[Federal Register Volume 85, Number 171 (Wednesday, September 2, 2020)]
[Notices]
[Pages 54611-54613]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19326]
[[Page 54611]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89692; File No. SR-NYSEAMER-2020-65]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Change To Modify the
NYSE American Options Fee Schedule
August 27, 2020.
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 26, 2020, 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 modify the NYSE American Options Fee
Schedule (``Fee Schedule'') to waive certain Floor-based fixed fees for
September 2020. The Exchange proposes to implement the fee change
effective August 26, 2020. The proposed 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. 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 waive
certain Floor-based fixed fees for September 2020 for market
participants that have been unable to resume their Floor operations to
a certain capacity level, as discussed below. The Exchange proposes to
implement the fee change effective August 26, 2020.
On March 18, 2020, the Exchange announced that it would temporarily
close the Trading Floor, effective Monday, March 23, 2020, as a
precautionary measure to prevent the potential spread of COVID-19.
Following the temporary closure of the Trading Floor, the Exchange
temporarily modified certain fees for April, May and June 2020 (the
``fee waiver'').\4\ Although the Trading Floor partially reopened on
May 26, 2020 and Floor-based open outcry activity is supported, certain
participants have been unable to resume pre-Floor closure levels of
operations. As a result, the Exchange extended the fee waiver through
July, and later August, 2020, but only for Floor Broker firms that were
unable to operate at more than 50% of their March 2020 on-Floor
staffing levels and for Market Maker firms that have vacant or
``unmanned'' Podia for the entire month due to COVID-19 related
considerations (the ``Qualifying Firms'').\5\ Because the Trading Floor
will continue to operate with reduced capacity, the Exchange proposes
to extend the August fee waiver for Qualifying Firms through September
2020.
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\4\ See Securities Exchange Act Release Nos. 88595 (April 8,
2020), 85 FR 20737 (April 14, 2020) (SR-NYSEAMER-2020-25) (waiving
Floor-based fixed fees); 88840 (May 8, 2020), 85 FR 28992 (May 14,
2020) (SR-NYSEAMER-2020-37) (extending April 2020 fee changes
through May 2020); and 89049 (June 11, 2020), 85 FR 36649 (June 17,
2020) (SR-NYSEAMER-2020-44) (extending April and May fee changes
through June 2020). See also Fee Schedule, Section III. Monthly
Trading Permit, Rights, Floor Access and Premium Product Fees, and
IV. Monthly Floor Communication, Connectivity, Equipment and Booth
or Podia Fees.
\5\ See Securities Exchange Act Release Nos. 89241 (July 7,
2020), 85 FR 42034 (July 13, 2020) (SR-NYSEAMER-2020-47); 89482
(August 5, 2020), 85 FR 48577 (August 11, 2020) (SR-NYSEAMER-2020-
55) (the ``August fee waiver''). See also Fee Schedule, Section
III., Monthly Trading Permit, Rights, Floor Access and Premium
Product Fees, and IV. Monthly Floor Communication, Connectivity,
Equipment and Booth or Podia Fees.
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Specifically, the proposed fee waiver covers the following fixed
fees for Qualifying Firms, which relate directly to Floor operations,
are charged only to Floor participants and do not apply to participants
that conduct business off-Floor:
Floor Access Fee;
Floor Broker Handheld
Transport Charges
Floor Market Maker Podia;
Booth Premises; and
Wire Services.\6\
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\6\ See proposed Fee Schedule, Section III., Monthly Trading
Permit, Rights, Floor Access and Premium Product Fees, and IV.
Monthly Floor Communication, Connectivity, Equipment and Booth or
Podia Fees.
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Like the August fee waiver, the proposed fee change is designed to
reduce monthly costs for Qualifying Firms whose operations continue to
be disrupted, despite the fact that the Trading Floor has partially
reopened. In reducing this monthly financial burden, the proposed
change would allow Qualifying Firms to reallocate funds to assist with
the cost of shifting and maintaining their prior fully-staffed on-Floor
operations to off-Floor and recoup losses as a result of the partial
reopening of the Floor. Absent this change, such participants may
experience an unexpected increase in the cost of doing business on the
Exchange.\7\ The Exchange believes that all Qualifying Firms would
benefit from this proposed fee change.
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\7\ The Exchange will refund participants of the Floor Broker
Prepayment Program for any prepaid September 2020 fees that are
waived. See proposed Fee Schedule, Section III.E.1 (providing that
``the Exchange will refund certain of the prepaid Eligible Fixed
costs that were waived for July through September 2020 for
Qualifying Firms, as defined, and set forth in, Sections III.B and
IV'').
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\8\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\9\ 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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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4) and (5).
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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
[[Page 54612]]
broader forms that are most important to investors and listed
companies.'' \10\
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\10\ 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.\11\ Therefore, currently no exchange possesses significant
pricing power in the execution of multiply-listed equity & ETF options
order flow. More specifically, in June 2020, the Exchange had less than
10% market share of executed volume of multiply-listed equity & ETF
options trades.\12\
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\11\ 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/volume/default.jsp.
\12\ Based on OCC data, see id., the Exchange's market share in
equity-based options increased slightly from 8.20% for the month of
June 2019 to 8.32% for the month of June 2020.
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This proposed fee change is reasonable, equitable, and not unfairly
discriminatory because it would reduce monthly costs for Qualifying
Firms whose operations have been disrupted despite the fact that the
Trading Floor has partially reopened because of the social distancing
requirements and/or other health concerns related to resuming operation
on the Floor. In reducing this monthly financial burden, the proposed
change would allow Qualifying Firms to reallocate funds to assist with
the cost of shifting and maintaining their prior fully-staffed on-Floor
operations to off-Floor and recoup losses as a result of the partial
reopening. Absent this change, such participants may experience an
unexpected increase in the cost of doing business on the Exchange.
The Exchange believes the proposed rule change is an equitable
allocation of its fees and credits as it merely continues the August
fee waiver, which affects fees charged only to Floor participants and
does not apply to participants that conduct business off-Floor. The
Exchange believes it is an equitable allocation of fees and credits to
extend this fee waiver to Qualifying Firms because such firms have
either less than half of their Floor staff (March 2020) levels or have
vacant podia--and this reduction in physical capacity on the Floor
impacts the speed, volume and efficiency with which these firms can
operate, which is to their detriment.
The Exchange believes that the proposal is not unfairly
discriminatory because the proposed continuation of the fee waiver
would affect all similarly-situated market participants on an equal and
non-discriminatory basis.
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. The Exchange believes that the proposed changes
would encourage the continued participation of Qualifying Firms,
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.'' \13\
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\13\ See Reg NMS Adopting Release, supra note 10, at 37499.
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Intramarket Competition. The proposed change, which continues the
fee waiver in place when the Floor was temporarily closed but only for
Qualifying Firms, is designed to reduce monthly costs for Floor
participants whose operations continue to be impacted, despite the fact
that the Trading Floor has partially reopened. In reducing this monthly
financial burden, the proposed change would allow Qualifying Firms to
reallocate funds to assist with the cost of shifting and maintaining
their previously on-Floor operations to off-Floor. Absent this change,
such Qualifying Firms may experience an unintended increase in the cost
of doing business on the Exchange, given that the Floor has only
reopened in a limited capacity. The Exchange believes that the proposed
waiver of fees for Qualifying Firms would not impose a disparate burden
on competition among market participants on the Exchange because off-
Floor market participants are not subject to these Floor-based fixed
fees, and Floor-based firms that are not subject to the extent of
staffing shortfalls as the Qualifying Firms--i.e., have at least 50% of
their March 2020 staffing levels on the Floor and/or have no vacant
Podia during September 2020, do not face the same operational
disruption and potential financial impact during the partial reopening
of the Floor.
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 currently has more than 16% of the market share of executed
volume of multiply-listed equity and ETF options trades.\14\ Therefore,
currently no exchange possesses significant pricing power in the
execution of multiply-listed equity & ETF options order flow. More
specifically, in June 2020, the Exchange had less than 10% market share
of executed volume of multiply-listed equity & ETF options trades.\15\
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\14\ See supra note 11.
\15\ Based on OCC data, supra note 12, the Exchange's market
share in equity-based options was 8.20% for the month of June 2019
and 8.32% for the month of June 2020.
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The Exchange believes that the proposed rule change reflects this
competitive environment because it waives fees for Qualifying Firms and
is designed to reduce monthly costs for Floor participants whose
operations continue to be disrupted despite the fact that the Trading
Floor has partially reopened. In reducing this monthly financial
burden, the proposed change would allow affected participants to
reallocate funds to assist with the cost of shifting and maintaining
their prior fully-staffed on-Floor operations to off-Floor. Absent this
change, Qualifying Firms may experience an unintended increase in the
cost of doing business on the Exchange, which would make the Exchange a
less competitive venue on which to trade as compared to other options
exchanges.
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
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subparagraph (f)(2) of Rule 19b-4 \17\ thereunder, because it
establishes a due, fee, or other charge imposed by the Exchange.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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) \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).
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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-2020-65 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-2020-65. 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-2020-65, and should be
submitted on or before September 23, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020-19326 Filed 9-1-20; 8:45 am]
BILLING CODE 8011-01-P