Document ID: SEC-2014-0291-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2014-02-19T05:00Z

[Federal Register Volume 79, Number 33 (Wednesday, February 19, 2014)]
[Notices]
[Pages 9531-9535]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-03562]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71531; File No. SR-NYSEMKT-2014-16]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending the NYSE Amex 
Options Fee Schedule in a Number of Different Ways

February 12, 2014.
    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 January 31, 2014, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend the NYSE Amex Options Fee Schedule 
(``Fee Schedule'') in a number of different ways. The proposed changes 
will be operative on February 3, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule in a number of 
different ways as described below. The proposed changes will be 
operative on February 3, 2014.
    First, the Exchange proposes to eliminate the existing Professional 
Customer and Broker Dealer Electronic average daily volume (``ADV'') 
Tiers For Taking Liquidity and the associated endnote 16. Instead, the 
Exchange will adopt a flat fee of $0.32 per contract for electronically 
executed Professional Customer and Broker Dealer volumes. The fee of 
$0.32 per contract is the same rate presently charged to Professional 
Customers and/or Broker Dealers for their electronic volumes up to and 
including 16,999 contracts of ADV in taking liquidity volume.\4\
---------------------------------------------------------------------------

    \4\ See Securities and Exchange Release No. 34-68407 (December 
11, 2012), 77 FR 74710 (December 17, 2012) (SR-NYSEMKT-2012-74).
---------------------------------------------------------------------------

    Second, the Exchange proposes to make changes to what qualifies as 
a Firm Facilitation trade for purposes of the Fee Schedule by modifying 
Firm Facilitation to read as Firm Facilitation Manual and making edits 
to the associated endnote 6. Currently, Firm Facilitation trades are 
charged a rate of $0.00 per contract and are defined in endnote 6 as 
follows: ``The firm facilitation rate applies to trades that clear in 
the firm range (clearance account ``F'') and customer on the contra 
(clearance account ``C'') with the same clearing firm symbol on both 
sides of the trade''. At this time, the Exchange does not offer an 
electronic means for crossing a facilitation trade.\5\ Consequently, 
the only manner that a Facilitation Cross Transaction can be executed 
is by trading in open outcry.\6\ The Exchange proposes to revise 
endnote 6 to make clear that the Firm Facilitation rate of $0.00 per 
contract will apply only to those Facilitation Cross Transactions 
executed manually or in open outcry. In addition, the Exchange proposes 
to capitalize and revise the term ``firm facilitation'' as it appears 
in endnote 6 to ``Firm Facilitation Manual'' to conform to the amended 
Fee Schedule.
---------------------------------------------------------------------------

    \5\ Although the Exchange does not currently offer an electronic 
means of executing Facilitation Cross Transactions, Firms have in 
the past received the Firm Facilitation rate for electronic trades 
by sheer happenstance, which would happen when an electronic Firm 
Proprietary order traded with an electronic Customer order where 
both sides of the trade had the same clearing firm symbol. When this 
has occurred, the Firm did not receive any participation 
entitlements or priority advantages, etc. that would normally be 
associated with a Facilitation Cross Transaction. The Exchange 
believes that, when this has occurred, it appropriately charged any 
Firms the Firm Facilitation rate of $0.00 for electronic trades and 
the Exchange will continue to charge this rate under these 
circumstances, until the effective date of this filing. Upon the 
effective date of this filing, if an electronic Firm Proprietary 
order were to execute against an electronic Customer order, where 
the same clearing firm symbol is present on both sides of the trade, 
the Firm Proprietary order would be subject to the Firm Proprietary 
Electronic charge of $0.32 per contract, as proposed herein and 
discussed below, and the electronic Customer order would be subject 
to the current Non BD Customer Electronic charge of $0.00 per 
contract.
    \6\ See Rule 934.1NY (Facilitation Cross Transactions).
---------------------------------------------------------------------------

    Third, the Exchange proposes to eliminate the Firm Proprietary 
Electronic ADV Tiers. Instead, the Exchange proposes to adopt a flat 
fee of $0.32 per contract for electronically executed Firm Proprietary 
volumes. The fee of $0.32 per contract is the same rate presently 
charged to Firms Proprietary trades for their electronic volumes up to 
and including .21% of Total Industry Customer equity and Exchange-
Traded Funds (``ETF'') option ADV.\7\
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release 34-71275 (January 9, 
2014), 79 FR 2723 (January 15, 2014) (SR-NYSEMKT-2014-04).
---------------------------------------------------------------------------

    Fourth, the Exchange proposes a non-substantive change to the Fee 
Schedule designed to make it easier to navigate. The Exchange recently 
submitted a filing to adopt a Market Access and Connectivity Subsidy 
(the ``MAC Subsidy'').\8\ In proposing the MAC

[[Page 9532]]

Subsidy, the Exchange added a new section to the end of the Fee 
Schedule entitled, ``NYSE AMEX OPTIONS: TRADE-RELATED REBATES OR 
SUBSIDIES FOR STANDARD OPTIONS''. The Exchange believes that creating 
this separate section for trade-related rebates and subsidies would 
make it easier for participants to navigate and locate the relevant 
parts of the Fee Schedule. Accordingly, the Exchange is proposing to 
move the existing subsection entitled ``Customer Electronic Complex 
Order ADV Tiers'' and the associated per contract rebates to this 
recently added section of the Fee Schedule (i.e., ``NYSE AMEX OPTIONS: 
TRADE-RELATED REBATES OR SUBSIDIES FOR STANDARD OPTIONS''), with no 
other change to either the qualifying volumes, the tiers, or the rebate 
per contract, per tier associated with the existing Customer Electronic 
Complex Order ADV Tiers. As proposed, the Customer Electronic Complex 
Order ADV Tiers and the associated per contract rebates would appear 
directly below the Mac [sic] Subsidy rebate in the Fee Schedule.
---------------------------------------------------------------------------

    \8\ See SR-NYSEMKT-2014-12. Because the Exchange has previously 
filed the MAC Subsidy filing, which is immediately effective upon 
filing, the Exchange has not included as new rule text in the 
accompanying Exhibit 5 the subsection entitled ``NYSE AMEX OPTIONS: 
TRADE-RELATED REBATES OR SUBSIDIES FOR STANDARD OPTIONS'', even 
though the MAC Subsidy is not operative until February 3, 2014.
---------------------------------------------------------------------------

    Fifth, the Exchange proposes to modify the existing criteria and 
tiers used by Order Flow Providers (``OFPs'') to qualify and earn a 
rebate under the Customer Electronic ADV Tiers. The Exchange proposes 
to eliminate the existing Customer Electronic ADV Tiers and will 
instead adopt a single tier (Tier 1) with two parts--A and B--each of 
which provides OFPs an alternate means of earning a rebate. The newly 
proposed Tier 1A and Tier 1B, and language describing the qualifying 
criteria and the associated rebate is shown below:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
OFP Electronic ADV Tiers...............  Rebate Per Contract For Certain
                                          Electronic Equity and ETF
                                          Option Volume (excludes volume
                                          from QCC Orders, Strategy
                                          Executions, Complex Orders and
                                          orders routed away in
                                          connection with the Options
                                          Order Protection and Locked/
                                          Crossed Market Plan referenced
                                          in Rule 991NY).
TIER 1A--Electronic Customer volume of   $0.06.
 at least 2.0% of Total Industry
 Customer equity and ETF option ADV--
 rebate paid on Customer electronic
 contract volumes in excess of 200,000
 ADV only.
OR
TIER 1B--Electronic volume of at least   $0.06.
 .75% of Total Industry Customer equity
 and ETF option ADV where 40% of the
 electronic volume consists of Non-NYSE
 Amex Options Market Maker, Firm,
 Professional Customer and/or Broker
 Dealer--rebate paid on all Customer
 electronic contract volumes.
------------------------------------------------------------------------

    The Exchange proposes that both Tier 1A and Tier 1B would be based 
on the Total Industry Customer equity and ETF option ADV, as is current 
practice.\9\ For reference, the 3-month average of Total Industry 
Customer equity and ETF option ADV as of December 31, 2013 was 
11,867,765 contracts. Under the current proposal, an OFP would be 
eligible to earn a rebate under one of the two tiers. First, to be 
eligible to receive the $0.06 per contact rebate under Tier 1A, an OFP 
would need to have executed electronic Customer ADV of at least 2.0% of 
Total Industry Customer equity and ETF options volume or 237,355 
contracts ADV. Under Tier 1A, the rebate would only be paid on 
electronic Customer volumes in excess of 200,000 contracts ADV. 
Alternatively, to be eligible to receive the $0.06 per contact rebate 
under Tier 1B, an OFP would need to have executed electronic ADV of at 
least .75% of Total Industry Customer equity and ETF options volume or 
89,008 contracts ADV and, of those 89,008 contracts ADV executed 
electronically, the OFP must have 40%--or at least 35,603 contracts--of 
electronic ADV executed on behalf of any combination of Non-NYSE Amex 
Options Market Maker, Firm Proprietary, Professional Customer or Broker 
Dealer business. As proposed, provided the foregoing criteria are met, 
the rebate under Tier 1B would be paid on all Customer electronic 
volumes.
---------------------------------------------------------------------------

    \9\ Total Industry Customer equity and ETF option ADV will be 
that which is reported for the month by The Options Clearing 
Corporation (``OCC'') in the month in which the OFP may earn a 
rebate for certain electronic volumes. For example, February 2014 
Total Industry Customer equity and ETF option ADV will be used in 
determining what, if any, rebate a qualifying OFP may be eligible 
for on select electronic Customer volumes it executes in February 
2014 relative to Total Industry Customer equity and ETF option ADV. 
Total Industry Customer equity and ETF option ADV comprises 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.
---------------------------------------------------------------------------

    As with the existing Customer Electronic ADV Tiers, as proposed, 
volumes attributable to Qualified Contingent Cross (``QCC'') Orders, 
Strategy Executions, Complex Orders and orders routed away in 
connection with the Options Order Protection and Locked/Crossed Market 
Plan referenced in Rule 991NY would not count toward achieving either 
Tier 1A or Tier 1B and would not be eligible for the per contract 
rebate that might be paid under Tier 1A or Tier 1B. In the event that 
an OFP qualifies for a rebate under both Tier 1A and Tier 1B, the 
Exchange proposes that the OFP would only be paid under the Tier--A or 
B--that yields the greatest total rebate and the Exchange proposes to 
reflect this change in a revised endnote 17. In addition, the Exchange 
proposes to move the modified Customer Electronic ADV Tiers to the end 
of the newly proposed subsection of the Fee Schedule entitled ``NYSE 
AMEX OPTIONS: TRADE-RELATED REBATES OR SUBSIDIES FOR STANDARD OPTIONS'' 
\10\ and retitle that section ``OFP Electronic ADV Tiers'' to more 
accurately reflect how different types of electronic volumes will now 
be capable of earning a rebate for the OFP on certain types of 
electronic Customer volumes.
---------------------------------------------------------------------------

    \10\ See supra note 8.
---------------------------------------------------------------------------

    Finally, the Exchange is proposing to eliminate the service fee for 
any capped participants who are trading as part of a QCC. Currently, 
the Exchange assesses a service fee or surcharge for Firms, 
Specialists, e-Specialists, and Market Makers (both Directed and non-
Directed) who have exceeded their monthly fee cap. The amount of the 
service fee is the same for all enumerated participants and only varies 
based on whether the contra party is a Customer, in which case the 
service fee is $0.10, or a non-Customer in which case the service fee 
is $0.05. With this proposed change, the service fee would be 
eliminated such that any Firm, Specialist, e-Specialist or Market Maker 
(Directed or non-Directed) that has exceeded their applicable monthly 
fee

[[Page 9533]]

cap \11\ would not pay any incremental service fee when they 
participate in a QCC trade. Concurrent with this change, the Exchange 
would also adopt language to limit the amount of the Floor Broker 
Rebate for Executed QCC orders to a maximum of $375,000 per month per 
Floor Brokerage firm, which changes would be reflected in the section 
for ``NYSE AMEX OPTIONS: QUALIFIED CONTINGENT CROSS (`QCC') FEES'' and 
related endnotes 5, 6 and 15.
---------------------------------------------------------------------------

    \11\ See NYSE Amex Options Fee Schedule available here https://globalderivatives.nyx.com/sites/globalderivatives.nyx.com/files/nyse_amex_options_fee_schedule_for_1-8-14.pdf at endnotes 5 
and 6 (describing Market Maker and Firm monthly fee caps).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) \12\ of the Act, in general, and 
Section 6(b)(4) and (5) \13\ of the Act, in particular, in that it is 
designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges among its members and other persons using its 
facilities and does not unfairly discriminate between customers, 
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposal to eliminate the existing 
Professional Customer and Broker Dealer Electronic ADV Tiers For Taking 
Liquidity and to instead adopt flat, per contract, pricing of $0.32 is 
reasonable, equitable and not unfairly discriminatory for the following 
reasons. First, the Exchange notes that the proposed per contract fee 
of $0.32 is within the range of fees charged by other exchanges for 
Professional Customers and Broker Dealers.\14\ Further, the Exchange 
notes that the proposed $0.32 fee is the same fee that the Exchange 
currently charges for Professional Customers and Broker Dealers who 
execute electronically less than 17,000 contracts per day in taking 
liquidity volume, and, as noted by the Exchange when it adopted the 
fee, the fee is reasonable, equitable and not unfairly 
discriminatory.\15\ For these reasons, the Exchange believes that the 
proposal to charge $0.32 per contract for electronic volumes from 
Professional Customers and Broker Dealers while eliminating volume-
based tiers at the same time is reasonable, equitable and not unfairly 
discriminatory, particularly as it will apply equally to all 
Professional Customers and Broker Dealers electronically executed 
volumes on the Exchange.
---------------------------------------------------------------------------

    \14\ See Chicago Board of Options (``CBOE'') Fee Schedule 
available at http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf (charging a $0.30 per contract for Professional 
Customers and either $0.45 or $0.60 per contract in Penny/Non-Penny 
issues for Broker Dealers). See also Nasdaq Options Market (``NOM'') 
Fee Schedule available at http://www.nasdaqtrader.com/Micro.aspx?id=OptionsPricing (charging $0.49 per contract in Penny 
issues and $.89 per contract in Non-Penny issues to both 
Professional Customers and Broker Dealers who take liquidity).
    \15\ See supra note 4.
---------------------------------------------------------------------------

    In addition, the Exchange believes that the proposal to modify the 
criteria for what qualifies as a Firm Facilitation trade for purposes 
of the Fee Schedule is reasonable given that the change will make clear 
that Firms wishing to qualify for the Firm Facilitation charge of $0.00 
per contract must do so using the procedures of Rule 934.1NY 
Facilitation Cross Transactions. Further, the Exchange believes this 
proposed change is also equitable and not unfairly discriminatory as it 
will apply equally to all Firms that trade on the Exchange. The 
Exchange notes that other exchanges that offer open outcry trading have 
also limited the application of the Firm Facilitation rate to those 
trades effected in open outcry.\16\ For these reasons the Exchange 
believes the proposal to limit the application of the Firm Facilitation 
rate to those transactions executed in open outcry utilizing the 
procedures set forth in Rule 934.1NY are reasonable, equitable and not 
unfairly discriminatory.
---------------------------------------------------------------------------

    \16\ See NASDAQ OMX PHLX (``PHLX'') Fee Schedule available at 
http://www.nasdaqtrader.com/Micro.aspx?id=PHLXPricing (``The Firm 
Floor Options Transaction Charges will be waived for members 
executing facilitation orders pursuant to Exchange Rule 1064 
[Crossing, Facilitation and Solicited Orders] when such members are 
trading in their own proprietary account (including `Cabinet Options 
Transaction Charges')'').
---------------------------------------------------------------------------

    The Exchange likewise believes that the proposal to eliminate the 
existing Firm Proprietary Electronic ADV Tiers and to adopt flat per 
contract pricing of $0.32 per contract is reasonable, equitable and not 
unfairly discriminatory for the following reasons. First, the Exchange 
notes that the proposed per contract fee of $0.32 is within the range 
of fees charged by other exchanges for Firm Proprietary Electronic 
volumes.\17\ Further, the Exchange notes that the proposed fee is the 
same fee that the Exchange currently charges for Firms that execute 
electronically less than .21% of Total Industry Customer equity and ETF 
option ADV, and, as noted by the Exchange when it adopted the fee, the 
fee is reasonable, equitable and not unfairly discriminatory.\18\ For 
these reasons, the Exchange believes that the proposal to charge $0.32 
per contract for electronic volumes from Firms and to eliminate volume-
based tiers at the same time is reasonable, equitable and not unfairly 
discriminatory, particularly as it will apply equally to all Firm 
Proprietary electronically executed volumes on the Exchange.
---------------------------------------------------------------------------

    \17\ See International Securities Exchange (``ISE'') Fee 
Schedule, available at http://www.ise.com/assets/documents/OptionsExchange/legal/fee/ISE_fee_schedule.pdf (charging a flat 
fee of $0.30 per contract for Firm Proprietary transactions in Non-
Select Symbols). See also NOM Fee Schedule, available at http://www.nasdaqtrader.com/Micro.aspx?id=OptionsPricing (charging a flat 
fee of $0.49 per contract in Penny issues and $0.89 per contract in 
Non-Penny issues to Firms who take liquidity).
    \18\ See supra note 7.
---------------------------------------------------------------------------

    The Exchange believes that the proposal to re-locate the existing 
Customer Electronic Complex Order ADV Tiers to a new section of the Fee 
Schedule, entitled ``NYSE AMEX OPTIONS: TRADE RELATED REBATES OR 
SUBSIDIES FOR STANDARD OPTIONS'' is reasonable, equitable and not 
unfairly discriminatory as it will make it easier for participants to 
locate all standard options rebates and/or subsidies within the Fee 
Schedule. The Exchange further notes that there are no changes, aside 
from the location of the text describing the existing Customer 
Electronic Complex Order ADV Tiers and, as the Exchange noted when it 
adopted these volume-based tiers, the rebates are reasonable, equitable 
and not unfairly discriminatory.\19\
---------------------------------------------------------------------------

    \19\ See Securities and Exchange Release No. 34-67635 (August 9, 
2012), 77 FR 49035 (August 15, 2012) (SR-NYSEMKT-2012-34).
---------------------------------------------------------------------------

    The Exchange believes that the proposal to modify the existing 
criteria and tiers used by Order Flow Providers (``OFPs'') to qualify 
and earn a rebate under the Customer Electronic ADV Tiers by the 
adoption of Tier 1A and Tier 1B is reasonable, equitable and not 
unfairly discriminatory for the following reasons.
    First, the Exchange is providing OFPs with two alternate means of 
potentially earning a rebate on certain of their electronic Customer 
volumes. Under the first, Tier 1A, an OFP would need to have executed 
electronic Customer ADV of at least 2.0% of Total Industry Customer 
equity and ETF options volume, in which case they would be eligible for 
a rebate of $0.06 per contract on certain Customer electronic volumes 
over 200,000 contracts ADV. Under the second, Tier 1B, an OFP would 
need to have executed electronic ADV of at least .75% of Total Industry 
Customer equity and ETF options volume, of which 40% must be comprised 
of any combination of Non-NYSE Amex Options Market Maker, Firm, 
Professional Customer or Broker Dealer business in order to qualify for 
the rebate of $0.06 per

[[Page 9534]]

contract for their electronic Customer volumes. Offering OFPs an 
alternate means to earn a rebate is nothing new or novel. In fact, at 
least one exchange offers OFPs three different ways to earn the same 
rebate per contract.\20\ The Exchange believes that offering OFPs a 
$0.06 per contract rebate under the terms outlined in Tier 1A--beyond 
the level of 200,000 contracts ADV--is reasonable as the rebate is 
designed to attract additional Customer volumes to the Exchange which 
benefits all other participants by increasing the opportunities to 
trade, enhancing transparency and price discovery. By only offering the 
rebate to qualifying OFPs for Customer electronic volumes in excess of 
200,000 contracts ADV the Exchange is intending to attract new business 
to the Exchange and to avoid paying for existing business, which the 
Exchange believes is a reasonable approach lest the Exchange risk 
raising costs for other participants to fund a rebate for existing 
business.
---------------------------------------------------------------------------

    \20\ See NOM Fee Schedule available here: http://www.nasdaqtrader.com/Micro.aspx?id=OptionsPricing and Tiers 4, 5, 
and 6 (The Customer and Professional Rebate to Add Liquidity in 
Penny Pilot Options) (offering alternate means of achieving a $0.45 
rebate for NOM participants with Customer and Professional volumes 
that add liquidity).
---------------------------------------------------------------------------

    Similarly, the Exchange believes that offering OFPs a $0.06 per 
contract rebate under the terms and conditions outlined in Tier 1B is 
also reasonable as the rebate is designed to attract additional 
Customer volumes along with Non-NYSE Amex Options Market Maker, Firm 
Proprietary, Professional Customer and Broker Dealer volumes to the 
Exchange which benefits all other participants by increasing the 
opportunities to trade, enhancing transparency and price discovery. 
Requiring a certain level and type of activity before qualifying for a 
rebate on a different type of activity is also not new or novel and has 
not been viewed as being unreasonable, inequitable or unfairly 
discriminatory. Specifically, the Exchange notes the fee arrangements 
available on two other exchanges that require participants to commit to 
a certain level and type of activity before qualifying for a rebate on 
other activity.\21\
---------------------------------------------------------------------------

    \21\ See CBOE Fee Schedule available here: http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf (offering the CBOE 
Proprietary Products Sliding Scale which provides Clearing Trading 
Permit Holders reduced rates in CBOE Proprietary Products (SPX, VIX, 
etc.) if the Clearing Trading Permit Holder achieves certain ADV 
thresholds in multiply-listed options). See also PHLX Fee Schedule 
available here http://www.nasdaqtrader.com/Micro.aspx?id=PHLXPricing 
(offering the Customer Rebate Program and Tier 3 where, ``The 
Exchange will pay a $0.02 per contract rebate in addition to the 
applicable Tier 3 rebate to a Specialist or Market Maker or its 
member or member organization affiliate under Common Ownership 
provided the Specialist or Market Maker has reached the Monthly 
Market Maker Cap, as defined in Section II'').
---------------------------------------------------------------------------

    In addition, the Exchange believes that excluding certain volumes 
from being eligible for the rebate, specifically QCC volumes, 
electronic Customer Complex volumes, Strategy Executions and orders 
routed away in conjunction with the Options Order Protection and 
Locked/Crossed Market Plan referenced in Rule 991NY is also reasonable 
as these volumes are already eligible for either reduced rates, rebates 
or capped fees and offering additional discounts on these volumes is 
not desirable as to do so may lead to increased costs for other 
participants.
    As the Exchange noted when it established OFP Rebates with 
exclusions for the above-described volumes, excluding such volumes is 
reasonable, equitable and not unfairly discriminatory as well.\22\ The 
Exchange also believes that paying OFPs that qualify under both Tier 1A 
and Tier 1B from the tier that generates the largest rebate for the OFP 
is also reasonable, as to do otherwise might result in having to raise 
fees for other participants in order to fund a rebate for any 
participant who qualified for both Tier 1A and Tier 1B. As the proposed 
OFP Electronic ADV Tiers and the associated rebates will be available 
to all participants who route electronic Customer business, the 
Exchange believes the proposal is also equitable and not unfairly 
discriminatory.
---------------------------------------------------------------------------

    \22\ See Securities and Exchange Release No. 34-68036 (October 
11, 2012), 77 FR 63900 (October 17, 2012) (SR-NYSEMKT-2012-50).
---------------------------------------------------------------------------

    The Exchange believes that the proposal to eliminate the service 
fee of either $0.10 or $0.05 per contract for any capped participants 
who are trading as part of a QCC is also reasonable, equitable and not 
unfairly discriminatory. First, the Exchange notes that other exchanges 
that offer QCC trading do not charge a service fee for capped 
participants who are party to a QCC trade.\23\ The Exchange believes 
that the elimination of the service fee for capped participants will 
better enable our Floor Broker participants to compete for QCC orders, 
enhancing the competitiveness of the Exchange relative to those 
exchanges that either do not charge a service fee for capped 
participants engaged in QCC trades or those that pay a higher per 
contract rebate for QCC volumes.\24\ To enhance the competiveness of 
the Exchange is reasonable, as higher overall volume levels on the 
Exchange can benefit all participants potentially in the form of more 
complete information and enhanced price discovery. The Exchange also 
believes that the elimination of the of the [sic] service fee for 
capped participants that are party to a QCC trade is also equitable and 
not unfairly discriminatory as all capped participants are being 
treated the same in this regard.
---------------------------------------------------------------------------

    \23\ See PHLX Fee Schedule available here http://www.nasdaqtrader.com/Micro.aspx?id=PHLXPricing (QCC Transaction 
Fees).
    \24\ See ISE Fee Schedule available here http://www.ise.com/assets/documents/OptionsExchange/legal/fee/ISE_fee_schedule.pdf 
(offering QCC rebates up to $0.11 per contract compared to $0.10 on 
NYSE Amex). See also supra note 20 [sic].
---------------------------------------------------------------------------

    Finally, the Exchange believes that adopting a maximum Floor Broker 
Rebate for QCC trades of $375,000 per month is reasonable, particularly 
in light of the elimination of the service fee for capped participants 
who are party to a QCC trade. The Exchange believes that absent a cap 
on the maximum to be paid under the monthly QCC rebate program, costs 
of the program may need to be shared by other participants on the 
Exchange, even those who do not engage in QCC trading. As such, the 
Exchange believes it is reasonable and equitable to adopt such a cap. 
The Exchange further notes that at least one other exchange with a QCC 
rebate has also adopted a similar cap or maximum rebate to be paid.\25\ 
As the proposed monthly maximum rebate to be paid under the Floor 
Broker Rebate program for QCC is applying to all ATP Holders acting as 
Floor Brokers equally, the Exchange believes the proposal is also 
equitable and not unfairly discriminatory.
---------------------------------------------------------------------------

    \25\ See supra note 20 [sic] (PHLX Fee Schedule, regarding QCC 
Transaction Fees, ``The maximum QCC Rebate to be paid in a given 
month will not exceed $375,000.'').
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    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. The Exchange believes that 
the proposed changes will enhance the competiveness of the Exchange 
relative to other exchanges. The Exchange notes that it operates in a 
highly competitive market in which market participants can readily 
favor competing venues if they deem fee levels at a particular venue to 
be excessive. In such an environment, the Exchange must continually 
review, and consider adjusting, its fees and credits to remain 
competitive with other

[[Page 9535]]

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) \26\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \27\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(3)(A).
    \27\ 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) \28\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \28\ 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-2014-16 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2014-16. 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 at 100 F Street NE., 
Washington, DC 20549-1090 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-
NYSEMKT-2014-16, and should be submitted on or before March 12, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
---------------------------------------------------------------------------

    \29\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-03562 Filed 2-18-14; 8:45 am]
BILLING CODE 8011-01-P