FR 2025-01623

The Federal Register recently published a notice regarding a proposal by the NYSE American LLC to modify its Options Fee Schedule. This change, filed on January 15, 2025, introduces several amendments to the Floor Broker Fixed Cost Prepayment Incentive Program. The proposed alterations aim to increase the manual and QCC trading volumes required for brokers to obtain additional credits, establish a new rebate based on Firm Facilitation volume, raise the maximum for combined credits, and ensure that brokers undergoing restructuring can retain their status. This proposal is intended to take immediate effect, with the Securities and Exchange Commission (SEC) inviting public comments until February 13, 2025.

General Concerns

One of the significant concerns arising from this document is the volatility in the filing process. The proposal went through multiple cycles of withdrawal and replacement (SR-NYSEAmer-2024-83, SR-NYSEAmer-2025-02, and SR-NYSEAmer-2025-03) within a short period. This sequence of events might suggest instability or confusion in the proposed changes. Such frequent amendments could indicate a lack of clear policy direction or insufficient stakeholder consultation, raising potential issues of wastefulness and inefficiency.

Furthermore, the language employed in the proposal, involving terms like "QCC trades," "Manual Billable Rebate Program," and "Firm Facilitation volume," seems quite technical. This complexity could alienate individuals not well-versed in securities exchange jargon, potentially leading to misunderstandings about the rule changes.

Impact on the Public and Stakeholders

The proposal's impact on the public could vary. For the general audience, the amendments might remain abstract and technical without a direct effect on everyday life. However, for stakeholders within the trading community, particularly Floor Brokers, the changes could have significant implications.

The increase in required trading volumes and the introduction of new rebates could favor larger Floor Brokers capable of meeting these thresholds. Smaller brokers, or new entrants lacking the capacity or resources to achieve these volumes, might find themselves at a disadvantage. This adjustment could inadvertently consolidate market control among larger, more established players, potentially limiting competition within the exchange.

Additionally, the document's lack of clarity on how restructuring of Floor Brokers is handled within the FB Prepay Program presents another concern. There is little detail on how these processes will be regulated, creating an area that could be open to manipulation or inconsistencies in application.

Conclusion

While the NYSE American LLC's proposed changes to the Options Fee Schedule might aim to streamline and enhance trading processes within the exchange, the execution and communication of these changes necessitate careful scrutiny. The SEC's invitation for public comment is an opportunity for both industry insiders and the broader public to voice concerns and seek clarifications, ensuring that the final implementation of this rule change is both clear and equitable for all parties involved.