Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Options Proprietary Market Data Fee Schedule, 44176-44180 [2023-14525]
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Federal Register / Vol. 88, No. 131 / Tuesday, July 11, 2023 / Notices
identified above, as well as any other
concerns they may have with the
proposed rule change, as modified by
Amendment No. 1. In particular, the
Commission invites the written views of
interested persons concerning whether
the proposed rule change, as modified
by Amendment No. 1, is consistent with
the Exchange Act and the rules
thereunder.
Although there do not appear to be
any issues relevant to approval or
disapproval that would be facilitated by
an oral presentation of views, data, and
arguments, the Commission will
consider, pursuant to Rule 19b-4, any
request for an opportunity to make an
oral presentation.47
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposed rule change, as modified by
Amendment No. 1, should be approved
or disapproved by August 1, 2023. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by August 15, 2023.
Comments may be submitted by any
of the following methods:
and all written communications relating
to the proposed rule change, as
modified by Amendment No. 1, 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 such filing
also will be available for inspection and
copying at the principal office of
FINRA. 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–FINRA–2023–006 and should be
submitted on or before August 1, 2023.
If comments are received, any rebuttal
comments should be submitted on or
before August 15, 2023.
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–
FINRA–2023–006 on the subject line.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.48
Sherry R. Haywood,
Assistant Secretary.
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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–FINRA–2023–006. 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, as modified by Amendment No.
1, that are filed with the Commission,
47 Section 19(b)(2) of the Exchange Act, as
amended by the Securities Acts Amendments of
1975, Public Law 94–29, 89 Stat. 97 (1975), grants
the Commission flexibility to determine what type
of proceeding—either oral or notice and
opportunity for written comments—is appropriate
for consideration of a particular proposal by a selfregulatory organization. See Securities Acts
Amendments of 1975, Report of the Senate
Committee on Banking, Housing and Urban Affairs
to Accompany S. 249, S. Rep. No. 75, 94th Cong.,
1st Sess. 30 (1975).
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[FR Doc. 2023–14523 Filed 7–10–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97841; File No. SR–
NYSEARCA–2023–46]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the NYSE Arca
Options Proprietary Market Data Fee
Schedule
July 5, 2023.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 30,
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
48 17 CFR 200.30–3(a)(12); 17 CFR 200.30–
3(a)(57).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
NYSE Arca Options Proprietary Market
Data Fee Schedule (‘‘Fee Schedule’’) to
introduce a data product to be known as
the NYSE Options Open-Close Intra-Day
Volume Summary (‘‘Intra-Day Volume
Summary’’) that would be available for
purchase by any market participant, i.e.,
members 3 and non-members, on an adhoc basis and to adopt fees for such
product.
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 Exchange proposes to introduce a
data product to be known as the IntraDay Volume Summary that would be
available for purchase by market
participants on an ad-hoc basis and to
adopt fees for such product.4
More specifically, the Exchange
proposes to offer an ad-hoc historic
monthly Intra-Day Volume Summary
market data product that provides a
volume summary of trading activity on
3 Members of the Exchange are OTP Firms, OTP
Holders and ETP Holders.
4 The Exchange previously adopted a
subscription-based market data product known as
the NYSE Options Open-Close Volume Summary
that market participants can purchase on a
subscription basis. See Securities Exchange Act
Release No. 93132 (September 27, 2021), 86 FR
54499 (October 1, 2021) (SR–NYSEArca–2021–82).
The purpose of this filing is to introduce a historic
monthly report of the NYSE Options Open-Close
Volume Summary that would be available for
purchase by any market participant on an ad-hoc
basis.
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the Exchange at the option level by
origin (Customer, Professional
Customer, Firm, Broker-Dealer, and
Market Maker),5 side of the market (buy
or sell), contract volume, and
transaction type (opening or closing).
The Customer, Professional Customer,
Firm, Broker-Dealer, and Market Maker
volume is further broken down into
trade size buckets (less than 100
contracts, 100–199 contracts, greater
than 199 contracts). The ad-hoc historic
monthly Intra-Day Volume Summary is
proprietary Exchange trade data and
does not include trade data from any
other exchange. It is also a historical
data product and not a real-time data
feed. The Exchange proposes to offer
data that would go back to August 2022
and would contain all series in an
underlying security if it has volume.6
The Exchange anticipates a wide
variety of market participants to
purchase the ad-hoc historic monthly
Intra-Day Volume Summary, including,
but not limited to, individual customers,
buy-side investors, investment banks
and academic institutions. For example,
academic institutions may utilize the
proposed product to promote research
and studies of the options industry to
the benefit of all market participants.
The Exchange believes the proposed
product may also provide helpful
trading information regarding investor
sentiment and may be used to create
and test trading models and analytical
strategies. The ad-hoc historic monthly
Intra-Day Volume Summary is a
completely voluntary product, in that
the Exchange is not required by any rule
or regulation to make this data available
and that potential customers may
purchase it on an ad-hoc basis only if
they voluntarily choose to do so. The
Exchange notes that other exchanges
offer a similar product.7 As such, the ad5 The terms Customer, Professional Customer,
Firm and Market Maker are defined in NYSE Arca
Rule 1.1.
6 The specifications for the ad-hoc historic
monthly Intra-Day Volume Summary can be found
at https://www.nyse.com/market-data/historical/
open-close-volume-summary.
7 See e.g., Securities Exchange Act Release Nos.
89496 (August 6, 2020), 85 FR 48743 (August 12,
2020) (SR–C2–2020–010) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change
Relating To Introduce a New Data Product To Be
Known as Intraday Open-Close Data); and 97723
(June 14, 2023), 88 FR 40358 (June 21, 2023) (SR–
BOX–2023–16) (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change To Amend
the Fee Schedule for Trading on the BOX Options
Market LLC Facility To Offer Ad-Hoc Historical
Requests for the Intraday Open-Close Data Report
and Adopt Fees for This Data). The ad-hoc historic
monthly Intra-Day Volume Summary report
contains the same information that is provided in
the monthly subscription-based market data
product known as the NYSE Options Open-Close
Volume Summary. See note 5, supra.
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hoc historic monthly Intra-Day Volume
Summary is subject to direct
competition from similar intra-day
options trading summaries offered by
other exchanges. All of these exchanges
offer essentially the same intra-day
options trading summary information
for purchase on an ad-hoc basis, and
generally differ solely in the amount of
history available for purchase.8
The Exchange proposes to provide in
its Fee Schedule that market
participants may purchase the ad-hoc
historic monthly Intra-Day Volume
Summary for a specified month
(historical data). The Exchange proposes
to assess a fee of $1,000 per request per
month for an ad-hoc request of
historical Intra-Day Volume Summary
covering all Exchange-listed securities.
An ad-hoc request can be for any
number of months beginning with
August 2022 for which the data is
available.9 The proposed fee for ad-hoc
requests for the historic monthly IntraDay Volume Summary will apply to all
market participants. The Exchange notes
that other exchanges provide a similar
data product 10 that may be purchased
on an ad-hoc basis. The proposed fee is
comparably priced to at least one other
exchange that sells a market data
product similar to Intra-Day Volume
Summary that may be purchased on an
ad-hoc basis.11
The Exchange intends to offer the
historic monthly Intra-Day Volume
Summary on an ad-hoc basis and charge
the proposed fees effective July 3, 2023.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,12 in general, and
8 For example, Nasdaq PHLX LLC offers history
for its intra-day data starting in January 2009 for
purchase on an ad-hoc basis while Intra-Day
Volume Summary history is only offered starting in
August 2022. See https://www.nasdaqtrader.com/
micro.aspx?id=photo.
9 For example, a customer that requests historical
Intra-Day Volume Summary for the months of
October 2022 and November 2022, would be
assessed a total of $2,000.
10 See e.g., Cboe LiveVol, LLC Market Data Fees
available at https://www.cboe.com/us/options/
membership/fee_schedule/ctwo/. Cboe C2 Options
(‘‘C2’’) offers Open-Close Data: Intraday Ad-hoc
Request (historical data) and assesses a fee of $500
per request per month. Cboe EDGX Exchange, Inc.
(‘‘EDGX’’) similarly offers Open-Close Data:
Intraday Ad-hoc Request (historical data) and
assesses a fee of $500 per request per month. See
https://www.cboe.com/us/options/membership/fee_
schedule/edgx/. Nasdaq ISE, LLC (‘‘ISE’’) offers
Nasdaq ISE Open/Close Trade Profile Intraday AdHoc Request (historical data) and assesses a fee of
$1,000 per request per month, $2,000 per request
per quarter and $8,000 per request per year. See
Sec. 10, Market Data, at https://
listingcenter.nasdaq.com/rulebook/ise/rules/iseoptions-7.
11 See ISE fees, note 11, supra.
12 15 U.S.C. 78f(b).
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furthers the objectives of Section 6(b)(5)
of the Act,13 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and to protect investors and the
public interest, and that it is not
designed to permit unfair
discrimination among customers,
brokers, or dealers. The Exchange also
believes that its proposal to adopt fees
for ad-hoc historic monthly Intra-Day
Volume Summary is consistent with
Section 6(b) of the Act 14 in general, and
furthers the objectives of Section 6(b)(4)
of the Act 15 in particular, in that it is
an equitable allocation of dues, fees and
other charges among its members and
other recipients of Exchange data.
In adopting Regulation NMS, the
Commission granted self-regulatory
organizations (‘‘SROs’’) and brokerdealers increased authority and
flexibility to offer new and unique
market data to the public. It was
believed that this authority would
expand the amount of data available to
users and consumers of such data and
also spur innovation and competition
for the provision of market data.
The Exchange believes that the
proposed ad-hoc historic monthly IntraDay Volume Summary market data
product would further broaden the
availability of U.S. options market data
to investors consistent with the
principles of Regulation NMS. The
proposed rule change would benefit
investors by providing access to historic
data, which as noted above, may
promote better informed trading, as well
as research and studies of the options
industry. Particularly, information
regarding opening and closing activity
across different options series may
indicate investor sentiment, which can
be helpful research and/or trading
information. Customers of the historic
data product may be able to enhance
their ability to analyze options trade and
volume data, and create and test trading
models and analytical strategies. The
Exchange believes ad-hoc historic
monthly Intra-Day Volume Summary
would provide a valuable tool that
customers can use to gain
comprehensive insight into the trading
activity in a particular series, but also
emphasizes such data is not necessary
13 15
U.S.C. 78f(b)(5).
U.S.C. 78f(b).
15 15 U.S.C. 78f(b)(4).
14 15
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for trading. Moreover, other exchanges
offer a similar data product.16
The Exchange operates in a highly
competitive market. Indeed, there are
currently 16 registered options
exchanges competing for order flow.
Based on publicly-available
information, and excluding index-based
options, no single exchange has more
than 16% of the market share of
executed volume of multiply-listed
equity and ETF options trades.17
Therefore, 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.18
The Commission has repeatedly
expressed its preference for competition
over regulatory intervention in
determining prices, products, and
services in the securities markets.
Specifically, in Regulation NMS, the
Commission highlighted the importance
of market forces in determining prices
and SRO revenues, and also recognized
that current regulation of the market
system ‘‘has been remarkably successful
in promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 19
With respect to market data, the
decision of the United States Court of
Appeals for the District of Columbia
Circuit in NetCoalition v. SEC upheld
the Commission’s reliance on the
existence of competitive market
mechanisms to evaluate the
reasonableness and fairness of fees for
proprietary market data:
In fact, the legislative history
indicates that the Congress intended
that the market system ‘‘evolve through
the interplay of competitive forces as
unnecessary regulatory restrictions are
removed’’ and that the SEC wield its
regulatory power ‘‘in those situations
where competition may not be
sufficient,’’ such as in the creation of a
16 See,
note 8, supra.
Options Clearing Corporation (‘‘OCC’’)
publishes options and futures volume in a variety
of formats, including daily and monthly volume by
exchange, available here: https://www.theocc.com/
Market-Data/Market-Data-Reports/Volume-andOpen-Interest/Monthly-Weekly-Volume-Statistics.
18 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.
19 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
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17 The
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‘‘consolidated transactional reporting
system.’’ 20
The court agreed with the
Commission’s conclusion that
‘‘Congress intended that ‘competitive
forces should dictate the services and
practices that constitute the U.S.
national market system for trading
equity securities.’ ’’ 21 More recently, the
Commission confirmed that it applies a
‘‘market-based’’ test in its assessment of
market data fees, and that under that
test:
the Commission considers whether
the exchange was subject to significant
competitive forces in setting the terms
of its proposal for [market data],
including the level of any fees. If an
exchange meets this burden, the
Commission will find that its fee rule is
consistent with the Act unless there is
a substantial countervailing basis to find
that the terms of the rule violate the Act
or the rules thereunder.22
Making similar historic data products
available to market participants fosters
competition in the marketplace, and
constrains the ability of exchanges to
charge supra-competitive fees. In the
event that a market participant views
one exchange’s historic data product as
more or less attractive than the
competition they can and do switch
between similar products. The proposed
fees are a result of the competitive
environment, as the Exchange seeks to
adopt fees to attract purchasers of the
ad-hoc historic monthly Intra-Day
Volume Summary data product.
The Exchange believes its proposal to
provide the ad-hoc historic monthly
Intra-Day Volume Summary is
reasonable as the proposed fee is
comparable to the fee charged by at least
one other exchange that provides a
similar historic data product.23 Indeed,
proposing fees that are excessively
higher than established fees for similar
historic data products would simply
serve to reduce demand for the
Exchange’s historic data product, which
as noted, is entirely optional. Like the
ad-hoc historic monthly Intra-Day
Volume Summary, other exchanges offer
similar historic data products that each
provide insight into trading on those
markets and may likewise aid in
assessing investor sentiment. Although
20 NetCoalition v. SEC, 615 F.3d 525, 535 (D.C.
Cir. 2010) (quoting H.R. Rep. No. 94–229 at 92
(1975), as reprinted in 1975 U.S.C.C.A.N. 323).
21 Id. at 535.
22 See Securities Exchange Act Release No. 34–
90217 (October 16, 2020), 85 FR 67392 (October 22,
2020) (SR–NYSENAT–2020–05) (internal quotation
marks omitted), quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
74770, 74781 (December 9, 2008) (ArcaBook
Approval Order).
23 See, note 12, supra.
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each of these similar historic data
products provide only proprietary trade
data and not trade data from other
exchanges, it is possible investors are
still able to gauge overall investor
sentiment across different options series
based on open and closing interest on
any one exchange. Similarly, market
participants may be able to analyze
options trade and volume data, and
create and test trading models and
analytical strategies using only the adhoc historic monthly Intra-Day Volume
Summary data relating to trading
activity on one or more of the other
markets that provide similar historic
data products. As such, if a market
participant views another exchange’s
data as more attractive than the
Exchange’s offering, then such market
participant can merely choose not to
purchase the Exchange’s historic data
product and instead purchase another
exchange’s historic product, which offer
similar data points, albeit based on that
other market’s trading activity.
The Exchange also believes the
proposed fees are reasonable as they
would support the introduction of a
historic market data product that is
designed to aid investors by providing
insight into trading on the Exchange. In
turn, this data would assist market
participants in gauging investor
sentiment and trading activity, resulting
in potentially better-informed trading
decisions. As noted above, customers
may also use such data to create and test
trading models and analytical strategies.
Selling historic market data, such as
the ad-hoc historic monthly Intra-Day
Volume Summary, is also a means by
which exchanges compete to attract
business. To the extent that the
Exchange is successful in attracting
customers to the Exchange’s historic
data product, it may earn trading
revenues and further enhance the value
of its data products. If the market deems
the proposed fees to be unfair or
inequitable, customers can diminish or
discontinue their use of the historic data
and/or avail themselves of similar
products offered by other exchanges.24
The Exchange therefore believes that the
proposed fees reflect the competitive
environment and would be properly and
equally assessed to all customers. The
Exchange also believes the proposed
fees are equitable and not unfairly
discriminatory as the fees would apply
equally to all customers who choose to
purchase such data. The proposed fees
would not differentiate between
customers that purchase the ad-hoc
historic monthly Intra-Day Volume
Summary, and are set at a modest level
24 See,
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that would allow any interested market
participant to purchase such data based
on their business needs. Nothing in this
proposal treats any category of market
participant any differently from any
other category of market participant.
The ad-hoc historic monthly Intra-Day
Volume Summary is available to all
market participants, i.e., members and
non-members, and all market
participants would receive the same
information in the data feed.
As noted above, the Exchange
anticipates a wide variety of market
participants to purchase the ad-hoc
historic monthly Intra-Day Volume
Summary data product, including but
not limited to individual customers,
buy-side investors, investment banks
and academic institutions. As such, the
Exchange anticipates that the historic
data product may be used not just for
commercial or monetizing purposes, but
also for educational use and research.
The Exchange reiterates that the
decision as to whether or not to
purchase the ad-hoc historic monthly
Intra-Day Volume Summary is entirely
optional for all potential customers.
Indeed, no market participant is
required to purchase the historic data
product, and the Exchange is not
required to make the historic data
product available to market participants.
Rather, the Exchange is voluntarily
making the historic data product
available, as requested by customers,
and market participants may choose to
receive (and pay for) this data based on
their own business needs. Potential
customers may request the data at any
time if they believe it to be valuable or
may decline to purchase such data.
In sum, the fierce competition for
order flow constrains any exchange
from pricing its historic market data at
a supra-competitive price, and
constrains the Exchange here in setting
its fees for the ad-hoc historic monthly
Intra-Day Volume Summary data
product.
The proposed fees are therefore
reasonable because in setting them, the
Exchange is constrained by the
availability of numerous substitute
venues offering historic market data
products and trading.25 Such substitutes
need not be identical, but only
substantially similar to the product at
hand. More specifically, in setting fees
for the ad-hoc historic monthly IntraDay Volume Summary data product, the
Exchange is constrained by the fact that,
if its pricing is unattractive to
customers, customers have their pick of
an increasing number of alternative
venues to use instead of the Exchange.26
Because of the availability of
substitutes, an exchange that overprices
its historic market data products stands
a high risk that customers may
substitute another source of market data
information for its own. Those
competitive pressures imposed by
available alternatives are evident in the
Exchange’s proposed pricing. The
existence of numerous alternatives to
the Exchange ensures that the Exchange
cannot set unreasonable fees for historic
market data without suffering the
negative effects of that decision in the
fiercely competitive market in which it
operates.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange also does not believe the
proposed fees would cause any
unnecessary or inappropriate burden on
intermarket competition as other
exchanges are free to introduce their
own comparable historic data product
and adopt fees to better compete with
the Exchange’s offering. Rather, the
Exchange believes that the proposal will
promote competition by permitting the
Exchange to sell a historic data product
similar to those offered by other
competitor options exchanges.27 The
Exchange is offering the ad-hoc historic
monthly Intra-Day Volume Summary in
order to keep pace with changes in the
industry and evolving customer needs,
and believes the data product will
contribute to robust competition among
national securities exchanges.
Furthermore, the Exchange operates
in a highly competitive environment,
and its ability to price the ad-hoc
historic monthly Intra-Day Volume
Summary is constrained by competition
among exchanges that offer similar
historic data products to their
customers. As discussed above, there
are currently a number of similar
products available to market
participants and investors. A number of
U.S. options exchanges offer a historic
market data product that is substantially
similar to the Exchange’s offering,
which the Exchange must consider in its
pricing discipline in order to compete
effectively. For example, proposing fees
that are excessively higher than
established fees for similar historic data
products would simply serve to reduce
demand for the Exchange’s historic data
26 See,
25 See,
note 8, supra.
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27 See,
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note 8, supra.
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product, which as discussed, market
participants are under no obligation to
utilize or purchase. In this competitive
environment, potential purchasers are
free to choose which, if any, similar
historic data product to purchase to
satisfy their need for market
information. As a result, the Exchange
believes this proposed rule change
permits fair competition among national
securities exchanges.
The Exchange does not believe the
proposed rule change would cause any
unnecessary or inappropriate burden on
intramarket competition. Particularly,
the proposed fees would apply
uniformly to any customer, in that the
Exchange would not differentiate
between customers that purchase the
ad-hoc historic monthly Intra-Day
Volume Summary and all customers
would receive the same information in
the data feed. The Exchange believes the
proposed fees are set at a modest level
that would allow interested customers
to purchase such data based on their
business needs.
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
Because the foregoing proposed rule
change does not: (i) significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 28 and Rule
19b–4(f)(6) thereunder.29
A proposed rule change filed under
Rule 19b–4(f)(6) 30 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),31 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
28 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires the Exchange to give the
Commission written notice of its intent to file the
proposed rule change, along with a brief description
and text of the proposed rule change, at least five
business days prior to the date of filing of the
proposed rule change, or such shorter time as
designated by the Commission. The Exchange has
satisfied this requirement.
30 17 CFR 240.19b–4(f)(6).
31 17 CFR 240.19b–4(f)(6)(iii).
29 17
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44180
Federal Register / Vol. 88, No. 131 / Tuesday, July 11, 2023 / Notices
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Commission believes that
waiver of the 30-day operative delay is
consistent with the protection of
investors and the public interest
because the proposal does not raise any
new or novel issues.32 Accordingly, the
Commission hereby waives the 30-day
operative delay and designates the
proposal operative upon filing.33
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) 34 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:
ddrumheller on DSK120RN23PROD with NOTICES1
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–2023–46 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–2023–46. 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
32 See
supra, notes 7 and 10.
purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
34 15 U.S.C. 78s(b)(2)(B).
33 For
VerDate Sep<11>2014
17:25 Jul 10, 2023
Jkt 259001
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
SR–NYSEARCA–2023–46 and should be
submitted on or before August 1, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.35
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–14525 Filed 7–10–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–540, OMB Control No.
3235–0600]
Submission for OMB Review;
Comment Request; Extension: Rule
611
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Rule 611 (17 CFR 242.611) under the
Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) (‘‘Exchange Act’’).
On June 9, 2005, effective August 29,
2005 (see 70 FR 37496, June 29, 2005),
PO 00000
35 17
CFR 200.30–3(a)(12).
Frm 00080
Fmt 4703
Sfmt 4703
the Commission adopted Rule 611 of
Regulation NMS under the Exchange
Act to require any national securities
exchange, national securities
association, alternative trading system,
exchange market maker, over-thecounter market maker, and any other
broker-dealer that executes orders
internally by trading as principal or
crossing orders as agent, to establish,
maintain, and enforce written policies
and procedures reasonably designed to
prevent the execution of a transaction in
its market at a price that is inferior to
a bid or offer displayed in another
market at the time of execution (a
‘‘trade-though’’), absent an applicable
exception and, if relying on an
exception, that are reasonably designed
to assure compliance with the terms of
the exception. Without this collection of
information, respondents would not
have a means to enforce compliance
with the Commission’s intention to
prevent trade-throughs pursuant to the
rule.
There are approximately 235
respondents 1 per year that will require
an aggregate total of approximately
14,100 hours per year to comply with
this Rule. It is anticipated that each
respondent will continue to expend
approximately 60 hours annually: two
hours per month of internal legal time
and three hours per month of internal
compliance time to ensure that its
written policies and procedures are upto-date and remain in compliance with
Rule 611. The estimated cost for an inhouse attorney is $489 per hour and the
estimated cost for an assistant
compliance director in the securities
industry is $432 per hour. Therefore the
estimated total internal cost of
compliance for the annual hour burden
is as follows: [(2 legal hours × 12 months
× $489) × 235] + [(3 compliance hours
× 12 months × $432) × 235] =
$6,412,680.2
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid OMB
control number.
1 This estimate includes 16 national securities
exchanges that are equity securities exchanges. The
estimate also includes an estimated 187 firms that
are over-the-counter market makers or exchange
market makers, as well as an estimated 32
alternative trading systems that trade NMS stocks.
2 The total cost of compliance for the annual hour
burden has been revised to reflect updated
estimated cost figures for an in-house attorney and
an assistant compliance director. These figures are
from SIFMA’s Management & Professional Earnings
in the Securities Industry 2017, modified by
Commission staff for an 1800-hour work-year and
multiplied by 5.35 to account for bonuses, firm size,
employee benefits, and overhead, and then adjusted
for inflation.
E:\FR\FM\11JYN1.SGM
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]]>Agencies
[Federal Register Volume 88, Number 131 (Tuesday, July 11, 2023)]
[Notices]
[Pages 44176-44180]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-14525]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97841; File No. SR-NYSEARCA-2023-46]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE
Arca Options Proprietary Market Data Fee Schedule
July 5, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 30, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Options Proprietary
Market Data Fee Schedule (``Fee Schedule'') to introduce a data product
to be known as the NYSE Options Open-Close Intra-Day Volume Summary
(``Intra-Day Volume Summary'') that would be available for purchase by
any market participant, i.e., members \3\ and non-members, on an ad-hoc
basis and to adopt fees for such product.
---------------------------------------------------------------------------
\3\ Members of the Exchange are OTP Firms, OTP Holders and ETP
Holders.
---------------------------------------------------------------------------
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 Exchange proposes to introduce a data product to be known as
the Intra-Day Volume Summary that would be available for purchase by
market participants on an ad-hoc basis and to adopt fees for such
product.\4\
---------------------------------------------------------------------------
\4\ The Exchange previously adopted a subscription-based market
data product known as the NYSE Options Open-Close Volume Summary
that market participants can purchase on a subscription basis. See
Securities Exchange Act Release No. 93132 (September 27, 2021), 86
FR 54499 (October 1, 2021) (SR-NYSEArca-2021-82). The purpose of
this filing is to introduce a historic monthly report of the NYSE
Options Open-Close Volume Summary that would be available for
purchase by any market participant on an ad-hoc basis.
---------------------------------------------------------------------------
More specifically, the Exchange proposes to offer an ad-hoc
historic monthly Intra-Day Volume Summary market data product that
provides a volume summary of trading activity on
[[Page 44177]]
the Exchange at the option level by origin (Customer, Professional
Customer, Firm, Broker-Dealer, and Market Maker),\5\ side of the market
(buy or sell), contract volume, and transaction type (opening or
closing). The Customer, Professional Customer, Firm, Broker-Dealer, and
Market Maker volume is further broken down into trade size buckets
(less than 100 contracts, 100-199 contracts, greater than 199
contracts). The ad-hoc historic monthly Intra-Day Volume Summary is
proprietary Exchange trade data and does not include trade data from
any other exchange. It is also a historical data product and not a
real-time data feed. The Exchange proposes to offer data that would go
back to August 2022 and would contain all series in an underlying
security if it has volume.\6\
---------------------------------------------------------------------------
\5\ The terms Customer, Professional Customer, Firm and Market
Maker are defined in NYSE Arca Rule 1.1.
\6\ The specifications for the ad-hoc historic monthly Intra-Day
Volume Summary can be found at https://www.nyse.com/market-data/historical/open-close-volume-summary.
---------------------------------------------------------------------------
The Exchange anticipates a wide variety of market participants to
purchase the ad-hoc historic monthly Intra-Day Volume Summary,
including, but not limited to, individual customers, buy-side
investors, investment banks and academic institutions. For example,
academic institutions may utilize the proposed product to promote
research and studies of the options industry to the benefit of all
market participants. The Exchange believes the proposed product may
also provide helpful trading information regarding investor sentiment
and may be used to create and test trading models and analytical
strategies. The ad-hoc historic monthly Intra-Day Volume Summary is a
completely voluntary product, in that the Exchange is not required by
any rule or regulation to make this data available and that potential
customers may purchase it on an ad-hoc basis only if they voluntarily
choose to do so. The Exchange notes that other exchanges offer a
similar product.\7\ As such, the ad-hoc historic monthly Intra-Day
Volume Summary is subject to direct competition from similar intra-day
options trading summaries offered by other exchanges. All of these
exchanges offer essentially the same intra-day options trading summary
information for purchase on an ad-hoc basis, and generally differ
solely in the amount of history available for purchase.\8\
---------------------------------------------------------------------------
\7\ See e.g., Securities Exchange Act Release Nos. 89496 (August
6, 2020), 85 FR 48743 (August 12, 2020) (SR-C2-2020-010) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change
Relating To Introduce a New Data Product To Be Known as Intraday
Open-Close Data); and 97723 (June 14, 2023), 88 FR 40358 (June 21,
2023) (SR-BOX-2023-16) (Notice of Filing and Immediate Effectiveness
of a Proposed Rule Change To Amend the Fee Schedule for Trading on
the BOX Options Market LLC Facility To Offer Ad-Hoc Historical
Requests for the Intraday Open-Close Data Report and Adopt Fees for
This Data). The ad-hoc historic monthly Intra-Day Volume Summary
report contains the same information that is provided in the monthly
subscription-based market data product known as the NYSE Options
Open-Close Volume Summary. See note 5, supra.
\8\ For example, Nasdaq PHLX LLC offers history for its intra-
day data starting in January 2009 for purchase on an ad-hoc basis
while Intra-Day Volume Summary history is only offered starting in
August 2022. See https://www.nasdaqtrader.com/micro.aspx?id=photo.
---------------------------------------------------------------------------
The Exchange proposes to provide in its Fee Schedule that market
participants may purchase the ad-hoc historic monthly Intra-Day Volume
Summary for a specified month (historical data). The Exchange proposes
to assess a fee of $1,000 per request per month for an ad-hoc request
of historical Intra-Day Volume Summary covering all Exchange-listed
securities. An ad-hoc request can be for any number of months beginning
with August 2022 for which the data is available.\9\ The proposed fee
for ad-hoc requests for the historic monthly Intra-Day Volume Summary
will apply to all market participants. The Exchange notes that other
exchanges provide a similar data product \10\ that may be purchased on
an ad-hoc basis. The proposed fee is comparably priced to at least one
other exchange that sells a market data product similar to Intra-Day
Volume Summary that may be purchased on an ad-hoc basis.\11\
---------------------------------------------------------------------------
\9\ For example, a customer that requests historical Intra-Day
Volume Summary for the months of October 2022 and November 2022,
would be assessed a total of $2,000.
\10\ See e.g., Cboe LiveVol, LLC Market Data Fees available at
https://www.cboe.com/us/options/membership/fee_schedule/ctwo/. Cboe
C2 Options (``C2'') offers Open-Close Data: Intraday Ad-hoc Request
(historical data) and assesses a fee of $500 per request per month.
Cboe EDGX Exchange, Inc. (``EDGX'') similarly offers Open-Close
Data: Intraday Ad-hoc Request (historical data) and assesses a fee
of $500 per request per month. See https://www.cboe.com/us/options/membership/fee_schedule/edgx/. Nasdaq ISE, LLC (``ISE'') offers
Nasdaq ISE Open/Close Trade Profile Intraday Ad-Hoc Request
(historical data) and assesses a fee of $1,000 per request per
month, $2,000 per request per quarter and $8,000 per request per
year. See Sec. 10, Market Data, at https://listingcenter.nasdaq.com/rulebook/ise/rules/ise-options-7.
\11\ See ISE fees, note 11, supra.
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The Exchange intends to offer the historic monthly Intra-Day Volume
Summary on an ad-hoc basis and charge the proposed fees effective July
3, 2023.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\12\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\13\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and to protect investors and the public
interest, and that it is not designed to permit unfair discrimination
among customers, brokers, or dealers. The Exchange also believes that
its proposal to adopt fees for ad-hoc historic monthly Intra-Day Volume
Summary is consistent with Section 6(b) of the Act \14\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \15\ in
particular, in that it is an equitable allocation of dues, fees and
other charges among its members and other recipients of Exchange data.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers increased authority and
flexibility to offer new and unique market data to the public. It was
believed that this authority would expand the amount of data available
to users and consumers of such data and also spur innovation and
competition for the provision of market data.
The Exchange believes that the proposed ad-hoc historic monthly
Intra-Day Volume Summary market data product would further broaden the
availability of U.S. options market data to investors consistent with
the principles of Regulation NMS. The proposed rule change would
benefit investors by providing access to historic data, which as noted
above, may promote better informed trading, as well as research and
studies of the options industry. Particularly, information regarding
opening and closing activity across different options series may
indicate investor sentiment, which can be helpful research and/or
trading information. Customers of the historic data product may be able
to enhance their ability to analyze options trade and volume data, and
create and test trading models and analytical strategies. The Exchange
believes ad-hoc historic monthly Intra-Day Volume Summary would provide
a valuable tool that customers can use to gain comprehensive insight
into the trading activity in a particular series, but also emphasizes
such data is not necessary
[[Page 44178]]
for trading. Moreover, other exchanges offer a similar data
product.\16\
---------------------------------------------------------------------------
\16\ See, note 8, supra.
---------------------------------------------------------------------------
The Exchange operates in a highly competitive market. Indeed, there
are currently 16 registered options exchanges competing for order flow.
Based on publicly-available information, and excluding index-based
options, no single exchange has more than 16% of the market share of
executed volume of multiply-listed equity and ETF options trades.\17\
Therefore, 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.\18\
---------------------------------------------------------------------------
\17\ The Options Clearing Corporation (``OCC'') publishes
options and futures volume in a variety of formats, including daily
and monthly volume by exchange, available here: https://www.theocc.com/Market-Data/Market-Data-Reports/Volume-and-Open-Interest/Monthly-Weekly-Volume-Statistics.
\18\ 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.
---------------------------------------------------------------------------
The Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. Specifically, in
Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues, and also recognized that
current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \19\
---------------------------------------------------------------------------
\19\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
---------------------------------------------------------------------------
With respect to market data, the decision of the United States
Court of Appeals for the District of Columbia Circuit in NetCoalition
v. SEC upheld the Commission's reliance on the existence of competitive
market mechanisms to evaluate the reasonableness and fairness of fees
for proprietary market data:
In fact, the legislative history indicates that the Congress
intended that the market system ``evolve through the interplay of
competitive forces as unnecessary regulatory restrictions are removed''
and that the SEC wield its regulatory power ``in those situations where
competition may not be sufficient,'' such as in the creation of a
``consolidated transactional reporting system.'' \20\
---------------------------------------------------------------------------
\20\ NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010)
(quoting H.R. Rep. No. 94-229 at 92 (1975), as reprinted in 1975
U.S.C.C.A.N. 323).
---------------------------------------------------------------------------
The court agreed with the Commission's conclusion that ``Congress
intended that `competitive forces should dictate the services and
practices that constitute the U.S. national market system for trading
equity securities.' '' \21\ More recently, the Commission confirmed
that it applies a ``market-based'' test in its assessment of market
data fees, and that under that test:
---------------------------------------------------------------------------
\21\ Id. at 535.
---------------------------------------------------------------------------
the Commission considers whether the exchange was subject to
significant competitive forces in setting the terms of its proposal for
[market data], including the level of any fees. If an exchange meets
this burden, the Commission will find that its fee rule is consistent
with the Act unless there is a substantial countervailing basis to find
that the terms of the rule violate the Act or the rules thereunder.\22\
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\22\ See Securities Exchange Act Release No. 34-90217 (October
16, 2020), 85 FR 67392 (October 22, 2020) (SR-NYSENAT-2020-05)
(internal quotation marks omitted), quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR 74770, 74781 (December
9, 2008) (ArcaBook Approval Order).
---------------------------------------------------------------------------
Making similar historic data products available to market
participants fosters competition in the marketplace, and constrains the
ability of exchanges to charge supra-competitive fees. In the event
that a market participant views one exchange's historic data product as
more or less attractive than the competition they can and do switch
between similar products. The proposed fees are a result of the
competitive environment, as the Exchange seeks to adopt fees to attract
purchasers of the ad-hoc historic monthly Intra-Day Volume Summary data
product.
The Exchange believes its proposal to provide the ad-hoc historic
monthly Intra-Day Volume Summary is reasonable as the proposed fee is
comparable to the fee charged by at least one other exchange that
provides a similar historic data product.\23\ Indeed, proposing fees
that are excessively higher than established fees for similar historic
data products would simply serve to reduce demand for the Exchange's
historic data product, which as noted, is entirely optional. Like the
ad-hoc historic monthly Intra-Day Volume Summary, other exchanges offer
similar historic data products that each provide insight into trading
on those markets and may likewise aid in assessing investor sentiment.
Although each of these similar historic data products provide only
proprietary trade data and not trade data from other exchanges, it is
possible investors are still able to gauge overall investor sentiment
across different options series based on open and closing interest on
any one exchange. Similarly, market participants may be able to analyze
options trade and volume data, and create and test trading models and
analytical strategies using only the ad-hoc historic monthly Intra-Day
Volume Summary data relating to trading activity on one or more of the
other markets that provide similar historic data products. As such, if
a market participant views another exchange's data as more attractive
than the Exchange's offering, then such market participant can merely
choose not to purchase the Exchange's historic data product and instead
purchase another exchange's historic product, which offer similar data
points, albeit based on that other market's trading activity.
---------------------------------------------------------------------------
\23\ See, note 12, supra.
---------------------------------------------------------------------------
The Exchange also believes the proposed fees are reasonable as they
would support the introduction of a historic market data product that
is designed to aid investors by providing insight into trading on the
Exchange. In turn, this data would assist market participants in
gauging investor sentiment and trading activity, resulting in
potentially better-informed trading decisions. As noted above,
customers may also use such data to create and test trading models and
analytical strategies.
Selling historic market data, such as the ad-hoc historic monthly
Intra-Day Volume Summary, is also a means by which exchanges compete to
attract business. To the extent that the Exchange is successful in
attracting customers to the Exchange's historic data product, it may
earn trading revenues and further enhance the value of its data
products. If the market deems the proposed fees to be unfair or
inequitable, customers can diminish or discontinue their use of the
historic data and/or avail themselves of similar products offered by
other exchanges.\24\ The Exchange therefore believes that the proposed
fees reflect the competitive environment and would be properly and
equally assessed to all customers. The Exchange also believes the
proposed fees are equitable and not unfairly discriminatory as the fees
would apply equally to all customers who choose to purchase such data.
The proposed fees would not differentiate between customers that
purchase the ad-hoc historic monthly Intra-Day Volume Summary, and are
set at a modest level
[[Page 44179]]
that would allow any interested market participant to purchase such
data based on their business needs. Nothing in this proposal treats any
category of market participant any differently from any other category
of market participant. The ad-hoc historic monthly Intra-Day Volume
Summary is available to all market participants, i.e., members and non-
members, and all market participants would receive the same information
in the data feed.
---------------------------------------------------------------------------
\24\ See, note 11, supra.
---------------------------------------------------------------------------
As noted above, the Exchange anticipates a wide variety of market
participants to purchase the ad-hoc historic monthly Intra-Day Volume
Summary data product, including but not limited to individual
customers, buy-side investors, investment banks and academic
institutions. As such, the Exchange anticipates that the historic data
product may be used not just for commercial or monetizing purposes, but
also for educational use and research. The Exchange reiterates that the
decision as to whether or not to purchase the ad-hoc historic monthly
Intra-Day Volume Summary is entirely optional for all potential
customers. Indeed, no market participant is required to purchase the
historic data product, and the Exchange is not required to make the
historic data product available to market participants. Rather, the
Exchange is voluntarily making the historic data product available, as
requested by customers, and market participants may choose to receive
(and pay for) this data based on their own business needs. Potential
customers may request the data at any time if they believe it to be
valuable or may decline to purchase such data.
In sum, the fierce competition for order flow constrains any
exchange from pricing its historic market data at a supra-competitive
price, and constrains the Exchange here in setting its fees for the ad-
hoc historic monthly Intra-Day Volume Summary data product.
The proposed fees are therefore reasonable because in setting them,
the Exchange is constrained by the availability of numerous substitute
venues offering historic market data products and trading.\25\ Such
substitutes need not be identical, but only substantially similar to
the product at hand. More specifically, in setting fees for the ad-hoc
historic monthly Intra-Day Volume Summary data product, the Exchange is
constrained by the fact that, if its pricing is unattractive to
customers, customers have their pick of an increasing number of
alternative venues to use instead of the Exchange.\26\ Because of the
availability of substitutes, an exchange that overprices its historic
market data products stands a high risk that customers may substitute
another source of market data information for its own. Those
competitive pressures imposed by available alternatives are evident in
the Exchange's proposed pricing. The existence of numerous alternatives
to the Exchange ensures that the Exchange cannot set unreasonable fees
for historic market data without suffering the negative effects of that
decision in the fiercely competitive market in which it operates.
---------------------------------------------------------------------------
\25\ See, note 8, supra.
\26\ See, note 11, supra.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
also does not believe the proposed fees would cause any unnecessary or
inappropriate burden on intermarket competition as other exchanges are
free to introduce their own comparable historic data product and adopt
fees to better compete with the Exchange's offering. Rather, the
Exchange believes that the proposal will promote competition by
permitting the Exchange to sell a historic data product similar to
those offered by other competitor options exchanges.\27\ The Exchange
is offering the ad-hoc historic monthly Intra-Day Volume Summary in
order to keep pace with changes in the industry and evolving customer
needs, and believes the data product will contribute to robust
competition among national securities exchanges.
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\27\ See, note 8, supra.
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Furthermore, the Exchange operates in a highly competitive
environment, and its ability to price the ad-hoc historic monthly
Intra-Day Volume Summary is constrained by competition among exchanges
that offer similar historic data products to their customers. As
discussed above, there are currently a number of similar products
available to market participants and investors. A number of U.S.
options exchanges offer a historic market data product that is
substantially similar to the Exchange's offering, which the Exchange
must consider in its pricing discipline in order to compete
effectively. For example, proposing fees that are excessively higher
than established fees for similar historic data products would simply
serve to reduce demand for the Exchange's historic data product, which
as discussed, market participants are under no obligation to utilize or
purchase. In this competitive environment, potential purchasers are
free to choose which, if any, similar historic data product to purchase
to satisfy their need for market information. As a result, the Exchange
believes this proposed rule change permits fair competition among
national securities exchanges.
The Exchange does not believe the proposed rule change would cause
any unnecessary or inappropriate burden on intramarket competition.
Particularly, the proposed fees would apply uniformly to any customer,
in that the Exchange would not differentiate between customers that
purchase the ad-hoc historic monthly Intra-Day Volume Summary and all
customers would receive the same information in the data feed. The
Exchange believes the proposed fees are set at a modest level that
would allow interested customers to purchase such data based on their
business needs.
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
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \28\ and Rule
19b-4(f)(6) thereunder.\29\
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\28\ 15 U.S.C. 78s(b)(3)(A)(iii).
\29\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires the Exchange to give the Commission written notice of its
intent to file the proposed rule change, along with a brief
description and text of the proposed rule change, at least five
business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \30\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\31\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public
[[Page 44180]]
interest. The Exchange has asked the Commission to waive the 30-day
operative delay so that the proposal may become operative immediately
upon filing. The Commission believes that waiver of the 30-day
operative delay is consistent with the protection of investors and the
public interest because the proposal does not raise any new or novel
issues.\32\ Accordingly, the Commission hereby waives the 30-day
operative delay and designates the proposal operative upon filing.\33\
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\30\ 17 CFR 240.19b-4(f)(6).
\31\ 17 CFR 240.19b-4(f)(6)(iii).
\32\ See supra, notes 7 and 10.
\33\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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) \34\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\34\ 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-2023-46 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-2023-46. 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 SR-NYSEARCA-2023-46 and should
be submitted on or before August 1, 2023.
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\35\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-14525 Filed 7-10-23; 8:45 am]
BILLING CODE 8011-01-P
