Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Arca Options Fee Schedule Relating to Lead Market Maker Rights Fees
Federal Register, Volume 79 Issue 111 (Tuesday, June 10, 2014)
Federal Register Volume 79, Number 111 (Tuesday, June 10, 2014)
Notices
Pages 33247-33249
From the Federal Register Online via the Government Printing Office www.gpo.gov
FR Doc No: 2014-13456
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SECURITIES AND EXCHANGE COMMISSION
Release No. 34-72312; File No. SR-NYSEArca-2014-63
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Arca Options Fee Schedule Relating to Lead Market Maker Rights Fees
June 4, 2014.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that, on May 23, 2014, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE Arca'') 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 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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Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Options Fee Schedule (``Fee Schedule'') relating to Lead Market Maker (``LMM'') Rights fees. The Exchange proposes to implement the fee change effective June 1, 2014. The text of the proposed rule change is available on the Exchange's Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission's Public Reference Room.
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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.
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Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
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Purpose
The purpose of this filing is to modify the Exchange's fees so as to provide a discount to LMMs that have a large number of issues in their LMM Allocation.
Currently, LMMs pay a Lead Market Maker Rights fee on each issue in their allocation, ranging from $45 per month to $1,500 per month, depending on the activity level in the issue. The Monthly Issue Fee is based on the Average National Daily Customer Contracts.
The Exchange is proposing that LMMs that have been allocated 400 or more issues receive a 50% discount in total Lead Market Maker Rights fees, from June 1, 2014 through December 31, 2014.
At the present time, there are approximately 2,600 different underlying issues listed on NYSE Arca Options. The Exchange regularly receives five to 10 requests to list new issues each week. The Exchange then surveys the LMM community to invite applications for allocation. At present, most surveys only receive one or two responses per issue, and a key factor in applying for allocation is the profitability of trading in an issue given the anticipated rights fee.
The Exchange believes that by providing a discount to LMM firms that have a large number of issues allocated to them will encourage LMM firms to apply for additional allocations. NYSE Arca proposes to have this discount in effect for the balance of the year, reverting back to the current total amount for all firms in January 2015.
NYSE Arca is not proposing any additional changes to Floor and Equipment Fees with this filing.
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Statutory Basis
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,\4\ in general, and furthers the objectives of Sections 6(b)(4) and (5) of the Act,\5\ 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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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the proposed discount on Lead Market Maker Rights fees is reasonable as it will reduce the overhead costs of LMM firms with a large number of issues in their allocation. In addition, the proposed discount is reasonable because it will help some LMMs meet their obligation to provide liquidity in a diverse selection of issues. The increased number of issues in their allocation will allow LMM firms to spread their risk across different industry sectors.
It is also not unfairly discriminatory to provide a discount to LMM firms because the reduced overhead costs will enhance the ability of LMMs to provide liquidity which will benefit all market participants.
The discount is also not unfairly discriminatory because it is available to any LMM firm that wishes to apply for appointment in a large number of issues.
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 these reasons, the Exchange believes that the proposal is consistent with the Act.
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Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\6\ the Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the proposed discount reduces the burden on competition because it will enhance the ability for LMM firms to quote competitively in more issues.
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\6\ 15 U.S.C. 78f(b)(8).
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The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues, and providing a discount on LMM Rights fees will allow LMM Firms to both expand the number of issues allocated to them and to reduce the overhead, which, in turn, encourages liquidity to compete for business. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment.
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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.
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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) \7\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \8\ thereunder, because it establishes a due, fee, or other charge imposed by the Exchange.
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 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) \9\ of the Act to determine whether the proposed rule change should be approved or disapproved.
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\9\ 15 U.S.C. 78s(b)(2)(B).
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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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include File Number SR-NYSEArca-2014-63 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-2014-63. 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 Web site (http://www.sec.gov/
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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 Web site 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 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-
NYSEArca-2014-63, and should be submitted on or before July 1, 2014.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
FR Doc. 2014-13456 Filed 6-9-14; 8:45 am
BILLING CODE 8011-01-P
