[Federal Register Volume 82, Number 149 (Friday, August 4, 2017)]
[Notices]
[Pages 36516-36519]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-16403]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-81268; File No. SR-NYSEARCA-2017-79]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE
Arca Options Fee Schedule
July 31, 2017.
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 20, 2017, 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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[[Page 36517]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify the NYSE Arca Options Fee Schedule
(``Fee Schedule'') to add clarification and consistency, but the
Exchange is not proposing any changes to its fees. The Exchange
proposes to implement the fee change effective July 20, 2017. 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 make a number of textual changes
designed to clarify and add consistency to the Fee Schedule. The
Exchange is not proposing to make any substantive changes to its
current fees.
Earlier this month, July 2017, the Exchange submitted a filing that
included clarifying changes to certain tables regarding Market Maker
incentives (the ``MM Cleanup Filing'').\4\ The first sets of proposed
changes are conforming changes, which are designed to align the text
used in other incentive programs described in the Fee Schedule with
those modified in the MM Cleanup Filing. Specifically, these conforming
changes include:
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\4\ See Securities Exchange Act Release No. 81140 (July 13,
2017), 82 FR 33194 (July 19, 2017) (SR-NYSEArca-2017-77).
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The Exchange proposes to re-locate the reference to
Endnote 15 from the beginning [sic] to the end [sic] of each of the
following tables: ``Customer and Professional Customer Monthly Posting
Credit Tiers and Qualifications for Executions in Penny Pilot Issues'';
``Customer and Professional Customer Incentive Program''; and [sic]
``Non-Customer Monthly Posting Credit Tiers and Qualifications for
Executions in Non-Penny Pilot Issues''; ``Take Fee Discount
Qualification for Penny Pilot Issues''; and ``Take Fee Discount
Qualification for Non-Penny Pilot Issues'' (the ``Modified Tables'').
Endnote 15 provides that the qualification thresholds set forth in the
applicable tables ``[i]ncludes transaction volume from the OTP Holder's
or OTP Firm's affiliates or its Appointed OFP or Appointed MM.'' \5\
Consistent with this proposed change, the Exchange proposes to remove
the language that appears at the end of each of the Modified Tables
providing that volume of an Appointed MM or Appointed OFP may be
included because it would be duplicative of text contained in Endnote
15.
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\5\ See Fee Schedule, Endnote 15.
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The Exchange proposes to replace reference to ``Total
Industry Customer equity and ETF option average daily volume'' with
``TCADV'' (as defined in Endnote 8) \6\ and to use this shorthand
reference in the Modified Tables. Given that TCADV is defined in
Endnote 8 and given that the ``Customer and Professional Customer
Monthly Posting Credit Tiers and Qualifications for Executions in Penny
Pilot Issues'' includes reference to Endnote 8, the Exchange proposes
to remove the following language from this table because it is
duplicative: ``Qualifications based in part on Total Industry Customer
equity and ETF option average daily volume (``TCADV'').''
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\6\ See supra note 4, the MM Cleanup Filing (adding definition
of TCADV).
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In each of the Modified Tables, the Exchange proposes to
replace reference to ``Posted Orders'' with ``posted interest'' and any
reference to ``orders'' with ``interest'' to make clear that, where
applicable, liquidity may include orders or quotes.
For consistency, the Exchange proposes to remove any
capitalization from ``issues'' in reference to ``all issues'' in the
Modified Tables. The Exchange also proposes to capitalize ``Issues'' as
relates to ``Penny Pilot Issues,'' in the preamble to the ``Customer
and Professional Customer Monthly Posting Credit Tiers and
Qualifications for Executions in Penny Pilot Issues,'' and as relates
to ``non-Penny Pilot Issues,'' in the preamble to the ``Non-Customer
Monthly Posting Credit Tiers and Qualifications for Executions in Non-
Penny Pilot Issues.''
The Exchange also proposes to add a comma and, where
applicable, the word ``or'', to signify an alternative qualification
basis in certain of the Modified Tables as well as to remove any
capitalization of the word ``Plus'' as relates to any alterative
qualification bases in the Modified Tables.
The Exchange also proposes to alter the language in the
Modified Tables to clarify how the credits are applied, i.e., that
credit is applied to ``electronic executions of [the applicable] posted
interest'' in the applicable securities. For consistency and clarity,
the Exchange proposes to add ``Electronic'' to, as well as to
capitalize ``Non-Penny,'' in the table heading for the ``Non-Customer
Monthly Posting Credit Tiers and Qualifications for Executions in Non-
Penny Pilot Issues.''
For ease of reference, the Exchange proposes to rename the
``Non-Customer Monthly Posting Credit Tiers and Qualifications for
Executions in Non-Penny Pilot Issues'' to ``Non-Customer, Non-Penny
Pilot Posting Credit Tiers.''
In addition to the foregoing, the Exchange also proposes to
consistently utilize the term ``Customer'' to include Professional
Customers, unless otherwise specified. Per the current Fee Schedule,
regarding trade-related charges for standard options, the Exchange
specifies that ``[u]nless Professional Customer executions are
specifically delineated, such executions will be treated as Customer
executions for fee purposes.'' \7\ Although this language should
(arguably) apply to the sections that follow, including incentive
programs based on posted interest, the Exchange refers to both Customer
and Professional Customer volume being counted towards the same
incentives.\8\ Because the Exchange treats both Professional Customer
and Customer volume the same for purposes of achieving the Customer
Posting Tiers, the Exchange proposes to remove reference to
Professional Customer from these sections of the Fee Schedule.'' \9\
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\7\ See Fee Schedule, NYSE Arca Options: Trade-Related Changes
for Standard Options. For additional clarity, the Exchange proposes
to revise this sentence to put Customer in quotations and to add
reference to credits. See proposed Fee Schedule, NYSE Arca Options:
Trade-Related Changes for Standard Options (providing that
``[u]nless Professional Customer executions are specifically
delineated, such executions will be treated as ``Customer''
executions for fee/credit purposes).
\8\ See id., Customer and Professional Customer Monthly Posting
Credit Tiers and Qualifications for Executions in Penny Pilot
Issues; Customer and Professional Customer Incentive Program; and
Customer and Professional Customer Posting Credit Tiers In Non Penny
Pilot Issues (collectively, the ``Customer Posting Tiers'').
\9\ See proposed Fee Schedule, the Customer Posting Tiers.
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[[Page 36518]]
Consistent with this change, the Exchange proposes the following
changes to the Customer Posting Tiers:
The Exchange proposes to re-name the ``Customer and
Professional Customer Monthly Posting Credit Tiers and Qualifications
for Executions in Penny Pilot Issues,'' as ``Customer Penny Pilot
Posting Credit Tiers.'' Consistent with certain of the conforming
changes referenced above regarding how the applicable credits are the
[sic] applied, the Exchange also proposes to modify the preamble to
provide that ``OTP Holders and OTP Firms meeting the qualifications
below will receive the corresponding posting credit on all electronic
executions of Customer posted interest in Penny Pilot Issues.'' In
addition, the Exchange proposes to update cross-references to this
newly named table as appears in the Firm and Broker Dealer Monthly Fee
Cap.
The Exchange proposes to add a title to signify the
incentive program for ``Customer and Professional Customer Posting
Credit Tiers In Non Penny Pilot Issues,'' which title would be
``Customer Posting Credit Tiers in Non-Penny Pilot Issues.'' The
Exchange proposes to add a hyphen to the word ``Non Penny'' as appears
in the table, for internal consistency. The Exchange also proposes to
add a preamble to this table, which provides that ``OTP Holders and OTP
Firms meeting the qualifications below will receive the corresponding
credit on all electronic executions of Customer posted interest in Non-
Penny Pilot issues,'' and to reference Endnotes 8 and 15, which
describe what is included in eligible monthly volume and how that
volume is calculated. Consistent with the proposed reference to Endnote
8 at the beginning of this table, which includes a description of
qualifying ADV of Retail Orders of U.S. Equity Market Share on the NYSE
Arca Equity Market, the Exchange proposes to remove duplicative
references to Endnote 8 that appear throughout this table.
For avoidance of doubt, the Exchange proposes to add a
sentence to Endnote 8 which provides that repeats that [sic] ``[u]nless
Professional Customer executions are specifically delineated, such
executions will be treated as ``Customer'' executions executions [sic]
in calculating qualifications for monthly posting credits or
discounts.''
The Exchange also proposes to define ``Non-Customers,'' as used in
the Fee Schedule, to include Firms, Broker Dealers, and Market
Makers.\10\ Consistent with this change, the Exchange proposes to
utilize, as shorthand, the defined term Non-Customer in place of
references to Firms, Broker Dealers and Market Makers.\11\
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\10\ See proposed Fee Schedule, NYSE Arca Options: Trade-Related
Changes for Standard Options (providing that ``Firms, Broker
Dealers, and Market Makers are collectively referred to herein as
``Non-Customers'').
\11\ See proposed Fee Schedule, Discount in Take Liquidity Fees
for Professional Customer and Non-Customer Liquidity Removing
Interest; Take Fee Discount Qualification for Penny Pilot Issues
(providing alternative threshold of at least 2.00% of TCADV from
Professional Customer and Non-Customer Liquidity Removing interest
in all issues.''
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Finally, the Exchange also proposes to re-locate the Market Maker
Incentive For Penny Pilot Issues; the Market Maker Incentive For Non-
Penny Pilot Issues; and the MM Tiers (collectively, the ``MM Tables''),
without altering the substance of these tables.\12\ Specifically, the
Exchange proposes to move the MM Tables immediately below the current
Discount in Take Liquidity Fees for Professional Customer, Market
Maker, Firm, and Broker Dealer Liquidity Removing Orders,\13\ which
would place the MM Tables Immediately before the recently modified
``Market Maker Penny Pilot and SPY Posting Credit Tiers.'' \14\ The
Exchange believes moving table applicable to certain participants
adjacent to each other would add to the clarity of the Fee Schedule and
make it easier to navigate and comprehend.
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\12\ See supra note 4, the MM Cleanup Filing (includes
modifications to the text of the MM Tables).
\13\ See supra note 10 (proposing to re-name this table).
\14\ See supra note 4, the MM Cleanup Filing (includes
modifications to the text of the MM Tables).
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To the extent not specifically noted herein, the Exchange has also
corrected certain typographical errors (such as missing hyphens or
redundant endnote markings) as well as streamlined certain text to add
clarity and transparency to the Fee Schedule.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\15\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\16\ 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. There are no changes to actual
fees in this filing.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes the proposed non-substantive changes to the
Fee Schedule are reasonable, equitable, and not unfairly discriminatory
because the changes would add clarity, transparency and internal
consistency to the Fee Schedule making it easier to navigate and
comprehend, which would benefit 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,\17\ 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 that the proposed
textual changes are not intended to have any impact on competition, but
instead are designed to make the Fee Schedule easier for market
participants to navigate and digest, which is in the public interest.
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\17\ 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) \18\ of the Act and subparagraph (f)(2) of Rule
19b-4 \19\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 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
[[Page 36519]]
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) \20\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\20\ 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-2017-79 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-NYSEArca-2017-79. 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 the 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-2017-79, and should
be submitted on or before August 25, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-16403 Filed 8-3-17; 8:45 am]
BILLING CODE 8011-01-P