[Federal Register Volume 85, Number 144 (Monday, July 27, 2020)]
[Notices]
[Pages 45285-45287]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16156]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89359; File No. SR-NYSEArca-2020-68]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Update the NYSE
Arca Options Fee Schedule
July 21, 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 July 16, 2020 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 and II
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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[[Page 45286]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify its rules to conform the
terminology in the NYSE Arca Options Fee Schedule (``Fee Schedule'') to
Rule 6.72A-O (Requirements for Penny Interval Program), which permits
quoting in penny increments for certain option classes on a permanent
basis. 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. 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 purpose of this filing is to modify its rules to conform the
terminology in the Fee Schedule to Rule 6.72A-O (Requirements for Penny
Interval Program), which permits quoting in penny increments for
certain option classes on a permanent basis. In sum, the Exchange
proposes to define ``Penny'' and ``non-Penny'' issues, with cross-
reference to Rule 6.72A-O and to eliminate from the Fee Schedule
obsolete references to the ``Pilot'' program. This filing is technical
in nature as it merely updates the nomenclature regarding transactions
in Penny and non-Penny issues and does not modify any associated fees
or credits for such transactions.
Background
On April 1, 2020, the U.S. Securities and Exchange Commission (the
``Commission'') approved Amendment No. 5 to the Plan for the Purpose of
Developing and Implementing Procedures Designed to Facilitate the
Listing and Trading of Standardized Options to Adopt a Penny Interval
Program (``Amendment No. 5'').\4\ The Exchange then filed to conform
its rules--including Rule 6.27A-O--to Amendment No. 5, which rules
(like Amendment No. 5) became operative July 1, 2020 (the ``Penny
Program'').\5\ The Penny Pilot, which was adopted in 2007 and extended
and expanded over the years, expired by its own terms on June 30,
2020.\6\
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\4\ See Securities Exchange Act Release No. 88532 (April 1,
2020), 85 FR 19545 (April 7, 2020) (File No 4-443).
\5\ See Securities Exchange Act Release No. 88943 (May 26,
2020), 85 FR 33255 (June 1, 2020) (SR-NYSEArca-2020-50) (immediately
effective filing that is operative on July 1, 2020, which outlines
the history of the Penny Pilot program and details the process for
the Penny Interval Program).
\6\ See Securities Exchange Act Release No. 87610 (November 25,
2019) 84 FR 66047 (December 2, 2019) (NYSEArca-2019-83).
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Proposed Changes
The Exchange proposes to modify the terminology in the Fee Schedule
to align with the terminology in the Penny Program by adding new
definitions for ``Penny'' and ``non-Penny'' issues and eliminating all
references to ``Pilot.'' \7\ As proposed, a `` `Penny' issue or class
refers to option classes that participate in the Penny Interval
Program, as described in Rule 6.72A-O'' and a ```non-Penny' issue or
class refers to option classes that do not participate in the Penny
Interval Program, as described in Rule 6.72A-O.'' \8\
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\7\ See generally proposed Fee Schedule, NYSE Arca OPTIONS:
TRADE-RELATED CHARGES FOR STANDARD OPTIONS and NYSE Arca OPTIONS:
GENERAL.
\8\ See proposed Fee Schedule, NYSE Arca OPTIONS: TRADE-RELATED
CHARGES FOR STANDARD OPTIONS.
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Consistent with the foregoing, the Exchange proposes to eliminate
from the Fee Schedule all references to ``Pilot'' as that term relates
to the ``Penny Pilot'' because such references became obsolete as of
July 1, 2020.\9\
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\9\ See proposed Fee Schedule, NYSE Arca OPTIONS: TRADE-RELATED
CHARGES FOR STANDARD OPTIONS (deleting reference to ``Pilot''
throughout) and NYSE Arca OPTIONS: GENERAL, Endnote 6 (deleting
reference to ``Pilot'' and including a reference to Penny Interval
Program and cross reference to Rule 6.72A-O).
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For consistency in usage and terminology, the Exchange proposes to
modify references to ``non-Penny'' in existing text to consistently
hyphenate and utilize a lower case ``n'' to denote the term except when
it is used in a section or column heading, which would add clarity,
transparency and internal consistency.\10\
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\10\ See generally proposed Fee Schedule, NYSE Arca OPTIONS:
TRADE-RELATED CHARGES FOR STANDARD OPTIONS.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\11\ in
general, and furthers the objectives of Section 6(b)(5) of the Act,\12\
in particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to 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.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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In particular, the proposed rule change, which conforms the
terminology in the Fee Schedule to Rule 6.72A-O, promotes just and
equitable principles of trade because it does not alter any existing
fees or credits but instead is technical in nature insofar as it adopts
new definitions for ``Penny'' and ``non-Penny'' issues, consistent with
Exchange rules, and removes references to the now-expired (Penny)
``Pilot.'' This proposed change would provide internal consistency
within Exchange rules and operate to protect investors and the
investing public by making the Exchange rules easier to navigate and
comprehend. The proposed change would render the rules more accurate
and reduce potential investor confusion, thus helping to facilitate the
maintenance of a fair and orderly market.
Regarding the proposed technical changes (see supra notes 9 and
10), the Exchange believes the changes would add clarity and
transparency to the Fee Schedule making it easier to navigate and
comprehend to the benefit of all market participants.
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 proposal, which modifies the terminology in
the Fee Schedule to align with the terminology in the Exchange's rules,
is not a competitive filing. Instead, the proposed change is meant to
add clarity and transparency to the Fee Schedule to the benefit of all
market participants that trade on the Exchange. Given the technical
nature of this filing, the Exchange anticipates that other options
exchanges will similarly update their fee schedules (as needed) to
align
[[Page 45287]]
with any rule(s) adopted in conformance with Amendment No. 5.
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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
Because the foregoing proposed rule change does not: (i) Significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days after the date of the filing, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A) of the Act \15\ and Rule 19b-4(f)(6) \16\ thereunder. The
Exchange has proposed to implement the proposed rule change immediately
upon filing and has asked the Commission to waive the 30-day operative
delay for this filing.
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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(6).
\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because it will allow the Exchange to modify the terminology in its fee
schedule to conform it to the Penny Program, which is currently
described in NYSE Arca Rule 6.72A-O. The proposed rule change does not
raise any novel issues and is technical in nature as it is designed to
update the language in the Exchange's fee schedule to reflect the
language used throughout the Exchange's rulebook. The Commission
believes that the proposed rule change proposes ministerial changes
which are designed to alleviate the potential for investor confusion.
Accordingly, the Commission designates the proposed rule change as
operative upon filing.\17\
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\17\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the 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 to
determine whether the proposed rule 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:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEArca-2020-68 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-2020-68. 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-NYSEArca-2020-68 and should be submitted
on or before August 17, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-16156 Filed 7-24-20; 8:45 am]
BILLING CODE 8011-01-P