Document ID: SEC-2016-0722-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2016-04-26T04:00Z

[Federal Register Volume 81, Number 80 (Tuesday, April 26, 2016)]
[Notices]
[Pages 24674-24676]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-09594]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77658; File No. SR-NYSEMKT-2016-45]

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

April 20, 2016.
    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 April 11, 2016, 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to modify the NYSE Amex Options Fee Schedule 
(``Fee Schedule''). The Exchange proposes to implement the fee change 
effective April 11, 2016. The proposed 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 amend Sections I. E. and G. of the 
Fee Schedule \4\ to adjust fees and credits payable, effective on April 
11, 2016.
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    \4\ See Fee Schedule, Sections I. E. (Amex Customer Engagement 
(``ACE'') Program--Standard Options) and G. (CUBE Auction Fees & 
Credits), available here, https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf.
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Proposed changes to ACE Program
    Section I.E. of the Fee Schedule describes the Exchange's ACE 
Program, which features five tiers expressed as a percentage of total 
industry Customer equity and Exchange Traded Fund (``ETF'') option 
average daily volume \5\ and provides two alternative methods through 
which Order Flow Providers (each an ``OFP'') may receive per contract 
credits for Electronic Customer volume that the OFP, as agent, submits 
to the Exchange.
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    \5\ The volume thresholds are based on an NYSE Amex Options 
Market Makers' volume transacted Electronically as a percentage of 
total industry Customer equity and ETF options volumes as reported 
by the Options Clearing Corporation (the ``OCC''). Total industry 
Customer equity and ETF option volume is comprised of those equity 
and ETF contracts that clear in the Customer account type at OCC and 
does not include contracts that clear in either the Firm or Market 
Maker account type at OCC or contracts overlying a security other 
than an equity or ETF security. See OCC Monthly Statistics Reports, 
available here, http://www.theocc.com/webapps/monthly-volume-reports.
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    The Exchange proposes to modify the ACE Program by increasing 
certain of the credits available for Tiers 2 through 5 as illustrated 
in the table below, with proposed additions appearing underscored and 
proposed deletions appearing in brackets:

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                                                        ACE Program--Standard options                         Credits payable on customer volume only
                                    --------------------------------------------------------------------------------------------------------------------
                                                                                    Total electronic ADV
                                                                                      (of which 20% or
                                      Customer electronic                              greater of the
                Tier                     ADV as a % of                               minimum qualifying                       1 Year          3 Year
                                       industry customer              OR            volume for each tier     Customer        enhanced        enhanced
                                         equity and ETF                             must be customer) as  volume credits     customer        customer
                                          options ADV                                 a % of industry                     volume credits  volume credits
                                                                                    customer equity and
                                                                                      ETF options ADV
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1..................................  0.00% to 0.60%.......  .....................  N/A..................           $0.00           $0.00           $0.00

[[Page 24675]]

 
2..................................  > 0.60% to 0.80% or    .....................  N/A..................         [(0.16]        [(0.16)]        [(0.16)]
                                      >= 0.35% over                                                               (0.18)          (0.18)          (0.18)
                                      October 2015 volumes.
3..................................  > 0.80% to 1.25%.....  .....................  1.50% to 2.50% of            [(0.17)]        [(0.18)]        [(0.19)]
                                                                                    which 20% or greater          (0.19)          (0.20)          (0.21)
                                                                                    of 1.50% must be
                                                                                    Customer.
4..................................  > 1.25 to 1.75%......  .....................  > 2.50% to 3.50% of          [(0.18)]        [(0.19)]        [(0.21)]
                                                                                    which 20% or greater          (0.20)          (0.21)          (0.22)
                                                                                    of 2.50% must be
                                                                                    Customer.
5..................................  > 1.75%..............  .....................  > 3.50% of which 20%         [(0.19)]        [(0.21)]        [(0.23)]
                                                                                    or greater of 3.5%            (0.22)          (0.23)          (0.24)
                                                                                    must be Customer.
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* * * * *
    The proposed amendments to the ACE Program are designed to enhance 
the rebates, which the Exchange believes would attract more volume and 
liquidity to the Exchange to the benefit of Exchange participants 
through increased opportunities to trade as well as enhancing price 
discovery.
Proposed changes to CUBE Pricing
    Section I.G. of the Fee Schedule sets forth the rates for per 
contract fees and credits for executions associated with a CUBE 
Auction. The Exchange is proposing to adjust rates for RFR Response 
fees and Initiating Credits and Rebates. Specifically, the Exchange 
proposes to adjust RFR Response fees for Non-Customers to $0.70 for 
symbols in the Penny Pilot, from $0.12; and to adjust RFR Response fees 
for Non-Customers for symbols not in the Penny Pilot to $1.05, from 
$0.12. The Exchange also proposes to adjust the Initiating Participant 
credits and rebates to $0.35 for symbols in the Penny Pilot, $0.70 for 
symbols not in the Penny Pilot, an increase from the $0.05 Initiating 
Participant credit in all names. The Exchange also proposes to increase 
the ACE Initiating Participant Rebate from $0.05 to $0.18.
    The proposed changes are designed to increase incentives for 
submission of CUBE Orders, which should maximize price improvement 
opportunities for Customers. In addition, the Exchange notes that prior 
changes to CUBE Pricing (effective in February 2016), designed to 
address concerns raised about auction fee structures revealed that fee 
adjustments to incent Market Maker participation did not lead to 
greater volume and liquidity in CUBE Auctions, and did not encourage 
Market Maker RFR Responses to such Auctions.\6\
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    \6\ See Securities Exchange Act Release No. 77106 (February 10, 
2016), 81 FR 8107, 8108 (February 17, 2016) (SR-MKT-2016-18) (the 
``February CUBE Changes'') (noting that the changes to CUBE pricing, 
particularly the reduction in the RFR Response Fee, were designed to 
address concerns raised by Market Makers that auction pricing, 
including the CUBE, hindered competition by Market Makers, and 
providing that ``the proposed changes would also provide the 
concerned Market Makers to have a platform on which they can provide 
proof of concept.'') The Exchange notes that the CUBE fees and 
credits in place prior to the February CUBE Changes are consistent 
with the adjustments proposed herein.
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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 that the proposed amendments to the ACE 
Program are reasonable, equitable and not unfairly discriminatory 
because they would enhance the incentives to Order Flow Providers to 
transact Customer orders on the Exchange, which would benefit all 
market participants by providing more trading opportunities and tighter 
spreads, even to those market participants that do not participate in 
the ACE Program. Additionally, the Exchange believes the proposed 
changes to the ACE Program are consistent with the Act because they may 
attract greater volume and liquidity to the Exchange, which would 
benefit all market participants by providing tighter quoting and better 
prices, all of which perfects the mechanism for a free and open market 
and national market system.
    The Exchange believes that the proposed changes to CUBE Auction 
fees are reasonable, equitable and not unfairly discriminatory. 
Specifically, the proposed increases to both the Initiating Participant 
Credits (for both Penny Pilot and Non-Penny Pilot) as well as the fees 
associated with RFR Responses that participate in the CUBE are 
reasonable, equitable and non-discriminatory because they apply equally 
to all ATP Holders that choose to participate in the CUBE, and access 
to the Exchange is offered on terms that are not unfairly 
discriminatory.
    The Exchange believes the proposed changes to CUBE are reasonable, 
as they are similar to fee and credit structures previously applied to 
the CUBE Auction \9\ and to fees charged for similar auction mechanisms 
on other markets, such as BOX Options Exchange LLC (``BOX''), which 
charges a total fee of $1.05 for a Market Maker response to a PIP 
auction in a non-Penny Pilot issue.\10\
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    \9\ See supra n. 6.
    \10\ See BOX Fee Schedule, available here, http://boxexchange.com/assets/BOX_Fee_Schedule.pdf.
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    The Exchange likewise believes the proposed increase of the ACE 
Initiating Participant Credit is reasonable, equitable and not unfairly 
discriminatory for the following reasons. First, the ACE Initiating 
Participant Rebate is based on the amount of business transacted on the 
Exchange and is designed to attract more volume and liquidity to the

[[Page 24676]]

Exchange generally, and to CUBE Auctions specifically, which would 
benefit all market participants (including those that do not 
participate in the ACE Program) through increased opportunities to 
trade at potentially improved prices as well as enhancing price 
discovery. Furthermore, the Exchange notes that the ACE Initiating 
Participant Rebate is equitable and not unfairly discriminatory because 
it would continue to incent ATP Holders to transact Customer orders on 
the Exchange and an increase in Customer order flow would bring greater 
volume and liquidity to the Exchange. Increased volume to the Exchange 
benefits all market participants by providing more trading 
opportunities and tighter spreads, even to those market participants 
that do not participate in the ACE Program.
    Finally, the Exchange believes the proposed changes are consistent 
with the Act because to the extent the modifications permit the 
Exchange to continue to attract greater volume and liquidity, the 
proposed change would improve the Exchange's overall competitiveness 
and strengthen its market quality for 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 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 amendments 
to the ACE Program are pro-competitive as the proposed increased 
rebates may encourage OFPs to direct Customer order flow to the 
Exchange and any resulting increase in volume and liquidity to the 
Exchange would benefit all Exchange participants through increased 
opportunities to trade as well as enhancing price discovery. Further, 
the Exchange believes the proposed amendments to CUBE Auction pricing 
are pro-competitive as the fees and credits are designed to incent 
increases in the number of CUBE Auctions brought to the Exchange, which 
would benefit all Exchange participants through increased opportunities 
to trade as well as enhancing price discovery.
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    \11\ 15 U.S.C. 78f(b)(8).
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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) \12\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \13\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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) \14\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \14\ 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-2016-45 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-NYSEMKT-2016-45. 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-2016-45, and should 
be submitted on or before May 17, 2016.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-09594 Filed 4-25-16; 8:45 am]
BILLING CODE 8011-01-P