[Federal Register Volume 80, Number 110 (Tuesday, June 9, 2015)]
[Notices]
[Pages 32638-32640]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-13987]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75102; File No. SR-NYSEArca-2015-48]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE
Arca Options Fee Schedule to Modify Certain of Its Posting Credits
June 3, 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 May 29, 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 the
Substance of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Options Fee Schedule
(``Fee Schedule'') to modify certain of its posting credits. The
Exchange proposes to implement the fee change effective June 1, 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 Exchange proposes to amend its Fee Schedule to modify certain
of its posting credits. The Exchange proposes to implement the fee
change effective June 1, 2015.
Currently, the Exchange offers Order Flow Providers (each an
``OFP'') a number of ways to earn posting credits for electronic
Customer and Professional Customer executions on the Exchange, provided
the OFP meets certain volume thresholds. The purpose of this filing is
to modify certain of these posting credits to attract additional order
flow to the Exchange.
First, the Exchange proposes to modify the Customer and
Professional Customer Incentive Program, which
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provides various alternatives to earn credits. One of the current
alternatives provides an additional $0.03 credit on Customer and
Professional Customer posting credits if an OFP achieves at least 0.75%
of total industry Customer equity and ETF option average daily volume
(``ADV'') from Customer and Professional Customer posted orders in both
Penny Pilot and non-Penny Pilot issues, of which at least 0.28% of
total industry Customer equity and ETF option ADV is from Customer and
Professional Customer posted orders in non-Penny Pilot issues. The
Exchange proposes to slightly lower the minimum ADV from posted orders
in non-Penny Pilot issues from 0.28% to 0.25%. The Exchange believes
this proposed change would provide additional incentives to direct
Customer and Professional Customer order flow to the Exchange, which
benefits all market participants through increased liquidity and
enhanced price discovery.
Second, the Exchange proposes to modify the Customer and
Professional Customer Posting Credit Tiers in Non Penny Pilot Issues,
which provides two ways (Tier A or Tier B) to achieve a $0.83 credit if
specified volume thresholds have been met. Currently, pursuant to Tier
A, the $0.83 credit may be reached by achieving at least 0.80% of total
industry Customer equity and ETF option average ADV from Customer and
Professional Customer posted orders in all issues, plus an executed ADV
of Retail Orders of 0.1% ADV of U.S. equity market share posted and
executed on the NYSE Arca Equity Market. Alternatively, the $0.83
credit may be achieved pursuant to Tier B, by achieving a level of at
least 1.00% of total industry Customer equity and ETF option ADV from
Customer and Professional Customer posted orders in both Penny Pilot
and non-Penny Pilot issues.
The Exchange proposes to modify both Tiers as follows.
Tier A would require a minimum of 0.70% (rather than
0.80%) of total industry Customer equity and ETF options ADV from
Customer and Professional Customer posted orders in all issues.\4\
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\4\ The Commission notes that the Exchange is not proposing to
modify the additional Tier A requirement of an additional executed
ADV of Retail Orders of 0.1% ADV of U.S. equity market share posted
and executed on the NYSE Arca Equity Market.
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Tier B would require a minimum of 0.80% (rather than
1.00%) of total industry Customer equity and ETF options ADV from
Customer and Professional Customer posted orders in all issues.
In addition, the Exchange proposes to replace the language ``both
Penny Pilot and non-Penny Pilot Issues'' in Tier B with ``all Issues''
for simplicity and to conform to the language used in Tier A. The
Exchange believes the proposed changes to the Customer and Professional
Customer Posting Credit Tiers in Non Penny Pilot Issues would encourage
market participants to direct a higher rate of Customer and
Professional Customer orders to the Exchange.
Finally, the Exchange proposes to make a non-substantive change to
the Base credit of the Customer and Professional Customer Posting
Credit Tiers in Non Penny Pilot Issues by adding a dollar sign before
(0.75), so that it accurately reflects the baseline credit of ($0.75),
which the Exchange believes would add clarity and consistency to the
Fee Schedule.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act,\5\ in general, and furthers the
objectives of sections 6(b)(4) and (5) of the Act,\6\ 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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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes the adjustments to qualifications for
enhanced posting liquidity credits, are reasonable and not unfairly
discriminatory as they are designed to attract increased Customer and
Professional Customer business on the Exchange and are achievable in
various ways. An increase in Customer and Professional Customer orders
executed on the Exchange benefits all participants by offering greater
price discovery, increased transparency, and an increased opportunity
to trade on the Exchange. The Exchange also believes that the proposed
credits are reasonable because they are within a range of similar
credits available on other option exchanges.\7\ Additionally,
attracting posted Customer and Professional Customer order flow is
desirable because it encourages liquidity to be present on the
Exchange.
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\7\ See, e.g., ISE Gemini, LLC fee schedule, available at,
http://www.ise.com/assets/gemini/documents/OptionsExchange/legal/fee/Topaz_Fee_Schedule.pdf (providing rebates ranging from $0.75--
$0.85 predicated on volume tiers); NASDAQ Options Market--Fees and
Rebates, available at, http://www.nasdaqtrader.com/Micro.aspx?id=optionsPricing (providing a flat rebate of $0.84 with
an additional rebate for participants that qualify for Penny Pilot
Options Customer or Professional Rebate to Add Liquidity Tiers 7 or
8 in a given month); BATS Options Exchange fee schedule, available
at, http://www.batsoptions.com/support/fee_schedule/ (providing flat
$0.85 posting credit for Customer orders that is not contingent on
any volume requirement).
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The Exchange believes that the proposed changes in the Customer
Posting Credit Tiers in Non Penny Pilot Issues and the Customer
Incentive Program are equitable and not unfairly discriminatory because
they will be available to all OTPs that execute posted electronic
Customer and Professional Customer orders on the Exchange on an equal
and non-discriminatory basis, in particular because they provide
alternative means of achieving the same credit. The Exchange believes
that providing methods for achieving the credits based on posted
electronic Customer and Professional Customer Executions in both Penny
Pilot and non-Penny Pilot issues is equitable and not unfairly
discriminatory because it would continue to result in more OTPs
qualifying for the credits and therefore reducing their overall
transaction costs on the Exchange.
Further, the Exchange believes the proposed change to the Customer
Posting Credit Tiers in Non Penny Pilot Issues and Customer Incentive
Program is reasonable because it is designed to continue to bring
additional posted order flow to NYSE Arca Equities [sic], so as to
provide additional opportunities for all ETP [sic] Holders to trade on
NYSE Arca Equities [sic].
The Exchange believes that the proposed a non-substantive,
technical change to the Base credit of the Customer and Professional
Customer Posting Credit Tiers in Non Penny Pilot Issues by adding a
dollar sign before (0.75), so that it accurately reflects the baseline
credit of ($0.75), is reasonable, equitable and non-discriminatory
because it would add clarity and consistency to the Fee Schedule.
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,\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. Instead, the Exchange believes that the proposed
change would continue to encourage competition, including by
[[Page 32640]]
attracting additional liquidity to the Exchange, which would continue
to make the Exchange a more competitive venue for, among other things,
order execution and price discovery.
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\8\ 15 U.S.C. 78f(b)(8).
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The proposed changes to the Customer Posting Credit Tiers in Non
Penny Pilot Issues, and the proposed modification to the Customer
Incentives are designed to attract additional volume, in particular
posted electronic Customer and Professional Customer executions, to the
Exchange, which would promote price discovery and transparency in the
securities markets thereby benefitting competition in the industry. As
stated above, the Exchange believes that the proposed change would
impact all similarly situated OTPs that post electronic Customer and
Professional Customer executions on the Exchange equally, and as such,
the proposed change would not impose a disparate burden on competition
either among or between classes of market participants.
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)\9\ of the Act and subparagraph (f)(2) of Rule 19b-
4\10\ thereunder, because it establishes a due, fee, or other charge
imposed by the Exchange.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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)\11\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\11\ 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-NYSEArca-2015-48 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 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2015-48. 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-2015-48, and should
be submitted on or before June 30, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Robert W. Errett,
Deputy Secretary.
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\12\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-13987 Filed 6-8-15; 8:45 am]
BILLING CODE 8011-01-P