Document ID: SEC-2020-0044-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE American, LLC
Posted Date: 2020-01-13T05:00Z

[Federal Register Volume 85, Number 8 (Monday, January 13, 2020)]
[Notices]
[Pages 1848-1853]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00264]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87903; File No. SR-NYSEAMER-2020-02]

Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Change To Amend the NYSE 
American Options Fee Schedule Regarding the Floor Broker Prepayment 
Program

January 7, 2020.
    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 January 2, 2020, NYSE American LLC (``NYSE American'' or 
``Exchange'') 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 amend the NYSE American Options Fee 
Schedule (``Fee Schedule'') regarding the Floor Broker Prepayment 
Program. The Exchange proposes to implement the fee change effective 
January 2, 2020. 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.

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.

[[Page 1849]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to modify and extend the prepayment 
incentive program for Floor Broker organizations (each a ``Floor 
Broker'') which allows Floor Brokers to prepay certain annual costs in 
exchange for volume rebates, as set forth in the Fee Schedule (the ``FB 
Prepay Program'' or ``Program'').\4\ The Exchange also plans to 
eliminate the Floor Broker Volume Rebate Program (the ``FB Volume 
Rebate'') as duplicative and superfluous in light of the proposed 
changes to the FB Prepay Program.\5\
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    \4\ See Fee Schedule, Section I.E.1, Floor Broker Fixed Cost 
Prepayment Incentive Program (the ``FB Prepay Program''), available 
here, https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf.
    \5\ See id., Fee Schedule, Section I.E.2 Floor Broker Volume 
Rebate Program (the ``FB Volume Rebate''). Given the plans to remove 
the FB Volume Rebate, the Exchange proposes a technical change to 
remove reference to ``Floor Broker Programs'' in the Table of 
Contents, as well as in the body of the Fee Schedule to re-number 
the FB Prepay Program as Section I.E., which would add clarity and 
transparency to the Fee Schedule.
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    Pursuant to the current FB Prepay Program, the Exchange offers 
Floor Brokers a 10% discount on their ``Eligible Fixed Costs'' if such 
costs are prepaid in advance of the year (the ``10% Discount'') \6\ and 
an opportunity to qualify for the Percentage Growth Incentive (the 
``Growth Incentive''), which is designed to encourage Floor Brokers to 
increase their average daily volume (``ADV'') in billable manual 
contract sides by certain percentages (correlated with Tiers) as 
measured against (the greater of) one of two benchmarks.\7\
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    \6\ See id. (providing that Eligible Fixed Costs include: 
Section III.A. Monthly ATP Fees; Section III.B. Floor Access Fee; 
and Section IV. Monthly Floor Communication, Connectivity, Equipment 
and Booth or Podia Fees, specifically: Login, Transport Charges, 
Booth Premises, Telephone Service, Cellular Phones, Booth Telephone 
System--Line Charge, Booth Telephone System--Single line phone jack 
and data jack, and Wire Services).
    \7\ The Percentage Growth Incentive excludes Customer volume, 
Firm Facilitation trades and QCCs. Any volume calculated to achieve 
the Firm and Broker Dealer Monthly Fee Cap and the Limit of Fees on 
Options Strategy Executions, are likewise excluded from the 
Percentage Growth Incentive because fees on such volume is already 
capped and therefore does not increase billable manual volume. See 
id.
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    The Exchange proposes to make several changes to this Program, 
including to make it renewable annually, to remove the 10% Discount, 
and to offer an alternative annual fixed rebate amount if a participant 
qualifies for the Growth Incentive. Currently, if a Floor Broker 
qualifies for the Growth Incentive, it would be eligible for specified 
percentage reductions of its pre-paid annual fixed costs. The Exchange 
proposes to offer an alternative to receive a specified annual fixed 
rebate if a Floor Broker qualifies for the Growth Incentive. 
Participants that qualify would receive the greater of the two rebates. 
The Exchange also proposes to adjust the qualifying baseline volumes 
and benchmarks.
    In addition, the FB Volume Rebate offers Floor Brokers the 
opportunity to qualify for a $5,000 rebate each month that the Floor 
Broker increases its ADV by a certain percentage over one of two 
benchmarks. Given the proposed changes to the FB Prepay Program, the 
Exchange proposes to eliminate (as duplicative) the FB Volume Rebate 
Program as discussed further herein.
    The Exchange proposes to implement the fee change effective January 
2, 2020.
Background
    The Commission has repeatedly expressed its preference for 
competition over regulatory intervention in determining prices, 
products, and services in the securities markets. In Regulation NMS, 
the Commission highlighted the importance of market forces in 
determining prices and SRO revenues and, also, recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its broader forms that are most 
important to investors and listed companies.'' \8\
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    \8\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04) (``Reg NMS 
Adopting Release'').
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    There are currently 16 registered options exchanges competing for 
order flow. Based on publicly-available information, and excluding 
index-based options, no single exchange has more than 16% of the market 
share of executed volume of multiply-listed equity and ETF options 
trades.\9\ Therefore, no exchange possesses significant pricing power 
in the execution of multiply-listed equity & ETF options order flow. 
More specifically, in the third quarter of 2019, the Exchange had less 
than 10% market share of executed volume of multiply-listed equity & 
ETF options trades.\10\
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    \9\ The OCC publishes options and futures volume in a variety of 
formats, including daily and monthly volume by exchange, available 
here: https://www.theocc.com/market-data/volume/default.jsp.
    \10\ Based on OCC data, see id., the Exchange's market share in 
equity-based options declined from 9.82% for the month of January to 
7.86% for the month of September.
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow, or discontinue or reduce use of certain categories of 
products, in response to fee changes. Accordingly, competitive forces 
constrain options exchange transaction fees. To respond to this 
competitive marketplace, the Exchange has established incentives for 
Floor Brokers, as such participants serve an important function in 
facilitating the execution of orders via open outcry, which promotes 
price discovery on the public markets. To the extent that these 
incentives succeed, the increased liquidity on the Exchange would 
result in enhanced market quality for all participants.
Proposed Rule Change
    The Exchange proposes to modify the Floor Broker Prepayment Program 
in several ways. First, the Exchange proposes to remove reference to 
specific years and to add rule text making clear that the Program is 
renewable on an annual basis.\11\ The Exchange also proposes to remove 
language regarding the 10% Discount, as that would no longer be 
included in the Program.\12\ In addition, the Exchange proposes to 
expand the Growth Incentive to provide an annual fixed-rebate option.
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    \11\ See proposed Fee Schedule, Section I.E., Floor Broker Fixed 
Cost Prepayment Incentive Program (the ``FB Prepay Program'') 
(including removing reference to specific years and adding 
references to Floor Brokers prepaying for the ``the following 
calendar year'' after committing thereto by ``the last business day 
of December in the current year''; being invoiced in January for 
Eligible Fixed Costs based on annualizing their Eligible Fixed Costs 
incurred in the previous November;'' and participants receiving 
their rebate ``in the following January.'' See id. For example, if a 
participating Floor Broker incurred $6,000 in Eligible Fixed Costs 
in November, that Floor Broker would be invoiced in January of the 
following year in the amount of $72,000 to prepay such costs for the 
entire year.
    \12\ See id. For consistency, the Exchange would also remove 
reference to ``larger discounts'' as it related to the smaller 10% 
Discount and replace this reference with the word ``rebates.'' See 
id.
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    Currently, to qualify for the Growth Incentive, the minimum 
threshold that a participant needs to exceed is the greater of: 11,000 
contract sides in billable manual ADV; or 110% of the Floor Broker's 
total billable manual ADV in contract sides during the second half of 
2017--i.e., July through December 2017.\13\
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    \13\ See Fee Schedule, Section I.E.2 Floor Broker Volume Rebate 
Program (the ``FB Volume Rebate'').
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    The Exchange proposes to revise the minimum thresholds that a 
participant needs to exceed to qualify for the Growth Incentive as 
follows: 20,000 contract sides (up from 11,000) in billable manual ADV; 
or 105% of the

[[Page 1850]]

Floor Broker's total billable manual ADV in contract sides (down from 
110%) during the second half of 2017--i.e., July through December 
2017.\14\ The Exchange believes that 20,000 ADV is a reasonable minimum 
threshold above which a participating Floor Broker would need to 
increase volume in order to qualify for the Growth Incentive given the 
increased options volume executed by Floor Brokers in the past year. 
The Exchange also notes that Floor Brokers that are new to the Exchange 
would be able to qualify for the Growth Incentive based on the minimum 
threshold of 20,000 contract sides. In addition, because Floor Broker 
volume has increased, the Exchange believes that Floor Brokers that 
previously participated in the Program would be able to achieve this 
proposed minimum threshold. The Exchange likewise believes it is 
appropriate to reduce the requisite percentage to meet the 2017 
benchmark because it would make this alternative more achievable for 
Floor Brokers that do not meet the billable manual ADV threshold. The 
Exchange notes that the changes to the Program are designed to 
encourage those Floor Brokers that have previously enrolled in the 
Program to reenroll for the upcoming year as well as to attract Floor 
Brokers that have not yet participated.
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    \14\ See proposed Fee Schedule, Section I.E., Floor Broker Fixed 
Cost Prepayment Incentive Program (the ``FB Prepay Program'').
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    Regardless of which benchmark a Floor Broker's growth is measured 
against, all Floor Brokers that aim to qualify for the Growth Incentive 
would be required to increase volume executed on the Exchange. The 
total annual rebate available for achieving each Tier would be the same 
regardless of whether the Floor Broker relied on the minimum (proposed) 
20,000 ADV contract sides as the benchmark or 105% of the second half 
of 2017 volume.
    The Exchange also proposes to add an option for a Floor broker to 
receive a fixed rebate instead of a percentage reduction of pre-paid 
annual fixed costs if it qualifies for the Growth Incentive. To reflect 
this new option, the Exchange proposes to add rule text providing that 
``[e]ligible Floor Broker organizations are entitled to an annual 
rebate that is the greater of the `Total Percentage Reduction of pre-
paid annual Eligible Fixed Costs' or the `Alternative Rebate' based 
upon the Percentage Growth Incentive Tier achieved, as set forth in the 
table below''.
    As in prior years, the Exchange is proposing rebates based on the 
growth in ADV in contract sides, but proposes to modify (and make more 
achievable) the requisite Percentage Growth requirements to as low as 
5% to achieve an annual rebate of 10% of prepaid Eligible Fixed Costs 
or $2,000/month, whichever is greater, to Growth Incentive as high as 
100% to achieve an annual rebate of 100% Eligible Fixed Costs or 
$16,000/month (under new Tier 4), whichever is greater.\15\ Just as the 
total percentage reduction increases as the Percentage Growth 
increases, the Exchange proposes that the annual Alternative Rebate, 
with fixed dollar amounts tied to each Tier, would also increase as the 
Percentage Growth increases. Participants that qualify for one of the 
Tiers would receive only the higher of the two potential rebates, paid 
annually.
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    \15\ See id. The Exchange notes that new Tier 4 effectively 
replacing current Tier 3 in terms of growth requirement and 
potential rebate, as the Exchange has lowered (and made more 
achievable) proposed Tier 3. See id.
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    The following table reflects the proposed changes (with deletions 
in brackets and new text italicized):\16\
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    \16\ Given that the annual Alternative Rebate will be available 
for all Tiers (and not just Tier 3 as is currently the case), the 
Exchange also proposes to delete the following language from the Fee 
Schedule as obsolete: ``*Participants in the FB Prepay Program that 
qualify for Tier 3 will be rebated the greater of 100% of their pre-
paid annual Eligible Fixed Costs, or $10,000/month.'' See id.

                                        FB Prepayment Program Incentives
                     [Based on annual ADV in contract sides for the calendar year (in 2019)]
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                                                                    Total Percentage
                                          Percentage growth      Reduction of pre- paid
                 Tier                         incentive          annual Eligible Fixed      Alternative Rebate
                                                                    Costs [for 2019]
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Tier 1...............................                    [30]5  [40%]10................  $2,000/month.
Tier 2...............................                   [65]30  [75]50.................  $4,000/month.
Tier 3...............................                  [100]50  [100*]80...............  $8,000/month.
Tier 4...............................                      100  100....................  $16,000/month.
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    Thus, as proposed, a participating Floor Broker would qualify for 
the proposed Growth Incentive by executing ADV growth in manual 
billable contract sides that is 5%, 30%, 50%, or 100%, over the greater 
of (i) 20,000 contract sides ADV; or (ii) 105% of their ADV during the 
second half of 2017 (i.e., July through December). Participants that 
qualify for Tiers 1, 2, 3, or 4 would be eligible for 10%, 50%, 80% or 
100% of their pre-paid annual Eligible Fixed costs, respectively. 
However, if the amount of the annual Alternative Rebate works out to be 
greater than the rebate available under the Growth Incentive program, 
the Floor Broker would be entitled to that amount.
    The Exchange also proposes to eliminate the Floor Broker Volume 
Rebate, as it is now duplicative following the modifications to the FB 
Prepayment Program.\17\ In particular, proposed Tier 3 of the FB Prepay 
Program requires the same level of growth as the FB Volume Rebate and a 
greater potential rebate. Both programs require the greater of 20,000 
contract sides or a level of trading as compared to a prior period that 
is the same or greater than volume during that period. The Exchange 
notes, however, that the FB Volume Rebate uses the second half of 2018 
volume as the prior volume benchmark whereas the proposed FB Prepay 
Program uses the second half of 2017 volume. The Exchange believes the 
similarities in the program--both in terms of incentives and potential 
rebates--obviate the need to keep both programs. Thus, the Exchange 
proposes to delete as superfluous (and duplicative) the FB Volume 
Rebate.
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    \17\ See id.
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    Although the FB Prepay Program relates to fixed costs, the Exchange 
believes the Program (as modified) would continue to incent Floor 
Brokers to increase their billable volume executed in open outcry on 
the Exchange, which would benefit all market participants by expanding 
liquidity and providing more trading

[[Page 1851]]

opportunities, even to those market participants that have not 
committed to the Program. Regardless of which benchmark a participating 
Floor Broker's growth is measured against, all Floor Broker's that opt 
to participate would be required to increase volume executed on the 
Exchange in order to receive the enhanced discount. The Exchange cannot 
predict with certainty whether any Floor Brokers would avail themselves 
of this proposed fee change. However, all Floor brokers are eligible 
for this Program.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\18\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\19\ 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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    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposed Rule Change Is Reasonable
    The Exchange operates in a highly competitive market. The 
Commission has repeatedly expressed its preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. In Regulation NMS, the Commission 
highlighted the importance of market forces in determining prices and 
SRO revenues and, also, recognized that current regulation of the 
market system ``has been remarkably successful in promoting market 
competition in its broader forms that are most important to investors 
and listed companies.'' \20\
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    \20\ See Reg NMS Adopting Release, supra note 8, at 37499.
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    There are currently 16 registered options exchanges competing for 
order flow. Based on publicly-available information, and excluding 
index-based options, no single exchange has more than 16% of the market 
share of executed volume of multiply-listed equity and ETF options 
trades.\21\ Therefore, no exchange possesses significant pricing power 
in the execution of multiply-listed equity & ETF options order flow. 
More specifically, in the third quarter of 2019, the Exchange had less 
than 10% market share of executed volume of multiply-listed equity & 
ETF options trades.\22\
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    \21\ See supra note 9.
    \22\ Based on OCC data, see supra note 10, in 2019, the 
Exchange's market share in equity-based options declined from 9.82% 
for the month of January to 7.86% for the month of September.
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow, or discontinue or reduce use of certain categories of 
products, in response to fee changes. Accordingly, competitive forces 
constrain options exchange transaction fees. Stated otherwise, changes 
to exchange transaction fees can have a direct effect on the ability of 
an exchange to compete for order flow.
    The Exchange believes the FB Prepay Program, as modified, is 
reasonable because the Program is optional and Floor Brokers can elect 
to participate or not. In addition, the Exchange is continuing to offer 
two alternative means to achieve the same enhanced rebate to ensure 
that Floor Brokers that are new to the Exchange (or Floor Brokers that 
did not execute more than 20,000 ADV in contract sides) could also 
participate in the Program. The Exchange believes that increasing one 
of the alternate requirements to 20,000 ADV is a reasonable minimum 
threshold above which a participating Floor Broker would need to 
increase volume in order to realize the proposed Growth Incentive 
because numerous Floor brokers exceeded this volume requirement in 
2019, even though it was not required. Because Floor Brokers are 
already performing at this level, the Exchange believes it is 
reasonable to adjust the eligibility requirement for the Growth 
Incentive to match current performance levels. Having demonstrated an 
ability to meet this higher volume threshold, the Exchange is seeking 
to encourage Floor Brokers to sustain this volume threshold throughout 
the year. The Exchange also believes it is reasonable to use each Floor 
Broker's historical volume in the second half of 2017 as a benchmark 
against which to measure future growth to achieve the proposed Growth 
Incentive, and to lower from 110% to 105% the requisite increase over 
the Floor Broker's 2017 volume, because it makes the Growth Incentive 
more achievable and provides an opportunity for more Floor Brokers to 
qualify for the Growth Incentive Program.
    The Exchange further believes that the proposed changes to add an 
additional tier to the Growth Incentive is reasonable because it will 
provide greater opportunities to Floor Brokers to be eligible for one 
of the two rebates by providing lower thresholds to qualify. Overall, 
the proposed changes to the Growth Incentive program are designed to 
make the existing Tiers more achievable while adding new Tier 4 (which 
has same threshold percentage as existing Tier 3) to encourage 
increased executions by Floor Brokers on the Exchange, which activity 
(even with lower volume thresholds) would benefit all market 
participants.
    The Exchange also believes it is reasonable to provide an annual 
alternative fixed rebate because it provides an option for Floor 
brokers to earn the higher of the percentage reduction rebate, or the 
fixed-rebate amount.
    Moreover, the FB Prepay Program provides Floor Brokers the 
opportunity to receive rebates on its Eligible Fixed Costs that they 
otherwise would not receive, based on trading activity. Such rebates 
may encourage Floor Brokers to increase their billable volume executed 
in open outcry on the Exchange, which would benefit all market 
participants by expanding liquidity and providing more trading 
opportunities, even to non-Floor Broker market participants (including 
participating Floor Brokers who do not hit the volume thresholds).
    Finally, to the extent the proposed change continues to attract 
greater volume and liquidity to the Exchange (including to the Floor), 
the Exchange believes the proposed change would improve the Exchange's 
overall competitiveness and strengthen its market quality for all 
market participants. In the backdrop of the competitive environment in 
which the Exchange operates, the proposed rule change is a reasonable 
attempt by the Exchange to increase the depth of its market and improve 
its market share relative to its competitors.
    The Exchange cannot predict with certainty whether any Floor 
Brokers would avail themselves of this proposed fee change. However, 
all Floor brokers are eligible to participate in the Program.
    The proposed technical change to re-number the Table of Contents as 
well as the body of the Fee Schedule in light of the removal of the FB 
Volume Rebate program is reasonable as it would add clarity and 
transparency to the Fee Schedule.
The Proposed Rule Change Is an Equitable Allocation of Credits and Fees
    The Exchange believes the proposed rule change is an equitable 
allocation of its fees and credits. The proposal is based on the amount 
and type of business transacted on the Exchange and Floor Brokers can 
opt to avail themselves of the Program or not, and to attempt to trade 
sufficient volume to achieve one of the Tiers, or not. All

[[Page 1852]]

participating Floor Brokers have the ability to qualify for the same 
enhanced rebate under two alternatives means offered (i.e., the greater 
of at least 20,000 contract sides in billable ADV or 105% of the Floor 
Broker's total billable manual ADV in the second half of 2017). The 
Exchange notes that the changes to the Program are designed to 
encourage those Floor Brokers that have previously enrolled in the 
Program to reenroll for the upcoming year as well as to attract Floor 
Brokers that have not yet participated.
    Moreover, the proposed change applies to qualifying Floor Brokers 
equally and because Floor Brokers serve an important function in 
facilitating the execution of orders via open outcry, which as a price-
improvement mechanism, the Exchange wishes to encourage and support.
    To the extent that the proposed change continues to attract more 
participation in the programs of the Exchange, the increased order flow 
would continue to make the Exchange a more competitive venue for, among 
other things, order execution. Thus, the Exchange believes the proposed 
rule change would improve market quality for all market participants on 
the Exchange and, as a consequence, attract more order flow to the 
Exchange thereby improving market-wide quality and price discovery.
The Proposed Rule Change Is Not Unfairly Discriminatory
    The Exchange believes it is not unfairly discriminatory to modify 
the FB Prepayment program because the proposed modification would be 
available to all similarly-situated Floor Brokers on an equal and non-
discriminatory basis.
    The proposed modified Program is not unfairly discriminatory to 
non-Floor Brokers because Floor Brokers serve an important function in 
facilitating the execution of orders via open outcry, which as a price-
improvement mechanism, the Exchange wishes to encourage and support. To 
the extent that the proposed change continues to attract more 
participation in the programs of the Exchange, the increased order flow 
would continue to make the Exchange a more competitive venue for, among 
other things, order execution. Thus, the Exchange believes the proposed 
rule change would improve market quality for all market participants on 
the Exchange and, as a consequence, attract more order flow to the 
Exchange thereby improving market-wide quality and price discovery.
    Moreover, the proposal is based on the amount and type of business 
transacted on the Exchange and Floor Broker organizations are not 
obligated to participate in the Program and, if they do, they are not 
obligated to try to achieve any of the Tiers.
    To the extent that the proposed change attracts a variety of 
transactions to the Exchange, this increased order flow would continue 
to make the Exchange a more competitive venue for order execution. 
Thus, the Exchange believes the proposed rule change would improve 
market quality for all market participants on the Exchange and, as a 
consequence, attract more order flow to (the Floor of) the Exchange 
thereby improving market-wide quality and price discovery. The 
resulting increased volume and liquidity would provide more trading 
opportunities and tighter spreads to all market participants and thus 
would promote just and equitable principles of trade, remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.

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. Instead, as discussed above, the Exchange believes 
that the proposed changes would encourage the submission of additional 
liquidity to a public exchange, thereby promoting market depth, price 
discovery and transparency and enhancing order execution opportunities 
for all market participants. As a result, the Exchange believes that 
the proposed change furthers the Commission's goal in adopting 
Regulation NMS of fostering integrated competition among orders, which 
promotes ``more efficient pricing of individual stocks for all types of 
orders, large and small.'' \23\
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    \23\ See Reg NMS Adopting Release, supra note 8, at 37499.
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    Intramarket Competition. The Exchange believes the proposed 
Program, as modified, should continue to encourage order flow to be 
directed to the (Floor of the) Exchange, which would enhance the 
quality of quoting and may increase the volumes of contracts trade on 
the Exchange. To the extent that there is an additional competitive 
burden on non-Floor Brokers, the Exchange believes that this is 
appropriate because Floor Brokers serve an important function in 
facilitating the execution of orders via open outcry, which as a price-
improvement mechanism, the Exchange wishes to encourage and support.
    To the extent that this function is achieved, all of the Exchange's 
market participants should benefit from the improved market liquidity. 
Enhanced market quality and increased transaction volume that results 
from the anticipated increase in order flow directed to the Exchange 
will benefit all market participants and improve competition on the 
Exchange.
    The proposed technical change to re-number the Table of Contents as 
well as the body of the Fee Schedule in light of the removal of the FB 
Volume Rebate program is not designed to impact competition but instead 
should add clarity and transparency to the Fee Schedule.
    Intermarket Competition. The Exchange believes that the proposed 
change could promote competition between the Exchange and other 
execution venues, by encouraging additional orders to be sent to the 
(Floor of the) Exchange for execution. The proposed adjustments to the 
Program are designed to make the incentives more achievable and to 
continue to encourage Floor Brokers to execute orders on the Floor of 
the Exchange, which would increase volume and liquidity, to the benefit 
of all market participants by providing more trading opportunities and 
tighter spreads.
    Given the robust competition for volume among options markets, many 
of which offer the same products, implementing programs to attract 
order flow, such as the proposed modification to the FB Prepayment 
Program, are consistent with the above-mentioned goals of the Act.
    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.

[[Page 1853]]

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) \24\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \25\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \24\ 15 U.S.C. 78s(b)(3)(A).
    \25\ 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) \26\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \26\ 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-NYSEAMER-2020-02 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-2020-02. 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-2020-02, and should be 
submitted on or before February 3, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-00264 Filed 1-10-20; 8:45 am]
 BILLING CODE 8011-01-P