[Federal Register Volume 83, Number 161 (Monday, August 20, 2018)]
[Notices]
[Pages 42196-42198]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17830]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83843; File No. SR-NYSENAT-2018-18]


Self-Regulatory Organizations; NYSE National, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its 
Schedule of Fees and Rebates

August 14, 2018.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on August 1, 2018, NYSE National, Inc. (``Exchange'' or ``NYSE 
National'') filed with the Securities and Exchange Commission 
(``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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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Schedule of Fees and Rebates to 
specify that an ETP Holder may request that the Exchange aggregate its 
eligible activity with activity of its ETP Holder affiliates for 
purposes of charges or credits based on volume. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Schedule of Fees and Rebates to 
specify that an ETP Holder may request that the Exchange aggregate its 
eligible activity with activity of its ETP Holder affiliates for 
purposes of charges or credits based on volume. As noted below, the 
proposed provision is based on similar provisions in the price lists of 
the Exchange's affiliates New York Stock Exchange LLC (``NYSE''), NYSE 
Arca, Inc. (``NYSE Arca''), and NYSE American Equities (``NYSE 
American'') (together, the ``Exchange Affiliates'').\4\
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    \4\ See New York Stock Exchange Price List 2018, available at 
https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf; NYSE Arca Equities Fees and Charges, available 
at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf; and the NYSE American Equities Price 
List, available at https://www.nyse.com/publicdocs/nyse/markets/nyse-american/NYSE_America_Equities_Price_List.pdf.
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    The Exchange proposes to amend its Schedule of Fees and Rebates to 
specify that an ETP Holder may request that the Exchange aggregate its 
eligible activity with eligible activity of its ETP Holder affiliates 
for purposes of charges or credits based on volume. The proposed rule 
change is based on the rules of the Exchange Affiliates, which contain 
substantially the same language.\5\ The Exchange notes that this type 
of provision is also common among many other exchanges.\6\
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    \5\ See note 4, supra. The Exchange proposes to omit a reference 
to Designated Market Makers or ``DMMs'' found in price lists of the 
Exchange Affiliates because the Exchange does not currently have 
DMMs.
    \6\ See, e.g., NASDAQ Stock Market Rule 7027, NASDAQ Options 
Market Rules at Chapter XV, and the NASDAQ PHLX LLC Pricing 
Schedule, available at http://nasdaqphlx.cchwallstreet.com/NASDAQPHLXTools/PlatformViewer.asp?selectednode=chp_1_5_2&manual=%2Fnasdaqomxphlx%2Fphlx%2Fphlx-rulesbrd%2F.
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    As proposed, for purposes of applying any provision of the 
Exchange's Schedule of Fees and Rebates where the charge assessed, or 
credit provided, by the Exchange depends on the volume of an ETP 
Holder's activity (i.e., where a volume threshold or volume percentage 
is required to obtain the pricing), an ETP Holder may request that the 
Exchange aggregate its eligible activity with eligible activity of its 
ETP Holder affiliates. The Exchange further proposes that an ETP Holder 
requesting aggregation of eligible affiliate activity would be required 
to (1) certify to the Exchange which affiliate(s) it seeks to aggregate 
prior to receiving approval for aggregation, and (2) inform the 
Exchange immediately of any event that causes an entity to cease being 
an affiliate(s). The Exchange would review available information 
regarding the entities and reserves the right to request additional 
information to verify the affiliate status of an entity. As further 
proposed, the Exchange would approve a request, unless it determines 
that the certificate is not accurate.
    The Exchange also proposes that if two or more ETP Holders become 
affiliated on or prior to the sixteenth day of a month, and submit the 
required request for aggregation on or prior to the twenty-second day 
of the month, an approval of the request would be deemed to be 
effective as of the first day of that month. If two or more ETP Holders 
become affiliated after the sixteenth day of a month, or submit a 
request for aggregation after the twenty second day of the month, an 
approval of the request would be deemed to be effective as of the first 
day of the next calendar month. The Exchange believes that this 
requirement, which is also similar to requirements of the Exchange 
Affiliates, would be a fair and objective way to apply the aggregation 
rule to fees and streamline the billing process. The Exchange further 
proposes to provide that for purposes of applying any provision of the 
Schedule of Fees and Rebates where the charge assessed, or credit 
provided, by the Exchange depends upon the volume of an ETP Holder's 
activity, references to an entity would be deemed to include the entity 
and its affiliates that have been approved for aggregation. The 
Exchange proposes to provide that ETP Holders may not aggregate volume 
where the Schedule of Fees and Rebates specifies that aggregation is 
not permitted.\7\
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    \7\ See note 4, supra.
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    Finally, the Exchange proposes that for purposes of the Schedule of 
Fees and Rebates, the term ``affiliate'' would mean any ETP Holder 
under 75% common ownership or control of that ETP Holder. Once again, 
this is consistent with the rules of the Exchange Affiliates and other 
exchanges.\8\
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    \8\ See note 4, supra; see also, e.g., NASDAQ Rule 7027(c).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\10\ in 
particular, because it provides for the equitable allocation of 
reasonable dues,

[[Page 42197]]

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, and because it is designed 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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) & (5).
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    The Exchange believes that the proposed rule change establishes a 
reasonable and clear process for the Exchange to treat affiliated ETP 
Holders for purposes of assessing charges or credits that are based on 
volume. The provision is equitable because all ETP Holders seeking to 
aggregate their activity are subject to the same parameters, in 
accordance with a standard that recognizes an affiliation as of the 
month's beginning or close in time to when the affiliation occurs, 
provided the ETP Holder submits a timely request. Moreover, the 
proposed billing aggregation language is substantially similar to 
aggregation language adopted by the NYSE Affiliates and other 
exchanges.\11\
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    \11\ See notes 5-6, supra.
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    The Exchange notes that the proposal would serve to reduce 
disparity of treatment between ETP Holders with regard to the pricing 
of different services and reduce any potential for confusion on how 
activity can be aggregated. The Exchange believes that the proposed 
rule change avoids disparate treatment of ETP Holders that have divided 
their various business activities between separate corporate entities 
as compared to ETP Holders that operate those business activities 
within a single corporate entity. The Exchange further notes that the 
proposed rule change is reasonable and is designed to remove 
impediments to and perfect the mechanism of a free and open market by 
harmonizing the manner by which the Exchanges permits ETP Holders to 
aggregate volume with other exchanges. As noted, the Exchange 
Affiliates and other markets all have the same standard that the 
Exchange is proposing to adopt.
    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,\12\ 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. The proposed rule change, which would apply 
equally to all ETP Holders, would incent submission of order flow to a 
public exchange by permitting the Exchange to apply price discounts to 
ETP Holders that have requested aggregation with an affiliated ETP 
Holder and is substantially similar to rules adopted by the Exchange 
Affiliates as well as other exchanges. Because the market for order 
execution and routing is extremely competitive, ETP Holders may readily 
opt to disfavor the Exchange if they believe that alternatives offer 
them better value. The Exchange does not believe the proposed changes 
will impair the ability of ETP Holders or competing order execution 
venues to maintain their competitive standing in the financial markets. 
Moreover, because the Exchange does not propose to alter or modify 
specific fees or credits applicable to ETP Holders, the proposal does 
not impose any burden on competition.
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    \12\ 15 U.S.C. 78f(b)(8).
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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 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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder. \15\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 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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    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\17\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. According to 
the Exchange, waiving the 30-day operative delay would be consistent 
with the protection of investors and the public interest because it 
would enable the Exchange to harmonize its rules with respect to 
aggregation of affiliate activity with the rules of its affiliates 
without delay and, as a result, reduce potential confusion for 
investors. The Exchange explains that as it is harmonizing its Schedule 
of Fees and Rebates with the requirements in the price lists of its 
affiliates as well as other exchanges, the proposed change does not 
present any new or novel issues. The Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. Accordingly, the Commission waives 
the 30-day operative delay and designates the proposed rule change 
operative upon filing.\18\
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ For purposes only of waiving the 30-day operative delay, 
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 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) \19\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \19\ 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

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     Send an email to [email protected]. Please include 
File Number SR-NYSENAT-2018-18 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-NYSENAT-2018-18. 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; the Commission does not edit 
personal identifying information from submissions. 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-NYSENAT-2018-18 and should 
be submitted on or before September 10, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018-17830 Filed 8-17-18; 8:45 am]
 BILLING CODE 8011-01-P