[Federal Register Volume 84, Number 26 (Thursday, February 7, 2019)]
[Notices]
[Pages 2628-2630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-01389]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85035; File No. SR-NYSEARCA-2018-101]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Arca Equities Fees and Charges Regarding Credits Applicable To Lead 
Market Makers and to ETP Holders and Market Makers Affiliated With the 
LMM That Provide Displayed Liquidity to the NYSE Arca Book in Tape B 
Securities

February 1, 2019.
    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 26, 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Equities Fees and 
Charges (the ``Fee Schedule'') regarding credits applicable to Lead 
Market Makers (``LMMs'') \4\ and to ETP Holders and Market Makers 
affiliated with the LMM that provide displayed liquidity to the NYSE 
Arca Book in Tape B Securities. The Exchange proposes to implement the 
proposed fee change on January 2, 2019. 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.
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    \4\ The term ``Lead Market Maker'' is defined in Rule 1.1(w) to 
mean a registered Market Maker that is the exclusive Designated 
Market Maker in listings for which the Exchange is the primary 
market.
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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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule regarding credits 
applicable to LMMs \5\ and to ETP Holders and Market Makers affiliated 
with the LMM that provide displayed liquidity to the NYSE Arca Book in 
Tape B Securities. The Exchange proposes to implement the proposed fee 
change on January 2, 2019.
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    \5\ The term ``Lead Market Maker'' is defined in Rule 1.1(w) to 
mean a registered Market Maker that is the exclusive Designated 
Market Maker in listings for which the Exchange is the primary 
market.
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    The Exchange currently provides tier-based incremental credits for 
orders that provide displayed liquidity to the NYSE Arca Book in Tape B 
Securities. Specifically, LMMs that are registered as the LMM in Tape B 
Securities that have a consolidated average daily volume (``CADV'') in 
the previous month of less than 100,000 shares, or 0.0070% of 
Consolidated Tape B ADV, whichever is greater (``Less Active ETP 
Securities''), and the ETP Holders and Market Makers affiliated with 
such LMMs, currently receive an additional credit for orders that 
provide displayed liquidity to the Book in any Tape B Securities that 
trade on the Exchange.\6\ The current incremental credits and volume 
thresholds are as follows:
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    \6\ The Exchange defines ``affiliate'' to ``mean any ETP Holder 
under 75% common ownership or control of that ETP Holder.'' See Fee 
Schedule, NYSE Arca Marketplace: General.

 An additional credit of $0.0004 per share if an LMM is 
registered as the

[[Page 2629]]

LMM in at least 300 Less Active ETP Securities
 An additional credit of $0.0003 per share if an LMM is 
registered as the LMM in at least 200 but less than 300 Less Active ETP 
Securities
 An additional credit of $0.0002 per share if an LMM is 
registered as the LMM in at least 100 but less than 200 Less Active ETP 
Securities
 An additional credit of $0.0001 per share if an LMM is 
registered as the LMM in at least 75 but less than 100 Less Active ETP 
Securities

    The incremental credits also apply to ETP Holders and Market Makers 
affiliated with the LMM whose orders in Tape B Securities provide 
displayed liquidity to the NYSE Arca Book.
    The number of Less Active ETP Securities for the billing month is 
based on the number of Less Active ETP Securities in which an LMM is 
registered as the LMM on the last business day of the previous month. 
The Exchange proposes to amend the manner by which it determines how 
many Less Active ETP Securities in which an LMM is registered as the 
LMM. As proposed, the number of Less Active ETP Securities for the 
billing month would be based on the number of Less Active ETP 
Securities in which an LMM is registered as the LMM on the average of 
the first and last business day of the previous month. The Exchange 
would no longer make this determination based solely on the number of 
Less Active ETP Securities in which an LMM is registered as the LMM on 
just the last business day of the previous month.
    For example, assume a LMM has 95 Less Active ETP Securities on the 
last day of the previous month. Further assume that same LMM has 115 
Less Active ETP Securities on the first day of that same previous 
month. For purposes of this pricing tier, the LMM had 105 Less Active 
ETP Securities (the average of 95 and 115 Less Active ETP Securities) 
for the previous month and would therefore qualify for an additional 
credit of $0.0002 per share as that LMM is registered as the LMM in at 
least 100 but less than 200 Less Active ETP Securities.
* * * * *
    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,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\8\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed rule change to amend the 
manner by which the Exchange would determine how many Less Active ETP 
Securities in which an LMM is registered as the LMM is reasonable 
because it is intended to reduce the impact of relying on one day to 
count an LMM's registration in Less Active ETP Securities. The Exchange 
believes that expanding the date for determining registration to also 
include the first day of the previous billing month would provide 
greater diversity of calculating LMM registration in Less Active ETP 
Securities and would reduce the impact to LMMs from relying on one day 
registration in Less Active ETP Securities. Further, a LMM that loses 
registration in Less Active ETP Securities after the first day of the 
previous billing month would have the remainder of the month to 
register for additional Less Active ETP Securities to make up for any 
loss of Less Active ETP Securities for that billing month.
    The Exchange believes it is equitable and not unfairly 
discriminatory to amend the manner by which the Exchange would 
determine how many Less Active ETP Securities in which an LMM is 
registered as the LMM, as the proposed change would apply to all 
qualifying participants on an equal basis.
    The proposed rule change is intended to encourage LMMs to promote 
price discovery and market quality in Less Active ETP Securities for 
the benefit of all market participants. Moreover, the Exchange believes 
that the proposed fee change would incentivize LMMs to register as an 
LMM in Less Active ETP Securities and thus, add more liquidity in these 
and other Tape B Securities to the benefit of all market participants.
    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 these 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,\9\ 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 
fee change would encourage increased participation by LMMs in the 
trading of ETP securities generally and Less Active ETP Securities, in 
particular. The proposed change would also 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 affiliated with LMMs.
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    \9\ 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. In 
such an environment, the Exchange must continually review, and consider 
adjusting, its fees and credits to remain competitive with other 
exchanges. For the reasons described above, the Exchange believes that 
this proposal promotes a competitive environment.

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) \10\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \11\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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) \12\ of the Act to determine whether the proposed 
rule

[[Page 2630]]

change should be approved or disapproved.
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    \12\ 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-2018-101 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-NYSEARCA-2018-101. 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 such 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-2018-101, and should be 
submitted on or before February 22, 2019.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-01389 Filed 2-6-19; 8:45 am]
BILLING CODE 8011-01-P