Document ID: SEC-2015-0964-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2015-06-09T04:00Z

[Federal Register Volume 80, Number 110 (Tuesday, June 9, 2015)]
[Notices]
[Pages 32638-32640]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-13987]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75102; File No. SR-NYSEArca-2015-48]

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

June 3, 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 May 29, 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.
---------------------------------------------------------------------------

    \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 Arca Options Fee Schedule 
(``Fee Schedule'') to modify certain of its posting credits. The 
Exchange proposes to implement the fee change effective June 1, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedule to modify certain 
of its posting credits. The Exchange proposes to implement the fee 
change effective June 1, 2015.
    Currently, the Exchange offers Order Flow Providers (each an 
``OFP'') a number of ways to earn posting credits for electronic 
Customer and Professional Customer executions on the Exchange, provided 
the OFP meets certain volume thresholds. The purpose of this filing is 
to modify certain of these posting credits to attract additional order 
flow to the Exchange.
    First, the Exchange proposes to modify the Customer and 
Professional Customer Incentive Program, which

[[Page 32639]]

provides various alternatives to earn credits. One of the current 
alternatives provides an additional $0.03 credit on Customer and 
Professional Customer posting credits if an OFP achieves at least 0.75% 
of total industry Customer equity and ETF option average daily volume 
(``ADV'') from Customer and Professional Customer posted orders in both 
Penny Pilot and non-Penny Pilot issues, of which at least 0.28% of 
total industry Customer equity and ETF option ADV is from Customer and 
Professional Customer posted orders in non-Penny Pilot issues. The 
Exchange proposes to slightly lower the minimum ADV from posted orders 
in non-Penny Pilot issues from 0.28% to 0.25%. The Exchange believes 
this proposed change would provide additional incentives to direct 
Customer and Professional Customer order flow to the Exchange, which 
benefits all market participants through increased liquidity and 
enhanced price discovery.
    Second, the Exchange proposes to modify the Customer and 
Professional Customer Posting Credit Tiers in Non Penny Pilot Issues, 
which provides two ways (Tier A or Tier B) to achieve a $0.83 credit if 
specified volume thresholds have been met. Currently, pursuant to Tier 
A, the $0.83 credit may be reached by achieving at least 0.80% of total 
industry Customer equity and ETF option average ADV from Customer and 
Professional Customer posted orders in all issues, plus an executed ADV 
of Retail Orders of 0.1% ADV of U.S. equity market share posted and 
executed on the NYSE Arca Equity Market. Alternatively, the $0.83 
credit may be achieved pursuant to Tier B, by achieving a level of at 
least 1.00% of total industry Customer equity and ETF option ADV from 
Customer and Professional Customer posted orders in both Penny Pilot 
and non-Penny Pilot issues.
    The Exchange proposes to modify both Tiers as follows.
     Tier A would require a minimum of 0.70% (rather than 
0.80%) of total industry Customer equity and ETF options ADV from 
Customer and Professional Customer posted orders in all issues.\4\
---------------------------------------------------------------------------

    \4\ The Commission notes that the Exchange is not proposing to 
modify the additional Tier A requirement of an additional executed 
ADV of Retail Orders of 0.1% ADV of U.S. equity market share posted 
and executed on the NYSE Arca Equity Market.
---------------------------------------------------------------------------

     Tier B would require a minimum of 0.80% (rather than 
1.00%) of total industry Customer equity and ETF options ADV from 
Customer and Professional Customer posted orders in all issues.
    In addition, the Exchange proposes to replace the language ``both 
Penny Pilot and non-Penny Pilot Issues'' in Tier B with ``all Issues'' 
for simplicity and to conform to the language used in Tier A. The 
Exchange believes the proposed changes to the Customer and Professional 
Customer Posting Credit Tiers in Non Penny Pilot Issues would encourage 
market participants to direct a higher rate of Customer and 
Professional Customer orders to the Exchange.
    Finally, the Exchange proposes to make a non-substantive change to 
the Base credit of the Customer and Professional Customer Posting 
Credit Tiers in Non Penny Pilot Issues by adding a dollar sign before 
(0.75), so that it accurately reflects the baseline credit of ($0.75), 
which the Exchange believes 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,\5\ in general, and furthers the 
objectives of sections 6(b)(4) and (5) of the Act,\6\ 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.
---------------------------------------------------------------------------

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

    The Exchange believes the adjustments to qualifications for 
enhanced posting liquidity credits, are reasonable and not unfairly 
discriminatory as they are designed to attract increased Customer and 
Professional Customer business on the Exchange and are achievable in 
various ways. An increase in Customer and Professional Customer orders 
executed on the Exchange benefits all participants by offering greater 
price discovery, increased transparency, and an increased opportunity 
to trade on the Exchange. The Exchange also believes that the proposed 
credits are reasonable because they are within a range of similar 
credits available on other option exchanges.\7\ Additionally, 
attracting posted Customer and Professional Customer order flow is 
desirable because it encourages liquidity to be present on the 
Exchange.
---------------------------------------------------------------------------

    \7\ See, e.g., ISE Gemini, LLC fee schedule, available at, 
http://www.ise.com/assets/gemini/documents/OptionsExchange/legal/fee/Topaz_Fee_Schedule.pdf (providing rebates ranging from $0.75--
$0.85 predicated on volume tiers); NASDAQ Options Market--Fees and 
Rebates, available at, http://www.nasdaqtrader.com/Micro.aspx?id=optionsPricing (providing a flat rebate of $0.84 with 
an additional rebate for participants that qualify for Penny Pilot 
Options Customer or Professional Rebate to Add Liquidity Tiers 7 or 
8 in a given month); BATS Options Exchange fee schedule, available 
at, http://www.batsoptions.com/support/fee_schedule/ (providing flat 
$0.85 posting credit for Customer orders that is not contingent on 
any volume requirement).
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes in the Customer 
Posting Credit Tiers in Non Penny Pilot Issues and the Customer 
Incentive Program are equitable and not unfairly discriminatory because 
they will be available to all OTPs that execute posted electronic 
Customer and Professional Customer orders on the Exchange on an equal 
and non-discriminatory basis, in particular because they provide 
alternative means of achieving the same credit. The Exchange believes 
that providing methods for achieving the credits based on posted 
electronic Customer and Professional Customer Executions in both Penny 
Pilot and non-Penny Pilot issues is equitable and not unfairly 
discriminatory because it would continue to result in more OTPs 
qualifying for the credits and therefore reducing their overall 
transaction costs on the Exchange.
    Further, the Exchange believes the proposed change to the Customer 
Posting Credit Tiers in Non Penny Pilot Issues and Customer Incentive 
Program is reasonable because it is designed to continue to bring 
additional posted order flow to NYSE Arca Equities [sic], so as to 
provide additional opportunities for all ETP [sic] Holders to trade on 
NYSE Arca Equities [sic].
    The Exchange believes that the proposed a non-substantive, 
technical change to the Base credit of the Customer and Professional 
Customer Posting Credit Tiers in Non Penny Pilot Issues by adding a 
dollar sign before (0.75), so that it accurately reflects the baseline 
credit of ($0.75), is reasonable, equitable and non-discriminatory 
because it would add clarity and consistency to the Fee Schedule.
    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,\8\ 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

[[Page 32640]]

attracting additional liquidity to the Exchange, which would continue 
to make the Exchange a more competitive venue for, among other things, 
order execution and price discovery.
---------------------------------------------------------------------------

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

    The proposed changes to the Customer Posting Credit Tiers in Non 
Penny Pilot Issues, and the proposed modification to the Customer 
Incentives are designed to attract additional volume, in particular 
posted electronic Customer and Professional Customer executions, to the 
Exchange, which would promote price discovery and transparency in the 
securities markets thereby benefitting competition in the industry. As 
stated above, the Exchange believes that the proposed change would 
impact all similarly situated OTPs that post electronic Customer and 
Professional Customer executions on the Exchange equally, and as such, 
the proposed change would not impose a disparate burden on competition 
either among or between classes of market participants.
    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)\9\ of the Act and subparagraph (f)(2) of Rule 19b-
4\10\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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)\11\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \11\ 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-NYSEArca-2015-48 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-2015-48. 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 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-NYSEArca-2015-48, and should 
be submitted on or before June 30, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Robert W. Errett,
Deputy Secretary.
---------------------------------------------------------------------------

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

[FR Doc. 2015-13987 Filed 6-8-15; 8:45 am]
 BILLING CODE 8011-01-P