83_FR_47413 83 FR 47232 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE Arca Options Fee Schedule

83 FR 47232 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE Arca Options Fee Schedule

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 181 (September 18, 2018)

Page Range47232-47234
FR Document2018-20194

Federal Register, Volume 83 Issue 181 (Tuesday, September 18, 2018)
[Federal Register Volume 83, Number 181 (Tuesday, September 18, 2018)]
[Notices]
[Pages 47232-47234]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-20194]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84099; File No. SR-NYSEARCA-2018-64]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE 
Arca Options Fee Schedule

September 12, 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 August 29, 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.
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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 Arca Options Fee Schedule 
(``Fee Schedule''). The Exchange proposes to implement the fee change 
effective September 1, 2018. The proposed rule change is available on 
the Exchange's website at www.nyse.com, at the principal office of the 
Exchange, and at

[[Page 47233]]

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, effective 
September 1, 2018, to modify the existing Floor Broker rebate for 
executed Qualified Contingent Cross (``QCC'') orders,\4\ and to adjust 
the Firm and Broker Dealer Monthly Fee Cap.
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    \4\ The QCC permits an OTP Holder or OTP Firm to effect a 
qualified contingent trade (``QCT'') in a Regulation NMS stock and 
cross the options leg of the trade on the Exchange immediately upon 
entry and without order exposure if the order is for at least 1,000 
contracts, is part of a QCT, is executed at a price at least equal 
to the national best bid or offer, as long as there are no Customer 
orders in the Exchange's Consolidated Book at the same price.
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    Currently, the Exchange offers a Floor Brokers Rebate of $0.035 per 
contract side for QCC trades executed on behalf of non-Customers.\5\ 
The Exchange also offers a Firm and Broker Dealer Monthly Fee Cap (the 
``Fee Cap'') which caps fees at $100,000 for Manual (Open Outcry) 
Executions and, for QCC transactions executed by a Floor Broker from 
the Floor of the Exchange, for Firm and Broker Dealer transactions 
cleared in the customer range.\6\
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    \5\ See Fee Schedule, QUALIFIED CONTINGENT CROSS TRANSACTION 
FEES, available here,https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf.
    \6\ The Fee Cap excludes fees for Strategy Executions, Royalty 
Fees and firm trades executed via a Joint Back Office agreement. See 
id. FIRM AND BROKER DEALER MONTHLY FEE CAP. The Exchange also offers 
a lesser cap on fees for those OTP Holders and OTP Firms that 
achieve certain Tiers of the Customer Penny Pilot Posting Credit 
Tiers. See id., FIRM AND BROKER DEALER MONTHLY FIRM CAP TIERS.
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    The Exchange proposes to replace the existing Floor Broker Rebate 
with a two-tiered credit. As proposed, the first tier would provide a 
$0.07 per contract credit for ``Floor Brokers executing 300,000 or 
fewer contracts in a month,'' which tier would effectively replace the 
current $0.035 ``Floor Broker Rebate for Executed Orders--Per Contract 
Side.'' \7\ The Exchange proposes to introduce a second tier that would 
enable Floor Brokers to earn a higher credit--of $0.10--for executed 
QCC transactions in excess of 300,000 contracts.\8\ The proposed 
credits would be paid solely on the volume executed to achieve each 
tier and is not retroactive to the first contract.\9\ For example, if a 
Floor Broker executes 400,000 QCC contracts in a given month, the Floor 
Broker would receive the $0.07 per contract for the first 300,000 QCC 
transactions and $0.10 per contract for the remaining 100,000 
contracts. As with the existing Floor Broker Rebate, Customer-to-
Customer QCC trades would not qualify for any credit as such 
transactions net the Exchange no revenue.
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    \7\ The Exchange also proposes to make a number of textual 
changes to the table regarding QCC transactions. Specifically, the 
Exchange proposes to revise the title of the table to reflect the 
shorthand ``QCC'' and that the table includes fees ``and credits''; 
to revise the column headings to ``Participant'' and ``Per Contract 
Fee or Credit''; to remove reference to ``per side'' with respect to 
QCC fees as fees/credits are based on participant type executing 
such contracts; and to remove the term ``Rebate'' as the Floor 
Brokers are actually given a credit against fees incurred. See 
proposed Fee Schedule, QUALIFIED CONTINGENT CROSS (``QCC'') 
TRANSACTION FEES AND CREDITS and Endnote 13. The Exchange believes 
these technical changes would add clarity and transparency to the 
Fee Schedule.
    \8\ See id. (including reference to Endnote 13 in proposed tier, 
consistent with the current schedule for QCCs). See Fee Schedule, 
Endnote 13 supra n. 5 (providing that the Floor Broker credit does 
not apply to QCC executions in which a Customer is on both sides of 
the QCC and capping the potential monthly credit at $375,000 per 
Floor Broker firm).
    \9\ See id., Endnote 13 (providing, in relevant part, ``[t]he 
Floor Broker credit is paid only on volume within the applicable 
tier and is not retroactive to the first contract traded'').
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    The Exchange notes that the proposed credit for Floor Brokers is 
consistent with such credits offered for QCC volumes across the 
industry. Specifically, the Nasdaq OMX PHLX (``PHLX'') and Nasdaq ISE 
(``ISE'') pay volume-based rebates for QCC volume that range from $0.00 
to $0.11 per contract.\10\
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    \10\ See PHLX Pricing Schedule, available here, http://www.nasdaqtrader.com/Micro.aspx?id=phlxpricing; and ISE Schedule of 
Fees, available here, http://ise.cchwallstreet.com/tools/PlatformViewer.asp?selectednode=chp_1_1_5&manual=%2Fcontents%2Fise%2Fise-fee%2F.
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    The Exchange also proposes to adopt an incremental service fee of 
$0.01 per contract for Firm or Broker Dealer Manual transactions once 
an OTP Holder or OTP Firm has reached the applicable Fee Cap. The 
incremental service fee would not apply to the execution of a QCC 
order. The Exchange notes that this proposed fee is competitive as it 
is consistent with the incremental service fee that NYSE American 
imposes once firms have reached a similar monthly fee cap on that 
exchange.\11\
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    \11\ See NYSE American Options Fee Schedule, Section I.I., Firm 
Monthly Fee Cap, available here, https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf 
(providing that ``[o]nce a Firm has reached the Firm Monthly Fee 
Cap, an incremental service fee of $0.01 per contract for Firm 
Manual transactions will apply, except for the execution of a QCC 
order, in which case there is no incremental service fee''). The 
Exchange notes that the fee cap on NYSE American applies only to 
``Firms,'' whereas the NYSE Arca Fee Cap applies to both Firms and 
Broker Dealers.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act, in general, and furthers the objectives 
of Sections 6(b)(4) and (5) of the Act, 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.
    The Exchange believes that the proposed tiered Floor Broker credits 
for QCC volume rebates are reasonable, equitable and not unfairly 
discriminatory because the credits are designed to attract more QCC 
volume to the Exchange. To the extent that the credits attract 
additional order flow to the Exchange, all market participants should 
benefit. Market participants may engage Floor Brokers to entrust them 
with their QCC orders and, given the credit that a Floor Broker may 
receive, such market participants may negotiate the appropriate fee for 
such order flow.
    The Exchange also believes that the proposed credits are equitable 
and not unfairly discriminatory because they would apply to all Floor 
Brokers that execute QCC orders on the Exchange on an equal and non-
discriminatory basis. Moreover, the Exchange notes that the proposed 
credits are consistent with credits offered by other options exchanges. 
Specifically, PHLX and ISE pay volume-based rebates for QCC volume that 
range from $0.00 to $0.11 per contract.\12\
    The Exchange believes that the proposed textual changes to the 
Floor Broker credit (see supra n. 7) would add clarity, transparency 
and internal consistency to the Fee Schedule.
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    \12\ See supra n. 10.
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    The Exchange believes that adopting the proposed incremental 
service fee once a firm reaches the Fee Cap is

[[Page 47234]]

reasonable because it would allow the Exchange to recoup the costs 
incurred in providing certain services, including but not limited to 
trade matching and processing, post trade allocation, submission for 
clearing and customer service activities related to trading activity on 
the Exchange. In this regard, the Exchanges notes that the proposed fee 
is consistent with similarly such incremental fees charged on other 
options exchanges in connection with similar fee caps and is therefore 
competitive.\13\ Finally, the Exchange believes the proposal to adopt 
the service fee is equitable and not unfairly discriminatory because it 
would uniformly apply to all member firms engaged in manual proprietary 
trading that have reached the Fee Cap.
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    \13\ See supra n. 11.
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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 change would allow Floor 
Brokers to better compete for QCC volumes as the credits are consistent 
with those paid to participants on other exchanges.\14\ The Exchange 
also believes that the proposed service fee is likewise competitive as 
it would allow the Exchange to recoup certain costs incurred in 
providing services to member firms and is consistent with similar such 
fees charged by other exchanges that offer a similar monthly fee 
cap.\15\
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    \14\ See supra n. 10.
    \15\ See supra n. 11.
---------------------------------------------------------------------------

    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) \16\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \17\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 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) \18\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \18\ 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-NYSEARCA-2018-64 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE, 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEARCA-2018-64. 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 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. 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-2018-64 and should be submitted 
on or before October 9, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Eduardo A. Aleman,
Assistant Secretary.
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    \19\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2018-20194 Filed 9-17-18; 8:45 am]
BILLING CODE 8011-01-P



                                               47232                        Federal Register / Vol. 83, No. 181 / Tuesday, September 18, 2018 / Notices

                                               B. Self-Regulatory Organization’s                          subparagraph (f)(2) of Rule 19b–4 14                   Washington, DC 20549, on official
                                               Statement on Burden on Competition                         thereunder, because it establishes a due,              business days between the hours of
                                                  In accordance with Section 6(b)(8) of                   fee, or other charge imposed by the                    10:00 a.m. and 3:00 p.m. Copies of the
                                               the Act,12 the Exchange believes that the                  Exchange.                                              filing also will be available for
                                                                                                             At any time within 60 days of the                   inspection and copying at the principal
                                               proposed rule change would not impose
                                                                                                          filing of such proposed rule change, the               office of the Exchange. All comments
                                               any burden on competition that is not
                                                                                                          Commission summarily may                               received will be posted without change.
                                               necessary or appropriate in furtherance
                                                                                                          temporarily suspend such rule change if                Persons submitting comments are
                                               of the purposes of the Act. Debt
                                                                                                          it appears to the Commission that such                 cautioned that we do not redact or edit
                                               securities typically trade in a
                                                                                                          action is necessary or appropriate in the              personal identifying information from
                                               decentralized OTC dealer market that is
                                                                                                          public interest, for the protection of                 comment submissions. You should
                                               less liquid and transparent than the
                                                                                                          investors, or otherwise in furtherance of              submit only information that you wish
                                               equities markets. The Exchange believes
                                                                                                          the purposes of the Act. If the                        to make available publicly. All
                                               that the proposed change would
                                                                                                          Commission takes such action, the                      submissions should refer to File No.
                                               increase competition with these OTC
                                                                                                          Commission shall institute proceedings                 SR–NYSE–2018–39, and should be
                                               venues by creating additional incentives
                                                                                                          under Section 19(b)(2)(B) 15 of the Act to             submitted on or before October 9, 2018.
                                               to engage in bonds transactions on the
                                                                                                          determine whether the proposed rule                      For the Commission, by the Division of
                                               Exchange and rewarding market
                                                                                                          change should be approved or                           Trading and Markets, pursuant to delegated
                                               participants for actively quoting and
                                                                                                          disapproved.                                           authority.16
                                               providing liquidity in the only
                                                                                                                                                                 Eduardo A. Aleman,
                                               transparent bond market, which the                         IV. Solicitation of Comments
                                               Exchange believes will enhance market                                                                             Assistant Secretary.
                                                                                                            Interested persons are invited to                    [FR Doc. 2018–20195 Filed 9–17–18; 8:45 am]
                                               quality.                                                   submit written data, views, and
                                                  The Exchange notes that it operates in                  arguments concerning the foregoing,
                                                                                                                                                                 BILLING CODE 8011–01–P
                                               a highly competitive market in which                       including whether the proposed rule
                                               market participants can readily favor                      change is consistent with the Act.
                                               competing venues that are not                                                                                     SECURITIES AND EXCHANGE
                                                                                                          Comments may be submitted by any of                    COMMISSION
                                               transparent. In such an environment,                       the following methods:
                                               the Exchange must continually review,                                                                             [Release No. 34–84099; File No. SR–
                                               and consider adjusting its fees and                        Electronic Comments                                    NYSEARCA–2018–64]
                                               rebates to remain competitive with other                     • Use the Commission’s internet
                                               exchanges as well as with alternative                      comment form (http://www.sec.gov/                      Self-Regulatory Organizations; NYSE
                                               trading systems and other venues that                      rules/sro.shtml); or                                   Arca, Inc.; Notice of Filing and
                                               are not required to comply with the                          • Send an email to rule-comments@                    Immediate Effectiveness of Proposed
                                               statutory standards applicable to                          sec.gov. Please include File No. SR–                   Rule Change To Modify the NYSE Arca
                                               exchanges. Because competitors are free                    NYSE–2018–39 on the subject line.                      Options Fee Schedule
                                               to modify their own fees and credits in                                                                           September 12, 2018.
                                                                                                          Paper Comments
                                               response, and because market                                                                                         Pursuant to Section 19(b)(1) 1 of the
                                               participants may readily adjust their                         • Send paper comments in triplicate
                                                                                                                                                                 Securities Exchange Act of 1934 (the
                                               order routing practices, the Exchange                      to Secretary, Securities and Exchange
                                                                                                                                                                 ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
                                               believes that the degree to which fee                      Commission, 100 F Street NE,
                                                                                                                                                                 notice is hereby given that, on August
                                               changes in this market may impose any                      Washington, DC 20549–1090.
                                                                                                                                                                 29, 2018, NYSE Arca, Inc. (the
                                               burden on competition is extremely                         All submissions should refer to File No.               ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
                                               limited. As a result of all of these                       SR–NYSE–2018–39. This file number                      the Securities and Exchange
                                               considerations, the Exchange does not                      should be included on the subject line                 Commission (the ‘‘Commission’’) the
                                               believe that the proposed change will                      if email is used. To help the                          proposed rule change as described in
                                               impair the ability of member                               Commission process and review your                     Items I, II, and III below, which Items
                                               organizations or competing order                           comments more efficiently, please use                  have been prepared by the self-
                                               execution venues to maintain their                         only one method. The Commission will                   regulatory organization. The
                                               competitive standing in the financial                      post all comments on the Commission’s                  Commission is publishing this notice to
                                               markets.                                                   internet website (http://www.sec.gov/                  solicit comments on the proposed rule
                                                                                                          rules/sro.shtml). Copies of the                        change from interested persons.
                                               C. Self-Regulatory Organization’s
                                                                                                          submission, all subsequent
                                               Statement on Comments on the                                                                                      I. Self-Regulatory Organization’s
                                                                                                          amendments, all written statements
                                               Proposed Rule Change Received From                                                                                Statement of the Terms of Substance of
                                                                                                          with respect to the proposed rule
                                               Members, Participants, or Others                                                                                  the Proposed Rule Change
                                                                                                          change that are filed with the
                                                 No written comments were solicited                       Commission, and all written                               The Exchange proposes to modify the
                                               or received with respect to the proposed                   communications relating to the                         NYSE Arca Options Fee Schedule (‘‘Fee
                                               rule change.                                               proposed rule change between the                       Schedule’’). The Exchange proposes to
                                               III. Date of Effectiveness of the                          Commission and any person, other than                  implement the fee change effective
                                               Proposed Rule Change and Timing for                        those that may be withheld from the                    September 1, 2018. The proposed rule
                                                                                                          public in accordance with the                          change is available on the Exchange’s
daltland on DSKBBV9HB2PROD with NOTICES




                                               Commission Action
                                                                                                          provisions of 5 U.S.C. 552, will be                    website at www.nyse.com, at the
                                                 The foregoing rule change is effective                   available for website viewing and                      principal office of the Exchange, and at
                                               upon filing pursuant to Section                            printing in the Commission’s Public
                                               19(b)(3)(A) 13 of the Act and                              Reference Room, 100 F Street NE,                         16 17 CFR 200.30–3(a)(12).
                                                                                                                                                                   1 15 U.S.C. 78s(b)(1).
                                                 12 15   U.S.C. 78f(b)(8).                                  14 17   CFR 240.19b–4(f)(2).                           2 15 U.S.C. 78a.
                                                 13 15   U.S.C. 78s(b)(3)(A).                               15 15   U.S.C. 78s(b)(2)(B).                           3 17 CFR 240.19b–4.




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                                                                          Federal Register / Vol. 83, No. 181 / Tuesday, September 18, 2018 / Notices                                                      47233

                                               the Commission’s Public Reference                       300,000 or fewer contracts in a month,’’                 notes that this proposed fee is
                                               Room.                                                   which tier would effectively replace the                 competitive as it is consistent with the
                                                                                                       current $0.035 ‘‘Floor Broker Rebate for                 incremental service fee that NYSE
                                               II. Self-Regulatory Organization’s
                                                                                                       Executed Orders—Per Contract Side.’’ 7                   American imposes once firms have
                                               Statement of the Purpose of, and
                                                                                                       The Exchange proposes to introduce a                     reached a similar monthly fee cap on
                                               Statutory Basis for, the Proposed Rule
                                                                                                       second tier that would enable Floor                      that exchange.11
                                               Change
                                                                                                       Brokers to earn a higher credit—of
                                                  In its filing with the Commission, the               $0.10—for executed QCC transactions in                   2. Statutory Basis
                                               self-regulatory organization included                   excess of 300,000 contracts.8 The                           The Exchange believes that the
                                               statements concerning the purpose of,                   proposed credits would be paid solely                    proposed rule change is consistent with
                                               and basis for, the proposed rule change                 on the volume executed to achieve each                   Section 6(b) of the Act, in general, and
                                               and discussed any comments it received                  tier and is not retroactive to the first                 furthers the objectives of Sections
                                               on the proposed rule change. The text                   contract.9 For example, if a Floor Broker                6(b)(4) and (5) of the Act, in particular,
                                               of those statements may be examined at                  executes 400,000 QCC contracts in a                      because it provides for the equitable
                                               the places specified in Item IV below.                  given month, the Floor Broker would                      allocation of reasonable dues, fees, and
                                               The Exchange has prepared summaries,                    receive the $0.07 per contract for the                   other charges among its members,
                                               set forth in sections A, B, and C below,                first 300,000 QCC transactions and                       issuers and other persons using its
                                               of the most significant parts of such                   $0.10 per contract for the remaining                     facilities and does not unfairly
                                               statements.                                             100,000 contracts. As with the existing                  discriminate between customers,
                                               A. Self-Regulatory Organization’s                       Floor Broker Rebate, Customer-to-                        issuers, brokers or dealers.
                                               Statement of the Purpose of, and the                    Customer QCC trades would not qualify                       The Exchange believes that the
                                               Statutory Basis for, the Proposed Rule                  for any credit as such transactions net                  proposed tiered Floor Broker credits for
                                               Change                                                  the Exchange no revenue.                                 QCC volume rebates are reasonable,
                                                                                                          The Exchange notes that the proposed                  equitable and not unfairly
                                               1. Purpose                                              credit for Floor Brokers is consistent                   discriminatory because the credits are
                                                  The purpose of this filing is to modify              with such credits offered for QCC                        designed to attract more QCC volume to
                                               the Fee Schedule, effective September 1,                volumes across the industry.                             the Exchange. To the extent that the
                                               2018, to modify the existing Floor                      Specifically, the Nasdaq OMX PHLX                        credits attract additional order flow to
                                               Broker rebate for executed Qualified                    (‘‘PHLX’’) and Nasdaq ISE (‘‘ISE’’) pay                  the Exchange, all market participants
                                               Contingent Cross (‘‘QCC’’) orders,4 and                 volume-based rebates for QCC volume                      should benefit. Market participants may
                                               to adjust the Firm and Broker Dealer                    that range from $0.00 to $0.11 per                       engage Floor Brokers to entrust them
                                               Monthly Fee Cap.                                        contract.10                                              with their QCC orders and, given the
                                                  Currently, the Exchange offers a Floor                  The Exchange also proposes to adopt                   credit that a Floor Broker may receive,
                                               Brokers Rebate of $0.035 per contract                   an incremental service fee of $0.01 per                  such market participants may negotiate
                                               side for QCC trades executed on behalf                  contract for Firm or Broker Dealer                       the appropriate fee for such order flow.
                                               of non-Customers.5 The Exchange also                    Manual transactions once an OTP                             The Exchange also believes that the
                                               offers a Firm and Broker Dealer Monthly                 Holder or OTP Firm has reached the                       proposed credits are equitable and not
                                               Fee Cap (the ‘‘Fee Cap’’) which caps fees               applicable Fee Cap. The incremental                      unfairly discriminatory because they
                                               at $100,000 for Manual (Open Outcry)                    service fee would not apply to the                       would apply to all Floor Brokers that
                                               Executions and, for QCC transactions                    execution of a QCC order. The Exchange                   execute QCC orders on the Exchange on
                                               executed by a Floor Broker from the                                                                              an equal and non-discriminatory basis.
                                                                                                          7 The Exchange also proposes to make a number
                                               Floor of the Exchange, for Firm and                                                                              Moreover, the Exchange notes that the
                                                                                                       of textual changes to the table regarding QCC
                                               Broker Dealer transactions cleared in the               transactions. Specifically, the Exchange proposes to     proposed credits are consistent with
                                               customer range.6                                        revise the title of the table to reflect the shorthand   credits offered by other options
                                                  The Exchange proposes to replace the                 ‘‘QCC’’ and that the table includes fees ‘‘and           exchanges. Specifically, PHLX and ISE
                                               existing Floor Broker Rebate with a two-                credits’’; to revise the column headings to              pay volume-based rebates for QCC
                                               tiered credit. As proposed, the first tier              ‘‘Participant’’ and ‘‘Per Contract Fee or Credit’’; to
                                                                                                       remove reference to ‘‘per side’’ with respect to QCC     volume that range from $0.00 to $0.11
                                               would provide a $0.07 per contract                      fees as fees/credits are based on participant type       per contract.12
                                               credit for ‘‘Floor Brokers executing                    executing such contracts; and to remove the term            The Exchange believes that the
                                                                                                       ‘‘Rebate’’ as the Floor Brokers are actually given a     proposed textual changes to the Floor
                                                  4 The QCC permits an OTP Holder or OTP Firm          credit against fees incurred. See proposed Fee
                                                                                                       Schedule, QUALIFIED CONTINGENT CROSS                     Broker credit (see supra n. 7) would add
                                               to effect a qualified contingent trade (‘‘QCT’’) in a
                                               Regulation NMS stock and cross the options leg of       (‘‘QCC’’) TRANSACTION FEES AND CREDITS and               clarity, transparency and internal
                                               the trade on the Exchange immediately upon entry        Endnote 13. The Exchange believes these technical        consistency to the Fee Schedule.
                                               and without order exposure if the order is for at       changes would add clarity and transparency to the           The Exchange believes that adopting
                                               least 1,000 contracts, is part of a QCT, is executed    Fee Schedule.
                                                                                                          8 See id. (including reference to Endnote 13 in
                                                                                                                                                                the proposed incremental service fee
                                               at a price at least equal to the national best bid or
                                               offer, as long as there are no Customer orders in the   proposed tier, consistent with the current schedule      once a firm reaches the Fee Cap is
                                               Exchange’s Consolidated Book at the same price.         for QCCs). See Fee Schedule, Endnote 13 supra n.
                                                  5 See Fee Schedule, QUALIFIED CONTINGENT             5 (providing that the Floor Broker credit does not          11 See NYSE American Options Fee Schedule,

                                               CROSS TRANSACTION FEES, available                       apply to QCC executions in which a Customer is on        Section I.I., Firm Monthly Fee Cap, available here,
                                               here,https://www.nyse.com/publicdocs/nyse/              both sides of the QCC and capping the potential          https://www.nyse.com/publicdocs/nyse/markets/
                                               markets/arca-options/NYSE_Arca_Options_Fee_             monthly credit at $375,000 per Floor Broker firm).       american-options/NYSE_American_Options_Fee_
                                               Schedule.pdf.                                              9 See id., Endnote 13 (providing, in relevant part,   Schedule.pdf (providing that ‘‘[o]nce a Firm has
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                                                  6 The Fee Cap excludes fees for Strategy             ‘‘[t]he Floor Broker credit is paid only on volume       reached the Firm Monthly Fee Cap, an incremental
                                               Executions, Royalty Fees and firm trades executed       within the applicable tier and is not retroactive to     service fee of $0.01 per contract for Firm Manual
                                               via a Joint Back Office agreement. See id. FIRM         the first contract traded’’).                            transactions will apply, except for the execution of
                                               AND BROKER DEALER MONTHLY FEE CAP. The                     10 See PHLX Pricing Schedule, available here,         a QCC order, in which case there is no incremental
                                               Exchange also offers a lesser cap on fees for those     http://www.nasdaqtrader.com/Micro.aspx?id=               service fee’’). The Exchange notes that the fee cap
                                               OTP Holders and OTP Firms that achieve certain          phlxpricing; and ISE Schedule of Fees, available         on NYSE American applies only to ‘‘Firms,’’
                                               Tiers of the Customer Penny Pilot Posting Credit        here, http://ise.cchwallstreet.com/tools/                whereas the NYSE Arca Fee Cap applies to both
                                               Tiers. See id., FIRM AND BROKER DEALER                  PlatformViewer.asp?selectednode=chp_1_1_                 Firms and Broker Dealers.
                                               MONTHLY FIRM CAP TIERS.                                 5&manual=%2Fcontents%2Fise%2Fise-fee%2F.                    12 See supra n. 10.




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                                               47234                     Federal Register / Vol. 83, No. 181 / Tuesday, September 18, 2018 / Notices

                                               reasonable because it would allow the                   III. Date of Effectiveness of the                     proposed rule change between the
                                               Exchange to recoup the costs incurred                   Proposed Rule Change and Timing for                   Commission and any person, other than
                                               in providing certain services, including                Commission Action                                     those that may be withheld from the
                                               but not limited to trade matching and                      The foregoing rule change is effective             public in accordance with the
                                               processing, post trade allocation,                      upon filing pursuant to Section                       provisions of 5 U.S.C. 552, will be
                                               submission for clearing and customer                    19(b)(3)(A) 16 of the Act and                         available for website viewing and
                                               service activities related to trading                   subparagraph (f)(2) of Rule 19b–4 17                  printing in the Commission’s Public
                                               activity on the Exchange. In this regard,               thereunder, because it establishes a due,             Reference Room, 100 F Street NE,
                                               the Exchanges notes that the proposed                   fee, or other charge imposed by the                   Washington, DC 20549 on official
                                               fee is consistent with similarly such                   Exchange.                                             business days between the hours of
                                               incremental fees charged on other                          At any time within 60 days of the                  10:00 a.m. and 3:00 p.m. Copies of the
                                               options exchanges in connection with                    filing of such proposed rule change, the              filing also will be available for
                                               similar fee caps and is therefore                       Commission summarily may                              inspection and copying at the principal
                                               competitive.13 Finally, the Exchange                    temporarily suspend such rule change if               office of the Exchange. All comments
                                               believes the proposal to adopt the                      it appears to the Commission that such                received will be posted without change.
                                               service fee is equitable and not unfairly               action is necessary or appropriate in the             Persons submitting comments are
                                               discriminatory because it would                         public interest, for the protection of                cautioned that we do not redact or edit
                                               uniformly apply to all member firms                     investors, or otherwise in furtherance of             personal identifying information from
                                               engaged in manual proprietary trading                   the purposes of the Act. If the                       comment submissions. You should
                                               that have reached the Fee Cap.                          Commission takes such action, the                     submit only information that you wish
                                                                                                       Commission shall institute proceedings                to make available publicly. All
                                               B. Self-Regulatory Organization’s                       under Section 19(b)(2)(B) 18 of the Act to            submissions should refer to File
                                               Statement on Burden on Competition                      determine whether the proposed rule                   Number SR–NYSEARCA–2018–64 and
                                                  In accordance with Section 6(b)(8) of                change should be approved or                          should be submitted on or before
                                               the Act, the Exchange does not believe                  disapproved.                                          October 9, 2018.
                                               that the proposed rule change would                     IV. Solicitation of Comments                            For the Commission, by the Division of
                                               impose any burden on competition that                                                                         Trading and Markets, pursuant to delegated
                                                                                                         Interested persons are invited to                   authority.19
                                               is not necessary or appropriate in
                                                                                                       submit written data, views, and                       Eduardo A. Aleman,
                                               furtherance of the purposes of the Act.
                                                                                                       arguments concerning the foregoing,
                                                  The Exchange believes that the                                                                             Assistant Secretary.
                                                                                                       including whether the proposed rule
                                               proposed change would allow Floor                                                                             [FR Doc. 2018–20194 Filed 9–17–18; 8:45 am]
                                                                                                       change is consistent with the Act.
                                               Brokers to better compete for QCC                       Comments may be submitted by any of                   BILLING CODE 8011–01–P
                                               volumes as the credits are consistent                   the following methods:
                                               with those paid to participants on other
                                               exchanges.14 The Exchange also                          Electronic Comments
                                                                                                                                                             DEPARTMENT OF STATE
                                               believes that the proposed service fee is                  • Use the Commission’s internet
                                               likewise competitive as it would allow                  comment form (http://www.sec.gov/                     [Delegation of Authority No. 460]
                                               the Exchange to recoup certain costs                    rules/sro.shtml); or
                                               incurred in providing services to                          • Send an email to rule-comments@                  Delegation of Authority Payment of
                                               member firms and is consistent with                     sec.gov. Please include File Number SR–               Rewards
                                               similar such fees charged by other                      NYSEARCA–2018–64 on the subject
                                                                                                       line.                                                   By virtue of the authority vested in
                                               exchanges that offer a similar monthly                                                                        the Secretary of State by the laws of the
                                               fee cap.15                                              Paper Comments                                        United States, including 22 U.S.C.
                                                  The Exchange notes that it operates in                  • Send paper comments in triplicate                265l(a) and 22 U.S.C. 2708(e), I hereby
                                               a highly competitive market in which                    to Brent J. Fields, Secretary, Securities             delegate to the Assistant Secretary for
                                               market participants can readily favor                   and Exchange Commission, 100 F Street                 Diplomatic Security, to the extent
                                               competing venues. In such an                            NE, Washington, DC 20549–1090.                        authorized by law, authority to approve
                                               environment, the Exchange must                          All submissions should refer to File                  the payment of rewards of $100,000 or
                                               continually review, and consider                        Number SR–NYSEARCA–2018–64. This                      less as recommended by the relevant
                                               adjusting, its fees and credits to remain               file number should be included on the                 Interagency Rewards Committee.
                                               competitive with other exchanges. For                   subject line if email is used. To help the              Approval of such rewards will be in
                                               the reasons described above, the                        Commission process and review your                    accordance with 22 U.S.C. 2708 and
                                               Exchange believes that the proposed                     comments more efficiently, please use                 Volume 12 of the Foreign Affairs
                                               rule change reflects this competitive                   only one method. The Commission will                  Manual Subchapter 228.
                                               environment.                                            post all comments on the Commission’s                   Any authorities covered by this
                                                                                                       internet website (http://www.sec.gov/                 delegation may also be exercised by the
                                               C. Self-Regulatory Organization’s
                                                                                                       rules/sro.shtml). Copies of the                       Secretary, the Deputy Secretary, and the
                                               Statement on Comments on the
                                                                                                       submission, all subsequent                            Under Secretary for Management.
                                               Proposed Rule Change Received From
                                                                                                       amendments, all written statements                    Nothing in this delegation of authority
                                               Members, Participants, or Others
                                                                                                       with respect to the proposed rule                     shall be deemed to supersede any
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                                                 No written comments were solicited                    change that are filed with the                        existing delegation of authority, which
                                               or received with respect to the proposed                Commission, and all written                           shall remain in full force and effect
                                               rule change.                                            communications relating to the                        during and after this delegation.
                                                                                                                                                               This memorandum shall be published
                                                 13 See supra n. 11.                                     16 15 U.S.C. 78s(b)(3)(A).                          in the Federal Register.
                                                 14 See supra n. 10.                                     17 17 CFR 240.19b–4(f)(2).
                                                 15 See supra n. 11.                                     18 15 U.S.C. 78s(b)(2)(B).                            19 17   CFR 200.30–3(a)(12).



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Document Created: 2018-09-18 01:18:59
Document Modified: 2018-09-18 01:18:59
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation83 FR 47232 

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