Document ID: SEC-2017-1512-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE American, LLC
Posted Date: 2017-09-13T04:00Z

[Federal Register Volume 82, Number 176 (Wednesday, September 13, 2017)]
[Notices]
[Pages 43064-43066]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-19378]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81549; File No. SR-NYSEAMER-2017-08]

Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify 
the NYSE American Options Fee Schedule

September 7, 2017.
    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 31, 2017, NYSE American LLC (the ``Exchange'' or 
``NYSE American'') 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 American Options Fee 
Schedule. 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 the Fee Schedule effective 
September 1, 2017. Specifically, the Exchange proposes to modify the 
surcharge that is applied to certain Complex Orders executed on the 
Exchange.
    Currently, the Exchange imposes a $0.05 per contract surcharge for 
any Electronic Non-Customer Complex Order that executes against a 
Customer Complex Order, regardless of whether the execution occurs in a 
Complex Order Auction (the ``Surcharge'').\4\ The Exchange proposes to 
modify the Surcharge to $0.10 per contract, which surcharge is 
comparable to charges imposed by other options exchanges.\5\ For 
clarity, the Exchange also proposes to make clear that the Surcharge is 
applied on a ``per contract'' basis.\6\
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    \4\ See Fee Schedule, Section I.A., n. 6, available here, 
https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf. Per the Fee Schedule, a 
``Customer'' is an individual or organization that is not a Broker-
Dealer, per Rule 900.2NY(18); and is not a Professional Customer; 
and a ``Non-Customer'' is anyone who is not a Customer. See id., Fee 
Schedule, Key Terms and Definitions. Thus, Non-Customers include 
Specialists, e-Specialists, Directed Order Market Makers, Firms, 
Broker Dealers, and Professional Customers. The Exchange notes that 
Firm Facilitation trades are not electronic and are therefore not 
subject to the Surcharge.
    \5\ See MIAX Options fee schedule, available here, https://www.miaxoptions.com/sites/default/files/fee_schedule-files/MIAX_Options_Fee_Schedule_08072017.pdf (imposing a $0.10 on certain 
complex orders). See also The Chicago Board Options Exchange, Inc. 
(``CBOE'') fee schedule, available here, http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf, at n. 35 (same).
    \6\ See proposed Fee Schedule, Section I.A., n. 6. The Exchange 
also proposes to correct a typographical error referring to ``a CUBE 
Auctions'' by removing the word ``a.'' See id.
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    Additionally, to encourage ATP Holders to transact additional Non-
Customer Complex Orders on the Exchange, the Exchange proposes to offer 
a reduced Surcharge for those ATP Holders that meet a certain volume 
threshold. Specifically, the Exchange proposes to reduce the per 
contract surcharge to $0.07 for any ATP Holder that transacts at least 
0.20% of Total Industry Customer equity and ETF option average daily 
volume (or TCADV) of Electronic Non-Customer Complex Order Executions 
in a month.
    Finally, the Exchange proposes to add ``TCADV'' as a defined term 
in the Key

[[Page 43065]]

Terms and Definitions section of the Fee Schedule, which would add 
clarity and transparency to the Fee Schedule.\7\ As proposed, TCADV 
would refer to ``Total Industry Customer equity and ETF option average 
daily volume that includes OCC calculated Customer volume of all types, 
including Complex Order Transactions and QCC transactions, in equity 
and ETF options.'' \8\ This proposed definition is consistent with how 
other options exchanges define this term.\9\ Consistent with this 
proposed change, the Exchange proposes to utilize this defined term in 
Section I.E. regarding the American Customer Engagement (``ACE'') 
Program.\10\
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    \7\ See Fee Schedule, Preface, Key Terms and Definitions.
    \8\ See proposed Fee Schedule, Preface, Key Terms and 
Definitions.
    \9\ See e.g., NYSE Arca Options Fee Schedule, Endnote 8.
    \10\ See proposed Fee Schedule, Section I.E. The Exchange also 
proposes to fix a typographical error and add the word ``for'' to 
the end of the first paragraph describing the ACE Program, which 
would clearly provide that the ACE Program offers ``two methods for 
OFPs to receive credits'' (emphasis added). See id.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\11\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\12\ 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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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes the proposed increase to the Surcharge is 
reasonable, equitable, and not unfairly discriminatory, as it applies 
to all similarly situated Non-Customer Complex Orders. Applying the 
Surcharge, as modified, to market participant orders except Customer 
orders is equitable and not unfairly discriminatory because Customer 
order flow enhances liquidity on the Exchange for the benefit of all 
market participants. Specifically, Customer liquidity benefits all 
market participants by providing more trading opportunities, which 
attracts Market Makers. An increase in the activity of Specialists and 
Market Makers in turn facilitates tighter spreads, which may cause an 
additional corresponding increase in order flow from other market 
participants.
    In addition, the proposed surcharge is reasonable, equitable, and 
not unfairly discriminatory as it is consistent with fees charged by 
other options exchanges.\13\ For example, MIAX imposes a $0.10 ``Per 
Contract Surcharge for Removing Liquidity Against A Resting Priority 
Customer Complex Order on the Strategy Book'' for all option classes), 
which may result in an overall per contract fee of $0.60.\14\
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    \13\ See supra note 5.
    \14\ See MIAX fee schedule, supra note 5 (providing for a 
potential total per contract fee of $0.60 for Market Makers, which 
includes a ``Complex Per Contract Fee for Penny Classes,'' a per 
contract ``Marketing Fee,'' and a $0.10 ``Per Contract Surcharge for 
Removing Liquidity Against a Resting Priority Customer Complex Order 
on the Strategy Book for Penny and Non-Penny Classes''). The 
Exchange believes that MIAX does not subject transactions in a 
complex order auction to any fee cap. See also Securities Exchange 
Act Release No. 80262 (March 16, 2017), 82 FR 14779 (March 22, 2017) 
(SR-NYSEMKT-2017-15) (establishing the Surcharge).
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    Further, the Exchange believes that the proposal to offer a reduced 
surcharge to those ATP Holders that achieve certain volume thresholds 
is reasonable, equitable and not unfairly discriminatory. The Exchange 
believes the proposed reduced rate is reasonably designed to encourage 
ATP Holders that transact Non-Customer Complex Orders to direct more of 
this order flow to the Exchange to qualify for the reduced rates. The 
proposed rates are reasonable and equitable and not unfairly 
discriminatory because they apply equally to all ATP Holders that 
transact Non-Customer Complex Orders. In addition, the proposed changes 
are equitable and not unfairly discriminatory because, while only Non-
Customer Complex Orders qualify for the reduced surcharge, the Exchange 
believes any increase in Non-Customer Complex Orders would result in 
greater volume and liquidity being attracted to the Exchange, which 
benefit all market participants by providing more trading opportunities 
and tighter spreads.\15\ To the extent this goal is achieved, the 
Exchange would improve its overall competitiveness and strengthen its 
market quality for all market participants.
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    \15\ The Exchange notes that it does not impose any fee on 
Electronic executions of Customer interest.
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    The proposal to define ``TCADV'' in the Fee Schedule, as well as to 
fix the typographical errors in Section I.A.\16\ and I.E.,\17\ is 
likewise reasonable, equitable and not unfairly discriminatory because 
it would add clarity and transparency to the Fee Schedule to the 
benefit of all market participants.
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    \16\ See supra note 6.
    \17\ See supra note 10.
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    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,\18\ 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 proposed modification to the Surcharge 
would not impose an unfair burden on competition as it is consistent 
with fees charged by other exchanges.\19\ Further, the proposal to 
reduce the surcharge for certain ATP Holders that achieve certain 
volume thresholds would likewise not impose an unfair burden on 
competition because it is designed to attract Non-Customer Complex 
Orders to the Exchange. To the extent that this purpose is achieved, 
this proposal would enhance the quality of the Exchange's markets and 
increase the volume of Complex Orders traded here. In turn, all the 
Exchange's market participants would benefit from the improved market 
liquidity. If the proposed changes make the Exchange a more attractive 
marketplace for market participants at other exchanges, such market 
participants are welcome to become ATP Holders.
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    \18\ 15 U.S.C. 78f(b)(8).
    \19\ See supra note 5.
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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) \20\ of the Act and

[[Page 43066]]

subparagraph (f)(2) of Rule 19b-4 \21\ thereunder, because it 
establishes a due, fee, or other charge imposed by the Exchange.
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 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) \22\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \22\ 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-2017-08 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-2017-08. 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 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; 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-NYSEAMER-2017-08, and should 
be submitted on or before October 4, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-19378 Filed 9-12-17; 8:45 am]
 BILLING CODE 8011-01-P