Document ID: SEC-2018-1005-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE American, LLC
Posted Date: 2018-07-02T04:00Z

[Federal Register Volume 83, Number 127 (Monday, July 2, 2018)]
[Notices]
[Pages 31009-31011]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14110]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83524; File No. SR-NYSEAMER-2018-29]

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

June 26, 2018
    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 June 11, 2018, NYSE American LLC (``Exchange'' or ``NYSE 
American'') 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 modify the NYSE American Options Fee 
Schedule (``Fee Schedule''). The Exchange proposes to implement the fee 
change effective June 11, 2018.\4\ 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.
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    \4\ The Exchange originally filed to amend the Fee Schedule on 
June 1, 2018 (SR-NYSEAmer-2018-25) and withdrew such filing on June 
11, 2018.
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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, effective 
June 11, 2018. Specifically, the Exchange proposes to modify certain 
transaction fees.
Rates To Incentivize Non-Customer, Non-Market Maker Volume
    First, the Exchange proposes to eliminate the reduced rates 
available to ATP Holders that transact a certain amount of Electronic 
volume as ``Non-Customer, Non-Market Maker'' (i.e., Electronic volume 
as a Broker-Dealer, Firm, Non-NYSE American Market Maker, or 
Professional Customer). Currently, an ATP Holder that transacts 
Electronic volume as a Non-Customer, Non-Market Maker at least 0.05% 
above that ATP Holder's 2nd Quarter 2017 Non-Customer, Non-Market Maker 
Electronic volume is charged $0.36 per contract (as opposed to $0.50) 
for Penny Pilot Issues and $0.60 (as opposed to $0.75) per contract in 
Non-Penny Pilot Issues.\5\ The Exchange proposes to

[[Page 31010]]

eliminate these reduced rates and references thereto from the Fee 
Schedule.\6\
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    \5\ Such calculations exclude volume in CUBE, QCC, Strategy 
Executions, or volume attributable to orders routed to another 
exchange in connection with the Options Order Protection and Locked/
Crossed Market Plan referenced in Rule 991NY. See Fee Schedule, 
I.A., note 7, available here, https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf.
    \6\ See proposed Fee Schedule, Section I.A. The Exchange notes 
that rather than delete note 7 to Section I.A. it is replacing the 
now deleted text with the reduced Manual rate proposed herein. See, 
e.g., infra n. 10.
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Rates for Manual Transaction (i.e., Executed in Open Outcry)
    Next, the Exchange proposes to modify the fees for Manual 
transactions assessed on NYSE American Options Market Makers (``Market 
Makers'') and Specialists and e-Specialists (collectively, 
``Specialists'').\7\ The Exchange proposes to charge Market Makers 
$0.25 per contract (up from $0.20) and to charge Specialists $0.18 per 
contract (up from $0.13).\8\
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    \7\ Specialists and e-Specialist must be registered as Market 
Makers on the Exchange and are subject to heightened quoting 
obligations. See, e.g., Fee Schedule, Key Terms and Definitions; see 
also Rules 920NY, 927NY and 927.4NY.
    \8\ See proposed Fee Schedule, Section I.A.
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    The Exchange also proposes to charge a reduced rate for Manual 
transactions to those Market Makers or Specialists that participate in 
the Prepayment Program, as outlined in the Fee Schedule.\9\ 
Specifically, participating Market Makers would be charged $0.23 per 
contract and participating Specialists would be charged $0.17 per 
contract, and such changes and references thereto would be set forth in 
the Fee Schedule.\10\ For additional clarity, the Exchange also 
proposes to modify Section I.D. (Prepayment Program) to make clear that 
participation in such program would entitle participants to these 
proposed reduced manual rates.\11\
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    \9\ See Fee Schedule, Section I.D. (describing Prepayment 
Program).
    \10\ See proposed Fee Schedule, Section I.A., note 7.
    \11\ See proposed Fee Schedule, Section I.D.
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Complex Surcharge for Non-Customer Complex Orders
    Currently, the exchange applies a $0.10 per contract surcharge to 
any Electronic Non-Customer Complex Order that executes against a 
Customer Complex Order, regardless of whether the execution occurs in a 
Complex Order Auction (the ``Surcharge'').\12\ The Exchange offers a 
reduced per contract Surcharge (of $0.07) to those ATP Holders that 
achieve at least 0.20% of TCADV of Electronic Non-Customer Complex 
Orders in a month. The Exchange proposes to increase the Surcharge to 
$0.12. In addition, for ATP Holders that continue to qualify for the 
reduced Surcharge, the Exchange proposes to increase this reduced 
Surcharge to $0.10 per contract.\13\
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    \12\ See Fee Schedule, Section I.A, note 6. The Surcharge does 
not apply to executions in CUBE Auctions.
    \13\ See proposed Fee Schedule, Section I.A, note 6. As is the 
case today, the Surcharge would not apply to executions in CUBE 
Auctions.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\14\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\15\ 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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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange also believes that eliminating the reduced rates for 
certain Non-Customer/Non-Market Maker volume is reasonable, equitable, 
and non-discriminatory as it applies to all similarly situated 
participants. The Exchange notes that the reduced rate did not generate 
the desired result of Non-Customer/Non-Market Maker volume being 
directed to the Exchange, and therefore the Exchange believes it is 
reasonable to eliminate this incentive fee.
    The Exchange believes that the proposed modifications to the fees 
charged to Market Makers for Manual transactions are reasonable, 
equitable, and not unfairly discriminatory because the proposed rates 
are consistent with rates charged for other Non-Customer volume (i.e., 
volume executed as Broker-Dealer, Firm, Non-NYSE American Market Maker, 
or Professional Customer). The Exchange likewise believes that the 
proposed (more favorable) rates charged to Specialists for Manual 
transactions are reasonable, equitable, and non-discriminatory, because 
Specialists have a heightened quoting obligations and higher overhead 
costs related to such obligations. The Exchange also notes that the 
proposed rates for Manual transactions are consistent with rates 
charged on other options markets.\16\
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    \16\ 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 (charging NYSE Arca Market Makers 
$0.25 per contract executed manually and charging Lead Market Makers 
(or LMMs) $0.18 per contract executed manually); BOX options fee 
schedule, available here, https://boxoptions.com/regulatory/fee-schedule/ (charging market makers $0.25 per contract to transact 
manually); and NASDAQ PHLX (``PHLX'') pricing schedule, available 
here, http://www.nasdaqtrader.com/Micro.aspx?id=phlxpricing 
(charging specialists and market makers $0.35 per contract to 
transact manually).
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    The Exchange also believes the reduced Manual transaction rates for 
ATP Holders that are participating in the Prepayment Program are 
reasonable, equitable, and non-discriminatory, as it is available to 
all similarly situated participants, and is designed to incent ATP 
Holders to participate in the Prepayment Program. Any NYSE American 
Options Market Makers may elect to participate (or elect not to 
participate) in any of the Prepayment Programs. The Prepayment Programs 
are designed to incent Market Makers to commit to directing their order 
flow to the Exchange, which would benefit all market participants by 
expanding liquidity, providing more trading opportunities and tighter 
spreads, even to those market participants that are not eligible for 
the Programs. Thus, the Exchange believes that introducing additional 
incentives to encourage participation in the Prepayment Programs is 
reasonable, equitable and not unfairly discriminatory to other market 
participants because non-Market Makers and other market participants 
will benefit from the anticipated greater capital commitment and 
resulting liquidity on the Exchange. To the extent that participation 
in the Prepayment Program is increased, all market participants would 
benefit from increased liquidity on the Exchange by providing tighter 
quoting and better prices, all of which perfects the mechanism for a 
free and open market and national market system.
    The Exchange further believes the increase in the Complex Order 
Surcharge is reasonable, equitable, and non-discriminatory, as it is 
similar to charges on other exchanges, and is charged to all similarly 
situated non-Customers.\17\ Applying the Surcharge to all market 
participant orders except Customer orders is equitable and not unfairly 
discriminatory because Customer order flow enhances liquidity on the 
Exchange for the benefit of all market participants. Specifically, 
Customer liquidity benefits all market participants by providing more 
trading opportunities, which attracts Market Makers. An increase in the 
activity of Specialists and Market Makers in turn

[[Page 31011]]

facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants.
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    \17\ See id., PHLX pricing schedule (imposing a $0.12 surcharge 
on certain complex orders); and Cboe fee schedule, available here, 
http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf (same).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\18\ 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 believes the proposed changes, 
particularly the elimination of the incentive for Non-Customer/Non-
Market Maker volume and the modification to Manual transaction rates, 
would not place an unfair burden on competition as it would apply to 
all similarly-situated market participants. The Exchange also notes 
that the proposed rates for Manual transactions, as well as the 
proposed modifications to the Surcharge, are competitive with rates 
charges by other options exchanges.\19\ To the extent that the proposed 
reduced Manual rates for certain participants in the Prepayment Program 
make the Exchange a more attractive marketplace for market participants 
at other exchanges, such market participants are welcome to become NYSE 
American Options ATP Holders.
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    \18\ 15 U.S.C. 78f(b)(8).
    \19\ See supra notes 16 and 17.
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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) \20\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \21\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 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) \22\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \22\ 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 [email protected]. Please include 
File Number SR-NYSEAMER-2018-29 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-2018-29. 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-2018-29 and should be submitted 
on or before July 23, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-14110 Filed 6-29-18; 8:45 am]
 BILLING CODE 8011-01-P