Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE Arca Options Fee Schedule, 44424-44427 [2023-14669]
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Federal Register / Vol. 88, No. 132 / Wednesday, July 12, 2023 / Notices
rule change not later than 180 days after
the date of publication of notice of filing
of the proposed rule change. The
Commission may extend the period for
issuing an order approving or
disapproving the proposed rule change,
however, by not more than 60 days if
the Commission determines that a
longer period is appropriate and
publishes the reasons for such
determination. The proposed rule
change was published for notice and
comment in the Federal Register on
January 10, 2023.9 July 9, 2023, is 180
days from that date, and September 7,
2023, is 240 days from that date.
The Commission finds it appropriate
to designate a longer period within
which to issue an order approving or
disapproving the proposed rule change,
as modified by Amendment No. 1, so
that it has sufficient time to consider the
proposed rule change, the issues raised
in the comment letters that have been
submitted in connection therewith, and
the Exchange’s response to comments.
Accordingly, the Commission, pursuant
to Section 19(b)(2) of the Act,10
designates September 7, 2023, as the
date by which the Commission should
either approve or disapprove the
proposed rule change, as modified by
Amendment No. 1 (File No. SR–
NASDAQ–2022–079).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–14667 Filed 7–11–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–564, OMB Control No.
3235–0628]
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Proposed Collection; Comment
Request; Extension: Rule 17g–2
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
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 17g–2 (17 CFR
240.17g–2) under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
9 See
Notice, supra note 3.
U.S.C. 78s(b)(2).
11 17 CFR 200.30–3(a)(57).
seq.) (‘‘Exchange Act’’). The
Commission plans to submit this
existing collection of information to the
Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 17g–2, ‘‘Records to be made and
retained by nationally recognized
statistical rating organizations,’’
implements the Commission’s
recordkeeping rulemaking authority
under Section 17(a) of the Exchange
Act.1 The rule requires a Nationally
Recognized Statistical Rating
Organization (‘‘NRSRO’’) to make and
retain certain records relating to its
business and to retain certain other
business records, if such records are
made. The rule also prescribes the time
periods and manner in which all these
records must be retained. There are 10
credit rating agencies registered with the
Commission as NRSROs under section
15E of the Exchange Act, which have
already established the record keeping
policies and procedures required by
Rule 17g–2. Based on staff experience,
NRSROs are estimated to spend a total
industry-wide burden of 2,390 annual
hours to make and retain the
appropriate records.
Written comments are invited on: (a)
whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information on respondents; and
(d) ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication. August 11, 2023
The Commission may not conduct or
sponsor a collection of information
unless it displays a currently valid
control number. No person shall be
subject to any penalty for failing to
comply with a collection of information
subject to the PRA that does not display
a valid OMB control number.
Please direct your written comments
to: Dave Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F St NE, Washington, DC
20549 or send an email to: PRA_
Mailbox@sec.gov.
10 15
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Dated: July 6, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–14661 Filed 7–11–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97849; File No. SR–
NYSEARCA–2023–45]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Modify the NYSE Arca
Options Fee Schedule
July 6, 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 30,
2023, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to modify the
NYSE Arca Options Fee Schedule (‘‘Fee
Schedule’’) regarding the Ratio
Threshold Fee. The Exchange proposes
to implement the fee change effective
July 3, 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.
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
1 15
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Federal Register / Vol. 88, No. 132 / Wednesday, July 12, 2023 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The purpose of this filing is to (1)
delete language relating to an expired
waiver of the Ratio Threshold Fee and
(2) add an exemption to the Ratio
Threshold Fee for the first time that
such fee is assessed in a rolling 12month period. The Exchange proposes
to implement the rule change on July 3,
2023.
The Ratio Threshold Fee is based on
the number of orders entered as
compared to the number of executions
received in a calendar month and is
intended to deter OTP Holders from
submitting an excessive number of
orders that are not executed.4 In
connection with the Exchange’s
migration to the Pillar platform, the
Exchange implemented a waiver of the
Ratio Threshold Fee (the ‘‘Waiver’’) that
took effect beginning in the month in
which the Exchange began its migration
to the Pillar platform and would remain
in effect for the three months following
the month during which the Exchange
completed its migration to the Pillar
platform. As the Exchange completed
the migration in July 2022, the Waiver
was originally due to expire on October
31, 2022. The Exchange previously filed
to extend the Waiver until January 31,
2023, and, subsequently, to extend the
Waiver until April 30, 2023, and again
to June 30, 2023.5
The Exchange proposes to delete
language from the Fee Schedule
providing for the Waiver following its
expiration, as it would no longer be
applicable to any OTP Holders. The
Exchange also proposes to adopt an
exemption from the Ratio Threshold Fee
for the first time that an OTP Holder
incurs such fee in a rolling 12-month
period (the ‘‘Exemption’’), similar to the
exemption currently offered by the
Exchange’s affiliate, NYSE American
Options.6 The Exchange believes that
4 See Fee Schedule, RATIO THRESHOLD FEE;
see also Securities Exchange Act Release No. 60102
(June 11, 2009), 74 FR 29251 (June 19, 2009) (SR–
NYSEArca–2009–50).
5 See Securities Exchange Act Release Nos. 96252
(November 7, 2022), 87 FR 68210 (November 14,
2022) (SR–NYSEARCA–2022–74) (extension of
Waiver until January 31, 2023); 96878 (February 10,
2023), 88 FR 10156 (February 16, 2023) (SR–
NYSEARCA–2023–14) (extension of Waiver until
April 30, 2023); 97460 (May 9, 2023), 88 FR 31087
(May 15, 2023) (SR–NYSEArca–2023–35) (extension
of Waiver until June 30, 2023).
6 See NYSE American Options Fee Schedule,
Section II. Monthly Excessive Bandwidth
Utilization Fees, available at: https://
www.nyse.com/publicdocs/nyse/markets/americanoptions/NYSE_American_Options_Fee_
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the Exemption could help protect OTP
Holders from incurring the Ratio
Threshold Fee when they first
encounter lower than expected
executions in a rolling 12-month period,
such as when they are new to the
trading platform, deploying new
technologies, or testing different trading
strategies, thereby encouraging OTP
Holders to maintain their trading
activity on the Exchange by mitigating
the initial impact of the Ratio Threshold
Fee.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,7 in general, and
furthers the objectives of Sections
6(b)(4) and (5) of the Act,8 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.’’ 9
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.10
Therefore, no exchange possesses
significant pricing power in the
execution of multiply-listed equity and
Schedule.pdf (‘‘The Monthly Excessive Bandwidth
Utilization Fee will not be assessed for the first
occurrence in a rolling 12-month period.’’).
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(4) and (5).
9 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(S7–10–04) (‘‘Reg NMS Adopting Release’’).
10 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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ETF options order flow. More
specifically, in May 2023, the Exchange
had less than 13% market share of
executed volume of multiply-listed
equity and ETF options trades.11
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 the proposed
deletion of the language describing the
Waiver is reasonable because the Waiver
would no longer be in effect, and the
deletion would thus improve the clarity
of the Fee Schedule and reduce
confusion as to the fees and credits that
are currently in effect. The Exchange
also believes that the removal of
obsolete text from the Fee Schedule
would further the protection of
investors and the public interest by
promoting clarity and transparency in
the Fee Schedule and making the Fee
Schedule easier to navigate and
understand.
The Exchange believes that the
proposed Exemption is reasonable
because it would offer OTP Holders an
exemption from the Ratio Threshold Fee
the first time it is incurred in a rolling
12-month period and is designed to
potentially protect firms that are, for
example, new to the trading platform,
deploying new technologies, or testing
different trading strategies, from
incurring excess Ratio Threshold Fees
and affording them an opportunity to
assess their order to execution ratios. To
the extent the proposed change
encourages OTP Holders to maintain
their trading activity on the Exchange,
the Exchange believes the proposed
change would sustain the Exchange’s
overall competitiveness and its market
quality for all market participants. In the
backdrop of the competitive
environment in which the Exchange
operates, the proposed rule change is a
reasonable attempt by the Exchange to
mitigate effects of an ever-changing
marketplace without affecting its
competitiveness.
11 Based on a compilation of OCC data for
monthly volume of equity-based options and
monthly volume of equity-based ETF options, see
id., the Exchange’s market share in equity-based
options decreased from 13.08% for the month of
May 2022 to 12.35% for the month of May 2023.
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Federal Register / Vol. 88, No. 132 / Wednesday, July 12, 2023 / Notices
The Proposed Rule Change Is an
Equitable Allocation of Credits and Fees
Exchange’s statement regarding the
burden on competition.
The Exchange believes the proposed
change is an equitable allocation of fees
and credits. The proposed deletion of
language relating to the expired Waiver
would eliminate text from the Fee
Schedule no longer applicable to any
OTP Holders. Accordingly, the
Exchange believes the proposal would
impact all similarly situated OTP
Holders on an equal basis. The proposed
Exemption is an equitable allocation of
fees and credits because it would be
available to all OTP Holders; all OTP
Holders would be eligible for the
Exemption the first time they incur the
Ratio Threshold Fee in a rolling 12month period. In addition, to the extent
the Exemption encourages OTP Holders
to maintain their trading activity on the
Exchange by mitigating the initial
impact of the Ratio Threshold Fee, the
Exchange believes the proposed change
would promote market quality to the
benefit of all market participants.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act, the Exchange does not believe
that the proposed rule change would
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
Instead, as discussed above, the
Exchange believes that the proposed
change would encourage the submission
of additional liquidity to a public
exchange, thereby promoting market
depth, price discovery and transparency
and enhancing order execution
opportunities for all market
participants. As a result, the Exchange
believes that the proposed change
furthers the Commission’s goal in
adopting Regulation NMS of fostering
integrated competition among orders,
which promotes ‘‘more efficient pricing
of individual stocks for all types of
orders, large and small.’’ 12
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The Proposed Rule Change Is Not
Unfairly Discriminatory
The Exchange believes that the
proposal is not unfairly discriminatory
because it neither targets nor will it
have a disparate impact on any category
of market participant. The proposed
elimination of text describing the
expired Waiver would affect all OTP
Holders on an equal and nondiscriminatory basis, as the Waiver
would no longer be applicable to any
OTP Holders. The Exchange believes the
proposed Exemption is not unfairly
discriminatory because it would apply
to all OTP Holders on an equal and nondiscriminatory basis. The Exemption, as
proposed, would provide all OTP
Holders with an exemption from the
Ratio Threshold Fee the first time such
fee is incurred in a rolling 12-month
period. The Exchange believes that the
proposed change would encourage OTP
Holders to continue trading on the
Exchange by lessening the initial impact
of the Ratio Threshold Fee and
providing OTP Holders with an
opportunity to evaluate order to
execution ratios. The proposed change
would thus support continued trading
opportunities for all market
participants, thereby promoting just and
equitable principles of trade, removing
impediments to and perfecting the
mechanism of a free and open market
and a national market system and, in
general, protecting investors and the
public interest.
Finally, the Exchange believes that it
is subject to significant competitive
forces, as described below in the
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Intramarket Competition
The Exchange does not believe the
proposed changes would impose any
burden on intramarket competition that
is not necessary or appropriate. The
deletion of the language relating to the
Waiver would remove language from the
Fee Schedule no longer applicable to
any OTP Holders and, accordingly,
would not have any impact on
intramarket competition. The proposed
Exemption would apply equally to all
OTP Holders; all OTP Holders would be
eligible for the Exemption for the first
occurrence of the Ratio Threshold Fee
in a rolling 12-month period. To the
extent the proposed change is successful
in encouraging OTP Holders to maintain
their trading activity on the Exchange,
the Exchange believes the proposed
change could promote market quality to
the benefit of all market participants.
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
12 See Reg NMS Adopting Release, supra note 9,
at 37499.
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equity and ETF options trades.13
Therefore, currently no exchange
possesses significant pricing power in
the execution of multiply-listed equity
and ETF options order flow. More
specifically, in May 2023, the Exchange
had less than 13% market share of
executed volume of multiply-listed
equity and ETF options trades.14
The Exchange does not believe the
proposed changes would impose any
burden on intramarket competition that
is not necessary or appropriate. Deleting
text describing the Waiver would add
clarity to the Fee Schedule by removing
expired pricing and, accordingly, would
not have any impact on intermarket
competition. The proposed Exemption
would not impose any burden on
competition that is not necessary or
appropriate because it would apply
equally to all OTP Holders. All OTP
Holders would be eligible for the
Exemption the first time the Ratio
Threshold Fee is applied in a rolling 12month period. To the extent the
Exemption encourages OTP Holders to
continue trading on the Exchange, the
Exchange believes the proposed change
would sustain the Exchange’s overall
competitiveness and its market quality
for all market participants.
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 has become
effective upon filing pursuant to Section
19(b)(3)(A) 15 of the Act and paragraph
(f) thereunder. At any time within 60
days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
13 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.
14 Based on a compilation of OCC data for
monthly volume of equity-based options and
monthly volume of equity-based ETF options, see
id., the Exchange’s market share in equity-based
options decreased from 13.08% for the month of
May 2022 to 12.35% for the month of May 2023.
15 15 U.S.C. 78s(b)(3)(A).
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Federal Register / Vol. 88, No. 132 / Wednesday, July 12, 2023 / Notices
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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–2023–45 on the subject
line.
Paper Comments
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• 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–2023–45. 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–2023–45 and should be
submitted on or before August 2, 2023.
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For the Commission, by the Division
of Trading and Markets, pursuant to
delegated authority.16
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–14669 Filed 7–11–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97850; File No. SR–
CboeBZX–2023–043]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To List and
Trade Shares of the Principal Focused
Blue Chip ETF, a Series of Principal
Exchange-Traded Funds, Under
Exchange Rule 14.11(m), Tracking
Fund Shares
July 6, 2023
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 27,
2023, Cboe BZX Exchange, Inc.
(‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) is filing with the
Securities and Exchange Commission
(‘‘Commission’’ or ‘‘SEC’’)) a proposed
rule change to list and trade shares of
the Principal Focused Blue Chip ETF
(the ‘‘Fund’’), a series of Principal
Exchange-Traded Funds (the ‘‘Trust’’),
under Rule 14.11(m), Tracking Fund
Shares.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/bzx/), at
the Exchange’s Office of the Secretary,
PO 00000
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
1 15
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44427
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange adopted BZX Rule
14.11(m) for the purpose of permitting
the listing and trading, or pursuant to
unlisted trading privileges (‘‘UTP’’), of
Tracking Fund Shares,5 which are
securities issued by an actively managed
open-end management investment
company.6 Exchange Rule
5 Rule 14.11(m)(3)(A) provides that the term
‘‘Tracking Fund Share’’ means a security that (i)
represents an interest in an investment company
registered under the Investment Company Act of
1940 (‘‘Investment Company’’) organized as an
open-end management investment company, that
invests in a portfolio of securities selected by the
Investment Company’s investment adviser
consistent with the Investment Company’s
investment objectives and policies; (ii) is issued in
a specified aggregate minimum number in return for
a deposit of a specified Tracking Basket or Custom
Basket, as applicable, and/or a cash amount with a
value equal to the next determined net asset value
(‘‘NAV’’); (iii) when aggregated in the same
specified minimum number, may be redeemed at a
holder’s request, which holder will be paid a
specified Tracking Basket or Custom Basket, as
applicable, and/or a cash amount with a value equal
to the next determined net asset value; and (iv) the
portfolio holdings for which are disclosed within at
least 60 days following the end of every fiscal
quarter. Rule 14.11(m)(3)(E) provides that the term
‘‘Tracking Basket’’ means the identities and
quantities of the securities and other assets
included in a basket that is designed to closely track
the daily performance of the Fund Portfolio, as
provided in the exemptive relief under the
Investment Company Act of 1940 (the ‘‘1940 Act’’)
applicable to a series of Tracking Fund Shares. Rule
14.11(m)(3)(F) provides that the term ‘‘Custom
Basket’’ means a portfolio of securities that is
different from the Tracking Basket and is otherwise
consistent with the exemptive relief issued
pursuant to the 1940 Act applicable to a series of
Tracking Fund Shares.
6 See Securities Exchange Act No. 87856
(December 23, 2019) 84 FR 72414 (December 31,
2019) (SR–CboeBZX–2019–107) (Notice of Filing of
a Proposed Rule Change To Adopt Rule 14.11(m),
Portfolio Fund Shares, and To List and Trade
Shares of the Fidelity Value ETF, Fidelity Growth
Continued
E:\FR\FM\12JYN1.SGM
12JYN1
]]>Agencies
[Federal Register Volume 88, Number 132 (Wednesday, July 12, 2023)]
[Notices]
[Pages 44424-44427]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-14669]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97849; File No. SR-NYSEARCA-2023-45]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE
Arca Options Fee Schedule
July 6, 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 30, 2023, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the self-regulatory organization. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify the NYSE Arca Options Fee Schedule
(``Fee Schedule'') regarding the Ratio Threshold Fee. The Exchange
proposes to implement the fee change effective July 3, 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.
[[Page 44425]]
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 (1) delete language relating to an
expired waiver of the Ratio Threshold Fee and (2) add an exemption to
the Ratio Threshold Fee for the first time that such fee is assessed in
a rolling 12-month period. The Exchange proposes to implement the rule
change on July 3, 2023.
The Ratio Threshold Fee is based on the number of orders entered as
compared to the number of executions received in a calendar month and
is intended to deter OTP Holders from submitting an excessive number of
orders that are not executed.\4\ In connection with the Exchange's
migration to the Pillar platform, the Exchange implemented a waiver of
the Ratio Threshold Fee (the ``Waiver'') that took effect beginning in
the month in which the Exchange began its migration to the Pillar
platform and would remain in effect for the three months following the
month during which the Exchange completed its migration to the Pillar
platform. As the Exchange completed the migration in July 2022, the
Waiver was originally due to expire on October 31, 2022. The Exchange
previously filed to extend the Waiver until January 31, 2023, and,
subsequently, to extend the Waiver until April 30, 2023, and again to
June 30, 2023.\5\
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\4\ See Fee Schedule, RATIO THRESHOLD FEE; see also Securities
Exchange Act Release No. 60102 (June 11, 2009), 74 FR 29251 (June
19, 2009) (SR-NYSEArca-2009-50).
\5\ See Securities Exchange Act Release Nos. 96252 (November 7,
2022), 87 FR 68210 (November 14, 2022) (SR-NYSEARCA-2022-74)
(extension of Waiver until January 31, 2023); 96878 (February 10,
2023), 88 FR 10156 (February 16, 2023) (SR-NYSEARCA-2023-14)
(extension of Waiver until April 30, 2023); 97460 (May 9, 2023), 88
FR 31087 (May 15, 2023) (SR-NYSEArca-2023-35) (extension of Waiver
until June 30, 2023).
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The Exchange proposes to delete language from the Fee Schedule
providing for the Waiver following its expiration, as it would no
longer be applicable to any OTP Holders. The Exchange also proposes to
adopt an exemption from the Ratio Threshold Fee for the first time that
an OTP Holder incurs such fee in a rolling 12-month period (the
``Exemption''), similar to the exemption currently offered by the
Exchange's affiliate, NYSE American Options.\6\ The Exchange believes
that the Exemption could help protect OTP Holders from incurring the
Ratio Threshold Fee when they first encounter lower than expected
executions in a rolling 12-month period, such as when they are new to
the trading platform, deploying new technologies, or testing different
trading strategies, thereby encouraging OTP Holders to maintain their
trading activity on the Exchange by mitigating the initial impact of
the Ratio Threshold Fee.
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\6\ See NYSE American Options Fee Schedule, Section II. Monthly
Excessive Bandwidth Utilization Fees, available at: https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf (``The Monthly Excessive
Bandwidth Utilization Fee will not be assessed for the first
occurrence in a rolling 12-month period.'').
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\8\ 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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\7\ 15 U.S.C. 78f(b).
\8\ 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.'' \9\
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\9\ 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.\10\ Therefore, no exchange possesses significant pricing power
in the execution of multiply-listed equity and ETF options order flow.
More specifically, in May 2023, the Exchange had less than 13% market
share of executed volume of multiply-listed equity and ETF options
trades.\11\
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\10\ 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.
\11\ Based on a compilation of OCC data for monthly volume of
equity-based options and monthly volume of equity-based ETF options,
see id., the Exchange's market share in equity-based options
decreased from 13.08% for the month of May 2022 to 12.35% for the
month of May 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 the proposed deletion of the language
describing the Waiver is reasonable because the Waiver would no longer
be in effect, and the deletion would thus improve the clarity of the
Fee Schedule and reduce confusion as to the fees and credits that are
currently in effect. The Exchange also believes that the removal of
obsolete text from the Fee Schedule would further the protection of
investors and the public interest by promoting clarity and transparency
in the Fee Schedule and making the Fee Schedule easier to navigate and
understand.
The Exchange believes that the proposed Exemption is reasonable
because it would offer OTP Holders an exemption from the Ratio
Threshold Fee the first time it is incurred in a rolling 12-month
period and is designed to potentially protect firms that are, for
example, new to the trading platform, deploying new technologies, or
testing different trading strategies, from incurring excess Ratio
Threshold Fees and affording them an opportunity to assess their order
to execution ratios. To the extent the proposed change encourages OTP
Holders to maintain their trading activity on the Exchange, the
Exchange believes the proposed change would sustain the Exchange's
overall competitiveness and its market quality for all market
participants. In the backdrop of the competitive environment in which
the Exchange operates, the proposed rule change is a reasonable attempt
by the Exchange to mitigate effects of an ever-changing marketplace
without affecting its competitiveness.
[[Page 44426]]
The Proposed Rule Change Is an Equitable Allocation of Credits and Fees
The Exchange believes the proposed change is an equitable
allocation of fees and credits. The proposed deletion of language
relating to the expired Waiver would eliminate text from the Fee
Schedule no longer applicable to any OTP Holders. Accordingly, the
Exchange believes the proposal would impact all similarly situated OTP
Holders on an equal basis. The proposed Exemption is an equitable
allocation of fees and credits because it would be available to all OTP
Holders; all OTP Holders would be eligible for the Exemption the first
time they incur the Ratio Threshold Fee in a rolling 12-month period.
In addition, to the extent the Exemption encourages OTP Holders to
maintain their trading activity on the Exchange by mitigating the
initial impact of the Ratio Threshold Fee, the Exchange believes the
proposed change would promote market quality to the benefit of all
market participants.
The Proposed Rule Change Is Not Unfairly Discriminatory
The Exchange believes that the proposal is not unfairly
discriminatory because it neither targets nor will it have a disparate
impact on any category of market participant. The proposed elimination
of text describing the expired Waiver would affect all OTP Holders on
an equal and non-discriminatory basis, as the Waiver would no longer be
applicable to any OTP Holders. The Exchange believes the proposed
Exemption is not unfairly discriminatory because it would apply to all
OTP Holders on an equal and non-discriminatory basis. The Exemption, as
proposed, would provide all OTP Holders with an exemption from the
Ratio Threshold Fee the first time such fee is incurred in a rolling
12-month period. The Exchange believes that the proposed change would
encourage OTP Holders to continue trading on the Exchange by lessening
the initial impact of the Ratio Threshold Fee and providing OTP Holders
with an opportunity to evaluate order to execution ratios. The proposed
change would thus support continued trading opportunities for all
market participants, thereby promoting just and equitable principles of
trade, removing impediments to and perfecting the mechanism of a free
and open market and a national market system and, in general,
protecting investors and the public interest.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act, the Exchange does
not believe that the proposed rule change would impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, as discussed above, the Exchange believes
that the proposed change would encourage the submission of additional
liquidity to a public exchange, thereby promoting market depth, price
discovery and transparency and enhancing order execution opportunities
for all market participants. As a result, the Exchange believes that
the proposed change furthers the Commission's goal in adopting
Regulation NMS of fostering integrated competition among orders, which
promotes ``more efficient pricing of individual stocks for all types of
orders, large and small.'' \12\
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\12\ See Reg NMS Adopting Release, supra note 9, at 37499.
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Intramarket Competition
The Exchange does not believe the proposed changes would impose any
burden on intramarket competition that is not necessary or appropriate.
The deletion of the language relating to the Waiver would remove
language from the Fee Schedule no longer applicable to any OTP Holders
and, accordingly, would not have any impact on intramarket competition.
The proposed Exemption would apply equally to all OTP Holders; all OTP
Holders would be eligible for the Exemption for the first occurrence of
the Ratio Threshold Fee in a rolling 12-month period. To the extent the
proposed change is successful in encouraging OTP Holders to maintain
their trading activity on the Exchange, the Exchange believes the
proposed change could promote market quality to the benefit of all
market participants.
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.\13\ Therefore, currently no exchange possesses
significant pricing power in the execution of multiply-listed equity
and ETF options order flow. More specifically, in May 2023, the
Exchange had less than 13% market share of executed volume of multiply-
listed equity and ETF options trades.\14\
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\13\ 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.
\14\ Based on a compilation of OCC data for monthly volume of
equity-based options and monthly volume of equity-based ETF options,
see id., the Exchange's market share in equity-based options
decreased from 13.08% for the month of May 2022 to 12.35% for the
month of May 2023.
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The Exchange does not believe the proposed changes would impose any
burden on intramarket competition that is not necessary or appropriate.
Deleting text describing the Waiver would add clarity to the Fee
Schedule by removing expired pricing and, accordingly, would not have
any impact on intermarket competition. The proposed Exemption would not
impose any burden on competition that is not necessary or appropriate
because it would apply equally to all OTP Holders. All OTP Holders
would be eligible for the Exemption the first time the Ratio Threshold
Fee is applied in a rolling 12-month period. To the extent the
Exemption encourages OTP Holders to continue trading on the Exchange,
the Exchange believes the proposed change would sustain the Exchange's
overall competitiveness and its market quality for all market
participants.
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 has become effective upon filing pursuant
to Section 19(b)(3)(A) \15\ of the Act and paragraph (f) thereunder. At
any time within 60 days of the filing of the proposed rule change, the
Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
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\15\ 15 U.S.C. 78s(b)(3)(A).
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[[Page 44427]]
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-2023-45 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-2023-45. 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-2023-45 and should
be submitted on or before August 2, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-14669 Filed 7-11-23; 8:45 am]
BILLING CODE 8011-01-P
