Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE Arca Options Fee Schedule, 31087-31090 [2023-10243]
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Federal Register / Vol. 88, No. 93 / Monday, May 15, 2023 / Notices
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dates from the relevant calculations
would apply to all members uniformly
and in the same manner that the
Exchange currently excludes the date of
the annual reconstitution of the Russell
Investments Indexes from such
calculations.
The Exchange notes that its members
are free to trade on other venues to the
extent they believe that these proposals
are not attractive. As one can observe by
looking at any market share chart, price
competition between exchanges is
fierce, with liquidity and market share
moving freely between exchanges in
reaction to fee and credit changes.
Intermarket Competition
In terms of inter-market competition,
the Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
credits and fees to remain competitive
with other exchanges and with
alternative trading systems that have
been exempted from compliance with
the statutory standards applicable to
exchanges. Because competitors are free
to modify their own credits and fees in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which credit
or fee changes in this market may
impose any burden on competition is
extremely limited. The proposal is
reflective of this competition.
Even as one of the largest U.S.
equities exchanges by volume, the
Exchange has less than 20% market
share, which in most markets could
hardly be categorized as having enough
market power to burden competition.
Moreover, as noted above, price
competition between exchanges is
fierce, with liquidity and market share
moving freely between exchanges in
reaction to fee and credit changes. This
is in addition to free flow of order flow
to and among off-exchange venues,
which comprises upwards of 50% of
industry volume.
Additionally, the Exchange believes
the proposal to exclude certain dates
from calculating Consolidated Volume
and trading activity is not concerned
with competitive issues, but rather
relates to calculation methodologies
applicable to its pricing tiers/incentives.
If the changes proposed herein are
unattractive to market participants, it is
likely that the Exchange will lose
market share as a result. Accordingly,
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the Exchange does not believe that the
proposed changes will impair the ability
of members or competing order
execution venues to maintain their
competitive standing in the financial
markets.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.8
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
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–
NASDAQ–2023–013 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–NASDAQ–2023–013. 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
8 15
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U.S.C. 78s(b)(3)(A)(ii).
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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. Do not include
personal identifiable information in
submissions; you should submit only
information that you wish to make
available publicly. We may redact in
part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NASDAQ–2023–013 and should be
submitted on or before June 5, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–10249 Filed 5–12–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97460; File No. SR–
NYSEARCA–2023–35]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Modify the NYSE Arca
Options Fee Schedule
May 9, 2023.
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 May 1,
2023, 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
9 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
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Federal Register / Vol. 88, No. 93 / Monday, May 15, 2023 / Notices
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 the Ratio
Threshold Fee. The Exchange proposes
to implement the fee change effective
May 1, 2023. 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.
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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 further
extend the waiver of the Ratio
Threshold Fee that was originally
implemented in connection with the
Exchange’s migration to the Pillar
platform.4 The Exchange proposes to
implement the rule change on May 1,
2023.
The Ratio Threshold Fee is based on
the number of orders entered as
compared to the number of executions
received in a calendar month and is
intended to deter OTP Holders from
submitting an excessive number of
orders that are not executed.5 Because
order to execution ratios of 10,000 to 1
or greater have the potential residual
effect of exhausting system resources,
bandwidth, and capacity, such ratios
may create latency and impact other
4 See Securities Exchange Act Release No. 94095
(January 28, 2022), 87 FR 6216 (February 3, 2022)
(SR–NYSEArca–2022–04) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
To Amend the NYSE Arca Options Fee Schedule).
5 See Fee Schedule, RATIO THRESHOLD FEE;
see also Securities Exchange Act Release No. 60102
(June 11, 2009), 74 FR 29251 (June 19, 2009) (SR–
NYSEArca–2009–50).
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OTP Holders’ ability to receive timely
executions.6 In connection with the
Exchange’s migration to the Pillar
platform, the Exchange implemented a
waiver of the Ratio Threshold Fee (the
‘‘Waiver’’) that took effect beginning in
the month in which the Exchange began
its migration to the Pillar platform and
would remain in effect for the three
months following the month during
which the Exchange completed its
migration to the Pillar platform. As the
Exchange completed the migration in
July 2022, the Waiver was originally due
to expire on October 31, 2022. The
Exchange previously filed to extend the
Waiver until January 31, 2023 and,
subsequently, to extend the Waiver until
April 30, 2023.7
The Exchange believes that extending
the Waiver would allow the Exchange
additional time to continue to monitor
and to further analyze traffic rates and
order to execution ratios, without
imposing a financial burden on OTP
Holders based on their order to
execution ratios. The Exchange thus
proposes to modify the Fee Schedule to
provide that the Waiver would extend
through June 30, 2023.8
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
section 6(b) of the Act,9 in general, and
furthers the objectives of sections 6(b)(4)
and (5) of the Act,10 in particular,
because it provides for the equitable
allocation of reasonable dues, fees, and
other charges among its members,
issuers and other persons using its
facilities and does not unfairly
discriminate between customers,
issuers, brokers or dealers.
The Proposed Rule Change Is
Reasonable
The Exchange operates in a highly
competitive market. The Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, the
Commission highlighted the importance
of market forces in determining prices
and SRO revenues and, also, recognized
that current regulation of the market
6 See
id.
Securities Exchange Act Release Nos. 96252
(November 7, 2022), 87 FR 68210 (November 14,
2022) (SR–NYSEARCA–2022–74) (extension of
Waiver until January 31, 2023); 96878 (February 10,
2023), 88 FR 10156 (February 16, 2023) (SR–
NYSEARCA–2023–14) (extension of Waiver until
April 30, 2023).
8 See proposed Fee Schedule, RATIO
THRESHOLD FEE.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(4) and (5).
7 See
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system ‘‘has been remarkably successful
in promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 11
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.12
Therefore, no exchange possesses
significant pricing power in the
execution of multiply-listed equity and
ETF options order flow. More
specifically, in March 2023, the
Exchange had less than 13% market
share of executed volume of multiplylisted equity and ETF options trades.13
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.
The Exchange believes that the
proposed extension of the Waiver is
reasonable because it is designed to
lessen the impact of the migration on
OTP Holders and would allow OTP
Holders to continue trading on the Pillar
platform without incurring excess Ratio
Threshold Fees while the Exchange
continues to evaluate and conduct
further analysis on traffic rates and
order to execution ratios. To the extent
the proposed rule change encourages
OTP Holders to maintain their trading
activity on the Exchange, the Exchange
believes the proposed change would
sustain the Exchange’s overall
competitiveness and 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
11 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(S7–10–04) (‘‘Reg NMS Adopting Release’’).
12 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.
13 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 13.57% for the month of
March 2022 to 12.83% for the month of March
2023.
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Federal Register / Vol. 88, No. 93 / Monday, May 15, 2023 / Notices
mitigate the impacts of the Pillar
migration without affecting its
competitiveness.
The Proposed Rule Change Is an
Equitable Allocation of Credits and Fees
The proposed extension of the Waiver
is an equitable allocation of fees and
credits because the Waiver would
continue to apply to all OTP Holders.
All OTP Holders would have the
opportunity to continue trading on the
Pillar platform without incurring Ratio
Threshold Fees, while the Exchange
continues to evaluate post-migration
traffic rates and order to execution
ratios. Thus, the Exchange believes the
proposed rule change would continue to
mitigate the impact of the migration
process for all market participants on
the Exchange, thereby sustaining
market-wide quality.
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The Proposed Rule Change Is Not
Unfairly Discriminatory
The Exchange believes the proposed
extension of the Waiver is not unfairly
discriminatory because it would apply
to all OTP Holders on an equal and nondiscriminatory basis. The Waiver, as
proposed, would permit all OTP
Holders to continue trading on the Pillar
platform, without incurring additional
fees based on their monthly order to
execution ratios, while the Exchange
continues to evaluate post-migration
traffic rates and order to execution
ratios. The Exchange thus believes that
the proposed change would support
continued trading opportunities for all
market participants, thereby promoting
just and equitable principles of trade,
removing impediments to and
perfecting the mechanism of a free and
open market and a national market
system and, in general, protecting
investors and the public interest.
Finally, the Exchange believes that it
is subject to significant competitive
forces, as described below in the
Exchange’s statement regarding the
burden on competition.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with section 6(b)(8) of
the Act, the Exchange does not believe
that the proposed rule change would
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
Instead, as discussed above, the
Exchange believes that the proposed
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
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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.’’ 14
Intramarket Competition. The
Exchange does not believe the proposed
extension of the Waiver would impose
any burden on intramarket competition
that is not necessary or appropriate
because it would apply equally to all
OTP Holders. All OTP Holders would
continue to be eligible for the Waiver for
an additional two months while the
Exchange continues to assess traffic
rates and order to execution ratios
following the migration to Pillar.
Intermarket Competition. The
Exchange operates in a highly
competitive market in which market
participants can readily favor one of the
16 competing option exchanges if they
deem fee levels at a particular venue to
be excessive. In such an environment,
the Exchange must continually adjust its
fees to remain competitive with other
exchanges and to attract order flow to
the Exchange. Based on publiclyavailable information, and excluding
index-based options, no single exchange
has more than 16% of the market share
of executed volume of multiply-listed
equity and ETF options trades.15
Therefore, currently no exchange
possesses significant pricing power in
the execution of multiply-listed equity
and ETF options order flow. More
specifically, in March 2023, the
Exchange had less than 13% market
share of executed volume of multiplylisted equity and ETF options trades.16
The Exchange does not believe the
proposed extension of the Waiver would
impose any burden on intramarket
competition that is not necessary or
appropriate because it would apply
equally to all OTP Holders. All OTP
Holders would continue to be eligible
for the Waiver for an additional two
months while the Exchange continues to
assess traffic rates and order to
14 See
Reg NMS Adopting Release, supra note 11,
at 37499.
15 The OCC publishes options and futures volume
in a variety of formats, including daily and monthly
volume by exchange, available here: https://
www.theocc.com/Market-Data/Market-DataReports/Volume-and-Open-Interest/MonthlyWeekly-Volume-Statistics.
16 Based on a compilation of OCC data for
monthly volume of equity-based options and
monthly volume of equity-based ETF options, see
id., the Exchange’s market share in equity-based
options decreased from 13.57% for the month of
March 2022 to 12.83% for the month of March
2023.
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31089
execution ratios following the migration
to Pillar.
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) 17 of the Act and
subparagraph (f)(2) of Rule 19b–4 18
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) 19 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–2023–35 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–2023–35. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
17 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
19 15 U.S.C. 78s(b)(2)(B).
18 17
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Federal Register / Vol. 88, No. 93 / Monday, May 15, 2023 / Notices
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. Do not include
personal identifiable information in
submissions; you should submit only
information that you wish to make
available publicly. We may redact in
part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. All submissions should refer
to File Number SR–NYSEARCA–2023–
35, and should be submitted on or
before June 5, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Sherry R. Haywood,
Assistant Secretary.
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)
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
Dated: May 11, 2023.
Vanessa A. Countryman,
Secretary.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2023–10386 Filed 5–11–23; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97464; File No. SR–BX–
2023–010]
Sunshine Act Meetings
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Equity 7,
Section 118
2 p.m. on Thursday, May
18, 2023.
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
ddrumheller on DSK120RN23PROD with NOTICES1
May 9, 2023.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on May 1,
2023, Nasdaq BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
prepared by the Exchange. The
1 15
20 17
CFR 200.30–3(a)(12).
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2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00148
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The Exchange proposes to amend
Equity 7, Section 118(a) to exclude
certain days for purposes of calculating
Consolidated Volume and trading
activity, as described further below.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/bx/rules, 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
Exchange 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 these
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 aspects of such
statements.
1. Purpose
BILLING CODE 8011–01–P
[FR Doc. 2023–10243 Filed 5–12–23; 8:45 am]
TIME AND DATE:
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Sfmt 4703
The purpose of the proposed rule
change is to amend Equity 7, Section
118(a) to exclude certain days for
purposes of calculating Consolidated
Volume and trading activity.
Specifically, the Exchange also proposes
to amend Equity 7, Section 118(a) to
exclude the following from calculations
of total Consolidated Volume and the
member’s trading activity for purposes
of volume calculations for equity
pricing tiers/incentives: (1) the dates on
which stock options, stock index
options, and stock index futures expire
(i.e., the third Friday of March, June,
September, and December) (‘‘Triple
Witch Dates’’); (2) the dates on which
the MSCI Equity Indexes are rebalanced
(i.e., on a quarterly basis) (‘‘MSCI
Rebalance Dates’’); (3) the dates on
which the S&P 400, S&P 500, and S&P
600 Indexes are rebalanced (i.e., on a
quarterly basis) (‘‘S&P Rebalance
Dates’’); and (4) and the date of the
annual reconstitution of the Nasdaq-100
and Nasdaq Biotechnology Indexes
(‘‘Nasdaq Reconstitution Date’’).
E:\FR\FM\15MYN1.SGM
15MYN1
]]>Agencies
[Federal Register Volume 88, Number 93 (Monday, May 15, 2023)]
[Notices]
[Pages 31087-31090]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10243]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97460; File No. SR-NYSEARCA-2023-35]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE
Arca Options Fee Schedule
May 9, 2023.
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 May 1, 2023, 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
[[Page 31088]]
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 the Ratio Threshold Fee. The Exchange
proposes to implement the fee change effective May 1, 2023. 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 further extend the waiver of the
Ratio Threshold Fee that was originally implemented in connection with
the Exchange's migration to the Pillar platform.\4\ The Exchange
proposes to implement the rule change on May 1, 2023.
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\4\ See Securities Exchange Act Release No. 94095 (January 28,
2022), 87 FR 6216 (February 3, 2022) (SR-NYSEArca-2022-04) (Notice
of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the NYSE Arca Options Fee Schedule).
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The Ratio Threshold Fee is based on the number of orders entered as
compared to the number of executions received in a calendar month and
is intended to deter OTP Holders from submitting an excessive number of
orders that are not executed.\5\ Because order to execution ratios of
10,000 to 1 or greater have the potential residual effect of exhausting
system resources, bandwidth, and capacity, such ratios may create
latency and impact other OTP Holders' ability to receive timely
executions.\6\ In connection with the Exchange's migration to the
Pillar platform, the Exchange implemented a waiver of the Ratio
Threshold Fee (the ``Waiver'') that took effect beginning in the month
in which the Exchange began its migration to the Pillar platform and
would remain in effect for the three months following the month during
which the Exchange completed its migration to the Pillar platform. As
the Exchange completed the migration in July 2022, the Waiver was
originally due to expire on October 31, 2022. The Exchange previously
filed to extend the Waiver until January 31, 2023 and, subsequently, to
extend the Waiver until April 30, 2023.\7\
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\5\ See Fee Schedule, RATIO THRESHOLD FEE; see also Securities
Exchange Act Release No. 60102 (June 11, 2009), 74 FR 29251 (June
19, 2009) (SR-NYSEArca-2009-50).
\6\ See id.
\7\ See Securities Exchange Act Release Nos. 96252 (November 7,
2022), 87 FR 68210 (November 14, 2022) (SR-NYSEARCA-2022-74)
(extension of Waiver until January 31, 2023); 96878 (February 10,
2023), 88 FR 10156 (February 16, 2023) (SR-NYSEARCA-2023-14)
(extension of Waiver until April 30, 2023).
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The Exchange believes that extending the Waiver would allow the
Exchange additional time to continue to monitor and to further analyze
traffic rates and order to execution ratios, without imposing a
financial burden on OTP Holders based on their order to execution
ratios. The Exchange thus proposes to modify the Fee Schedule to
provide that the Waiver would extend through June 30, 2023.\8\
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\8\ See proposed Fee Schedule, RATIO THRESHOLD FEE.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act,\9\ in general, and furthers the
objectives of sections 6(b)(4) and (5) of the Act,\10\ 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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\9\ 15 U.S.C. 78f(b).
\10\ 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.'' \11\
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\11\ 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.\12\ Therefore, no exchange possesses significant pricing power
in the execution of multiply-listed equity and ETF options order flow.
More specifically, in March 2023, the Exchange had less than 13% market
share of executed volume of multiply-listed equity and ETF options
trades.\13\
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\12\ 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.
\13\ 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 13.57% for the month of March 2022 to 12.83% for the
month of March 2023.
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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 extension of the Waiver is
reasonable because it is designed to lessen the impact of the migration
on OTP Holders and would allow OTP Holders to continue trading on the
Pillar platform without incurring excess Ratio Threshold Fees while the
Exchange continues to evaluate and conduct further analysis on traffic
rates and order to execution ratios. To the extent the proposed rule
change encourages OTP Holders to maintain their trading activity on the
Exchange, the Exchange believes the proposed change would sustain the
Exchange's overall competitiveness and 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
[[Page 31089]]
mitigate the impacts of the Pillar migration without affecting its
competitiveness.
The Proposed Rule Change Is an Equitable Allocation of Credits and Fees
The proposed extension of the Waiver is an equitable allocation of
fees and credits because the Waiver would continue to apply to all OTP
Holders. All OTP Holders would have the opportunity to continue trading
on the Pillar platform without incurring Ratio Threshold Fees, while
the Exchange continues to evaluate post-migration traffic rates and
order to execution ratios. Thus, the Exchange believes the proposed
rule change would continue to mitigate the impact of the migration
process for all market participants on the Exchange, thereby sustaining
market-wide quality.
The Proposed Rule Change Is Not Unfairly Discriminatory
The Exchange believes the proposed extension of the Waiver is not
unfairly discriminatory because it would apply to all OTP Holders on an
equal and non-discriminatory basis. The Waiver, as proposed, would
permit all OTP Holders to continue trading on the Pillar platform,
without incurring additional fees based on their monthly order to
execution ratios, while the Exchange continues to evaluate post-
migration traffic rates and order to execution ratios. The Exchange
thus believes that the proposed change would support continued trading
opportunities for all market participants, thereby promoting just and
equitable principles of trade, removing impediments to and perfecting
the mechanism of a free and open market and a national market system
and, in general, protecting investors and the public interest.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with section 6(b)(8) of the Act, the Exchange does
not believe that the proposed rule change would impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, as discussed above, the Exchange believes
that the proposed 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.'' \14\
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\14\ See Reg NMS Adopting Release, supra note 11, at 37499.
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Intramarket Competition. The Exchange does not believe the proposed
extension of the Waiver would impose any burden on intramarket
competition that is not necessary or appropriate because it would apply
equally to all OTP Holders. All OTP Holders would continue to be
eligible for the Waiver for an additional two months while the Exchange
continues to assess traffic rates and order to execution ratios
following the migration to Pillar.
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.\15\ Therefore, currently
no exchange possesses significant pricing power in the execution of
multiply-listed equity and ETF options order flow. More specifically,
in March 2023, the Exchange had less than 13% 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 13.57% for the month of March 2022 to 12.83% for the
month of March 2023.
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The Exchange does not believe the proposed extension of the Waiver
would impose any burden on intramarket competition that is not
necessary or appropriate because it would apply equally to all OTP
Holders. All OTP Holders would continue to be eligible for the Waiver
for an additional two months while the Exchange continues to assess
traffic rates and order to execution ratios following the migration to
Pillar.
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) \17\ of the Act and subparagraph (f)(2) of Rule
19b-4 \18\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 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) \19\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\19\ 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-2023-35 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-2023-35. This
file number should be included on the subject line if email is used. To
help the Commission process and review your
[[Page 31090]]
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. Do not include personal identifiable
information in submissions; you should submit only information that you
wish to make available publicly. We may redact in part or withhold
entirely from publication submitted material that is obscene or subject
to copyright protection. All submissions should refer to File Number
SR-NYSEARCA-2023-35, and should be submitted on or before June 5, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10243 Filed 5-12-23; 8:45 am]
BILLING CODE 8011-01-P
