Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Amend the NYSE American Options Fee Schedule Regarding Fees Charged Under the Market Maker Sliding Scale, 1853-1857 [2020-00263]

Download as PDF Federal Register / Vol. 85, No. 8 / Monday, January 13, 2020 / Notices 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) 24 of the Act and subparagraph (f)(2) of Rule 19b–4 25 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) 26 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: khammond on DSKJM1Z7X2PROD with NOTICES 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– NYSEAMER–2020–02 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–2020–02. 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–2020–02, and should be submitted on or before February 3, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.27 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–00264 Filed 1–10–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–87902; File No. SR– NYSEAMER–2020–01] Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Amend the NYSE American Options Fee Schedule Regarding Fees Charged Under the Market Maker Sliding Scale January 7, 2020. 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 January 2, 2020, NYSE American LLC (‘‘NYSE American’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the 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. 24 15 U.S.C. 78s(b)(3)(A). 25 17 CFR 240.19b–4(f)(2). 26 15 U.S.C. 78s(b)(2)(B). VerDate Sep<11>2014 16:32 Jan 10, 2020 1 15 Jkt 250001 PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 1853 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 American Options Fee Schedule (‘‘Fee Schedule’’) regarding fees charged under the Market Maker Sliding Scale. The Exchange proposes to implement the fee change effective January 2, 2020. 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 Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this filing is to modify certain of the fees charged under the Market Maker Sliding Scale program, as described in more detail below. Section I.C. of the Fee Schedule sets forth the Sliding Scale of transaction fees charged to NYSE American Options Market Makers (referred to as Market Makers herein), which fees decrease upon the Market Maker trading certain minimum (increasing) monthly volume thresholds as expressed in five tiers (the ‘‘MM Sliding Scale’’).4 The MM Sliding 4 See Fee Schedule, Section I.C., NYSE American Options Market Maker Sliding Scale—Electronic, available here, https://www.nyse.com/publicdocs/ nyse/markets/american-options/NYSE_American_ Options_Fee_Schedule.pdf (excluding any volumes attributable to QCC trades, CUBE Auctions, and Strategy Execution Fee Caps, as these transactions are subject to separate pricing described in Fee Schedule Sections I.F., I.G., and I.J., respectively). The thresholds are based on a Market Makers’ volume transacted Electronically as a percentage of Continued E:\FR\FM\13JAN1.SGM 13JAN1 1854 Federal Register / Vol. 85, No. 8 / Monday, January 13, 2020 / Notices Scale offers different rates depending on whether volume is make or take 5 and offers reduced rates for Market Makers that participate in the Exchange’s Prepayment Programs, per Section I.D. of the Fee Schedule.6 The Exchange proposes to modify (increase) the MM Siding Scale per contract rate in some of the tiers for Market Makers enrolled in the Prepayment Program, but will not be changing any aspect of the Prepayment Program or the volume thresholds required to qualify for each MM Sliding Scale tier.7 The Exchange proposes to implement the fee change effective January 2, 2020. Background The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 8 There are currently 16 registered options exchanges competing for order flow. Based on publicly-available information, and excluding index-based options, no single exchange has more than 16% of the market share of executed volume of multiply-listed equity and ETF options trades.9 Therefore, no exchange possesses significant pricing power in the execution of multiply-listed equity & ETF options order flow. More specifically, in the third quarter of 2019, the Exchange had less than 10% market share of executed volume of multiplylisted equity & ETF options trades.10 The Exchange believes that the evershifting market share among the exchanges from month to month demonstrates that market participants can shift order flow, or discontinue or reduce use of certain categories of products, in response to fee changes. Accordingly, competitive forces constrain options exchange transaction fees. To respond to this competitive marketplace, the Exchange has already established incentives to encourage Market Makers to provide liquid and active markets on the Exchange, including by offering the MM Sliding Scale and Prepayment Programs. Market Makers that would like to receive a more favorable per contract rate under the MM Sliding Scale have the option to commit to the Exchange’s Prepayment Program, which commitment increases liquidity on the Exchange to the benefit of all market participants. The Exchange provides Market Makers with the flexibility to join annually or at various points in the year to encourage broader participation. While the proposed change would increase certain MM Sliding Scale fees for Market Makers that have prepaid, the Exchange nonetheless believes that the (still lower and) reduced MM Sliding Scale fees would continue to encourage Market Makers to increase their participation, thereby improving the quoted markets and attracting more order flow trading volume to the Exchange. To the extent that these incentives succeed, the increased liquidity on the Exchange would result in enhanced market quality for all participants. Proposed Rule Change The Exchange proposes to modify the per contract rate for Market Makers enrolled in the Prepayment Program and that qualify for tiers 2, 3 or 4, as shown in the table below (with current rates in brackets and proposed rates italicized), but will not be changing tiers 1 or 5, nor the volume thresholds required to qualify for any MM Sliding Scale tier: 11 Prepayment Program participant rates Tier khammond on DSKJM1Z7X2PROD with NOTICES 1 2 3 4 5 ..................... ..................... ..................... ..................... ..................... Market Maker electronic ADV as a % of TCADV Rate per contract for non-take volume 0.00% to 0.20% ............................................................................................................... >0.20% to 0.65% ............................................................................................................. >0.65% to 1.40% ............................................................................................................. >1.40% to 2.00% ............................................................................................................. >2.00% ............................................................................................................................ $0.22 [$0.17] 0.18 [0.08] 0.09 [0.05] 0.06 0.03 Rate per contract for take volume $0.24 [$0.20] 0.22 [0.11] 0.13 [0.08] 0.10 0.06 The Exchange believes that the modified rates (while increased) still reflect a significant reduction in overall transaction rates for participants in one of the Prepayment Programs. Thus, the Exchange believes that the (still lower and) reduced MM Sliding Scale fees would continue to encourage Market Makers to increase their participation, thereby improving the quoted markets and attracting more order flow trading volume to the Exchange. To the extent that these incentives succeed, the increased liquidity on the Exchange would result in enhanced market total industry Customer equity and Exchange Traded Fund options volumes as reported by the Options Clearing Corporation (the ‘‘OCC’’). See OCC Monthly Statistics Reports, available here, https:// www.theocc.com/webapps/monthly-volume-reports. See also Fee Schedule, Key Terms and Definitions, TCADV (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’’). 5 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 Fee Schedule, Section I.C., note 1. For example, any Market Maker transaction that interacts with resting liquidity is take volume. 6 The Exchange offers Market Makers the opportunity to prepay a portion of certain transactions costs in exchange for reduced rates under the MM Sliding Scale program as well as enabling such Market Makers to qualify their Affiliated OFP or Appointed OFP, if any, to earn enhanced credits under the American Customer Engagement (‘‘ACE’’) Program per Section I.E. of the Fee Schedule. See Fee Schedule, Section I.D., supra note 4 (describing 1 Year Prepayment Program and Balance of the Year Program). See also Fee Schedule, Section I.E. (setting forth the ACE Program). 7 See proposed Fee Schedule, Section I.C., NYSE American Options Market Maker Sliding Scale— Electronic. See also Fee Schedule, Section I.D. (Prepayment Program). 8 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (S7–10–04) (‘‘Reg NMS Adopting Release’’). 9 The OCC publishes options and futures volume in a variety of formats, including daily and monthly volume by exchange, available here: https:// www.theocc.com/market-data/volume/default.jsp. 10 Based on OCC data, see id., the Exchange’s market share in equity-based options declined from 9.82% for the month of January to 7.86% for the month of September. 11 The Exchange notes that this table does not include the tiered MM Sliding Scale rates for participants that are not enrolled in a Prepayment Program. See Fee Schedule, Section I.C. (setting forth the rate per contract for non-take and take volume for non-Prepayment participants, based on tier). VerDate Sep<11>2014 16:32 Jan 10, 2020 Jkt 250001 PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 E:\FR\FM\13JAN1.SGM 13JAN1 khammond on DSKJM1Z7X2PROD with NOTICES Federal Register / Vol. 85, No. 8 / Monday, January 13, 2020 / Notices quality for all participants. The Exchange notes that it is not modifying the rates for Tiers 1 or 5 because it believes those rates are appropriate and should continue to attract liquidity to the Exchange. In particular, Tier 1 has no minimum volume threshold and thus operates as a base tier, which any Market Maker doing business on the Exchange can achieve; whereas Tier 5 is the highest MM Sliding Scale tier and the Exchange wants to keep the rate the same so as to continue to encourage those Market Makers that already qualify for the tier to continue to execute sufficient volume to achieve this highest perk (i.e., lower per contract pricing). The Exchange believes that the Market Makers that would like to receive a more favorable per contract rate under the MM Sliding Scale have the option to commit the Exchange’s Prepayment Program, which commitment increases liquidity on the Exchange to the benefit of all market participants. The Exchange notes that Market Makers serve a crucial role in the options markets by providing liquidity to facilitate market efficiency and functioning. The Exchange provides Market Makers with the flexibility to join annually or at various points in the year to encourage broader participation. The proposed fees, although increased, are still less expensive for participants in the Prepayment Program and therefore the Exchange believes that the Prepayment Program and MM Sliding Scale would continue to encourage Market Makers to commit to directing their order flow to the Exchange in exchange for reduced rates, which would increase volume and liquidity, to the benefit of all market participants by providing more trading opportunities and tighter spreads. The Exchange’s fees are constrained by intermarket competition, as Market Makers can register on any or all of the 16 options exchanges. Thus, ATP Holders that are also members of other exchanges have a choice of where they register and operate as Market Makers. The proposed fees, although increased, are still less expensive for participants in the Prepayment Program and therefore the Exchange believes that the Prepayment Program and MM Sliding Scale would continue to encourage Market Makers to commit to directing their order flow to the Exchange in exchange for reduced rates, which would increase volume and liquidity, to the benefit of all market participants by providing more trading opportunities and tighter spreads. The Exchange notes that all market participants stand to benefit from increased transaction VerDate Sep<11>2014 16:32 Jan 10, 2020 Jkt 250001 1855 share of executed volume of multiplylisted equity & ETF options trades.16 The Exchange believes that the evershifting market share among the exchanges from month to month demonstrates that market participants can shift order flow, or discontinue or reduce use of certain categories of products, in response to fee changes. Accordingly, competitive forces constrain options exchange transaction fees. Stated otherwise, changes to exchange transaction fees can have a direct effect on the ability of an exchange to compete for order flow. Market Makers that would like to receive a more favorable per contract rate under the MM Sliding Scale have 2. Statutory Basis the option to commit the Exchange’s The Exchange believes that the Prepayment Program, which proposed rule change is consistent with commitment increases liquidity on the Section 6(b) of the Act,12 in general, and Exchange to the benefit of all market furthers the objectives of Sections participants. The Exchange provides 6(b)(4) and (5) of the Act,13 in particular, Market Makers with the flexibility to because it provides for the equitable join annually or at various points in the allocation of reasonable dues, fees, and year to encourage broader participation. other charges among its members, The proposed fees, although increased, issuers and other persons using its are still less expensive for participants facilities and does not unfairly in the Prepayment Program and discriminate between customers, therefore the Exchange believes that the issuers, brokers or dealers. Prepayment Program and MM Sliding Scale would continue to encourage The Proposed Rule Change Is Market Makers to commit to directing Reasonable their order flow to the Exchange in The Exchange operates in a highly exchange for reduced rates, which competitive market. The Commission would increase volume and liquidity, to has repeatedly expressed its preference the benefit of all market participants by for competition over regulatory providing more trading opportunities intervention in determining prices, and tighter spreads. Further, the products, and services in the securities proposed Sliding Scale rates are markets. In Regulation NMS, the competitive with fees charged by other Commission highlighted the importance exchanges and are designed to attract of market forces in determining prices (and compete for) order flow to the and SRO revenues and, also, recognized Exchange, which provides a greater that current regulation of the market opportunity for trading by all market system ‘‘has been remarkably successful participants.17 in promoting market competition in its Finally, to the extent the proposed broader forms that are most important to change continues to attract greater investors and listed companies.’’ 14 volume and liquidity to the Exchange, There are currently 16 registered the Exchange believes the proposed options exchanges competing for order change would improve the Exchange’s flow. Based on publicly-available overall competitiveness and strengthen information, and excluding index-based its market quality for all market options, no single exchange has more participants. In the backdrop of the than 16% of the market share of competitive environment in which the executed volume of multiply-listed 16 Based on OCC data, see supra note 10, in 2019, equity and ETF options trades.15 the Exchange’s market share in equity-based Therefore, no exchange possesses options declined from 9.82% for the month of significant pricing power in the January to 7.86% for the month of September. execution of multiply-listed equity & 17 See, e.g., Cboe Exchange, Inc. (‘‘Cboe’’) fee ETF options order flow. More schedule, Liquidity Provider Sliding Scale specifically, in the third quarter of 2019, Prepayment, available here: https://www.cboe.com/ the Exchange had less than 10% market publish/feeschedule/CBOEFeeSchedule.pdf. The volume, which promotes market depth, facilitates tighter spreads and enhances price discovery, and may lead to a corresponding increase in order flow from other market participants. The Exchange cannot predict with certainty whether any Market Makers would avail themselves of this proposed fee change, particularly because the deadline for Market Makers to sign up for the Prepayment Program for 2020 is not until the end of 2019. Moreover, Market Makers may be registered on other options exchanges and may choose to post orders and quotes to those exchanges based on available incentives. 12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(4) and (5). 14 See Reg NMS Adopting Release, supra note 8, at 37499. 15 See supra note 9. PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 Exchange further 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_12052019.pdf (‘‘Market Maker Sliding Scale’’). E:\FR\FM\13JAN1.SGM 13JAN1 1856 Federal Register / Vol. 85, No. 8 / Monday, January 13, 2020 / Notices Exchange operates, the proposed rule change is a reasonable attempt by the Exchange to increase the depth of its market and improve its market share relative to its competitors. The Exchange cannot predict with certainty whether any Market Makers would avail themselves of this proposed fee change, particularly because the deadline for Market Makers to sign up for the Prepayment Program for 2020 is not until the end of 2019. Moreover, Market Makers may be registered on other options exchanges and may choose to post orders and quotes to those exchanges based on available incentives. khammond on DSKJM1Z7X2PROD with NOTICES The Proposed Rule Change Is an Equitable Allocation of Credits and Fees The Exchange believes the proposed rule change is an equitable allocation of its fees and credits. The proposal is based on the amount and type of business transacted on the Exchange and Market Makers can opt to avail themselves of the Prepayment program or not, and to attempt to trade sufficient monthly volume to achieve one of the MM Sliding Scale tiers, or not. Moreover, the Prepayment Program— which is tied to the proposed fee changes—is designed to encourage Market Makers to commit capital to the Exchange as a demonstration of long term participation on the Exchange as a primary execution venue. To the extent that the proposed change continues to attract more participation in the programs of the Exchange, the increased order flow would continue to make the Exchange a more competitive venue for, among other things, order execution. Thus, the Exchange believes the proposed rule change would improve market quality for all market participants on the Exchange and, as a consequence, attract more order flow to the Exchange thereby improving marketwide quality and price discovery. The Proposed Rule Change Is Not Unfairly Discriminatory The Exchange believes it is not unfairly discriminatory to modify the MM Sliding Scale because the proposed modification would be available to all similarly-situated market participants on an equal and non-discriminatory basis. The proposed modified MM Sliding Scale rates are 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 VerDate Sep<11>2014 16:32 Jan 10, 2020 Jkt 250001 market participants. Moreover, all Market Makers would be subject to the differing rates depending on whether eligible volume is make or take volume. The proposal is based on the amount and type of business transacted on the Exchange and Market Maker organizations are not obligated to try to achieve any of the MM Sliding Scale tiers, even if they participate in the Prepayment Program (that latter program also being optional to Market Makers). In addition, Market Maker organizations have increased obligations with respect to trading on the Exchange, and the Exchange believes that the proposed fees, although increased, are still less expensive for participants in the Prepayment Program and therefore the Exchange believes that the Prepayment Program and MM Sliding Scale would continue to encourage Market Makers to commit to directing their order flow to the Exchange in exchange for reduced rates, which would increase volume and liquidity, to the benefit of all market participants by providing more trading opportunities and tighter spreads. To the extent that the proposed change attracts a variety of transactions to the Exchange, this increased order flow would continue to make the Exchange a more competitive venue for order execution thereby improving market-wide quality and price discovery. The resulting increased volume and liquidity would provide more trading opportunities and tighter spreads to all market participants and thus would promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. 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, 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. Instead, as discussed above, the Exchange believes that the proposed changes would encourage the submission of additional liquidity to a public exchange, thereby promoting market depth, price discovery and transparency and enhancing order execution opportunities for all market participants. As a result, the Exchange PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 believes that the proposed change furthers the Commission’s goal in adopting Regulation NMS of fostering integrated competition among orders, which promotes ‘‘more efficient pricing of individual stocks for all types of orders, large and small.’’ 18 Intramarket Competition. The proposed change is designed to continue to attract order flow to the Exchange by offering competitive rates based on increased volumes on the Exchange, which would enhance the quality of quoting and may increase the volumes of contracts trade on the Exchange. To the extent that there is an additional competitive burden on nonNYSE 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. Intermarket Competition. The Exchange believes that the proposed change, which is consistent with the goals of the MM Sliding Scale Program by providing reduced per contract rates for Market Makers in the Preypayment [sic] Program, could promote competition between the Exchange and other execution venues, by encouraging additional orders to be sent to the Exchange for execution. The proposed adjustments to the MM Sliding Scale fees are designed to continue 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 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.19 18 See Reg NMS Adopting Release, supra note 8, at 37499. 19 See supra note 17 (regarding Cboe’s Liquidity Provider Sliding Scale Prepayment). E:\FR\FM\13JAN1.SGM 13JAN1 Federal Register / Vol. 85, No. 8 / Monday, January 13, 2020 / Notices 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. khammond on DSKJM1Z7X2PROD with NOTICES III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) 20 of the Act and subparagraph (f)(2) of Rule 19b–4 21 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) 22 of the Act to determine whether the proposed rule change should be approved or disapproved. 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–2020–01, and should be submitted on or before February 3, 2020. 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 J. Matthew DeLesDernier, Assistant Secretary. 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– NYSEAMER–2020–01 on the subject line. SECURITIES AND EXCHANGE COMMISSION 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–2020–01. 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 20 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 22 15 U.S.C. 78s(b)(2)(B). [FR Doc. 2020–00263 Filed 1–10–20; 8:45 am] BILLING CODE 8011–01–P 16:32 Jan 10, 2020 Sunshine Act Meetings 2:00 p.m. on Wednesday, January 15, 2020. PLACE: The meeting will be held at the Commission’s headquarters, 100 F Street NE, Washington, DC 20549. STATUS: This meeting will be closed to the public. MATTERS TO BE CONSIDERED: Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the closed meeting. Certain staff members who have an interest in the matters also may be present. In the event that the time, date, or location of this meeting changes, an announcement of the change, along with the new time, date, and/or place of the meeting will be posted on the TIME AND DATE: 23 17 Jkt 250001 Commission’s website at https:// www.sec.gov. The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) and (10) and 17 CFR 200.402(a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and (a)(10), permit consideration of the scheduled matters at the closed meeting. The subject matters of the closed meeting will consist of the following topics: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; Resolution of litigation claims; and Other matters relating to enforcement proceedings. At times, changes in Commission priorities require alterations in the scheduling of meeting agenda items that may consist of adjudicatory, examination, litigation, or regulatory matters. CONTACT PERSON FOR MORE INFORMATION: For further information; please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551–5400. Dated: January 8, 2020. Vanessa A. Countryman, Secretary. [FR Doc. 2020–00373 Filed 1–9–20; 11:15 am] BILLING CODE 8011–01–P DEPARTMENT OF STATE [Public Notice:10999] 21 17 VerDate Sep<11>2014 1857 PO 00000 CFR 200.30–3(a)(12). Frm 00058 Fmt 4703 Sfmt 4703 Notice of Determinations; Culturally Significant Objects Imported for Exhibition—Determinations: ‘‘Millet and Modern Art: From Van Gogh to Dalı´’’ Exhibition Notice is hereby given of the following determinations: I hereby determine that certain objects to be included in the exhibition ‘‘Millet and Modern Art: From Van Gogh to Dalı´’’ imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are imported pursuant to loan agreements with the foreign owners or custodians. I also determine that the exhibition or display of the exhibit objects at the Saint Louis Art Museum, St. Louis, Missouri, from on or about February 16, 2020, until on or about May 17, 2020, and at possible additional exhibitions or venues yet to be determined, is in the national interest. I have ordered that Public Notice of these determinations be published in the Federal Register. SUMMARY: E:\FR\FM\13JAN1.SGM 13JAN1

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[Federal Register Volume 85, Number 8 (Monday, January 13, 2020)]
[Notices]
[Pages 1853-1857]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00263]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87902; File No. SR-NYSEAMER-2020-01]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Change To Amend the NYSE 
American Options Fee Schedule Regarding Fees Charged Under the Market 
Maker Sliding Scale

January 7, 2020.
    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 January 2, 2020, NYSE American LLC (``NYSE American'' or 
``Exchange'') 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.
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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 American Options Fee 
Schedule (``Fee Schedule'') regarding fees charged under the Market 
Maker Sliding Scale. The Exchange proposes to implement the fee change 
effective January 2, 2020. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to modify certain of the fees charged 
under the Market Maker Sliding Scale program, as described in more 
detail below.
    Section I.C. of the Fee Schedule sets forth the Sliding Scale of 
transaction fees charged to NYSE American Options Market Makers 
(referred to as Market Makers herein), which fees decrease upon the 
Market Maker trading certain minimum (increasing) monthly volume 
thresholds as expressed in five tiers (the ``MM Sliding Scale'').\4\ 
The MM Sliding

[[Page 1854]]

Scale offers different rates depending on whether volume is make or 
take \5\ and offers reduced rates for Market Makers that participate in 
the Exchange's Prepayment Programs, per Section I.D. of the Fee 
Schedule.\6\ The Exchange proposes to modify (increase) the MM Siding 
Scale per contract rate in some of the tiers for Market Makers enrolled 
in the Prepayment Program, but will not be changing any aspect of the 
Prepayment Program or the volume thresholds required to qualify for 
each MM Sliding Scale tier.\7\
---------------------------------------------------------------------------

    \4\ See Fee Schedule, Section I.C., NYSE American Options Market 
Maker Sliding Scale--Electronic, available here, https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf (excluding any volumes 
attributable to QCC trades, CUBE Auctions, and Strategy Execution 
Fee Caps, as these transactions are subject to separate pricing 
described in Fee Schedule Sections I.F., I.G., and I.J., 
respectively). The thresholds are based on a Market Makers' volume 
transacted Electronically as a percentage of total industry Customer 
equity and Exchange Traded Fund options volumes as reported by the 
Options Clearing Corporation (the ``OCC''). See OCC Monthly 
Statistics Reports, available here, https://www.theocc.com/webapps/monthly-volume-reports. See also Fee Schedule, Key Terms and 
Definitions, TCADV (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'').
    \5\ 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 Fee Schedule, Section I.C., note 1. 
For example, any Market Maker transaction that interacts with 
resting liquidity is take volume.
    \6\ The Exchange offers Market Makers the opportunity to prepay 
a portion of certain transactions costs in exchange for reduced 
rates under the MM Sliding Scale program as well as enabling such 
Market Makers to qualify their Affiliated OFP or Appointed OFP, if 
any, to earn enhanced credits under the American Customer Engagement 
(``ACE'') Program per Section I.E. of the Fee Schedule. See Fee 
Schedule, Section I.D., supra note 4 (describing 1 Year Prepayment 
Program and Balance of the Year Program). See also Fee Schedule, 
Section I.E. (setting forth the ACE Program).
    \7\ See proposed Fee Schedule, Section I.C., NYSE American 
Options Market Maker Sliding Scale--Electronic. See also Fee 
Schedule, Section I.D. (Prepayment Program).
---------------------------------------------------------------------------

    The Exchange proposes to implement the fee change effective January 
2, 2020.
Background
    The Commission has repeatedly expressed its preference for 
competition over regulatory intervention in determining prices, 
products, and services in the securities markets. In Regulation NMS, 
the Commission highlighted the importance of market forces in 
determining prices and SRO revenues and, also, recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its broader forms that are most 
important to investors and listed companies.'' \8\
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04) (``Reg NMS 
Adopting Release'').
---------------------------------------------------------------------------

    There are currently 16 registered options exchanges competing for 
order flow. Based on publicly-available information, and excluding 
index-based options, no single exchange has more than 16% of the market 
share of executed volume of multiply-listed equity and ETF options 
trades.\9\ Therefore, no exchange possesses significant pricing power 
in the execution of multiply-listed equity & ETF options order flow. 
More specifically, in the third quarter of 2019, the Exchange had less 
than 10% market share of executed volume of multiply-listed equity & 
ETF options trades.\10\
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    \9\ The OCC publishes options and futures volume in a variety of 
formats, including daily and monthly volume by exchange, available 
here: https://www.theocc.com/market-data/volume/default.jsp.
    \10\ Based on OCC data, see id., the Exchange's market share in 
equity-based options declined from 9.82% for the month of January to 
7.86% for the month of September.
---------------------------------------------------------------------------

    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow, or discontinue or reduce use of certain categories of 
products, in response to fee changes. Accordingly, competitive forces 
constrain options exchange transaction fees. To respond to this 
competitive marketplace, the Exchange has already established 
incentives to encourage Market Makers to provide liquid and active 
markets on the Exchange, including by offering the MM Sliding Scale and 
Prepayment Programs. Market Makers that would like to receive a more 
favorable per contract rate under the MM Sliding Scale have the option 
to commit to the Exchange's Prepayment Program, which commitment 
increases liquidity on the Exchange to the benefit of all market 
participants. The Exchange provides Market Makers with the flexibility 
to join annually or at various points in the year to encourage broader 
participation. While the proposed change would increase certain MM 
Sliding Scale fees for Market Makers that have prepaid, the Exchange 
nonetheless believes that the (still lower and) reduced MM Sliding 
Scale fees would continue to encourage Market Makers to increase their 
participation, thereby improving the quoted markets and attracting more 
order flow trading volume to the Exchange. To the extent that these 
incentives succeed, the increased liquidity on the Exchange would 
result in enhanced market quality for all participants.
Proposed Rule Change
    The Exchange proposes to modify the per contract rate for Market 
Makers enrolled in the Prepayment Program and that qualify for tiers 2, 
3 or 4, as shown in the table below (with current rates in brackets and 
proposed rates italicized), but will not be changing tiers 1 or 5, nor 
the volume thresholds required to qualify for any MM Sliding Scale 
tier: \11\
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    \11\ The Exchange notes that this table does not include the 
tiered MM Sliding Scale rates for participants that are not enrolled 
in a Prepayment Program. See Fee Schedule, Section I.C. (setting 
forth the rate per contract for non-take and take volume for non-
Prepayment participants, based on tier).

----------------------------------------------------------------------------------------------------------------
                                                                            Prepayment Program participant rates
                                                                           -------------------------------------
                 Tier                   Market Maker electronic ADV as a %  Rate per contract
                                                     of TCADV                  for non-take    Rate per contract
                                                                                  volume        for take volume
----------------------------------------------------------------------------------------------------------------
1.....................................  0.00% to 0.20%....................              $0.22              $0.24
2.....................................  >0.20% to 0.65%...................       [$0.17] 0.18       [$0.20] 0.22
3.....................................  >0.65% to 1.40%...................        [0.08] 0.09        [0.11] 0.13
4.....................................  >1.40% to 2.00%...................        [0.05] 0.06        [0.08] 0.10
5.....................................  >2.00%............................               0.03               0.06
----------------------------------------------------------------------------------------------------------------

    The Exchange believes that the modified rates (while increased) 
still reflect a significant reduction in overall transaction rates for 
participants in one of the Prepayment Programs. Thus, the Exchange 
believes that the (still lower and) reduced MM Sliding Scale fees would 
continue to encourage Market Makers to increase their participation, 
thereby improving the quoted markets and attracting more order flow 
trading volume to the Exchange. To the extent that these incentives 
succeed, the increased liquidity on the Exchange would result in 
enhanced market

[[Page 1855]]

quality for all participants. The Exchange notes that it is not 
modifying the rates for Tiers 1 or 5 because it believes those rates 
are appropriate and should continue to attract liquidity to the 
Exchange. In particular, Tier 1 has no minimum volume threshold and 
thus operates as a base tier, which any Market Maker doing business on 
the Exchange can achieve; whereas Tier 5 is the highest MM Sliding 
Scale tier and the Exchange wants to keep the rate the same so as to 
continue to encourage those Market Makers that already qualify for the 
tier to continue to execute sufficient volume to achieve this highest 
perk (i.e., lower per contract pricing).
    The Exchange believes that the Market Makers that would like to 
receive a more favorable per contract rate under the MM Sliding Scale 
have the option to commit the Exchange's Prepayment Program, which 
commitment increases liquidity on the Exchange to the benefit of all 
market participants. The Exchange notes that Market Makers serve a 
crucial role in the options markets by providing liquidity to 
facilitate market efficiency and functioning. The Exchange provides 
Market Makers with the flexibility to join annually or at various 
points in the year to encourage broader participation. The proposed 
fees, although increased, are still less expensive for participants in 
the Prepayment Program and therefore the Exchange believes that the 
Prepayment Program and MM Sliding Scale would continue to encourage 
Market Makers to commit to directing their order flow to the Exchange 
in exchange for reduced rates, which would increase volume and 
liquidity, to the benefit of all market participants by providing more 
trading opportunities and tighter spreads.
    The Exchange's fees are constrained by intermarket competition, as 
Market Makers can register on any or all of the 16 options exchanges. 
Thus, ATP Holders that are also members of other exchanges have a 
choice of where they register and operate as Market Makers. The 
proposed fees, although increased, are still less expensive for 
participants in the Prepayment Program and therefore the Exchange 
believes that the Prepayment Program and MM Sliding Scale would 
continue to encourage Market Makers to commit to directing their order 
flow to the Exchange in exchange for reduced rates, which would 
increase volume and liquidity, to the benefit of all market 
participants by providing more trading opportunities and tighter 
spreads. The Exchange notes that all market participants stand to 
benefit from increased transaction volume, which promotes market depth, 
facilitates tighter spreads and enhances price discovery, and may lead 
to a corresponding increase in order flow from other market 
participants.
    The Exchange cannot predict with certainty whether any Market 
Makers would avail themselves of this proposed fee change, particularly 
because the deadline for Market Makers to sign up for the Prepayment 
Program for 2020 is not until the end of 2019. Moreover, Market Makers 
may be registered on other options exchanges and may choose to post 
orders and quotes to those exchanges based on available incentives.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\13\ 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

The Proposed Rule Change Is Reasonable
    The Exchange operates in a highly competitive market. The 
Commission has repeatedly expressed its preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. In Regulation NMS, the Commission 
highlighted the importance of market forces in determining prices and 
SRO revenues and, also, recognized that current regulation of the 
market system ``has been remarkably successful in promoting market 
competition in its broader forms that are most important to investors 
and listed companies.'' \14\
---------------------------------------------------------------------------

    \14\ See Reg NMS Adopting Release, supra note 8, at 37499.
---------------------------------------------------------------------------

    There are currently 16 registered options exchanges competing for 
order flow. Based on publicly-available information, and excluding 
index-based options, no single exchange has more than 16% of the market 
share of executed volume of multiply-listed equity and ETF options 
trades.\15\ Therefore, no exchange possesses significant pricing power 
in the execution of multiply-listed equity & ETF options order flow. 
More specifically, in the third quarter of 2019, the Exchange had less 
than 10% market share of executed volume of multiply-listed equity & 
ETF options trades.\16\
---------------------------------------------------------------------------

    \15\ See supra note 9.
    \16\ Based on OCC data, see supra note 10, in 2019, the 
Exchange's market share in equity-based options declined from 9.82% 
for the month of January to 7.86% for the month of September.
---------------------------------------------------------------------------

    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow, or discontinue or reduce use of certain categories of 
products, in response to fee changes. Accordingly, competitive forces 
constrain options exchange transaction fees. Stated otherwise, changes 
to exchange transaction fees can have a direct effect on the ability of 
an exchange to compete for order flow.
    Market Makers that would like to receive a more favorable per 
contract rate under the MM Sliding Scale have the option to commit the 
Exchange's Prepayment Program, which commitment increases liquidity on 
the Exchange to the benefit of all market participants. The Exchange 
provides Market Makers with the flexibility to join annually or at 
various points in the year to encourage broader participation. The 
proposed fees, although increased, are still less expensive for 
participants in the Prepayment Program and therefore the Exchange 
believes that the Prepayment Program and MM Sliding Scale would 
continue to encourage Market Makers to commit to directing their order 
flow to the Exchange in exchange for reduced rates, 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 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.\17\
---------------------------------------------------------------------------

    \17\ See, e.g., Cboe Exchange, Inc. (``Cboe'') fee schedule, 
Liquidity Provider Sliding Scale Prepayment, available here: https://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf. The Exchange 
further 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_12052019.pdf (``Market Maker Sliding 
Scale'').
---------------------------------------------------------------------------

    Finally, to the extent the proposed change continues to attract 
greater volume and liquidity to the Exchange, the Exchange believes the 
proposed change would improve the Exchange's overall competitiveness 
and strengthen its market quality for all market participants. In the 
backdrop of the competitive environment in which the

[[Page 1856]]

Exchange operates, the proposed rule change is a reasonable attempt by 
the Exchange to increase the depth of its market and improve its market 
share relative to its competitors.
    The Exchange cannot predict with certainty whether any Market 
Makers would avail themselves of this proposed fee change, particularly 
because the deadline for Market Makers to sign up for the Prepayment 
Program for 2020 is not until the end of 2019. Moreover, Market Makers 
may be registered on other options exchanges and may choose to post 
orders and quotes to those exchanges based on available incentives.
The Proposed Rule Change Is an Equitable Allocation of Credits and Fees
    The Exchange believes the proposed rule change is an equitable 
allocation of its fees and credits. The proposal is based on the amount 
and type of business transacted on the Exchange and Market Makers can 
opt to avail themselves of the Prepayment program or not, and to 
attempt to trade sufficient monthly volume to achieve one of the MM 
Sliding Scale tiers, or not. Moreover, the Prepayment Program--which is 
tied to the proposed fee changes--is designed to encourage Market 
Makers to commit capital to the Exchange as a demonstration of long 
term participation on the Exchange as a primary execution venue. To the 
extent that the proposed change continues to attract more participation 
in the programs of the Exchange, the increased order flow would 
continue to make the Exchange a more competitive venue for, among other 
things, order execution. Thus, the Exchange believes the proposed rule 
change would improve market quality for all market participants on the 
Exchange and, as a consequence, attract more order flow to the Exchange 
thereby improving market-wide quality and price discovery.
The Proposed Rule Change Is Not Unfairly Discriminatory
    The Exchange believes it is not unfairly discriminatory to modify 
the MM Sliding Scale because the proposed modification would be 
available to all similarly-situated market participants on an equal and 
non-discriminatory basis.
    The proposed modified MM Sliding Scale rates are 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 would be subject to the differing rates 
depending on whether eligible volume is make or take volume.
    The proposal is based on the amount and type of business transacted 
on the Exchange and Market Maker organizations are not obligated to try 
to achieve any of the MM Sliding Scale tiers, even if they participate 
in the Prepayment Program (that latter program also being optional to 
Market Makers). In addition, Market Maker organizations have increased 
obligations with respect to trading on the Exchange, and the Exchange 
believes that the proposed fees, although increased, are still less 
expensive for participants in the Prepayment Program and therefore the 
Exchange believes that the Prepayment Program and MM Sliding Scale 
would continue to encourage Market Makers to commit to directing their 
order flow to the Exchange in exchange for reduced rates, which would 
increase volume and liquidity, to the benefit of all market 
participants by providing more trading opportunities and tighter 
spreads. To the extent that the proposed change attracts a variety of 
transactions to the Exchange, this increased order flow would continue 
to make the Exchange a more competitive venue for order execution 
thereby improving market-wide quality and price discovery. The 
resulting increased volume and liquidity would provide more trading 
opportunities and tighter spreads to all market participants and thus 
would promote just and equitable principles of trade, remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest.
    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, 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. Instead, as discussed above, the Exchange believes 
that the proposed changes would encourage the submission of additional 
liquidity to a public exchange, thereby promoting market depth, price 
discovery and transparency and enhancing order execution opportunities 
for all market participants. As a result, the Exchange believes that 
the proposed change furthers the Commission's goal in adopting 
Regulation NMS of fostering integrated competition among orders, which 
promotes ``more efficient pricing of individual stocks for all types of 
orders, large and small.'' \18\
---------------------------------------------------------------------------

    \18\ See Reg NMS Adopting Release, supra note 8, at 37499.
---------------------------------------------------------------------------

    Intramarket Competition. The proposed change is designed to 
continue to attract order flow to the Exchange by offering competitive 
rates based on increased volumes on the Exchange, which would enhance 
the quality of quoting and may increase the volumes of contracts trade 
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.
    Intermarket Competition. The Exchange believes that the proposed 
change, which is consistent with the goals of the MM Sliding Scale 
Program by providing reduced per contract rates for Market Makers in 
the Preypayment [sic] Program, could promote competition between the 
Exchange and other execution venues, by encouraging additional orders 
to be sent to the Exchange for execution. The proposed adjustments to 
the MM Sliding Scale fees are designed to continue 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 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.\19\
---------------------------------------------------------------------------

    \19\ See supra note 17 (regarding Cboe's Liquidity Provider 
Sliding Scale Prepayment).

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[[Page 1857]]

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) \20\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \21\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \22\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEAMER-2020-01 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-2020-01. 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-2020-01, and should be 
submitted on or before February 3, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
---------------------------------------------------------------------------

    \23\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-00263 Filed 1-10-20; 8:45 am]
 BILLING CODE 8011-01-P
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