Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the Arca Options Deep Market Data Product
| Published date | 13 September 2021 |
| Record Number | 2021-19612 |
| Section | Notices |
| Court | Securities And Exchange Commission |
Federal Register, Volume 86 Issue 174 (Monday, September 13, 2021)
[Federal Register Volume 86, Number 174 (Monday, September 13, 2021)]
[Notices]
[Pages 50915-50917]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-19612]
[[Page 50915]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92887; File No. SR-NYSEArca-2021-75]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Modify the Arca
Options Deep Market Data Product
September 7, 2021.
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 August 24, 2021, 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 Arca Options Deep market data
product. The proposed rule change is available on the Exchange's
website at www.nyse.com, 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 Exchange proposes to modify the Arca Options Deep market data
product.
The Exchange currently offers the following real-time options
market data feeds: ``Arca Options Top,'' ``Arca Options Deep,'' and
``Arca Options Complex'' (the ``Arca Options Products''). ``Arca
Options Top'' is a single market data product that combines last sale
data, best bids and offers (``BBO''), order imbalance information and
series status and underlying status messages. ``Arca Options Complex,''
also a single market data product, provides subscribers NYSE Arca
Options quote and trade information (including orders/quotes, requests
for responses, and trades) for the complex order book on a real-time
basis. ``Arca Options Deep'' is also a single market data product that
provides subscribers NYSE Arca Options quotes and orders at the first
three price levels in each series on a real-time basis.
The Exchange charges a single fee for Arca Options Products and
subscribers of Arca Options Products receive all three data feeds
described above.\4\ The Exchange charges a separate fee for Arca
Options Complex for subscribers that seek to obtain this data feed on a
standalone basis.\5\
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\4\ See Securities Exchange Act Release No. 68005 (October 9,
2012), 77 FR 63362 (October 16, 2012) (SR-NYSEArca-2012-106)
(establishing fees for certain proprietary options market data
products). See also Securities Exchange Act Release Nos. 69523 (May
6, 2013), 78 FR 27452 (May 10, 2013) (SR-NYSEArca-2013-41)
(establishing a schedule of NYSE Arca Options proprietary market
data fees); 69554 (May 10, 2013), 78 FR 28917 (May 16, 2013) (SR-
NYSEArca-2013-47) (establishing non-display usage fees and amending
the professional end-user fees); 71933 (April 11, 2014), 79 FR 21821
(April 17, 2014) (SR-NYSEArca-2014-34) (amending the professional
user fees); 73010 (September 5, 2014), 79 FR 54307 (September 11,
2014) (SR-NYSEArca-2014-94) (amending fees for non-display use);
76023 (September 29, 2015), 80 FR 60208 (October 5, 2015) (SR-
NYSEArca-2015-83) (modifying certain proprietary options data
products); and 77111 (February 11, 2016), 81 FR 8291 (February 18,
2016) (SR-NYSEArca-2016-29) (Modifying the Arca Options Deep market
data product).
\5\ See Securities Exchange Act Release No. 73588 (November 13,
2014), 79 FR 68922 (November 19, 2014) (SR-NYSEArca-2014-129)
(establishing fees for the complex order book feed).
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The Exchange proposes to modify the Arca Options Deep market data
product so that quotes and orders would be available for the full order
book in each series on a real-time basis rather than at the first three
price levels. As modified, Arca Options Deep would provide vendors and
subscribers with a unified view of events, in sequence, as they appear
on the Exchange's matching engine. The modified Arca Options Deep would
include depth of book order data, last sale data, opening imbalance
data, series status updates (e.g., trade corrections and trading halts)
and series summary messages. The series summary message would update
every minute and would include the opening price, high price, low
price, closing price, and cumulative volume for each series traded on
the Exchange. The Exchange is not making any changes to the current
product other than providing quotes and orders for the full order book
rather than at the first three price levels and the inclusion of
opening imbalance data.
The Exchange believes that Arca Options Deep, as modified,
addresses requests received from vendors and subscribers that would
like to receive the data described above in an integrated fashion. An
integrated data feed would provide greater efficiencies and reduce
errors for vendors and subscribers that currently choose to integrate
the data after receiving it from the Exchange. The Exchange believes
that providing vendors and subscribers with the option of a market data
product that both integrates existing products and includes additional
market data would allow vendors and subscribers to choose the best
solution for their specific businesses while also enhancing the
functionality of the product.
The proposed modification to the Arca Options Deep data feed will
allow subscribers who currently obtain depth of market data at three
price levels to receive the full order book market data in a single
data feed. Offering a data product that provides the full order book in
one market data product would provide greater efficiencies and better
sequencing for vendors and subscribers. As it does currently, Arca
Options Deep would continue to provide last sale and BBO information on
a real-time basis as reported to the Options Price Reporting Authority
(``OPRA'') and disseminated on a consolidated basis under the OPRA
Plan.\6\
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\6\ The OPRA Plan is a national market system plan approved by
the Securities and Exchange Commission (``Commission'') pursuant to
Section 11A of the Act and Rule 608 thereunder (formerly Rule 11Aa3-
2). See Securities Exchange Act Release No. 17638 (March 18, 1981),
22 SEC. Docket 484 (March 31, 1981). The full text of the OPRA Plan
is available at https://www.opraplan.com/. The OPRA Plan provides
for the collection and dissemination of last sale and quotation
information on options that are traded on the participant exchanges.
Section 5.2(c) of the OPRA Plan also permits OPRA Plan participants
to disseminate unconsolidated market information to certain of their
members under certain circumstances. The manner in which the
Exchange proposes to disseminate the products would comply with
Section 5.2(c) of the OPRA Plan, pursuant to which the Exchange may
not disseminate the products ``on any more timely basis than the
same information is furnished to the OPRA System for inclusion in
OPRA's consolidated dissemination of Options Information.''
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The Exchange does not propose to make any change to the fees for
Arca Options Deep. The single fee charged for the Arca Options Products
that comprise the Arca Options Top, Arca
[[Page 50916]]
Options Deep and Arca Options Complex would continue to apply. The
separate fee that now applies to Arca Options Complex, would likewise
continue to apply to the Arca Options Complex market data product.
Arca Options Deep would continue to be offered through the
Exchange's Liquidity Center Network (``LCN''), a local area network in
the Exchange's Mahwah, New Jersey data center that is available to
users of the Exchange's co-location services. The Exchange would also
continue to offer the Arca Options Deep through the Exchange's Secure
Financial Transaction Infrastructure (``SFTI'') network, through which
all other users and members access the Exchange's trading and execution
systems and other proprietary market data products.
The Exchange plans to introduce the modified Arca Options Deep
market data product when the Exchange transitions to the Pillar trading
platform, anticipated for the fourth quarter of 2021.\7\ The Exchange
will announce the exact date that the modified Arca Options Product
market data product will become available through a NYSE Trader Update.
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\7\ See Securities Exchange Act Release No. 92304 (June 30,
2021), 86 FR 36440 (July 9, 2021) (SR-NYSE-Arca-2021-47) (Notice of
Filing of Proposed Rule Change for New Rules 6.1P-O, 6.37AP-O,
6.40P-O, 6.41P-O, 6.62P-O, 6.64P-O, 6.76P-O, and 6.76AP-O and
Amendments to Rules 1.1, 6.1-O, 6.1A-O, 6.37-O, 6.65A-O and 6.96-O).
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2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \8\ of the
Act, in general, and furthers the objectives of Section 6(b)(5) \9\ of
the Act, in particular, in that it is designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, to protect investors and the
public interest, and it is not designed to permit unfair discrimination
among customers, brokers, or dealers.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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The Exchange also believes this proposal is consistent with Section
6(b)(5) of the Act because it protects investors and the public
interest and promotes just and equitable principles of trade by
providing investors with improved options for receiving market data.
The proposed rule change would benefit investors by facilitating their
prompt access to the additional real-time information contained in a
modified Arca Options Deep market data product.
The Exchange believes the proposed change is reasonable because it
would provide vendors and subscribers with a higher quality market data
product.
In adopting Regulation NMS, the Commission granted self-regulatory
organizations and broker-dealers increased authority and flexibility to
offer new and unique market data to consumers of such data. It was
believed that this authority would expand the amount of data available
to users and consumers of such data and also spur innovation and
competition for the provision of market data. The Exchange believes
that the options data product changes proposed herein are precisely the
sort of market data product evolutions that the Commission envisioned
when it adopted Regulation NMS. The Commission concluded that
Regulation NMS--by lessening regulation of the market in proprietary
data--would itself further the Act's goals of facilitating efficiency
and competition:
[E]fficiency is promoted when broker-dealers who do not need the
data beyond the prices, sizes, market center identifications of the
NBBO and consolidated last sale information are not required to
receive (and pay for) such data. The Commission also believes that
efficiency is promoted when broker-dealers may choose to receive
(and pay for) additional market data based on their own internal
analysis of the need for such data.\10\
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\10\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
By removing ``unnecessary regulatory restrictions'' on the ability
of exchanges to sell their own data, Regulation NMS advanced the goals
of the Act and the principles reflected in its legislative history.
The proposed modified Arca Options Deep market data feed will help
to protect a free and open market by providing additional data to the
marketplace and give investors greater choices. In addition, the
proposal would not permit unfair discrimination because the products
will be available to all of the Exchange's customers and broker-dealers
through both the LCN and SFTI.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\11\ 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 market for proprietary data products is
currently competitive and inherently contestable because there is
fierce competition for the inputs necessary to the creation of
proprietary data. Numerous exchanges compete with each other for
listings, trades, and market data itself, providing virtually limitless
opportunities for entrepreneurs who wish to produce and distribute
their own market data. This proprietary data is produced by each
individual exchange, as well as other entities (such as internalizing
broker-dealers and various forms of alternative trading systems,
including dark pools and electronic communication networks), in a
vigorously competitive market. It is common for market participants to
further and exploit this competition by sending their order flow and
transaction reports to multiple markets, rather than providing them all
to a single market. Because the Exchange's competitors already offer
similar products, the proposed modified Arca Options Deep market data
product will enhance competition. For example, Arca Options Deep would
provide an alternative to Nasdaq ITCH-to-Trade Options, offered by The
Nasdaq Stock Market, Inc. (``Nasdaq'').\12\
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\11\ 15 U.S.C. 78f(b)(8).
\12\ See Nasdaq ITCH-to-Trade Options (ITTO), https://www.nasdaqtrader.com/micro.aspx?id=Dapos (ITTO is designed to
provide full quote and order depth . ITTO uses a series of messages
to track the life of a quote or order through the Nasdaq Options
Market (NOM). ITTO supports NOM last sale data as well as Net Order
Imbalance data for the opening auction).
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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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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[[Page 50917]]
At any time within 60 days of the filing of the 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 to
determine whether the proposed rule change should be approved or
disapproved.
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
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEArca-2021-75 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-2021-75. 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 (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 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 10:00 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEArca-2021-75, and should be
submitted on or before October 4, 2021.
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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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-19612 Filed 9-10-21; 8:45 am]
BILLING CODE 8011-01-P
