Notice2024-30349
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
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Published
December 20, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 245 (Friday, December 20, 2024)</title>
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[Federal Register Volume 89, Number 245 (Friday, December 20, 2024)]
[Notices]
[Pages 104279-104281]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-30349]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101920; File No. SR-NYSEAMER-2024-77]
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
December 16, 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 December 11, 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 charges applicable to Manual
transactions by NYSE American Options Market Makers. The Exchange
proposes to implement the fee change effective December 11, 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 previously filed to amend the Fee Schedule on
November 29, 2024 (SR-NYSEAMER-2024-74), for December 2, 2024
effectiveness, and withdrew such filing on December 11, 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.
[[Page 104280]]
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 modify Section I.A. of the Fee
Schedule regarding the fee for Manual transactions by NYSE American
Options Market Makers (``Market Makers''). Currently, Market Makers are
charged $0.35 per contract for Manual transactions. The Exchange
proposes to increase the fee for Market Makers' Manual transactions to
$0.50 per contract.\5\ The proposed change is intended to more closely
align the Exchange's fee for Manual transactions by Market Makers with
fees charged by at least one other competing exchange.\6\ Although the
proposed change would increase the fee for Manual transactions for
Market Makers, the Exchange believes Market Makers will continue to
quote actively to participate in transactions on the Trading Floor as
they do today, thereby promoting trading opportunities and competition
on the Trading Floor to the benefit of all market participants.
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\5\ See Fee Schedule, Section I.A. (Rates for Options
transactions).
\6\ See Nasdaq PHLX, Options 7 Pricing Schedule, Section 4
(providing for $0.50 per contract fee for Market Maker manual
transactions).
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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 proposed change is reasonable, equitable, and not unfairly
discriminatory. As a threshold matter, the Exchange is subject to
significant competitive forces in the market for options securities
transaction services that constrain its pricing determinations in that
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.'' \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) (``Reg NMS
Adopting Release'').
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There are currently 18 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.\10\ Therefore, currently no exchange possesses significant
pricing power in the execution of multiply-listed equity & ETF options
order flow. More specifically, in October 2024, the Exchange had 6.26%
market share of executed volume of multiply-listed equity and ETF
options trades.\11\ In such a low-concentrated and highly competitive
market, no single options exchange possesses significant pricing power
in the execution of option order flow. Within this environment, market
participants can freely and often do shift their order flow among the
Exchange and competing venues in response to changes in their
respective pricing schedules.
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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 ETF-based options, see
id., the Exchange's market share in multiply-listed equity and ETF
options decreased slightly from 6.45% for the month of October 2023
to 6.26% for the month of October 2024.
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The Exchange believes the proposed change is reasonable because,
although it would increase the fee for Market Maker Manual
transactions, it is designed to bring the Exchange's fee closer into
alignment with a similar fee charged on at least one other competing
exchange with a trading floor.\12\ In addition, although Market Makers
would continue to be subject to a Manual transaction fee greater than
those charged to other market participants, the proposed fee is
reasonable, on balance, given various other incentives available only
to Market Makers.\13\ The Exchange also believes the proposed change,
although it would increase the fee applicable to Market Makers' Manual
transactions, would not discourage Market Makers from conducting Manual
transactions on the Exchange, thereby continuing to attract volume and
liquidity to the Exchange generally and to the benefit all market
participants (including those that do not participate in Manual
transactions) through increased opportunities to trade.
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\12\ See note 6, supra.
\13\ See, e.g., Fee Schedule, Sections I.C. (NYSE American
Options Market Maker Sliding Scale--Electronic) and I.D. (Prepayment
Program).
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The Exchange believes the proposed rule change is an equitable
allocation of its fees and credits and is not unfairly discriminatory,
as it applies equally to all similarly-situated market participants on
an equal and non-discriminatory basis. The proposal is based on the
type of business transacted on the Exchange, and Market Makers are not
obligated to engage in Manual transactions. Market Makers benefit from
having access to interact with orders that are made available in open
outcry on the Trading Floor, and the Exchange believes that the
proposed increased fee for Market Makers' Manual transactions is
designed to balance the need to attract both Market Makers' and other
market participants' orders to the Trading Floor. Although the proposed
change would increase the fee for Market Makers' Manual transactions,
the Exchange believes Market Makers would continue to quote actively so
that they may participate in Manual transactions as they do today,
thereby promoting competition and maintaining market quality for all
market participants. The Exchange also believes that increasing fees
for Manual transactions by Market Makers, but not for other market
participants, represents an equitable, non-discriminatory allocation of
fees on balance because Market Makers continue to be entitled to
various incentives not available to other market participants.\14\
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\14\ See id.
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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 be consistent with charges for similar
business on at least one other market. 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,
[[Page 104281]]
which promotes ``more efficient pricing of individual stocks for all
types of orders, large and small.'' \15\
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\15\ See Reg NMS Adopting Release, supra note 9, at 37499.
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Intramarket Competition. The proposed change is designed to
continue to promote the use of the Exchange as a primary trading venue,
and, specifically, to encourage competition on the Trading Floor. The
proposed change is designed to balance the need to attract both Market
Makers' and other market participants' orders to the Trading Floor. The
Exchange believes that the proposed change to the fee applicable to
Manual transactions by Market Makers would not discourage them from
continuing to conduct Manual transactions on the Exchange because
interacting with orders that are made available in open outcry on the
Trading Floor promotes additional opportunities for quality executions.
To the extent that this purpose is achieved, all of the Exchange's
market participants should benefit from the continued market liquidity.
Enhanced market quality and increased transaction volume that results
from the increase in order flow directed to the Exchange will benefit
all market participants and improve competition on the Exchange. The
Exchange also believes that increasing fees for Manual transactions by
Market Makers relative to other market participants does not impose an
undue burden on competition because, as noted above, Market Makers have
access to other incentives in the Fee Schedule not available to other
market participants.\16\
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\16\ See note 13, supra.
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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. Based on publicly-available
information, and excluding index-based options, no single exchange
currently has more than 16% of the market share of executed volume of
multiply-listed equity and ETF options trades.\17\ Therefore, no
exchange currently possesses significant pricing power in the execution
of multiply-listed equity and ETF options order flow. More
specifically, in October 2024, the Exchange had 6.26% market share of
executed volume of multiply-listed equity and ETF options trades.\18\
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\17\ See note 10, supra.
\18\ See note 11, supra.
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The Exchange believes that the proposed rule change reflects this
competitive environment because it modifies the Exchange's fees to be
more closely aligned with fees charged by at least one other market
with a Trading Floor for similar transactions.\19\ The Exchange also
believes that the proposed change would continue to promote competition
between the Exchange and other execution venues because continued
Market Maker activity on the Trading Floor would encourage liquidity,
thereby maintaining market quality on the Exchange and encouraging
orders to be sent to the Exchange for execution. To the extent that
this purpose is achieved, all the Exchange's market participants should
benefit from the improved market quality and increased opportunities
for price improvement.
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\19\ See note 6, supra.
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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) \20\ of the Act and subparagraph (f)(2) of Rule
19b-4 \21\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\20\ 15 U.S.C. 78s(b)(3)(A).
\21\ 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) \22\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\22\ 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#6d1f180108400e0200000803191e2d1e080e430a021b"><span class="__cf_email__" data-cfemail="e694938a83cb85898b8b83889295a6958385c8818990">[email protected]</span></a>. Please include
file number SR-NYSEAMER-2024-77 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-2024-77.
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-2024-77 and
should be submitted on or before January 10, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-30349 Filed 12-19-24; 8:45 am]
BILLING CODE 8011-01-P
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