81 FR 8291 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Modifying the Arca Options Deep Market Data Product
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 32 (February 18, 2016)
Federal Register Volume 81, Issue 32 (February 18, 2016)
| Page Range | 8291-8294 | |
| FR Document | 2016-03267 |
[Federal Register Volume 81, Number 32 (Thursday, February 18, 2016)] [Notices] [Pages 8291-8294] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-03267] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77111; File No. SR-NYSEARCA-2016-29] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Modifying the Arca Options Deep Market Data Product February 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 February 4, 2016, 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 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. --------------------------------------------------------------------------- \1\ 15 U.S.C.78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- 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 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 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 (collectively called security status messages). ``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. ``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.\4\ --------------------------------------------------------------------------- \4\ See Rule 6.62(e), which defines complex orders. --------------------------------------------------------------------------- The Exchange charges a single fee for Arca Options Top and subscribers of Arca Options Top receive all three data feeds described above. The Exchange charges a separate fee for Arca Options Complex for subscribers that seek to obtain this data feed on a standalone basis.\5\ --------------------------------------------------------------------------- \5\ See Securities Exchange Act Release No. 68005 (Oct. 9, 2012), 77 FR 63362 (Oct. 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 (Sept. 5, 2014), 79 FR 54307 (Sept. 11, 2014) (SR- NYSEArca-2014-94) (amending fees for non-display use); 73588 (Nov. 13, 2014), 79 FR 68922 (Nov. 19, 2014) (SR-NYSEArca-2014-129) (establishing fees for the complex order book feed); and 76023 (September 29, 2015), 80 FR 60208 (October 5, 2015) (modifying certain proprietary options data products). --------------------------------------------------------------------------- [[Page 8292]] The Exchange proposes to modify the Arca Options Deep data feed. As proposed, Arca Options Deep will also include security status messages, the same data that is currently provided as part of Arca Options Top. The proposed modification to the Arca Options Deep data feed will allow subscribers who currently obtain depth of market data to also receive security status messages in a single data feed. Currently, these subscribers are required to process two data feeds to get the depth of market data and security status information. Offering a data product that combines, in one market data product, depth of market data and security status messages would provide greater efficiencies and better sequencing for vendors and subscribers that currently choose to integrate the data after receiving it from the Exchange. As with Arca Options Top, Arca Options Deep would provide depth of market and series status 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\ --------------------------------------------------------------------------- \6\ The OPRA Plan is a national market system plan approved by the Securities and Exchange Commission (``Commission'') pursuant to Section 11A of the Securities Exchange Act of 1934 (the ``Act'') and Rule 608 thereunder (formerly Rule 11Aa3-2). See Securities Exchange Act Release No. 17638 (March 18, 1981), 22 S.E.C. Docket 484 (March 31, 1981). The full text of the OPRA Plan is available at http://www.opradata.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.'' --------------------------------------------------------------------------- The Arca Options Products would continue to be distributed in their current format, to maintain the format of the Arca Options Products with that of other market data products offered by the Exchange. The Exchange does not propose to make any changes to the fees. The single fee charged for the Arca Options Product that comprise [sic] the Arca Options Top, Arca 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.\7\ --------------------------------------------------------------------------- \7\ The Exchange has not attached an Exhibit 5 with this proposed rule change because the Exchange is not proposing to make any fee changes associated with the proposed modification to the Arca Options Deep market data product. --------------------------------------------------------------------------- Each of the Arca Options Products 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 products through the Exchange's Secure Financial Transaction Infrastructure (``SFTI'') network, through which all other users and member organizations access the Exchange's trading and execution systems and other proprietary market data products. The Exchange will announce the date that the Arca Options Deep market data product will begin to include security status messages through a NYSE Market Data Notice. The proposed change is not intended to address any issues other than those described herein, and the Exchange is not aware of any problems that vendors or subscribers would have in complying with the proposed change. 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. --------------------------------------------------------------------------- \8\ 15 U.S.C. 78f(b). \9\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- 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 changes would benefit investors by facilitating their prompt access to the additional real-time information contained in a modified Arca Options Deep market data product. In particular, the Exchange believes that combining depth of market data with security status messages in the Arca Options Deep product is reasonable because it would provide greater efficiencies for vendors and subscribers that currently choose to integrate the data after receiving it from the Exchange. In addition, the change to the Arca Options Deep product reflects the interests and needs of subscribers and vendors who will no longer have to subscribe to multiple data feeds to obtain the information they want. The Exchange believes the proposed changes are reasonable because they would provide vendors and subscribers with higher quality market data products. 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\ --------------------------------------------------------------------------- \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 Exchange further notes that the existence of alternatives to the Exchange's products, including real- [[Page 8293]] time consolidated data, free delayed consolidated data, and proprietary data from other sources, ensures that the Exchange is not unreasonably discriminatory because vendors and subscribers can elect these alternatives. The proposed options data products 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. --------------------------------------------------------------------------- \11\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- 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 Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\ Because the 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 prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b- 4(f)(6)(iii) thereunder. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78s(b)(3)(A)(iii). \13\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b- 4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the 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. --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4-(f)(6)(iii),\15\ the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission believes that waiver of the operative delay is consistent with investor protection and the public interest because the proposal would allow the Exchange to offer currently available market data in a streamlined format that would enhance the quality of market data available to investors and would enable investors to better monitor trading activity on the Exchange. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.\16\ --------------------------------------------------------------------------- \14\ 17 CFR 240.19b-4(f)(6). \15\ 17 CFR 240.19b-4(f)(6)(iii). \16\ For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). --------------------------------------------------------------------------- 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) \17\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- 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 CommentsUse 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-2016-29 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSEARCA-2016-29. 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-NYSEARCA-2016-29 and should be submitted on or before March 10, 2016. [[Page 8294]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\18\ Robert W. Errett, Deputy Secretary. --------------------------------------------------------------------------- \18\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- [FR Doc. 2016-03267 Filed 2-17-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 32 / Thursday, February 18, 2016 / Notices 8291
an easily accessible place a written copy books of the appropriate Investing www.nyse.com, at the principal office of
of the procedures described in the Management Company. the Exchange, and at the Commission’s
preceding condition, and any 11. Any sales charges and/or service Public Reference Room.
modifications to such procedures, and fees charged with respect to shares of a
Fund of Funds will not exceed the II. Self-Regulatory Organization’s
will maintain and preserve for a period Statement of the Purpose of, and
of not less than six years from the end limits applicable to a fund of funds as
set forth in NASD Conduct Rule 2830. Statutory Basis for, the Proposed Rule
of the fiscal year in which any purchase Change
in an Affiliated Underwriting occurred, 12. No Self-Indexing Fund will
the first two years in an easily accessible acquire securities of an investment In its filing with the Commission, the
place, a written record of each purchase company or company relying on section self-regulatory organization included
of securities in Affiliated Underwritings 3(c)(1) or 3(c)(7) of the Act in excess of statements concerning the purpose of,
once an investment by a Fund of Funds the limits contained in section and basis for, the proposed rule change
in the securities of the Self-Indexing 12(d)(1)(A) of the Act, except to the and discussed any comments it received
Fund exceeds the limit of section extent the Self-Indexing Fund acquires on the proposed rule change. The text
12(d)(1)(A)(i) of the Act, setting forth securities of another investment of those statements may be examined at
from whom the securities were company pursuant to exemptive relief the places specified in Item IV below.
acquired, the identity of the from the Commission permitting the The Exchange has prepared summaries,
underwriting syndicate’s members, the Self-Indexing Fund to acquire securities set forth in sections A, B, and C below,
terms of the purchase, and the of one or more investment companies of the most significant parts of such
information or materials upon which for short-term cash management statements.
the Board’s determinations were made. purposes. A. Self-Regulatory Organization’s
9. Before investing in a Self-Indexing For the Commission, by the Division of Statement of the Purpose of, and the
Fund in excess of the limit in section Investment Management, under delegated Statutory Basis for, the Proposed Rule
12(d)(1)(A), a Fund of Funds and the authority. Change
Trust will execute a FOF Participation Robert W. Errett,
Deputy Secretary. 1. Purpose
Agreement stating without limitation
that their respective boards of directors [FR Doc. 2016–03301 Filed 2–17–16; 8:45 am] The Exchange proposes to modify the
or trustees and their investment BILLING CODE 8011–01–P Arca Options Deep market data product.
advisers, or trustee and Sponsor, as The Exchange currently offers the
applicable, understand the terms and following real-time options market data
conditions of the order, and agree to SECURITIES AND EXCHANGE feeds: ‘‘Arca Options Top,’’ ‘‘Arca
fulfill their responsibilities under the COMMISSION Options Deep,’’ and ‘‘Arca Options
order. At the time of its investment in Complex’’ (the ‘‘Arca Options
[Release No. 34–77111; File No. SR–
Shares of a Self-Indexing Fund in excess NYSEARCA–2016–29] Products’’). ‘‘Arca Options Top’’ is a
of the limit in section 12(d)(1)(A)(i), a single market data product that
Fund of Funds will notify the Self- Self-Regulatory Organizations; NYSE combines last sale data, best bids and
Indexing Fund of the investment. At Arca, Inc.; Notice of Filing and offers (‘‘BBO’’), order imbalance
such time, the Fund of Funds will also Immediate Effectiveness of Proposed information and series status and
transmit to the Self-Indexing Fund a list Rule Change Modifying the Arca underlying status messages (collectively
of the names of each Fund of Funds Options Deep Market Data Product called security status messages). ‘‘Arca
Affiliate and Underwriting Affiliate. The Options Deep’’ is also a single market
February 11, 2016. data product that provides subscribers
Fund of Funds will notify the Self-
Indexing Fund of any changes to the list Pursuant to Section 19(b)(1) 1 of the NYSE Arca Options quotes and orders at
of the names as soon as reasonably Securities Exchange Act of 1934 (the the first three price levels in each series
practicable after a change occurs. The ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 on a real-time basis. ‘‘Arca Options
Self-Indexing Fund and the Fund of notice is hereby given that on February Complex,’’ also a single market data
Funds will maintain and preserve a 4, 2016, NYSE Arca, Inc. (the product, provides subscribers NYSE
copy of the order, the FOF Participation ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with Arca Options quote and trade
Agreement, and the list with any the Securities and Exchange information (including orders/quotes,
updated information for the duration of Commission (the ‘‘Commission’’) the requests for responses, and trades) for
the investment and for a period of not proposed rule change as described in the complex order book on a real-time
less than six years thereafter, the first Items I and II below, which Items have basis.4
two years in an easily accessible place. been prepared by the self-regulatory The Exchange charges a single fee for
organization. The Commission is Arca Options Top and subscribers of
10. Before approving any advisory
publishing this notice to solicit Arca Options Top receive all three data
contract under section 15 of the Act, the
comments on the proposed rule change feeds described above. The Exchange
board of directors or trustees of each
from interested persons. charges a separate fee for Arca Options
Investing Management Company,
including a majority of the disinterested I. Self-Regulatory Organization’s Complex for subscribers that seek to
directors or trustees, will find that the Statement of the Terms of Substance of obtain this data feed on a standalone
advisory fees charged under such the Proposed Rule Change basis.5
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contract are based on services provided The Exchange proposes to modify the 4 See Rule 6.62(e), which defines complex orders.
that will be in addition to, rather than Arca Options Deep market data product. 5 See Securities Exchange Act Release No. 68005
duplicative of, the services provided The proposed rule change is available (Oct. 9, 2012), 77 FR 63362 (Oct. 16, 2012) (SR–
under the advisory contract(s) of any on the Exchange’s Web site at NYSEArca–2012–106) (establishing fees for certain
Self-Indexing Fund in which the proprietary options market data products). See also
Securities Exchange Act Release Nos. 69523 (May
Investing Management Company may 1 15 U.S.C.78s(b)(1). 6, 2013), 78 FR 27452 (May 10, 2013) (SR–
invest. These findings and their basis 2 15 U.S.C. 78a. NYSEArca–2013–41) (establishing a schedule of
will be fully recorded in the minute 3 17 CFR 240.19b–4. Continued
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The Exchange proposes to modify the Product that comprise [sic] the Arca data. The proposed rule changes would
Arca Options Deep data feed. As Options Top, Arca Options Deep and benefit investors by facilitating their
proposed, Arca Options Deep will also Arca Options Complex would continue prompt access to the additional real-
include security status messages, the to apply. The separate fee that now time information contained in a
same data that is currently provided as applies to Arca Options Complex, modified Arca Options Deep market
part of Arca Options Top. The proposed would likewise continue to apply to the data product.
modification to the Arca Options Deep Arca Options Complex market data In particular, the Exchange believes
data feed will allow subscribers who product.7 that combining depth of market data
currently obtain depth of market data to Each of the Arca Options Products with security status messages in the
also receive security status messages in would continue to be offered through Arca Options Deep product is
a single data feed. Currently, these the Exchange’s Liquidity Center reasonable because it would provide
subscribers are required to process two Network (‘‘LCN’’), a local area network greater efficiencies for vendors and
data feeds to get the depth of market in the Exchange’s Mahwah, New Jersey subscribers that currently choose to
data and security status information. data center that is available to users of integrate the data after receiving it from
Offering a data product that combines, the Exchange’s co-location services. The the Exchange. In addition, the change to
in one market data product, depth of Exchange would also continue to offer the Arca Options Deep product reflects
market data and security status the products through the Exchange’s the interests and needs of subscribers
messages would provide greater Secure Financial Transaction and vendors who will no longer have to
efficiencies and better sequencing for Infrastructure (‘‘SFTI’’) network, subscribe to multiple data feeds to
vendors and subscribers that currently through which all other users and obtain the information they want. The
choose to integrate the data after member organizations access the Exchange believes the proposed changes
receiving it from the Exchange. As with Exchange’s trading and execution are reasonable because they would
Arca Options Top, Arca Options Deep systems and other proprietary market provide vendors and subscribers with
would provide depth of market and data products. higher quality market data products.
series status information on a real-time The Exchange will announce the date In adopting Regulation NMS, the
basis as reported to the Options Price that the Arca Options Deep market data Commission granted self-regulatory
Reporting Authority (‘‘OPRA’’) and product will begin to include security organizations and broker-dealers
disseminated on a consolidated basis status messages through a NYSE Market increased authority and flexibility to
under the OPRA Plan.6 Data Notice. offer new and unique market data to
The Arca Options Products would The proposed change is not intended consumers of such data. It was believed
continue to be distributed in their to address any issues other than those that this authority would expand the
current format, to maintain the format of described herein, and the Exchange is amount of data available to users and
the Arca Options Products with that of not aware of any problems that vendors consumers of such data and also spur
other market data products offered by or subscribers would have in complying innovation and competition for the
the Exchange. with the proposed change. provision of market data. The Exchange
The Exchange does not propose to believes that the options data product
2. Statutory Basis
make any changes to the fees. The single changes proposed herein are precisely
fee charged for the Arca Options The proposed rule change is
the sort of market data product
consistent with Section 6(b) 8 of the Act,
evolutions that the Commission
NYSE Arca Options proprietary market data fees); in general, and furthers the objectives of
envisioned when it adopted Regulation
69554 (May 10, 2013), 78 FR 28917 (May 16, 2013) Section 6(b)(5) 9 of the Act, in particular,
(SR–NYSEArca–2013–47) (establishing non-display NMS. The Commission concluded that
in that it is designed to prevent
usage fees and amending the professional end-user Regulation NMS—by lessening
fees); 71933 (April 11, 2014), 79 FR 21821 (April fraudulent and manipulative acts and
regulation of the market in proprietary
17, 2014) (SR–NYSEArca–2014–34) (amending the practices, to promote just and equitable
professional user fees); 73010 (Sept. 5, 2014), 79 FR data—would itself further the Act’s
principles of trade, to foster cooperation
54307 (Sept. 11, 2014) (SR–NYSEArca–2014–94) goals of facilitating efficiency and
and coordination with persons engaged
(amending fees for non-display use); 73588 (Nov. competition:
13, 2014), 79 FR 68922 (Nov. 19, 2014) (SR– in facilitating transactions in securities,
NYSEArca–2014–129) (establishing fees for the to remove impediments to and perfect [E]fficiency is promoted when broker-
complex order book feed); and 76023 (September the mechanism of a free and open dealers who do not need the data beyond the
29, 2015), 80 FR 60208 (October 5, 2015) (modifying
market and a national market system prices, sizes, market center identifications of
certain proprietary options data products). the NBBO and consolidated last sale
6 The OPRA Plan is a national market system plan and, in general, to protect investors and information are not required to receive (and
approved by the Securities and Exchange the public interest, and it is not pay for) such data. The Commission also
Commission (‘‘Commission’’) pursuant to Section designed to permit unfair believes that efficiency is promoted when
11A of the Securities Exchange Act of 1934 (the discrimination among customers,
‘‘Act’’) and Rule 608 thereunder (formerly Rule broker-dealers may choose to receive (and
11Aa3–2). See Securities Exchange Act Release No. brokers, or dealers. pay for) additional market data based on their
17638 (March 18, 1981), 22 S.E.C. Docket 484 The Exchange also believes this own internal analysis of the need for such
(March 31, 1981). The full text of the OPRA Plan proposal is consistent with Section data.10
is available at http://www.opradata.com. The OPRA 6(b)(5) of the Act because it protects
Plan provides for the collection and dissemination By removing ‘‘unnecessary regulatory
of last sale and quotation information on options investors and the public interest and restrictions’’ on the ability of exchanges
that are traded on the participant exchanges. promotes just and equitable principles to sell their own data, Regulation NMS
Section 5.2(c) of the OPRA Plan also permits OPRA of trade by providing investors with advanced the goals of the Act and the
Plan participants to disseminate unconsolidated
mstockstill on DSK4VPTVN1PROD with NOTICES
improved options for receiving market principles reflected in its legislative
market information to certain of their members
under certain circumstances. The manner in which history.
7 The Exchange has not attached an Exhibit 5
the Exchange proposes to disseminate the products The Exchange further notes that the
would comply with Section 5.2(c) of the OPRA with this proposed rule change because the
Exchange is not proposing to make any fee changes existence of alternatives to the
Plan, pursuant to which the Exchange may not
disseminate the products ‘‘on any more timely basis associated with the proposed modification to the Exchange’s products, including real-
than the same information is furnished to the OPRA Arca Options Deep market data product.
8 15 U.S.C. 78f(b). 10 See Securities Exchange Act Release No. 51808
System for inclusion in OPRA’s consolidated
dissemination of Options Information.’’ 9 15 U.S.C. 78f(b)(5). (June 9, 2005), 70 FR 37496 (June 29, 2005).
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![8294 Federal Register / Vol. 81, No. 32 / Thursday, February 18, 2016 / Notices
For the Commission, by the Division of (‘‘CCP’’) clearing services and performs under Section 806(e)(1) of the Payment,
Trading and Markets, pursuant to delegated critical functions in the clearance and Clearing, and Settlement Supervision
authority.18 settlement process.5 OCC’s services Act of 2010 (‘‘Payment, Clearing and
Robert W. Errett, increase the efficiency and speed of Settlement Supervision Act’’) 8 on
Deputy Secretary. options trading and settlement as well December 29, 2014. OCC filed the
[FR Doc. 2016–03267 Filed 2–17–16; 8:45 am] as reduce members’ operational proposed rule change implementing the
BILLING CODE 8011–01–P expenses and counterparty credit risk. Capital Plan, SR–OCC–2015–02, with
OCC’s role as the CCP for all listed the Commission pursuant to Section
options contracts in the U.S. makes it an 19(b)(1) of the Securities Exchange Act
SECURITIES AND EXCHANGE integral part of the national system for of 1934 (‘‘Exchange Act’’ or ‘‘Act’’) 9 and
COMMISSION clearance and settlement, and its failure Rule 19b–4 thereunder 10 on January 14,
[Release No. 34–77112; File No. SR–OCC–
or service disruption could have 2015. The proposed rule change was
2015–02] cumulative negative effects on the U.S. published for comment in the Federal
options and futures markets, financial Register on January 30, 2015.11 The
Self-Regulatory Organizations; The institutions, and the broader financial Commission received seventeen
Options Clearing Corporation; Order system. As such, OCC was designated comment letters on OCC’s proposal from
Setting Aside Action by Delegated by the Financial Stability Oversight twelve commenters, including OCC.12
Authority, Approving Proposed Rule Council as a systemically important
Change Concerning the Options financial market utility (‘‘SIFMU’’) in 8 12 U.S.C. 5465(e)(1). On February 26, 2015, the
Clearing Corporation’s Capital Plan 2012.6 Commission issued a notice of no objection to the
In the context of a number of advance notice filing. See Exchange Act Release No.
and Denying Motions 74387 (February 26, 2015), 80 FR 12215 (March 6,
developments in the financial markets, 2015) (SR–OCC–2014–813).
February 11, 2016. OCC’s Board of Directors (‘‘Board’’) 9 15 U.S.C. 78s(b)(1).
I. Introduction decided that OCC was significantly 10 17 CFR 240.19b–4.
undercapitalized, and, in response, 11 See Notice.
The Options Clearing Corporation proposed and implemented an 12 See Letter from Eric Swanson, General Counsel
(‘‘OCC’’) is a clearing agency registered expedited plan to substantially increase & Secretary, BATS Global Markets, Inc. (‘‘BATS’’)
with the Securities and Exchange OCC’s capitalization (the ‘‘Capital
(February 19, 2015) (‘‘BATS Letter I’’); Letter from
Commission (‘‘Commission’’) and is the Tony McCormick, Chief Executive Officer, BOX
Plan’’), and, given OCC’s critical Options Exchange, (‘‘BOX’’) (February 19, 2015)
only clearing agency for standardized clearing functions and its systemic (‘‘BOX Letter I’’); Letter from Howard L. Kramer on
U.S. options listed on U.S. national importance, the Commission agrees that behalf of Belvedere Trading, CTC Trading Group,
securities exchanges. Today, listed having OCC increase its capitalization is
IMC Financial Markets, Integral Derivatives,
options are traded on twelve national Susquehanna Investment Group, and Wolverine
appropriate and in the public interest.7 Trading (February 20, 2015) (‘‘MM Letter’’); Letter
securities exchanges: five national from Ellen Greene, Managing Director, Financial
securities exchanges that are equal Procedural Background Services Operations, SIFMA (February 20, 2015)
owners of OCC (‘‘Stockholder OCC filed the Capital Plan as an (‘‘SIFMA Letter’’); Letter from James E. Brown,
Exchanges’’) 1 and seven national General Counsel, OCC (February 23, 2015)
advance notice, SR–OCC–2014–813, (responding to BATS Letter and BOX Letter) (‘‘OCC
securities exchanges that have no Letter I’’); Letter from James E. Brown, General
ownership stake in OCC (‘‘Non- 5 For instance, OCC provides CCP services for Counsel, OCC (February 23, 2015) (responding to
Stockholder Exchanges’’).2 OCC also OTC options, and for two securities lending market MM Letter) (‘‘OCC Letter II’’); Letter from Barbara
serves other markets, including those structures, OCC’s OTC Stock Loan Program and J. Comly, Executive Vice President, General Counsel
AQS, an automated marketplace for securities & Corporate Secretary, Miami International
trading commodity futures, commodity lending and borrowing operated by Automated Securities Exchange, LLC, (‘‘MIAX’’) (February 24,
options, and security futures,3 the Equity Finance Markets, Inc. OCC currently 2015) (‘‘MIAX Letter I’’); Letter from James E.
securities lending market and the OTC participates in cross-margin programs with the CME Brown, General Counsel, OCC (February 24, 2015)
and ICE and offers an internal cross-margin program (responding to SIFMA Letter) (‘‘OCC Letter III’’);
options market. In each of these Letter from John A. McCarthy, General Counsel,
for products regulated by the SEC and CFTC. See
markets, OCC provides clearing OCC’s Web site, OCC Fact Sheet (available at: KCG Holdings, Inc., (‘‘KCG’’) (February 26, 2015)
members 4 with central counterparty http://www.optionsclearing.com/components/docs/ (‘‘KCG Letter I’’); Letter from Eric Swanson, General
about/occ-factsheet.pdf), ‘‘What is OCC?,’’ Counsel and Secretary, BATS (February 27, 2015)
18 17 CFR 200.30–3(a)(12). (available at: http://www.optionsclearing.com/ (‘‘BATS Letter II’’); Letter from John A. McCarthy,
1 The
about/corporate-information/what-is-occ.jsp.) and General Counsel, KCG (February 27, 2015) (‘‘KCG
Stockholder Exchanges are: Chicago Board OCC’s Web site, ‘‘Cross Margin Programs’’ Letter II’’); Letter from Richard J. McDonald, Chief
Options Exchange, Incorporated; International (available at: http://www.optionsclearing.com/ Regulatory Counsel, Susquehanna International
Securities Exchange, LLC; NASDAQ OMX PHLX, clearing/clearing-services/cross-margin.jsp.). Group, LLP, (‘‘SIG’’) (February 27, 2015) (‘‘SIG
LLC; NYSE MKT LLC; and NYSE Arca, Inc. See 6 See Financial Stability Oversight Council Letter I’’); Letter from Barbara J. Comly, Executive
Exchange Act Release No. 74136 (January 26, 2015),
(‘‘FSOC’’) 2012 Annual Report, Appendix A, Vice President, General Counsel & Corporate
80 FR 5171 (January 30, 2015) (SR–OCC–2015–02)
(available at http://www.treasury.gov/initiatives/ Secretary, MIAX (March 1, 2015) (‘‘MIAX Letter
(‘‘Notice’’).
2 Under OCC’s By-Laws, exchanges other than
fsoc/Documents/2012%20Appendix%20A%20 II’’); Letter from James E. Brown, General Counsel,
Designation%20of%20Systemically%20Important OCC (March 2, 2015) (‘‘OCC Letter IV’’); Letter from
Stockholder Exchanges may participate in OCC’s %20Market%20Utilities.pdf). Eric Swanson, General Counsel and Secretary,
services subject to meeting certain qualifications. 7 According to OCC, as of December 31, 2013, at BATS (March 3, 2015) (‘‘BATS Letter III’’); and
See OCC By-Laws, Article VIIB (Non-Equity Letter from Tony McCormick, Chief Executive
the time it developed the Capital Plan, OCC had
Exchanges). Officer, BOX (March 3, 2015) (‘‘BOX Letter II’’);
3 OCC also is registered with the Commodity
total shareholders’ equity of about $25 million,
which represents approximately 6 weeks of Letter from Brian Sopinsky, General Counsel, SIG
Futures Trading Commission as a derivatives operating expenses. Based on internal operational (March 4, 2015) (‘‘SIG Letter II’’). Since the proposal
clearing organization regulated to provide clearing risk scenarios and loss modeling, OCC quantified its was filed as both an advance notice and proposed
services for four futures exchanges.
mstockstill on DSK4VPTVN1PROD with NOTICES
operational risk at $226 million and pension risk at rule change, the Commission considered all
4 OCC has over 100 members which include large
$21 million. According to OCC, as of August 31, comments received on the proposal, regardless of
domestic and international broker-dealers and 2015, in the absence of the $150 million capital whether the comments were submitted to the
futures commission merchants. See OCC’s 2014 contribution made pursuant to the Capital Plan, proposed rule change or advance notice file. See
Annual Report (available at: http://www.options OCC’s adjusted shareholder equity would be about comments on the advance notice (File No. SR–
clearing.com/components/docs/about/annual- $149 million and OCC’s total capital resources OCC–2014–813), http://www.sec.gov/comments/sr-
reports/occ_2014_annual_report.pdf), and OCC’s would be less than $150 million. See Notice at occ-2014-813/occ2014813.shtml and comments on
Web site, ‘‘What is OCC?’’ (available at: https:// 5172–73; OCC’s Written Statement in Support of the proposed rule change (File No. SR–OCC–2015–
www.optionsclearing.com/about/corporate- Affirming March 6, 2015 Order Approving Capital 02), http://www.sec.gov/comments/sr-occ-2015-02/
information/what-is-occ.jsp). Plan (October 7, 2015) (‘‘OCC Support Statement’’). occ201502.shtml. In its evaluation of the proposed
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Document Created: 2016-02-18 07:46:36
Document Modified: 2016-02-18 07:46:36
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 8291 |
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