[Federal Register Volume 88, Number 32 (Thursday, February 16, 2023)]
[Notices]
[Pages 10153-10156]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-03250]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96879; File No. SR-NYSEAMER-2023-13]


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

February 10, 2023.
    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 February 9, 2023, 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 and II 
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 Firm Monthly Fee Cap. The 
Exchange proposes to implement the fee change effective February 9, 
2023.\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 previously filed to amend the Fee Schedule on 
January 31, 2023 (SR-NYSEAMER-2023-10) and withdrew such filing on 
February 9, 2023.
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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 amend the Fee Schedule to modify 
the Firm Monthly Fee Cap. The Exchange proposes to implement the rule 
change on February 9, 2023.
    The Firm Monthly Fee Cap is set forth in Section I.I. of the Fee 
Schedule.\5\ Currently, a Firm's fees associated with Manual 
transactions are capped at $150,000 per month per Firm.
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    \5\ See Fee Schedule, Section I.I., Firm Monthly Fee Cap, 
available at: https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf.
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    The Exchange proposes to raise the Firm Monthly Fee Cap to $200,000 
per month per Firm. To effect this change, the Exchange proposes to 
modify Section I.I. to replace references to a $150,000 cap with 
references to a $200,000 cap.\6\ The Exchange also proposes to increase 
the incremental service fee--which is charged for Manual transactions 
once the Firm Monthly Fee Cap has been reached--from $0.01 to $0.02 and 
to extend the proposed incremental service fee of $0.02 per contract to 
also apply to QCC transactions entered by Floor Brokers from the 
Trading Floor (i.e., manual QCC transactions). Royalty Fees and fees or 
volumes associated with Strategy Executions will continue to be 
excluded from the calculation of fees towards the Firm Monthly Fee Cap. 
Firm Facilitation Manual trades will also continue to be executed at 
the rate of $0.00 per contract regardless of whether a Firm has reached 
the Firm Monthly Fee Cap.
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    \6\ The Exchange also proposes a conforming change to footnote 4 
in Section I.A. (Rates for Options transactions) of the Fee 
Schedule, which cross-references the Firm Monthly Fee Cap as set 
forth in Section I.I. The Exchange likewise proposes to modify 
footnote 4 to replace the reference to a $150,000 cap with a 
reference to a $200,000 cap.
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    The Exchange believes that the proposed change, despite increasing 
the amount of the Firm Monthly Fee Cap and the incremental service fee 
for Manual transactions and QCC transactions, would continue to 
incentivize Firms to direct order flow to the Exchange to receive the 
benefits of a cap on their Manual transaction fees.
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

[[Page 10154]]

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 Proposed Rule Change Is Reasonable
    The Exchange operates in a highly competitive market. The 
Commission has repeatedly expressed its preference 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.'' \9\
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    \9\ 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.\10\ Therefore, no exchange possesses significant pricing power 
in the execution of multiply-listed equity and ETF options order flow. 
More specifically, in December 2022, the Exchange had less than 8% 
market share of executed volume of multiply-listed equity and ETF 
options trades.\11\
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    \10\ 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.
    \11\ 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 equity-based options was 6.77% 
for the month of December 2021 and 7.11% for the month of December 
2022.
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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 can have a direct effect on the ability of 
an exchange to compete for order flow.
    The proposed change to the Firm Monthly Fee Cap is reasonable 
because the Exchange believes the fee cap would continue to incentivize 
Firms to direct order flow to the Exchange to receive the benefits of 
capped fees for their Manual transactions (including manual QCC 
transactions), even though the proposed change would increase the 
amount of the fee cap and the incremental service charge applicable to 
Manual transactions (including manual QCC transactions) after a Firm 
has reached the fee cap. The Exchange also believes the proposed change 
is reasonable because the proposed fee cap amount would be applicable 
to all Firms and the proposed incremental service charge would be 
applicable to all Manual transactions (including manual QCC 
transactions) executed by a Firm once it reaches the fee cap. In 
addition, although the proposed change would establish a higher fee cap 
amount, it would continue to offer Firms the ability to qualify for 
capped fees on Manual transactions (including manual QCC transactions), 
which the Exchange believes provides Firms with a benefit not offered 
by at least one other options exchange.\12\
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    \12\ See, e.g., BOX Options Fee Schedule, available at: https://boxoptions.com/fee-schedule/ (no cap on Firm manual transaction 
fees).
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    To the extent that the proposed change continues to attract volume 
to the Exchange, this order flow would continue to make the Exchange a 
more competitive venue for order execution, which, in turn, promotes 
just and equitable principles of trade and removes impediments to and 
perfects the mechanism of a free and open market and a national market 
system. The Exchange notes that all market participants stand to 
benefit from any increase in volume, which could promote market depth, 
facilitate tighter spreads and enhance price discovery, particularly to 
the extent the proposed change encourages market participants to 
utilize the Exchange as a primary trading venue, and may lead to a 
corresponding increase in order flow from other market participants.
    Finally, to the extent the proposed change continues to attract 
greater volume and liquidity, the Exchange believes the proposed change 
would 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 increase the 
depth of its market and improve its market share relative to its 
competitors. The Exchange's fees are constrained by intermarket 
competition, as market participants can choose to direct their order 
flow to any of the 16 options exchanges The Exchange believes that 
proposed rule change is designed to continue to incent market 
participants to direct liquidity to the Exchange, and, to the extent 
they continue to be incentivized to aggregate their trading activity at 
the Exchange, that increased liquidity could promote market depth, 
price discovery and improvement, and enhanced order execution 
opportunities for all market participants.
The Proposed Rule Change Is an Equitable Allocation of Credits and Fees
    The Exchange believes the proposed rule change is an equitable 
allocation of its fees and credits. The proposed change is equitable 
because the increased Firm Monthly Fee Cap would be available to all 
Firms equally. The proposed change is also equitable because the 
increased incremental service charge would apply equally to all Firms 
that achieve the fee cap and would now also apply to manual QCC 
transactions executed by Firms once they have reached the fee cap. The 
Exchange also believes that the proposed rule change is equitable with 
respect to non-Firm market participants because the Firm Monthly Fee 
Cap would not be as meaningful for Customers or Professional Customers 
and because Market Makers are offered other incentives to reduce 
transaction fees.\13\ The Exchange believes that the proposed changes, 
although they increase the fee cap and incremental service charge 
amounts, would not discourage Firms from directing order flow to the 
Exchange. To the extent that the proposed change achieves its purpose 
in continuing to incent Firms to aggregate their executions at the 
Exchange as a primary execution venue and attracting more volume to the 
Exchange, this increased 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 improve 
market quality for all market participants on the Exchange and, as a 
consequence, attract more order flow to the Exchange,

[[Page 10155]]

thereby improving market-wide quality and price discovery.
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    \13\ Customers are not subject to a fee for Manual transactions, 
and neither Customers nor Professional Customers pay transaction 
fees for QCC transactions. See Fee Schedule at Sections I.A. and 
I.F. The Exchange offers various incentives to Market Makers, 
including the Market Maker Sliding Scale and Prepayment Program. See 
id. at Sections I.C. and I.D.
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The Proposed Rule Change Is Not Unfairly Discriminatory
    The Exchange believes that the modification of the Firm Monthly Fee 
Cap is not unfairly discriminatory because the fee cap and incremental 
service charge amounts, as proposed, would continue to be applicable to 
all similarly situated Firms, any of which could continue to be 
incentivized to direct order flow to the Exchange to qualify for the 
fee cap. The Exchange notes that offering the Firm Monthly Fee Cap, as 
proposed, to Firms but not to other market participants is not unfairly 
discriminatory because the Firm Monthly Fee Cap would not be as 
meaningful for Customers or Professional Customers and because Market 
Makers are offered other incentives to reduce transaction fees.\14\
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    \14\ See note 13, supra.
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    Thus, to the extent the proposed change continues to attract Manual 
transactions (including manual QCC transactions) to the Exchange, the 
Exchange believes the proposed rule change would improve 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 increased volume and 
liquidity would 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 encourage the submission of additional 
liquidity to a public exchange, thereby promoting market depth, price 
discovery and transparency and enhancing order execution opportunities 
for all market participants. As a result, the Exchange believes that 
the proposed change furthers 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.'' \15\
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    \15\ See Reg NMS Adopting Release, supra note 9, at 37499.
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    Intramarket Competition. The proposed change is designed to 
continue to attract order flow to the Exchange, which could increase 
the volumes of contracts traded on the Exchange. Greater liquidity 
benefits all market participants on the Exchange, and the Exchange 
believes that the proposed modification of the Firm Monthly Fee Cap 
(even though it would raise the amount of the fee cap and incremental 
service charge) would not impose any burden on competition that is not 
necessary or appropriate because it is intended to continue to 
incentivize Firms to direct order flow to the Exchange to be eligible 
for the benefits of capped fees on Manual transactions, thereby 
promoting liquidity on the Exchange to the benefit of all market 
participants.
    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 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 has more than 16% of the market share of executed volume of 
multiply-listed equity and ETF options trades.\16\ Therefore, no 
exchange possesses significant pricing power in the execution of 
multiply-listed equity and ETF options order flow. More specifically, 
in December 2022, the Exchange had less than 8% market share of 
executed volume of multiply-listed equity and ETF options trades.\17\
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    \16\ See note 10, supra.
    \17\ See note 11, supra.
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    The Exchange believes that the proposed rule change reflects this 
competitive environment because it modifies the Exchange's fees in a 
manner designed to continue to incent market participants to direct 
trading interest to the Exchange, to provide liquidity and to attract 
order flow. To the extent that Firms are incentivized to utilize the 
Exchange as a primary trading venue for all transactions, all of the 
Exchange's market participants should benefit from the improved market 
quality and increased opportunities for price improvement. The Exchange 
notes that it operates in a highly competitive market in which market 
participants can readily favor competing venues, including those that 
do not offer a cap on Firm fees.\18\ In such an environment, the 
Exchange must continually review, and consider adjusting, its fees and 
credits to remain competitive with other exchanges.
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    \18\ See note 12, supra.
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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) \19\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \20\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 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) \21\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \21\ 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-2023-13 on the subject line.

[[Page 10156]]

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-2023-13. 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-2023-13, and should be 
submitted on or before March 9, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-03250 Filed 2-15-23; 8:45 am]
BILLING CODE 8011-01-P