Notice2024-05486
Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the NYSE American Options Fee Schedule
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
March 15, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 52 (Friday, March 15, 2024)</title>
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[Federal Register Volume 89, Number 52 (Friday, March 15, 2024)]
[Notices]
[Pages 18974-18976]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-05486]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99709; File No. SR-NYSEAMER-2024-15]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify
the NYSE American Options Fee Schedule
March 11, 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 American LLC (``NYSE American'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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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 American Options Fee
Schedule (``Fee Schedule'') regarding the Professional Step-Up
Incentive program. The Exchange proposes to implement the fee changes
effective March 1, 2024. 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.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing [sic] to modify the Fee Schedule to
replace the Professional Step-Up Incentive program with the
Professional Volume Incentive program.
Currently, the Exchange offers an incentive program known as the
Professional Step-Up Incentive (the ``Step-Up Program''), designed to
encourage ATP Holders to increase their electronic volume in the
``Professional'' range.\4\ The Step-Up Program offers discounted rates
on monthly Professional volume and credits on Customer electronic
volume at the same rate as ATP Holders that qualify for Tier 1 of the
American Customer Engagement (``ACE'') Program \5\ to ATP Holders that
increase their Professional volume by specified percentages of TCADV
over their August 2019 volume, or in the case of new ATP Holders, above
a base level of 10,000 contracts ADV. Volume from strategy executions,
CUBE auctions, and QCC transactions are not included in the calculation
of base volume amounts or volume to qualify for the Step-Up Program,
nor is interest that takes liquidity from posted Customer interest.
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\4\ See Fee Schedule, Section I.H. (Professional Step-Up
Incentive). For purposes of this filing, ``Professional'' electronic
volume includes Professional Customer, Broker Dealer, Non-NYSE
American Options Market Maker, and Firm.
\5\ See Fee Schedule, Section I.E. (American Customer Engagement
(``ACE'') Program).
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The Exchange now proposes to rename the Step-Up Program as the
Professional Volume Incentive program.\6\ Under the Professional Volume
Incentive program, ATP Holders would qualify for the same discounted
rates and credits as in the Step-Up Program by achieving qualifying
volume of specified percentages of TCADV (``Qualifying Volume) rather
than increased volume over a certain base level. Volume from strategy
executions, CUBE auctions, and QCC transactions, as well as interest
that takes liquidity from posted Customer interest, will continue to be
excluded from an ATP Holder's Qualifying Volume.
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\6\ Consistent with this change, the Exchange also proposes to
amend the Fee Schedule's Table of Contents to update the title of
Section I.H. to ``Professional Volume Incentive.''
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As proposed, Tier A of the Professional Volume Incentive program
would have the same Qualifying Volume requirement as the Step-Up
Program (0.20% of TCADV) and would provide qualifying ATP Holders with
the same per contract Penny rate of $0.35 and the same per contract
non-Penny rate of $0.65. The Exchange proposes that the Qualifying
Volume requirement for Tier B would be 0.30% of TCADV under the
Professional Volume Incentive program (rather than an increase of 0.25%
of TCADV under the Step-Up Program), and that the per contract Penny
and non-Penny rates ($0.20 and $0.55, respectively) would remain the
same. ATP Holders that qualify for either tier of the proposed
Professional Volume Incentive program will also continue to receive
benefits offered in Tier 1 of the ACE program.
Currently, under the Step-Up Program, ATP Holders would also
qualify for an additional discount on the Tier B rates by increasing
their program-qualifying volume and executing a qualifying amount of
posted Professional volume. The Exchange proposes to eliminate this
additional discount and instead introduce additional discounts
available to ATP Holders that achieve higher levels of Qualifying
Volume. ATP Holders that achieve Qualifying Volume as set forth in the
table below would earn the corresponding additional discount on the
Tier B Penny and non-Penny rates (applicable from the first contract)
as set forth in the table below:
[[Page 18975]]
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Additional
discount on
tier B per
Qualifying volume as % of TCADV contract
penny and non-
penny rate
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0.40%................................................... $0.01
0.50%................................................... 0.02
0.60%................................................... 0.03
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The proposed change is intended to continue to encourage ATP
Holders to increase both Professional and Customer electronic order
flow to the Exchange by continuing to offer the discounted rates and
credits that were available in the Step-Up Program through the new
Professional Volume Incentive program, as well as additional discounts
for qualifying ATP Holders. The Exchange believes the proposed change
to the qualifications for the Professional Volume Incentive Program,
which are based on ATP Holders' Qualifying Volume rather than increased
volume over a certain base volume, is reasonable and that the volume
requirements are attainable by ATP Holders.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\8\ 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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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the proposed Professional Volume
Incentive program is reasonable, equitable, and not unfairly
discriminatory because it is designed to continue to incent ATP Holders
to increase the amount of Professional and Customer electronic order
flow directed to the Exchange. The Professional Volume Incentive
program, as proposed, would continue to offer discounted rates and
credits as under the Step-Up Program, as well as additional discounts
for qualifying ATP Holders, based on Qualifying Volume rather than
increased volume over a certain base volume. As noted above, the
Exchange believes the proposed volume requirements for the Professional
Volume Incentive program, including for the additional discounts on
Tier B rates, are attainable by ATP Holders and are reasonably designed
to incentivize ATP Holders to achieve increasingly higher levels of
Qualifying Volume to earn the corresponding higher discounts. In
addition, with respect to the additional discounts that would be
available under the Professional Volume Incentive program, the Exchange
believes that the Qualifying Volume requirements and discount amounts
are reasonably designed to encourage ATP Holders to direct increased
Professional and Customer electronic volume to the Exchange, thereby
providing additional liquidity, attracting additional order flow from
other market participants, and improving market quality for all market
participants. To the extent the proposed change achieves its purpose in
attracting greater volume and liquidity to the Exchange, the Exchange
believes that all market participants stand to benefit from increased
electronic transaction volume, whether Professional or Customer, as
greater volume and liquidity would improve the Exchange's overall
competitiveness and strengthen its market quality for all market
participants. The Exchange also believes that the proposed change is
equitable and not unfairly discriminatory because it would apply to all
similarly-situated market participants on an equal and non-
discriminatory basis. The qualifications for and benefits offered in
the Professional Volume Incentive program are based on the amount and
type of business transacted by ATP Holders, and all ATP Holders are
eligible to qualify for the Professional Volume Incentive program by
achieving the same Qualifying Volume as a percentage of TCADV.
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.
For the foregoing reasons, the Exchange believes that the proposal
is consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act, the Exchange does
not believe that the proposed rule change would impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, as discussed above, the Exchange believes
that the proposed changes would encourage the submission of additional
liquidity to a public exchange, thereby promoting market depth, price
discovery and transparency and enhancing order execution opportunities
for all market participants. As a result, the Exchange believes that
the proposed change furthers the Commission's goal in adopting
Regulation NMS of fostering integrated competition among orders, which
promotes ``more efficient pricing of individual stocks for all types of
orders, large and small.'' \9\
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\9\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04).
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Intramarket Competition. The proposed change to replace the Step-Up
Program with the Professional Volume Incentive program is designed to
continue to attract additional order flow to the Exchange. Greater
liquidity benefits all market participants on the Exchange and
increased Professional and Customer electronic volume could increase
opportunities for execution of other trading interest. Because the
Professional Volume Incentive program would be available to all
similarly-situated market participants, the Exchange does not believes
that the proposed change would impose a disparate burden on competition
among market participants on the Exchange.
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.\10\ Therefore, no
exchange possesses significant pricing power in the execution of
multiply-listed equity & ETF options order flow. More specifically, in
January of 2024, the Exchange had less than 8% market share of executed
volume of multiply-listed equity & ETF options trades.\11\ The Exchange
believes that the proposed rule change reflects this competitive
environment because it modifies the Exchange's fees in a manner
designed to continue to encourage ATP Holders to direct trading
[[Page 18976]]
interest to the Exchange, to provide liquidity and to attract order
flow. To the extent that this purpose is achieved, all the Exchange's
market participants should benefit from the improved market quality and
increased trading opportunities. The Exchange believes that the
proposed change could promote competition between the Exchange and
other execution venues by encouraging additional orders to be sent to
the Exchange for execution.
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\10\ 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>.
\11\ 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 7.96% for the month of January 2023 to 7.82% for the
month of January 2024.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \12\ of the Act and subparagraph (f)(2) of Rule
19b-4 \13\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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) \14\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\14\ 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#fe8c8b929bd39d9193939b908a8dbe8d9b9dd0999188"><span class="__cf_email__" data-cfemail="5123243d347c323e3c3c343f2522112234327f363e27">[email protected]</span></a>. Please include
file number SR-NYSEAMER-2024-15 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-NYSEAMER-2024-15. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<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-NYSEAMER-2024-15 and should
be submitted on or before April 5, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-05486 Filed 3-14-24; 8:45 am]
BILLING CODE 8011-01-P
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