Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Arca Options Fee Schedule Relating to Fees on Strategy Executions, 33252-33253 [2014-13454]

Download as PDF 33252 Federal Register / Vol. 79, No. 111 / Tuesday, June 10, 2014 / Notices 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 NSCC and on its Web site (https://www.dtcc.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 No. SR–NSCC–2014–06 and should be submitted on or before July 1, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–13452 Filed 6–9–14; 8:45 am] SECURITIES AND EXCHANGE COMMISSION Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Arca Options Fee Schedule Relating to Fees on Strategy Executions June 4, 2014. emcdonald on DSK67QTVN1PROD with NOTICES 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 23, 2014, 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. 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’’) relating to fees on Strategy Executions. The Exchange proposes to implement the fee change effective June 1, 2014. The text of the proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. VerDate Mar<15>2010 16:55 Jun 09, 2014 Jkt 232001 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. 1. Purpose [Release No. 34–72309; File No. SR– NYSEArca–2014–62] 1 15 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change BILLING CODE 8011–01–P 9 17 principal office of the Exchange, and at the Commission’s Public Reference Room. The purpose of this filing is to modify the Exchange’s Limit of Fees on Options Strategy Executions (‘‘Strategy Cap’’) to include Flexible Exchange Option (‘‘FLEX’’) 4 transactions executed as part of a qualifying Strategy Execution. Currently, certain Strategy Executions are eligible to be capped at $750 per day in transaction fees, and further capped at $25,000 per month per initiating firm. Strategies eligible for the Strategy Cap involve reversals and conversions; box spreads; short stock interest spreads; merger spreads; and jelly rolls.5 The 4 See NYSE Arca Rule 5.30(4) [sic] (defining Flexible Exchange Option as a ‘‘customized options contract’’). 5 See NYSE Arca Options Fees and Charges, available at, https://globalderivatives.nyx.com/ sites/globalderivatives.nyx.com/files/nyse_arca_ options_fee_schedule_for_4-1-14.pdf, n. 10, defining the eligible Strategy Executions as follows: (a) Reversals and Conversions. A ‘‘reversal’’ is established by combining a short security position with a short put and a long call position that shares the same strike and expiration. A ‘‘conversion’’ is established by combining a long position in the underlying security with a long put and a short call position that shares the same strike and expiration. (b) Box spread. A ‘‘box spread’’ is defined as transactions involving a long call option and a short put option at one strike, combined with a short call option and long put at a different strike, to create synthetic long and synthetic short stock positions, respectively. (c) Short stock interest spread. A ‘‘short stock interest spread’’ is defined as transactions done to achieve a short stock interest arbitrage involving the purchase, sale and exercise of in-the-money options of the same class. (d) Merger spread. A ‘‘merger spread’’ is defined as transactions done to achieve a merger arbitrage involving the purchase, sale and exercise of options of the same class and expiration date, each executed prior to the date on which shareholders of record are required to elect their respective form of consideration, i.e., cash or stock. PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 Exchange, however, currently deems FLEX transactions ineligible for the Strategy Cap. OTP Holders and OTP Firms occasionally receive orders for eligible Strategy Executions where one or more legs is comprised of a FLEX trade. Because FLEX trade fees are not eligible to be capped as part of a Strategy Execution, the OTP Holders and OTP Firms lose business to other markets that include FLEX transactions in their own competing Strategy Cap.6 NYSE Arca proposes to allow fees from FLEX transactions that are part of an otherwise eligible Strategy Execution to be included in the Strategy Cap. 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. The Exchange believes that the proposed inclusion of Strategy Executions that are comprised in whole or in part by FLEX transactions in the Strategy Cap to be reasonable as it will reduce the total transaction costs for these types of trades. In addition, the proposed fee change is reasonable because it is similar to the strategy caps available on other Exchanges.9 The use of these Strategy Executions benefit all market participants by increasing liquidity in general and allowing significantly large business to be brought together to enhance price discovery. By encouraging this type of business on the Exchange, the increased liquidity benefits all market participants. The Exchange also believes that the proposed inclusion of Strategy Executions that are comprised in whole or in part by FLEX transactions in the Strategy Cap is also not unfairly discriminatory, as Strategy Executions (e) Jelly rolls. A ‘‘jelly roll’’ is created by entering into two separate positions simultaneously. One position involves buying a put and selling a call with the same strike price and expiration. The second position involves selling a put and buying a call, with the same strike price, but with a different expiration from the first position. 6 See, e.g., NYSE Amex Options Fee Schedule, available at, https://globalderivatives.nyx.com/ sites/globalderivatives.nyx.com/files/nyse_amex_ options_fee_schedule_for_2-3-14_0.pdf. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(4) and (5). 9 See supra n. 6. E:\FR\FM\10JNN1.SGM 10JNN1 Federal Register / Vol. 79, No. 111 / Tuesday, June 10, 2014 / Notices can be conducted by any OTP Holder or OTP Firm. Finally, the Exchange believes that it is subject to significant competitive forces, including from options exchanges that do not exclude FLEX transactions from their strategy caps, as described below in the Exchange’s statement regarding the burden on competition. 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,10 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 fee change reduces the burden on competition because it will allow OTP Holders and OTP Firms to compete for business by broadening the scope of eligible transactions to be included in the Strategy Cap, which change would bring the Strategy Cap in line with the strategy caps available on other options exchanges.11 The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues, and providing a cap on Strategy Executions comprised in whole or in part by FLEX transactions in a manner consistent with other trading venues will encourage competition. 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. emcdonald on DSK67QTVN1PROD with NOTICES 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) 12 of the Act and subparagraph (f)(2) of Rule 19b–4 13 thereunder, because it establishes a due, 10 15 U.S.C. 78f(b)(8). supra n. 6. 12 15 U.S.C. 78s(b)(3)(A). 13 17 CFR 240.19b–4(f)(2). 11 See VerDate Mar<15>2010 16:55 Jun 09, 2014 fee, or other charge imposed by the Exchange. 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) 14 of the Act to determine whether the proposed rule change should be approved or disapproved. 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 (https://www.sec.gov/ rules/sro.shtml ); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–2014–62 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–2014–62. 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 (https://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 14 15 Jkt 232001 PO 00000 U.S.C. 78s(b)(2)(B). Frm 00083 Fmt 4703 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–2014–62, and should be submitted on or before July 1, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–13454 Filed 6–9–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [File No. 500–1] In the Matter of Prospect Ventures, Inc.; Order of Suspension of Trading June 6, 2014. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Prospect Ventures, Inc. (‘‘Prospect’’) because of questions regarding the accuracy of assertions by Prospect to investors in public filings concerning, among other things, the company’s beneficial ownership, assets, and operations. Prospect is a Nevada corporation based in Medellin, Colombia. Prospect’s securities are quoted on OTC Link (formerly ‘‘Pink Sheets’’) operated by OTC Markets Group Inc., under the symbol IVAP. The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed company. Therefore, it is ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading in the securities of the above-listed company is suspended for the period from 9:30 a.m. EDT on June 6, 2014 through 11:59 p.m. EDT on June 19, 2014. By the Commission. Jill M. Peterson, Assistant Secretary. [FR Doc. 2014–13574 Filed 6–6–14; 11:15 am] BILLING CODE 8011–01–P 15 17 Sfmt 9990 33253 E:\FR\FM\10JNN1.SGM CFR 200.30–3(a)(12). 10JNN1

Agencies

[Federal Register Volume 79, Number 111 (Tuesday, June 10, 2014)]
[Notices]
[Pages 33252-33253]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-13454]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72309; File No. SR-NYSEArca-2014-62]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE 
Arca Options Fee Schedule Relating to Fees on Strategy Executions

June 4, 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 May 23, 2014, 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Options Fee Schedule 
(``Fee Schedule'') relating to fees on Strategy Executions. The 
Exchange proposes to implement the fee change effective June 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.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to modify the Exchange's Limit of 
Fees on Options Strategy Executions (``Strategy Cap'') to include 
Flexible Exchange Option (``FLEX'') \4\ transactions executed as part 
of a qualifying Strategy Execution.
---------------------------------------------------------------------------

    \4\ See NYSE Arca Rule 5.30(4) [sic] (defining Flexible Exchange 
Option as a ``customized options contract'').
---------------------------------------------------------------------------

    Currently, certain Strategy Executions are eligible to be capped at 
$750 per day in transaction fees, and further capped at $25,000 per 
month per initiating firm. Strategies eligible for the Strategy Cap 
involve reversals and conversions; box spreads; short stock interest 
spreads; merger spreads; and jelly rolls.\5\ The Exchange, however, 
currently deems FLEX transactions ineligible for the Strategy Cap. OTP 
Holders and OTP Firms occasionally receive orders for eligible Strategy 
Executions where one or more legs is comprised of a FLEX trade. Because 
FLEX trade fees are not eligible to be capped as part of a Strategy 
Execution, the OTP Holders and OTP Firms lose business to other markets 
that include FLEX transactions in their own competing Strategy Cap.\6\
---------------------------------------------------------------------------

    \5\ See NYSE Arca Options Fees and Charges, available at, 
https://globalderivatives.nyx.com/sites/globalderivatives.nyx.com/files/nyse_arca_options_fee_schedule_for_4-1-14.pdf, n. 10, 
defining the eligible Strategy Executions as follows:
    (a) Reversals and Conversions. A ``reversal'' is established by 
combining a short security position with a short put and a long call 
position that shares the same strike and expiration. A 
``conversion'' is established by combining a long position in the 
underlying security with a long put and a short call position that 
shares the same strike and expiration.
    (b) Box spread. A ``box spread'' is defined as transactions 
involving a long call option and a short put option at one strike, 
combined with a short call option and long put at a different 
strike, to create synthetic long and synthetic short stock 
positions, respectively.
    (c) Short stock interest spread. A ``short stock interest 
spread'' is defined as transactions done to achieve a short stock 
interest arbitrage involving the purchase, sale and exercise of in-
the-money options of the same class.
    (d) Merger spread. A ``merger spread'' is defined as 
transactions done to achieve a merger arbitrage involving the 
purchase, sale and exercise of options of the same class and 
expiration date, each executed prior to the date on which 
shareholders of record are required to elect their respective form 
of consideration, i.e., cash or stock.
    (e) Jelly rolls. A ``jelly roll'' is created by entering into 
two separate positions simultaneously. One position involves buying 
a put and selling a call with the same strike price and expiration. 
The second position involves selling a put and buying a call, with 
the same strike price, but with a different expiration from the 
first position.
    \6\ See, e.g., NYSE Amex Options Fee Schedule, available at, 
https://globalderivatives.nyx.com/sites/globalderivatives.nyx.com/files/nyse_amex_options_fee_schedule_for_2-3-14_0.pdf.
---------------------------------------------------------------------------

    NYSE Arca proposes to allow fees from FLEX transactions that are 
part of an otherwise eligible Strategy Execution to be included in the 
Strategy Cap.
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 that the proposed inclusion of Strategy 
Executions that are comprised in whole or in part by FLEX transactions 
in the Strategy Cap to be reasonable as it will reduce the total 
transaction costs for these types of trades. In addition, the proposed 
fee change is reasonable because it is similar to the strategy caps 
available on other Exchanges.\9\ The use of these Strategy Executions 
benefit all market participants by increasing liquidity in general and 
allowing significantly large business to be brought together to enhance 
price discovery. By encouraging this type of business on the Exchange, 
the increased liquidity benefits all market participants.
---------------------------------------------------------------------------

    \9\ See supra n. 6.
---------------------------------------------------------------------------

    The Exchange also believes that the proposed inclusion of Strategy 
Executions that are comprised in whole or in part by FLEX transactions 
in the Strategy Cap is also not unfairly discriminatory, as Strategy 
Executions

[[Page 33253]]

can be conducted by any OTP Holder or OTP Firm.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, including from options exchanges that do not 
exclude FLEX transactions from their strategy caps, as described below 
in the Exchange's statement regarding the burden on competition. 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,\10\ 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 fee 
change reduces the burden on competition because it will allow OTP 
Holders and OTP Firms to compete for business by broadening the scope 
of eligible transactions to be included in the Strategy Cap, which 
change would bring the Strategy Cap in line with the strategy caps 
available on other options exchanges.\11\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b)(8).
    \11\ See supra n. 6.
---------------------------------------------------------------------------

    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues, and 
providing a cap on Strategy Executions comprised in whole or in part by 
FLEX transactions in a manner consistent with other trading venues will 
encourage competition. 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) \12\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \13\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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 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) \14\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \14\ 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 (https://www.sec.gov/rules/sro.shtml ); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2014-62 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-2014-62. 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 (https://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-2014-62, and should 
be submitted on or before July 1, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-13454 Filed 6-9-14; 8:45 am]
BILLING CODE 8011-01-P
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