Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE Arca Options Fee Schedule, 39314-39317 [2023-12755]
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Federal Register / Vol. 88, No. 115 / Thursday, June 15, 2023 / Notices
subject to copyright protection. All
submissions should refer to file number
SR–NYSEAMER–2023–31 and should
be submitted on or before July 6, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–12764 Filed 6–14–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97682; File No. SR–
NYSEARCA–2023–41]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Modify the NYSE Arca
Options Fee Schedule
June 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 June 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
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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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 June
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
19 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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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 a credit
offered to qualifying Submitting Brokers
for QCC transactions.4 The Exchange
proposes to implement the rule change
on June 1, 2023.
Currently, the Exchange offers
Submitting Brokers a credit of ($0.22)
per contract for Non-Customer vs. NonCustomer QCC transactions or ($0.16)
per contract for Customer vs. NonCustomer QCC transactions.5 QCC
executions in which a Customer is on
both sides of the QCC trade are not
eligible for a credit.6 In addition,
Submitting Brokers who achieve 3
million QCC contracts in a month
currently receive an additional ($0.02)
credit on Customer vs. Non-Customer
QCC transactions, and an additional
($0.06) credit on Non-Customer vs. NonCustomer QCC transactions.
The Exchange now proposes to
increase the credit on Non-Customer vs.
Non-Customer QCC transactions for
those Submitting Brokers that achieve
the 3 million monthly QCC contract
requirement from ($0.06) to ($0.08).7
The proposed ($0.08) credit will
continue to be applicable back to the
first QCC contract executed by a
Submitting Broker in a month and will
not be cumulative across tiers.8
4 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).
5 See Fee Schedule, QUALIFIED CONTINGENT
CROSS (‘‘QCC’’) TRANSACTION FEES AND
CREDITS.
6 See id.
7 The Exchange notes that the proposed change
does not impact the applicability of Endnote 17,
which provides that Submitting Broker QCC credits
and Floor Broker rebates earned through the
Manual Billable Rebate Program may not combine
to exceed $2,000,000 per month per firm. See Fee
Schedule, Endnote 17.
8 The Exchange currently offers an additional
($0.01) credit on Customer vs. Non-Customer QCC
transactions and an additional ($0.03) credit on
Non-Customer vs. Non-Customer QCC transactions
to Submitting Brokers that achieve 1.5 million QCC
contracts in a month. The Exchange does not
propose any changes to these credits or qualifying
requirements. As is currently the case, the
additional QCC credits available to Submitting
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Although the Exchange cannot predict
with certainty whether the proposed
change would encourage Submitting
Brokers to increase their QCC volume,
the proposed change is intended to
continue to incentivize additional QCC
executions by Submitting Brokers by
increasing the credits available on
certain such orders.
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
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
Brokers that achieve 1.5 million QCC contracts in
a month and those available to Submitting Brokers
that achieve 3 million QCC contracts in a month are
not cumulative across qualifying tiers. For example,
a Submitting Broker who transacts 3.1 million QCC
contracts in a month would be eligible for an
additional ($0.08) credit on Non-Customer vs. NonCustomer QCC transactions, as proposed, but would
not also earn the additional credits offered to
Submitting Brokers that achieve 1.5 million QCC
contracts in a month.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(4) and (5).
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.
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Federal Register / Vol. 88, No. 115 / Thursday, June 15, 2023 / Notices
significant pricing power in the
execution of multiply-listed equity and
ETF options order flow. More
specifically, in April 2023, the Exchange
had less than 13% market share of
executed volume of multiply-listed
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 change is reasonable because
it is designed to incent OTP Holders to
increase the number of QCC
transactions sent to the Exchange by
offering an increased credit on QCC
transactions for Submitting Brokers that
meet a requisite volume threshold. In
addition, the Exchange believes it is
reasonable to offer a higher additional
credit on Non-Customer vs. NonCustomer QCC transactions than on
Customer vs. Non-Customer QCC
transactions because Non-Customer vs.
Non-Customer QCC transactions are
billable on both sides, whereas
Customer vs. Non-Customer QCC
transactions are billable on one side
only. To the extent that the proposed
change attracts more volume to the
Exchange, 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.
Finally, to the extent the proposed
change continues to attract greater
volume and liquidity, the Exchange
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 12.94% for the month of
April 2022 to 12.54% for the month of April 2023.
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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.14 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 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
change is based on the amount and type
of business transacted on the Exchange,
and Submitting Brokers can attempt to
submit QCC transactions to earn the
additional credit or not. In addition, the
proposed credit is equally available to
all qualifying Submitting Brokers. To
the extent the proposed change
continues to incent Submitting Brokers
to direct increased liquidity to the
Exchange, all market participants would
benefit from enhanced opportunities for
price improvement and order execution.
Moreover, the proposed credit is
designed to incent Submitting Brokers
to encourage OTP Holders to aggregate
their executions—including QCC
transactions—at the Exchange as a
14 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).
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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 credit on QCC
transactions would be available to all
qualifying Submitting Brokers on an
equal and non-discriminatory basis. The
proposed change is based on the amount
and type of business transacted on the
Exchange, and Submitting Brokers are
not obligated to execute QCC
transactions. Rather, the proposal is
designed to encourage Submitting
Brokers 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.
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
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Federal Register / Vol. 88, No. 115 / Thursday, June 15, 2023 / Notices
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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.’’ 15
Intramarket Competition. The
proposed change is designed to attract
additional QCC transactions to the
Exchange, 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 and achieve the
applicable volume threshold.
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.16
Therefore, currently no exchange
possesses significant pricing power in
the execution of multiply-listed equity
and ETF options order flow. More
specifically, in April 2023, the Exchange
had less than 13% market share of
executed volume of multiply-listed
equity and ETF options trades.17
15 See Reg NMS Adopting Release, supra note 11,
at 37499.
16 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.
17 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 12.94% for the month of
April 2022 to 12.54% for the month of April 2023.
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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 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 changes
could promote competition between the
Exchange and other execution venues,
including those that currently offer
credits on QCC transactions, by
encouraging additional orders (and, in
particular, QCC transactions) to be sent
to the Exchange for execution.18
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) 19 of the Act and
subparagraph (f)(2) of Rule 19b–4 20
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
18 See
note 14, supra.
U.S.C. 78s(b)(3)(A).
20 17 CFR 240.19b–4(f)(2).
Commission shall institute proceedings
under section 19(b)(2)(B) 21 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–2023–41 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–2023–41. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 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
19 15
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U.S.C. 78s(b)(2)(B).
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Federal Register / Vol. 88, No. 115 / Thursday, June 15, 2023 / Notices
SR–NYSEARCA–2023–41 and should be
submitted on or before July 6, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Sherry R. Haywood,
Assistant Secretary.
II. Background and Description of the
Proposal, as Modified by Amendment
No. 1
[FR Doc. 2023–12755 Filed 6–14–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97691; File No. SR–
NYSECHX–2023–09]
Self-Regulatory Organizations; NYSE
Chicago, Inc.; Notice of Filing of
Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed
Rule Change, as Modified by
Amendment No. 1, To Adopt New
NYSE Chicago Rule 29 To Establish
Listing Standards Related to Recovery
of Erroneously Awarded IncentiveBased Executive Compensation
June 9, 2023.
I. Introduction
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On February 22, 2023, NYSE Chicago,
Inc. (‘‘NYSE Chicago’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
adopt new Rule 29 to Article 22 of the
NYSE Chicago Rules (‘‘NYSE Chicago
Rule 29’’) to require issuers to adopt and
comply with a policy providing for the
recovery of erroneously awarded
incentive-based compensation received
by current or former executive officers
as required by Rule 10D–1 under the
Act (‘‘Rule 10D–1’’). The proposed rule
change was published for comment in
the Federal Register on March 13,
2023.3 On April 24, 2023, the
Commission extended the time period
within which to approve the proposed
rule change, disapprove the proposed
rule change, or institute proceedings to
determine whether to approve or
disapprove the proposed rule change.4
On June 7, 2023, the Exchange filed
Amendment No. 1 to the proposed rule
change, which replaced and superseded
the proposed rule change as originally
22 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 97052
(March 7, 2023), 88 FR 15476 (‘‘Notice’’). No
comments were received in response to this Notice.
4 See Securities Exchange Act Release No. 97363,
88 FR 26374 (April 28, 2023).
1 15
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17:54 Jun 14, 2023
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filed.5 The Commission is publishing
this notice to solicit comments on the
proposed rule change, as modified by
Amendment No. 1, from interested
persons and is approving the proposed
rule change, as modified by Amendment
No. 1, on an accelerated basis.
On October 26, 2022, the Commission
adopted final Rule 10D–1 6 to
implement section 954 of the DoddFrank Wall Street Reform and Consumer
Protection Act of 2010 (‘‘Dodd-Frank
Act’’), which added section 10D to the
Act. Section 10D of the Act requires the
Commission to adopt rules directing the
national securities exchanges to prohibit
the listing of any security of an issuer
that is not in compliance with the
requirements of section 10D of the Act.
Rule 10D–1 requires national securities
exchanges that list securities to establish
listing standards that require each issuer
to adopt and comply with a written
executive compensation recovery policy
and to provide the disclosures required
by Rule 10D–1 and in the applicable
Commission filings.7 Under Rule 10D–
1, listed companies must recover from
current and former executive officers
incentive-based compensation received
during the three completed fiscal years
preceding the date on which the issuer
is required to prepare an accounting
restatement.
As required by Rule 10D–1, the
Exchange proposes to adopt NYSE
Chicago Rule 29 entitled ‘‘Erroneously
Awarded Compensation.’’ Proposed
NYSE Chicago Rule 29 (the ‘‘Rule’’)
5 Amendment No. 1 is available on the
Commission’s website at https://www.sec.gov/
comments/sr-nysechx-2023-09/srnysechx202309201319-402803.pdf. In Amendment No. 1, the
Exchange (i) amends proposed NYSE Chicago Rule
29(b) to provide that the effective date of proposed
NYSE Chicago Rule 29 would be October 2, 2023;
and (ii) amends proposed NYSE Chicago Rule 29(f)
(Noncompliance with Rule 29 (Erroneously
Awarded Compensation)) to provide that in the
event of any failure by a listed issuer to comply
with any requirement of proposed NYSE Chicago
Rule 29, the Exchange may at its sole discretion
provide such issuer with an initial six-month cure
period and an additional six-month cure period.
6 17 CFR 240.10D–1.
7 See Securities Exchange Act Release No. 96159,
87 FR 73076 (November 28, 2022) (‘‘Adopting
Release’’). Rule 10D–1 requires such exchange
listing rules to be effective no later than one year
after November 28, 2022. Rule 10D–1 further
requires that each listed issuer: (i) adopt the
required recovery policy no later than 60 days
following the effective date of the listing standard;
(ii) comply with the recovery policy for all
incentive-based compensation received by
executive officers on or after the effective date of
the applicable listing standard; and (iii) provide the
required disclosures on or after the effective date of
the listing standard.
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39317
mirrors the text of Rule 10D–1.
Specifically, the Rule would require
Exchange listed issuers to adopt a
recovery policy that complies with the
requirements of the Rule (‘‘recovery
policy’’), comply with their recovery
policy, and provide the required
disclosures in the applicable
Commission filing.8 Proposed NYSE
Chicago Rule 29(f) would prohibit the
initial or continued listing of any
security of an issuer that is not in
compliance with the requirements of
any portion of the Rule.9
Specifically, proposed NYSE Chicago
Rule 29(c)(1) would require each issuer,
for initial and continued listing, to
adopt and comply with a written
recovery policy providing that the issuer
will recover reasonably promptly the
amount of erroneously awarded
incentive-based compensation in the
event that the issuer is required to
prepare an accounting restatement due
to the material noncompliance of the
issuer with any financial reporting
requirement under the securities laws,
including any required accounting
restatement to correct an error in
previously issued financial statements
that is material to the previously issued
financial statements, or that would
result in a material misstatement if the
error were corrected in the current
period or left uncorrected in the current
period.
The issuer’s recovery policy must
apply to all incentive-based
compensation received by a person: (A)
after beginning service as an executive
officer; (B) who served as an executive
officer at any time during the
performance period for that incentivebased compensation; (C) while the
issuer has a class of securities listed on
a national securities exchange or a
national securities association; and (D)
during the three completed fiscal years
immediately preceding the date that the
issuer is required to prepare an
accounting restatement as described in
paragraph (c)(1) of the Rule.10 An
issuer’s obligation to recover
erroneously awarded compensation is
not dependent on if or when the
restated financial statements are filed.
For purposes of determining the
relevant recovery period, the date that
8 See
proposed NYSE Chicago Rule 29(b) and (c).
proposed NYSE Chicago Rule 29(f).
10 See proposed NYSE Chicago Rule 29(c)(1)(i). In
addition to these last three completed fiscal years,
the recovery policy must apply to any transition
period (that results from a change in the issuer’s
fiscal year) within or immediately following those
three completed fiscal years. However, a transition
period between the last day of the issuer’s previous
fiscal year end and the first day of its new fiscal
year that comprises a period of nine to 12 months
would be deemed a completed fiscal year.
9 See
E:\FR\FM\15JNN1.SGM
15JNN1
]]>Agencies
[Federal Register Volume 88, Number 115 (Thursday, June 15, 2023)]
[Notices]
[Pages 39314-39317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-12755]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97682; File No. SR-NYSEARCA-2023-41]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE
Arca Options Fee Schedule
June 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 June 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 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 June 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 amend the Fee Schedule to modify a
credit offered to qualifying Submitting Brokers for QCC
transactions.\4\ The Exchange proposes to implement the rule change on
June 1, 2023.
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\4\ 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 Submitting Brokers a credit of
($0.22) per contract for Non-Customer vs. Non-Customer QCC transactions
or ($0.16) per contract for Customer vs. Non-Customer QCC
transactions.\5\ QCC executions in which a Customer is on both sides of
the QCC trade are not eligible for a credit.\6\ In addition, Submitting
Brokers who achieve 3 million QCC contracts in a month currently
receive an additional ($0.02) credit on Customer vs. Non-Customer QCC
transactions, and an additional ($0.06) credit on Non-Customer vs. Non-
Customer QCC transactions.
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\5\ See Fee Schedule, QUALIFIED CONTINGENT CROSS (``QCC'')
TRANSACTION FEES AND CREDITS.
\6\ See id.
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The Exchange now proposes to increase the credit on Non-Customer
vs. Non-Customer QCC transactions for those Submitting Brokers that
achieve the 3 million monthly QCC contract requirement from ($0.06) to
($0.08).\7\ The proposed ($0.08) credit will continue to be applicable
back to the first QCC contract executed by a Submitting Broker in a
month and will not be cumulative across tiers.\8\ Although the Exchange
cannot predict with certainty whether the proposed change would
encourage Submitting Brokers to increase their QCC volume, the proposed
change is intended to continue to incentivize additional QCC executions
by Submitting Brokers by increasing the credits available on certain
such orders.
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\7\ The Exchange notes that the proposed change does not impact
the applicability of Endnote 17, which provides that Submitting
Broker QCC credits and Floor Broker rebates earned through the
Manual Billable Rebate Program may not combine to exceed $2,000,000
per month per firm. See Fee Schedule, Endnote 17.
\8\ The Exchange currently offers an additional ($0.01) credit
on Customer vs. Non-Customer QCC transactions and an additional
($0.03) credit on Non-Customer vs. Non-Customer QCC transactions to
Submitting Brokers that achieve 1.5 million QCC contracts in a
month. The Exchange does not propose any changes to these credits or
qualifying requirements. As is currently the case, the additional
QCC credits available to Submitting Brokers that achieve 1.5 million
QCC contracts in a month and those available to Submitting Brokers
that achieve 3 million QCC contracts in a month are not cumulative
across qualifying tiers. For example, a Submitting Broker who
transacts 3.1 million QCC contracts in a month would be eligible for
an additional ($0.08) credit on Non-Customer vs. Non-Customer QCC
transactions, as proposed, but would not also earn the additional
credits offered to Submitting Brokers that achieve 1.5 million QCC
contracts in a month.
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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
[[Page 39315]]
significant pricing power in the execution of multiply-listed equity
and ETF options order flow. More specifically, in April 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 12.94% for the month of April 2022 to 12.54% for the
month of April 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 change is reasonable
because it is designed to incent OTP Holders to increase the number of
QCC transactions sent to the Exchange by offering an increased credit
on QCC transactions for Submitting Brokers that meet a requisite volume
threshold. In addition, the Exchange believes it is reasonable to offer
a higher additional credit on Non-Customer vs. Non-Customer QCC
transactions than on Customer vs. Non-Customer QCC transactions because
Non-Customer vs. Non-Customer QCC transactions are billable on both
sides, whereas Customer vs. Non-Customer QCC transactions are billable
on one side only. To the extent that the proposed change attracts more
volume to the Exchange, 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.
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.\14\ 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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\14\ 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 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 change is based on the
amount and type of business transacted on the Exchange, and Submitting
Brokers can attempt to submit QCC transactions to earn the additional
credit or not. In addition, the proposed credit is equally available to
all qualifying Submitting Brokers. To the extent the proposed change
continues to incent Submitting Brokers to direct increased liquidity to
the Exchange, all market participants would benefit from enhanced
opportunities for price improvement and order execution. Moreover, the
proposed credit is 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 credit on QCC transactions would be
available to all qualifying Submitting Brokers on an equal and non-
discriminatory basis. The proposed change is based on the amount and
type of business transacted on the Exchange, and Submitting Brokers are
not obligated to execute QCC transactions. Rather, the proposal is
designed to encourage Submitting Brokers 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.
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
[[Page 39316]]
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.'' \15\
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\15\ See Reg NMS Adopting Release, supra note 11, at 37499.
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Intramarket Competition. The proposed change is designed to attract
additional QCC transactions to the Exchange, 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 and achieve the applicable
volume threshold.
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.\16\ Therefore, currently
no exchange possesses significant pricing power in the execution of
multiply-listed equity and ETF options order flow. More specifically,
in April 2023, the Exchange had less than 13% market share of executed
volume of multiply-listed equity and ETF options trades.\17\
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\16\ 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.
\17\ 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 12.94% for the month of April 2022 to 12.54% for the
month of April 2023.
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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 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 changes could promote
competition between the Exchange and other execution venues, including
those that currently offer credits on QCC transactions, by encouraging
additional orders (and, in particular, QCC transactions) to be sent to
the Exchange for execution.\18\
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\18\ See note 14, 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) \19\ of the Act and subparagraph (f)(2) of Rule
19b-4 \20\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 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) \21\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\21\ 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-2023-41 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-2023-41. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 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
[[Page 39317]]
SR-NYSEARCA-2023-41 and should be submitted on or before July 6, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-12755 Filed 6-14-23; 8:45 am]
BILLING CODE 8011-01-P
