[Federal Register Volume 89, Number 52 (Friday, March 15, 2024)]
[Notices]
[Pages 18974-18976]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-05486]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99709; File No. SR-NYSEAMER-2024-15]


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

March 11, 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 29, 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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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 Professional Step-Up 
Incentive program. The Exchange proposes to implement the fee changes 
effective March 1, 2024. 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.

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 [sic] to modify the Fee Schedule to 
replace the Professional Step-Up Incentive program with the 
Professional Volume Incentive program.
    Currently, the Exchange offers an incentive program known as the 
Professional Step-Up Incentive (the ``Step-Up Program''), designed to 
encourage ATP Holders to increase their electronic volume in the 
``Professional'' range.\4\ The Step-Up Program offers discounted rates 
on monthly Professional volume and credits on Customer electronic 
volume at the same rate as ATP Holders that qualify for Tier 1 of the 
American Customer Engagement (``ACE'') Program \5\ to ATP Holders that 
increase their Professional volume by specified percentages of TCADV 
over their August 2019 volume, or in the case of new ATP Holders, above 
a base level of 10,000 contracts ADV. Volume from strategy executions, 
CUBE auctions, and QCC transactions are not included in the calculation 
of base volume amounts or volume to qualify for the Step-Up Program, 
nor is interest that takes liquidity from posted Customer interest.
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    \4\ See Fee Schedule, Section I.H. (Professional Step-Up 
Incentive). For purposes of this filing, ``Professional'' electronic 
volume includes Professional Customer, Broker Dealer, Non-NYSE 
American Options Market Maker, and Firm.
    \5\ See Fee Schedule, Section I.E. (American Customer Engagement 
(``ACE'') Program).
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    The Exchange now proposes to rename the Step-Up Program as the 
Professional Volume Incentive program.\6\ Under the Professional Volume 
Incentive program, ATP Holders would qualify for the same discounted 
rates and credits as in the Step-Up Program by achieving qualifying 
volume of specified percentages of TCADV (``Qualifying Volume) rather 
than increased volume over a certain base level. Volume from strategy 
executions, CUBE auctions, and QCC transactions, as well as interest 
that takes liquidity from posted Customer interest, will continue to be 
excluded from an ATP Holder's Qualifying Volume.
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    \6\ Consistent with this change, the Exchange also proposes to 
amend the Fee Schedule's Table of Contents to update the title of 
Section I.H. to ``Professional Volume Incentive.''
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    As proposed, Tier A of the Professional Volume Incentive program 
would have the same Qualifying Volume requirement as the Step-Up 
Program (0.20% of TCADV) and would provide qualifying ATP Holders with 
the same per contract Penny rate of $0.35 and the same per contract 
non-Penny rate of $0.65. The Exchange proposes that the Qualifying 
Volume requirement for Tier B would be 0.30% of TCADV under the 
Professional Volume Incentive program (rather than an increase of 0.25% 
of TCADV under the Step-Up Program), and that the per contract Penny 
and non-Penny rates ($0.20 and $0.55, respectively) would remain the 
same. ATP Holders that qualify for either tier of the proposed 
Professional Volume Incentive program will also continue to receive 
benefits offered in Tier 1 of the ACE program.
    Currently, under the Step-Up Program, ATP Holders would also 
qualify for an additional discount on the Tier B rates by increasing 
their program-qualifying volume and executing a qualifying amount of 
posted Professional volume. The Exchange proposes to eliminate this 
additional discount and instead introduce additional discounts 
available to ATP Holders that achieve higher levels of Qualifying 
Volume. ATP Holders that achieve Qualifying Volume as set forth in the 
table below would earn the corresponding additional discount on the 
Tier B Penny and non-Penny rates (applicable from the first contract) 
as set forth in the table below:

[[Page 18975]]



------------------------------------------------------------------------
                                                            Additional
                                                            discount on
                                                            tier  B per
             Qualifying volume as % of TCADV                 contract
                                                          penny and non-
                                                            penny rate
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0.40%...................................................           $0.01
0.50%...................................................            0.02
0.60%...................................................            0.03
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    The proposed change is intended to continue to encourage ATP 
Holders to increase both Professional and Customer electronic order 
flow to the Exchange by continuing to offer the discounted rates and 
credits that were available in the Step-Up Program through the new 
Professional Volume Incentive program, as well as additional discounts 
for qualifying ATP Holders. The Exchange believes the proposed change 
to the qualifications for the Professional Volume Incentive Program, 
which are based on ATP Holders' Qualifying Volume rather than increased 
volume over a certain base volume, is reasonable and that the volume 
requirements are attainable by ATP Holders.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\8\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed Professional Volume 
Incentive program is reasonable, equitable, and not unfairly 
discriminatory because it is designed to continue to incent ATP Holders 
to increase the amount of Professional and Customer electronic order 
flow directed to the Exchange. The Professional Volume Incentive 
program, as proposed, would continue to offer discounted rates and 
credits as under the Step-Up Program, as well as additional discounts 
for qualifying ATP Holders, based on Qualifying Volume rather than 
increased volume over a certain base volume. As noted above, the 
Exchange believes the proposed volume requirements for the Professional 
Volume Incentive program, including for the additional discounts on 
Tier B rates, are attainable by ATP Holders and are reasonably designed 
to incentivize ATP Holders to achieve increasingly higher levels of 
Qualifying Volume to earn the corresponding higher discounts. In 
addition, with respect to the additional discounts that would be 
available under the Professional Volume Incentive program, the Exchange 
believes that the Qualifying Volume requirements and discount amounts 
are reasonably designed to encourage ATP Holders to direct increased 
Professional and Customer electronic volume to the Exchange, thereby 
providing additional liquidity, attracting additional order flow from 
other market participants, and improving market quality for all market 
participants. To the extent the proposed change achieves its purpose in 
attracting greater volume and liquidity to the Exchange, the Exchange 
believes that all market participants stand to benefit from increased 
electronic transaction volume, whether Professional or Customer, as 
greater volume and liquidity would improve the Exchange's overall 
competitiveness and strengthen its market quality for all market 
participants. The Exchange also believes that the proposed change is 
equitable and not unfairly discriminatory because it would apply to all 
similarly-situated market participants on an equal and non-
discriminatory basis. The qualifications for and benefits offered in 
the Professional Volume Incentive program are based on the amount and 
type of business transacted by ATP Holders, and all ATP Holders are 
eligible to qualify for the Professional Volume Incentive program by 
achieving the same Qualifying Volume as a percentage of TCADV.
    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.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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.'' \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).
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    Intramarket Competition. The proposed change to replace the Step-Up 
Program with the Professional Volume Incentive program is designed to 
continue to attract additional order flow to the Exchange. Greater 
liquidity benefits all market participants on the Exchange and 
increased Professional and Customer electronic volume could increase 
opportunities for execution of other trading interest. Because the 
Professional Volume Incentive program would be available to all 
similarly-situated market participants, the Exchange does not believes 
that the proposed change would impose a disparate burden on competition 
among market participants on the Exchange.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily favor one 
of the 17 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.\10\ Therefore, no 
exchange possesses significant pricing power in the execution of 
multiply-listed equity & ETF options order flow. More specifically, in 
January of 2024, the Exchange had less than 8% market share of executed 
volume of multiply-listed equity & ETF options trades.\11\ 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 encourage ATP Holders to direct trading

[[Page 18976]]

interest to the Exchange, to provide liquidity and to attract order 
flow. To the extent that this purpose is achieved, all the Exchange's 
market participants should benefit from the improved market quality and 
increased trading opportunities. The Exchange believes that the 
proposed change could promote competition between the Exchange and 
other execution venues by encouraging additional orders to be sent to 
the Exchange for execution.
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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 equity-based ETF options, 
see id., the Exchange's market share in equity-based options 
decreased from 7.96% for the month of January 2023 to 7.82% for the 
month of January 2024.
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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) \12\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \13\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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) \14\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \14\ 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-2024-15 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-2024-15. 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-2024-15 and should 
be submitted on or before April 5, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-05486 Filed 3-14-24; 8:45 am]
BILLING CODE 8011-01-P