Federal Register / Vol. 86, No. 15 / Tuesday, January 26, 2021 / Notices 7149 

3See Securities Exchange Act Release No. 90571 

(December 4, 2020), 85 FR 79556. Comments 

received on the proposed rule change are available 

on the Commission’s website at: https://

www.sec.gov/comments/sr-nasdaq-2020-082/ 

srnasdaq2020082.htm. 

4 15 U.S.C. 78s(b)(2). 

5Additionally, the Exchange consented to 

extending to March 10, 2021 the date by which the 

Commission must either approve, disapprove, or 

institute proceedings to determine whether to 

disapprove, the proposed rule change. See letter 

from Jeffrey S. Davis, Senior Vice President and 

Senior Deputy General Counsel, Exchange, to 

Vanessa A. Countryman, Secretary, Commission, 

dated January 8, 2021. 

6 15 U.S.C. 78s(b)(2). 

7 17 CFR 200.30–3(a)(31). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Pursuant to Equity 7, Section 118(a), the term 

‘‘Consolidated Volume’’ means the total 

consolidated volume reported to all consolidated 

transaction reporting plans by all exchanges and 

trade reporting facilities during a month in equity 

securities, excluding executed orders with a size of 

less than one round lot. For purposes of calculating 

Consolidated Volume and the extent of a member’s 

trading activity the date of the annual reconstitution 

of the Russell Investments Indexes is excluded from 

both total Consolidated Volume and the member’s 

trading activity. 

access to a complimentary board 

recruiting solution to help advance 

diversity on company boards. The 

proposed rule change was published for 

comment in the Federal Register on 

December 10, 2020.3

Section 19(b)(2) of the Act 4 provides 

that within 45 days of the publication of 

notice of the filing of a proposed rule 

change, or within such longer period up 

to 90 days as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding, or as to which the 

self-regulatory organization consents, 

the Commission shall either approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether the 

proposed rule change should be 

disapproved. The 45th day after 

publication of the notice for this 

proposed rule change is January 24, 

2021. 

The Commission is extending the 45- 

day time period for Commission action 

on the proposed rule change. The 

Commission finds it appropriate to 

designate a longer period within which 

to take action on the proposed rule 

change so that it has sufficient time to 

consider the proposed rule change and 

the comment letters.5

Accordingly, pursuant to Section 

19(b)(2) of the Act,6 the Commission 

designates March 10, 2021 as the date 

by which the Commission shall either 

approve or disapprove, or institute 

proceedings to determine whether to 

disapprove, the proposed rule change 

(File No. SR–NASDAQ–2020–082). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–01590 Filed 1–25–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90954; File No. SR– 

NASDAQ–2021–003] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Exchange’s Transaction Credits at 

Equity 7, Section 118 

January 19, 2021. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on January 

12, 2021, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I, II, 

and III, 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Exchange’s transaction credits at Equity 

7, Section 118, as described further 

below. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules, 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 

Exchange 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 these 

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 aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

schedule of credits at Equity 7, Section 

118, to add a new credit for executing 

orders in securities in all three Tapes. 

Presently, the Exchange offers a 

member a credit of $0.0030 per share of 

displayed orders/quotes (other than 

Supplemental Orders or Designated 

Retail Orders) to the extent such 

member has shares of liquidity provided 

in all securities through one or more of 

its Nasdaq Market Center MPIDs that 

represent 1.30% or more of 

Consolidated Volume 3 during the 

month, which includes shares of 

liquidity provided with respect to 

securities that are listed on exchanges 

other than Nasdaq or NYSE that 

represent 0.40% or more of 

Consolidated Volume. The purpose of 

this credit is to incentivize members to 

add substantial liquidity to the 

Exchange, and to do so to a significant 

extent by adding liquidity in securities 

listed on exchanges other than Nasdaq 

or NYSE. 

The Exchange now proposes to add a 

new, lower credit for members that meet 

similar criteria, albeit with less stringent 

volume requirements. Specifically, the 

Exchange proposes to provide a new 

credit of $0.00295 per share of 

displayed orders/quotes (other than 

Supplemental Orders or Designated 

Retail Orders) that provide liquidity for 

a member with shares of liquidity 

provided in all securities through one or 

more of its Nasdaq Market Center MPIDs 

that represent 0.90% or more of 

Consolidated Volume during the month, 

which includes shares of liquidity 

provided with respect to securities that 

are listed on exchanges other than 

Nasdaq or NYSE that represent 0.25% or 

more of Consolidated Volume. 

By proposing to add this new tier, the 

Exchange will provide a new means for 

its members to qualify for a credit for 

adding significant liquidity to the 

Exchange in securities listed on 

exchanges other than Nasdaq and NYSE. 

This new credit will be lower than the 

existing credit for such activity, but 

members will also qualify for it by 

satisfying less stringent criteria. By 

providing an additional incentive for 

members to add liquidity to the 

Exchange in securities listed on 

exchanges other than Nasdaq and NYSE, 

the Exchange intends to improve the 

7150 Federal Register / Vol. 86, No. 15 / Tuesday, January 26, 2021 / Notices 

4 15 U.S.C. 78f(b). 

5 15 U.S.C. 78f(b)(4) and (5). 

6NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 

2010) (quoting Securities Exchange Act Release No. 

59039 (December 2, 2008), 73 FR 74770, 74782–83 

(December 9, 2008) (SR–NYSEArca–2006–21)). 

7Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) 

(‘‘Regulation NMS Adopting Release’’). 

overall quality and attractiveness of the 

market. 

Impact of the Changes 

Those participants that act as 

significant providers of liquidity to the 

Exchange, and who provide significant 

volumes of liquidity in securities listed 

on exchanges other than Nasdaq and 

NYSE, will benefit directly from the 

proposed addition of the new credit. 

Other participants will also benefit from 

the new credit insofar as any increase in 

liquidity adding activity on the 

Exchange will improve the overall 

quality of the market, to the benefit of 

all members. 

The Exchange notes that its proposals 

are not otherwise targeted at or expected 

to be limited in their applicability to a 

specific segment of market participants 

nor will they apply differently to 

different types of market participants. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,4 in general, and further the 

objectives of Sections 6(b)(4) and 6(b)(5) 

of the Act,5 in particular, in that it 

provides for the equitable allocation of 

reasonable dues, fees and other charges 

among members and issuers and other 

persons using any facility, and is not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. The 

proposal is also consistent with Section 

11A of the Act relating to the 

establishment of the national market 

system for securities. 

The Proposal Is Reasonable 

The Exchange’s proposed change to 

its schedule of credits is reasonable in 

several respects. As a threshold matter, 

the Exchange is subject to significant 

competitive forces in the market for 

equity securities transaction services 

that constrain its pricing determinations 

in that market. The fact that this market 

is competitive has long been recognized 

by the courts. In NetCoalition v. 

Securities and Exchange Commission, 

the D.C. Circuit stated as follows: ‘‘[n]o 

one disputes that competition for order 

flow is ‘fierce.’ . . . As the SEC 

explained, ‘[i]n the U.S. national market 

system, buyers and sellers of securities, 

and the broker-dealers that act as their 

order-routing agents, have a wide range 

of choices of where to route orders for 

execution’; [and] ‘no exchange can 

afford to take its market share 

percentages for granted’ because ‘no 

exchange possesses a monopoly, 

regulatory or otherwise, in the execution 

of order flow from broker 

dealers’. . . .’’ 6

The Commission and the courts have 

repeatedly expressed their preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. In Regulation NMS, while 

adopting a series of steps to improve the 

current market model, the Commission 

highlighted the importance of market 

forces in determining prices and SRO 

revenues and, also, recognized that 

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.’’ 7

Numerous indicia demonstrate the 

competitive nature of this market. For 

example, clear substitutes to the 

Exchange exist in the market for equity 

security transaction services. The 

Exchange is only one of several equity 

venues to which market participants 

may direct their order flow. Competing 

equity exchanges offer similar tiered 

pricing structures to that of the 

Exchange, including schedules of 

rebates and fees that apply based upon 

members achieving certain volume 

thresholds. 

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. Within the foregoing context, 

the proposal represents a reasonable 

attempt by the Exchange to increase its 

liquidity and market share relative to its 

competitors. 

The Exchange has designed its 

proposed new credit to provide an 

additional incentive to members to 

increase their liquidity adding activity 

on the Exchange, and in particular, their 

liquidity adding activity in securities 

listed on exchanges other than Nasdaq 

and NYSE. An increase in liquidity 

adding activity on the Exchange will, in 

turn, improve the quality of the Nasdaq 

market and increase its attractiveness to 

existing and prospective participants. 

The Exchange notes that those market 

participants that are dissatisfied with 

the new credit are free to shift their 

order flow to competing venues that 

offer them lower charges or higher 

credits. 

The Proposal Is an Equitable Allocation 

of Credits 

The Exchange believes its proposal 

will allocate its credits fairly among its 

market participants. It is equitable for 

the Exchange to establish the proposed 

new credit as a means of incentivizing 

members to provide meaningful 

amounts of liquidity to the Exchange, 

including in securities listed on 

exchanges other than Nasdaq and NYSE. 

To the extent that the Exchange 

succeeds in increasing liquidity on the 

Exchange, including liquidity adding 

activity in securities listed on exchanges 

other than Nasdaq and NYSE, then the 

Exchange would experience 

improvements in its market quality, 

which would benefit all market 

participants. 

Any participant that is dissatisfied 

with the proposed new credit is free to 

shift their order flow to competing 

venues that provide more generous 

pricing or less stringent qualifying 

criteria. 

The Proposed Credit Is Not Unfairly 

Discriminatory 

The Exchange believes that the 

proposal is not unfairly discriminatory. 

As an initial matter, the Exchange 

believes that nothing about its volumebased tiered pricing model is inherently 

unfair; instead, it is a rational pricing 

model that is well-established and 

ubiquitous in today’s economy among 

firms in various industries—from cobranded credit cards to grocery stores to 

cellular telephone data plans—that use 

it to reward the loyalty of their best 

customers that provide high levels of 

business activity and incent other 

customers to increase the extent of their 

business activity. It is also a pricing 

model that the Exchange and its 

competitors have long employed with 

the assent of the Commission. It is fair 

because it incentivizes customer activity 

that increases liquidity, enhances price 

discovery, and improves the overall 

quality of the equity markets. 

Moreover, the Exchange believes that 

its new proposed credit is not unfairly 

discriminatory because it stands to 

improve the overall market quality of 

the Exchange, to the benefit of all 

market participants, by incentivizing 

members to provide meaningful 

amounts of liquidity, including in 

securities listed on exchanges other than 

Nasdaq and NYSE. 

Finally, any participant that is 

dissatisfied with the proposed new 

credit is free to shift their order flow to 

competing venues that provide more 

generous pricing or less stringent 

qualifying criteria. 

Federal Register / Vol. 86, No. 15 / Tuesday, January 26, 2021 / Notices 7151 

8 15 U.S.C. 78s(b)(3)(A)(ii). 9 17 CFR 200.30–3(a)(12). 

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 not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Intramarket Competition 

The Exchange does not believe that its 

proposal will place any category of 

Exchange participant at a competitive 

disadvantage. To the contrary, the 

proposed change will provide an 

opportunity for members that do not 

qualify for the $0.0030 per share 

executed credit to receive a lower credit 

based upon achieving similar, albeit 

lower thresholds of liquidity adding 

activity. Any member may elect to 

provide the levels of market activity 

required in order to receive the new 

credit. Furthermore, all members of the 

Exchange will benefit from any increase 

in market activity that the proposal 

effectuates. 

Moreover, members are free to trade 

on other venues to the extent they 

believe that the proposed credit is too 

low or the qualification criteria are not 

attractive. As one can observe by 

looking at any market share chart, price 

competition between exchanges is 

fierce, with liquidity and market share 

moving freely between exchanges in 

reaction to fee and credit changes. The 

Exchange notes that the tier structure is 

consistent with broker-dealer fee 

practices as well as the other industries, 

as described above. 

Intermarket Competition 

The Exchange believes that its 

proposal will not burden competition 

because the Exchange’s execution 

services are completely voluntary and 

subject to extensive competition both 

from the multitude of other live 

exchanges and from off-exchange 

venues. The Exchange notes that it 

operates in a highly competitive market 

in which market participants can 

readily favor competing venues if they 

deem fee levels at a particular venue to 

be excessive, or rebate opportunities 

available at other venues to be more 

favorable. In such an environment, the 

Exchange must continually adjust its 

fees and credits to remain competitive 

with other exchanges and with 

alternative trading systems that have 

been exempted from compliance with 

the statutory standards applicable to 

exchanges. Because competitors are free 

to modify their own fees in response, 

and because market participants may 

readily adjust their order routing 

practices, the Exchange believes that the 

degree to which fee and credit changes 

in this market may impose any burden 

on competition is extremely limited. 

The proposed new credit is reflective 

of this competition because, even as one 

of the largest U.S. equities exchanges by 

volume, the Exchange has less than 20% 

market share, which in most markets 

could hardly be categorized as having 

enough market power to burden 

competition. Moreover, as noted above, 

price competition between exchanges is 

fierce, with liquidity and market share 

moving freely between exchanges in 

reaction to fee and credit changes. This 

is in addition to free flow of order flow 

to and among off-exchange venues 

which comprises upwards of 40% of 

industry volume. 

The Exchange’s proposal is procompetitive in that the Exchange 

intends for it to increase liquidity 

adding activity on the Exchange and 

thereby render the Exchange a more 

attractive and vibrant venue to market 

participants. 

In sum, if the change proposed herein 

is 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 change 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 either 

solicited or received. 

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)(ii) of the Act.8

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: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2021–003 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–NASDAQ–2021–003. 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 (http://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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NASDAQ–2021–003 and 

should be submitted on or before 

February 16, 2021. 

7152 Federal Register / Vol. 86, No. 15 / Tuesday, January 26, 2021 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Fee Schedule, Limit of Fees on Options 

Strategy Executions, available here: https://

www.nyse.com/publicdocs/nyse/markets/arcaoptions/NYSE_Arca_Options_Fee_Schedule.pdf. 

5See id. 

6See proposed Fee Schedule, Limit of Fees on 

Options Strategy Executions. 

7See id. 

8See, e.g., Cboe fee schedule, footnote 13. Cboe 

caps fees for each participant at $0.00 for the 

following strategies executed on the same trading 

day: Short stock interest, reversal, conversion, jelly 

roll, and merger strategies. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–01592 Filed 1–25–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90949; No. SR–NYSEArca– 

2021–06] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Modify the NYSE Arca 

Options Fee Schedule Regarding the 

Limits on Fees for Options Strategy 

Executions 

January 19, 2021. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on January 

13, 2021, NYSE Arca, Inc. (‘‘NYSE 

Arca’’ or the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to modify the 

NYSE Arca Options Fee Schedule (‘‘Fee 

Schedule’’) regarding the Limit of Fees 

on Options Strategy Executions. The 

Exchange proposes to implement the fee 

change effective January 13, 2021. 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 modify the Limit of 

Fees on Options Strategy Executions 

(‘‘Strategy Cap’’), effective January 13, 

2021. 

Currently, the Fee Schedule provides 

that transaction fees for OTP Holders 

and OTP Firms (collectively, ‘‘OTP 

Holders’’) are limited or capped at 

$1,000 for certain options strategy 

executions ‘‘on the same trading day,’’ 

meaning it is a daily fee cap.4 Strategy 

executions that qualify for the Strategy 

Cap are (a) reversals and conversions, 

(b) box spreads, (c) short stock interest 

spreads, (d) merger spreads, and (e) jelly 

rolls, which are described in detail in 

the Fee Schedule (the ‘‘Strategy 

Executions’’).5

The Exchange proposes to modify the 

Strategy Cap to offer a lower cap of $200 

for those OTP Holders that trade at least 

25,000 monthly billable contract sides 

in Strategy Executions.6 Thus, at the 

end of the month, qualifying OTP 

Holders would have transaction fees for 

their Strategy Executions for each day of 

the month capped at $200 (as opposed 

to $1,000 for non-qualifying OTP 

Holders).7

For example, assume an OTP Holder 

executes the following Strategy 

Executions against interest in the 

Trading Crowd on the third business 

day of the month on behalf of a nonCustomer that is not a Lead Market 

Maker, which participants are subject to 

a $0.25 per Manual transaction fee. 

Under the current Fee Schedule, an OTP 

Holder would be charged a total of 

$1,000 in options fees, per the daily fee 

cap: 

• Trade 1: A Reversal Conversion in 

DEF comprised of 3,000 call options 

against 3,000 put options would be 

$1,500 (at $0.25 per execution), absent 

the $1,000 Strategy Cap. 

• Trade 2: A Reversal Conversion in 

ABC comprised of 1,000 call options 

against 1,000 put options would be $500 

(at $0.25 per execution), absent the 

Strategy Cap, but the OTP Holder, 

having reached the daily cap, would not 

be charged for these transactions. 

However, if, in addition to the two 

trades above, the OTP Holder executes 

a ‘‘jelly roll’’ consisting of 5,000 October 

puts and 5,000 October calls against 

5,000 November calls and 5,000 

November puts on the fifteenth business 

day of the month, the total fees for these 

qualifying Strategy Executions under 

the proposed Fee Schedule would be 

capped at $200 for this trading day, 

given that the total number of contracts 

on day three and day fifteen is above the 

minimum 25,000 billable contract sides 

threshold. Similarly, having met this 

threshold, the fees charged on Trades 1 

and 2 that were executed on the third 

business day would likewise be capped 

at $200. Thus, the fees for each of the 

third and fifteenth trading days would 

be capped at $200 each, for a monthly 

total of $400 for Strategy Executions. 

The Exchange’s fees are constrained 

by intermarket competition, as OTP 

Holders may direct their order flow to 

any of the 16 options exchanges, 

including another exchange that 

provides a cap on fees for strategy 

executions.8 Thus, OTP Holders have a 

choice of where they direct their order 

flow. This proposed change is designed 

to incent OTP Holders to increase their 

Strategy Execution volumes by 

executing (often smaller) strategies that 

are not necessarily economically viable 

on a per symbol basis, but which may 

be profitable when fees on Strategy 

Executions—regardless of symbol—are 

capped for the trading day. The 

Exchange notes that all market 

participants stand to benefit from 

increased volume, which promotes 

market depth, facilitates tighter spreads 

and enhances price discovery, and may 

lead to a corresponding increase in 

order flow from other market 

participants. 

The Exchange cannot predict with 

certainty whether any, or how many, 

OTP Holders would avail themselves of 

this proposed fee change. The Exchange 

believes that OTP Holders that execute 

Strategy Executions on the Exchange 

can achieve the proposed 25,000 

minimum contract sides threshold to 

qualify for the proposed (reduced) 

Strategy Cap and that this proposal may 

encourage OTP Holders to execute (and 

aggregate) Strategy Executions on the