Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE Arca Options Fee Schedule, 15980-15983 [2021-06122]

Download as PDF 15980 Federal Register / Vol. 86, No. 56 / Thursday, March 25, 2021 / Notices B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,23 the Exchange believes that the proposed rule change would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change, which would apply equally to all market data subscribers, would establish a clear process for billing disputes, and is substantially similar to rules adopted by the Cboe Exchanges and rules adopted by other equities and options markets as well as by the Exchange’s affiliates for transaction fees. The Exchange does not believe the proposed rule change would impair the ability of market data subscribers or competing venues that also sell market data products to maintain their competitive standing in the financial markets. Moreover, because the Exchange does not propose to alter or modify specific fees or credits applicable to market data subscribers, the proposal does not impose any burden on competition. 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 Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 24 and Rule 19b–4(f)(6) thereunder.25 Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6)(iii) thereunder. 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 23 15 U.S.C. 78f(b)(8). 24 15 U.S.C. 78s(b)(3)(A)(iii). 25 17 CFR 240.19b–4(f)(6). VerDate Sep<11>2014 17:52 Mar 24, 2021 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: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–2021–19 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2021–19. 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 26 15 Jkt 253001 PO 00000 U.S.C. 78s(b)(2)(B). Frm 00104 Fmt 4703 Sfmt 4703 to make available publicly. All submissions should refer to File Number SR–NYSEArca–2021–19 and should be submitted on or before April 15, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.27 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2021–06116 Filed 3–24–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91372; No. SR–NYSEArca– 2021–18] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE Arca Options Fee Schedule March 19, 2021. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on March 10, 2021, NYSE Arca, Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to modify the NYSE Arca Options Fee Schedule (‘‘Fee Schedule’’) to extend the waiver of certain Floor-based fixed fees. The Exchange proposes to implement the fee change effective April 1, 2021. The proposed rule 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, 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. 1 15 E:\FR\FM\25MRN1.SGM 25MRN1 Federal Register / Vol. 86, No. 56 / Thursday, March 25, 2021 / Notices 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 the Fee Schedule to extend the waiver of certain Floor-based fixed fees for market participants that have been unable to resume their Floor operations to a certain capacity level, as discussed below. The Exchange proposes to implement the fee change effective April 1, 2021. On March 18, 2020, the Exchange announced that it would temporarily close the Trading Floor, effective Monday, March 23, 2020, as a precautionary measure to prevent the potential spread of COVID–19. Following the temporary closure of the Trading Floor, the Exchange waived certain Floor-based fixed fees for April and May 2020.4 Although the Trading Floor partially reopened on May 4, 2020 and Floor-based open outcry activity is supported, certain participants have been unable to resume pre-Floor closure levels of operations. As a result, the Exchange extended the fee waiver through March 2021, but only for Floor Broker firms that were unable to operate at more than 50% of their March 2020 on-Floor staffing levels and for Market Maker firms that have vacant or ‘‘unmanned’’ Podia for the entire month due to COVID–19 related considerations (the ‘‘Qualifying Firms’’).5 Because the Trading Floor will continue to operate with reduced capacity, the Exchange proposes to extend the fee waiver for Qualifying Firms through the earlier of the first full month of a full reopening 4 See Securities Exchange Act Release Nos. 88596 (April 8, 2020), 85 FR 20796 (April 14, 2020) (SR– NYSEArca–2020–29); 88812 (May 5, 2020), 85 FR 27787 (May 11, 2020) (SR–NYSEArca–2020–38). 5 See Securities Exchange Act Release Nos. 89038 (June 10, 2020), 85 FR 36447 (June 16, 2020) (SR– NYSEArca–2020–52); 89242 (June 7, 2020), 85 FR 42037 (July 13, 2020) (SR–NYSEArca–2020–60); 89480 (August 5, 2020), 85 FR 48591 (August 11, 2020) (SR–NYSEArca–2020–69); 89694 (August 27, 2020), 85 FR 54608 (September 2, 2020) (SR– NYSEArca–2020–76); 90191 (October 15, 2020), 85 FR 67032 (October 21, 2020) (SR–NYSEArca–2020– 90); 90838 (December 31, 2020), 86 FR 657 (January 6, 2021) (SR–NYSEArca–2020–115). See also Fee Schedule, NYSE Arca OPTIONS: FLOOR and EQUIPMENT and CO-LOCATION FEES. VerDate Sep<11>2014 17:52 Mar 24, 2021 Jkt 253001 of the Trading Floor facilities to Floor personnel or June 2021.6 Specifically, as with the prior fee waivers, the proposed fee waiver covers the following fixed fees for Qualifying Firms, which relate directly to Floor operations, are charged only to Floor participants and do not apply to participants that conduct business offFloor: • Floor Booths; • Market Maker Podia; • Options Floor Access; • Wire Services; and • ISP Connection.7 The proposed fee change is designed to reduce monthly costs for all Qualifying Firms whose operations continue to be disrupted even though the Trading Floor has partially reopened. In reducing this monthly financial burden, the proposed change would allow Qualifying Firms that had Floor operations in March 2020 to reallocate funds to assist with the cost of shifting and maintaining their prior fully-staffed on-Floor operations to offFloor and recoup losses as a result of the partial reopening. The Exchange believes that all Qualifying Firms would benefit from this proposed fee change. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,8 in general, and furthers the objectives of Sections 6(b)(4) and (5) of the Act,9 in particular, because it provides for the equitable allocation of reasonable dues, fees, and other charges among its members, issuers and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers or dealers. The Exchange 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.’’ 10 6 See proposed Fee Schedule, NYSE Arca OPTIONS: FLOOR and EQUIPMENT and COLOCATION FEES. 7 See id. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(4) and (5). 10 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (S7–10–04) (‘‘Reg NMS Adopting Release’’). PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 15981 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.11 Therefore, currently no exchange possesses significant pricing power in the execution of multiply-listed equity and ETF options order flow. More specifically, in February 2021, the Exchange had less than 11% market share of executed volume of multiplylisted equity and ETF options trades.12 This proposed fee change is reasonable, equitable, and not unfairly discriminatory because it would reduce monthly costs for all Qualifying Firms whose operations have been disrupted despite the fact that the Trading Floor has partially reopened because of the social distancing requirements and/or other health concerns related to resuming operation on the Floor. In reducing this monthly financial burden, the proposed change would allow Qualifying Firms that had Floor operations in March 2020 to reallocate funds to assist with the cost of shifting and maintaining their prior fully-staffed on-Floor operations to off-Floor and recoup losses as a result of the partial reopening of the Floor. The Exchange believes that all Qualifying Firms would benefit from this proposed fee change. The Exchange believes the proposed rule change is an equitable allocation of its fees and credits as it merely continues the previous fee waiver for Qualifying Firms, which affects fees charged only to Floor participants and does not apply to participants that conduct business off-Floor. The Exchange believes it is an equitable allocation of fees and credits to extend the fee waiver for Qualifying Firms because such firms have either no more than half of their Floor staff (as measured by either the March 2020 or Exchange-approved) levels or have vacant podia—and this reduction in staffing levels on the Floor impacts the speed, volume and efficiency with which these firms can operate, which is to their financial detriment. 11 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/Market-DataReports/Volume-and-Open-Interest/MonthlyWeekly-Volume-Statistics. 12 Based on a compilation of OCC data for monthly volume of equity-based options and monthly volume of ETF-based options, see id., the Exchange’s market share in multiply-listed equity and ETF options increased from 10.23% for the month of February 2020 to 10.74% for the month of February 2021. E:\FR\FM\25MRN1.SGM 25MRN1 15982 Federal Register / Vol. 86, No. 56 / Thursday, March 25, 2021 / Notices The Exchange believes that the proposal is not unfairly discriminatory because the proposed continuation of the fee waiver would affect all similarlysituated market participants on an equal and non-discriminatory basis. 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. The Exchange believes that the proposed changes would encourage the continued participation of Qualifying Firms, thereby promoting market depth, price discovery and transparency and would enhance 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.’’ 13 Intramarket Competition. The proposed change, which continues the fee waiver for all Qualifying Firms, is designed to reduce monthly costs for those Floor participants whose operations continue to be impacted even though the Trading Floor has partially reopened. In reducing this monthly financial burden, the proposed change would allow Qualifying Firms that had Floor operations in March 2020 to reallocate funds to assist with the cost of shifting and maintaining their previously on-Floor operations to offFloor. The Exchange believes that the proposed waiver of fees for Qualifying Firms would not impose a disparate burden on competition among market participants on the Exchange because off-Floor market participants are not subject to these Floor-based fixed fees. In addition, Floor-based firms that are not subject to the extent of staffing shortfalls as are Qualifying Firms, i.e., such firms have more than 50% of their March 2020—or Exchange-approved— staffing levels on the Floor and/or have no vacant Podia during the month, do not face the same operational disruption and potential financial impact during the partial reopening of the Floor. 13 See Reg NMS Adopting Release, supra note 10, at 37499. VerDate Sep<11>2014 17:52 Mar 24, 2021 Jkt 253001 Intermarket Competition. The Exchange operates in a highly competitive market in which market participants can readily favor one of the 16 competing option exchanges if they deem fee levels at a venue to be excessive. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and to attract order flow to the Exchange. Based on publiclyavailable information, and excluding index-based options, no single exchange currently has more than 16% of the market share of executed volume of multiply-listed equity and ETF options trades.14 Therefore, currently no exchange possesses significant pricing power in the execution of multiplylisted equity and ETF options order flow. More specifically, in February 2021, the Exchange had slightly over 10% market share of executed volume of multiply-listed equity and ETF options trades.15 The Exchange believes that the proposed rule change reflects this competitive environment because it waives fees for Qualifying Firms and is designed to reduce monthly costs for Floor participants whose operations continue to be disrupted even though the Trading Floor has partially reopened. In reducing this monthly financial burden, the proposed change would allow affected participants to reallocate funds to assist with the cost of shifting and maintaining their prior fully staffed on-Floor operations to offFloor. 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) 16 of the Act and subparagraph (f)(2) of Rule 19b–4 17 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 14 See supra note 11. on OCC data, supra note 12, the Exchange’s market share in multiply-listed equity and ETF options increased from 10.23% for the month of February 2020 to 10.74% for the month of February 2021. 16 15 U.S.C. 78s(b)(3)(A). 17 17 CFR 240.19b–4(f)(2). 15 Based PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 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) 18 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–2021–18 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2021–18. 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. 18 15 E:\FR\FM\25MRN1.SGM U.S.C. 78s(b)(2)(B). 25MRN1 Federal Register / Vol. 86, No. 56 / Thursday, March 25, 2021 / Notices 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–2021–18, and should be submitted on or before April 15, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2021–06122 Filed 3–24–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91376; File No. SR–ICEEU– 2021–002] Self-Regulatory Organizations; ICE Clear Europe Limited; Order Approving Proposed Rule Change Relating to Amendments to the ICE Clear Europe Price Submission Disciplinary Framework March 19, 2021. I. Introduction On February 2, 2021, ICE Clear Europe Limited (‘‘ICE Clear Europe’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to modify certain provisions of its Price Submission Disciplinary Framework and to rename it as the ‘‘Price Submission Disciplinary Procedure’’ (hereinafter referred to as the ‘‘Procedure’’).3 The proposed rule change was published for comment in the Federal Register on February 18, 2021.4 The Commission did not receive comments regarding the proposed rule change. For the reasons discussed below, the Commission is approving the proposed rule change. II. Description of the Proposed Rule Change ICE Clear Europe proposes to make specific amendments to the current 19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing of Proposed Rule Change Relating to Amendments to the ICE Clear Europe Price Submission Disciplinary Framework, Exchange Act Release No. 91114 (February 11, 2021), 86 FR 10152 (February 18, 2021) (SR– ICEEU–2021–002) (‘‘Notice’’). 4 See Notice, supra note 3, 86 FR 10152. 1 15 VerDate Sep<11>2014 17:52 Mar 24, 2021 Jkt 253001 Procedure for investigating and disciplining Clearing Members for missed price submissions when a Clearing Member holds cleared open interest in a single-name or index credit default swap (‘‘CDS’’) product.5 The proposed amendments are summarized below.6 Cash Assessments for Missed Submissions and Waivers The proposed amendments in renumbered Section 2.2.3 (Fixed Cash Assessments for Missed Submissions) would state that a Clearing Member in receipt of a Notice of Investigation issued in respect of an alleged Missed Submission will have five days to submit written comments. The proposed amendments would also provide an additional five days for ICE Clear Europe to review the relevant Clearing Member’s comments before sending a Letter of Mindedness to the Clearing Member under Rule 1002(f) at the conclusion of the investigation. ICE Clear Europe represents that these proposed amendments would improve the current process by affording the Clearing Member an opportunity to respond to the initial notice and giving ICE Clear Europe time to assess the Clearing Member’s response before determining whether to take further action under the Rules.7 The proposed rule change would also clarify when ICE Clear Europe would issue a cash assessment notice to a Clearing Member, regardless of whether ICE Clear Europe receives written comments from the Clearing Member during the ten-day period from the date of a Letter of Mindedness. Specifically, the proposed rule change would provide that ICE Clear Europe will issue a cash assessment notice following the expiry of such ten-day period where it determines that an assessment amount is required to be collected. The proposed rule change would make a drafting clarification to specify that the cash assessment notice would be calculated according to the cash assessment calculation details outlined in the Procedure. In addition, the proposed rule change would remove the current investigation procedures for one or more Missed Submissions in a month for the type of instrument (index or single-name) involved. Instead, the proposed amendments would update and clarify 5 Capitalized terms used not defined herein have the meanings specified in the Procedure or the ICE Clear Europe Clearing Rules (the ‘‘Rules’’), as applicable. 6 The following description is substantially excerpted from the Notice. 7 See Notice, 86 FR at 10152. PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 15983 the procedures by which a Clearing Member may assert that one or more Missed Submissions were due to extraordinary circumstances outside of its control. In such circumstances, the proposed rule change would designate the Head of Regulation and Compliance to determine whether such circumstances apply, rather than the currently designated Head of Clearing Compliance. ICE Clear Europe also proposes changes in renumbered Section 2.2.3 (Fixed Cash Assessments for Missed Submissions) to the process for granting waivers of the applicable cash assessment amount for Missed Submissions based on the CDS product type. The proposed rule change would clarify that if a waiver is granted, no cash assessment amount would be due for the Missed Submission. Further, the proposed rule change would change the current eligibility provisions for such waivers. ICE Clear Europe represents that, under the current waiver process, a Clearing Member receives only one waiver over the course of its clearing membership for a Missed Submission.8 The proposed rule change would change that process by providing that a Clearing Member is eligible for one waiver per calendar year for Missed Submissions for single-name products and one waiver per calendar year for Missed Submissions for index products. The proposed rule change would also expressly limit such waivers to Missed Submissions caused by technical failures. In addition, the proposed rule change would require that Clearing Members must provide an adequate written explanation of the technical failure and a summary of planned remedial actions. The proposed rule change would also specify that only the first instance of a Missed Submission in any calendar year for both single-name and index products will be eligible for a waiver. ICE Clear Europe represents that it believes the proposed approach to waivers strikes a better balance than the current approach between the need for robust submissions under the Policy and the goal of not unnecessarily penalizing Clearing Members for technical failures.9 Changes Regarding Missed Submissions In the definition of the term ‘‘Missed Submissions’’ in Section 2.1.2, ICE Clear Europe would change the type of submissions that count as Missed Submissions. Specifically, ICE Clear Europe would remove the statement that spread submissions will be counted as 8 Id. 9 See E:\FR\FM\25MRN1.SGM Notice, 86 FR at 10153. 25MRN1

Agencies

[Federal Register Volume 86, Number 56 (Thursday, March 25, 2021)]
[Notices]
[Pages 15980-15983]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-06122]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91372; No. SR-NYSEArca-2021-18]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE 
Arca Options Fee Schedule

March 19, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on March 10, 2021, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify the NYSE Arca Options Fee Schedule 
(``Fee Schedule'') to extend the waiver of certain Floor-based fixed 
fees. The Exchange proposes to implement the fee change effective April 
1, 2021. The proposed rule 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,

[[Page 15981]]

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 the Fee Schedule to extend 
the waiver of certain Floor-based fixed fees for market participants 
that have been unable to resume their Floor operations to a certain 
capacity level, as discussed below. The Exchange proposes to implement 
the fee change effective April 1, 2021.
    On March 18, 2020, the Exchange announced that it would temporarily 
close the Trading Floor, effective Monday, March 23, 2020, as a 
precautionary measure to prevent the potential spread of COVID-19. 
Following the temporary closure of the Trading Floor, the Exchange 
waived certain Floor-based fixed fees for April and May 2020.\4\ 
Although the Trading Floor partially reopened on May 4, 2020 and Floor-
based open outcry activity is supported, certain participants have been 
unable to resume pre-Floor closure levels of operations. As a result, 
the Exchange extended the fee waiver through March 2021, but only for 
Floor Broker firms that were unable to operate at more than 50% of 
their March 2020 on-Floor staffing levels and for Market Maker firms 
that have vacant or ``unmanned'' Podia for the entire month due to 
COVID-19 related considerations (the ``Qualifying Firms'').\5\ Because 
the Trading Floor will continue to operate with reduced capacity, the 
Exchange proposes to extend the fee waiver for Qualifying Firms through 
the earlier of the first full month of a full reopening of the Trading 
Floor facilities to Floor personnel or June 2021.\6\
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    \4\ See Securities Exchange Act Release Nos. 88596 (April 8, 
2020), 85 FR 20796 (April 14, 2020) (SR-NYSEArca-2020-29); 88812 
(May 5, 2020), 85 FR 27787 (May 11, 2020) (SR-NYSEArca-2020-38).
    \5\ See Securities Exchange Act Release Nos. 89038 (June 10, 
2020), 85 FR 36447 (June 16, 2020) (SR-NYSEArca-2020-52); 89242 
(June 7, 2020), 85 FR 42037 (July 13, 2020) (SR-NYSEArca-2020-60); 
89480 (August 5, 2020), 85 FR 48591 (August 11, 2020) (SR-NYSEArca-
2020-69); 89694 (August 27, 2020), 85 FR 54608 (September 2, 2020) 
(SR-NYSEArca-2020-76); 90191 (October 15, 2020), 85 FR 67032 
(October 21, 2020) (SR-NYSEArca-2020-90); 90838 (December 31, 2020), 
86 FR 657 (January 6, 2021) (SR-NYSEArca-2020-115). See also Fee 
Schedule, NYSE Arca OPTIONS: FLOOR and EQUIPMENT and CO-LOCATION 
FEES.
    \6\ See proposed Fee Schedule, NYSE Arca OPTIONS: FLOOR and 
EQUIPMENT and CO-LOCATION FEES.
---------------------------------------------------------------------------

    Specifically, as with the prior fee waivers, the proposed fee 
waiver covers the following fixed fees for Qualifying Firms, which 
relate directly to Floor operations, are charged only to Floor 
participants and do not apply to participants that conduct business 
off-Floor:
     Floor Booths;
     Market Maker Podia;
     Options Floor Access;
     Wire Services; and
     ISP Connection.\7\
---------------------------------------------------------------------------

    \7\ See id.
---------------------------------------------------------------------------

    The proposed fee change is designed to reduce monthly costs for all 
Qualifying Firms whose operations continue to be disrupted even though 
the Trading Floor has partially reopened. In reducing this monthly 
financial burden, the proposed change would allow Qualifying Firms that 
had Floor operations in March 2020 to reallocate funds to assist with 
the cost of shifting and maintaining their prior fully-staffed on-Floor 
operations to off-Floor and recoup losses as a result of the partial 
reopening. The Exchange believes that all Qualifying Firms would 
benefit from this proposed fee change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\8\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\9\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4) and (5).
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    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.'' \10\
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    \10\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04) (``Reg NMS 
Adopting Release'').
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    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.\11\ Therefore, currently no exchange possesses significant 
pricing power in the execution of multiply-listed equity and ETF 
options order flow. More specifically, in February 2021, the Exchange 
had less than 11% market share of executed volume of multiply-listed 
equity and ETF options trades.\12\
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    \11\ 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/Market-Data-Reports/Volume-and-Open-Interest/Monthly-Weekly-Volume-Statistics.
    \12\ Based on a compilation of OCC data for monthly volume of 
equity-based options and monthly volume of ETF-based options, see 
id., the Exchange's market share in multiply-listed equity and ETF 
options increased from 10.23% for the month of February 2020 to 
10.74% for the month of February 2021.
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    This proposed fee change is reasonable, equitable, and not unfairly 
discriminatory because it would reduce monthly costs for all Qualifying 
Firms whose operations have been disrupted despite the fact that the 
Trading Floor has partially reopened because of the social distancing 
requirements and/or other health concerns related to resuming operation 
on the Floor. In reducing this monthly financial burden, the proposed 
change would allow Qualifying Firms that had Floor operations in March 
2020 to reallocate funds to assist with the cost of shifting and 
maintaining their prior fully-staffed on-Floor operations to off-Floor 
and recoup losses as a result of the partial reopening of the Floor. 
The Exchange believes that all Qualifying Firms would benefit from this 
proposed fee change.
    The Exchange believes the proposed rule change is an equitable 
allocation of its fees and credits as it merely continues the previous 
fee waiver for Qualifying Firms, which affects fees charged only to 
Floor participants and does not apply to participants that conduct 
business off-Floor. The Exchange believes it is an equitable allocation 
of fees and credits to extend the fee waiver for Qualifying Firms 
because such firms have either no more than half of their Floor staff 
(as measured by either the March 2020 or Exchange-approved) levels or 
have vacant podia--and this reduction in staffing levels on the Floor 
impacts the speed, volume and efficiency with which these firms can 
operate, which is to their financial detriment.

[[Page 15982]]

    The Exchange believes that the proposal is not unfairly 
discriminatory because the proposed continuation of the fee waiver 
would affect all similarly-situated market participants on an equal and 
non-discriminatory basis.
    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. The Exchange believes that the proposed changes 
would encourage the continued participation of Qualifying Firms, 
thereby promoting market depth, price discovery and transparency and 
would enhance 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.'' \13\
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    \13\ See Reg NMS Adopting Release, supra note 10, at 37499.
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    Intramarket Competition. The proposed change, which continues the 
fee waiver for all Qualifying Firms, is designed to reduce monthly 
costs for those Floor participants whose operations continue to be 
impacted even though the Trading Floor has partially reopened. In 
reducing this monthly financial burden, the proposed change would allow 
Qualifying Firms that had Floor operations in March 2020 to reallocate 
funds to assist with the cost of shifting and maintaining their 
previously on-Floor operations to off-Floor. The Exchange believes that 
the proposed waiver of fees for Qualifying Firms would not impose a 
disparate burden on competition among market participants on the 
Exchange because off-Floor market participants are not subject to these 
Floor-based fixed fees. In addition, Floor-based firms that are not 
subject to the extent of staffing shortfalls as are Qualifying Firms, 
i.e., such firms have more than 50% of their March 2020--or Exchange-
approved--staffing levels on the Floor and/or have no vacant Podia 
during the month, do not face the same operational disruption and 
potential financial impact during the partial reopening of the Floor.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily favor one 
of the 16 competing option exchanges if they deem fee levels at a venue 
to be excessive. In such an environment, the Exchange must continually 
adjust its fees to remain competitive with other exchanges and to 
attract order flow to the Exchange. Based on publicly-available 
information, and excluding index-based options, no single exchange 
currently has more than 16% of the market share of executed volume of 
multiply-listed equity and ETF options trades.\14\ Therefore, currently 
no exchange possesses significant pricing power in the execution of 
multiply-listed equity and ETF options order flow. More specifically, 
in February 2021, the Exchange had slightly over 10% market share of 
executed volume of multiply-listed equity and ETF options trades.\15\
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    \14\ See supra note 11.
    \15\ Based on OCC data, supra note 12, the Exchange's market 
share in multiply-listed equity and ETF options increased from 
10.23% for the month of February 2020 to 10.74% for the month of 
February 2021.
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    The Exchange believes that the proposed rule change reflects this 
competitive environment because it waives fees for Qualifying Firms and 
is designed to reduce monthly costs for Floor participants whose 
operations continue to be disrupted even though the Trading Floor has 
partially reopened. In reducing this monthly financial burden, the 
proposed change would allow affected participants to reallocate funds 
to assist with the cost of shifting and maintaining their prior fully 
staffed on-Floor operations to off-Floor.

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) \16\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \17\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 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) \18\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \18\ 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-NYSEArca-2021-18 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2021-18. 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.

[[Page 15983]]

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-2021-18, and should 
be submitted on or before April 15, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2021-06122 Filed 3-24-21; 8:45 am]
BILLING CODE 8011-01-P
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