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Federal Register / Vol. 86, No. 24 / Monday, February 8, 2021 / Notices
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to excessive quoting rates. 7 However, since that time, 11 new exchanges launched, resulting in a total 16 options exchanges. With the increase in the number of exchanges, and associated quote traffic, OPRA capacity has been increased without issue.
As discussed further below, the Exchange believes that OPRA has the capacity to accommodate any increase in quote traffic from the Exchange arising from the publication of quotes in dark series. As an OPRA participant, the Exchange makes capacity requests to OPRA. Notwithstanding Rule 970.1NY, when the Exchange makes capacity requests to OPRA, it has always factored the total quote traffic it receives from Market Makers, including quotes in dark series.8 In other words, the Exchange presumes that all series will be active and therefore requests capacity to accommodate sending quotes for all series to OPRA. As such, the Exchange does not believe the proposed rule change would impact or change its capacity requests to OPRA. Nor would it change the total amount of capacity needed at OPRA to accommodate quotes in dark series from the Exchange because those series have already been factored into the Exchanges capacity requests to OPRA. Similarly, because OPRA publishes quote capacity information to the market which already incorporates capacity planning that includes quotes in dark series that would be disseminated to OPRA, market participants including data vendors and subscribers have the opportunity to prepare for and make any necessary accommodations for anticipated quote traffic. Accordingly, the elimination of the Exchanges 7 See Securities Exchange Act Release No. 54590
October 12, 2006, 71 FR 61525, 61527 October 18, 2006 SRNYSEArca200673 notice regarding adoption of NYSE Arca Rule Arca Notice. For example, in 20062007, OPRA had the capacity to process 360,000 message per second and, at its peak message rate, the Exchange accounted for 15% of OPRA capacity, sending 55, 248 message per second for active series.
8 OPRA has delegated certain functions pertaining to planning the capacity of the OPRA System to an Independent System Capacity Advisor ISCA
that may provide less than all of the capacity that has been requested if it determines a that the capacity requests of one or more of the parties are unreasonable, or b that it is not reasonable to develop or maintain a System that has capacity sufficient to satisfy the requests of the parties. See the OPRA Capacity Guidelines, at p. 1, available here, https assets.website-files.com/5ba40927ac 854d8c97bc92d7/5bf419b52de21fff3e88107f_
capacity_guidelines.pdf. The Exchange has never been informed by the ISCA that the capacity it has requested cannot be met for any reason, including because the ISCA had deemed the request to be unreasonable. Thus, the Exchange believes that any increase in quote traffic that might be sent to OPRA
as a result of the current proposal should not impact any other exchanges capacity at OPRA.

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suppression of quotes in dark series should not impact market participants or downstream users that consume Exchange or OPRA data. Thus, the Exchange believes that this proposal would not impact its capacity requests to OPRA nor would it impact market participants or downstream consumers of OPRA data.
The Exchange also believes that the proposed discontinuation of its suppression of quotes in dark series would increase transparency and enhance price discovery. Specifically, as proposed, all Market Maker quotes including in inactive series under the current Rule would be displayed and reflected in the market to the benefit of all market participants who would be on notice of such liquidity. The Exchange also notes that, over the years, certain market participants have expressed confusion regarding what quotes are being published and which are being suppressed. Therefore, the Exchange believes that the proposal would remove the element of potential confusion among market participants by publishing all quotes not just those in active series in the disseminated quote feed.
Importantly, since the adoption of Rule 970.1NY, the Exchange has implemented the following measures that serve as additional safeguards against excessive quoting:
Monitoring: The Exchange actively monitors the quotation activity of its Market Makers. When the Exchange detects that a Market Maker is disseminating an unusual number of quotes, the Exchange contacts that Market Maker and alerts it to such activity. Such monitoring may reveal that the Market Maker may have internal system issues or has incorrectly set system parameters that were not immediately apparent. Alerting a Market Maker to the heightened levels of activity will usually result in a change that reduces the number of quotes sent to the Exchange by the Market Maker.
Codification of select provisions of the Options Listing Procedures Plan OLPP
in Rule 903A.9 The OLPP is a national market system plan that, among other things, sets forth procedures governing the listing of new options series. From the OLPP, the Exchange incorporated in Rule 903A applied uniform standards to the range of options series exercise or strike prices available for trading on the Exchange as a quote mitigation strategy. 10 In approving the OLPP
9 See Securities Exchange Act Release No. 61978
April 23, 2010, 75 FR 22886 April 30, 2010 SR
NYSEAmex20103. See also OLPP, available at, http www.theocc.com/clearing/industry-services/
olpp.jsp.
10 Rule 903A codified Amendment No. 3 to the OLPP. See Securities Exchange Act Release No.
60531 August 19, 2009, 74 FR 43173 File No. 4
443. See also Rule 903A.

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provisions, subsequently incorporated in Rule 903A, the Commission indicated that adopting uniform standards to the range of options series exercise or strike prices available for trading on the Exchange should reduce the number of option series available for trading, and thus should reduce increases in the options quote message traffic because market participants will not be submitting quotes in those series. 11 The Exchange believes that adherence to the OLPP standard for strike listings has contributed to the decline of the number of strikes listed, which has in turn, reduced the amount of quotes in dark series. that were held back from OPRA. 12
Refined Market Maker Quoting Obligations: One year after adopting select provisions of the OLPP, the Exchange refined the quoting obligations applicable to Market Makers as a quote mitigation strategy.13 Specifically, the Exchange adopted Commentary .01 to Rule 925.1NY, which states that Specialists and Market Makers continuous quoting obligations shall not apply to Market Makers with respect to adjusted option series, and series with a time to expiration of nine months or greater, for options on equities and Exchange Traded Fund Shares, and series with a time to expiration of twelve months or greater for Index options. 14 Because there are no Market Maker quoting obligations associated with adjusted options series, there is a reduction in quote traffic that is sent to OPRA. Indeed, in approving the text of Commentary .01 to Rule 925.1NY, the Commission noted, . . . the Exchanges proposal would reduce the burden on market makers to submit continuous quotes that the Exchange may not submit to OPRA. 15

The Exchange believes that these quote mitigation strategies would allow the Exchange to continue to effectively mitigate quote message traffic.
In connection with the foregoing, the Exchange proposes to amend paragraphs b1 and b2 of Rule 970NY to delete references to the Quote Mitigation 11 Id.,
74 FR at 43174.
NYSE Arca adopted its quote mitigation rule, which the Exchange copied, it estimated that deployment of the rule would reduce its quote traffic by 2030%. See supra note 7, Arca Notice, 71 FR at 61527. In actuality, the rule has resulted in a reduction of approximately 10% of quote message traffic to OPRA. The Exchange believes this disparity was a result of the number of inactive series being much lower than anticipated because of increased competition and quoting activity as well as limitations on proliferation of unnecessary strikes, per the OLPP.
13 See Securities Exchange Act Release No. 65572
October 14, 2011, 76 FR 65310 October 20, 2011
NYSEAmex201161. See also Commentary .01 to Rule 925.1NY.
14 An adjusted series is an option series wherein, as a result of a corporate action by the issuer of the underlying security, one option contract in the series represents the delivery of other than 100 shares of underlying stock or Exchange-Traded Fund Shares. See Commentary .01 to Rule 925.1NY.
15 See supra note 13, 76 FR at 65311.
12 When
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