Document ID: SEC-2016-1868-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2016-10-19T04:00Z

[Federal Register Volume 81, Number 202 (Wednesday, October 19, 2016)]
[Notices]
[Pages 72133-72135]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25238]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79089; File No. SR-NYSEMKT-2016-91]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Change To Modify the NYSE Amex 
Options Fee Schedule

October 13, 2016.
    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 October 3, 2016, NYSE MKT LLC (the

[[Page 72134]]

``Exchange'' or ``NYSE MKT'') 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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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify the NYSE Amex Options Fee Schedule. 
The proposed change is available on the Exchange's Web site 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 Section I.F. of the Fee 
Schedule to treat Professional Customer Qualified Contingent Cross 
(``QCC'') transactions the same as Customer QCC transactions.\4\ The 
Exchange proposes to implement these changes effective on October 3, 
2016.
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    \4\ See Fee Schedule, Section I.F. (Qualified Contingent Cross 
(``QCC'') Fees & Credits for Standard Options & Mini Options), 
available here, https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf.
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    Section I.F. of the Fee Schedule describes QCC Fees and Credits. 
Currently, the Exchange imposes the following fees for QCC transactions 
in Standard Options:

------------------------------------------------------------------------
                                                               Standard
                                                             options per
                        Participant                            contract
                                                                fee or
                                                                credit
------------------------------------------------------------------------
Customer...................................................        $0.00
Non-Customer excluding Specialists and e-Specialists.......         0.20
Specialists and e-Specialists..............................         0.13
------------------------------------------------------------------------

    Currently, Professional Customer QCC trades are charged as ``Non-
Customer excluding Specialists and e-Specialists.'' \5\ The Exchange 
also offers a Floor Broker rebate which varies based on the volume of 
executed QCC orders, provided there are not Customers on both sides of 
the transaction (``Floor Broker Rebate'').\6\
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    \5\ See id., note 1 (providing a per contract rebate of either 
$0.07 or $0.10 to Floor Brokers executing qualifying QCC volume, 
depending on whether the Floor Broker executes 300,000 or fewer 
contracts ($0.07 per contract) or more than 300,000 contracts ($0.10 
per contract)).
    \6\ See, e.g., Securities Exchange Act Release No. 68139 
(November 2, 2012), 77 FR 66902, 66902, n. 5 (November 7, 2012) (SR-
NYSEMKT-2012-56) (noting that Professional Customers are treated as 
Non-Customers in filing to modify QCC fees for Specialists and e-
Specialists).
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    The Exchange proposes to treat Professional Customers the same as 
Customers for purposes of fees for QCC transactions. In other words, 
Professional Customers would be charged $0.00 for QCC trades. Thus, the 
Exchange proposes to modify Section I.F. to add reference to 
Professional Customers (along with the existing reference to Customers) 
to reflect this proposed change.
    Currently, the Floor Broker Rebate is not available for QCC trades 
where neither side of the QCC is billable (i.e., Customer-to-Customer 
QCC transactions). Thus, by extension, the Exchange proposes that the 
Floor Broker Rebate would likewise be unavailable for QCC trades where 
there is a Professional Customer or Customer, or both, on both sides of 
the QCC transaction, as such transactions are all non-billable. For 
example, a Floor Broker executing as a QCC trade an order from a 
Customer buying 1,000 ABC Dec 40 Calls and an order from a Professional 
Customer selling 1,000 ABC Dec 40 Calls at $2.00 would not be eligible 
for the Floor Broker credits. This example would also apply to QCC 
trades with a Professional Customer (or Customer) on both sides of the 
QCC transaction.
    The proposal is designed to attract more QCC volume to the 
Exchange, because there would be no fee for Professional Customer 
orders, and to enhance the Exchange's competitiveness with other 
options exchanges that likewise do not charge QCC fees on Professional 
Customer orders.\7\
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    \7\ See, e.g., NYSE Arca Options Fee Schedule, available here, 
https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf; NASDAQ OMX PHLX LLC (``PHLX'') 
pricing schedule (Section II), available here, http://www.nasdaqtrader.com/Micro.aspx?id=PHLXPricing.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\8\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\9\ 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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes the proposal is reasonable, equitable and not 
unfairly discriminatory as it is consistent with other options markets 
that treat Professional Customers similar to Customers for purposes of 
QCC transaction fees.\10\
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    \10\ See supra note 7.
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    The Exchange also believes that the proposed changes are 
reasonable, equitable and not unfairly discriminatory because 
permitting Professional Customer orders to be treated similar to 
Customer orders (i.e., not be subject to a fee) should attract more QCC 
transactions to the Exchange, which would continue to make the Exchange 
a more competitive venue for, among other things, order execution.
    For these reasons, the Exchange believes that the proposal is 
consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\11\ the Exchange 
does not believe that the proposed rule change will impose any burden 
on competition that is not necessary or appropriate in furtherance of 
the purposes of the Act. Instead, the Exchange believes that the 
proposed change would continue to encourage competition, including by 
attracting additional QCC Transactions to the Exchange, which would 
continue to make the Exchange a more competitive venue for, among other 
things, order execution. The Exchange's proposal does not place on 
undue burden on inter-market competition because other exchanges 
likewise do not

[[Page 72135]]

charge Professional Customers for QCC transactions.\12\
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    \11\ 15 U.S.C. 78f(b)(8).
    \12\ See supra note 7.
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    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. Because competitors are free to modify their own fees in 
response, and because market participants may readily adjust their 
order routing practices, the degree to which fee changes in this market 
may impose any burden on competition is extremely limited. 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)\13\ of the Act and subparagraph (f)(2) of Rule 19b-
4\14\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(2).
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    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)\15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \15\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSEMKT-2016-91 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2016-91. 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 Web site (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 Web site 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 such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEMKT-2016-91, and should 
be submitted on or before November 9, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-25238 Filed 10-18-16; 8:45 am]
 BILLING CODE 8011-01-P