Document ID: SEC-2014-2105-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2014-12-15T05:00Z

[Federal Register Volume 79, Number 240 (Monday, December 15, 2014)]
[Notices]
[Pages 74152-74153]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-29242]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73794; File No. SR-NYSEMKT-2014-98]

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

December 9, 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 November 26, 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 amend the NYSE Amex Options Fee Schedule 
(``Fee Schedule'') to amend the application of Routing Surcharge fees. 
The Exchange proposes to implement the change on December 1, 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 it relates to 
the application of Routing Surcharge fees. The purpose of the proposed 
change is to account for recent changes introduced on other exchanges 
that impact the fees charged when routing orders.
    The Exchange currently charges ATP Holders a Routing Surcharge when 
it routes orders to other exchanges for execution. The Routing 
Surcharge is comprised of an $0.11 per contract fee, plus the 
applicable charges assessed by the away market for execution of the 
order (which the Exchange is able to discern from the away market fee 
schedule). If the executing exchange does not charge a transaction fee 
for the execution of a Customer order, the Routing Surcharge is waived.
    Recently, the BOX Options Exchange LLC (``BOX'') adopted per 
contract pricing that varies based upon the counter party to the trade. 
This pricing change makes it impossible to know in advance of the 
execution what the charges will be for an order routed to BOX. For 
example, a Professional Customer order routed to BOX in a non-Penny 
option would be charged $0.35 per contract if it traded against another 
Professional Customer or Broker/Dealer, but would be charged $0.94 per 
contract if it traded against a Customer.\4\
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    \4\ See BOX Fee Schedule, Section 1 (as of November 2014), 
available here, http://boxexchange.com/assets/BOX_Fee_Schedule.pdf.
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    In order to provide ATP Holders with certainty regarding the 
routing fees for which they may be liable, the Exchange is proposing to 
amend the Fee Schedule as it relates to the application of Routing 
Surcharge fees, specifically endnote 7. The proposed amendment would 
specify that if the actual transaction fees assessed by the away 
exchange(s) cannot be determined prior to the execution, the Exchange 
would charge the $0.11 per contract fee plus the highest per contract 
charge assessed by the away exchange(s) for the relevant option class 
and type of market participant (e.g., Customer, Firm, Broker/Dealer, 
Professional Customer or Market Maker).
    The Exchange proposes to make a non-substantive changes [sic] to 
the Fee Schedule to replace the term ``all actual charges'' with the 
term ``any transaction fees'' as the Exchange believes that the term 
transaction fees better represents the applicable charges on away 
exchanges, and is consistent with existing rule text on the NYSE Arca, 
Inc. Options (``NYSE Arca'') Fee Schedule.
    The Exchange notes that ATP Holders can avoid having their orders 
routed to away markets by utilizing specific, non-routable order types 
if they so choose.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Securities Exchange Act of 1934 (the 
``Act''),\5\ in general, and furthers the objectives of Section 6(b)(4) 
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.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed fee change is reasonable 
and equitable because charging market participants a set per contract 
rate in those instances when an order is routed to an away exchange 
provides market participants with certainty, which will enable them to 
make informed decisions regarding whether to continue to designate such 
orders as eligible for routing to away exchange. The Exchange further 
believes that the proposed fee change to charge the

[[Page 74153]]

highest rate charged by the away exchange if the Exchange cannot 
discern the per contract charge in the option class in question in 
advance of the execution is reasonable and equitable because the 
Exchange cannot know in advance what the charge would be on the away 
exchange. If the Exchange charged the lowest feasible charge, the 
Exchange could end up bearing the costs of routing an order to an away 
exchange. The Exchange notes that--just as they do today--to avoid 
incurring any Routing Surcharge in preference of an execution on the 
Exchange, ATP Holders are able to designate their orders as non-
routable.
    The Exchange believes that the proposed non-substantive change to 
the Fee Schedule is reasonable and equitable because it conforms the 
terms used in the Fee Schedule to terms used by NYSE Arca and that 
better describe the applicable charges.
    The Exchange further believes that this proposed change is not 
unfairly discriminatory either as it applies equally to all ATP Holders 
that send orders to the Exchange.
    Finally, 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.

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 that is 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 
(i.e., Market Markers versus non-Market Makers) as it applies equally 
to all ATP Holders that send routable orders to the Exchange.
    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) \7\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \8\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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) \9\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \9\ 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-2014-98 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-2014-98. 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-2014-98, and should 
be submitted on or before January 5, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29242 Filed 12-12-14; 8:45 am]
BILLING CODE 8011-01-P