Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend the NYSE American Options Fee Schedule, 19653-19656 [2021-07596]
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Federal Register / Vol. 86, No. 70 / Wednesday, April 14, 2021 / Notices
proposed collection of information,
including the validity of the
methodology and assumptions used;
3. Enhance the quality, utility, and
clarity of the information to be
collected; and
4. Minimize the burden of the
collection of information on those who
are to respond, including through the
use of appropriate automated,
electronic, mechanical, or other
technological collection techniques or
other forms of information technology,
e.g., permitting electronic submissions
of responses.
RI 20–120 is designed to collect
information the Office of Personnel
Management needs to comply with the
wishes of the retired Federal employee
whose marriage has ended. This form
provides an organized way for the
retiree to give us everything at one time.
Analysis
Agency: Retirement Operations,
Retirement Services, Office of Personnel
Management.
Title: Request for Change to
Unreduced Annuity.
OMB Number: 3206–0245.
Frequency: On occasion.
Affected Public: Individuals or
Households.
Number of Respondents: 5,000.
Estimated Time per Respondent: 30
minutes.
Total Burden Hours: 2,500 minutes.
Office of Personnel Management.
Alexys Stanley,
Regulatory Affairs Analyst.
BILLING CODE 6325–38–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91510; File No. SR–
NYSEAMER–2021–20]
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Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change to Amend the NYSE
American Options Fee Schedule
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 April 8,
2021, NYSE American LLC (‘‘NYSE
American’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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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 the
Professional Step-Up Incentive program.
The Exchange proposes to implement
the fee change effective April 8, 2021.4
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,
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
[FR Doc. 2021–07659 Filed 4–13–21; 8:45 am]
1 15
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.
1. Purpose
The purpose of this filing is to modify
the Fee Schedule regarding the
Professional Step-Up Incentive program
(the ‘‘Step-Up Incentive’’) 5 and correct
a typographical error.6
The Exchange proposes to implement
the rule change on April 8, 2021.
The Exchange has established various
pricing incentives designed to
encourage increased Electronic volume
executed on the Exchange, including
(but not limited to) the American
Customer Engagement (‘‘ACE’’)
Program 7 and the Step-Up Incentive.
4 The Exchange originally filed to amend the Fee
Schedule on April 1, 2021 (SR–NYSEAmer–2021–
18) and withdrew such filing on April 8, 2021 to
make a clarifying change to the proposed Fee
Schedule, set forth in the instant filing.
5 See Fee Schedule, Section I.H.
6 The Exchange proposes a non-substantive
change to delete an extraneous word in Section I.H.,
which would improve the clarity of the Fee
Schedule. See proposed Fee Schedule, Section I.H.
7 See Fee Schedule, Section I.E.
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19653
While the ACE Program is limited to
Electronic Customer volume, the StepUp Incentive is limited to Electronic
Professional 8 volume. The Exchange
proposes to modify certain volume
exclusions and qualifying criteria for the
Step-Up Incentive to continue to
encourage greater Electronic
Professional volume and, specifically, to
continue to incentivize increased
Electronic Professional volume. To the
extent that the modifications succeed,
the increased liquidity on the Exchange
would result in enhanced market
quality for all participants.
Currently, the Step-Up Incentive
program provides that ATP Holders who
increase their monthly Electronic
Professional volume by specified
percentages of TCADV over their August
2019 volume or, for new ATP Holders,
that increase Electronic Professional
volume by the specified percentages of
TCADV above a base level of 10,000
contracts ADV (the ‘‘Qualifying
Volume’’), will qualify for certain
reduced transaction rates on Electronic
Professional volume, as well as credits
on Electronic Customer volume at Tier
1 of the ACE program.
The Exchange proposes to modify the
Step-Up Incentive program to (1)
exclude an additional category of
volume from the calculations of base
volume amounts and Qualifying
Volume, and (2) revise the Qualifying
Volume percentages for Tiers A and B.
Currently, volumes from Strategy
Executions, CUBE Auctions, and QCC
Transactions are excluded from the
calculation of base volume amounts and
Qualifying Volume. The Exchange
proposes to further specify that volume
from interest that takes liquidity from
posted Customer interest would also be
excluded for purposes of calculating
base volume amounts and Qualifying
Volume for the Step-Up Incentive, as
such Customer interest is eligible for
discounted rates and credits under other
programs set forth in the Exchange’s Fee
Schedule.9
The Step-Up Incentive program
includes two tiers that ATP Holders can
qualify for based on Qualifying Volume
as a percentage of TCADV. The
Exchange proposes to increase the
qualification for Tier A from 0.12% of
TCADV to 0.20% of TCADV and for Tier
B from 0.15% of TCADV to 0.25% of
TCADV. This proposed change is shown
in the table below, with to-be-deleted
8 For purposes of this filing, Electronic
‘‘Professional’’ volume includes Electronic volume
in the Professional Customer, Broker Dealer, NonNYSE American Options Market Maker, and Firm
ranges.
9 See, e.g., Fee Schedule, Section I.E.
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Federal Register / Vol. 86, No. 70 / Wednesday, April 14, 2021 / Notices
text in brackets and proposed (new) text
underscored.10
PROFESSIONAL STEP-UP INCENTIVE
Qualifying volume as a % of
TCADV
Tier A ............................................
Tier B ............................................
[0.12%] 0.20% ...............................
[0.15%] 0.25% ...............................
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As shown in the table above, by
achieving an increase in Qualifying
Volume, benefits accrue to the ATP
Holder. For example, assume an ATP
Holder executed Electronic Professional
volume in August 2019 totaling 9,000
ADV and, in April 2021, the ATP
Holder executed Electronic Professional
volume of 100,000 ADV and the TCADV
is 37,200,000. To qualify for the Step-Up
Incentive, that ATP Holder would need
to execute Electronic Professional
volume that is at least 74,400 contracts
(i.e., 0.20% of TCADV) above its August
2019 Electronic Professional Volume for
Tier A, as modified, or at least 93,000
contracts (i.e., 0.25% of TCADV) above
its August 2019 Electronic Professional
Volume for Tier B, as modified. In other
words, that ATP Holder would need to
attain Electronic Professional volume of
83,400 contracts to qualify for Tier A
and 102,000 contracts to qualify for Tier
B, and, in this example, would qualify
for Tier A but not for Tier B. If an ATP
Holder did not have August 2019
volume, it would have to execute the
outlined volumes above the 10,000 ADV
base level to qualify for Tiers A and B.
Such an ATP Holder would need to
attain Electronic Professional volume of
84,400 contracts to qualify for Tier A
and 103,000 contracts to qualify for Tier
B, and, in this example, would likewise
qualify for Tier A but not for Tier B.
ATP Holders that qualify for Tier A,
as modified, would continue to be
charged reduced rates of $0.35 and
$0.60 on Electronic Professional
executions on Penny and Non-Penny
issues, respectively, and would also
receive ACE Tier 1 Customer Credits on
Customer executions.
ATP Holders that qualify for Tier B,
as modified, would continue to be
eligible for even further reduced rates of
$0.20 and $0.50 on Electronic
Professional executions on Penny and
Non-Penny issues, respectively, and
would also receive ACE Tier 1 Customer
10 See
also proposed Fee Schedule, Section I.H.
e.g., MIAX Options (‘‘MIAX’’) Fee
Schedule, Section 1.a.iv, Professional Rebate
Program, available at: https://
www.miaxoptions.com/sites/default/files/fee_
schedule-files/MIAX_Options_Fee_Schedule_01_
11 See,
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Per contract
penny rate
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Per contract
non-penny rate
$0.35
0.20
Credits on Customer executions. The
Exchange also proposes to modify the
Fee Schedule to specify that ATP
Holders that qualify for Tier B as
modified (i.e., ATP Holders that
increase Qualifying Volume by 0.25% of
TCADV) and also execute posted
Professional volume (i.e., that adds
liquidity) of at least 0.10% of TCADV
would continue to receive a $0.03 per
contract discount off the Tier B rates.
The Exchange’s fees are constrained
by intermarket competition, as ATP
Holders may direct their order flow to
any of the 16 options exchanges,
including an exchange with a similar
incentive program.11 Thus, ATP Holders
have a choice of where they direct their
order flow. These proposed
modifications to the Step-Up Incentive
program are designed to continue to
encourage ATP Holders to increase the
amount of Electronic Professional
volume directed to and executed on the
Exchange. The Exchange notes that all
market participants stand to benefit
from increased Electronic Professional
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 believes that the StepUp Incentive, as modified, would
continue to incent ATP Holders to
direct volume to the Exchange even
with the exclusion of interest that takes
liquidity from posted Customer interest
from the calculations of base volume
amounts and Qualifying Volume, and
even though ATP Holders would have
to meet higher volume thresholds to
qualify for Tiers A and B. Because both
Tiers A and B, as proposed, will
continue to offer discounted rates
coupled with ACE program Tier 1
credits on certain Customer executions,
the Exchange believes the Step-Up
Incentive, as modified, should continue
to incent the consistent and concerted
13_21.pdf (setting forth incentive program that, like
the Step-Up Incentive, provides a discounted net
rate on Professional (as defined by the MIAX
program) electronic volume, provided the Member
achieves certain Professional volume increase
percentage thresholds in the month relative to the
fourth quarter of 2015).
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$0.60
0.50
ACE benefits
Tier 1
Tier 1
redirection of order flow to the
Exchange by ATP Holders in exchange
for better economics as provided by the
incentive program (i.e., enhanced
discounts and credits), making it a more
attractive venue for trading.
The Exchange cannot predict with
certainty whether any ATP Holders
would be incented to qualify for the
Step-Up Incentive, as modified;
however, the Exchange believes that
ATP Holders would continue to be
encouraged to direct Electronic
Professional volume to the Exchange to
qualify for the Step-Up Incentive.
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.
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
There are currently 16 registered
options exchanges competing for order
flow. Based on publicly-available
information, and excluding index-based
12 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
14 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(S7–10–04) (‘‘Reg NMS Adopting Release’’).
13 15
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Federal Register / Vol. 86, No. 70 / Wednesday, April 14, 2021 / Notices
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, 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 10% market
share of executed volume of multiplylisted equity and 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.
The Exchange believes that the
proposed modifications to the Step-Up
Incentive are reasonable because they
are designed to continue to incent ATP
Holders to increase the amount of
Electronic Professional order flow
directed to the Exchange. The Exchange
believes that, even though the proposed
changes to the Step-Up Incentive
program would exclude an additional
category of volume from the calculation
of base volume and Qualifying Volume,
as well as increase the threshold volume
to qualify for Tiers A and B, ATP
Holders will still be incentivized to
direct order flow to the Exchange in
exchange for better economics as
provided by the incentive program (i.e.,
enhanced discounts and credits). The
Exchange also notes that all market
participants stand to benefit from
increased Electronic Professional
volume, as such increase promotes
market depth, facilitates tighter spreads
and enhances price discovery, and may
lead to a corresponding increase in
order flow from other market
participants that do not participate in
(or qualify for) the Step-Up Incentive
program.
Finally, to the extent the proposed
modifications attract greater volume and
liquidity, the Exchange believes the
proposed changes would improve the
Exchange’s overall competitiveness and
strengthen its market quality for all
market participants, and continue to
attract Electronic Professional volume to
the Exchange even though the proposed
changes would raise the qualification
thresholds for the Step-Up Incentive. In
the backdrop of the competitive
environment in which the Exchange
operates, the proposed changes are a
reasonable attempt by the Exchange to
increase the depth of its market and
improve its market share relative to its
competitors. The proposed changes are
designed to incent ATP Holders to
direct liquidity to the Exchange in
Electronic Professional executions,
similar to another exchange program
offering incentives on professional
volume,17 thereby promoting market
depth, price discovery and
improvement and enhancing order
execution opportunities for market
participants.
15 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.
16 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 slightly from 8.42% for
the month of February 2020 to 8.86% for the month
of February 2021.
The Proposed Rule Change is not
Unfairly Discriminatory
The Exchange believes that the
proposal is not unfairly discriminatory
because the proposed modifications
would be available to all similarly-
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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 proposed
change is based on the amount and type
of business transacted on the Exchange,
and ATP Holders can opt to avail
themselves of the Step-Up Incentive
program or not. Moreover, even though
the proposed changes would exclude
additional volume from the calculation
of base volume and Qualifying Volume,
as well as increase the threshold volume
to qualify for the Step-Up Incentive, the
Exchange believes they are designed to
encourage ATP Holders to aggregate
their executions—particularly
Electronic Professional—at the
Exchange as a primary execution venue.
To the extent that the proposed changes
attract more Electronic Professional
volume to the Exchange, this 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 changes would continue
to improve market quality for all market
participants on the Exchange and, as a
consequence, continue to attract more
order flow to the Exchange thereby
improving market-wide quality and
price discovery.
17 See, e.g., supra note 11 (regarding MIAX
Professional Rebate Program).
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19655
situated market participants on an equal
and non-discriminatory basis.
The proposed changes are based on
the amount and type of business
transacted on the Exchange and ATP
Holders are not obligated to participate
in the Step-Up Incentive program.
Rather, the proposed changes are
designed to continue to encourage ATP
Holders to utilize the Exchange as a
primary trading venue (if they have not
done so previously) or increase
Electronic Professional volume sent to
the Exchange. To the extent that the
proposed changes attract more
executions to the Exchange, this
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 changes 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, even
though they exclude an additional
category of volume from the calculation
of base volume and Qualifying Volume
and increase the threshold volume to
qualify for the Step-Up Incentive. 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.
For the foregoing reasons, the
Exchange believes that the proposal is
consistent with the Act.
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
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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 changes are designed to attract
additional order flow (particularly
Electronic Professional volume) to the
Exchange. The Exchange believes that
the proposed modifications to the StepUp Incentive would continue to incent
market participants to direct additional
volume to the Exchange. Greater
liquidity benefits all market participants
on the Exchange and increased
Electronic Professional volume would
increase opportunities for execution of
other trading interest. The proposed
modifications to the calculation of base
volume amounts and Qualifying
Volume and to the qualification bases
for Tiers A and B of the Step-Up
Incentive would apply to all ATP
Holders that execute Electronic
Professional volume, and, as such, the
proposed change would not impose a
disparate burden on competition among
market participants on the Exchange.
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 particular 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
has more than 16% of the market share
of executed volume of multiply-listed
equity and ETF options trades.19
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 10% market
share of executed volume of multiplylisted equity and ETF options trades.20
The Exchange believes that the
proposed rule change reflects this
competitive environment because it
modifies the Exchange’s fees in a
manner designed to continue to
encourage ATP Holders to direct trading
18 See Reg NMS Adopting Release, supra note 14,
at 37499.
19 See supra note 15.
20 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 slightly from 8.42% for
the month of February 2020 to 8.86% for the month
of February 2021.
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interest (and, in particular, Electronic
Professional volume) to the Exchange, to
provide liquidity and to attract order
flow. To the extent that this purpose is
achieved, all the Exchange’s market
participants should benefit from the
improved market quality and increased
opportunities for price improvement.
The Exchange believes that the
proposed change could promote
competition between the Exchange and
other execution venues, including those
that currently offer similar pricing
incentives, by encouraging additional
orders to be sent to the Exchange for
execution.
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) 21 of the Act and
subparagraph (f)(2) of Rule 19b–4 22
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) 23 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–
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
23 15 U.S.C. 78s(b)(2)(B).
NYSEAMER–2021–20 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–2021–20. 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–2021–20, and
should be submitted on or before May
5, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–07596 Filed 4–13–21; 8:45 am]
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22 17
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CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 86, Number 70 (Wednesday, April 14, 2021)]
[Notices]
[Pages 19653-19656]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-07596]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91510; File No. SR-NYSEAMER-2021-20]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to Amend
the NYSE American Options Fee Schedule
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 April 8, 2021, NYSE American LLC (``NYSE American'' 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.
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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 the Professional Step-Up
Incentive program. The Exchange proposes to implement the fee change
effective April 8, 2021.\4\ 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.
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\4\ The Exchange originally filed to amend the Fee Schedule on
April 1, 2021 (SR-NYSEAmer-2021-18) and withdrew such filing on
April 8, 2021 to make a clarifying change to the proposed Fee
Schedule, set forth in the instant filing.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to modify the Fee Schedule regarding
the Professional Step-Up Incentive program (the ``Step-Up Incentive'')
\5\ and correct a typographical error.\6\
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\5\ See Fee Schedule, Section I.H.
\6\ The Exchange proposes a non-substantive change to delete an
extraneous word in Section I.H., which would improve the clarity of
the Fee Schedule. See proposed Fee Schedule, Section I.H.
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The Exchange proposes to implement the rule change on April 8,
2021.
The Exchange has established various pricing incentives designed to
encourage increased Electronic volume executed on the Exchange,
including (but not limited to) the American Customer Engagement
(``ACE'') Program \7\ and the Step-Up Incentive. While the ACE Program
is limited to Electronic Customer volume, the Step-Up Incentive is
limited to Electronic Professional \8\ volume. The Exchange proposes to
modify certain volume exclusions and qualifying criteria for the Step-
Up Incentive to continue to encourage greater Electronic Professional
volume and, specifically, to continue to incentivize increased
Electronic Professional volume. To the extent that the modifications
succeed, the increased liquidity on the Exchange would result in
enhanced market quality for all participants.
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\7\ See Fee Schedule, Section I.E.
\8\ For purposes of this filing, Electronic ``Professional''
volume includes Electronic volume in the Professional Customer,
Broker Dealer, Non-NYSE American Options Market Maker, and Firm
ranges.
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Currently, the Step-Up Incentive program provides that ATP Holders
who increase their monthly Electronic Professional volume by specified
percentages of TCADV over their August 2019 volume or, for new ATP
Holders, that increase Electronic Professional volume by the specified
percentages of TCADV above a base level of 10,000 contracts ADV (the
``Qualifying Volume''), will qualify for certain reduced transaction
rates on Electronic Professional volume, as well as credits on
Electronic Customer volume at Tier 1 of the ACE program.
The Exchange proposes to modify the Step-Up Incentive program to
(1) exclude an additional category of volume from the calculations of
base volume amounts and Qualifying Volume, and (2) revise the
Qualifying Volume percentages for Tiers A and B.
Currently, volumes from Strategy Executions, CUBE Auctions, and QCC
Transactions are excluded from the calculation of base volume amounts
and Qualifying Volume. The Exchange proposes to further specify that
volume from interest that takes liquidity from posted Customer interest
would also be excluded for purposes of calculating base volume amounts
and Qualifying Volume for the Step-Up Incentive, as such Customer
interest is eligible for discounted rates and credits under other
programs set forth in the Exchange's Fee Schedule.\9\
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\9\ See, e.g., Fee Schedule, Section I.E.
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The Step-Up Incentive program includes two tiers that ATP Holders
can qualify for based on Qualifying Volume as a percentage of TCADV.
The Exchange proposes to increase the qualification for Tier A from
0.12% of TCADV to 0.20% of TCADV and for Tier B from 0.15% of TCADV to
0.25% of TCADV. This proposed change is shown in the table below, with
to-be-deleted
[[Page 19654]]
text in brackets and proposed (new) text underscored.\10\
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\10\ See also proposed Fee Schedule, Section I.H.
Professional Step-Up Incentive
----------------------------------------------------------------------------------------------------------------
Qualifying volume as Per contract Per contract
a % of TCADV penny rate non-penny rate ACE benefits
----------------------------------------------------------------------------------------------------------------
Tier A............................ [0.12%] 0.20%....... $0.35 $0.60 Tier 1
Tier B............................ [0.15%] 0.25%....... 0.20 0.50 Tier 1
----------------------------------------------------------------------------------------------------------------
As shown in the table above, by achieving an increase in Qualifying
Volume, benefits accrue to the ATP Holder. For example, assume an ATP
Holder executed Electronic Professional volume in August 2019 totaling
9,000 ADV and, in April 2021, the ATP Holder executed Electronic
Professional volume of 100,000 ADV and the TCADV is 37,200,000. To
qualify for the Step-Up Incentive, that ATP Holder would need to
execute Electronic Professional volume that is at least 74,400
contracts (i.e., 0.20% of TCADV) above its August 2019 Electronic
Professional Volume for Tier A, as modified, or at least 93,000
contracts (i.e., 0.25% of TCADV) above its August 2019 Electronic
Professional Volume for Tier B, as modified. In other words, that ATP
Holder would need to attain Electronic Professional volume of 83,400
contracts to qualify for Tier A and 102,000 contracts to qualify for
Tier B, and, in this example, would qualify for Tier A but not for Tier
B. If an ATP Holder did not have August 2019 volume, it would have to
execute the outlined volumes above the 10,000 ADV base level to qualify
for Tiers A and B. Such an ATP Holder would need to attain Electronic
Professional volume of 84,400 contracts to qualify for Tier A and
103,000 contracts to qualify for Tier B, and, in this example, would
likewise qualify for Tier A but not for Tier B.
ATP Holders that qualify for Tier A, as modified, would continue to
be charged reduced rates of $0.35 and $0.60 on Electronic Professional
executions on Penny and Non-Penny issues, respectively, and would also
receive ACE Tier 1 Customer Credits on Customer executions.
ATP Holders that qualify for Tier B, as modified, would continue to
be eligible for even further reduced rates of $0.20 and $0.50 on
Electronic Professional executions on Penny and Non-Penny issues,
respectively, and would also receive ACE Tier 1 Customer Credits on
Customer executions. The Exchange also proposes to modify the Fee
Schedule to specify that ATP Holders that qualify for Tier B as
modified (i.e., ATP Holders that increase Qualifying Volume by 0.25% of
TCADV) and also execute posted Professional volume (i.e., that adds
liquidity) of at least 0.10% of TCADV would continue to receive a $0.03
per contract discount off the Tier B rates.
The Exchange's fees are constrained by intermarket competition, as
ATP Holders may direct their order flow to any of the 16 options
exchanges, including an exchange with a similar incentive program.\11\
Thus, ATP Holders have a choice of where they direct their order flow.
These proposed modifications to the Step-Up Incentive program are
designed to continue to encourage ATP Holders to increase the amount of
Electronic Professional volume directed to and executed on the
Exchange. The Exchange notes that all market participants stand to
benefit from increased Electronic Professional 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.
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\11\ See, e.g., MIAX Options (``MIAX'') Fee Schedule, Section
1.a.iv, Professional Rebate Program, available at: https://www.miaxoptions.com/sites/default/files/fee_schedule-files/MIAX_Options_Fee_Schedule_01_13_21.pdf (setting forth incentive
program that, like the Step-Up Incentive, provides a discounted net
rate on Professional (as defined by the MIAX program) electronic
volume, provided the Member achieves certain Professional volume
increase percentage thresholds in the month relative to the fourth
quarter of 2015).
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The Exchange believes that the Step-Up Incentive, as modified,
would continue to incent ATP Holders to direct volume to the Exchange
even with the exclusion of interest that takes liquidity from posted
Customer interest from the calculations of base volume amounts and
Qualifying Volume, and even though ATP Holders would have to meet
higher volume thresholds to qualify for Tiers A and B. Because both
Tiers A and B, as proposed, will continue to offer discounted rates
coupled with ACE program Tier 1 credits on certain Customer executions,
the Exchange believes the Step-Up Incentive, as modified, should
continue to incent the consistent and concerted redirection of order
flow to the Exchange by ATP Holders in exchange for better economics as
provided by the incentive program (i.e., enhanced discounts and
credits), making it a more attractive venue for trading.
The Exchange cannot predict with certainty whether any ATP Holders
would be incented to qualify for the Step-Up Incentive, as modified;
however, the Exchange believes that ATP Holders would continue to be
encouraged to direct Electronic Professional volume to the Exchange to
qualify for the Step-Up Incentive.
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.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4) and (5).
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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\
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\14\ 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
[[Page 19655]]
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, 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 10%
market share of executed volume of multiply-listed equity and ETF
options trades.\16\
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\15\ 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.
\16\ 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 slightly from 8.42% for the month of February 2020
to 8.86% for the month of February 2021.
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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.
The Exchange believes that the proposed modifications to the Step-
Up Incentive are reasonable because they are designed to continue to
incent ATP Holders to increase the amount of Electronic Professional
order flow directed to the Exchange. The Exchange believes that, even
though the proposed changes to the Step-Up Incentive program would
exclude an additional category of volume from the calculation of base
volume and Qualifying Volume, as well as increase the threshold volume
to qualify for Tiers A and B, ATP Holders will still be incentivized to
direct order flow to the Exchange in exchange for better economics as
provided by the incentive program (i.e., enhanced discounts and
credits). The Exchange also notes that all market participants stand to
benefit from increased Electronic Professional volume, as such increase
promotes market depth, facilitates tighter spreads and enhances price
discovery, and may lead to a corresponding increase in order flow from
other market participants that do not participate in (or qualify for)
the Step-Up Incentive program.
Finally, to the extent the proposed modifications attract greater
volume and liquidity, the Exchange believes the proposed changes would
improve the Exchange's overall competitiveness and strengthen its
market quality for all market participants, and continue to attract
Electronic Professional volume to the Exchange even though the proposed
changes would raise the qualification thresholds for the Step-Up
Incentive. In the backdrop of the competitive environment in which the
Exchange operates, the proposed changes are a reasonable attempt by the
Exchange to increase the depth of its market and improve its market
share relative to its competitors. The proposed changes are designed to
incent ATP Holders to direct liquidity to the Exchange in Electronic
Professional executions, similar to another exchange program offering
incentives on professional volume,\17\ thereby promoting market depth,
price discovery and improvement and enhancing order execution
opportunities for market participants.
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\17\ See, e.g., supra note 11 (regarding MIAX Professional
Rebate Program).
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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 proposed change is based on the
amount and type of business transacted on the Exchange, and ATP Holders
can opt to avail themselves of the Step-Up Incentive program or not.
Moreover, even though the proposed changes would exclude additional
volume from the calculation of base volume and Qualifying Volume, as
well as increase the threshold volume to qualify for the Step-Up
Incentive, the Exchange believes they are designed to encourage ATP
Holders to aggregate their executions--particularly Electronic
Professional--at the Exchange as a primary execution venue. To the
extent that the proposed changes attract more Electronic Professional
volume to the Exchange, this 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 changes
would continue to improve market quality for all market participants on
the Exchange and, as a consequence, continue to 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 that the proposal is not unfairly
discriminatory because the proposed modifications would be available to
all similarly-situated market participants on an equal and non-
discriminatory basis.
The proposed changes are based on the amount and type of business
transacted on the Exchange and ATP Holders are not obligated to
participate in the Step-Up Incentive program. Rather, the proposed
changes are designed to continue to encourage ATP Holders to utilize
the Exchange as a primary trading venue (if they have not done so
previously) or increase Electronic Professional volume sent to the
Exchange. To the extent that the proposed changes attract more
executions to the Exchange, this 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 changes
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, even though
they exclude an additional category of volume from the calculation of
base volume and Qualifying Volume and increase the threshold volume to
qualify for the Step-Up Incentive. 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.
For the foregoing reasons, the Exchange believes that the proposal
is consistent with the Act.
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
[[Page 19656]]
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\
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\18\ See Reg NMS Adopting Release, supra note 14, at 37499.
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Intramarket Competition. The proposed changes are designed to
attract additional order flow (particularly Electronic Professional
volume) to the Exchange. The Exchange believes that the proposed
modifications to the Step-Up Incentive would continue to incent market
participants to direct additional volume to the Exchange. Greater
liquidity benefits all market participants on the Exchange and
increased Electronic Professional volume would increase opportunities
for execution of other trading interest. The proposed modifications to
the calculation of base volume amounts and Qualifying Volume and to the
qualification bases for Tiers A and B of the Step-Up Incentive would
apply to all ATP Holders that execute Electronic Professional volume,
and, as such, the proposed change would not impose a disparate burden
on competition among market participants on the Exchange.
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
particular 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 has more than 16% of the market share of executed volume of
multiply-listed equity and ETF options trades.\19\ 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 10% market share of
executed volume of multiply-listed equity and ETF options trades.\20\
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\19\ See supra note 15.
\20\ 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 slightly from 8.42% for the month of February 2020
to 8.86% for the month of February 2021.
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The Exchange believes that the proposed rule change reflects this
competitive environment because it modifies the Exchange's fees in a
manner designed to continue to encourage ATP Holders to direct trading
interest (and, in particular, Electronic Professional volume) to the
Exchange, to provide liquidity and to attract order flow. To the extent
that this purpose is achieved, all the Exchange's market participants
should benefit from the improved market quality and increased
opportunities for price improvement.
The Exchange believes that the proposed change could promote
competition between the Exchange and other execution venues, including
those that currently offer similar pricing incentives, by encouraging
additional orders to be sent to the Exchange for execution.
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) \21\ of the Act and subparagraph (f)(2) of Rule
19b-4 \22\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 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) \23\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\23\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEAMER-2021-20 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-2021-20. 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-2021-20, and should be
submitted on or before May 5, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-07596 Filed 4-13-21; 8:45 am]
BILLING CODE 8011-01-P
