[Federal Register Volume 84, Number 100 (Thursday, May 23, 2019)]
[Notices]
[Pages 23821-23823]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-10752]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85888; File No. SR-NYSEARCA-2019-37]


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 To Adopt a Higher Credit for the Tier 2 
Pricing Tier

May 17, 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 May 10, 2019, NYSE Arca, Inc. (``NYSE Arca'' 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 the NYSE Arca Equities Fees and 
Charges (``Fee Schedule'') to adopt a higher credit for the Tier 2 
pricing tier. The Exchange proposes to implement the fee changes 
effective May 10, 2019.\4\ 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 Exchange originally filed to amend the Fee Schedule on 
April 30, 2019 (SR-NYSEArca-2019-31) and withdrew such filing on May 
10, 2019.
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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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to adopt a higher 
credit for Tier 2. The Exchange proposes to implement the fee changes 
effective May 10, 2019.
    The Exchange proposes to adopt a higher credit for a current 
pricing tier--Tier 2--for securities with a per share price $1.00 or 
above.
    Currently, a Tier 2 credit of $0.0029 per share for orders in Tape 
A and Tape C Securities that provide liquidity to the Book, and a 
credit of $0.0022 per share for orders in Tape B Securities \5\ that 
provide liquidity to the Book, applies to ETP Holders and Market Makers 
that either (1) provide liquidity an average daily share volume per 
month of 0.30% or more, but less than 0.70% of the US CADV or (2) 
provide liquidity of 0.10% of more of the US CADV per month, and are 
affiliated with an OTP Holder or OTP Firm that provides an ADV of 
electronic posted Customer and Professional Customer executions in all 
issues on NYSE Arca Options (excluding mini options) of at least 1.50% 
of total Customer equity and ETF option ADV as reported by The Options 
Clearing Corporation (``OCC'').
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    \5\ An additional credit applies to ETP Holders and Market 
Makers affiliated with LMMs that provide displayed liquidity to the 
Book based on the number of Less Active ETP Securities in which the 
LMM is registered as the LMM. See LMM Transaction Fees and Credits 
on the Fee Schedule for the applicable tiered credits.
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    The Exchange proposes to adopt a higher credit of $0.0031 per share 
for orders that provide liquidity in Tape A and Tape C Securities, and 
$0.0024 per share for orders that provide liquidity in Tape B 
Securities. The proposed higher credit would be applicable for orders 
that provide displayed liquidity to the Book for ETP Holders and Market 
Makers that meet the requirements of Tier 2 described above and, for 
the billing month, (1) execute providing volume equal to at least 0.30% 
of US CADV, (2) execute removing volume equal to at least 0.285% of US 
CADV, and (3) execute Market-On-Close and Limit-On-Close Orders 
executed in a Closing Auction of at least 0.075% of US CADV.
    For example, assume an ETP Holder posts an order for 1,000 shares 
that provides liquidity to the Book. Assume further that 600 shares, 
from the 1,000 shares that are posted and therefore are adding 
liquidity, trade against an incoming order which would be removing 
liquidity. The 600 share execution would be a product of two orders 
interacting, one that provided liquidity and the contra order that 
removed liquidity. The remaining 400 shares of that ETP Holder's adding 
order would remain posted on the Book. The 600 shares of the adding 
order that executed and added liquidity would count towards the 
executed adding volume requirement of 0.30% of US CADV, the first prong 
of the requirement. The 400 shares of that adding order that remain 
unexecuted would not count towards the requirement.
    Further, assume the same ETP Holder sends an Immediate or Cancel 
(``IOC'') order of 1,000 shares to the Exchange, of which 600 shares 
execute against an order that was already resting on the Book. The 600 
share execution would be a product of two orders interacting, one that 
provided liquidity and the contra order that took liquidity. The 400 
shares remaining of that IOC order that did not immediately execute 
would cancel back to the ETP Holder that submitted the 1,000 share 
order. The 600 shares of the IOC order that executed and removed 
liquidity would count towards the executed removing volume requirement 
of 0.285% of US CADV, the second prong of the requirement. The 400 
shares of that IOC order that did not execute and was canceled would 
not count towards the requirement.
    Additionally, assume an ETP Holder sends a Market-On-Close 
(``MOC'') order of 2,000 shares to the Exchange for execution in the 
Closing Auction. Further assume that 1,200 shares of that MOC order 
executed in the Closing Auction, and the remaining 800 shares did not 
execute and were canceled after the Closing Auction. The 1,200 shares 
of that MOC order that executed and traded in the Closing Auction would 
count towards the Market-On-Close and Limit-On-Close Orders executed in 
a

[[Page 23822]]

Closing Auction requirement of at least 0.075% of US CADV, the third 
prong of the requirement. The 800 shares of that MOC order that were 
canceled would not count towards the requirement.
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any significant problems 
that market participants would have in complying with the proposed 
changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\7\ 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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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed modification to adopt a 
higher Tier 2 credit is reasonable because the proposed credit is 
designed to encourage increased trading by ETP Holders and Market 
Makers. The Exchange notes that ETP Holders and Market Makers that do 
not meet the requirements to qualify for the higher credit may still 
qualify for current Tier 2 credits if they meet the Tier 2 
requirements. The Exchange further believes that the higher credit will 
encourage ETP Holders and Market Makers to provide higher volumes of 
MOC and Limit-On-Close (``LOC'') Orders, which will contribute to the 
quality of the Exchange's Closing Auction and provide ETP Holders and 
Market Makers that submit MOC and LOC Orders greater opportunity for 
execution.
    The Exchange further believes the proposed higher credit is 
reasonable and appropriate in that it is based on the amount of 
business transacted on the Exchange. The Exchange believes the proposed 
increased credit for adding liquidity is also reasonable because it 
will encourage liquidity and competition in securities quoted and 
traded on the Exchange.
    The Exchange also believes the proposed higher credit is equitable 
and not unfairly discriminatory because it is open to all ETP Holders 
and Market Makers on an equal basis and provides discounts that are 
reasonably related to the value to the Exchange's market quality 
associated with higher volumes. The Exchange further believes that the 
proposed increased credit is not unfairly discriminatory because the 
magnitude of the additional credit is not unreasonably high in 
comparison to the credit paid with respect to other displayed 
liquidity-providing orders. For example, for ETP Holders and Market 
Makers that provide liquidity an average daily share volume per month 
of 0.70% or more of the US CADV receive a Tier 1 credit of $0.0031 per 
share for orders that provide liquidity in Tape A Securities, $0.0023 
per share for orders that provide liquidity in Tape B Securities, and 
$0.0032 per share for orders that provide liquidity for Tape C 
Securities.
    The Exchange does not believe that it is unfairly discriminatory to 
offer increased credits to ETP Holders and Market Makers as these 
participants would be subject to additional volume requirements.
    The Exchange believes that the proposed fee change is equitable and 
not unfairly discriminatory because providing incentives for orders in 
exchange-listed securities that are executed on a registered national 
securities exchange (rather than relying on certain available off-
exchange execution methods) would contribute to investors' confidence 
in the fairness of their transactions and would benefit all investors 
by deepening the Exchange's liquidity pool, supporting the quality of 
price discovery, promoting market transparency and improving investor 
protection.
    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,\8\ 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 proposal 
to adopt incremental credits for an existing pricing tier would 
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. The Exchange 
believes that this could promote competition between the Exchange and 
other execution venues, including those that currently offer similar 
order types and comparable transaction pricing, by encouraging 
additional orders to be sent to the Exchange for execution.
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    \8\ 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 change will impair the 
ability of ETP Holders 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) \9\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \10\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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) \11\ of the Act to

[[Page 23823]]

determine whether the proposed rule change should be approved or 
disapproved.
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    \11\ 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-2019-37 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-2019-37. 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-2019-37 and should be submitted 
on or before June 13, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-10752 Filed 5-22-19; 8:45 am]
 BILLING CODE 8011-01-P