[Federal Register Volume 83, Number 180 (Monday, September 17, 2018)]
[Notices]
[Pages 46977-46981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-20192]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84097; File No. SR-NYSE-2018-40]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the NYSE Price List

September 12, 2018.
    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 August 31, 2018, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') 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 to amend its Price List to (1) modify the Tier 1 and 
Tier 3 Adding Credit requirements; (2) amend its routing fees; (3) 
introduce a new incremental step up tier for Supplemental Liquidity 
Providers (``SLP''); and (4) modify the Tier 1 and Tier 2 Adding Tier 
and SLP Provide Tier requirements for securities traded pursuant to 
Unlisted Trading Privileges (``UTP'') (Tapes B and C). The Exchange 
proposes to implement these changes to its Price List effective 
September 4, 2018. 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,

[[Page 46978]]

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 Price List to (1) modify the 
Tier 1 and Tier 3 Adding Credit requirements; (2) amend its routing 
fees; (3) introduce a new incremental SLP step up tier; and (4) modify 
the Tier 1 and Tier 2 Adding Tier and SLP Provide Tier requirements for 
UTP Securities (Tapes B and C).
    The Exchange proposes to implement these changes to its Price List 
effective September 4, 2018.
Adding Tiers
    The Exchange currently provides an equity per share credit of 
$0.0022 per transaction for all orders, other than MPL and Non-Display 
Reserve orders, for transactions in stocks with a share price of $1.00 
or more when adding liquidity to the Exchange if the member 
organization (1) executes an average daily trading volume (``ADV'') 
that adds liquidity to the Exchange during the billing month (``Adding 
ADV'') \4\ that is at least 1.10% of NYSE consolidated average daily 
volume (``CADV''), excluding liquidity added by a Designated Market 
Maker (``DMM''), and (2) executes MOC and LOC orders of at least 0.12% 
of NYSE CADV.
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    \4\ Footnote 2 to the Price List defines ADV as ``average daily 
volume'' and ``Adding ADV'' as ADV that adds liquidity to the 
Exchange during the billing month. The Exchange is not proposing to 
change these definitions.
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    The Exchange proposes to modify the Adding ADV requirement for the 
Tier 1 Adding Credit to require an Adding ADV, excluding liquidity 
added by a DMM, of at least 1.20% of NYSE CADV.
    Similarly, the Exchange currently provides an equity per share 
credit of $0.0018 per transaction for all orders, other than MPL and 
Non-Display Reserve orders, that add liquidity to the NYSE if the 
member organization (i) has Adding ADV that is at least 0.35% of NYSE 
CADV, and (ii) executes market at-the-close (``MOC'') and limit at-the-
close (``LOC'') of at least 0.05% of NYSE CADV.
    The Exchange proposes to modify the Adding ADV requirement for the 
Tier 3 Adding Credit to require an Adding ADV that is at least 0.40% of 
NYSE CADV.
Routing Fees
    The Exchange proposes the following modifications to its routing 
fees.
    The Exchange currently charges a $0.0030 per share fee to route in 
Tape A securities. The Exchange proposes to charge $0.0035 per share 
fee to route and a lower $0.0030 per share fee if the member 
organization has adding ADV in Tapes A, B, and C combined that is at 
least 0.20% of Tapes A, B and C CADV combined.
    For orders in UTP Securities that are routed, the Exchange 
currently charges a fee of $0.0005 per share for executions in 
securities with a price at or above $1.00 that route to and execute in 
an auction on the Exchange's affiliate NYSE American. For executions in 
securities with a price at or above $1.00 that route to and execute in 
an auction on an Away Market \5\ other than NYSE American, the Exchange 
charges a fee of $0.0010 per share, and a fee of $0.0030 per share for 
all other executions.\6\
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    \5\ The term ``Away Market'' is defined in Rule 1.1(ff) to mean 
any exchange, alternative trading system (``ATS'') or other broker-
dealer (1) with which the Exchange maintains an electronic linkage, 
and (2) that provides instantaneous responses to orders routed from 
the Exchange.
    \6\ For securities priced below $1.00 that route to and execute 
on an Away Market, the Exchange charges a fee of 0.30% of the total 
dollar value of the transaction for executions in an Away Market 
auction as well as all other executions. The Exchange proposes no 
changes to these routing fees.
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    The Exchange proposes to charge a fee of $0.0035 per share for all 
other executions in securities with a price at or above $1.00. The 
Exchange also proposes a fee of $0.0030 if the member organization has 
adding ADV \7\ in Tapes A, B, and C combined that is at least 0.20% of 
Tapes A, B and C CADV combined.
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    \7\ The Exchange proposes to use ``adding ADV'' in connection 
with the routing fees for UTP Securities to distinguish it from the 
defined term ``Adding ADV'' that only applies to Tape A securities. 
See NYSE Price List, notes 2 & 4 and note 3, supra.
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Incremental SLP Step Up Tier
    The Exchange proposes a new, incremental SLP step up tier 
designated the ``Incremental SLP Step Up Tier'' that would provide an 
SLP a credit in addition to the tiered or non-tiered SLP credit up to a 
maximum combined credit when adding liquidity to the NYSE with orders 
(other than MPL orders or Retail orders) in securities with a per share 
price of $1.00 or more.
    Specifically, the Exchange would provide a credit of $0.0002 to a 
SLP in addition to the SLP's tiered or non-tiered credit for adding 
displayed liquidity provided that such combined credits do not exceed 
$0.0031 per share, if the SLP (1) meets the 10% average or more quoting 
requirement in an assigned security pursuant to Rule 107B (quotes of an 
SLP-Prop and an SLMM of the same member organization shall not be 
aggregated), and (2) adds liquidity for all assigned SLP securities in 
the aggregate (including shares of both an SLP-Prop and an SLMM of the 
same or an affiliated member organization) of an ADV of more than 0.15% 
of NYSE CADV in the billing month over the SLP's adding liquidity for 
all assigned SLP securities in the aggregate (including shares of both 
an SLP-Prop and an SLMM of the same or an affiliated member 
organization) as a percent of NYSE CADV in the second quarter of 2018.
    For example, assume a SLP adds liquidity of 0.50% in the second 
quarter of 2018, which qualifies them for the SLP Tier 2 adding credit 
of $0.0026 per share, based on the SLP Tier 2 adding requirement of 
0.45%. If that SLP adds liquidity in the billing month of at least 
0.65%, or 0.15% above their baseline, that SLP would qualify for the 
Incremental Step Up credit of $0.0002 in addition to the SLP Tier 1A 
credit of $0.00275 based on the SLP Tier 1A requirement of 0.60%, for a 
combined SLP credit of $0.00295 in that billing month. Further assume 
that same SLP adds liquidity in UTP Securities of at least 0.30% of 
Tape B and Tape C CADV combined, which would receive an additional 
$0.0001 per share. That same SLP would then qualify for a combined 
credit of $0.00305 ($0.00275 Tier 1A credit plus the $0.0002 
Incremental Step Up credit plus the $0.0001 credit from Tape B and C).
    If in the following month, assume that same SLP adds liquidity in 
the billing month of at least 0.90%, then that SLP would qualify for an 
Incremental Step Up credit of $0.0002, as well as the SLP Tier 1 credit 
of $0.0029, based on the SLP Tier 1 requirement of 0.90%, for a 
combined SLP credit of $0.0031 in that billing month. If that SLP in 
that same billing month adds liquidity in UTP Securities of at least 
0.30% of Tape B and Tape C CADV combined, the SLP would qualify to 
receive an additional $0.00005 per share for SLP Tier 1. However, since 
the combined credit would be $0.00315, the combined credit would be 
capped at $0.0031.
Tier 1 and Tier 2 Adding Credits for UTP Securities
    The current Tier 1 Adding Credit for UTP Securities offers a per 
tape credit of $0.0026 per share ($0.0025 if an MPL order) on a per 
tape basis for transactions in stocks with a per share price of $1.00 
or more when adding liquidity to the Exchange if the member 
organization has at least 0.05% of Adding CADV in Tape B or C. For 
purposes of qualifying for this tier, the 0.05% of Adding CADV could 
include

[[Page 46979]]

shares of both an SLP-Prop and an SLMM of the same or an affiliated 
member organization.
    The Exchange proposes to require at least 0.10% of Adding CADV in 
Tape B or C in order to qualify for this credit.
    Similarly, the current Tier 2 Adding Credit offers a per tape 
credit of $0.0023 per share for transactions in stocks with a per share 
price of $1.00 or more when adding liquidity to the Exchange if the 
member organization has at least 0.01% of Adding CADV in Tape B or C. 
For purposes of qualifying for this tier, the 0.01% of Adding CADV 
could include shares of both an SLP-Prop and an SLMM \8\ of the same or 
an affiliated member organization.
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    \8\ Under Rule 107B, a SLP can be either a proprietary trading 
unit of a member organization (``SLP-Prop'') or a registered market 
maker at the Exchange (``SLMM''). For purposes of the 10% average or 
more quoting requirement in assigned securities pursuant to Rule 
107B, quotes of an SLP-Prop and an SLMM of the same member 
organization are not aggregated. However, for purposes of adding 
liquidity for assigned SLP securities in the aggregate, shares of 
both an SLP-Prop and an SLMM of the same member organization are 
included.
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    The Exchange proposes to require at least 0.03% of Adding CADV in 
Tape B or C in order to qualify for this credit.
SLP Provide Tiers for UTP Securities
    Current SLP Provide Tier 2 provides a $0.0029 per share credit per 
tape in an assigned UTP Security for SLPs adding displayed liquidity to 
the Exchange if the SLP (1) adds liquidity for all assigned UTP 
Securities in the aggregate of an CADV of at least 0.01% per tape, and 
(2) meets the 10% average or more quoting requirement in 250 or more 
assigned UTP Securities in Tapes B and C combined pursuant to Rule 
107B, and (3) meets the 10% average or more quoting requirement in an 
assigned UTP Security pursuant to Rule 107B.
    The Exchange proposes to require SLPs to add liquidity for all 
assigned UTP Securities in the aggregate of an CADV of at least 0.03% 
per tape. The Exchange would also require SLPs to meet the 10% average 
or more quoting requirement in 200 or more assigned UTP Securities in 
Tapes B and C combined pursuant to Rule 107B. The other requirement for 
qualifying for this tier would remain unchanged.
    Current SLP Provide Tier 1 offers a $0.0032 per share credit per 
tape in an assigned UTP Security for SLPs adding displayed liquidity to 
the Exchange if the SLP (1) adds liquidity for all assigned UTP 
Securities in the aggregate of an CADV of at least 0.05% per tape, and 
(2) meets the 10% average or more quoting requirement in 500 or more 
assigned UTP Securities in Tapes B and C combined pursuant to Rule 
107B, and (3) meets the 10% average or more quoting requirement in an 
assigned UTP Security pursuant to Rule 107B.
    The Exchange proposes to modify the adding liquidity requirement to 
require SLPs to add liquidity for all assigned UTP Securities in the 
aggregate of an CADV of at least 0.10% per tape. The remaining 
requirements for qualifying for this tier would remain unchanged.
* * * * *
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any problems that member 
organizations would have in complying with the proposed change.
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, 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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) & (5).
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Adding Tiers
    The Exchange believes that increasing the Adding ADV requirement 
for the Tier 1 Adding Credit and the Tier 3 Adding Credit is 
reasonable, equitable and not an unfairly discriminatory allocation of 
fees because it would encourage additional liquidity on the Exchange 
and because members and member organizations benefit from the 
substantial amounts of liquidity that are present on the Exchange. The 
Exchange believes the proposed changes are equitable and not unfairly 
discriminatory because it would continue to encourage member 
organizations to send orders, thereby contributing to robust levels of 
liquidity, which benefits all market participants. The proposed changes 
will encourage the submission of additional liquidity to a national 
securities exchange, thereby promoting price discovery and transparency 
and enhancing order execution opportunities for member organizations 
from the substantial amounts of liquidity that are present on the 
Exchange. Moreover, the proposed changes are equitable and not unfairly 
discriminatory because they would apply equally to all qualifying 
member organizations, including Floor brokers, that submit orders to 
the NYSE and add liquidity to the Exchange.
Routing Fees
    The Exchange believes that its proposed routing fees for Tape A and 
UTP Securities are a reasonable, equitable and not an unfairly 
discriminatory allocation of fees because the fee would be applicable 
to all member organizations in an equivalent manner.
    The proposed fees for routing shares Tape A securities are also 
reasonable, equitable and not unfairly discriminatory because they are 
consistent with fees charged on other exchanges. In particular, the 
Exchange's proposal to charge $0.0035 per share fee to route in Tape A 
securities is consistent with the fees to route charged on other 
exchanges.\11\ The Exchange's proposal to charge a lower fee of $0.0030 
per share fee if the member organization has adding ADV in Tapes A, B, 
and C combined that is at least 0.20% of Tapes A, B and C CADV combined 
is reasonable, equitable and not unfairly discriminatory because it is 
in line with the fees charged on NYSE Arca, which charges a fee of 
$0.0030 for ETP Holders and Market Makers meeting the requirements of 
Tier 1, Tier 2 and Tier 3.
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    \11\ See page 14 of the NYSE Arca, Inc. (``NYSE Arca'') Equities 
Fees and Charges, available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf.
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    Further, the proposal to charge $0.0035 for all other executions in 
UTP Securities priced at or above $1.00 that route to and execute on 
Away Market auctions is reasonable, equitable and not unfairly 
discriminatory because it is consistent with fees charged on other 
exchanges.\12\ The proposal to charge $0.0030 if the member 
organization has adding ADV in Tapes A, B, and C combined that is at 
least 0.20% of Tapes A, B and C CADV combined is reasonable, equitable 
and not unfairly discriminatory because it is in line with the fees 
charged on NYSE Arca, which charges a fee of $0.0035 for Basic Rates 
(applicable when tier rates do not apply).
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    \12\ See id.; see also https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf.
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Incremental SLP Step Up Tier
    The Exchange believes that the proposal to introduce a new 
incremental SLP Step Up Tier is reasonable because it provides SLPs as 
well as SLPs that are also DMMs with added incentive to bring 
additional order flow to a public market. In particular, the Exchange 
believes that the new tier will provide

[[Page 46980]]

greater incentives for more active SLPs to add liquidity to the 
Exchange, to the benefit of the investing public and all market 
participants. Moreover, offering an additional credit, up to a $0.0031 
per share maximum, in addition to the SLP's tiered or non-tiered credit 
for adding displayed liquidity for SLPS that add liquidity for all 
assigned SLP securities in the aggregate (including shares of both an 
SLP-Prop and an SLMM of the same or an affiliated member organization) 
of an ADV of more than 0.15% of NYSE CADV over that SLPs' second 
quarter of 2018 adding liquidity and that meet the SLP quoting 
requirements would provide an incentive for less active SLPs to add 
displayed liquidity in order to meet the SLP quoting requirements, 
thereby contributing to additional levels of liquidity to a public 
exchange, which benefits all market participants. Finally, the Exchange 
believes that the proposed tier is equitable and not unfairly 
discriminatory because it would apply equally to all SLPs that would 
submit additional adding liquidity to the Exchange in order to qualify 
for the additional credit.
UTP Securities
    The Exchange believes that increasing the Adding ADV requirement 
for Tier 1 and Tier 2 Adding Credits per share for transactions in UTP 
Securities with a per share stock price of $1.00 or more when adding 
liquidity is reasonable because it would further contribute to 
incenting member organizations to provide additional amounts of 
liquidity on the Exchange. The Exchange believes that the proposed 
modifications to the Tier 1 and Tier 2 Adding Credit requirement are 
thus reasonable, equitable and not unfairly discriminatory because all 
member organizations would benefit from such increased levels of 
liquidity. For the same reasons, the Exchange believes that increasing 
the SLP Provide Tier 1 and Tier 2 adding liquidity requirements is also 
reasonable, equitable and not unfairly discriminatory because the 
proposed requirements will encourage the SLPs to add liquidity to the 
market in UTP Securities, thereby providing customers with a higher 
quality venue for price discovery, liquidity, competitive quotes and 
price improvement.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    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,\13\ 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 proposed 
change would foster liquidity provision and stability in the 
marketplace, thereby promoting price discovery and transparency and 
enhancing order execution opportunities for member organizations. In 
this regard, the Exchange believes that the transparency and 
competitiveness of attracting additional executions on an exchange 
market would encourage competition. The Exchange also believes that the 
proposed rule change is designed to provide the public and investors 
with a Price List that is clear and consistent, thereby reducing 
burdens on the marketplace and facilitating investor protection.
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    \13\ 15 U.S.C. 78f(b)(8).
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    Finally, 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 member organizations 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) \14\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \15\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 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-NYSE-2018-40 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-NYSE-2018-40. 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

[[Page 46981]]

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. 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-
NYSE-2018-40 and should be submitted on or before October 9, 2018.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-20192 Filed 9-14-18; 8:45 am]
 BILLING CODE 8011-01-P