Notice2024-02068
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE Arca Options Fee Schedule
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
February 2, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 23 (Friday, February 2, 2024)</title>
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[Federal Register Volume 89, Number 23 (Friday, February 2, 2024)]
[Notices]
[Pages 7429-7433]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-02068]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99440; File No. SR-NYSEARCA-2024-10]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE
Arca Options Fee Schedule
January 29, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on January 25, 2024, NYSE 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 Floor Broker Fixed Cost Prepayment
Incentive Program (the ``FB Prepay Program''). The Exchange proposes to
implement the fee change effective January 25, 2024.\4\ The proposed
rule change is available on the Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a>, 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
January 2, 2024 (NYSEArca-2023-90) [sic] and withdrew such filing on
January 12, 2024 (SR-NYSEArca-2024-07) [sic], which latter filing
the Exchange withdrew on January 25, 2024.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to amend the Fee Schedule to modify
the FB Prepay Program. The Exchange proposes to implement the rule
change on January 25, 2024.
The FB Prepay Program is a prepayment incentive program that allows
Floor Brokers to prepay certain of their annual Eligible Fixed Costs in
exchange for volume rebates. Participating Floor Brokers receive their
monthly rebate amount on a monthly basis.\5\ All Floor Brokers that
participate in the FB Prepay Program are eligible for a rebate on
manual billable volume of ($0.08) per billable side, payable on a
monthly basis. In addition, FB Prepay Program participants that achieve
more than 500,000 billable sides in a month are eligible for an
additional rebate of ($0.02) per billable side. The additional ($0.02)
is retroactive to the first billable side. Manual billable volume
includes transactions for which at least one side is subject to manual
transaction fees and excludes QCCs. Any volume calculated to achieve
the Limit of Fees on Options Strategy Executions (``Strategy Cap''),
regardless of whether this cap is achieved, is likewise excluded from
the Manual Billable Rebate Program because fees on such volume are
already capped and therefore such volume does not increase billable
manual volume. The Exchange notes that it places a $2,000,000 per firm,
monthly maximum limit on the rebates earned through the Manual Billable
Rebate Program when combined with ``Submitting Broker QCC Credits.''
\6\
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\5\ See Fee Schedule, Floor Broker Fixed Cost Prepayment
Incentive Program (the ``FB Prepay Program''). The Exchange notes
that the FB Prepay Program is currently structured similarly to the
Floor Broker prepayment program offered by its affiliated exchange,
NYSE American LLC (``NYSE American'').
\6\ See Fee Schedule, FB Prepay Program, endnote 17 (providing
in relevant part that ``Submitting Broker QCC credits and Floor
Broker rebates earned through the Manual Billable Rebate Program
shall not combine to exceed $2,500,000 per month per firm''). A
``Submitting Broker QCC credit'' is available to any broker
submitting a QCC transaction to the Exchange (a ``Submitting
Broker''), whether the broker is a Floor Broker on the Trading Floor
or a broker that enters orders electronically through an interface
with the Exchange. The Exchange provides a ($0.22) per contract
credits to Submitting Brokers for Non-Customer vs.Non-Customer QCC
transactions and a ($0.16) per contract credit to Submitting Brokers
for Customer vs. Non-Customer QCC transactions. See Fee Schedule,
NYSE Arca OPTIONS: TRADE-RELATED CHARGES FOR STANDARD OPTIONS,
QUALIFIED CONTINGENT CROSS (``QCC'') TRANSACTION FEES AND CREDITS.
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Floor Brokers that wish to participate in the FB Prepay Program for
the following calendar year must notify the Exchange no later than the
last business day of December in the current year.\7\ The Exchange does
not issue any refunds in the event that a Floor Broker organization's
prepaid Eligible Fixed Costs exceeds actual costs.
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\7\ See Fee Schedule, FB Prepay Program (providing, in relevant
part, that the notification ``email to enroll in the Program must
originate from an officer of the Floor Broker organization and,
except as provided for below, represents a binding commitment
through the end of the following calendar year.''). The Exchange
proposes to modify Section III.E. [sic] of the Fee Schedule to
remove the now obsolete phrase ``except as provided for below,'' as
there is no exception to the notification requirement, which
modification will add clarity, transparency, and internal
consistency to the Fee Schedule. See proposed Fee Schedule, FB
Prepay Program.
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The Exchange proposes to modify the FB Prepay Program as follows.
First, the Exchange proposes to increase the maximum allowable combined
Submitting Broker QCC credits and Floor Broker rebates earned through
the Manual Billable Rebate Program (the ``Maximum Combined Rebate/
Credit'') to $2,500,000 per month per firm, an increase from the
current maximum of $2,000,000. The proposed increase is designed to
encourage Floor Broker firms to continue to direct transactions to the
Exchange, despite increasing industry volumes making it less difficult
to attain the maximum rebate.
Next, the Exchange proposes to modify the FB Prepay Program to
remove reference to a specific year (i.e., November 2022) and to
instead reference ``November of the current year'' as the date that the
Exchange will use for the calculation of a Floor Broker's Eligible
Fixed Costs for the following calendar year. The FB Prepay Program
currently specifies that a Floor Broker that commits to the program
will be invoiced in January for Eligible Fixed Costs, based on
annualizing their Eligible Fixed Costs incurred in November 2022. The
Exchange believes that this proposed change would prevent the Exchange
from relying on a stale date and would add flexibility to the program
(insofar as it would not need to be revised each year).
Finally, the Exchange proposes to allow a Floor Broker to join the
Program after the first of the year To do so,
[[Page 7430]]
similar to the protocol required of existing Program participants, such
Floor Broker organizations would notify the Exchange in writing by
emailing <a href="/cdn-cgi/l/email-protection#6c031c180503021f0e05000005020b2c02151f09420f0301"><span class="__cf_email__" data-cfemail="f39c83879a9c9d80919a9f9f9a9d94b39d8a8096dd909c9e">[email protected]</span></a> and indicating their commitment to
submit prepayment for the balance of the calendar year; the email
notification would have to originate from an officer of the Floor
Broker organization and would represent a binding commitment through
the balance of the calendar year.\8\ As further proposed, the Floor
Broker organization would be enrolled in the Program beginning on the
first day of the next full month and would be invoiced for that first
full month for Eligible Fixed Costs and the balance of the year, based
on annualizing for the remainder of the calendar year their Eligible
Fixed Costs incurred in its first full month in the Program.\9\ The
Exchange notes that both the current and proposed methodology rely on
recently incurred Eligible Fixed Costs to predict anticipated Eligible
Fixed Costs. For current program Participants the Exchange relies on
November costs; whereas, for later-joining Program participants, the
Exchange would rely on costs incurred in the Floor Broker's first full
month in the Program. The Exchange believes that this approach allows
the Exchange the flexibility to offer the FB Prepay Program to Floor
Brokers that did not enroll before the end of the prior calendar year,
including/especially Floor Brokers new to the Exchange, without putting
these Floor Brokers at a competitive disadvantage.
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\8\ See proposed Fee Schedule, FB Prepay Program (providing, in
relevant part, that ``[t]o participate in the FB Prepay Program
after the first of the year, Floor Broker organizations must notify
the Exchange in writing by emailing <a href="/cdn-cgi/l/email-protection#4f203f3b2620213c2d2623232621280f21363c2a612c2022"><span class="__cf_email__" data-cfemail="93fce3e7fafcfde0f1fafffffafdf4d3fdeae0f6bdf0fcfe">[email protected]</span></a>,
indicating a commitment to submit prepayment for the balance of the
calendar year'' and that the notification ``email to enroll in the
Program must originate from an officer of the Floor Broker
organization and represents a binding commitment through the balance
of the calendar year.'').
\9\ See proposed Fee Schedule, FB Prepay Program.
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Although the Exchange cannot predict with certainty whether the
proposed changes to the FB Prepay Program would encourage Floor Brokers
to participate in the program or to increase their manual billable
volume, the Exchange believes that the proposed changes would continue
to incent Floor Brokers to participate in the FB Prepay Program by
adding flexibility to the structure of the Program, including by
allowing Floor Brokers to join the Program after the first of the year
and increasing the Maximum Combined Rebate/Credit. All Floor Brokers
are eligible to participate in the FB Prepay Program and qualify for
the proposed rebates.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\10\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\11\ 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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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposed Rule Change Is Reasonable
The Exchange operates in a highly competitive market. The
Commission has repeatedly expressed its preference for competition over
regulatory intervention in determining prices, products, and services
in the securities markets. In Regulation NMS, the Commission
highlighted the importance of market forces in determining prices and
SRO revenues and, also, recognized that current regulation of the
market system ``has been remarkably successful in promoting market
competition in its broader forms that are most important to investors
and listed companies.'' \12\
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\12\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04) (``Reg NMS
Adopting Release'').
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There are currently 17 registered options exchanges competing for
order flow. Based on publicly-available information, and excluding
index-based options, no single exchange has more than 16% of the market
share of executed volume of multiply-listed equity and ETF options
trades.\13\ Therefore, no exchange possesses significant pricing power
in the execution of multiply-listed equity and ETF options order flow.
More specifically, in November 2023, the Exchange had less than 12%
market share of executed volume of multiply-listed equity and ETF
options trades.\14\
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\13\ The OCC publishes options and futures volume in a variety
of formats, including daily and monthly volume by exchange,
available here: <a href="https://www.theocc.com/Market-Data/Market-Data-Reports/Volume-and-Open-Interest/Monthly-Weekly-Volume-Statistics">https://www.theocc.com/Market-Data/Market-Data-Reports/Volume-and-Open-Interest/Monthly-Weekly-Volume-Statistics</a>.
\14\ 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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The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
shift order flow or discontinue or reduce use of certain categories of
products, in response to fee changes. Accordingly, competitive forces
constrain options exchange transaction fees. Stated otherwise,
modifications to exchange transaction fees can have a direct effect on
the ability of an exchange to compete for order flow.
The Exchange believes that the proposed changes are reasonable
because they are designed to continue to incent Floor Brokers to
increase the number of manual transactions sent to the Exchange by
offering them rebates on manual transactions with at least one billable
side. The Exchange also believes that the proposed higher maximum
monthly amount that a firm could earn from Submitting Broker QCC
credits and Floor Broker rebates on manual billable volume (i.e., the
Maximum Combined Rebate/Credit) is reasonable because it is set at an
amount that is designed to encourage Floor Brokers to direct QCC
transactions and manual billable volume to the Exchange to receive the
existing credits and proposed rebates.
With respect to the FB Prepay Program, the Exchange also believes
that the proposed changes are reasonable because participation in the
program is optional, and Floor Brokers can elect to participate in the
program to be eligible for the rebates offered through the Manual
Billable Rebate Program or not. The Exchange also believes that the
proposed modification of the FB Prepay Program is reasonable because it
is designed to continue to encourage Floor Brokers to participate in
the FB Prepay Program, and to provide liquidity on the Exchange.
Specifically, the Exchange believes that the proposed continuation of
the FB Prepay Program to offer participating Floor Brokers rebates on
manual billable volume is reasonable because it would maintain both the
incentives offered to Floor Brokers and the qualification basis for
such incentives; all Floor Brokers participating in the FB Prepay
Program would be eligible for the same rebate on manual billable volume
and would qualify for the same additional rebate on manual billable
volume by meeting a set volume threshold (which the Exchange believes
is reasonable and is attainable based on manual billable volume rebates
earned by Floor Brokers).
To the extent that the continued aspects of the program continue to
attract more volume to the Exchange, this increased order flow would
continue to make the Exchange a more competitive venue for order
execution, which, in turn, promotes just and
[[Page 7431]]
equitable principles of trade and removes impediments to and perfects
the mechanism of a free and open market and a national market system.
The Exchange notes that all market participants stand to benefit from
any increase in volume entered by Floor Brokers, which could promote
market depth, facilitate tighter spreads, and enhance price discovery,
to the extent the proposed change encourages Floor Brokers to utilize
the Exchange as a primary trading venue, and may lead to a
corresponding increase in order flow from other market participants. In
addition, any increased liquidity on the Exchange would result in
enhanced market quality for all participants.
The Exchange also believes that the proposed change to modify the
Program to remove reference to a specific year is reasonable because it
would prevent the Exchange from using a benchmark based on a stale date
and would add flexibility to the Program (insofar as it would not need
to be revised each year). In addition, the proposed change to allow
Floor Brokers to join the Program after the first of the year--by
prepaying an amount (to cover the balance of the year) based on their
Eligible Fixed Costs incurred in their first month in the Program--is
reasonable for several reasons. First, the proposed method used to
determine the prepayment amount for any later-joining Floor Brokers is
analogous to the Exchange's current method of determining the
prepayment amount for Program participants (i.e., prepayment amount is
based on the Eligible Fixed Costs recently-incurred). Second, the
Exchange believes that the proposed method of determining a (later-
joining) Floor Broker's prepayment amount would provide the most
accurate basis for anticipating that Floor Broker's future Eligible
Fixed Costs. Moreover, the Exchange believes that this approach would
allow the Exchange the flexibility to offer the FB Prepay Program to
later-joining Floor Brokers, including/especially Floor Brokers new to
the Exchange, without putting these Floor Brokers at a competitive
disadvantage.
To the extent the continuation of the program would continue to
attract greater volume and liquidity, the Exchange believes the
proposed change would improve the Exchange's overall competitiveness
and strengthen its market quality for all market participants. In the
backdrop of the competitive environment in which the Exchange operates,
the proposed rule change is a reasonable attempt by the Exchange to
increase the depth of its market and improve its market share relative
to its competitors. The Exchange's fees are constrained by intermarket
competition, as Floor Brokers may direct their order flow to any of the
17 options exchanges, including an exchange offering Floor Broker
rebates on manual transactions.\15\ Thus, Floor Brokers have a choice
of where they direct their order flow, including their manual
transactions. The proposed rule changes are designed to continue to
incent Floor Brokers to direct liquidity and, in particular, manual
transactions to the Exchange. In addition, to the extent Floor Brokers
are incented to continue to aggregate their trading activity at the
Exchange, that increased liquidity could promote market depth, price
discovery and improvement, and enhanced order execution opportunities
for market participants.
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\15\ See id.
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Finally, the proposed changes to remove superfluous or obsolete
text from the FB Prepay Program, are reasonable because they would add
clarity, transparency, and internal consistency to the Fee Schedule to
the benefit of all market participants.
The Proposed Rule Change Is an Equitable Allocation of Credits and Fees
The Exchange believes the proposed rule change is an equitable
allocation of its fees and credits because the proposal is based on the
amount and type of business transacted on the Exchange. Floor Brokers
are not obligated to participate in the FB Prepay Program, and those
who do can choose to execute manual billable volume to earn rebates
through the Manual Billable Rebate Program or not. In addition, the
Manual Billable Rebate Program continues to be equally available to all
Floor Brokers that participate in the FB Prepay Program and the
proposed monthly limit on the amount that firms could earn from Floor
Broker manual billable rebates and Submitting Broker QCC credits
combined would apply to all firms equally (i.e., the Maximum Combined
Rebate/Credit).
The Exchange also notes that the proposed changes are designed to
encourage Floor Brokers that have previously enrolled in the FB Prepay
Program to reenroll for the upcoming year, as well as to attract Floor
Brokers that have not yet participated in the program. Moreover, the
Exchange believes that the proposed modifications to the FB Prepay
Program are an equitable allocation of fees and credits because they
would apply to participating Floor Brokers equally and are intended to
encourage the role performed by Floor Brokers in facilitating the
execution of orders via open outcry, a function which the Exchange
wishes to support for the benefit of all market participants.
The Exchange also believes that the proposed change to modify the
Program to remove reference to a specific year is equitable because it
would prevent the Exchange from using a benchmark based on a stale
date. In addition, the proposed change to allow Floor Brokers to join
the Program after the first of the year--by prepaying an amount (to
cover the balance of the year) based on their Eligible Fixed Costs
incurred in their first month in the Program--is equitable for several
reasons. First, the proposed method used to determine the prepayment
amount for any later-joining Floor Brokers is analogous to the
Exchange's current method of determining the prepayment amount for
Program participants (i.e., prepayment amount is based on the Eligible
Fixed Costs recently-incurred). Second, the Exchange believes that the
proposed method of determining a (later-joining) Floor Broker's
prepayment amount would provide the most accurate basis for
anticipating that Floor Broker's future Eligible Fixed Costs. Moreover,
the Exchange believes that this approach would allow the Exchange the
flexibility to offer the FB Prepay Program to later-joining Floor
Brokers, including/especially Floor Brokers new to the Exchange,
without putting these Floor Brokers at a competitive disadvantage.
Moreover, the proposed changes are designed to continue to incent
Floor Brokers to encourage OTP Holders to aggregate their executions at
the Exchange as a primary execution venue. To the extent that the
proposed change achieves its purpose in attracting more volume to the
Exchange, this increased order flow would continue to make the Exchange
a more competitive venue for, among other things, order execution.
Thus, the Exchange believes the proposed rule change would improve
market quality for all market participants on the Exchange and, as a
consequence, attract more order flow to the Exchange, thereby improving
market-wide quality and price discovery.
The Proposed Rule Change Is Not Unfairly Discriminatory
The Exchange believes the proposed change is not unfairly
discriminatory because it is based on the amount and type of business
transacted on the Exchange. Floor Brokers are not obligated to execute
manual billable transactions or participate in the FB
[[Page 7432]]
Prepay Program, and the proposed rebates offered through the Manual
Billable Rebate Program are available to all Floor Brokers that
participate in the FB Prepay Program on a non-discriminatory basis. The
proposed changes are designed to add flexibility to the FB Prepay
Program by offering all participating Floor Brokers the same increased
Maximum Combined Rebate/Credit and to encourage Floor Brokers to
utilize the Exchange as a primary trading venue for all transactions
(if they have not done so previously) and increase manual billable
volume sent to the Exchange.
The Exchange also believes that the proposed change to modify the
Program to remove reference to a specific year is not unfairly
discriminatory because it would apply equally to all Program
participants and would prevent the Exchange from using a benchmark
based on a stale date. In addition, the proposed change to allow Floor
Brokers to join the Program after the first of the year--by prepaying
an amount (to cover the balance of the year) based on their Eligible
Fixed Costs incurred in their first month in the Program--is not
unfairly discriminatory for several reasons. First, the proposed method
used to determine the prepayment amount for any later-joining Floor
Brokers is analogous to the Exchange's current method of determining
the prepayment amount for Program participants (i.e., prepayment amount
is based on the Eligible Fixed Costs recently-incurred). Second, the
Exchange believes that the proposed method of determining a (later-
joining) Floor Broker's prepayment amount would provide the most
accurate basis for anticipating that Floor Broker's future Eligible
Fixed Costs. Moreover, the Exchange believes that this approach would
allow the Exchange the flexibility to offer the FB Prepay Program to
later-joining Floor Brokers, including/especially Floor Brokers new to
the Exchange, without putting these Floor Brokers at a competitive
disadvantage.
To the extent that the proposed continuation of (and modifications
to) the Program attracts more manual transactions to the Exchange, this
increased order flow would continue to make the Exchange a more
competitive venue for order execution. Thus, the Exchange believes the
proposed rule change would improve market quality for all market
participants on the Exchange and, as a consequence, attract more order
flow to the Exchange, thereby improving market-wide quality and price
discovery. The resulting increased volume and liquidity would provide
more trading opportunities and tighter spreads to all market
participants and thus would promote just and equitable principles of
trade, remove impediments to and perfect the mechanism of a free and
open market and a national market system and, in general, protect
investors and the public interest.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act, the Exchange does
not believe that the proposed rule change would impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, as discussed above, the Exchange believes
that the proposed change would encourage the submission of additional
liquidity to a public exchange, thereby promoting market depth, price
discovery and transparency and enhancing order execution opportunities
for all market participants. As a result, the Exchange believes that
the proposed change furthers the Commission's goal in adopting
Regulation NMS of fostering integrated competition among orders, which
promotes ``more efficient pricing of individual stocks for all types of
orders, large and small.'' \16\
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\16\ See Reg NMS Adopting Release, supra note 12, at 37499.
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Intramarket Competition. The continuation of the rebates on manual
billable volume is designed to attract additional order flow to the
Exchange (particularly in manual billable transactions), which could
increase the volumes of contracts traded on the Exchange. The proposed
modification of the FB Prepay Program is likewise intended to incent
Floor Brokers specifically to direct manual billable transactions to
the Exchange, as well as encourage Floor Brokers to participate in the
Program. The continued rebates would be available to all similarly
situated Floor Brokers that participate in the FB Prepay Program.
Greater liquidity benefits all market participants on the Exchange, and
increased manual transactions could increase opportunities for
execution of other trading interest. The proposed Maximum Combined
Rebate/Credit would likewise apply equally to all similarly situated
Floor Brokers.
To the extent that the proposed continuation of the program imposes
an additional competitive burden on non-Floor Brokers, the Exchange
believes that any such burden would be appropriate because all market
participants stand to benefit from any increase in volume entered by
Floor Brokers because an increase in trading volume could promote
market depth, facilitate tighter spreads, and enhance price discovery.
In addition, any increased liquidity on the Exchange would result in
enhanced market quality for all participants.
Intermarket Competition. The Exchange operates in a highly
competitive market in which market participants can readily favor one
of the 17 competing option exchanges if they deem fee levels at a
particular venue to be excessive. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
exchanges and to attract order flow to the Exchange. Based on publicly-
available information, and excluding index-based options, no single
exchange has more than 16% of the market share of executed volume of
multiply-listed equity and ETF options trades.\17\ Therefore, currently
no exchange possesses significant pricing power in the execution of
multiply-listed equity and ETF options order flow. More specifically,
in November 2023, the Exchange had less than 12% market share of
executed volume of multiply-listed equity and ETF options trades.\18\
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\17\ The OCC publishes options and futures volume in a variety
of formats, including daily and monthly volume by exchange,
available here: <a href="https://www.theocc.com/Market-Data/Market-Data-Reports/Volume-and-Open-Interest/Monthly-Weekly-Volume-Statistics">https://www.theocc.com/Market-Data/Market-Data-Reports/Volume-and-Open-Interest/Monthly-Weekly-Volume-Statistics</a>.
\18\ 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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The Exchange believes that the proposed changes reflect this
competitive environment because they modify the Exchange's fees and
rebates in a manner designed to continue to incent OTP Holders to
direct trading interest (particularly manual transactions) to the
Exchange, to provide liquidity and to attract order flow. To the extent
that Floor Brokers are encouraged to participate in the FB Prepay
Program and/or incented to utilize the Exchange as a primary trading
venue for all transactions, all of the Exchange's market participants
should benefit from the improved market quality and increased
opportunities for price improvement.
The Exchange further believes that the proposed change could
promote
[[Page 7433]]
competition between the Exchange and other execution venues, including
those that currently offer rebates on manual transactions by
encouraging additional orders to be sent to the Exchange for execution.
Finally, the proposed changes to remove superfluous or obsolete
text from the FB Prepay Program are not designed to address any
competitive issue but are instead designed to add clarity,
transparency, and internal consistency to the Fee Schedule.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
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) \19\ of the Act and subparagraph (f)(2) of Rule
19b-4 \20\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 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) \21\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\21\ 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, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#83f1f6efe6aee0eceeeee6edf7f0c3f0e6e0ade4ecf5"><span class="__cf_email__" data-cfemail="91e3e4fdf4bcf2fefcfcf4ffe5e2d1e2f4f2bff6fee7">[email protected]</span></a>. Please include
file number SR-NYSEARCA-2024-10 on the subject line.
Paper Comments
<bullet> 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-2024-10. 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 (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). 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-2024-10 and should
be submitted on or before February 23, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-02068 Filed 2-1-24; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on February 2, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.