[Federal Register Volume 84, Number 32 (Friday, February 15, 2019)]
[Notices]
[Pages 4567-4569]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02391]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85095; File No. SR-NYSE-2019-02]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Price List To Add a New Incentive for Supplemental Liquidity
Providers in Tape A Securities When Adding Liquidity in Securities
Traded Pursuant to Unlisted Trading Privileges
February 11, 2019.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the
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``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that,
on February 1, 2019, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') 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 its Price List to add a new
incentive for Supplemental Liquidity Providers (``SLP'') in Tape A
securities when adding liquidity in securities traded pursuant to
Unlisted Trading Privileges (``UTP'') (Tapes B and C). The Exchange
proposes to implement these changes to its Price List effective
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.
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 its Price List to add a new
incentive for SLPs in Tape A securities when adding liquidity in UTP
Securities (Tapes B and C).
The Exchange proposes to implement these changes to its Price List
effective February 1, 2019.
Proposed Rule Change
Currently, SLP Tier 1 provides that an SLP adding liquidity in Tape
A securities with a per share price of $1.00 or more is eligible for a
per share credit of $0.0029 if the SLP (1) meets the 10% average or
more quoting requirement in an assigned security pursuant to Rule 107B,
and (2) adds liquidity for all assigned SLP securities in the aggregate
(including shares of both an SLP-Prop and an SLMM of the same or an
affiliated member organization) \4\ of an ADV \5\ of more than 0.90% of
NYSE CADV, or with respect to an SLP that is also a Designated Market
Maker (``DMM'') and subject to Rule 107B(i)(2)(a), more than 0.90% of
NYSE CADV after a discount of the percentage for the prior quarter of
NYSE.
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\4\ Under Rule 107B, an SLP can be either a proprietary trading
unit of a member organization (``SLP-Prop'') or a registered market
maker at the Exchange (``SLMM''). For purposes of the 10% average or
more quoting requirement in assigned securities pursuant to Rule
107B, quotes of an SLP-Prop and an SLMM of the same member
organization are not aggregated. However, for purposes of adding
liquidity for assigned SLP securities in the aggregate, shares of
both an SLP-Prop and an SLMM of the same member organization are
included.
\5\ The defined term, ``ADV,'' is used here as defined in
footnote 2 to the Price List.
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CADV in DMM assigned securities as of the last business day of the
prior month. The SLP Tier 1 credit in the case of Non-Displayed Reserve
Orders is $0.0012.
The Exchange proposes an additional incentive to SLPs in Tape A
securities under SLP Tier 1 for SLPs that meet the current requirements
for SLP Provide Tier 1 in UTP Securities.
SLP Provide Tier 1 provides a $0.0032 per share credit per tape in
an assigned UTP Security for SLPs adding displayed liquidity to the
Exchange if the SLP (1) adds liquidity for all assigned UTP Securities
in the aggregate of an CADV of at least 0.10% for Tape B and 0.075% for
Tape C, (2) meets the 10% average or more quoting requirement in 400 or
more assigned UTP Securities in Tapes B and C combined pursuant to Rule
107B, and (3) meets the 10% average or more quoting requirement in an
assigned UTP Security pursuant to Rule 107B.
The Exchange proposes that SLPs meeting the requirements of SLP
Provide Tier 1 in UTP Securities would be eligible to qualify for the
SLP Tier 1 adding rates where the SLP, in addition to meeting the 10%
average or more quoting requirement in an assigned security pursuant to
Rule 107B, adds liquidity for all assigned SLP securities in the
aggregate of an ADV of more than 0.75% of NYSE CADV or, with respect to
SLPs that are also DMMs and subject to Rule 107B(i)(2)(a), more than
0.75% of NYSE CADV after a discount of the percentage for the prior
quarter of NYSE CADV in DMM assigned securities as of the last business
day of the prior month. The Price List would refer to this as the ``SLP
Cross Tape Tier 1 Incentive.''
For example, assume an SLP averages an Adding ADV \6\ of 28 million
shares a day in Tape A securities in the billing month where the NYSE
CADV is 3.5 billion shares, for a percent adding of CADV of 0.80% in
Tape A securities, which before the proposed change qualifies the SLP
for SLP Tier 1A in Tape A securities by meeting the current 0.60% CADV
requirement. Further assume that the SLP meets the requirements of SLP
Provide Tier 1 in UTP Securities in both Tape B securities and Tape C
securities. Under the proposed change, that SLP would be eligible for
the lower SLP Tier 1 requirement for Tape A securities of 0.75% of
CADV, which it would meet by having a percent adding CADV of 0.80%.
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\6\ ``Adding ADV'' is when a member organization has ADV that
adds liquidity to the Exchange during the billing month. Adding ADV
excludes any liquidity added by a DMM.
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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 6(b)(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) & (5).
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The Exchange believes that lowering the ADV requirement to qualify
for SLP Tier 1 in Tape A securities for SLPs that add liquidity in UTP
Securities by meeting the SLP Provide Tier 1 requirements in both Tape
B and Tape C securities is reasonable because it would further
contribute to incenting member organizations to provide additional
liquidity to a public exchange in UTP Securities, thereby promoting
price discovery and transparency and enhancing order execution
opportunities for member organizations. The Exchange believes that that
the proposal is reasonable and not unfairly discriminatory because it
would apply to all member
[[Page 4569]]
organizations eligible for the relevant SLP Tier 1 credits equally.
The Exchange further believes that the proposal is reasonable and
not unfairly discriminatory because, although the proposed alternative
requirement is offered for members organizations qualifying for SLP
Tier 1 and not for the SLP Non-Tier, Adding Tier 2, Adding Tier 3 and
Adding Tier 4, the proposal will encourage SLPs that do not currently
qualify for either the SLP Tier 1 in Tape A securities or the SLP
Provide Tier 1 in UTP Securities to add additional liquidity in order
to reach the SLP Tier 1 and SLP Provide Tier 1. The Exchange notes that
SLPs qualifying for SLP Tier 2 in Tape A securities that receive a
credit of $0.0026 and that do not trade UTP Securities can qualify for
the SLP Tier 1 credit of $0.0029 by meeting the requirements for the
SLP Step Up Tier 1 and thereby receive an additional $0.0003 credit,
for a combined adding credit of $0.0029.
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 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,\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
change would foster liquidity provision and stability in the
marketplace, thereby promoting price discovery and transparency and
enhancing order execution opportunities for member organizations. In
this regard, the Exchange believes that the transparency and
competitiveness of attracting additional executions on an exchange
market would encourage competition. The Exchange also believes that the
proposed rule change is designed to provide the public and investors
with a Price List that is clear and consistent, thereby reducing
burdens on the marketplace and facilitating investor protection.
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\9\ 15 U.S.C. 78f(b)(8).
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Finally, 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
with alternative trading systems that have been exempted from
compliance with the statutory standards applicable to exchanges.
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 member organizations 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) \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 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-NYSE-2019-02 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-NYSE-2019-02. 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-NYSE-2019-02 and should be submitted on
or before March 8, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-02391 Filed 2-14-19; 8:45 am]
BILLING CODE 8011-01-P