Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Change Modifying the NYSE Amex Options Fee Schedule
Federal Register, Volume 81 Issue 95 (Tuesday, May 17, 2016)
Federal Register Volume 81, Number 95 (Tuesday, May 17, 2016)
Notices
Pages 30583-30585
From the Federal Register Online via the Government Publishing Office www.gpo.gov
FR Doc No: 2016-11544
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SECURITIES AND EXCHANGE COMMISSION
Release No. 34-77814; File No. SR-NYSEMKT-2016-50
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Change Modifying the NYSE Amex Options Fee Schedule
May 11, 2016.
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 April 28, 2016, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') 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 Substance of the Proposed Rule Change
The Exchange proposes to modify the NYSE Amex Options Fee Schedule (``Fee Schedule''). The Exchange proposes to implement the fee change effective May 2, 2016. The proposed 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 the Statutory Basis for, the Proposed Rule Change
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Purpose
The purpose of this filing is to modify the definition of a Firm Facilitation trade to include Broker-Dealers, which would be consistent with the treatment of such transactions on another options market. The Exchange proposes to implement the change effective on May 2, 2016.
The current Fee Schedule defines a ``Firm Facilitation'' trade as ``a Manual trade that is executed in open outcry, in which one counterparty clears in the Firm range at the OCC, the other counterparty clears in the Customer range at the OCC, and both counterparties have the same Clearing Member symbol or identification.'' \4\ Firm Facilitation trades are not subject to transaction charges and are only subject to Royalty Fees.\5\
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\4\ See Fee Schedule, Terms and Definitions, available here, https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf.
\5\ See id., Fee Schedule, sections I. A. and B. (providing that Firm Facilitation trades are executed at the rate of $0.00 per contract) and K. (providing that Firm Facilitation trades are subject to Royalty Fees). The Exchange notes that Royalty Fees (or license fees) apply to certain classes of options and such fees are passed-on by the Exchange to the actual participants executing the trade.
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The Exchange proposes to modify the definition of Firm Facilitation to include Manual trades clearing in the
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Broker-Dealer range at the OCC.\6\ The Exchange notes that this proposal would align its definition of a Firm Facilitation trade with that of another options exchange. Specifically, the fee schedule for NYSE Arca provides that firm facilitation trades are manual trades that apply to ``any transaction involving a Firm proprietary trading account that has a customer of that same Firm on the contra side of the transaction, or a broker dealer facilitating a Customer order, where the broker dealer and the Customer both clear through the same clearing firm and the broker dealer clears in the customer range.'' \7\
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\6\ See proposed Fee Schedule. Per the Fee Schedule, a ``Firm'' means a Broker-Dealer that is not registered as a dealer-specialist or Market Maker that is an ATP Holder on the Exchange, per Rule 900.2NY(28) and a ``Broker-Dealer'' is an entity registered pursuant to section 15 of the Exchange Act, per Rule 990NY(3). See Fee Schedule, supra n. 4.
\7\ See NYSE Arca fee schedule, Endnote 7, available here, https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf (describing Firm Facilitation and Broker Dealer facilitating a Customer--Manual). NYSE Arca likewise does not charge transaction fees for firm facilitation trades.
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Statutory Basis
The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act,\8\ in general, and furthers the objectives of sections 6(b)(4) and (5) of the Act,\9\ 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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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the proposed modification to the definition of Firm Facilitation trades is reasonable, equitable and not unfairly discriminatory because it would align the scope of such trades with how trades are characterized on at least one other options exchange, thereby encouraging greater harmonization across exchange. Additionally, the Exchange believes the proposed change is consistent with the Act because they it attract greater volume and liquidity to the Exchange, which would benefit all market participants by providing tighter quoting and better prices, all of which perfects the mechanism for a free and open market and national market system.
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,\10\ 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. The Exchange believes the proposed amendment is pro-competitive as expanding the definition of Firm Facilitation trades consistent with other markets may encourage additional order flow to be direction to the Exchange and any resulting increase in volume and liquidity to the Exchange would benefit all Exchange participants through increased opportunities to trade as well as enhancing price discovery.
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\10\ 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. 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) \11\ of the Act and subparagraph (f)(2) of Rule 19b-4 \12\ thereunder, because it establishes a due, fee, or other charge imposed by the Exchange.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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) \13\ of the Act to determine whether the proposed rule change should be approved or disapproved.
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\13\ 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-NYSEMKT-2016-50 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-NYSEMKT-2016-50. 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/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 the 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-NYSEMKT-2016-50, and should be submitted on or before June 7, 2016.
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For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
FR Doc. 2016-11544 Filed 5-16-16; 8:45 am
BILLING CODE 8011-01-P
