Document ID: SEC-2015-0645-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2015-04-15T04:00Z

[Federal Register Volume 80, Number 72 (Wednesday, April 15, 2015)]
[Notices]
[Pages 20273-20274]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-08548]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74694; File No. SR-NYSEArca-2015-28]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Modifying the NYSE 
Arca Options Fee Schedule To Adopt Fees for Certain Manual Transactions 
in Options Overlying IWM

April 9, 2015.
    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 3, 2015, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') 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 adopt fees for certain Manual transactions 
in options overlying IWM (the iShares Russell 2000 ETF). The Exchange 
proposes to implement the fee change effective April 3, 2015. 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 purpose of this filing is to adopt fees for certain manual 
transactions in options overlying IWM (the iShares Russell 2000 ETF). 
The Exchange proposes to implement the fee change effective April 3, 
2015.
    Currently, manual trades in IWM are subject to the same fees as any 
other listed option that is traded manually. However, the Exchange is 
proposing to offer special pricing to encourage increased manual 
trading in the product and to offset losses of manual transactions 
associated with options in the iShares Russell Index (RUT), which is 
exclusively trading on another venue.
    Accordingly, for Manual transactions in IWM executed by NYSE Arca 
Market Makers, Firms and Broker Dealers (collectively, the ``IWM 
Participants''), the Exchange proposes to charge $0.125 per 
contract.\4\ The Exchange also proposes to offer IWM Participants 
certain incentives for increased monthly volumes of manual transactions 
in IWM. Specifically, the Exchange proposes to instead offer the 
enhanced rates of (a) $0.075 for each contract in excess of 74,999 
contracts; and (b) $0.025 for each contract in excess of 99,999 
contracts, for Manual executions in IWM transacted during the month.\5\ 
As is the case today, Customers (including Professional Customers) will 
not be charged for manual transactions in IWM.
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    \4\ The Exchange notes that there is currently no Lead Market 
Maker (``LMM'') in IWM and, thus, the proposed fee reduction does 
not apply to LMMs. In the event that the Exchange appoints an LMM in 
IWM, the Exchange would address how the proposed fee reduction would 
apply to the LMM in a subsequent filing.
    \5\ Id.
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    The Exchange notes that Firm Facilitations,\6\ Strategy Executions 
\7\ and Qualified Contingent Crosses are excluded from the proposed fee 
change and would not count towards calculations of the total monthly 
Manual transactions in IWM. Further, after calculating fees associated 
with Manual transactions in IWM, at the end of the month, the Exchange 
will round to the nearest penny when applicable.
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    \6\ As defined in the Fee Schedule, a Firm Facilitation is any 
transaction involving a Firm proprietary trading account that has a 
customer of that same Firm on the contra side of the transaction, or 
a broker dealer facilitating a Customer order, where the broker 
dealer and the Customer both clear through the same clearing firm 
and the broker dealer clears in the customer range. See Fee 
Schedule, Endnote 7, available here, https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf
    \7\ As set forth in the Fee Schedule, Strategy Executions are 
transactions involving (a) reversals and conversions, (b) box 
spreads, (c) short stock interest spreads, (d) merger spreads, and 
(e) jelly rolls. See id., ``LIMIT OF FEES ON OPTIONS STRATEGY 
EXECUTIONS''.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\8\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\9\ 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

[[Page 20274]]

discriminate between customers, issuers, brokers or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4) and (5).
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    Overall, the Exchange believes that the proposed changes to IWM 
pricing for Manual transactions are reasonable, equitable and not 
unfairly discriminatory because the reduced rates are based on the 
executions in IWM transacted on the Exchange. In addition, the Exchange 
believes the proposed fees are reasonable, equitable and not unfairly 
discriminatory because the fees are designed to incentivize IWM 
Participants to conduct Manual trades in IWM and apply equally to all 
IWM Participants.\10\ The Exchange believes the proposed fee changes 
may result in an increase in volume and liquidity to the Exchange, 
which would provide more trading opportunities and tighter spreads, to 
the benefit of all market participants even non-IWM Participants, all 
of which perfects the mechanism for a free and open market and national 
market system.
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    \10\ Similarly, as noted above, supra n. 4, the proposed fee is 
reasonable, equitable and not unfairly discriminatory because there 
is currently no LMM in IWM and, therefore, no LMM is impacted by 
this proposed fee change.
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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,\11\ 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 fees 
associated with IWM are pro-competitive as they may attract more volume 
and liquidity to the Exchange through the proposed reduced rates, 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-NYSEArca-2015-28 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.

All submissions should refer to File Number SR-NYSEArca-2015-28. 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-NYSEArca-2015-28 and should 
be submitted on or before May 6, 2015.
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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\
Brent J. Fields,
Secretary.
[FR Doc. 2015-08548 Filed 4-14-15; 8:45 am]
 BILLING CODE 8011-01-P