Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Modify the NYSE American Options Fee Schedule, 57481-57485 [2023-18105]
Download as PDF
lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 88, No. 162 / Wednesday, August 23, 2023 / Notices
In addition, this notice lists the
organizational unit(s) accumulating the
records or states that the schedule has
agency-wide applicability. It also
provides the control number assigned to
each schedule, which you will need if
you submit comments on that schedule.
We have uploaded the records
schedules and accompanying appraisal
memoranda to the regulations.gov
docket for this notice as ‘‘other’’
documents. Each records schedule
contains a full description of the records
at the file unit level as well as their
proposed disposition. The appraisal
memorandum for the schedule includes
information about the records.
We will post comments, including
any personal information and
attachments, to the public docket
unchanged. Because comments are
public, you are responsible for ensuring
that you do not include any confidential
or other information that you or a third
party may not wish to be publicly
posted. If you want to submit a
comment with confidential information
or cannot otherwise use the
regulations.gov portal, you may contact
request.schedule@nara.gov for
instructions on submitting your
comment.
We will consider all comments
submitted by the posted deadline and
consult as needed with the Federal
agency seeking the disposition
authority. After considering comments,
we may or may not make changes to the
proposed records schedule. The
schedule is then sent for final approval
by the Archivist of the United States.
After the schedule is approved, we will
post on regulations.gov a ‘‘Consolidated
Reply’’ summarizing the comments,
responding to them, and noting any
changes we made to the proposed
schedule. You may elect at
regulations.gov to receive updates on
the docket, including an alert when we
post the Consolidated Reply, whether or
not you submit a comment. If you have
a question, you can submit it as a
comment, and can also submit any
concerns or comments you would have
to a possible response to the question.
We will address these items in
consolidated replies along with any
other comments submitted on that
schedule.
We will post schedules on our
website in the Records Control Schedule
(RCS) Repository, at https://
www.archives.gov/records-mgmt/rcs,
after the Archivist approves them. The
RCS contains all schedules approved
since 1973.
VerDate Sep<11>2014
17:27 Aug 22, 2023
Jkt 259001
Background
Each year, Federal agencies create
billions of records. To control this
accumulation, agency records managers
prepare schedules proposing retention
periods for records and submit these
schedules for NARA’s approval. Once
approved by NARA, records schedules
provide mandatory instructions on what
happens to records when no longer
needed for current Government
business. The records schedules
authorize agencies to preserve records of
continuing value in the National
Archives or to destroy, after a specified
period, records lacking continuing
administrative, legal, research, or other
value. Some schedules are
comprehensive and cover all the records
of an agency or one of its major
subdivisions. Most schedules, however,
cover records of only one office or
program or a few series of records. Many
of these update previously approved
schedules, and some include records
proposed as permanent.
Agencies may not destroy Federal
records without the approval of the
Archivist of the United States. The
Archivist grants this approval only after
thorough consideration of the records’
administrative use by the agency of
origin, the rights of the Government and
of private people directly affected by the
Government’s activities, and whether or
not the records have historical or other
value. Public review and comment on
these records schedules is part of the
Archivist’s consideration process.
Schedules Pending
1. Department of Justice, Executive
Office for Immigration Review, Charging
Document Bond Files (DAA–0582–
2023–0001).
Laurence Brewer,
Chief Records Officer for the U.S.
Government.
[FR Doc. 2023–18101 Filed 8–22–23; 8:45 am]
BILLING CODE 7515–01–P
57481
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on August
8, 2023, NYSE American LLC (‘‘NYSE
American’’ 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 selfregulatory 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 American Options Fee Schedule
(‘‘Fee Schedule’’) regarding Floor Broker
incentives and the Strategy Execution
Fee Cap. The Exchange proposes to
implement the fee changes effective
August 8, 2023.4 The proposed rule
change is available on the Exchange’s
website at www.nyse.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98159; File No. SR–
NYSEAMER–2023–40]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Change To Modify the NYSE American
Options Fee Schedule
August 17, 2023.
Pursuant to section 19(b)(1) 1 of the
Securities Exchange Act of 1934
1 15
PO 00000
U.S.C. 78s(b)(1).
Frm 00076
Fmt 4703
Sfmt 4703
The purpose of this filing to amend
the Fee Schedule to (1) delete text
relating to the expired Floor Broker
Grow With Me Program and add a new
Floor Broker incentive, and (2) add
dividend strategies to the list of strategy
executions eligible for the Strategy
Execution Fee Cap (the ‘‘Strategy Cap’’).
The Exchange proposes to implement
the rule changes on August 8, 2023.
2 15
U.S.C. 78a.
CFR 240.19b–4.
4 The Exchange previously filed to amend the Fee
Schedule on July 31, 2023 (SR–NYSEAMER–2023–
38) and withdrew such filing on August 8, 2023.
3 17
E:\FR\FM\23AUN1.SGM
23AUN1
57482
Federal Register / Vol. 88, No. 162 / Wednesday, August 23, 2023 / Notices
lotter on DSK11XQN23PROD with NOTICES1
Floor Broker Incentives
The Exchange proposes to modify
Section III.E.2. of the Fee Schedule to
delete text providing for the Floor
Broker Grow With Me Program (the
‘‘Grow With Me Program’’), which
expired on July 31, 2023, and to
introduce the Floor Broker Manual
Billable Incentive Program (the ‘‘Manual
Billable Incentive Program’’). The
Exchange proposes that Floor Brokers
would be eligible for rebates on manual
billable volume through the Manual
Billable Incentive Program by achieving
certain qualifying levels of average daily
manual billable contracts. Specifically, a
Floor Broker would earn a rebate of
($0.05) per manual billable side by
executing an average daily volume of
40,000 manual billable contracts; a
rebate of ($0.07) per manual billable
side by executing an average daily
volume of 100,000 manual billable
contracts; or a rebate of ($0.09) per
manual billable side by executing an
average daily volume of 150,000 manual
billable contracts. Rebates available
through the Manual Billable Incentive
Program would be payable back to the
first contract, and Floor Brokers would
earn the highest rebate for which they
qualify.5 The Exchange believes that the
proposed qualifications for rebates
available through the Manual Billable
Incentive Program are reasonable and
attainable by Floor Brokers based on
their recent manual billable volume.
Although the Exchange cannot predict
with certainty whether the proposed
change would encourage Floor Brokers
to increase their manual billable
volume, the proposed change is
designed to continue to incentivize
Floor Brokers to do so by offering
rebates on manual billable volume. All
Floor Brokers would be eligible to earn
a rebate through the Manual Billable
Incentive Program, as proposed.
Strategy Cap
Currently, the Strategy Cap provides
for a $1,000 cap on transaction fees for
strategy executions involving (a)
reversals and conversions, (b) box
spreads, (c) short stock interest spreads,
(d) merger spreads, and (e) jelly rolls.6
The Strategy Cap applies to each
strategy execution executed in standard
option contracts on the same trading
day. In addition, the cap is reduced to
$200 on transactions fees for qualifying
strategies traded on the same trading
5 For example, a Floor Broker that executes an
average daily volume of 100,000 manual billable
contracts would be eligible for the ($0.07) rebate but
would not also earn the ($0.05) rebate.
6 See Fee Schedule, Section I.J., Strategy
Execution Fee Cap.
VerDate Sep<11>2014
17:27 Aug 22, 2023
Jkt 259001
day for those ATP Holders that trade at
least 25,000 monthly billable contract
sides in qualifying strategy executions.
The Exchange now proposes to
modify Section I.J. of the Fee Schedule
to add dividend strategies as item (f) in
the list of strategy executions eligible for
the Strategy Cap (and to make nonsubstantive conforming changes to
include an item (f) in such list). The
Exchange also proposes that dividend
strategies would be included among the
strategies that contribute to an ATP
Holder’s qualification for the lower cap
of $200. Finally, the Exchange proposes
to add new subparagraph (f) to Section
I.J. of the Fee Schedule to define a
dividend strategy as transactions done
to achieve a dividend arbitrage
involving the purchase, sale, and
exercise of in-the-money options of the
same class, executed the first business
day prior to the date on which the
underlying stock goes ex-dividend.
The Exchange notes that other options
exchanges currently offer caps on fees
for dividend strategy executions.7
Although the Exchange cannot predict
with certainty whether the proposed
change would encourage ATP Holders
to increase their dividend strategy
executions, the proposed change is
intended to encourage additional
dividend strategy executions on the
Exchange by including them in the
strategies eligible for the Strategy Cap
(including the lower cap for qualifying
ATP Holders).
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
section 6(b) of the Act,8 in general, and
furthers the objectives of sections 6(b)(4)
and (5) of the Act,9 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
7 See, e.g., BOX Options Fee Schedule, Section
V.D. (Strategy QOO Order Fee Cap and Rebate),
available at: https://boxexchange.com/assets/BOXFee-Schedule-as-of-July-3-2023.pdf (providing for
daily cap on manual transaction fees for dividend
strategies); Nasdaq PHLX LLC Options 7, Section 4,
available at: https://listingcenter.nasdaq.com/
rulebook/phlx/rules/Phlx%20Options%207
(providing for daily cap on fees for dividend
strategies).
8 15 U.S.C. 78f(b).
9 15 U.S.C. 78f(b)(4) and (5).
PO 00000
Frm 00077
Fmt 4703
Sfmt 4703
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.’’ 10
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.11
Therefore, no exchange possesses
significant pricing power in the
execution of multiply-listed equity and
ETF options order flow. More
specifically, in June 2023, the Exchange
had less than 7% market share of
executed volume of multiply-listed
equity and ETF options trades.12
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, changes 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
Grow With Me Program is reasonable
because the program has expired, 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
10 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(S7–10–04) (‘‘Reg NMS Adopting Release’’).
11 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.
12 Based on a compilation of OCC data for
monthly volume of equity-based options and
monthly volume of ETF-based options, see id., the
Exchange’s market share in equity-based options
decreased from 7.43% for the month of June 2022
to 6.57% for the month of June 2023.
E:\FR\FM\23AUN1.SGM
23AUN1
lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 88, No. 162 / Wednesday, August 23, 2023 / Notices
Schedule easier to navigate and
understand.
The Exchange believes that the
proposed Manual Billable Incentive
Program is reasonable because it is
designed to continue to incent Floor
Brokers to increase their manual billable
volume executed on the Exchange. The
Exchange also believes that the
proposed change is reasonable because
the proposed volume thresholds to
qualify for the rebates are attainable
based on recent manual billable volume
executed by Floor Brokers, and the
proposed rebates would be available to
all Floor Brokers.
The Exchange believes the proposed
modification of the Strategy Cap is
reasonable because it is designed to
encourage ATP Holders to increase their
dividend strategies executed on the
Exchange by including dividend
strategies among the strategy executions
eligible for the Strategy Cap. The
Exchange also believes the proposed
change could incent ATP Holders to
execute and aggregate dividend strategy
orders as well as other types of strategy
orders at NYSE American as a primary
execution venue.
To the extent that the proposed
changes attract greater volume and
liquidity, the Exchange believes they
would improve the Exchange’s overall
competitiveness, strengthen its market
quality for all market participants, and
continue to make the Exchange a more
competitive venue for order execution,
which, in turn, promotes just and
equitable principles of trade and
removes impediments to and perfects
the mechanism of a free and open
market and a national market system.
The Exchange notes that all market
participants stand to benefit from any
increase in volume, which could
promote market depth, facilitate tighter
spreads, and enhance price discovery,
particularly to the extent the proposed
change encourages market participants
to utilize the Exchange as a primary
trading venue, and may lead to a
corresponding increase in order flow
from other market participants.
In addition, in the backdrop of the
competitive environment in which the
Exchange operates, the proposed rule
change is a reasonable attempt by the
Exchange to increase the depth of its
market and improve its market share
relative to its competitors. The
Exchange’s fees are constrained by
intermarket competition, as ATP
Holders may direct their order flow to
any of the 16 options exchanges,
including those that also offer caps on
dividend strategies.13 Thus, ATP
13 See
note 7, supra.
VerDate Sep<11>2014
17:27 Aug 22, 2023
Jkt 259001
57483
Holders have a choice of where they
direct their order flow, including their
strategy executions. The proposed rule
change is designed to incent ATP
Holders to direct liquidity to the
Exchange, thereby promoting market
depth and enhancing order execution
opportunities for market participants.
for all market participants on the
Exchange and, as a consequence, attract
more order flow to the Exchange,
thereby improving marked-wide quality
and price discovery.
The Proposed Rule Change Is an
Equitable Allocation of Fees and Credits
The Exchange believes the proposed
rule change is an equitable allocation of
its fees and credits. The proposed
deletion of language relating to the
expired Grow With Me Program would
eliminate text from the Fee Schedule no
longer applicable to any Floor Brokers,
thus impacting all similarly situated
Floor Brokers on an equal basis and
improving the clarity of the Fee
Schedule to the benefit of all market
participants. The proposed Manual
Billable Incentive Program is equitable
because it is based on the amount and
type of business transacted on the
Exchange; Floor Brokers can choose to
execute manual billable volume to earn
rebates through the program or not. In
addition, the rebates offered through the
Manual Billable Incentive Program
would be available to all qualifying
Floor Brokers equally. The Exchange
further believes that the proposed
change is equitable because it is
intended to encourage the role
performed by Floor Brokers in
facilitating the execution of orders via
open outcry, a function which the
Exchange wishes to support for the
benefit of all market participants. To the
extent the proposed change continues to
encourage increased liquidity on the
Exchange, all market participants would
benefit from enhanced opportunities for
price improvement and order execution.
The Exchange also believes that the
proposed change to the Strategy Cap is
an equitable allocation of fees and
credits because it is based on the
amount and type of business transacted
on the Exchange, and ATP Holders can
opt to avail themselves of the Strategy
Cap or not. The modified Strategy Cap,
as proposed, would continue to be
available to all ATP Holders that direct
strategy executions, including dividend
strategies, to the Exchange. Moreover,
the proposal is designed to continue to
encourage ATP Holders to aggregate
strategy executions at the Exchange as a
primary execution venue. To the extent
that the proposed change attracts more
dividend strategies to the Exchange, this
increased order flow would continue to
make the Exchange a more competitive
venue for order execution. Thus, the
Exchange believes the proposed rule
change would improve market quality
The Exchange believes the proposed
rule change is not unfairly
discriminatory. The proposed
elimination of text describing the
expired Grow With Me Program would
affect all Floor Brokers on an equal and
non-discriminatory basis, as the
program would no longer be available to
any Floor Brokers. The Exchange
believes that the proposed Manual
Billable Incentive Program is not
unfairly discriminatory because all
Floor Brokers are eligible to qualify for
the rebates offered through the program.
Moreover, the proposed change is not
unfairly discriminatory to non-Floor
Brokers because Floor Brokers serve an
important function in facilitating the
execution of orders on the Exchange,
which the Exchange wishes to
encourage and support to promote price
improvement opportunities for all
market participants.
The Exchange also believes the
proposed change is not unfairly
discriminatory because the proposed
modification of the Strategy Cap would
apply to all similarly-situated market
participants on an equal and nondiscriminatory basis. The proposal is
based on the amount and type of
business transacted on the Exchange,
and ATP Holders are not obligated to try
to achieve the Strategy Cap, nor are they
obligated to execute any dividend
strategies. Rather, the proposal is
designed to encourage ATP Holders to
increase their dividend strategy
executions and to utilize the Exchange
as a primary trading venue for all
strategy executions (if they have not
done so previously).
Thus, the Exchange believes that, to
the extent the proposed rule change
would continue to improve market
quality for all market participants on the
Exchange by attracting more order flow
to the Exchange, thereby improving
market-wide quality and price
discovery, the resulting increased
volume and liquidity would provide
more trading opportunities and tighter
spreads to all market participants and
thus would promote just and equitable
principles of trade, remove
impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, protect investors and the public
interest.
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
The Proposed Rule Change Is Not
Unfairly Discriminatory
E:\FR\FM\23AUN1.SGM
23AUN1
57484
Federal Register / Vol. 88, No. 162 / Wednesday, August 23, 2023 / Notices
lotter on DSK11XQN23PROD with NOTICES1
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
changes would encourage the
submission of additional liquidity to a
public exchange, thereby promoting
market depth, price discovery and
transparency and enhancing order
execution opportunities for all market
participants. As a result, the Exchange
believes that the proposed change
furthers the Commission’s goal in
adopting Regulation NMS of fostering
integrated competition among orders,
which promotes ‘‘more efficient pricing
of individual stocks for all types of
orders, large and small.’’ 14
Intramarket Competition. The
Exchange does not believe that the
proposed changes would impose any
burden on intramarket competition that
is not necessary or appropriate. The
proposed changes are designed to attract
order flow to the Exchange. The
proposed Manual Billable Incentive
Program is intended to attract additional
order flow to the Exchange by offering
Floor Brokers rebates on manual billable
volume, which could increase the
volume of contracts traded on the
Exchange. The proposed modification of
the Strategy Cap to include dividend
strategies is intended to attract
additional dividend strategies to the
Exchange and could also encourage ATP
Holders to aggregate all strategy
executions on the Exchange to qualify
for the Strategy Cap. Greater liquidity
benefits all market participants on the
Exchange, and increased manual
billable transactions and strategy
executions could increase opportunities
for execution of other trading interest.
Finally, the proposed deletion of
language relating to the Grow With Me
Program would remove language from
the Fee Schedule no longer applicable
to any Floor Brokers and, accordingly,
would not have any impact on
intramarket competition.
Intermarket Competition. The
Exchange operates in a highly
competitive market in which market
participants can readily favor one of the
16 competing option exchanges if they
deem fee levels at a particular venue to
be excessive. In such an environment,
the Exchange must continually adjust its
fees to remain competitive with other
exchanges and to attract order flow to
the Exchange. Based on publiclyavailable information, and excluding
index-based options, no single exchange
has more than 16% of the market share
of executed volume of multiply-listed
equity and ETF options trades.15
Therefore, no exchange possesses
significant pricing power in the
execution of multiply-listed equity and
ETF options order flow. More
specifically, in June 2023, the Exchange
had less than 8% market share of
executed volume of multiply-listed
equity and ETF options trades.16
The Exchange believes that the
proposed rule change reflects this
competitive environment because it
modifies the Exchange’s fees and credits
in a manner designed to continue to
incent additional manual billable
volume and dividend strategy volume to
the Exchange, to provide liquidity, and
to attract order flow. To the extent the
proposed changes encourage Floor
Brokers and other market participants to
utilize the Exchange as a primary
trading venue for all transactions, all of
the Exchange’s market participants
should benefit from the improved
market quality and increased
opportunities for price improvement.
The Exchange also believes that the
proposed change could promote
competition between the Exchange and
other execution venues, as other
competing options exchanges currently
offer fee caps for dividend strategies.17
Finally, the Exchange believes that
deleting text describing the Grow With
Me Program would add clarity to the
Fee Schedule by removing expired
pricing and, accordingly, would not
have any impact on intermarket
competition.
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
15 See
14 See
Reg NMS Adopting Release, supra note 10,
at 37499.
VerDate Sep<11>2014
17:27 Aug 22, 2023
Jkt 259001
note 11, supra.
note 12, supra.
17 See note 7, supra.
19(b)(3)(A) 18 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.
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–
NYSEAMER–2023–40 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–NYSEAMER–2023–40. 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
16 See
PO 00000
Frm 00079
Fmt 4703
18 15
Sfmt 4703
E:\FR\FM\23AUN1.SGM
U.S.C. 78s(b)(3)(A).
23AUN1
Federal Register / Vol. 88, No. 162 / Wednesday, August 23, 2023 / Notices
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–NYSEAMER–2023–40 and should
be submitted on or before September 13,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–18105 Filed 8–22–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98160; File No. SR–FICC–
2023–011]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Notice of
Filing of Proposed Rule Change, as
Modified by Amendment No. 1, To
Adopt a Portfolio Differential Charge
as an Additional Component to the
Government Securities Division
Required Fund Deposit
August 17, 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 August 3,
2023, Fixed Income Clearing
Corporation (‘‘FICC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) proposed rule change
SR–FICC–2023–011. On August 16,
2023, FICC filed Amendment No. 1 to
the proposed rule change, to make
clarifications and corrections to the
proposed rule change.3 The proposed
rule change, as modified by Amendment
No. 1, is described in Items I, II and III
below, which Items have been prepared
by the clearing agency. The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested persons.
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Amendment No. 1 made clarifications and
corrections to the description of the proposed rule
change and Exhibit 3a of the filing (Summary of
Impact Study) to incorporate a longer impact
analysis. As originally filed, the time-period of the
impact analysis was November 2021 to October
2022. As amended by Amendment No. 1, the timeperiod of the impact analysis is November 2021 to
March 2023. These clarifications and corrections
have been incorporated, as appropriate, into the
description of the proposed rule change in Item II
below. FICC has requested confidential treatment of
Exhibit 3a, pursuant to 17 CFR 240.24b–2.
lotter on DSK11XQN23PROD with NOTICES1
1 15
VerDate Sep<11>2014
17:27 Aug 22, 2023
Jkt 259001
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change consists of
modifications to FICC’s Government
Securities Division (‘‘GSD’’) Rulebook
(‘‘Rules’’) in order to adopt a Portfolio
Differential Charge (‘‘PD Charge’’) as an
additional component to the GSD
Required Fund Deposit, as described in
greater detail below.4
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the
clearing agency 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
clearing agency has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
FICC is proposing to enhance the
methodology for calculating Required
Fund Deposit to the GSD Clearing Fund
by adopting a new component, the PD
Charge, which would be calculated to
mitigate the risk presented to FICC by
period-over-period fluctuations in a
Member’s Margin Portfolio(s) that may
occur between the collections of
Member’s Required Fund Deposits.
Background
FICC, through GSD, serves as a central
counterparty and provider of clearance
and settlement services for the U.S.
Treasury securities, as well as
repurchase and reverse repurchase
transactions involving U.S. Treasury
securities.5 As part of its market risk
management strategy, FICC manages its
credit exposure to Members by
determining the appropriate Required
Fund Deposit to the GSD Clearing Fund
and monitoring its sufficiency, as
provided for in the GSD Rules.6 The
4 Terms not defined herein are defined in the GSD
Rules, available at www.dtcc.com/∼/media/Files/
Downloads/legal/rules/ficc_gov_rules.pdf.
5 GSD also clears and settles certain transactions
on securities issued or guaranteed by U.S.
government agencies and government sponsored
enterprises.
6 See GSD Rule 4 (Clearing Fund and Loss
Allocation), supra note 4. FICC’s market risk
management strategy is designed to comply with
Rule 17Ad–22(e)(4) under the Act, where these
risks are referred to as ‘‘credit risks.’’ 17 CFR
240.17Ad–22(e)(4).
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
57485
Required Fund Deposit serves as each
Member’s margin.
The objective of a Member’s margin is
to mitigate potential losses to FICC
associated with liquidating a Member’s
portfolio in the event FICC ceases to act
for that Member (hereinafter referred to
as a ‘‘default’’).7 The aggregate amount
of all Members’ margin constitutes the
GSD Clearing Fund. FICC would access
the GSD Clearing Fund should a
defaulting Member’s own margin be
insufficient to satisfy losses to FICC
caused by the liquidation of that
Member’s portfolio. Each Member’s
Required Fund Deposit is calculated at
least twice daily at the start-of-day and
noon on each Business Day.
FICC regularly assesses market and
liquidity risks as such risks relate to its
margin methodologies to evaluate
whether margin levels are
commensurate with the particular risk
attributes of each relevant product,
portfolio, and market. For example,
FICC employs daily backtesting to
determine the adequacy of each
Member’s Required Fund Deposit.8
FICC compares the Required Fund
Deposit 9 for each Member with the
simulated liquidation gains/losses,
using the actual positions in the
Member’s portfolio(s) and the actual
historical security returns. A backtesting
deficiency occurs when a Member’s
Required Fund Deposit would not have
been adequate to cover the projected
liquidation losses estimated from a
Member’s settlement activity based on
7 The GSD Rules identify when FICC may cease
to act for a Member and the types of actions FICC
may take. For example, FICC may suspend a firm’s
membership with FICC or prohibit or limit a
Member’s access to FICC’s services in the event that
Member defaults on a financial or other obligation
to FICC. See GSD Rule 21 (Restrictions on Access
to Services) of the GSD Rules, supra note 4.
8 The Model Risk Management Framework
(‘‘Model Risk Management Framework’’) sets forth
the model risk management practices of FICC and
states that Value at Risk (‘‘VaR’’) and Clearing Fund
requirement coverage backtesting would be
performed on a daily basis or more frequently. See
Securities Exchange Act Release Nos. 81485 (Aug.
25, 2017), 82 FR 41433 (Aug. 31, 2017) (SR–FICC–
2017–014), 84458 (Oct. 19, 2018), 83 FR 53925 (Oct.
25, 2018) (SR–FICC–2018–010), 88911 (May 20,
2020), 85 FR 31828 (May 27, 2020) (SR–FICC–2020–
004), 92380 (Jul. 13, 2021), 86 FR 38140 (Jul. 19,
2021) (SR–FICC–2021–006), 94271 (Feb. 17, 2022),
87 FR 10411 (Feb. 24, 2022) (SR–FICC–2022–001),
and 97890 (Jul. 13, 2023), 88 FR 46287 (Jul. 19,
2023) (SR–FICC–2023–008).
9 Members may be required to post additional
collateral to the GSD Clearing Fund in addition to
their Required Fund Deposit amount. See e.g.,
Section 7 of GSD Rule 3 (Ongoing Membership
Requirements), supra note 4 (providing that
adequate assurances of financial responsibility of a
member may be required, such as increased
Clearing Fund deposits). For backtesting
comparisons, FICC uses the Required Fund Deposit
amount, without regard to the actual, total collateral
posted by the member to the GSD Clearing Fund.
E:\FR\FM\23AUN1.SGM
23AUN1
Agencies
[Federal Register Volume 88, Number 162 (Wednesday, August 23, 2023)]
[Notices]
[Pages 57481-57485]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-18105]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98159; File No. SR-NYSEAMER-2023-40]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Change To Modify the
NYSE American Options Fee Schedule
August 17, 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 August 8, 2023, NYSE American LLC (``NYSE American'' 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify the NYSE American Options Fee
Schedule (``Fee Schedule'') regarding Floor Broker incentives and the
Strategy Execution Fee Cap. The Exchange proposes to implement the fee
changes effective August 8, 2023.\4\ The proposed rule change is
available on the Exchange's website at www.nyse.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
---------------------------------------------------------------------------
\4\ The Exchange previously filed to amend the Fee Schedule on
July 31, 2023 (SR-NYSEAMER-2023-38) and withdrew such filing on
August 8, 2023.
---------------------------------------------------------------------------
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing to amend the Fee Schedule to (1) delete
text relating to the expired Floor Broker Grow With Me Program and add
a new Floor Broker incentive, and (2) add dividend strategies to the
list of strategy executions eligible for the Strategy Execution Fee Cap
(the ``Strategy Cap''). The Exchange proposes to implement the rule
changes on August 8, 2023.
[[Page 57482]]
Floor Broker Incentives
The Exchange proposes to modify Section III.E.2. of the Fee
Schedule to delete text providing for the Floor Broker Grow With Me
Program (the ``Grow With Me Program''), which expired on July 31, 2023,
and to introduce the Floor Broker Manual Billable Incentive Program
(the ``Manual Billable Incentive Program''). The Exchange proposes that
Floor Brokers would be eligible for rebates on manual billable volume
through the Manual Billable Incentive Program by achieving certain
qualifying levels of average daily manual billable contracts.
Specifically, a Floor Broker would earn a rebate of ($0.05) per manual
billable side by executing an average daily volume of 40,000 manual
billable contracts; a rebate of ($0.07) per manual billable side by
executing an average daily volume of 100,000 manual billable contracts;
or a rebate of ($0.09) per manual billable side by executing an average
daily volume of 150,000 manual billable contracts. Rebates available
through the Manual Billable Incentive Program would be payable back to
the first contract, and Floor Brokers would earn the highest rebate for
which they qualify.\5\ The Exchange believes that the proposed
qualifications for rebates available through the Manual Billable
Incentive Program are reasonable and attainable by Floor Brokers based
on their recent manual billable volume.
---------------------------------------------------------------------------
\5\ For example, a Floor Broker that executes an average daily
volume of 100,000 manual billable contracts would be eligible for
the ($0.07) rebate but would not also earn the ($0.05) rebate.
---------------------------------------------------------------------------
Although the Exchange cannot predict with certainty whether the
proposed change would encourage Floor Brokers to increase their manual
billable volume, the proposed change is designed to continue to
incentivize Floor Brokers to do so by offering rebates on manual
billable volume. All Floor Brokers would be eligible to earn a rebate
through the Manual Billable Incentive Program, as proposed.
Strategy Cap
Currently, the Strategy Cap provides for a $1,000 cap on
transaction fees for strategy executions involving (a) reversals and
conversions, (b) box spreads, (c) short stock interest spreads, (d)
merger spreads, and (e) jelly rolls.\6\ The Strategy Cap applies to
each strategy execution executed in standard option contracts on the
same trading day. In addition, the cap is reduced to $200 on
transactions fees for qualifying strategies traded on the same trading
day for those ATP Holders that trade at least 25,000 monthly billable
contract sides in qualifying strategy executions.
---------------------------------------------------------------------------
\6\ See Fee Schedule, Section I.J., Strategy Execution Fee Cap.
---------------------------------------------------------------------------
The Exchange now proposes to modify Section I.J. of the Fee
Schedule to add dividend strategies as item (f) in the list of strategy
executions eligible for the Strategy Cap (and to make non-substantive
conforming changes to include an item (f) in such list). The Exchange
also proposes that dividend strategies would be included among the
strategies that contribute to an ATP Holder's qualification for the
lower cap of $200. Finally, the Exchange proposes to add new
subparagraph (f) to Section I.J. of the Fee Schedule to define a
dividend strategy as transactions done to achieve a dividend arbitrage
involving the purchase, sale, and exercise of in-the-money options of
the same class, executed the first business day prior to the date on
which the underlying stock goes ex-dividend.
The Exchange notes that other options exchanges currently offer
caps on fees for dividend strategy executions.\7\ Although the Exchange
cannot predict with certainty whether the proposed change would
encourage ATP Holders to increase their dividend strategy executions,
the proposed change is intended to encourage additional dividend
strategy executions on the Exchange by including them in the strategies
eligible for the Strategy Cap (including the lower cap for qualifying
ATP Holders).
---------------------------------------------------------------------------
\7\ See, e.g., BOX Options Fee Schedule, Section V.D. (Strategy
QOO Order Fee Cap and Rebate), available at: https://boxexchange.com/assets/BOX-Fee-Schedule-as-of-July-3-2023.pdf
(providing for daily cap on manual transaction fees for dividend
strategies); Nasdaq PHLX LLC Options 7, Section 4, available at:
https://listingcenter.nasdaq.com/rulebook/phlx/rules/Phlx%20Options%207 (providing for daily cap on fees for dividend
strategies).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act,\8\ in general, and furthers the
objectives of sections 6(b)(4) and (5) of the Act,\9\ 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.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
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.'' \10\
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04) (``Reg NMS
Adopting Release'').
---------------------------------------------------------------------------
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.\11\ Therefore, no exchange possesses significant pricing power
in the execution of multiply-listed equity and ETF options order flow.
More specifically, in June 2023, the Exchange had less than 7% market
share of executed volume of multiply-listed equity and ETF options
trades.\12\
---------------------------------------------------------------------------
\11\ 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.
\12\ Based on a compilation of OCC data for monthly volume of
equity-based options and monthly volume of ETF-based options, see
id., the Exchange's market share in equity-based options decreased
from 7.43% for the month of June 2022 to 6.57% for the month of June
2023.
---------------------------------------------------------------------------
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, changes
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 Grow With Me Program is reasonable because the program
has expired, 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
[[Page 57483]]
Schedule easier to navigate and understand.
The Exchange believes that the proposed Manual Billable Incentive
Program is reasonable because it is designed to continue to incent
Floor Brokers to increase their manual billable volume executed on the
Exchange. The Exchange also believes that the proposed change is
reasonable because the proposed volume thresholds to qualify for the
rebates are attainable based on recent manual billable volume executed
by Floor Brokers, and the proposed rebates would be available to all
Floor Brokers.
The Exchange believes the proposed modification of the Strategy Cap
is reasonable because it is designed to encourage ATP Holders to
increase their dividend strategies executed on the Exchange by
including dividend strategies among the strategy executions eligible
for the Strategy Cap. The Exchange also believes the proposed change
could incent ATP Holders to execute and aggregate dividend strategy
orders as well as other types of strategy orders at NYSE American as a
primary execution venue.
To the extent that the proposed changes attract greater volume and
liquidity, the Exchange believes they would improve the Exchange's
overall competitiveness, strengthen its market quality for all market
participants, and continue to make the Exchange a more competitive
venue for order execution, which, in turn, promotes just and equitable
principles of trade and removes impediments to and perfects the
mechanism of a free and open market and a national market system. The
Exchange notes that all market participants stand to benefit from any
increase in volume, which could promote market depth, facilitate
tighter spreads, and enhance price discovery, particularly to the
extent the proposed change encourages market participants to utilize
the Exchange as a primary trading venue, and may lead to a
corresponding increase in order flow from other market participants.
In addition, in the backdrop of the competitive environment in
which the Exchange operates, the proposed rule change is a reasonable
attempt by the Exchange to increase the depth of its market and improve
its market share relative to its competitors. The Exchange's fees are
constrained by intermarket competition, as ATP Holders may direct their
order flow to any of the 16 options exchanges, including those that
also offer caps on dividend strategies.\13\ Thus, ATP Holders have a
choice of where they direct their order flow, including their strategy
executions. The proposed rule change is designed to incent ATP Holders
to direct liquidity to the Exchange, thereby promoting market depth and
enhancing order execution opportunities for market participants.
---------------------------------------------------------------------------
\13\ See note 7, supra.
---------------------------------------------------------------------------
The Proposed Rule Change Is an Equitable Allocation of Fees and Credits
The Exchange believes the proposed rule change is an equitable
allocation of its fees and credits. The proposed deletion of language
relating to the expired Grow With Me Program would eliminate text from
the Fee Schedule no longer applicable to any Floor Brokers, thus
impacting all similarly situated Floor Brokers on an equal basis and
improving the clarity of the Fee Schedule to the benefit of all market
participants. The proposed Manual Billable Incentive Program is
equitable because it is based on the amount and type of business
transacted on the Exchange; Floor Brokers can choose to execute manual
billable volume to earn rebates through the program or not. In
addition, the rebates offered through the Manual Billable Incentive
Program would be available to all qualifying Floor Brokers equally. The
Exchange further believes that the proposed change is equitable because
it is intended to encourage the role performed by Floor Brokers in
facilitating the execution of orders via open outcry, a function which
the Exchange wishes to support for the benefit of all market
participants. To the extent the proposed change continues to encourage
increased liquidity on the Exchange, all market participants would
benefit from enhanced opportunities for price improvement and order
execution.
The Exchange also believes that the proposed change to the Strategy
Cap is an equitable allocation of fees and credits because it is based
on the amount and type of business transacted on the Exchange, and ATP
Holders can opt to avail themselves of the Strategy Cap or not. The
modified Strategy Cap, as proposed, would continue to be available to
all ATP Holders that direct strategy executions, including dividend
strategies, to the Exchange. Moreover, the proposal is designed to
continue to encourage ATP Holders to aggregate strategy executions at
the Exchange as a primary execution venue. To the extent that the
proposed change attracts more dividend strategies to the Exchange, this
increased order flow would continue to make the Exchange a more
competitive venue for order execution. Thus, the Exchange believes the
proposed rule change would improve market quality for all market
participants on the Exchange and, as a consequence, attract more order
flow to the Exchange, thereby improving marked-wide quality and price
discovery.
The Proposed Rule Change Is Not Unfairly Discriminatory
The Exchange believes the proposed rule change is not unfairly
discriminatory. The proposed elimination of text describing the expired
Grow With Me Program would affect all Floor Brokers on an equal and
non-discriminatory basis, as the program would no longer be available
to any Floor Brokers. The Exchange believes that the proposed Manual
Billable Incentive Program is not unfairly discriminatory because all
Floor Brokers are eligible to qualify for the rebates offered through
the program. Moreover, the proposed change is not unfairly
discriminatory to non-Floor Brokers because Floor Brokers serve an
important function in facilitating the execution of orders on the
Exchange, which the Exchange wishes to encourage and support to promote
price improvement opportunities for all market participants.
The Exchange also believes the proposed change is not unfairly
discriminatory because the proposed modification of the Strategy Cap
would apply to all similarly-situated market participants on an equal
and non-discriminatory basis. The proposal is based on the amount and
type of business transacted on the Exchange, and ATP Holders are not
obligated to try to achieve the Strategy Cap, nor are they obligated to
execute any dividend strategies. Rather, the proposal is designed to
encourage ATP Holders to increase their dividend strategy executions
and to utilize the Exchange as a primary trading venue for all strategy
executions (if they have not done so previously).
Thus, the Exchange believes that, to the extent the proposed rule
change would continue to improve market quality for all market
participants on the Exchange by attracting more order flow to the
Exchange, thereby improving market-wide quality and price discovery,
the resulting increased volume and liquidity would provide more trading
opportunities and tighter spreads to all market participants and thus
would promote just and equitable principles of trade, remove
impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, protect investors and the
public interest.
[[Page 57484]]
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 changes would encourage the submission of additional
liquidity to a public exchange, thereby promoting market depth, price
discovery and transparency and enhancing order execution opportunities
for all market participants. As a result, the Exchange believes that
the proposed change furthers the Commission's goal in adopting
Regulation NMS of fostering integrated competition among orders, which
promotes ``more efficient pricing of individual stocks for all types of
orders, large and small.'' \14\
---------------------------------------------------------------------------
\14\ See Reg NMS Adopting Release, supra note 10, at 37499.
---------------------------------------------------------------------------
Intramarket Competition. The Exchange does not believe that the
proposed changes would impose any burden on intramarket competition
that is not necessary or appropriate. The proposed changes are designed
to attract order flow to the Exchange. The proposed Manual Billable
Incentive Program is intended to attract additional order flow to the
Exchange by offering Floor Brokers rebates on manual billable volume,
which could increase the volume of contracts traded on the Exchange.
The proposed modification of the Strategy Cap to include dividend
strategies is intended to attract additional dividend strategies to the
Exchange and could also encourage ATP Holders to aggregate all strategy
executions on the Exchange to qualify for the Strategy Cap. Greater
liquidity benefits all market participants on the Exchange, and
increased manual billable transactions and strategy executions could
increase opportunities for execution of other trading interest.
Finally, the proposed deletion of language relating to the Grow With Me
Program would remove language from the Fee Schedule no longer
applicable to any Floor Brokers and, accordingly, would not have any
impact on intramarket competition.
Intermarket Competition. The Exchange operates in a highly
competitive market in which market participants can readily favor one
of the 16 competing option exchanges if they deem fee levels at a
particular venue to be excessive. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
exchanges and to attract order flow to the Exchange. Based on publicly-
available information, and excluding index-based options, no single
exchange has more than 16% of the market share of executed volume of
multiply-listed equity and ETF options trades.\15\ Therefore, no
exchange possesses significant pricing power in the execution of
multiply-listed equity and ETF options order flow. More specifically,
in June 2023, the Exchange had less than 8% market share of executed
volume of multiply-listed equity and ETF options trades.\16\
---------------------------------------------------------------------------
\15\ See note 11, supra.
\16\ See note 12, supra.
---------------------------------------------------------------------------
The Exchange believes that the proposed rule change reflects this
competitive environment because it modifies the Exchange's fees and
credits in a manner designed to continue to incent additional manual
billable volume and dividend strategy volume to the Exchange, to
provide liquidity, and to attract order flow. To the extent the
proposed changes encourage Floor Brokers and other market participants
to utilize the Exchange as a primary trading venue for all
transactions, all of the Exchange's market participants should benefit
from the improved market quality and increased opportunities for price
improvement. The Exchange also believes that the proposed change could
promote competition between the Exchange and other execution venues, as
other competing options exchanges currently offer fee caps for dividend
strategies.\17\ Finally, the Exchange believes that deleting text
describing the Grow With Me Program would add clarity to the Fee
Schedule by removing expired pricing and, accordingly, would not have
any impact on intermarket competition.
---------------------------------------------------------------------------
\17\ See note 7, supra.
---------------------------------------------------------------------------
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) \18\ 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.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78s(b)(3)(A).
---------------------------------------------------------------------------
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-NYSEAMER-2023-40 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-NYSEAMER-2023-40. 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
[[Page 57485]]
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-NYSEAMER-2023-40 and
should be submitted on or before September 13, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
---------------------------------------------------------------------------
\19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-18105 Filed 8-22-23; 8:45 am]
BILLING CODE 8011-01-P