Document ID: SEC-2014-1428-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2014-08-25T04:00Z

[Federal Register Volume 79, Number 164 (Monday, August 25, 2014)]
[Notices]
[Pages 50725-50726]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-20081]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72865; File No. SR-NYSEMKT-2014-67]

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

August 19, 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 August 8, 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.
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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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to proposes to amend the NYSE Amex Options 
Fee Schedule (``Fee Schedule''). The proposed changes will be operative 
on August 8, 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 as described below. 
The proposed changes will be operative on August 8, 2014.
    The Exchange proposes to add language that excludes certain 
Customer-to-Customer activity from qualifying for any rebate under the 
Customer Electronic Complex Order ADV Tier rebate schedule. Presently, 
the Exchange pays rebates to Order Flow Providers (``OFP's'') according 
to the table shown below.

------------------------------------------------------------------------
                                                            Rebate per
                                                           contract for
                                                           all customer
                                                            electronic
                                                          Complex orders
       Customer Electronic Complex Order ADV Tiers         (retroactive
                                                           to the first
                                                             contract
                                                           traded during
                                                            the month)
------------------------------------------------------------------------
35,000 to 49,999........................................           $0.04
50,000 to 69,999........................................            0.06
70,000 to 109,999.......................................            0.08
110,000 and greater.....................................            0.10
------------------------------------------------------------------------

    The Exchange is proposing to add language that would exclude 
certain types of activity from counting towards any portion of the 
rebate, to include both volume associated with the activity and any per 
contract rebate associated with the activity. Specifically, the 
Exchange proposes to exclude volume from any Customer to Customer 
Electronic Complex executions. Therefore, the Exchange proposes to 
amend the fee schedule to read as follows: \4\
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    \4\ Text that the Exchange proposes to delete appears in 
brackets; text that the Exchange proposes to add appears 
underscored.

------------------------------------------------------------------------
                                                            Rebate per
                                                           contract for
                                                          [all] customer
                                                            electronic
                                                          complex orders
                                                             excluding
                                                            customer to
  Customer Electronic Complex Order ADV Tiers--excludes      customer
   volume from customer to customer electronic complex      electronic
                       executions                             complex
                                                            executions
                                                           (retroactive
                                                           to the first
                                                             contract
                                                           traded during
                                                            the month)
------------------------------------------------------------------------
35,000 to 49,999........................................           $0.04
50,000 to 69,999........................................            0.06
70,000 to 109,999.......................................            0.08
110,000 and greater.....................................            0.10
------------------------------------------------------------------------

    As this fee is being filed for immediate effectiveness on August 8, 
2014, for the month of August only, the Exchange will exclude Customer 
to Customer Electronic Complex Executions from the calculation of the 
proposed rebate only during the remaining trading days of August (i.e., 
excluding August 1,4-7--the first five trading days) and any such 
volume executed prior to August 8, 2014 will apply to a Customer's 
potential rebate.\5\ By calculating the August 2014 proposed rebate in 
this fashion, the Exchange believes that Customers seeking to meet the 
volume metric would have an opportunity to do so and would not be 
disadvantaged if trading volume prior to the effective date of this 
rule change did not meet the volume metric.
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    \5\ For example, if a OFP on behalf of a Customer achieved 
50,000 contracts or greater volume of Customer to Customer 
Electronic Complex Executions during the first five trading days in 
August 2014 only, that activity will apply to that any potential 
rebate for August 2014. As proposed, Customer to Customer Electronic 
Complex Executions from August 8, 2014 forward will not apply to any 
potential rebate.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) \6\ of the Act, in general, and 
Section 6(b)(4) and (5) \7\ 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.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposal to exclude certain activity 
from counting towards or earning the rebate paid under the existing 
Customer Electronic Complex Order ADV Tiers is reasonable, equitable 
and not unfairly discriminatory for the following

[[Page 50726]]

reasons. First, the specific type of activity being excluded does not 
generate transaction fee revenue for the Exchange as Customers are 
charge a rate of $0.00 per contract. As a result, the Customers who are 
engaging in the activity--Customer to Customer Electronic Complex Order 
executions--are not being charged transaction fees. The Exchange 
believes it is reasonable, equitable and not unfairly discriminatory to 
refrain from paying a rebate for activity that is already free for the 
participants involved. The Exchange also believes that the proposal is 
reasonable, equitable, and not unfairly discriminatory because it 
applies to all Customers equally. Finally, because the rebate only 
applies to Customer activity, the elimination of the rebate as proposed 
puts Customers on the same competitive footing for the excluded orders 
as other market participants, and therefore is reasonable, equitable 
and not unfairly discriminatory.
    With respect to the proposed fee being applicable to the balance of 
August 2014, the Exchange believes the fee is reasonable because 
Customers are on notice of the proposed fee and the rebate would be 
based only on the volume executed during the remaining trading days of 
August.

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 not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes the 
proposed fee change is reasonably designed to be fair and equitable, 
and therefore, will not unduly burden any particular group of market 
participants trading on the Exchange vis-[agrave]-vis another group. 
The Exchange notes that the rebate only applies to Customers and 
therefore the elimination of the rebate in the described situation puts 
Customers on the same competitive footing as other market participants. 
As such, no market participant would be entitled to a credit for these 
types of transactions. As noted above, the proposed fee change applies 
equally to all Customers, thus the proposed fee change does not pose an 
undue burden among Customers. The Exchange does not believe that the 
proposed rule change will impose any burden on intermarket competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act because the proposed change only applies to trading on the 
Exchange.
    The Exchange operates in a highly competitive market, comprised of 
many options exchanges, in which market participants can easily and 
readily direct order flow to competing venues if they deem fee levels 
at a particular venue to be excessive or rebates to be inadequate. 
Accordingly, the fees that are assessed and the rebates paid by the 
Exchange described in the above proposal are influenced by these robust 
market forces and therefore must remain competitive with fees charged 
and rebates paid by other venues and therefore must continue to be 
reasonable and equitably allocated to those ATP Holders that opt to 
direct orders to the Exchange rather than competing venues.

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) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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) \10\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \10\ 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-NYSEMKT-2014-67 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-NYSEMKT-2014-67. 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-NYSEMKT-2014-67, and should 
be submitted on or before September 15, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-20081 Filed 8-22-14; 8:45 am]
BILLING CODE 8011-01-P