83 FR 18374 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Options Fee Schedule
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 81 (April 26, 2018)
Federal Register Volume 83, Issue 81 (April 26, 2018)
| Page Range | 18374-18376 | |
| FR Document | 2018-08725 |
[Federal Register Volume 83, Number 81 (Thursday, April 26, 2018)] [Notices] [Pages 18374-18376] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-08725] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83074; File No. SR-NYSEArca-2018-24] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Options Fee Schedule April 20, 2018. 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 April 12, 2018, 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, 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 the Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE Arca Options Fee Schedule (``Fee Schedule''). The Exchange proposes to implement the fee change effective April 12, 2018.\4\ The proposed rule change is available on the Exchange's website at www.nyse.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. --------------------------------------------------------------------------- \4\ The Exchange originally filed to amend the Fee Schedule on April 2, 2018 (SR-NYSEArca-2018-21) and withdrew and re-filed on April 3, 2018 (SR-NYSEArca-2018-22). --------------------------------------------------------------------------- II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this filing is to modify the Fee Schedule to adopt a prepayment incentive program for Floor Broker organizations (each a ``Floor Broker''). Currently, Floor Brokers that operate on the Exchange incur certain monthly fixed costs that rarely change from month-to-month (and, in some cases, year-to-year). Floor Brokers receive an invoice from the Exchange each month for the fixed cost incurred the prior month. The Exchange proposes to offer Floor Brokers a 10% discount on their ``Eligible Fixed Costs'' (described in the table below) if Floor Brokers prepay such costs for the remaining nine months of 2018 --i.e., April through December (the ``FB Prepay Program'' or ``Program'').\5\ --------------------------------------------------------------------------- \5\ To participate in the FB Prepay Program, Floor Broker organizations would have to notify the Exchange in writing by emailing [email protected], indicating a commitment to submit prepayment, by no later than April 13, 2018. The email to enroll in the Program would have to originate from an officer of the Floor Broker organization and, except as provided for below, represents a binding commitment through the end of 2018. To participate in the Program, pre-payment for the balance of the year must be received by the close of business on April 30, 2018. See proposed Fee Schedule, NYSE Arca OPTIONS: FLOOR and EQUIPMENT and CO-LOCATION FEES, FLOOR BROKER FIXED COST PREPAYMENT INCENTIVE PROGRAM. ------------------------------------------------------------------------ ----------------------------------------------------------------------- Eligible Fixed Costs OTP trading participant rights. Floor Broker order capture device--market data fees. Floor booths. Telephones. Options floor access fee. Wire services. Vendor equipment room/cabinet fee. ------------------------------------------------------------------------ A Floor Broker that commits to the proposed Program would be invoiced in April 2018 for its estimated Eligible [[Page 18375]] Fixed Costs, through the end of 2018, less 10%. The estimated Eligible Fixed Costs for April through December 2018 for each participating Floor Broker would be based on that Floor Broker's February 2018 invoice for such costs. For example, if a participating Floor Broker incurred $6,000 in Eligible Fixed Costs in February 2018, that Floor Broker would be invoiced in April 2018 in the amount of $48,600 to prepay such costs for the balance of the year (i.e., $54,000 (to pre- pay Eligible Fixed Costs for April through December) minus $5,400 (10% discount) equals $48,600). The Exchange also proposes to offer participants in the FB Prepay Program the opportunity to qualify for larger discounts (i.e., more than 10% of the remaining of 2018 Eligible Fixed Costs) through the Percentage Growth Incentive (the ``Incentive''), which is designed to encourage Floor Brokers to increase their average daily volume (``ADV'') in billable manual contract sides by certain percentages (correlated with Tiers) as measured against one of two benchmarks.\6\ Specifically, to qualify for the Incentive, a participating Floor Broker must increase its manual billable ADV in contract sides during the final nine months of 2018 (i.e., April through December) by percentages (set forth below) above the greater of: --------------------------------------------------------------------------- \6\ The Percentage Growth Incentive would exclude Customer volume, Firm Facilitation and Broker Dealer facilitating a Customer trades, and QCCs. Any volume calculated to achieve the Firm and Broker Dealer Monthly Fee Cap and the Limit of Fees on Options Strategy Executions (``Strategy Cap''), regardless of whether either of these caps is achieved, will likewise be excluded from the Percentage Growth Incentive because fees on such volume are already capped and therefore such volume does not increase billable manual volume. See id. --------------------------------------------------------------------------- i. 10,000 Contract sides in billable manual ADV; or ii. The Floor Broker's total billable manual ADV in contract sides during the second half of 2017--i.e., July through December 2017. As proposed, a participating Floor Broker would qualify for the proposed Incentive by executing, in the final nine months of 2018, ADV growth in manual billable contract sides that is 30%, 65%, or 100% over the greater of (i) 10,000 contract sides ADV; or (ii) their ADV during the second half of 2017 (i.e., June through December). For example, a Floor Broker that is new to the Exchange (or one that did not execute at least 10,000 contract sides in billable manual ADV in the second half of 2017) would have the ability to qualify for the Incentive by executing at least 10,000 contract sides in manual billable ADV increased by the specified percentages. Such a Floor Broker would qualify for each Tier, respectively, by executing billable manual ADV in contract sides of 13,000 (Tier 1), 16,500 (Tier 2), and 20,000 (Tier 3) during April through December 2018. Similarly, a Floor Broker that executed 50,000 billable manual ADV in the second half of 2017, would qualify for each Tier, respectively, by executing ADV in contracts sides of 65,000 (Tier 1), 82,500 (Tier 2), and 100,000 (Tier 3) during April through December 2018. The total rebate available for achieving each Tier is the same regardless of whether the Floor Broker relied on its second half of 2017 volume or the minimum 10,000 ADV contract sides as the benchmark. As proposed, Floor Brokers that earn the Percentage Growth Incentive would receive their 2018 rebate in January 2019.\7\ --------------------------------------------------------------------------- \7\ The Exchange would not issue any refunds in the event that a Floor Broker's prepaid Eligible Fixed Costs exceeds such actual costs for the nine month period. See id. --------------------------------------------------------------------------- The Exchange proposes to specify the proposed Incentive on the Fee Schedule with the following table: --------------------------------------------------------------------------- \8\ Participants in the FB Prepay Program that qualify for Tier 3 (i.e., increased 2018 volume (from April through December) by 100% over the Floor Broker's volume from the second half of 2017, or the 10,0000 ADV in contract sides) would be rebated the greater of 100% of their pre-paid Eligible Fixed Costs, or $10,000/month for April through December 2018. See id. FB Prepayment Program Incentives [based on ADV in contract sides between April 1--December 31, 2018] ------------------------------------------------------------------------ Total percentage reduction of Percentage growth eligible fixed Tier incentive costs for April- December 2018 ------------------------------------------------------------------------ Tier 1............................ 30 40 Tier 2............................ 65 75 Tier 3............................ 100 \8\ 100 ------------------------------------------------------------------------ The Exchange is not proposing any other changes to the Fee Schedule at this time. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,\9\ in general, and furthers the objectives of Sections 6(b)(4) and (5) of the Act,\10\ 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. --------------------------------------------------------------------------- \9\ 15 U.S.C. 78f(b). \10\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The proposal to introduce the FB Prepayment Program is reasonable, equitable and not unfairly discriminatory for the following reasons. First, the Program is optional and Floor Brokers can elect to participate (or elect not to participate). In addition, the Exchange is offering two alternative means to achieve the same enhanced discount to ensure that Floor Brokers that are new to the Exchange (or Floor Brokers that did not execute more than 10,000 ADV in contract sides) could nonetheless participate in the Program. The Exchange believes that 10,000 ADV is a reasonable minimum threshold above which a participating Floor Broker would need to increase volume in order to realize the proposed Incentive (on a similar playing field with Floor Brokers that exceeded this volume requirement in 2017). For Floor Brokers that exceeded the 10,000 ADV in the second half of 2017, the Exchange believes it is reasonable to use each Floor Broker's historical volume as a benchmark against which to measure future growth to achieve the proposed Incentive. Moreover, the Exchange notes that prepayment programs such as the FB Prepay Program are not new or novel as other options exchanges provide incentives to other specific market participants for prepayment of certain Exchange fees/costs--including the [[Page 18376]] prepayment programs offered to market makers on NYSE American and the Chicago Board of Options Exchange (Cboe).\11\ Although these market maker prepay programs apply to transaction costs as opposed to fixed costs, the Exchange believes the proposed program would similarly incent Floor Brokers to increase their billable volume executed in open outcry on the Exchange, which would benefit all market participants by expanding liquidity and providing more trading opportunities, even to those market participants that have not committed to the Program. Regardless of which benchmark a participating Floor Broker's growth is measured against, all Floor Broker's [sic] that opt to participate would be required to increase volume executed on the Exchange in order to receive the enhanced discount. Thus, the Exchange believes the proposed Program, is reasonable, equitable and not unfairly discriminatory to others. --------------------------------------------------------------------------- \11\ See NYSE American Fee Schedule, Section I.D. (Prepayment Program), available here, https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf; Cboe fee schedule, Liquidity Provider Sliding Scale, available here, http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act, 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 FB Prepayment Program may increase both inter-market and intra-market 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-Exchange participants, 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 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 would benefit all market participants and improve competition on the Exchange. Given the robust competition for volume among options markets, many of which offer the same products, implementing programs to attract order flow, such as the proposed FB Prepayment Program, 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) \12\ of the Act and subparagraph (f)(2) of Rule 19b-4 \13\ thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78s(b)(3)(A). \13\ 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) \14\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \14\ 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-2018-24 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-NYSEArca2018-24. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEArca-2018-24, and should be submitted on or before May 17, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\15\ --------------------------------------------------------------------------- \15\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-08725 Filed 4-25-18; 8:45 am] BILLING CODE 8011-01-P
![18374 Federal Register / Vol. 83, No. 81 / Thursday, April 26, 2018 / Notices
Services, 100 F Street NE, Washington, respond to, a collection of information II. Self-Regulatory Organization’s
DC 20549–2736. unless it displays a currently valid Statement of the Purpose of, and
Extension: control number. Statutory Basis for, the Proposed Rule
Form 1–K, SEC File No. 270–662, OMB Please direct your written comments Change
Control No. 3235–0720. to Pamela Dyson, Director/Chief In its filing with the Commission, the
Notice is hereby given that, pursuant Information Officer, Securities and self-regulatory organization included
to the Paperwork Reduction Act of 1995 Exchange Commission, c/o Remi Pavlik- statements concerning the purpose of,
(44 U.S.C. 3501 et seq.), the Securities Simon, 100 F Street NE, Washington, and basis for, the proposed rule change
and Exchange Commission DC 20549; or send an email to: PRA_ and discussed any comments it received
(‘‘Commission’’) is soliciting comments Mailbox@sec.gov. on the proposed rule change. The text
on the collection of information of those statements may be examined at
Dated: April 23, 2018.
summarized below. The Commission the places specified in Item IV below.
Eduardo A. Aleman, The Exchange has prepared summaries,
plans to submit this existing collection
of information to the Office of Assistant Secretary. set forth in sections A, B, and C below,
Management and Budget for extension [FR Doc. 2018–08817 Filed 4–25–18; 8:45 am] of the most significant parts of such
and approval. BILLING CODE 8011–01–P statements.
Form 1–K (17 CFR 239.91) is used to A. Self-Regulatory Organization’s
file annual reports by Tier 2 issuers Statement of the Purpose of, and
under Regulation A, an exemption from SECURITIES AND EXCHANGE Statutory Basis for, the Proposed Rule
registration under the Securities Act of COMMISSION Change
1933 (15 U.S.C. 77a et seq.). Tier 2
issuers under Regulation A conducting 1. Purpose
[Release No. 34–83074; File No. SR–
offerings of up to $50 million within a NYSEArca–2018–24] The purpose of this filing is to modify
12-month period are required to file the Fee Schedule to adopt a prepayment
Form 1–K. Form 1–K provides audited Self-Regulatory Organizations; NYSE incentive program for Floor Broker
year-end financial statements and Arca, Inc.; Notice of Filing and organizations (each a ‘‘Floor Broker’’).
information about the issuer’s business Immediate Effectiveness of Proposed Currently, Floor Brokers that operate
operation, ownership, management, Rule Change To Amend the NYSE Arca on the Exchange incur certain monthly
liquidity, capital resources and Options Fee Schedule fixed costs that rarely change from
operations on an annual basis. In month-to-month (and, in some cases,
addition, Part I of the Form 1–K collects April 20, 2018. year-to-year). Floor Brokers receive an
information on any offerings under Pursuant to Section 19(b)(1) 1 of the invoice from the Exchange each month
Regulation A that have been terminated Securities Exchange Act of 1934 (the for the fixed cost incurred the prior
or completed unless it has been ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 month. The Exchange proposes to offer
previous reported on Form 1–Z. The notice is hereby given that, on April 12, Floor Brokers a 10% discount on their
purpose of the Form 1–K is to better 2018, NYSE Arca, Inc. (the ‘‘Exchange’’ ‘‘Eligible Fixed Costs’’ (described in the
inform the public about companies that or ‘‘NYSE Arca’’) filed with the table below) if Floor Brokers prepay
have conducted Tier 2 offerings under Securities and Exchange Commission such costs for the remaining nine
Regulation A. We estimate that (the ‘‘Commission’’) the proposed rule months of 2018 —i.e., April through
approximately 24 issuers file Form 1–K change as described in Items I, II, and December (the ‘‘FB Prepay Program’’ or
annually. We estimate that Form 1–K III below, which Items have been ‘‘Program’’).5
takes approximately 600 hours to prepared by the self-regulatory
prepare. We estimate that 75% of the organization. The Commission is Eligible Fixed Costs
600 hours per response (450 hours) is OTP trading participant rights.
publishing this notice to solicit Floor Broker order capture device—market
prepared by the company for a total comments on the proposed rule change data fees.
annual burden of 10,800 hours (450.0 from interested persons. Floor booths.
hours per response × 24 responses). Telephones.
Written comments are invited on: (a) I. Self-Regulatory Organization’s Options floor access fee.
Whether the proposed collection of Statement of the Terms of the Substance Wire services.
information is necessary for the proper of the Proposed Rule Change Vendor equipment room/cabinet fee.
performance of the functions of the
agency, including whether the The Exchange proposes to amend the A Floor Broker that commits to the
information will have practical utility; NYSE Arca Options Fee Schedule (‘‘Fee proposed Program would be invoiced in
(b) the accuracy of the agency’s estimate Schedule’’). The Exchange proposes to April 2018 for its estimated Eligible
of the burden imposed by the collection implement the fee change effective
of information; (c) ways to enhance the April 12, 2018.4 The proposed rule 5 To participate in the FB Prepay Program, Floor
quality, utility, and clarity of the change is available on the Exchange’s Broker organizations would have to notify the
website at www.nyse.com, at the Exchange in writing by emailing optionsbilling@
information collected; and (d) ways to nyse.com, indicating a commitment to submit
minimize the burden of the collection of principal office of the Exchange, and at prepayment, by no later than April 13, 2018. The
information on respondents, including the Commission’s Public Reference email to enroll in the Program would have to
through the use of automated collection Room. originate from an officer of the Floor Broker
organization and, except as provided for below,
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techniques or other forms of information represents a binding commitment through the end
1 15 U.S.C. 78s(b)(1).
technology. Consideration will be given of 2018. To participate in the Program, pre-payment
2 15 U.S.C. 78a.
to comments and suggestions submitted 3 17 CFR 240.19b–4.
for the balance of the year must be received by the
in writing within 60 days of this close of business on April 30, 2018. See proposed
4 The Exchange originally filed to amend the Fee Fee Schedule, NYSE Arca OPTIONS: FLOOR and
publication. Schedule on April 2, 2018 (SR–NYSEArca–2018– EQUIPMENT and CO–LOCATION FEES, FLOOR
An agency may not conduct or 21) and withdrew and re-filed on April 3, 2018 (SR– BROKER FIXED COST PREPAYMENT INCENTIVE
sponsor, and a person is not required to NYSEArca–2018–22). PROGRAM.
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Fixed Costs, through the end of 2018, two benchmarks.6 Specifically, to contract sides in manual billable ADV
less 10%. The estimated Eligible Fixed qualify for the Incentive, a participating increased by the specified percentages.
Costs for April through December 2018 Floor Broker must increase its manual Such a Floor Broker would qualify for
for each participating Floor Broker billable ADV in contract sides during each Tier, respectively, by executing
would be based on that Floor Broker’s the final nine months of 2018 (i.e., April billable manual ADV in contract sides of
February 2018 invoice for such costs. through December) by percentages (set 13,000 (Tier 1), 16,500 (Tier 2), and
For example, if a participating Floor forth below) above the greater of: 20,000 (Tier 3) during April through
Broker incurred $6,000 in Eligible Fixed i. 10,000 Contract sides in billable December 2018.
Costs in February 2018, that Floor manual ADV; or Similarly, a Floor Broker that
Broker would be invoiced in April 2018 ii. The Floor Broker’s total billable executed 50,000 billable manual ADV in
in the amount of $48,600 to prepay such manual ADV in contract sides during the second half of 2017, would qualify
costs for the balance of the year (i.e., the second half of 2017—i.e., July for each Tier, respectively, by executing
$54,000 (to pre-pay Eligible Fixed Costs through December 2017. ADV in contracts sides of 65,000 (Tier
As proposed, a participating Floor
for April through December) minus 1), 82,500 (Tier 2), and 100,000 (Tier 3)
Broker would qualify for the proposed
$5,400 (10% discount) equals $48,600). during April through December 2018.
Incentive by executing, in the final nine
The Exchange also proposes to offer months of 2018, ADV growth in manual The total rebate available for
participants in the FB Prepay Program billable contract sides that is 30%, 65%, achieving each Tier is the same
the opportunity to qualify for larger or 100% over the greater of (i) 10,000 regardless of whether the Floor Broker
discounts (i.e., more than 10% of the contract sides ADV; or (ii) their ADV relied on its second half of 2017 volume
remaining of 2018 Eligible Fixed Costs) during the second half of 2017 (i.e., June or the minimum 10,000 ADV contract
through the Percentage Growth through December). For example, a sides as the benchmark. As proposed,
Incentive (the ‘‘Incentive’’), which is Floor Broker that is new to the Exchange Floor Brokers that earn the Percentage
designed to encourage Floor Brokers to (or one that did not execute at least Growth Incentive would receive their
increase their average daily volume 10,000 contract sides in billable manual 2018 rebate in January 2019.7
(‘‘ADV’’) in billable manual contract ADV in the second half of 2017) would The Exchange proposes to specify the
sides by certain percentages (correlated have the ability to qualify for the proposed Incentive on the Fee Schedule
with Tiers) as measured against one of Incentive by executing at least 10,000 with the following table:
FB PREPAYMENT PROGRAM INCENTIVES
[based on ADV in contract sides between April 1—December 31, 2018]
Total percentage
reduction of eligi-
Percentage
Tier ble fixed costs for
growth incentive April–December
2018
Tier 1 ............................................................................................................................................................ 30 40
Tier 2 ............................................................................................................................................................ 65 75
Tier 3 ............................................................................................................................................................ 100 8 100
The Exchange is not proposing any The proposal to introduce the FB volume in order to realize the proposed
other changes to the Fee Schedule at Prepayment Program is reasonable, Incentive (on a similar playing field
this time. equitable and not unfairly with Floor Brokers that exceeded this
discriminatory for the following volume requirement in 2017). For Floor
2. Statutory Basis reasons. First, the Program is optional Brokers that exceeded the 10,000 ADV
The Exchange believes that the and Floor Brokers can elect to in the second half of 2017, the Exchange
proposed rule change is consistent with participate (or elect not to participate). believes it is reasonable to use each
Section 6(b) of the Act,9 in general, and In addition, the Exchange is offering two Floor Broker’s historical volume as a
alternative means to achieve the same benchmark against which to measure
furthers the objectives of Sections
enhanced discount to ensure that Floor future growth to achieve the proposed
6(b)(4) and (5) of the Act,10 in particular,
Brokers that are new to the Exchange (or Incentive.
because it provides for the equitable
allocation of reasonable dues, fees, and Floor Brokers that did not execute more Moreover, the Exchange notes that
other charges among its members, than 10,000 ADV in contract sides) prepayment programs such as the FB
issuers and other persons using its could nonetheless participate in the Prepay Program are not new or novel as
facilities and does not unfairly Program. The Exchange believes that other options exchanges provide
10,000 ADV is a reasonable minimum incentives to other specific market
discriminate between customers,
threshold above which a participating participants for prepayment of certain
issuers, brokers or dealers.
Floor Broker would need to increase Exchange fees/costs—including the
6 The Percentage Growth Incentive would exclude volume are already capped and therefore such April through December) by 100% over the Floor
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Customer volume, Firm Facilitation and Broker volume does not increase billable manual volume. Broker’s volume from the second half of 2017, or
Dealer facilitating a Customer trades, and QCCs. See id. the 10,0000 ADV in contract sides) would be
Any volume calculated to achieve the Firm and 7 The Exchange would not issue any refunds in
rebated the greater of 100% of their pre-paid
Broker Dealer Monthly Fee Cap and the Limit of the event that a Floor Broker’s prepaid Eligible Eligible Fixed Costs, or $10,000/month for April
Fees on Options Strategy Executions (‘‘Strategy Fixed Costs exceeds such actual costs for the nine
through December 2018. See id.
Cap’’), regardless of whether either of these caps is month period. See id.
9 15 U.S.C. 78f(b).
achieved, will likewise be excluded from the 8 Participants in the FB Prepay Program that
10 15 U.S.C. 78f(b)(4) and (5).
Percentage Growth Incentive because fees on such qualify for Tier 3 (i.e., increased 2018 volume (from
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prepayment programs offered to market participants and improve competition Electronic Comments
makers on NYSE American and the on the Exchange.
Chicago Board of Options Exchange Given the robust competition for • Use the Commission’s internet
(Cboe).11 Although these market maker volume among options markets, many of comment form (http://www.sec.gov/
prepay programs apply to transaction which offer the same products, rules/sro.shtml); or
costs as opposed to fixed costs, the implementing programs to attract order • Send an email to rule-comments@
Exchange believes the proposed flow, such as the proposed FB sec.gov. Please include File Number SR–
program would similarly incent Floor Prepayment Program, are consistent NYSEArca–2018–24 on the subject line.
Brokers to increase their billable volume with the above-mentioned goals of the
executed in open outcry on the Act. Paper Comments
Exchange, which would benefit all The Exchange notes that it operates in
a highly competitive market in which • Send paper comments in triplicate
market participants by expanding
market participants can readily favor to Brent J. Fields, Secretary, Securities
liquidity and providing more trading
opportunities, even to those market competing venues. In such an and Exchange Commission, 100 F Street
participants that have not committed to environment, the Exchange must NE, Washington, DC 20549–1090.
the Program. Regardless of which continually review, and consider All submissions should refer to File
benchmark a participating Floor adjusting, its fees and credits to remain Number SR–NYSEArca2018–24. This
Broker’s growth is measured against, all competitive with other exchanges. For file number should be included on the
Floor Broker’s [sic] that opt to the reasons described above, the subject line if email is used. To help the
participate would be required to Exchange believes that the proposed Commission process and review your
increase volume executed on the rule change reflects this competitive comments more efficiently, please use
Exchange in order to receive the environment.
only one method. The Commission will
enhanced discount. Thus, the Exchange C. Self-Regulatory Organization’s post all comments on the Commission’s
believes the proposed Program, is Statement on Comments on the internet website (http://www.sec.gov/
reasonable, equitable and not unfairly Proposed Rule Change Received From rules/sro.shtml). Copies of the
discriminatory to others. Members, Participants, or Others submission, all subsequent
B. Self-Regulatory Organization’s No written comments were solicited amendments, all written statements
Statement on Burden on Competition or received with respect to the proposed with respect to the proposed rule
rule change. change that are filed with the
In accordance with Section 6(b)(8) of Commission, and all written
the Act, the Exchange does not believe III. Date of Effectiveness of the
communications relating to the
that the proposed rule change would Proposed Rule Change and Timing for
proposed rule change between the
impose any burden on competition that Commission Action
Commission and any person, other than
is not necessary or appropriate in The foregoing rule change is effective
furtherance of the purposes of the Act. those that may be withheld from the
upon filing pursuant to Section public in accordance with the
The Exchange believes that the 19(b)(3)(A) 12 of the Act and
proposed FB Prepayment Program may provisions of 5 U.S.C. 552, will be
subparagraph (f)(2) of Rule 19b–4 13 available for website viewing and
increase both inter-market and intra- thereunder, because it establishes a due,
market competition by incenting printing in the Commission’s Public
fee, or other charge imposed by the Reference Room, 100 F Street NE,
participants to direct their orders to the Exchange.
Exchange, which would enhance the Washington, DC 20549 on official
At any time within 60 days of the
quality of quoting and may increase the filing of such proposed rule change, the business days between the hours of
volume of contracts traded on the Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of such
Exchange. To the extent that there is an temporarily suspend such rule change if filing also will be available for
additional competitive burden on non- it appears to the Commission that such inspection and copying at the principal
Exchange participants, the Exchange action is necessary or appropriate in the office of the Exchange. All comments
believes that this is appropriate because public interest, for the protection of received will be posted without change.
the proposal should incent market investors, or otherwise in furtherance of Persons submitting comments are
participants to direct additional order the purposes of the Act. If the cautioned that we do not redact or edit
flow to the Exchange, and thus provide Commission takes such action, the personal identifying information from
additional liquidity that enhances the Commission shall institute proceedings comment submissions. You should
quality of its markets and increases the under Section 19(b)(2)(B) 14 of the Act to submit only information that you wish
volume of contracts traded here. To the determine whether the proposed rule to make available publicly. All
extent that this purpose is achieved, all change should be approved or submissions should refer to File
of the Exchange’s market participants disapproved. Number SR–NYSEArca–2018–24, and
should benefit from the improved should be submitted on or before May
market liquidity. Enhanced market IV. Solicitation of Comments
17, 2018.
quality and increased transaction Interested persons are invited to
volume that results from the anticipated submit written data, views, and For the Commission, by the Division of
increase in order flow directed to the arguments concerning the foregoing, Trading and Markets, pursuant to delegated
Exchange would benefit all market including whether the proposed rule authority.15
amozie on DSK30RV082PROD with NOTICES
change is consistent with the Act. Eduardo A. Aleman,
11 See NYSE American Fee Schedule, Section I.D.
Comments may be submitted by any of Assistant Secretary.
(Prepayment Program), available here, https://www. the following methods: [FR Doc. 2018–08725 Filed 4–25–18; 8:45 am]
nyse.com/publicdocs/nyse/markets/american-
options/NYSE_American_Options_Fee_ BILLING CODE 8011–01–P
12 15 U.S.C. 78s(b)(3)(A).
Schedule.pdf; Cboe fee schedule, Liquidity Provider
13 17 CFR 240.19b–4(f)(2).
Sliding Scale, available here, http://www.cboe.com/
publish/feeschedule/CBOEFeeSchedule.pdf. 14 15 U.S.C. 78s(b)(2)(B). 15 17 CFR 200.30–3(a)(12).
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Document Created: 2018-11-02 08:19:51
Document Modified: 2018-11-02 08:19:51
| 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 | 83 FR 18374 |
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