Document ID: SEC-2015-1228-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2015-07-22T04:00Z

[Federal Register Volume 80, Number 140 (Wednesday, July 22, 2015)]
[Notices]
[Pages 43480-43482]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17893]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75469; File No. SR-NYSEARCA-2015-62]

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

July 16, 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 July 10, 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 July 10, 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to enhance the application of the 
Limit of Fees on Firm and Broker Dealer Open Outcry Executions (the 
``Firm Cap'') to include Qualified Contingent Cross Transactions 
(``QCCs'').
    Currently, the Exchange imposes a Firm Cap of $100,000 per month on 
combined Firm Proprietary Fees and Broker Dealer Fees for transactions 
clearing in the customer range, if executed in open outcry (i.e., 
Manual Transactions). The Firm Cap excludes Strategy Executions, 
Royalty Fees, firm trades executed via a Joint Back Office agreement, 
and Mini option contracts.\4\
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    \4\ See Fee Schedule, endnote 9.
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    To date, fees arising from QCCs have not been included in the Firm 
Cap because QCCs are not executed in open outcry. Rather, QCCs are 
executed by the entry of a matched trade into the Exchange System and 
reported electronically.\5\ Because Firms and Broker Dealers are 
generally represented on the Floor by Floor Brokers and QCC 
transactions may be entered into the System from a terminal on the 
Floor as part of an array of services that a Floor Brokerage operation 
can offer to clients, the Exchange proposes to include fees

[[Page 43481]]

for QCCs executed by Floor Brokers in the aggregation towards the Firm 
Cap. The Exchange believes this proposed change would encourage Firms 
and Broker Dealers to direct a greater number of their orders, 
including QCC orders, to the Trading Floor, given the increased 
opportunities to achieve the Firm Cap on their monthly transaction 
fees. For example, if a Broker Dealer achieves the Firm Cap with the 
inclusion of $20,000 in QCC fees, the Broker Dealer may be inclined to 
direct other orders to the Exchange Floor having reached the Firm Cap, 
which increased liquidity would benefit all market participants. The 
Exchange notes that competing options exchanges likewise include QCC 
transactions in monthly fee caps similar to the Firm Cap.\6\
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    \5\ See Rule 6.90. Qualified Contingent Crosses (providing in 
relevant part that QCCs are ``automatically executed upon entry into 
the NYSE Arca System provided that the execution (i) is not at the 
same price as a Customer Order in the Consolidated Book and (ii) is 
at or between the NBBO''). See also Commentary .01 to Rule 6.90 
(providing that QCC orders ``can be entered into the NYSE Arca 
System from on the Floor of the Exchange only by Floor Brokers'').
    \6\ See, e.g., NYSE Amex Options fee schedule, available at, 
https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf (including QCCs in the Monthly 
Firm Fee Cap for Manual transactions, which aggregates the fees 
associated with Firm Manual transactions and cap them at $100,000 
per month, per Firm); NASDAQ OMX PHLX LLC fee schedule, available 
at, http://www.nasdaqtrader.com/Micro.aspx?id=phlxpricing (including 
QCCs in the Monthly Firm Fee Cap, which aggregates the fees 
associated with Firm Floor Options Transactions and QCCs and cap 
them at $75,000 per month, per Firm).
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    The proposed inclusion of QCC fees in the Firm Cap would not affect 
the Floor Broker Rebate for Executed Orders, as Floor Brokers would 
still earn the Rebate even if the fee for the transaction itself is 
capped.
    Consistent with the proposed change, the Exchange proposes to 
change the name of this fee from ``Limit of Fees on Firm and Broker 
Dealer Open Outcry Executions'' to ``Firm and Broker Dealer Monthly Fee 
Cap,'' which the Exchange believes would add more clarity and 
consistency to the fee schedule. Relatedly, the Exchange also proposes 
to modify the language in the Firm Cap regarding the exclusion of Mini 
options which erroneously refers to Strategy Executions. Specifically, 
the Exchange proposes to replace the language ``Mini option contracts 
are excluded from the Limit of Fees on Strategy Executions,'' with 
``Mini option contracts are excluded from the Firm and Broker Dealer 
Monthly Fee Cap.'' The Exchange believes that this change would add 
clarity and consistency to the Fee Schedule.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\8\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes the inclusion of the Floor executed QCCs 
under the Firm Cap is reasonable and not unfairly discriminatory 
because it would provide additional opportunities for Firms and Broker 
Dealers to achieve the Firm Cap, which may, in turn, encourage more 
business, not limited to QCC trades, to be brought to the Floor, which 
would benefit all market participants. The proposed change is 
reasonable, equitable and not unfairly discriminatory as the Firm Cap 
would not be meaningful for Customers or Professional Customers because 
neither Customers nor Professional Customers pay transaction charges 
for QCCs. The proposed change is also reasonable, equitable and not 
unfairly discriminatory towards Market Makers, as Market Makers are 
generally charged a lower fee for Manual executions, and have 
alternative avenues to reduce transaction fees.\9\ In addition, the 
Exchange believes that by including QCCs in the Firm Cap, thereby 
making the Cap more achievable and encouraging additional order flow 
not limited to QCCs, Market Makers are provided a greater opportunity 
to interact with order flow, which, in turn, benefits market 
participants.
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    \9\ See generally Fee Schedule (various credits available to 
Market Makers for posted monthly volume, including for executions in 
Penny Pilot Issues and SPY).
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    The Exchange also believes that the proposed change is reasonable 
because several competing options exchanges likewise include QCC 
transactions in monthly fee caps similar to Firm Cap.\10\
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    \10\ See supra n. 6.
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    The Exchange believes that its proposal to modify the name of this 
fee, as well as the language regarding the exclusion of Mini options 
from the Firm Cap to correct the erroneous reference to Strategy 
Executions, would add clarity and consistency to the Fee Schedule to 
the benefit of all market participants.
    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 continue to encourage competition, including by 
attracting a wider variety of business to the Floor of the Exchange, 
which would continue to make the Exchange a more competitive venue for, 
among other things, order execution and price discovery. The Exchange 
believes the proposed fee change would not unduly burden any particular 
group of market participants trading on the Exchange vis-[agrave]-vis 
another group. Specifically, neither Customers nor Professional 
Customers are charged for QCC transactions. Moreover, Market Makers are 
generally charged a lower fee for Manual executions, and have 
alternative avenues to reduce transaction fees.\12\ In addition, the 
Exchange believes that by including QCCs in the Firm Cap, thereby 
making the Cap more achievable and encouraging additional order flow 
not limited to QCCs, Market Makers are provided a greater opportunity 
to interact with order flow, which, in turn, benefits market 
participants.
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    \11\ 15 U.S.C. 78f(b)(8).
    \12\ See supra n. 9.
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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) \13\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \14\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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

[[Page 43482]]

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) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \15\ 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-2015-62 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEARCA-2015-62. 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 Section, 100 F Street 
NE., Washington, DC 20549-1090. Copies of the filing will also be 
available for inspection and copying at the NYSE's principal office and 
on its Internet Web site at www.nyse.com. 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-2015-62 and should be submitted 
on or before August 12, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-17893 Filed 7-21-15; 8:45 am]
BILLING CODE 8011-01-P