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, 66007-66010 [2014-26349]
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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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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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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Notices
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 oreers and/or
quotes. The Exchange proposes to
implement the fee changes on
November 3, 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
PORT FEES:
ORDER/QUOTE ENTRY PORT* ......................................................
(described below), while continuing to
offer competitive rates to ATP Holders.
The Exchange currently makes
available to ATP Holders order/quote
entry ports for connectivity to Exchange
trading systems (each a ‘‘Port’’). ATP
Holders may be authorized to utilize
Port(s) for option activity on NYSE
Amex 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.
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
ATP Holder authorized to utilize five
Ports, an ATP Holder will, for example,
pay $200 per month for a sixth Port.
Once ATP Holders exceed the first five
Ports, the charges may look as follows:
An ATP Holder 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 for
PORT FEES:
ORDER/QUOTE ENTRY PORT* ......................................................
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NYSE Amex Options Market Maker Open Outcry Discount ....................
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.
[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 Amex Options 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.
In sum, the Exchange is proposing to
no longer offer Ports 1–5 free of charge
and will instead charge ATP Holders
$450 per Port, per month for the first 40
Ports that an ATP Holder 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 ATP Holder is authorized.
Using the example above, an ATP
Holder would be charged as follows: An
ATP Holder 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 Amex
Option Market Maker firms 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. 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 ATP
Holder 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 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.
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 900.2NY(1).
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 NYSE Amex 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 NYSE Amex Market Maker executes at least
50% of their volume in open outcry, the NYSE
Amex 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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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.
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 ATP Holders.
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’’) 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—ATP
7 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
9 See Securities and Exchange Release No. 68231
(November 14, 2012), 77 FR 69682 (November 20,
2012) (SR–NYSEMKT–2012–60).
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/nasdaqoptionsrules/ (Section 3, NASDAQ Options
Market—Access Services).
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8 15
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Holders are able to request, and pay for,
only those Ports that they require, with
no impact to other ATP Holders.
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 ATP
Holders 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
ATP Holders.
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 ATP Holders 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
ATP Holder 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
ATP Holder 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
Amex Option 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 2,482 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
12 See
supra nn. 10–11.
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.
66009
Ports required, is such that the
Exchange believes it is reasonable,
equitable and not unfairly
discriminatory to offer a reduced fee to
ATP Holders 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
NYSE Amex Options 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 NYSE Amex Options
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 it has
offered similar discounts in the past to
encourage NYSE Amex Options Market
Makers to maintain a presence in the
open outcry market. For example, the
Exchange charges a lower ATP fee for
Floor Market Makers to encourage their
presence and participation in the outcry
markets on the trading floor. The
qualifying criteria for eligibility for the
discounted ATP fees is a function of
how much of the Floor Market Maker’s
volume is transacted in open outcry.15
As the proposed discount is available
to any NYSE Amex Options 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
13 For
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15 See the Fee Schedule, available here, https://
www.nyse.com/publicdocs/nyse/markets/amexoptions/NYSE_Amex_Options_Fee_Schedule.pdf.
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outcry and therefore not dependent on
a Port, but a Port is nonetheless
necessary to meet Market Maker quoting
obligations. The Exchange notes that
Floor 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 ATP Holders.
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 ATP
Holders 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 NYSE Amex Options 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 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.
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–
NYSEMKT–2014–092 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.
18 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
20 15 U.S.C. 78s(b)(2)(B).
16 15
U.S.C. 78f(b)(8).
17 See supra nn. 10–11.
VerDate Sep<11>2014
19:46 Nov 05, 2014
All submissions should refer to File
Number SR–NYSEMKT–2014–092. 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–
NYSEMKT–2014–092 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. 2014–26349 Filed 11–5–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73483; File No. SR–OCC–
2014–14]
Self-Regulatory Organizations; The
Options Clearing Corporation; Order
Approving Proposed Rule Change To
Better Manage Risks Concentration
and Other Risks Associated With
Accepting Deposits of Common
Stocks for Margin Purposes
October 31, 2014.
On July 15, 2014, The Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
19 17
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CFR 200.30–3(a)(12).
06NON1
]]>Agencies
[Federal Register Volume 79, Number 215 (Thursday, November 6, 2014)]
[Notices]
[Pages 66007-66010]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-26349]
-----------------------------------------------------------------------
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 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 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,
[[Page 66008]]
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 oreers and/or quotes. The Exchange
proposes to implement the fee changes on November 3, 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 ATP Holders.
The Exchange currently makes available to ATP Holders order/quote
entry ports for connectivity to Exchange trading systems (each a
``Port''). ATP Holders may be authorized to utilize Port(s) for option
activity on NYSE Amex Options and incur monthly Port Fees by the
Exchange, as set forth in the table below.
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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
900.2NY(1).
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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.
Backup datacenter port: no fee
unless utilized during the
relevant month, in which case,
above fees shall apply.
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* 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 ATP Holder authorized to
utilize five Ports, an ATP Holder will, for example, pay $200 per month
for a sixth Port. Once ATP Holders exceed the first five Ports, the
charges may look as follows: An ATP Holder 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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\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.
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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 Amex Options Market Maker Open Any NYSE Amex Options Market
Outcry Discount. 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.
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In sum, the Exchange is proposing to no longer offer Ports 1-5 free
of charge and will instead charge ATP Holders $450 per Port, per month
for the first 40 Ports that an ATP Holder 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 ATP Holder is authorized. Using the
example above, an ATP Holder would be charged as follows: An ATP Holder
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 Amex Option Market
Maker firms 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 NYSE Amex 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
NYSE Amex Market Maker executes at least 50% of their volume in open
outcry, the NYSE Amex 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. 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 ATP Holder 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.
[[Page 66009]]
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 ATP Holders. 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'')
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. 68231 (November 14,
2012), 77 FR 69682 (November 20, 2012) (SR-NYSEMKT-2012-60).
\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--ATP Holders are able to request, and pay for, only those Ports
that they require, with no impact to other ATP Holders.
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 ATP Holders 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
ATP Holders.
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 ATP Holders 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 ATP Holder 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 ATP Holder 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 Amex Option 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 2,482 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 ATP Holders 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 NYSE Amex Options 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 NYSE Amex Options 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 it has offered similar
discounts in the past to encourage NYSE Amex Options Market Makers to
maintain a presence in the open outcry market. For example, the
Exchange charges a lower ATP fee for Floor Market Makers to encourage
their presence and participation in the outcry markets on the trading
floor. The qualifying criteria for eligibility for the discounted ATP
fees is a function of how much of the Floor Market Maker's volume is
transacted in open outcry.\15\
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\15\ See the Fee Schedule, available here, https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf.
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As the proposed discount is available to any NYSE Amex Options
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
[[Page 66010]]
outcry and therefore not dependent on a Port, but a Port is nonetheless
necessary to meet Market Maker quoting obligations. The Exchange notes
that Floor 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 ATP Holders.
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 ATP Holders 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 NYSE Amex
Options 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 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-NYSEMKT-2014-092 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-NYSEMKT-2014-092. 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-NYSEMKT-2014-092 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. 2014-26349 Filed 11-5-14; 8:45 am]
BILLING CODE 8011-01-P
