[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