[Federal Register Volume 78, Number 150 (Monday, August 5, 2013)]
[Notices]
[Pages 47465-47467]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-18757]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70071; File No. SR-NYSEMKT-2013-65]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Amex
Options Fee Schedule To Increase the Royalty Fees Applicable to Non-
Customer Transactions in Options on the Russell 2000 Index
July 30, 2013.
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 July 19, 2013, 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
to increase the Royalty Fees applicable to non-Customer transactions in
options on the Russell 2000 Index (``RUT''). 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.
[[Page 47466]]
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 NYSE Amex Options Fee Schedule
to increase the Royalty Fees applicable to non-Customer transactions in
options on RUT from $0.15 to $0.40 per contract. Royalty Fees charged
by the Exchange reflect the pass-through charges associated with the
licensing of certain products, including RUT. The proposed increase in
the Royalty Fee for RUT from $0.15 to $0.40 per contract is a
reflection of the increased cost the Exchange has incurred in securing
a license agreement from the index provider. Absent the license
agreement, the Exchange and its participants would be unable to trade
RUT options and would lose the ability to hedge small cap securities
with a large notional value, European-style cash-settled index option.
The proposed change will be operative on August 1, 2013.
The proposed change is not otherwise intended to address any other
issues relating to Royalty Fees and the Exchange is not aware of any
problems that market participants would have in complying with the
proposed change.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\4\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\5\ 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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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the proposed increase in the Royalty Fee
from $0.15 to $0.40 for options on RUT is reasonable because Royalty
Fees charged by the Exchange reflect the pass-through charges
associated with the licensing of certain products, including RUT. The
proposed increase is therefore a direct result of an increase in the
licensing fee charged to the Exchange by the index provider and the
owner of the intellectual property associated with the index.
The Exchange believes that the proposed increase in the Royalty Fee
from $0.15 to $0.40 for options on RUT is equitable and not unfairly
discriminatory because Royalty Fees are assessed only on those non-
Customer participants who choose to transact in a product that requires
the Exchange to obtain a licensing agreement based on the intellectual
property rights associated with the product, as is the case with RUT.
The Exchange further believes that this is equitable and not unfairly
discriminatory because RUT has some products that can give participants
a similar economic exposure without an associated Royalty Fee. In
particular, there are exchange-traded fund (``ETF'') options that are
based on RUT, such as the iShares Russell 2000 ETF traded under the
symbol IWM. This means that participants that would be liable for the
Royalty Fees can avoid them by transacting in alternative products, if
they so choose.
The Exchange assesses the Royalty Fees on non-Customer participants
such as NYSE Amex Market Makers, non-NYSE Amex Market Makers, ATP
Firms, Professional Customers, and Broker Dealers.\6\ The Exchange
believes that it is equitable and not unfairly discriminatory to
continue to not charge Royalty Fees to Customers, which has been the
case since the Exchange implemented Royalty Fees, because the Exchange
is attempting to continue to attract Customer order flow in RUT
options, which in turn can interact with other participants' order flow
on the Exchange to their benefit.\7\
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\6\ See endnote 11 of the Fee Schedule.
\7\ See Securities Exchange Act Release No. 53968 (June 9,
2006), 71 FR 34971 (June 16, 2006) (SR-Amex-2006-56).
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For the reasons given above, the Exchange believes that the
proposed increase from $0.15 to $0.40 for the Royalty Fee charged to
non-Customer transactions in RUT options is reasonable, equitable, and
not unfairly discriminatory. Finally, the Exchange believes that it is
subject to significant competitive forces, as described below in the
Exchange's statement regarding the burden on competition.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\8\ 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. By providing all participants on the Exchange with
the ability to hedge via RUT options, the Exchange is not placing any
burden on competition among its various participants. The Exchange
further notes that the licensing agreement it has secured is not an
exclusive agreement as at least two other option exchanges continue to
trade RUT options and charge a fee related to such license.\9\ As such,
there is no burden on competition among exchanges for the trading of
RUT options.
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\8\ 15 U.S.C. 78f(b)(8).
\9\ See Chicago Board Options Exchange (``CBOE'') Fee Schedule,
available at http://www.cboe.com/TradingResources/FeeSchedule.aspx.
The Exchange's affiliate NYSE Arca, Inc. also has proposed to
increase its Royalty Fee for RUT options from $0.15 to $0.40 per
contract. See SR-NYSEArca-2013-76.
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Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive. 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) \10\ of the Act and subparagraph (f)(2) of Rule
19b-4 \11\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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) \12\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\12\ 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
[[Page 47467]]
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 Number SR-NYSEMKT-2013-65 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEMKT-2013-65. 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 at 100 F Street NE.,
Washington, DC 20549-1090 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-2013-65, and should be submitted on or before August 26, 2013.
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-18757 Filed 8-2-13; 8:45 am]
BILLING CODE 8011-01-P