[Federal Register Volume 80, Number 140 (Wednesday, July 22, 2015)]
[Notices]
[Pages 43480-43482]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17893]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75469; File No. SR-NYSEARCA-2015-62]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE
Arca Options Fee Schedule
July 16, 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 July 10, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Options Fee Schedule
(``Fee Schedule''). The Exchange proposes to implement the fee change
effective July 10, 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to enhance the application of the
Limit of Fees on Firm and Broker Dealer Open Outcry Executions (the
``Firm Cap'') to include Qualified Contingent Cross Transactions
(``QCCs'').
Currently, the Exchange imposes a Firm Cap of $100,000 per month on
combined Firm Proprietary Fees and Broker Dealer Fees for transactions
clearing in the customer range, if executed in open outcry (i.e.,
Manual Transactions). The Firm Cap excludes Strategy Executions,
Royalty Fees, firm trades executed via a Joint Back Office agreement,
and Mini option contracts.\4\
---------------------------------------------------------------------------
\4\ See Fee Schedule, endnote 9.
---------------------------------------------------------------------------
To date, fees arising from QCCs have not been included in the Firm
Cap because QCCs are not executed in open outcry. Rather, QCCs are
executed by the entry of a matched trade into the Exchange System and
reported electronically.\5\ Because Firms and Broker Dealers are
generally represented on the Floor by Floor Brokers and QCC
transactions may be entered into the System from a terminal on the
Floor as part of an array of services that a Floor Brokerage operation
can offer to clients, the Exchange proposes to include fees
[[Page 43481]]
for QCCs executed by Floor Brokers in the aggregation towards the Firm
Cap. The Exchange believes this proposed change would encourage Firms
and Broker Dealers to direct a greater number of their orders,
including QCC orders, to the Trading Floor, given the increased
opportunities to achieve the Firm Cap on their monthly transaction
fees. For example, if a Broker Dealer achieves the Firm Cap with the
inclusion of $20,000 in QCC fees, the Broker Dealer may be inclined to
direct other orders to the Exchange Floor having reached the Firm Cap,
which increased liquidity would benefit all market participants. The
Exchange notes that competing options exchanges likewise include QCC
transactions in monthly fee caps similar to the Firm Cap.\6\
---------------------------------------------------------------------------
\5\ See Rule 6.90. Qualified Contingent Crosses (providing in
relevant part that QCCs are ``automatically executed upon entry into
the NYSE Arca System provided that the execution (i) is not at the
same price as a Customer Order in the Consolidated Book and (ii) is
at or between the NBBO''). See also Commentary .01 to Rule 6.90
(providing that QCC orders ``can be entered into the NYSE Arca
System from on the Floor of the Exchange only by Floor Brokers'').
\6\ See, e.g., NYSE Amex Options fee schedule, available at,
https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf (including QCCs in the Monthly
Firm Fee Cap for Manual transactions, which aggregates the fees
associated with Firm Manual transactions and cap them at $100,000
per month, per Firm); NASDAQ OMX PHLX LLC fee schedule, available
at, http://www.nasdaqtrader.com/Micro.aspx?id=phlxpricing (including
QCCs in the Monthly Firm Fee Cap, which aggregates the fees
associated with Firm Floor Options Transactions and QCCs and cap
them at $75,000 per month, per Firm).
---------------------------------------------------------------------------
The proposed inclusion of QCC fees in the Firm Cap would not affect
the Floor Broker Rebate for Executed Orders, as Floor Brokers would
still earn the Rebate even if the fee for the transaction itself is
capped.
Consistent with the proposed change, the Exchange proposes to
change the name of this fee from ``Limit of Fees on Firm and Broker
Dealer Open Outcry Executions'' to ``Firm and Broker Dealer Monthly Fee
Cap,'' which the Exchange believes would add more clarity and
consistency to the fee schedule. Relatedly, the Exchange also proposes
to modify the language in the Firm Cap regarding the exclusion of Mini
options which erroneously refers to Strategy Executions. Specifically,
the Exchange proposes to replace the language ``Mini option contracts
are excluded from the Limit of Fees on Strategy Executions,'' with
``Mini option contracts are excluded from the Firm and Broker Dealer
Monthly Fee Cap.'' The Exchange believes that this change 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,\7\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\8\ 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.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange believes the inclusion of the Floor executed QCCs
under the Firm Cap is reasonable and not unfairly discriminatory
because it would provide additional opportunities for Firms and Broker
Dealers to achieve the Firm Cap, which may, in turn, encourage more
business, not limited to QCC trades, to be brought to the Floor, which
would benefit all market participants. The proposed change is
reasonable, equitable and not unfairly discriminatory as the Firm Cap
would not be meaningful for Customers or Professional Customers because
neither Customers nor Professional Customers pay transaction charges
for QCCs. The proposed change is also reasonable, equitable and not
unfairly discriminatory towards Market Makers, as Market Makers are
generally charged a lower fee for Manual executions, and have
alternative avenues to reduce transaction fees.\9\ In addition, the
Exchange believes that by including QCCs in the Firm Cap, thereby
making the Cap more achievable and encouraging additional order flow
not limited to QCCs, Market Makers are provided a greater opportunity
to interact with order flow, which, in turn, benefits market
participants.
---------------------------------------------------------------------------
\9\ See generally Fee Schedule (various credits available to
Market Makers for posted monthly volume, including for executions in
Penny Pilot Issues and SPY).
---------------------------------------------------------------------------
The Exchange also believes that the proposed change is reasonable
because several competing options exchanges likewise include QCC
transactions in monthly fee caps similar to Firm Cap.\10\
---------------------------------------------------------------------------
\10\ See supra n. 6.
---------------------------------------------------------------------------
The Exchange believes that its proposal to modify the name of this
fee, as well as the language regarding the exclusion of Mini options
from the Firm Cap to correct the erroneous reference to Strategy
Executions, would add clarity and consistency to the Fee Schedule to
the benefit of all market participants.
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. Instead, the Exchange believes that the
proposed change would continue to encourage competition, including by
attracting a wider variety of business to the Floor of the Exchange,
which would continue to make the Exchange a more competitive venue for,
among other things, order execution and price discovery. The Exchange
believes the proposed fee change would not unduly burden any particular
group of market participants trading on the Exchange vis-[agrave]-vis
another group. Specifically, neither Customers nor Professional
Customers are charged for QCC transactions. Moreover, Market Makers are
generally charged a lower fee for Manual executions, and have
alternative avenues to reduce transaction fees.\12\ In addition, the
Exchange believes that by including QCCs in the Firm Cap, thereby
making the Cap more achievable and encouraging additional order flow
not limited to QCCs, Market Makers are provided a greater opportunity
to interact with order flow, which, in turn, benefits market
participants.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b)(8).
\12\ See supra n. 9.
---------------------------------------------------------------------------
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) \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.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if
[[Page 43482]]
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.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
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-2015-62 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-2015-62. 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 Section, 100 F Street
NE., Washington, DC 20549-1090. Copies of the filing will also be
available for inspection and copying at the NYSE's principal office and
on its Internet Web site at www.nyse.com. 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-2015-62 and should be submitted
on or before August 12, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------
\16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-17893 Filed 7-21-15; 8:45 am]
BILLING CODE 8011-01-P