Document ID: SEC-2018-1040-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE American, LLC
Posted Date: 2018-07-05T04:00Z

[Federal Register Volume 83, Number 129 (Thursday, July 5, 2018)]
[Notices]
[Pages 31431-31433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14362]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83553; File No. SR-NYSEAMER-2018-34]

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

June 28, 2018.
    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 June 27, 2018, NYSE American LLC (the ``Exchange'' or 
``NYSE American'') 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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[[Page 31432]]

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 27, 2018. The proposed rule 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.

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 27, 2018, to introduce fees for the newly listed options on the 
NYSE FANG+ Index (``NYSE FANG+''), which will trade under the symbol 
FAANG. Section 1 of the Fee Schedule sets forth the rates for options 
transactions, both manual and electronic.\4\ The Exchange proposes to 
introduce fees related to transactions in NYSE FANG+ in new note 8 to 
Section I, Options Transaction Fees and Credits. As proposed, the 
Exchange would charge $0.35 per contract, per side for non-Customer 
NYSE FANG+ transactions, whether executed manually or electronically. 
However, the Exchange would not charge a fee for any NYSE FANG+ options 
transactions (i) on behalf of Customers or (ii) by Market Makers with 
an appointment in NYSE FANG+.\5\ Further, the Exchange would not impose 
any Marketing Charges on NYSE FANG+ option transactions or any Rights 
Fees upon allocation in options on NYSE FANG+.\6\ Market Makers that do 
not have an appointment in NYSE FANG+ will be subject to the same fee 
of $0.35 per contract, per side for non-Customer NYSE FANG+ 
transactions. However, volume in NYSE FANG+ would be included in the 
calculations to qualify for any volume-based incentives currently being 
offered on the Exchange (e.g., such monthly volume would be counted 
towards the Market Maker Sliding Scale program, per Section I.C., and 
the American Customer Engagement (``ACE'') Program, per Section I.E. of 
the Fee Schedule, and the Firm Monthly Fee Cap, per Section I.J.).\7\
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    \4\ See e.g., Fee Schedule, I.A. (Rates for Standard Options 
transactions), available here, https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf.
    \5\ The term Market Maker, as used herein, includes NYSE 
American Options Market Makers, Specialists, e-Specialists and 
Directed Order Market Makers.
    \6\ See Fee Schedule, Sections I.A., note 3 (for description of 
the collection, and distribution of, Marketing Fees); and Section 
III.C. (for description of the e-Specialist, DOMM and Specialist 
Monthly Rights Fees). See also proposed Fee Schedule, note 8 to 
Section I, Options Transaction Fees and Credits (providing, in part, 
that ``Marketing Charges will not be applied to FAANG 
transactions'').
    \7\ See proposed Fee Schedule, note 8 to Section I, Options 
Transaction Fees and Credits (providing, in part, that ``[a]ny 
volume in FAANG will be included in the calculations to qualify for 
any volume-based incentives currently being offered on the 
Exchange'').
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    The Exchange believes the proposed fees for NYSE FANG+ would 
further the Exchange's goal of introducing new products to the 
marketplace by encouraging trading in this index, in particular by 
encouraging Market Makers to make a market in these products, which 
would in turn, benefit market participants.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act, in general, and furthers the objectives 
of Sections 6(b)(4) and (5) of the Act, 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.
    The Exchange believes the proposal to implement fees for options on 
NYSE FANG+ is reasonable, equitable and not unfairly discriminatory for 
the following reasons. The Exchange believes the proposed fees, which 
apply equally to electronic and manual (open outcry) transactions on 
behalf of non-Customers, on the one hand, and Customers, on the other 
hand, to be reasonable and equitable because the proposed 
differentiation among market participants for NYSE FANG+ fees is 
consistent with the manner in which the Exchange distinguishes among 
market participants for fee purposes in other contexts.\8\ The Exchange 
believes that not imposing fees for NYSE FANG+ transactions on behalf 
of Customers is likewise reasonable, 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 Market Makers in turn facilitates tighter spreads, which 
may cause an additional corresponding increase in order flow from other 
market participants.
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    \8\ See id. (providing that non-Customers (i.e., NYSE American 
Options Market Makers, Firms and Broker Dealers and Professional 
Customers) are charged a total $0.25 per contract for manual 
executions, while Customers are charged $0.00 per contract for 
manual executions).
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    The Exchange believes that applying the same fee on all non-
Customer NYSE FANG+ option transactions, other than those by Market 
Makers with an appointment in NYSE FANG+, is non-discriminatory because 
it applies to all similarly situated participants on an equal basis 
that opt to trade the product. Moreover, the decision to transact in 
NYSE FANG+ (or, for Market Makers, to seek an appointment) is 
voluntary. The Exchange believes that allowing Market Makers with an 
appointment in NYSE FANG+ to transact in the product free of charge 
(and without incurring Marketing Fees) is not unfairly discriminatory 
because Market Makers have heightened obligations that are not 
applicable to other non-Customer market participants.\9\ It is also 
non-discriminatory because all Market Makers may apply for an 
appointment in NYSE FANG+ options. Further, encouraging Market Makers 
to seek an appointment in, and thus provide continuous quotes in, NYSE 
FANG+ would add liquidity to the market and provide market 
participants--both Customer and non-Customer alike--increased 
opportunities to trade options on NYSE FANG+. The Exchange believes 
that exempting transactions in NYSE FANG+ from the monthly Rights Fees 
would likewise encourage trading in NYSE FANG+ options, which increase 
in the availability of such options would benefit all market 
participants.
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    \9\ See, e.g., Rules 920NY, 925.1NY(b) and 927NY (setting forth 
heightened quoting obligations).
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    Further, the proposal to include any volume in NYSE FANG+ in the 
calculations to qualify for any volume-based incentives offered on the 
Exchange would further the Exchange's

[[Page 31433]]

goal of introducing new products to the marketplace by encouraging 
trading in these products. To the extent that the proposed change 
incentivizes any market participants to direct their order flow to the 
Exchange, all market participants would benefit from increased 
liquidity and trading opportunities on the Exchange. Finally, the 
Exchange notes that offering market participants incentives to trade in 
certain newly offered products is not new or novel.\10\
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    \10\ See, e.g., Securities Exchange Act Release No. 77293 (March 
4, 2016), 81 FR 12762 (March 4, 2016) (SR-NYSEMKT-2016-34) 
(addressing the treatment of Binary Return Derivatives--or ByRDs--
and exempting such transactions from all Exchange fees to encourage 
trading in the product).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act, 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 transaction 
fees for NYSE FANG+ would not place an unfair burden on competition as 
it would apply to all similarly situated non-Customer/non-Market Maker 
participants. The Exchange also believes the proposed pricing for NYSE 
FANG+ is procompetitive as it would further the Exchange's goal of 
introducing new products to the marketplace and encouraging Market 
Makers to make a market in these products, which would in turn, benefit 
market participants. Market participants that do not wish to trade in 
or seek an appointment in NYSE FANG+ are not obliged to do so.
    The Exchange does not believe that the proposed change will impair 
the ability of any market participants or competing order execution 
venues to maintain their competitive standing in the financial markets. 
Further, the fees would be applied to all similarly situated 
participants (i.e., non-Customers), and, as such, the proposed change 
would not impose a disparate burden on competition either among or 
between classes of market participants.

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) \11\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \12\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \13\ 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 No. SR-NYSEAMER-2018-34 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 No. SR-NYSEAMER-2018-34. 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 No. SR-NYSEAMER-2018-34, and should be submitted 
on or before July 26, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-14362 Filed 7-3-18; 8:45 am]
BILLING CODE 8011-01-P