Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Amend the NYSE American Options Fee Schedule, 6639-6643 [2022-02314]

Download as PDF Federal Register / Vol. 87, No. 24 / Friday, February 4, 2022 / Notices 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–NYSECHX–2022–01 and should be submitted on or before February 25, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2022–02315 Filed 2–3–22; 8:45 am] BILLING CODE 8011–01–P The application was filed on October 21, 2021, and amended on November 5, 2021, and January 10, 2022. FILING DATES: HEARING OR NOTIFICATION OF HEARING: An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing on any application by emailing the SEC’s Secretary at Secretarys-Office@sec.gov and serving the relevant applicant with a copy of the request by email, if an email address is listed for the relevant applicant below, or personally or by mail, if a physical address is listed for the relevant applicant below. Hearing requests should be received by the Commission by 5:30 p.m. on February 25, 2022, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to rule 0–5 under the Act, hearing requests should state the nature of the writer’s interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by emailing the Commission’s Secretary. For Applicants’ representations, legal analysis, and condition, please refer to Applicants’ application, dated January 10, 2022, which may be obtained via the Commission’s website by searching for the file number, using the Company name box, at https://www.sec.gov/ search/search.htm, or by calling (202) 551–8090. SUPPLEMENTARY INFORMATION: Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice. AGENCY: lotter on DSK11XQN23PROD with NOTICES1 Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Amend the NYSE American Options Fee Schedule Lisa Reid Ragen, Branch Chief, at (202) 551– 6825 (Division of Investment Management, Chief Counsel’s Office). January 31, 2022. Notice of an application under section 6(c) of the Investment Company Act of 1940 (the ‘‘Act’’) for an exemption from sections 18(a)(2), 18(c) and 18(i) of the Act and for an order pursuant to section 17(d) of the Act and rule 17d–1 under the Act. SUMMARY OF APPLICATION: Applicants request an order to permit certain For the Commission, by the Division of Investment Management, under delegated authority. J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2022–02325 Filed 2–3–22; 8:45 am] BILLING CODE 8011–01–P CFR 200.30–3(a)(12). 18:50 Feb 03, 2022 John Hancock Asset-Based Lending Fund (the ‘‘Trust’’), and John Hancock Investment Management LLC (the ‘‘Advisor’’). APPLICANTS: FOR FURTHER INFORMATION CONTACT: John Hancock Asset-Based Lending Fund and John Hancock Investment Management LLC VerDate Sep<11>2014 SECURITIES AND EXCHANGE COMMISSION mark.goshko@klgates.com and pablo.man@klgates.com. [Investment Company Act Release No. 34491; 812–15276] 14 17 registered closed end investment companies to issue multiple classes of shares of beneficial interest with varying sales loads and to impose asset-based distribution and/or service fees. ADDRESSES: SECURITIES AND EXCHANGE COMMISSION Jkt 256001 6639 PO 00000 Frm 00157 Fmt 4703 Sfmt 4703 [Release No. 34–94104; File No. SR– NYSEAMER–2022–09] January 31, 2022. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on January 21, 2022, NYSE American LLC (‘‘NYSE American’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE American Options Fee Schedule (‘‘Fee Schedule’’) regarding incentives relating to Complex Customer Best Execution Auctions. 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. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 4 The Exchange originally filed to amend the Fee Schedule on December 29, 2021 (SR–NYSEAmer– 2021–53), with an effective date of January 3, 2022, then withdrew such filing on January 12, 2022 (SR– NYSEAmer–2022–05), which latter filing the Exchange withdrew on January 21, 2022. 2 15 E:\FR\FM\04FEN1.SGM 04FEN1 6640 Federal Register / Vol. 87, No. 24 / Friday, February 4, 2022 / Notices 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 qualifications for (1) the Alternative Initiating Participant Rebate, as set forth in Section I.G. (the ‘‘Rebate’’), and (2) the credit on Customer Electronic Simple and Complex executions set forth in Section I.H (the ‘‘Credit’’). As further discussed below, the proposed changes are designed to encourage ATP Holders to initiate Complex Customer Best Execution (‘‘CUBE’’) Auctions while also maintaining levels of both Customer and Professional Electronic volume.5 The Exchange proposes to implement this fee change on January 21, 2022. Proposed Rule Change lotter on DSK11XQN23PROD with NOTICES1 Alternative Initiating Participant Rebate Section I.G. of the Fee Schedule sets forth the per contract fees and credits for executions associated with SingleLeg and Complex CUBE Auctions. To encourage participation in Complex CUBE Auctions, the Exchange offers rebates on certain initiating Complex CUBE volume. Currently, the Exchange offers the ACE Initiating Participant Rebate to ATP Holders that also qualify for the American Customer Engagement (‘‘ACE’’) Program 6 and an Alternative Initiating Participant Rebate (the ‘‘Rebate’’) for ATP Holders that do not qualify for the ACE program.7 Both the ACE Initiating Participant Rebate and the Rebate for Complex CUBE orders provide for a rebate of $0.10 per contract, and an ATP Holder that qualifies for both rebates is entitled to only the greater of the two.8 Currently, to qualify for the Rebate, an ATP Holder must execute a minimum of 5,000 contracts ADV in the Professional range (as defined in Section I.H. of the Fee Schedule) and execute a minimum of 15,000 contracts ADV from Initiating CUBE Orders in Single-Leg and/or Complex CUBE Auctions.9 The Exchange proposes to modify the qualifications to earn the Rebate by 5 For purposes of this filing, ‘‘Professional’’ Electronic volume includes: Professional Customer, Broker Dealer, Non-NYSE American Options Market Maker, and Firm. 6 See Fee Schedule, Section I.E., American Customer Engagement (‘‘ACE’’) Program, available at: https://www.nyse.com/publicdocs/nyse/markets/ american-options/NYSE_American_Options_Fee_ Schedule.pdf. 7 See id. at Section I.G., CUBE Auction Fees and Credits, Complex CUBE Auction. 8 See id. 9 See id. VerDate Sep<11>2014 18:50 Feb 03, 2022 Jkt 256001 decreasing the required volume in Initiating CUBE Orders from 15,000 ADV from Initiating CUBE Orders in Single-Leg and/or Complex CUBE Auctions to 10,000 ADV in Initiating CUBE orders from Complex CUBE Auctions only. The Exchange proposes to modify this qualification to be based only on Initiating CUBE Orders in Complex CUBE Auctions in order to encourage increased participation in Complex CUBE Auctions. The Exchange also proposes to delete the requirement to execute a minimum of 5,000 contracts ADV in the Professional range and proposes two additional qualifications to earn the Rebate. The Exchange proposes these changes to align the requirements for this incentive with those for the Credit (as further discussed below). Specifically, the Exchange proposes to require, in addition to the volume requirement with respect to Initiating CUBE Orders in Complex CUBE Auctions, that an ATP Holder also achieve Customer Electronic executions of 0.05% of TCADV (excluding CUBE Auctions, QCC Transactions, and volume from orders routed to another exchange) and Professional (as defined in Section I.H. of the Fee Schedule) Electronic executions of 0.03% of TCADV (excluding CUBE Auctions, QCC Transactions, and volume from orders routed to another exchange). The Exchange proposes to exclude CUBE Auctions, QCC Transactions, and volume from orders routed to another exchange from the calculations of Customer Electronic and Professional Electronic volume, consistent with exclusions set forth elsewhere in the Fee Schedule.10 The Exchange proposes to exclude volume from CUBE Auctions, QCC Transactions, and orders routed to another exchange because volume from such transactions would be subject to separate pricing.11 The Exchange does not propose to modify the amount of the Rebate (which will remain at $0.10 per contract), and an ATP Holder that 10 See, e.g., Fee Schedule, Section I.C., NYSE American Options Market Maker Sliding Scale— Electronic (excluding volumes attributable to QCC trades and CUBE Auctions from calculation of Market Maker Electronic monthly volumes); Section I.E., American Customer Engagement (‘‘ACE’’) Program (excluding volume resulting from QCC trades and volume attributable to orders routed to another exchange from calculation of an OFP’s Electronic volume); Section I.H., Professional StepUp Incentive (excluding volumes from CUBE Auctions and QCC transactions from the calculation of base volume and qualifying volume for the incentive). 11 See Fee Schedule, Sections I.F. (setting forth fees and credits for QCC trades) and I.G. (setting forth fees and credits for CUBE Auctions). Volume from orders routed to another exchange would be subject to pricing set forth by such exchange. PO 00000 Frm 00158 Fmt 4703 Sfmt 4703 qualifies for both the ACE Initiating Participant Rebate and the Rebate will continue to be entitled only to the greater of the two rebates. Credit on Customer Electronic Simple and Complex Executions The Exchange also proposes to modify the qualifications to earn the Credit. Currently, the Credit provides that ATP Holders are eligible to receive a credit of $0.10 per contract on Customer Electronic Simple and Complex executions, excluding CUBE Auctions, QCC Transactions, and volume from orders routed to another exchange, by meeting each of the following monthly qualification levels: (a) 15,000 contracts ADV from Initiating CUBE Orders in Complex CUBE Auctions; (b) Customer Electronic executions of 0.05% of TCADV, excluding CUBE Auctions, QCC Transactions, and volume from orders routed to another exchange; and (c) Professional Electronic executions of 0.03% of TCADV.12 The Exchange proposes to decrease the required volume in Initiating Complex CUBE Orders from 15,000 to 10,000 ADV, which, as discussed above, would align the qualifying bases for the Credit with the proposed requirements for the Rebate. While the Exchange is not proposing any changes to the qualifying requirements with respect to Customer or Professional Electronic executions or to the amount of the Credit, which will remain $0.10 per contract, the Exchange proposes to modify the Fee Schedule to clarify the Professional Electronic volume requirement. Specifically, the Exchange proposes to specify that qualifying Professional Electronic volume, like Customer Electronic qualifying volume, excludes CUBE Auctions, QCC Transactions, and volume from orders routed to another exchange. The Exchange proposes this change to improve the clarity of the Fee Schedule by providing additional detail regarding how qualifying volume for the Credit is currently determined. * * * * * The proposed changes are designed to incent ATP Holders to direct order flow to the Exchange and to encourage ATP Holders to engage in a variety of transactions on the Exchange. In particular, the Exchange notes that volume executed in auctions has increased across the industry and thus believes the proposed change would 12 See Fee Schedule, Section I.H. In calculating an OFP’s Electronic volume, the Exchange will include the activity of either (i) Affiliates of the OFP, such as when an OFP has an Affiliated NYSE American Options Market Making firm, or (ii) an Appointed MM of such OFP. E:\FR\FM\04FEN1.SGM 04FEN1 Federal Register / Vol. 87, No. 24 / Friday, February 4, 2022 / Notices 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.’’ 17 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.18 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 multiplylisted equity and ETF options trades.19 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 2. Statutory Basis constrain options exchange transaction The Exchange believes that the fees. Stated otherwise, changes to proposed rule change is consistent with exchange transaction fees and rebates Section 6(b) of the Act,15 in general, and can have a direct effect on the ability of furthers the objectives of Sections an exchange to compete for order flow. 6(b)(4) and (5) of the Act,16 in particular, The proposed rule change is designed because it provides for the equitable to continue to incent ATP Holders to allocation of reasonable dues, fees, and direct liquidity to the Exchange in a other charges among its members, variety of forms and from a variety of issuers and other persons using its sources, thereby promoting market facilities and does not unfairly depth, price discovery, and price discriminate between customers, improvement and enhancing order issuers, brokers or dealers. execution opportunities for market participants. In particular, the Exchange The Proposed Rule Change Is believes it is reasonable to provide ATP Reasonable Holders with a rebate or credit for The Exchange operates in a highly achieving certain volume goals in competitive market. The Commission different types of executions, consistent has repeatedly expressed its preference with credits offered through a similarly lotter on DSK11XQN23PROD with NOTICES1 encourage ATP Holders to direct more auction-eligible order flow (and, in particular, Initiating CUBE Orders in Complex CUBE auctions) to the Exchange to qualify for the Rebate and Credit.13 To the extent that the proposed changes to the Rebate and Credit achieve their intended purpose, the increased liquidity on the Exchange would result in enhanced market quality for all participants. 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 one with an incentive program similar to the Rebate and Credit.14 Thus, ATP Holders have a choice of where they direct their order flow. The proposed modifications to the qualifications for the Rebate and Credit are designed to encourage the submission of Complex CUBE Orders, which should maximize price improvement opportunities. In addition, because both the Rebate and Credit will also have requirements based on Customer Electronic executions and Professional Electronic order flow, as modified, the Exchange believes all market participants stand to benefit from increased order flow, which promotes market depth, facilitates tighter spreads, and enhances price discovery. 13 The Exchange’s analysis of OPRA data indicates that auction volume has fluctuated from 19.2% of all options industry volume at the end of 2019, to as high as 23.4% in June 2020, to a current level of 19.7% in November 2021. 14 See, e.g., Cboe Exchange Inc. Fee Schedule, Volume Incentive Program, available at: https:// cdn.cboe.com/resources/membership/Cboe_ FeeSchedule.pdf (providing comparable per contract credits for Customer orders based on volume from a variety of executions, including auction volume, volume from various account types, and volume from both simple and complex executions). 15 15 U.S.C. 78f(b). 16 15 U.S.C. 78f(b)(4) and (5). VerDate Sep<11>2014 18:50 Feb 03, 2022 Jkt 256001 17 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (S7–10–04) (‘‘Reg NMS Adopting Release’’). 18 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. 19 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 decreased from 9.09% for the month of November 2020 to 7.06% for the month of November 2021. PO 00000 Frm 00159 Fmt 4703 Sfmt 4703 6641 structured program on a competing options exchange.20 The Exchange also believes that the proposed exclusions applicable to qualifying volume for the Rebate are reasonable because they are consistent with exclusions set forth elsewhere in the Fee Schedule, based on CUBE Auctions, QCC trades, and volume from orders routed to another exchange being subject to separate fees and credits.21 The Exchange also believes that the proposed modifications to the qualifications for the Rebate and the Credit are reasonably designed because they would encourage ATP Holders to execute a variety of orders on the Exchange and, in particular, make greater use of Complex CUBE Auctions. The Exchange further believes that implementing the same criteria to qualify for the Rebate or Credit should encourage greater use of the Exchange by all ATP Holders, which may lead to greater opportunities to trade—and for price improvement—for all participants. The Exchange notes that all market participants stand to benefit from increased transaction 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. The Exchange believes that the proposed modification of the Fee Schedule regarding qualifying Professional Electronic volume for the Credit is reasonable because it will provide additional clarity regarding the current method of calculating qualifying volume for the Credit. The Exchange cannot predict with certainty whether any ATP Holders would seek to qualify for the Rebate or the Credit, as modified, but believes that the proposed qualifying bases for the Rebate and Credit, which lower the volume of CUBE Orders necessary to qualify and align the volume requirements in Customer and Professional Electronic executions across the two incentives, are achievable for ATP Holders and would continue to incent ATP Holders to direct volume to the Exchange. Finally, to the extent the proposed changes 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. In the backdrop of the competitive environment in which the Exchange operates, the proposed rule changes are a reasonable attempt by 20 See 21 See E:\FR\FM\04FEN1.SGM supra note 14. supra notes 10 & 11. 04FEN1 6642 Federal Register / Vol. 87, No. 24 / Friday, February 4, 2022 / Notices the Exchange to increase the depth of its market and improve its market share relative to its competitors. lotter on DSK11XQN23PROD with NOTICES1 The Proposed Rule Change Is an Equitable Allocation of Fees and Rebates The Exchange believes the proposed rule change is an equitable allocation of its fees and rebates. The proposal is based on the amount and type of business transacted on the Exchange, and ATP Holders can seek to qualify for these incentives or not. The Exchange further believes that the proposed exclusion of CUBE Auctions, QCC trades, and volume routed to another exchange from the qualifying Customer Electronic and Professional Electronic volume for the Rebate is equitable because volume from such transactions is subject to separate pricing.22 Moreover, because ATP Holders would need to meet requirements based on Initiating CUBE Orders, Customer Electronic executions, and Professional Electronic executions in order to qualify for either the Rebate or Credit, as modified, the Exchange believes that the proposed changes are designed to encourage ATP Holders to aggregate their executions at the Exchange as a primary execution venue. To the extent that the proposed changes attract more volume to the Exchange (and, in particular, more Complex CUBE auction volume), this increased order flow would continue to make the Exchange a more competitive venue for 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. The Exchange also believes that the proposed change to specify that CUBE Auctions, QCC trades, and volume routed to another exchange are excluded from the calculation of qualifying Professional Electronic volume for the Credit is an equitable allocation of fees and rebates because the proposed exclusion is consistent with exclusions set forth elsewhere in the Fee Schedule and such transactions are subject to separate pricing.23 The Exchange also believes that the proposed change promotes an equitable allocation of fees and rebates by ensuring that the Fee Schedule reflects the current method of calculating qualifying volume for the Credit. 22 See 23 See supra note 11. supra notes 10 & 11. VerDate Sep<11>2014 18:50 Feb 03, 2022 The Proposed Rule Change Is not Unfairly Discriminatory The Exchange believes that the proposal is not unfairly discriminatory because the proposed modifications would apply 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 try to achieve either incentive. Rather, the proposals are designed to encourage participants to utilize the Exchange as a primary trading venue (if they have not done so previously) and increase auction, Customer Electronic, and Professional Electronic volume sent to the Exchange. In addition, the proposed modifications to the requirements to qualify for the Rebate and Credit are designed to align the requirements for the two incentives and to encourage greater use of Complex CUBE Auctions by ATP Holders, which may lead to greater opportunities to trade—and for price improvement—for all participants. The Exchange believes that the proposed exclusions from qualifying volume for the Rebate are not unfairly discriminatory because they are consistent with exclusions set forth elsewhere in the Fee Schedule and account for CUBE Auctions, QCC trades, and volume routed to another exchange being subject to separate pricing.24 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 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. 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. The Exchange further believes that the proposed change to specify that CUBE Auctions, QCC trades, and volume routed to another exchange are excluded from the calculation of qualifying Professional Electronic volume for the Credit is not unfairly discriminatory because it would update the Fee 24 See Jkt 256001 PO 00000 supra notes 10 & 11. Frm 00160 Fmt 4703 Sfmt 4703 Schedule to provide additional clarity regarding the current method of calculating qualifying volume for the Credit. 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 changes further 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.’’ 25 Intramarket Competition. The proposed change is designed to continue to attract increased and diverse order flow to the Exchange by offering competitive credits and rebates, which would enhance the quality of quoting and may increase the volume of contracts traded on the Exchange. Specifically, the Exchange believes the proposed rule change, by specifying requirements in auction, Customer Electronic, and Professional Electronic volume, would incent ATP Holders to participate in a variety of types of executions on the Exchange to qualify for the Rebate or Credit. To the extent that this purpose is achieved, all of the Exchange’s market participants should benefit from the improved market liquidity. Enhanced market quality and increased transaction volume resulting from the anticipated increase in order flow directed to the Exchange would benefit all market participants and improve competition on the Exchange. Intermarket Competition. The Exchange operates in a highly competitive market in which market participants can readily favor one of the 25 See Reg NMS Adopting Release, supra note 17, at 37499. E:\FR\FM\04FEN1.SGM 04FEN1 Federal Register / Vol. 87, No. 24 / Friday, February 4, 2022 / Notices lotter on DSK11XQN23PROD with NOTICES1 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 currently has more than 16% of the market share of executed volume of multiply-listed equity and ETF options trades.26 Therefore, no exchange currently possesses significant pricing power in the execution of multiplylisted 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.27 The Exchange believes that the proposed rule change reflects this competitive environment because it modifies the Exchange’s fees and rebates in a manner designed to encourage ATP Holders to direct trading interest to the Exchange, to provide liquidity and to attract order flow. Specifically, the Exchange believes that the proposed change would encourage ATP Holders to direct increased volume to the Exchange, thereby increasing the number of executions (and executions of varying types) on the Exchange. The Exchange further believes that harmonizing the requirements for the Rebate and Credit could make the incentives more achievable for ATP Holders and would thus continue to make the Exchange a more attractive and competitive venue for order execution. 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. Thus, the Exchange believes that the proposed changes 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. 26 See supra note 18. 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 decreased from 9.09% for the month of November 2020 to 7.06% for the month of November 2021. 27 Based VerDate Sep<11>2014 18:50 Feb 03, 2022 Jkt 256001 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) 28 of the Act and subparagraph (f)(2) of Rule 19b–4 29 thereunder. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 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–2022–09 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–2022–09. 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 28 15 29 17 PO 00000 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). Frm 00161 Fmt 4703 Sfmt 4703 6643 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–2022–09 and should be submitted on or before February 25, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.30 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2022–02314 Filed 2–3–22; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF STATE [Public Notice 11646] Notice of Determinations; Culturally Significant Objects Being Imported for Exhibition—Determinations: ‘‘Alberto Giacometti: Toward the Ultimate Figure’’ Exhibition Notice is hereby given of the following determinations: I hereby determine that certain objects being imported from abroad pursuant to an agreement with their foreign owner or custodian for temporary display in the exhibition ‘‘Alberto Giacometti: Toward the Ultimate Figure’’ at the Cleveland Museum of Art, Cleveland, Ohio; the Seattle Art Museum, Seattle, Washington; the Museum of Fine Arts, Houston, in Houston, Texas; the NelsonAtkins Museum of Art, Kansas City, Missouri; and at possible additional exhibitions or venues yet to be determined, are of cultural significance, and, further, that their temporary exhibition or display within the United States as aforementioned is in the national interest. I have ordered that Public Notice of these determinations be published in the Federal Register. FOR FURTHER INFORMATION CONTACT: Chi D. Tran, Program Administrator, Office of the Legal Adviser, U.S. Department of SUMMARY: 30 17 E:\FR\FM\04FEN1.SGM CFR 200.30–3(a)(12). 04FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 87, Number 24 (Friday, February 4, 2022)]
[Notices]
[Pages 6639-6643]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-02314]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94104; File No. SR-NYSEAMER-2022-09]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Change To Amend the NYSE 
American Options Fee Schedule

January 31, 2022.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on January 21, 2022, NYSE American LLC (``NYSE American'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the 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 (``Fee Schedule'') regarding incentives relating to Complex 
Customer Best Execution Auctions. 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-2021-53), with an effective date of 
January 3, 2022, then withdrew such filing on January 12, 2022 (SR-
NYSEAmer-2022-05), 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.

[[Page 6640]]

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 qualifications for (1) the Alternative Initiating Participant 
Rebate, as set forth in Section I.G. (the ``Rebate''), and (2) the 
credit on Customer Electronic Simple and Complex executions set forth 
in Section I.H (the ``Credit'').
    As further discussed below, the proposed changes are designed to 
encourage ATP Holders to initiate Complex Customer Best Execution 
(``CUBE'') Auctions while also maintaining levels of both Customer and 
Professional Electronic volume.\5\
---------------------------------------------------------------------------

    \5\ For purposes of this filing, ``Professional'' Electronic 
volume includes: Professional Customer, Broker Dealer, Non-NYSE 
American Options Market Maker, and Firm.
---------------------------------------------------------------------------

    The Exchange proposes to implement this fee change on January 21, 
2022.
Proposed Rule Change
Alternative Initiating Participant Rebate
    Section I.G. of the Fee Schedule sets forth the per contract fees 
and credits for executions associated with Single-Leg and Complex CUBE 
Auctions. To encourage participation in Complex CUBE Auctions, the 
Exchange offers rebates on certain initiating Complex CUBE volume. 
Currently, the Exchange offers the ACE Initiating Participant Rebate to 
ATP Holders that also qualify for the American Customer Engagement 
(``ACE'') Program \6\ and an Alternative Initiating Participant Rebate 
(the ``Rebate'') for ATP Holders that do not qualify for the ACE 
program.\7\ Both the ACE Initiating Participant Rebate and the Rebate 
for Complex CUBE orders provide for a rebate of $0.10 per contract, and 
an ATP Holder that qualifies for both rebates is entitled to only the 
greater of the two.\8\
---------------------------------------------------------------------------

    \6\ See Fee Schedule, Section I.E., American Customer Engagement 
(``ACE'') Program, available at: https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf.
    \7\ See id. at Section I.G., CUBE Auction Fees and Credits, 
Complex CUBE Auction.
    \8\ See id.
---------------------------------------------------------------------------

    Currently, to qualify for the Rebate, an ATP Holder must execute a 
minimum of 5,000 contracts ADV in the Professional range (as defined in 
Section I.H. of the Fee Schedule) and execute a minimum of 15,000 
contracts ADV from Initiating CUBE Orders in Single-Leg and/or Complex 
CUBE Auctions.\9\
---------------------------------------------------------------------------

    \9\ See id.
---------------------------------------------------------------------------

    The Exchange proposes to modify the qualifications to earn the 
Rebate by decreasing the required volume in Initiating CUBE Orders from 
15,000 ADV from Initiating CUBE Orders in Single-Leg and/or Complex 
CUBE Auctions to 10,000 ADV in Initiating CUBE orders from Complex CUBE 
Auctions only. The Exchange proposes to modify this qualification to be 
based only on Initiating CUBE Orders in Complex CUBE Auctions in order 
to encourage increased participation in Complex CUBE Auctions. The 
Exchange also proposes to delete the requirement to execute a minimum 
of 5,000 contracts ADV in the Professional range and proposes two 
additional qualifications to earn the Rebate. The Exchange proposes 
these changes to align the requirements for this incentive with those 
for the Credit (as further discussed below). Specifically, the Exchange 
proposes to require, in addition to the volume requirement with respect 
to Initiating CUBE Orders in Complex CUBE Auctions, that an ATP Holder 
also achieve Customer Electronic executions of 0.05% of TCADV 
(excluding CUBE Auctions, QCC Transactions, and volume from orders 
routed to another exchange) and Professional (as defined in Section 
I.H. of the Fee Schedule) Electronic executions of 0.03% of TCADV 
(excluding CUBE Auctions, QCC Transactions, and volume from orders 
routed to another exchange). The Exchange proposes to exclude CUBE 
Auctions, QCC Transactions, and volume from orders routed to another 
exchange from the calculations of Customer Electronic and Professional 
Electronic volume, consistent with exclusions set forth elsewhere in 
the Fee Schedule.\10\ The Exchange proposes to exclude volume from CUBE 
Auctions, QCC Transactions, and orders routed to another exchange 
because volume from such transactions would be subject to separate 
pricing.\11\ The Exchange does not propose to modify the amount of the 
Rebate (which will remain at $0.10 per contract), and an ATP Holder 
that qualifies for both the ACE Initiating Participant Rebate and the 
Rebate will continue to be entitled only to the greater of the two 
rebates.
---------------------------------------------------------------------------

    \10\ See, e.g., Fee Schedule, Section I.C., NYSE American 
Options Market Maker Sliding Scale--Electronic (excluding volumes 
attributable to QCC trades and CUBE Auctions from calculation of 
Market Maker Electronic monthly volumes); Section I.E., American 
Customer Engagement (``ACE'') Program (excluding volume resulting 
from QCC trades and volume attributable to orders routed to another 
exchange from calculation of an OFP's Electronic volume); Section 
I.H., Professional Step-Up Incentive (excluding volumes from CUBE 
Auctions and QCC transactions from the calculation of base volume 
and qualifying volume for the incentive).
    \11\ See Fee Schedule, Sections I.F. (setting forth fees and 
credits for QCC trades) and I.G. (setting forth fees and credits for 
CUBE Auctions). Volume from orders routed to another exchange would 
be subject to pricing set forth by such exchange.
---------------------------------------------------------------------------

Credit on Customer Electronic Simple and Complex Executions
    The Exchange also proposes to modify the qualifications to earn the 
Credit. Currently, the Credit provides that ATP Holders are eligible to 
receive a credit of $0.10 per contract on Customer Electronic Simple 
and Complex executions, excluding CUBE Auctions, QCC Transactions, and 
volume from orders routed to another exchange, by meeting each of the 
following monthly qualification levels: (a) 15,000 contracts ADV from 
Initiating CUBE Orders in Complex CUBE Auctions; (b) Customer 
Electronic executions of 0.05% of TCADV, excluding CUBE Auctions, QCC 
Transactions, and volume from orders routed to another exchange; and 
(c) Professional Electronic executions of 0.03% of TCADV.\12\
---------------------------------------------------------------------------

    \12\ See Fee Schedule, Section I.H. In calculating an OFP's 
Electronic volume, the Exchange will include the activity of either 
(i) Affiliates of the OFP, such as when an OFP has an Affiliated 
NYSE American Options Market Making firm, or (ii) an Appointed MM of 
such OFP.
---------------------------------------------------------------------------

    The Exchange proposes to decrease the required volume in Initiating 
Complex CUBE Orders from 15,000 to 10,000 ADV, which, as discussed 
above, would align the qualifying bases for the Credit with the 
proposed requirements for the Rebate. While the Exchange is not 
proposing any changes to the qualifying requirements with respect to 
Customer or Professional Electronic executions or to the amount of the 
Credit, which will remain $0.10 per contract, the Exchange proposes to 
modify the Fee Schedule to clarify the Professional Electronic volume 
requirement. Specifically, the Exchange proposes to specify that 
qualifying Professional Electronic volume, like Customer Electronic 
qualifying volume, excludes CUBE Auctions, QCC Transactions, and volume 
from orders routed to another exchange. The Exchange proposes this 
change to improve the clarity of the Fee Schedule by providing 
additional detail regarding how qualifying volume for the Credit is 
currently determined.
* * * * *
    The proposed changes are designed to incent ATP Holders to direct 
order flow to the Exchange and to encourage ATP Holders to engage in a 
variety of transactions on the Exchange. In particular, the Exchange 
notes that volume executed in auctions has increased across the 
industry and thus believes the proposed change would

[[Page 6641]]

encourage ATP Holders to direct more auction-eligible order flow (and, 
in particular, Initiating CUBE Orders in Complex CUBE auctions) to the 
Exchange to qualify for the Rebate and Credit.\13\ To the extent that 
the proposed changes to the Rebate and Credit achieve their intended 
purpose, the increased liquidity on the Exchange would result in 
enhanced market quality for all participants.
---------------------------------------------------------------------------

    \13\ The Exchange's analysis of OPRA data indicates that auction 
volume has fluctuated from 19.2% of all options industry volume at 
the end of 2019, to as high as 23.4% in June 2020, to a current 
level of 19.7% in November 2021.
---------------------------------------------------------------------------

    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 one with an incentive program similar to the 
Rebate and Credit.\14\ Thus, ATP Holders have a choice of where they 
direct their order flow. The proposed modifications to the 
qualifications for the Rebate and Credit are designed to encourage the 
submission of Complex CUBE Orders, which should maximize price 
improvement opportunities. In addition, because both the Rebate and 
Credit will also have requirements based on Customer Electronic 
executions and Professional Electronic order flow, as modified, the 
Exchange believes all market participants stand to benefit from 
increased order flow, which promotes market depth, facilitates tighter 
spreads, and enhances price discovery.
---------------------------------------------------------------------------

    \14\ See, e.g., Cboe Exchange Inc. Fee Schedule, Volume 
Incentive Program, available at: https://cdn.cboe.com/resources/membership/Cboe_FeeSchedule.pdf (providing comparable per contract 
credits for Customer orders based on volume from a variety of 
executions, including auction volume, volume from various account 
types, and volume from both simple and complex executions).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\15\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\16\ 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.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b).
    \16\ 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.'' \17\
---------------------------------------------------------------------------

    \17\ 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.\18\ 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.\19\
---------------------------------------------------------------------------

    \18\ 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.
    \19\ 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 decreased from 9.09% for the month of November 2020 to 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 and rebates can have a direct effect on 
the ability of an exchange to compete for order flow.
    The proposed rule change is designed to continue to incent ATP 
Holders to direct liquidity to the Exchange in a variety of forms and 
from a variety of sources, thereby promoting market depth, price 
discovery, and price improvement and enhancing order execution 
opportunities for market participants. In particular, the Exchange 
believes it is reasonable to provide ATP Holders with a rebate or 
credit for achieving certain volume goals in different types of 
executions, consistent with credits offered through a similarly 
structured program on a competing options exchange.\20\ The Exchange 
also believes that the proposed exclusions applicable to qualifying 
volume for the Rebate are reasonable because they are consistent with 
exclusions set forth elsewhere in the Fee Schedule, based on CUBE 
Auctions, QCC trades, and volume from orders routed to another exchange 
being subject to separate fees and credits.\21\
---------------------------------------------------------------------------

    \20\ See supra note 14.
    \21\ See supra notes 10 & 11.
---------------------------------------------------------------------------

    The Exchange also believes that the proposed modifications to the 
qualifications for the Rebate and the Credit are reasonably designed 
because they would encourage ATP Holders to execute a variety of orders 
on the Exchange and, in particular, make greater use of Complex CUBE 
Auctions. The Exchange further believes that implementing the same 
criteria to qualify for the Rebate or Credit should encourage greater 
use of the Exchange by all ATP Holders, which may lead to greater 
opportunities to trade--and for price improvement--for all 
participants. The Exchange notes that all market participants stand to 
benefit from increased transaction 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.
    The Exchange believes that the proposed modification of the Fee 
Schedule regarding qualifying Professional Electronic volume for the 
Credit is reasonable because it will provide additional clarity 
regarding the current method of calculating qualifying volume for the 
Credit.
    The Exchange cannot predict with certainty whether any ATP Holders 
would seek to qualify for the Rebate or the Credit, as modified, but 
believes that the proposed qualifying bases for the Rebate and Credit, 
which lower the volume of CUBE Orders necessary to qualify and align 
the volume requirements in Customer and Professional Electronic 
executions across the two incentives, are achievable for ATP Holders 
and would continue to incent ATP Holders to direct volume to the 
Exchange.
    Finally, to the extent the proposed changes 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. In the backdrop of the competitive 
environment in which the Exchange operates, the proposed rule changes 
are a reasonable attempt by

[[Page 6642]]

the Exchange to increase the depth of its market and improve its market 
share relative to its competitors.
The Proposed Rule Change Is an Equitable Allocation of Fees and Rebates
    The Exchange believes the proposed rule change is an equitable 
allocation of its fees and rebates. The proposal is based on the amount 
and type of business transacted on the Exchange, and ATP Holders can 
seek to qualify for these incentives or not. The Exchange further 
believes that the proposed exclusion of CUBE Auctions, QCC trades, and 
volume routed to another exchange from the qualifying Customer 
Electronic and Professional Electronic volume for the Rebate is 
equitable because volume from such transactions is subject to separate 
pricing.\22\ Moreover, because ATP Holders would need to meet 
requirements based on Initiating CUBE Orders, Customer Electronic 
executions, and Professional Electronic executions in order to qualify 
for either the Rebate or Credit, as modified, the Exchange believes 
that the proposed changes are designed to encourage ATP Holders to 
aggregate their executions at the Exchange as a primary execution 
venue. To the extent that the proposed changes attract more volume to 
the Exchange (and, in particular, more Complex CUBE auction volume), 
this increased order flow would continue to make the Exchange a more 
competitive venue for 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.
---------------------------------------------------------------------------

    \22\ See supra note 11.
---------------------------------------------------------------------------

    The Exchange also believes that the proposed change to specify that 
CUBE Auctions, QCC trades, and volume routed to another exchange are 
excluded from the calculation of qualifying Professional Electronic 
volume for the Credit is an equitable allocation of fees and rebates 
because the proposed exclusion is consistent with exclusions set forth 
elsewhere in the Fee Schedule and such transactions are subject to 
separate pricing.\23\ The Exchange also believes that the proposed 
change promotes an equitable allocation of fees and rebates by ensuring 
that the Fee Schedule reflects the current method of calculating 
qualifying volume for the Credit.
---------------------------------------------------------------------------

    \23\ See supra notes 10 & 11.
---------------------------------------------------------------------------

The Proposed Rule Change Is not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory because the proposed modifications would apply 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 try to achieve either incentive. Rather, the proposals are 
designed to encourage participants to utilize the Exchange as a primary 
trading venue (if they have not done so previously) and increase 
auction, Customer Electronic, and Professional Electronic volume sent 
to the Exchange. In addition, the proposed modifications to the 
requirements to qualify for the Rebate and Credit are designed to align 
the requirements for the two incentives and to encourage greater use of 
Complex CUBE Auctions by ATP Holders, which may lead to greater 
opportunities to trade--and for price improvement--for all 
participants. The Exchange believes that the proposed exclusions from 
qualifying volume for the Rebate are not unfairly discriminatory 
because they are consistent with exclusions set forth elsewhere in the 
Fee Schedule and account for CUBE Auctions, QCC trades, and volume 
routed to another exchange being subject to separate pricing.\24\
---------------------------------------------------------------------------

    \24\ See supra notes 10 & 11.
---------------------------------------------------------------------------

    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 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. 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.
    The Exchange further believes that the proposed change to specify 
that CUBE Auctions, QCC trades, and volume routed to another exchange 
are excluded from the calculation of qualifying Professional Electronic 
volume for the Credit is not unfairly discriminatory because it would 
update the Fee Schedule to provide additional clarity regarding the 
current method of calculating qualifying volume for the Credit.
    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 changes further 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.'' \25\
---------------------------------------------------------------------------

    \25\ See Reg NMS Adopting Release, supra note 17, at 37499.
---------------------------------------------------------------------------

    Intramarket Competition. The proposed change is designed to 
continue to attract increased and diverse order flow to the Exchange by 
offering competitive credits and rebates, which would enhance the 
quality of quoting and may increase the volume of contracts traded on 
the Exchange. Specifically, the Exchange believes the proposed rule 
change, by specifying requirements in auction, Customer Electronic, and 
Professional Electronic volume, would incent ATP Holders to participate 
in a variety of types of executions on the Exchange to qualify for the 
Rebate or Credit. To the extent that this purpose is achieved, all of 
the Exchange's market participants should benefit from the improved 
market liquidity. Enhanced market quality and increased transaction 
volume resulting from the anticipated increase in order flow directed 
to the Exchange would benefit all market participants and improve 
competition on the Exchange.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily favor one 
of the

[[Page 6643]]

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 
currently has more than 16% of the market share of executed volume of 
multiply-listed equity and ETF options trades.\26\ Therefore, no 
exchange currently 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.\27\
---------------------------------------------------------------------------

    \26\ See supra note 18.
    \27\ 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 decreased from 9.09% for the month of November 2020 to 7.06% 
for the month of November 2021.
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change reflects this 
competitive environment because it modifies the Exchange's fees and 
rebates in a manner designed to encourage ATP Holders to direct trading 
interest to the Exchange, to provide liquidity and to attract order 
flow. Specifically, the Exchange believes that the proposed change 
would encourage ATP Holders to direct increased volume to the Exchange, 
thereby increasing the number of executions (and executions of varying 
types) on the Exchange. The Exchange further believes that harmonizing 
the requirements for the Rebate and Credit could make the incentives 
more achievable for ATP Holders and would thus continue to make the 
Exchange a more attractive and competitive venue for order execution. 
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.
    Thus, the Exchange believes that the proposed changes 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) \28\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \29\ thereunder. At any time within 60 days of the filing of such 
proposed rule change, the Commission summarily may temporarily suspend 
such rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2022-09 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-2022-09. 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-2022-09 and should be submitted 
on or before February 25, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
---------------------------------------------------------------------------

    \30\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-02314 Filed 2-3-22; 8:45 am]
BILLING CODE 8011-01-P

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