Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 31205 

22For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). In 

addition, Rule 19b–4(f)(6)(iii) requires the Exchange 

to give the Commission written notice of the 

Exchange’s intent to file the proposed rule change, 

along with a brief description and text of the 

proposed rule change, at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange did not provide this 

notice, and it has requested that the Commission 

waive the requirement for this proposed rule 

change in order to allow the Program to continue 

uninterrupted. The Exchange asserts this would 

benefit market participants and help to eliminate 

the potential for investor confusion. For the same 

reasons stated above with regard to the 

Commission’s waiver of the 30-day operative delay, 

the Commission permits this proposed rule change 

to be filed without advanced written notice of the 

Exchange’s intent to file. 23 17 CFR 200.30–3(a)(12), (59). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

investors and the public interest, 

because waiver would allow the pilot 

period to continue uninterrupted after 

its current expiration date of June 30, 

2018, thereby avoiding any potential 

investor confusion that could result 

from temporary interruption in the 

Program. For this reason, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposal operative upon filing.22

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 shall institute proceedings 

to determine whether the proposed rule 

change 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– 

BX–2018–026 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–BX–2018–026. 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 

offices 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–BX–2018–026, and should 

be submitted on or before July 24, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–14284 Filed 7–2–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

TIME AND DATE: 2:00 p.m. on Thursday, 

July 5, 2018. 

PLACE: Closed Commission Hearing, 

Room 10800. 

STATUS: This meeting will be closed to 

the public. 

MATTERS TO BE CONSIDERED: 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the closed meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) 

and (10) and 17 CFR 200.402(a)(3), 

(a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and 

(a)(10), permit consideration of the 

scheduled matters at the closed meeting. 

Commissioner Stein, as duty officer, 

voted to consider the items listed for the 

closed meeting in closed session. 

The subject matters of the closed 

meeting will be: 

Institution and settlement of 

injunctive actions; 

Institution and settlement of 

administrative proceedings; 

Resolution of litigation claims; and 

Other matters relating to enforcement 

proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information and to ascertain 

what, if any, matters have been added, 

deleted or postponed; please contact 

Brent J. Fields from the Office of the 

Secretary at (202) 551–5400. 

Dated: June 28, 2018. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–14392 Filed 6–29–18; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83532; File No. SR– 

NYSEAMER–2018–32] 

Self-Regulatory Organizations; NYSE 

American LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Change To Modify the NYSE American 

Options Fee Schedule 

June 28, 2018. 

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 June 20, 

2018, NYSE American LLC (the 

‘‘Exchange’’ or ‘‘NYSE American’’) 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 selfregulatory organization. The 

Commission is publishing this notice to 


sradovich on DSK3GMQ082PROD with NOTICES
31206 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 

4The Exchange originally filed to amend the Fee 

Schedule on June 11, 2018 (SR–NYSEAmer–2018– 

28) and withdrew such filing on June 20, 2018. 

5See Securities Exchange Act Release Nos. 83384 

(June 5, 2018), 83 FR 27061 (June 11, 2018) (SR– 

NYSEAMER–2018–05) (‘‘Complex CUBE Approval 

Order’’); 82802 (March 2, 2018), 83 FR 9769 (March 

7, 2018) (SR–NYSEAMER–2018–05) (‘‘Complex 

CUBE Notice’’). 

6Complex Orders on the opposite side of the 

market as Complex CUBE Order that arrive during 

the Auction and are eligible to trade with the 

Complex CUBE Order will be treated as RFR 

Responses and may trade in the Auction. See 

Complex CUBE Notice, id. [sic], 83 FR 9769, 9774– 

5. 

7See proposed Fee Schedule, Key Terms and 

Definitions. 

8See, e.g., Fee Schedule, Sections I.A., note 6 

(exempting executions in CUBE Auctions from 

Marketing Fees), I.C. (excluding CUBE Auction 

volume from monthly threshold calculations for the 

Market Maker Sliding Scale program), I.E. 

(including CUBE Auction volume in monthly 

threshold calculations for the American Customer 

Engagement Program (‘‘ACE’’) Program, but 

excluding CUBE Auction executions from eligibility 

for enhanced credits under the ACE Program), 

available here, https://www.nyse.com/publicdocs/ 

nyse/markets/american-options/NYSE_American_

Options_Fee_Schedule.pdf. In these instances, the 

Exchange believes it is reasonable to treat Complex 

CUBE Volume in the same manner as Single-Leg 

CUBE volume because all CUBE Auction volume is 

subject to separate fees and credits as set forth in 

Section I.G. of the Fee Schedule. 

9See id., Fee Schedule, Section I.G., CUBE 

Auction Fees & Credits. The Exchange is not 

modifying fees and credits related to the Single-Leg 

CUBE Auction. The Exchange proposes to modify 

Section I.G. to make clear that the current table 

relates to pricing for executions in a ‘‘Single-Leg 

CUBE Auction’’ and to add a new table that sets 

forth pricing for executions in a ‘‘Complex CUBE 

Auction.’’ See proposed Fee Schedule, Section I.G., 

CUBE Auction Fees & Credits. 

10See Securities Exchange Act Release No. 72469 

(June 25, 2014), 79 FR 37380 (July 1, 2014) (SR– 

NYSEMKT–2014–52) (adopting fees and credits 

related to Single-Leg CUBE Auctions). 

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 American Options Fee Schedule 

(‘‘Fee Schedule’’). The Exchange 

proposes to implement the fee change 

effective June 20, 2018.4. [sic] The 

proposed 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 modify 

portions of the Fee Schedule, effective 

June 20, 2018, by introducing defined 

terms and pricing for new functionality 

that facilitates executing Complex 

Orders using the Complex CUBE 

Auction mechanism (‘‘Complex CUBE’’ 

or ‘‘Auction’’). 

On June 5, 2018, the Exchange 

received approval to adopt the Complex 

CUBE mechanism, which operates in a 

manner substantially similar to the 

existing Single-Leg CUBE Auction.5 The 

Exchange proposes to adopt fees and 

credits for the Complex CUBE Auction 

so that such pricing will be in place 

once the Complex CUBE Auction 

mechanism is implemented on June 11, 

2018. 

In short, similar to the Single-Leg 

CUBE Auction, the Complex CUBE 

Auction allows an ATP Holder to 

guarantee the execution of an order it 

represents as agent on behalf of a public 

customer, broker dealer, or any other 

entity, via the Complex CUBE Auction 

(‘‘Complex CUBE Order’’). The ATP 

Holder that submits the Complex CUBE 

Order (the ‘‘Initiating Participant’’) 

agrees to guarantee the execution of the 

Complex CUBE Order by submitting a 

contra-side order (‘‘Complex Contra 

Order’’) representing principal interest 

or interest it has solicited to trade with 

the Complex CUBE Order. Although the 

Complex Contra Order would guarantee 

the execution of the Complex CUBE 

Order, the purpose of the Auction is to 

provide the Complex CUBE Order the 

opportunity for price improvement. 

Accordingly, the Exchange will notify 

market participants when an Auction is 

occurring and interested parties may 

submit ‘‘RFR Responses’’ during the 

auction.6

Key Terms and Definitions Related to 

Complex CUBE 

First, the Exchange proposes to add 

(or modify) the following to the ‘‘Key 

Terms and Definitions’’ section of the 

Fee Schedule: 7

• A ‘‘Complex CUBE Auction’’ would 

refer to the electronic crossing 

mechanism that provides opportunities 

for price improvement to Complex 

CUBE Orders submitted to such 

auctions. 

• A ‘‘Single-Leg CUBE Auction’’ 

would refer to the electronic crossing 

mechanism that provides opportunities 

for price improvement to CUBE Orders 

submitted to such auctions. 

• A ‘‘CUBE Auction’’ would refer 

collectively to the Single-Leg and 

Complex CUBE Auctions available on 

the Exchange. The Exchange will use 

this reference in the Fee Schedule when 

executions in (and resulting volume 

from) such auctions are treated the 

same.8

• A ‘‘Complex CUBE Order’’ would 

refer to an agency Complex Order that 

is guaranteed an execution in the 

Complex CUBE Auction by a Complex 

Contra Order. 

D In this regard, the Exchange 

proposes to modify the current 

definition of ‘‘CUBE Order’’ to specify 

that such orders relate to Single-Leg 

CUBE Auctions. 

• A ‘‘Complex Contra Order’’ would 

be either principal interest or solicited 

interest an Initiating Participant is using 

to guarantee the execution of a Complex 

CUBE Order in the Complex CUBE 

Auction. 

D In this regard, the Exchange 

proposes to modify the current 

definition of ‘‘Contra Order’’ to specify 

that such orders relate to Single-Leg 

CUBE Auctions. 

• To account for both Single-Leg and 

Complex CUBE Auctions, the Exchange 

proposes to modify ‘‘Initiating 

Participant’’ to refer to ‘‘an ATP Holder 

that submits the CUBE Order (or 

Complex CUBE Order) and agrees to 

guarantee the execution of such order by 

submitting a Contra Order (or Complex 

Contra Order) representing principal 

interest or interest it has solicited to 

trade with the CUBE Order (or Complex 

CUBE Order).’’ 

Fees and Credits Related to Complex 

CUBE 

Section I.G. sets forth fees and credits 

related to Single-Leg CUBE Auctions for 

single-leg orders.9 The Exchange 

proposes to implement a pricing 

structure for the Complex CUBE 

Auction that mirrors its pricing 

structure for Single-Leg CUBE Auctions, 

with differences described below.10

As noted above, there are three ways 

to participate in a Complex CUBE 

Auction: (i) As the Complex CUBE 

Order; (ii) as the Complex Contra Order; 

and (iii) as an RFR Response. The 

Exchange proposes to charge for 

participation in the Complex CUBE 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 31207 

11See proposed Fee Schedule, Section I.G., CUBE 

Auction Fees & Credits. The Exchange proposes to 

modify the Single-Leg CUBE Auction table in 

Section I.G. to replace references to ‘‘both Penny 

and Non-Penny Pilot’’ with ‘‘all issues’’ in the table 

setting forth fees and credits for Single-Leg CUBE 

Auctions, which adds clarity, transparency and 

internal consistency to the Fee Schedule. See id. 

The Exchange likewise proposes to modify note 1 

to Section I.G. of the Fee Schedule to make clear 

that ‘‘Initiating Participant Credits are payable to 

the Initiating Participant for each contract in a 

Contra Order paired with a CUBE Order that does 

not trade with the CUBE Order because it is 

replaced in the auction,’’ which adds clarity, 

transparency and internal consistency to the Fee 

Schedule. See id. 

12See Fee Schedule, Section I.E., American 

Customer Engagement (‘‘ACE’’) Program,’’ supra 

note 7 [sic]. 

13 15 U.S.C. 78f(b). 

14 15 U.S.C. 78f(b)(4) and (5). 

Auction based on the following 

schedule of fees: 11

* * * * * 

COMPLEX CUBE AUCTION

Participant/penny or 

non-penny 

Standard 

option per 

contract fee 

or credit 

Complex CUBE Order Fee 

Customer—All issues ........ $0.00 

Complex CUBE Order Fee 

Non-Customer—All issues 0.20 

Complex Contra Order 

Fee—Penny Pilot issues ... 0.05 

COMPLEX CUBE AUCTION—Continued 

Participant/penny or 

non-penny 

Standard 

option per 

contract fee 

or credit 

Complex Contra Order 

Fee—Non-Penny Pilot 

issues ................................ 0.07 

RFR Response Fee Customer—All issues .............. 0.00 

RFR Response Fee NonCustomer—Penny Pilot ..... 0.50 

RFR Response Fee NonCustomer—Non-Penny 

Pilot ................................... 1.05 

This proposed pricing is the same as 

the pricing for participation in the 

Single-Leg CUBE Auction with the 

exception of the Complex Contra Order 

Fee—Non-Penny Pilot issues, which is 

$0.02 more than what is charged for 

such Contra Orders in the Single-Leg 

CUBE Auction. 

The Exchange is also proposing to 

adopt credits to be paid to Initiating 

Participants for each Complex CUBE 

Order contract that does not trade with 

the Complex Contra Order, which 

credits increase if the Initiating 

Participant achieves Tier 2, 3, 4, or 5 of 

the ACE Program (or ‘‘Program’’), as set 

forth below.12

INITIATING PARTICIPANT CREDIT

Base/ACE Tier Penny pilot Non-penny 

pilot 

Base or Tier 1 .......................................................................................................................................................... ($0.20) ($0.50) 

Tier 2 ........................................................................................................................................................................ ($0.23) ($0.55) 

Tier 3 ........................................................................................................................................................................ ($0.26) ($0.60) 

Tier 4 ........................................................................................................................................................................ ($0.28) ($0.65) 

Tier 5 ........................................................................................................................................................................ ($0.35) ($0.75) 

Thus, as proposed, ATP Holders who 

do not participate in the ACE Program 

or ACE Program participants who 

achieve Tier 1 would be eligible for a 

per contract credit of $0.20 or $0.50 for 

Complex CUBE Orders in Penny Pilot 

issues or non-Penny Pilot issues, 

respectively. Further, the Exchange 

proposes that ACE Program participants 

that achieve at least Tier 2 would 

qualify for higher Initiating Credits, 

based on the Tier achieved, as outlined 

in the table above. In addition, the 

Exchange proposes to offer an 

alternative (higher) credit to ATP 

Holders that achieve Tier 5 and execute 

more than 1% TCADV in monthly 

Initiating Complex CUBE Orders (the 

‘‘enhanced Tier 5 credits’’). The 

enhanced Tier 5 credits would be 

$(0.45) per contract for Penny Pilot 

issues and ($0.90) per contract for nonPenny Pilot issues. The Exchange 

believes enhanced Tier 5 credits would 

encourage ATP Holders to direct 

Complex Order volume to the Exchange, 

specifically via the Complex CUBE 

mechanism, which benefits all markets 

participants, particularly those that 

receive price improvement on their 

Complex Orders. 

The Exchange also proposes to offer 

an additional $0.10 per contract rebate 

to Initiating Participants in the ACE 

Program (the ‘‘ACE Initiating Participant 

Rebate’’ or ‘‘ACE Rebate’’). The ACE 

Rebate would be available to ATP 

Holders that achieve at least Tier 1 of 

the Program and would be applied to 

each of the first 1,000 Customer 

contracts for each leg of a Complex 

CUBE Order execution in a Complex 

CUBE Auction. The proposed ACE 

Rebate is payable in addition to any 

other fees or credits accrued from the 

Auction (e.g., in addition to the 

Initiating Participant Credit for both 

Penny and non-Penny Pilot issues). 

Thus, as proposed, the maximum 

potential Complex CUBE credit for 

Penny Pilot issues is $0.55 ($0.10 ACE 

Rebate + $0.45 Initiating Participant 

Credit for Tier 5 ACE Program 

Participants) and for non-Penny Pilot 

issues is $1.00 ($0.10 ACE Rebate + 

$0.90 Initiating Participant Credit for 

Tier 5 ACE Program Participants). The 

ACE Rebate is available regardless of 

whether the Complex CUBE Order 

trades with the Complex Contra Order 

or RFR Response(s), whereas the 

Initiating Participant Credits (set forth 

in the table above) are payable only for 

each Complex CUBE Order contract that 

does not trade with the Complex Contra 

Order. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,13 in general, and 

furthers the objectives of Sections 

6(b)(4) and (5) of the Act,14 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. 

The proposal to add (or modify) 

defined terms related to the Complex 

CUBE are reasonable, equitable and not 

unfairly discriminatory as these terms 

would add clarity and transparency to 

the Fee Schedule making it easier to 

comprehend and navigate. The 

Exchange notes that the new definitions 

for Complex CUBE mirror the existing 

concepts defined in the Fee Schedule 

for Single-Leg CUBE and that the 

proposed updates to some existing 

Single-Leg CUBE definitions are meant 

to differentiate each of the auctions. 


sradovich on DSK3GMQ082PROD with NOTICES
31208 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 

15See e.g., Nasdaq ISE, LLC (‘‘ISE’’) Schedule of 

Fees, Section I, II, IV.B., available here, http://

ise.cchwallstreet.com/tools/Platform

Viewer.asp?selectednode=chp_1_1_

2&manual=%2Fcontents%2Fise%2Fise-fee%2F 

(setting forth fees and credits related to its price 

improvement auction or PIM); BOX Options 

Exchange (‘‘BOX’’) Fee Schedule, available here, 

https://boxoptions.com/assets/BOX-Fee-Scheduleas-of-April-2-2018.pdf (setting forth fees and credits 

related to its price improvement auctions—PIP (for 

single-leg orders) or COPIP (for complex orders); 

MIAX Options fee schedule, available here, https:// 

www.miaxoptions.com/sites/default/files/fee_

schedule-files/MIAX_Options_Fee_Schedule_

03012018B.pdf (setting forth fees and credits related 

to its price improvement auctions—PRIME (for 

single-leg orders) or cPRIME (for complex orders); 

Cboe fee schedule, available here, http://

www.cboe.com/publish/feeschedule/CBOEFee

Schedule.pdf (setting forth fees and credits related 

to its price improvement auction or AIM). 

16See id. 

17See id. For example, on ISE, fees for trades in 

Select and Non-Select Symbols are $0.00 per 

contract for Priority Customer Crossing Orders and 

$0.20 per contract for non-Priority Customer 

Crossing Orders. Similarly, BOX charges $0.00 per 

contract for Customer COPIP orders, but charges 

$0.05 per contract for COPIP orders submitted on 

behalf of Professional Customers, Broker Dealers or 

Market. 

18The Exchange notes that, as discussed below, 

certain Non-Customers may be eligible to enhanced 

Initiating Participant Credits based on volume 

executed on the Exchange, which would offset their 

transaction costs. 

19For example, the Exchange offers Customers 

preferential rates for other trades executed on the 

Exchange such as for Qualified Contingent Cross 

(‘‘QCC’’) orders. See, e.g., Fee Schedule, Section 

I.F., supra note 7 [sic] (assessing $0.00 per contract 

for Customer QCC orders and $0.20 per contract for 

non-Customer QCC orders). 

Similarly, the proposed modifications to 

the current table in Section I.G., which 

are designed to streamline the pricing 

descriptions or to account for the 

addition of Complex CUBE pricing, 

would likewise add clarity and 

transparency to the Fee Schedule 

making it easier to comprehend and 

navigate. Finally, the proposal to treat 

Complex CUBE Auction executions/ 

volume in the same manner as SingleLeg CUBE vis-a`-vis other sections of the 

Fee Schedule (see supra note 7 [sic]) are 

reasonable, equitable and not unfairly 

discriminatory because the Complex 

CUBE Auction (like the Single-Leg 

CUBE auction) will be subject to the 

separate fees and credits as proposed 

herein. 

The Exchange believes that the 

proposed fee structure for the Complex 

CUBE Auction is reasonable, equitable, 

and not unfairly discriminatory. The 

proposed fee structure is reasonably 

designed because it is intended to 

incentivize market participants to send 

Complex Order flow to the Exchange in 

order to participate in the price 

improvement mechanism in a manner 

that enables the Exchange to improve its 

overall competitiveness and strengthen 

its market quality for all market 

participants. Complex CUBE Auctions 

and the corresponding fees are also 

reasonably designed because the 

proposed fees and credits are very 

similar to ones the Exchange assesses 

for Single-Leg CUBE Auctions, and are 

within the range of fees and credits 

assessed by other exchanges employing 

similar fee structures for complex orders 

submitted and executed in a price 

improvement mechanism.15 Other 

competing exchanges offer different fees 

and credits for complex agency orders, 

contra-side orders, and responders to an 

auction in a manner similar to the 

proposal.16 Other competing exchanges 

also charge different rates for 

transactions in their complex price 

improvement mechanisms for 

Customers versus their non-Customers 

in a manner similar to the proposal.17

The Complex CUBE transaction fees 

applied are reasonable, equitable, and 

not unfairly discriminatory because they 

would apply equally amongst all 

Customer orders in each category of 

Complex CUBE Auction participation 

and would also apply equally amongst 

all non-Customer orders in each 

category of Complex CUBE. Regarding 

Customers, all similarly situated orders 

for Customers are subject to the same 

transaction fee schedule and the 

Exchange believes that is equitable and 

not unfairly discriminatory that 

Customers be charged lower fees in 

Complex CUBE Auctions than other 

market participants. The exchanges in 

general have historically aimed to 

improve markets for investors and 

develop various features within market 

structure for customer benefit.18 The 

Exchange assesses Customers lower or 

no transactions fees because Customer 

order flow enhances liquidity on the 

Exchange for the benefit of all market 

participants. Customer liquidity benefits 

all market participants by providing 

more trading opportunities, which 

attracts Market Makers. An increase in 

the activity of these market participants 

in turn facilitates tighter spreads, which 

may cause an additional corresponding 

increase in order flow from other market 

participants. 

Regarding Non-Customers, all 

similarly situated orders for market 

participants that are not Customers are 

subject to the same transaction fees and 

access to the Exchange is offered on 

terms that are not unfairly 

discriminatory.19 Moreover, assessing a 

higher transaction fee on Non-Customer 

interest than on Customer interests for 

Complex CUBE Order transactions is 

reasonable, equitable, and not unfairly 

discriminatory because these types of 

market participants are more 

sophisticated and have higher levels of 

order flow activity and system usage, 

which system usage better equips NonCustomers to both interact with 

Auctions and to react to market changes. 

This level of trading activity draws on 

a greater amount of system resources 

than that of Customers, and thus, 

generates greater ongoing operational 

costs. Further, the Exchange believes 

that charging all market participants 

that are not Customers the same fee for 

all transactions is not unfairly 

discriminatory as the fees will apply to 

all these market participants equally. 

The Exchange likewise believes that it 

is reasonable for Complex CUBE Orders 

and Complex Contra Orders to be 

assessed lower fees than those providing 

RFR Responses. Complex Contra Orders 

guarantee the Complex CUBE Order, 

and are subject to market risk during the 

time period that the Complex CUBE 

Order is exposed to other market 

participants. The Exchange believes that 

the market participants entering the 

Complex Contra Order plays a critical 

role in the Auction as their willingness 

to guarantee the Complex CUBE Order 

is the keystone to providing that CUBE 

Order the opportunity for price 

improvement. The Exchange believes 

that it is equitable and not unfairly 

discriminatory to assess fees to 

responders to the Complex CUBE 

Auction and credit another participant 

to provide incentive for participants to 

submit order flow to Complex CUBE 

Auctions (as discussed further below). 

The Exchange believes that it is 

appropriate to provide incentives to 

market participants to direct orders to 

participate in Complex CUBE Auction. 

Further, the Exchange believes that the 

proposed transaction fees for 

responding to the Auction would not 

deter market participants from 

providing price improvement. 

Similarly, the Exchange believes that 

the proposed changes to CUBE Auction 

credits are reasonable, equitable and not 

unfairly discriminatory. First, as 

proposed, all Initiating Participants 

would receive a base per contract credit 

for each Complex CUBE Order contract 

that does not trade with the Complex 

Contra Order in a Complex CUBE 

Auction, regardless of whether that 

Initiating Participant qualifies for the 

ACE Program. Thus, the proposed 

credits are not applied in a 

discriminatory manner. The proposed 

credits of $0.20 per contract for Penny 

Pilot issues and $0.50 per contract for 

non-Penny Pilot issues are consistent 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 31209 

20For example, the ISE pays a volume-based 

Complex PIM Break Up Rebate ranging from a base 

rate of $0.26 per contract in Select Symbols to $0.85 

in the highest tier for contracts submitted to a PIM 

that do not trade with their contra order. See ISE 

fee schedule, supra note 15. 

21See id. 

22For example, MIAX offers an additional per 

contract rebate on certain agency orders executed in 

PRIME, which provides for a maximum credit of 

$0.12 per contract, based on a member achieving 

certain monthly volume thresholds. See MIAX fee 

schedule, Priority Customer Rebate Program, supra 

note 15. 

23Similar to the Exchange, Cboe also caps the 

number of contracts submitted to its price 

improvement auction that are eligible for additional 

volume rebates. Cboe’s cap is at 1,000 contracts per 

order for simple executions and at 1,000 contracts 

per leg for complex executions. See Cboe fee 

schedule, Volume Incentive Program, supra note 

15. 

24 15 U.S.C. 78f(b)(8). 

25See supra note 14. See also Chicago Board 

Options Exchange, Inc. (‘‘CBOE’’) Rule 6.74A— 

Automated Improvement Mechanism (‘‘AIM’’); 

Nasdaq PHLX, LLC (‘‘PHLX’’) Rule 1087—Price 

Improvement XL (‘‘PIXL’’); BOX Options Exchange 

LLC (‘‘BOX’’) Rule 7245—Complex Order Price 

Improvement Period (‘‘COPIP’’); Nasdaq ISE, LLC 

(‘‘ISE’’) Rule 723—Price Improvement Mechanism 

(‘‘PIM’’); Miami International Securities Exchange, 

LLC (‘‘MIAX’’) Rule 515A, Interpretation and 

Policies .12—Price Improvement Mechanism 

(‘‘PRIME’’). 

26See Fee Schedule, Section I.G., CUBE Auction 

Fees & Credits, supra note 8 and supra note 16 

(citing the fee schedules of other exchanges that set 

forth pricing for price improvement auctions). 

with ‘‘break up’’ credits offered on other 

exchanges.20

The Exchange also believes the 

proposal to provide ATP Holders the 

opportunity to achieve greater Initiating 

Participant Credits, based on Tier, if 

those ATP Holders achieve at least Tier 

2 of the ACE Program is likewise 

reasonable, equitable and not unfairly 

discriminatory. The ACE Program is 

based on the amount of Customer 

business transacted on the Exchange 

and offers ATP Holders an enhanced per 

contract credit on transaction fees for 

Customer volumes above certain 

minimum thresholds (established in 

Tiers 1–5). Thus, the Exchange believes 

this proposed change is reasonably 

designed because it would incentivize 

providers of Customer order flow to 

direct that order flow to the Exchange to 

receive greater Complex CUBE credits in 

a manner that enables the Exchange to 

improve its overall competitiveness and 

strengthen its market quality for all 

market participants. The proposed 

(tiered) rebate is fair, equitable, and not 

unreasonably discriminatory because it 

would apply equally to all Customer 

orders submitted as a Complex CUBE 

Order. The Exchange also notes that the 

concept of offering a tiered rebate in 

connection with a price improvement 

auction is not new or novel.21 Finally, 

the Exchange believes this proposed 

tiered rebate is reasonable because it 

would attract more volume and 

liquidity to the Exchange generally, and 

to Complex CUBE Auctions specifically, 

and would therefore benefit all market 

participants (including those that do not 

participate in the ACE Program) through 

increased opportunities to trade at 

potentially improved prices as well as 

enhancing price discovery. The 

Exchange believes enhanced Tier 5 

credits would encourage ATP Holders to 

direct Complex Order volume to the 

Exchange, specifically via the Complex 

CUBE mechanism, which benefits all 

markets participants, particularly those 

that receive price improvement on their 

Complex Orders. 

The Exchange believes that the 

proposed ACE Initiating Participant 

credit is likewise reasonable, equitable 

and not unfairly discriminatory. 

Specifically, the ACE Initiating 

Participant Rebate is based on the 

amount of business transacted on the 

Exchange and is designed to attract 

more volume and liquidity to the 

Exchange generally, and to CUBE 

Auctions specifically, which will 

benefit all market participants 

(including those that do not participate 

in the ACE Program) through increased 

opportunities to trade at potentially 

improved prices as well as enhancing 

price discovery. Furthermore, the 

proposed ACE Rebate is reasonably 

designed and not unfairly 

discriminatory because it is available 

regardless of the parties that trade with 

the Complex CUBE Order (i.e., whether 

the CUBE Order trades with the 

Complex Contra Order or otherwise). 

The Exchange notes that the proposal to 

offer an additional incentive to 

participate in the Complex CUBE 

Auction to those ATP Holders that have 

achieved certain monthly volume 

thresholds is also not new or novel.22

Nor it is novel that the Exchange caps 

the amount of the potential rebate at the 

first 1,000 contracts per leg of a 

Complex CUBE Order, as the Exchange 

currently caps the potential rebate in the 

Single-Leg CUBE at the first 5,000 

Customer contracts of a CUBE Order.23

The Exchange notes that although the 

proposed ACE Rebate applies solely to 

Customer orders, it is nonetheless 

equitable and not unfairly 

discriminatory because it would 

enhance the incentives to ATP Holders 

to transact Customer orders on the 

Exchange and an increase in Customer 

order flow would bring greater volume 

and liquidity to the Exchange. Increased 

volume to the Exchange benefits all 

market participants by providing more 

trading opportunities and tighter 

spreads, even to those market 

participants that do not participate in 

the ACE Program. 

The Exchange believes that it is 

reasonable to assess lower transaction 

and credit rates to Penny Pilot option 

classes than non-Penny Pilot option 

classes. The Exchange believes that 

options that trade at these wider spreads 

merit offering greater inducement for 

market participants. In particular, 

within the Complex CUBE Auction, 

option classes that typically trade in 

minimum increments of $0.05 or $0.10 

provide greater opportunity for market 

participants to offer price improvement. 

As such, the Exchange believes that the 

opportunity for additional price 

improvement provided by these wider 

spreads again merits offering greater 

incentive for market participants to 

increase the potential price 

improvement for customer orders in 

these transactions. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with Section 6(b)(8) of 

the Act,24 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. 

The Exchange believes that the 

proposed change would enhance the 

competiveness of the Exchange relative 

to other exchanges that offer their own 

electronic crossing mechanisms, 

including for complex orders.25 The 

Exchange believes that the proposed 

fees and rebates for participation in the 

Complex CUBE Auction would not have 

an impact on intra-market competition 

based on the total cost for participants 

to transact in such order types versus 

the cost for participants to transact in 

the other order types available for 

trading on the Exchange. 

As noted above, the Exchange 

believes that the proposed pricing for 

the Complex CUBE Auction is 

comparable to its own pricing for 

Single-Leg CUBE and that of other 

exchanges offering similar electronic 

price improvement mechanisms for 

complex orders.26 The Exchange 

believes that, based on experience with 

electronic price improvement crossing 

mechanisms on other markets, market 

participants understand that the priceimproving benefits offered by the 

Complex CUBE Auction justify the 

transaction costs associated with the 

Auction. To the extent that there is a 

difference between non-Complex CUBE 

Auction transactions and Complex 

CUBE Auction transactions, the 

Exchange does not believe this 


sradovich on DSK3GMQ082PROD with NOTICES
31210 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 

27 15 U.S.C. 78s(b)(3)(A). 

28 17 CFR 240.19b–4(f)(2). 

29 15 U.S.C. 78s(b)(2)(B). 30 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

difference would cause participants to 

refrain from responding to Complex 

CUBE Auctions. The Exchange expects 

to see robust competition within the 

Complex CUBE Auction to trade against 

the Complex CUBE Order. 

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. 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. The Exchange believes 

that the proposed rule change reflects 

this competitive environment because it 

establishes a fee structure in a manner 

that encourages market participants to 

direct their order flow, to provide 

liquidity, and to attract additional 

transaction volume to the Exchange. 

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) 27 of the Act and 

subparagraph (f)(2) of Rule 19b–4 28

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

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) 29 of the Act to 

determine whether the proposed rule 

change 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– 

NYSEAMER–2018–32 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–2018–32. 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–NYSEAMER–2018–32 and 

should be submitted on or before July 

24, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–14293 Filed 7–2–18; 8:45 am] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83538; File No. SR– 

NYSEArca–2018–46] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Extend the Pilot 

Period for the Exchange’s Retail 

Liquidity Program Until December 31, 

2018 

June 28, 2018. 

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 June 15, 

2018, NYSE Arca, Inc. (the ‘‘Exchange’’ 

or ‘‘NYSE Arca’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to extend the 

pilot period for the Exchange’s Retail 

Liquidity Program (the ‘‘Retail Liquidity 

Program’’ or the ‘‘Program’’), which is 

currently scheduled to expire on June 

30, 2018, until December 31, 2018. 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. 


sradovich on DSK3GMQ082PROD with NOTICES