Document ID: SEC-2015-1392-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2015-08-20T04:00Z

[Federal Register Volume 80, Number 161 (Thursday, August 20, 2015)]
[Notices]
[Pages 50683-50685]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-20548]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75704; File No. SR-NYSEArca-2015-71]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE 
Arca Options Fee Schedule

August 14, 2015.
    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 August 6, 2015, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') 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 amend the NYSE Arca Options Fee Schedule 
(``Fee Schedule''). The Exchange proposes to implement the fee change 
effective August 6, 2015. The text of the proposed rule 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to modify the rates that Lead Market 
Makers and Market Makers are charged for Manual Executions, and to 
establish tiers for the Firm and Broker Dealer Monthly Firm Cap. The 
Exchange proposes to implement fee changes effective on August 6, 2015.
    First, the Exchange is proposing to increase the rates that Lead 
Market Makers and Market Makers are charged for Manual Executions. 
Currently, Lead Market Makers are assessed a fee of $0.09 per contract, 
and Market Makers a fee of $0.16 per contract, for Manual Executions. 
The Exchange proposes to raise each fee $0.09 per contract, to $0.18 
for Lead Market Makers, and $0.25 for Market Makers. With this proposed 
change, the fee for Market Makers would be the same as the fee charged 
to Firm and Broker Dealer executions. The Lead Market Maker rate would 
be increased by the same amount, while maintaining a lower rate for 
Lead Market Makers because Lead Market Makers pay a monthly Rights Fee 
and have greater quoting obligations.
    Second, the Exchange is proposing to establish tiers for the Firm 
and Broker Dealer Monthly Firm Cap that are tied to Customer and 
Professional Customer Monthly Posting Credit Tiers and Qualifications 
for Executions in Penny Pilot Issues \4\ (``Customer and Professional 
Customer Posting Tiers''). At present, the Exchange places a limit, or 
cap, of $100,000 per month on combined Firm Proprietary Fees and Broker 
Dealer Fees, for transactions clearing in the customer range, if 
executed in open outcry (Manual Transactions), including fees for QCC 
transactions executed by a Floor Broker. The Firm Cap excludes Strategy 
Executions, Royalty Fees, and firm trades executed via a Joint Back 
Office agreement, and Mini option contracts.
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    \4\ See Fee Schedule, NYSE Arca Options: Trade-Related Charges 
for Standard Options, Customer and Professional Customer Monthly 
Posting Credit Tiers and Qualifications for Executions in Penny 
Pilot Issues (setting forth the monthly volume requirements and 
credits applied for each tier achieved).
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    The Exchange proposes to introduce tiered caps, with $100,000 being 
the maximum Monthly Firm Cap, which would decrease based on the Firm or 
Broker Dealer achieving Tier 2 or higher on the Customer and 
Professional Customer Posting Tiers (``Tiered Firm Caps''). 
Specifically, the higher Customer and Professional Customer Monthly 
Posting Credit Tier that a Firm or Broker Dealer achieves, the lower 
the Tiered Firm Cap, with the Cap getting progressively lower upon 
achieving higher tiers.
    The proposed Tiered Firm Caps and the corresponding Customer and 
Professional Customer Monthly Posting Credit Tiers are set forth in the 
table below:

              Firm and Broker Dealer Monthly Firm Cap Tiers
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  Customer and professional customer monthly posting credit
                        tier achieved                           Firm cap
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Base or Tier 1...............................................   $100,000
Tier 2.......................................................     85,000
Tier 3.......................................................     80,000
Tier 4.......................................................     75,000
Tier 5.......................................................     70,000
Tier 6.......................................................     65,000
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\6\ 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that increasing the fees for Lead Market 
Maker and Market Maker Manual executions is

[[Page 50684]]

reasonable and not unfairly discriminatory as it brings Market Maker 
fees in line with the fees paid by Firms and Broker Dealers that engage 
in trading activity similar to Market Makers. The Exchange also notes 
that the proposed rate for Market Makers is still lower than the rate 
charged by competing options exchanges.\7\ The Exchange also notes that 
other competing options exchanges likewise similarly charge Market 
Makers the same transaction fees for manual transactions as Broker 
Dealers and Firms.\8\ The Exchange also notes that Market Makers have 
alternative avenues to reduce transaction fees not available to Firms 
and Broker Dealers.\9\ The Exchange also believes that is not unfairly 
discriminatory to assess a lower rate for Lead Market Makers because 
Lead Market Makers pay Rights Fees and have more burdensome quoting 
obligations.
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    \7\ See, e.g., NASDAQ OMX PHLX, available here, http://www.nasdaqtrader.com/Micro.aspx?id=phlxpricing (charging market 
makers $0.30 per contract for manual executions).
    \8\ See, e.g., NYSE Amex Options, available here, https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf (charging both non-Amex options 
market makers and broker deals alike $0.25 per contract for manual 
executions).
    \9\ See Fee Schedule (various credits available to Market Makers 
for posted monthly volume, including for executions in Penny Pilot 
Issues and SPY and Market Maker Incentive).
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    The Exchange also believes that the proposal to institute Tiered 
Firm Caps is reasonable equitable, and not unfairly discriminatory, as 
the Tiered Firm Caps would not be meaningful to Customers or 
Professional Customers that are not charged any transaction charges 
[sic] Manual Executions. The proposed Tiered Firm Caps are also 
reasonable, equitable and not unfairly discriminatory towards Market 
Makers, as Market Makers have alternative avenues to reduce transaction 
fees not available to Firms and Broker Dealers.\10\ In addition, the 
Exchange believes that linking the Tiered Firm Caps to the Customer and 
Professional Customer Posting Credit Tiers would benefit all market 
participants because it renders the Caps more achievable, which, in 
turn encourages additional open outcry order flow, with which Market 
Makers may interact, once fees are capped. Further, the proposed change 
likewise encourages Firms and Broker Dealers to achieve higher monthly 
Customer and Professional Customer Posting Tiers, which increases 
liquidity and provides greater opportunities for all market 
participants to interact with electronic order flow. This additional 
volume and liquidity would benefit all Exchange participants through 
increased opportunities to trade as well as enhancing price discovery 
and price improvement.
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    \10\ See id.
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    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 a wider variety of business to the Exchange, which would 
continue to make the Exchange a more competitive venue for, among other 
things, order execution and price discovery.
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    \11\ 15 U.S.C. 78f(b)(8).
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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. 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) \12\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \13\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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) \14\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \14\ 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-NYSEArca-2015-71 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-2015-71. 
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 the filing will also be 
available for inspection and copying at the NYSE's principal office and 
on its Internet Web site at www.nyse.com. 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-

[[Page 50685]]

NYSEArca-2015-71, and should be submitted on or before September 10, 
2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-20548 Filed 8-19-15; 8:45 am]
BILLING CODE 8011-01-P