[Federal Register Volume 89, Number 46 (Thursday, March 7, 2024)]
[Notices]
[Pages 16594-16597]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-04796]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99658; File No. SR-NYSEAMER-2024-13]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the NYSE American Options Fee Schedule
March 1, 2024.
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 22, 2024, 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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[[Page 16595]]
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'') to modify the Premium Product Fees. The
Exchange proposes to implement the fee change effective February 22,
2024.\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\ On January 31, 2024, the Exchange originally filed to amend
the Fee Schedule, effective February 1, 2024 (NYSEARCA-2024-08)
[sic] and withdrew such filing on February 7, 2024 (NYSEARCA-2024-
09) [sic], which latter filing the Exchange withdrew on February 22,
2024.
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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 (i)
update the list of options issues that are subject to the Premium
Product Fee (ii) and [sic] the application of the Premium Product Fee
to apply to all NYSE American Options Market Makers, including Floor
Market Makers. The Exchange proposes to implement the fee change
effective February 22, 2024.
In August 2012, the Exchange introduced Premium Product Fees, which
are monthly fees charged to NYSE American Options Market Makers
transacting in the most active issues trading on the Exchange; provided
that this fee is [sic] not assessed on Floor Market Makers who transact
at least 75% of their volumes in public outcry.\5\ In support of this
fee change, the Exchange noted that it does not limit the number of
participants who may act as Market Makers, either electronically or in
public outcry, and then stated that ``[b]y adopting a Premium Product
Issues List, which is comprised of many of the most active issues on
the Exchange, and a corresponding monthly fee applicable to NYSE Amex
Options Market Makers who transact in any of those names, the Exchange
intends to encourage meaningful market maker participation in these
names.'' \6\ The Exchange updated the initial list in August 2015.\7\
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\5\ See Securities Exchange Act Release No. 67634 (August 9,
2012), 77 FR 49038 (August 15, 2012) (SR-NYSEMKT-2012-33) (``Premium
Product Filing'') (setting forth the original list of Premium
Products, which included SPY, AAPL, IWM, QQQ, BAC, EEM, GLD, JPM,
XLF, and VXX, transactions in which Products carried a monthly fee
of $1,000 per product traded with a monthly cap of $7,000). Per the
Premium Product Filing, the Premium Product Fee applies solely to
NYSE American Options Market Makers ``other than NYSE American
Options Floor Market Makers as described in note 1 to Section
III.A.'' of the Fee Schedule (Monthly ATP Fees) (i.e., Floor Market
Makers who transact at least 75% of their volumes in public outcry).
See id.
\6\ See Premium Product Filing, 77 FR at 49039-40 (including an
example of a ``less meaningful'' quote (i.e., one that has an
extremely low probability of ever being executed against) that the
Exchange nonetheless would be required to process).
\7\ See Securities Exchange Act Release No. 75614 (August 5,
2015), 80 FR 48129 (August 11, 2015) (SR-NYSEMKT-2015-62) (revising
the list of Premium Products to remove GLD, JPM, and XLF and to add
BABA, META, and USO).
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Section III.D. of the Fee Schedule sets forth the (current) list of
10 Premium Products, which are as follows: SPY, AAPL, IWM, QQQ, BABA,
BAC, EEM, META, USO, and VXX. Subject to the exception for qualifying
Floor Market Makers, NYSE American Options Marker Makers that transact
in these issues are subject to a monthly fee of $1,000 per product
traded with a monthly cap of $7,000.\8\
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\8\ See Fee Schedule, Section III.D. (NYSE American Options
Market Maker Monthly Premium Product Fee). The Exchange is not
proposing to alter the amount of the monthly Premium Product Fee or
the associated monthly fee cap.
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The Exchange proposes to amend the list of Premium Products to
reflect the most actively-traded securities on the Exchange today,
which have changed since the fees were last updated.\9\ Specifically,
the Exchange proposes to remove BABA, BAC, EEM, and USO from the list
of Premium Products and to replace them with TSLA, AMZN, NVDA, and
AMD.\10\ The Exchange believes that the proposed change would continue
to encourage meaningful Market Maker participation in the option issues
that are currently the most actively-traded on the Exchange.
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\9\ The Exchange represented in the Premium Product Filing that
``any change to the list of Premium Products would be done through a
fee filing.'' See Premium Product Filing, 77 FR at 49038.
\10\ See proposed Fee Schedule, Section III.D. (NYSE American
Options Market Maker Monthly Premium Product Fee)
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Next, the Exchange proposes to amend the Premium Product Fee to
discontinue the exemption afforded to Floor Market Makers who transact
at least 75% of their volumes in public outcry (the ``FMM carve out'').
In the Premium Products Filing, at the same time the Exchange adopted
the FMM carve out it also introduced discounted ATP Fees for Floor
Market Makers that transacted at least 75% of their monthly volume in
open outcry from the Trading Floor (the ``FMM ATP Fees'').\11\ The
rationale for the FMM ATP Fees was that ``the Exchange believes that
open or public outcry markets serve an important role in the price
discovery process that benefits all participants on the Exchange and in
the marketplace.'' \12\ Consistent with this rationale, the Exchange
stated that the FMM carve out was ``in keeping with the Exchange's
stated goals of continuing to foster price discovery through public
outcry while at the same time reducing the instances of `less
meaningful' electronic quotes in the more liquid names that comprise
the Premium Product Issues List.'' \13\
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\11\ See generally Premium Product Filing.
\12\ See id., 77 FR at 49039.
\13\ See id., 77 FR at 49040.
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The Exchange no longer believes that the FMM carve out is necessary
and therefore proposes to remove it from the Fee Schedule.\14\ The
landscape for options trading generally, and open outcry options
trading specifically, has changed in the last decade since the FMM
carve out was adopted. The volume of options traded on the Exchange
(including in open outcry) has increased significantly. As was the case
in 2012, the Exchange still does not limit the number of participants
who may act as Market Makers, either electronically or in public
outcry. This fact taken together with the increase in options trading
(including in open outcry) renders the favorable treatment afforded by
the FMM carve out no longer necessary to encourage Floor Market Makers
to participate in open outcry trading. The Exchange does not believe
that the discontinuation would function as a disincentive to Floor
Market Makers to transact open outcry.
[[Page 16596]]
Specifically, qualifying Floor Market Makers would still be entitled to
reduced ATP fees which carry the same minimum monthly open outcry
trading requirement. The Exchange believes that the pricing incentive
afforded by the Floor Market Maker ATP Fees is sufficient to
incentivize open outcry trading to foster price discovery. The Exchange
therefore does not believe there is a need to keep both pricing
incentives in place. The Exchange believes that removing the FMM carve
out would further the Exchange's stated goal for adopting the Premium
Products Fee over a decade ago: to encourage meaningful Market Maker
participation in the most actively-traded option issues. With this
change, the Exchange's intention to encourage meaningful participation
would apply to all Market Makers transacting in the most liquid option
issues currently traded on the Exchange, regardless of open outcry
volume.
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\14\ See proposed Fee Schedule, Section III.D. (NYSE American
Options Market Maker Monthly Premium Product Fee) (removing the
proviso that the Premium Product Fee applied to NYSE American
Options Markt Makers ``other than a Market Maker that qualifies as
an NYSE American Options Floor Market Maker as described in note 1
to Section III.A.,'' which Section III.A. sets forth the Monthly ATP
Fees and offers the discounted ATP rates to Floor Market Makers who
transact at least 75% of their volumes in public outcry).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\15\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\16\ 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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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the proposed modification of the list of
Premium Products is reasonable, equitable, and not unfairly
discriminatory for the following reasons. First, this proposal merely
revises and updates the Fee Schedule to apply the Premium Products Fee
to the option issues that are currently the most-actively traded on the
Exchange. The proposed change is reasonably designed to apply the
Premium Product Fee solely to the most liquid issues that provide the
greatest opportunities for options trading on the Exchange. In this
regard, by removing certain option issues from the list (i.e., BABA,
BAC, EEM, and USO), the proposed rule change would ensure the Exchange
continues to assess the Premium Product Fee solely on the most-actively
traded option issues. By updating the list of option issues subject to
the Premium Product Fees, the Exchange intends to continue to encourage
meaningful market maker participation in these names. To the extent
that Market Makers maintain or increase their level of meaningful
quoting activity in these option issues, all market participants stand
to benefit from increased trading opportunities. Further, the Exchange
believes the proposal is an equitable and not unfairly discriminatory
because the updated list, and the associated fees, would apply to all
similarly-situated market participants on equal and non-discriminatory
basis.
The Exchange believes that the proposal to discontinue the FMM
carve out is reasonable, equitable, and not unfairly discriminatory for
the following reasons. First, the Exchange no longer believes that the
FMM carve out is necessary. Over the last decade, since the FMM carve
out was adopted, the landscape for options trading, including open
outcry options trading, has changed. The volume of options traded on
the Exchange (including in open outcry) has increased significantly. As
was the case in 2012, the Exchange does not limit the number of
participants who may act as Market Makers, either electronically or in
public outcry. The Exchange believes that this fact taken together with
the increase in options trading (including in open outcry) renders the
favorable treatment afforded by the FMM carve out no longer necessary.
As such, the Exchange believes the proposal to remove the FMM carve out
is reasonable. The Exchange does not believe that the proposed
discontinuation would act as a disincentive to Floor Market Makers to
transact [sic] open outcry. Specifically, qualifying Floor Market
Makers would still be entitled to reduced ATP fees which carry the same
minimum monthly open outcry trading requirement. The Exchange believes
that the pricing incentive afforded by the Floor Market Maker ATP Fees
is sufficient to incentivize open outcry trading to foster price
discovery. The Exchange therefore does not believe there is a need to
keep both pricing incentives in place. The Exchange believes that
removing the FMM carve out would further the Exchange's stated goal for
adopting the Premium Products Fee over a decade ago: to encourage
meaningful Market Maker participation in the most actively-traded
option issues. With this change, the Exchange's intention to encourage
meaningful participation would apply to all Market Makers transacting
in the most liquid option issues currently traded on the Exchange,
regardless of open outcry volume. As such, this proposal is equitable
and not unfairly discriminatory because it would apply to all
similarly-situated market participants on an equal and non-
discriminatory basis.
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.
Intramarket Competition. The Exchange believes the proposed rule
change does not impose any burden on intramarket competition that is
not necessary or appropriate in furtherance of the purposes of the Act.
The proposal to update the list of option issues subject to the Premium
Product Fee would apply to all similarly-situated market participants
on an equal and non-discriminatory basis. As noted herein, the Exchange
is not proposing to alter the amount of the monthly Premium Product Fee
or the associated monthly fee cap, but instead is updating the Premium
Product list to reflect the most liquid option issues currently trading
on the Exchange.
The Exchange believes that the proposal to discontinue the FMM
carve out does not impose any burden on intramarket competition that is
not necessary or appropriate in furtherance of the purposes of the Act
because it would result in all Market Makers, including Floor Market
Makers who execute at least 75% of monthly volume in open outcry, being
subject to the Premium Product Fees. As a result, the Exchange's goal
of encouraging meaningful participation in the most liquid option
issues currently traded on the Exchange, would apply to all Market
Makers transacting in these issues--regardless of open outcry volume.
The Exchange does not believe this proposal would impose an undue
burden on Floor Market Makers who previously qualified for the FMM
carve out because the Exchange will continue to offer discounted ATP
fees to Floor Market Makers who execute the same minimum monthly volume
(i.e., 75%) in open outcry. Therefore, such participants are still
eligible to receive special pricing that is not available to non-Floor
Market Makers.
Intermarket Competition. The Exchange believes the proposed rule
change does not impose any burden on intermarket competition that is
not necessary or appropriate in furtherance
[[Page 16597]]
of the purposes of the Act. 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.\17\
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\17\ For example, based on a compilation of OCC data for monthly
volume of equity-based options and monthly volume of ETF-based
options, no single exchange has more than 16% of market share and,
the Exchange's market share in equity-based options for the month of
December 2023 was approximately 8%. See https://www.theocc.com/Market-Data/Market-Data-Reports/Volume-and-Open-Interest/Monthly-Weekly-Volume-Statistics (publication by OCC of options and futures
volume in a variety of formats, including daily and monthly volume
by exchange).
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Because competitors are free to modify their own fees, and because
market participants may readily adjust their order routing practices,
the Exchange believes that the degree to which this proposal may impose
any burden on competition is extremely limited. In sum, if the changes
proposed herein are unattractive to market participants, it is likely
that the Exchange will lose market share as a result. Accordingly, the
Exchange does not believe that the proposed changes will impair the
ability of members or competing order execution venues to maintain
their competitive standing in the financial markets.
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) \18\ of the Act and subparagraph (f)(2) of Rule
19b-4 \19\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 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) \20\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\20\ 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-NYSEAMER-2024-13 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-2024-13. 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 (https://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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NYSEAMER-2024-13 and should
be submitted on or before March 29, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-04796 Filed 3-6-24; 8:45 am]
BILLING CODE 8011-01-P