Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE Arca Options Fee Schedule, 79408-79412 [2022-28081]

Download as PDF 79408 Federal Register / Vol. 87, No. 247 / Tuesday, December 27, 2022 / Notices 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–PEARL–2022–57, and should be submitted on or before January 17, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2022–28086 Filed 12–23–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96544; No. SR– NYSEARCA–2022–83] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE Arca Options Fee Schedule Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘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 modify the NYSE Arca Options Fee Schedule (‘‘Fee Schedule’’) regarding credits for Qualified Contingent Cross (‘‘QCC’’) transactions. The Exchange proposes to implement the fee change effective December 14, 2022.4 The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this filing is to amend the Fee Schedule to modify the credits offered for QCC transactions.5 The Exchange proposes to implement the rule change on December 14, 2022. Currently, the Exchange offers Floor Brokers a credit of ($0.22) per contract for Non-Customer vs. Non-Customer QCC transactions or ($0.11) per contract for Customer vs. Non-Customer QCC TKELLEY on DSK125TN23PROD with NOTICES December 20, 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 December 14, 2022, NYSE Arca, Inc. (‘‘NYSE 21 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 22:43 Dec 23, 2022 Jkt 259001 4 The Exchange originally filed to amend the Fee Schedule on December 1, 2022 (SR–NYSEARCA– 2022–79), then withdrew such filing and amended the Fee Schedule on December 14, 2022 (SR– NYSEARCA–2022–81), which latter filing the Exchange also withdrew on December 14, 2022. 5 A QCC Order is defined as an originating order to buy or sell at least 1,000 contracts that is identified as being part of a qualified contingent trade coupled with a contra-side order or orders totaling an equal number of contracts. See Rule 6.62P–O(g)(1)(A). PO 00000 Frm 00136 Fmt 4703 Sfmt 4703 transactions.6 The Exchange also currently offers an additional ($0.04) per contract credit to Floor Brokers on all Customer vs. Non-Customer QCC transactions if they execute at least 500,000 contracts of credit-eligible volume in QCC transactions in a month.7 QCC executions in which a Customer is on both sides of the QCC trade are not eligible for a credit, and the maximum Floor Broker credit for QCC transactions is $375,000 per month per Floor Broker firm.8 The Exchange now proposes to offer the credits on QCC transactions currently available only to Floor Brokers to any broker submitting a QCC transaction to the Exchange (a ‘‘Submitting Broker’’), whether the broker is a Floor Broker on the Trading Floor or a broker that enters orders electronically through an interface with the Exchange. In other words, the Exchange proposes to offer the existing Floor Broker QCC credits to any OTP Holder or OTP Firm (collectively, ‘‘OTP Holder’’) that submits a QCC transaction to the Exchange. The Exchange also proposes to increase the credit offered on Customer vs. Non-Customer QCC transactions from ($0.11) to ($0.16) and, in light of such proposed increase, to eliminate the additional ($0.04) credit currently offered on Customer vs. Non-Customer QCC transactions to Floor Brokers that execute at least 500,000 contracts of credit-eligible volume in QCC transactions in a month. The Exchange proposes to eliminate the additional credit currently offered to qualifying Floor Brokers because the proposed increased credit of ($0.16) on all Customer vs. Non-Customer QCC transactions would provide Submitting Brokers with a higher credit than the combination of the current ($0.11) and ($0.04) credits available on Customer vs. Non-Customer QCC transactions. To effect these changes, the Exchange proposes to modify the Fee Schedule to substitute the term ‘‘Submitting Broker’’ for ‘‘Floor Broker’’ in connection with credits relating to QCC transactions.9 First, the Exchange proposes to modify the Participant column of the table setting forth the fees and credits for QCC transactions to provide for a ‘‘Submitting Broker credit for Non6 See Fee Schedule, QUALIFIED CONTINGENT CROSS (‘‘QCC’’) TRANSACTION FEES AND CREDITS, available at: https://www.nyse.com/ publicdocs/nyse/markets/arca-options/NYSE_Arca_ Options_Fee_Schedule.pdf. 7 See id. at Endnote 13. 8 See id. 9 See proposed Fee Schedule, QUALIFIED CONTINGENT CROSS (‘‘QCC’’) TRANSACTION FEES AND CREDITS & Endnote 13. E:\FR\FM\27DEN1.SGM 27DEN1 TKELLEY on DSK125TN23PROD with NOTICES Federal Register / Vol. 87, No. 247 / Tuesday, December 27, 2022 / Notices Customer vs. Non-Customer QCC Transaction’’ and a ‘‘Submitting Broker credit for Customer vs. Non-Customer QCC Transaction.’’ The Exchange also proposes to modify Endnote 13 to refer to a ‘‘Submitting Broker’’ rather than a ‘‘Floor Broker,’’ such that Endnote 13 would provide that Customer vs. Customer QCC executions are not eligible for Submitting Broker credits on QCC executions and that the maximum QCC credit allowed will apply to a Submitting Broker firm. The Exchange also proposes to modify Endnote 13 to delete the sentence setting forth the additional ($0.04) credit on Customer vs. Non-Customer QCC transactions. The Exchange also proposes conforming changes to modify the description of the Firm and Broker Dealer Monthly Fee Cap (the ‘‘Monthly Fee Cap’’), as well as Endnote 9, to eliminate text referring to QCC transactions executed by a Floor Broker from the Floor of the Exchange.10 To reflect the proposed changes described above to extend the current Floor Broker QCC credits to any Submitting Broker (whether a Floor Broker on the Trading Floor or a broker that submits orders electronically), the Exchange proposes to delete references to the execution of QCC transactions by a Floor Broker on the on Floor of the Exchange. The Exchange does not propose any other modifications to the Monthly Fee Cap or Endnote 9. Although the Exchange cannot predict with certainty whether the proposed change would encourage OTP Holders to increase their QCC volume, the proposed change is intended to incent OTP Holders to submit additional QCC transactions to the Exchange by expanding the universe of OTP Holders that would be eligible for credits on QCC transactions and increasing the amount of the credit offered on Customer vs. Non-Customer QCC transactions. The Exchange notes that the current Floor Broker QCC credits, when adopted, were offered to Floor Brokers based on their function in facilitating the execution of orders on the Exchange and intended to incent Floor Brokers to aggregate their trading activity, including QCC transactions, at the Exchange as a primary execution venue.11 The instant proposal would continue to provide QCC credits to Floor Brokers and would offer QCC credits to other OTP Holders that submit QCC transactions to the Exchange as well. The Exchange believes the proposed change would continue to encourage Floor Broker QCC volume and also encourage additional OTP Holders to increase QCC volume submitted to the Exchange by offering credits on such transactions. The Exchange believes that the proposal, which also increases the credit on Customer vs. Non-Customer QCC transactions, could incentivize both Floor Brokers and other OTP Holders to aggregate their trading activity at the Exchange, thereby making the Exchange a more attractive venue for order execution and providing additional trading opportunities for all market participants. Therefore, no exchange possesses significant pricing power in the execution of multiply-listed equity and ETF options order flow. More specifically, in October 2022, the Exchange had less than 12% market share of executed volume of multiplylisted equity and ETF options trades.16 The Exchange believes that the evershifting market share among the exchanges from month to month demonstrates that market participants can shift order flow, or discontinue or reduce use of certain categories of products, in response to fee changes. Accordingly, competitive forces constrain options exchange transaction fees. Stated otherwise, modifications to exchange transaction fees can have a direct effect on the ability of an exchange to compete for order flow. 2. Statutory Basis The Exchange believes that the The Exchange believes that the proposed rule change is consistent with proposed change is reasonable because Section 6(b) of the Act,12 in general, and it is designed to incent OTP Holders to increase the number of QCC furthers the objectives of Sections 6(b)(4) and (5) of the Act,13 in particular, transactions sent to the Exchange by offering credits to all OTP Holders that because it provides for the equitable execute QCC transactions (i.e., both allocation of reasonable dues, fees, and continuing to offer credits to Floor other charges among its members, Brokers and providing credits to brokers issuers and other persons using its that submit QCC transactions facilities and does not unfairly electronically as well) and by increasing discriminate between customers, the amount of the credit offered on issuers, brokers, or dealers. Customer vs. Non-Customer QCC The Proposed Rule Change Is transactions. To the extent that the Reasonable proposed change attracts more volume to the Exchange from both Floor Brokers The Exchange operates in a highly and brokers that submit orders competitive market. The Commission electronically, this increased order flow has repeatedly expressed its preference would continue to make the Exchange a for competition over regulatory more competitive venue for order intervention in determining prices, execution, which, in turn, promotes just products, and services in the securities and equitable principles of trade and markets. In Regulation NMS, the Commission highlighted the importance removes impediments to and perfects the mechanism of a free and open of market forces in determining prices and SRO revenues and, also, recognized market and a national market system. The Exchange notes that all market that current regulation of the market system ‘‘has been remarkably successful participants stand to benefit from any increase in volume entered by in promoting market competition in its broader forms that are most important to Submitting Brokers, which could promote market depth, facilitate tighter investors and listed companies.’’ 14 spreads and enhance price discovery, to There are currently 16 registered the extent the proposed change options exchanges competing for order encourages OTP Holders to utilize the flow. Based on publicly-available information, and excluding index-based Exchange as a primary trading venue, and may lead to a corresponding options, no single exchange has more increase in order flow from other market than 16% of the market share of participants. In addition, any increased executed volume of multiply-listed liquidity on the Exchange would result equity and ETF options trades.15 12 15 10 See proposed Fee Schedule, FIRM AND BROKER DEALER MONTHLY FEE CAP & Endnote 9. 11 See Securities Exchange Act Release No. 95471 (August 11, 2022), 87 FR 50662 (August 17, 2022) (SR–NYSEARCA–2022–50) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE Arca Options Fee Schedule). VerDate Sep<11>2014 22:43 Dec 23, 2022 Jkt 259001 79409 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 14 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (S7–10–04) (‘‘Reg NMS Adopting Release’’). 15 The OCC publishes options and futures volume in a variety of formats, including daily and monthly volume by exchange, available here: https:// www.theocc.com/Market-Data/Market-Data13 15 PO 00000 Frm 00137 Fmt 4703 Sfmt 4703 Reports/Volume-and-Open-Interest/MonthlyWeekly-Volume-Statistics. 16 Based on a compilation of OCC data for monthly volume of equity-based options and monthly volume of equity-based ETF options, see id., the Exchange’s market share in equity-based options decreased from 12.30% for the month of October 2021 to 11.87% for the month of October 2022. E:\FR\FM\27DEN1.SGM 27DEN1 79410 Federal Register / Vol. 87, No. 247 / Tuesday, December 27, 2022 / Notices TKELLEY on DSK125TN23PROD with NOTICES in enhanced market quality for all participants. Finally, to the extent the proposed change continues to attract greater volume and liquidity, the Exchange believes the proposed change would improve the Exchange’s overall competitiveness and strengthen its market quality for all market participants. In the backdrop of the competitive environment in which the Exchange operates, the proposed rule change is a reasonable attempt by the Exchange to increase the depth of its market and improve its market share relative to its competitors. The Exchange’s fees are constrained by intermarket competition, as OTP Holders may direct their order flow to any of the 16 options exchanges, including those offering rebates on QCC transactions.17 Thus, OTP Holders have a choice of where they direct their order flow, including their QCC transactions. The proposed rule change is designed to continue to incent OTP Holders to direct liquidity and, in particular, QCC transactions to the Exchange. In addition, to the extent OTP Holders are incentivized to aggregate their trading activity at the Exchange, that increased liquidity could promote market depth, price discovery and improvement, and enhanced order execution opportunities for market participants. The Exchange believes that the proposed conforming changes are reasonable because they would not modify the substantive provisions of the Monthly Fee Cap or Endnote 9, but would instead promote consistency and clarity in the Fee Schedule by removing text describing QCC transactions as executed by Floor Brokers on the Floor of the Exchange, consistent with the proposed changes described above to extend QCC credits to any Submitting Broker. The Exchange cannot predict with certainty whether the proposed change would encourage OTP Holders to increase their QCC order flow to the 17 See, e.g., EDGX Options Exchange Fee Schedule, QCC Initiator/Solicitation Rebate Tiers (applying ($0.14) per contract rebate up to 999,999 contracts for QCC transactions when only one side of the transaction is a non-customer or ($0.22) per contract rebate up to 999,999 contracts for QCC transactions with non-customers on both sides); BOX Options Fee Schedule at Section IV.D.1. (QCC Rebate) (providing for ($0.14) per contract rebate up to 1,499,999 contracts for QCC transactions when only one side of the QCC transaction is a brokerdealer or market maker or ($0.22) per contract rebate up to 1,499,999 contracts for QCC transactions when both parties are a broker-dealer or market maker); Nasdaq ISE, Options 7, Section 6.B. (QCC Rebate) (offering rebates on QCC transactions of ($0.14) per contract when only one side of the QCC transaction is a non-customer or ($0.22) per contract when both sides of the QCC transaction are non-customers). VerDate Sep<11>2014 22:43 Dec 23, 2022 Jkt 259001 Exchange, but believes that the proposed change, which would offer credits on QCC transactions to all Submitting Brokers and increase the amount of the credit available on Customer vs. Non-Customer QCC transactions, would incent OTP Holders to direct additional QCC transactions to the Exchange. The Proposed Rule Change Is an Equitable Allocation of Credits and Fees The Exchange believes the proposed rule change is an equitable allocation of its fees and credits. The proposed QCC credits are based on the type of business transacted on the Exchange, and OTP Holders can attempt to submit QCC transactions to earn the credits or not. In addition, the proposed credits are equally available to all brokers that enter QCC transactions. The Exchange also believes that the proposed change is an equitable allocation of fees and credits because it would provide for QCC credits to all Submitting Brokers (including Floor Brokers, whose eligibility for QCC credits would not change) and a consistent credit amount for all Customer vs. Non-Customer QCC transactions. To the extent the proposed credits continue to incent Floor Brokers and encourage other brokers to direct increased liquidity to the Exchange, all market participants would benefit from enhanced opportunities for price improvement and order execution. The Exchange believes that the proposed conforming changes are equitable because they would promote consistency and clarity in the Fee Schedule by removing text describing QCC transactions as executed by Floor Brokers on the Floor of the Exchange, in support of the proposed change to extend QCC credits to any Submitting Broker, without modifying the existing substantive provisions of the Monthly Fee Cap or Endnote 9. Moreover, the proposed credits are designed to incent Submitting Brokers to encourage OTP Holders to aggregate their executions—including QCC transactions—at the Exchange as a primary execution venue. To the extent that the proposed change achieves its purpose in attracting more volume to the Exchange, this increased order flow would continue to make the Exchange a more competitive venue for, among other things, order execution. Thus, the Exchange believes the proposed rule change would improve market quality for all market participants on the Exchange and, as a consequence, attract more order flow to the Exchange, thereby improving market-wide quality and price discovery. PO 00000 Frm 00138 Fmt 4703 Sfmt 4703 The Proposed Rule Change Is Not Unfairly Discriminatory The Exchange believes the proposed change is not unfairly discriminatory because the proposed credits on QCC transactions would be available to all Submitting Brokers on an equal and non-discriminatory basis. The proposed change is also not unfairly discriminatory to Floor Brokers because, although the Exchange proposes to offer credits on QCC transactions to additional market participants, Floor Brokers would continue to be eligible for the QCC credits currently available to them. The Exchange also believes that the proposed conforming changes to the Monthly Fee Cap and Endnote 9 are not unfairly discriminatory because they are intended only to promote consistency and clarity in the Fee Schedule by removing text describing QCC transactions as executed by Floor Brokers on the Floor of the Exchange, in alignment with the proposed change to extend QCC credits to any Submitting Broker, and do not otherwise modify the substantive provisions of those sections. The proposed credits are based on the type of business transacted on the Exchange, and OTP Holders are not obligated to execute QCC transactions. Rather, the proposal is designed to encourage OTP Holders to increase QCC volume sent to the Exchange and to utilize the Exchange as a primary trading venue for all transactions (if they have not done so previously). To the extent that the proposed change attracts more QCC transactions to the Exchange, this increased order flow would continue to make the Exchange a more competitive venue for order execution. Thus, the Exchange believes the proposed rule change would improve market quality for all market participants on the Exchange and, as a consequence, attract more order flow to the Exchange, thereby improving market-wide quality and price discovery. The resulting increased volume and liquidity would provide more trading opportunities and tighter spreads to all market participants and thus would promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, protect investors and the public interest. Finally, the Exchange believes that it is subject to significant competitive forces, as described below in the Exchange’s statement regarding the burden on competition. E:\FR\FM\27DEN1.SGM 27DEN1 Federal Register / Vol. 87, No. 247 / Tuesday, December 27, 2022 / Notices TKELLEY on DSK125TN23PROD with NOTICES 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 change would encourage the submission of additional liquidity to a public exchange, thereby promoting market depth, price discovery and transparency and enhancing order execution opportunities for all market participants. As a result, the Exchange believes that the proposed change furthers the Commission’s goal in adopting Regulation NMS of fostering integrated competition among orders, which promotes ‘‘more efficient pricing of individual stocks for all types of orders, large and small.’’ 18 Intramarket Competition. The proposed change is designed to attract additional order flow to the Exchange (particularly in QCC transactions), which could increase the volumes of contracts traded on the Exchange. Greater liquidity benefits all market participants on the Exchange, and increased QCC transactions could increase opportunities for execution of other trading interest. The proposed credit would be available to all similarly-situated Submitting Brokers that execute QCC trades. The Exchange does not believe that the proposed conforming changes would impose any burden on intramarket competition that is not necessary or appropriate, as they are intended only to promote clarity and consistency in the Fee Schedule in consideration of the proposed change to extend QCC credits to all Submitting Brokers, whether a Floor Broker or a broker that submits orders to the Exchange electronically. Intermarket Competition. The Exchange operates in a highly competitive market in which market participants can readily favor one of the 16 competing option exchanges if they deem fee levels at a particular venue to be excessive. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and to attract order flow to the Exchange. Based on publiclyavailable information, and excluding index-based options, no single exchange has more than 16% of the market share of executed volume of multiply-listed 18 See Reg NMS Adopting Release, supra note 14, at 37499. VerDate Sep<11>2014 22:43 Dec 23, 2022 Jkt 259001 equity and ETF options trades.19 Therefore, currently no exchange possesses significant pricing power in the execution of multiply-listed equity and ETF options order flow. More specifically, in October 2022, the Exchange had less than 12% market share of executed volume of multiplylisted equity and ETF options trades.20 The Exchange believes that the proposed rule change reflects this competitive environment because it modifies the Exchange’s fees in a manner designed to continue to incent OTP Holders to direct trading interest (particularly QCC transactions) to the Exchange, to provide liquidity and to attract order flow. To the extent that Submitting Brokers are incentivized to utilize the Exchange as a primary trading venue for all transactions, all of the Exchange’s market participants should benefit from the improved market quality and increased opportunities for price improvement. The Exchange also believes that the proposed conforming changes would not impose any burden on intermarket competition that is not necessary or appropriate; the proposed conforming changes are intended only to promote consistency with the proposed change to extend QCC credits to all Submitting Brokers, whether a Floor Broker or a broker that submits orders to the Exchange electronically, thereby improving the clarity of the Fee Schedule. The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment. The Exchange further believes that the proposed change could promote competition between the Exchange and other execution venues, including those that currently offer rebates on QCC transactions, by encouraging additional orders (and, in 19 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. 20 Based on a compilation of OCC data for monthly volume of equity-based options and monthly volume of equity-based ETF options, see id., the Exchange’s market share in equity-based options decreased from 12.30% for the month of October 2021 to 11.87% for the month of October 2022. PO 00000 Frm 00139 Fmt 4703 Sfmt 4703 79411 particular, QCC transactions) to be sent to the Exchange for execution.21 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) 22 of the Act and subparagraph (f)(2) of Rule 19b–4 23 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) 24 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEARCA–2022–83 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–2022–83. This file number should be included on the subject line if email is used. To help the 21 See note 17, supra. U.S.C. 78s(b)(3)(A). 23 17 CFR 240.19b–4(f)(2). 24 15 U.S.C. 78s(b)(2)(B). 22 15 E:\FR\FM\27DEN1.SGM 27DEN1 79412 Federal Register / Vol. 87, No. 247 / Tuesday, December 27, 2022 / Notices 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–2022–83, and should be submitted on or before January 17, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2022–28081 Filed 12–23–22; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #17733; UTAH Disaster Number UT–00094 Declaration of Economic Injury] Administrative Declaration of an Economic Injury Disaster for the State of Utah U.S. Small Business Administration. ACTION: Notice. AGENCY: This is a notice of an Economic Injury Disaster Loan (EIDL) declaration for the State of UTAH dated 12/20/2022. Incident: Severe Storm and Flooding. Incident Period: 08/19/2022 through 08/21/2022. TKELLEY on DSK125TN23PROD with NOTICES SUMMARY: 25 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 22:43 Dec 23, 2022 Jkt 259001 electric utilities; one representative from biofuel feedstock growers or providers and biofuel refiners, processors, and distributors; one representative from private car owners, car lessors, or car manufacturers; two representatives from renewable energy sources; and one representative from a labor organization. The Board is soliciting nominations from the public for candidates to fill these vacancies. DATES: Nominations for candidates for membership on RETAC are due January 26, 2023. ADDRESSES: Nominations may be submitted either via the Board’s e-filing format or in paper format. Any person using e-filing should attach a document and otherwise comply with the instructions at the E–FILING link on the Board’s website, at https://www.stb.gov. Any person submitting a filing in paper format should send the original and 10 copies to: Surface Transportation Board, Attn: Docket No. EP 670 (Sub-No. 2), 395 E Street SW, Washington, DC 20423–0001. FOR FURTHER INFORMATION CONTACT: Kristen Nunnally at 202–245–0312. [Assistance for the hearing impaired is available through the Federal Percent Information Relay Service (FIRS) at 1– 800–877–8339.] Businesses and Small Agricultural SUPPLEMENTARY INFORMATION: The Board Cooperatives without Credit Available Elsewhere .................. 3.040 exercises broad authority over Non-Profit Organizations without transportation by rail carriers, including Credit Available Elsewhere ....... 1.875 rates and services (49 U.S.C. 10701– 10747, 11101–11124), construction, The number assigned to this disaster acquisition, operation, and for economic injury is 177330. abandonment of railroad lines (49 The States which received an EIDL U.S.C. 10901–10907), and Declaration #17733 are Colorado, Utah. consolidation, merger, or common control arrangements between railroads (Catalog of Federal Domestic Assistance (49 U.S.C. 10902, 11323–11327). Number 59008) The Board established RETAC in 2007 Isabella Guzman, as a Federal advisory committee Administrator. consisting of a balanced cross-section of [FR Doc. 2022–28089 Filed 12–23–22; 8:45 am] energy and rail industry stakeholders to BILLING CODE 8026–09–P provide independent, candid policy advice to the Board and to foster open, effective communication among the SURFACE TRANSPORTATION BOARD affected interests on issues such as rail performance, capacity constraints, [Docket No. EP 670 (Sub-No. 2)] infrastructure planning and development, and effective coordination Notice of Rail Energy Transportation among suppliers, railroads, and users of Advisory Committee Vacancies energy resources. RETAC operates AGENCY: Surface Transportation Board. under the Federal Advisory Committee Act (5 U.S.C. app. 2, 1–16). ACTION: Notice of vacancies on Federal RETAC’s membership is balanced and advisory committee and solicitation of representative of interested and affected nominations. parties, consisting of not less than: five SUMMARY: The Surface Transportation representatives from the Class I Board (Board) hereby gives notice of railroads; three representatives from nine vacancies on its Rail Energy Class II and III railroads; three Transportation Advisory Committee representatives from coal producers; (RETAC) for three representatives from five representatives from electric coal producers; one representative from utilities (including at least one rural Issued on 12/20/2022. Economic Injury (EIDL) Loan Application Deadline Date: 09/20/2023. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205–6734. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the Administrator’s EIDL declaration, applications for economic injury disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties: Grand. Contiguous Counties: Utah: Emery, San Juan, Uintah, Wayne Colorado: Garfield, Mesa, Montrose The Interest Rates are: DATES: PO 00000 Frm 00140 Fmt 4703 Sfmt 4703 E:\FR\FM\27DEN1.SGM 27DEN1

Agencies

[Federal Register Volume 87, Number 247 (Tuesday, December 27, 2022)]
[Notices]
[Pages 79408-79412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-28081]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96544; No. SR-NYSEARCA-2022-83]


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

December 20, 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 December 14, 2022, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify the NYSE Arca Options Fee Schedule 
(``Fee Schedule'') regarding credits for Qualified Contingent Cross 
(``QCC'') transactions. The Exchange proposes to implement the fee 
change effective December 14, 2022.\4\ The proposed rule change is 
available on the Exchange's website at www.nyse.com, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.
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    \4\ The Exchange originally filed to amend the Fee Schedule on 
December 1, 2022 (SR-NYSEARCA-2022-79), then withdrew such filing 
and amended the Fee Schedule on December 14, 2022 (SR-NYSEARCA-2022-
81), which latter filing the Exchange also withdrew on December 14, 
2022.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

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

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

1. Purpose
    The purpose of this filing is to amend the Fee Schedule to modify 
the credits offered for QCC transactions.\5\ The Exchange proposes to 
implement the rule change on December 14, 2022.
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    \5\ A QCC Order is defined as an originating order to buy or 
sell at least 1,000 contracts that is identified as being part of a 
qualified contingent trade coupled with a contra-side order or 
orders totaling an equal number of contracts. See Rule 6.62P-
O(g)(1)(A).
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    Currently, the Exchange offers Floor Brokers a credit of ($0.22) 
per contract for Non-Customer vs. Non-Customer QCC transactions or 
($0.11) per contract for Customer vs. Non-Customer QCC transactions.\6\ 
The Exchange also currently offers an additional ($0.04) per contract 
credit to Floor Brokers on all Customer vs. Non-Customer QCC 
transactions if they execute at least 500,000 contracts of credit-
eligible volume in QCC transactions in a month.\7\ QCC executions in 
which a Customer is on both sides of the QCC trade are not eligible for 
a credit, and the maximum Floor Broker credit for QCC transactions is 
$375,000 per month per Floor Broker firm.\8\
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    \6\ See Fee Schedule, QUALIFIED CONTINGENT CROSS (``QCC'') 
TRANSACTION FEES AND CREDITS, available at: https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf.
    \7\ See id. at Endnote 13.
    \8\ See id.
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    The Exchange now proposes to offer the credits on QCC transactions 
currently available only to Floor Brokers to any broker submitting a 
QCC transaction to the Exchange (a ``Submitting Broker''), whether the 
broker is a Floor Broker on the Trading Floor or a broker that enters 
orders electronically through an interface with the Exchange. In other 
words, the Exchange proposes to offer the existing Floor Broker QCC 
credits to any OTP Holder or OTP Firm (collectively, ``OTP Holder'') 
that submits a QCC transaction to the Exchange.
    The Exchange also proposes to increase the credit offered on 
Customer vs. Non-Customer QCC transactions from ($0.11) to ($0.16) and, 
in light of such proposed increase, to eliminate the additional ($0.04) 
credit currently offered on Customer vs. Non-Customer QCC transactions 
to Floor Brokers that execute at least 500,000 contracts of credit-
eligible volume in QCC transactions in a month. The Exchange proposes 
to eliminate the additional credit currently offered to qualifying 
Floor Brokers because the proposed increased credit of ($0.16) on all 
Customer vs. Non-Customer QCC transactions would provide Submitting 
Brokers with a higher credit than the combination of the current 
($0.11) and ($0.04) credits available on Customer vs. Non-Customer QCC 
transactions.
    To effect these changes, the Exchange proposes to modify the Fee 
Schedule to substitute the term ``Submitting Broker'' for ``Floor 
Broker'' in connection with credits relating to QCC transactions.\9\ 
First, the Exchange proposes to modify the Participant column of the 
table setting forth the fees and credits for QCC transactions to 
provide for a ``Submitting Broker credit for Non-

[[Page 79409]]

Customer vs. Non-Customer QCC Transaction'' and a ``Submitting Broker 
credit for Customer vs. Non-Customer QCC Transaction.'' The Exchange 
also proposes to modify Endnote 13 to refer to a ``Submitting Broker'' 
rather than a ``Floor Broker,'' such that Endnote 13 would provide that 
Customer vs. Customer QCC executions are not eligible for Submitting 
Broker credits on QCC executions and that the maximum QCC credit 
allowed will apply to a Submitting Broker firm. The Exchange also 
proposes to modify Endnote 13 to delete the sentence setting forth the 
additional ($0.04) credit on Customer vs. Non-Customer QCC 
transactions.
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    \9\ See proposed Fee Schedule, QUALIFIED CONTINGENT CROSS 
(``QCC'') TRANSACTION FEES AND CREDITS & Endnote 13.
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    The Exchange also proposes conforming changes to modify the 
description of the Firm and Broker Dealer Monthly Fee Cap (the 
``Monthly Fee Cap''), as well as Endnote 9, to eliminate text referring 
to QCC transactions executed by a Floor Broker from the Floor of the 
Exchange.\10\ To reflect the proposed changes described above to extend 
the current Floor Broker QCC credits to any Submitting Broker (whether 
a Floor Broker on the Trading Floor or a broker that submits orders 
electronically), the Exchange proposes to delete references to the 
execution of QCC transactions by a Floor Broker on the on Floor of the 
Exchange. The Exchange does not propose any other modifications to the 
Monthly Fee Cap or Endnote 9.
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    \10\ See proposed Fee Schedule, FIRM AND BROKER DEALER MONTHLY 
FEE CAP & Endnote 9.
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    Although the Exchange cannot predict with certainty whether the 
proposed change would encourage OTP Holders to increase their QCC 
volume, the proposed change is intended to incent OTP Holders to submit 
additional QCC transactions to the Exchange by expanding the universe 
of OTP Holders that would be eligible for credits on QCC transactions 
and increasing the amount of the credit offered on Customer vs. Non-
Customer QCC transactions. The Exchange notes that the current Floor 
Broker QCC credits, when adopted, were offered to Floor Brokers based 
on their function in facilitating the execution of orders on the 
Exchange and intended to incent Floor Brokers to aggregate their 
trading activity, including QCC transactions, at the Exchange as a 
primary execution venue.\11\ The instant proposal would continue to 
provide QCC credits to Floor Brokers and would offer QCC credits to 
other OTP Holders that submit QCC transactions to the Exchange as well. 
The Exchange believes the proposed change would continue to encourage 
Floor Broker QCC volume and also encourage additional OTP Holders to 
increase QCC volume submitted to the Exchange by offering credits on 
such transactions. The Exchange believes that the proposal, which also 
increases the credit on Customer vs. Non-Customer QCC transactions, 
could incentivize both Floor Brokers and other OTP Holders to aggregate 
their trading activity at the Exchange, thereby making the Exchange a 
more attractive venue for order execution and providing additional 
trading opportunities for all market participants.
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    \11\ See Securities Exchange Act Release No. 95471 (August 11, 
2022), 87 FR 50662 (August 17, 2022) (SR-NYSEARCA-2022-50) (Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify the NYSE Arca Options Fee Schedule).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\13\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers, or dealers.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposed Rule Change Is Reasonable
    The Exchange operates in a highly competitive market. The 
Commission has repeatedly expressed its preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. In Regulation NMS, the Commission 
highlighted the importance of market forces in determining prices and 
SRO revenues and, also, recognized that current regulation of the 
market system ``has been remarkably successful in promoting market 
competition in its broader forms that are most important to investors 
and listed companies.'' \14\
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    \14\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04) (``Reg NMS 
Adopting Release'').
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    There are currently 16 registered options exchanges competing for 
order flow. Based on publicly-available information, and excluding 
index-based options, no single exchange has more than 16% of the market 
share of executed volume of multiply-listed equity and ETF options 
trades.\15\ Therefore, no exchange possesses significant pricing power 
in the execution of multiply-listed equity and ETF options order flow. 
More specifically, in October 2022, the Exchange had less than 12% 
market share of executed volume of multiply-listed equity and ETF 
options trades.\16\
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    \15\ The OCC publishes options and futures volume in a variety 
of formats, including daily and monthly volume by exchange, 
available here: https://www.theocc.com/Market-Data/Market-Data-Reports/Volume-and-Open-Interest/Monthly-Weekly-Volume-Statistics.
    \16\ Based on a compilation of OCC data for monthly volume of 
equity-based options and monthly volume of equity-based ETF options, 
see id., the Exchange's market share in equity-based options 
decreased from 12.30% for the month of October 2021 to 11.87% for 
the month of October 2022.
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow, or discontinue or reduce use of certain categories of 
products, in response to fee changes. Accordingly, competitive forces 
constrain options exchange transaction fees. Stated otherwise, 
modifications to exchange transaction fees can have a direct effect on 
the ability of an exchange to compete for order flow.
    The Exchange believes that the proposed change is reasonable 
because it is designed to incent OTP Holders to increase the number of 
QCC transactions sent to the Exchange by offering credits to all OTP 
Holders that execute QCC transactions (i.e., both continuing to offer 
credits to Floor Brokers and providing credits to brokers that submit 
QCC transactions electronically as well) and by increasing the amount 
of the credit offered on Customer vs. Non-Customer QCC transactions. To 
the extent that the proposed change attracts more volume to the 
Exchange from both Floor Brokers and brokers that submit orders 
electronically, this increased order flow would continue to make the 
Exchange a more competitive venue for order execution, which, in turn, 
promotes just and equitable principles of trade and removes impediments 
to and perfects the mechanism of a free and open market and a national 
market system. The Exchange notes that all market participants stand to 
benefit from any increase in volume entered by Submitting Brokers, 
which could promote market depth, facilitate tighter spreads and 
enhance price discovery, to the extent the proposed change encourages 
OTP Holders to utilize the Exchange as a primary trading venue, and may 
lead to a corresponding increase in order flow from other market 
participants. In addition, any increased liquidity on the Exchange 
would result

[[Page 79410]]

in enhanced market quality for all participants.
    Finally, to the extent the proposed change continues to attract 
greater volume and liquidity, the Exchange believes the proposed change 
would improve the Exchange's overall competitiveness and strengthen its 
market quality for all market participants. In the backdrop of the 
competitive environment in which the Exchange operates, the proposed 
rule change is a reasonable attempt by the Exchange to increase the 
depth of its market and improve its market share relative to its 
competitors. The Exchange's fees are constrained by intermarket 
competition, as OTP Holders may direct their order flow to any of the 
16 options exchanges, including those offering rebates on QCC 
transactions.\17\ Thus, OTP Holders have a choice of where they direct 
their order flow, including their QCC transactions. The proposed rule 
change is designed to continue to incent OTP Holders to direct 
liquidity and, in particular, QCC transactions to the Exchange. In 
addition, to the extent OTP Holders are incentivized to aggregate their 
trading activity at the Exchange, that increased liquidity could 
promote market depth, price discovery and improvement, and enhanced 
order execution opportunities for market participants.
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    \17\ See, e.g., EDGX Options Exchange Fee Schedule, QCC 
Initiator/Solicitation Rebate Tiers (applying ($0.14) per contract 
rebate up to 999,999 contracts for QCC transactions when only one 
side of the transaction is a non-customer or ($0.22) per contract 
rebate up to 999,999 contracts for QCC transactions with non-
customers on both sides); BOX Options Fee Schedule at Section 
IV.D.1. (QCC Rebate) (providing for ($0.14) per contract rebate up 
to 1,499,999 contracts for QCC transactions when only one side of 
the QCC transaction is a broker-dealer or market maker or ($0.22) 
per contract rebate up to 1,499,999 contracts for QCC transactions 
when both parties are a broker-dealer or market maker); Nasdaq ISE, 
Options 7, Section 6.B. (QCC Rebate) (offering rebates on QCC 
transactions of ($0.14) per contract when only one side of the QCC 
transaction is a non-customer or ($0.22) per contract when both 
sides of the QCC transaction are non-customers).
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    The Exchange believes that the proposed conforming changes are 
reasonable because they would not modify the substantive provisions of 
the Monthly Fee Cap or Endnote 9, but would instead promote consistency 
and clarity in the Fee Schedule by removing text describing QCC 
transactions as executed by Floor Brokers on the Floor of the Exchange, 
consistent with the proposed changes described above to extend QCC 
credits to any Submitting Broker.
    The Exchange cannot predict with certainty whether the proposed 
change would encourage OTP Holders to increase their QCC order flow to 
the Exchange, but believes that the proposed change, which would offer 
credits on QCC transactions to all Submitting Brokers and increase the 
amount of the credit available on Customer vs. Non-Customer QCC 
transactions, would incent OTP Holders to direct additional QCC 
transactions to the Exchange.
The Proposed Rule Change Is an Equitable Allocation of Credits and Fees
    The Exchange believes the proposed rule change is an equitable 
allocation of its fees and credits. The proposed QCC credits are based 
on the type of business transacted on the Exchange, and OTP Holders can 
attempt to submit QCC transactions to earn the credits or not. In 
addition, the proposed credits are equally available to all brokers 
that enter QCC transactions. The Exchange also believes that the 
proposed change is an equitable allocation of fees and credits because 
it would provide for QCC credits to all Submitting Brokers (including 
Floor Brokers, whose eligibility for QCC credits would not change) and 
a consistent credit amount for all Customer vs. Non-Customer QCC 
transactions. To the extent the proposed credits continue to incent 
Floor Brokers and encourage other brokers to direct increased liquidity 
to the Exchange, all market participants would benefit from enhanced 
opportunities for price improvement and order execution. The Exchange 
believes that the proposed conforming changes are equitable because 
they would promote consistency and clarity in the Fee Schedule by 
removing text describing QCC transactions as executed by Floor Brokers 
on the Floor of the Exchange, in support of the proposed change to 
extend QCC credits to any Submitting Broker, without modifying the 
existing substantive provisions of the Monthly Fee Cap or Endnote 9.
    Moreover, the proposed credits are designed to incent Submitting 
Brokers to encourage OTP Holders to aggregate their executions--
including QCC transactions--at the Exchange as a primary execution 
venue. To the extent that the proposed change achieves its purpose in 
attracting more volume to the Exchange, this increased order flow would 
continue to make the Exchange a more competitive venue for, among other 
things, order execution. Thus, the Exchange believes the proposed rule 
change would improve market quality for all market participants on the 
Exchange and, as a consequence, attract more order flow to the 
Exchange, thereby improving market-wide quality and price discovery.
The Proposed Rule Change Is Not Unfairly Discriminatory
    The Exchange believes the proposed change is not unfairly 
discriminatory because the proposed credits on QCC transactions would 
be available to all Submitting Brokers on an equal and non-
discriminatory basis. The proposed change is also not unfairly 
discriminatory to Floor Brokers because, although the Exchange proposes 
to offer credits on QCC transactions to additional market participants, 
Floor Brokers would continue to be eligible for the QCC credits 
currently available to them. The Exchange also believes that the 
proposed conforming changes to the Monthly Fee Cap and Endnote 9 are 
not unfairly discriminatory because they are intended only to promote 
consistency and clarity in the Fee Schedule by removing text describing 
QCC transactions as executed by Floor Brokers on the Floor of the 
Exchange, in alignment with the proposed change to extend QCC credits 
to any Submitting Broker, and do not otherwise modify the substantive 
provisions of those sections.
    The proposed credits are based on the type of business transacted 
on the Exchange, and OTP Holders are not obligated to execute QCC 
transactions. Rather, the proposal is designed to encourage OTP Holders 
to increase QCC volume sent to the Exchange and to utilize the Exchange 
as a primary trading venue for all transactions (if they have not done 
so previously). To the extent that the proposed change attracts more 
QCC transactions to the Exchange, this increased order flow would 
continue to make the Exchange a more competitive venue for order 
execution. Thus, the Exchange believes the proposed rule change would 
improve market quality for all market participants on the Exchange and, 
as a consequence, attract more order flow to the Exchange, thereby 
improving market-wide quality and price discovery. The resulting 
increased volume and liquidity would provide more trading opportunities 
and tighter spreads to all market participants and thus would promote 
just and equitable principles of trade, remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system and, in general, protect investors and the public interest.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.

[[Page 79411]]

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 change would encourage the submission of additional 
liquidity to a public exchange, thereby promoting market depth, price 
discovery and transparency and enhancing order execution opportunities 
for all market participants. As a result, the Exchange believes that 
the proposed change furthers the Commission's goal in adopting 
Regulation NMS of fostering integrated competition among orders, which 
promotes ``more efficient pricing of individual stocks for all types of 
orders, large and small.'' \18\
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    \18\ See Reg NMS Adopting Release, supra note 14, at 37499.
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    Intramarket Competition. The proposed change is designed to attract 
additional order flow to the Exchange (particularly in QCC 
transactions), which could increase the volumes of contracts traded on 
the Exchange. Greater liquidity benefits all market participants on the 
Exchange, and increased QCC transactions could increase opportunities 
for execution of other trading interest. The proposed credit would be 
available to all similarly-situated Submitting Brokers that execute QCC 
trades. The Exchange does not believe that the proposed conforming 
changes would impose any burden on intramarket competition that is not 
necessary or appropriate, as they are intended only to promote clarity 
and consistency in the Fee Schedule in consideration of the proposed 
change to extend QCC credits to all Submitting Brokers, whether a Floor 
Broker or a broker that submits orders to the Exchange electronically.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily favor one 
of the 16 competing option exchanges if they deem fee levels at a 
particular venue to be excessive. In such an environment, the Exchange 
must continually adjust its fees to remain competitive with other 
exchanges and to attract order flow to the Exchange. Based on publicly-
available information, and excluding index-based options, no single 
exchange has more than 16% of the market share of executed volume of 
multiply-listed equity and ETF options trades.\19\ Therefore, currently 
no exchange possesses significant pricing power in the execution of 
multiply-listed equity and ETF options order flow. More specifically, 
in October 2022, the Exchange had less than 12% market share of 
executed volume of multiply-listed equity and ETF options trades.\20\
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    \19\ 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.
    \20\ Based on a compilation of OCC data for monthly volume of 
equity-based options and monthly volume of equity-based ETF options, 
see id., the Exchange's market share in equity-based options 
decreased from 12.30% for the month of October 2021 to 11.87% for 
the month of October 2022.
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    The Exchange believes that the proposed rule change reflects this 
competitive environment because it modifies the Exchange's fees in a 
manner designed to continue to incent OTP Holders to direct trading 
interest (particularly QCC transactions) to the Exchange, to provide 
liquidity and to attract order flow. To the extent that Submitting 
Brokers are incentivized to utilize the Exchange as a primary trading 
venue for all transactions, all of the Exchange's market participants 
should benefit from the improved market quality and increased 
opportunities for price improvement. The Exchange also believes that 
the proposed conforming changes would not impose any burden on 
intermarket competition that is not necessary or appropriate; the 
proposed conforming changes are intended only to promote consistency 
with the proposed change to extend QCC credits to all Submitting 
Brokers, whether a Floor Broker or a broker that submits orders to the 
Exchange electronically, thereby improving the clarity of the Fee 
Schedule.
    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues. In 
such an environment, the Exchange must continually review, and consider 
adjusting, its fees and credits to remain competitive with other 
exchanges. For the reasons described above, the Exchange believes that 
the proposed rule change reflects this competitive environment. The 
Exchange further believes that the proposed change could promote 
competition between the Exchange and other execution venues, including 
those that currently offer rebates on QCC transactions, by encouraging 
additional orders (and, in particular, QCC transactions) to be sent to 
the Exchange for execution.\21\
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    \21\ See note 17, supra.
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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) \22\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \23\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \22\ 15 U.S.C. 78s(b)(3)(A).
    \23\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \24\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \24\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEARCA-2022-83 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-2022-83. This 
file number should be included on the subject line if email is used. To 
help the

[[Page 79412]]

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-2022-83, and should be 
submitted on or before January 17, 2023.
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    \25\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-28081 Filed 12-23-22; 8:45 am]
BILLING CODE 8011-01-P
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