Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE Arca Options Fee Schedule, 19613-19617 [2024-05739]
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Federal Register / Vol. 89, No. 54 / Tuesday, March 19, 2024 / Notices
19613
LICENSE AMENDMENT ISSUANCES—Continued
Public Comments Received as to Proposed
NSHC (Yes/No).
No.
Dated: March 13, 2024.
For the Nuclear Regulatory Commission.
Aida E. Rivera-Varona,
Deputy Director, Division of Operating
Reactor Licensing, Office of Nuclear Reactor
Regulation.
[FR Doc. 2024–05678 Filed 3–18–24; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–668, OMB Control No.
3235–0751]
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Proposed Collection; Comment
Request; Extension: Rule 18a–6
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA
Services, 100 F Street NE,
Washington, DC 20549–2736
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 18a–6 (17 CFR
240.18a–6), under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.). The Commission plans to submit
this existing collection of information to
the Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 18a–6, which is modeled on
Rule 17a–4, establishes record
maintenance and preservation
requirements for stand-alone and bank
security-based swap dealers (‘‘SBSDs’’)
and major security-based swap
participants (‘‘MSBSPs’’) (collectively,
‘‘SBS entities’’). Specifically, Rule 18a–
6 prescribes the period of time the
records required to be made and kept
current under Rule 18a–5 must be
preserved by stand-alone SBSDs and
MSBSPs and the manner in which the
records must be preserved. Rule 18a–6
also identifies additional types of
records that must be preserved (e.g.,
written communications and
agreements relating to the firm’s
business) if the record is made or
received by the SBS entity.
The Commission estimates that the
total hour burden under Rule 18a–6 is
approximately 15,626 burden hours per
year, and the total cost burden is
approximately $1,349,098 per year.
Written comments are invited on: (a)
whether the proposed collection of
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information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted by
May 20, 2024.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid OMB
control number.
Please direct your written comments
to: David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,
DC 20549, or send an email to: PRA_
Mailbox@sec.gov.
Dated: March 14, 2024.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–05765 Filed 3–18–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
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[Release No. 34–99729; File No. SR–
NYSEARCA–2024–23]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Modify the NYSE Arca
Options Fee Schedule
March 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
29, 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
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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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’’) to introduce certain fees for
Floor Market Makers. The Exchange
proposes to implement the fee change
effective February 29, 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.
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 establish fees
relating to OTPs utilized by Floor
Market Makers.5 The Exchange proposes
to implement the fee changes effective
February 29, 2024.
Currently, the number of option
issues a Market Maker may quote in
their assignment is based on the number
of OTPs the Market Maker holds per
month. The Exchange charges monthly
fees for Market Maker OTPs as set forth
in the ‘‘Market Maker OTP Table’’
4 The Exchange originally filed to amend the Fee
Schedule on February 1, 2024 (SR–NYSEARCA–
2024–12), then withdrew such filing and amended
the Fee Schedule on February 15, 2024 (SR–
NYSEARCA–2024–18), which latter filing the
Exchange withdrew on February 29, 2024.
5 Per Rule 1.1, an OTP is an Options Trading
Permit issued by the Exchange for effecting
approved securities transactions on the Exchange.
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Federal Register / Vol. 89, No. 54 / Tuesday, March 19, 2024 / Notices
below, which fees are not being
modified by this proposal: 6
Monthly fee
per OTP
Number of OTPs
1st OTP ......................................................................................
2nd OTP .....................................................................................
3rd OTP ......................................................................................
4th OTP ......................................................................................
5th OTP ......................................................................................
6th to 9th OTP ............................................................................
10th or more OTPs .....................................................................
Reserve Market Maker OTP ......................................................
As described herein, the Exchange
proposes to adopt fees for ‘‘Floor Market
Maker OTPs,’’ which fees would be
discounted and available to Floor
Market Makers that satisfy certain
criteria. As proposed, a Floor Market
Maker would be defined as a registered
Market Maker who makes transactions
as a dealer-specialist while on the Floor
of the Exchange, which proposed
definition is identical to the definition
recently adopted by the Exchange.7
Proposed Fee Change
The proposed fee change described
below is designed to further increase
$8,000
6,000
5,000
4,000
3,000
2,000
500
175
60 plus the Bottom 45%.
150 plus the Bottom 45%.
500 plus the Bottom 45%.
1,100 plus the Bottom 45%.
All issues.
All issues.
All issues.
N/A.
open outcry trading by providing
special fee treatment for OTP fees to
Floor Market Makers that execute a
specified percentage of trading in open
outcry. As proposed, a Floor Market
Maker would pay $6,000 for the first
OTP and $4,000 for the second OTP, for
up to two OTPs, provided that the Floor
Market Maker transacts at least 75% of
its volume, excluding Qualified
Contingent Transactions (‘‘QCCs’’) and
Strategy Executions, as Manual (open
outcry) trades (the ‘‘minimum 75%
Manual trading requirement’’).8 This
proposed minimum 75% Manual
trading requirement is distinct from a
Monthly fee
per OTP
Number of OTPs
1st Floor Market Maker OTP ......................................................
2nd Floor Market Maker OTP ....................................................
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Number of issues permitted in a Market Maker’s quoting
assignment
$6,000
4,000
Market Maker’s appointment trading
requirement as described in Rule 6.35–
O(i), which includes both electronic and
Manual trading. In addition, the
minimum 75% Manual trading
requirement is consistent with
Commentary .01 to Rule 6.35–O insofar
as it would count a Floor Market
Maker’s trading in all option issues (not
just those in its appointment) towards
the minimum 75% Manual trading
requirement.9
To effect this change, the Exchange
proposes to add the following fees to the
bottom of the Market Maker OTP
Table: 10
Number of issues permitted in a Market Maker’s quoting
assignment
60 plus the Bottom 45%.
150 plus the Bottom 45%.
The proposed rates for each of the
first and second OTP would allow a
Floor Market Maker that meets the
minimum 75% Manual trading
requirement to quote in the same
number of option issues as a Market
Maker with a 1st or 2nd OTP, but at a
discounted rate (i.e., as compared to the
fees for the first and second OTP (for
non-Floor Market Maker), which are
$8,000 and $6,000, respectively). This
proposed discount is designed to
encourage Floor Market Makers to
actively quote and trade in a greater
number of option issues and to ensure
that each Floor Market Maker OTP is
being used to foster price discovery in
public outcry markets. The Exchange
notes that this proposed fee structure—
i.e., tiered pricing—is consistent with
how the Exchange charges for non-Floor
Market Maker OTPs as shown in the
Market Maker OTP Table above.
The Exchange proposes to charge a
lower rate for the second Floor Market
Maker OTP than for the first Floor
Market Maker OTP, even though the
second OTP offers the Floor Market
Maker a higher number of issues in its
quoting assignment, to encourage
additional Floor Market Maker quoting
6 See Fee Schedule, NYSE Arca GENERAL
OPTIONS and TRADING PERMIT (OTP) FEES,
available at: https://www.nyse.com/publicdocs/
nyse/markets/arcaoptions/NYSE_Arca_Options_
Fee_Schedule.pdf.
7 See proposed Fee Schedule, Endnote 1 (defining
Floor Market Maker) and Rule 1.1 (defining Floor
Market Maker). Consistent with this proposal, the
Exchange submitted a separate rule filing to adopt
the new category of Market Maker called a Floor
Market Maker, which includes a definition of Floor
Market Maker that is identical to the definition
proposed herein. See Securities Exchange Act
Release No. 99606 (February 26, 2024)
(NYSEARCA–2024–16) (immediately effective filing
to modify Rule 1.1 to adopt a category of Market
Makers called Floor Market Makers and to make
conforming changes to various Exchange rules
regarding Market Maker obligations, including
modifying Rule 6.32–O(a) (Market Maker Defined)
to include Floor Market Maker in the definition of
Market Maker).
8 See proposed Fee Schedule, NYSE Arca
GENERAL OPTIONS and TRADING PERMIT (OTP)
FEES (setting forth the $6,000 and $4,000 monthly
fee for the first and second Floor Market Maker
OTP, respectively) and Endnote 1 (describing
minimum 75% Manual trading requirement for
Floor Market Maker OTPs). See also Fee Schedule,
QUALIFIED CONTINGENT CROSS (‘‘QCC’’)
TRANSACTION FEES AND CREDITS (describing
fees and credits associated with QCC transactions)
and LIMIT OF FEES ON OPTIONS STRATEGY
EXECUTIONS and Endnote 10 (describing Strategy
Executions and limit of fees on such executions).
9 Commentary .01 to Rule 6.35–O provides that a
Market Maker’s trades effected on the Trading Floor
to accommodate cross trades (per Rule 6.47–O) will
count toward the Market Maker’s appointment
trading requirement, regardless of whether the
trades are in issues within the Market Maker’s
appointment.
10 See proposed Fee Schedule. The ‘‘bottom 45%’’
of issues traded on the Exchange means ‘‘the least
actively traded issues on the Exchange, ranked by
industry volume, as reported by the OCC for each
issue during the calendar quarter.’’ The Exchange
notes that the proposed fees for Floor Market OTPs
are similar to fees charges on the Exchange’s
affiliated exchange, NYSE American, LLC (‘‘NYSE
American’’), insofar as the total for two Floor
Market Maker trading permits is $10,000, QCC and
Strategy executions are excluded, and the same
number of option issues may be quoted with the
first and second permit; the proposed fees differ
however in that NYSE American charges the same
amount for each trading permit—i.e., $5,000 for
each. See NYSE American Fee Schedule, Section
III.A. (Monthly ATP Fees), n.1 (‘‘An NYSE
American Options Floor Market Maker ATP is a
Floor Market Maker that purchases no more than
two ATPs per month and transacts at least 75% of
its volume, excluding QCC and Strategy Executions,
as Manual trades in open outcry on the Trading
Floor.’’).
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in a wider range of option classes. Floor
Market Makers would be required to
meet the 75% Manual trading
requirement to qualify for the reduced
OTP fees, as proposed, but their OTPs
would also entitle them to quote and
electronically trade names in their
appointment. Accordingly, the proposed
discount afforded on the second OTP is
intended to enable Floor Market Makers
to quote and electronically trade a
robust suite of symbols for which it
could also reasonably be actively
engaged in providing liquidity in open
outcry.
The Exchange notes that it does not
limit the number of participants who
may act as Market Makers and would
likewise not limit the number of Market
Makers acting as Floor Market Makers.
The Exchange notes that the primary
role of a Floor Market Maker is to
provide liquidity for orders submitted
for execution on the Floor of the
Exchange through open outcry. As such,
the Exchange believes that affording
Floor Market Makers discounted rates
would benefit all market participants
because doing so would continue to
incent Floor Market Makers to quote in
a broad range of options, including
especially illiquid and inactive issues
(i.e., the Bottom 45%), with a specific
focus on open outcry transactions.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,11 in general, and
furthers the objectives of Sections
6(b)(4) and (5) of the Act,12 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.
As noted herein, the Exchange does
not limit the number of participants
who may act as Market Makers and
would likewise not limit the number of
Market Makers acting as Floor Market
Makers. The primary role of a Floor
Market Maker is to provide liquidity for
orders submitted for execution on the
Floor of the Exchange through open
outcry. The Exchange believes that the
proposed rates (and obligations)
associated with Floor Market Maker
OTPs are reasonably designed to
incentivize Market Makers to avail
themselves of at least one (and up to
two) Floor Market Maker OTP(s) and to
quote in a broad range of options,
including especially illiquid and
11 15
U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(4) and (5).
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inactive issues (i.e., the Bottom 45%),
with a specific focus on open outcry
transactions. To the extent that this
proposal results in increased order flow
being directed to the Exchange (and the
Trading Floor, in particular), this
increased liquidity would improve
market quality to benefit all market
participants. Moreover, the proposal to
exclude QCC and Strategy Executions
from the minimum 75% Manual trading
requirement is reasonable because these
transaction types are subject to their
own fees and credits.
The Exchange believes that charging
the less for the second Floor Market
Maker OTP is not only consistent with
how the Exchange charges Market
Makers for non-Floor OTPs but is
reasonable because the proposed
discount extended to the second OTP is
intended to encourage Floor Market
Makers to actively quote and trade in
open outcry, while also affording them
the ability to quote and electronically
trade in a wider range of symbols.
The Exchange believes the proposed
rates (and obligations) associated with
Floor Market Maker OTPs are equitable
and not unfairly discriminatory.
Specifically, the proposal would apply
equally to all Market Makers that choose
to primarily transact business on the
Exchange’s Trading Floor. The
Exchange notes that transacting on the
Trading Floor, as well as utilizing the
proposed Floor Market Maker OTP(s), is
entirely voluntary.
Regarding the proposed rates (and
obligations) associated with Floor
Market Maker OTPs generally, the
Exchange believes the proposal is
reasonable, equitable and not unfairly
discriminatory because it would benefit
all market participants trading on the
Exchange. In addition, the proposed
Floor Market Maker OTP would
encourage Market Makers that already
have a presence on the Trading Floor (or
that are contemplating having a Floor
presence) to utilize at least one Floor
Market Maker OTP and to satisfy the
applicable quoting standards, which
may increase liquidity and provide
more trading opportunities and tighter
spreads. Indeed, the Exchange notes that
these Floor Market Makers serve a role
in providing quotes and the opportunity
for market participants to trade in a
broad range of options, especially the
less actively-traded issues in the
‘‘Bottom 45%,’’ which can lead to
increased volume, providing for robust
markets.
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.
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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.
Intramarket Competition. First, the
Exchange does not believe that the
proposed rule change would impose an
undue burden on intramarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act. Particularly, the
proposal would apply equally to all
Floor Market Makers in a uniform
manner. The decision to utilize a Floor
Market Maker OTP (and to meet the
requirements to qualify for the
discounted rates for a Floor Market
Maker OTP) is entirely voluntary and no
Market Maker is required to undertake
the obligation. As discussed herein, the
proposed fees for Floor Market Maker
OTPs are designed to encourage Floor
Market Makers to quote in a broad range
of options, especially less liquid and
less active issues (i.e., the Bottom 45%),
with a specific focus on open outcry
transactions. Market Makers play a
crucial role in providing active and
liquid markets in their appointed
products, thereby providing a robust
market which benefits all market
participants. Such Market Makers also
have obligations and regulatory
requirements that other participants do
not have. The Exchange also notes that
the proposal is designed to attract
additional order flow to the Floor of the
Exchange, wherein greater liquidity
benefits all market participants by
providing more trading opportunities,
tighter spreads, and added market
transparency and price discovery, and
signals to other market participants to
direct their order flow to those markets,
thereby contributing to robust levels of
liquidity. As a result, the Exchange
believes that the proposed change
furthers the Commission’s goal in
adopting Regulation NMS of fostering
competition among orders, which
promotes ‘‘more efficient pricing of
individual stocks for all types of orders,
large and small.’’ 13
Intermarket Competition. Further, the
Exchange does not believe that the
proposed rule change would impose an
undue burden on intermarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act as the proposal
would apply solely to Market Makers
13 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37498–99 (June 29,
2005) (S7–10–04) (‘‘Reg NMS Adopting Release’’).
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that opted to act as Floor Market Makers
and to utilize at least one Floor Market
OTP. As noted above, the proposal is
designed to attract additional order flow
to the Exchange (and to the Trading
Floor in particular), wherein greater
liquidity benefits all market participants
by providing more trading
opportunities, tighter spreads, and
added market transparency and price
discovery, and signals to other market
participants to direct their order flow to
those markets, thereby contributing to
robust levels of liquidity.
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.14
Therefore, currently 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.15
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.
Therefore, no exchange possesses
significant pricing power in the
execution of option order flow. Indeed,
participants can readily choose to send
their orders to other exchange, and,
14 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.
15 Based on a compilation of OCC data for
monthly volume of equity-based options and
monthly volume of equity-based ETF options, see
id., the Exchange’s market share in equity-based
options decreased from 12.31% for the month of
November 2022 to 11.67% for the month of
November 2023.
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additionally off-exchange venues, if
they deem fee levels at those other
venues to be more favorable.
Moreover, the Commission has
repeatedly expressed its preference for
competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, 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.’’ 16 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’.17 Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
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) 18 of the Act and
subparagraph (f)(2) of Rule 19b–4 19
thereunder, because it establishes a due,
16 See Reg NMS Adopting Release, 70 FR 37496,
37499.
17 See NetCoalition v. SEC, 615 F.3d 525, 539
(D.C. Cir. 2010) (quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
74770, 74782–83 (December 9, 2008) (SR–
NYSEArca–2006–21)).
18 15 U.S.C. 78s(b)(3)(A).
19 17 CFR 240.19b–4(f)(2).
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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) 20 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
NYSEARCA–2024–23 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–2024–23. 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
20 15
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U.S.C. 78s(b)(2)(B).
19MRN1
Federal Register / Vol. 89, No. 54 / Tuesday, March 19, 2024 / Notices
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–2024–23 and should be
submitted on or before April 9, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–05739 Filed 3–18–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99727; File No. SR–CBOE–
2024–010]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fees
Schedule
March 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 February
29, 2024, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
ddrumheller on DSK120RN23PROD with NOTICES1
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
its Fees Schedule. 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://www.cboe.com/
AboutCBOE/CBOELegalRegulatory
Home.aspx), at the Exchange’s Office of
21 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
17:41 Mar 18, 2024
Jkt 262001
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
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 its
Fees Schedule.3 Specifically, the
Exchange proposes to amend the Global
Trading Hours (‘‘GTH’’) Executing
Agent Subsidy Program, set forth in the
Fees Schedule. The GTH Executing
Agent Subsidy Program offers a monthly
subsidy to Trading Permit Holders
(‘‘TPHs’’) with executing agent
operations 4 during the GTH trading
session. Pursuant to the current
program, a designated GTH executing
agent receives the monthly subsidy
amount that corresponds to the number
of contracts executed on behalf of
customers (including public and brokerdealer customers) during GTH in a
calendar month per the GTH Executing
Agent Subsidy Program table, as shown
in the table below. Qualifying customer
volume is limited to those symbols that
trade during GTH (i.e., SPX, VIX, and
XSP).
19617
form to the Exchange no later than 3:00
p.m. on the second to last business day
of a calendar month to be designated an
GTH executing agent under the
program, and thus eligible for the
subsidy, beginning the following
calendar month. The TPH must include
on or with the form information
demonstrating it maintains an GTH
executing agent operation: (1) physically
staffed throughout each entire GTH
trading session and (2) willing to accept
and execute orders on behalf of
customers, including customers for
which the agent does not hold accounts.
The designation will be effective the
first business day of the following
calendar month, subject to the
Exchange’s confirmation the TPH’s GTH
executing agent operations satisfies
these two conditions and will remain in
effect until the Exchange receives an
email from the TPH terminating its
designation or the Exchange determines
the TPH’s GTH executing agent
operation no longer satisfies these two
conditions.
The Exchange proposes to amend the
GTH Executing Agent Subsidy Program
to only include SPX and VIX options
that trade during GTH; as such, the
Exchange proposes to add clarifying
language to the table to reflect that
qualifying customer volume under the
program is limited to GTH monthly
customer SPX and VIX Options volume.
The Exchange also proposes to increase
the GTH monthly customer volume
thresholds, as well as certain subsidy
amounts, as shown in the table below.
GTH monthly customer SPX
and VIX options volume
0–19,999 contracts ...............
20,000–39,999 contracts ......
40,000–99,999 contracts ......
100,000+ contracts ...............
Subsidy
$0.00
10,000
15,000
50,000
The proposed changes reflect the
growth of the GTH trading session,
which has occurred predominantly in
0–999 contracts ....................
$0.00 SPX and VIX options. The proposed
1,000–4,999 contracts ..........
5,000 changes are designed to continue to
5,000–29,999 contracts ........
15,000 encourage designated GTH executing
30,000+ contracts .................
20,000
agents to increase their order flow
executed as agent in SPX and VIX
To become a designated GTH
options that trade during GTH, to meet
executing agent, a TPH must submit a
the proposed amended volume
thresholds and receive the proposed
3 The Exchange initially filed the proposed fee
changes on February 1, 2024 (SR–CBOE–2024–007). corresponding subsidies. The Exchange
On February 14, 2024, the Exchange withdrew that
notes that incentivizing TPHs to
filing and submitted SR–CBOE–2024–009. On
conduct executing agent operations
February 29, 2024, the Exchange withdrew that
willing to accept orders from all
filing and submitted SR–CBOE–2024–010.
4 An executing agent operation is one that accepts
customers during GTH is intended to
orders from customers (who may be public or
increase customer accessibility to the
broker-dealer customers and including customers
GTH trading session. The Exchange
for which the agent does not hold accounts) and
believes that increased order flow
submits the orders for execution (either directly to
through designated GTH executing
the Exchange or through another TPH).
PO 00000
GTH monthly customer
volume
Frm 00051
Fmt 4703
Sfmt 4703
Subsidy
E:\FR\FM\19MRN1.SGM
19MRN1
]]>Agencies
[Federal Register Volume 89, Number 54 (Tuesday, March 19, 2024)]
[Notices]
[Pages 19613-19617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-05739]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99729; File No. SR-NYSEARCA-2024-23]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE
Arca Options Fee Schedule
March 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 29, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify the NYSE Arca Options Fee Schedule
(``Fee Schedule'') to introduce certain fees for Floor Market Makers.
The Exchange proposes to implement the fee change effective February
29, 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
February 1, 2024 (SR-NYSEARCA-2024-12), then withdrew such filing
and amended the Fee Schedule on February 15, 2024 (SR-NYSEARCA-2024-
18), which latter filing the Exchange withdrew on February 29, 2024.
---------------------------------------------------------------------------
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
establish fees relating to OTPs utilized by Floor Market Makers.\5\ The
Exchange proposes to implement the fee changes effective February 29,
2024.
---------------------------------------------------------------------------
\5\ Per Rule 1.1, an OTP is an Options Trading Permit issued by
the Exchange for effecting approved securities transactions on the
Exchange.
---------------------------------------------------------------------------
Currently, the number of option issues a Market Maker may quote in
their assignment is based on the number of OTPs the Market Maker holds
per month. The Exchange charges monthly fees for Market Maker OTPs as
set forth in the ``Market Maker OTP Table''
[[Page 19614]]
below, which fees are not being modified by this proposal: \6\
---------------------------------------------------------------------------
\6\ See Fee Schedule, NYSE Arca GENERAL OPTIONS and TRADING
PERMIT (OTP) FEES, available at: https://www.nyse.com/publicdocs/nyse/markets/arcaoptions/NYSE_Arca_Options_Fee_Schedule.pdf.
------------------------------------------------------------------------
Number of issues
Monthly fee permitted in a
Number of OTPs per OTP Market Maker's
quoting assignment
------------------------------------------------------------------------
1st OTP........................... $8,000 60 plus the Bottom
45%.
2nd OTP........................... 6,000 150 plus the Bottom
45%.
3rd OTP........................... 5,000 500 plus the Bottom
45%.
4th OTP........................... 4,000 1,100 plus the
Bottom 45%.
5th OTP........................... 3,000 All issues.
6th to 9th OTP.................... 2,000 All issues.
10th or more OTPs................. 500 All issues.
Reserve Market Maker OTP.......... 175 N/A.
------------------------------------------------------------------------
As described herein, the Exchange proposes to adopt fees for
``Floor Market Maker OTPs,'' which fees would be discounted and
available to Floor Market Makers that satisfy certain criteria. As
proposed, a Floor Market Maker would be defined as a registered Market
Maker who makes transactions as a dealer-specialist while on the Floor
of the Exchange, which proposed definition is identical to the
definition recently adopted by the Exchange.\7\
---------------------------------------------------------------------------
\7\ See proposed Fee Schedule, Endnote 1 (defining Floor Market
Maker) and Rule 1.1 (defining Floor Market Maker). Consistent with
this proposal, the Exchange submitted a separate rule filing to
adopt the new category of Market Maker called a Floor Market Maker,
which includes a definition of Floor Market Maker that is identical
to the definition proposed herein. See Securities Exchange Act
Release No. 99606 (February 26, 2024) (NYSEARCA-2024-16)
(immediately effective filing to modify Rule 1.1 to adopt a category
of Market Makers called Floor Market Makers and to make conforming
changes to various Exchange rules regarding Market Maker
obligations, including modifying Rule 6.32-O(a) (Market Maker
Defined) to include Floor Market Maker in the definition of Market
Maker).
---------------------------------------------------------------------------
Proposed Fee Change
The proposed fee change described below is designed to further
increase open outcry trading by providing special fee treatment for OTP
fees to Floor Market Makers that execute a specified percentage of
trading in open outcry. As proposed, a Floor Market Maker would pay
$6,000 for the first OTP and $4,000 for the second OTP, for up to two
OTPs, provided that the Floor Market Maker transacts at least 75% of
its volume, excluding Qualified Contingent Transactions (``QCCs'') and
Strategy Executions, as Manual (open outcry) trades (the ``minimum 75%
Manual trading requirement'').\8\ This proposed minimum 75% Manual
trading requirement is distinct from a Market Maker's appointment
trading requirement as described in Rule 6.35-O(i), which includes both
electronic and Manual trading. In addition, the minimum 75% Manual
trading requirement is consistent with Commentary .01 to Rule 6.35-O
insofar as it would count a Floor Market Maker's trading in all option
issues (not just those in its appointment) towards the minimum 75%
Manual trading requirement.\9\
---------------------------------------------------------------------------
\8\ See proposed Fee Schedule, NYSE Arca GENERAL OPTIONS and
TRADING PERMIT (OTP) FEES (setting forth the $6,000 and $4,000
monthly fee for the first and second Floor Market Maker OTP,
respectively) and Endnote 1 (describing minimum 75% Manual trading
requirement for Floor Market Maker OTPs). See also Fee Schedule,
QUALIFIED CONTINGENT CROSS (``QCC'') TRANSACTION FEES AND CREDITS
(describing fees and credits associated with QCC transactions) and
LIMIT OF FEES ON OPTIONS STRATEGY EXECUTIONS and Endnote 10
(describing Strategy Executions and limit of fees on such
executions).
\9\ Commentary .01 to Rule 6.35-O provides that a Market Maker's
trades effected on the Trading Floor to accommodate cross trades
(per Rule 6.47-O) will count toward the Market Maker's appointment
trading requirement, regardless of whether the trades are in issues
within the Market Maker's appointment.
---------------------------------------------------------------------------
To effect this change, the Exchange proposes to add the following
fees to the bottom of the Market Maker OTP Table: \10\
---------------------------------------------------------------------------
\10\ See proposed Fee Schedule. The ``bottom 45%'' of issues
traded on the Exchange means ``the least actively traded issues on
the Exchange, ranked by industry volume, as reported by the OCC for
each issue during the calendar quarter.'' The Exchange notes that
the proposed fees for Floor Market OTPs are similar to fees charges
on the Exchange's affiliated exchange, NYSE American, LLC (``NYSE
American''), insofar as the total for two Floor Market Maker trading
permits is $10,000, QCC and Strategy executions are excluded, and
the same number of option issues may be quoted with the first and
second permit; the proposed fees differ however in that NYSE
American charges the same amount for each trading permit--i.e.,
$5,000 for each. See NYSE American Fee Schedule, Section III.A.
(Monthly ATP Fees), n.1 (``An NYSE American Options Floor Market
Maker ATP is a Floor Market Maker that purchases no more than two
ATPs per month and transacts at least 75% of its volume, excluding
QCC and Strategy Executions, as Manual trades in open outcry on the
Trading Floor.'').
------------------------------------------------------------------------
Number of issues
Monthly fee permitted in a
Number of OTPs per OTP Market Maker's
quoting assignment
------------------------------------------------------------------------
1st Floor Market Maker OTP........ $6,000 60 plus the Bottom
45%.
2nd Floor Market Maker OTP........ 4,000 150 plus the Bottom
45%.
------------------------------------------------------------------------
The proposed rates for each of the first and second OTP would allow
a Floor Market Maker that meets the minimum 75% Manual trading
requirement to quote in the same number of option issues as a Market
Maker with a 1st or 2nd OTP, but at a discounted rate (i.e., as
compared to the fees for the first and second OTP (for non-Floor Market
Maker), which are $8,000 and $6,000, respectively). This proposed
discount is designed to encourage Floor Market Makers to actively quote
and trade in a greater number of option issues and to ensure that each
Floor Market Maker OTP is being used to foster price discovery in
public outcry markets. The Exchange notes that this proposed fee
structure--i.e., tiered pricing--is consistent with how the Exchange
charges for non-Floor Market Maker OTPs as shown in the Market Maker
OTP Table above.
The Exchange proposes to charge a lower rate for the second Floor
Market Maker OTP than for the first Floor Market Maker OTP, even though
the second OTP offers the Floor Market Maker a higher number of issues
in its quoting assignment, to encourage additional Floor Market Maker
quoting
[[Page 19615]]
in a wider range of option classes. Floor Market Makers would be
required to meet the 75% Manual trading requirement to qualify for the
reduced OTP fees, as proposed, but their OTPs would also entitle them
to quote and electronically trade names in their appointment.
Accordingly, the proposed discount afforded on the second OTP is
intended to enable Floor Market Makers to quote and electronically
trade a robust suite of symbols for which it could also reasonably be
actively engaged in providing liquidity in open outcry.
The Exchange notes that it does not limit the number of
participants who may act as Market Makers and would likewise not limit
the number of Market Makers acting as Floor Market Makers. The Exchange
notes that the primary role of a Floor Market Maker is to provide
liquidity for orders submitted for execution on the Floor of the
Exchange through open outcry. As such, the Exchange believes that
affording Floor Market Makers discounted rates would benefit all market
participants because doing so would continue to incent Floor Market
Makers to quote in a broad range of options, including especially
illiquid and inactive issues (i.e., the Bottom 45%), with a specific
focus on open outcry transactions.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\11\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\12\ 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.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
As noted herein, the Exchange does not limit the number of
participants who may act as Market Makers and would likewise not limit
the number of Market Makers acting as Floor Market Makers. The primary
role of a Floor Market Maker is to provide liquidity for orders
submitted for execution on the Floor of the Exchange through open
outcry. The Exchange believes that the proposed rates (and obligations)
associated with Floor Market Maker OTPs are reasonably designed to
incentivize Market Makers to avail themselves of at least one (and up
to two) Floor Market Maker OTP(s) and to quote in a broad range of
options, including especially illiquid and inactive issues (i.e., the
Bottom 45%), with a specific focus on open outcry transactions. To the
extent that this proposal results in increased order flow being
directed to the Exchange (and the Trading Floor, in particular), this
increased liquidity would improve market quality to benefit all market
participants. Moreover, the proposal to exclude QCC and Strategy
Executions from the minimum 75% Manual trading requirement is
reasonable because these transaction types are subject to their own
fees and credits.
The Exchange believes that charging the less for the second Floor
Market Maker OTP is not only consistent with how the Exchange charges
Market Makers for non-Floor OTPs but is reasonable because the proposed
discount extended to the second OTP is intended to encourage Floor
Market Makers to actively quote and trade in open outcry, while also
affording them the ability to quote and electronically trade in a wider
range of symbols.
The Exchange believes the proposed rates (and obligations)
associated with Floor Market Maker OTPs are equitable and not unfairly
discriminatory. Specifically, the proposal would apply equally to all
Market Makers that choose to primarily transact business on the
Exchange's Trading Floor. The Exchange notes that transacting on the
Trading Floor, as well as utilizing the proposed Floor Market Maker
OTP(s), is entirely voluntary.
Regarding the proposed rates (and obligations) associated with
Floor Market Maker OTPs generally, the Exchange believes the proposal
is reasonable, equitable and not unfairly discriminatory because it
would benefit all market participants trading on the Exchange. In
addition, the proposed Floor Market Maker OTP would encourage Market
Makers that already have a presence on the Trading Floor (or that are
contemplating having a Floor presence) to utilize at least one Floor
Market Maker OTP and to satisfy the applicable quoting standards, which
may increase liquidity and provide more trading opportunities and
tighter spreads. Indeed, the Exchange notes that these Floor Market
Makers serve a role in providing quotes and the opportunity for market
participants to trade in a broad range of options, especially the less
actively-traded issues in the ``Bottom 45%,'' which can lead to
increased volume, providing for robust markets.
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.
Intramarket Competition. First, the Exchange does not believe that
the proposed rule change would impose an undue burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Particularly, the proposal would apply equally to
all Floor Market Makers in a uniform manner. The decision to utilize a
Floor Market Maker OTP (and to meet the requirements to qualify for the
discounted rates for a Floor Market Maker OTP) is entirely voluntary
and no Market Maker is required to undertake the obligation. As
discussed herein, the proposed fees for Floor Market Maker OTPs are
designed to encourage Floor Market Makers to quote in a broad range of
options, especially less liquid and less active issues (i.e., the
Bottom 45%), with a specific focus on open outcry transactions. Market
Makers play a crucial role in providing active and liquid markets in
their appointed products, thereby providing a robust market which
benefits all market participants. Such Market Makers also have
obligations and regulatory requirements that other participants do not
have. The Exchange also notes that the proposal is designed to attract
additional order flow to the Floor of the Exchange, wherein greater
liquidity benefits all market participants by providing more trading
opportunities, tighter spreads, and added market transparency and price
discovery, and signals to other market participants to direct their
order flow to those markets, thereby contributing to robust levels of
liquidity. As a result, the Exchange believes that the proposed change
furthers the Commission's goal in adopting Regulation NMS of fostering
competition among orders, which promotes ``more efficient pricing of
individual stocks for all types of orders, large and small.'' \13\
---------------------------------------------------------------------------
\13\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37498-99 (June 29, 2005) (S7-10-04) (``Reg NMS
Adopting Release'').
---------------------------------------------------------------------------
Intermarket Competition. Further, the Exchange does not believe
that the proposed rule change would impose an undue burden on
intermarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act as the proposal would apply
solely to Market Makers
[[Page 19616]]
that opted to act as Floor Market Makers and to utilize at least one
Floor Market OTP. As noted above, the proposal is designed to attract
additional order flow to the Exchange (and to the Trading Floor in
particular), wherein greater liquidity benefits all market participants
by providing more trading opportunities, tighter spreads, and added
market transparency and price discovery, and signals to other market
participants to direct their order flow to those markets, thereby
contributing to robust levels of liquidity.
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.\14\ Therefore, currently 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.\15\
---------------------------------------------------------------------------
\14\ 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.
\15\ Based on a compilation of OCC data for monthly volume of
equity-based options and monthly volume of equity-based ETF options,
see id., the Exchange's market share in equity-based options
decreased from 12.31% for the month of November 2022 to 11.67% for
the month of November 2023.
---------------------------------------------------------------------------
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. Therefore,
no exchange possesses significant pricing power in the execution of
option order flow. Indeed, participants can readily choose to send
their orders to other exchange, and, additionally off-exchange venues,
if they deem fee levels at those other venues to be more favorable.
Moreover, the Commission has repeatedly expressed its preference
for competition over regulatory intervention in determining prices,
products, and services in the securities markets. Specifically, 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.'' \16\ The fact
that this market is competitive has also long been recognized by the
courts. In NetCoalition v. Securities and Exchange Commission, the D.C.
Circuit stated as follows: ``[n]o one disputes that competition for
order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S.
national market system, buyers and sellers of securities, and the
broker-dealers that act as their order-routing agents, have a wide
range of choices of where to route orders for execution'; [and] `no
exchange can afford to take its market share percentages for granted'
because `no exchange possesses a monopoly, regulatory or otherwise, in
the execution of order flow from broker dealers'. . . .''.\17\
Accordingly, the Exchange does not believe its proposed fee change
imposes any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
---------------------------------------------------------------------------
\16\ See Reg NMS Adopting Release, 70 FR 37496, 37499.
\17\ See NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
---------------------------------------------------------------------------
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) \18\ of the Act and subparagraph (f)(2) of Rule
19b-4 \19\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 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) \20\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-NYSEARCA-2024-23 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-2024-23. 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
[[Page 19617]]
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-2024-23 and should
be submitted on or before April 9, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-05739 Filed 3-18-24; 8:45 am]
BILLING CODE 8011-01-P
