Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE Arca Options Fee Schedule, 12917-12919 [2024-03337]

Download as PDF Federal Register / Vol. 89, No. 34 / Tuesday, February 20, 2024 / Notices A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION [Release No. 34–99532; File No. SR– NYSEARCA–2024–15] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE Arca Options Fee Schedule February 13, 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 February 12, 2024, NYSE Arca, Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to modify the NYSE Arca Options Fee Schedule (‘‘Fee Schedule’’) regarding the Limit of Fees on Options Strategy Executions. The Exchange proposes to implement the fee change effective February 12, 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. ddrumheller on DSK120RN23PROD with NOTICES1 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 4 The Exchange originally filed to amend the Fee Schedule on February 1, 2024 (SR–NYSEArca– 2024–14) and withdrew such filing on February 12, 2024. 2 15 VerDate Sep<11>2014 16:54 Feb 16, 2024 Jkt 262001 1. Purpose The purpose of this filing is to amend the Fee Schedule to modify the Limit of Fees on Options Strategy Executions (the ‘‘Strategy Cap’’ or ‘‘Cap’’), effective February 12, 2024. Background The Exchange first notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. More specifically, the Exchange is only one of 17 options venues to which market participants may direct their order flow. Based on publicly available information, no single options exchange has more than 16% of the market share of executed volume of multiply-listed equity and ETF options trades. Therefore, no exchange possesses significant pricing power in the execution of multiply-listed equity and ETF options order flow. More specifically, in December 2023, the Exchange had less than 13% market share of executed volume of multiplylisted equity and ETF options trades. Thus, in such a low-concentrated and highly competitive market, no single options exchange possesses significant pricing power in the execution of option order flow. 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 use of certain categories of products, in response to fee changes. Accordingly, competitive forces constrain the Exchange’s transaction fees, and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. In response to the competitive environment, the Exchange offers specific rates and credits in its Fees Schedule, as do other competing options exchanges, which the Exchange believes provide incentive to OTP Holder and OTP Firms (collectively, ‘‘OTP Holders’’) to increase order flow of certain qualifying orders—the Strategy Cap (as described below) is one such incentive. Proposed Fee Change Currently, the Fee Schedule provides that transaction fees for OTP Holders are limited or capped at $1,000 for certain PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 12917 options strategy executions ‘‘on the same trading day,’’ meaning the Strategy Cap is a daily fee cap.5 Strategy executions that qualify for the Strategy Cap are (a) reversals and conversions, (b) box spreads, (c) short stock interest spreads, (d) merger spreads, (e) jelly rolls, and (f) dividends, which are described in detail in the Fee Schedule (the ‘‘Strategy Executions’’).6 The Exchange also offers a lower daily Strategy Cap of $200 for OTP Holders that trade at least 25,000 monthly billable contract sides in Strategy Executions (the ‘‘minimum billable sides requirement’’). Thus, the Exchange caps the daily Strategy Execution fees at $200 for each day of the month (as opposed to $1,000 for nonqualifying OTP Holders) for OTP Holders that meet the minimum billable sides requirement. The Exchange proposes to reduce the Strategy Cap from $1,000 to $200 and to remove the minimum billable sides requirement to qualify for this lower $200 daily Cap. Put another way, the Exchange proposes to cap daily fees for Strategy Executions at $200 for each day of the month regardless of an OTP Holder’s monthly billable volume in Strategy Executions.7 The Exchange notes that the proposed fee change is designed to compete with other options exchanges that likewise cap fees on certain options strategies.8 Therefore, the Exchange believes the proposed reduction of the Strategy Cap may further incentivize OTP Holders to direct Strategy Executions to the Exchange. 5 See Fee Schedule, Limit of Fees on Options Strategy Executions, available here: https:// www.nyse.com/publicdocs/nyse/markets/ arcaoptions/NYSE_Arca_Options_Fee_ Schedule.pdf. 6 See id., Endnote 10 (describing each Strategy Execution). 7 See proposed Fee Schedule, Limit of Fees on Options Strategy Executions. 8 The Exchange notes that at least three other options exchanges offer a daily fee cap on certain option strategies, which caps range from as little $0 (on Cboe Exchange, Inc. (‘‘Cboe’’) to as much as $1,100 (on Nasdaq PHLX LLC (‘‘PHLX ’’) and differ based on the specific strategies executed and the type of market participants on the trade. See, e.g., Cboe Fee Schedule, Footnote 13, available here: https://cdn.cboe.com/resources/membership/Cboe_ FeeSchedule.pdf; PHLX Options 7, Pricing Schedule, Section 4 (Strategy Caps), available here: https://listingcenter.nasdaq.com/rulebook/phlx/ rules/Phlx%20Options%207. See also BOX Options Market LLC (‘‘BOX’’) Fee Schedule, Section V.D, Strategy Qualified Open Outcry ‘‘QOO’’ Order Fee Cap and Rebate, available here: https:// boxexchange.com/regulatory/fees/. Despite the nuances in how each option exchange applies the various strategy caps, the Exchange directly competes with these exchanges for order flow in options strategy executions. E:\FR\FM\20FEN1.SGM 20FEN1 12918 Federal Register / Vol. 89, No. 34 / Tuesday, February 20, 2024 / Notices corresponding increase in order flow from other market participants. The Exchange believes that the The Exchange believes that the everproposed rule change is consistent with shifting market share among the 9 Section 6(b) of the Act, in general, and exchanges from month to month furthers the objectives of Sections 6(b)(4) and (5) of the Act,10 in particular, demonstrates that market participants can shift order flow or discontinue or because it provides for the equitable reduce use of certain categories of allocation of reasonable dues, fees, and products, in response to fee changes. other charges among its members, Accordingly, competitive forces issuers and other persons using its constrain options exchange transaction facilities and does not unfairly fees. Stated differently, changes to discriminate between customers, exchange transaction fees can have a issuers, brokers or dealers. direct effect on the ability of an The Exchange believes that the exchange to compete for order flow. The proposed change to the Strategy Cap is Exchange believes the proposed change reasonable, equitable, and not unfairly is a reasonable attempt to effectively discriminatory. As noted above, the Exchange operates in highly competitive compete for Strategy Executions. The Exchange believes that the proposed market. The Exchange is only one of several options venues to which market change may encourage OTP Holders to participants may direct their order flow, conduct Strategy Executions on the Exchange and, in turn, may increase the and it represents a small percentage of depth of the market to the benefit of all the overall market. As such, market market participants. The Exchange notes participants can readily direct order that OTP Holders may avail themselves flow to competing venues if they deem of the Exchange’s proposed Strategy Cap fee levels at a particular venue to be or they can opt for similar offerings at excessive or incentives to be 12 insufficient. The Exchange believes that another exchange. the proposed fee change is reasonable, B. Self-Regulatory Organization’s equitable, and not unfairly Statement on Burden on Competition discriminatory in that the Exchange and In accordance with Section 6(b)(8) of competing options exchanges currently the Act, the Exchange does not believe offer reduced fees or credits in that the proposed rule change would connection with strategy orders.11 The Exchange notes that the proposed impose any burden on competition that is not necessary or appropriate in change would be applied uniformly to furtherance of the purposes of the Act. all similarly-situated OTP Holders. The proposed change is designed to Moreover, the Exchange believes that attract additional order flow to the the proposed change would further Exchange, particularly Strategy incentivize OTP Holder [sic] to direct Strategy Executions to the Exchange and Executions. In particular, the Exchange believes that the proposed change could may encourage them to aggregate their further incentivize market participants Strategy Executions at the Exchange as to direct their Strategy Executions to the the primary execution venue. For Exchange. As noted herein, the example, this proposed change may encourage OTP Holders to increase their proposed Strategy Cap would be applicable to all similarly-situated Strategy Execution volumes by market participants, and, as such, the executing (often smaller) strategies that proposed change would not impose a are not necessarily economically viable disparate burden on competition among on a per symbol basis, but which may OTP Holders. The Exchange believes be profitable when fees on Strategy that the proposed change may continue Executions—regardless of symbol—are to encourage OTP Holders to conduct capped for the trading day. To the extent that the proposed change attracts Strategy Executions on the Exchange, more Strategy Executions, this increased which increased liquidity and quote competition on the Exchange benefits order flow may make the Exchange a all market participants. more competitive venue for order The Exchange also does not believe execution. In addition, the Exchange that the proposed Strategy Cap will notes that all market participants stand to benefit from increased volume, which impose any burden on intermarket competition that is not necessary or promotes market depth, facilitates appropriate in furtherance of the Act tighter spreads, and enhances price because, as noted above, other discovery, and may lead to a competing options exchanges currently has [sic] a similar fee cap in place in 9 15 U.S.C. 78f(b). ddrumheller on DSK120RN23PROD with NOTICES1 2. Statutory Basis U.S.C. 78f(b)(4) and (5). 11 See, e.g., supra note 8 (describing similar fee caps available on Cboe, PHLX, and BOX). 16:54 Feb 16, 2024 Jkt 262001 C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) 14 of the Act and subparagraph (f)(2) of Rule 19b–4 15 thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 16 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, 13 Id. 14 15 10 15 VerDate Sep<11>2014 connection with strategy orders.13 Because competitors are free to modify their own fees or fee caps in response to competing exchanges, the Exchange believes that the degree to which changes in this market may impose any burden on competition is limited. Further, the Exchange believes that the proposed change could promote competition between the Exchange and other execution venues, including those that currently offer similar strategy order fees or fee caps. Finally, 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. 12 See, e.g., supra note 8 (describing similar fee caps available on Cboe, PHLX, and BOX). PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 16 15 U.S.C. 78s(b)(2)(B). 15 17 E:\FR\FM\20FEN1.SGM 20FEN1 Federal Register / Vol. 89, No. 34 / Tuesday, February 20, 2024 / Notices including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– NYSEARCA–2024–15 on the subject line. ddrumheller on DSK120RN23PROD with NOTICES1 Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to file number SR–NYSEARCA–2024–15. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR–NYSEARCA–2024–15 and should be submitted on or before March 12, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–03337 Filed 2–16–24; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–99524; File No. SR– CboeBZX–2024–010] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Corporate Governance Requirements, as Provided Under Exchange Rule 14.10 and Make Certain Other Changes to Its Listing Rules as Provided Under Exchange Rules 14.3, 14.6, 14.7, and 14.12 February 13, 2024. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 29, 2024, Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) 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 Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) proposes to amend its Corporate Governance Requirements, as provided under Exchange Rule 14.10 and make certain other changes to its listing rules as provided under Exchange Rules 14.3, 14.6, 14.7, and 14.12. The text of the proposed rule change is provided in Exhibit 5. The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ equities/regulation/rule_filings/bzx/), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set BILLING CODE 8011–01–P 1 15 17 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 16:54 Feb 16, 2024 2 17 Jkt 262001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00108 Fmt 4703 Sfmt 4703 12919 forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the corporate governance requirements as provided under Exchange Rule 14.10 and make certain other related changes to its listing rules as provided under Exchange Rules 14.3, 14.6, 14.7, and 14.12. The proposed changes are substantively similar to the equivalent rule on another exchange.3 Specifically, the proposed changes will (1) modify the compensation-related listing rules to align with that of other exchanges; (2) modify the exemption to the Direct Registration Program (‘‘DRP’’) requirement as it pertains to foreign issuers; (3) require listed Companies to publicly disclose compensation or other payments by third parties to any nominee for director or sitting director in connection with their candidacy for or service on the Companies’ Board of Directors; (4) modify the listing requirements to change the definition of market value for purposes of the shareholder approval rules and eliminate the requirement for shareholder approval of issuances at a price less than book value but greater than market value; (5) modify and clarify the exemptions from certain corporate governance requirements; (6) modify the definition of a ‘‘Family Member’’ as defined in Rule 14.10; (7) modify the quorum requirement applicable to a non-U.S. company where such company’s home country law is in direct conflict with the Exchange’s quorum requirement; and (8) modify rule numbers and make other ministerial clarifying changes. As noted above, the proposed changes would result in Exchange Rules that are substantively similar to the existing rules of Nasdaq and are supported by prior Commission approval orders and immediately effective exchange proposals, as discussed in further detail below. 3 See the Nasdaq Stock Market LLC (‘‘Nasdaq’’) listing rules series 5200 (General Procedures and Prerequisites for Initial and Continued Listing on the Nasdaq Stock Market), 5600 (Corporate Governance Requirements), and 5800 (Failure to Meeting Listing Standards). Additionally, the chart provided in Item 8 below summarizes each Nasdaq Rule and each corresponding proposed Exchange Rule. E:\FR\FM\20FEN1.SGM 20FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 89, Number 34 (Tuesday, February 20, 2024)]
[Notices]
[Pages 12917-12919]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03337]



[[Page 12917]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99532; File No. SR-NYSEARCA-2024-15]


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

February 13, 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 February 12, 2024, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify the NYSE Arca Options Fee Schedule 
(``Fee Schedule'') regarding the Limit of Fees on Options Strategy 
Executions. The Exchange proposes to implement the fee change effective 
February 12, 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.
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    \4\ The Exchange originally filed to amend the Fee Schedule on 
February 1, 2024 (SR-NYSEArca-2024-14) and withdrew such filing on 
February 12, 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 is to amend the Fee Schedule to modify 
the Limit of Fees on Options Strategy Executions (the ``Strategy Cap'' 
or ``Cap''), effective February 12, 2024.
Background
    The Exchange first notes that it operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. More specifically, the 
Exchange is only one of 17 options venues to which market participants 
may direct their order flow. Based on publicly available information, 
no single options exchange has more than 16% of the market share of 
executed volume of multiply-listed equity and ETF options trades. 
Therefore, no exchange possesses significant pricing power in the 
execution of multiply-listed equity and ETF options order flow. More 
specifically, in December 2023, the Exchange had less than 13% market 
share of executed volume of multiply-listed equity and ETF options 
trades. Thus, in such a low-concentrated and highly competitive market, 
no single options exchange possesses significant pricing power in the 
execution of option order flow.
    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 use of certain categories of products, 
in response to fee changes. Accordingly, competitive forces constrain 
the Exchange's transaction fees, and market participants can readily 
trade on competing venues if they deem pricing levels at those other 
venues to be more favorable. In response to the competitive 
environment, the Exchange offers specific rates and credits in its Fees 
Schedule, as do other competing options exchanges, which the Exchange 
believes provide incentive to OTP Holder and OTP Firms (collectively, 
``OTP Holders'') to increase order flow of certain qualifying orders--
the Strategy Cap (as described below) is one such incentive.
Proposed Fee Change
    Currently, the Fee Schedule provides that transaction fees for OTP 
Holders are limited or capped at $1,000 for certain options strategy 
executions ``on the same trading day,'' meaning the Strategy Cap is a 
daily fee cap.\5\ Strategy executions that qualify for the Strategy Cap 
are (a) reversals and conversions, (b) box spreads, (c) short stock 
interest spreads, (d) merger spreads, (e) jelly rolls, and (f) 
dividends, which are described in detail in the Fee Schedule (the 
``Strategy Executions'').\6\ The Exchange also offers a lower daily 
Strategy Cap of $200 for OTP Holders that trade at least 25,000 monthly 
billable contract sides in Strategy Executions (the ``minimum billable 
sides requirement''). Thus, the Exchange caps the daily Strategy 
Execution fees at $200 for each day of the month (as opposed to $1,000 
for nonqualifying OTP Holders) for OTP Holders that meet the minimum 
billable sides requirement.
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    \5\ See Fee Schedule, Limit of Fees on Options Strategy 
Executions, available here: https://www.nyse.com/publicdocs/nyse/markets/arcaoptions/NYSE_Arca_Options_Fee_Schedule.pdf.
    \6\ See id., Endnote 10 (describing each Strategy Execution).
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    The Exchange proposes to reduce the Strategy Cap from $1,000 to 
$200 and to remove the minimum billable sides requirement to qualify 
for this lower $200 daily Cap. Put another way, the Exchange proposes 
to cap daily fees for Strategy Executions at $200 for each day of the 
month regardless of an OTP Holder's monthly billable volume in Strategy 
Executions.\7\
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    \7\ See proposed Fee Schedule, Limit of Fees on Options Strategy 
Executions.
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    The Exchange notes that the proposed fee change is designed to 
compete with other options exchanges that likewise cap fees on certain 
options strategies.\8\ Therefore, the Exchange believes the proposed 
reduction of the Strategy Cap may further incentivize OTP Holders to 
direct Strategy Executions to the Exchange.
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    \8\ The Exchange notes that at least three other options 
exchanges offer a daily fee cap on certain option strategies, which 
caps range from as little $0 (on Cboe Exchange, Inc. (``Cboe'') to 
as much as $1,100 (on Nasdaq PHLX LLC (``PHLX '') and differ based 
on the specific strategies executed and the type of market 
participants on the trade. See, e.g., Cboe Fee Schedule, Footnote 
13, available here: https://cdn.cboe.com/resources/membership/Cboe_FeeSchedule.pdf; PHLX Options 7, Pricing Schedule, Section 4 
(Strategy Caps), available here: https://listingcenter.nasdaq.com/rulebook/phlx/rules/Phlx%20Options%207. See also BOX Options Market 
LLC (``BOX'') Fee Schedule, Section V.D, Strategy Qualified Open 
Outcry ``QOO'' Order Fee Cap and Rebate, available here: https://boxexchange.com/regulatory/fees/. Despite the nuances in how each 
option exchange applies the various strategy caps, the Exchange 
directly competes with these exchanges for order flow in options 
strategy executions.

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[[Page 12918]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\10\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed change to the Strategy Cap 
is reasonable, equitable, and not unfairly discriminatory. As noted 
above, the Exchange operates in highly competitive market. The Exchange 
is only one of several options venues to which market participants may 
direct their order flow, and it represents a small percentage of the 
overall market. As such, market participants can readily direct order 
flow to competing venues if they deem fee levels at a particular venue 
to be excessive or incentives to be insufficient. The Exchange believes 
that the proposed fee change is reasonable, equitable, and not unfairly 
discriminatory in that the Exchange and competing options exchanges 
currently offer reduced fees or credits in connection with strategy 
orders.\11\
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    \11\ See, e.g., supra note 8 (describing similar fee caps 
available on Cboe, PHLX, and BOX).
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    The Exchange notes that the proposed change would be applied 
uniformly to all similarly-situated OTP Holders. Moreover, the Exchange 
believes that the proposed change would further incentivize OTP Holder 
[sic] to direct Strategy Executions to the Exchange and may encourage 
them to aggregate their Strategy Executions at the Exchange as the 
primary execution venue. For example, this proposed change may 
encourage OTP Holders to increase their Strategy Execution volumes by 
executing (often smaller) strategies that are not necessarily 
economically viable on a per symbol basis, but which may be profitable 
when fees on Strategy Executions--regardless of symbol--are capped for 
the trading day. To the extent that the proposed change attracts more 
Strategy Executions, this increased order flow may make the Exchange a 
more competitive venue for order execution. In addition, the Exchange 
notes that all market participants stand to benefit from increased 
volume, which promotes market depth, facilitates tighter spreads, and 
enhances price discovery, and may lead to a corresponding increase in 
order flow from other market participants.
    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 differently, 
changes to exchange transaction fees can have a direct effect on the 
ability of an exchange to compete for order flow. The Exchange believes 
the proposed change is a reasonable attempt to effectively compete for 
Strategy Executions. The Exchange believes that the proposed change may 
encourage OTP Holders to conduct Strategy Executions on the Exchange 
and, in turn, may increase the depth of the market to the benefit of 
all market participants. The Exchange notes that OTP Holders may avail 
themselves of the Exchange's proposed Strategy Cap or they can opt for 
similar offerings at another exchange.\12\
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    \12\ See, e.g., supra note 8 (describing similar fee caps 
available on Cboe, PHLX, and BOX).
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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.
    The proposed change is designed to attract additional order flow to 
the Exchange, particularly Strategy Executions. In particular, the 
Exchange believes that the proposed change could further incentivize 
market participants to direct their Strategy Executions to the 
Exchange. As noted herein, the proposed Strategy Cap would be 
applicable to all similarly-situated market participants, and, as such, 
the proposed change would not impose a disparate burden on competition 
among OTP Holders. The Exchange believes that the proposed change may 
continue to encourage OTP Holders to conduct Strategy Executions on the 
Exchange, which increased liquidity and quote competition on the 
Exchange benefits all market participants.
    The Exchange also does not believe that the proposed Strategy Cap 
will impose any burden on intermarket competition that is not necessary 
or appropriate in furtherance of the Act because, as noted above, other 
competing options exchanges currently has [sic] a similar fee cap in 
place in connection with strategy orders.\13\ Because competitors are 
free to modify their own fees or fee caps in response to competing 
exchanges, the Exchange believes that the degree to which changes in 
this market may impose any burden on competition is limited. Further, 
the Exchange believes that the proposed change could promote 
competition between the Exchange and other execution venues, including 
those that currently offer similar strategy order fees or fee caps. 
Finally, 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.
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    \13\ Id.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

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

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \14\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \15\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing,

[[Page 12919]]

including whether the proposed rule change is consistent with the Act. 
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-NYSEARCA-2024-15 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-NYSEARCA-2024-15. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-NYSEARCA-2024-15 and should 
be submitted on or before March 12, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-03337 Filed 2-16-24; 8:45 am]
BILLING CODE 8011-01-P

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