This PDF is the current document as it appeared on Public Inspection on 12/12/2014 at 08:45 am.
Pursuant to Section 19(b)(1)  of the Securities Exchange Act of 1934 (the “Act”)  and Rule 19b-4 thereunder, notice is hereby given that, on November 26, 2014, NYSE Arca, Inc. (the “Exchange” or “NYSE Arca”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Options Fee Schedule (“Fee Schedule”) to amend the application of Routing Fees. The Exchange proposes to implement the change on December 1, 2014. 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.
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
The Exchange proposes to amend the Fee Schedule as it relates to the application of Routing Fees. The purpose of the proposed change is to account for recent changes introduced on other exchanges that impact the fees charged when routing orders.
The Exchange currently charges OTP Holders or OTP Firms (collectively, “OTPs”) a Routing Fee when it routes orders to other exchanges for execution. The Routing Fee is comprised of an $0.11 per contract fee, plus the applicable transaction fees assessed by the away market for execution of the order (which the Exchange is able to discern from the away market fee schedule). The Routing Fees are applicable for both standard and mini options and are set forth separately in the Fee Schedule.
Recently, the BOX Options Exchange LLC (“BOX”) adopted per contract pricing that varies based upon the counter party to the trade. This pricing change makes it impossible to know in advance of the execution what the charges will be for an order routed to BOX. For example, a Professional Customer order routed to BOX in a non-Penny option would be charged $0.35 per contract if it traded against another Professional Customer or Broker/Dealer, but would be charged $0.94 per contract if it traded against a Customer.
In order to provide OTPs with certainty regarding the routing fees for which they may be liable, the Exchange is proposing to amend the Fee Schedule as it relates to the application of Routing Fees, as set forth in the sections of the Fee Schedule relating to Trade-Related Charges for Standard Options and Trade-Related Charges for Mini Options. The proposed amendments would specify in both sections that if the actual transaction fees assessed by the away exchange(s) cannot be determined prior to the execution, the Exchange would charge the $0.11 per contract fee plus the highest per contract charge assessed by the away exchange(s) for the relevant option class and type of market participant (e.g., Customer, Firm, Broker/Dealer, Professional Customer or Market Maker).
The Exchange proposes to make other non-substantive changes to the Fee Schedule. First, the Exchange proposes to replace the reference to “away market,” with a reference to “away exchange,” because the Exchange only routes orders to registered exchanges. Second, the Exchange proposes to replace the term “charged” with the term “assessed,” to make it parallel with the proposed changes to the Routing Fees. Third, the Exchange proposes to add the following text as a parenthetical: “calculated on an order-by-order basis since different away exchange charge different amounts.” The Exchange notes that this rule text is based on the fee schedule for NYSE Amex Options LLC (“NYSE Amex Options”) and represents how the Exchange currently calculates the Routing Fee. Fourth, the Exchange proposes to delete the parenthetical text that provides “applies to both Mini and standard option contracts” as this parenthetical is redundant because the Routing Fee is set forth separately in the Fee Schedule in the specific sections relating to fees for standard options and for Mini options. Finally, to provide clarity regarding the applicability of Routing Fees, the Exchange proposes to add the following text, which is based on language from the NYSE Amex Options fee schedule: “The Routing Fee is in addition to NYSE Arca's customary execution fees applicable to the order.”
The Exchange notes that OTPs can avoid having their orders routed to away markets by utilizing specific, non-routable order types if they so choose.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934 (the “Act”), in general, and furthers the objectives of Section 6(b)(4) of the Act, in particular, because it provides for the equitable allocation of reasonable dues, fees, and other charges among its members, issuers and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers or dealers.
The Exchange believes that the proposed fee change is reasonable and equitable because charging market participants a set per contract rate in those instances when an order is routed to an away exchange provides market participants with certainty, which will enable them to make informed decisions regarding whether to continue to designate such orders as eligible for routing to away exchanges. The Exchange further believes that the proposed fee change to charge the highest rate charged by the away Start Printed Page 74144exchange if the Exchange cannot discern the per contract charge in the option class in question in advance of the execution is reasonable and equitable because the Exchange cannot know in advance what the charge would be on the away exchange. If the Exchange charged the lowest feasible charge, the Exchange could end up bearing the costs of routing an order to an away exchange. The Exchange notes that—just as they do today—to avoid incurring any Routing Fee in preference of an execution on the Exchange, OTPs are able to designate their orders as non-routable.
The Exchange believes that the proposed non-substantive changes to the Fee Schedule are reasonable and equitable because they provide transparency in the Fee Schedule regarding how the Exchange calculates transaction fees, including Routing Fees, and eliminate redundant rule text.
The Exchange further believes that this proposed change is not unfairly discriminatory either as it applies equally to all OTPs that send orders to the Exchange.
Finally, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment.
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 the proposed fee change is reasonably designed to be fair and equitable, and therefore, will not unduly burden any particular group of market participants trading on the Exchange vis-à-vis another group (i.e., Market Markers versus non-Market Makers) as it applies equally to all OTP Holders that send routable orders to the Exchange.
The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment.
C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others
No written comments were solicited or received with respect to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)  of the Act and subparagraph (f)(2) of Rule 19b-4  thereunder, because it establishes a due, fee, or other charge imposed by the Exchange.
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)  of the Act to determine whether the proposed rule change should be approved or disapproved.
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:
- Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
- Send an email to email@example.com. Please include File Number SR-NYSEArca-2014-137 on the subject line.
- 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-2014-137. 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, 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 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-NYSEArca-2014-137, and should be submitted on or before January 5, 2015.Start Signature
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Kevin M. O'Neill,
1. 15 U.S.C.78s(b)(1).Back to Citation
4. See BOX Fee Schedule, Section 1 (as of November 2014), available here, http://boxexchange.com/assets/BOX_Fee_Schedule.pdf.Back to Citation
[FR Doc. 2014-29241 Filed 12-12-14; 8:45 am]
BILLING CODE 8011-01-P