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, 5906-5910 [2022-02081]

Download as PDF 5906 Federal Register / Vol. 87, No. 22 / Wednesday, February 2, 2022 / Notices 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 filings also will be available for inspection and copying at the principal office of each 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 Numbers SR–MIAX–2021–59 and SR– PEARL–2021–57 and should be submitted on or before February 23, 2022. Rebuttal comments should be submitted by March 9, 2022. VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(3)(C) of the Act,59 that File Numbers SR–MIAX–2021–59 and SR– PEARL–2021–57 be, and hereby are, temporarily suspended. In addition, the Commission is instituting proceedings to determine whether the proposed rule changes should be approved or disapproved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.60 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2022–02083 Filed 2–1–22; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–94086; File No. SR– NYSEAMER–2022–06] 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 jspears on DSK121TN23PROD with NOTICES1 January 27, 2022. 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 January 21, 2022, NYSE American LLC (‘‘NYSE U.S.C. 78s(b)(3)(C). CFR 200.30–3(a)(57) and (58). 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 60 17 VerDate Sep<11>2014 21:31 Feb 01, 2022 Jkt 256001 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 (the ‘‘Fee Schedule’’) regarding the Floor Broker Fixed Cost Prepayment Incentive Program. The Exchange proposes to implement the fee change effective January 21, 2022.4 The proposed change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change BILLING CODE 8011–01–P 59 15 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 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 Floor Broker Fixed Cost Prepayment Incentive Program (the ‘‘FB Prepay Program’’), a prepayment incentive program that allows Floor Broker organizations (each, a ‘‘Floor Broker’’) to prepay certain of their annual Eligible Fixed Costs in exchange for volume rebates, as set forth in the Fee Schedule.5 4 The Exchange originally filed to amend the Fee Schedule on December 29, 2021 (SR–NYSEAmer– 2021–50), with an effective date of January 3, 2022, then withdrew such filing and amended the Fee Schedule on January 12, 2022 (SR–NYSEAmer– 2022–02), which latter filing the Exchange withdrew on January 21, 2022. 5 See Fee Schedule, Section III.E.1, Floor Broker Fixed Cost Prepayment Incentive Program (the ‘‘FB Prepay Program’’), available here: https:// PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 Currently, the FB Prepay Program offers participating Floor Brokers an opportunity to qualify for rebates by achieving growth in billable manual volume by a certain percentage as measured against one of two benchmarks (the ‘‘Percentage Growth Incentive’’). Specifically, the Percentage Growth Incentive is designed to encourage Floor Brokers to increase their average daily volume (‘‘ADV’’) in billable manual contract sides to qualify for a Tier; each Tier of the FB Prepay Program corresponds to an annual rebate equal to the greater of the ‘‘Total Percentage Reduction of pre-paid annual Eligible Fixed Costs’’ or the annualization of the monthly ‘‘Alternative Rebate.’’ 6 In either case, participating Floor Brokers receive their annual rebate amount in the following January.7 Floor Brokers that wish to participate in the FB Prepay Program for the following calendar year must notify the Exchange no later than the last business day of December in the current year.8 As further described below, the Exchange proposes to modify the qualifying benchmarks, growth percentage requirements, and rebate amounts for the FB Prepay Program, and further proposes to offer Floor Brokers that participate in the FB Prepay Program additional per contract credits for certain QCC trades. The Exchange also proposes to adjust the basis for the calculation of a participating Floor Broker’s Eligible Fixed Costs for the following calendar year. The Exchange proposes to implement the fee changes effective January 21, 2022. Proposed Rule Change The Exchange proposes to modify the benchmarks that Floor Brokers that participate in the FB Prepay Program must meet to qualify for the Percentage Growth Incentive. Currently, to qualify for the Percentage Growth Incentive, a Floor Broker must increase their ADV for the calendar year above the greater www.nyse.com/publicdocs/nyse/markets/americanoptions/NYSE_American_Options_Fee_ Schedule.pdf. ‘‘Eligible Fixed Costs’’ include monthly ATP Fees, the Floor Access Fee, and certain monthly Floor communication, connectivity, equipment and booth or podia fees, as set forth in the table in Section III.E.1. 6 See id. The Percentage Growth Incentive excludes Customer volume, Firm Facilitation trades, and QCCs. Any volume calculated to achieve the Firm Monthly Fee Cap and the Strategy Execution Fee Cap, regardless of whether either of these caps is achieved, will likewise be excluded from the Percentage Growth Incentive because fees on such volume are already capped and therefore do not increase billable manual volume. See id. 7 See Fee Schedule, Section III.E.1. 8 See id. E:\FR\FM\02FEN1.SGM 02FEN1 Federal Register / Vol. 87, No. 22 / Wednesday, February 2, 2022 / Notices of (1) 20,000 contract sides in billable manual ADV, or (2) 105% of the Floor Broker’s total billable manual ADV in contract sides during the second half of 2017.9 The Exchange proposes to modify each of the minimum thresholds to qualify for the Percentage Growth Incentive. Specifically, the Exchange proposes to (1) modify the first benchmark to increase the requisite minimum contract sides in billable manual ADV from 20,000 to 30,000, and (2) modify the second benchmark from 105% of the Floor Broker’s total billable manual ADV in contract sides during the second half of 2017 (i.e., July through December 2017) to the Floor Broker’s total billable manual ADV in contract sides during the second half of 2020 (i.e., July through December 2020).10 The Exchange believes that 30,000 ADV is a reasonable minimum threshold above which a participating Floor Broker would need to increase volume to earn a rebate under the FB Prepay Program, particularly in light of the increased options volume executed by Floor Brokers in the past year. The Exchange notes that Floor Brokers that are new to the Exchange would also be eligible to qualify for the Percentage Growth Incentive based on this minimum threshold. For Floor Brokers that exceed 30,000 ADV in growth, the Exchange believes that it is reasonable to continue to use each Floor Broker’s historical volume as a benchmark against which to measure growth and also believes that updating the benchmark to account for the Floor Broker’s more recent activity on the Exchange is reasonable. The Exchange further believes that, in light of the market volatility in the first half of 2020 and the unusually high volumes observed in 2021, Floor Broker activity in the second half of 2020 would be an appropriate benchmark against which to measure volume for purposes of the FB Prepay Program. All Floor Brokers that aim to achieve the rebate would still be required to increase volume executed on the Exchange, and the total annual rebate available for achieving each Tier would continue to be the same regardless of whether the Floor Broker qualifies based on growth over 30,000 5907 ADV contract sides or its second half of 2020 volume, as proposed. The Exchange also proposes to modify the growth requirement for Tier 2 to decrease the requirement from 30% to 20%. The Exchange further proposes to increase the Alternative Rebate amounts for all Tiers, as set forth in the table below. Finally, the Exchange proposes to eliminate Tier 4. The Exchange believes eliminating this Tier is reasonable in light of the proposed changes described above, including because Tier 3, as modified, would offer participating Floor Brokers an Alternative Rebate amount greater than the amount currently offered by Tier 4. The Exchange believes the proposed modifications would continue to incentivize Floor Brokers to participate in the FB Prepay Program by making Tier 2 more achievable and by enhancing the rebate amount available across all Tiers through the Alternative Rebate. The following table reflects the proposed changes (with deletions in brackets and new text in italics): FB PREPAYMENT PROGRAM INCENTIVES [Based on annual ADV in contract sides for the calendar year] Tier Percentage growth incentive Total percentage reduction of pre-paid annual eligible fixed costs 5 [30] 20 50 100 10 50 80 100 jspears on DSK121TN23PROD with NOTICES1 Tier 1 ........................................................................................................ Tier 2 ........................................................................................................ Tier 3 ........................................................................................................ [Tier 4 ....................................................................................................... Thus, as proposed, a participating Floor Broker would qualify for the Percentage Growth Incentive by executing ADV growth in manual billable contract sides that is 5%, 20%, 50%, or 100% over the greater of (1) 30,000 contract sides ADV, or (2) 100% of their ADV during the second half of 2020 (i.e., July through December 2020). A Floor Broker that participates in the FB Prepay Program and achieves a Percentage Growth Incentive Tier, as modified, will continue to be eligible for an annual rebate that is the greater of the ‘‘Total Percentage Reduction of prepaid annual Eligible Fixed Costs’’ or the ‘‘Alternative Rebate’’ based on the Tier achieved. A Floor Broker that is new to the Exchange (or one that did not execute at least 30,000 contract sides in billable manual ADV in the second half of 2020) would continue to have the ability to qualify for the Percentage Growth Incentive by executing at least 30,000 contract sides in manual billable ADV, increased by the specified percentages during the year. The total rebate available for achieving each Tier would be the same regardless of whether the Floor Broker qualifies based on 100% of its second half of 2020 volume or the minimum 30,000 ADV contract sides benchmark. The Exchange also proposes to provide participants in the FB Prepay Program with the opportunity to qualify for enhanced credits on QCC transactions. Specifically, Floor Brokers that participate in the FB Prepay Program and increase their QCC credit eligible contracts in a month by at least 20% over the greater of their second half 9 See Fee Schedule, Section III.E.1, FLOOR BROKER FIXED COST PREPAYMENT INCENTIVE PROGRAM (the ‘‘FB Prepay Program’’). 10 See proposed Fee Schedule, FLOOR BROKER FIXED COST PREPAYMENT INCENTIVE PROGRAM (the ‘‘FB Prepay Program’’). VerDate Sep<11>2014 21:31 Feb 01, 2022 Jkt 256001 PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 Alternative rebate [$2,000] $8,000/month. [$4,000] $16,000/month. [$8,000] $24,000/month. $16,000/month] of 2021 average monthly QCC credit eligible volume or 1,500,000 contracts will receive an additional credit of $0.04 per contract on the first 300,000 QCC credit eligible QCC trades and an additional credit of $0.01 per contract on all QCC credit eligible QCC trades above 300,000, subject to the monthly maximum credit per Floor Broker firm. The Exchange believes that the proposed credits would provide an additional incentive for Floor Brokers to participate in the FB Prepay Program. Finally, the Exchange proposes to modify the date it will use for the calculation of a Floor Broker’s Eligible Fixed Costs for the following calendar year. The FB Prepay Program currently specifies that a Floor Broker that commits to the program will be invoiced in January for Eligible Fixed Costs, E:\FR\FM\02FEN1.SGM 02FEN1 5908 Federal Register / Vol. 87, No. 22 / Wednesday, February 2, 2022 / Notices There are currently 16 registered options exchanges competing for order flow. Based on publicly-available information, and excluding index-based options, no single exchange has more than 16% of the market share of executed volume of multiply-listed equity and ETF options trades.15 Therefore, currently no exchange possesses significant pricing power in the execution of multiply-listed equity and ETF options order flow. More specifically, in November 2021, the 2. Statutory Basis Exchange had less than 8% market share of executed volume of multiplyThe Exchange believes that the 16 proposed rule change is consistent with listed equity and ETF options trades. The Exchange believes that the everSection 6(b) of the Act,12 in general, and shifting market share among the furthers the objectives of Sections 6(b)(4) and (5) of the Act,13 in particular, exchanges from month to month demonstrates that market participants because it provides for the equitable can shift order flow, or discontinue or allocation of reasonable dues, fees, and reduce use of certain categories of other charges among its members, products, in response to fee changes. issuers and other persons using its Accordingly, competitive forces facilities and does not unfairly constrain options exchange transaction discriminate between customers, fees. Stated otherwise, changes to issuers, brokers or dealers. exchange transaction fees can have a The Proposed Rule Change Is direct effect on the ability of an Reasonable exchange to compete for order flow. The Exchange believes the proposed The Exchange operates in a highly modifications to the FB Prepay Program competitive market. The Commission are reasonable because participation in has repeatedly expressed its preference the program is optional, and Floor for competition over regulatory Brokers can elect to participate and seek intervention in determining prices, to qualify for the Percentage Growth products, and services in the securities Incentive as they see fit. The Exchange markets. In Regulation NMS, the also believes that the proposed change Commission highlighted the importance is reasonably designed to encourage of market forces in determining prices Floor Brokers to provide liquidity on the and SRO revenues and, also, recognized Exchange, to continue to incent Floor that current regulation of the market Brokers to participate in the FB Prepay system ‘‘has been remarkably successful Program, and to ensure that Floor in promoting market competition in its Brokers that are new to the Exchange (or broader forms that are most important to Floor Brokers that did not execute more investors and listed companies.’’ 14 than 30,000 ADV in contract sides) could also participate in the program, 11 The Fee Schedule currently provides that the including by continuing to offer two ‘‘Exchange will not issue any refunds in the event alternative means to achieve the same that a Floor Broker organization’s prepaid Eligible rebate at each Tier. The Exchange Fixed Costs exceeds such actual annual costs, believes that 30,000 ADV is a reasonable except that the Exchange will refund certain of the prepaid Eligible Fixed costs that were waived for minimum threshold above which a Qualifying Firms, as defined, and set forth in, participating Floor Broker would need Sections III.B and IV.’’ See Fee Schedule, Section to increase volume in order to realize III.E.1, FLOOR BROKER FIXED COST the proposed Percentage Growth PREPAYMENT INCENTIVE PROGRAM (the ‘‘FB Prepay Program’’). The Exchange proposes Incentive (and is on a similar playing clarifying changes to (1) delete the word ‘‘such’’ field with Floor Brokers that exceeded from the description of actual Eligible Fixed Costs, this volume requirement in 2020). For and (2) delete the reference to the circumstances Floor Brokers that exceeded 30,000 ADV under which the Exchange would refund certain jspears on DSK121TN23PROD with NOTICES1 based on annualizing their Eligible Fixed Costs incurred in the previous November.11 The Exchange proposes to modify the Fee Schedule to specify that the annualization of Eligible Fixed Costs would be based on costs incurred in November 2020. The Exchange believes that Floor Brokers’ costs as of November 2020 would more accurately reflect Eligible Fixed Costs for the coming calendar year based on anticipated fixed costs in 2022. prepaid Eligible Fixed Costs, as the Fee Schedule no longer provides for a waiver to Qualifying Firms in connection with COVID–19 related considerations. See Securities Exchange Act Release No. 92559 (August 4, 2021), 86 FR 43700 (August 10, 2021) (SR–NYSEAmer–2021–34) (removing language from the Fee Schedule associated with COVID–19 related fee waivers). 12 15 U.S.C. 78f(b). 13 15 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’’). VerDate Sep<11>2014 21:31 Feb 01, 2022 Jkt 256001 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/Market-DataReports/Volume-and-Open-Interest/MonthlyWeekly-Volume-Statistics. 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 equity-based options was 9.09% for the month of November 2020 and 7.06% for the month of November 2021. PO 00000 Frm 00130 Fmt 4703 Sfmt 4703 in the second half of 2020, the Exchange believes it is reasonable to use each Floor Broker’s historical volume as a benchmark against which to measure future growth to achieve the Percentage Growth Incentive and further believes that activity in the second half of 2020 would provide an appropriate updated benchmark in light of the market volatility in the first half of 2020 and the unusually high volumes observed in 2021. In addition, the Exchange believes that the proposed changes to the Percentage Growth Incentive are reasonable because they are designed to continue to incent Floor Broker participation in the FB Prepay Program by making Tier 2 more achievable and by offering increased rebate amounts and therefore are designed to encourage increased executions by Floor Brokers on the Exchange, which activity would benefit all market participants. Moreover, the proposed change to offer participants in the FB Prepay Program credits on QCC transactions is reasonable because it would provide Floor Brokers with the opportunity to earn additional credits that they otherwise would not receive, based on their QCC trading activity. The Exchange believes that such credits would encourage Floor Brokers to increase both their billable volume and their QCC transactions executed on the Exchange, which would benefit all market participants by expanding liquidity and providing more trading opportunities, including to non-Floor Broker market participants (as well as participating Floor Brokers who do not reach the volume thresholds, as proposed). The Exchange also believes that the proposed change with respect to the date used for the calculation of Eligible Fixed Costs is reasonable because it expects Floor Broker organizations’ November 2020 costs to provide a more accurate basis for annualizing Eligible Fixed Costs for the coming calendar year based on anticipated fixed costs in 2022. Finally, to the extent the proposed change continues to attract greater volume and liquidity to the Exchange Floor, the Exchange believes the proposed change would improve the Exchange’s overall competitiveness and strengthen its market quality for all market participants. In the backdrop of the competitive environment in which the Exchange operates, the proposed rule change is a reasonable attempt by the Exchange to increase the depth of its market and improve its market share relative to its competitors. E:\FR\FM\02FEN1.SGM 02FEN1 jspears on DSK121TN23PROD with NOTICES1 Federal Register / Vol. 87, No. 22 / Wednesday, February 2, 2022 / Notices The Proposed Rule Change Is an Equitable Allocation of Credits and Fees The Exchange believes the proposed rule change is an equitable allocation of its fees and credits. The proposal is based on the amount and type of business that Floor Brokers transact on the Exchange, and Floor Brokers are not obligated to participate in the FB Prepay Program or attempt to trade sufficient volume to qualify for one of the Percentage Growth Incentive Tiers. In addition, all participating Floor Brokers have the opportunity to qualify for the same rebate at each Tier through two alternatives means (i.e., growth over the greater of at least 30,000 contract sides in billable ADV or the Floor Broker’s total billable manual ADV in the second half of 2020). The Exchange also notes that the proposed changes are designed to encourage Floor Brokers that have previously enrolled in the FB Prepay Program to reenroll for the upcoming year, as well as to attract Floor Brokers that have not yet participated in the program. Moreover, the Exchange believes that the proposed modifications to the FB Prepay Program are an equitable allocation of fees and credits because they would apply to participating Floor Brokers equally and are intended to encourage the important role performed by Floor Brokers in facilitating the execution of orders via open outcry and providing opportunities to obtain price improvement, a function which the Exchange wishes to support for the benefit of all market participants. The Exchange further believes that the proposed change with respect to the calculation of Eligible Fixed Costs is equitable because it would continue to be based on each Floor Broker organization’s annualized costs and because the November 2020 basis for annualizing costs would provide a more accurate reflection of Eligible Fixed Costs for the coming calendar year based on anticipated fixed costs in 2022. To the extent that the proposed change continues to incent Floor Brokers to participate in the FB Prepay Program and achieve the volume required to qualify for the Percentage Growth Incentive, the increased order flow would continue to make the Exchange a more competitive venue for, among other things, order execution. Similarly, to the extent the proposed change, and, in particular, the proposed additional credit for QCC transactions, encourages Floor Brokers to participate in a greater variety of transactions on the Exchange, the resulting increased order flow would likewise continue to make the Exchange a more competitive VerDate Sep<11>2014 21:31 Feb 01, 2022 Jkt 256001 venue for order execution. Thus, the Exchange believes the proposed rule change would improve market quality for all market participants on the Exchange and, as a consequence, attract more order flow to the Exchange thereby improving market-wide quality and price discovery. The Proposed Rule Change Is Not Unfairly Discriminatory The Exchange believes the proposed modifications to the FB Prepay Program are not unfairly discriminatory because they would apply to all similarlysituated Floor Brokers. The proposal is based on the amount and type of business transacted on the Exchange, and Floor Brokers are not obligated to participate in the FB Prepay Program or try to achieve any of the Percentage Growth Incentive Tiers. The Exchange also believes that the proposed change is not unfairly discriminatory to non-Floor Brokers because it is intended to encourage Floor Brokers to continue facilitating the execution of orders via open outcry and providing opportunities to obtain price improvement, a function that benefits all market participants. To the extent that the proposed change continues to attract participation in the FB Prepay Program and incent Floor Brokers to increase volume to qualify for the Percentage Growth Incentive, the increased order flow would continue to make the Exchange a more competitive venue for, among other things, order execution. Thus, the Exchange believes the proposed rule change would improve market quality for all market participants on the Exchange and, as a consequence, attract more order flow to the Exchange thereby improving market-wide quality and price discovery. In addition, to the extent that the proposed change attracts a variety of transactions to the Exchange, this increased order flow would continue to make the Exchange a more competitive venue for order execution. Thus, the Exchange believes the proposed rule change would improve market quality for all market participants on the Exchange and, as a consequence, attract more order flow to the Exchange Floor, thereby improving market-wide quality and price discovery. The resulting increased volume and liquidity would provide more trading opportunities and tighter spreads to all market participants and thus would promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system and, in PO 00000 Frm 00131 Fmt 4703 Sfmt 4703 5909 general, protect investors and the public interest. Finally, the Exchange believes that it is subject to significant competitive forces, as described below in the Exchange’s statement regarding the burden on competition. B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act, the Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Instead, as discussed above, the Exchange believes that the proposed changes would encourage the submission of additional liquidity to a public exchange, thereby promoting market depth, price discovery and transparency and enhancing order execution opportunities for all market participants. As a result, the Exchange believes that the proposed change furthers the Commission’s goal in adopting Regulation NMS of fostering integrated competition among orders, which promotes ‘‘more efficient pricing of individual stocks for all types of orders, large and small.’’ 17 Intramarket Competition. The Exchange believes the proposed change will continue to incent Floor Brokers to participate in the FB Prepay Program and encourage order flow to be directed to the Exchange Floor, which would enhance the quality of quoting and may increase the volumes of contracts traded on the Exchange. To the extent that the proposed change imposes an additional competitive burden on non-Floor Brokers, the Exchange believes that any such burden would be appropriate because of Floor Brokers’ important role in facilitating the execution of orders via open outcry and providing opportunities for price improvement, and the Exchange believes the proposed change is designed to encourage and support that function. In addition, to the extent that the proposed change in fact encourages Floor Broker volume, all market participants should benefit from the improved market liquidity. Enhanced market quality and increased transaction volume that results from the anticipated increase in order flow directed to the Exchange will benefit all market participants and improve competition on the Exchange. Intermarket Competition. The Exchange believes that the proposed change would promote competition 17 See Reg NMS Adopting Release, supra note 14, at 37499. E:\FR\FM\02FEN1.SGM 02FEN1 5910 Federal Register / Vol. 87, No. 22 / Wednesday, February 2, 2022 / Notices between the Exchange and other execution venues by encouraging additional orders to be sent to the Exchange Floor for execution. The proposed modifications to the FB Prepay Program are designed to continue to incent Floor Broker participation in the program, including by making the incentives more achievable and increasing the amounts of the rebates available. The Exchange thus believes that the proposed change would continue to encourage Floor Brokers to execute orders on the Floor of the Exchange, which would increase volume and liquidity, to the benefit of all market participants by providing more trading opportunities and tighter spreads. Given the robust competition for volume among options markets, implementing programs to attract order flow, such as the proposed modifications to the FB Prepay Program, are consistent with the above-mentioned goals of the Act. The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment. jspears on DSK121TN23PROD with NOTICES1 C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) 18 of the Act and subparagraph (f)(2) of Rule 19b–4 19 thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the 18 15 19 17 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). VerDate Sep<11>2014 21:31 Feb 01, 2022 Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 20 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEAMER–2022–06 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–2022–06. 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 20 15 Jkt 256001 PO 00000 U.S.C. 78s(b)(2)(B). Frm 00132 Fmt 4703 Sfmt 4703 submissions should refer to File Number SR–NYSEAMER–2022–06, and should be submitted on or before February 23, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2022–02081 Filed 2–1–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–94089; File No. SR– EMERALD–2021–42] Self-Regulatory Organizations; MIAX Emerald, LLC; Suspension of and Order Instituting Proceedings To Determine Whether To Approve or Disapprove Proposed Rule Change To Amend the MIAX Emerald Fee Schedule To Adopt a Tiered Pricing Structure for Certain Connectivity Fees January 27, 2022. I. Introduction On December 1, 2021, MIAX Emerald, LLC (‘‘MIAX Emerald’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule 19b–4 thereunder,2 a proposed rule change (File Number SR–EMERALD–2021–42) to amend the Exchange’s Fee Schedule (‘‘Fee Schedule’’) to adopt a tiered pricing structure for certain connectivity fees. The proposed rule change was immediately effective upon filing with the Commission pursuant to Section 19(b)(3)(A) of the Act.3 The proposed rule change was published for comment in the Federal Register on December 20, 2021.4 Under Section 19(b)(3)(C) of the Act,5 the Commission is hereby: (i) Temporarily suspending File Number SR–EMERALD–2021–42; and (ii) instituting proceedings to determine whether to approve or disapprove File Number SR–EMERALD–2021–42. 21 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). A proposed rule change may take effect upon filing with the Commission if it is designated by the exchange as ‘‘establishing or changing a due, fee, or other charge imposed by the self-regulatory organization on any person, whether or not the person is a member of the self-regulatory organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii). 4 See Securities Exchange Act Release No. 93776 (December 14, 2021), 86 FR 71983 (‘‘Notice’’). 5 15 U.S.C. 78s(b)(3)(C). 1 15 E:\FR\FM\02FEN1.SGM 02FEN1

Agencies

[Federal Register Volume 87, Number 22 (Wednesday, February 2, 2022)]
[Notices]
[Pages 5906-5910]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-02081]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94086; File No. SR-NYSEAMER-2022-06]


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

January 27, 2022.
    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 January 21, 2022, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE American Options Fee 
Schedule (the ``Fee Schedule'') regarding the Floor Broker Fixed Cost 
Prepayment Incentive Program. The Exchange proposes to implement the 
fee change effective January 21, 2022.\4\ The proposed change is 
available on the Exchange's website at www.nyse.com, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.
---------------------------------------------------------------------------

    \4\ The Exchange originally filed to amend the Fee Schedule on 
December 29, 2021 (SR-NYSEAmer-2021-50), with an effective date of 
January 3, 2022, then withdrew such filing and amended the Fee 
Schedule on January 12, 2022 (SR-NYSEAmer-2022-02), which latter 
filing the Exchange withdrew on January 21, 2022.
---------------------------------------------------------------------------

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 Floor Broker Fixed Cost 
Prepayment Incentive Program (the ``FB Prepay Program''), a prepayment 
incentive program that allows Floor Broker organizations (each, a 
``Floor Broker'') to prepay certain of their annual Eligible Fixed 
Costs in exchange for volume rebates, as set forth in the Fee 
Schedule.\5\
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    \5\ See Fee Schedule, Section III.E.1, Floor Broker Fixed Cost 
Prepayment Incentive Program (the ``FB Prepay Program''), available 
here: https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf. ``Eligible Fixed Costs'' 
include monthly ATP Fees, the Floor Access Fee, and certain monthly 
Floor communication, connectivity, equipment and booth or podia 
fees, as set forth in the table in Section III.E.1.
---------------------------------------------------------------------------

    Currently, the FB Prepay Program offers participating Floor Brokers 
an opportunity to qualify for rebates by achieving growth in billable 
manual volume by a certain percentage as measured against one of two 
benchmarks (the ``Percentage Growth Incentive''). Specifically, the 
Percentage Growth Incentive is designed to encourage Floor Brokers to 
increase their average daily volume (``ADV'') in billable manual 
contract sides to qualify for a Tier; each Tier of the FB Prepay 
Program corresponds to an annual rebate equal to the greater of the 
``Total Percentage Reduction of pre-paid annual Eligible Fixed Costs'' 
or the annualization of the monthly ``Alternative Rebate.'' \6\ In 
either case, participating Floor Brokers receive their annual rebate 
amount in the following January.\7\ Floor Brokers that wish to 
participate in the FB Prepay Program for the following calendar year 
must notify the Exchange no later than the last business day of 
December in the current year.\8\
---------------------------------------------------------------------------

    \6\ See id. The Percentage Growth Incentive excludes Customer 
volume, Firm Facilitation trades, and QCCs. Any volume calculated to 
achieve the Firm Monthly Fee Cap and the Strategy Execution Fee Cap, 
regardless of whether either of these caps is achieved, will 
likewise be excluded from the Percentage Growth Incentive because 
fees on such volume are already capped and therefore do not increase 
billable manual volume. See id.
    \7\ See Fee Schedule, Section III.E.1.
    \8\ See id.
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    As further described below, the Exchange proposes to modify the 
qualifying benchmarks, growth percentage requirements, and rebate 
amounts for the FB Prepay Program, and further proposes to offer Floor 
Brokers that participate in the FB Prepay Program additional per 
contract credits for certain QCC trades. The Exchange also proposes to 
adjust the basis for the calculation of a participating Floor Broker's 
Eligible Fixed Costs for the following calendar year.
    The Exchange proposes to implement the fee changes effective 
January 21, 2022.
Proposed Rule Change
    The Exchange proposes to modify the benchmarks that Floor Brokers 
that participate in the FB Prepay Program must meet to qualify for the 
Percentage Growth Incentive. Currently, to qualify for the Percentage 
Growth Incentive, a Floor Broker must increase their ADV for the 
calendar year above the greater

[[Page 5907]]

of (1) 20,000 contract sides in billable manual ADV, or (2) 105% of the 
Floor Broker's total billable manual ADV in contract sides during the 
second half of 2017.\9\ The Exchange proposes to modify each of the 
minimum thresholds to qualify for the Percentage Growth Incentive. 
Specifically, the Exchange proposes to (1) modify the first benchmark 
to increase the requisite minimum contract sides in billable manual ADV 
from 20,000 to 30,000, and (2) modify the second benchmark from 105% of 
the Floor Broker's total billable manual ADV in contract sides during 
the second half of 2017 (i.e., July through December 2017) to the Floor 
Broker's total billable manual ADV in contract sides during the second 
half of 2020 (i.e., July through December 2020).\10\
---------------------------------------------------------------------------

    \9\ See Fee Schedule, Section III.E.1, FLOOR BROKER FIXED COST 
PREPAYMENT INCENTIVE PROGRAM (the ``FB Prepay Program'').
    \10\ See proposed Fee Schedule, FLOOR BROKER FIXED COST 
PREPAYMENT INCENTIVE PROGRAM (the ``FB Prepay Program'').
---------------------------------------------------------------------------

    The Exchange believes that 30,000 ADV is a reasonable minimum 
threshold above which a participating Floor Broker would need to 
increase volume to earn a rebate under the FB Prepay Program, 
particularly in light of the increased options volume executed by Floor 
Brokers in the past year. The Exchange notes that Floor Brokers that 
are new to the Exchange would also be eligible to qualify for the 
Percentage Growth Incentive based on this minimum threshold. For Floor 
Brokers that exceed 30,000 ADV in growth, the Exchange believes that it 
is reasonable to continue to use each Floor Broker's historical volume 
as a benchmark against which to measure growth and also believes that 
updating the benchmark to account for the Floor Broker's more recent 
activity on the Exchange is reasonable. The Exchange further believes 
that, in light of the market volatility in the first half of 2020 and 
the unusually high volumes observed in 2021, Floor Broker activity in 
the second half of 2020 would be an appropriate benchmark against which 
to measure volume for purposes of the FB Prepay Program. All Floor 
Brokers that aim to achieve the rebate would still be required to 
increase volume executed on the Exchange, and the total annual rebate 
available for achieving each Tier would continue to be the same 
regardless of whether the Floor Broker qualifies based on growth over 
30,000 ADV contract sides or its second half of 2020 volume, as 
proposed.
    The Exchange also proposes to modify the growth requirement for 
Tier 2 to decrease the requirement from 30% to 20%. The Exchange 
further proposes to increase the Alternative Rebate amounts for all 
Tiers, as set forth in the table below. Finally, the Exchange proposes 
to eliminate Tier 4. The Exchange believes eliminating this Tier is 
reasonable in light of the proposed changes described above, including 
because Tier 3, as modified, would offer participating Floor Brokers an 
Alternative Rebate amount greater than the amount currently offered by 
Tier 4. The Exchange believes the proposed modifications would continue 
to incentivize Floor Brokers to participate in the FB Prepay Program by 
making Tier 2 more achievable and by enhancing the rebate amount 
available across all Tiers through the Alternative Rebate.
    The following table reflects the proposed changes (with deletions 
in brackets and new text in italics):

                                        FB Prepayment Program Incentives
                          [Based on annual ADV in contract sides for the calendar year]
----------------------------------------------------------------------------------------------------------------
                                                        Total percentage
                                                        reduction of pre-
               Tier                 Percentage growth      paid annual               Alternative rebate
                                        incentive        eligible fixed
                                                              costs
----------------------------------------------------------------------------------------------------------------
Tier 1...........................                   5                  10  [$2,000] $8,000/month.
Tier 2...........................             [30] 20                  50  [$4,000] $16,000/month.
Tier 3...........................                  50                  80  [$8,000] $24,000/month.
[Tier 4..........................                 100                 100  $16,000/month]
----------------------------------------------------------------------------------------------------------------

    Thus, as proposed, a participating Floor Broker would qualify for 
the Percentage Growth Incentive by executing ADV growth in manual 
billable contract sides that is 5%, 20%, 50%, or 100% over the greater 
of (1) 30,000 contract sides ADV, or (2) 100% of their ADV during the 
second half of 2020 (i.e., July through December 2020). A Floor Broker 
that participates in the FB Prepay Program and achieves a Percentage 
Growth Incentive Tier, as modified, will continue to be eligible for an 
annual rebate that is the greater of the ``Total Percentage Reduction 
of pre-paid annual Eligible Fixed Costs'' or the ``Alternative Rebate'' 
based on the Tier achieved. A Floor Broker that is new to the Exchange 
(or one that did not execute at least 30,000 contract sides in billable 
manual ADV in the second half of 2020) would continue to have the 
ability to qualify for the Percentage Growth Incentive by executing at 
least 30,000 contract sides in manual billable ADV, increased by the 
specified percentages during the year. The total rebate available for 
achieving each Tier would be the same regardless of whether the Floor 
Broker qualifies based on 100% of its second half of 2020 volume or the 
minimum 30,000 ADV contract sides benchmark.
    The Exchange also proposes to provide participants in the FB Prepay 
Program with the opportunity to qualify for enhanced credits on QCC 
transactions. Specifically, Floor Brokers that participate in the FB 
Prepay Program and increase their QCC credit eligible contracts in a 
month by at least 20% over the greater of their second half of 2021 
average monthly QCC credit eligible volume or 1,500,000 contracts will 
receive an additional credit of $0.04 per contract on the first 300,000 
QCC credit eligible QCC trades and an additional credit of $0.01 per 
contract on all QCC credit eligible QCC trades above 300,000, subject 
to the monthly maximum credit per Floor Broker firm. The Exchange 
believes that the proposed credits would provide an additional 
incentive for Floor Brokers to participate in the FB Prepay Program.
    Finally, the Exchange proposes to modify the date it will use for 
the calculation of a Floor Broker's Eligible Fixed Costs for the 
following calendar year. The FB Prepay Program currently specifies that 
a Floor Broker that commits to the program will be invoiced in January 
for Eligible Fixed Costs,

[[Page 5908]]

based on annualizing their Eligible Fixed Costs incurred in the 
previous November.\11\ The Exchange proposes to modify the Fee Schedule 
to specify that the annualization of Eligible Fixed Costs would be 
based on costs incurred in November 2020. The Exchange believes that 
Floor Brokers' costs as of November 2020 would more accurately reflect 
Eligible Fixed Costs for the coming calendar year based on anticipated 
fixed costs in 2022.
---------------------------------------------------------------------------

    \11\ The Fee Schedule currently provides that the ``Exchange 
will not issue any refunds in the event that a Floor Broker 
organization's prepaid Eligible Fixed Costs exceeds such actual 
annual costs, except that the Exchange will refund certain of the 
prepaid Eligible Fixed costs that were waived for Qualifying Firms, 
as defined, and set forth in, Sections III.B and IV.'' See Fee 
Schedule, Section III.E.1, FLOOR BROKER FIXED COST PREPAYMENT 
INCENTIVE PROGRAM (the ``FB Prepay Program''). The Exchange proposes 
clarifying changes to (1) delete the word ``such'' from the 
description of actual Eligible Fixed Costs, and (2) delete the 
reference to the circumstances under which the Exchange would refund 
certain prepaid Eligible Fixed Costs, as the Fee Schedule no longer 
provides for a waiver to Qualifying Firms in connection with COVID-
19 related considerations. See Securities Exchange Act Release No. 
92559 (August 4, 2021), 86 FR 43700 (August 10, 2021) (SR-NYSEAmer-
2021-34) (removing language from the Fee Schedule associated with 
COVID-19 related fee waivers).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\13\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
---------------------------------------------------------------------------

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

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

    \14\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04) (``Reg NMS 
Adopting Release'').
---------------------------------------------------------------------------

    There are currently 16 registered options exchanges competing for 
order flow. Based on publicly-available information, and excluding 
index-based options, no single exchange has more than 16% of the market 
share of executed volume of multiply-listed equity and ETF options 
trades.\15\ Therefore, currently no exchange possesses significant 
pricing power in the execution of multiply-listed equity and ETF 
options order flow. More specifically, in November 2021, the Exchange 
had less than 8% market share of executed volume of multiply-listed 
equity and ETF options trades.\16\
---------------------------------------------------------------------------

    \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/Market-Data-Reports/Volume-and-Open-Interest/Monthly-Weekly-Volume-Statistics.
    \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 equity-based options was 9.09% 
for the month of November 2020 and 7.06% for the month of November 
2021.
---------------------------------------------------------------------------

    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 the proposed modifications to the FB Prepay 
Program are reasonable because participation in the program is 
optional, and Floor Brokers can elect to participate and seek to 
qualify for the Percentage Growth Incentive as they see fit. The 
Exchange also believes that the proposed change is reasonably designed 
to encourage Floor Brokers to provide liquidity on the Exchange, to 
continue to incent Floor Brokers to participate in the FB Prepay 
Program, and to ensure that Floor Brokers that are new to the Exchange 
(or Floor Brokers that did not execute more than 30,000 ADV in contract 
sides) could also participate in the program, including by continuing 
to offer two alternative means to achieve the same rebate at each Tier. 
The Exchange believes that 30,000 ADV is a reasonable minimum threshold 
above which a participating Floor Broker would need to increase volume 
in order to realize the proposed Percentage Growth Incentive (and is on 
a similar playing field with Floor Brokers that exceeded this volume 
requirement in 2020). For Floor Brokers that exceeded 30,000 ADV in the 
second half of 2020, the Exchange believes it is reasonable to use each 
Floor Broker's historical volume as a benchmark against which to 
measure future growth to achieve the Percentage Growth Incentive and 
further believes that activity in the second half of 2020 would provide 
an appropriate updated benchmark in light of the market volatility in 
the first half of 2020 and the unusually high volumes observed in 2021.
    In addition, the Exchange believes that the proposed changes to the 
Percentage Growth Incentive are reasonable because they are designed to 
continue to incent Floor Broker participation in the FB Prepay Program 
by making Tier 2 more achievable and by offering increased rebate 
amounts and therefore are designed to encourage increased executions by 
Floor Brokers on the Exchange, which activity would benefit all market 
participants.
    Moreover, the proposed change to offer participants in the FB 
Prepay Program credits on QCC transactions is reasonable because it 
would provide Floor Brokers with the opportunity to earn additional 
credits that they otherwise would not receive, based on their QCC 
trading activity. The Exchange believes that such credits would 
encourage Floor Brokers to increase both their billable volume and 
their QCC transactions executed on the Exchange, which would benefit 
all market participants by expanding liquidity and providing more 
trading opportunities, including to non-Floor Broker market 
participants (as well as participating Floor Brokers who do not reach 
the volume thresholds, as proposed).
    The Exchange also believes that the proposed change with respect to 
the date used for the calculation of Eligible Fixed Costs is reasonable 
because it expects Floor Broker organizations' November 2020 costs to 
provide a more accurate basis for annualizing Eligible Fixed Costs for 
the coming calendar year based on anticipated fixed costs in 2022.
    Finally, to the extent the proposed change continues to attract 
greater volume and liquidity to the Exchange Floor, the Exchange 
believes the proposed change would improve the Exchange's overall 
competitiveness and strengthen its market quality for all market 
participants. In the backdrop of the competitive environment in which 
the Exchange operates, the proposed rule change is a reasonable attempt 
by the Exchange to increase the depth of its market and improve its 
market share relative to its competitors.

[[Page 5909]]

The Proposed Rule Change Is an Equitable Allocation of Credits and Fees
    The Exchange believes the proposed rule change is an equitable 
allocation of its fees and credits. The proposal is based on the amount 
and type of business that Floor Brokers transact on the Exchange, and 
Floor Brokers are not obligated to participate in the FB Prepay Program 
or attempt to trade sufficient volume to qualify for one of the 
Percentage Growth Incentive Tiers. In addition, all participating Floor 
Brokers have the opportunity to qualify for the same rebate at each 
Tier through two alternatives means (i.e., growth over the greater of 
at least 30,000 contract sides in billable ADV or the Floor Broker's 
total billable manual ADV in the second half of 2020). The Exchange 
also notes that the proposed changes are designed to encourage Floor 
Brokers that have previously enrolled in the FB Prepay Program to 
reenroll for the upcoming year, as well as to attract Floor Brokers 
that have not yet participated in the program.
    Moreover, the Exchange believes that the proposed modifications to 
the FB Prepay Program are an equitable allocation of fees and credits 
because they would apply to participating Floor Brokers equally and are 
intended to encourage the important role performed by Floor Brokers in 
facilitating the execution of orders via open outcry and providing 
opportunities to obtain price improvement, a function which the 
Exchange wishes to support for the benefit of all market participants. 
The Exchange further believes that the proposed change with respect to 
the calculation of Eligible Fixed Costs is equitable because it would 
continue to be based on each Floor Broker organization's annualized 
costs and because the November 2020 basis for annualizing costs would 
provide a more accurate reflection of Eligible Fixed Costs for the 
coming calendar year based on anticipated fixed costs in 2022.
    To the extent that the proposed change continues to incent Floor 
Brokers to participate in the FB Prepay Program and achieve the volume 
required to qualify for the Percentage Growth Incentive, the increased 
order flow would continue to make the Exchange a more competitive venue 
for, among other things, order execution. Similarly, to the extent the 
proposed change, and, in particular, the proposed additional credit for 
QCC transactions, encourages Floor Brokers to participate in a greater 
variety of transactions on the Exchange, the resulting increased order 
flow would likewise continue to make the Exchange a more competitive 
venue for order execution. Thus, the Exchange believes the proposed 
rule change would improve market quality for all market participants on 
the Exchange and, as a consequence, attract more order flow to the 
Exchange thereby improving market-wide quality and price discovery.
The Proposed Rule Change Is Not Unfairly Discriminatory
    The Exchange believes the proposed modifications to the FB Prepay 
Program are not unfairly discriminatory because they would apply to all 
similarly-situated Floor Brokers. The proposal is based on the amount 
and type of business transacted on the Exchange, and Floor Brokers are 
not obligated to participate in the FB Prepay Program or try to achieve 
any of the Percentage Growth Incentive Tiers.
    The Exchange also believes that the proposed change is not unfairly 
discriminatory to non-Floor Brokers because it is intended to encourage 
Floor Brokers to continue facilitating the execution of orders via open 
outcry and providing opportunities to obtain price improvement, a 
function that benefits all market participants.
    To the extent that the proposed change continues to attract 
participation in the FB Prepay Program and incent Floor Brokers to 
increase volume to qualify for the Percentage Growth Incentive, the 
increased order flow would continue to make the Exchange a more 
competitive venue for, among other things, order execution. Thus, the 
Exchange believes the proposed rule change would improve market quality 
for all market participants on the Exchange and, as a consequence, 
attract more order flow to the Exchange thereby improving market-wide 
quality and price discovery.
    In addition, to the extent that the proposed change attracts a 
variety of transactions to the Exchange, this increased order flow 
would continue to make the Exchange a more competitive venue for order 
execution. Thus, the Exchange believes the proposed rule change would 
improve market quality for all market participants on the Exchange and, 
as a consequence, attract more order flow to the Exchange Floor, 
thereby improving market-wide quality and price discovery. The 
resulting increased volume and liquidity would provide more trading 
opportunities and tighter spreads to all market participants and thus 
would promote just and equitable principles of trade, remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, in general, protect investors and the 
public interest.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act, the Exchange does 
not believe that the proposed rule change would impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, as discussed above, the Exchange believes 
that the proposed changes would encourage the submission of additional 
liquidity to a public exchange, thereby promoting market depth, price 
discovery and transparency and enhancing order execution opportunities 
for all market participants. As a result, the Exchange believes that 
the proposed change furthers the Commission's goal in adopting 
Regulation NMS of fostering integrated competition among orders, which 
promotes ``more efficient pricing of individual stocks for all types of 
orders, large and small.'' \17\
---------------------------------------------------------------------------

    \17\ See Reg NMS Adopting Release, supra note 14, at 37499.
---------------------------------------------------------------------------

    Intramarket Competition. The Exchange believes the proposed change 
will continue to incent Floor Brokers to participate in the FB Prepay 
Program and encourage order flow to be directed to the Exchange Floor, 
which would enhance the quality of quoting and may increase the volumes 
of contracts traded on the Exchange. To the extent that the proposed 
change imposes an additional competitive burden on non-Floor Brokers, 
the Exchange believes that any such burden would be appropriate because 
of Floor Brokers' important role in facilitating the execution of 
orders via open outcry and providing opportunities for price 
improvement, and the Exchange believes the proposed change is designed 
to encourage and support that function.
    In addition, to the extent that the proposed change in fact 
encourages Floor Broker volume, all market participants should benefit 
from the improved market liquidity. Enhanced market quality and 
increased transaction volume that results from the anticipated increase 
in order flow directed to the Exchange will benefit all market 
participants and improve competition on the Exchange.
    Intermarket Competition. The Exchange believes that the proposed 
change would promote competition

[[Page 5910]]

between the Exchange and other execution venues by encouraging 
additional orders to be sent to the Exchange Floor for execution. The 
proposed modifications to the FB Prepay Program are designed to 
continue to incent Floor Broker participation in the program, including 
by making the incentives more achievable and increasing the amounts of 
the rebates available. The Exchange thus believes that the proposed 
change would continue to encourage Floor Brokers to execute orders on 
the Floor of the Exchange, which would increase volume and liquidity, 
to the benefit of all market participants by providing more trading 
opportunities and tighter spreads.
    Given the robust competition for volume among options markets, 
implementing programs to attract order flow, such as the proposed 
modifications to the FB Prepay Program, are consistent with the above-
mentioned goals of the Act.
    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues. In 
such an environment, the Exchange must continually review, and consider 
adjusting, its fees and credits to remain competitive with other 
exchanges. For the reasons described above, the Exchange believes that 
the proposed rule change reflects this competitive environment.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \18\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \19\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \20\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEAMER-2022-06 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-2022-06. 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-2022-06, and should be 
submitted on or before February 23, 2022.
    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-02081 Filed 2-1-22; 8:45 am]
BILLING CODE 8011-01-P
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