4090 Federal Register / Vol. 87, No. 17 / Wednesday, January 26, 2022 / Notices 

150See Brean Capital Letter at 13. 

151See SIFMA Letter at 3. 

152See Amendment No. 1 at 20. 

153 Id. 

154After the original rulemaking was approved, 

FINRA made available a set of FAQs and guidance 

clarify certain of the requirements, available at: 

www.finra.org. 

155See SIFMA Letter at 6–7. 

156See Amendment No. 1 at 20. 

157See SIFMA AMG letter at 1–3; SIFMA Letter 

at 2; BDA Letter at 5. 

158See Amendment No. 1 at 20. 

159See Letter from Chris Killian, Managing 

Director, Securitization, Corporate Credit, Libor, 

Securities Industry and Financial Markets 

Association, to Secretary, Commission (Sep. 10, 

2021). The comment letter was submitted jointly by 

SIFMA and SIFMA AMG. 

160See FINRA Letter at 7–8. 

161 15 U.S.C. 78s(b)(2). 

162 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

tailored reporting requirements. This 

engagement will provide industry 

participants the opportunity to provide 

input into the reporting requirements. 

10. Introducing and Clearing Firm 

Issues 

A commenter stated said that the 

proposed rule change does not address 

the role of the clearing broker or reflect 

that FINRA has considered the actual 

way in which introducing brokers clear 

trades.150 Another commenter suggested 

that FINRA should continue to facilitate 

dialogue among introducing and 

clearing firms to facilitate the 

implementation of the proposed rule 

change.151

FINRA responded by stating that it 

has conducted extensive dialogue with 

introducing and clearing firms regarding 

the requirements of the current rule and 

the proposed rule change in the context 

of introducing and clearing 

arrangements, and several of the 

proposed rule change’s clarifying 

changes to the original rulemaking were 

informed by such dialogue.152 Further, 

FINRA stated that it intends to continue 

to discuss the proposed rule change and 

its implementation with clearing and 

introducing firms, and to facilitate 

dialogue among them as the Covered 

Agency Transaction margin 

requirements are implemented.153

FINRA’s response regarding issues 

involving clearing and introducing firms 

appropriately addresses the 

commenters’ concerns. Specifically, 

FINRA has engaged in extensive 

dialogue with introducing and clearing 

firms regarding the requirements of the 

original rulemaking and with respect to 

the proposed rule change. Further, 

FINRA has indicated it will continue to 

facilitate dialogue with introducing and 

clearing firms as the margin 

requirements for Covered Agency 

Transactions are implemented. 

11. Status of Published Frequently 

Asked Questions (‘‘FAQs’’) 

A commenter requested confirmation 

as to whether the FAQs regarding 

Covered Agency Transactions, 

maintained on FINRA’s website,154 will 

apply in the event the proposed rule 

change is approved.155 FINRA stated 

that if the Commission approves the 

proposed rule change, FINRA will 

revisit the FAQs with Commission staff, 

members, and industry participants as 

appropriate.156 The Commission agrees 

that FINRA’s response to the status of 

the FAQs appropriately addresses the 

commenter’s request for confirmation 

with respect to the application of the 

FAQs under the proposed rule change. 

12. Implementation Period 

In response to the proposed rule 

change, several commenters requested 

that FINRA provide an implementation 

period of at least 18 months after 

publication of a final rule text before 

compliance is required, stating that a 

constrained time period for 

implementation could present market 

access risk, and citing the need to build 

operations and technology and to 

negotiate necessary documentation.157

FINRA responded to these concerns as 

part of Amendment No. 1 by stating 

while it believes that the subject matter 

is well understood by member firms and 

industry participants, FINRA would 

announce the effective date no later 

than 60 days following approval, if the 

Commission approves the proposed rule 

change, and would provide an effective 

date between nine and ten months 

following such approval.158

In response to Amendment No. 1, a 

commenter reiterated its previous 

comments regarding the implementation 

date, again requesting that FINRA 

provide an implementation period of 18 

months, or in the alternative an 

implementation timeframe of at least 

one year.159 FINRA responded to the 

comment stating that in connection with 

Amendment No. 1, it provided a longer 

implementation timeframe than 

originally proposed as part of the 

proposed rule change. FINRA stated that 

Covered Agency Transactions have been 

under discussion for a considerable 

time, both prior to and since approval 

of the original rulemaking in 2016, and 

that this subject matter is well 

understood by members and industry 

participants. As a result FINRA believes 

that the public interest would not be 

served by continuing delay and that the 

timeframe set forth in Amendment No. 

1 is appropriate.160

FINRA’s proposed implementation 

schedule is appropriate and consistent 

with the requirements of the Exchange 

Act. The Covered Agency Transaction 

margin requirements were approved in 

2016 under the 2016 Approval Order. 

FINRA member firms and industry 

participants are aware of the 

requirements of the Covered Agency 

Transaction margin rule and have had 

time to work toward implementation. 

Consequently, the proposed 

implementation timeframe of nine to ten 

months from the approval date as 

described in Amendment No. 1 should 

provide sufficient time for FINRA firms 

to comply with the rule’s requirements. 

IV. Conclusion 

It is therefore ordered pursuant to 

Section 19(b)(2) of the Exchange Act 161

that the proposed rule change (SR– 

FINRA–2021–010), as modified by 

Amendment No. 1, be, and hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.162

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–01471 Filed 1–25–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94015; No. SR–NYSEArca– 

2022–02] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the NYSE Arca 

Options Fee Schedule 

January 20, 2022. 

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 

12, 2022, 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. 


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4The Exchange originally filed to amend the Fee 

Schedule on December 29, 2021 (SR–NYSEArca– 

2021–108) and withdrew such filing on January 12, 

2022. 

5See Fee Schedule, FLOOR BROKER FIXED 

COST PREPAYMENT INCENTIVE PROGRAM (the 

‘‘FB Prepay Program’’), available here: https://

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

‘‘Eligible Fixed Costs,’’ as set forth in the Fee 

Schedule, include the OTP Trading Participant 

Rights fee for a Floor Broker, Floor Broker Order 

Capture Device—Market Data Fees, Floor Booth 

fees, the Options Floor Access Fee, and Wire 

Services fees. 

6See id. The Percentage Growth Incentive 

excludes Customer volume, Firm Facilitation and 

Broker Dealer facilitating a Customer trades, and 

QCCs. Any volume calculated to achieve the Firm 

and Broker Dealer Monthly Fee Cap and the Limit 

of Fees on Options Strategy Executions, will 

likewise be excluded from the Percentage Growth 

Incentive because fees on such volume are already 

capped and therefore do not increase billable 

manual volume. See id. 

7See Fee Schedule, FLOOR BROKER FIXED 

COST PREPAYMENT INCENTIVE PROGRAM (the 

‘‘FB Prepay Program’’). 

8See id. 

9See Fee Schedule, FLOOR BROKER FIXED 

COST PREPAYMENT INCENTIVE PROGRAM (the 

‘‘FB Prepay Program’’). 

10See proposed Fee Schedule, FLOOR BROKER 

FIXED COST PREPAYMENT INCENTIVE 

PROGRAM (the ‘‘FB Prepay Program’’). 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

NYSE Arca Options Fee Schedule (the 

‘‘Fee Schedule’’) regarding the Floor 

Broker Fixed Cost Prepayment Incentive 

Program. The Exchange proposes to 

implement the fee change effective 

January 12, 2022.4 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 modify 

the Floor Broker Fixed Cost Prepayment 

Incentive Program (the ‘‘FB Prepay 

Program’’), a prepayment incentive 

program that allows Floor Broker 

organizations (each, a ‘‘Floor Broker’’) to 

prepay certain of their annual Eligible 

Fixed Costs in exchange for volume 

rebates, as set forth in the Fee 

Schedule.5

Currently, the FB Prepay Program 

offers participating Floor Brokers an 

opportunity to qualify for rebates by 

achieving growth in billable manual 

volume by a certain percentage as 

measured against one of two 

benchmarks (the ‘‘Percentage Growth 

Incentive’’). Specifically, the Percentage 

Growth Incentive is designed to 

encourage Floor Brokers to increase 

their average daily volume (‘‘ADV’’) in 

billable manual contract sides to qualify 

for a Tier; each Tier of the FB Prepay 

Program corresponds to an annual 

rebate equal to the greater of the ‘‘Total 

Percentage Reduction of pre-paid 

annual Eligible Fixed Costs’’ or the 

annualization of the montly 

‘‘Alternative Rebate.’’ 6 In either case, 

participating Floor Brokers receive their 

annual rebate amount in the following 

January.7 Floor Brokers that wish to 

participate in the FB Prepay Program for 

the following calendar year must notify 

the Exchange no later than the last 

business day of December in the current 

year.8

As further described below, the 

Exchange proposes to modify the 

qualifying benchmarks, growth 

percentage requirements, and rebate 

amounts for the FB Prepay Program, and 

further proposes to adjust the basis for 

the calculation of a participating Floor 

Broker’s Eligible Fixed Costs for the 

following calendar year. 

The Exchange proposes to implement 

the fee changes effective January 12, 

2022. 

Proposed Rule Change 

The Exchange proposes to modify the 

benchmarks that Floor Brokers that 

participate in the FB Prepay Program 

must meet to qualify for the Percentage 

Growth Incentive. Currently, to qualify 

for the Percentage Growth Incentive, a 

Floor Broker must increase their ADV 

for the calendar year above the greater 

of (1) 20,000 contract sides in billable 

manual ADV, or (2) 105% of the Floor 

Broker’s total billable manual ADV in 

contract sides during the second half of 

2017.9 The Exchange proposes to 

modify each of the minimum thresholds 

to qualify for the Percentage Growth 

Incentive. Specifically, the Exchange 

proposes to (1) modify the first 

benchmark to increase the requisite 

minimum contract sides in billable 

manual ADV from 20,000 to 30,000, and 

(2) modify the second benchmark from 

105% of the Floor Broker’s total billable 

manual ADV in contract sides during 

the second half of 2017 (i.e., July 

through December 2017) to the Floor 

Broker’s total billable manual ADV in 

contract sides during the second half of 

2020 (i.e., July through December 

2020).10

The Exchange believes that 30,000 

ADV is a reasonable minimum 

threshold above which a participating 

Floor Broker would need to increase 

volume to earn a rebate under the FB 

Prepay Program, particularly in light of 

the increased options volume executed 

by Floor Brokers in the past year. The 

Exchange notes that Floor Brokers that 

are new to the Exchange would also be 

eligible to qualify for the Percentage 

Growth Incentive based on this 

minimum threshold. For Floor Brokers 

that exceed 30,000 ADV in growth, the 

Exchange believes that it is reasonable 

to continue to use each Floor Broker’s 

historical volume as a benchmark 

against which to measure growth and 

also believes that updating the 

benchmark to account for the Floor 

Broker’s more recent activity on the 

Exchange is reasonable. The Exchange 

further believes that, in light of the 

market volatility in the first half of 2020 

and the unusually high volumes 

observed in 2021, Floor Broker activity 

in the second half of 2020 would be an 

appropriate benchmark against which to 

measure volume for purposes of the FB 

Prepay Program. All Floor Brokers that 

aim to achieve the rebate would still be 

required to increase volume executed on 

the Exchange, and the total annual 

rebate available for achieving each Tier 

would continue to be the same 

regardless of whether the Floor Broker 

qualifies based on growth over 30,000 

ADV contract sides or its second half of 

2020 volume, as proposed. 

The Exchange also proposes a series 

of modifications to the percentage 

growth requirements for the Percentage 

Growth Incentive, the percentage 

reductions of annual fixed costs, and the 

Alternative Rebate amounts. The 

Exchange believes the proposed 

modifications would continue to 

incentivize Floor Brokers to participate 

in the FB Prepay Program and would 

generally make the rebates offered 

pursuant to the FB Prepay Program 

more achievable for participating Floor 

Brokers. First, the Exchange proposes to 

decrease certain of the percentage 

growth requirements for the Percentage 

Growth Incentive Tiers. Specifically, the 


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11The Fee Schedule also currently provides that 

the ‘‘Exchange will not issue any refunds in the 

event that a Floor Broker organization’s prepaid 

Eligible Fixed Costs exceeds such actual costs, 

except that the Exchange will refund certain of the 

prepaid Eligible Fixed Costs that were waived for 

Qualifying Firms as defined, and set forth in, NYSE 

Arca OPTIONS: FLOOR and EQUIPMENT and CO– 

LOCATION FEES.’’ See Fee Schedule, FLOOR 

BROKER FIXED COST PREPAYMENT INCENTIVE 

PROGRAM (the ‘‘FB Prepay Program’’). The 

Exchange proposes clarifying changes to (1) delete 

the word ‘‘such’’ from the description of actual 

Eligible Fixed Costs, and (2) delete the reference to 

the circumstances under which the Exchange 

would refund certain prepaid Eligible Fixed Costs, 

as the Fee Schedule no longer provides for a waiver 

to Qualifying Firms in connection with COVID–19 

related considerations. See Securities Exchange Act 

Release No. 92614 (August 9, 2021), 86 FR 44765 

(August 13, 2021) (SR–NYSEArca–2021–69) 

(removing language from the Fee Schedule 

associated with COVID–19 related fee waivers). 

12 15 U.S.C. 78f(b). 

13 15 U.S.C. 78f(b)(4) and (5). 

14See Securities Exchange Act Release No. 51808 

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

(S7–10–04) (‘‘Reg NMS Adopting Release’’). 

15The 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-DataReports/Volume-and-Open-Interest/MonthlyWeekly-Volume-Statistics. 

16Based on a compilation of OCC data for 

monthly volume of equity-based options and 

monthly volume of ETF-based options, see id., the 

Exchange’s market share in equity-based options 

Exchange proposes to reduce the 

requirement for Tier 2 from 25% to 15% 

and for Tier 3 from 50% to 30%. 

Second, the Exchange proposes to 

modify the total percentage reduction of 

pre-paid annual Eligible Fixed Costs 

offered for certain Tiers. Specifically, 

the Exchange proposes to modify the 

percentage for Tier 1 from 25% to 10% 

and for Tier 3 from 75% to 80%. Third, 

the Exchange proposes to increase the 

Alternative Rebate offered for Tiers 1 

through 3, as set forth in the table 

below. Finally, the Exchange proposes 

to eliminate Tiers 4 and 5. The 

Exchange believes eliminating these 

Tiers is reasonable in light of the 

proposed changes described above, 

including because Tier 3, as modified, 

would offer participating Floor Brokers 

an Alternative Rebate amount greater 

than the amount currently offered by 

either Tier 4 or 5. 

The following table reflects the 

proposed changes (with deletions in 

brackets and new text italicized): 

FB PREPAYMENT PROGRAM INCENTIVES

[Based on annual ADV in contract sides for the calendar year] 

Tier Percentage growth incentive 

Total percentage reduction of 

pre-paid annual Eligible Fixed 

Costs 

Alternative rebate 

Tier 1 ....................... 5% ............................................... [25%] 10% ................................... [$4,000] $8,000/month. 

Tier 2 ....................... [25%] 15% ................................... 50% ............................................. [$6,000] $18,000/month. 

Tier 3 ....................... [50%] 30% ................................... [75%] 80% ................................... [$8,000] $24,000/month. 

[Tier 4 ...................... 100% ........................................... 80% ............................................. $14,000/month]. 

[Tier 5 ...................... 150% ........................................... 100% ........................................... $18,000/month]. 

Thus, as proposed, a participating 

Floor Broker would qualify for the 

Percentage Growth Incentive by 

executing ADV growth in manual 

billable contract sides that is 5%, 15%, 

or 30% over the greater of (1) 30,000 

contract sides ADV, or (2) their ADV 

during the second half of 2020 (i.e., July 

through December 2020). A Floor Broker 

that participates in the FB Prepay 

Program and achieves a Percentage 

Growth Incentive Tier, as modified, will 

continue to be eligible for an annual 

rebate that is the greater of the ‘‘Total 

Percentage Reduction of pre-paid 

annual Eligible Fixed Costs’’ or the 

‘‘Alternative Rebate’’ based on the Tier 

achieved. A Floor Broker that is new to 

the Exchange (or one that did not 

execute at least 30,000 contract sides in 

billable manual ADV in the second half 

of 2020) would continue to have the 

ability to qualify for the Percentage 

Growth Incentive by executing at least 

30,000 contract sides in manual billable 

ADV, increased by the specified 

percentages during the year. The total 

rebate available for achieving each Tier 

would be the same regardless of 

whether the Floor Broker qualifies based 

on 100% of its second half of 2020 

volume or the minimum 30,000 ADV 

contract sides benchmark. 

The Exchange also proposes to modify 

the date it will use for the calculation 

of a Floor Broker’s Eligible Fixed Costs 

for the following calendar year. The FB 

Prepay Program currently specifies that 

a Floor Broker that commits to the 

program will be invoiced in January for 

Eligible Fixed Costs, based on 

annualizing their Eligible Fixed Costs 

incurred in the previous November.11

The Exchange proposes to modify the 

Fee Schedule to specify that the 

annualization of Eligible Fixed Costs 

would be based on costs incurred in 

November 2020. The Exchange believes 

that Floor Brokers’ costs as of November 

2020 would more accurately reflect 

Eligible Fixed Costs for the coming 

calendar year based on anticipated fixed 

costs in 2022. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,12 in general, and 

furthers the objectives of Sections 

6(b)(4) and (5) of the Act,13 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 Proposed Rule Change Is 

Reasonable 

The Exchange operates in a highly 

competitive market. The Commission 

has repeatedly expressed its preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. In Regulation NMS, the 

Commission highlighted the importance 

of market forces in determining prices 

and SRO revenues and, also, recognized 

that 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.’’ 14

There are currently 16 registered 

options exchanges competing for order 

flow. Based on publicly-available 

information, and excluding index-based 

options, no single exchange has more 

than 16% of the market share of 

executed volume of multiply-listed 

equity and ETF options trades.15

Therefore, currently no exchange 

possesses significant pricing power in 

the execution of multiply-listed equity 

and ETF options order flow. More 

specifically, in November 2021, the 

Exchange had less than 13% market 

share of executed volume of multiplylisted equity and ETF options trades.16


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was 10.35% for the month of November 2020 and 

12.99% for the month of November 2021. 

The Exchange believes that the evershifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can shift order flow, or discontinue or 

reduce use of certain categories of 

products, in response to fee changes. 

Accordingly, competitive forces 

constrain options exchange transaction 

fees. Stated otherwise, changes to 

exchange transaction fees can have a 

direct effect on the ability of an 

exchange to compete for order flow. 

The Exchange believes the proposed 

modifications to the FB Prepay Program 

are reasonable because participation in 

the program is optional, and Floor 

Brokers can elect to participate and seek 

to qualify for the Percentage Growth 

Incentive as they see fit. The Exchange 

also believes that the proposed change 

is reasonably designed to encourage 

Floor Brokers to provide liquidity on the 

Exchange, to continue to incent Floor 

Brokers to participate in the FB Prepay 

Program, and to ensure that Floor 

Brokers that are new to the Exchange (or 

Floor Brokers that did not execute more 

than 30,000 ADV in contract sides) 

could also participate in the program, 

including by continuing to offer two 

alternative means to achieve the same 

rebate at each Tier. The Exchange 

believes that 30,000 ADV is a reasonable 

minimum threshold above which a 

participating Floor Broker would need 

to increase volume in order to realize 

the Percentage Growth Incentive (and is 

on a similar playing field with Floor 

Brokers that exceeded this volume 

requirement in 2020). For Floor Brokers 

that exceeded the 30,000 ADV in the 

second half of 2020, the Exchange 

believes it is reasonable to use each 

Floor Broker’s historical volume as a 

benchmark against which to measure 

future growth to achieve the Percentage 

Growth Incentive and further believes 

that activity in the second half of 2020 

would provide an appropriate updated 

benchmark in light of the market 

volatility in the first half of 2020 and the 

unusually high volumes observed in 

2021. 

In addition, the Exchange believes 

that the proposed changes to the 

Percentage Growth Incentive are 

reasonable because they are designed to 

continue to incent Floor Broker 

participation in the FB Prepay Program 

by making the rebates offered under the 

FB Prepay Program generally more 

achievable and by offering increased 

rebate amounts and are therefore 

designed to encourage increased 

executions by Floor Brokers on the 

Exchange, which activity would benefit 

all market participants. 

The Exchange also believes that the 

proposed change with respect to the 

date used for the calculation of Eligible 

Fixed Costs is reasonable because it 

expects Floor Broker organizations’ 

November 2020 costs to provide a more 

accurate basis for annualizing Eligible 

Fixed Costs for the coming calendar 

year based on anticipated fixed costs in 

2022. 

Finally, to the extent the proposed 

change continues to attract greater 

volume and liquidity to the Exchange 

Floor, the Exchange believes the 

proposed change would improve the 

Exchange’s overall competitiveness and 

strengthen its market quality for all 

market participants. In the backdrop of 

the competitive environment in which 

the Exchange operates, the proposed 

rule change is a reasonable attempt by 

the Exchange to increase the depth of its 

market and improve its market share 

relative to its competitors. 

The Proposed Rule Change Is an 

Equitable Allocation of Credits and Fees 

The Exchange believes the proposed 

rule change is an equitable allocation of 

its fees and credits. The proposal is 

based on the amount and type of 

business that Floor Brokers transact on 

the Exchange, and Floor Brokers are not 

obligated to participate in the FB Prepay 

Program or attempt to trade sufficient 

volume to qualify for one of the 

Percentage Growth Incentive Tiers. In 

addition, all participating Floor Brokers 

have the opportunity to qualify for the 

same rebate at each Tier through two 

alternatives means (i.e., growth over the 

greater of at least 30,000 contract sides 

in billable ADV or the Floor Broker’s 

total billable manual ADV in the second 

half of 2020). The Exchange also notes 

that the proposed changes are designed 

to encourage Floor Brokers that have 

previously enrolled in the FB Prepay 

Program to reenroll for the upcoming 

year, as well as to attract Floor Brokers 

that have not yet participated in the 

program. 

Moreover, the Exchange believes that 

the proposed modifications to the FB 

Prepay Program are an equitable 

allocation of fees and credits because 

they would apply to participating Floor 

Brokers equally and are intended to 

encourage the important role performed 

by Floor Brokers in facilitating the 

execution of orders via open outcry and 

providing opportunities to obtain price 

improvement, a function which the 

Exchange wishes to support for the 

benefit of all market participants. The 

Exchange further believes that the 

proposed change with respect to the 

calculation of Eligible Fixed Costs is 

equitable because it would continue to 

be based on each Floor Broker 

organization’s annualized costs and 

because the November 2020 basis for 

annualizing costs would provide a more 

accurate reflection of Eligible Fixed 

Costs for the coming calendar year 

based on anticipated fixed costs in 2022. 

To the extent that the proposed 

change continues to incent Floor 

Brokers to participate in the FB Prepay 

Program and achieve the volume 

required to qualify for the Percentage 

Growth Incentive, the increased order 

flow would continue to make the 

Exchange a more competitive venue for, 

among other things, order execution. 

Similarly, to the extent the proposed 

change encourages Floor Brokers to 

participate in a greater variety of 

transactions on the Exchange, the 

resulting increased order flow would 

likewise continue to make the Exchange 

a more competitive venue for order 

execution. Thus, the Exchange believes 

the proposed rule change would 

improve market quality for all market 

participants on the Exchange and, as a 

consequence, attract more order flow to 

the Exchange, thereby improving 

market-wide quality and price 

discovery. 

The Proposed Rule Change Is Not 

Unfairly Discriminatory 

The Exchange believes the proposed 

modifications to the FB Prepay Program 

are not unfairly discriminatory because 

they would apply to all similarlysituated Floor Brokers. The proposal is 

based on the amount and type of 

business transacted on the Exchange, 

and Floor Brokers are not obligated to 

participate in the FB Prepay Program or 

try to achieve any of the Percentage 

Growth Incentive Tiers. 

The Exchange also believes that the 

proposed change is not unfairly 

discriminatory to non-Floor Brokers 

because it is intended to encourage 

Floor Brokers to continue facilitating the 

execution of orders via open outcry and 

providing opportunities to obtain price 

improvement, a function that benefits 

all market participants. 

To the extent that the proposed 

change continues to attract participation 

in the FB Prepay Program and incent 

Floor Brokers to increase volume to 

qualify for the Percentage Growth 

Incentive, the increased order flow 

would continue to make the Exchange a 

more competitive venue for, among 

other things, order execution. Thus, the 

Exchange believes the proposed rule 

change would improve market quality 

for all market participants on the 

Exchange and, as a consequence, attract 


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17See Reg NMS Adopting Release, supra note 14, 

at 37499. 

18 15 U.S.C. 78s(b)(3)(A). 

19 17 CFR 240.19b–4(f)(2). 

20 15 U.S.C. 78s(b)(2)(B). 

more order flow to the Exchange thereby 

improving market-wide quality and 

price discovery. 

In addition, to the extent that the 

proposed change attracts a variety of 

transactions to the Exchange, this 

increased order flow would continue to 

make the Exchange a more competitive 

venue for order execution. Thus, the 

Exchange believes the proposed rule 

change would improve market quality 

for all market participants on the 

Exchange and, as a consequence, attract 

more order flow to the Exchange Floor, 

thereby improving market-wide quality 

and price discovery. The resulting 

increased volume and liquidity would 

provide more trading opportunities and 

tighter spreads to all market participants 

and thus would promote just and 

equitable principles of trade, remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, protect investors and the public 

interest. 

Finally, the Exchange believes that it 

is subject to significant competitive 

forces, as described below in the 

Exchange’s statement regarding the 

burden on competition. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

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

the Act, the Exchange does not believe 

that the proposed rule change would 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

Instead, as discussed above, the 

Exchange believes that the proposed 

changes would encourage the 

submission of additional liquidity to a 

public exchange, thereby promoting 

market depth, price discovery and 

transparency and enhancing order 

execution opportunities for all market 

participants. As a result, the Exchange 

believes that the proposed change 

furthers the Commission’s goal in 

adopting Regulation NMS of fostering 

integrated competition among orders, 

which promotes ‘‘more efficient pricing 

of individual stocks for all types of 

orders, large and small.’’ 17

Intramarket Competition. The 

Exchange believes the proposed change 

will continue to incent Floor Brokers to 

participate in the FB Prepay Program 

and encourage order flow to be directed 

to the Exchange Floor, which would 

enhance the quality of quoting and may 

increase the volumes of contracts traded 

on the Exchange. To the extent that the 

proposed change imposes an additional 

competitive burden on non-Floor 

Brokers, the Exchange believes that any 

such burden would be appropriate 

because of Floor Brokers’ important role 

in facilitating the execution of orders via 

open outcry and providing 

opportunities for price improvement, 

and the Exchange believes the proposed 

change is designed to encourage and 

support that function. 

In addition, to the extent that the 

proposed change in fact encourages 

Floor Broker volume, all market 

participants should benefit from the 

improved market liquidity. Enhanced 

market quality and increased 

transaction volume that results from the 

anticipated increase in order flow 

directed to the Exchange will benefit all 

market participants and improve 

competition on the Exchange. 

Intermarket Competition. The 

Exchange believes that the proposed 

change would promote competition 

between the Exchange and other 

execution venues by encouraging 

additional orders to be sent to the 

Exchange Floor for execution. The 

proposed modifications to the FB 

Prepay Program are designed to 

continue to incent Floor Broker 

participation in the program, including 

by making the incentives more 

achievable and increasing the amounts 

of the rebates available. The Exchange 

thus believes that the proposed change 

would continue to encourage Floor 

Brokers to execute orders on the Floor 

of the Exchange, which would increase 

volume and liquidity, to the benefit of 

all market participants by providing 

more trading opportunities and tighter 

spreads. 

Given the robust competition for 

volume among options markets, 

implementing programs to attract order 

flow, such as the proposed 

modifications to the FB Prepay Program, 

are consistent with the above-mentioned 

goals of the Act. 

The Exchange notes that it operates in 

a highly competitive market in which 

market participants can readily favor 

competing venues. In such an 

environment, the Exchange must 

continually review, and consider 

adjusting, its fees and credits to remain 

competitive with other exchanges. For 

the reasons described above, the 

Exchange believes that the proposed 

rule change reflects this competitive 

environment. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 18 of the Act and 

subparagraph (f)(2) of Rule 19b–4 19

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) 20 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– 

NYSEArca–2022–02 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–NYSEArca–2022–02. 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/ 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 87, No. 17 / Wednesday, January 26, 2022 / Notices 4095 

21 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See NYSE Arca Rule 6.1A–O(a)(13). 

5The Exchange has announced that, pending 

regulatory approval, it will begin migrating 

Exchange-listed options to Pillar on February 7, 

2022, available here: https://w0ww.nyse.com/ 

trader-update/history#110000387355. See also 

Securities Exchange Act Release No. 92304 (June 

30, 2021), 86 FR 36440 (July 9, 2021) (SR– 

NYSEArca–2021–47) (Notice of Filing of Proposed 

Rule Change for New Rules 6.1P–O, 6.37AP–O, 

6.40P–O, 6.41P–O, 6.62P–O, 6.64P–O, 6.76P–O, and 

6.76AP–O and Amendments to Rules 1.1, 6.1–O, 

6.1A–O, 6.37–O, 6.65A–O and 6.96–O) and 

Amendment No. 2 to SR–NYSEArca–2021–47, 

available here: https://www.sec.gov/comments/srnysearca-2021-47/srnysearca202147-20109876- 

264219.pdf. 

6The Exchange notes that the NYSE Arca Equities 

exchange adopted a similar fee cap in connection 

with its migration to the Pillar technology platform 

in 2017 so that its member organizations would not 

incur additional charges during the transition 

period. See Securities Exchange Act Release No. 

81573 (September 11, 2017), 82 FR 43430 

(September 15, 2017) (SR–NYSEArca–2017–97) 

(providing for a temporary cap on monthly fees for 

use of ports during Pillar transition). 

7 15 U.S.C. 78f(b). 

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–NYSEArca–2022–02, and 

should be submitted on or before 

February 16, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–01470 Filed 1–25–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94017; No. SR–NYSEArca– 

2022–03] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the NYSE Arca 

Options Fee Schedule To Cap Certain 

Port Fees 

January 20, 2022. 

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 

14, 2022, 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 amend the 

NYSE Arca Options Fee Schedule (the 

‘‘Fee Schedule’’) to cap certain port fees 

in connection with the Exchange’s 

migration to a new trading platform. 

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 cap certain port fees 

during the Exchange’s migration of 

options trading to a new electronic 

trading platform. 

Currently, the Exchange conducts 

options trading on an electronic 

platform known as ‘‘OX.’’ OX refers to 

the Exchange’s electronic order 

delivery, execution, and reporting 

system for designated option issues 

through which orders and quotes of 

Users are consolidated for execution 

and/or display.4

On or about February 7, 2022, the 

Exchange anticipates beginning the 

migration of its options trading to a new 

technology platform known as Pillar.5

The Exchange proposes to adopt a cap 

on the monthly fees assessed for the use 

of certain ports connecting to the 

Exchange, which will go into effect on 

the day the Exchange commences its 

migration to the Pillar platform and 

remain in effect until the end of the 

month in which the migration is 

completed (the ‘‘Migration Period’’). 

Specifically, the Exchange proposes to 

cap the monthly fees charged to an OTP 

Holder or OTP Firm (collectively, ‘‘OTP 

Holders’’) for the use of Order/Quote 

Entry Ports, Quote Takedown Ports, and 

Drop Copy Ports (collectively, the ‘‘Port 

Fees’’) during the Migration Period (the 

‘‘Migration Cap’’). The Migration Cap 

will be based on the number of ports an 

OTP Holder is billed for in the month 

preceding the beginning of the 

Exchange’s migration to the Pillar 

platform, except that if an OTP Holder 

reduces the number of ports used during 

the Migration Period (i.e., incurs Port 

Fees below the Migration Cap), the OTP 

Holder would only be billed for the 

actual number of ports used. 

Without this proposed rule change, 

the Fee Schedule provides that OTP 

Holders would be charged for the use of 

both legacy OX platform ports and new 

Pillar platform ports, which could 

significantly increase costs to OTP 

Holders during the Migration Period. 

Thus, the proposed Migration Cap is 

intended to encourage OTP Holders to 

maintain the same levels of interaction 

with Exchange during the Migration 

Period, as well as promptly migrate to 

the more efficient Pillar technology 

platform, without incurring additional 

Port Fees as a result of the transition.6

The Exchange proposes to implement 

this fee change on the day it commences 

its migration to the Pillar technology 

platform. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,7 in general, and 

furthers the objectives of Sections 


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