[Federal Register Volume 83, Number 224 (Tuesday, November 20, 2018)]
[Notices]
[Pages 58637-58640]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25235]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84583; File No. SR-NYSE-2018-53]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Its Price List as to Certain Credits Applicable to 
Supplemental Liquidity Providers

November 14, 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 October 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 proposes to amend its Price List to modify (1) the 
incremental step up tier for Supplemental Liquidity Providers 
(``SLPs''), and (2) the ADV and quoting requirements for SLP Tier 1 
rates for displayed and non-displayed orders in securities traded 
pursuant to Unlisted Trading Privileges (``UTP'') (Tapes B and C). The 
Exchange proposes to implement these changes to its Price List 
effective November 1, 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, 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 modify (1) the 
incremental SLP step up tier, and (2) the ADV and quoting requirements 
for SLP Tier 1 rates for displayed and non-displayed orders in UTP 
securities.
    The Exchange proposes to implement these changes to its Price List 
effective November 1, 2018.
Incremental SLP Step Up Tier
    The Exchange currently provides 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) 
(the ``Quoting Requirement''), 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 
average daily trading volume (``ADV'') \4\ of more than 0.15% of NYSE 
consolidated average daily volume (``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.
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    \4\ Footnote 2 to the Price List defines ADV as ``average daily 
volume''. The Exchange is not proposing to change this definition.
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    The Exchange proposes to modify the Incremental SLP Step Up Tier to 
provide additional ways that SLPs

[[Page 58638]]

adding different amounts of displayed liquidity to the Exchange can 
qualify for a credit.
    Specifically, the Exchange would provide an incremental credit of 
$0.0001 to SLPs that (1) meet the Quoting Requirement, and (2) 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 0.10% 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.
    Alternatively, the Exchange would continue provide an incremental 
credit of $0.0002 to SLPs that (1) meet the Quoting Requirement, and 
(2) 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 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.
    Finally, the Exchange would provide an incremental credit of 
$0.0003 to SLPs that (1) meet the Quoting Requirement, and (2) 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 0.25% 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.
    The Exchange proposes that SLPs could only qualify for one of the 
three proposed credits in a billing month. Further, the combined SLP 
credits cannot exceed $0.0032 per share in a billing month.
    For example, assume a SLP adds liquidity of 0.50% in the second 
quarter of 2018 (the ``Baseline''), which would qualify 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:
     More than 0.60%, or 0.10% above the Baseline, that SLP 
would qualify for the Incremental Step Up credit of $0.0001 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 $0.00285 in that 
billing month.
     more than 0.65%, or 0.15% above the 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.
     more than 0.75%, or 0.25% above the Baseline, that SLP 
would qualify for the Incremental Step Up credit of $0.0003 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 $0.00305 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 $0.00315 ($0.00275 Tier 1A credit plus 
the $0.0003 Incremental Step Up credit plus the $0.0001 credit from 
Tape B and C SLP Adding).
    If an SLP qualified for the SLP Tier 1 credit of $0.0029 plus the 
Incremental Step Up Credit of $0.0003 and an additional credit of 
$0.0001 for adding liquidity in UTP Securities of at least 0.30% of 
Tape B and Tape C CADV combined, or $0.0033 in total, that SLP credit 
would be limited to a total credit of $0.0032 per share.
Quoting and Adding Requirements for SLP Tiered Credits
    Currently, the Exchange offers tiered rates for displayed and non-
displayed orders by SLPs that add liquidity to the Exchange in UTP 
Securities priced at or above $1.00. Specifically, Tier 1 provides 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 0.10% 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 the SLP to add liquidity for all assigned UTP Securities in the 
aggregate of an CADV of at least 0.10% for Tape B and 0.075%for Tape C. 
In addition, the Exchange proposes to require SLPs to meets the 10% 
average or more quoting requirement in 400 or more assigned UTP 
Securities in Tapes B and C combined pursuant to Rule 107B.
    The remaining requirements and credits for qualifying for Tier 1 
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,\5\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\6\ 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) & (5).
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Incremental SLP Step Up Tier
    The Exchange believes that the proposal to modify the Incremental 
SLP Step Up Tier to provide additional ways that SLPs adding different 
amounts of displayed liquidity to the Exchange can qualify for a credit 
is reasonable because it provides existing SLPs (including 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 tiered 
rates will provide additional incentives for more active SLPs to add 
liquidity to the Exchange, to the benefit of the investing public and 
all market participants. Moreover, offering additional credits, up to a 
$0.0032 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 0.10%, 0.15% or 0.25% of 
NYSE CADV over that SLPs' second quarter of 2018 adding liquidity and 
that meet the SLP quoting requirements would provide incentives for 
less active SLPs to add displayed liquidity in order to meet the SLP 
quoting requirements, thereby contributing to additional levels

[[Page 58639]]

of displayed liquidity and quoting on a public exchange, which benefits 
all market participants. The Exchange also believes the new tiered 
rates, combined with higher credits from existing tiers such as the SLP 
Step Up Tier and credits for SLPs that are in their first two calendar 
months as an SLP, will also encourage member organizations that are not 
currently SLPs to participate in the SLP program. The Exchange also 
believes it is reasonable to raise the limit on combined SLP credits 
from $0.0031 to $0.0032 per share in a billing month as the Incremental 
SLP Step Up Tier now offers a higher credit of $0.0001 over the current 
Incremental SLP Step Up Tier credit.
    Finally, the Exchange believes that the proposed tier modifications 
are equitable and not unfairly discriminatory because they would apply 
equally to all SLPs that would submit additional adding liquidity to 
the Exchange in order to qualify for the additional credits.
Quoting and Adding Requirements for SLP Tiered Credits
    The Exchange believes that retaining a 0.10% adding liquidity 
requirement for SLP Provide Tier 1 for Tape B securities and lowering 
it slightly to 0.075% for Tape C securities is reasonable, equitable 
and not unfairly discriminatory because the proposed requirements will 
encourage the SLPs to add liquidity to the market in Tape C securities, 
thereby providing customers with a higher quality venue for price 
discovery, liquidity, competitive quotes and price improvement.
    The Exchange also believes that lowering the requirements for 
adding and quoting will encourage participation from a greater number 
of current and new SLPs which would promote additional liquidity in 
Tape C securities. Further, the Exchange believes that it reasonable, 
equitable and not unfairly discriminatory to lower the adding 
requirements for SLP Provide Tier 1 in Tape C securities while keeping 
the adding requirements for SLP Provider Tier 1 in Tape B securities 
unchanged as the Exchange's market share in Tape C securities is 
relatively lower than in Tape B securities.
    For the same reasons, the Exchange believes that lowering the SLP 
Provide Tier 1 quoting requirement to 400 or more assigned UTP 
securities in Tapes B and C combined pursuant to Rule 107B is 
reasonable, equitable and not unfairly discriminatory as it will 
encourage additional SLPs to qualify for the higher Tier 1 SLP credit.
    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,\7\ 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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    \7\ 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) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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) \10\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \10\ 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-2018-53 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-2018-53. 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/

[[Page 58640]]

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. 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-2018-53 and should be 
submitted on or before December 11, 2018.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-25235 Filed 11-19-18; 8:45 am]
 BILLING CODE 8011-01-P