Document ID: SEC-2014-1903-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2014-11-13T05:00Z

[Federal Register Volume 79, Number 219 (Thursday, November 13, 2014)]
[Notices]
[Pages 67496-67498]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-26843]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73542; File No. SR-NYSEMKT-2014-87]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Proposed Rule Change Amending the NYSE Amex Options Fee Schedule To Add 
a Service Fee for Certain Post Trade Adjustments Performed by the 
Exchange To Be Effective December 1, 2014

November 6, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 28, 2014, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') 
filed with the Securities and Exchange Commission (the ``Commission'') 
a proposed rule change as described in Items I, II and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Amex Options Fee Schedule 
(``Fee Schedule'') to add a service fee for certain post-trade 
adjustments performed by the Exchange. The Exchange proposes to 
implement the fee

[[Page 67497]]

change effective December 1, 2014. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to add a service 
fee for certain post-trade adjustments performed by the Exchange (the 
``Service Fee''). The Exchange proposes to implement the Service Fee 
effective December 1, 2014. As described below, the proposed Service 
Fee would apply to certain post-trade adjustments performed by Exchange 
staff. The purpose of the proposed Service Fee is to ensure a fair and 
reasonable use of Exchange resources by allowing the Exchange to recoup 
for valuable employee time and resources expended on these post-trade 
adjustments that may also be self-executed by ATP Holders. In addition, 
the Exchange believes that the proposed Service Fee would incentivize 
ATP Holders to process their own post-trade adjustments going forward.
    In an effort to conserve Exchange resources, the Exchange has 
provided ATP Holders with the functionality to perform certain of their 
own post-trade adjustments. Specifically, ATP Holders may perform post-
trade adjustments on their side of the trade that do not affect the 
contractual terms of a transaction. For example, ATP Holders may 
currently make the following non-contractual post-trade adjustments 
without Exchange interaction: changing the position indicator (e.g., 
from Open to Close or Close to Open); adding or removing Clearing 
Member Trade Agreement (``CMTA'') information; allocating trades (e.g., 
adding multiple executing domains or ``give-ups''); changing the 
clearing account type (e.g., Customer, Firm, Market Maker) and 
modifying the optional data field, which may be used by ATP Holders for 
their own internal back-office processing (collectively, the ``Post-
Trade Adjustments'').
    Notwithstanding the availability of functionality for ATP Holders 
to perform this function themselves, ATP Holders still send the 
Exchange a significant number of requests, on a daily basis, to perform 
these straightforward Post-Trade Adjustments on the ATP Holders' 
behalf. The Exchange uses its best efforts to respond to these requests 
by ATP Holders in a timely manner. While the Exchange is committed to 
delivering a certain level of customer service to its ATP Holders, it 
believes that performing the Post-Trade Adjustments free of charge 
results in the diversion of valuable Exchange time and resources in a 
manner that is not a [sic] fair and equitable to either the Exchange 
or, ultimately the ATP Holders.
    Thus, to help offset the costs of having Exchange staff process 
Post-Trade Adjustments on behalf of ATP Holders, the Exchange is 
proposing a $5.00 Service Fee, per trade adjusted. The Post-Trade 
Adjustments that would be subject to the proposed Service Fee would be 
only those Post-Trade Adjustments that do not affect the contractual 
terms of a transaction and that are performed by the Exchange on behalf 
of ATP Holders when the ATP Holders could otherwise enter the Post-
Trade Adjustments on their own behalf.\3\ The Exchange notes that if an 
outage or malfunction of an Exchange system makes it infeasible for ATP 
Holders to enter Post-Trade Adjustments on their own behalf, the 
Exchange would not assess any Service Fees to process Post-Trade 
Adjustments on behalf of ATP Holders.
---------------------------------------------------------------------------

    \3\ Should the Exchange propose to charge ATP Holders for any 
additional post-trade adjustments made on behalf of ATP Holders, 
other than non-contractual changes that ATP Holders may do on their 
own behalf, the Exchange would only do so pursuant to a separate fee 
filing.
---------------------------------------------------------------------------

    The $5.00 Service Fee would apply to each trade adjusted, not to 
each non-contractual change that the Exchange is requested to make to a 
given trade.\4\ For example, if, for a given trade, an ATP Holder 
requested that the Exchange change both the position indicator from 
open to close and at the same time change the CMTA information, the 
Service Fee would still be $5.00, because the changes were for the same 
trade. The Exchange believes that the $5.00 Service Fee would 
reasonably compensate the Exchange for the resources diverted to the 
Post-Trade Adjustments (i.e., cover employee and overhead expenses). 
The Exchange also believes that the $5.00 Service Fee may operate as an 
effective disincentive for ATP Holders that have relied on the Exchange 
to perform these services free of charge and believes these ATP Holders 
may take these tasks in-house given the newly introduced costs.
---------------------------------------------------------------------------

    \4\ The Exchange proposes to add this Service Fee to the Fee 
Schedule immediately following ``Report Fees'' under a new section 
entitled ``NYSE AMEX OPTIONS: SERVICE FEES.''
---------------------------------------------------------------------------

    The Exchange is proposing to discount the $5.00 fee to $1.00 per 
trade adjusted for the first three months that the Service Fee is 
operative (i.e., December 1, 2014--February 28, 2015). The Exchange 
believes this temporary discount is reasonable as it would provide ATP 
Holders time to adjust to the Exchange's new policy. To further provide 
ATP Holders notice of this proposed change, the Exchange previously 
announced by Trader Update the specific type of Post-Trade Adjustments 
that would be subject to the Service Fee.\5\
---------------------------------------------------------------------------

    \5\ See NYSE Amex Options Trader Update, available here, http://www1.nyse.com/pdfs/NYSE_Amex_Options_Service_Fee_Post_Trade_Adjustments_10_13_14.pdf.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\7\ 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the Service Fee is reasonable, equitable 
and not unfairly discriminatory because it is designed to ensure a fair 
and reasonable use of Exchange resources by allowing the Exchange to 
recoup for valuable employee time and resources expended on the Post-
Trade Adjustments. The Exchange believes that imposing this $5.00 fee 
per trade adjusted would reasonably compensate the Exchange for the 
resources diverted to the Post-Trade Adjustments (i.e., cover employee 
and overhead expenses).\8\
---------------------------------------------------------------------------

    \8\ As noted above, the Exchange would offer an introductory 
rate of $1.00 per trade adjusted for the first three months that the 
Service Fee is operational.
---------------------------------------------------------------------------

    Moreover, the Exchange believes that the Service Fee would promote 
a fair

[[Page 67498]]

and orderly market and protect investors and the public interest 
because the Service Fee may result in a more efficient use of Exchange 
resources, which would benefit all market participants.
    The Exchange believes that the Service Fee is reasonable, equitable 
and not unfairly discriminatory because ATP Holders would have the 
option, as they do today, to perform the Post-Trade Adjustments 
themselves and the Service Fee would only apply if ATP Holders elected 
to rely on the Exchange to perform these adjustments for them. 
Moreover, the Service Fee would apply equally to all market 
participants who opt to rely on the Exchange to perform the Post-Trade 
Adjustments. In fact, the Exchange believes that the proposed Service 
Fee would incentivize ATP Holders to process their own Post-Trade 
Adjustments going forward.
    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,\9\ 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 proposed rule Service Fee is not intended to 
address any competitive issues among exchanges or ATP Holders but 
rather to more efficiently use the Exchange's employee time and 
resources, which may ultimately benefit ATP Holders.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues, and 
imposing the Service Fee may enable the Exchange to improve efficiency 
and ensure the fair and reasonable use of Exchange resources. 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 Service Fee 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) \10\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \11\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-2014-87 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-NYSEMKT-2014-87. 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 offices 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-2014-
87, and should be submitted on or before December 4, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O' Neill,
Deputy Secretary.
[FR Doc. 2014-26843 Filed 11-12-14; 8:45 am]
BILLING CODE 8011-01-P