Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Options Proprietary Market Data Fee Schedule, 12752-12756 [2022-04675]

Download as PDF 12752 Federal Register / Vol. 87, No. 44 / Monday, March 7, 2022 / Notices 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: • 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–2022–11 on the subject line. Paper Comments khammond on DSKJM1Z7X2PROD with NOTICES • 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–2022–11. 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–2022–11 and should be submitted on or before March 28, 2022. 17:50 Mar 04, 2022 Jkt 256001 Dated: March 3, 2022. Vanessa A. Countryman, Secretary. [FR Doc. 2022–04922 Filed 3–3–22; 4:15 pm] BILLING CODE 8011–01–P [FR Doc. 2022–04673 Filed 3–4–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION SECURITIES AND EXCHANGE COMMISSION Electronic Comments VerDate Sep<11>2014 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.29 J. Matthew DeLesDernier, Assistant Secretary. Sunshine Act Meetings 2 p.m. on Thursday, March 10, 2022. PLACE: The meeting will be held via remote means and/or at the Commission’s headquarters, 100 F Street NE, Washington, DC 20549. STATUS: This meeting will be closed to the public. MATTERS TO BE CONSIDERED: Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the closed meeting. Certain staff members who have an interest in the matters also may be present. In the event that the time, date, or location of this meeting changes, an announcement of the change, along with the new time, date, and/or place of the meeting will be posted on the Commission’s website at https:// www.sec.gov. The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) and (10) and 17 CFR 200.402(a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and (a)(10), permit consideration of the scheduled matters at the closed meeting. The subject matter of the closed meeting will consist of the following topics: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; Resolution of litigation claims; and Other matters relating to examinations and enforcement proceedings. At times, changes in Commission priorities require alterations in the scheduling of meeting agenda items that may consist of adjudicatory, examination, litigation, or regulatory matters. CONTACT PERSON FOR MORE INFORMATION: For further information; please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551–5400. Authority: 5 U.S.C. 552b. TIME AND DATE: [Release No. 34–94336; File No. SR– NYSEArca–2022–09] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Options Proprietary Market Data Fee Schedule March 1, 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 February 23, 2022, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE Arca Options Proprietary Market Data Fee Schedule (‘‘Fee Schedule’’) to adopt fees for the NYSE Options OpenClose Volume Summary market data product, effective March 1, 2022. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 29 17 PO 00000 CFR 200.30–3(a)(12). Frm 00097 Fmt 4703 Sfmt 4703 E:\FR\FM\07MRN1.SGM 07MRN1 Federal Register / Vol. 87, No. 44 / Monday, March 7, 2022 / Notices 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 Exchange proposes to amend the Fee Schedule to adopt fees for the NYSE Options Open-Close Volume Summary,4 which will be available for purchase by any market participant, i.e., members 5 and non-members. The Exchange proposes to implement fees for the NYSE Options Open-Close Volume Summary market data product on March 1, 2022. The proposed fees would be applied equally to all market participants and all market participants would receive the same information in the data feed. khammond on DSKJM1Z7X2PROD with NOTICES Background By way of background, pursuant to the Product Filing, the Exchange adopted two versions of the NYSE Options Open-Close Volume Summary: An End of Day Volume Summary market data product and an Intra-Day Volume Summary market data product. The Exchange will initially offer the End of Day Volume Summary market data product and the purpose of this filing is to adopt fees for the End of Day Volume Summary market data product.6 The End of Day Volume Summary provides a volume summary of trading activity on the Exchange at the option level by origin (Customer, Professional Customer, Firm, Broker-Dealer, and Market Maker 7), side of the market (buy or sell), contract volume, and transaction type (opening or closing). The Customer, Professional Customer, Firm, Broker-Dealer, and Market Maker volume is further broken down into trade size buckets (less than 100 contracts, 100–199 contracts, greater than 199 contracts). The NYSE Options Open-Close Volume Summary is proprietary Exchange trade data and 4 See Securities Exchange Act Release No. 93132 (September 27, 2021), 86 FR 54499 (October 1, 2021) (SR–NYSEArca–2021–82) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Adopt a New Historical Market Data Product to Be Known as the NYSE Options OpenClose Volume Summary) (‘‘Product Filing’’). 5 Members of the Exchange are OTP Firms, OTP Holders and ETP Holders. 6 The Exchange intends to offer the Intra-Day Volume Summary market data product when the NYSE Arca options market transitions to the Pillar trading platform, anticipated for Q2 2022. The Exchange will submit a separate proposed rule change to establish fees for the Intra-Day Volume Summary product prior to its launch. 7 The terms Customer, Professional Customer, Firm and Market Maker are defined in Rule 1.1, Definitions. VerDate Sep<11>2014 17:50 Mar 04, 2022 Jkt 256001 does not include trade data from any other exchange. It is also a historical data product and not a real-time data feed. The Exchange anticipates a wide variety of market participants to purchase the End of Day Volume Summary data product, including, but not limited to, individual customers, buy-side investors, and investment banks. The Exchange believes the End of Day Volume Summary would provide subscribers data that should enhance their ability to analyze options trade and volume data, and to create and test trading models and analytical strategies. The Exchange believes the End of Day Volume Summary will be a valuable tool that subscribers can use to gain comprehensive insight into the trading activity in a particular options series. The End of Day Volume Summary is a completely voluntary product, in that the Exchange is not required by any rule or regulation to make this data available and that potential subscribers may purchase it only if they voluntarily choose to do so. The Exchange notes that other exchanges offer a similar product.8 The End of Day Volume Summary is subject to direct competition from similar end of day options trading summaries offered by other options exchanges.9 All of these exchanges offer essentially the same end of day options trading summary information. The options trading summary files offered by the Exchange’s competitors are substitutes, not complements. The End of Day Volume Summary provides data on options market activity which can be used to infer longer-term trends. The information provided by one exchange is generally similar to that provided by other exchanges because order flow can move from one exchange to another, and market sentiment trends that appear on one exchange are likely to be similar to the sentiment trends on other 8 See Securities Exchange Act Release Nos. 89497 (August 6, 2020), 85 FR 48747 (August 12, 2020) (SR–CboeBZX–2020–059); 89498 (August 6, 2020), 85 FR 48735 (August 12, 2020) (SR–Cboe–EDGX– 2020–36); 85817 (May 9, 2019), 84 FR 21863 (May 15, 2019) (SR–CBOE–2019–026); 89496 (August 6, 2020), 85 FR 48743 (August 12, 2020) (SR–C2– 2020–010); 89586 (August 17, 2020), 85 FR 51833 (August 21, 2020) (SR–C2–2020–012); 62887 (September 10, 2010), 75 FR 57092 (September 17, 2010) (SR–Phlx–2010–121); 65587 (October 18, 2011), 76 FR 65765 (October 24, 2011) (SR– NASDAQ–2011–144); 61317 (January 8, 2010), 75 FR 2915 (January 19, 2010) (SR–ISE–2009–103); 81632 (September 15, 2017), 82 FR 44235 (September 21, 2017) (SR–GEMX–2017–42); 91963 (May 21, 2021), 86 FR 28662 (May 27, 2021) (SR– EMERALD–2021–18); 91964 (May 21, 2012), 86 FR 28667 (May 27, 2021) (SR–PEARL–2021–24); and 91965 (May 21, 2021), 86 FR 28665 (May 27, 2021) (SR–MIAX–2021–18). 9 See note 8, supra. PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 12753 exchanges. The key differentiator in the quality of the data depends on the volume of transactions on a given exchange. The greater the volume of transactions, the greater the value of the data. Proposed Rule Change The Exchange proposes to adopt subscription fees for the purchase of the End of Day Volume Summary on a monthly basis. The Exchange proposes to assess a fee of $750 per month for subscribing to the End of Day Volume Summary. The Exchange also proposes that for mid-month subscriptions, new subscribers will be charged for the full calendar month for which they subscribe and will be provided NYSE Options Open-Close Volume Summary data for each trading day of the calendar month in which they subscribed. The proposed monthly fees will apply to all market participants. The Exchange notes that other exchanges provide similar data products that may be purchased on a monthly basis and are comparably priced.10 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,11 in general, and furthers the objectives of Section 6(b)(5) of the Act,12 in particular, in that it is 10 See Price List—U.S. Derivatives Data for Nasdaq PHLX, LLC (‘‘PHLX’’), The Nasdaq Stock Market, LLC (‘‘Nasdaq’’), Nasdaq ISE, LLC (‘‘ISE’’), and Nasdaq GEMX, LLC (‘‘GEMX’’), available at https://www.nasdaqtrader.com/Trader.aspx?id= DPPriceListOptions#web. Particularly, PHLX offers ‘‘Nasdaq PHLX Options Trade Outline (PHOTO)’’ and assesses $750 per month for an end of day subscription; Nasdaq offers the ‘‘Nasdaq Options Trade Outline (NOTO)’’ and assesses $500 per month for an end of day subscription; ISE offers the ‘‘Nasdaq ISE Open/Close Trade Profile’’ and assesses $750 per month for an end of day subscription; and GEMX offers the ‘‘Nasdaq GEMX Open/Close Trade Profile’’ and assesses $500 per month for an end of day subscription. Cboe EDGX Exchange, Inc. (‘‘EDGX’’) assesses $500 per month for an end of day subscription and Cboe BZX Exchange, Inc. (‘‘BZX’’) assesses $500 per month for an end of day subscription. See EDGX fee schedule available at https://markets.cboe.com/us/options/ membership/fee_schedule/edgx/; and BZX fee schedule available at https://markets.cboe.com/us/ options/membership/fee_schedule/bzx/. Miami International Securities Exchange, LLC (‘‘MIAX’’), MIAX Emerald, LLC (‘‘Emerald’’) and MIAX PEARL, LLC (‘‘PEARL’’) each assesses $600 per month for an end of day subscription. See MIAX Fee Schedule, available at https:// www.miaxoptions.com/sites/default/files/fee_ schedule-files/MIAX_Options_Fee_Schedule_ 09282021.pdf; Emerald Fee Schedule, available at https://www.miaxoptions.com/sites/default/files/ fee_schedule-files/MIAX_Emerald_Fee_Schedule_ 09282021.pdf; and PEARL Fee Schedule, available at https://www.miaxoptions.com/sites/default/files/ fee_schedule-files/MIAX_Pearl_Options_Fee_ Schedule_092821.pdf. 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(5). E:\FR\FM\07MRN1.SGM 07MRN1 12754 Federal Register / Vol. 87, No. 44 / Monday, March 7, 2022 / Notices khammond on DSKJM1Z7X2PROD with NOTICES designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and to protect investors and the public interest, and that it is not designed to permit unfair discrimination among customers, brokers, or dealers. The Exchange also believes that its proposal to adopt fees for the End of Day Volume Summary market data product is consistent with Section 6(b) of the Act 13 in general, and furthers the objectives of Section 6(b)(4) of the Act 14 in particular, in that it is an equitable allocation of dues, fees and other charges among its members and other recipients of Exchange data. In adopting Regulation NMS, the Commission granted self-regulatory organizations (‘‘SROs’’) and brokerdealers increased authority and flexibility to offer new and unique market data to the public. It was believed that this authority would expand the amount of data available to users and consumers of such data and also spur innovation and competition for the provision of market data. Particularly, the End of Day Volume Summary further broadens the availability of U.S. options market data to investors consistent with the principles of Regulation NMS. Subscribers to the data may also be able to enhance their ability to analyze options trade and volume data and create and test trading models and analytical strategies. The Exchange believes the End of Day Volume Summary would provide a valuable tool that subscribers can use to gain comprehensive insight into the trading activity in a particular series, but also emphasizes such data is not necessary for trading. Moreover, other exchanges offer a similar data product.15 The Exchange operates in a highly competitive market. Indeed, 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.16 Therefore, currently no exchange 13 15 U.S.C. 78f(b). U.S.C. 78f(b)(4). 15 See note 8, supra. 16 The Options Clearing Corporation (‘‘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-andOpen-Interest/Monthly-Weekly-Volume-Statistics. 14 15 VerDate Sep<11>2014 17:50 Mar 04, 2022 Jkt 256001 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 13% market share of executed volume of multiplylisted equity and ETF options trades.17 The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, 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.’’ 18 With respect to market data, the decision of the United States Court of Appeals for the District of Columbia Circuit in NetCoalition v. SEC upheld the Commission’s reliance on the existence of competitive market mechanisms to evaluate the reasonableness and fairness of fees for proprietary market data: In fact, the legislative history indicates that the Congress intended that the market system ‘‘evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed’’ and that the SEC wield its regulatory power ‘‘in those situations where competition may not be sufficient,’’ such as in the creation of a ‘‘consolidated transactional reporting system.’’ 19 The court agreed with the Commission’s conclusion that ‘‘Congress intended that ‘competitive forces should dictate the services and practices that constitute the U.S. national market system for trading equity securities.’ ’’ 20 More recently, the Commission confirmed that it applies a ‘‘marketbased’’ test in its assessment of market data fees, and that under that test: the Commission considers whether the exchange was subject to significant competitive forces in setting the terms of its proposal for [market data], including the level of any fees. If an exchange meets this burden, the Commission will find that its fee rule is consistent with the Act unless there is a substantial countervailing basis to find 17 Based on OCC data for monthly volume of equity-based options and monthly volume of ETFbased options, see id., the Exchange’s market share in multiply-listed equity and ETF options was 10.35% for the month of November 2020 and 12.99% for the month of November 2021. 18 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 19 NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010) (quoting H.R. Rep. No. 94–229 at 92 (1975), as reprinted in 1975 U.S.C.C.A.N. 323). 20 Id. at 535. PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 that the terms of the rule violate the Act or the rules thereunder.21 Making similar historic data products available to market participants fosters competition in the marketplace, and constrains the ability of exchanges to charge supra-competitive fees. In the event that a market participant views one exchange’s data product as more or less attractive than the competition they can and do switch between similar products. The proposed fees are a result of the competitive environment, as the Exchange seeks to adopt fees to attract purchasers of the End of Day Volume Summary data product. The Exchange believes the proposed fees are reasonable as they are comparable to the fees assessed by other exchanges that provide similar data products.22 Indeed, proposing fees that are excessively higher than established fees for similar data products would simply serve to reduce demand for the Exchange’s data product, which as noted, is entirely optional. Like the End of Day Volume Summary, other exchanges offer similar data products that each provide insight into trading on those markets and may likewise aid in assessing investor sentiment. Although each of these similar data products provide only proprietary trade data and not trade data from other exchanges, it is possible investors are still able to gauge overall investor sentiment across different option series based on open and closing interest on any one exchange. Similarly, market participants may be able to analyze option trade and volume data, and create and test trading models and analytical strategies using only the End of Day Volume Summary data relating to trading activity on one or more of the other markets that provide similar data products. As such, if a market participant views another exchange’s data as more attractive than the Exchange’s data product, then such market participant can merely choose not to purchase the Exchange’s data product and instead purchase another exchange’s product, which offer similar data points, albeit based on that other market’s trading activity. The Exchange also believes the proposed fees are reasonable as they would support the introduction of a new historic market data product that is designed to aid investors by providing insight into trading on the Exchange. 21 See Securities Exchange Act Release No. 34– 90217 (October 16, 2020), 85 FR 67392 (October 22, 2020) (SR–NYSENAT–2020–05) (internal quotation marks omitted), quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74781 (December 9, 2008) (ArcaBook Approval Order). 22 See, note 10, supra. E:\FR\FM\07MRN1.SGM 07MRN1 khammond on DSKJM1Z7X2PROD with NOTICES Federal Register / Vol. 87, No. 44 / Monday, March 7, 2022 / Notices Once the End of Day Volume Summary is made available, it would provide options market participants with valuable information about opening and closing transactions executed on the Exchange throughout the trading day, similar to other trade data products offered by competing options exchanges. In turn, this data would assist market participants in gauging investor sentiment and trading activity, resulting in potentially better-informed trading decisions. As noted above, subscribers may also use such data to create and test trading models and analytical strategies. Selling historic market data is also a means by which exchanges compete to attract business. To the extent that the Exchange is successful in attracting subscribers to the Exchange’s historic data product, it may earn trading revenues and further enhance the value of its data products. If the market deems the proposed fees to be unfair or inequitable, subscribers can diminish or discontinue their use of the historic data and/or avail themselves of similar products offered by other exchanges.23 The Exchange therefore believes that the proposed fees reflect the competitive environment and would be properly and equally assessed to all subscribers. The Exchange also believes the proposed fees are equitable and not unfairly discriminatory as the fees would apply equally to all subscribers who choose to purchase such data. Nothing in this proposal treats any category of market participant any differently from any other category of market participant. The End of Day Volume Summary is available to all market participants, i.e., members and non-members, and all market participants would receive the same information in the data feed. As noted above, the Exchange anticipates a wide variety of market participants to purchase the Exchange’s data product, including but not limited to individual customers, buy-side investors and investment banks. The Exchange reiterates that the decision as to whether or not to purchase the End of Day Volume Summary is entirely optional for all potential subscribers. Indeed, no market participant is required to purchase the data product, and the Exchange is not required to make the data product available to market participants. Rather, the Exchange is voluntarily making the End of Day Volume Summary data product available, as requested by customers, and market participants may choose to receive (and pay for) this data based on their own business needs. Potential 23 See, note 8, supra. VerDate Sep<11>2014 17:50 Mar 04, 2022 Jkt 256001 subscribers may request the data at any time if they believe it to be valuable or may decline to purchase such data. In sum, the fierce competition for order flow constrains any exchange from pricing its historic market data at a supra-competitive price, and constrains the Exchange here in setting its fees for the End of Day Volume Summary data product. As described above, the Exchange’s data product competes head-to-head with numerous products currently available in the marketplace. These products each serve as reasonable substitutes for one another as they are each designed to provide data on options market activity which can be used to infer longer-term trends. The information provided by one exchange is generally similar to that provided by other exchanges because order flow can move from one exchange to another, and market sentiment trends that appear on one exchange are likely to be similar to the sentiment trends on other exchanges. The key differentiator in the quality of the data depends on the volume of transactions on a given exchange. The greater the volume of transactions, the greater the value of the historic data. The proposed fees are therefore reasonable because in setting them, the Exchange is constrained by the availability of numerous substitute venues offering historic market data products and trading. Such substitutes need not be identical, but only substantially similar to the product at hand. More specifically, in setting fees for the End of Day Volume Summary, the Exchange is constrained by the fact that, if its pricing is unattractive to subscribers, subscribers have their pick of an increasing number of alternative venues to use instead of the Exchange. The existence of numerous alternatives to the Exchange ensures that the Exchange cannot set unreasonable fees for historic market data without suffering the negative effects of that decision in the fiercely competitive market in which it operates. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange also does not believe the proposed fees would cause any unnecessary or inappropriate burden on intermarket competition as other exchanges are free to introduce their own comparable historic data product and adopt fees to better compete with the Exchange’s offering. Rather, the PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 12755 Exchange believes that the proposal will promote competition by permitting the Exchange to sell a data product similar to those offered by other competitor options exchanges.24 The Exchange is offering the End of Day Volume Summary in order to keep pace with changes in the industry and evolving customer needs, and believes the data product will contribute to robust competition among national securities exchanges. At least eight other U.S. options exchanges offer a market data product that is substantially similar to the Exchange’s offering. As a result, the Exchange believes this proposed rule change permits fair competition among national securities exchanges. Furthermore, the Exchange operates in a highly competitive environment, and its ability to price End of Day Volume Summary is constrained by competition among exchanges that offer similar data products to their customers. As discussed above, there are currently a number of similar products available to market participants and investors. At least eight other U.S. options exchanges offer a market data product that is substantially similar to the Exchange’s offering, which the Exchange must consider in its pricing discipline in order to compete effectively.25 For example, proposing fees that are excessively higher than established fees for similar data products would simply serve to reduce demand for the Exchange’s data product, which as discussed, market participants are under no obligation to utilize or purchase. In this competitive environment, potential purchasers are free to choose which, if any, similar product to purchase to satisfy their need for market information. As a result, the Exchange believes this proposed rule change permits fair competition among national securities exchanges. The Exchange does not believe the proposed rule change would cause any unnecessary or inappropriate burden on intramarket competition. Particularly, the proposed fees would apply uniformly to any subscriber, in that the Exchange would not differentiate between subscribers that purchase the End of Day Volume Summary and all subscribers would receive the same information in the data feed. The Exchange believes the proposed fees are set at a modest level that would allow interested subscribers to purchase such data based on their business needs. 24 Id. 25 See, E:\FR\FM\07MRN1.SGM note 10, supra. 07MRN1 12756 Federal Register / Vol. 87, No. 44 / Monday, March 7, 2022 / Notices C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) 26 of the Act and subparagraph (f)(2) of Rule 19b–4 27 thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 28 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: khammond on DSKJM1Z7X2PROD with NOTICES Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–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–NYSEArca–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/ U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 28 15 U.S.C. 78s(b)(2)(B). 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–NYSEArca–2022–09 and should be submitted on or before March 28, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.29 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2022–04675 Filed 3–4–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–94335; File No. SR– EMERALD–2021–38] Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Exchange Rule 531 To Provide for a New Service Called the High Precision Network Time Signal Service March 1, 2022. I. Introduction On November 19, 2021, MIAX Emerald, LLC (‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 26 15 27 17 VerDate Sep<11>2014 17:50 Mar 04, 2022 29 17 1 15 Jkt 256001 PO 00000 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). Frm 00101 Fmt 4703 Sfmt 4703 19b–4 thereunder,2 a proposed rule change to amend Exchange Rule 531, Reports and Market Data Products, to provide for a new service called the ‘‘High Precision Network Time Signal Service.’’ The proposed rule change was published for comment in the Federal Register on December 7, 2021.3 On January 19, 2022, pursuant to Section 19(b)(2) of the Act,4 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.5 On February 18, 2022, the Exchange filed Amendment No. 1 to the proposed rule change.6 The Commission has received no comments on the proposed rule change. This order provides notice of the filing of Amendment No. 1 to the proposed rule change, and grants approval to the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. II. Description of the Proposed Rule Change, as Modified by Amendment No. 1 The Exchange proposes to provide for a new, optional service called the ‘‘High Precision Network Time Signal Service’’ (‘‘Service’’), which would enable members to synchronize their internal devices to the same time as the Exchange’s devices with high precision.7 According to the Exchange, the U.S. Government’s Global Positioning Satellite (‘‘GPS’’) clock time signal is the publicly-available benchmark that the Exchange and most, if not all, members use to synchronize their internal 2 17 CFR 240.19b–4. Securities Exchange Act Release No. 93698 (December 1, 2021), 86 FR 69301 (December 7, 2021) (‘‘Notice’’). 4 15 U.S.C. 78s(b)(2). 5 See Securities Exchange Act Release No. 94000 (January 19, 2022), 87 FR 3865 (January 25, 2022). The Commission designated March 7, 2022, as the date by which the Commission shall approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change. 6 In Amendment No. 1, the Exchange amended the proposal to provide additional detail, clarification, and justification regarding the proposed rule change and make a non-substantive change to streamline the proposed rule text. Amendment No. 1 is available on the Commission’s website at https://www.sec.gov/comments/sremerald-2021-38/sremerald202138-20116580268058.pdf. 7 See proposed Rule 531(c); Amendment No. 1, at 4. The Exchange states that the proposed Service would be available to all members who choose to subscribe, and that any member may discontinue its subscription at any time. See Amendment No. 1, at 4 n.4., 14. The Exchange also states that it intends to submit a separate rule filing with the Commission to propose fees for the Service. See id. at 4 n.4. 3 See E:\FR\FM\07MRN1.SGM 07MRN1

Agencies

[Federal Register Volume 87, Number 44 (Monday, March 7, 2022)]
[Notices]
[Pages 12752-12756]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-04675]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94336; File No. SR-NYSEArca-2022-09]


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

March 1, 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 February 23, 2022, NYSE Arca, Inc. (``NYSE Arca'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend the NYSE Arca Options Proprietary 
Market Data Fee Schedule (``Fee Schedule'') to adopt fees for the NYSE 
Options Open-Close Volume Summary market data product, effective March 
1, 2022. The proposed rule change is available on the Exchange's 
website at www.nyse.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below,

[[Page 12753]]

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 Exchange proposes to amend the Fee Schedule to adopt fees for 
the NYSE Options Open-Close Volume Summary,\4\ which will be available 
for purchase by any market participant, i.e., members \5\ and non-
members. The Exchange proposes to implement fees for the NYSE Options 
Open-Close Volume Summary market data product on March 1, 2022. The 
proposed fees would be applied equally to all market participants and 
all market participants would receive the same information in the data 
feed.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 93132 (September 27, 
2021), 86 FR 54499 (October 1, 2021) (SR-NYSEArca-2021-82) (Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change to 
Adopt a New Historical Market Data Product to Be Known as the NYSE 
Options Open-Close Volume Summary) (``Product Filing'').
    \5\ Members of the Exchange are OTP Firms, OTP Holders and ETP 
Holders.
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Background
    By way of background, pursuant to the Product Filing, the Exchange 
adopted two versions of the NYSE Options Open-Close Volume Summary: An 
End of Day Volume Summary market data product and an Intra-Day Volume 
Summary market data product. The Exchange will initially offer the End 
of Day Volume Summary market data product and the purpose of this 
filing is to adopt fees for the End of Day Volume Summary market data 
product.\6\ The End of Day Volume Summary provides a volume summary of 
trading activity on the Exchange at the option level by origin 
(Customer, Professional Customer, Firm, Broker-Dealer, and Market Maker 
\7\), side of the market (buy or sell), contract volume, and 
transaction type (opening or closing). The Customer, Professional 
Customer, Firm, Broker-Dealer, and Market Maker volume is further 
broken down into trade size buckets (less than 100 contracts, 100-199 
contracts, greater than 199 contracts). The NYSE Options Open-Close 
Volume Summary is proprietary Exchange trade data and does not include 
trade data from any other exchange. It is also a historical data 
product and not a real-time data feed.
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    \6\ The Exchange intends to offer the Intra-Day Volume Summary 
market data product when the NYSE Arca options market transitions to 
the Pillar trading platform, anticipated for Q2 2022. The Exchange 
will submit a separate proposed rule change to establish fees for 
the Intra-Day Volume Summary product prior to its launch.
    \7\ The terms Customer, Professional Customer, Firm and Market 
Maker are defined in Rule 1.1, Definitions.
---------------------------------------------------------------------------

    The Exchange anticipates a wide variety of market participants to 
purchase the End of Day Volume Summary data product, including, but not 
limited to, individual customers, buy-side investors, and investment 
banks. The Exchange believes the End of Day Volume Summary would 
provide subscribers data that should enhance their ability to analyze 
options trade and volume data, and to create and test trading models 
and analytical strategies. The Exchange believes the End of Day Volume 
Summary will be a valuable tool that subscribers can use to gain 
comprehensive insight into the trading activity in a particular options 
series. The End of Day Volume Summary is a completely voluntary 
product, in that the Exchange is not required by any rule or regulation 
to make this data available and that potential subscribers may purchase 
it only if they voluntarily choose to do so. The Exchange notes that 
other exchanges offer a similar product.\8\
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release Nos. 89497 (August 6, 
2020), 85 FR 48747 (August 12, 2020) (SR-CboeBZX-2020-059); 89498 
(August 6, 2020), 85 FR 48735 (August 12, 2020) (SR-Cboe-EDGX-2020-
36); 85817 (May 9, 2019), 84 FR 21863 (May 15, 2019) (SR-CBOE-2019-
026); 89496 (August 6, 2020), 85 FR 48743 (August 12, 2020) (SR-C2-
2020-010); 89586 (August 17, 2020), 85 FR 51833 (August 21, 2020) 
(SR-C2-2020-012); 62887 (September 10, 2010), 75 FR 57092 (September 
17, 2010) (SR-Phlx-2010-121); 65587 (October 18, 2011), 76 FR 65765 
(October 24, 2011) (SR-NASDAQ-2011-144); 61317 (January 8, 2010), 75 
FR 2915 (January 19, 2010) (SR-ISE-2009-103); 81632 (September 15, 
2017), 82 FR 44235 (September 21, 2017) (SR-GEMX-2017-42); 91963 
(May 21, 2021), 86 FR 28662 (May 27, 2021) (SR-EMERALD-2021-18); 
91964 (May 21, 2012), 86 FR 28667 (May 27, 2021) (SR-PEARL-2021-24); 
and 91965 (May 21, 2021), 86 FR 28665 (May 27, 2021) (SR-MIAX-2021-
18).
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    The End of Day Volume Summary is subject to direct competition from 
similar end of day options trading summaries offered by other options 
exchanges.\9\ All of these exchanges offer essentially the same end of 
day options trading summary information. The options trading summary 
files offered by the Exchange's competitors are substitutes, not 
complements. The End of Day Volume Summary provides data on options 
market activity which can be used to infer longer-term trends. The 
information provided by one exchange is generally similar to that 
provided by other exchanges because order flow can move from one 
exchange to another, and market sentiment trends that appear on one 
exchange are likely to be similar to the sentiment trends on other 
exchanges. The key differentiator in the quality of the data depends on 
the volume of transactions on a given exchange. The greater the volume 
of transactions, the greater the value of the data.
---------------------------------------------------------------------------

    \9\ See note 8, supra.
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Proposed Rule Change
    The Exchange proposes to adopt subscription fees for the purchase 
of the End of Day Volume Summary on a monthly basis. The Exchange 
proposes to assess a fee of $750 per month for subscribing to the End 
of Day Volume Summary. The Exchange also proposes that for mid-month 
subscriptions, new subscribers will be charged for the full calendar 
month for which they subscribe and will be provided NYSE Options Open-
Close Volume Summary data for each trading day of the calendar month in 
which they subscribed. The proposed monthly fees will apply to all 
market participants. The Exchange notes that other exchanges provide 
similar data products that may be purchased on a monthly basis and are 
comparably priced.\10\
---------------------------------------------------------------------------

    \10\ See Price List--U.S. Derivatives Data for Nasdaq PHLX, LLC 
(``PHLX''), The Nasdaq Stock Market, LLC (``Nasdaq''), Nasdaq ISE, 
LLC (``ISE''), and Nasdaq GEMX, LLC (``GEMX''), available at https://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#web. 
Particularly, PHLX offers ``Nasdaq PHLX Options Trade Outline 
(PHOTO)'' and assesses $750 per month for an end of day 
subscription; Nasdaq offers the ``Nasdaq Options Trade Outline 
(NOTO)'' and assesses $500 per month for an end of day subscription; 
ISE offers the ``Nasdaq ISE Open/Close Trade Profile'' and assesses 
$750 per month for an end of day subscription; and GEMX offers the 
``Nasdaq GEMX Open/Close Trade Profile'' and assesses $500 per month 
for an end of day subscription. Cboe EDGX Exchange, Inc. (``EDGX'') 
assesses $500 per month for an end of day subscription and Cboe BZX 
Exchange, Inc. (``BZX'') assesses $500 per month for an end of day 
subscription. See EDGX fee schedule available at https://markets.cboe.com/us/options/membership/fee_schedule/edgx/; and BZX 
fee schedule available at https://markets.cboe.com/us/options/membership/fee_schedule/bzx/. Miami International Securities 
Exchange, LLC (``MIAX''), MIAX Emerald, LLC (``Emerald'') and MIAX 
PEARL, LLC (``PEARL'') each assesses $600 per month for an end of 
day subscription. See MIAX Fee Schedule, available at https://www.miaxoptions.com/sites/default/files/fee_schedule-files/MIAX_Options_Fee_Schedule_09282021.pdf; Emerald Fee Schedule, 
available at https://www.miaxoptions.com/sites/default/files/fee_schedule-files/MIAX_Emerald_Fee_Schedule_09282021.pdf; and PEARL 
Fee Schedule, available at https://www.miaxoptions.com/sites/default/files/fee_schedule-files/MIAX_Pearl_Options_Fee_Schedule_092821.pdf.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\11\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\12\ in particular, in that it 
is

[[Page 12754]]

designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and to protect investors and the public interest, and 
that it is not designed to permit unfair discrimination among 
customers, brokers, or dealers. The Exchange also believes that its 
proposal to adopt fees for the End of Day Volume Summary market data 
product is consistent with Section 6(b) of the Act \13\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \14\ in 
particular, in that it is an equitable allocation of dues, fees and 
other charges among its members and other recipients of Exchange data.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations (``SROs'') and broker-dealers increased authority and 
flexibility to offer new and unique market data to the public. It was 
believed that this authority would expand the amount of data available 
to users and consumers of such data and also spur innovation and 
competition for the provision of market data. Particularly, the End of 
Day Volume Summary further broadens the availability of U.S. options 
market data to investors consistent with the principles of Regulation 
NMS. Subscribers to the data may also be able to enhance their ability 
to analyze options trade and volume data and create and test trading 
models and analytical strategies. The Exchange believes the End of Day 
Volume Summary would provide a valuable tool that subscribers can use 
to gain comprehensive insight into the trading activity in a particular 
series, but also emphasizes such data is not necessary for trading. 
Moreover, other exchanges offer a similar data product.\15\
---------------------------------------------------------------------------

    \15\ See note 8, supra.
---------------------------------------------------------------------------

    The Exchange operates in a highly competitive market. Indeed, 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.\16\ 
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 13% 
market share of executed volume of multiply-listed equity and ETF 
options trades.\17\
---------------------------------------------------------------------------

    \16\ The Options Clearing Corporation (``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.
    \17\ Based on 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 
was 10.35% for the month of November 2020 and 12.99% for the month 
of November 2021.
---------------------------------------------------------------------------

    The Commission has repeatedly expressed its preference for 
competition over regulatory intervention in determining prices, 
products, and services in the securities markets. Specifically, 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.'' \18\
---------------------------------------------------------------------------

    \18\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
---------------------------------------------------------------------------

    With respect to market data, the decision of the United States 
Court of Appeals for the District of Columbia Circuit in NetCoalition 
v. SEC upheld the Commission's reliance on the existence of competitive 
market mechanisms to evaluate the reasonableness and fairness of fees 
for proprietary market data:

    In fact, the legislative history indicates that the Congress 
intended that the market system ``evolve through the interplay of 
competitive forces as unnecessary regulatory restrictions are 
removed'' and that the SEC wield its regulatory power ``in those 
situations where competition may not be sufficient,'' such as in the 
creation of a ``consolidated transactional reporting system.'' \19\
---------------------------------------------------------------------------

    \19\ NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010) 
(quoting H.R. Rep. No. 94-229 at 92 (1975), as reprinted in 1975 
U.S.C.C.A.N. 323).

    The court agreed with the Commission's conclusion that ``Congress 
intended that `competitive forces should dictate the services and 
practices that constitute the U.S. national market system for trading 
equity securities.' '' \20\
---------------------------------------------------------------------------

    \20\ Id. at 535.
---------------------------------------------------------------------------

    More recently, the Commission confirmed that it applies a ``market-
based'' test in its assessment of market data fees, and that under that 
test:

the Commission considers whether the exchange was subject to 
significant competitive forces in setting the terms of its proposal 
for [market data], including the level of any fees. If an exchange 
meets this burden, the Commission will find that its fee rule is 
consistent with the Act unless there is a substantial countervailing 
basis to find that the terms of the rule violate the Act or the 
rules thereunder.\21\
---------------------------------------------------------------------------

    \21\ See Securities Exchange Act Release No. 34-90217 (October 
16, 2020), 85 FR 67392 (October 22, 2020) (SR-NYSENAT-2020-05) 
(internal quotation marks omitted), quoting Securities Exchange Act 
Release No. 59039 (December 2, 2008), 73 FR 74770, 74781 (December 
9, 2008) (ArcaBook Approval Order).

    Making similar historic data products available to market 
participants fosters competition in the marketplace, and constrains the 
ability of exchanges to charge supra-competitive fees. In the event 
that a market participant views one exchange's data product as more or 
less attractive than the competition they can and do switch between 
similar products. The proposed fees are a result of the competitive 
environment, as the Exchange seeks to adopt fees to attract purchasers 
of the End of Day Volume Summary data product.
    The Exchange believes the proposed fees are reasonable as they are 
comparable to the fees assessed by other exchanges that provide similar 
data products.\22\ Indeed, proposing fees that are excessively higher 
than established fees for similar data products would simply serve to 
reduce demand for the Exchange's data product, which as noted, is 
entirely optional. Like the End of Day Volume Summary, other exchanges 
offer similar data products that each provide insight into trading on 
those markets and may likewise aid in assessing investor sentiment. 
Although each of these similar data products provide only proprietary 
trade data and not trade data from other exchanges, it is possible 
investors are still able to gauge overall investor sentiment across 
different option series based on open and closing interest on any one 
exchange. Similarly, market participants may be able to analyze option 
trade and volume data, and create and test trading models and 
analytical strategies using only the End of Day Volume Summary data 
relating to trading activity on one or more of the other markets that 
provide similar data products. As such, if a market participant views 
another exchange's data as more attractive than the Exchange's data 
product, then such market participant can merely choose not to purchase 
the Exchange's data product and instead purchase another exchange's 
product, which offer similar data points, albeit based on that other 
market's trading activity.
---------------------------------------------------------------------------

    \22\ See, note 10, supra.
---------------------------------------------------------------------------

    The Exchange also believes the proposed fees are reasonable as they 
would support the introduction of a new historic market data product 
that is designed to aid investors by providing insight into trading on 
the Exchange.

[[Page 12755]]

Once the End of Day Volume Summary is made available, it would provide 
options market participants with valuable information about opening and 
closing transactions executed on the Exchange throughout the trading 
day, similar to other trade data products offered by competing options 
exchanges. In turn, this data would assist market participants in 
gauging investor sentiment and trading activity, resulting in 
potentially better-informed trading decisions. As noted above, 
subscribers may also use such data to create and test trading models 
and analytical strategies.
    Selling historic market data is also a means by which exchanges 
compete to attract business. To the extent that the Exchange is 
successful in attracting subscribers to the Exchange's historic data 
product, it may earn trading revenues and further enhance the value of 
its data products. If the market deems the proposed fees to be unfair 
or inequitable, subscribers can diminish or discontinue their use of 
the historic data and/or avail themselves of similar products offered 
by other exchanges.\23\ The Exchange therefore believes that the 
proposed fees reflect the competitive environment and would be properly 
and equally assessed to all subscribers. The Exchange also believes the 
proposed fees are equitable and not unfairly discriminatory as the fees 
would apply equally to all subscribers who choose to purchase such 
data. Nothing in this proposal treats any category of market 
participant any differently from any other category of market 
participant. The End of Day Volume Summary is available to all market 
participants, i.e., members and non-members, and all market 
participants would receive the same information in the data feed.
---------------------------------------------------------------------------

    \23\ See, note 8, supra.
---------------------------------------------------------------------------

    As noted above, the Exchange anticipates a wide variety of market 
participants to purchase the Exchange's data product, including but not 
limited to individual customers, buy-side investors and investment 
banks. The Exchange reiterates that the decision as to whether or not 
to purchase the End of Day Volume Summary is entirely optional for all 
potential subscribers. Indeed, no market participant is required to 
purchase the data product, and the Exchange is not required to make the 
data product available to market participants. Rather, the Exchange is 
voluntarily making the End of Day Volume Summary data product 
available, as requested by customers, and market participants may 
choose to receive (and pay for) this data based on their own business 
needs. Potential subscribers may request the data at any time if they 
believe it to be valuable or may decline to purchase such data.
    In sum, the fierce competition for order flow constrains any 
exchange from pricing its historic market data at a supra-competitive 
price, and constrains the Exchange here in setting its fees for the End 
of Day Volume Summary data product. As described above, the Exchange's 
data product competes head-to-head with numerous products currently 
available in the marketplace. These products each serve as reasonable 
substitutes for one another as they are each designed to provide data 
on options market activity which can be used to infer longer-term 
trends. The information provided by one exchange is generally similar 
to that provided by other exchanges because order flow can move from 
one exchange to another, and market sentiment trends that appear on one 
exchange are likely to be similar to the sentiment trends on other 
exchanges. The key differentiator in the quality of the data depends on 
the volume of transactions on a given exchange. The greater the volume 
of transactions, the greater the value of the historic data. The 
proposed fees are therefore reasonable because in setting them, the 
Exchange is constrained by the availability of numerous substitute 
venues offering historic market data products and trading. Such 
substitutes need not be identical, but only substantially similar to 
the product at hand.
    More specifically, in setting fees for the End of Day Volume 
Summary, the Exchange is constrained by the fact that, if its pricing 
is unattractive to subscribers, subscribers have their pick of an 
increasing number of alternative venues to use instead of the Exchange. 
The existence of numerous alternatives to the Exchange ensures that the 
Exchange cannot set unreasonable fees for historic market data without 
suffering the negative effects of that decision in the fiercely 
competitive market in which it operates.

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
also does not believe the proposed fees would cause any unnecessary or 
inappropriate burden on intermarket competition as other exchanges are 
free to introduce their own comparable historic data product and adopt 
fees to better compete with the Exchange's offering. Rather, the 
Exchange believes that the proposal will promote competition by 
permitting the Exchange to sell a data product similar to those offered 
by other competitor options exchanges.\24\ The Exchange is offering the 
End of Day Volume Summary in order to keep pace with changes in the 
industry and evolving customer needs, and believes the data product 
will contribute to robust competition among national securities 
exchanges. At least eight other U.S. options exchanges offer a market 
data product that is substantially similar to the Exchange's offering. 
As a result, the Exchange believes this proposed rule change permits 
fair competition among national securities exchanges.
---------------------------------------------------------------------------

    \24\ Id.
---------------------------------------------------------------------------

    Furthermore, the Exchange operates in a highly competitive 
environment, and its ability to price End of Day Volume Summary is 
constrained by competition among exchanges that offer similar data 
products to their customers. As discussed above, there are currently a 
number of similar products available to market participants and 
investors. At least eight other U.S. options exchanges offer a market 
data product that is substantially similar to the Exchange's offering, 
which the Exchange must consider in its pricing discipline in order to 
compete effectively.\25\ For example, proposing fees that are 
excessively higher than established fees for similar data products 
would simply serve to reduce demand for the Exchange's data product, 
which as discussed, market participants are under no obligation to 
utilize or purchase. In this competitive environment, potential 
purchasers are free to choose which, if any, similar product to 
purchase to satisfy their need for market information. As a result, the 
Exchange believes this proposed rule change permits fair competition 
among national securities exchanges.
---------------------------------------------------------------------------

    \25\ See, note 10, supra.
---------------------------------------------------------------------------

    The Exchange does not believe the proposed rule change would cause 
any unnecessary or inappropriate burden on intramarket competition. 
Particularly, the proposed fees would apply uniformly to any 
subscriber, in that the Exchange would not differentiate between 
subscribers that purchase the End of Day Volume Summary and all 
subscribers would receive the same information in the data feed. The 
Exchange believes the proposed fees are set at a modest level that 
would allow interested subscribers to purchase such data based on their 
business needs.

[[Page 12756]]

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) \26\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \27\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(3)(A).
    \27\ 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) \28\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \28\ 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-NYSEArca-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-NYSEArca-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-NYSEArca-2022-09 and should be submitted 
on or before March 28, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
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    \29\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-04675 Filed 3-4-22; 8:45 am]
BILLING CODE 8011-01-P
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