participants in the Prepayment 
Program will continue to receive a discount on the rates applicable to 
their respective Manual transactions. The proposal is based on the 
amount and type of business transacted on the Exchange, and Market 
Makers and Specialists are not obligated to participate in Manual 
transactions on the Exchange. Rather, the proposal is designed to 
continue to encourage the use of the Exchange as a primary trading 
venue (if they have not done so previously) by maintaining the Trading 
Floor for Manual transactions.
    The Exchange also believes that increasing fees for Manual 
executions by Market Makers, but not other market participants, is not 
unfairly discriminatory given that the proposed rates (and resulting 
disparity) are a competitive response to rates charged on competing 
options exchanges for manual executions by market makers and because 
these participants may available themselves of other reduced fees and 
incentives offered by the Exchange.\21\ The Exchange also believes that 
it is not unfairly discriminatory to continue to offer Specialists 
lower fees than Market Makers given that Specialists are subject to 
additional fees set forth in the Exchange's Fee Schedule.\22\
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    \21\ See supra notes 5, 16 and 17.
    \22\ See supra note 6.
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    To the extent that the proposed change assists the Exchange in 
continuing to attract Manual transactions to the Trading Floor, this 
order flow would continue to make the Exchange a more competitive venue 
for order execution. Thus, the Exchange believes the proposed rule 
change would contribute to market quality for all market participants 
on the Exchange and, as a consequence, attract more order flow to the 
Exchange, thereby improving market-wide quality and price discovery. 
The resulting volume and liquidity would continue to provide more 
trading opportunities and tighter spreads to all market participants 
and thus would promote just and equitable principles of trade, remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, in general, protect investors and the 
public interest.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.

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. Instead, as discussed above, the Exchange believes 
that the proposed changes would be consistent with charges for similar 
business at other markets. As a result, the Exchange believes that the 
proposed changes further the Commission's goal in adopting Regulation 
NMS of fostering integrated competition among orders, which promotes 
``more efficient pricing of individual stocks for all types of orders, 
large and small.'' \23\
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    \23\ See Reg NMS Adopting Release, supra note 11, at 37499.
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    Intramarket Competition. The proposed change is designed to 
continue to promote the use of the Exchange as a primary trading venue 
by maintaining the Trading Floor for Manual transactions, which would 
enhance the quality of quoting and may increase the volumes of 
contracts traded on the Exchange. The Exchange believes that the 
proposed increased fees for Manual executions by Market Makers and 
Specialists but not for other market participants would not impose any 
burden on intermarket competition that is not necessary or appropriate 
because the proposed fees (and resulting disparity) are consistent with 
fees charged for Manual executions by market makers on other exchanges 
and because these participants may available themselves of other 
reduced fees and incentives offered by the Exchange.\24\ The Exchange 
believes that the proposed modifications to the rates applicable to 
Manual transactions by Market Makers and Specialists will not 
discourage those market participants from continuing to conduct Manual 
transactions on the Exchange (including because those Market Makers and 
Specialists who participate in the Prepayment Program will continue to 
receive a discounted rate on Manual transactions and because 
Specialists will continue to receive lower fees than those assessed by 
competing options exchanges for similar transactions). To the extent 
that this purpose is achieved, all of the Exchange's market 
participants should benefit from the continued market liquidity. 
Enhanced market quality and increased transaction volume that results 
from the increase in order flow directed to the Exchange will benefit 
all market participants and improve competition on the Exchange.
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    \24\ See supra notes 5, 16 and 17.
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    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily favor one 
of the 16 competing option exchanges if they deem fee levels at a 
particular venue to be excessive. In such an environment, the Exchange 
must continually adjust its mechanisms and fees to remain competitive 
with other exchanges and to attract order flow to the Exchange. Based 
on publicly-available information, and excluding index-based options, 
no single exchange currently has more than 16% of the market share of 
executed volume of multiply-listed equity and ETF options trades.\25\ 
Therefore, no exchange currently possesses significant pricing power in 
the execution of multiply-listed equity & ETF options order flow. More 
specifically, in March 2021, the Exchange had less than 10% market 
share of executed volume of multiply-listed equity and ETF options 
trades.\26\
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    \25\ See supra note 12.
    \26\ Based on a compilation of OCC data for monthly volume of 
equity-based options and monthly volume of ETF-based options, see 
id., the Exchange's market share in multiply-listed equity and ETF 
options increased slightly from 7.89% for the month of March 2020 to 
8.63% for the month of March 2021.
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    The Exchange believes that the proposed rule change reflects this 
competitive environment because it modifies the Exchange's fees to be 
more closely aligned with fees charged by other markets with Trading 
Floors for similar transactions.\27\ The Exchange also believes that 
the proposed changes would continue to promote competition between the 
Exchange and other execution venues by encouraging orders to be sent to 
the Exchange for execution. To the extent that this purpose is 
achieved, all the Exchange's market participants should benefit from 
the improved market quality and increased opportunities for price 
improvement.
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    \27\ See supra notes 5 and 16.

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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) \28\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \29\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ 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) \30\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \30\ 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-NYSEAMER-2021-30 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-2021-30. 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-2021-30, and should be 
submitted on or before July 2, 2021.
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    \31\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-12249 Filed 6-10-21; 8:45 am]
BILLING CODE 8011-01-P