Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the NYSE American Options Fee Schedule, 7750-7756 [2024-02160]

Download as PDF 7750 Federal Register / Vol. 89, No. 24 / Monday, February 5, 2024 / Notices 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–MRX–2024–02 and should be submitted on or before February 26, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.31 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–02162 Filed 2–2–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–99449; File No. SR– NYSEAMER–2024–06] Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the NYSE American Options Fee Schedule January 30, 2024. lotter on DSK11XQN23PROD with NOTICES1 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 January 25, 2024, 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 modify the NYSE American Options Fee Schedule (‘‘Fee Schedule’’). The Exchange proposes to implement the fee change effective January 25, 2024.4 The 31 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 4 The Exchange originally filed to amend the Fee Schedule on January 2, 2024 (NYSEAmer–2023–69) 1 15 VerDate Sep<11>2014 17:56 Feb 02, 2024 Jkt 262001 proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this filing [sic] to amend the Fee Schedule in a number of ways as described herein. The Exchange proposes to implement the rule change on January 25, 2024. First, the Exchange proposes to modify the Fee Schedule to remove reference to costs that are no longer charged and are therefore inapplicable. Specifically, the Exchange proposes to modify the Fee Schedule to remove ‘‘Login’’ costs from Sections III.E.1 and IV and to remove ‘‘Floor Broker Handheld’’ costs from Section IV. Next, the Exchange proposes to modify the Floor Broker Fixed Cost Prepayment Incentive Program (the ‘‘FB Prepay Program’’ or ‘‘Program’’), a prepayment incentive program that allows Floor Brokers to prepay certain of their annual Eligible Fixed Costs in exchange for the opportunity to qualify for certain volume rebates.5 Specifically, the Manual Billable Volume Rebate is designed to encourage Floor Brokers to increase their monthly volume in [sic] and withdrew such filing on January 12, 2024 (SR–NYSEAmer–2024–05) [sic], which latter filing the Exchange withdrew on January 25, 2024. 5 See Fee Schedule, Section III.E.1., Floor Broker Fixed Cost Prepayment Incentive Program (the ‘‘FB Prepay Program’’). ‘‘Eligible Fixed Costs’’ include monthly ATP Fees, the Floor Access Fee, and certain monthly Floor communication, connectivity, equipment and booth or podia fees, as set forth in the table in Section III.E.1. The Exchange notes that the FB Prepay Program is currently structured similarly to the Floor Broker prepayment program offered by its affiliated exchange, NYSE Arca, Inc. (‘‘NYSE Arca’’). See NYSE Arca Options Fee Schedule, FLOOR BROKER FIXED COST PREPAYMENT INCENTIVE PROGRAM (the ‘‘FB Prepay Program’’). PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 billable manual contract sides to qualify for a rebate; increasing volumes qualify the Floor Broker for a higher level of rebate. Additional rebates may be earned by meeting the qualification levels of the Floor Broker Manual Billable Incentive Program.6 Participating Floor Brokers receive their rebates payable on a monthly basis.7 Floor Brokers that wish to participate in the FB Prepay Program for the following calendar year must notify the Exchange no later than the last business day of December in the current year.8 The Exchange proposes to eliminate the Floor Broker Manual Billable Incentive Program and accompanying monthly rebates 9 and instead provide Floor Brokers participating in the FB Prepay Program with enhanced opportunities for monthly rebates based on manual billable transaction volume (the ‘‘Manual Billable Rebate Program’’) and the QCC Billable Bonus Rebate. The calculation of volume on which rebates earned through the Manual Billable Rebate Program would be paid is based on transactions for which at least one side is subject to manual transaction fees and excludes volume from QCC transactions, unless otherwise specified.10 The Exchange proposes to 6 See Fee Schedule, Section III.E.2., Floor Broker Manual Billable Incentive Program. 7 See Fee Schedule, Section III.E. The Exchange proposes to remove the preamble to Section III.E., which relates to the Exchange’s already-completed migration to the Pillar trading platform, because the text is no longer applicable and its removal would add clarity to the Fee Schedule. See proposed Fee Schedule, Section III.E. 8 See Fee Schedule, Section III.E (providing, in relevant part, that the notification ‘‘email to enroll in the Program must originate from an officer of the Floor Broker organization and, except as provided for below, represents a binding commitment through the end of the following calendar year.’’). The Exchange proposes to modify Section III.E. of the Fee Schedule to remove the now obsolete phrase ‘‘except as provided for below,’’ as there is no exception to the notification requirement, which modification will add clarity, transparency, and internal consistency to the Fee Schedule. See proposed Fee Schedule, Section III.E. 9 To effect the proposed change to eliminate the Floor Broker Manual Billable Incentive Program and related rebates, the Exchange proposes to delete in its entirety Section III.E.2. of the Fee Schedule. In addition, for consistency, the Exchange proposes to delete from the Table of Contents reference to this Section III.E.2., which is currently (and erroneously) listed as ‘‘Reserved’’. See proposed Fee Schedule, Table of Contents. 10 See proposed Fee Schedule, Section III.E.1 (excluding QCC transactions from volume calculation ‘‘unless otherwise specified’’), which would add clarity, transparency, and internal consistency to the Fee Schedule. For certain volume thresholds (i.e., those based solely on ‘‘manual billable sides’’), the Exchange proposes to continue to exclude QCC volume from the calculation of eligible volume for rebates paid through the Manual Billable Rebate Program because Floor Brokers would continue to be eligible for separate credits and rebates for QCC transactions through the QCC Billable Bonus Rebate. E:\FR\FM\05FEN1.SGM 05FEN1 Federal Register / Vol. 89, No. 24 / Monday, February 5, 2024 / Notices continue to exclude any volume calculated to achieve the Strategy Execution Fee Cap, regardless of whether the cap is achieved, from the Manual Billable Rebate Program because fees on such volume are already capped and therefore such volume does not increase billable manual volume. The Exchange will not issue any refunds in the event that a Floor Broker organization’s prepaid Eligible Fixed Costs exceeds actual annual costs.11 The Exchange proposes to modify the qualification levels and corresponding rebates in the Manual Billable Rebate Program as follows. • First, the Exchange proposes to add a new qualification level that would provide for a ($0.05) rebate per billable side for Floor Brokers that execute a minimum of 500,000 manual billable sides. This proposed new qualification threshold provides for a lower volume threshold than is currently required to achieve a rebate, with the distinction that it does not include ‘‘combined’’ QCC transactions—only manual executions. The Exchange believes that this proposed qualification threshold may make the rebate more achievable for Floor Brokers, especially Floor Brokers that conduct more manual transactions than QCC transactions. • Second, the Exchange proposes to modify the next-highest qualification level from 1 million ‘‘combined manual and QCC billable contracts’’ for a rebate of ($0.05) per billable side to 1.1 million ‘‘manual billable sides,’’ which are no longer ‘‘combined’’ with QCC transactions and to raise the corresponding rebate to ($0.07) per billable side. This proposed change raises the potential rebate along with the number of required manual executions while at the same time removing QCC executions from eligibility. • Third, the Exchange proposes to remove the existing qualification level that offers an ($0.08) rebate per billable side for Floor Brokers that execute 3 million combined manual and QCC billable contracts. • Finally, the Exchange proposes to offer two new ‘‘Additional’’ rebates as described below. Æ As proposed, a Floor Broker that executes at least 7 million ‘‘combined manual billable and QCC billable contracts’’ is eligible to receive an additional rebate of one cent ($0.01) per billable side. However, a Floor Broker that executes at least 11 million ‘‘combined manual billable and QCC billable contracts’’ is eligible to instead receive an additional rebate of two cents ($0.02). The Exchange notes that it is not modifying the existing qualification level the requires a Floor Broker to execute 5 million ‘‘combined manual billable and QCC billable contracts’’ to achieve a ($0.10) rebate per billable side. The table below illustrates the monthly qualification levels and the related rebates that the Exchange proposes to make available through the Manual Billable Rebate Program, payable on a monthly basis: Manual billable rebate qualification Execute Execute Execute Execute Execute Rebate per billable side 500,000 manual billable sides ................................................................................................................................. 1.1 million manual billable sides ............................................................................................................................. 5 million combined manual billable and QCC billable contracts ............................................................................ 7 million combined manual billable and QCC billable contracts ............................................................................ 11 million combined manual billable and QCC billable contracts .......................................................................... Consistent with the current Manual Billable Rebate Program, Floor Brokers who achieve a Rebate Qualification level will earn the associated rebate back to the first contract and, as noted above, Participants that qualify for both ‘‘Additional’’ rebates are eligible to receive only one such rebate.12 The FB Prepay Program also currently offers participating Floor Brokers to be eligible to qualify for rebates on QCC transactions, payable on a monthly basis, in addition to the credits set forth in Section I.F (QCC Fees & Credits). The Exchange proposes to modify the volume thresholds required to achieve the ‘‘QCC Billable Bonus Rebate. Specifically, the Exchange proposes to reduce the qualification threshold for the ‘‘Prepay Bonus Level’’ from 2 million to 500,000 ‘‘QCC billable contracts.’’ The Exchange also proposes to modify the ‘‘Additional Bonus Level,’’ which is currently only achievable if a Floor Broker that conduct volume that is ‘‘100% above Prepay Bonus Level,’’ to instead require ($0.05). ($0.07). ($0.10). Additional ($0.01). Additional ($0.02). ‘‘4 million QCC billable contracts.’’ The proposed changes are designed to make the Prepay Bonus Level more achievable and the Additional Bonus Level more difficult to achieve. The Exchange is not proposing to modify the rebates available to Floor Brokers that achieve the new volume thresholds. The table below illustrates the proposed requirements to achieve the QCC Billable Bonus Rebate—both the Prepay Bonus Level and the Additional Bonus Level. Additional rebate on single billable side QCC contract QCC billable bonus rebate qualification Prepay Bonus Level—achieved with 500,000 QCC billable contracts ................................... Additional Bonus Level—achieved with 4 million QCC billable contracts .............................. lotter on DSK11XQN23PROD with NOTICES1 7751 ($0.02) ($0.04) Additional rebate on two billable side QCC contract ($0.04) ($0.06) As with other rebates, the QCC Billable Bonus Rebate would be payable back to the first side and Participants that qualify for more than one ‘‘Additional’’ rebate are eligible to receive only one such rebate.13 The Exchange further proposes to modify Section III.E.1. and Section I.F. to increase the maximum Floor Broker credits paid for QCC trades and rebates paid through the Manual Billable Rebate Program to $2,500,000 per month per 11 As discussed infra, the Exchange proposes to expand entry to the FB Prepay Program to mid-year and therefore will remove reference to actual ‘‘annual’’ costs. See proposed Schedule, Section III.E.1. 12 See proposed Fee Schedule, Section III.E.1 (providing that ‘‘[t]he Manual Billable Rebate (including the ‘‘Additional’’ rebates) is payable back to the first billable side. Qualifying Participants are eligible to receive only one ‘‘Additional’’ rebate’’) 13 See proposed Fee Schedule, Section III.E.1 (providing that ‘‘Qualifying Participants are eligible to receive only one ‘‘Additional’’ rebate’’). VerDate Sep<11>2014 17:56 Feb 02, 2024 Jkt 262001 PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 E:\FR\FM\05FEN1.SGM 05FEN1 7752 Federal Register / Vol. 89, No. 24 / Monday, February 5, 2024 / Notices lotter on DSK11XQN23PROD with NOTICES1 Floor Broker firm, an increase from the current monthly amount of 2,000,000 (the ‘‘Maximum Combined Rebate/ Credit’’).14 The proposed increase is designed to encourage Floor Broker firms to continue to direct transactions to the Exchange, despite increasing industry volumes making it less difficult to attain the maximum rebate. Next, the Exchange proposes to modify the FB Prepay Program to remove reference to a specific year (i.e., November 2022) and to instead reference ‘‘November of the current year’’ as the date that the Exchange will use for the calculation of a Floor Broker’s Eligible Fixed Costs for the following calendar year. The FB Prepay Program currently specifies that a Floor Broker that commits to the program will be invoiced in January for Eligible Fixed Costs, based on annualizing their Eligible Fixed Costs incurred in November 2022. The Exchange believes that this proposed change would prevent the Exchange from relying on a stale date and would add flexibility to the program (insofar as it would not need to be revised each year). Finally, the Exchange proposes to allow a Floor Broker to join the Program after the first of the year. To do so, similar to the protocol required of existing Program participants, such Floor Broker organizations would notify the Exchange in writing by emailing optionsbilling@nyse.com and indicating their commitment to submit prepayment for the balance of the calendar year; the email notification would have to originate from an officer of the Floor Broker organization and would represent a binding commitment through the balance of the calendar year.15 As further proposed, the Floor Broker organization would be enrolled in the Program beginning on the first day of the next full month and would be invoiced for that first full month for Eligible Fixed Costs and the balance of the year, based on annualizing for the remainder of the calendar year their Eligible Fixed Costs incurred in its first 14 See proposed Fee Schedule, Sections III.E.1 and I.F. (providing, in relevant, part that Floor Broker credits paid for QCC trades and rebates paid through the Manual Billable Rebate Program shall not combine to exceed $2,500,000 per month per Floor Broker firm). 15 See proposed Fee Schedule, FB Prepay Program (providing, in relevant part, that ‘‘[t]o participate in the FB Prepay Program after the first of the year, Floor Broker organizations must notify the Exchange in writing by emailing optionsbilling@ nyse.com, indicating a commitment to submit prepayment for the balance of the calendar year’’ and that the notification ‘‘email to enroll in the Program must originate from an officer of the Floor Broker organization and represents a binding commitment through the balance of the calendar year.’’). VerDate Sep<11>2014 17:56 Feb 02, 2024 Jkt 262001 full month in the Program.16 The Exchange notes that both the current and proposed methodology rely on recently incurred Eligible Fixed Costs to predict anticipated Eligible Fixed Costs. For current program Participants the Exchange relies on November costs; whereas, for later-joining Program participants, the Exchange would rely on costs incurred in the Floor Broker’s first full month in the Program. The Exchange believes that this approach allows the Exchange the flexibility to offer the FB Prepay Program to Floor Brokers that did not enroll before the end of the prior calendar year, including/especially Floor Brokers new to the Exchange, without putting these Floor Brokers at a competitive disadvantage. Finally, consistent with the current Program, the Exchange will not issue refunds if a Floor Broker organization’s prepaid Eligible Fixed Costs exceeds its actual costs; however, the Exchange proposes to remove reference to ‘‘annual’’ costs in the current Fee Schedule because this phrase would not apply to Floor Brokers that join the Program after the first of the year.17 Finally, as noted above, the Exchange proposes to eliminate the Floor Broker Manual Billable Incentive Program. The Exchange determined that this program was duplicative of the FB Prepay Program, which made it difficult for Floor Brokers to ascertain the total rebates earned. The Exchange believes that the proposed adjustments to the Prepay Program (including changes to the QCC Billable Bonus Rebate Qualification) would reduce potential confusion and would add clarity and transparency to the Fee Schedule. Although the Exchange cannot predict with certainty whether the proposed changes to the FB Prepay Program would encourage Floor Brokers to participate in the program or to increase either their manual billable volume or QCC volume, the Exchange believes that the proposed changes would continue to incent Floor Brokers to participate in the FB Prepay Program by adding flexibility to the structure of the Program, including by allowing Floor Brokers to join the Program after the first of the year and increasing the Maximum Combined Rebate/Credit. All Floor Brokers are eligible to participate in the FB Prepay Program and qualify for the proposed credits and rebates, and the credits and rebates are achievable in any given month without regard to volumes from any other month. The Exchange notes that the proposed restructuring of the FB Prepay Program (including by eliminating the Floor Broker Manual Billable Incentive Program) would more closely align the qualifications for and incentives offered through the Program with order flow executed by Floor Broker firms operating on the Exchange and with other fees and credits set forth in the Fee Schedule. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act,18 in general, and furthers the objectives of sections 6(b)(4) and (5) of the Act,19 in particular, because it provides for the equitable allocation of reasonable dues, fees, and other charges among its members, issuers and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers or dealers. The Proposed Rule Change Is Reasonable The Exchange operates in a highly competitive market. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 20 There are currently 17 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.21 Therefore, no exchange possesses significant pricing power in the execution of multiply-listed equity and 18 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 20 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (S7–10–04) (‘‘Reg NMS Adopting Release’’). 21 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. 19 15 16 See proposed Fee Schedule, FB Prepay Program. 17 See proposed Fee Schedule, Section III.E (providing, in relevant part, that ‘‘[t]he Exchange will not issue any refunds in the event that a Floor Broker organization’s prepaid Eligible Fixed Costs exceeds actual costs.’’). The Exchange believes this proposed change would add clarity, transparency, and internal consistency to the Fee Schedule. PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 E:\FR\FM\05FEN1.SGM 05FEN1 lotter on DSK11XQN23PROD with NOTICES1 Federal Register / Vol. 89, No. 24 / Monday, February 5, 2024 / Notices ETF options order flow. More specifically, in November 2023, the Exchange had less than 8% market share of executed volume of multiplylisted equity and ETF options trades.22 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 that the proposed credits offered to Floor Brokers on QCC transactions and manual billable volume offered through the FB Prepay Program, as proposed, are reasonable because they are designed to continue to incent Floor Brokers to increase the number of QCC transactions and manual billable orders executed on the Exchange. The Exchange also believes that the proposed increase in the maximum monthly amount that a Floor Broker firm could earn from Floor Broker QCC credits or from rebates via the proposed changes to the Manual Billable Rebate Program (i.e., the Maximum Combined Rebate/Credit) is reasonable because it is likewise intended to encourage Floor Brokers to direct QCC transactions and manual billable volume to the Exchange. With respect to the FB Prepay Program, the Exchange also believes that the proposed changes are reasonable because participation in the program is optional, and Floor Brokers can elect to participate in the program to be eligible to earn the proposed rebates on manual billable transactions and QCC transactions or not. The Exchange also believes that the proposed modification of the FB Prepay Program (including the proposal to eliminate the Floor Broker Manual Billable Incentive Program) is reasonable because it is designed to simplify the incentives offered through the program, to continue to encourage Floor Brokers to participate in the FB Prepay Program, and to provide liquidity on the Exchange. Specifically, the Exchange believes that the proposed qualifying thresholds for the Manual Billable Rebate Program and QCC Bonus Rebate are achievable by Floor Broker 22 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 was 6.98% for the month of November 2022 and 7.60% for the month of November 2023. VerDate Sep<11>2014 17:56 Feb 02, 2024 Jkt 262001 firms based on recent Floor Broker activity and in consideration of the proposed changes in this filing, and that the rebate amounts are designed to encourage Floor Brokers to continue to direct manual billable volume and QCC transactions to the Exchange. The Exchange further believes that the amounts of the proposed rebates are reasonable and comparable to rebate amounts offered by another options exchange to Floor Brokers on manual transactions. To the extent that the proposed changes attract more volume to the Exchange, this increased order flow would continue to make the Exchange a more competitive venue for order execution, which, in turn, promotes just and equitable principles of trade and removes impediments to and perfects the mechanism of a free and open market and a national market system. The Exchange notes that all market participants stand to benefit from any increase in volume by Floor Brokers, which could promote market depth, facilitate tighter spreads and enhance price discovery, to the extent the proposed change encourages Floor Brokers 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, any increased liquidity on the Exchange would result in enhanced market quality for all participants. The Exchange also believes that the proposed change to modify the Program to remove reference to a specific year is reasonable because it would prevent the Exchange from using a benchmark based on a stale date and would add flexibility to the Program (insofar as it would not need to be revised each year). In addition, the proposed change to allow Floor Brokers to join the Program after the first of the year—by prepaying an amount (to cover the balance of the year) based on their Eligible Fixed Costs incurred in their first month in the Program—is reasonable for several reasons. First, the proposed method used to determine the prepayment amount for any later-joining Floor Brokers is analogous to the Exchange’s current method of determining the prepayment amount for Program participants (i.e., prepayment amount is based on the Eligible Fixed Costs recently-incurred). Second, the Exchange believes that the proposed method of determining a (later-joining) Floor Broker’s prepayment amount would provide the most accurate basis for anticipating that Floor Broker’s future Eligible Fixed Costs. Moreover, the Exchange believes that this approach would allow the Exchange the PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 7753 flexibility to offer the FB Prepay Program to later-joining Floor Brokers, including/especially Floor Brokers new to the Exchange, without putting these Floor Brokers at a competitive disadvantage. Further, the proposal to eliminate the Floor Broker Manual Billable Incentive Program and accompanying monthly rebates is reasonable because it is rendered redundant by the proposed enhanced opportunities for Floor Brokers participating in the FB Prepay Program to achieve rebates through the Manual Billable Rebate Program and the QCC Billable Bonus Rebate. The Exchange believes that this proposed restructuring is reasonable because it may encourage more Floor Brokers to sign up for the Program, which may result in increased liquidity on the Exchange to the benefit of all market participants. To the extent the proposed changes continue to attract greater volume and liquidity, the Exchange believes the proposed changes would improve the Exchange’s overall competitiveness and strengthen its market quality for all market participants. In the backdrop of the competitive environment in which the Exchange operates, the proposed rule change is a reasonable attempt by the Exchange to increase the depth of its market and improve its market share relative to its competitors. The Exchange’s fees are constrained by intermarket competition, as Floor Brokers may direct their order flow to any of the 17 options exchanges, including those offering rebates on QCC orders 23 and Floor Broker rebates on manual billable orders. Thus, Floor Brokers have a choice of where they direct their order flow, including their QCC transactions and manual billable orders. The proposed rule changes are designed to continue to incent Floor Brokers to direct liquidity (and, in particular, QCC orders and manual billable orders) to the Exchange; to the extent Floor Brokers are incented to 23 See, e.g., EDGX Options Exchange Fee Schedule, QCC Initiator/Solicitation Rebate Tiers (applying ($0.16) per contract rebate up to 999,999 contracts for QCC transactions when only one side of the transaction is a non-customer or ($0.24) per contract rebate up to 999,999 contracts for QCC transactions with non-customers on both sides); BOX Options Fee Schedule at Section IV.D.1. (QCC Rebate) (providing for ($0.14) per contract rebate up to 999,999 contracts for QCC transactions when only one side of the QCC transaction is a brokerdealer or market maker or ($0.22) per contract rebate up to 1,499,999 contracts for QCC transactions when both parties are a broker-dealer or market maker); Nasdaq ISE, Options 7, Section 6.B. (QCC Rebate) (offering rebates on QCC transactions of ($0.14) per contract when only one side of the QCC transaction is a non-customer or ($0.22) per contract when both sides of the QCC transaction are non-customers). E:\FR\FM\05FEN1.SGM 05FEN1 7754 Federal Register / Vol. 89, No. 24 / Monday, February 5, 2024 / Notices lotter on DSK11XQN23PROD with NOTICES1 aggregate their trading activity at the Exchange, that increased liquidity could promote market depth, price discovery and improvement, and enhanced order execution opportunities for market participants. Finally, the proposed changes to remove reference to inapplicable fees (i.e., costs for Login and Floor Broker Hand Held), to remove now obsolete language related to the migration to Pillar, as well as the to make conforming changes to the Table of Contents (in connection with the deletion of Floor Broker Incentive Program), and to remove superfluous or obsolete text from the FB Prepay Program, are reasonable because they would add clarity, transparency, and internal consistency to the Fee Schedule to the benefit of all market participants. The Proposed Rule Change Is an Equitable Allocation of Credits and Fees The Exchange believes the proposed rule change is an equitable allocation of its fees and credits. The proposal is based on the amount and type of business transacted on the Exchange; Floor Brokers are not obligated to participate in the FB Prepay Program and can choose to execute QCC transactions or manual billable transactions to earn the various proposed credits and rebates or not. In addition, the proposed credits and rebates are available to all Floor Brokers equally, and the proposed monthly limit on the amount that Floor Brokers could earn from credits and rebates on QCC transactions and manual billable transactions would apply to all Floor Brokers equally. The Exchange also notes that the proposed changes are designed to encourage Floor Brokers that have previously enrolled in the FB Prepay Program to reenroll for the upcoming year, as well as to attract Floor Brokers that have not yet participated in the program. Moreover, the Exchange believes that the proposed modifications to the FB Prepay Program are an equitable allocation of fees and credits because they would apply to participating Floor Brokers equally and are 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. The Exchange also believes that the proposed change to modify the Program to remove reference to a specific year is equitable because it would prevent the Exchange from using a benchmark based on a stale date. In addition, the proposed change to allow Floor Brokers VerDate Sep<11>2014 17:56 Feb 02, 2024 Jkt 262001 to join the Program after the first of the year—by prepaying an amount (to cover the balance of the year) based on their Eligible Fixed Costs incurred in their first month in the Program—is equitable for several reasons. First, the proposed method used to determine the prepayment amount for any later-joining Floor Brokers is analogous to the Exchange’s current method of determining the prepayment amount for Program participants (i.e., prepayment amount is based on the Eligible Fixed Costs recently-incurred). Second, the Exchange believes that the proposed method of determining a (later-joining) Floor Broker’s prepayment amount would provide the most accurate basis for anticipating that Floor Broker’s future Eligible Fixed Costs. Moreover, the Exchange believes that this approach would allow the Exchange the flexibility to offer the FB Prepay Program to later-joining Floor Brokers, including/especially Floor Brokers new to the Exchange, without putting these Floor Brokers at a competitive disadvantage. Further, the proposal to eliminate the Floor Broker Manual Billable Incentive Program and accompanying monthly rebates is equitable because it is rendered redundant by the proposed enhanced opportunities for Floor Brokers participating in the FB Prepay Program to achieve rebates through the Manual Billable Rebate Program and the QCC Billable Bonus Rebate. The Exchange believes that this proposed restructuring is reasonable because it may encourage more Floor Brokers to sign up for the Program, which may result in increased liquidity on the Exchange to the benefit of all market participants Moreover, the proposed changes are designed to continue to incent Floor Brokers to encourage ATP Holders to aggregate their executions—including QCC transactions and manual orders— at the Exchange as a primary execution venue. To the extent that the proposed change achieves its purpose in attracting more Floor Broker volume to the Exchange, this increased order flow would continue to make the Exchange a more competitive venue for, among other things, order execution. Thus, the Exchange believes the proposed rule changes would improve market quality for all market participants on the Exchange and, as a consequence, attract more order flow to the Exchange, thereby improving market-wide quality and price discovery. PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 The Proposed Rule Change Is Not Unfairly Discriminatory The Exchange believes the proposed fees, credits, and rebates applicable to Floor Brokers on QCC transactions and manual billable transactions are not unfairly discriminatory because they are based on the amount and type of business transacted on the Exchange, and Floor Brokers are not obligated to execute QCC or manual billable volume, or to participate in the FB Prepay Program. Further, the proposal to eliminate the Floor Broker Manual Billable Incentive Program and accompanying monthly rebates is not unfairly discriminatory because it is rendered redundant by the proposed enhanced opportunities for Floor Brokers participating in the FB Prepay Program to achieve rebates through the Manual Billable Rebate Program and the QCC Billable Bonus Rebate. The Exchange believes that this proposed restructuring is reasonable because it may encourage more Floor Brokers to sign up for the Program, which may result in increased liquidity on the Exchange to the benefit of all market participants. In addition, the proposed changes, including the increase of the Maximum Combined Rebate/Credit, would apply to all similarly-situated Floor Brokers on an equal and nondiscriminatory basis. The proposed credits and rebates are also 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 that the proposed change to modify the Program to remove reference to a specific year is not unfairly discriminatory because it would apply equally to all Program participants and would prevent the Exchange from using a benchmark based on a stale date In addition, the proposed change to allow Floor Brokers to join the Program after the first of the year—by prepaying an amount (to cover the balance of the year) based on their Eligible Fixed Costs incurred in their first month in the Program—is not unfairly discriminatory for several reasons. First, the proposed method used to determine the prepayment amount for any later-joining Floor Brokers is analogous to the Exchange’s current method of determining the prepayment amount for Program participants (i.e., prepayment amount is based on the Eligible Fixed Costs recently-incurred). Second, the E:\FR\FM\05FEN1.SGM 05FEN1 Federal Register / Vol. 89, No. 24 / Monday, February 5, 2024 / Notices lotter on DSK11XQN23PROD with NOTICES1 Exchange believes that the proposed method of determining a (later-joining) Floor Broker’s prepayment amount would provide the most accurate basis for anticipating that Floor Broker’s future Eligible Fixed Costs. Moreover, the Exchange believes that this approach would allow the Exchange the flexibility to offer the FB Prepay Program to later-joining Floor Brokers, including/especially Floor Brokers new to the Exchange, without putting these Floor Brokers at a competitive disadvantage. Further, the proposal to eliminate the Floor Broker Manual Billable Incentive Program and accompanying monthly rebates is not unfairly discriminatory because it is rendered redundant by the proposed enhanced opportunities for Floor Brokers participating in the FB Prepay Program to achieve rebates through the Manual Billable Rebate Program and the QCC Billable Bonus Rebate. The Exchange believes that this proposed restructuring is reasonable because it may encourage more Floor Brokers to sign up for the Program, which may result in increased liquidity on the Exchange to the benefit of all market participants. To the extent that the proposed changes attract more QCC orders and manual orders to the Exchange, this increased order flow would continue to make the Exchange a more competitive venue for order execution. Thus, the Exchange believes the proposed rule change would improve market quality for all market participants on the Exchange and, as a consequence, attract more order flow to the Exchange, thereby improving market-wide quality and price discovery. The resulting increased volume and liquidity would provide more trading opportunities and tighter spreads to all market participants and thus would promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, protect investors and the public interest. Finally, the Exchange believes that it is subject to significant competitive forces, as described below in the Exchange’s statement regarding the burden on competition. B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with section 6(b)(8) of the Act, the Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Instead, as discussed above, the VerDate Sep<11>2014 17:56 Feb 02, 2024 Jkt 262001 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.’’ 24 Intramarket Competition. The proposed modification of the FB Prepay Program and the proposed credits and rebates offered to Floor Brokers manual billable orders are designed to incent participation in the FB Prepay Program and to attract additional order flow to the Exchange, which could increase the volumes of contracts traded on the Exchange. Greater liquidity benefits all market participants on the Exchange, and increased QCC and manual billable transactions could increase opportunities for execution of other trading interest. The proposed rebates available through the Manual Billable Rebate Program and QCC Billable Bonus Rebate would be available to all Floor Brokers that choose to participate in the FB Prepay Program and meet the qualifying criteria for such rebates. The proposed increase of the Maximum Combined Rebate/Credit would likewise apply equally to all similarly-situated Floor Brokers. To the extent that there is an additional competitive burden on non-Floor Brokers, the Exchange believes that any such burden would be appropriate because Floor Brokers serve an important function in facilitating the execution of orders and price discovery for all market participants. Intermarket Competition. The Exchange operates in a highly competitive market in which market participants can readily favor one of the 17 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.25 Therefore, no exchange possesses significant pricing power in the 24 See Reg NMS Adopting Release, supra note 20, at 37499. 25 See note 21, supra. PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 7755 execution of multiply-listed equity and ETF options order flow. More specifically, in November 2023, the Exchange had less than 8% market share of executed volume of multiplylisted equity and ETF options trades.26 The Exchange believes that the proposed changes reflect this competitive environment because they modify the Exchange’s fees and credits in a manner designed to continue to incent Floor Brokers to direct trading interest (particularly QCC transactions and manual orders) to the Exchange, to provide liquidity and to attract order flow. To the extent that Floor Brokers are encouraged to participate in the FB Prepay Program and/or incentivized to utilize the Exchange as a primary trading venue for all transactions, all of the Exchange’s market participants should benefit from the improved market quality and increased opportunities for price improvement. The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment. The Exchange further believes that the proposed change could promote competition between the Exchange and other execution venues, including those that currently offer rebates on QCC transactions and manual billable volume,27 by encouraging additional orders to be sent to the Exchange for execution. Finally, the proposed changes to remove reference to inapplicable fees (i.e., costs for Login and Floor Broker Hand Held) and to make conforming changes to the Table of Contents (to reflect deletion of Floor Broker Incentive Program), and to remove superfluous or obsolete text from the FB Prepay Program are not designed to address any competitive issue but are instead designed to add clarity, transparency, and internal consistency to the Fee Schedule. 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. 26 See 27 See E:\FR\FM\05FEN1.SGM note 22, supra. note 23, supra. 05FEN1 lotter on DSK11XQN23PROD with NOTICES1 7756 Federal Register / Vol. 89, No. 24 / Monday, February 5, 2024 / Notices 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) 28 of the Act and subparagraph (f)(2) of Rule 19b–4 29 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) 30 of the Act to determine whether the proposed rule change should be approved or disapproved. 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–NYSEAMER–2024–06 and should be submitted on or before February 26, 2024. 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.31 Sherry R. Haywood, Assistant Secretary. 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–2024–06 on the subject line. SECURITIES AND EXCHANGE COMMISSION 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–2024–06. 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 AGENCY: 28 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 30 15 U.S.C. 78s(b)(2)(B). [FR Doc. 2024–02160 Filed 2–2–24; 8:45 am] BILLING CODE 8011–01–P [Investment Company Act Release No. 35121; 812–15209] Blue Tractor ETF Trust and Blue Tractor Group, LLC January 31, 2024. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice of an application to amend a prior order for exemptive relief. Applicants request an order (‘‘Amended Order’’) that would amend a prior order to permit a Fund (as defined below) to engage in short sales with respect to the same types of instruments that a Fund is permitted to hold as long positions. APPLICANTS: Blue Tractor ETF Trust and Blue Tractor Group, LLC (‘‘Applicants’’). FILING DATES: The application was filed on March 19, 2021, and amended on August 12, 2021, February 15, 2022, June 3, 2022, June 7, 2023 and January 30, 2024. HEARING OR NOTIFICATION OF HEARING: An order granting the requested relief SUMMARY OF APPLICATION: 29 17 VerDate Sep<11>2014 17:56 Feb 02, 2024 31 17 Jkt 262001 PO 00000 CFR 200.30–3(a)(12). Frm 00075 Fmt 4703 Sfmt 4703 will be issued unless the Commission orders a hearing. Interested persons may request a hearing by emailing the Commission’s Secretary at SecretarysOffice@sec.gov and serving Applicants with a copy of the request by email, if an email address is listed for the relevant Applicant below, or personally or by mail, if a physical address is listed for the relevant Applicant below. Hearing requests should be received by the Commission by 5:30 p.m. on February 26, 2024 and should be accompanied by proof of service on the Applicants, in the form of an affidavit, or, for lawyers, a certificate of service. Pursuant to rule 0–5 under the Investment Company Act of 1940 (‘‘Act’’), hearing requests should state the nature of the writer’s interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by emailing to the Commission’s Secretary. ADDRESSES: The Commission: Secretarys-Office@sec.gov. Applicants: MMundt@stradley.com. FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel; Trace W. Rakestraw, Senior Special Counsel, at (202) 551–6825 (Division of Investment Management, Chief Counsel’s Office). SUPPLEMENTARY INFORMATION: For Applicants’ representations, legal analysis, and conditions, please refer to Applicants’ fifth amended and restated application, dated January 30, 2024, which may be obtained via the Commission’s website by searching for the file number at the top of this document, or for an Applicant using the Company name search field, on the SEC’s EDGAR system. The SEC’s EDGAR system may be searched at, https://www.sec.gov/edgar/searchedgar/ legacy/companysearch.html. You may also call the SEC’s Public Reference Room at (202) 551–8090. I. Introduction 1. On December 10, 2019, the Commission issued an order 1 (as subsequently amended,2 the ‘‘Prior Order’’) 3 under section 6(c) of the Act 1 See Blue Tractor ETF Trust and Blue Tractor Group, LLC, Investment Company Act Release No. 33682 (Nov. 14, 2019) (notice) and Investment Company Act Release No. 33710 (Dec. 10, 2019) (order). 2 See Blue Tractor ETF Trust and Blue Tractor Group, LLC, Investment Company Act Release No. 34194 (Feb. 10, 2021) (notice) and Investment Company Act Release No. 34221 (Mar. 9, 2021) (order). 3 Except as specifically noted in the application for the Amended Order, all representations and conditions contained in the application first E:\FR\FM\05FEN1.SGM 05FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 89, Number 24 (Monday, February 5, 2024)]
[Notices]
[Pages 7750-7756]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-02160]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99449; File No. SR-NYSEAMER-2024-06]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify 
the NYSE American Options Fee Schedule

January 30, 2024.
    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 January 25, 2024, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify the NYSE American Options Fee 
Schedule (``Fee Schedule''). The Exchange proposes to implement the fee 
change effective January 25, 2024.\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 originally filed to amend the Fee Schedule on 
January 2, 2024 (NYSEAmer-2023-69) [sic] and withdrew such filing on 
January 12, 2024 (SR-NYSEAmer-2024-05) [sic], which latter filing 
the Exchange withdrew on January 25, 2024.
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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 [sic] to amend the Fee Schedule in a 
number of ways as described herein. The Exchange proposes to implement 
the rule change on January 25, 2024.
    First, the Exchange proposes to modify the Fee Schedule to remove 
reference to costs that are no longer charged and are therefore 
inapplicable. Specifically, the Exchange proposes to modify the Fee 
Schedule to remove ``Login'' costs from Sections III.E.1 and IV and to 
remove ``Floor Broker Handheld'' costs from Section IV.
    Next, the Exchange proposes to modify the Floor Broker Fixed Cost 
Prepayment Incentive Program (the ``FB Prepay Program'' or 
``Program''), a prepayment incentive program that allows Floor Brokers 
to prepay certain of their annual Eligible Fixed Costs in exchange for 
the opportunity to qualify for certain volume rebates.\5\ Specifically, 
the Manual Billable Volume Rebate is designed to encourage Floor 
Brokers to increase their monthly volume in billable manual contract 
sides to qualify for a rebate; increasing volumes qualify the Floor 
Broker for a higher level of rebate. Additional rebates may be earned 
by meeting the qualification levels of the Floor Broker Manual Billable 
Incentive Program.\6\ Participating Floor Brokers receive their rebates 
payable on a monthly basis.\7\ Floor Brokers that wish to participate 
in the FB Prepay Program for the following calendar year must notify 
the Exchange no later than the last business day of December in the 
current year.\8\
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    \5\ See Fee Schedule, Section III.E.1., Floor Broker Fixed Cost 
Prepayment Incentive Program (the ``FB Prepay Program''). ``Eligible 
Fixed Costs'' include monthly ATP Fees, the Floor Access Fee, and 
certain monthly Floor communication, connectivity, equipment and 
booth or podia fees, as set forth in the table in Section III.E.1. 
The Exchange notes that the FB Prepay Program is currently 
structured similarly to the Floor Broker prepayment program offered 
by its affiliated exchange, NYSE Arca, Inc. (``NYSE Arca''). See 
NYSE Arca Options Fee Schedule, FLOOR BROKER FIXED COST PREPAYMENT 
INCENTIVE PROGRAM (the ``FB Prepay Program'').
    \6\ See Fee Schedule, Section III.E.2., Floor Broker Manual 
Billable Incentive Program.
    \7\ See Fee Schedule, Section III.E. The Exchange proposes to 
remove the preamble to Section III.E., which relates to the 
Exchange's already-completed migration to the Pillar trading 
platform, because the text is no longer applicable and its removal 
would add clarity to the Fee Schedule. See proposed Fee Schedule, 
Section III.E.
    \8\ See Fee Schedule, Section III.E (providing, in relevant 
part, that the notification ``email to enroll in the Program must 
originate from an officer of the Floor Broker organization and, 
except as provided for below, represents a binding commitment 
through the end of the following calendar year.''). The Exchange 
proposes to modify Section III.E. of the Fee Schedule to remove the 
now obsolete phrase ``except as provided for below,'' as there is no 
exception to the notification requirement, which modification will 
add clarity, transparency, and internal consistency to the Fee 
Schedule. See proposed Fee Schedule, Section III.E.
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    The Exchange proposes to eliminate the Floor Broker Manual Billable 
Incentive Program and accompanying monthly rebates \9\ and instead 
provide Floor Brokers participating in the FB Prepay Program with 
enhanced opportunities for monthly rebates based on manual billable 
transaction volume (the ``Manual Billable Rebate Program'') and the QCC 
Billable Bonus Rebate. The calculation of volume on which rebates 
earned through the Manual Billable Rebate Program would be paid is 
based on transactions for which at least one side is subject to manual 
transaction fees and excludes volume from QCC transactions, unless 
otherwise specified.\10\ The Exchange proposes to

[[Page 7751]]

continue to exclude any volume calculated to achieve the Strategy 
Execution Fee Cap, regardless of whether the cap is achieved, from the 
Manual Billable Rebate Program because fees on such volume are already 
capped and therefore such volume does not increase billable manual 
volume. The Exchange will not issue any refunds in the event that a 
Floor Broker organization's prepaid Eligible Fixed Costs exceeds actual 
annual costs.\11\
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    \9\ To effect the proposed change to eliminate the Floor Broker 
Manual Billable Incentive Program and related rebates, the Exchange 
proposes to delete in its entirety Section III.E.2. of the Fee 
Schedule. In addition, for consistency, the Exchange proposes to 
delete from the Table of Contents reference to this Section 
III.E.2., which is currently (and erroneously) listed as 
``Reserved''. See proposed Fee Schedule, Table of Contents.
    \10\ See proposed Fee Schedule, Section III.E.1 (excluding QCC 
transactions from volume calculation ``unless otherwise 
specified''), which would add clarity, transparency, and internal 
consistency to the Fee Schedule. For certain volume thresholds 
(i.e., those based solely on ``manual billable sides''), the 
Exchange proposes to continue to exclude QCC volume from the 
calculation of eligible volume for rebates paid through the Manual 
Billable Rebate Program because Floor Brokers would continue to be 
eligible for separate credits and rebates for QCC transactions 
through the QCC Billable Bonus Rebate.
    \11\ As discussed infra, the Exchange proposes to expand entry 
to the FB Prepay Program to mid-year and therefore will remove 
reference to actual ``annual'' costs. See proposed Schedule, Section 
III.E.1.
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    The Exchange proposes to modify the qualification levels and 
corresponding rebates in the Manual Billable Rebate Program as follows.
     First, the Exchange proposes to add a new qualification 
level that would provide for a ($0.05) rebate per billable side for 
Floor Brokers that execute a minimum of 500,000 manual billable sides. 
This proposed new qualification threshold provides for a lower volume 
threshold than is currently required to achieve a rebate, with the 
distinction that it does not include ``combined'' QCC transactions--
only manual executions. The Exchange believes that this proposed 
qualification threshold may make the rebate more achievable for Floor 
Brokers, especially Floor Brokers that conduct more manual transactions 
than QCC transactions.
     Second, the Exchange proposes to modify the next-highest 
qualification level from 1 million ``combined manual and QCC billable 
contracts'' for a rebate of ($0.05) per billable side to 1.1 million 
``manual billable sides,'' which are no longer ``combined'' with QCC 
transactions and to raise the corresponding rebate to ($0.07) per 
billable side. This proposed change raises the potential rebate along 
with the number of required manual executions while at the same time 
removing QCC executions from eligibility.
     Third, the Exchange proposes to remove the existing 
qualification level that offers an ($0.08) rebate per billable side for 
Floor Brokers that execute 3 million combined manual and QCC billable 
contracts.
     Finally, the Exchange proposes to offer two new 
``Additional'' rebates as described below.
    [cir] As proposed, a Floor Broker that executes at least 7 million 
``combined manual billable and QCC billable contracts'' is eligible to 
receive an additional rebate of one cent ($0.01) per billable side. 
However, a Floor Broker that executes at least 11 million ``combined 
manual billable and QCC billable contracts'' is eligible to instead 
receive an additional rebate of two cents ($0.02).
    The Exchange notes that it is not modifying the existing 
qualification level the requires a Floor Broker to execute 5 million 
``combined manual billable and QCC billable contracts'' to achieve a 
($0.10) rebate per billable side.
    The table below illustrates the monthly qualification levels and 
the related rebates that the Exchange proposes to make available 
through the Manual Billable Rebate Program, payable on a monthly basis:

------------------------------------------------------------------------
   Manual billable rebate qualification       Rebate per billable side
------------------------------------------------------------------------
Execute 500,000 manual billable sides....  ($0.05).
Execute 1.1 million manual billable sides  ($0.07).
Execute 5 million combined manual          ($0.10).
 billable and QCC billable contracts.
Execute 7 million combined manual          Additional ($0.01).
 billable and QCC billable contracts.
Execute 11 million combined manual         Additional ($0.02).
 billable and QCC billable contracts.
------------------------------------------------------------------------

    Consistent with the current Manual Billable Rebate Program, Floor 
Brokers who achieve a Rebate Qualification level will earn the 
associated rebate back to the first contract and, as noted above, 
Participants that qualify for both ``Additional'' rebates are eligible 
to receive only one such rebate.\12\
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    \12\ See proposed Fee Schedule, Section III.E.1 (providing that 
``[t]he Manual Billable Rebate (including the ``Additional'' 
rebates) is payable back to the first billable side. Qualifying 
Participants are eligible to receive only one ``Additional'' 
rebate'')
---------------------------------------------------------------------------

    The FB Prepay Program also currently offers participating Floor 
Brokers to be eligible to qualify for rebates on QCC transactions, 
payable on a monthly basis, in addition to the credits set forth in 
Section I.F (QCC Fees & Credits). The Exchange proposes to modify the 
volume thresholds required to achieve the ``QCC Billable Bonus Rebate. 
Specifically, the Exchange proposes to reduce the qualification 
threshold for the ``Prepay Bonus Level'' from 2 million to 500,000 
``QCC billable contracts.'' The Exchange also proposes to modify the 
``Additional Bonus Level,'' which is currently only achievable if a 
Floor Broker that conduct volume that is ``100% above Prepay Bonus 
Level,'' to instead require ``4 million QCC billable contracts.'' The 
proposed changes are designed to make the Prepay Bonus Level more 
achievable and the Additional Bonus Level more difficult to achieve. 
The Exchange is not proposing to modify the rebates available to Floor 
Brokers that achieve the new volume thresholds.
    The table below illustrates the proposed requirements to achieve 
the QCC Billable Bonus Rebate--both the Prepay Bonus Level and the 
Additional Bonus Level.

----------------------------------------------------------------------------------------------------------------
                                                                  Additional rebate on     Additional rebate on
            QCC billable bonus rebate qualification               single billable side    two billable side QCC
                                                                      QCC contract               contract
----------------------------------------------------------------------------------------------------------------
Prepay Bonus Level--achieved with 500,000 QCC billable                          ($0.02)                  ($0.04)
 contracts....................................................
Additional Bonus Level--achieved with 4 million QCC billable                    ($0.04)                  ($0.06)
 contracts....................................................
----------------------------------------------------------------------------------------------------------------

    As with other rebates, the QCC Billable Bonus Rebate would be 
payable back to the first side and Participants that qualify for more 
than one ``Additional'' rebate are eligible to receive only one such 
rebate.\13\
---------------------------------------------------------------------------

    \13\ See proposed Fee Schedule, Section III.E.1 (providing that 
``Qualifying Participants are eligible to receive only one 
``Additional'' rebate'').
---------------------------------------------------------------------------

    The Exchange further proposes to modify Section III.E.1. and 
Section I.F. to increase the maximum Floor Broker credits paid for QCC 
trades and rebates paid through the Manual Billable Rebate Program to 
$2,500,000 per month per

[[Page 7752]]

Floor Broker firm, an increase from the current monthly amount of 
2,000,000 (the ``Maximum Combined Rebate/Credit'').\14\ The proposed 
increase is designed to encourage Floor Broker firms to continue to 
direct transactions to the Exchange, despite increasing industry 
volumes making it less difficult to attain the maximum rebate.
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    \14\ See proposed Fee Schedule, Sections III.E.1 and I.F. 
(providing, in relevant, part that Floor Broker credits paid for QCC 
trades and rebates paid through the Manual Billable Rebate Program 
shall not combine to exceed $2,500,000 per month per Floor Broker 
firm).
---------------------------------------------------------------------------

    Next, the Exchange proposes to modify the FB Prepay Program to 
remove reference to a specific year (i.e., November 2022) and to 
instead reference ``November of the current year'' as the date that the 
Exchange will use for the calculation of a Floor Broker's Eligible 
Fixed Costs for the following calendar year. The FB Prepay Program 
currently specifies that a Floor Broker that commits to the program 
will be invoiced in January for Eligible Fixed Costs, based on 
annualizing their Eligible Fixed Costs incurred in November 2022. The 
Exchange believes that this proposed change would prevent the Exchange 
from relying on a stale date and would add flexibility to the program 
(insofar as it would not need to be revised each year).
    Finally, the Exchange proposes to allow a Floor Broker to join the 
Program after the first of the year. To do so, similar to the protocol 
required of existing Program participants, such Floor Broker 
organizations would notify the Exchange in writing by emailing 
[email protected] and indicating their commitment to submit 
prepayment for the balance of the calendar year; the email notification 
would have to originate from an officer of the Floor Broker 
organization and would represent a binding commitment through the 
balance of the calendar year.\15\ As further proposed, the Floor Broker 
organization would be enrolled in the Program beginning on the first 
day of the next full month and would be invoiced for that first full 
month for Eligible Fixed Costs and the balance of the year, based on 
annualizing for the remainder of the calendar year their Eligible Fixed 
Costs incurred in its first full month in the Program.\16\ The Exchange 
notes that both the current and proposed methodology rely on recently 
incurred Eligible Fixed Costs to predict anticipated Eligible Fixed 
Costs. For current program Participants the Exchange relies on November 
costs; whereas, for later-joining Program participants, the Exchange 
would rely on costs incurred in the Floor Broker's first full month in 
the Program. The Exchange believes that this approach allows the 
Exchange the flexibility to offer the FB Prepay Program to Floor 
Brokers that did not enroll before the end of the prior calendar year, 
including/especially Floor Brokers new to the Exchange, without putting 
these Floor Brokers at a competitive disadvantage. Finally, consistent 
with the current Program, the Exchange will not issue refunds if a 
Floor Broker organization's prepaid Eligible Fixed Costs exceeds its 
actual costs; however, the Exchange proposes to remove reference to 
``annual'' costs in the current Fee Schedule because this phrase would 
not apply to Floor Brokers that join the Program after the first of the 
year.\17\
---------------------------------------------------------------------------

    \15\ See proposed Fee Schedule, FB Prepay Program (providing, in 
relevant part, that ``[t]o participate in the FB Prepay Program 
after the first of the year, Floor Broker organizations must notify 
the Exchange in writing by emailing [email protected], 
indicating a commitment to submit prepayment for the balance of the 
calendar year'' and that the notification ``email to enroll in the 
Program must originate from an officer of the Floor Broker 
organization and represents a binding commitment through the balance 
of the calendar year.'').
    \16\ See proposed Fee Schedule, FB Prepay Program.
    \17\ See proposed Fee Schedule, Section III.E (providing, in 
relevant part, that ``[t]he Exchange will not issue any refunds in 
the event that a Floor Broker organization's prepaid Eligible Fixed 
Costs exceeds actual costs.''). The Exchange believes this proposed 
change would add clarity, transparency, and internal consistency to 
the Fee Schedule.
---------------------------------------------------------------------------

    Finally, as noted above, the Exchange proposes to eliminate the 
Floor Broker Manual Billable Incentive Program. The Exchange determined 
that this program was duplicative of the FB Prepay Program, which made 
it difficult for Floor Brokers to ascertain the total rebates earned. 
The Exchange believes that the proposed adjustments to the Prepay 
Program (including changes to the QCC Billable Bonus Rebate 
Qualification) would reduce potential confusion and would add clarity 
and transparency to the Fee Schedule.
    Although the Exchange cannot predict with certainty whether the 
proposed changes to the FB Prepay Program would encourage Floor Brokers 
to participate in the program or to increase either their manual 
billable volume or QCC volume, the Exchange believes that the proposed 
changes would continue to incent Floor Brokers to participate in the FB 
Prepay Program by adding flexibility to the structure of the Program, 
including by allowing Floor Brokers to join the Program after the first 
of the year and increasing the Maximum Combined Rebate/Credit. All 
Floor Brokers are eligible to participate in the FB Prepay Program and 
qualify for the proposed credits and rebates, and the credits and 
rebates are achievable in any given month without regard to volumes 
from any other month. The Exchange notes that the proposed 
restructuring of the FB Prepay Program (including by eliminating the 
Floor Broker Manual Billable Incentive Program) would more closely 
align the qualifications for and incentives offered through the Program 
with order flow executed by Floor Broker firms operating on the 
Exchange and with other fees and credits set forth in the Fee Schedule.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\18\ in general, and furthers the 
objectives of sections 6(b)(4) and (5) of the Act,\19\ 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.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 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.'' \20\
---------------------------------------------------------------------------

    \20\ 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 17 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.\21\ Therefore, no exchange possesses significant pricing power 
in the execution of multiply-listed equity and

[[Page 7753]]

ETF options order flow. More specifically, in November 2023, the 
Exchange had less than 8% market share of executed volume of multiply-
listed equity and ETF options trades.\22\
---------------------------------------------------------------------------

    \21\ 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.
    \22\ 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 was 6.98% 
for the month of November 2022 and 7.60% for the month of November 
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 that the proposed credits offered to Floor 
Brokers on QCC transactions and manual billable volume offered through 
the FB Prepay Program, as proposed, are reasonable because they are 
designed to continue to incent Floor Brokers to increase the number of 
QCC transactions and manual billable orders executed on the Exchange. 
The Exchange also believes that the proposed increase in the maximum 
monthly amount that a Floor Broker firm could earn from Floor Broker 
QCC credits or from rebates via the proposed changes to the Manual 
Billable Rebate Program (i.e., the Maximum Combined Rebate/Credit) is 
reasonable because it is likewise intended to encourage Floor Brokers 
to direct QCC transactions and manual billable volume to the Exchange.
    With respect to the FB Prepay Program, the Exchange also believes 
that the proposed changes are reasonable because participation in the 
program is optional, and Floor Brokers can elect to participate in the 
program to be eligible to earn the proposed rebates on manual billable 
transactions and QCC transactions or not. The Exchange also believes 
that the proposed modification of the FB Prepay Program (including the 
proposal to eliminate the Floor Broker Manual Billable Incentive 
Program) is reasonable because it is designed to simplify the 
incentives offered through the program, to continue to encourage Floor 
Brokers to participate in the FB Prepay Program, and to provide 
liquidity on the Exchange. Specifically, the Exchange believes that the 
proposed qualifying thresholds for the Manual Billable Rebate Program 
and QCC Bonus Rebate are achievable by Floor Broker firms based on 
recent Floor Broker activity and in consideration of the proposed 
changes in this filing, and that the rebate amounts are designed to 
encourage Floor Brokers to continue to direct manual billable volume 
and QCC transactions to the Exchange. The Exchange further believes 
that the amounts of the proposed rebates are reasonable and comparable 
to rebate amounts offered by another options exchange to Floor Brokers 
on manual transactions.
    To the extent that the proposed changes attract more volume to the 
Exchange, this increased order flow would continue to make the Exchange 
a more competitive venue for order execution, which, in turn, promotes 
just and equitable principles of trade and removes impediments to and 
perfects the mechanism of a free and open market and a national market 
system. The Exchange notes that all market participants stand to 
benefit from any increase in volume by Floor Brokers, which could 
promote market depth, facilitate tighter spreads and enhance price 
discovery, to the extent the proposed change encourages Floor Brokers 
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, any increased liquidity on the Exchange would result in 
enhanced market quality for all participants.
    The Exchange also believes that the proposed change to modify the 
Program to remove reference to a specific year is reasonable because it 
would prevent the Exchange from using a benchmark based on a stale date 
and would add flexibility to the Program (insofar as it would not need 
to be revised each year). In addition, the proposed change to allow 
Floor Brokers to join the Program after the first of the year--by 
prepaying an amount (to cover the balance of the year) based on their 
Eligible Fixed Costs incurred in their first month in the Program--is 
reasonable for several reasons. First, the proposed method used to 
determine the prepayment amount for any later-joining Floor Brokers is 
analogous to the Exchange's current method of determining the 
prepayment amount for Program participants (i.e., prepayment amount is 
based on the Eligible Fixed Costs recently-incurred). Second, the 
Exchange believes that the proposed method of determining a (later-
joining) Floor Broker's prepayment amount would provide the most 
accurate basis for anticipating that Floor Broker's future Eligible 
Fixed Costs. Moreover, the Exchange believes that this approach would 
allow the Exchange the flexibility to offer the FB Prepay Program to 
later-joining Floor Brokers, including/especially Floor Brokers new to 
the Exchange, without putting these Floor Brokers at a competitive 
disadvantage.
    Further, the proposal to eliminate the Floor Broker Manual Billable 
Incentive Program and accompanying monthly rebates is reasonable 
because it is rendered redundant by the proposed enhanced opportunities 
for Floor Brokers participating in the FB Prepay Program to achieve 
rebates through the Manual Billable Rebate Program and the QCC Billable 
Bonus Rebate. The Exchange believes that this proposed restructuring is 
reasonable because it may encourage more Floor Brokers to sign up for 
the Program, which may result in increased liquidity on the Exchange to 
the benefit of all market participants.
    To the extent the proposed changes continue to attract greater 
volume and liquidity, the Exchange believes the proposed changes would 
improve the Exchange's overall competitiveness and strengthen its 
market quality for all market participants. In the backdrop of the 
competitive environment in which the Exchange operates, the proposed 
rule change is a reasonable attempt by the Exchange to increase the 
depth of its market and improve its market share relative to its 
competitors. The Exchange's fees are constrained by intermarket 
competition, as Floor Brokers may direct their order flow to any of the 
17 options exchanges, including those offering rebates on QCC orders 
\23\ and Floor Broker rebates on manual billable orders. Thus, Floor 
Brokers have a choice of where they direct their order flow, including 
their QCC transactions and manual billable orders. The proposed rule 
changes are designed to continue to incent Floor Brokers to direct 
liquidity (and, in particular, QCC orders and manual billable orders) 
to the Exchange; to the extent Floor Brokers are incented to

[[Page 7754]]

aggregate their trading activity at the Exchange, that increased 
liquidity could promote market depth, price discovery and improvement, 
and enhanced order execution opportunities for market participants.
---------------------------------------------------------------------------

    \23\ See, e.g., EDGX Options Exchange Fee Schedule, QCC 
Initiator/Solicitation Rebate Tiers (applying ($0.16) per contract 
rebate up to 999,999 contracts for QCC transactions when only one 
side of the transaction is a non-customer or ($0.24) per contract 
rebate up to 999,999 contracts for QCC transactions with non-
customers on both sides); BOX Options Fee Schedule at Section 
IV.D.1. (QCC Rebate) (providing for ($0.14) per contract rebate up 
to 999,999 contracts for QCC transactions when only one side of the 
QCC transaction is a broker-dealer or market maker or ($0.22) per 
contract rebate up to 1,499,999 contracts for QCC transactions when 
both parties are a broker-dealer or market maker); Nasdaq ISE, 
Options 7, Section 6.B. (QCC Rebate) (offering rebates on QCC 
transactions of ($0.14) per contract when only one side of the QCC 
transaction is a non-customer or ($0.22) per contract when both 
sides of the QCC transaction are non-customers).
---------------------------------------------------------------------------

    Finally, the proposed changes to remove reference to inapplicable 
fees (i.e., costs for Login and Floor Broker Hand Held), to remove now 
obsolete language related to the migration to Pillar, as well as the to 
make conforming changes to the Table of Contents (in connection with 
the deletion of Floor Broker Incentive Program), and to remove 
superfluous or obsolete text from the FB Prepay Program, are reasonable 
because they would add clarity, transparency, and internal consistency 
to the Fee Schedule to the benefit of all market participants.
The Proposed Rule Change Is an Equitable Allocation of Credits and Fees
    The Exchange believes the proposed rule change is an equitable 
allocation of its fees and credits. The proposal is based on the amount 
and type of business transacted on the Exchange; Floor Brokers are not 
obligated to participate in the FB Prepay Program and can choose to 
execute QCC transactions or manual billable transactions to earn the 
various proposed credits and rebates or not. In addition, the proposed 
credits and rebates are available to all Floor Brokers equally, and the 
proposed monthly limit on the amount that Floor Brokers could earn from 
credits and rebates on QCC transactions and manual billable 
transactions would apply to all Floor Brokers equally.
    The Exchange also notes that the proposed changes are designed to 
encourage Floor Brokers that have previously enrolled in the FB Prepay 
Program to reenroll for the upcoming year, as well as to attract Floor 
Brokers that have not yet participated in the program. Moreover, the 
Exchange believes that the proposed modifications to the FB Prepay 
Program are an equitable allocation of fees and credits because they 
would apply to participating Floor Brokers equally and are 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.
    The Exchange also believes that the proposed change to modify the 
Program to remove reference to a specific year is equitable because it 
would prevent the Exchange from using a benchmark based on a stale 
date. In addition, the proposed change to allow Floor Brokers to join 
the Program after the first of the year--by prepaying an amount (to 
cover the balance of the year) based on their Eligible Fixed Costs 
incurred in their first month in the Program--is equitable for several 
reasons. First, the proposed method used to determine the prepayment 
amount for any later-joining Floor Brokers is analogous to the 
Exchange's current method of determining the prepayment amount for 
Program participants (i.e., prepayment amount is based on the Eligible 
Fixed Costs recently-incurred). Second, the Exchange believes that the 
proposed method of determining a (later-joining) Floor Broker's 
prepayment amount would provide the most accurate basis for 
anticipating that Floor Broker's future Eligible Fixed Costs. Moreover, 
the Exchange believes that this approach would allow the Exchange the 
flexibility to offer the FB Prepay Program to later-joining Floor 
Brokers, including/especially Floor Brokers new to the Exchange, 
without putting these Floor Brokers at a competitive disadvantage.
    Further, the proposal to eliminate the Floor Broker Manual Billable 
Incentive Program and accompanying monthly rebates is equitable because 
it is rendered redundant by the proposed enhanced opportunities for 
Floor Brokers participating in the FB Prepay Program to achieve rebates 
through the Manual Billable Rebate Program and the QCC Billable Bonus 
Rebate. The Exchange believes that this proposed restructuring is 
reasonable because it may encourage more Floor Brokers to sign up for 
the Program, which may result in increased liquidity on the Exchange to 
the benefit of all market participants
    Moreover, the proposed changes are designed to continue to incent 
Floor Brokers to encourage ATP Holders to aggregate their executions--
including QCC transactions and manual orders--at the Exchange as a 
primary execution venue. To the extent that the proposed change 
achieves its purpose in attracting more Floor Broker volume to the 
Exchange, this increased order flow would continue to make the Exchange 
a more competitive venue for, among other things, order execution. 
Thus, the Exchange believes the proposed rule changes would improve 
market quality for all market participants on the Exchange and, as a 
consequence, attract more order flow to the Exchange, thereby improving 
market-wide quality and price discovery.
The Proposed Rule Change Is Not Unfairly Discriminatory
    The Exchange believes the proposed fees, credits, and rebates 
applicable to Floor Brokers on QCC transactions and manual billable 
transactions are not unfairly discriminatory because they are based on 
the amount and type of business transacted on the Exchange, and Floor 
Brokers are not obligated to execute QCC or manual billable volume, or 
to participate in the FB Prepay Program. Further, the proposal to 
eliminate the Floor Broker Manual Billable Incentive Program and 
accompanying monthly rebates is not unfairly discriminatory because it 
is rendered redundant by the proposed enhanced opportunities for Floor 
Brokers participating in the FB Prepay Program to achieve rebates 
through the Manual Billable Rebate Program and the QCC Billable Bonus 
Rebate. The Exchange believes that this proposed restructuring is 
reasonable because it may encourage more Floor Brokers to sign up for 
the Program, which may result in increased liquidity on the Exchange to 
the benefit of all market participants. In addition, the proposed 
changes, including the increase of the Maximum Combined Rebate/Credit, 
would apply to all similarly-situated Floor Brokers on an equal and 
non-discriminatory basis. The proposed credits and rebates are also 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 that the proposed change to modify the 
Program to remove reference to a specific year is not unfairly 
discriminatory because it would apply equally to all Program 
participants and would prevent the Exchange from using a benchmark 
based on a stale date In addition, the proposed change to allow Floor 
Brokers to join the Program after the first of the year--by prepaying 
an amount (to cover the balance of the year) based on their Eligible 
Fixed Costs incurred in their first month in the Program--is not 
unfairly discriminatory for several reasons. First, the proposed method 
used to determine the prepayment amount for any later-joining Floor 
Brokers is analogous to the Exchange's current method of determining 
the prepayment amount for Program participants (i.e., prepayment amount 
is based on the Eligible Fixed Costs recently-incurred). Second, the

[[Page 7755]]

Exchange believes that the proposed method of determining a (later-
joining) Floor Broker's prepayment amount would provide the most 
accurate basis for anticipating that Floor Broker's future Eligible 
Fixed Costs. Moreover, the Exchange believes that this approach would 
allow the Exchange the flexibility to offer the FB Prepay Program to 
later-joining Floor Brokers, including/especially Floor Brokers new to 
the Exchange, without putting these Floor Brokers at a competitive 
disadvantage.
    Further, the proposal to eliminate the Floor Broker Manual Billable 
Incentive Program and accompanying monthly rebates is not unfairly 
discriminatory because it is rendered redundant by the proposed 
enhanced opportunities for Floor Brokers participating in the FB Prepay 
Program to achieve rebates through the Manual Billable Rebate Program 
and the QCC Billable Bonus Rebate. The Exchange believes that this 
proposed restructuring is reasonable because it may encourage more 
Floor Brokers to sign up for the Program, which may result in increased 
liquidity on the Exchange to the benefit of all market participants.
    To the extent that the proposed changes attract more QCC orders and 
manual orders to the Exchange, this increased order flow would continue 
to make the Exchange a more competitive venue for order execution. 
Thus, the Exchange believes the proposed rule change would improve 
market quality for all market participants on the Exchange and, as a 
consequence, attract more order flow to the Exchange, thereby improving 
market-wide quality and price discovery. The resulting increased volume 
and liquidity would provide more trading opportunities and tighter 
spreads to all market participants and thus would promote just and 
equitable principles of trade, remove impediments to and perfect the 
mechanism of a free and open market and a national market system and, 
in general, protect investors and the public interest.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.

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

    In accordance with section 6(b)(8) of the Act, the Exchange does 
not believe that the proposed rule change would impose any burden on 
competition that is not necessary or appropriate in 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.'' \24\
---------------------------------------------------------------------------

    \24\ See Reg NMS Adopting Release, supra note 20, at 37499.
---------------------------------------------------------------------------

    Intramarket Competition. The proposed modification of the FB Prepay 
Program and the proposed credits and rebates offered to Floor Brokers 
manual billable orders are designed to incent participation in the FB 
Prepay Program and to attract additional order flow to the Exchange, 
which could increase the volumes of contracts traded on the Exchange. 
Greater liquidity benefits all market participants on the Exchange, and 
increased QCC and manual billable transactions could increase 
opportunities for execution of other trading interest. The proposed 
rebates available through the Manual Billable Rebate Program and QCC 
Billable Bonus Rebate would be available to all Floor Brokers that 
choose to participate in the FB Prepay Program and meet the qualifying 
criteria for such rebates. The proposed increase of the Maximum 
Combined Rebate/Credit would likewise apply equally to all similarly-
situated Floor Brokers. To the extent that there is an additional 
competitive burden on non-Floor Brokers, the Exchange believes that any 
such burden would be appropriate because Floor Brokers serve an 
important function in facilitating the execution of orders and price 
discovery for all market participants.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily favor one 
of the 17 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.\25\ Therefore, no 
exchange possesses significant pricing power in the execution of 
multiply-listed equity and ETF options order flow. More specifically, 
in November 2023, the Exchange had less than 8% market share of 
executed volume of multiply-listed equity and ETF options trades.\26\
---------------------------------------------------------------------------

    \25\ See note 21, supra.
    \26\ See note 22, supra.
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes reflect this 
competitive environment because they modify the Exchange's fees and 
credits in a manner designed to continue to incent Floor Brokers to 
direct trading interest (particularly QCC transactions and manual 
orders) to the Exchange, to provide liquidity and to attract order 
flow. To the extent that Floor Brokers are encouraged to participate in 
the FB Prepay Program and/or incentivized to utilize the Exchange as a 
primary trading venue for all transactions, all of the Exchange's 
market participants should benefit from the improved market quality and 
increased opportunities for price improvement. The Exchange notes that 
it operates in a highly competitive market in which market participants 
can readily favor competing venues. In such an environment, the 
Exchange must continually review, and consider adjusting, its fees and 
credits to remain competitive with other exchanges. For the reasons 
described above, the Exchange believes that the proposed rule change 
reflects this competitive environment.
    The Exchange further believes that the proposed change could 
promote competition between the Exchange and other execution venues, 
including those that currently offer rebates on QCC transactions and 
manual billable volume,\27\ by encouraging additional orders to be sent 
to the Exchange for execution.
---------------------------------------------------------------------------

    \27\ See note 23, supra.
---------------------------------------------------------------------------

    Finally, the proposed changes to remove reference to inapplicable 
fees (i.e., costs for Login and Floor Broker Hand Held) and to make 
conforming changes to the Table of Contents (to reflect deletion of 
Floor Broker Incentive Program), and to remove superfluous or obsolete 
text from the FB Prepay Program are not designed to address any 
competitive issue but are instead designed to add clarity, 
transparency, and internal consistency to the Fee Schedule.

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.

[[Page 7756]]

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) \28\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \29\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ 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) \30\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \30\ 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-NYSEAMER-2024-06 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-2024-06. 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-NYSEAMER-2024-06 and should 
be submitted on or before February 26, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
---------------------------------------------------------------------------

    \31\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-02160 Filed 2-2-24; 8:45 am]
BILLING CODE 8011-01-P

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