[Federal Register Volume 83, Number 243 (Wednesday, December 19, 2018)]
[Notices]
[Pages 65190-65192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27408]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84819; File No. SR-NYSEArca-2018-90]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE
Arca Equities Fees and Charges
December 13, 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 December 3, 2018, 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 Fees and
Charges (``Fee Schedule''). 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 the Fee Schedule by increasing the
credit applicable to the Retail Order Step-Up Tier 2, as described
below.
The Exchange currently has a Retail Order Step-Up Tier 2 credit of
$0.0035 per share for Retail Orders \4\ that provide displayed
liquidity during the month in Tape A, Tape B and Tape C Securities that
applies to ETP Holders, including Market Makers, that provide liquidity
an average daily share volume per month of 1.10% or more of the U.S.
CADV, and execute an ADV of Retail Orders with a time-in-force
designation of Day that add or remove liquidity during the month that
is an increase of 0.35% or more of the U.S. CADV above their April 2018
ADV taken as a percentage of U.S. CADV. Retail Orders with a time-in-
force designation of Day that remove liquidity from the Book are not
charged a fee.\5\ The Exchange proposes to increase the current credit
for Retail Orders that provide displayed liquidity during the month in
Tape A, Tape B and Tape C Securities to $0.0038 per share. The Exchange
is not proposing any other change to the Retail Order Step-Up Tier 2.
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\4\ A Retail Order is an agency order that originates from a
natural person and is submitted to the Exchange by an ETP Holder,
provided that no change is made to the terms of the order to price
or side of market and the order does not originate from a trading
algorithm or any other computerized methodology. See Securities
Exchange Act Release No. 67540 (July 30, 2012), 77 FR 46539 (August
3, 2012) (SR-NYSEArca-2012-77).
\5\ See Securities Exchange Act Release No. 83828 (August 10,
2018), 83 FR 40816 (August 16, 2018) (SR-NYSEArca-2018-58). An ETP
Holder that qualifies for the Retail Order Step-Up Tier 2 also
receives a credit of $0.0035 per share for orders (not just Retail
Orders) that provide displayed liquidity to the order book in Tape C
Securities, and an incremental credit of $0.0002 per share for
orders that provide non-displayed liquidity to the order book in
Tape C Securities. The incremental credit is in addition to the ETP
Holder's or Market Maker's Tiered or Basic Rate credit(s). Pursuant
to the Retail Order Step-Up Tier 2, ETP Holders and Market Makers
pay a fee of $0.0027 per share for orders that take liquidity from
the order book in Tape C Securities.
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For all other fees and credits, tiered or basic rates apply based
on a firm's qualifying levels.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\6\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\7\ 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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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4) and (5).
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[[Page 65191]]
The Exchange believes that the amendment to the Retail Order Step-
Up Tier 2 is reasonable, equitable and not unfairly discriminatory
because the proposed amendment would apply uniformly to all similarly
situated ETP Holders and Market Makers that send orders to the
Exchange. The Exchange believes providing increased credits for Retail
Orders that provide displayed liquidity in Tape A, Tape B and Tape C
Securities will incentivize ETP Holders to send a greater number of
such orders to the Exchange and therefore provide greater liquidity
that supports the quality of price discovery and promotes market
transparency. The Exchange further believes that the proposed increased
credit would create an added financial incentive for ETP Holders to
bring additional retail order flow to a public market. The Exchange
believes that by recalibrating the credits for providing liquidity will
attract additional order flow and liquidity to the Exchange, thereby
contributing to price discovery on the Exchange and benefiting
investors generally.
The Exchange believes the Retail Order Step-Up Tier 2 is equitable
and not unfairly discriminatory because it is available to all ETP
Holders and Market Makers on an equal basis and provides discounts that
are reasonably related to the value to the Exchange's market quality
associated with higher volumes. The Exchange does not believe that it
is unfairly discriminatory to offer increased credits to ETP Holders
and Market Makers as these participants would be subject to additional
volume requirements.
The Exchange believes that the proposed rule change is equitable
and not unfairly discriminatory because maintaining or increasing the
proportion of Retail 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. This
aspect of the proposed rule change also is consistent with the Act
because all similarly situated ETP Holders would pay the same rate, as
is currently the case, and because all ETP Holders would be eligible to
qualify for the rates by satisfying the related threshold, where
applicable. Furthermore, the submission of Retail Orders is optional
for ETP Holders, in that an ETP Holder could choose whether to submit
Retail Orders and, if it does, the extent of its activity in this
regard.
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,\8\ 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
rule change 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 comparable transaction pricing, by encouraging
additional orders to be sent to the Exchange for execution. The
Exchange also believes that the proposed rule change is consistent with
the Act because it strikes an appropriate balance between fees and
credits, which will encourage submission of orders to the Exchange,
thereby promoting competition.
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\8\ 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 to attract order
flow to the Exchange. 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) \9\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \10\ thereunder, because it establishes a due, fee, or other charge
imposed by the Exchange.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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) \11\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\11\ 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-2018-90 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-2018-90. 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 65192]]
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-NYSEArca-2018-90 and should
be submitted on or before January 9, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27408 Filed 12-18-18; 8:45 am]
BILLING CODE 8011-01-P