Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the NYSE Arca Options Fee Schedule To Modify the Options Regulatory Fee, 69969-69973 [2023-22347]

Download as PDF Federal Register / Vol. 88, No. 194 / Tuesday, October 10, 2023 / Notices supplement to the GEIS does not entitle participants to become parties to the proceeding to which the supplement to the GEIS relates. Matters related to participation in any hearing are outside the scope of matters to be discussed at this public meeting. Dated: October 4, 2023. For the Nuclear Regulatory Commission. Theodore B. Smith, Chief, Environmental Review License Renewal Branch, Division of Rulemaking, Environment, and Financial Support, Office of Nuclear Material Safety and Safeguards. [FR Doc. 2023–22374 Filed 10–6–23; 8:45 am] BILLING CODE 7590–01–P A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION [Release No. 34–98676; File No. SR– NYSEARCA–2023–68] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the NYSE Arca Options Fee Schedule To Modify the Options Regulatory Fee October 3, 2023. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on September 29, 2023, NYSE Arca, Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. ddrumheller on DSK120RN23PROD with NOTICES1 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE Arca Options Fee Schedule (‘‘Fee Schedule’’) regarding the Options Regulatory Fee (‘‘ORF’’). 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. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 VerDate Sep<11>2014 18:39 Oct 06, 2023 Jkt 262001 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. Purpose The Exchange proposes to amend the Fee Schedule to decrease the ORF from $0.0055 per contract to $0.0038 per contract, effective on January 1, 2024, and to provide for a temporary waiver of the ORF for the three months leading up to such change, from October 1, 2023 through December 31, 2023 (the ‘‘Waiver Period’’).4 Background As a general matter, the Exchange may only use regulatory funds such as the ORF ‘‘to fund the legal, regulatory, and surveillance operations’’ of the Exchange.5 More specifically, the ORF is designed to recover a material portion, but not all, of the Exchange’s costs for the supervision and regulation of OTP Holders and OTP Firms (collectively, ‘‘OTP Holders’’), including the Exchange’s regulatory program and legal expenses associated with options regulation, such as the costs related to in-house staff, third-party service providers, and technology that facilitate regulatory functions such as surveillance, investigation, examinations and enforcement (collectively, the ‘‘ORF Costs’’). ORF funds may also be used for indirect expenses such as human resources and other administrative costs. The Exchange monitors the amount of 4 See proposed Fee Schedule, NYSE Arca GENERAL OPTIONS and TRADING PERMIT (OTP) FEES, Regulatory Fees, Options Regulatory Fee (‘‘ORF’’). The Exchange proposes to modify the Fee Schedule to provide for a waiver of ORF from October 1, 2023 until December 31, 2023, and to provide that the ORF rate would be $0.0038 when the Exchange resumes assessing ORF on January 1, 2024. 5 The Exchange considers surveillance operations part of regulatory operations. The limitation on the use of regulatory funds also provides that they shall not be distributed. See Bylaws of NYSE Arca, Inc., Art. II, Sec. 2.03. PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 69969 revenue collected from the ORF to ensure that this revenue, in combination with other regulatory fees and fines, does not exceed regulatory costs. The ORF is assessed on OTP Holders for options transactions that are cleared by the OTP Holder through the Options Clearing Corporation (‘‘OCC’’) in the Customer range regardless of the exchange on which the transaction occurs and is collected from OTP Holder clearing firms by the OCC on behalf of NYSE Arca.6 All options transactions must clear via a clearing firm and such clearing firms can then choose to pass through all, a portion, or none of the cost of the ORF to its customers, i.e., the entering firms. The Exchange notes that the costs relating to monitoring OTP Holders with respect to Customer trading activity are generally higher than the costs associated with monitoring OTP Holders that do not engage in Customer trading activity, which tends to be more automated and less labor-intensive. By contrast, regulating OTP Holders that engage in Customer trading activity is generally more labor intensive and requires a greater expenditure of human and technical resources as the Exchange needs to review not only the trading activity on behalf of Customers, but also the OTP Holder’s relationship with its Customers via more labor-intensive exam-based programs.7 As a result, the costs associated with administering the customer component of the Exchange’s overall regulatory program are materially higher than the costs associated with administering the noncustomer component (e.g., OTP Holder proprietary transactions) of its regulatory program. ORF Collections and Monitoring of ORF Exchange rules establish that market participants must be notified of any 6 See Fee Schedule, NYSE Arca GENERAL OPTIONS and TRADING PERMIT (OTP) FEES, Regulatory Fees, Options Regulatory Fee (‘‘ORF’’). The Exchange uses reports from OCC when assessing and collecting the ORF. The ORF is not assessed on outbound linkage trades. An OTP Holder is not assessed the fee until it has satisfied applicable technological requirements necessary to commence operations on NYSE Arca. See id. 7 The Exchange notes that many of the Exchange’s market surveillance programs require the Exchange to look at and evaluate activity across all options markets, such as surveillance for position limit violations, manipulation, front-running and contrary exercise advice violations/expiring exercise declarations. The Exchange and other options SROs are parties to a 17d–2 agreement allocating among the SROs regulatory responsibilities relating to compliance by the common members with rules for expiring exercise declarations, position limits, OCC trade adjustments, and Large Option Position Report reviews. See, e.g., Securities Exchange Act Release No. 85097 (February 11, 2019), 84 FR 4871 (February 19, 2019). E:\FR\FM\10OCN1.SGM 10OCN1 69970 Federal Register / Vol. 88, No. 194 / Tuesday, October 10, 2023 / Notices change in the ORF via Trader Update at least 30 calendar days prior to the effective date of the change.8 Because the ORF is based on options transactions volume, the amount of ORF collected is variable. For example, if options transactions reported to OCC in a given month increase, the ORF collected from OTP Holders will likely increase as well. Similarly, if options transactions reported to OCC in a given month decrease, the ORF collected from OTP Holders will likely decrease as well. Accordingly, the Exchange monitors the amount of ORF collected to ensure that it does not exceed the ORF Costs. If the Exchange determines the amount of ORF collected exceeds ORF Costs, the Exchange will adjust the ORF by submitting a fee change filing to the Securities and Exchange Commission (the ‘‘Commission’’). Reduction of ORF and Temporary ORF Waiver The Exchange currently assesses an ORF of $0.0055 per contract. Based on the Exchange’s recent review of regulatory costs, ORF collections, and options transaction volume, the Exchange proposes to decrease the ORF from the current rate of $0.0055 per contract to $0.0038 per contract effective January 1, 2024 and, in concert with the proposed reduction of the ORF, to waive the ORF from October 1, 2023 through December 31, 2023 in order to help ensure that the amount collected from the ORF, in combination with other regulatory fees and fines, does not exceed the Exchange’s total regulatory costs. The Exchange notified OTP Holders of the proposed temporary waiver of the ORF via Trader Update on September 1, 2023 (which was at least 30 calendar days prior to the proposed operative date of the waiver, October 1, 2023) 9 and will also notify OTP Holders of the proposed change to the ORF rate via Trader Update at least 30 days prior to the proposed operative date of the new rate, January 1, 2024. The Exchange believes such notices will ensure that market participants have sufficient opportunity to configure their systems to account properly for both the ORF waiver and revised ORF. The proposed modification of the ORF and accompanying waiver are informed by the Exchange’s analysis of recent options volumes. The Exchange proposes to reduce the ORF because it believes that options transaction volume has increased to a level that if the ORF is not adjusted, the ORF revenue to the Exchange year-over-year could exceed a material portion of the Exchange’s ORF Costs.10 The options industry has continued to experience extremely high options trading volumes and volatility, as illustrated in the table below reflecting industry data from OCC for 2021, 2022, and 2023: 11 2021 Customer ADV ............................................................................................................................. Total ADV .................................................................................................................................... For example, although customer average daily volume decreased slightly from 2021 to 2022, both total average daily volume and customer average daily volume in 2023 increased over the already elevated levels in 2021 and 2022. April 2023 ddrumheller on DSK120RN23PROD with NOTICES1 Customer ADV ..................................................................... Total ADV ............................................................................. The persisting increased options volumes have, in turn, impacted the amount of ORF collected. To determine whether ORF fees should be adjusted, the Exchange reviewed options transaction volume from 2021 through August 2023. Based on the Exchange’s review and analysis of historical options transaction volume and predictions regarding future options transaction volume, the Exchange projects that options transaction volume is likely to continue to remain high into 2024. The Exchange believes that it has sufficient information based on recent options transaction volume to determine how to adjust the ORF for 2024. Taking into consideration both the sustained 8 See Fee Schedule, supra note 6. https://www.nyse.com/trader-update/ history#110000672056. 10 The Exchange notes that it last modified the ORF rate in February 2014. See Securities Exchange Act Release No. 71409 (January 27, 2014), 79 FR 5499 (January 31, 2014) (SR–NYSEArca–2014–06). 9 See VerDate Sep<11>2014 18:39 Oct 06, 2023 Jkt 262001 May 2023 32,498,578 73,005,006 34,535,662 78,571,791 2022 34,730,276 74,339,870 34,091,409 76,488,459 2023 35,957,560 81,483,685 The below industry data from OCC demonstrates the high options trading volumes and volatility that the industry has continued to experience in 2023: June 2023 37,028,394 83,362,815 July 2023 35,965,918 80,391,999 August 2023 35,387,029 81,381,473 increase in options transaction volume, which has persisted into 2023 (and which has translated to increased ORF collection), the Exchange proposes to decrease the ORF from $0.0055 to $0.0038 per contract. The Exchange further proposes to make this change effective on January 1, 2024 and to not assess any ORF during the Waiver Period, rather than further adjusting the ORF for the duration of the Waiver Period, as the Exchange believes this proposal would most efficiently accomplish the goals of ensuring that ORF collection does not exceed ORF Costs for 2023 and modifying the ORF rate so that the Exchange may assess an ORF that is designed to recover a material portion, but not all, of the Exchange’s projected ORF Costs when the Exchange resumes assessing ORF on January 1, 2024. The proposed decrease in ORF is based on the Exchange’s estimated projections for its regulatory costs, balanced with the observed increase in options volumes. The Exchange cannot predict whether options volume will remain at the current level going forward and projections for future regulatory costs are estimated, preliminary, and may change. However, the Exchange believes that amounts collected from assessment of the ORF (as modified) will continue to cover a material portion, but not all, of the The Exchange also previously filed to waive the ORF from November 1, 2022 through January 31, 2023. See Securities Exchange Act Release No. 96374 (November 22, 2022), 87 FR 73372 (November 29, 2022) (SR–NYSEARCA–2022–78). 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. The volume discussed in this filing is based on a compilation of OCC data for monthly volume of equity-based options and monthly volume of ETF-based options, in contract sides. PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 E:\FR\FM\10OCN1.SGM 10OCN1 Federal Register / Vol. 88, No. 194 / Tuesday, October 10, 2023 / Notices Exchange’s ORF Costs. In addition, because of the sustained impact of the elevated trading volumes that have persisted into 2023, along with the difficulty of predicting when volumes may return to more normal levels, the Exchange believes that waiving ORF from October 1, 2023 to December 31, 2023 and implementing the reduced ORF rate of $0.0038 on January 1, 2024 (rather than reducing ORF more drastically in the interim) would lessen the potential for generating excess funds and help ensure that the ORF is designed to recover a material portion, but not all, of the Exchange’s projected ORF Costs. The Exchange will continue monitoring ORF Costs in advance of the resumption of the ORF and when it resumes assessing ORF on January 1, 2024, and, if the Exchange determines that, in light of projected volumes and ORF Costs, the ORF rate should be further modified to help ensure that ORF collections would not exceed a material portion of ORF Costs, adjust the ORF by submitting a proposed rule change and notifying OTP Holders of such change by Trader Update. ddrumheller on DSK120RN23PROD with NOTICES1 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6(b) 12 of the Act, in general, and Section 6(b)(4) and (5) 13 of the Act, in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among its members and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers, or dealers. The Proposal Is Reasonable The Exchange believes the proposed reduction of ORF and accompanying temporary waiver of the ORF is reasonable because it would help ensure that collections from the ORF do not exceed a material portion of the Exchange’s ORF Costs. As noted above, the ORF is designed to recover a material portion, but not all, of the Exchange’s ORF Costs. Although there can be no assurance that the Exchange’s final costs for 2023 will not differ materially from its expectations and prior practice, nor can the Exchange predict with certainty whether options volume will remain at current or similar levels going forward, the Exchange believes that the amount collected based on the current ORF rate, when combined with regulatory fees and fines, may result in collections in excess of the estimated ORF Costs for 12 15 13 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). VerDate Sep<11>2014 18:39 Oct 06, 2023 Jkt 262001 the year and going forward. Particularly, as noted above, the options market has continued to experience elevated volumes and volatility in 2023, thereby resulting in substantially higher ORF collections than projected. The Exchange therefore believes that it would be reasonable to decrease the ORF from $0.0055 per contract to $0.0038 per contract effective January 1, 2024, and, in connection with that change, to waive ORF from October 1, 2023 through December 31, 2023. The Exchange believes the proposed change is reasonable because it would help the Exchange ensure that ORF collection does not exceed a material portion of the ORF Costs for 2023 and facilitate the efficient implementation of a revised ORF rate designed to recover a material portion, but not all, of the Exchange’s projected ORF Costs. The Exchange proposes to make the new ORF rate effective on January 1, 2024 and to not assess any ORF during the Waiver Period, rather than further adjusting the ORF for the duration of the Waiver Period, as the Exchange believes this proposal would most efficiently accomplish these objectives. The Exchange believes that not assessing ORF during the Waiver Period and taking into account all of the Exchange’s other regulatory fees and fines would allow the Exchange to continue covering a material portion of ORF Costs, while lessening the potential for generating excess funds that may otherwise occur using the current rate. The Exchange also believes that it is reasonable to resume ORF at the decreased rate of $0.0038 on January 1, 2024. The proposed rate of $0.0038 per contract is based on the Exchange’s estimated projections for its regulatory costs, balanced with the increase in options volumes that has persisted into 2023 and that is likely to continue into 2024; the Exchange thus believes that resumption of the ORF at this rate on January 1, 2024 is reasonable because it would permit the Exchange to resume assessing an ORF that is designed to recover a material portion, but not all, of the Exchange’s projected ORF Costs. The Exchange would continue monitoring ORF Costs in advance of the resumption of the ORF and when it resumes assessing ORF on January 1, 2024 and, if the Exchange determines that, in light of projected volumes and ORF Costs, the ORF rate should be further modified to help ensure that ORF collections would not exceed a material portion of ORF Costs, further adjust the ORF by submitting a proposed rule change and notifying OTP PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 69971 Holders of such change by Trader Update. The Proposal Is an Equitable Allocation of Fees The Exchange believes its proposal is an equitable allocation of fees among its market participants. The Exchange believes that the proposed waiver would not place certain market participants at an unfair disadvantage because all options transactions must clear via a clearing firm. Such clearing firms can then choose to pass through all, a portion, or none of the cost of the ORF to its customers, i.e., the entering firms. As noted above, the ORF is collected from OTP Holder clearing firms by the OCC on behalf of NYSE Arca and is assessed on all options transactions that are cleared at the OCC in the Customer range. In addition, the Exchange notes that the costs relating to monitoring OTP Holders with respect to Customer trading activity are generally higher than the costs associated with monitoring OTP Holders that do not engage in Customer trading activity, which tends to be more automated and less labor-intensive. By contrast, regulating OTP Holders that engage in Customer trading activity is generally more labor intensive and requires a greater expenditure of human and technical resources as the Exchange needs to review not only the trading activity on behalf of Customers, but also the OTP Holder’s relationship with its Customers via more labor-intensive exam-based programs. As a result, the costs associated with administering the customer component of the Exchange’s overall regulatory program are materially higher than the costs associated with administering the noncustomer component (e.g., OTP Holder proprietary transactions) of its regulatory program. The Exchange believes that the proposed reduction of ORF from $0.0055 per contract to $0.0038 per contract effective January 1, 2024, along with a temporary waiver of the ORF for the three months prior to such change, is an equitable allocation of fees because the new ORF rate would apply equally to all OTP Holders on all their transactions that clear in the Customer range at the OCC, and the Exchange would not assess the ORF on any such transactions during the Waiver Period. The proposed change also would permit the Exchange to efficiently adjust the ORF, which is applicable to all OTP Holders’ transactions that clear in the Customer range at the OCC, to an amount designed to recover a material portion, but not all, of the Exchange’s projected ORF Costs. The Exchange also believes E:\FR\FM\10OCN1.SGM 10OCN1 ddrumheller on DSK120RN23PROD with NOTICES1 69972 Federal Register / Vol. 88, No. 194 / Tuesday, October 10, 2023 / Notices that recommencing the ORF at the decreased rate of $0.0038 per contract effective January 1, 2024, unless the Exchange determines it necessary to further adjust the ORF to ensure that ORF collections do not exceed a material portion of ORF Costs, is equitable because the ORF would resume applying equally to all OTP Holders on options transactions in the Customer range, at a rate designed to recover a material portion, but not all, of the Exchange’s projected ORF Costs. 2024 at $0.0038, unless the Exchange determines it necessary to further adjust the ORF to ensure that ORF collections do not exceed a material portion of ORF Costs, is not unfairly discriminatory because the Exchange would resume assessing an ORF designed to recover a material portion, but not all, of the Exchange’s projected ORF Costs, and the ORF would resume applying equally to all OTP Holders based on their transactions that clear in the Customer range at the OCC. The Proposed Fee Is Not Unfairly Discriminatory The Exchange believes that the proposal is not unfairly discriminatory. The Exchange believes that the proposed waiver of the ORF would not place certain market participants at an unfair disadvantage because all options transactions must clear via a clearing firm. Such clearing firms can then choose to pass through all, a portion, or none of the cost of the ORF to its customers, i.e., the entering firms. As noted above, the ORF is collected from OTP Holder clearing firms by the OCC on behalf of NYSE Arca and is assessed on options transactions that are cleared at the OCC in the Customer range. In addition, the Exchange notes that the costs relating to monitoring OTP Holders with respect to Customer trading activity are generally higher than the costs associated with monitoring OTP Holders that do not engage in Customer trading activity, which tends to be more automated and less labor-intensive. By contrast, regulating OTP Holders that engage in Customer trading activity is generally more labor intensive and requires a greater expenditure of human and technical resources as the Exchange needs to review not only the trading activity on behalf of Customers, but also the OTP Holder’s relationship with its Customers via more labor-intensive exam-based programs. As a result, the costs associated with administering the customer component of the Exchange’s overall regulatory program are materially higher than the costs associated with administering the noncustomer component (e.g., OTP Holder proprietary transactions) of its regulatory program. Thus, the Exchange believes the proposed reduction of ORF and accompanying temporary waiver of the ORF is not unfairly discriminatory because the changes would apply to all OTP Holders subject to the ORF and the Exchange would provide all such OTP Holders with 30 days’ advance notice of planned changes to the ORF. The Exchange also believes that recommencing the ORF on January 1, B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Intramarket Competition. The Exchange believes the proposed change would not impose an undue burden on intramarket competition because the ORF is charged to all OTP Holders on all their transactions that clear in the Customer range at the OCC; thus, the amount of ORF imposed is based on the amount of Customer volume transacted. The Exchange believes that the proposed reduction of the ORF rate and temporary waiver of the ORF would not place certain market participants at an unfair disadvantage because all options transactions must clear via a clearing firm. Such clearing firms can then choose to pass through all, a portion, or none of the cost of the ORF to its customers, i.e., the entering firms. The ORF is collected from OTP Holder clearing firms by the OCC on behalf of NYSE Arca and is assessed on all options transactions cleared at the OCC in the Customer range. The Exchange also believes recommencing the ORF on January 1, 2024 at $0.0038 (unless the Exchange determines it necessary at that time to adjust the ORF to ensure that ORF collections do not exceed a material portion of ORF Costs) would not impose an undue burden on competition because the proposed decreased rate would apply equally to all OTP Holders subject to ORF and would permit the Exchange to resume assessing an ORF that is designed to recover a material portion, but not all, of the Exchange’s projected ORF Costs and the ORF would, as currently, apply to all OTP Holders on their options transactions that clear in the Customer range at the OCC. The Exchange will continue to provide advance notice of changes to the ORF to all OTP Holders via Trader Update to provide OTP Holders with sufficient opportunity to configure their systems to account properly for both the Waiver Period and VerDate Sep<11>2014 18:39 Oct 06, 2023 Jkt 262001 PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 resumption of ORF at a new, lower rate on January 1, 2024. Intermarket Competition. The proposed fee change is not designed to address any competitive issues. Rather, the proposed change is designed to help the Exchange adequately fund its regulatory activities while seeking to ensure that total collections from regulatory fees do not exceed total regulatory costs. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) 14 of the Act and subparagraph (f)(2) of Rule 19b–4 15 thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 16 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– NYSEARCA–2023–68 on the subject line. 14 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 16 15 U.S.C. 78s(b)(2)(B). 15 17 E:\FR\FM\10OCN1.SGM 10OCN1 Federal Register / Vol. 88, No. 194 / Tuesday, October 10, 2023 / Notices 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–2023–68. 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–2023–68 and should be submitted on or before October 31, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Sherry R. Haywood, Assistant Secretary. SECURITIES AND EXCHANGE COMMISSION SECURITIES AND EXCHANGE COMMISSION [Release No. 34–98680] [Release No. 34–98678; File No. SR– NYSEAMER–2023–48] Order Cancelling Registrations of Certain Municipal Advisors Pursuant to Section 15B(c)(3) of the Securities Exchange Act of 1934 October 3, 2023. The municipal advisors whose names appear in the attached Appendix, hereinafter referred to as the ‘‘registrants,’’ are registered as municipal advisors pursuant to Sections 15B(a)(1)(B) and 15B(a)(2) of the Securities Exchange Act of 1934 (the ‘‘Act’’). On August 29, 2023, a Notice of Intention to Cancel Registration of Certain Municipal Advisors, including the registrants, was published in the Federal Register (Securities Exchange Act Release No. 34–98208). The notice gave interested persons an opportunity to request a hearing and stated that an order or orders cancelling the registrations would be issued unless a hearing was ordered. No request for a hearing has been filed by any of the registrants, and the Securities and Exchange Commission (the ‘‘Commission’’) has not ordered a hearing. Pursuant to Section 15B(c)(3) of the Act, the Commission has found that each of the registrants is no longer in existence or has ceased to do business as a municipal advisor. Accordingly, It is ordered, pursuant to Section 15B(c)(3) of the Act, that the registration of each registrant be, and hereby is, cancelled. For the Commission, by the Office of Municipal Securities, pursuant to delegated authority.1 Sherry R. Haywood, Assistant Secretary. Appendix: Registrant name SEC ID No. Betnun Nathan S ................................... Christen Group, Inc ............................... Southern Cross Financial Group LLC ... OCONNOR & Co SECURITIES, INC ... Capital Alaska LLC ............................... Fray Municipal Securities ...................... Massena Associates LLC ..................... SUMMERS, CARROLL, WHISLER LLC 867–02495 867–02467 867–02544 867–01245 867–02604 867–02064 867–02569 867–01938 [FR Doc. 2023–22347 Filed 10–6–23; 8:45 am] ddrumheller on DSK120RN23PROD with NOTICES1 BILLING CODE 8011–01–P Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the NYSE American Options Fee Schedule To Modify the Options Regulatory Fee October 3, 2023. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on September 29, 2023, NYSE American LLC (‘‘NYSE American’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE American Options Fee Schedule (‘‘Fee Schedule’’) regarding the Options Regulatory Fee (‘‘ORF’’). 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. [FR Doc. 2023–22349 Filed 10–6–23; 8:45 am] BILLING CODE 8011–01–P 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 17 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 18:39 Oct 06, 2023 1 17 Jkt 262001 PO 00000 CFR 200.30–3a(a)(1)(ii). Frm 00079 Fmt 4703 Sfmt 4703 69973 E:\FR\FM\10OCN1.SGM 10OCN1

Agencies

[Federal Register Volume 88, Number 194 (Tuesday, October 10, 2023)]
[Notices]
[Pages 69969-69973]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22347]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98676; File No. SR-NYSEARCA-2023-68]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the NYSE 
Arca Options Fee Schedule To Modify the Options Regulatory Fee

October 3, 2023.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on September 29, 2023, NYSE Arca, Inc. (``NYSE Arca'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
and II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 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 amend the NYSE Arca Options Fee Schedule 
(``Fee Schedule'') regarding the Options Regulatory Fee (``ORF''). The 
proposed rule change is available on the Exchange's website at 
www.nyse.com, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to decrease the ORF 
from $0.0055 per contract to $0.0038 per contract, effective on January 
1, 2024, and to provide for a temporary waiver of the ORF for the three 
months leading up to such change, from October 1, 2023 through December 
31, 2023 (the ``Waiver Period'').\4\
---------------------------------------------------------------------------

    \4\ See proposed Fee Schedule, NYSE Arca GENERAL OPTIONS and 
TRADING PERMIT (OTP) FEES, Regulatory Fees, Options Regulatory Fee 
(``ORF''). The Exchange proposes to modify the Fee Schedule to 
provide for a waiver of ORF from October 1, 2023 until December 31, 
2023, and to provide that the ORF rate would be $0.0038 when the 
Exchange resumes assessing ORF on January 1, 2024.
---------------------------------------------------------------------------

Background
    As a general matter, the Exchange may only use regulatory funds 
such as the ORF ``to fund the legal, regulatory, and surveillance 
operations'' of the Exchange.\5\ More specifically, the ORF is designed 
to recover a material portion, but not all, of the Exchange's costs for 
the supervision and regulation of OTP Holders and OTP Firms 
(collectively, ``OTP Holders''), including the Exchange's regulatory 
program and legal expenses associated with options regulation, such as 
the costs related to in-house staff, third-party service providers, and 
technology that facilitate regulatory functions such as surveillance, 
investigation, examinations and enforcement (collectively, the ``ORF 
Costs''). ORF funds may also be used for indirect expenses such as 
human resources and other administrative costs. The Exchange monitors 
the amount of revenue collected from the ORF to ensure that this 
revenue, in combination with other regulatory fees and fines, does not 
exceed regulatory costs.
---------------------------------------------------------------------------

    \5\ The Exchange considers surveillance operations part of 
regulatory operations. The limitation on the use of regulatory funds 
also provides that they shall not be distributed. See Bylaws of NYSE 
Arca, Inc., Art. II, Sec. 2.03.
---------------------------------------------------------------------------

    The ORF is assessed on OTP Holders for options transactions that 
are cleared by the OTP Holder through the Options Clearing Corporation 
(``OCC'') in the Customer range regardless of the exchange on which the 
transaction occurs and is collected from OTP Holder clearing firms by 
the OCC on behalf of NYSE Arca.\6\ All options transactions must clear 
via a clearing firm and such clearing firms can then choose to pass 
through all, a portion, or none of the cost of the ORF to its 
customers, i.e., the entering firms. The Exchange notes that the costs 
relating to monitoring OTP Holders with respect to Customer trading 
activity are generally higher than the costs associated with monitoring 
OTP Holders that do not engage in Customer trading activity, which 
tends to be more automated and less labor-intensive. By contrast, 
regulating OTP Holders that engage in Customer trading activity is 
generally more labor intensive and requires a greater expenditure of 
human and technical resources as the Exchange needs to review not only 
the trading activity on behalf of Customers, but also the OTP Holder's 
relationship with its Customers via more labor-intensive exam-based 
programs.\7\ As a result, the costs associated with administering the 
customer component of the Exchange's overall regulatory program are 
materially higher than the costs associated with administering the non-
customer component (e.g., OTP Holder proprietary transactions) of its 
regulatory program.
---------------------------------------------------------------------------

    \6\ See Fee Schedule, NYSE Arca GENERAL OPTIONS and TRADING 
PERMIT (OTP) FEES, Regulatory Fees, Options Regulatory Fee 
(``ORF''). The Exchange uses reports from OCC when assessing and 
collecting the ORF. The ORF is not assessed on outbound linkage 
trades. An OTP Holder is not assessed the fee until it has satisfied 
applicable technological requirements necessary to commence 
operations on NYSE Arca. See id.
    \7\ The Exchange notes that many of the Exchange's market 
surveillance programs require the Exchange to look at and evaluate 
activity across all options markets, such as surveillance for 
position limit violations, manipulation, front-running and contrary 
exercise advice violations/expiring exercise declarations. The 
Exchange and other options SROs are parties to a 17d-2 agreement 
allocating among the SROs regulatory responsibilities relating to 
compliance by the common members with rules for expiring exercise 
declarations, position limits, OCC trade adjustments, and Large 
Option Position Report reviews. See, e.g., Securities Exchange Act 
Release No. 85097 (February 11, 2019), 84 FR 4871 (February 19, 
2019).
---------------------------------------------------------------------------

ORF Collections and Monitoring of ORF
    Exchange rules establish that market participants must be notified 
of any

[[Page 69970]]

change in the ORF via Trader Update at least 30 calendar days prior to 
the effective date of the change.\8\
---------------------------------------------------------------------------

    \8\ See Fee Schedule, supra note 6.
---------------------------------------------------------------------------

    Because the ORF is based on options transactions volume, the amount 
of ORF collected is variable. For example, if options transactions 
reported to OCC in a given month increase, the ORF collected from OTP 
Holders will likely increase as well. Similarly, if options 
transactions reported to OCC in a given month decrease, the ORF 
collected from OTP Holders will likely decrease as well. Accordingly, 
the Exchange monitors the amount of ORF collected to ensure that it 
does not exceed the ORF Costs. If the Exchange determines the amount of 
ORF collected exceeds ORF Costs, the Exchange will adjust the ORF by 
submitting a fee change filing to the Securities and Exchange 
Commission (the ``Commission'').
Reduction of ORF and Temporary ORF Waiver
    The Exchange currently assesses an ORF of $0.0055 per contract. 
Based on the Exchange's recent review of regulatory costs, ORF 
collections, and options transaction volume, the Exchange proposes to 
decrease the ORF from the current rate of $0.0055 per contract to 
$0.0038 per contract effective January 1, 2024 and, in concert with the 
proposed reduction of the ORF, to waive the ORF from October 1, 2023 
through December 31, 2023 in order to help ensure that the amount 
collected from the ORF, in combination with other regulatory fees and 
fines, does not exceed the Exchange's total regulatory costs. The 
Exchange notified OTP Holders of the proposed temporary waiver of the 
ORF via Trader Update on September 1, 2023 (which was at least 30 
calendar days prior to the proposed operative date of the waiver, 
October 1, 2023) \9\ and will also notify OTP Holders of the proposed 
change to the ORF rate via Trader Update at least 30 days prior to the 
proposed operative date of the new rate, January 1, 2024. The Exchange 
believes such notices will ensure that market participants have 
sufficient opportunity to configure their systems to account properly 
for both the ORF waiver and revised ORF.
---------------------------------------------------------------------------

    \9\ See https://www.nyse.com/trader-update/history#110000672056.
---------------------------------------------------------------------------

    The proposed modification of the ORF and accompanying waiver are 
informed by the Exchange's analysis of recent options volumes. The 
Exchange proposes to reduce the ORF because it believes that options 
transaction volume has increased to a level that if the ORF is not 
adjusted, the ORF revenue to the Exchange year-over-year could exceed a 
material portion of the Exchange's ORF Costs.\10\ The options industry 
has continued to experience extremely high options trading volumes and 
volatility, as illustrated in the table below reflecting industry data 
from OCC for 2021, 2022, and 2023: \11\
---------------------------------------------------------------------------

    \10\ The Exchange notes that it last modified the ORF rate in 
February 2014. See Securities Exchange Act Release No. 71409 
(January 27, 2014), 79 FR 5499 (January 31, 2014) (SR-NYSEArca-2014-
06). The Exchange also previously filed to waive the ORF from 
November 1, 2022 through January 31, 2023. See Securities Exchange 
Act Release No. 96374 (November 22, 2022), 87 FR 73372 (November 29, 
2022) (SR-NYSEARCA-2022-78).
    \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. 
The volume discussed in this filing is based on a compilation of OCC 
data for monthly volume of equity-based options and monthly volume 
of ETF-based options, in contract sides.

----------------------------------------------------------------------------------------------------------------
                                                                       2021            2022            2023
----------------------------------------------------------------------------------------------------------------
Customer ADV....................................................      34,730,276      34,091,409      35,957,560
Total ADV.......................................................      74,339,870      76,488,459      81,483,685
----------------------------------------------------------------------------------------------------------------

    For example, although customer average daily volume decreased 
slightly from 2021 to 2022, both total average daily volume and 
customer average daily volume in 2023 increased over the already 
elevated levels in 2021 and 2022.
    The below industry data from OCC demonstrates the high options 
trading volumes and volatility that the industry has continued to 
experience in 2023:

----------------------------------------------------------------------------------------------------------------
                                    April 2023       May 2023        June 2023       July 2023      August 2023
----------------------------------------------------------------------------------------------------------------
Customer ADV....................      32,498,578      34,535,662      37,028,394      35,965,918      35,387,029
Total ADV.......................      73,005,006      78,571,791      83,362,815      80,391,999      81,381,473
----------------------------------------------------------------------------------------------------------------

    The persisting increased options volumes have, in turn, impacted 
the amount of ORF collected. To determine whether ORF fees should be 
adjusted, the Exchange reviewed options transaction volume from 2021 
through August 2023. Based on the Exchange's review and analysis of 
historical options transaction volume and predictions regarding future 
options transaction volume, the Exchange projects that options 
transaction volume is likely to continue to remain high into 2024.
    The Exchange believes that it has sufficient information based on 
recent options transaction volume to determine how to adjust the ORF 
for 2024. Taking into consideration both the sustained increase in 
options transaction volume, which has persisted into 2023 (and which 
has translated to increased ORF collection), the Exchange proposes to 
decrease the ORF from $0.0055 to $0.0038 per contract. The Exchange 
further proposes to make this change effective on January 1, 2024 and 
to not assess any ORF during the Waiver Period, rather than further 
adjusting the ORF for the duration of the Waiver Period, as the 
Exchange believes this proposal would most efficiently accomplish the 
goals of ensuring that ORF collection does not exceed ORF Costs for 
2023 and modifying the ORF rate so that the Exchange may assess an ORF 
that is designed to recover a material portion, but not all, of the 
Exchange's projected ORF Costs when the Exchange resumes assessing ORF 
on January 1, 2024.
    The proposed decrease in ORF is based on the Exchange's estimated 
projections for its regulatory costs, balanced with the observed 
increase in options volumes. The Exchange cannot predict whether 
options volume will remain at the current level going forward and 
projections for future regulatory costs are estimated, preliminary, and 
may change. However, the Exchange believes that amounts collected from 
assessment of the ORF (as modified) will continue to cover a material 
portion, but not all, of the

[[Page 69971]]

Exchange's ORF Costs. In addition, because of the sustained impact of 
the elevated trading volumes that have persisted into 2023, along with 
the difficulty of predicting when volumes may return to more normal 
levels, the Exchange believes that waiving ORF from October 1, 2023 to 
December 31, 2023 and implementing the reduced ORF rate of $0.0038 on 
January 1, 2024 (rather than reducing ORF more drastically in the 
interim) would lessen the potential for generating excess funds and 
help ensure that the ORF is designed to recover a material portion, but 
not all, of the Exchange's projected ORF Costs. The Exchange will 
continue monitoring ORF Costs in advance of the resumption of the ORF 
and when it resumes assessing ORF on January 1, 2024, and, if the 
Exchange determines that, in light of projected volumes and ORF Costs, 
the ORF rate should be further modified to help ensure that ORF 
collections would not exceed a material portion of ORF Costs, adjust 
the ORF by submitting a proposed rule change and notifying OTP Holders 
of such change by Trader Update.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) \12\ of the Act, in general, and 
Section 6(b)(4) and (5) \13\ of the Act, in particular, in that it is 
designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges among its members and other persons using its 
facilities and does not unfairly discriminate between customers, 
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

The Proposal Is Reasonable
    The Exchange believes the proposed reduction of ORF and 
accompanying temporary waiver of the ORF is reasonable because it would 
help ensure that collections from the ORF do not exceed a material 
portion of the Exchange's ORF Costs. As noted above, the ORF is 
designed to recover a material portion, but not all, of the Exchange's 
ORF Costs.
    Although there can be no assurance that the Exchange's final costs 
for 2023 will not differ materially from its expectations and prior 
practice, nor can the Exchange predict with certainty whether options 
volume will remain at current or similar levels going forward, the 
Exchange believes that the amount collected based on the current ORF 
rate, when combined with regulatory fees and fines, may result in 
collections in excess of the estimated ORF Costs for the year and going 
forward. Particularly, as noted above, the options market has continued 
to experience elevated volumes and volatility in 2023, thereby 
resulting in substantially higher ORF collections than projected. The 
Exchange therefore believes that it would be reasonable to decrease the 
ORF from $0.0055 per contract to $0.0038 per contract effective January 
1, 2024, and, in connection with that change, to waive ORF from October 
1, 2023 through December 31, 2023. The Exchange believes the proposed 
change is reasonable because it would help the Exchange ensure that ORF 
collection does not exceed a material portion of the ORF Costs for 2023 
and facilitate the efficient implementation of a revised ORF rate 
designed to recover a material portion, but not all, of the Exchange's 
projected ORF Costs. The Exchange proposes to make the new ORF rate 
effective on January 1, 2024 and to not assess any ORF during the 
Waiver Period, rather than further adjusting the ORF for the duration 
of the Waiver Period, as the Exchange believes this proposal would most 
efficiently accomplish these objectives. The Exchange believes that not 
assessing ORF during the Waiver Period and taking into account all of 
the Exchange's other regulatory fees and fines would allow the Exchange 
to continue covering a material portion of ORF Costs, while lessening 
the potential for generating excess funds that may otherwise occur 
using the current rate. The Exchange also believes that it is 
reasonable to resume ORF at the decreased rate of $0.0038 on January 1, 
2024. The proposed rate of $0.0038 per contract is based on the 
Exchange's estimated projections for its regulatory costs, balanced 
with the increase in options volumes that has persisted into 2023 and 
that is likely to continue into 2024; the Exchange thus believes that 
resumption of the ORF at this rate on January 1, 2024 is reasonable 
because it would permit the Exchange to resume assessing an ORF that is 
designed to recover a material portion, but not all, of the Exchange's 
projected ORF Costs. The Exchange would continue monitoring ORF Costs 
in advance of the resumption of the ORF and when it resumes assessing 
ORF on January 1, 2024 and, if the Exchange determines that, in light 
of projected volumes and ORF Costs, the ORF rate should be further 
modified to help ensure that ORF collections would not exceed a 
material portion of ORF Costs, further adjust the ORF by submitting a 
proposed rule change and notifying OTP Holders of such change by Trader 
Update.
The Proposal Is an Equitable Allocation of Fees
    The Exchange believes its proposal is an equitable allocation of 
fees among its market participants. The Exchange believes that the 
proposed waiver would not place certain market participants at an 
unfair disadvantage because all options transactions must clear via a 
clearing firm. Such clearing firms can then choose to pass through all, 
a portion, or none of the cost of the ORF to its customers, i.e., the 
entering firms. As noted above, the ORF is collected from OTP Holder 
clearing firms by the OCC on behalf of NYSE Arca and is assessed on all 
options transactions that are cleared at the OCC in the Customer range. 
In addition, the Exchange notes that the costs relating to monitoring 
OTP Holders with respect to Customer trading activity are generally 
higher than the costs associated with monitoring OTP Holders that do 
not engage in Customer trading activity, which tends to be more 
automated and less labor-intensive. By contrast, regulating OTP Holders 
that engage in Customer trading activity is generally more labor 
intensive and requires a greater expenditure of human and technical 
resources as the Exchange needs to review not only the trading activity 
on behalf of Customers, but also the OTP Holder's relationship with its 
Customers via more labor-intensive exam-based programs. As a result, 
the costs associated with administering the customer component of the 
Exchange's overall regulatory program are materially higher than the 
costs associated with administering the non-customer component (e.g., 
OTP Holder proprietary transactions) of its regulatory program. The 
Exchange believes that the proposed reduction of ORF from $0.0055 per 
contract to $0.0038 per contract effective January 1, 2024, along with 
a temporary waiver of the ORF for the three months prior to such 
change, is an equitable allocation of fees because the new ORF rate 
would apply equally to all OTP Holders on all their transactions that 
clear in the Customer range at the OCC, and the Exchange would not 
assess the ORF on any such transactions during the Waiver Period. The 
proposed change also would permit the Exchange to efficiently adjust 
the ORF, which is applicable to all OTP Holders' transactions that 
clear in the Customer range at the OCC, to an amount designed to 
recover a material portion, but not all, of the Exchange's projected 
ORF Costs. The Exchange also believes

[[Page 69972]]

that recommencing the ORF at the decreased rate of $0.0038 per contract 
effective January 1, 2024, unless the Exchange determines it necessary 
to further adjust the ORF to ensure that ORF collections do not exceed 
a material portion of ORF Costs, is equitable because the ORF would 
resume applying equally to all OTP Holders on options transactions in 
the Customer range, at a rate designed to recover a material portion, 
but not all, of the Exchange's projected ORF Costs.
The Proposed Fee Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. The Exchange believes that the proposed waiver of the 
ORF would not place certain market participants at an unfair 
disadvantage because all options transactions must clear via a clearing 
firm. Such clearing firms can then choose to pass through all, a 
portion, or none of the cost of the ORF to its customers, i.e., the 
entering firms. As noted above, the ORF is collected from OTP Holder 
clearing firms by the OCC on behalf of NYSE Arca and is assessed on 
options transactions that are cleared at the OCC in the Customer range. 
In addition, the Exchange notes that the costs relating to monitoring 
OTP Holders with respect to Customer trading activity are generally 
higher than the costs associated with monitoring OTP Holders that do 
not engage in Customer trading activity, which tends to be more 
automated and less labor-intensive. By contrast, regulating OTP Holders 
that engage in Customer trading activity is generally more labor 
intensive and requires a greater expenditure of human and technical 
resources as the Exchange needs to review not only the trading activity 
on behalf of Customers, but also the OTP Holder's relationship with its 
Customers via more labor-intensive exam-based programs. As a result, 
the costs associated with administering the customer component of the 
Exchange's overall regulatory program are materially higher than the 
costs associated with administering the non-customer component (e.g., 
OTP Holder proprietary transactions) of its regulatory program. Thus, 
the Exchange believes the proposed reduction of ORF and accompanying 
temporary waiver of the ORF is not unfairly discriminatory because the 
changes would apply to all OTP Holders subject to the ORF and the 
Exchange would provide all such OTP Holders with 30 days' advance 
notice of planned changes to the ORF. The Exchange also believes that 
recommencing the ORF on January 1, 2024 at $0.0038, unless the Exchange 
determines it necessary to further adjust the ORF to ensure that ORF 
collections do not exceed a material portion of ORF Costs, is not 
unfairly discriminatory because the Exchange would resume assessing an 
ORF designed to recover a material portion, but not all, of the 
Exchange's projected ORF Costs, and the ORF would resume applying 
equally to all OTP Holders based on their transactions that clear in 
the Customer range at the OCC.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.
    Intramarket Competition. The Exchange believes the proposed change 
would not impose an undue burden on intramarket competition because the 
ORF is charged to all OTP Holders on all their transactions that clear 
in the Customer range at the OCC; thus, the amount of ORF imposed is 
based on the amount of Customer volume transacted. The Exchange 
believes that the proposed reduction of the ORF rate and temporary 
waiver of the ORF would not place certain market participants at an 
unfair disadvantage because all options transactions must clear via a 
clearing firm. Such clearing firms can then choose to pass through all, 
a portion, or none of the cost of the ORF to its customers, i.e., the 
entering firms. The ORF is collected from OTP Holder clearing firms by 
the OCC on behalf of NYSE Arca and is assessed on all options 
transactions cleared at the OCC in the Customer range. The Exchange 
also believes recommencing the ORF on January 1, 2024 at $0.0038 
(unless the Exchange determines it necessary at that time to adjust the 
ORF to ensure that ORF collections do not exceed a material portion of 
ORF Costs) would not impose an undue burden on competition because the 
proposed decreased rate would apply equally to all OTP Holders subject 
to ORF and would permit the Exchange to resume assessing an ORF that is 
designed to recover a material portion, but not all, of the Exchange's 
projected ORF Costs and the ORF would, as currently, apply to all OTP 
Holders on their options transactions that clear in the Customer range 
at the OCC. The Exchange will continue to provide advance notice of 
changes to the ORF to all OTP Holders via Trader Update to provide OTP 
Holders with sufficient opportunity to configure their systems to 
account properly for both the Waiver Period and resumption of ORF at a 
new, lower rate on January 1, 2024.
    Intermarket Competition. The proposed fee change is not designed to 
address any competitive issues. Rather, the proposed change is designed 
to help the Exchange adequately fund its regulatory activities while 
seeking to ensure that total collections from regulatory fees do not 
exceed total regulatory costs.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \14\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \15\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-2023-68 on the subject line.

[[Page 69973]]

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-2023-68. 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-2023-68 and should 
be submitted on or before October 31, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-22347 Filed 10-6-23; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.