[Federal Register Volume 86, Number 26 (Wednesday, February 10, 2021)]
[Notices]
[Pages 8930-8933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02714]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91065; File No. SR-NYSEAMER-2021-07]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the NYSE American Options Fee Schedule

February 4, 2021.
    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 February 1, 2021, NYSE American LLC (``NYSE American'' 
or the ``Exchange'') 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 amend the NYSE American Options Fee 
Schedule (``Fee Schedule'') to introduce a new credit applicable to 
Customer Electronic executions. The Exchange proposes to implement the 
fee change effective February 1, 2021. 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.

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.

[[Page 8931]]

The Exchange has prepared summaries, set forth in sections A, B, and C 
below, of the most significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to modify the Fee Schedule to add a 
new credit for Customer Electronic Simple and Complex executions based 
on an ATP Holder's achievement of certain volume thresholds. 
Specifically, an ATP Holder that executes the requisite volume in 
Complex CUBE Auctions, Customer Electronic executions, and Professional 
(as defined in Section I.H. of the Fee Schedule) Electronic executions 
will earn a $0.10 per contract credit on Customer Electronic 
executions, excluding CUBE Auctions, QCC Transactions, and orders 
routed to another exchange. The Exchange proposes to introduce this 
pricing on February 1, 2021.
    Section I.H. of the Fee Schedule currently provides incentives for 
ATP Holders that increase their Electronic volume in the Professional 
Customer, Broker Dealer, Non-NYSE American Options Market Maker, and 
Firm ranges (collectively, the ``Professional'' range).
    The Exchange proposes to modify Section I.H. to provide ATP Holders 
with a new credit of $0.10 per contract on Customer Electronic Simple 
and Complex executions (excluding CUBE Auctions, QCC Transactions, and 
orders routed to another exchange), provided that each of three monthly 
volume qualifications are met: (a) 15,000 Contracts ADV from Initiating 
CUBE Orders in Complex CUBE Auctions; (b) Customer Electronic 
executions of 0.05% of TCADV, excluding CUBE Auctions, QCC 
Transactions, and volume from orders routed to another exchange; and 
(c) Professional Electronic executions of 0.03% of TCADV.\4\ In 
calculating an OFP's Electronic volume for purposes of this credit, the 
Exchange will include the activity of either (i) Affiliates of the OFP, 
such as when an OFP has an Affiliated NYSE American Options Market 
Making firm, or (ii) an Appointed MM of such OFP.
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    \4\ See proposed Fee Schedule, Section I.H.
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    The Exchange believes the proposed credit will continue to incent 
ATP Holders to direct order flow to the Exchange and also encourage ATP 
Holders to engage in a variety of transactions on the Exchange, thereby 
promoting market depth, facilitating tighter spreads, and enhancing 
price discovery to the benefit of all market participants.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\6\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposed Rule Change Is Reasonable
    The Exchange operates in a highly competitive market. The 
Commission has repeatedly expressed its preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. In Regulation NMS, the Commission 
highlighted the importance of market forces in determining prices and 
SRO revenues and, also, recognized that current regulation of the 
market system ``has been remarkably successful in promoting market 
competition in its broader forms that are most important to investors 
and listed companies.'' \7\
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    \7\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04) (``Reg NMS 
Adopting Release'').
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    There are currently 16 registered options exchanges competing for 
order flow. Based on publicly-available information, and excluding 
index-based options, no single exchange has more than 16% of the market 
share of executed volume of multiply-listed equity and ETF options 
trades.\8\ Therefore, currently no exchange possesses significant 
pricing power in the execution of multiply-listed equity and ETF 
options order flow. More specifically, in November 2020, the Exchange 
had less than 10% market share of executed volume of multiply-listed 
equity and ETF options trades.\9\
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    \8\ The OCC publishes options and futures volume in a variety of 
formats, including daily and monthly volume by exchange, available 
here: https://www.theocc.com/Market-Data/Market-Data-Reports/Volume-and-Open-Interest/Monthly-Weekly-Volume-Statistics.
    \9\ Based on a compilation of OCC data for monthly volume of 
equity-based options and monthly volume of ETF-based options, see 
id., the Exchange's market share in multiply-listed equity and ETF 
options increased from 8.06% for the month of November 2019 to 9.09% 
for the month of November 2020.
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow, or discontinue or reduce use of certain categories of 
products, in response to fee changes. Accordingly, competitive forces 
constrain options exchange transaction fees. Stated otherwise, changes 
to exchange transaction fees and rebates can have a direct effect on 
the ability of an exchange to compete for order flow.
    The proposed rule change is designed to continue to incent ATP 
Holders to direct liquidity to the Exchange in a variety of forms and 
from a variety of sources, thereby promoting market depth, price 
discovery, and price improvement and enhancing order execution 
opportunities for market participants. In particular, the Exchange 
believes it is reasonable to provide ATP Holders with a credit for 
achieving certain volume goals in different types of executions, 
consistent with credits offered through a similarly-structured program 
on a competing options exchange.\10\
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    \10\ See, e.g., Cboe Exchange Inc. Fee Schedule, Volume 
Incentive Program, available at: https://cdn.cboe.com/resources/membership/Cboe_FeeSchedule.pdf (providing comparable per contract 
credits for Customer orders based on volume from a variety of 
executions, including auction volume, volume from various account 
types, and volume from both simple and complex executions).
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    The Exchange believes that the proposed credit is reasonably 
designed to encourage ATP Holders to execute a variety of orders on the 
Exchange and that having multiple volume criteria to qualify for the 
proposed credit should encourage greater use of the Exchange by all ATP 
Holders, which may lead to greater opportunities to trade--and for 
price improvement--for all participants.
    Further, the Exchange believes the proposed new credit would 
continue to attract more volume and liquidity to the Exchange generally 
and would therefore benefit all market participants through increased 
opportunities to trade at potentially improved prices, as well as by 
enhancing price discovery.
    Finally, to the extent the proposed fees and credits encourage 
greater volume and liquidity, the Exchange believes the proposed change 
would continue to improve the Exchange's overall competitiveness and 
strengthen its market quality for all market participants. In the 
backdrop of the competitive environment in which the Exchange operates, 
the proposed rule change is a reasonable attempt by the Exchange to 
maintain its market share relative to its competitors.

[[Page 8932]]

The Proposed Rule Change Is an Equitable Allocation of Fees and Credits
    The Exchange believes the proposed rule change is an equitable 
allocation of its fees and credits. The proposal is based on the amount 
and type of business transacted on the Exchange and ATP Holders can opt 
to avail themselves of the incentive or not. Moreover, the proposal is 
designed to encourage ATP Holders and their affiliated or appointed 
parties to aggregate their executions at the Exchange as a primary 
execution venue. To the extent that the proposed change continues to 
attract more executions to the Exchange, this increased order flow 
would continue to make the Exchange a more competitive venue for order 
execution. Thus, the Exchange believes the proposed rule change would 
improve market quality for all market participants on the Exchange and, 
as a consequence, continue to attract more order flow to the Exchange 
thereby improving market-wide quality and price discovery.
The Proposed Rule Change Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory because the proposed modifications would be available to 
all similarly-situated market participants on an equal and non-
discriminatory basis. The Exchange's fees and credits are designed to 
continue to encourage greater use of the Exchange, which may lead to 
greater opportunities to trade--and for price improvement--for all 
participants.
    The proposal is based on the amount and type of business transacted 
on the Exchange and ATP Holders are not obligated to try to achieve the 
incentive. Rather, the proposal is designed to continue to encourage 
participants to utilize the Exchange as a primary trading venue (if 
they have not done so previously) or increase Electronic volume sent to 
the Exchange. To the extent that the proposed change continues to 
attract more executions--and executions of varying types--to the 
Exchange, this increased order flow would continue to make the Exchange 
a more competitive venue for order execution. Thus, the Exchange 
believes the proposed rule change would continue to improve market 
quality for all market participants on the Exchange and, as a 
consequence, attract more order flow to the Exchange, thereby improving 
market-wide quality and price discovery. The resulting volume and 
liquidity would continue to provide more trading opportunities and 
tighter spreads to all market participants and thus would promote just 
and equitable principles of trade, remove impediments to and perfect 
the mechanism of a free and open market and a national market system 
and, in general, to protect investors and the public interest.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.

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. Instead, as discussed above, the Exchange believes 
that the proposed changes would continue to encourage the submission of 
additional liquidity to a public exchange, thereby promoting market 
depth, price discovery and transparency and enhancing order execution 
opportunities for all market participants. As a result, the Exchange 
believes that the proposed changes further the Commission's goal in 
adopting Regulation NMS of fostering integrated competition among 
orders, which promotes ``more efficient pricing of individual stocks 
for all types of orders, large and small.'' \11\
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    \11\ See Reg NMS Adopting Release, supra note 7, at 37499.
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    Intramarket Competition. The proposed change is designed to 
continue to attract increased and diverse order flow to the Exchange by 
offering competitive credits based on increased volumes on the 
Exchange, which may increase the volumes of contracts traded on the 
Exchange. Specifically, the Exchange believes that the proposed rule 
change, by offering an additional credit applicable to Customer 
Electronic executions, will incent ATP Holders to direct order flow to 
the Exchange and participate in a variety of types of executions on the 
Exchange to meet the proposed thresholds to qualify for the credit. To 
the extent that this purpose is achieved, all of the Exchange's market 
participants should benefit from the continued market liquidity. 
Enhanced market quality and increased transaction volume that results 
from the increase in order flow directed to the Exchange will benefit 
all market participants and improve competition on the Exchange.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily favor one 
of the 16 competing option exchanges if they deem fee levels at a 
particular venue to be excessive. In such an environment, the Exchange 
must continually adjust its fees and credits to remain competitive with 
other exchanges and to attract order flow to the Exchange. Based on 
publicly-available information, and excluding index-based options, no 
single exchange currently has more than 16% of the market share of 
executed volume of multiply-listed equity and ETF options trades.\12\ 
Therefore, no exchange currently possesses significant pricing power in 
the execution of multiply-listed equity and ETF options order flow. 
More specifically, in November 2020, the Exchange had less than 10% 
market share of executed volume of multiply-listed equity and ETF 
options trades.\13\
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    \12\ See supra note 8.
    \13\ Based on OCC data, supra note 9, the Exchange's market 
share in multiply-listed equity and ETF options increased from 8.06% 
for the month of November 2019 to 9.09% for the month of November 
2020.
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    The Exchange believes that the proposed rule change reflects this 
competitive environment because it modifies the Exchange's fees and 
credits in a manner designed to encourage ATP Holders to direct trading 
interest to the Exchange, to provide liquidity and to attract order 
flow. Specifically, the Exchange believes that the proposed rule change 
will encourage ATP Holders to direct increased Electronic volume to the 
Exchange, thereby increasing the number of executions (and executions 
of varying types) on the Exchange and continuing to make the Exchange a 
more competitive venue for order execution. To the extent that this 
purpose is achieved, all the Exchange's market participants should 
benefit from the improved market quality and increased opportunities 
for price improvement.
    The Exchange believes that the proposed changes could promote 
competition between the Exchange and other execution venues by 
encouraging additional orders to be sent to the Exchange for execution.

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

[[Page 8933]]

19(b)(3)(A) \14\ of the Act and subparagraph (f)(2) of Rule 19b-4 \15\ 
thereunder, because it establishes a due, fee, or other charge imposed 
by the Exchange.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEAMER-2021-07 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEAMER-2021-07. 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-NYSEAMER-2021-07, and should be 
submitted on or before March 3, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-02714 Filed 2-9-21; 8:45 am]
BILLING CODE 8011-01-P


