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 the Fees Related to the Use of Ports That Provide Connectivity to the Exchange's Trading Systems for Entry of Orders and/or Quotes, 66004-66007 [2014-26348]
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66004
Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Notices
administered by the RRB are dependent
on input developed from the
information collection.
The RRB utilizes Form BA–11 to
obtain gross earnings information from
railroad employers. Employers have the
option of preparing and submitting BA–
11 reports online via the RRB’s
Employer Reporting System or on paper
(or in like format) on magnetic tape
cartridges, by File Transfer Protocol
(FTP), or secure Email. The online BA–
11 includes the option to file a
‘‘negative report’’ (no employees, or no
employees with the digits ‘‘30’’).
Completion is mandatory. One response
is requested of each respondent. The
RRB proposes to formally eliminate the
paper and magnetic tape cartridge
versions of Form BA–11 from the
information collection.
ESTIMATE OF ANNUAL RESPONDENT BURDEN
Annual
responses
Form No.
BA–11
BA–11
BA–11
BA–11
BA–11
Time
(minutes)
Burden
(hours)
File Transfer Protocol ......................................................................................................
CD–ROM .........................................................................................................................
secure E-mail ...................................................................................................................
(Internet)—Positive ..........................................................................................................
(Internet)—Negative .........................................................................................................
7
5
5
137
329
300 (5 hours)
30
30
30
15
35
2
2
68
82
Total ......................................................................................................................................
483
........................
189
Additional Information or Comments:
To request more information or to
obtain a copy of the information
collection justification, forms, and/or
supporting material, contact Dana
Hickman at (312) 751–4981 or
Dana.Hickman@RRB.GOV. Comments
regarding the information collection
should be addressed to Charles
Mierzwa, Railroad Retirement Board,
844 North Rush Street, Chicago, Illinois
60611–2092 or emailed to
Charles.Mierzwa@RRB.GOV. Written
comments should be received within 60
days of this notice.
Charles Mierzwa.
Chief of Information Resources Management.
[FR Doc. 2014–26365 Filed 11–5–14; 8:45 am]
BILLING CODE 7905–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73489; File No. SR–
NYSEARCA–2014–123]
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 the
Fees Related to the Use of Ports That
Provide Connectivity to the
Exchange’s Trading Systems for Entry
of Orders and/or Quotes
October 31, 2014.
mstockstill on DSK4VPTVN1PROD 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 October
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 selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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.
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’’) to modify the fees related to
the use of ports that provide
connectivity to the Exchange’s trading
systems for entry of orders and/or
quotes. The Exchange proposes to
implement the fee changes effective
November 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.
1. Purpose
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
PORT FEES:
ORDER/QUOTE ENTRY PORT * .....................................................
1 15
U.S.C. 78s(b)(1).
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The Exchange proposes to amend the
Fee Schedule to modify the fees related
to the use of ports that provide
connectivity to the Exchange’s trading
systems for entry of orders and/or
quotes. The Exchange proposes to
implement the fee changes on
November 1, 2014. The purpose of the
proposed fee changes are to ensure a fair
and reasonable use of Exchange
resources by allowing the Exchange to
recoup certain of its connectivity costs
(described below), while continuing to
offer competitive rates to OTP Holders
and OTP Firms (‘‘OTPs’’).
The Exchange currently makes
available to OTPs order/quote entry
ports for connectivity to Exchange
trading systems (each a ‘‘Port’’). OTPs
may be authorized to utilize Port(s) for
option activity on NYSE Arca Options
and incur monthly Port Fees by the
Exchange, as set forth in the table
below.
Ports 1–5: no charge.
Ports 6–100: $200 per port per month.
Ports 101 and greater: $100 per port per month.
U.S.C. 78a.
Frm 00083
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
3 17
Sfmt 4703
CFR 240.19b–4.
E:\FR\FM\06NON1.SGM
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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Notices
66005
Backup datacenter port: no fee unless utilized during the relevant
month, in which case, above fees shall apply.
* For purpose of calculating the number of order/quote entry ports, the Exchange shall aggregate the ports of affiliates.4
Thus, while there is no charge to an
OTP authorized to utilize five Ports, an
OTP will, for example, pay $200 per
month for a sixth Port. Once OTPs
exceed the first five Ports, the charges
may look as follows: An OTP authorized
to utilize 50 Ports is charged $9,000 in
monthly Port Fees (i.e., 45 × $200); 100
Ports is charged $19,000 in monthly
Port Fees (i.e., 95 × $200); or 120 Ports
is charged $21,000 in monthly Ports
Fees (i.e., 95 × $200 plus 20 × $100).
Finally, unutilized Ports that connect to
the Exchange via its backup datacenter
are considered to have been established
PORT FEES:
ORDER/QUOTE ENTRY PORT * .....................................................
NYSE Arca Market Maker Open Outcry Discount ...................................
[Ports 1–5: no charge].
[Ports 6–100: $200 per port per month].
Ports 1–40: $450 per port per month.
Ports [101]41 and greater: [$100]$150 per port per month.
Any NYSE Arca Market Maker that executes 50% or more of their market maker volume in open outcry shall receive a discount on their
monthly port fees of 60%, not to exceed a maximum dollar discount
of $10,000 per month.
authorized—except for Ports that are
considered established for backup
purposes—such that the level of activity
with respect to a particular Port would
not affect the assessment of monthly
fees. With regard to the discount on
monthly Port Fees for Market Maker
volume executed in open outcry, the
measurement period for billing
purposes will be based on the activity
in the month prior, such that September
Market Maker volumes will be used to
decide if the Market Maker qualified for
the 60% discount on their October Port
Fees.
The Exchange is also proposing a nonsubstantive, formatting change to the
section of the fee schedule that applies
to Port Fees. The Exchange is proposing
to re-format that section of the Fee
Schedule as a table with distinct rows
and columns to make the Fee Schedule
easier for participants to understand.
mstockstill on DSK4VPTVN1PROD with NOTICES
In sum, the Exchange is proposing to
no longer offer Ports 1–5 free of charge
and will instead charge OTPs $450 per
Port, per month for the first 40 Ports that
an OTP is authorized to utilize. The
Exchange further proposes to charge
$150 per Port, per month for any Port
in excess of 40 for which an OTP is
authorized. Using the example above, an
OTP would be charged as follows: An
OTP authorized to utilize 50 Ports
would be charged $19,500 in monthly
Port Fees (i.e., 40 × $450 plus 10 ×
$150); 100 Ports is charged $27,000 in
monthly Port Fees (i.e., 40 × $450 plus
60 × $150); or 120 Ports is charged
$30,000 in monthly Ports Fees (i.e., 40
× $450 plus 80 × $150). In addition, the
Exchange proposes to offer a discount
on monthly Port Fees of 60%, not to
exceed $10,000, for any NYSE Arca
Market Maker that execute at least 50%
of their Market Maker volume in open
outcry in any given month.6
The Exchange proposes to implement
these changes on November 3, 2014[sic].
In this regard, as is the case today, the
Exchange notes that billing for Ports
would continue to be based on the
number of Ports for which an OTP has
been authorized for option activity on
the third business day prior to the end
of the month. Similarly, the Exchange
would continue to assess the Port Fees
based on the number of Ports
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Securities Exchange
Act of 1934 (the ‘‘Act’’),7 in general, and
furthers the objectives of Section 6(b)(4)
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
4 An affiliate is a person or firm that directly, or
indirectly through one or more intermediaries,
controls or is controlled by, or is under common
control with, the firm. See Rule 1.1(a).
5 The Exchange’s backup datacenter is currently
located in Chicago, Illinois. The Exchange notes
that it monitors usage of these particular Ports and,
accordingly, if an order/quote is sent to the
Exchange via one of these Ports, then the Port is
charged the applicable monthly Port Fee.
6 For example, a Market Maker authorized to
utilize 100 Ports is charged $27,000 in monthly Port
Fees (i.e., $450 × 40 = $18,000 plus $150 × 60 =
$9,000). However, if during that month, the Market
Maker executes at least 50% of their volume in
open outcry, the Market Maker then becomes
eligible for a discount of 60%—or a reduction of
$16,200. However, the proposal caps the amount of
the available discount to $10,000 per month. Thus,
in this example, the Port Fees charged would be
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19:46 Nov 05, 2014
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PO 00000
Frm 00084
Fmt 4703
for backup purposes and are not charged
Port Fees.5
At this time, the Exchange is
proposing to modify its Port Fees as set
forth in the table below, with new
charges appearing underlined and
deletions appearing in brackets.
Sfmt 4703
unfairly discriminate between
customers, issuers, brokers or dealers.
The Exchange believes that the
proposed fee changes are reasonable,
equitable and not unfairly
discriminatory because they are
designed to ensure a fair and reasonable
use of Exchange resources by allowing
the Exchange to recoup for certain of its
connectivity costs, while continuing to
offer competitive rates to OTPs. The
Exchange notes that it has not increased
its Port Fees since November 2012,9 and
the proposed increases are intended to
adjust the Port Fees to reflect the
increased costs that the Exchange bears
with respect to maintaining the Ports.
Specifically, the Exchange believes that
the proposed increase in Port Fees are
reasonable because the proposed fees
charged for Ports would enable the
Exchange to offset, in part, its
connectivity costs associated with
making such Ports available, including
costs based on gateway software and
hardware enhancements and resources
dedicated to gateway development,
quality assurance, and support. In this
regard, the Exchange believes that the
proposed Port Fees are in line with
those charged by other venues, and that
in some cases its Port Fees would be
less expensive than many of its primary
competitors. For example, the Chicago
Board Options Exchange (‘‘CBOE’’)
$17,000 ($27,000 less the maximum monthly
discount of $10,000).
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(4).
9 See Securities and Exchange Release No. 34–
68230 (November 14, 2012), 77 FR 69670
(November 20, 2012) (SR–NYSEArca–2012–122).
E:\FR\FM\06NON1.SGM
06NON1
66006
Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Notices
charges $500 per port per month for a
Network Access Port.10 The NASDAQ
Options Market (‘‘NOM’’) charges $550
per port per month.11
The Exchange believes that the
proposed fees are reasonable, equitable
and not unfairly discriminatory
because—just as they do today—OTPs
are able to request, and pay for, only
those Ports that they require, with no
impact to other OTPs.
The Exchange believes that it is
reasonable, equitable and not unfairly
discriminatory to no longer offer the
first five ports free of charge as all OTPs
are being treated in the same manner.
Further, as noted above, the Exchange
believes that the proposed fee changes
are reasonable, equitable and not
unfairly discriminatory because they are
designed to ensure a fair and reasonable
use of Exchange resources by allowing
the Exchange to recoup for certain of its
connectivity costs, while continuing to
offer competitive rates to OTPs.
The Exchange believes that the
proposed monthly per Port fee of $450
for the first 40 Ports is reasonable,
equitable and not unfairly
discriminatory because it is comparable
to the rates of other exchanges.12 The
Exchange also believes that the
proposed fees are equitable and not
unfairly discriminatory because they
would apply to all OTPs that utilize
Ports for options activity on the
Exchange.
The Exchange also believes that it is
reasonable, equitable and not unfairly
discriminatory to decrease the monthly
per Port rate from $450 to $150 once an
OTP has exceeded 40 Ports (i.e., a
monthly per Port charge of $150 for
Ports 41+). Specifically, reducing the
monthly fee to $150 per Port when an
OTP needs to utilize more than 40 Ports
would enable those firms to maintain
those connections to the Exchange,
while helping to offset the increased
costs of that connection. In addition, the
reduced fee is likewise appropriate
given that certain market participants,
particularly options Market Makers,
require more than 40 Ports in order to
satisfy their responsibilities and
obligations to investors, which stem
from the significant number of series
that exist for any particular option
mstockstill on DSK4VPTVN1PROD with NOTICES
10 See
CBOE Fee Schedule available here, https://
www.cboe.com/publish/feeschedule/
CBOEFeeSchedule.pdf (CBOE Command
Connectivity Charges, at p 10).
11 See NOM Price List, available here, https://
nasdaq.cchwallstreet.com/NASDAQTools/
bookmark.asp?id=nasdaq-rule-options_
XVS3&manual=/nasdaq/main/nasdaq-optionsrules
(Section 3, NASDAQ Options Market—Access
Services).
12 See supra nn. 10–11.
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19:46 Nov 05, 2014
Jkt 235001
class 13 and the requirement for NYSE
Arca Market Makers to maintain a bid
or offer in assigned classes.
Furthermore, Market Makers that quote
across a significant number, if not all, of
the 2,602 classes traded on the
Exchange have responsibility for
upwards of 650,000 individual option
series.14 Accordingly, the level of
activity that is required to satisfy a
Market Maker’s quoting obligations,
which directly relates to the number of
Ports required, is such that the
Exchange believes it is reasonable,
equitable and not unfairly
discriminatory to offer a reduced fee to
OTPs that utilize more than 40 Ports on
the Exchange in a given month.
Further, the Exchange believes that
the proposal to offer a 60% discount on
Port Fees, not to exceed a maximum
discount of $10,000 per month, to those
Market Makers that execute at least 50%
of their market maker volume in a given
month in open outcry is also reasonable,
equitable and not unfairly
discriminatory. First, the Exchange
believes that the trading floor plays an
important role in the options market.
Specifically, trading floors provide price
discovery for large or complex strategies
not easily exposed in electronic
auctions. In order to encourage robust
participation in the Exchange’s outcry
markets, the Exchange believes that it is
reasonable to offer a discount in the
manner described for those Market
Makers that continue to provide price
discovery in open outcry as evidenced
by the relative level of their market
maker volume executed in open outcry.
The Exchange notes that other options
exchanges offer similar discounts in the
to encourage market makers to maintain
a presence in the open outcry market.15
As the proposed discount is available
to any Market Maker that executes at
least 50% of their market maker volume
in open outcry, the Exchange believes
that the current proposal is not unfairly
discriminatory as any market making
firm can seek to place individual traders
on the trading floor. The Exchange
believes the proposal is reasonable and
equitable as the price discovery found
in the outcry markets benefits all
participants. The Exchange notes that
the proposed discount would apply for
13 For example, as of October 9, 2014, there were
more than 2350 individual option series overlying
Chipotle Mexican Grill, Inc. (NYSE: CMG).
14 These figures are valid as of October 9, 2014.
15 See the NYSE Amex Options Fee Schedule,
available here, https://www.nyse.com/publicdocs/
nyse/markets/amex-options/NYSE_Amex_Options_
Fee_Schedule.pdf (charging lower ATP fees for
Floor Market Makers, based on volume transacted
in open outcry, to encourage their presence and
participation in the outcry markets on the trading
floor).
PO 00000
Frm 00085
Fmt 4703
Sfmt 4703
those Market Makers that reach or
exceed the volume threshold for open
outcry transactions. The Exchange
believes that this threshold has been
appropriately set to provide an
incentive for floor-based market making
because this threshold represents a level
where the preponderance of volume is
in open outcry and therefore not
dependent on a Port, but a Port is
nonetheless necessary to meet Market
Maker quoting obligations. The
Exchange notes that Market Makers that
do not meet this volume threshold for
their options activity in open outcry
would continue to be charged at the
same rate for Port Fees as all other
OTPs.
The Exchange believes that the
proposal to re-format the section of the
fee schedule describing Port Fees into a
table, with distinct rows and columns,
is reasonable, equitable and not unfairly
discriminatory as the proposed change
will reduce confusion and will make the
fee schedule more transparent and
easier for all participants to understand.
Finally, the Exchange believes that it
is subject to significant competitive
forces, as described below in the
Exchange’s statement regarding the
burden on competition.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,16 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 fee
change is reasonably designed to be fair
and equitable, and therefore, will not
unduly burden any particular group of
market participants trading on the
`
Exchange vis-a-vis another group (i.e.,
Market Markers versus non-Market
Makers). Specifically, the Exchange
believes that the reduced fee for OTPs
that utilize more than 40 Ports will
relieve any undue burden that the
proposed fee change might have on
Marker Makers. Further, the Exchange
believes that the proposed discount to
the monthly Port Fee, capped at $10,000
for those Market Maker that executes at
least 50% of their market maker volume
in open outcry, likewise does not
impose any undue burden on
competition among and between market
participants because as any market
making firm can seek to place
individual traders on the trading floor.
In addition, the Exchange believes that
the proposed changes will enhance the
competiveness of the Exchange relative
16 15
E:\FR\FM\06NON1.SGM
U.S.C. 78f(b)(8).
06NON1
Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Notices
to other exchanges and, as noted above,
the increased fees are comparable to
port fees offered by competing option
exchanges.17 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.
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) 20 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
mstockstill on DSK4VPTVN1PROD with NOTICES
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–
supra nn. 10–11.
U.S.C. 78s(b)(3)(A).
19 17 CFR 240.19b–4(f)(2).
20 15 U.S.C. 78s(b)(2)(B).
NYSEARCA–2014–123 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.
All submissions should refer to File
Number SR–NYSEARCA–2014–123.
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–2014–123 and should be
submitted on or before November 28,
2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–26348 Filed 11–5–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73490; File No. SR–
NYSEMKT–2014–92]
Self-Regulatory Organizations: NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending the NYSE
Amex Options Fee Schedule To Modify
the Fees Related to the Use of Ports
That Provide Connectivity to the
Exchange’s Trading Systems for Entry
of Orders and/or Quotes
October 31, 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 October
23, 2014, NYSE MKT LLC (the
‘‘Exchange’’ or ‘‘NYSE MKT’’) 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 selfregulatory 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 Substance of
the Proposed Rule Change
The Exchange proposes to amend the
NYSE Amex Options Fee Schedule
(‘‘Fee Schedule’’) to modify the fees
related to the use of ports that provide
connectivity to the Exchange’s trading
systems for entry of orders and/or
quotes. The Exchange proposes to
implement the fee changes effective
November 3, 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,
17 See
18 15
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19:46 Nov 05, 2014
1 15
U.S.C.78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
21 17
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CFR 200.30–3(a)(12).
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66007
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]]>Agencies
[Federal Register Volume 79, Number 215 (Thursday, November 6, 2014)]
[Notices]
[Pages 66004-66007]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-26348]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73489; File No. SR-NYSEARCA-2014-123]
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 the Fees Related to the Use of
Ports That Provide Connectivity to the Exchange's Trading Systems for
Entry of Orders and/or Quotes
October 31, 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 October 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.
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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 Substance
of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Options Fee Schedule
(``Fee Schedule'') to modify the fees related to the use of ports that
provide connectivity to the Exchange's trading systems for entry of
orders and/or quotes. The Exchange proposes to implement the fee
changes effective November 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 Exchange proposes to amend the Fee Schedule to modify the fees
related to the use of ports that provide connectivity to the Exchange's
trading systems for entry of orders and/or quotes. The Exchange
proposes to implement the fee changes on November 1, 2014. The purpose
of the proposed fee changes are to ensure a fair and reasonable use of
Exchange resources by allowing the Exchange to recoup certain of its
connectivity costs (described below), while continuing to offer
competitive rates to OTP Holders and OTP Firms (``OTPs'').
The Exchange currently makes available to OTPs order/quote entry
ports for connectivity to Exchange trading systems (each a ``Port'').
OTPs may be authorized to utilize Port(s) for option activity on NYSE
Arca Options and incur monthly Port Fees by the Exchange, as set forth
in the table below.
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PORT FEES:
ORDER/QUOTE ENTRY PORT *........... Ports 1-5: no charge.
Ports 6-100: $200 per port per
month.
Ports 101 and greater: $100 per
port per month.
[[Page 66005]]
Backup datacenter port: no fee
unless utilized during the
relevant month, in which case,
above fees shall apply.
------------------------------------------------------------------------
* For purpose of calculating the number of order/quote entry ports, the
Exchange shall aggregate the ports of affiliates.\4\
Thus, while there is no charge to an OTP authorized to utilize five
Ports, an OTP will, for example, pay $200 per month for a sixth Port.
Once OTPs exceed the first five Ports, the charges may look as follows:
An OTP authorized to utilize 50 Ports is charged $9,000 in monthly Port
Fees (i.e., 45 x $200); 100 Ports is charged $19,000 in monthly Port
Fees (i.e., 95 x $200); or 120 Ports is charged $21,000 in monthly
Ports Fees (i.e., 95 x $200 plus 20 x $100). Finally, unutilized Ports
that connect to the Exchange via its backup datacenter are considered
to have been established for backup purposes and are not charged Port
Fees.\5\
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\4\ An affiliate is a person or firm that directly, or
indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the firm. See Rule
1.1(a).
\5\ The Exchange's backup datacenter is currently located in
Chicago, Illinois. The Exchange notes that it monitors usage of
these particular Ports and, accordingly, if an order/quote is sent
to the Exchange via one of these Ports, then the Port is charged the
applicable monthly Port Fee.
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At this time, the Exchange is proposing to modify its Port Fees as
set forth in the table below, with new charges appearing underlined and
deletions appearing in brackets.
------------------------------------------------------------------------
------------------------------------------------------------------------
PORT FEES:
ORDER/QUOTE ENTRY PORT *........... [Ports 1-5: no charge].
[Ports 6-100: $200 per port per
month].
Ports 1-40: $450 per port per
month.
Ports [101]41 and greater:
[$100]$150 per port per month.
NYSE Arca Market Maker Open Outcry Any NYSE Arca Market Maker that
Discount. executes 50% or more of their
market maker volume in open
outcry shall receive a
discount on their monthly port
fees of 60%, not to exceed a
maximum dollar discount of
$10,000 per month.
------------------------------------------------------------------------
In sum, the Exchange is proposing to no longer offer Ports 1-5 free
of charge and will instead charge OTPs $450 per Port, per month for the
first 40 Ports that an OTP is authorized to utilize. The Exchange
further proposes to charge $150 per Port, per month for any Port in
excess of 40 for which an OTP is authorized. Using the example above,
an OTP would be charged as follows: An OTP authorized to utilize 50
Ports would be charged $19,500 in monthly Port Fees (i.e., 40 x $450
plus 10 x $150); 100 Ports is charged $27,000 in monthly Port Fees
(i.e., 40 x $450 plus 60 x $150); or 120 Ports is charged $30,000 in
monthly Ports Fees (i.e., 40 x $450 plus 80 x $150). In addition, the
Exchange proposes to offer a discount on monthly Port Fees of 60%, not
to exceed $10,000, for any NYSE Arca Market Maker that execute at least
50% of their Market Maker volume in open outcry in any given month.\6\
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\6\ For example, a Market Maker authorized to utilize 100 Ports
is charged $27,000 in monthly Port Fees (i.e., $450 x 40 = $18,000
plus $150 x 60 = $9,000). However, if during that month, the Market
Maker executes at least 50% of their volume in open outcry, the
Market Maker then becomes eligible for a discount of 60%--or a
reduction of $16,200. However, the proposal caps the amount of the
available discount to $10,000 per month. Thus, in this example, the
Port Fees charged would be $17,000 ($27,000 less the maximum monthly
discount of $10,000).
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The Exchange proposes to implement these changes on November 3,
2014[sic]. In this regard, as is the case today, the Exchange notes
that billing for Ports would continue to be based on the number of
Ports for which an OTP has been authorized for option activity on the
third business day prior to the end of the month. Similarly, the
Exchange would continue to assess the Port Fees based on the number of
Ports authorized--except for Ports that are considered established for
backup purposes--such that the level of activity with respect to a
particular Port would not affect the assessment of monthly fees. With
regard to the discount on monthly Port Fees for Market Maker volume
executed in open outcry, the measurement period for billing purposes
will be based on the activity in the month prior, such that September
Market Maker volumes will be used to decide if the Market Maker
qualified for the 60% discount on their October Port Fees.
The Exchange is also proposing a non-substantive, formatting change
to the section of the fee schedule that applies to Port Fees. The
Exchange is proposing to re-format that section of the Fee Schedule as
a table with distinct rows and columns to make the Fee Schedule easier
for participants to understand.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Securities Exchange Act of 1934 (the
``Act''),\7\ in general, and furthers the objectives of Section 6(b)(4)
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.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed fee changes are reasonable,
equitable and not unfairly discriminatory because they are designed to
ensure a fair and reasonable use of Exchange resources by allowing the
Exchange to recoup for certain of its connectivity costs, while
continuing to offer competitive rates to OTPs. The Exchange notes that
it has not increased its Port Fees since November 2012,\9\ and the
proposed increases are intended to adjust the Port Fees to reflect the
increased costs that the Exchange bears with respect to maintaining the
Ports. Specifically, the Exchange believes that the proposed increase
in Port Fees are reasonable because the proposed fees charged for Ports
would enable the Exchange to offset, in part, its connectivity costs
associated with making such Ports available, including costs based on
gateway software and hardware enhancements and resources dedicated to
gateway development, quality assurance, and support. In this regard,
the Exchange believes that the proposed Port Fees are in line with
those charged by other venues, and that in some cases its Port Fees
would be less expensive than many of its primary competitors. For
example, the Chicago Board Options Exchange (``CBOE'')
[[Page 66006]]
charges $500 per port per month for a Network Access Port.\10\ The
NASDAQ Options Market (``NOM'') charges $550 per port per month.\11\
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\9\ See Securities and Exchange Release No. 34-68230 (November
14, 2012), 77 FR 69670 (November 20, 2012) (SR-NYSEArca-2012-122).
\10\ See CBOE Fee Schedule available here, https://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf (CBOE Command Connectivity
Charges, at p 10).
\11\ See NOM Price List, available here, https://nasdaq.cchwallstreet.com/NASDAQTools/bookmark.asp?id=nasdaq-rule-options_XVS3&manual=/nasdaq/main/nasdaq-optionsrules (Section 3,
NASDAQ Options Market--Access Services).
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The Exchange believes that the proposed fees are reasonable,
equitable and not unfairly discriminatory because--just as they do
today--OTPs are able to request, and pay for, only those Ports that
they require, with no impact to other OTPs.
The Exchange believes that it is reasonable, equitable and not
unfairly discriminatory to no longer offer the first five ports free of
charge as all OTPs are being treated in the same manner. Further, as
noted above, the Exchange believes that the proposed fee changes are
reasonable, equitable and not unfairly discriminatory because they are
designed to ensure a fair and reasonable use of Exchange resources by
allowing the Exchange to recoup for certain of its connectivity costs,
while continuing to offer competitive rates to OTPs.
The Exchange believes that the proposed monthly per Port fee of
$450 for the first 40 Ports is reasonable, equitable and not unfairly
discriminatory because it is comparable to the rates of other
exchanges.\12\ The Exchange also believes that the proposed fees are
equitable and not unfairly discriminatory because they would apply to
all OTPs that utilize Ports for options activity on the Exchange.
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\12\ See supra nn. 10-11.
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The Exchange also believes that it is reasonable, equitable and not
unfairly discriminatory to decrease the monthly per Port rate from $450
to $150 once an OTP has exceeded 40 Ports (i.e., a monthly per Port
charge of $150 for Ports 41+). Specifically, reducing the monthly fee
to $150 per Port when an OTP needs to utilize more than 40 Ports would
enable those firms to maintain those connections to the Exchange, while
helping to offset the increased costs of that connection. In addition,
the reduced fee is likewise appropriate given that certain market
participants, particularly options Market Makers, require more than 40
Ports in order to satisfy their responsibilities and obligations to
investors, which stem from the significant number of series that exist
for any particular option class \13\ and the requirement for NYSE Arca
Market Makers to maintain a bid or offer in assigned classes.
Furthermore, Market Makers that quote across a significant number, if
not all, of the 2,602 classes traded on the Exchange have
responsibility for upwards of 650,000 individual option series.\14\
Accordingly, the level of activity that is required to satisfy a Market
Maker's quoting obligations, which directly relates to the number of
Ports required, is such that the Exchange believes it is reasonable,
equitable and not unfairly discriminatory to offer a reduced fee to
OTPs that utilize more than 40 Ports on the Exchange in a given month.
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\13\ For example, as of October 9, 2014, there were more than
2350 individual option series overlying Chipotle Mexican Grill, Inc.
(NYSE: CMG).
\14\ These figures are valid as of October 9, 2014.
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Further, the Exchange believes that the proposal to offer a 60%
discount on Port Fees, not to exceed a maximum discount of $10,000 per
month, to those Market Makers that execute at least 50% of their market
maker volume in a given month in open outcry is also reasonable,
equitable and not unfairly discriminatory. First, the Exchange believes
that the trading floor plays an important role in the options market.
Specifically, trading floors provide price discovery for large or
complex strategies not easily exposed in electronic auctions. In order
to encourage robust participation in the Exchange's outcry markets, the
Exchange believes that it is reasonable to offer a discount in the
manner described for those Market Makers that continue to provide price
discovery in open outcry as evidenced by the relative level of their
market maker volume executed in open outcry. The Exchange notes that
other options exchanges offer similar discounts in the to encourage
market makers to maintain a presence in the open outcry market.\15\
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\15\ See the NYSE Amex Options Fee Schedule, available here,
https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf (charging lower ATP fees for
Floor Market Makers, based on volume transacted in open outcry, to
encourage their presence and participation in the outcry markets on
the trading floor).
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As the proposed discount is available to any Market Maker that
executes at least 50% of their market maker volume in open outcry, the
Exchange believes that the current proposal is not unfairly
discriminatory as any market making firm can seek to place individual
traders on the trading floor. The Exchange believes the proposal is
reasonable and equitable as the price discovery found in the outcry
markets benefits all participants. The Exchange notes that the proposed
discount would apply for those Market Makers that reach or exceed the
volume threshold for open outcry transactions. The Exchange believes
that this threshold has been appropriately set to provide an incentive
for floor-based market making because this threshold represents a level
where the preponderance of volume is in open outcry and therefore not
dependent on a Port, but a Port is nonetheless necessary to meet Market
Maker quoting obligations. The Exchange notes that Market Makers that
do not meet this volume threshold for their options activity in open
outcry would continue to be charged at the same rate for Port Fees as
all other OTPs.
The Exchange believes that the proposal to re-format the section of
the fee schedule describing Port Fees into a table, with distinct rows
and columns, is reasonable, equitable and not unfairly discriminatory
as the proposed change will reduce confusion and will make the fee
schedule more transparent and easier for all participants to
understand.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\16\ 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 fee change
is reasonably designed to be fair and equitable, and therefore, will
not unduly burden any particular group of market participants trading
on the Exchange vis-[agrave]-vis another group (i.e., Market Markers
versus non-Market Makers). Specifically, the Exchange believes that the
reduced fee for OTPs that utilize more than 40 Ports will relieve any
undue burden that the proposed fee change might have on Marker Makers.
Further, the Exchange believes that the proposed discount to the
monthly Port Fee, capped at $10,000 for those Market Maker that
executes at least 50% of their market maker volume in open outcry,
likewise does not impose any undue burden on competition among and
between market participants because as any market making firm can seek
to place individual traders on the trading floor. In addition, the
Exchange believes that the proposed changes will enhance the
competiveness of the Exchange relative
[[Page 66007]]
to other exchanges and, as noted above, the increased fees are
comparable to port fees offered by competing option exchanges.\17\ 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.
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\16\ 15 U.S.C. 78f(b)(8).
\17\ See supra nn. 10-11.
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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 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 (https://www.sec.gov/rules/sro.shtml ); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEARCA-2014-123 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.
All submissions should refer to File Number SR-NYSEARCA-2014-123. 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-2014-123 and should
be submitted on or before November 28, 2014.
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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-26348 Filed 11-5-14; 8:45 am]
BILLING CODE 8011-01-P
