Document ID: SEC-2015-1530-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2015-09-16T04:00Z

[Federal Register Volume 80, Number 179 (Wednesday, September 16, 2015)]
[Notices]
[Pages 55665-55667]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-23214]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75881; File No. SR-NYSEArca-2015-75]

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

September 10, 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 September 1, 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 September 1, 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 criteria used for Lead 
Market Makers and Market Makers (collectively, ``Market Makers'') to 
qualify for the Monthly Posting Credit Tiers For Executions in Penny 
Pilot Issues and SPY (the ``Posting Tiers''). The Exchange proposes to 
implement the fee change effective September 1, 2015.
    Currently, Market Makers qualify for the Posting Tiers by achieving 
certain volume-based criteria based on average electronic executions 
per day.\4\ The Posting Tiers include the Select, Super and Super II 
tiers and the volume requirements to achieve each are as follows:
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    \4\ The Exchange notes that there is a posting credit associated 
with a Base Tier for which there is no volume requirement.
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     Select Tier: a Market Maker must meet an Average Daily 
Volume (``ADV'') of 30,000 contracts from Market Maker Posted Orders in 
both Penny Pilot and non-Penny Pilot issues;
     Super Tier: a Market Maker must meet either (i) an ADV of 
80,000 contracts from Market Maker Posted Orders in both Penny Pilot 
and non-Penny Pilot issues or (ii) an ADV of 200,000 contracts combined 
from all orders in Penny Pilot Issues,\5\ and at least 100,000 of those 
contracts have to be from Posted Orders in Penny Pilot Issues; and
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    \5\ Unlike the Select Tier and Super Tier II, in calculating the 
Super Tier, the Exchange will include the ADV of the Market Maker's 
affiliate(s).
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     Super Tier II: a Market Maker must meet an ADV of 200,000 
contracts from Market Maker orders in all issues, and at least 110,000 
of those contracts have to be from Posted Orders from both Penny Pilot 
and non-Penny Pilot issues.
    The Exchange is proposing to replace the existing thresholds that 
are based on static ADV of contracts traded with market share criteria, 
specifically percentages of total industry customer equity and exchange 
traded fund (``ETF'') option ADV.\6\ The Exchange believes this 
modification would enable Market Makers to achieve the Posting Tiers 
more consistently, despite monthly or seasonal fluctuations in industry 
volume. The Exchange is not proposing to adjust the source of the 
qualifying volume for each Posting Tier. Specifically, the Exchange 
proposes the market share requirements to achieve each Posting Tier as 
follows:
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    \6\ The volume thresholds are based on Market Makers' volume 
transacted electronically as a percentage of total industry Customer 
equity and ETF options volumes as reported by the Options Clearing 
Corporation (the ``OCC''). Total industry customer equity and ETF 
option volume is comprised of those equity and ETF contracts that 
clear in the Customer account type at OCC and does not include 
contracts that clear in either the Firm or Market Maker account type 
at OCC or contracts overlying a security other than an equity or ETF 
security. See OCC Monthly Statistics Reports, available here, http://www.theocc.com/webapps/monthly-volume-reports.
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     Select Tier: a Market Maker would have to achieve at least 
0.25% of Total Industry Customer Equity and ETF option ADV from Market 
Maker Posted Orders in both Penny Pilot and non-Penny Pilot issues;
     Super Tier: a Market Maker would have to achieve either 
(i) at least 0.65% of Total Industry Customer Equity and ETF option ADV 
from Market Maker Posted Orders in both Penny Pilot and non-Penny Pilot 
issues or (ii) at least 1.60% of Total Industry Customer Equity and ETF 
option ADV from all orders in Penny Pilot Issues, all account types, 
with at least 0.80% of Total Industry Customer Equity and ETF option 
ADV from Posted Orders in Penny Pilot Issues; \7\ and
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    \7\ As is the case today, in calculating the Super Tier, the 
Exchange will include the ADV of the Market Maker's affiliate(s).
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     Super Tier II: a Market Maker must achieve at least 1.60% 
of Total Industry Customer Equity and ETF option ADV

[[Page 55666]]

from Market Maker orders in all issues, and at least 0.90% of Total 
Industry Customer Equity and ETF option ADV from Posted Orders from 
both Penny Pilot and non-Penny Pilot issues.
    The Exchange is not proposing any changes to the amount of the 
Posting Credits for any of the tiers.
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 that modifying the qualification criteria for 
Market Maker Posting Credit Tiers is reasonable, equitable, and not 
unfairly discriminatory because it makes the Posting Tiers more 
consistently achievable as the Tiers will be less dependent on 
fluctuations in overall industry volume. The Exchange believes 
modifying the Posting Tiers based on achieving percentages of market 
share is also not unfairly discriminatory as it is based on the amount 
of business conducted on the Exchange and therefore rewards similar 
efforts month-to-month, while not resulting in windfalls during periods 
of heavy volumes, or penalizing firms focused on trading at NYSE Arca 
during months of overall lower volumes.
    The Exchange believes modifying the Posting Tiers based on 
achieving percentages of market share is reasonable, equitable, and not 
unfairly discriminatory because the Exchange utilizes this criterion as 
a basis for determining posting credits to other market participants 
and this criterion is commonly used for this purpose by competing 
exchanges.\10\
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    \10\ See, e.g., Fee Schedule, available here, https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf (Customer and Professional 
Customer Monthly Posting Credit Tiers and Qualifications for 
Executions in Penny Pilot Issues and Customer and Professional 
Customer Posting Credit Tiers in Non Penny Pilot Issues, both based 
on percentage of Total Industry Customer Equity and ETF Option ADV); 
NASDAQ Options Market fee schedule, available at, http://www.nasdaqtrader.com/Micro.aspx?id=optionsPricing (NOM Market Maker 
Rebate to Add Liquidity in Penny Pilot Options based on total 
industry customer equity and ETF option ADV contracts per day in a 
month); BATS Options Exchange fee schedule, available at, http://www.batsoptions.com/support/fee_schedule/ (Market Maker and Non-BATS 
Market Maker Penny Pilot Add Volume Tiers Market Maker and Non-BATS 
Market Maker Non Penny Pilot Add Volume Tiers, both based on 
percentage of total consolidated monthly volume calculated).
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    The Exchange also believes that the proposed change to the 
qualification criteria is reasonable, equitable, and not unfairly 
discriminatory, as the Posting Credits are intended to encourage 
quoting at the National Best Bid and Offer (``NBBO'') which in turn 
benefits both Customers and non-Customers by having narrower spreads 
available for 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 encourage competition, including by attracting a 
wider variety of business to the Exchange, which would make the 
Exchange a more competitive venue for, among other things, order 
execution and price discovery. In addition, by adjusting the 
qualifications to a market share basis rather than per contract volume 
levels, the Exchange believes the proposed change encourages 
competition without undue burden by being based on a share of overall 
business rather than a static volume amount.
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    \11\ 15 U.S.C. 78f(b)(8).
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    Moreover, because the proposed change continues to base the Posting 
Tiers on the amount of business conducted on the Exchange, it would 
apply equally to similarly-situated Marker Makers and would not impose 
a disparate burden on competition either among or between classes of 
market participants.
    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-2015-75 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-2015-75. 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/

[[Page 55667]]

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-
NYSEArca-2015-75 and should be submitted on or before October 7, 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. 2015-23214 Filed 9-15-15; 8:45 am]
 BILLING CODE 8011-01-P