82 FR 28726 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Modify the NYSE Amex Options Fee Schedule

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 120 (June 23, 2017)

[Federal Register Volume 82, Number 120 (Friday, June 23, 2017)]
[Notices]
[Pages 28726-28728]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-13095]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80964; File No. SR-NYSEMKT-2017-37]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Change To Modify the NYSE Amex 
Options Fee Schedule

June 19, 2017.
    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 June 9, 2017, 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 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 June 9, 2017. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to establish fees and credits for a 
recently adopted Exchange trading mechanism known as Broadcast Order 
Liquidity Delivery Mechanism (``BOLD''), which was launched on May 31, 
2017.\4\
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    \4\ See Securities Exchange Act Release Nos. 80494 (April 20, 
2017) 82 FR 19300 (April 26, 2017) (SR-NYSEMKT-2017-21) and 80695 
(May 16, 2017) (SR-NYSEMKT-2017-28).
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    BOLD is a new feature within the Exchange's trading system that 
provides automated order handling in eligible orders that are 
executable against quotations disseminated by other exchanges that are 
participants in the Options Order Protection and Locked/Crossed Market 
Plan.\5\
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    \5\ See Rule 994NY.
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    First, the Exchange proposes to adopt definitions related to BOLD. 
The Exchange proposes to define the ``BOLD Mechanism'' as referring to 
``the Exchange's automated order handling for eligible orders in 
designated classes, pursuant to Rule 994NY.'' \6\ As a general matter, 
the BOLD Mechanism is Exchange functionality that allows ATP Holders to 
``step-up'' and trade against orders that are exposed by the Exchange 
prior to such orders being routed to another market or posted on the 
Exchange's order book. ATP Holders that submit orders that are 
designated to be BOLD-eligible will be considered BOLD Initiating 
Orders for purposes of this proposed rule change. As such, the Exchange 
proposes to define a ``BOLD Initiating Order'' as ``an order submitted 
to be executed via the BOLD Mechanism.'' \7\ ATP Holders that ``step-
up'' to trade against a BOLD Initiating Order will be considered BOLD 
Responding Order for purposes of this proposed rule change. As such, 
the Exchange proposes to define a ``BOLD Responding Order'' as ``an 
order that trades with the BOLD Initiating Order.'' \8\ The Exchange 
believes these proposed changes would add clarity and transparency to 
the Fee Schedule.
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    \6\ See proposed Fee Schedule, Key Terms and Definitions.
    \7\ See id.
    \8\ See id.
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    Regarding pricing, the Exchange proposes that Non-Customer \9\ and 
Professional Customer orders executed via BOLD would be charged the 
same rate as currently applied to Electronic executions in standard 
options contracts, based on participant type and whether the option 
traded is a Penny Pilot issue.\10\ The Exchange proposes to apply a per 
contract credit for all BOLD Initiating Orders that are Customer orders 
executed via BOLD, which credit would be the greater of $0.12 or the 
rebate amount achieved through the Amex Customer Engagement (``ACE'') 
Program.\11\ The Exchange proposes to exclude from this proposed credit 
any transactions in Binary Return Derivatives--or ByRDs--executed via 
BOLD as ByRDs transactions are not currently subject to transaction 
charges.\12\ The Exchange proposes to impose no fee on Customer orders 
that are BOLD Responding Orders. The Exchange notes that, as proposed, 
NYSE Amex Options Market Makers would not be assessed Marketing Charges 
for transactions executed via the BOLD Mechanism.\13\ The Exchange 
believes this proposed change would encourage Market Makers to provide 
additional liquidity to orders directed to BOLD Mechanism for execution 
on the Exchange.
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    \9\ Non-Customers include Broker-Dealers, DOMMs, e-Specialists, 
Firms, Market Makers, and Specialists.
    \10\ See Fee Schedule, Section I.A. (Rates for Standard Options 
transactions--Electronic and Manual), available here, https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf.
    \11\ See proposed Fee Schedule, Section I.M. (BOLD Mechanism 
Fees & Credits).
    \12\ See Fee Schedule, supra note 11, at footnote 5 to Section 
I.A. (excluding transactions in ByRDs from transaction fees and 
credits) and proposed Fee Schedule, Section I.M., at footnote 2 
(excluding ByRDs from proposed credit for executions via the BOLD 
Mechanism). See also Fee Schedule, Section I.H. (Early Adopter 
Specialist) (providing incentive to Specialists appointed to trade 
ByRDs).
    \13\ See proposed Fee Schedule, Section I.M., at footnote 1. 
Only Market Makers incur Marketing Charges, such charges are not 
imposed on any other market participants.
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    The Exchange proposes that, beginning in June 2017, volume

[[Page 28727]]

executed via BOLD would be included for purposes of calculating monthly 
volume thresholds for the Market Maker Sliding Scale and the ACE 
Program.\14\ Also beginning in June 2017, the Exchange proposes to 
apply fees incurred via the BOLD Mechanism to the Prepayment 
Programs.\15\
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    \14\ See proposed Fee Schedule, Sections I.C. (NYSE Amex Options 
Market Maker Sliding Scale--Electronic and Manual) and I.E (ACE 
Program). The Exchange also proposes to remove from Section I.C. of 
the Fee Schedule the now-superfluous language ``[e]ffective January 
3, 2017,'' which would add clarity and transparency to the Fee 
Schedule. See proposed Fee Schedule, Section I.C.
    \15\ See proposed Fee Schedule, Section I.D. (Prepayment 
Program).
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    Finally, the Exchange proposes to make a clarifying change to the 
ACE Program to make clear that ATP Holders that achieve Tier 2 and are 
eligible to receive the $0.19 per contract credit for Electronic 
Customer Complex Orders would receive such credit ``regardless of 
whether the Complex Order trades against interest in the Complex Order 
Book or with individual orders and quotes in the Consolidated Book.'' 
\16\ The Exchange notes that this treatment would be consistent with 
how other credits for Complex Orders achieved through the ACE Program 
are handled.\17\ The Exchange believes this change would add clarity, 
transparency and internal consistency to the Fee Schedule.
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    \16\ See proposed Fee Schedule, Section I.E., n. 4 (ACE 
Program).
    \17\ See Fee Schedule, supra note 11, Section I.E., n. 2 
(providing that credits for Complex Orders achieved under Tiers 4 or 
5 of the ACE Program would be paid ``regardless of whether the 
Complex Order trades against interest in the Complex Order Book or 
with individual orders and quotes in the Consolidated Book'').
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\18\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\19\ 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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    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes applying standard transaction fees (based on 
participant type and whether a Penny Pilot issue) for Non-Customer and 
Professional Customer orders executed using the BOLD Mechanism is 
reasonable, equitable, and not unfairly discriminatory, because these 
market participants would be subject to the same or lower fees as are 
currently imposed on these market participants for Electronic 
transactions executed on the Exchange.
    Further, the Exchange believes the proposed treatment of Customer 
orders executed via BOLD--i.e., the proposed credit for BOLD Initiating 
Orders, no fee for BOLD Responding Orders and absence of Marketing 
Charge--is reasonable, equitable, and not unfairly discriminatory as 
these fees and credits recognize the benefits of additional liquidity 
delivered to the Exchange when ATP Holders utilize the BOLD Mechanism. 
Specifically, the proposed pricing provides an incentive for Customer 
orders that are marketable against the National Best Bid/Offer 
(``NBBO'') to be sent to NYSE Amex, which benefits all market 
participants by providing more trading opportunities. The Exchange also 
notes that other markets have utilized pricing incentives for features 
similar to the BOLD Mechanism and therefore the concept is not new or 
novel.\20\ The Exchange also notes that it is reasonable to exclude 
transactions in ByRDs from the proposed credit for BOLD Initiating 
Orders because ByRDs are not currently subject to any transaction 
fees.\21\
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    \20\ See, e.g., Nasdaq ISE Schedule of Fees, available here, 
https://www.ise.com/fees (Section IV.G., providing credit for 
responses to Flash Orders). See also NASDAQ PHLX LLC Pricing 
Schedule, available here, http://www.nasdaqtrader.com/Micro.aspx?id=phlxpricing (providing that ``[n]o Marketing Fees will 
be assessed on transactions which execute against an order for which 
the Exchange broadcast an order exposure alert in Penny Pilot 
Options,'' which exposure alert is similar to BOLD).
    \21\ The Exchange notes that ByRDs, which were re-launched in 
2016, are exempted from standard transaction fees and are also not 
subject to monthly rights fees. See Fee Schedule, supra note 11, 
Section I.A., n. 5 and Section III. C., n. 1, respectively.
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    Further, the proposal to include orders executed via the BOLD 
Mechanism for purposes of calculating monthly volume thresholds for the 
Market Maker Sliding Scale and the ACE Program, as well as to apply 
fees incurred for BOLD transactions to the Prepayment Program, are 
reasonable, equitable, and not unfairly discriminatory as these 
programs are designed to encourage participation by Customers and 
Market Makers in the full spectrum of NYSE Amex Options transactions. 
The Exchange also believes it is reasonable, equitable, and not 
unfairly discriminatory to not impose Marketing Charges on NYSE Amex 
Market Makers for orders executed via the BOLD Mechanism because such 
orders do not interact with quoted markets but are required to be 
filled at prices no worse than the NBBO. The Exchange believes that 
removing the Marketing Charges should incentivize Market Makers to more 
actively provide liquidity in response to orders submitted via 
BOLD.\22\ To the extent that the proposed changes attract additional 
order flow to the Exchange, this would result in liquidity and more 
trading opportunities to the benefit of all market participants.
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    \22\ The Exchange also notes that other options exchanges do not 
charge marketing fees for orders similar to BOLD-designated orders. 
See supra note 21 (citing NASDAQ PHLX fee schedule).
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    In addition, the Exchange believes the proposed changes are 
consistent with the Act because to the extent the BOLD Mechanism 
permits the Exchange to continue to attract greater volume and 
liquidity, the proposed change would improve the Exchange's overall 
competitiveness and strengthen its market quality for all market 
participants.
    Finally, the Exchange believes the proposed clarifying change to 
the ACE Program regarding how credits for Complex Orders would be 
handled is consistent with the Act as this change would add clarity, 
transparency and internal consistency to the Fee Schedule. In addition, 
the proposal to remove extraneous language from Section I.C. of the Fee 
Schedule \23\ would likewise add clarity, transparency and internal 
consistency to the Fee Schedule.
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    \23\ See supra note 15.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\24\ 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 credit for 
Customer orders executed via BOLD and the proposed absence of a fee for 
Customer orders that are BOLD Responding Orders are pro-competitive as 
the proposed pricing is designed to encourage Order Flow Providers 
(``OFPs'') to direct Customer order flow 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. The proposed fees for Non-
Customer and Professional Customer orders executed via BOLD would not 
discourage competition and are instead intended to promote competition 
and better improve the Exchange's competitive position. Further, the 
proposed changes only

[[Page 28728]]

affect trading on the Exchange. To the extent that the proposed changes 
make NYSE Amex a more attractive marketplace for market participants at 
other exchanges, such market participants are welcome to become ATP 
Holders on the Exchange.
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    \24\ 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.

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) \25\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \26\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \25\ 15 U.S.C. 78s(b)(3)(A).
    \26\ 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) \27\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \27\ 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-2017-37 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-2017-37. 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-2017-37, and should 
be submitted on or before July 14, 2017.
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    \28\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-13095 Filed 6-22-17; 8:45 am]
 BILLING CODE 8011-01-P