[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