Document ID: SEC-2019-0460-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE American LLC
Posted Date: 2019-04-12T04:00Z

[Federal Register Volume 84, Number 71 (Friday, April 12, 2019)]
[Notices]
[Pages 15020-15022]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07236]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85553; File No. SR-NYSEAMER-2019-09]

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

April 8, 2019.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on March 27, 2019, NYSE American LLC (``NYSE American'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, 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 amend the NYSE American Options Fee 
Schedule (``Fee Schedule''). The Exchange proposes to implement the fee 
change effective April 1, 2019. 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 the Fee Schedule to 
introduce a Floor Broker Volume Rebate Program (``FB Volume Rebate'') 
for Floor Broker organizations (each a ``Floor Broker'').
    The Exchange proposes to offer Floor Brokers the opportunity to 
qualify for a $5,000 rebate each month that the Floor Broker increases 
its Average Daily Volume (``ADV'') by a certain percentage over one of 
two benchmarks. Specifically, a Floor Broker may qualify for the FB 
Volume Rebate by increasing its contract sides in billable manual ADV 
by at least 50% over the greater of:
    (i) 20,000 contract sides in billable manual ADV; or
    (ii) The Floor Broker's total billable manual ADV in contract sides 
during the second half of 2018--i.e., July through December 2018.
    As proposed, the Exchange would exclude Customer volume, Firm 
Facilitation trades, and QCCs from the calculation of a Floor Broker's 
billable manual ADV for purposes of the FB Volume Rebate. In addition, 
the Exchange proposes to exclude from the FB Volume Rebate any volume 
included in the calculation to achieve the Firm Monthly Fee Cap and the 
Strategy Execution Fee Cap, regardless of whether either of these caps 
is achieved, because fees on such volume are already capped and 
therefore such volume does not increase billable manual volume.
    For example, if a Floor Broker achieves 30,000 contract sides 
(i.e., an increase of 50% over 20,000--the minimum volume requirement 
under the first benchmark), that Floor Broker would qualify for the 
monthly $5,000 FB Volume Rebate. However, if that Floor Broker's 
billable manual ADV in contract sides during the second half of 2018 
was 30,000, that Floor Broker would have to achieve at least 45,000 
contract sides (i.e., an increase of 50% over 30,000) to receive the 
rebate--as the FB Volume Rebate applies to the ``50% over the greater 
of'' the two benchmarks, which in this case would be the Floor Broker's 
2018 second half of year volume.
    As described above, the Exchange proposes to enumerate which volume 
would be excluded from the calculation for the FB Rebate Volume. If not 
specifically enumerated, volume would be eligible to be included in the 
calculation. For example, Floor Brokers that participate in the Floor 
Broker Fixed Cost Prepayment Incentive

[[Page 15021]]

Program (the ``FB Prepay Program'') \4\ may apply the same monthly 
contract sides in billable ADV to qualify for both the FB Volume Rebate 
and the Percentage Growth Incentive available via the FB Prepay Program 
provided the Floor Broker meets the (different) requirements of each 
incentive program.\5\
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    \4\ See Fee Schedule, Section III.E (Floor Broker Fixed Cost 
Prepayment Incentive Program), available here: https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf, (providing that the 
Percentage Growth Incentive allows participating Floor Broker's 
[sic] to qualify for incrementally larger discounts on prepaid 
Eligible Fixed Costs by increasing their ADV during 2019 by 
incrementally increasing percentages (i.e., 30%, 65% or 100%, 
respectively), above the greater of: (i) 11,000 contract sides in 
billable manual ADV; or (ii) 110% of the Floor Broker's total 
billable manual ADV in contract sides during the second half of 
2017--i.e., July through December 2017).
    \5\ Consistent with the Exchange's practice of applying monthly 
credits/rebates, the FB Volume Rebate (when achieved) would be paid 
monthly on a one-month lag (i.e., if a Floor Broker achieves the 
benchmark in May 2019, the $5,000 Rebate will be applied in July 
2019); whereas the Percentage Growth Incentive earned in 2019 would 
be paid in January 2020. See, e.g., Fee Schedule, Section III.E 
(providing that ``[p]articipating Floor Broker organizations that 
qualify for the Percentage Growth Incentive will receive their 2019 
rebate in January 2020'').
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    The Exchange proposes to amend Section III.E of the Fee Schedule to 
reflect the FB Volume Rebate by adding a new heading under Section E 
entitled ``Floor Broker Programs,'' renumbering current Section III.E 
as Section III.E.1 and adding the proposed FB Volume Rebate as proposed 
Section III.E.2 to the Fee Schedule.\6\ The proposed FB Volume Rebate 
is designed to encourage Floor Brokers to increase their ADV in 
billable manual contract sides, regardless of whether the Floor Broker 
participates in the FB Prepay Programs [sic], as this should encourage 
more manual volume to be directed to the Exchange.
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    \6\ The Exchange also proposes to make conforming changes to the 
Table of Contents. See proposed Fee Schedule, Table of Contents, 
Preface, Section III.E., 1., 2.
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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 6(b)(4) and (5) of the Act,\8\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
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    The proposal to introduce the FB Volume Rebate is reasonable, 
equitable and not unfairly discriminatory for the following reasons. 
First, the Exchange is offering two alternative means to achieve the 
same rebate to ensure that Floor Brokers that are new to the Exchange 
(or Floor Brokers that did not execute more than 20,000 ADV in contract 
sides in the second half of 2018) could nonetheless be eligible for the 
FB Volume Rebate. The Exchange believes that 20,000 ADV is a reasonable 
minimum threshold above which a participating Floor Broker would need 
to increase volume in order to earn the proposed rebate. For Floor 
Brokers that exceeded the 20,000 ADV in the second half of 2018, the 
Exchange believes it is reasonable to use each Floor Broker's 
historical volume as a benchmark against which to measure future growth 
to earn the proposed rebate. Regardless of which benchmark a Floor 
Broker's growth is measured against, all Floor Brokers that aim to 
achieve the rebate would be required to increase volume executed on the 
Exchange. Thus, the proposed change is equitable and not unfairly 
discriminatory because it applies to qualifying Floor Brokers equally 
and because Floor Brokers serve an important function in facilitating 
the execution of orders via open outcry, which as a price-improvement 
mechanism, the Exchange wishes to encourage and support.
    Moreover, offering incentives to encourage Floor Broker executions 
of manual volume is not new or novel as other options exchanges provide 
incentives to other specific market participants for achieving volume 
levels, including the Percentage Growth Incentive on the Exchange for 
Floor Brokers that participated in the FB Prepay Program.\9\ For 
example, the Cboe Exchange, Inc. (``Cboe'') offers a $9,000 or $15,000 
rebate to Cboe floor brokers that execute an average of 14,000 or 
25,0000, respectively, ``customer and/or professional customer and 
voluntary professional open-outcry contracts per day over the course of 
a calendar month in all underlying symbols,'' with certain enumerated 
exclusions.\10\ Like similar offerings on the Exchange and at other 
options exchange, the Exchange believes the proposed FB Volume Rebate 
would similarly incent Floor Brokers to increase their billable volume 
executed in open outcry on the Exchange, which would benefit all market 
participants by expanding liquidity and providing more trading 
opportunities, even to non-Floor Broker market participants.
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    \9\ See supra note 4.
    \10\ See Cboe Fee Schedule, footnote 25 (at p. 19), available 
here: http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf. 
The Exchange notes that, unlike Cboe, it excludes Customer 
executions from qualifying volumes, while Cboe specifies excluded 
indices and symbols.
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    The Exchange believes that the proposed organizational and non-
substantive changes to the rule text to incorporate the proposed FB 
Volume Rebate under Section III.E of the Fee Schedule would provide 
clarity, transparency and internal consistency to the Fee Schedule 
Exchange rules and would to protect investors and the investing public 
by making the Exchange rules easier to navigate and comprehend.

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. The Exchange does not believe that the proposed 
rule change will impose any burden on intramarket competition that is 
not necessary or appropriate in furtherance of the purposes of the Act 
because while the proposed change benefits Floor Brokers that reach the 
qualifying volume thresholds, Floor Brokers serve an important function 
in facilitating the execution of orders via open outcry, which promotes 
price discovery on the public markets. The Exchange does not believe 
that the proposed rule change will impose any burden on intermarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act because the proposed change only affects trading on 
the Exchange. To the extent that the proposed change makes the Exchange 
a more attractive marketplace for market participants at other 
exchanges, such market participants are welcome to become Exchange 
market participants.

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) \11\ of the Act and

[[Page 15022]]

subparagraph (f)(2) of Rule 19b-4 \12\ 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.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(2).
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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 [email protected]. Please include 
File Number SR-NYSEAMER-2019-09 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-2019-09. 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-2019-09 and should be submitted 
on or before May 3, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-07236 Filed 4-11-19; 8:45 am]
BILLING CODE 8011-01-P