[Federal Register Volume 82, Number 136 (Tuesday, July 18, 2017)]
[Notices]
[Pages 32911-32913]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-14987]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81134; File No. SR-NYSEARCA-2017-72]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Arca Equities Schedule of Fees and Charges for Exchange Services To 
Adopt a New Pricing Tier, Tape A and Tape C Tier

July 12, 2017.
    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 June 30, 2017, 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.
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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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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Equities Schedule of 
Fees and Charges for Exchange Services (``Fee Schedule'') to adopt a 
new pricing tier, Tape A and Tape C Tier. The Exchange proposes to 
implement the fee changes effective July 3, 2017. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule, as described 
below, and implement the fee changes on July 3, 2017.
    The Exchange proposes to introduce a new pricing tier--Tape A and 
Tape C Tier--for securities with a per share price of $1.00 or above.
    As proposed, a new Tape A and Tape C Tier credit of $0.0028 per 
share for orders that provide liquidity in Tape A and Tape C Securities 
would be applicable to ETP Holders and Market Makers, that, on a daily 
basis, measured monthly, (1) directly execute providing volume in Tape 
A Securities during the billing month (``Tape A Adding ADV'') that is 
at least 2 million shares ADV over the ETP Holder's or Market Maker's 
first quarter 2017 Tape A Adding ADV,

[[Page 32912]]

(2) directly execute providing volume in Tape C Securities during the 
billing month (``Tape C Adding ADV'') that is at least 2 million shares 
ADV over the ETP Holder's or Market Maker's first quarter 2017 Tape C 
Adding ADV, and (3) meet the requirements of Tape B Tier 2.\4\ For 
example, if an ETP Holder's Tape A Baseline during the first quarter of 
2017 was 5 million shares ADV and the ETP Holder's Tape C Baseline 
during the first quarter of 2017 was 3 million shares, the ETP Holder 
would need a Tape A Adding ADV of at least 7 million shares and a Tape 
C Adding ADV of at least 5 million shares and meet the requirements of 
Tape B Tier 2 to qualify for the proposed credit of $0.0028 per share 
in Tape A and Tape C Securities in the billing month.\5\
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    \4\ Tape B Tier 2 requires that ETP Holders and Market Makers on 
a daily basis, measured monthly, directly execute providing volume 
that is either (1) equal to at least 1.0% of the US Tape B CADV or 
(2) equal to at least 0.20% of the US Tape B ADV [sic] for the 
billing month over the ETP Holder's or Market Maker's Q2 2015 Tape B 
Adding ADV taken as a percentage of Tape B CADV. See Tape B Tier 2, 
Schedule of Fees.
    \5\ The Exchange recognizes that a firm that becomes an ETP 
Holder or Market Maker after the Baseline Month [sic] would have a 
Tape A and Tape C Baseline ADV of zero. In this regard, a new ETP 
Holder or Market Maker would need to have a Tape A Adding ADV and 
Tape C Adding ADV during the billing month of 2 million shares, in 
addition to meeting the Tape B Tier 2 requirements, for the $0.0028 
per share credit to apply.
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    For ETP Holders that qualify for the proposed new Tape A and Tape C 
Tier, Tiered or Basic Rates would apply to all other fees and credits, 
based on the firm's qualifying levels, and if an ETP Holder qualifies 
for more than one tier in the Fee Schedule, the Exchange would apply 
the most favorable rate available under such tiers.
    Additionally, the Exchange recently adopted the Tape C Tier 3 
pricing tier that references the applicability of a $0.0002 per share 
credit to ETP Holders and Market Makers that qualify for that pricing 
tier.\6\ The Exchange proposes to make a non-substantive change to the 
Tape C Tier 3 pricing tier by adding the word ``directly'' in front of 
``execute'' in the second prong of the pricing tier. The proposed 
change is intended to provide consistency within the pricing tier and 
the Fee Schedule generally. The Exchange is not proposing any other 
change to Tape C Tier 3.
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    \6\ See Securities Exchange Act Release No. 80285 [sic] (May 11, 
2017), 82 FR 22687 (May 17, 2017) (SR-NYSEArca-2017-51).
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    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any significant problems 
that market participants would have in complying with the proposed 
changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\8\ 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.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes the proposed Tape A and Tape C Tier is 
reasonable and equitably allocated because it would apply to ETP 
Holders and Market Makers that provide liquidity in Tape A, Tape B and 
Tape C Securities to the Exchange and is designed to incentivize these 
market participants to increase the orders sent directly to the 
Exchange and therefore provide liquidity that supports the quality of 
price discovery and promotes market transparency. The Exchange believes 
the new Tape A and Tape C Tier is equitable because the proposed new 
tier would be available to all similarly situated ETP Holders and 
Market Makers on an equal basis and the proposed new tier provides a 
credit that is reasonably related to the value of an exchange's market 
quality associated with higher volumes. The Exchange currently provides 
a comparable credit for orders that provide liquidity in Tape B 
Securities to ETP Holders and Market Makers that meet the requirements 
of Tape B Tier 2 and with this proposed rule change, the Exchange would 
extend the availability of a similar credit to ETP Holders and Market 
Makers in Tape A and Tape C Securities.
    The Exchange further believes that the proposed Tape A and Tape C 
Tier is reasonable, equitable and not unfairly discriminatory because 
the Exchange has previously implemented pricing tiers that target a 
particular segment of securities. For example, to qualify for the Step 
Up Tier, ETP Holders and Market Makers are required to set a new NYSE 
Arca Best Bid or Offer with at least 25% in each of the ETP Holder's or 
Market Maker's Tape A, Tape B and Tape C providing ADV.
    The Exchange also believes that the requirement to execute 
providing volume in Tape A and Tape C Securities during the billing 
month that is at least 2 million shares ADV over the ETP Holder's and 
Market Maker's first quarter 2017 adding ADV in each of Tape A and Tape 
C Securities is reasonable as it would provide incentives for adding 
liquidity in Tape A and Tape C Securities and strengthen market quality 
in those securities. The Exchange further believes that the requirement 
to execute providing volume in Tape A and Tape C Securities for the 
proposed Tape A and Tape C Tier is equitable and not unfairly 
discriminatory because it would apply uniformly to all similarly 
situated ETP Holders and Market Makers.
    The Exchange believes that the proposed rule change regarding Tape 
A and Tape C credits would create an added incentive for ETP Holders 
and Market Makers to execute additional orders on the Exchange. The 
Exchange believes that the proposed change is equitable and not 
unfairly discriminatory because providing incentives for orders in 
exchange-listed securities that are executed on a registered national 
securities exchange (rather than relying on certain available off-
exchange execution methods) would contribute to investors' confidence 
in the fairness of their transactions and would benefit all investors 
by deepening the Exchange's liquidity pool, supporting the quality of 
price discovery, promoting market transparency and improving investor 
protection.
    The Exchange believes that the non-substantive change to add the 
word ``directly'' in front of ``execute'' in current Tape C Tier 3 
pricing tier removes impediments to and perfects the mechanism of a 
free and open market by providing clarity and adding transparency to 
the Exchange's rules. The Exchange believes the proposed amendment to 
the Fee Schedule is both reasonable and equitable because ETP Holders 
and Market Makers would benefit from clear guidance in the rule text 
describing the manner in which the Exchange's fees and credits would be 
assessed.
    Volume-based rebates and fees such as the ones currently in place 
on the Exchange, and as proposed herein, have been widely adopted in 
the cash equities markets and are equitable because they are open to 
all ETP Holders and Market Makers on an equal basis and provide 
additional benefits or discounts that are reasonably related to the 
value to an exchange's market quality associated with higher levels of 
market activity, such as higher levels of liquidity provision and/or 
growth patterns, and introduction of higher volumes of orders into the 
price and volume discovery processes. The Exchange believes that the 
proposed introduction of Tape A and Tape C Tier will provide such 
enhancements in market quality on the Exchange's equity

[[Page 32913]]

market by incentivizing increased participation.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\9\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, the Exchange believes that the addition 
of the proposed new credit would encourage the submission of additional 
liquidity to a public exchange, thereby promoting price discovery and 
transparency and enhancing order execution opportunities for ETP 
Holders and Market Makers. The Exchange believes that this could 
promote competition between the Exchange and other execution venues, 
including those that currently offer similar order types and comparable 
transaction pricing, by encouraging additional orders to be sent to the 
Exchange for execution.
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    \9\ 15 U.S.C. 78f(b)(8).
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    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues if they 
deem fee levels at a particular venue to be excessive or rebate 
opportunities available at other venues to be more favorable. In such 
an environment, the Exchange must continually adjust its fees and 
rebates to remain competitive with other exchanges and with alternative 
trading systems that have been exempted from compliance with the 
statutory standards applicable to exchanges. Because competitors are 
free to modify their own fees and credits in response, and because 
market participants may readily adjust their order routing practices, 
the Exchange believes that the degree to which fee changes in this 
market may impose any burden on competition is extremely limited. As a 
result of all of these considerations, the Exchange does not believe 
that the proposed changes will impair the ability of ETP Holders or 
competing order execution venues to maintain their competitive standing 
in the financial markets.

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)\10\ of the Act and subparagraph (f)(2) of Rule 19b-
4\11\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(2).
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    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) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \12\ 15 U.S.C. 78s(b)(2)(B).
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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-2017-72 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEARCA-2017-72. 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 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; 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-2017-72 and should 
be submitted on or before August 8, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2017-14987 Filed 7-17-17; 8:45 am]
 BILLING CODE 8011-01-P