[Federal Register Volume 90, Number 239 (Tuesday, December 16, 2025)]
[Notices]
[Pages 58361-58364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-22857]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104361; File No. SR-NYSEAMER-2025-70]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Lower
the Options Regulatory Fee (ORF)
December 11, 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 December 1, 2025, NYSE American LLC (``NYSE American'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. 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 amend the NYSE American Options Fee
Schedule (``Fee Schedule'') regarding the Options Regulatory Fee
(``ORF''). The proposed rule change is available on the Exchange's
website at www.nyse.com and at the principal office of the Exchange.
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 Exchange proposes to amend the Fee Schedule to decrease the ORF
from $0.0038 per contract to $0.0026 per contract, effective on January
1, 2026, and to provide for a temporary waiver of the ORF for the month
leading up to such change, from December 1, through December 31, 2025
(the ``Waiver Period'').\4\
---------------------------------------------------------------------------
\4\ See proposed Fee Schedule, Section VII.A., Options
Regulatory Fee (``ORF''). The Exchange proposes to modify the Fee
Schedule to provide for a waiver of ORF from December 1 through
December 31, 2025, and to provide that the ORF rate would be $0.0026
when the Exchange resumes assessing ORF on January 1, 2026.
---------------------------------------------------------------------------
Background
As a general matter, the Exchange may only use regulatory funds
such as the ORF ``to fund the legal, regulatory, and surveillance
operations'' of the Exchange.\5\ More specifically, the ORF is designed
to recover a material portion, but not all, of the Exchange's costs for
the supervision and regulation of ATP Holders, including the Exchange's
regulatory program and legal expenses associated with options
regulation, such as the costs related to in-house staff, third-party
service providers, and technology that facilitate regulatory functions
such as surveillance, investigation, examinations, and enforcement
(collectively, the ``ORF Costs''). ORF funds may also be used for
indirect expenses such as human resources and other administrative
costs. The Exchange monitors the amount of ORF collection to ensure
that this amount, in combination with other regulatory fees and fines,
does not exceed regulatory costs.
---------------------------------------------------------------------------
\5\ The Exchange considers surveillance operations part of
regulatory operations. The limitation on the use of regulatory funds
also provides that they shall not be distributed. See Thirteenth
Amended and Restated Operating Agreement of NYSE American LLC,
Article IV, Section 4.05 and Securities Exchange Act Release No.
87993 (January 16, 2020), 85 FR 4050 (January 23, 2020) (SR-
NYSEAMER-2020-04).
---------------------------------------------------------------------------
The ORF is assessed on ATP Holders for options transactions that
are cleared by the ATP Holder through the OCC in the Customer range
regardless of the exchange on which the transaction occurs and is
collected from ATP Holder clearing firms by the OCC on behalf of NYSE
American.\6\ All options transactions must clear via a clearing firm,
and such clearing firms can then choose to pass through all, a portion,
or none of the cost of the ORF to its Customers, i.e., the entering
firms. The Exchange notes that the costs relating to monitoring ATP
Holders with respect to Customer trading activity are generally higher
than the costs associated with monitoring ATP Holders that do not
engage in Customer trading activity, which tends to be more automated
and less labor-intensive. By contrast, regulating ATP Holders that
engage in Customer trading activity is generally more labor-intensive
and requires a greater expenditure of human and technical resources as
the Exchange needs to review not only the trading activity on behalf of
Customers, but also the ATP Holder's relationship with its Customers
via more labor-intensive exam-based programs.\7\ As a result, the
[[Page 58362]]
costs associated with administering the Customer component of the
Exchange's overall regulatory program are materially higher than the
costs associated with administering the non-Customer component (e.g.,
ATP Holder proprietary transactions) of its regulatory program.
---------------------------------------------------------------------------
\6\ See Fee Schedule, Section VII.A., Options Regulatory Fee
(``ORF''), available at: https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf. The
Exchange uses reports from OCC when assessing and collecting the
ORF. The ORF is not assessed on outbound linkage trades. An ATP
Holder is not assessed the fee until it has satisfied applicable
technological requirements necessary to commence operations on NYSE
American. See id.
\7\ The Exchange notes that many of the Exchange's market
surveillance programs require the Exchange to look at and evaluate
activity across all options markets, such as surveillance for
position limit violations, manipulation, front-running, and contrary
exercise advice violations/expiring exercise declarations. The
Exchange and other options SROs are parties to a 17d-2 agreement
allocating among the SROs regulatory responsibilities relating to
compliance by the common members with rules for expiring exercise
declarations, position limits, OCC trade adjustments, and Large
Option Position Report reviews. See, e.g., Securities Exchange Act
Release No. 85097 (February 11, 2019), 84 FR 4871 (February 19,
2019).
---------------------------------------------------------------------------
Because the ORF is based on options transactions volume, the amount
of ORF collected is variable. For example, if options transactions
reported to OCC in a given month increase, the ORF collected from ATP
Holders will likely increase as well. Similarly, if options
transactions reported to OCC in a given month decrease, the ORF
collected from ATP Holders will likely decrease as well. Accordingly,
the Exchange monitors the amount of ORF collected to ensure that it
does not exceed a material portion of ORF Costs. If the Exchange
determines the amount of ORF collected exceeds or may exceed a material
portion of ORF Costs, the Exchange will, as appropriate, adjust the ORF
by submitting a fee change filing to the Securities and Exchange
Commission (the ``Commission''). Exchange rules establish that market
participants must be notified of any change in the ORF via Trader
Update at least 30 calendar days prior to the effective date of the
change.\8\
---------------------------------------------------------------------------
\8\ See Fee Schedule, note 6, supra.
---------------------------------------------------------------------------
Proposed Rule Change
Earlier this year, the Exchange temporarily reduced the ORF from
$0.0038 per contract to $0.0023 per contract through December 31, 2025,
after which date the ORF would revert to the rate of $0.0038 per
contract.\9\ Based on the Exchange's recent review of regulatory costs,
ORF collections, and options transaction volume, the Exchange proposes
to decrease the ORF from $0.0038 per contract to $0.0026 per contract
effective January 1, 2026 and, in concert with the proposed reduction
of the ORF, to waive the ORF from December 1 through December 31, 2025
in order to help ensure that the amount collected from the ORF, in
combination with other regulatory fees and fines, does not exceed the
Exchange's total regulatory costs. The Exchange notified ATP Holders of
the proposed temporary waiver of the ORF via Trader Update on October
31, 2025 (which was at least 30 calendar days prior to the proposed
operative date of the waiver, December 1, 2025) \10\ and will also
notify ATP Holders of the proposed change to the ORF rate via Trader
Update at least 30 days prior to the proposed operative date of the new
rate, January 1, 2026. The Exchange believes such notices will ensure
that market participants have sufficient opportunity to configure their
systems to account properly for both the ORF waiver and revised ORF.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 103507 (July 21,
2025), 90 FR 34949 (July 24, 2025) (SR-NYSERAMER-2025-42) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to
Temporarily Lower the Options Regulatory Fee (ORF)).
\10\ See https://www.nyse.com/trader-update/history#110000952389.
---------------------------------------------------------------------------
The proposed modification of the ORF and accompanying waiver are
informed by the Exchange's analysis of recent options volumes. Based on
the Exchange's recent review of regulatory costs, ORF collections, and
options transaction volume, the Exchange proposes to waive the ORF for
the period December 1 through December 31, 2025 and, when ORF
collection resumes on January 1, 2026, reduce the ORF to $0.0026 per
contract to help ensure that the amount collected from the ORF, in
combination with other regulatory fees and fines, does not exceed the
Exchange's total regulatory costs. The proposed change to the ORF is
based on the Exchange's analysis of recent options volumes and its
regulatory costs. The Exchange believes that, if the ORF is not
adjusted as proposed, ORF collection year over year could exceed a
material portion of the Exchange's ORF costs. Although the Exchange
earlier this year temporarily reduced the ORF, persisting increased
options volumes have impacted the Exchange's ORF collection. As shown
in the table below, during the second half of 2025, options trading
volumes remained at elevated levels.\11\
---------------------------------------------------------------------------
\11\ 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.
The volume discussed in this filing is based on a compilation of OCC
data for monthly volume of equity-based options and monthly volume
of ETF-based options, in contract sides.
----------------------------------------------------------------------------------------------------------------
June 2025 July 2025 Aug. 2025 Sept. 2025 Oct. 2025
----------------------------------------------------------------------------------------------------------------
Customer ADV.................... 45,453,622 47,242,125 50,273,952 56,005,046 61,209,858
-------------------------------------------------------------------------------
Total ADV................... 50,576,203 51,516,242 54,909,360 61,298,900 67,192,745
----------------------------------------------------------------------------------------------------------------
Because of the sustained impact of trading volumes that have
persisted through 2025, the Exchange proposes to waive the ORF from
December 1 through December 31, 2025 to help ensure that ORF collection
will not exceed ORF Costs for 2025. The Exchange cannot predict whether
options volumes will remain at current levels going forward and
projections for regulatory costs are estimated, preliminary, and may
change. However, the Exchange believes that this proposed change would
allow the Exchange to continue to monitor the amount collected from the
ORF to help ensure that ORF collection, in combination with other
regulatory fees and fines, does not exceed regulatory costs for 2025.
In addition, the Exchange believes that it has sufficient
information based on recent options transaction volume to determine how
to adjust the ORF for 2026. Taking into consideration both the
sustained increase in options transaction volume, which has persisted
through 2025 (and which has translated to increased ORF collection),
the Exchange proposes to decrease the ORF from $0.0038 to $0.0026 per
contract, effective January 1, 2026. The Exchange further proposes to
make this change effective on January 1, 2026 and to not assess any ORF
during the Waiver Period, rather than further adjusting the ORF for the
duration of the Waiver Period, as the Exchange believes this proposal
would most efficiently accomplish the goals of ensuring that ORF
collection does not exceed ORF Costs for 2025 and modifying the ORF
rate so that the Exchange may assess an ORF that is designed to recover
a material portion, but not all, of the Exchange's projected ORF Costs
when the Exchange resumes assessing ORF on January 1, 2026.
[[Page 58363]]
The proposed decrease in ORF is based on the Exchange's estimated
projections for its regulatory costs, balanced with the observed
increase in options volumes. The Exchange cannot predict whether
options volume will remain at the current level going forward and
projections for future regulatory costs are estimated, preliminary, and
may change. However, the Exchange believes that amounts collected from
assessment of the ORF (as modified) will continue to cover a material
portion, but not all, of the Exchange's ORF Costs. In addition, because
of the sustained impact of the elevated trading volumes that have
persisted into 2025, along with the difficulty of predicting when
volumes may return to more normal levels, the Exchange believes that
waiving ORF from December 1 to December 31, 2025 and implementing the
reduced ORF rate of $0.0026 on January 1, 2026 would lessen the
potential for generating excess funds and help ensure that the ORF is
designed to recover a material portion, but not all, of the Exchange's
projected ORF Costs. The Exchange will continue monitoring ORF Costs in
advance of the resumption of the ORF and when it resumes assessing ORF
on January 1, 2026, and, if the Exchange determines that, in light of
projected volumes and ORF Costs, the ORF rate should be further
modified to help ensure that ORF collections would not exceed a
material portion of ORF Costs, adjust the ORF by submitting a proposed
rule change and notifying ATP Holders of such change by Trader Update.
Potential ORF Reform
As it has previously noted,\12\ the Exchange appreciates the
evolving changes in the markets and regulatory environment and, in
connection with industry and other feedback, is continuing to evaluate
the current methodologies and practices for the assessment and
collection of ORF. The Exchange continues to believe ORF reform is
appropriate, including moving to a model in which ORF would be assessed
only to transactions occurring on the Exchange, which would allow for
consistent industry billing. The Exchange intends to file a proposed
rule change by the first quarter of 2026 to transition to a new,
modified model, provided that a consistent framework has been
established with the SEC and necessary regulatory filings submitted.
Until that time, the Exchange believes it is fair and reasonable to
waive the ORF during the Waiver Period and to decrease the current ORF
under the existing model, effective January 1, 2026, while the Exchange
continues to discuss its anticipated, or potential alternative, ORF
methodology with relevant stakeholders.
---------------------------------------------------------------------------
\12\ See note 9, supra.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) \13\ of the Act, in general, and
Section 6(b)(4) and (5) \14\ of the Act, in particular, in that it is
designed to provide for the equitable allocation of reasonable dues,
fees, and other charges among its members and other persons using its
facilities and does not unfairly discriminate between customers,
issuers, brokers, or dealers.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange believes the proposed reduction of the ORF to $0.0026
per contract, effective January 1, 2026, and accompanying temporary
waiver of the ORF is reasonable, equitable, and not unfairly
discriminatory. As noted above, the ORF is designed to recover a
material portion, but not all, of the Exchange's ORF Costs. Although
there can be no assurance that the Exchange's final costs for 2025 will
not differ materially from its expectations and prior practice, nor can
the Exchange predict with certainty whether options volume will remain
at current or similar levels going forward, the Exchange believes that
the amount collected based on the current ORF rate, when combined with
regulatory fees and fines, may result in collections in excess of the
estimated ORF Costs for the year and going forward. Particularly, as
noted above, the options market has continued to experience elevated
volumes in 2025, thereby resulting in higher ORF collections than
projected, even at the current, temporarily decreased ORF rate. The
Exchange therefore proposes to decrease the ORF from $0.0038 per
contract to $0.0026 per contract effective January 1, 2026, and, in
connection with that change, to waive ORF from December 1 through
December 31, 2025 to help ensure that ORF collection does not exceed a
material portion of the ORF Costs for 2025 and facilitate the efficient
implementation of a revised ORF rate designed to recover a material
portion, but not all, of the Exchange's projected ORF Costs.
The Exchange proposes to make the new ORF rate effective on January
1, 2026 and to not assess any ORF during the Waiver Period, rather than
further adjusting the ORF for the duration of the Waiver Period, as the
Exchange believes this proposal would most efficiently accomplish these
objectives. The Exchange believes that not assessing ORF during the
Waiver Period and taking into account all of the Exchange's other
regulatory fees and fines would allow the Exchange to continue covering
a material portion of ORF Costs, while lessening the potential for
generating excess funds that may otherwise occur using the current
rate. The proposed new ORF rate of $0.0026 per contract is based on the
Exchange's estimated projections for its regulatory costs, balanced
with the increase in options volumes that has persisted into 2025 and
that is likely to continue into 2026; the Exchange thus believes that
resumption of the ORF at this rate on January 1, 2026 would permit the
Exchange to resume assessing an ORF that is designed to recover a
material portion, but not all, of the Exchange's projected ORF Costs.
The Exchange would continue monitoring ORF Costs in advance of the
resumption of the ORF and when it resumes assessing ORF on January 1,
2026 and, if the Exchange determines that, in light of projected
volumes and ORF Costs, the ORF rate should be further modified to help
ensure that ORF collections would not exceed a material portion of ORF
Costs, further adjust the ORF by submitting a proposed rule change and
notifying ATP Holders of such change by Trader Update.
The Exchange believes its proposal is an equitable allocation of
fees among its market participants and is not unfairly discriminatory.
The Exchange believes that the proposed rule change would not place
certain market participants at an unfair disadvantage because it would
apply equally to all ATP Holders subject to the ORF on all their
transactions that clear in the Customer range at the OCC and would
allow the Exchange to continue to monitor the amount collected from the
ORF to help ensure that ORF collection, in combination with other
regulatory fees and fines, does not exceed regulatory costs. The
proposed change would permit the Exchange to efficiently adjust the
ORF, which is applicable to all ATP Holders' transactions that clear in
the Customer range at the OCC, to an amount designed to recover a
material portion, but not all, of the Exchange's projected ORF Costs.
The Exchange also believes that recommencing the ORF at the decreased
rate of $0.0026 per contract effective January 1, 2026, unless the
Exchange determines it necessary to further adjust the ORF to help
ensure that ORF collections do not exceed a material portion of ORF
Costs, is
[[Page 58364]]
equitable and not unfairly discriminatory because the ORF would resume
applying equally to all ATP Holders on options transactions in the
Customer range, at a rate designed to recover a material portion, but
not all, of the Exchange's projected ORF Costs. The Exchange also will
provide all ATP Holders with 30 days' advance notice of the planned
change to the ORF.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
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 change
would not impose an undue burden on intramarket competition because the
ORF is charged to all ATP Holders on all their transactions that clear
in the Customer range at the OCC; thus, the amount of ORF imposed is
based on the amount of Customer volume transacted. The Exchange
believes that the proposed reduction of the ORF rate and temporary
waiver of the ORF would not place certain market participants at an
unfair disadvantage because all options transactions must clear via a
clearing firm. Such clearing firms can then choose to pass through all,
a portion, or none of the cost of the ORF to its customers, i.e., the
entering firms. The ORF is collected from ATP Holder clearing firms by
the OCC on behalf of NYSE American and is assessed on all options
transactions cleared at the OCC in the Customer range. The Exchange
also believes recommencing the ORF on January 1, 2026 at $0.0026 per
contract (unless the Exchange determines it necessary at that time to
adjust the ORF to help ensure that ORF collections do not exceed a
material portion of ORF Costs) would not impose an undue burden on
competition because the proposed decreased rate would apply equally to
all ATP Holders subject to ORF and would permit the Exchange to resume
assessing an ORF that is designed to recover a material portion, but
not all, of the Exchange's projected ORF Costs and the ORF would, as
currently, apply to all ATP Holders on their options transactions that
clear in the Customer range at the OCC. The Exchange will continue to
provide advance notice of changes to the ORF to all ATP Holders via
Trader Update to provide ATP Holders with sufficient opportunity to
configure their systems to account properly for both the Waiver Period
and resumption of ORF at a new, lower rate on January 1, 2026.
Intermarket Competition. The proposed fee change is not designed to
address any competitive issues. Rather, the proposed change is designed
to help the Exchange adequately fund its regulatory activities while
seeking to ensure that total collections from regulatory fees do not
exceed total regulatory costs.
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 has become effective pursuant to Section
19(b)(3)(A) of the Act \15\ and paragraph (f) of Rule 19b-4 \16\
thereunder. At any time within 60 days of the filing of the 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 will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------
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-2025-70 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-2025-70. 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 filing 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-2025-70 and should be submitted
on or before January 6, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------
\17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-22857 Filed 12-15-25; 8:45 am]
BILLING CODE 8011-01-P