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Federal Register / Vol. 86, No. 156 / Tuesday, August 17, 2021 / Notices
meet the updated criteria. The Exchange also believes that the marginally increased reduced fees, as proposed, offered under each of the Market Maker, Away Market Maker, and Professional Penny Take Volume Tiers continue to be a reasonable distribution of reduced fees, commensurate with the corresponding proposed criteria. The Exchange notes that it offers similar reduced rates for criteria of comparable difficulty in other volume-based tier programs. For example, Tier 2 of the Non-Customer Non-Penny Take Volume Tiers in Footnote 13 of the Fee Schedule offers a higher reduced fee $1.07 than the proposed reduced fees $0.49, $0.48
and $0.47 where a Member must meet three different prongs of criteria.
The Exchange also believes that it is reasonable and equitable to update the Customer Non-Penny Add Volume Tiers to provide different criteria which the Exchange does not believe is necessarily more or less difficult than the existing criteria and to also provide new criteria via new tiers because these modifications and additions are reasonably designed to provide Members with increased supplementary opportunities to receive corresponding enhanced rebates. The Exchange also believes that the marginally decreased enhanced rebates, as proposed, continue to be a reasonable distribution of enhanced rebates, commensurate with the corresponding proposed criteria, as the Customer Non-Penny Add Volume Tiers continue to offer a range of enhanced rebates $0.90 to $1.05, as proposed within a comparable range as offered today $0.92 to $1.06. The proposed rule change just provides additional opportunities within the proposed comparable range of enhanced rebates for Members to meet criteria and receive an enhanced rebate.
The Exchange believes that the proposed updated and new tiers represent an equitable allocation of fees and are not unfairly discriminatory because the Customer Penny Add Volume, Market Maker, Away Market Maker, and Professional Penny Take Volume, and Customer Non-Penny Add Volume Tiers Add Penny Tiers, as proposed, will continue to apply uniformly to all qualifying Members, in that all Members that submit the requisite order flow per each tier program have the opportunity to compete for and achieve the proposed tiers. The proposed changes to and additions of criteria in the Customer Penny Add Volume, Market Maker, Away Market Maker, and Professional Penny Take Volume, and Customer Non-Penny Add Volume Tiers are designed as an incentive to any and all
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Members interested in meeting modified and new tier criteria to submit additional, requisite order flow directly to the Exchanges Book. Without having a view of activity on other markets and off-exchange venues, the Exchange has no way of knowing whether this proposed rule change will definitely result in any Members qualifying for the proposed tiers. While the Exchange has no way of predicting with certainty how the proposed tiers will impact Member activity, the Exchange anticipates that:
Between five and six Members will be able to compete for and potentially achieve the proposed criteria in Customer Penny Add Volume Tier 5
current Tier 6; at least two Members will be able to compete for and potentially achieve the proposed criteria in each of the updated Market Maker, Away Market Maker, and Professional Penny Take sic Tiers 1, 2 and 3; and at least four Members will be able to compete for and potentially achieve the proposed criteria in across the updated Customer Non-Penny Add Volume Tiers 1, 4 and 5, and new Tiers 6, 7 and 8.
The Exchange also notes that the proposed tiers will not adversely impact any Members pricing or their ability to qualify for other rebate tiers. Rather, should a Member not meet the proposed criteria for a tier, the Member will merely not receive the corresponding enhanced rebate or reduced fee, as applicable. Finally, the Exchange believes the proposal to eliminate certain tiers is equitable and not unfairly discriminatory because it applies to all Members, in that, such tiers will not be available for any Member.
B. Self-Regulatory Organizations Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on intramarket or intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. Rather, as discussed above, the Exchange believes that the proposed change 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 Members. As a result, the Exchange believes that the proposed change furthers the Commissions goal in adopting Regulation NMS of fostering competition among orders, which promotes more efficient pricing of
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individual stocks for all types of orders, large and small. 18
The Exchange believes the proposed rule change does not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. Particularly, the proposed tiers apply to all Members equally, in that, all Members that submit the requisite order flow per each tier program are eligible to achieve the tiers proposed criteria, have a reasonable opportunity to meet the tiers proposed criteria and will all receive the corresponding reduced fees or enhanced rebates as existing and proposed if such criteria is met. Overall, the proposed rule change is designed to attract additional overall Customer and liquidity provider order flow to the Exchange, which, as described above, brings different, yet key, liquidity and trading activity to the Exchange, resulting in overall tighter spreads, more execution opportunities at improved prices, and/or deeper levels of liquidity, which ultimately improves price transparency, provides continuous trading opportunities and enhances market quality on the Exchange, and generally continues to encourage Members to send orders to the Exchange, thereby contributing towards a robust and well-balanced market ecosystem to the benefit of all market participants.
Next, the Exchange believes the proposed rule change does not impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act.
As previously discussed, the Exchange operates in a highly competitive market.
Members have numerous alternative venues that they may participate on and director their order flow, including 15
other options exchanges and offexchange venues. Additionally, the Exchange represents a small percentage of the overall market. Based on publicly available information, no single options exchange has more than 16% of the market share.19 Therefore, no exchange possesses significant pricing power in the execution of option order flow.
Indeed, participants can readily choose to send their orders to other exchange and off-exchange venues if they deem fee levels at those other venues to be more favorable. Moreover, the Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the 18 Securities Exchange Act Release No. 51808, 70
FR 37495, 3749899 June 29, 2005 S71004
Final Rule.
19 See supra note 3.

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