[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