Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Modify the NYSE American Options Fee Schedule, 2700-2704 [2018-00723]
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Federal Register / Vol. 83, No. 12 / Thursday, January 18, 2018 / Notices
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSEArca–2017–138 and
should be submitted on or before
February 8, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–00721 Filed 1–17–18; 8:45 am]
BILLING CODE 8011–01–P
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Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Change To Modify the NYSE American
Options Fee Schedule
January 11, 2018.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on December
29, 2017, NYSE American LLC
(‘‘Exchange’’ or ‘‘NYSE American’’) filed
with the Securities and Exchange
Commission (‘‘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 modify the
NYSE American Options Fee Schedule.
The proposed change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this filing is to modify
portions of the Fee Schedule, as
described below, effective January 1,
2018.
Market Maker Sliding Scale-Electronic
(‘‘Sliding Scale’’)
Section I.C. of the Fee Schedule sets
forth the Sliding Scale of transaction
fees charged to NYSE American Options
Marker [sic] Makers (referred to as
Market Makers herein), which fees
decrease upon the Market Maker
achieving higher monthly volumes.4
Currently, Market Makers that have
monthly volume on the Exchange of
0.15% or less of total Industry Customer
Equity and ETF Option Volume are
charged a base rate of $0.25 per contract
and, these same market participants,
upon reaching certain volume
thresholds, or Tiers, receive the same
per contract reduction for volume in
each respective tier, as set forth in the
table below. In addition, the Exchange
charges a lower per contract base rate (of
$0.23) to Market Makers that participate
in a Prepayment Program, with lower
marginal rates applied to volumes in
successive tiers.
Rate per
contract
0.00% to 0.15% ...............................................................................................
>0.15% to 0.60% .............................................................................................
>0.60% to 1.10% .............................................................................................
>1.10% to 1.45% .............................................................................................
>1.45% to 1.80% .............................................................................................
>1.80% ............................................................................................................
27 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
4 See Fee Schedule, Section I.C., available here,
https://www.nyse.com/publicdocs/nyse/markets/
1 15
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[Release No. 34–82489; File No. SR–
NYSEAMER–2017–42]
Market Maker Electronic Monthly Volume as a % of Industry Customer
Equity and Exchange Traded Fund (‘‘ETF’’) Option Volume
Tier
1
2
3
4
5
6
SECURITIES AND EXCHANGE
COMMISSION
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american-options/NYSE_American_Options_Fee_
Schedule.pdf (excluding any volumes attributable
to Mini Options, QCC trades, CUBE Auctions, and
Strategy Execution Fee Caps, as these transactions
are subject to separate pricing described in Fee
Schedule Sections I.B., I.F., I.G., and I.J,
respectively). The volume thresholds are based on
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$0.25
0.22
0.14
0.10
0.07
0.05
Rate per contract if Monthly
Volume from Posted Volume is
more than .85% of Total Industry Customer Equity and ETF
Option Volume or for any NYSE
American Market Maker participating in a Prepayment Program pursuant to Section I.D.
$0.23
0.18
0.08
0.05
0.04
0.02
a Market Makers’ volume transacted Electronically
as a percentage of total industry Customer equity
and Exchange Traded Fund (‘‘ETF’’) options
volumes (‘‘ADV’’) as reported by the Options
Clearing Corporation (the ‘‘OCC’’). See OCC
Monthly Statistics Reports, available here, https://
www.theocc.com/webapps/monthly-volume-reports.
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The Exchange proposes to replace the
current table that describes the Sliding
Tier
1
2
3
4
5
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Rate per
contract for
Non-Take
Volume 1
Market Maker Electronic ADV as a % of TCADV
0.00% to 0.20% ...................................................................
>0.20% to 0.65% .................................................................
>0.65% to 1.40% .................................................................
>1.40% to 2.00% .................................................................
>2.00% ................................................................................
First, the Exchange proposes to restate
the volume thresholds in terms of a
Market Maker’s average daily volume or
ADV as a percent of the TCADV, a
defined term,5 which is mathematically
equivalent to a Market Maker’s monthly
total volume as a percent of the Industry
Customer equity and ETF Total Volume.
This proposed change would add clarity
and internal consistency to the Fee
Schedule.6
Second, as shown in the table above,
the Exchange proposes to:
• Increase the minimum volume
necessary to achieve each successive
Tier;
• Differentiate the type of volume that
qualifies for specific rates by applying
different rates depending on whether
the Market Maker volume is take or nontake volume; 7 8 and
• Reduce the number of Tiers from 6
to 5.
Third, because the Exchange will be
offering different rates depending on
whether volume is make or take, the
Exchange proposes to eliminate as
unnecessary the minimum volume
5 See Fee Schedule, supra note 4, Key Terms and
Definitions (defining TCADV as ‘‘Total Industry
Customer equity and ETF option average daily
volume. TCADV includes OCC calculated Customer
volume of all types, including Complex Order
transactions and QCC transactions, in equity and
ETF options’’).
6 See, e.g., Fee Schedule, supra note 4, Section
I.A. and I.E. (similarly expressing qualification
thresholds in terms of percentage of TCADV).
7 For purposes of the Sliding Scale, ‘‘all eligible
volume that does not remove liquidity’’ would be
considered non-take volume; whereas any volume
that removes liquidity would be considered take
volume. ’’ See proposed Fee Schedule, Section I.C.,
note 1. For example, any Market Maker transaction
that interacts with resting liquidity is take volume.
8 The Exchange notes that other options
exchanges similarly differentiate fees based on
maker-taker activity. See, e.g., MIAX Options fee
schedule, at p.1, available here, https://
www.miaxoptions.com/sites/default/files/fee_
schedule-files/MIAX_Options_Fee_Schedule_
12012017B.pdf (‘‘Market Maker Sliding Scale’’);
Cboe Exchange, Inc. fee schedule, at p. 3 available
here, https://www.cboe.com/publish/feeschedule/
CBOEFeeSchedule.pdf (‘‘Liquidity Provider Sliding
Scale’’).
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Scale with the table below, which
modifies qualification thresholds and
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associated transaction fees for all
Electronic Marker [sic] Maker volume:
Rate per
contract for
Take
Volume
$0.25
0.22
0.12
0.09
0.06
$0.25
0.24
0.17
0.14
0.09
Prepayment Program
Participant Rates
Rate per
contract for
Non-Take
Volume 1
$0.22
0.17
0.08
0.05
0.03
Rate per
contract for
Take
Volume
$0.24
0.20
0.11
0.08
0.06
threshold for posted volume (of 0.85%
of TCADV) to qualify for a reduced per
contract rate. The Exchange proposes to
continue to provide reduced rates to
Market Makers that participate in the
Prepayment Program.
The proposed changes are designed to
incent Market Makers to transact more
business on the Exchange, including by
posting a more meaningful percentage of
TCADV, executing more take volume,
and committing to transact a certain
amount of business on the Exchange by
enrolling in the Prepayment Program.9
beginning in 2018 to encourage broader
participation by Market Maker firms.
Specifically, the Exchange proposes to
eliminate reference to the 3 Year
Prepayment Program, which has
expired, and to maintain the 1 Year and
Balance of the Year Prepayment
Programs, as described below.13
The Exchange proposes to continue to
offer the 1 Year Prepayment Program,
without altering any aspects of the
Program, including offering the same $3
million prepayment amount as was
offered for 2017.14 Participants in the 1
Year Prepayment Program would
Prepayment Program
continue to qualify its Affiliated (or
The Exchange also proposes to update Appointed) OFP to be eligible to receive
the Prepayment Programs that it will
the enhanced credit(s) under the
offer beginning in 2018. In January
American Customer Engagement
2015, the Exchange introduced two
(‘‘ACE’’) Program, including revised
Prepayment Programs—for a 1- or 3credits as proposed herein (and
year term—to allow Market Makers to
discussed further below).15 To enroll in
prepay a portion of the charges incurred the proposed 1 Year Prepayment
for transactions executed on the
Program, a Market Maker would have to
Exchange.10 In 2016, the Exchange
notify the Exchange by the last business
introduced a ‘‘Balance of the Year’’
day before the start of the new
program that allowed Market Makers to
(following) year and remit payment to
commit to prepay a portion of their
the Exchange by the last business day of
transaction charges for some portion of
January the following year (i.e., the year
the calendar year, for a maximum of
in which the prepayments would be
three-quarters of the year.11 The terms of applied). Thus, any Market Maker that
the current 3-Year, and the subsequently would like to participate in the 1 Year
modified 1-Year, Prepayment Programs
Prepayment Program for 2018 should
terminate at the end of 2017.12 The
notify the Exchange of its intent by
Exchange is proposing to modify the
December 29, 2017and remit the $3
Prepayment Programs that it offers
million prepayment by January 31,
2018.16
9
See proposed Fee Schedule, Section I.C. See
also Fee Schedule, supra note 4, Section I.D.
(Prepayment Program) (describing the 1- and 3-Year
Prepayment Programs, including requisite timelines
for committing and prepaying as well as various
conditions to opt out of the 3-Year Prepayment
Program).
10 See Securities Exchange Act Release No. 74086
(January 16, 2015), 80 FR 3701 (January 23, 2015)
(SR–NYSEMKT–2015–4) (introducing the
prepayment programs).
11 See Securities Exchange Act Release No. 79737
(January 4, 2016), 82 FR 3052 (January 10, 2017)
(modifying the description of the Prepayment
Programs and introducing the Balance of the Year
program).
12 See Fee Schedule, Section I.D (Prepayment
Programs), supra note 4.
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13 See proposed Fee Schedule, Section I.D
(Prepayment Programs) (deleting all references to
the 3 Year Prepayment Program, including
reference to early termination and the ability to opt
out; and updating references to 1-Year and Balance
of the Year Prepayment Programs to reflect 2018
calendar year and other program updates as
described herein).
14 See proposed Fee Schedule, Section I.D.
15 See Fee Schedule, Section I.E. (American
Customer Engagement (‘‘ACE’’) Program—Standard
Options), supra note 4.
16 See proposed Fee Schedule, Section I.D
(Prepayment Programs) (modifying the description
of the 1Year Prepayment Programs to remove
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Next, the Exchange is proposing to
continue to offer a ‘‘Balance of the Year’’
Prepayment Program, without altering
any material aspects of the Program. The
Exchange would continue to require the
following prepayments based on the
quarter in which a Market Maker joined:
2nd Quarter
Prepayment Amount and Payment Schedule .............................................................................
Consistent with the current Balance of
the Year Prepayment Program, a Market
Maker that participates in the Balance of
the Year Program would receive a credit
equal to its prepayment amount (i.e.,
$2,475,000; $1,800,000; or $975,000,
respectively) toward certain fees it
incurs on the Exchange.17 As proposed,
Marker [sic] Makers that enroll in the
Balance of the Year Program would be
required to notify the Exchange by the
last business day before the start of the
new (following) quarter (e.g., to
participate for three-quarters of the year,
notice must be given by the last
business day of the first quarter of that
year, etc.).18 In addition, consistent with
2017, participants must remit payment
by the last business day in the first
month of the respective quarter (i.e., the
quarter in which prepayments will
begin to apply). However, the Exchange
proposes to remove reference to specific
dates, which were tied to prior calendar
years, to avoid having to revise the Fee
Schedule on an annual basis. Thus, as
proposed, the deadlines to participate in
the Balance of the Year Prepayment
Program for each quarter would be the
last business day in April, July and
October, for the second, third and fourth
quarter, respectively.
Finally, the Exchange proposes to
make clear that any prepayments made
pursuant to the 1 Year Prepayment
Program 1 or the Balance of the Year
Prepayment Program would apply to
transactions effected using the BOLD
Mechanism, pursuant to Section I.M. of
the Fee Schedule.19
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American Customer Engagement
(‘‘ACE’’) Program
Section I. E. of the Fee Schedule
describes the Exchange’s ACE Program.
The ACE Program features a base tier
reference to a specific calendar year and instead
maintain requirement [sic] that Market Makers
would [sic] the Exchange of their commitment to
the Program by sending an email the Exchange at
optionsbilling@nyse.com).
17 See id. Similarly, just as with the 1-Year
Prepayment Program, the Exchange would apply
the prepayment as a credit against certain charges
incurred on the Exchange. Once the prepayment
credit has been exhausted, the Exchange would
invoice the Market Maker at the appropriate rates.
In the event that a Market Maker does not conduct
sufficient activity to exhaust the entirety of their
prepayment credit within the calendar year, there
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and five higher tiers expressed as a
percentage of TCADV 20 and provides
two alternative methods by which Order
Flow Providers (each an ‘‘OFP’’) may
receive per contract credits for
Electronic Customer volume that the
OFP, as agent, submits to the
Exchange.21 The Exchange is proposing
to modify certain credits offered in the
ACE Program.
First, the Exchange proposes to delete
the ACE credits for 3 Year Enhanced
Customer Volume Credits, and any
references thereto, to reflect that the 3
Year Prepayment Program has expired,
as noted above.22 The Exchange believes
these changes would add clarity,
transparency and internal consistency to
the Fee Schedule.
Next, the Exchange proposes to
modify the enhanced per contract credit
applicable to Customer Complex Orders
for 1 Year and Balance of the Year
Prepayment Participants. Specially, the
Exchange proposes to reduce the credit
for Tier 1 from $0.20 to $0.19 per
contract, while increasing the per
contract credit for Tier 4 and 5, from
$0.21 and $0.23, respectively, to $0.22
and $0.24, respectively.
The Exchange also proposes to modify
the per contract credit applicable to
Simple Orders on Customer volume for
Tiers 3, 4 and 5. Specifically, the
Exchange proposes to reduce the credit
for Tier 3, 4, and 5 from $0.19, $0.20,
and $0.22, respectively, to $0.17, $0.19,
and $0.21, respectively. And, the
Exchange proposes to increase the
enhanced per contract credit applied to
Simple Orders on Customer volume for
Prepayment participants that qualify for
Tier 5 from $0.23 to $0.24.
The proposed changes to credits
payable on Customer volume are
intended to encourage ATP Holders and
would be no refunds issued for any unused portion
of their prepayment credit. See id.
18 See id. (providing that Market Makers would be
required to notify the Exchange of their
commitment to the Program by sending an email
the Exchange at optionsbilling@nyse.com).
19 See id. The Exchange notes that after
introducing fees associated with BOLD transactions
in 2017, it modified various aspects of the Fee
Schedule to account for these fees. However, the
Exchange failed to make clear that payments under
any of the Prepayment Programs would count
towards BOLD transactions and seeks to correct this
oversight with this proposed change. See id.
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$2,475,000
3rd Quarter
$1,800,000
4th Quarter
$975,000
their Affiliates and/or Appointed parties
to participate in the Prepayment
Programs, while still rewarding OFPs
that direct significant amounts of
Customer volume to the Exchange with
credits on transactions.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,23 in general, and
furthers the objectives of Sections
6(b)(4) and (5) of the Act,24 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.
Sliding Scale
The Exchange believes that the
proposed modifications to the Sliding
Scale are reasonable, equitable and not
unfairly discriminatory for a number of
reasons. First, the Sliding Scale is
available to all Market Makers and is
based on the amount of business
transacted on—and is designed to attract
greater volume to—the Exchange. In
addition, the elimination of the
alternative basis to qualify for a reduced
rate by posting monthly volume of at
least 0.85% TCADV (if not participating
in a Prepayment Program) is not
unfairly discriminatory because Market
Makers that would like to receive a
more favorable per contract rate under
the Sliding Scale have the option to
commit to one of the Prepayment
Programs, which commitment increases
liquidity on the Exchange to the benefit
of all market participants. Moreover, all
Market Makers will be subject to the
proposal to impose differing rates
20 See Fee Schedule, Section I.E., supra note 4.
The Exchange also proposes to make a grammatical
change to the second sentence of the introductory
paragraph by changing the word ‘‘is’’ to ‘‘are,’’
which should add clarity to the fee schedule. See
proposed Fee Schedule, Section I.E.
21 The volume thresholds are based on an OFP’s
Customer volume transacted Electronically as a
percentage of TCADV as reported by the OCC. See
OCC Monthly Statistics Reports, available here,
https://www.theocc.com/webapps/monthly-volumereports.
22 See proposed Fee Schedule, Section I. E.
23 15 U.S.C. 78f(b).
24 15 U.S.C. 78f(b)(4) and (5).
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depending on whether volume is make
or take volume. The proposed
adjustments are designed to encourage
Market Makers to commit to directing
their order flow to the Exchange, which
would increase volume and liquidity, to
the benefit of all market participants by
providing more trading opportunities
and tighter spreads. Further, the
proposed Sliding Scale thresholds and
rates are competitive with fees charged
by other exchanges and are designed to
attract (and compete for) order flow to
the Exchange, which provides a greater
opportunity for trading by all market
participants.25 In addition, the proposed
changes, which are designed to incent
market participants to increase the
orders sent directly to the Exchange,
should provide liquidity that supports
the quality of price discovery and
promotes market transparency to the
benefit of all market participants.
Finally, the Exchange notes that other
exchanges have established transaction
fees for Market Makers based on maker
and taker activity.26
Prepayment Program
The Exchange believes that the
proposed modifications to the
Prepayment Programs are reasonable,
equitable and not unfairly
discriminatory for a number of reasons.
First, all of the Prepayment Programs
offered on the Exchange are optional
and Market Makers can elect to
participate (or elect not to participate).
Given the expiration of the 3 Year
Prepayment Program, the Exchange
believes that the goals of the
Prepayment Program continue to be
served by continuing to offer the 1 Year
and Prepayment Program as well as the
Balance of the Year Program. The
Exchange believes that continuing to
offer these Programs would provide
Market Makers with the flexibility to
join annually or at various points in the
year, which may encourage broader
participation in the Prepayment
Programs. The Exchange anticipates that
the potential greater capital
commitment and resulting liquidity on
the Exchange would benefit all market
participants (including non-Market
Makers). Moreover, the Exchange notes
that other options exchanges likewise
offer Prepayment Programs to market
makers that may be joined after the start
of the year.27 The Exchange also notes
that, similar to the Sliding Scale, the
25 See MIAX and Cboe fee schedules, supra
note 8.
26 See id.
27 See, e.g., Cboe fee schedule, supra note 8, at p.
18, footnote 10 (a market maker may be permitted
to pay a pro-rated amount of the $2.4 million if, for
example, they join the program mid-year).
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18:27 Jan 17, 2018
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Prepayment Program is designed to
incent Market Makers to commit to
directing their order flow to the
Exchange, which would benefit all
market participants by expanding
liquidity, providing more trading
opportunities and tighter spreads, even
to those market participants that are not
eligible for the Programs. Thus, the
Exchange believes the Prepayment
Program, as modified, is reasonable,
equitable and not unfairly
discriminatory to others.
In addition, the Exchange believes
that the proposal to replace specific
dates with the term ‘‘last business day’’
removes impediments to and perfects
the mechanism of a free and open
market by eliminating redundant annual
rule filings when the Exchange is not
changing its fees. The Exchange further
believes that the proposal removes
impediments to and perfects the
mechanism of a free and open market by
reducing potential confusion among
market participants and the investing
public who may see a rule filing and
mistake it for a fee change when in fact
a fee is not changing. The proposed
change is also reasonable, equitable and
not unfairly discriminatory as it is
designed to add clarity to the Fee
Schedule to the benefit of all market
participants.
The Exchange believes that the
proposed change to make clear that fees
associated with BOLD transactions
would be applied against prepayments
made under the Balance of the Year
Program would add clarity,
transparency and internal consistency to
the Fee Schedule.
ACE Program
The Exchange believes the proposed
changes to the ACE Program are
reasonable, equitable and not unfairly
discriminatory for a number of reasons.
First, the proposed changes to increase
three of the credits associated with
participants in one of the Prepayment
Programs are designed to incent market
participants to increase the orders sent
directly to the Exchange and therefore
provide liquidity that supports the
quality of price discovery and promotes
market transparency to the benefit of all
market participants. The Exchange
believes that the proposed fee change
would directly relate to the activity of
a Market Maker and the activity of an
affiliated ATP Holder on the Exchange,
thereby encouraging increased trading
activity. The Exchange believes that the
proposal to amend the credits associated
with various Tiers of the ACE Program
is reasonable because it provides ATP
Holders affiliated with an NYSE
American Options Market Maker with
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2703
additional incentives to participate in
the Prepayment Program. The Exchange
believes that the proposal to slightly
reduce the credits for Simple Orders not
associated with participants in one of
the Prepayment Programs are likewise
reasonable, equitable and not unfairly
discriminatory because such credits are
within the range offered by competing
options exchanges.28
The Exchange’s proposed grammatical
change (see supra note 19) is reasonable,
equitable and not unfairly
discriminatory as it is designed to add
clarity to the Fee Schedule to the benefit
of all market participants.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,29 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 that the
proposed changes relating to the Sliding
Scale, the Prepayment Program, and the
ACE Program may increase both
intermarket and intramarket
competition by incenting participants to
direct their orders to the Exchange,
which would enhance the quality of
quoting and may increase the volume of
contracts traded on the Exchange. To
the extent that there is an additional
competitive burden on non-NYSE
American Market Makers, the Exchange
believes that this is appropriate because
Market Makers have heightened
obligations that other market
participants do not and the proposal
should incent market participants to
direct additional order flow to the
Exchange, and thus provide additional
liquidity that enhances the quality of its
markets and increases the volume of
contracts traded here. To the extent that
this purpose is achieved, all of the
Exchange’s market participants should
benefit from the improved market
liquidity. Enhanced market quality and
increased transaction volume that
results from the anticipated increase in
order flow directed to the Exchange will
benefit all market participants and
improve competition on the Exchange.
Given the robust competition for
volume among options markets, many of
which offer the same products,
implementing programs to attract order
flow similar to the ones being proposed
in this filing, are consistent with the
above-mentioned goals of the Act. The
28 See id., Volume Incentive Program, at p. 3
(offering per contracts credits ranging from $0.09–
$0.14 for simple orders).
29 15 U.S.C. 78f(b)(8).
E:\FR\FM\18JAN1.SGM
18JAN1
2704
Federal Register / Vol. 83, No. 12 / Thursday, January 18, 2018 / Notices
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) 30 of the Act and
subparagraph (f)(2) of Rule 19b–4 31
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) 32 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:
sradovich on DSK3GMQ082PROD with NOTICES
Electronic Comments
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEAMER–2017–42. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSEAMER–2017–42 and
should be submitted on or before
February 8, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–00723 Filed 1–17–18; 8:45 am]
BILLING CODE 8011–01–P
• 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–
NYSEAMER–2017–42 on the subject
line.
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
32 15 U.S.C. 78s(b)(2)(B).
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82484; File No. SR–
CboeBZX–2018–001]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing of
a Proposed Rule Change To List and
Trade Shares of the GraniteShares
Bitcoin ETF and the GraniteShares
Short Bitcoin ETF, a Series of the
GraniteShares ETP Trust, Under Rule
14.11(f)(4), Trust Issued Receipts
January 11, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January 5,
2018, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. 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 filed a proposal to list
and trade shares of the GraniteShares
Bitcoin ETF and the GraniteShares
Short Bitcoin ETF (each a ‘‘Fund’’ and,
collectively, the ‘‘Funds’’), a series of
the GraniteShares ETP Trust (the
‘‘Trust’’), under Rule 14.11(f)(4) (‘‘Trust
Issued Receipts’’). The shares of the
Funds are referred to herein as the
‘‘Shares.’’
The text of the proposed rule change
is available at the Exchange’s website at
www.markets.cboe.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
Exchange 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 these
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.
30 15
31 17
VerDate Sep<11>2014
18:27 Jan 17, 2018
1 15
33 17
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CFR 200.30–3(a)(12).
Frm 00090
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Sfmt 4703
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
18JAN1
]]>Agencies
[Federal Register Volume 83, Number 12 (Thursday, January 18, 2018)]
[Notices]
[Pages 2700-2704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-00723]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82489; File No. SR-NYSEAMER-2017-42]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Change To Modify the
NYSE American Options Fee Schedule
January 11, 2018.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on December 29, 2017, NYSE American LLC (``Exchange'' or ``NYSE
American'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C.78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify the NYSE American Options Fee
Schedule. The proposed change is available on the Exchange's website at
www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to modify portions of the Fee
Schedule, as described below, effective January 1, 2018.
Market Maker Sliding Scale-Electronic (``Sliding Scale'')
Section I.C. of the Fee Schedule sets forth the Sliding Scale of
transaction fees charged to NYSE American Options Marker [sic] Makers
(referred to as Market Makers herein), which fees decrease upon the
Market Maker achieving higher monthly volumes.\4\ Currently, Market
Makers that have monthly volume on the Exchange of 0.15% or less of
total Industry Customer Equity and ETF Option Volume are charged a base
rate of $0.25 per contract and, these same market participants, upon
reaching certain volume thresholds, or Tiers, receive the same per
contract reduction for volume in each respective tier, as set forth in
the table below. In addition, the Exchange charges a lower per contract
base rate (of $0.23) to Market Makers that participate in a Prepayment
Program, with lower marginal rates applied to volumes in successive
tiers.
---------------------------------------------------------------------------
\4\ See Fee Schedule, Section I.C., available here, https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf (excluding any volumes
attributable to Mini Options, QCC trades, CUBE Auctions, and
Strategy Execution Fee Caps, as these transactions are subject to
separate pricing described in Fee Schedule Sections I.B., I.F.,
I.G., and I.J, respectively). The volume thresholds are based on a
Market Makers' volume transacted Electronically as a percentage of
total industry Customer equity and Exchange Traded Fund (``ETF'')
options volumes (``ADV'') as reported by the Options Clearing
Corporation (the ``OCC''). See OCC Monthly Statistics Reports,
available here, https://www.theocc.com/webapps/monthly-volume-reports.
----------------------------------------------------------------------------------------------------------------
Market Maker
Electronic Monthly Rate per contract if Monthly Volume from
Volume as a % of Posted Volume is more than .85% of Total
Tier Industry Customer Rate per Industry Customer Equity and ETF Option
Equity and Exchange contract Volume or for any NYSE American Market Maker
Traded Fund (``ETF'') participating in a Prepayment Program
Option Volume pursuant to Section I.D.
----------------------------------------------------------------------------------------------------------------
1........................ 0.00% to 0.15%........ $0.25 $0.23
2........................ >0.15% to 0.60%....... 0.22 0.18
3........................ >0.60% to 1.10%....... 0.14 0.08
4........................ >1.10% to 1.45%....... 0.10 0.05
5........................ >1.45% to 1.80%....... 0.07 0.04
6........................ >1.80%................ 0.05 0.02
----------------------------------------------------------------------------------------------------------------
[[Page 2701]]
* * * * *
The Exchange proposes to replace the current table that describes
the Sliding Scale with the table below, which modifies qualification
thresholds and associated transaction fees for all Electronic Marker
[sic] Maker volume:
----------------------------------------------------------------------------------------------------------------
Prepayment Program Participant
Rates
Market Maker Rate per Rate per -------------------------------
Tier Electronic ADV as a % contract for contract for Rate per
of TCADV Non-Take Take Volume contract for Rate per
Volume \1\ Non-Take contract for
Volume \1\ Take Volume
----------------------------------------------------------------------------------------------------------------
1........................ 0.00% to 0.20%....... $0.25 $0.25 $0.22 $0.24
2........................ >0.20% to 0.65%...... 0.22 0.24 0.17 0.20
3........................ >0.65% to 1.40%...... 0.12 0.17 0.08 0.11
4........................ >1.40% to 2.00%...... 0.09 0.14 0.05 0.08
5........................ >2.00%............... 0.06 0.09 0.03 0.06
----------------------------------------------------------------------------------------------------------------
First, the Exchange proposes to restate the volume thresholds in
terms of a Market Maker's average daily volume or ADV as a percent of
the TCADV, a defined term,\5\ which is mathematically equivalent to a
Market Maker's monthly total volume as a percent of the Industry
Customer equity and ETF Total Volume. This proposed change would add
clarity and internal consistency to the Fee Schedule.\6\
---------------------------------------------------------------------------
\5\ See Fee Schedule, supra note 4, Key Terms and Definitions
(defining TCADV as ``Total Industry Customer equity and ETF option
average daily volume. TCADV includes OCC calculated Customer volume
of all types, including Complex Order transactions and QCC
transactions, in equity and ETF options'').
\6\ See, e.g., Fee Schedule, supra note 4, Section I.A. and I.E.
(similarly expressing qualification thresholds in terms of
percentage of TCADV).
---------------------------------------------------------------------------
Second, as shown in the table above, the Exchange proposes to:
Increase the minimum volume necessary to achieve each
successive Tier;
Differentiate the type of volume that qualifies for
specific rates by applying different rates depending on whether the
Market Maker volume is take or non-take volume; \7\ \8\ and
---------------------------------------------------------------------------
\7\ For purposes of the Sliding Scale, ``all eligible volume
that does not remove liquidity'' would be considered non-take
volume; whereas any volume that removes liquidity would be
considered take volume. '' See proposed Fee Schedule, Section I.C.,
note 1. For example, any Market Maker transaction that interacts
with resting liquidity is take volume.
\8\ The Exchange notes that other options exchanges similarly
differentiate fees based on maker-taker activity. See, e.g., MIAX
Options fee schedule, at p.1, available here, https://www.miaxoptions.com/sites/default/files/fee_schedule-files/MIAX_Options_Fee_Schedule_12012017B.pdf (``Market Maker Sliding
Scale''); Cboe Exchange, Inc. fee schedule, at p. 3 available here,
https://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf
(``Liquidity Provider Sliding Scale'').
---------------------------------------------------------------------------
Reduce the number of Tiers from 6 to 5.
Third, because the Exchange will be offering different rates
depending on whether volume is make or take, the Exchange proposes to
eliminate as unnecessary the minimum volume threshold for posted volume
(of 0.85% of TCADV) to qualify for a reduced per contract rate. The
Exchange proposes to continue to provide reduced rates to Market Makers
that participate in the Prepayment Program.
The proposed changes are designed to incent Market Makers to
transact more business on the Exchange, including by posting a more
meaningful percentage of TCADV, executing more take volume, and
committing to transact a certain amount of business on the Exchange by
enrolling in the Prepayment Program.\9\
---------------------------------------------------------------------------
\9\ See proposed Fee Schedule, Section I.C. See also Fee
Schedule, supra note 4, Section I.D. (Prepayment Program)
(describing the 1- and 3-Year Prepayment Programs, including
requisite timelines for committing and prepaying as well as various
conditions to opt out of the 3-Year Prepayment Program).
---------------------------------------------------------------------------
Prepayment Program
The Exchange also proposes to update the Prepayment Programs that
it will offer beginning in 2018. In January 2015, the Exchange
introduced two Prepayment Programs--for a 1- or 3- year term--to allow
Market Makers to prepay a portion of the charges incurred for
transactions executed on the Exchange.\10\ In 2016, the Exchange
introduced a ``Balance of the Year'' program that allowed Market Makers
to commit to prepay a portion of their transaction charges for some
portion of the calendar year, for a maximum of three-quarters of the
year.\11\ The terms of the current 3-Year, and the subsequently
modified 1-Year, Prepayment Programs terminate at the end of 2017.\12\
The Exchange is proposing to modify the Prepayment Programs that it
offers beginning in 2018 to encourage broader participation by Market
Maker firms. Specifically, the Exchange proposes to eliminate reference
to the 3 Year Prepayment Program, which has expired, and to maintain
the 1 Year and Balance of the Year Prepayment Programs, as described
below.\13\
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 74086 (January 16,
2015), 80 FR 3701 (January 23, 2015) (SR-NYSEMKT-2015-4)
(introducing the prepayment programs).
\11\ See Securities Exchange Act Release No. 79737 (January 4,
2016), 82 FR 3052 (January 10, 2017) (modifying the description of
the Prepayment Programs and introducing the Balance of the Year
program).
\12\ See Fee Schedule, Section I.D (Prepayment Programs), supra
note 4.
\13\ See proposed Fee Schedule, Section I.D (Prepayment
Programs) (deleting all references to the 3 Year Prepayment Program,
including reference to early termination and the ability to opt out;
and updating references to 1-Year and Balance of the Year Prepayment
Programs to reflect 2018 calendar year and other program updates as
described herein).
---------------------------------------------------------------------------
The Exchange proposes to continue to offer the 1 Year Prepayment
Program, without altering any aspects of the Program, including
offering the same $3 million prepayment amount as was offered for
2017.\14\ Participants in the 1 Year Prepayment Program would continue
to qualify its Affiliated (or Appointed) OFP to be eligible to receive
the enhanced credit(s) under the American Customer Engagement (``ACE'')
Program, including revised credits as proposed herein (and discussed
further below).\15\ To enroll in the proposed 1 Year Prepayment
Program, a Market Maker would have to notify the Exchange by the last
business day before the start of the new (following) year and remit
payment to the Exchange by the last business day of January the
following year (i.e., the year in which the prepayments would be
applied). Thus, any Market Maker that would like to participate in the
1 Year Prepayment Program for 2018 should notify the Exchange of its
intent by December 29, 2017and remit the $3 million prepayment by
January 31, 2018.\16\
---------------------------------------------------------------------------
\14\ See proposed Fee Schedule, Section I.D.
\15\ See Fee Schedule, Section I.E. (American Customer
Engagement (``ACE'') Program--Standard Options), supra note 4.
\16\ See proposed Fee Schedule, Section I.D (Prepayment
Programs) (modifying the description of the 1Year Prepayment
Programs to remove reference to a specific calendar year and instead
maintain requirement [sic] that Market Makers would [sic] the
Exchange of their commitment to the Program by sending an email the
Exchange at [email protected]).
---------------------------------------------------------------------------
[[Page 2702]]
Next, the Exchange is proposing to continue to offer a ``Balance of
the Year'' Prepayment Program, without altering any material aspects of
the Program. The Exchange would continue to require the following
prepayments based on the quarter in which a Market Maker joined:
----------------------------------------------------------------------------------------------------------------
2nd Quarter 3rd Quarter 4th Quarter
----------------------------------------------------------------------------------------------------------------
Prepayment Amount and Payment Schedule.......................... $2,475,000 $1,800,000 $975,000
----------------------------------------------------------------------------------------------------------------
Consistent with the current Balance of the Year Prepayment Program,
a Market Maker that participates in the Balance of the Year Program
would receive a credit equal to its prepayment amount (i.e.,
$2,475,000; $1,800,000; or $975,000, respectively) toward certain fees
it incurs on the Exchange.\17\ As proposed, Marker [sic] Makers that
enroll in the Balance of the Year Program would be required to notify
the Exchange by the last business day before the start of the new
(following) quarter (e.g., to participate for three-quarters of the
year, notice must be given by the last business day of the first
quarter of that year, etc.).\18\ In addition, consistent with 2017,
participants must remit payment by the last business day in the first
month of the respective quarter (i.e., the quarter in which prepayments
will begin to apply). However, the Exchange proposes to remove
reference to specific dates, which were tied to prior calendar years,
to avoid having to revise the Fee Schedule on an annual basis. Thus, as
proposed, the deadlines to participate in the Balance of the Year
Prepayment Program for each quarter would be the last business day in
April, July and October, for the second, third and fourth quarter,
respectively.
---------------------------------------------------------------------------
\17\ See id. Similarly, just as with the 1-Year Prepayment
Program, the Exchange would apply the prepayment as a credit against
certain charges incurred on the Exchange. Once the prepayment credit
has been exhausted, the Exchange would invoice the Market Maker at
the appropriate rates. In the event that a Market Maker does not
conduct sufficient activity to exhaust the entirety of their
prepayment credit within the calendar year, there would be no
refunds issued for any unused portion of their prepayment credit.
See id.
\18\ See id. (providing that Market Makers would be required to
notify the Exchange of their commitment to the Program by sending an
email the Exchange at [email protected]).
---------------------------------------------------------------------------
Finally, the Exchange proposes to make clear that any prepayments
made pursuant to the 1 Year Prepayment Program 1 or the Balance of the
Year Prepayment Program would apply to transactions effected using the
BOLD Mechanism, pursuant to Section I.M. of the Fee Schedule.\19\
---------------------------------------------------------------------------
\19\ See id. The Exchange notes that after introducing fees
associated with BOLD transactions in 2017, it modified various
aspects of the Fee Schedule to account for these fees. However, the
Exchange failed to make clear that payments under any of the
Prepayment Programs would count towards BOLD transactions and seeks
to correct this oversight with this proposed change. See id.
---------------------------------------------------------------------------
American Customer Engagement (``ACE'') Program
Section I. E. of the Fee Schedule describes the Exchange's ACE
Program. The ACE Program features a base tier and five higher tiers
expressed as a percentage of TCADV \20\ and provides two alternative
methods by which Order Flow Providers (each an ``OFP'') may receive per
contract credits for Electronic Customer volume that the OFP, as agent,
submits to the Exchange.\21\ The Exchange is proposing to modify
certain credits offered in the ACE Program.
---------------------------------------------------------------------------
\20\ See Fee Schedule, Section I.E., supra note 4. The Exchange
also proposes to make a grammatical change to the second sentence of
the introductory paragraph by changing the word ``is'' to ``are,''
which should add clarity to the fee schedule. See proposed Fee
Schedule, Section I.E.
\21\ The volume thresholds are based on an OFP's Customer volume
transacted Electronically as a percentage of TCADV as reported by
the OCC. See OCC Monthly Statistics Reports, available here, https://www.theocc.com/webapps/monthly-volume-reports.
---------------------------------------------------------------------------
First, the Exchange proposes to delete the ACE credits for 3 Year
Enhanced Customer Volume Credits, and any references thereto, to
reflect that the 3 Year Prepayment Program has expired, as noted
above.\22\ The Exchange believes these changes would add clarity,
transparency and internal consistency to the Fee Schedule.
---------------------------------------------------------------------------
\22\ See proposed Fee Schedule, Section I. E.
---------------------------------------------------------------------------
Next, the Exchange proposes to modify the enhanced per contract
credit applicable to Customer Complex Orders for 1 Year and Balance of
the Year Prepayment Participants. Specially, the Exchange proposes to
reduce the credit for Tier 1 from $0.20 to $0.19 per contract, while
increasing the per contract credit for Tier 4 and 5, from $0.21 and
$0.23, respectively, to $0.22 and $0.24, respectively.
The Exchange also proposes to modify the per contract credit
applicable to Simple Orders on Customer volume for Tiers 3, 4 and 5.
Specifically, the Exchange proposes to reduce the credit for Tier 3, 4,
and 5 from $0.19, $0.20, and $0.22, respectively, to $0.17, $0.19, and
$0.21, respectively. And, the Exchange proposes to increase the
enhanced per contract credit applied to Simple Orders on Customer
volume for Prepayment participants that qualify for Tier 5 from $0.23
to $0.24.
The proposed changes to credits payable on Customer volume are
intended to encourage ATP Holders and their Affiliates and/or Appointed
parties to participate in the Prepayment Programs, while still
rewarding OFPs that direct significant amounts of Customer volume to
the Exchange with credits on transactions.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\23\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\24\ 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.
---------------------------------------------------------------------------
\23\ 15 U.S.C. 78f(b).
\24\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
Sliding Scale
The Exchange believes that the proposed modifications to the
Sliding Scale are reasonable, equitable and not unfairly discriminatory
for a number of reasons. First, the Sliding Scale is available to all
Market Makers and is based on the amount of business transacted on--and
is designed to attract greater volume to--the Exchange. In addition,
the elimination of the alternative basis to qualify for a reduced rate
by posting monthly volume of at least 0.85% TCADV (if not participating
in a Prepayment Program) is not unfairly discriminatory because Market
Makers that would like to receive a more favorable per contract rate
under the Sliding Scale have the option to commit to one of the
Prepayment Programs, which commitment increases liquidity on the
Exchange to the benefit of all market participants. Moreover, all
Market Makers will be subject to the proposal to impose differing rates
[[Page 2703]]
depending on whether volume is make or take volume. The proposed
adjustments are designed to encourage Market Makers to commit to
directing their order flow to the Exchange, which would increase volume
and liquidity, to the benefit of all market participants by providing
more trading opportunities and tighter spreads. Further, the proposed
Sliding Scale thresholds and rates are competitive with fees charged by
other exchanges and are designed to attract (and compete for) order
flow to the Exchange, which provides a greater opportunity for trading
by all market participants.\25\ In addition, the proposed changes,
which are designed to incent market participants to increase the orders
sent directly to the Exchange, should provide liquidity that supports
the quality of price discovery and promotes market transparency to the
benefit of all market participants. Finally, the Exchange notes that
other exchanges have established transaction fees for Market Makers
based on maker and taker activity.\26\
---------------------------------------------------------------------------
\25\ See MIAX and Cboe fee schedules, supra note 8.
\26\ See id.
---------------------------------------------------------------------------
Prepayment Program
The Exchange believes that the proposed modifications to the
Prepayment Programs are reasonable, equitable and not unfairly
discriminatory for a number of reasons. First, all of the Prepayment
Programs offered on the Exchange are optional and Market Makers can
elect to participate (or elect not to participate). Given the
expiration of the 3 Year Prepayment Program, the Exchange believes that
the goals of the Prepayment Program continue to be served by continuing
to offer the 1 Year and Prepayment Program as well as the Balance of
the Year Program. The Exchange believes that continuing to offer these
Programs would provide Market Makers with the flexibility to join
annually or at various points in the year, which may encourage broader
participation in the Prepayment Programs. The Exchange anticipates that
the potential greater capital commitment and resulting liquidity on the
Exchange would benefit all market participants (including non-Market
Makers). Moreover, the Exchange notes that other options exchanges
likewise offer Prepayment Programs to market makers that may be joined
after the start of the year.\27\ The Exchange also notes that, similar
to the Sliding Scale, the Prepayment Program is designed to incent
Market Makers to commit to directing their order flow to the Exchange,
which would benefit all market participants by expanding liquidity,
providing more trading opportunities and tighter spreads, even to those
market participants that are not eligible for the Programs. Thus, the
Exchange believes the Prepayment Program, as modified, is reasonable,
equitable and not unfairly discriminatory to others.
---------------------------------------------------------------------------
\27\ See, e.g., Cboe fee schedule, supra note 8, at p. 18,
footnote 10 (a market maker may be permitted to pay a pro-rated
amount of the $2.4 million if, for example, they join the program
mid-year).
---------------------------------------------------------------------------
In addition, the Exchange believes that the proposal to replace
specific dates with the term ``last business day'' removes impediments
to and perfects the mechanism of a free and open market by eliminating
redundant annual rule filings when the Exchange is not changing its
fees. The Exchange further believes that the proposal removes
impediments to and perfects the mechanism of a free and open market by
reducing potential confusion among market participants and the
investing public who may see a rule filing and mistake it for a fee
change when in fact a fee is not changing. The proposed change is also
reasonable, equitable and not unfairly discriminatory as it is designed
to add clarity to the Fee Schedule to the benefit of all market
participants.
The Exchange believes that the proposed change to make clear that
fees associated with BOLD transactions would be applied against
prepayments made under the Balance of the Year Program would add
clarity, transparency and internal consistency to the Fee Schedule.
ACE Program
The Exchange believes the proposed changes to the ACE Program are
reasonable, equitable and not unfairly discriminatory for a number of
reasons. First, the proposed changes to increase three of the credits
associated with participants in one of the Prepayment Programs are
designed to incent market participants to increase the orders sent
directly to the Exchange and therefore provide liquidity that supports
the quality of price discovery and promotes market transparency to the
benefit of all market participants. The Exchange believes that the
proposed fee change would directly relate to the activity of a Market
Maker and the activity of an affiliated ATP Holder on the Exchange,
thereby encouraging increased trading activity. The Exchange believes
that the proposal to amend the credits associated with various Tiers of
the ACE Program is reasonable because it provides ATP Holders
affiliated with an NYSE American Options Market Maker with additional
incentives to participate in the Prepayment Program. The Exchange
believes that the proposal to slightly reduce the credits for Simple
Orders not associated with participants in one of the Prepayment
Programs are likewise reasonable, equitable and not unfairly
discriminatory because such credits are within the range offered by
competing options exchanges.\28\
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\28\ See id., Volume Incentive Program, at p. 3 (offering per
contracts credits ranging from $0.09-$0.14 for simple orders).
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The Exchange's proposed grammatical change (see supra note 19) is
reasonable, equitable and not unfairly discriminatory as it is designed
to add clarity to the Fee Schedule to the benefit of all market
participants.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\29\ 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 that the proposed
changes relating to the Sliding Scale, the Prepayment Program, and the
ACE Program may increase both intermarket and intramarket competition
by incenting participants to direct their orders to the Exchange, which
would enhance the quality of quoting and may increase the volume of
contracts traded on the Exchange. To the extent that there is an
additional competitive burden on non-NYSE American Market Makers, the
Exchange believes that this is appropriate because Market Makers have
heightened obligations that other market participants do not and the
proposal should incent market participants to direct additional order
flow to the Exchange, and thus provide additional liquidity that
enhances the quality of its markets and increases the volume of
contracts traded here. To the extent that this purpose is achieved, all
of the Exchange's market participants should benefit from the improved
market liquidity. Enhanced market quality and increased transaction
volume that results from the anticipated increase in order flow
directed to the Exchange will benefit all market participants and
improve competition on the Exchange.
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\29\ 15 U.S.C. 78f(b)(8).
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Given the robust competition for volume among options markets, many
of which offer the same products, implementing programs to attract
order flow similar to the ones being proposed in this filing, are
consistent with the above-mentioned goals of the Act. The
[[Page 2704]]
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) \30\ of the Act and subparagraph (f)(2) of Rule
19b-4 \31\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\30\ 15 U.S.C. 78s(b)(3)(A).
\31\ 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) \32\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\32\ 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 [email protected]. Please include
File Number SR-NYSEAMER-2017-42 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEAMER-2017-42. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEAMER-2017-42 and should be submitted
on or before February 8, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
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\33\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-00723 Filed 1-17-18; 8:45 am]
BILLING CODE 8011-01-P
