Document ID: SEC-2019-0486-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE American, LLC
Posted Date: 2019-04-16T04:00Z

[Federal Register Volume 84, Number 73 (Tuesday, April 16, 2019)]
[Notices]
[Pages 15654-15655]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07509]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85584; File No. SR-NYSEAMER-2019-10]

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

April 10, 2019.
    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 1, 2019, 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 amend the NYSE American Options Fee 
Schedule (``Fee Schedule''). The Exchange proposes to implement the fee 
change effective April 1, 2019. The proposed rule 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.

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 modify the Fee Schedule to expand 
the types of transactions that may be included in the Firm Monthly Fee 
Cap for ATP Holders that achieve a certain increase in Complex CUBE 
Auction volume.\4\
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    \4\ See Rule 971.2NY (describing Complex CUBE Auction, which 
offers price improvement opportunities to Complex Orders); see also 
Fee Schedule, Section I.G, CUBE Auction Fees & Credits, infra note 
5.
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    Currently, Section I.I. of the Fee Schedule sets forth a Firm 
Monthly Fee Cap (``Fee Cap'') that limits, or caps, at $100,000 per 
month the fees incurred by Firms trading though a Floor Broker in open 
outcry (i.e., manual transactions).\5\ The Fee Cap may be lower than 
$100,000 for ATP Holders that achieve Tier 2 or higher of the American 
Customer Engagement (``ACE'') Program.\6\ Once a Firm has reached the 
Fee Cap, an incremental service fee of $0.01 per contract for Firm 
Manual transactions will apply, except for the execution of QCC orders, 
which are not subject to the incremental service fee.\7\
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    \5\ See Fee Schedule, Section I. I. (Firm Monthly Fee Cap), 
available here, https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf (providing 
that an ATP Holder that achieves Tier 2, 3, 4 or 5 of the ACE 
Program is entitled to a Fee Cap of $85,000, $75,000, $70,000 or 
$65,000, respectively). The Fee Cap excludes volumes associated with 
Strategy Executions described in Section I.J., (e.g., reversal and 
conversion, box spread, short stock interest spread, merger spread 
and jelly roll) and Firm Manual Facilitation trades (which are 
always free). Royalty Fees described in Section I. K. still apply to 
applicable transactions even once Fee Cap is reached. See id.
    \6\ See Fee Schedule, Section I.E. (describing ACE Program), 
supra note 5.
    \7\ See supra note 5.
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    The Exchange proposes to include a broader range of Exchange 
activity under the Fee Cap for any ATP Holder that achieves an increase 
over January 2019 Initiating Complex CUBE volume by at least 0.20% of 
TCADV (the ``Complex CUBE Cap Incentive''). ATP Holders that qualify 
for the Complex CUBE Cap Incentive will continue to be eligible for a 
reduced Monthly Fee Cap based on ACE Tier achieved,\8\ but will also be 
able to aggregate the following transactions with their Firm Manual and 
Firm QCC transactions:
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    \8\ See supra note 5 (regarding reduced Fee Caps associated with 
ACE Tiers 2-5).
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     Broker Dealer Manual transactions; and
     Broker Dealer QCC transactions.\9\
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    \9\ See proposed Fee Schedule, Section I. I. (Firm Monthly Fee 
Cap).
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    As proposed, ATP Holders that qualify for the Complex CUBE Cap 
Incentive and attain the Firm Fee Cap would not be assessed transaction 
fees on Firm or Broker Dealer Manual volume, including QCC 
transactions. Further, an incremental service fee of $0.01 per contract 
would apply to Broker Dealer Manual transactions \10\ and for Broker 
Dealer QCC Transactions in excess of 25,000 contracts ADV, an 
incremental service fee of $0.10 per contract would apply.\11\
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    \10\ See supra note 5 (regarding incremental service fee 
applicable to Firm Manual transactions).
    \11\ See proposed Fee Schedule, Section I. I. (Firm Monthly Fee 
Cap).
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    For example, an ATP Holder that executed 6,000 contracts per day 
ADV via Complex CUBE during the month of January 2019 would have to 
execute over 18,000 contracts a day ADV via Complex CUBE in April 2019 
if the TCADV in April 2019 is 6 million contracts (i.e., 6,000 + (0.2% 
* 6 million) = (6,000 + 12,000)). Thus, the qualifying ATP Holder would 
be able to aggregate its Broker Dealer QCC transactions and Manual 
transactions (together with its Firm QCC transactions and Manual 
transactions) under the Fee Cap.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\13\ 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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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed Complex CUBE Cap Incentive 
is reasonable, equitable and not unfairly discriminatory for a number 
of reasons. First, the proposal is based on the amount of business 
transacted on the Exchange and ATP Holders can opt to try to achieve 
the Incentive or not. Second, the proposal is designed encourage ATP 
Holders to utilize (if they have not done so) or increase volume sent 
to the Complex CUBE Auction, which was adopted earlier this year. 
Further, ATP Holders that seek to or do achieve the Complex CUBE 
Incentive likewise would be incented to increase its Broker Dealer 
volume in Manual and QCC transaction in an effort

[[Page 15655]]

to meet the Fee Cap, which may, in turn, encourage more business to be 
brought to the Floor, which may extend beyond Manual and QCC 
transactions. To the extent that the proposed change attracts more 
Broker Dealer Manual and QCC transactions to the Exchange, this 
increased order flow would continue to make the Exchange a more 
competitive venue for, among other things, order execution.
    Further, the proposed ten cent fee on Broker Dealer QCC 
transactions over 25,000 contracts ADV is likewise reasonable, 
equitable and not unfairly discriminatory. The Exchange assesses a QCC 
Transaction fee of $0.20 per contract on Broker Dealer and Firm 
volume.\14\ Today, Firms that achieve the Fee Cap are charged $0.00 for 
Firm QCC volume beyond the Fee Cap, but are still charged $0.20 per 
contract for Broker Dealer QCC volume. As proposed, Firms that achieve 
the Complex CUBE Cap Incentive would more easily achieve the Fee Cap 
because the proposal allows Broker Dealer Manual and QCC volume 
(together with Firm Manual and QCC volume) to count towards the Fee 
Cap. For Firms that achieve the Complex CUBE Incentive Cap and the Fee 
Cap, Firm QCC volume beyond the Fee Cap will continue to be charged at 
$0.00 and the rate for Broker Dealer QCC volume will be reduced to 
$0.00 per contract for up to 25,000 contracts ADV and to $0.10 per 
contract with the proposed service fee for volume in excess of 25,000 
contracts ADV. The proposed service fee is not unreasonable because it 
would apply to all similarly-situated firms. Moreover, the Exchange 
believes the proposed service fee is reasonable given that it is still 
a reduction in cost for Broker Dealer QCC volume (once the Complex CUBE 
Cap Incentive and Fee Cap are achieved) and should encourage more such 
volume to be directed to and executed on the Exchange.
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    \14\ See Fee Schedule, Section I. F. (QCC Fees & Credits) 
(setting forth transaction fees for market participants, including 
Non-Customers that are not Professional Customers or Specialists, 
i.e., Firms and Broker Dealers).
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    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 (to the 
Floor or otherwise), the proposed change would improve the Exchange's 
overall competitiveness and strengthen its market quality for all 
market participants.

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. The Exchange believes that the proposed Complex 
CUBE Cap Incentive is pro-competitive as it is designed to incentivize 
increased volume and liquidity to the Exchange--for both Complex CUBE 
and Manual and QCC transactions--which would benefit all Exchange 
participants through increased opportunities to trade as well as 
enhancing price discovery.
    Given the robust competition for volume among options markets, many 
of which offer the same (or similar) products, implementing programs to 
attract order flow, such as the proposed Complex CUBE Cap Incentive, 
are consistent with the above-mentioned goals of the Act.

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) \15\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \16\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 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) \17\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \17\ 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 [email protected]. Please include 
File No. SR-NYSEAMER-2019-10 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 No. SR-NYSEAMER-2019-10. 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 No. SR-NYSEAMER-2019-10, and should be submitted 
on or before May 7, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-07509 Filed 4-15-19; 8:45 am]
 BILLING CODE 8011-01-P