[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