81 FR 5802 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Change Modifying the NYSE Amex Options Fee Schedule To Add an Early Adopter Specialist Credit

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 22 (February 3, 2016)

[Federal Register Volume 81, Number 22 (Wednesday, February 3, 2016)]
[Notices]
[Pages 5802-5803]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-01928]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76992; File No. SR-NYSEMKT-2016-10]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Change Modifying the NYSE Amex 
Options Fee Schedule To Add an Early Adopter Specialist Credit

January 28, 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 January 20, 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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I. Self-Regulatory Organization's Statement of the Terms of the 
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 February 1, 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.

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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to implement a monthly credit 
available to Specialists to promote trading in Binary Return 
Derivatives (``ByRDs''),\4\ which is a new product that the Exchange 
anticipates launching in February 2016.
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    \4\ See Securities Exchange Act Release No. 56251 (August 14, 
2007), 72 FR 46523 (August 20, 2007) (SR-Amex-2004-27) (Order 
approving listing of Fixed Return Options (``FROs'')); see also 
Securities Exchange Act Release No. 71957 (April 16, 2014), 79 FR 
22563 (April 22, 2014) (SR-NYSEMKT-2014-06) (Order approving name 
change from FROs to Binary Return Derivatives (ByRDs) and re-launch 
of these products, with certain modification, and amending Obvious 
Errors rules to include ByRDs). ByRDs are European-style option 
contracts on individual stocks, exchange-traded funds and Index-
Linked Securities that have a fixed return in cash based on a set 
strike price; satisfy specified listing criteria; and may only be 
exercised at expiration pursuant to the Rules of the Options 
Clearing Corporation. See, e.g., NYSE MKT Rule 900ByRDs.
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    To encourage trading of ByRDs, the Exchange proposes to offer an 
incentive to Specialists appointed to trade ByRDs.\5\ Specialists that 
are appointed in ByRDs and eligible for the incentive payment would be 
known on the Exchange's Fee Schedule as ``Early Adopter Specialists.'' 
Specifically, effective February 1, 2016, the Exchange proposes to 
offer each ``Early Adopter Specialist'' a monthly credit of $335 for 
each class of ByRDs for which that Specialist is appointed, which the 
Exchange believes would provide a competitive incentive to Specialists 
based on market conditions and competing interests for technology.\6\ 
The Exchange believes the proposed incentive payment would further the 
Exchange's goal of introducing new products to the marketplace by 
encouraging Specialists to make a market for these products.
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    \5\ Each Specialist must be registered with the Exchange as a 
Market Maker and is thus subject to the quoting requirements imposed 
on Market Makers. See, e.g., Rules 920NY, 925.1NY(b) and 927NY.
    \6\ See proposed Section I.H. of the Fee Schedule, which was 
previously Reserved.
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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 Exchange believes that the proposed monthly credit is 
reasonable, equitable and not unfairly discriminatory for the following 
reasons. First, the proposed credit would generate additional order 
flow to the Exchange by creating incentives to quote and trade ByRDs 
options, which would benefit all market participants even those not 
eligible to receive the credit. The Exchange believes it is appropriate 
to offer the credit to Specialists (and not to other types of Market 
Makers) as the Specialists are subject to heightened continuous quoting 
obligations, which exceed those imposed on other Market Makers.\9\ The 
Exchange believes the proposed credit would recognize the contributions 
of each Early Adopter Specialist to the trading environment on the 
Exchange and is designed to attract Specialists willing to seek 
appointments in and, thus provide continuous quotes in, ByRDs options, 
which increase in the availability of ByRDs options would benefit all 
market participants.
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    \9\ See supra n. 5.
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    In addition, the Exchange has evaluated the market conditions, 
including the technology needs of Specialists appointed to options on 
ByRDs and believes the proposed monthly credit of $335 is reasonable, 
equitable and not unfairly discriminatory.\10\ The Exchange notes that 
offering market participants incentives to trade in certain newly 
offered products is not new of novel.\11\
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    \10\ In determining the $335 fee, the Exchange considered 
factors such as systems upgrades and additional data feeds that may 
be necessary to act as a Specialist in ByRDS.
    \11\ See Exchange Act Release No. 34-60536 (August 19, 2009), 74 
FR 43204 (August 26, 2009) (SR-ISE-2009-59).
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    For these 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,\12\ 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 the proposed incentive 
is pro-competitive as it would further the Exchange's goal of

[[Page 5803]]

introducing new products to the marketplace and encouraging Specialists 
to make a market in these products, which would in turn, benefit market 
participants.
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    \12\ 15 U.S.C. 78f(b)(8).
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    To the extent that there is an additional competitive burden on 
market participants that are not eligible for the credit (i.e., non-
Specialists), the Exchange believes that this is appropriate because 
the proposal would incent Specialists to quote and trade in options on 
ByRDs which would enhance the quality of the Exchange's markets and 
increases the volume of contracts traded here. To the extent that this 
purpose is achieved, all of the Exchange's market participants should 
benefit from the improved market liquidity. Enhanced market quality and 
increased transaction volume that results from the anticipated increase 
in order flow directed to the Exchange will benefit all market 
participants and improve competition on the Exchange. Moreover, the 
Exchange believes it is appropriate to offer the credit to Specialists 
(and not to other types of Market Makers) as Specialists are subject to 
heightened continuous quoting obligations that exceed those required of 
other Market Makers.\13\
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    \13\ See supra n. 5.
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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) \14\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \15\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 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

     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-NYSEMKT-2016-10 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-2016-10. 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 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-NYSEMKT-2016-10, and should 
be submitted on or before February 24, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-01928 Filed 2-2-16; 8:45 am]
BILLING CODE 8011-01-P