[Federal Register Volume 83, Number 129 (Thursday, July 5, 2018)]
[Notices]
[Pages 31431-31433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14362]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83553; File No. SR-NYSEAMER-2018-34]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Modify
the NYSE American Options Fee Schedule
June 28, 2018.
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 June 27, 2018, NYSE American LLC (the ``Exchange'' or
``NYSE American'') 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 31432]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify the NYSE American Options Fee
Schedule (``Fee Schedule''). The Exchange proposes to implement the fee
change effective June 27, 2018. The proposed rule change is available
on the Exchange's website 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 modify the Fee Schedule, effective
June 27, 2018, to introduce fees for the newly listed options on the
NYSE FANG+ Index (``NYSE FANG+''), which will trade under the symbol
FAANG. Section 1 of the Fee Schedule sets forth the rates for options
transactions, both manual and electronic.\4\ The Exchange proposes to
introduce fees related to transactions in NYSE FANG+ in new note 8 to
Section I, Options Transaction Fees and Credits. As proposed, the
Exchange would charge $0.35 per contract, per side for non-Customer
NYSE FANG+ transactions, whether executed manually or electronically.
However, the Exchange would not charge a fee for any NYSE FANG+ options
transactions (i) on behalf of Customers or (ii) by Market Makers with
an appointment in NYSE FANG+.\5\ Further, the Exchange would not impose
any Marketing Charges on NYSE FANG+ option transactions or any Rights
Fees upon allocation in options on NYSE FANG+.\6\ Market Makers that do
not have an appointment in NYSE FANG+ will be subject to the same fee
of $0.35 per contract, per side for non-Customer NYSE FANG+
transactions. However, volume in NYSE FANG+ would be included in the
calculations to qualify for any volume-based incentives currently being
offered on the Exchange (e.g., such monthly volume would be counted
towards the Market Maker Sliding Scale program, per Section I.C., and
the American Customer Engagement (``ACE'') Program, per Section I.E. of
the Fee Schedule, and the Firm Monthly Fee Cap, per Section I.J.).\7\
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\4\ See e.g., Fee Schedule, I.A. (Rates for Standard Options
transactions), available here, https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf.
\5\ The term Market Maker, as used herein, includes NYSE
American Options Market Makers, Specialists, e-Specialists and
Directed Order Market Makers.
\6\ See Fee Schedule, Sections I.A., note 3 (for description of
the collection, and distribution of, Marketing Fees); and Section
III.C. (for description of the e-Specialist, DOMM and Specialist
Monthly Rights Fees). See also proposed Fee Schedule, note 8 to
Section I, Options Transaction Fees and Credits (providing, in part,
that ``Marketing Charges will not be applied to FAANG
transactions'').
\7\ See proposed Fee Schedule, note 8 to Section I, Options
Transaction Fees and Credits (providing, in part, that ``[a]ny
volume in FAANG will be included in the calculations to qualify for
any volume-based incentives currently being offered on the
Exchange'').
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The Exchange believes the proposed fees for NYSE FANG+ would
further the Exchange's goal of introducing new products to the
marketplace by encouraging trading in this index, in particular by
encouraging Market Makers to make a market in these products, which
would in turn, benefit market participants.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act, in general, and furthers the objectives
of Sections 6(b)(4) and (5) of the Act, 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.
The Exchange believes the proposal to implement fees for options on
NYSE FANG+ is reasonable, equitable and not unfairly discriminatory for
the following reasons. The Exchange believes the proposed fees, which
apply equally to electronic and manual (open outcry) transactions on
behalf of non-Customers, on the one hand, and Customers, on the other
hand, to be reasonable and equitable because the proposed
differentiation among market participants for NYSE FANG+ fees is
consistent with the manner in which the Exchange distinguishes among
market participants for fee purposes in other contexts.\8\ The Exchange
believes that not imposing fees for NYSE FANG+ transactions on behalf
of Customers is likewise reasonable, equitable and not unfairly
discriminatory because Customer order flow enhances liquidity on the
Exchange for the benefit of all market participants. Specifically,
Customer liquidity benefits all market participants by providing more
trading opportunities, which attracts Market Makers. An increase in the
activity of Market Makers in turn facilitates tighter spreads, which
may cause an additional corresponding increase in order flow from other
market participants.
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\8\ See id. (providing that non-Customers (i.e., NYSE American
Options Market Makers, Firms and Broker Dealers and Professional
Customers) are charged a total $0.25 per contract for manual
executions, while Customers are charged $0.00 per contract for
manual executions).
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The Exchange believes that applying the same fee on all non-
Customer NYSE FANG+ option transactions, other than those by Market
Makers with an appointment in NYSE FANG+, is non-discriminatory because
it applies to all similarly situated participants on an equal basis
that opt to trade the product. Moreover, the decision to transact in
NYSE FANG+ (or, for Market Makers, to seek an appointment) is
voluntary. The Exchange believes that allowing Market Makers with an
appointment in NYSE FANG+ to transact in the product free of charge
(and without incurring Marketing Fees) is not unfairly discriminatory
because Market Makers have heightened obligations that are not
applicable to other non-Customer market participants.\9\ It is also
non-discriminatory because all Market Makers may apply for an
appointment in NYSE FANG+ options. Further, encouraging Market Makers
to seek an appointment in, and thus provide continuous quotes in, NYSE
FANG+ would add liquidity to the market and provide market
participants--both Customer and non-Customer alike--increased
opportunities to trade options on NYSE FANG+. The Exchange believes
that exempting transactions in NYSE FANG+ from the monthly Rights Fees
would likewise encourage trading in NYSE FANG+ options, which increase
in the availability of such options would benefit all market
participants.
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\9\ See, e.g., Rules 920NY, 925.1NY(b) and 927NY (setting forth
heightened quoting obligations).
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Further, the proposal to include any volume in NYSE FANG+ in the
calculations to qualify for any volume-based incentives offered on the
Exchange would further the Exchange's
[[Page 31433]]
goal of introducing new products to the marketplace by encouraging
trading in these products. To the extent that the proposed change
incentivizes any market participants to direct their order flow to the
Exchange, all market participants would benefit from increased
liquidity and trading opportunities on the Exchange. Finally, the
Exchange notes that offering market participants incentives to trade in
certain newly offered products is not new or novel.\10\
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\10\ See, e.g., Securities Exchange Act Release No. 77293 (March
4, 2016), 81 FR 12762 (March 4, 2016) (SR-NYSEMKT-2016-34)
(addressing the treatment of Binary Return Derivatives--or ByRDs--
and exempting such transactions from all Exchange fees to encourage
trading in the product).
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B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act, the Exchange does
not believe that the proposed rule change would impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. The Exchange believes the proposed transaction
fees for NYSE FANG+ would not place an unfair burden on competition as
it would apply to all similarly situated non-Customer/non-Market Maker
participants. The Exchange also believes the proposed pricing for NYSE
FANG+ is procompetitive as it would further the Exchange's goal of
introducing new products to the marketplace and encouraging Market
Makers to make a market in these products, which would in turn, benefit
market participants. Market participants that do not wish to trade in
or seek an appointment in NYSE FANG+ are not obliged to do so.
The Exchange does not believe that the proposed change will impair
the ability of any market participants or competing order execution
venues to maintain their competitive standing in the financial markets.
Further, the fees would be applied to all similarly situated
participants (i.e., non-Customers), and, as such, the proposed change
would not impose a disparate burden on competition either among or
between classes of market participants.
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) \11\ of the Act and subparagraph (f)(2) of Rule
19b-4 \12\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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) \13\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\13\ 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 No. SR-NYSEAMER-2018-34 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 No. SR-NYSEAMER-2018-34. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File No. SR-NYSEAMER-2018-34, and should be submitted
on or before July 26, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-14362 Filed 7-3-18; 8:45 am]
BILLING CODE 8011-01-P