
[Federal Register Volume 79, Number 10 (Wednesday, January 15, 2014)]
[Notices]
[Pages 2723-2725]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-00583]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71275; File No. SR-NYSEMKT-2014-04]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending the NYSE Amex 
Options Fee Schedule for Firms To Increase the Transaction Fee for 
Certain Proprietary Electronic Executions of Standard Option Contracts 
That Fall Within the First of the Volume-Based Tiers for Certain 
Proprietary Electronic Executions of Standard Option Contracts

 January 9, 2014.
    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 January 8, 2014, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \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 Amex Options Fee Schedule 
(``Fee Schedule'') for Firms to increase the transaction fee for 
certain proprietary electronic executions of standard option contracts 
that fall within the first of the volume-based tiers for certain 
proprietary electronic executions of standard option contracts. Firms 
that achieve subsequent volume tiers will be charged a lower per 
contract rate for all of their proprietary electronic executions of 
standard option contracts that month. The proposed change will be 
operative on January 8, 2014.\4\ The text of the proposed rule change 
is available on the Exchange's Web site at www.nyse.com, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.
---------------------------------------------------------------------------

    \4\ The proposed filing replaces SR-NYSEMKT-2013-108, which 
proposed the same fee changes effective January 2, 2014 (the 
``January 2nd Fee Changes''), and which the Exchange shall withdraw. 
Upon the withdrawal of SR-NYSEMKT-2013-108, the January 2nd Fee 
Changes will be rendered ineffective, absent the present filing, 
which renews the Exchange's proposal to amend its fee schedule.
---------------------------------------------------------------------------

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 Exchange proposes to amend the Fee Schedule for Firms to 
increase the transaction fee for certain proprietary electronic 
executions of standard option contracts that fall within the first of 
the volume-based tiers for certain proprietary electronic executions of 
standard option contracts. Firms that achieve subsequent volume tiers 
will be charged a lower per contract rate for all of their proprietary 
electronic executions of standard option contracts

[[Page 2724]]

that month. The proposed change will be operative on January 8, 2014.
    Specifically, the Exchange proposes to increase the per contract 
transaction fee for proprietary electronically executed orders for 
Firms from $.25 to $.32 per contract, for volumes that fall under the 
first of the three volume tiers, for volumes less than .21% of Total 
Industry Customer equity and exchange-traded fund (``ETF'') option 
average daily volume (``ADV''). The Exchange notes that the proposed 
fee is within the range of Firm fees presently assessed in the 
industry, which range from $.20 per contract for high volume (over 
350,000 contracts per month) Firms in Multiply Listed Symbols on NASDAQ 
OMX PHLX (``PHLX'') \5\ to $.89 per contract to take liquidity on The 
NASDAQ Options Market (``NOM'') for non-Penny Pilot securities.\6\
---------------------------------------------------------------------------

    \5\ See PHLX Fee Schedule, available at http://www.nasdaqtrader.com/Micro.aspx?id=PHLXPricing
    \6\ See NOM Fee Schedule, available at http://www.nasdaqtrader.com/Micro.aspx?id=OptionsPricing
---------------------------------------------------------------------------

    At present and after the proposed change, upon achieving a higher 
volume tier, a Firm will automatically become eligible for a lower per 
contract rate on all of its electronic executions in that month. The 
existing volume-based tiers are based on a percentage of the Total 
Industry Customer equity and ETF option ADV.\7\ The existing tiers are 
as follows and the only change will be the rate per contract associated 
with the first tier for volumes less than .21% of Total Industry 
Customer equity and ETF option ADV will have a rate of $.32 per 
contract instead of $.25 per contract which is indicated below with 
[brackets for deletions] and italics for additions:
---------------------------------------------------------------------------

    \7\ Total Industry Customer equity and ETF option ADV will be 
that which is reported for the month by The Options Clearing 
Corporation (``OCC'') in the month in which the discounted rate may 
apply. For example, January 2014 Total Industry Customer equity and 
ETF option ADV will be used in determining what, if any, discount a 
Firm may be eligible for on its electronic Firm transactions based 
on the amount of electronic Firm volume it executes in January 2014 
relative to Total Industry Customer equity and ETF option ADV. Total 
Industry Customer equity and ETF option ADV comprises those equity 
and ETF contracts that clear in the customer account type at OCC and 
does not include contracts that clear in either the firm or market 
maker account type at OCC or contracts overlying a security other 
than an equity or ETF security.

------------------------------------------------------------------------
                                                       Rate per contract
                                                         (retroactive to
                                                           the first
  Tiers for firm proprietary electronic transactions    contract  traded
                                                          during  the
                                                             month)
------------------------------------------------------------------------
Less than .21% of Total Industry Customer equity and         [$.25] $.32
 ETF option ADV......................................
.21% to .32% of Total Industry Customer equity and                   .20
 ETF option ADV......................................
Greater than .32% of Total Industry Customer equity                  .17
 and ETF option ADV..................................
------------------------------------------------------------------------

    In calculating the amount of Firm electronic volume that is counted 
in the volume tier necessary to achieve the lower per contract rate, 
the Exchange will continue to exclude qualified contingent cross 
(``QCC'') volume because QCC volumes are already eligible for a 
separate rebate.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) \8\ of the Act, in general, and 
Section 6(b)(4) and (5) \9\ of the Act, in particular, in that it is 
designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges among its members and other persons using its 
facilities and does not unfairly discriminate between customers, 
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed fees are reasonable because 
they are within the range of similar fees on other exchanges.\10\ They 
also are reasonable because they are designed to attract higher volumes 
of Firm proprietary electronic equity and ETF volume to the Exchange, 
which will benefit all participants by offering greater price 
discovery, increased transparency, and an increased opportunity to 
trade on the Exchange. Encouraging Firms to send higher volumes of 
orders to the Exchange will contribute to the Exchange's depth of book 
as well as to the top of book liquidity. As noted by the Exchange when 
it adopted volume-based tiers for certain proprietary electronic 
executions, the proposed fee increase for lower volume Firms is 
reasonable and equitable because it will reasonably ensure that the 
Exchange will derive sufficient revenue to continue to fund the fee 
reductions at the higher volumes for the benefit of all 
participants.\11\ Moreover, the Exchange believes that the proposed 
volume-based fees are equitable and not unfairly discriminatory because 
they will apply to all Firms that execute proprietary electronic equity 
and ETF orders on the Exchange at each tier on an equal and non-
discriminatory basis. The sole basis for fee differentiation among the 
tiers will be participant volume on the Exchange.
---------------------------------------------------------------------------

    \10\ See supra nn.5-6.
    \11\ See Securities Exchange Act Release No. 34-69488 (May 1, 
2013), 78 FR 88 [sic] (May 7, 2013) (SR-NYSEMKT-2013-38).
---------------------------------------------------------------------------

    The Exchange believes that excluding the volumes attributable to 
QCC executions is reasonable, equitable, and not unfairly 
discriminatory. QCC volumes are already counted toward a separate 
rebate that the Exchange pays to Floor Brokers who transact QCC 
trades.\12\ If the Exchange were to count QCC volumes toward Firm 
electronic volumes for discounted rates, the Exchange would have to 
raise fees for all other participants. The Exchange does not believe 
such a result would be reasonable or equitable. Because all Firms will 
be treated equally with respect to QCC volume, the proposal to exclude 
this volume from the tiers is not inequitable or unfairly 
discriminatory.
---------------------------------------------------------------------------

    \12\ See Securities Exchange Act Release No. 65472 (Oct. 3, 
2011), 76 FR 62887 (Oct. 11, 2011) (SR-NYSEAmex-2011-72).
---------------------------------------------------------------------------

    The Exchange further notes that non-Firm market participants pay 
substantially more for the ability to trade on the Exchange, and as 
such, the proposed amount of the increase for Firms that contribute 
relatively lower levels of volume is reasonable. For example, Market 
Makers have much higher fixed monthly costs as compared to Firms. A 
Market Maker seeking to stream quotes in the entire universe of names 
traded on the Exchange must pay $26,000 per month in Amex Trading 
Permit (``ATP'') fees. In addition, a Market Maker acting as a 
Specialist, e-Specialist, or Directed Order Market Maker incurs monthly 
Rights Fees that range from $75 per option to $1,500 per option along 
with Premium Product Fees that can be as high as $7,000 per month. 
Firms pay only $1,000 per month in ATP fees and for that low monthly 
cost are able to send orders in all issues traded on the Exchange. 
Other participants have a much higher per contract cost to trade on the 
Exchange, such as Non-NYSE Amex Options Market Makers, who pay $.43 per 
contract to transact on the Exchange electronically.
    Firms also are free to change the manner in which they access the 
Exchange. Firms may apply to become Market Makers to transact on a 
proprietary basis as Market Makers. In light of the ability to access 
the Exchange in a variety of ways, each of which is priced differently, 
Firms and other participants may access the

[[Page 2725]]

Exchange in a manner that makes the most economic sense for them.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes that 
the proposed change will encourage Firms to send higher volumes of 
order flow to the Exchange to qualify for the lower transaction fees. 
The Exchange notes that it operates in a highly competitive market in 
which market participants can readily favor competing venues if they 
deem fee levels at a particular venue to be excessive. 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) \13\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \14\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \15\ 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 rule-comments@sec.gov. Please include 
File Number SR-NYSEMKT-2014-04 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2014-04. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room at 100 F Street NE., 
Washington, DC 20549-1090 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; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSEMKT-2014-04, and should be submitted on or before February 5, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-00583 Filed 1-14-14; 8:45 am]
BILLING CODE 8011-01-P


