82 FR 3052 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Change Modifying the NYSE Amex Options Fee Schedule
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 6 (January 10, 2017)
Federal Register Volume 82, Issue 6 (January 10, 2017)
| Page Range | 3052-3055 | |
| FR Document | 2017-00221 |
[Federal Register Volume 82, Number 6 (Tuesday, January 10, 2017)] [Notices] [Pages 3052-3055] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-00221] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79737; File No. SR-NYSEMKT-2016-127] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Change Modifying the NYSE Amex Options Fee Schedule January 4, 2017. Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that, on December 28, 2016, NYSE MKT LLC (``Exchange'' or ``NYSE MKT'') filed with the Securities and Exchange Commission (``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. --------------------------------------------------------------------------- \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 NYSE Amex Options Fee Schedule. 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 modify the Fee Schedule to: (1) Adjust the qualification thresholds and transaction fees for electronic transactions by NYSE Amex Options Marker Makers (``Sliding Scale''); \4\ and (2) modify the prepayment programs offered by the Exchange, including adding a new prepay option (the ``Prepayment Programs'').\5\ --------------------------------------------------------------------------- \4\ See Fee Schedule, Section I. C. (NYSE Amex Options Market Maker Sliding Scale--Electronic), available here, https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf. \5\ See id., Section I. D. (Prepayment Program). --------------------------------------------------------------------------- Market Maker Sliding Scale Section I.C. of the Fee Schedule sets forth the Sliding Scale of transaction fees charged to NYSE Amex Options Marker Makers (referred to as Market Makers herein), which per contract fees decrease as Market Maker trades higher monthly volumes.\6\ Currently, Market Makers that have monthly volume on the Exchange of 0.10% or less of total ICADV are charged a base rate of $0.25 per contract and, these same market participants, upon reaching certain volume thresholds, or Tiers, receive a reduction of this per contract rate.\7\ In addition, the Exchange charges a lower per contract rate to Market Makers that participate in one of the Prepayment Programs or that post monthly volume greater than 0.85% of total ICADV. --------------------------------------------------------------------------- \6\ See Fee Schedule, supra note 4. The volume thresholds are based on an NYSE Amex Options Market Maker's volume transacted Electronically as a percentage of total industry Customer equity and ETF options volumes (``ICADV'') as reported by the Options Clearing Corporation (the ``OCC''). Total ICADV is comprised of those equity and ETF contracts that clear in the Customer account type at OCC and does not include contracts that clear in either the Firm or Market Maker account type at OCC or contracts overlying security other than an equity or ETF security. See OCC Monthly Statistics Reports, available here, http://www.theocc.com/webapps/monthly-volume-reports. \7\ In calculating an NYSE Amex Options Market Maker Electronic volumes, the Exchange excludes any volumes attributable to Mini Options, QCC trades, CUBE Auctions, and Strategy Execution Fee Caps, as these transactions are subject to separate pricing described in Fee Schedule Sections I.B., I.F., I.G., and I.J, respectively. See Fee Schedule, Section I.C, supra note 4. --------------------------------------------------------------------------- Effective January 3, 2017, the Exchange proposes to modify the qualification thresholds and associated transaction fees for all Marker Makers as follows (with new rates/thresholds underlined and deleted rates/thresholds in brackets): * * * * * ---------------------------------------------------------------------------------------------------------------- Rate per contract if monthly volume from posted volume is more than .85% of total Market maker electronic monthly volume ICADV or for any NYSE Tier as a percentage of ICADV Rate per contract Amex Market Maker participating in a prepayment program pursuant to Section I.D. ---------------------------------------------------------------------------------------------------------------- 1........................... 0.00% to [0.10%]0.15%................. $0.25 [$0.20]$0.23 2........................... [>0.10%]0.15% to 0.60%..... $0.22 [$0.17]$0.18 3........................... >0.60% to [1.25%]1.10%................ [$0.12]$0.14 [$0.07]$0.08 [[Page 3053]] 4........................... [>1.25% to 1.40%] 1.10% to $0.10 $0.05 1.45%. 5........................... [>1.40% to 1.75%] 1.45% to $0.07 [$0.02]$0.04 1.80%. 6........................... [>1.75%] 1.80%.............. $0.05 [$0.00]$0.02 ---------------------------------------------------------------------------------------------------------------- The proposed changes are designed to incent Market Makers to electronically trade a more meaningful percentage of ICADV by increasing the percentage of ICADV required for Tiers 2, 5 and 6, and to make Tier 4 more achievable by lowering the percentage of ICADV required.\8\ In connection with the adjustment to the qualification thresholds for the various tiers, the Exchange proposes to increase the per contract rate for Tier 3, which is designed to both offset the lower threshold to Tier 4 and to encourage participants to achieve Tier 4. For those participants that achieve Tier 4, as modified, the per contract rate differential remains the same (i.e., $0.05 per contract for those who achieve 0.85% of IADV from Posted Volume, or participate in a Prepayment Program; as compared to $0.10 per contract for anyone else that achieves Tier 4), which is designed to encourage Market Makers to qualify for the more easily achievable Tier 4 and to qualify for the enhanced rates by enrolling in a prepayment program or meeting the Posted Volume criterion. In addition, the Exchange proposes to increase the discounted per contract rates to Market Makers that participate in one of the Prepayment Programs or that trade more than 0.85% of total ICADV based on posted volume. The Exchange believes the proposed modifications would encourage Market Makers to execute more volume on the Exchange and provide additional incentive to enroll in one of the Prepayment Programs, including as modified herein. --------------------------------------------------------------------------- \8\ See proposed Fee Schedule, Section I.C. --------------------------------------------------------------------------- Prepayment Program In January 2015, the Exchange introduced a two Prepayment Programs--for a 1- or 3-year term--to allow Market Makers to prepay a portion of the charges incurred for transactions executed on the Exchange.\9\ Although the 3-Year Prepayment Program, now in its final year, is closed to new entrants, the Exchange proposes to modify the terms of the 1 Year Prepayment Program, as well as to offer a new prepay option to be available throughout 2017.\10\ The proposed modifications to the Prepayment Program are designed to encourage broader participation by Market Maker firms. --------------------------------------------------------------------------- \9\ See Exchange Act Release No. 74086 (January 16, 2015) 80 FR 3701 (January 23, 2015) (SR-NYSEMKT-2015-4). See also Fee Schedule, Section I.D (Prepayment Programs), supra at note 4 (describing the 1- and 3-Year Prepayment Programs, including requisite timelines for committing and prepaying as well as various conditions to opt out of the 3-Year Prepayment Program). \10\ See proposed Fee Schedule, Section I.D (Prepayment Programs) (modifying the description of the 3 Year Prepayment Program to make clear that it is closed to new participants, that one year remains for any Market Maker that enrolled in 2015, that participants retain the ability to opt out by the specified date, including because there are fewer than 4 participants in the 1- or 3-Year programs as of January 3, 2017, as well as to update the description of the program to reflect the current and upcoming calendar year). The Exchange does not propose to modify the ($3 million) amount of, or deadline (of January 31, 2017) for, the final payment in connection with the 3 Year Prepayment Program. --------------------------------------------------------------------------- The Exchange proposes to reduce the prepayment amount for the 1 Year Prepayment Program from $4 million to $3 million, which would align with the final prepayment for participants in the 3 Year Prepayment Program. The Exchange does not propose to alter any other aspects of the 1 Year Prepayment Program.\11\ Participants in the 1 Year Prepayment Program would continue to qualify its Affiliated (or Appointed) OFP to be eligible to receive the enhanced credit(s) under the Amex Customer Engagement Program.\12\ To enroll in the modified 1 Year Prepayment Program, a Market Maker would have until December 30, 2016 to notify the Exchange, and until January 31, 2017 to remit the $3 million prepayment.\13\ --------------------------------------------------------------------------- \11\ See proposed Fee Schedule, Section I.C. (providing that the Exchange will apply the prepayment as a credit against charges incurred under Section I.C., I.G., or III.A. of the Fee Schedule and, once the prepayment credit has been exhausted, the Exchange will invoice the NYSE Amex Options Market Maker at the appropriate rates, and noting that if the NYSE Amex Options Market Maker does not conduct sufficient activity to exhaust the entirety of their prepayment credit within the calendar year, there will be no refunds issued for any unused portion of their prepayment credit). \12\ See Fee Schedule, Section I.E. (Amex Customer Engagement (``ACE'') Program--Standard Options). \13\ See proposed Fee Schedule, Section I.D (Prepayment Programs) (modifying the description of the 1Year Prepayment Programs, including reducing the prepayment amount and updating the deadlines to reflect the current and upcoming calendar year). As is the case today, Market Makers would have until the last business day of 2016 to notify the Exchange of their commitment to the Program by sending an email the Exchange at [email protected]. --------------------------------------------------------------------------- The Exchange is also proposing to offer a new option, the ``Balance of the Year'' program, which would allow Market Makers to commit to prepay a portion of their transaction charges for some portion of the calendar year, for a maximum of three-quarters of the year. The prepayment amount and payment schedule for the proposed Balance of the Year Program would be based on the quarter in which the Market Maker joins, as set forth below: ---------------------------------------------------------------------------------------------------------------- 2nd Quarter 3rd Quarter 4th Quarter ---------------------------------------------------------------------------------------------------------------- Prepayment Amount and Payment $2,475,000, due by $1,800,000, due by July $975,000, due by Schedule. April 28. 31. October 31. ---------------------------------------------------------------------------------------------------------------- Similar to the current 1- and 3-Year Prepayment Programs, a Market Maker that participates in the Balance of the Year Program would receive a credit equal to its prepayment amount (i.e., $2,475,000; $1,800,000; or $975,000, respectively) toward fees it incurs under [[Page 3054]] Section I.C., I.G., and III.A.\14\ As proposed, Marker Makers that enroll in the Balance of the Year Program would be required to notify the Exchange by the last business day before the start of the new (following) quarter.\15\ Thus, to participate for the last three- quarters of 2017, notice would have to be given by March 31, 2017--the last business day of the first quarter. --------------------------------------------------------------------------- \14\ See proposed Fee Schedule, Section I.D (Prepayment Programs). Similarly, just as with the 1- and 3-Year Prepayment Programs, the Exchange would apply the prepayment as a credit against charges incurred under Section I.C., I.G., or III.A. of the Fee Schedule. Once the prepayment credit has been exhausted, the Exchange would invoice the NYSE Amex Options Market Maker at the appropriate rates. In the event that a NYSE Amex Options Market Maker does not conduct sufficient activity to exhaust the entirety of their prepayment credit within the calendar year, there would be no refunds issued for any unused portion of their prepayment credit. See id. \15\ See id. (providing that Market Makers would be required to notify the Exchange of their commitment to the Program by sending an email the Exchange at [email protected]). --------------------------------------------------------------------------- The Exchange believes the proposed Balance of the Year Program would allow a Market Maker that had not committed to the 1- or 3-Year Prepayment Program the option to enroll at a later date, for a shorter duration, and to nonetheless receive the benefits of participating in the Prepayment Program for the duration of their commitment. Specifically, during the period of their participation, Market Makers enrolled in the Balance of the Year Program would be entitled to qualify for the reduced per contract Sliding Scale rates (see supra note 8), and a discount on Rights Fees.\16\ The Exchange likewise proposes to offer participants in the Balance of the Year Program enhanced ACE credits in the same amount as those available to participants in the 1 Year Prepayment Program, and to modify the Fee Schedule accordingly.\17\ Although the prepay commitment rates for partial Balance of the Year participation is not proportional to the time left in the year (i.e., the later in the year a Market Maker joins, the higher his prepayment amount relative to the annual cost), the Exchange believes this cost structure would incentivize interested Market Makers to commit to the Program earlier in the year. --------------------------------------------------------------------------- \16\ See Fee Schedule, Section III.C (e-Specialist, DOMM and Specialist Monthly Rights Fees) (describing Rights Fee Discount based on ACE tier achieved). See also infra, note 17. \17\ See proposed Fee Schedule, Section I.E. (modifying ACE Program to provide for ``1 Year/Balance of the Year Program Enhanced Customer Volume Credits'' in the same amount). --------------------------------------------------------------------------- The Exchange is not proposing any other fee changes at this time. 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. --------------------------------------------------------------------------- \18\ 15 U.S.C. 78f(b). \19\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Exchange believes that the proposed modifications to the Sliding Scale are reasonable, equitable and not unfairly discriminatory for a number of reasons. First, the Sliding Scale is available to all NYSE Amex Options Market Makers and is based on the amount of business transacted on--and is designed to attract greater volume to--the Exchange. The proposed adjustments are designed to encourage Market Makers to commit to directing their order flow to the Exchange, which would increase volume and liquidity, to the benefit of all market participants by providing more trading opportunities and tighter spreads. Further, the proposed Sliding Scale thresholds and rates are competitive with fees charged by other exchanges and are designed to attract (and compete for) order flow to the Exchange, which provides a greater opportunity for trading by all market participants.\20\ --------------------------------------------------------------------------- \20\ See e.g., CBOE fee schedule, available here, http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf (the ``Liquidity Provider Sliding Scale''); and MIAX fee schedule, available here, http://www.miaxoptions.com/sites/default/files/MIAX_Options_Fee_Schedule_11012016B.pdf (``Market Maker Sliding Scale''). --------------------------------------------------------------------------- The Exchange proposal to modify the Prepayment Programs, including by reducing the prepay commitment for the 1 Year Prepayment Program and adding the Balance of the Year Program, are also reasonable, equitable and not unfairly discriminatory for the following reasons. First, all of the Prepayment Programs offered on the Exchange are optional and Market Makers can elect to participate (or elect not to participate). In addition, the Exchange believes that reducing the prepay commitment for all participants in the 1 Year Prepayment Program, as well as offering Market Makers the flexibility to join at various points in the year, may encourage broader participation in the Prepayment Programs, which anticipated greater capital commitment and resulting liquidity on the Exchange would benefit all market participants (including non- Market Makers). Moreover, the Exchange notes that other options exchanges likewise offer Prepayment Programs to market makers that may be joined after the start of the year. For example, under CBOE's Liquidity Provider Sliding Scale, a CBOE market maker may be eligible for the lower rates associated with certain tiers by prepaying $2.4 million in fees on an annual basis, or prepaying $200,000 in fees on a monthly basis.\21\ The Exchange also notes that, similar to the Sliding Scale, the Prepayment Program is designed to incent Market Makers to commit to directing their order flow to the Exchange, which would benefit all market participants by expanding liquidity, providing more trading opportunities and tighter spreads, even to those market participants that are not eligible for the Programs. Thus, the Exchange believes the Prepayment Program, as modified, is reasonable, equitable and not unfairly discriminatory to others. --------------------------------------------------------------------------- \21\ CBOE fee schedule, at fn 10 (providing that a market maker may be permitted to pay a pro-rated amount of the $2.4 million if, for example, they join the program mid-year), supra note 20. --------------------------------------------------------------------------- Finally, the Exchange is subject to significant competitive forces, as described below in the Exchange's statement regarding the burden on competition. 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,\22\ 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 that the proposed changes relating to the Sliding Scale and the Prepayment Program may increase both intermarket and intramarket competition by incenting participants to direct their orders to the Exchange, which would enhance the quality of quoting and may increase the volume of contracts traded on the Exchange. To the extent that there is an additional competitive burden on non-NYSE Amex Market Makers, the Exchange believes that this is appropriate because the proposal should incent market participants to direct additional order flow to the Exchange, and thus provide additional liquidity that enhances the quality of its 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 [[Page 3055]] 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. --------------------------------------------------------------------------- \22\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- Given the robust competition for volume among options markets, many of which offer the same products, implementing programs to attract order flow similar to the ones being proposed in this filing, are consistent with the above-mentioned goals of the Act. 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) \23\ of the Act and subparagraph (f)(2) of Rule 19b-4 \24\ thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. --------------------------------------------------------------------------- \23\ 15 U.S.C. 78s(b)(3)(A). \24\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- 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) \25\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \25\ 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 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-2016-127 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-2016-127. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEMKT-2016-127 and should be submitted on or before January 31, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\26\ --------------------------------------------------------------------------- \26\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-00221 Filed 1-9-17; 8:45 am] BILLING CODE 8011-01-P
![3052 Federal Register / Vol. 82, No. 6 / Tuesday, January 10, 2017 / Notices
proposed rule change between the (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 A. Self-Regulatory Organization’s
Commission and any person, other than notice is hereby given that, on December Statement of the Purpose of, and the
those that may be withheld from the 28, 2016, NYSE MKT LLC (‘‘Exchange’’ Statutory Basis for, the Proposed Rule
public in accordance with the or ‘‘NYSE MKT’’) filed with the Change
provisions of 5 U.S.C. 552, will be Securities and Exchange Commission
available for Web site viewing and 1. Purpose
(‘‘Commission’’) the proposed rule
printing in the Commission’s Public change as described in Items I, II, and The purpose of this filing is to modify
Reference Room, 100 F Street NE., III below, which Items have been the Fee Schedule to: (1) Adjust the
Washington, DC 20549 on official prepared by the self-regulatory qualification thresholds and transaction
business days between the hours of fees for electronic transactions by NYSE
organization. The Commission is
10:00 a.m. and 3:00 p.m. Copies of such Amex Options Marker Makers (‘‘Sliding
publishing this notice to solicit
filing also will be available for Scale’’); 4 and (2) modify the
inspection and copying at the principal comments on the proposed rule change
from interested persons. prepayment programs offered by the
office of the Exchange. All comments Exchange, including adding a new
received will be posted without change; I. Self-Regulatory Organization’s prepay option (the ‘‘Prepayment
the Commission does not edit personal Statement of the Terms of Substance of Programs’’).5
identifying information from the Proposed Rule Change
submissions. You should submit only Market Maker Sliding Scale
information that you wish to make The Exchange proposes to modify the Section I.C. of the Fee Schedule sets
available publicly. All submissions NYSE Amex Options Fee Schedule. The forth the Sliding Scale of transaction
should refer to File No. SR–NYSE– proposed change is available on the fees charged to NYSE Amex Options
2016–92, and should be submitted on or Exchange’s Web site at www.nyse.com, Marker Makers (referred to as Market
before January 31, 2017. at the principal office of the Exchange, Makers herein), which per contract fees
For the Commission, by the Division of and at the Commission’s Public decrease as Market Maker trades higher
Trading and Markets, pursuant to delegated Reference Room. monthly volumes.6 Currently, Market
authority.38 Makers that have monthly volume on
Eduardo A. Aleman, II. Self-Regulatory Organization’s
the Exchange of 0.10% or less of total
Assistant Secretary. Statement of the Purpose of, and
ICADV are charged a base rate of $0.25
[FR Doc. 2017–00214 Filed 1–9–17; 8:45 am] Statutory Basis for, the Proposed Rule per contract and, these same market
BILLING CODE 8011–01–P
Change participants, upon reaching certain
In its filing with the Commission, the volume thresholds, or Tiers, receive a
self-regulatory organization included reduction of this per contract rate.7 In
SECURITIES AND EXCHANGE addition, the Exchange charges a lower
COMMISSION statements concerning the purpose of,
and basis for, the proposed rule change per contract rate to Market Makers that
[Release No. 34–79737; File No. SR– participate in one of the Prepayment
and discussed any comments it received
NYSEMKT–2016–127] Programs or that post monthly volume
on the proposed rule change. The text
greater than 0.85% of total ICADV.
Self-Regulatory Organizations; NYSE of those statements may be examined at
the places specified in Item IV below. Effective January 3, 2017, the
MKT LLC; Notice of Filing and Exchange proposes to modify the
Immediate Effectiveness of Proposed The Exchange has prepared summaries,
qualification thresholds and associated
Change Modifying the NYSE Amex set forth in sections A, B, and C below,
transaction fees for all Marker Makers as
Options Fee Schedule of the most significant parts of such
follows (with new rates/thresholds
statements. underlined and deleted rates/thresholds
January 4, 2017.
Pursuant to Section 19(b)(1) 1 of the in brackets):
Securities Exchange Act of 1934 * * * * *
Rate per contract if
monthly volume from
posted volume is more
than .85% of total
Tier Market maker electronic monthly volume as a percentage of ICADV Rate per contract ICADV or for any NYSE
Amex Market Maker par-
ticipating in a prepay-
ment program pursuant
to Section I.D.
1 ........... 0.00% to [0.10%]0.15% .................................................................................................. $0.25 [$0.20]$0.23
2 ........... [>0.10%]>0.15% to 0.60% .............................................................................................. $0.22 [$0.17]$0.18
3 ........... >0.60% to [1.25%]1.10% ................................................................................................ [$0.12]$0.14 [$0.07]$0.08
38 17 CFR 200.30–3(a)(12). 6 See Fee Schedule, supra note 4. The volume equity or ETF security. See OCC Monthly Statistics
thresholds are based on an NYSE Amex Options Reports, available here, http://www.theocc.com/
pmangrum on DSK3GDR082PROD with NOTICES
1 15 U.S.C.78s(b)(1).
2 15 U.S.C. 78a. Market Maker’s volume transacted Electronically as webapps/monthly-volume-reports.
3 17 CFR 240.19b–4.
a percentage of total industry Customer equity and 7 In calculating an NYSE Amex Options Market
ETF options volumes (‘‘ICADV’’) as reported by the Maker Electronic volumes, the Exchange excludes
4 See Fee Schedule, Section I. C. (NYSE Amex
Options Clearing Corporation (the ‘‘OCC’’). Total any volumes attributable to Mini Options, QCC
Options Market Maker Sliding Scale—Electronic), ICADV is comprised of those equity and ETF trades, CUBE Auctions, and Strategy Execution Fee
available here, https://www.nyse.com/publicdocs/ contracts that clear in the Customer account type Caps, as these transactions are subject to separate
nyse/markets/amex-options/NYSE_Amex_Options_ at OCC and does not include contracts that clear in pricing described in Fee Schedule Sections I.B., I.F.,
Fee_Schedule.pdf. either the Firm or Market Maker account type at I.G., and I.J, respectively. See Fee Schedule, Section
5 See id., Section I. D. (Prepayment Program). OCC or contracts overlying security other than an I.C, supra note 4.
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![Federal Register / Vol. 82, No. 6 / Tuesday, January 10, 2017 / Notices 3053
Rate per contract if
monthly volume from
posted volume is more
than .85% of total
Tier Market maker electronic monthly volume as a percentage of ICADV Rate per contract ICADV or for any NYSE
Amex Market Maker par-
ticipating in a prepay-
ment program pursuant
to Section I.D.
4 ........... [>1.25% to 1.40%]>1.10% to 1.45% .............................................................................. $0.10 $0.05
5 ........... [>1.40% to 1.75%]>1.45% to 1.80% .............................................................................. $0.07 [$0.02]$0.04
6 ........... [>1.75%]>1.80% .............................................................................................................. $0.05 [$0.00]$0.02
The proposed changes are designed to participate in one of the Prepayment Prepayment Program from $4 million to
incent Market Makers to electronically Programs or that trade more than 0.85% $3 million, which would align with the
trade a more meaningful percentage of of total ICADV based on posted volume. final prepayment for participants in the
ICADV by increasing the percentage of The Exchange believes the proposed 3 Year Prepayment Program. The
ICADV required for Tiers 2, 5 and 6, and modifications would encourage Market Exchange does not propose to alter any
to make Tier 4 more achievable by Makers to execute more volume on the other aspects of the 1 Year Prepayment
lowering the percentage of ICADV Exchange and provide additional Program.11 Participants in the 1 Year
required.8 In connection with the incentive to enroll in one of the Prepayment Program would continue to
adjustment to the qualification Prepayment Programs, including as qualify its Affiliated (or Appointed) OFP
thresholds for the various tiers, the modified herein. to be eligible to receive the enhanced
Exchange proposes to increase the per
Prepayment Program credit(s) under the Amex Customer
contract rate for Tier 3, which is
designed to both offset the lower In January 2015, the Exchange Engagement Program.12 To enroll in the
threshold to Tier 4 and to encourage introduced a two Prepayment modified 1 Year Prepayment Program, a
participants to achieve Tier 4. For those Programs—for a 1- or 3-year term—to Market Maker would have until
participants that achieve Tier 4, as allow Market Makers to prepay a December 30, 2016 to notify the
modified, the per contract rate portion of the charges incurred for Exchange, and until January 31, 2017 to
differential remains the same (i.e., $0.05 transactions executed on the Exchange.9 remit the $3 million prepayment.13
per contract for those who achieve Although the 3-Year Prepayment The Exchange is also proposing to
0.85% of IADV from Posted Volume, or Program, now in its final year, is closed offer a new option, the ‘‘Balance of the
participate in a Prepayment Program; as to new entrants, the Exchange proposes Year’’ program, which would allow
compared to $0.10 per contract for to modify the terms of the 1 Year Market Makers to commit to prepay a
anyone else that achieves Tier 4), which Prepayment Program, as well as to offer portion of their transaction charges for
is designed to encourage Market Makers a new prepay option to be available some portion of the calendar year, for a
to qualify for the more easily achievable throughout 2017.10 The proposed maximum of three-quarters of the year.
Tier 4 and to qualify for the enhanced modifications to the Prepayment
The prepayment amount and payment
rates by enrolling in a prepayment Program are designed to encourage
program or meeting the Posted Volume schedule for the proposed Balance of
broader participation by Market Maker
criterion. In addition, the Exchange the Year Program would be based on the
firms.
proposes to increase the discounted per The Exchange proposes to reduce the quarter in which the Market Maker
contract rates to Market Makers that prepayment amount for the 1 Year joins, as set forth below:
2nd Quarter 3rd Quarter 4th Quarter
Prepayment Amount and Payment $2,475,000, due by April 28 ......... $1,800,000, due by July 31 .......... $975,000, due by October 31.
Schedule.
Similar to the current 1- and 3-Year Year Program would receive a credit respectively) toward fees it incurs under
Prepayment Programs, a Market Maker equal to its prepayment amount (i.e.,
that participates in the Balance of the $2,475,000; $1,800,000; or $975,000,
8 See proposed Fee Schedule, Section I.C. than 4 participants in the 1- or 3-Year programs as to exhaust the entirety of their prepayment credit
9 See Exchange Act Release No. 74086 (January of January 3, 2017, as well as to update the within the calendar year, there will be no refunds
16, 2015) 80 FR 3701 (January 23, 2015) (SR– description of the program to reflect the current and issued for any unused portion of their prepayment
NYSEMKT–2015–4). See also Fee Schedule, upcoming calendar year). The Exchange does not credit).
Section I.D (Prepayment Programs), supra at note 4 propose to modify the ($3 million) amount of, or 12 See Fee Schedule, Section I.E. (Amex Customer
(describing the 1- and 3-Year Prepayment Programs, deadline (of January 31, 2017) for, the final payment Engagement (‘‘ACE’’) Program—Standard Options).
including requisite timelines for committing and in connection with the 3 Year Prepayment Program. 13 See proposed Fee Schedule, Section I.D
pmangrum on DSK3GDR082PROD with NOTICES
prepaying as well as various conditions to opt out 11 See proposed Fee Schedule, Section I.C. (Prepayment Programs) (modifying the description
of the 3-Year Prepayment Program). (providing that the Exchange will apply the of the 1Year Prepayment Programs, including
10 See proposed Fee Schedule, Section I.D prepayment as a credit against charges incurred reducing the prepayment amount and updating the
(Prepayment Programs) (modifying the description under Section I.C., I.G., or III.A. of the Fee Schedule deadlines to reflect the current and upcoming
of the 3 Year Prepayment Program to make clear and, once the prepayment credit has been calendar year). As is the case today, Market Makers
that it is closed to new participants, that one year exhausted, the Exchange will invoice the NYSE would have until the last business day of 2016 to
remains for any Market Maker that enrolled in 2015, Amex Options Market Maker at the appropriate notify the Exchange of their commitment to the
that participants retain the ability to opt out by the rates, and noting that if the NYSE Amex Options Program by sending an email the Exchange at
specified date, including because there are fewer Market Maker does not conduct sufficient activity optionsbilling@nyse.com.
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![Federal Register / Vol. 82, No. 6 / Tuesday, January 10, 2017 / Notices 3055
benefit from the improved market including whether the proposed rule SECURITIES AND EXCHANGE
liquidity. Enhanced market quality and change is consistent with the Act. COMMISSION
increased transaction volume that Comments may be submitted by any of
[Release No. 34–79733; File No. SR–ISE–
results from the anticipated increase in the following methods: 2016–26]
order flow directed to the Exchange will
Electronic Comments
benefit all market participants and Self-Regulatory Organizations;
improve competition on the Exchange. • Use the Commission’s Internet International Securities Exchange,
Given the robust competition for comment form (http://www.sec.gov/ LLC; Order Approving a Proposed
volume among options markets, many of rules/sro.shtml); or Rule Change To Modify the Response
which offer the same products, • Send an email to rule-comments@ Times in the Block Mechanism,
implementing programs to attract order sec.gov. Please include File Number SR– Facilitation Mechanism, Solicited
flow similar to the ones being proposed NYSEMKT–2016–127 on the subject Order Mechanism, and Price
in this filing, are consistent with the line. Improvement Mechanism
above-mentioned goals of the Act. The
Exchange notes that it operates in a Paper Comments January 4, 2017.
highly competitive market in which • Send paper comments in triplicate I. Introduction
market participants can readily favor to Secretary, Securities and Exchange
competing venues. In such an On November 8, 2016, the
Commission, 100 F Street, NE., International Securities Exchange, LLC
environment, the Exchange must Washington, DC 20549–1090. (the ‘‘Exchange’’ or ‘‘ISE’’) filed with the
continually review, and consider
All submissions should refer to File Securities and Exchange Commission
adjusting, its fees and credits to remain
Number SR–NYSEMKT–2016–127. This (‘‘Commission’’) pursuant to Section
competitive with other exchanges. For
file number should be included on the 19(b)(1) of the Securities Exchange Act
the reasons described above, the
subject line if email is used. To help the of 1934 (‘‘Act’’) 1 and Rule 19b–4
Exchange believes that the proposed
Commission process and review your thereunder,2 a proposed rule change to
rule change reflects this competitive
comments more efficiently, please use amend ISE Rules 716 (Block Trades) and
environment.
only one method. The Commission will 723 (Price Improvement Mechanism for
C. Self-Regulatory Organization’s post all comments on the Commission’s Crossing Transactions) to modify the
Statement on Comments on the Internet Web site (http://www.sec.gov/ response times in the Block Order
Proposed Rule Change Received From rules/sro.shtml). Copies of the Mechanism, Facilitation Mechanism,
Members, Participants, or Others submission, all subsequent Solicited Order Mechanism, and Price
No written comments were solicited amendments, all written statements Improvement Mechanism (‘‘PIM’’) from
or received with respect to the proposed with respect to the proposed rule 500 milliseconds to a time period
change that are filed with the designated by the Exchange of no less
rule change.
Commission, and all written than 100 milliseconds and no more than
III. Date of Effectiveness of the communications relating to the 1 second. The proposed rule change was
Proposed Rule Change and Timing for proposed rule change between the published for comment in the Federal
Commission Action Commission and any person, other than Register on November 25, 2016.3 No
The foregoing rule change is effective those that may be withheld from the comment letters were received on the
upon filing pursuant to Section public in accordance with the proposed rule change. This order
19(b)(3)(A) 23 of the Act and provisions of 5 U.S.C. 552, will be approves the proposed rule change.
subparagraph (f)(2) of Rule 19b–4 24 available for Web site viewing and II. Description of the Proposed Rule
thereunder, because it establishes a due, printing in the Commission’s Public Change
fee, or other charge imposed by the Reference Room, 100 F Street NE.,
ISE Rule 716 (Block Trades) contains
Exchange. Washington, DC 20549 on official
the requirements applicable to the
At any time within 60 days of the business days between the hours of execution of orders using the Block
filing of such proposed rule change, the 10:00 a.m. and 3:00 p.m. Copies of the Order Mechanism, Facilitation
Commission summarily may filing also will be available for Mechanism, and Solicited Order
temporarily suspend such rule change if inspection and copying at the principal Mechanism. The Block Order
it appears to the Commission that such office of the Exchange. All comments Mechanism allows ISE members to
action is necessary or appropriate in the received will be posted without change; obtain liquidity for the execution of a
public interest, for the protection of the Commission does not edit personal block-size order.4 The Facilitation and
investors, or otherwise in furtherance of identifying information from Solicited Order Mechanisms allow ISE
the purposes of the Act. If the submissions. You should submit only members to enter cross transactions
Commission takes such action, the information that you wish to make seeking price improvement.5 ISE Rule
Commission shall institute proceedings available publicly. All submissions 723 (Price Improvement Mechanism for
under Section 19(b)(2)(B) 25 of the Act to should refer to File Number SR– Crossing Transactions) contains the
determine whether the proposed rule NYSEMKT–2016–127 and should be requirements applicable to the
change should be approved or submitted on or before January 31, 2017.
disapproved. For the Commission, by the Division of 1 15 U.S.C. 78s(b)(1).
Trading and Markets, pursuant to delegated 2 17 CFR 240.19b–4.
pmangrum on DSK3GDR082PROD with NOTICES
IV. Solicitation of Comments
authority.26 3 See Securities Exchange Act Release No. 79352
Interested persons are invited to Eduardo A. Aleman, (November 18, 2016), 81 FR 85277 (‘‘Notice’’).
submit written data, views, and 4 Block-size orders are orders for 50 contracts or
Assistant Secretary. more. See ISE Rule 716(a).
arguments concerning the foregoing,
[FR Doc. 2017–00221 Filed 1–9–17; 8:45 am] 5 Only block-size orders can be entered into the
BILLING CODE 8011–01–P
Facilitation Mechanism, whereas only orders for
23 15 U.S.C. 78s(b)(3)(A). 500 contracts or more can be entered into the
24 17 CFR 240.19b–4(f)(2). Solicited Order Mechanism. See ISE Rule 716(d)
25 15 U.S.C. 78s(b)(2)(B). 26 17 CFR 200.30–3(a)(12). and (e).
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Document Created: 2018-02-01 14:53:53
Document Modified: 2018-02-01 14:53:53
| 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 | 82 FR 3052 |
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