[Federal Register Volume 86, Number 113 (Tuesday, June 15, 2021)]
[Notices]
[Pages 31754-31759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-12473]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92132; No. SR-NYSEArca-2021-51]


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

June 9, 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 June 4, 2021, NYSE Arca, Inc. (``NYSE Arca'' 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 modify the NYSE Arca Options Fee Schedule 
(``Fee Schedule'') regarding the Customer Posting Credit Tiers and the 
Customer Incentive Program. The Exchange proposes to implement the fee 
change effective June 4, 2021.\4\ The proposed rule change is available 
on the Exchange's website at www.nyse.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.
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    \4\ The Exchange originally filed to amend the Fee Schedule on 
June 1, 2021 (SR-NYSEArca-2021-48) and withdrew such filing on June 
4, 2021.
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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 amend the Fee Schedule to make 
modifications to the Customer Penny Posting Credit Tiers, Customer 
Incentive Program, and Customer Posting Credit Tiers in Non-Penny 
Issues.
    Currently, the Fee Schedule provides that OTP Holders and Firms 
(``OTP Holders'') can qualify for per contract credits applied to 
options transactions based on meeting certain minimum volume thresholds 
from Customer posting interest in Penny issues and Non-Penny issues and 
also qualify for an additional credit by meeting specified incentive 
volume levels. The Exchange proposes to make modifications to certain 
of its incentive programs as set forth below.
    The Exchange proposes to implement the fee change effective June 4, 
2021.
Customer Penny Posting Credit Tiers (the ``Penny Tiers'')
    The Exchange proposes to make the following modifications to the 
Penny Tiers, which provide per contract

[[Page 31755]]

credits on executions of Customer posted interest in Penny Issues. 
First, the Exchange proposes to modify one of the alternative minimum 
volume thresholds to achieve Penny Tier 4, eliminate Penny Tier 5, and 
modify both alternative minimum volume thresholds to achieve Penny Tier 
7 (which will also be renumbered to Tier 6). One of the two alternative 
means of achieving current Penny Tier 4 is for OTP Holders to execute 
at least 0.85% of TCADV from posted interest in Penny Issues, all 
account types. The Exchange is proposing to modify this alternative 
threshold to require at least 0.30% of TCADV from Customer posted 
interest in all issues, not including Professional Customer interest, 
plus executed ADV of 0.60% of U.S. Equity Market Share Posted and 
Executed on NYSE Arca Equity Market. The Exchange is not proposing to 
modify the Penny Tier 4 per contract credit of ($0.47).
    The Exchange's proposed changes to Penny Tier 4 would modify the 
qualification threshold for options order flow such that the qualifying 
volume would be restricted to posted Customer interest (not including 
Professional Customer interest) but would apply to posted Customer 
volume in all issues (not just Penny Issues). The proposed change 
excludes Professional Customer interest and is designed to attract 
Customer order flow, which provides benefits distinct from Professional 
Customer volume. Customer liquidity benefits all market participants by 
providing more trading opportunities, which attracts Market Makers. An 
increase in the activity of these market participants in turn 
facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants. 
The Exchange believes this proposed change would still encourage OTP 
Holders to achieve Tier 4 albeit with increased Customer posted 
interest. The Exchange's proposed change to Penny Tier 4 to add a 
cross-asset component is designed to incentivize OTP Holders to execute 
volume on the Exchange's equities platform which would make the 
Exchange a more attractive execution venue.
    Notwithstanding the proposed change to Penny Tier 4, the Exchange 
notes that OTP Holders are still eligible to qualify for the Penny Tier 
4 per contract credit of per contract credit [sic] of ($0.47) under the 
alternative (and unchanged) threshold, which requires that an OTP 
Holder execute at least 0.75% of TCADV from Customer posted interest in 
all issues. By continuing to provide such alternative methods to 
qualify for a Penny Tier, the Exchange believes the opportunities to 
qualify for credits is increased, which benefits all participants 
through increased volume to the Exchange.
    In connection with the proposed change to Penny Tier 4, the 
Exchange proposes to eliminate current Penny Tier 5, which provides a 
($0.48) per contract credit to OTP Holders that execute at least 0.22% 
of TCADV from Customer posted interest in all Issues, plus Executed ADV 
of 0.90% of U.S. Equity Market Share Posted and Executed on NYSE Arca 
Equity Market, or at least 0.75% of TCADV from Customer posted interest 
in all issues, plus at least 0.45% of TCADV from Market Maker Total 
Electronic Volume. The Exchange is eliminating Tier 5 because OTP 
Holders failed to consistently achieve this Tier and thus the incentive 
did not operate as intended. The Exchange notes that the proposed 
changes to Penny Tier 4 incorporates a cross-asset pricing component 
similar to the one being eliminated with existing Tier 5.
    The Exchange proposes to modify current Penny Tier 7 by increasing 
both of the minimum alternative volume thresholds to achieve the same 
($0.50) per contract credit. First, the Exchange is proposing to 
require that OTP Holders execute at least 1.30% (up from 1.00%) of 
TCADV from Customer posted interest in all issues, or execute at least 
1.00% (up from 0.80%) of TCADV from Customer posted interest in all 
issues, plus executed ADV of 0.30% of U.S. Equity Market Share Posted 
and Executed on NYSE Arca Equity Market.\5\
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    \5\ Regarding this alternative minimum threshold, the Exchange 
also proposes to make a non-substantive correction of a 
typographical error to eliminate an extraneous ``ADV,'' which would 
add clarity and transparency to the Fee Schedule.
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    The Exchange believes the proposed change to Penny Tier 7, which 
increases the minimum volume required, would not discourage OTP Holders 
from directing volume to the Exchange because the Penny Tier 7 per 
contract credit of ($0.50) is competitive with other options 
exchanges.\6\
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    \6\ See, e.g., BZX Options Fee Schedule, available at, https://markets.cboe.com/us/options/membership/fee_schedule/bzx/ (providing 
a $0.52 per contract credit to members that achieve Tier 4 of the 
Customer Penny Add Volume Tiers).
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    The Exchange proposes to renumber current Penny Tiers 6 and 7 as 
new Penny Tiers 5 and 6, respectively.
Customer Incentive Program (the ``Incentive Credits'')
    The Exchange also proposes modifications to the Incentive Credits, 
which enables OTP Holders to achieve one additional credit (to the 
Customer Posting Credits Tiers in Penny and Non-Penny Issues) if 
certain volume criteria and thresholds are met. The Exchange proposes 
to eliminate three of the existing Incentive Credits because such 
incentives failed to consistently incent OTP Holders to direct order 
flow to the Exchange. The Incentives Credits to be eliminated are:
     The additional ($0.01) per contract credit for OTP Holders 
that executed at least 0.50% of TCADV from Customer posted interest in 
all issues, plus, an ADV from Market Maker posted interest in Penny 
Issues equal to at least 0.30% of TCADV; and
     The additional ($0.03) per contract credit for OTP Holders 
that executed ADV of 0.90% of U.S. Equity Market Share Posted and 
Executed on NYSE Arca Equity Market; and
     The additional ($0.03) per contract credit for OTP Holders 
that executed at least 1.50% of TCADV from Customer posted interest in 
both Penny and non-Penny Issues, plus Executed ADV of 0.10% of U.S. 
Equity Market Share Posted and Executed on NYSE Arca Equity Market.
    The Exchange also proposes to add a new Incentive Credit which 
would provide an additional ($0.03) per contract credit for OTP Holders 
that executed at least 0.30% of TCADV from Customer posted interest in 
all issues, not including Professional Customer interest, plus executed 
ADV of 0.60% of U.S. Equity Market Share Posted and Executed on NYSE 
Arca Equity Market. The proposed new Incentive Credit excludes 
Professional Customer interest and is designed to attract Customer 
order flow, which provides benefits distinct from Professional Customer 
volume. Customer liquidity benefits all market participants by 
providing more trading opportunities, which attracts Market Makers. An 
increase in the activity of these market participants in turn 
facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants. 
The Exchange believes this proposed Incentive Credit would encourage 
OTP Holders to achieve this additional credit albeit with increased 
Customer posted interest. The Exchange's proposed inclusion of a cross-
asset component is designed to incentivize OTP Holders to execute 
volume on the Exchange's equities platform (in addition to the options 
platform) which would make the Exchange a more attractive execution 
venue.
Customer Posting Credit Tiers in Non-Penny Issues (the ``Non-Penny 
Tiers'')
    The Exchange proposes to modify the Non-Penny Tiers, which provide 
per

[[Page 31756]]

contract credits on executions of Customer posted interest in Non-Penny 
Issues, in several ways. First, the Exchange proposes to eliminate Tier 
B of the Non-Penny Tiers and the associated ($0.94) per contract 
credit, which Tier includes the same minimum volume requirement as the 
to-be-eliminated Penny Tier 5 (i.e., that an OTP Holder achieve at 
least 0.75% of TCADV from Customer posted interest in all issues, plus 
an ADV from Market Maker Total Electronic Volume equal to 0.45% of 
TCADV. [sic] Like the elimination of Penny Tier 5, the Exchange 
believes this change would remove an incentive that failed to 
consistently incent OTP Holders to direct order flow to the Exchange. 
In connection with this change, the Exchange proposes to rename the 
current Tier C as new Tier B and to offer a new Tier C.
    Proposed Tier C of the Non-Penny Tiers would offer a ($0.97) per 
contract credit to OTP Holders that execute at least 0.30% of TCADV 
from Customer posted interest in all issues, not including Professional 
Customer interest, plus executed ADV of 0.60% of U.S. Equity Market 
Share Posted and Executed on NYSE Arca Equity Market. Proposed Tier C, 
which excludes Professional Customer interest, is designed to attract 
Customer order flow, which provides benefits distinct from Professional 
Customer volume. Customer liquidity benefits all market participants by 
providing more trading opportunities, which attracts Market Makers. An 
increase in the activity of these market participants in turn 
facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants. 
The Exchange's proposed inclusion of a cross-asset component is 
designed to incentivize OTP Holders to execute volume on the Exchange's 
equities platform. The Exchange believes this proposed Tier C would 
encourage OTP Holders to achieve this Tier albeit with increased 
Customer posted interest and would also encourage increased equities 
trading, which would make the Exchange a more attractive execution 
venue.
    The Exchange also proposes to modify the minimum volume threshold 
required to achieve Tier F of the Non-Penny Tiers by offering a ($1.02) 
per contract credit to OTP Holders that execute at least 1.00%(up from 
0.80%) of TCADV from Customer posted interest in all issues, plus 
executed ADV of 0.30% ADV of U.S. Equity Market Share Posted and 
Executed on NYSE Arca Equity Market.\7\ The Exchange believes the 
proposed change to Non-Penny Tier F, which increases the minimum volume 
required, would not discourage OTP Holders from directing volume to the 
Exchange because the Non-Penny Tier F per contract credit of ($1.02) is 
competitive with other options exchanges.\8\
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    \7\ Regarding proposed Tier F, the Exchange also proposes to 
make a non-substantive correction of a typographical error to 
eliminate an extraneous ``ADV, which would add clarity and 
transparency to the Fee Schedule. The Exchange also proposes a non-
substantive change to Non-Penny Tier D to remove an extraneous 
comma, which would add clarity and transparency to the Fee Schedule.
    \8\ See, e.g., BZX Options Fee Schedule, supra note 6 (providing 
a $1.00 per contract credit to members that achieve Tier 2 of the 
Customer Non-Penny Add Volume Tiers).
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    The Exchange notes that an OTP Holder that qualifies for the new 
alternative volume threshold under Penny Tier 4 would also qualify for 
new Non-Penny Tier C as well as the new Incentive Credit as all three 
programs have the same minimum volume threshold. The Exchange notes 
that new Incentive Credit, which is a credit that is achieved in 
addition to credits associated with the Penny and Non-Penny Tiers, is 
designed to encourage OTP Holders that may already qualify based on the 
minimum options volume thresholds to also post and execute a certain 
amount of volume on the Exchange's equities trading platform, which 
would make the Exchange a more attractive execution venue for both 
options and equities.
    The Exchange cannot predict with certainty whether any OTP Holders 
will avail themselves of the proposed changes to the Penny Tiers, 
Incentive Credits or Non-Penny Tiers. At present, whether or when an 
OTP Holder would qualify for the enhanced credit varies month-to-month. 
Thus, the Exchange cannot predict with any certainty the number of OTP 
Holders that may qualify for the proposed new qualifications, but 
believes that OTP Holders would be encouraged to increase volume to 
take advantage of the credit tiers, and also to increase participation 
through posted interest on the NYSE Arca Equity Market.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\10\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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.'' \11\
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    \11\ 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.\12\ Therefore, currently no exchange possesses significant 
pricing power in the execution of multiply-listed equity & ETF options 
order flow. More specifically, in April 2021, the Exchange had less 
than 10% market share of executed volume of multiply-listed equity & 
ETF options trades.\13\
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    \12\ 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.
    \13\ Based on OCC data for monthly volume of equity-based 
options and monthly volume of ETF-based options, see id., the 
Exchange's market share in equity-based options increased from 7.46% 
for the month of April 2020 to 9.28% for the month of April 2021.
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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. In response to this 
competitive environment, the Exchange has established incentives, such 
as the Penny Tiers, the Incentive Credits, and the Non-Penny Tiers.
    The Exchange believes that the proposed modification to the Penny 
Tiers, including eliminating Penny Tier

[[Page 31757]]

5 and modifying the minimum volume thresholds and qualifying criteria 
for Penny Tier 4 and current Penny Tier 7 (new Tier 6) are reasonably 
designed to continue to incent OTP Holders to increase the amount of 
Customer interest sent to the Exchange, especially posted interest. The 
proposed changes to the Penny Tiers exclude Professional Customer 
interest and are reasonably designed to attract Customer order flow, 
which is unique and provides benefits distinct from Professional 
Customer volume. An increase in Customer volume would create more 
trading opportunities, which, in turn attracts Market Makers. A 
resulting increase in Market-Maker activity may facilitate tighter 
spreads, which may lead to an additional increase of order flow from 
other market participants, further contributing to a deeper, more 
liquid market to the benefit of all market participants by creating a 
more robust and well-balanced market ecosystem.
    As noted above, OTP Holders are still eligible to qualify for Penny 
Credit Tier 4 under the existing alternative (unchanged) qualification 
basis. By continuing to provide such alternative methods to qualify for 
a Penny Tier, the Exchange believes the opportunities to qualify for 
credits is increased, which benefits all participants through increased 
volume to the Exchange.
    The proposed addition of the cross-asset component to Penny Tier 4 
is designed to incent OTP Holders (and their affiliates) to transact 
more options and equities volume on the Exchange, which may result in 
an increase of volume and liquidity on both its options and equites 
platforms, which would benefit all market participants by providing 
more trading opportunities and tighter spreads, and may lead to a 
corresponding increase in order flow from other market participants.
    The proposed changes to eliminate certain Incentive Credits and 
Non-Penny Tier B are reasonably designed to eliminate from the Fee 
Schedule incentives that did not consistently encourage OTP Holders to 
direct order flow to the Exchange. The proposed new Incentive Credit 
and new Non-Penny Tier C, which each include a cross-asset component, 
are reasonably designed to encourage OTP Holders (and their affiliates) 
to transact more options and equities volume on the Exchange, which 
would benefit all market participants by providing more trading 
opportunities and tighter spreads, and may lead to a corresponding 
increase in order flow from other market participants.
    The Exchange believes that the proposed modification to the Non-
Penny Tier F is reasonably designed to continue to incent OTP Holders 
to increase the amount and type of Customer interest sent to the 
Exchange, especially posted interest. As noted above, an increase in 
posted Customer interest benefits all market participants.
    The proposed new Incentive Credit has a minimum volume threshold 
identical to proposed Penny Tier 4 and Non-Penny Tier C and similarly 
excludes Professional Customer interest. This proposed Incentive Credit 
is reasonably designed to attract Customer order flow, which provides 
benefits distinct from Professional Customer volume. Customer liquidity 
benefits all market participants by providing more trading 
opportunities, which attracts Market Makers. An increase in the 
activity of these market participants in turn facilitates tighter 
spreads, which may cause an additional corresponding increase in order 
flow from other market participants. The Exchange believes that this 
proposed Incentive Credit would encourage OTP Holders to achieve this 
additional credit albeit with increased Customer posted interest. The 
Exchange's proposed inclusion of a cross-asset component in the new 
Incentive Credit is designed to incentivize OTP Holders to execute 
volume on the Exchange's equities platform (in addition to the options 
platform) which would make the Exchange a more attractive execution 
venue.
    To the extent the proposed rule change continues to attract greater 
volume and liquidity by encouraging OTP Holders (and their affiliates) 
to increase their options and equities volume on the Exchange in an 
effort to achieve higher credits through the Penny and Non-Penny Tiers 
(as well as one of the additional Incentive Credits), the Exchange 
believes the proposed change would 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 increase the depth of its market and improve its 
market share relative to its competitors.
    The proposed non-substantive changes (see supra notes 5 and 7) are 
reasonably designed to add clarity and transparency to the Fee Schedule 
making it easier to navigate and comprehend.
The Proposed Rule Change is an Equitable Allocation of Credits and Fees
    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 OTP Holders can opt 
to avail themselves of the credits or not. Moreover, the proposal is 
designed to incent OTP Holders to aggregate all Customer posting 
interest at the Exchange as a primary execution venue and to attract 
more posting interest on the NYSE Arca Equity Market. To the extent 
that the proposed change attracts more Customer posting interest to the 
Exchange and more posting interest on the NYSE Arca Equity Market, this 
increased order flow would continue to make the Exchange a more 
competitive venue for, among other things, order execution on both 
options and cash equities. Thus, the Exchange believes the proposed 
rule change would 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 Proposed Rule Change Is Not Unfairly Discriminatory
    The Exchange believes it is not unfairly discriminatory to modify 
the Penny Tiers, the Incentive Credits, and the Non-Penny Tiers because 
the proposed modifications would be available to all similarly-situated 
market participants on an equal and non-discriminatory basis.
    The proposal is based on the amount and type of business transacted 
on the Exchange and OTP Holders are not obligated to try to achieve the 
enhanced qualifications, nor are they obligated to execute posted 
interest. Rather, the proposal is designed to encourage OTP Holders to 
utilize the Exchange as a primary trading venue for Customer posted 
interest (if they have not done so previously) and more posting 
interest on the NYSE Arca Equity Market. To the extent that the 
proposed change attracts more Customer interest, including posted 
interest, to the Exchange, this increased order flow would continue to 
make the Exchange a more competitive venue for, among other things, 
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, attract more order flow to the Exchange 
thereby improving market-wide quality and price discovery. The 
resulting increased volume and liquidity would 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

[[Page 31758]]

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 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 change furthers 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.'' \14\
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    \14\ See Reg NMS Adopting Release, supra note 11, at 37499.
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    Intramarket Competition. The proposed change is designed to attract 
additional order flow (particularly Customer posted interest and posted 
equity interest) to the Exchange. The Exchange believes that the 
proposed modification to the Penny Tiers, the Incentive Credits, and 
the Non-Penny Tiers would incent OTP Holders to direct their Customer 
order flow and their posted equity order flow to the Exchange. Greater 
liquidity benefits all market participants on the Exchange and 
increased Customer order flow and posted equity order flow would 
increase opportunities for execution of other trading interest. The 
proposed modifications to the Penny Tiers, the Incentive Credits, and 
the Non-Penny Tiers would be available to all similarly-situated market 
participants that execute Customer posted interest (excluding 
Professional Customer interest), and, as such, the proposed change 
would not impose a disparate burden on competition among market 
participants 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 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 has more than 16% of the market share of executed volume of 
multiply-listed equity and ETF options trades.\15\ Therefore, currently 
no exchange possesses significant pricing power in the execution of 
multiply-listed equity & ETF options order flow. More specifically, in 
April 2021, the Exchange had less than 10% market share of executed 
volume of multiply-listed equity & ETF options trades.\16\
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    \15\ See supra note 12.
    \16\ Based on OCC data for monthly volume of equity-based 
options and monthly volume of ETF-based options, see id., the 
Exchange's market share in equity-based options increased from 7.46% 
for the month of April 2020 to 9.28% for the month of April 2021.
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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 that is competitive and designed to incent OTP 
Holders to direct trading interest (particularly Customer posted 
interest and posted equity interest) to the Exchange, to provide 
liquidity and to attract order flow.\17\ 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.
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    \17\ See supra notes 6 and 8.
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    The Exchange believes that the proposed change could promote 
competition between the Exchange and other execution venues, including 
those that currently offer similar Customer posting credits, by 
encouraging additional orders to be sent to the Exchange for execution. 
The Exchange also believes that the proposed change is designed to 
provide the public and investors with a Fee Schedule that is clear and 
consistent, thereby reducing burdens on the marketplace and 
facilitating investor protection.

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) \18\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \19\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 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) \20\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \20\ 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-NYSEArca-2021-51 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-NYSEArca-2021-51. 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

[[Page 31759]]

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-2021-51, and should 
be submitted on or before July 6, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-12473 Filed 6-14-21; 8:45 am]
BILLING CODE 8011-01-P


