[Federal Register Volume 79, Number 135 (Tuesday, July 15, 2014)]
[Notices]
[Pages 41333-41335]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16500]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72574; File No. SR-NYSEMKT-2014-55]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending the NYSE Amex
Options Fee Schedule in a Number of Different Ways
July 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 July 1, 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'') in a number of different ways. The proposed changes
will be operative on July 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.
[[Page 41334]]
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 in a number of
different ways as described below. The proposed changes will be
operative on July 1, 2014.
First, the Exchange proposes to adopt separate fees for electronic
transactions in securities that are not included as part of the Penny
Pilot Program (``Non Penny Pilot'') for Broker Dealers, Professional
Customers, Non NYSE Amex Options Market Makers and Firms, similar to
how NYSE Amex Options Markets Makers liable for Marketing Charges pay a
different rate for electronic executions in Penny versus Non Penny
Pilot names.\4\ Specifically, the Exchange is proposing a fee of $0.58
per contract for Broker Dealers, Professional Customers, Non NYSE Amex
Options Market Maker and Firms who electronically transact in Non Penny
Pilot issues. The rate per contract for those same participants who
electronically transact in Penny Pilot issues will be the same rate
they are presently charged for electronic transactions generally. For
example, Broker Dealers, Professional Customers and Firms presently pay
$0.32 per contract for electronic transactions and Non NYSE Amex
Options Market Makers pay $0.43 per contract for electronic
transactions--these will continue to be the rates charged to those
participants for electronic transactions in Penny Pilot issues.
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\4\ The Exchange charges $0.25 per contract for manual
transactions in both Penny and Non Penny issues and this rate will
remain unchanged.
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The Exchange is also proposing a non-substantive, formatting change
to the section of the fee schedule that applies to Transaction Fees.
The Exchange is proposing to re-format that section of the fee schedule
as a table with distinct rows and columns (to distinguish charges for
manual versus electronic transactions) to make the fee schedule easier
for participants to understand.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) \5\ of the Act, in general, and
Section 6(b)(4) and (5) \6\ of the Act, in particular, in that it is
designed to provide for the equitable allocation of reasonable dues,
fees, and other charges among its members 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) and (5).
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The Exchange believes that the proposal to adopt separate fees for
electronic transactions in Non Penny Pilot securities for Broker
Dealers, Professional Customers, Non NYSE Amex Options Market Makers
and Firms is reasonable, equitable and not unfairly discriminatory for
the following reasons. First, the Exchange notes that the proposed per
contract fee of $0.58 is within the range of fees charged by other
exchanges for Broker Dealers, Professional Customers, Non NYSE Amex
Options Market Makers and Firms who electronically transact in Non
Penny Pilot issues.\7\ Further, the Exchange notes that the proposed
fee for these participants is still less than the fees for which a NYSE
Amex Options Market Maker might be liable. For example, an NYSE Amex
Options Market Maker that has reached the monthly fee cap
applicable,\8\ that electronically trades against a Customer in a Non
Penny issue will be liable for a maximum charge of $0.66 (comprised of
a $0.01 service fee and Marketing Charges of $0.65). For an NYSE Amex
Options Market Maker that has not reached the monthly fee cap and has
traded less than 50,000 contracts of ADV each day in the month, the
same transaction would result in a maximum fee of $0.85 per contract
(comprised of a transaction fee of $0.20 and Marketing Charges of
$0.65).
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\7\ See NASDAQ OMX PHLX (``PHLX'') fee schedule, as of 6/19/2014
located here: http://www.nasdaqtrader.com/Micro.aspx?id=phlxpricing.
PHLX charges Professionals, Broker Dealers, and Firms $0.70 per
contract to transact electronically in Non Penny Pilot issues and
$0.48 per contract in Penny issues. See also the Nasdaq Options
Market (``NOM'') fee schedule located here: http://www.nasdaqtrader.com/Micro.aspx?id=OptionsPricing, which charges
$0.89 per contract in Non Penny issues and $0.49 per contract in
Penny issues for Professionals, Broker Dealers, Firms and Non NOM
Market Makers who take liquidity.
\8\ See NYSE Amex Options fee schedule dated June 12, 2014
located here: https://www.theice.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf.
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NYSE Amex Options Market Makers are subject to other fees that are
either higher or not charged at all to Broker Dealers, Professional
Customers, Non NYSE Amex Options Market Makers and Firms, such as ATP
Permit fees and Rights Fees.\9\ For example, in order to transact
electronically on the Exchange, a NYSE Amex Options Market Maker is
required to have at least one options trading permit (``ATP'') that
allows it to quote sixty issues, plus the bottom 45% of issues traded
on the Exchange by volume. The cost of one ATP is $8,000 per month. A
NYSE Amex Options Market Maker that wishes to transact electronically
in all issues on the Exchange is required to have five ATPs, at a
monthly cost of $26,000. By comparison, in order to transact
electronically on the Exchange, Broker Dealers, Professional Customers,
Non NYSE Amex Options Market Makers and Firms are only required to have
a single ATP, at a monthly cost of $1,000.\10\ The Exchange notes the
monthly cost differential of $7,000 to $25,000 in ATP fees paid by NYSE
Amex Options Market Makers, while Broker Dealers, Professional
Customers, Non NYSE Amex Options Market Makers and Firms incur no such
cost. Therefore, while the NYSE Amex Options Markets Makers may be
charged a lower per contract rate than the rate proposed for Broker
Dealers, Professional Customers, Non NYSE Amex Options Market Makers
and Firms transacting electronically in Non Penny issues, when all
costs to these participants are considered, the cost differential is
much less or even transposed, with NYSE Amex Options Market Makers
paying higher fees.\11\ As such, the Exchange believes that charging
Broker Dealers, Professional Customers, Non NYSE Amex Options Market
Makers and Firms a higher rate to transact electronically in Non Penny
issues is equitable and reasonable as the higher rate is designed to
reflect the costs to the Exchange in supporting trading in Non Penny
issues.\12\ While Non Penny issues account for the vast majority of
issues by count, Non Penny issues represent a relatively small
percentage of overall total industry volume. For example, there are
currently 358 issues in the Penny Pilot as compared with 2,054 Non
Penny issues listed on the Exchange. However, with respect to volume
during the past
[[Page 41335]]
two months ending in May 2014, Penny Pilot options accounted for 81% of
Total Industry Equity Option volume, while Non Penny issues accounted
for only 19% of Total Industry Equity Option Volume.
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\9\ Id.
\10\ Of the participants in question, only Firms are members of
the Exchange that are billed directly for any ATPs they own. All of
the other participants conduct business through an Exchange member
that is only required to have a single ATP for all business that
flows through them. For example, an Order Flow Provider with a
single ATP may route electronic orders to the Exchange on behalf of
Broker Dealers, Professional Customers and Non NYSE Amex Options
Market Makers.
\11\ For example, an NYSE Amex Market Makers [sic] that
electronically trades contra to a Customer is potentially liable for
Marketing Charges. Further, the Exchange notes that a subset of NYSE
Amex Options Market Makers (Specialists, e-Specialists and Directed
Order Market Makers) also incur monthly Rights Fees, which fees are
not charged to Broker Dealers, Professional Customers, Non NYSE Amex
Options Market Makers and Firms. See supra n. 8.
\12\ The Exchange notes that this higher rate is still below the
rate charged to an NYSE Amex Options Market Maker that
electronically trades with a Customer. See supra n. 8.
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For the forgoing reasons, the Exchange believes that the proposal
to charge $0.58 per contract to Broker Dealers, Professional Customers,
Non NYSE Amex Options Market Makers and Firms that transact
electronically in Non Penny Pilot issues is reasonable, equitable and
not unfairly discriminatory. The proposed fee is also reasonable,
equitable and not unfairly discriminatory because the charge will apply
equally to all Broker Dealers, Professional Customers, Non NYSE Amex
Options Market Makers and Firms electronically executed volumes in Non
Penny Pilot issues on the Exchange.
The Exchange believes that the proposal to re-format the section of
the fee schedule describing Transaction Fees into a table and
delineating cost by transaction type (manual versus electronic) is
reasonable, equitable and not unfairly discriminatory as the proposed
change will reduce confusion and will make the fee schedule more
transparent and easier for all participants to understand.
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). Specifically, the
Exchange believes that Broker Dealers, Professional Customers, Non NYSE
Amex Options Market Makers and Firms who are not subject to the
additional dues and fees of NYSE Amex Market Makers, will not be unduly
burdened by the increased transaction fee. In addition, the Exchange
believes that the proposed changes will enhance the competiveness of
the Exchange relative to other exchanges. 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) \13\ of the Act and subparagraph (f)(2) of Rule
19b-4 \14\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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) \15\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\15\ 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 Number SR-NYSEMKT-2014-55 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-2014-55. 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-2014-55, and should
be submitted on or before August 5, 2014.
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\16\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16500 Filed 7-14-14; 8:45 am]
BILLING CODE 8011-01-P