[Federal Register Volume 84, Number 32 (Friday, February 15, 2019)]
[Notices]
[Pages 4579-4581]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02390]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85094; File No. SR-NYSEARCA-2019-05]


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

 February 11, 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 January 31, 2019, 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 (the ``Fee Schedule''). The Exchange proposes to implement the 
proposed fee change on February 1, 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.

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.

[[Page 4580]]

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 regarding the 
Exchange's tiered-rebate structure applicable to Lead Market Makers 
(``LMMs'') \4\ and to ETP Holders and Market Makers affiliated with the 
LMM that provide displayed liquidity in Tape B Securities to the NYSE 
Arca Book. The Exchange proposes to implement the proposed fee change 
on February 1, 2019.
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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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    The Exchange currently provides tier-based incremental credits for 
orders that provide displayed liquidity in Tape B Securities to the 
NYSE Arca Book.\5\ 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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    \5\ See Securities Exchange Act Release Nos. 76084 (October 6, 
2015), 80 FR 61529 (October 13, 2015) (SR-NYSEArca-2015-87); and 
79597 (December 19, 2016), 81 FR 94460 (December 23, 2016) (SR-
NYSEArca-2016-165).
    \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 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 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 average of the first and last business day 
of the previous month.
    The Exchange proposes to amend the CADV criteria for Less Active 
ETP Securities. As proposed, a Less Active ETP Security would be a Tape 
B Security that has a CADV in the previous month of less than 100,000 
shares, or 0.010% of Consolidated Tape B ADV, whichever is greater.
    The Exchange is not proposing any change to the level of the 
incremental credits and volume thresholds noted above that are payable 
to LMMs and to ETP Holders and Market Makers affiliated with the LMM.
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) of the Act,\8\ in that it is an 
equitable allocation of reasonable dues, fees and other charges among 
Exchange members and issuers and other persons using its facilities. 
The Exchange also believes the proposed rule change furthers the 
objectives of Section 6(b)(5) of the Act,\9\ in that it is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanisms of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest [sic] is not designed to 
permit unfair discrimination between customers, issuers, brokers and 
dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed change to the CADV criteria 
for Less Active ETP Securities is consistent with Section 6(b)(4) and 
6(b)(5) of the Act in that it is fair, equitable and not unfairly 
discriminatory because it would apply equally to all LMMs and to ETP 
Holders and Market Makers affiliated with the LMM. All LMMs and ETP 
Holders and Market Makers affiliated with the LMM are subject to the 
same fee schedule, and access to the Exchange is offered on terms that 
are not unfairly discriminatory. The Exchange further believes that the 
proposed rule change is not unfairly discriminatory because it is 
consistent with the market quality and competitiveness benefits 
associated with the fee program.
    The Exchange believes that the proposed change to the CADV criteria 
for Less Active ETP Securities is consistent with Section 6(b)(5) of 
the Act in that it promotes equitable access to the Exchange for all 
market participants. To the extent that LMM volume is increased by the 
proposed rule change, market participants will increasingly compete for 
the opportunity to trade on the Exchange including sending more orders 
to the Exchange. The resulting volume and liquidity would benefit all 
market participants by providing more trading opportunities and tighter 
spreads.
    The specific CADV criteria is set based upon business 
determinations and an analysis of current volume levels. The proposed 
fee change is intended to encourage LMMs and ETP Holders and Market 
Makers affiliated with such LMMs to promote price discovery and market 
quality in Less Active ETP Securities for the benefit of all market 
participants.
    The CADV criteria is intended to continue to incentivize LMMs and 
ETP Holders and Market Makers affiliated with the LMM to increase the 
orders they send to the Exchange for the benefit of all market 
participants. Increasing the number of orders sent to the Exchange 
would in turn provide tighter and more liquid markets, and therefore 
attract more business overall. The proposed rule change is intended to 
encourage participation from a greater number of LMMs, which would 
promote price discovery and market quality in Less Active ETP 
Securities for the benefit of all market participants. Additionally, 
volume-based rebates such as the ones currently in place on the 
Exchange have been widely adopted in the cash equities markets and are 
equitable because they are open to all LMMs and ETP Holders and Market 
Makers affiliated with such LMMs on an equal basis and provides 
additional benefits that are reasonably related to the value to an 
exchange's market quality associated with higher levels of market 
activity.
    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.

[[Page 4581]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\10\ 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. The incremental credits applicable to Less Active 
ETP Securities is intended to promote narrower spreads and encourage 
the posting of liquidity, and thus promote better prices. The proposed 
rule change should 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. Additionally, the proposed rule change 
should allow the Exchange to continue to attract and compete for order 
flow in Tape B Securities with other exchanges. However, this 
competition does not create an undue burden on competition but rather 
offers all market participants the opportunity to receive the benefit 
of competitive pricing.
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    \10\ 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) \11\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \12\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \13\ 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-2019-05 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-2019-05. 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 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-2019-05 and should be submitted 
on or before March 8, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-02390 Filed 2-14-19; 8:45 am]
 BILLING CODE 8011-01-P