[Federal Register Volume 90, Number 88 (Thursday, May 8, 2025)]
[Notices]
[Pages 19584-19586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-07992]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102985; File No. SR-NYSEAMER-2025-27]
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 To Waive the Combined Cap on
Floor Broker Credits Paid for QCC Trades and Rebates Paid Through the
Manual Billable Rebate Program for the Months of May, June and July
2025
May 2, 2025.
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 April 30, 2025, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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'') to waive the maximum combined Floor Broker
credits paid for QCC trades and rebates paid through the Manual
Billable Rebate Program for the months of May, June, and July 2025. The
Exchange proposes to implement the fee change effective May 1, 2025.
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 is to amend the Fee Schedule to waive
the maximum combined Floor Broker credits paid for QCC trades and
rebates paid through the Manual Billable Rebate Program for the months
of months of May, June, and July 2025.
The Exchange imposes a limit on the maximum combined Floor Broker
credits paid for QCC trades and rebates paid through the Manual
Billable Rebate Program of $3,000,000 per month per Floor Broker firm
(the ``Cap'').\4\ The purpose of this Cap is to encourage Floor Broker
firms to continue to direct open outcry transactions to the Exchange,
despite increasing industry volumes making it less difficult to reach
the Cap.\5\
---------------------------------------------------------------------------
\4\ See Fee Schedule, Sections I.F. and III.E.1 (providing, in
relevant part, that Floor Broker credits paid for QCC trades and
rebates paid through the Manual Billable Rebate Program shall not
combine to exceed $3,000,000 per month per Floor Broker firm).
\5\ The Exchange notes that, in January 2025, it increased the
Cap from $2,700,000 to $3,000,000 in response to higher industry
volumes. See Securities Exchange Act Release No. 102241 (January 17,
2025), 90 FR 8071 (January 23, 2025) (SR-NYSEAMER-2025-04).
---------------------------------------------------------------------------
In mid-April, in response to extreme market volatility and
concomitant surge of open outcry volume that led to Floor Broker firms
earning higher than average monthly credits/rebates, the Exchange
waived the Cap for April 2025.\6\ This waiver was adopted in
anticipation of Floor Broker firms reaching the Cap before the end of
April and potentially re-directing their order flow away from the
Exchange.\7\ The Exchange believes that the April waiver was effective
as it allowed Floor Broker firms to continue to send their credit/
rebate-generating order flow to the Exchange throughout the month
without concern for reaching the Cap.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 102890 (April 18,
2025), 90 FR 17273 (April 24, 2025) (SR-NYSEAMER-2025-26).
\7\ See id.
---------------------------------------------------------------------------
At present, the market remains volatile and open outcry volume on
the Exchange remains elevated. The Exchange therefore proposes to waive
the Cap for the months of May, June and July 2025.\8\ Like the April
waiver, the proposed waiver is being adopted in anticipation of Floor
Broker firms reaching the Cap before months end and potentially
redirecting their order flow away from the Exchange. In the absence of
the proposed waiver, Floor Broker firms may choose to re-direct such
order flow to a competing market.
---------------------------------------------------------------------------
\8\ See proposed Fee Schedule, Sections I.F. and III.E.1.
---------------------------------------------------------------------------
Although the Exchange cannot predict with certainty how many Floor
Broker firms would be impacted by this change, the Exchange believes
that the proposed changes would incent Floor Brokers to continue to
direct their order flow to the Exchange thus increasing liquidity to
the benefit of all market participants.
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.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The proposed changes to the Fee Schedule are reasonable, equitable,
and not unfairly discriminatory. As a threshold matter, the Exchange is
subject to significant competitive forces in the market for options
securities transaction services that constrain its pricing
determinations in that 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
[[Page 19585]]
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\
---------------------------------------------------------------------------
\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'').
---------------------------------------------------------------------------
There are currently 18 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 2025, the Exchange had 6.83%
market share of executed volume of multiply-listed equity & ETF options
trades.\13\ In such a low-concentrated and highly competitive market,
no single options exchange possesses significant pricing power in the
execution of options order flow. Within this environment, market
participants can freely and often do shift their order flow among the
Exchange and competing venues in response to changes in their
respective pricing schedules.
---------------------------------------------------------------------------
\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 equity-based ETF options,
see id., the Exchanges market share in equity-based options
decreased from 8.36% for the month of March 2024 to 6.83% for the
month of March 2025.
---------------------------------------------------------------------------
The proposed waiver of the Cap is reasonable because it is designed
to encourage the role performed by Floor Brokers in facilitating the
execution of orders via open outcry, a function that the Exchange
wishes to support for the benefit of all market participants. Absent
the proposed waiver, the Exchange believes that as soon as Floor
Brokers reach the Cap, they are likely to re-direct order flow away
from the Exchange, which may adversely impact other market participants
trading on the Exchange. To the extent that the proposed waiver
encourages Floor Brokers to facilitate transactions on the Exchange
instead of on a competing market, all market participants participating
on the Exchange would benefit from the increased liquidity. The
Exchange believes the proposed waiver should continue to incent Floor
Brokers to encourage market participants to aggregate their executions
at the Exchange as a primary execution venue. To the extent that the
proposed change achieves its purpose in attracting more volume to the
Exchange, this increased order flow would continue to make the Exchange
a more competitive venue for order execution, thus improving market
quality for all market participants.
The Exchange believes the proposed waiver of the Cap is an
equitable allocation of its fees and credits and is not unfairly
discriminatory because the proposal is based on the amount and type of
business transacted on the Exchange. Floor Brokers are not obligated to
execute manual transactions (and QCCs) to earn rebates and credits
applied toward the Cap. However, the proposed waiver is designed to
continue to encourage the role performed by Floor Brokers in
facilitating the execution of orders via open outcry, a function that
the Exchange wishes to support for the benefit of all market
participants.
To the extent that the proposed waiver of the Cap continues to
attract manual transactions (and QCCs) to the Exchange, this increased
order flow would continue to make the Exchange a more competitive venue
for order execution. Thus, the Exchange believes the proposed waiver
would improve market quality for all market participants on the
Exchange and 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.'' \14\
---------------------------------------------------------------------------
\14\ See Reg NMS Adopting Release, supra note 9, at 37499.
---------------------------------------------------------------------------
Intramarket Competition. The proposed waiver of the Cap apply
equally to all similarly-situated Floor Brokers. To the extent that
there is an additional competitive burden on non-Floor Brokers, the
Exchange believes that any such burden would be appropriate because
Floor Brokers serve an important function in facilitating the execution
of orders in open outcry and price discovery for all market
participants.
Intermarket Competition. The Exchange operates in a highly
competitive market in which market participants can readily favor one
of the other 17 competing options 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.\15\ Therefore,
currently no exchange possesses significant pricing power in the
execution of multiply-listed equity and ETF options order flow. More
specifically, in March 2025, the Exchange had 6.83% market share of
executed volume of multiply-listed equity & ETF options trades.\16\
---------------------------------------------------------------------------
\15\ 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.
\16\ 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 Exchanges market share in equity-based options
decreased from 8.36% for the month of March 2024 to 6.83% for the
month of March 2025.
---------------------------------------------------------------------------
The Exchange believes that the proposed waiver of the Cap reflects
this competitive environment because it is designed to continue to
incent Floor Brokers to direct manual and QCC transactions to the
Exchange, to provide liquidity and to attract order flow. To the extent
that Floor Brokers are encouraged to utilize the Exchange as a primary
trading venue for all
[[Page 19586]]
transactions, all Exchange market participants stand to 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. In such an environment, the Exchange must continually
review, and consider adjusting, its fees and credits to remain
competitive with other exchanges. For the reasons described above, the
Exchange believes that the proposed rule change reflects this
competitive environment.
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) \17\ of the Act and subparagraph (f)(2) of Rule
19b-4 \18\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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) \19\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
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-2025-27 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-2025-27. 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-2025-27 and should
be submitted on or before May 29, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
---------------------------------------------------------------------------
\20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-07992 Filed 5-7-25; 8:45 am]
BILLING CODE 8011-01-P