[Federal Register Volume 84, Number 158 (Thursday, August 15, 2019)]
[Notices]
[Pages 41788-41793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-17491]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86620; File No. SR-NYSEArca-2019-56]
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 An Incremental Credit Under a
Current Pricing Tier, Cross-Asset Tier 3
August 9, 2019.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act''),\2\ and Rule 19b-4
[[Page 41789]]
thereunder,\3\notice is hereby given that on August 1, 2019, NYSE Arca,
Inc. (``NYSE Arca'' or the ``Exchange'') filed with the Securities and
Exchange Commission (``SEC'' or ``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the Exchange. 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 an incremental credit under a
current pricing tier, Cross-Asset Tier 3. The Exchange proposes to
implement the fee change effective August 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 the Fee Schedule to adopt an
incremental credit under a current pricing tier, Cross-Asset Tier 3,
that would provide an additional incentive for all ETP Holders
(including Market Makers) \4\ to provide liquidity in Tapes A and B
Securities. The Exchange proposes to implement the fee change effective
August 1, 2019.
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\4\ All references to ETP Holders in connection with Cross-Asset
Tier 3 include Market Makers.
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The purpose of this proposed rule change is to introduce a new
incremental credit of $0.0002 per share under Cross-Asset Tier 3 if an
ETP Holder meets both the existing Cross-Asset Tier 3 requirements \5\
and executes a designated percentage of volume of its US CADV, as
described below.
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\5\ To qualify for credits under Cross-Asset Tier 3, ETP Holders
are required to (a) provide liquidity of 0.30% or more of the US
CADV per month, and (b) have an affiliation 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 0.80% of total Customer equity
and ETF option ADV as reported by OCC, of which at least 0.20% of
total Customer equity and ETF option ADV as reported by OCC is from
Customer and Professional Customer executions in non-Penny Pilot
issues on NYSE Arca Options. See Fee Schedule, Cross-Asset Tier 3.
US CADV means United States Consolidated Average Daily Volume for
transactions reported to the Consolidated Tape, excluding odd lots
through January 31, 2014 (except for purposes of Lead Market Maker
pricing), and excludes volume on days when the market closes early
and on the date of the annual reconstitution of the Russell
Investments Indexes. Transactions that are not reported to the
Consolidated Tape are not included in US CADV.
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Background
The Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. In Regulation NMS,
the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \6\
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\6\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule)
(``Regulation NMS'').
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As the Commission itself recognized, the market for trading
services in NMS stocks has become ``more fragmented and competitive.''
\7\ Indeed, equity trading is currently dispersed across 13
exchanges,\8\ 31 alternative trading systems,\9\ and numerous broker-
dealer internalizers and wholesalers, all competing for order flow.
Based on publicly-available information for June 2019, no single
exchange has more than 18% market share (whether including or excluding
auction volume).\10\ Therefore, no exchange possesses significant
pricing power in the execution of equity order flow. More specifically,
in June 2019, the Exchange had 8.5% market share of executed volume of
equity trades (excluding auction volume), down from 9.0% in March
2019.\11\
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\7\ See Securities Exchange Act Release No. 51808, 84 FR 5202,
5253 (February 20, 2019) (File No. S7-05-18) (Transaction Fee Pilot
for NMS Stocks Final Rule) (``Transaction Fee Pilot'').
\8\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at http://markets.cboe.com/us/equities/market_share/. See generally https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
\9\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. Although 54
alternative trading systems were registered with the Commission as
of July 29, 2019, only 31 are currently trading. A list of
alternative trading systems registered with the Commission is
available at https://www.sec.gov/foia/docs/atslist.htm.
\10\ See Cboe Global Markets U.S. Equities Market Volume
Summary, available at http://markets.cboe.com/us/equities/market_share/.
\11\ See id.
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The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
move order flow, or discontinue or reduce use of certain products.
While it is not possible to know a firm's reason for shifting order
flow, the Exchange believes that one such reason is because of fee
changes at any of the registered exchanges or non-exchange venues to
which a firm routes order flow. These fees vary month to month, and not
all are publicly available. With respect to non-marketable order flow
that would provide displayed liquidity on an Exchange against which
market makers can quote, ETP Holders can choose from any one of the 13
currently operating registered exchanges to route such order flow.
Accordingly, competitive forces constrain exchange transaction fees
that relate to orders that would provide liquidity on an exchange.
The Exchange operates a ``Maker-Taker'' model whereby it pays
credits to members that provide liquidity and assesses fees to those
that remove liquidity. The Exchange's Fee Schedule sets forth the
rebates and fees applied on a per share basis for orders that provide
and remove liquidity, respectively. In response to this competitive
environment, the Exchange offers tiered pricing that provides ETP
Holders opportunities to qualify for higher rebates or reduced fees
where certain volume criteria and thresholds are met. Tiered pricing
provides an incremental incentive for ETP Holders to strive for higher
tier levels, which provides increasingly higher discounts for
satisfying more stringent criteria.
More specifically, the Exchange currently has multiple levels of
credits designed to incentivize ETP Holders to achieve certain levels
of participation on both the Exchange's equities and options platform
(``NYSE Arca Options''). Under Cross-Asset Tier 1 and Cross-Asset Tier
3, ETP Holders can currently receive a credit of $0.0030 per share for
orders that provide liquidity, i.e., resting limit orders available for
execution on the Exchange, in Tapes A,
[[Page 41790]]
B and C Securities.\12\ Additionally, under Cross-Asset Tier 2, ETP
Holders can currently receive the following credits for orders that
provide liquidity: $0.0031 per share in Tape A Securities; $0.0030 per
share in Tape B Securities; and $0.0032 per share in Tape C
Securities.\13\
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\12\ See Fee Schedule, Cross-Asset Tier 1 and Cross-Asset Tier
3. Additionally, under Cross-Asset Tier 3, ETP Holders can also
receive an incremental credit of $0.0004 per share in Tape C
Securities if they meet the current requirements of Cross-Asset Tier
3 and execute a designated percentage of volume of its Tape C CADV.
\13\ See Fee Schedule, Cross-Asset Tier 2.
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Proposed Fee Change for Cross-Asset Tier 3
The Exchange proposes to provide an increased incentive for ETP
Holders that otherwise qualify for the current Cross-Asset Tier 3 to
send liquidity-providing orders to the Exchange in Tapes A, B and C
Securities. As proposed, if an ETP Holder (including Market Makers)
meets the requirements of Cross-Asset Tier 3 and, for the billing
month, executes orders that provide liquidity in Tapes A, B and C
Securities that is at least 0.65% of US CADV, that ETP Holder would be
eligible for an incremental credit of $0.0002 per share for orders that
provide liquidity to the Book in Tapes A and B Securities.
For example, assume an ETP Holder meets the options requirement of
Cross- Asset Tier 3 by having an affiliation 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 0.80% of total Customer equity and
ETF option ADV as reported by OCC, of which at least 0.20% of total
Customer equity and ETF option ADV as reported by OCC is from Customer
and Professional Customer executions in non-Penny Pilot issues on NYSE
Arca Options. Further assume that ETP Holder provides liquidity of 24.5
million shares in a month where US CADV is 7.0 billion shares, or 0.35%
of US CADV, thereby meeting the current requirements and qualifying for
the Cross-Asset Tier 3 credit of $0.0030 per share. If that ETP Holder
instead provides liquidity of at least 45.5 million shares, or 0.65% of
US CADV, that ETP Holder would be eligible for the proposed incremental
credit of $0.0002 per share for orders that provide liquidity to the
Book in Tapes A and B Securities, for a combined credit of $0.0032 per
share.
Applicability of Proposed Rule Change
The proposed rule change is designed to be available to all ETP
Holders on the Exchange and is intended to provide ETP Holders an
additional opportunity to receive an enhanced rebate by executing more
of their orders on the Exchange.
The Exchange proposes to increase the credits available under the
Cross-Asset Tier 3 pricing tier to provide an incentive for ETP Holders
to send increased order flow to qualify for these tiers. If an ETP
Holder qualifies for Cross-Asset Tier 3 and meets the additional
proposed volume requirement, that ETP Holder would be eligible for an
incremental credit as compared to the current credit for qualifying for
Cross-Asset Tier 3, which is $0.0030 per share credit for orders that
provide liquidity in Tapes A, B and C Securities.
The Exchange does not know how much order flow ETP Holders choose
to route to other exchanges or to off-exchange venues. There are
currently no firms that qualify for the credits under the current
Cross-Asset Tier 1 pricing tier. There is currently one firm that
qualifies for the credits under the current Cross-Asset Tier 2 pricing
tier and one firm that qualifies for the credits under the current
Cross-Asset Tier 3 pricing tier.\14\ However, without having a view of
ETP Holders' activity on other markets and off-exchange venues, the
Exchange has no way of knowing whether this proposed rule change would
result in any ETP Holders qualifying for the incremental credit. The
Exchange believes the proposed increased credit for Cross-Asset Tier 3
would provide an incentive for ETP Holders to submit additional
liquidity-providing orders to the Exchange to qualify for the
incremental credit.
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\14\ As of July 24, 2019, there are 165 ETP Holders on the
Exchange, of which 57 are affiliated with an OTP Holder or OTP Firm
and could therefore, qualify for the Exchange's Cross-Asset pricing
tiers.
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As noted above, the Exchange operates in a competitive environment,
particularly as it relates to attracting non-marketable, providing
liquidity that would be displayed on the Exchange. The proposed rule
change is designed to incentivize ETP Holders to increase the orders
sent to the Exchange that would provide liquidity, which would support
the quality of price discovery and transparency on the Exchange. The
Exchange believes that by correlating the level of the credit to the
level of executed providing volume on the Exchange, the Exchange's fee
structure would incentivize ETP Holders to submit more displayed,
liquidity-providing orders to the Exchange that are likely to be
executed (i.e., are not orders that are intended to be displayed, but
are priced such that they are not likely to be executed), thereby
increasing the potential for incoming marketable orders submitted to
the Exchange to receive an execution.
With respect to the proposed new incremental credit under Cross-
Asset Tier 3 for orders that provide liquidity, while there is
currently one ETP Holder that qualifies for Cross-Asset Tier 3, the
Exchange believes that at least three other ETP Holders could qualify
for the proposed new incremental credit if these firms were to direct
more of their eligible order flow to the Exchange such that these firms
would then meet both the existing Cross-Asset Tier 3 requirements and
the proposed new volume 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,\15\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\16\ 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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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposed Fee Change is Reasonable
As discussed above, the Exchange operates in a highly fragmented
and competitive market. The Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
in Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \17\
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\17\ See Regulation NMS, 70 FR at 37499.
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As the Commission itself recognized, the market for trading
services in NMS stocks has become ``more fragmented
[[Page 41791]]
and competitive.'' \18\ Indeed, equity trading is currently dispersed
across 13 exchanges,\19\ 31 alternative trading systems,\20\ and
numerous broker-dealer internalizers and wholesalers, all competing for
order flow. Based on publicly-available information, no single exchange
has more than 18% market share (whether including or excluding auction
volume).\21\ Therefore, no exchange possesses significant pricing power
in the execution of equity order flow. More specifically, as noted
earlier, the Exchange averaged less than 9% market share of executed
volume of equity trades (excluding auction volume) for June 2019. The
Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
shift order flow, or discontinue to reduce use of certain categories of
products, in response to fee changes. Accordingly, competitive forces
reasonably constrain exchange transaction fees. Stated otherwise,
changes to exchange transaction fees can have a direct effect on the
ability of an exchange to compete for order flow.
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\18\ See Transaction Fee Pilot, 84 FR at 5253.
\19\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at http://markets.cboe.com/us/equities/market_share/.
\20\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. Although 54
alternative trading systems were registered with the Commission as
of July 29, 2019, only 31 are currently trading. A list of
alternative trading systems registered with the Commission is
available at https://www.sec.gov/foia/docs/atslist.htm.
\21\ See Cboe Global Markets U.S. Equities Market Volume
Summary, available at http://markets.cboe.com/us/equities/market_share/.
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The Exchange believes the proposed increased credit is reasonable
as it would provide an additional incentive for ETP Holders to qualify
for the new incremental credit and direct their order flow to the
Exchange and provide meaningful added levels of liquidity, thereby
contributing to the depth and market quality on the Exchange. As noted
above, the Exchange operates in a highly competitive environment,
particularly for attracting order flow that provides liquidity on an
exchange. The Exchange believes it is reasonable to continue to provide
a higher credit for orders that provide liquidity if an ETP Holder
meets the heightened volume requirements to qualify for the new
incremental credit.
Because the proposed amendment to the Cross-Asset Tier 3 pricing
tier would be new with a requirement to increase liquidity providing
orders, no ETP Holder currently qualifies for the proposed new
incremental credit.
The Exchange notes that volume-based incentives and discounts have
been widely adopted by exchanges,\22\ including the Exchange,\23\ and
are reasonable, equitable and non-discriminatory because they are open
to all ETP Holders on an equal basis and provide additional credits
that are reasonably related to the value to an exchange's market
quality and associated higher levels of market activity.
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\22\ See e.g., Cboe BZX U.S. Equities Exchange (``BZX'') Fee
Schedule, Footnote 1, Add Volume Tiers which provide enhanced
rebates between $0.0025 and $0.0032 per share for displayed orders
where BZX members meet certain volume thresholds.
\23\ See e.g., Fee Schedule, Step Up Tier, Step Up Tier 2, Step
Up Tier 3 and Step Up Tier 4, which provide enhanced rebates between
$0.0025 and $0.0033 per share in Tape A Securities, between $0.0022
and $0.0034 per share in Tape B Securities, and between $0.0025 and
$0.0033 per share in Tape C Securities for orders that provide
displayed liquidity where ETP Holders meet certain volume
thresholds.
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As noted previously, there are a small number of firms that
currently qualify or could qualify for the credits under the current
Cross-Asset Tier 1, Cross-Asset Tier 2, and Cross-Asset Tier 3 pricing
tiers and if these firms were to submit more of their liquidity-
providing orders to the Exchange, each could qualify for the proposed
new incremental credit. However, without having a view of ETP Holders'
activity on other markets and off-exchange venues, the Exchange has no
way of knowing whether this proposed rule change would result in any
ETP Holders qualifying for the new incremental credit. The Exchange
believes the proposed incremental credit would provide an incentive for
ETP Holders to submit additional adding liquidity to qualify for the
additional credit.
The Exchange believes that the proposed new credit for liquidity
providing orders in Tapes A, B and C Securities under the current
Cross-Asset Tier 3 pricing tier is reasonable because it provides an
incentive for ETP Holders to route additional liquidity-providing order
flow to the Exchange, which would promote price discovery and increase
execution opportunities for all ETP Holders. The proposed pricing is
structured similarly to the incremental credit the Exchange currently
provides under current Cross-Asset Tier 3, which likewise provides ETP
Holders an incremental credit of $0.0004 per share (above the tiered
rate of $0.0030 per share) if the ETP Holder meets the qualifying
requirements.\24\ The Exchange believes that the proposed change to the
Cross-Asset Tier 3 pricing tier is reasonable because an ETP Holder
that otherwise qualifies for the tier would still be eligible for the
current per share credit of $0.0030 per share for orders that provide
liquidity. The proposed additional credit is designed to provide an
incentive for such ETP Holder to route additional providing liquidity
to the Exchange, which would be eligible for the higher credit.
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\24\ See Fee Schedule, Cross-Asset Tier 3. See also Securities
and Exchange Act Release No. 80920 (June 14, 2017), 82 FR 28106
(June 20, 2017) (SR-NYSEArca-2017-64).
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On the backdrop of the competitive environment in which the
Exchange currently operates, the proposed rule change is a reasonable
attempt to increase liquidity on the Exchange and improve the
Exchange's market share relative to its competitors.
The Proposed Fee Change is an Equitable Allocation of Fees and Credits
The Exchange believes the proposed rule change is an equitable
allocation of its fees and credits. The Exchange believes that the
proposed increased credit under the Cross-Asset Tier 3 pricing tier is
equitable because the magnitude of the additional credit is not
unreasonably high in comparison to the credit paid with respect to
other pricing tiers on the Exchange, and in comparison to the credits
paid by other exchanges for orders that provide liquidity. For example,
ETP Holders currently receive credits in Tape A, Tape B and Tape C
Securities that range between $0.0022 per share and $0.0034 per share
under Step Up Tier, Step Up Tier 2, Step Up Tier 3 and Step Up Tier 4.
With respect to credits paid by the Exchange's competitors, BZX
provides a credit that ranges between $0.0028 and $0.0030 per share in
Tape A, Tape B and Tape C Securities under that market's Cross-Asset
pricing tiers.\25\
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\25\ See Cross-Asset Add Volume Tier 1-4, at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/.
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The Exchange believes that the proposed new incremental credit for
liquidity providing orders in Tapes A, B and C Securities under current
Cross-Asset Tier 3 is also equitable because the proposal would
continue to encourage ETP Holders to route liquidity-providing orders
to the Exchange in Tapes A, B and C Securities, thereby contributing to
robust levels of liquidity, which benefits all market participants.
As noted above, there are a small number of firms that currently
qualify or could qualify for the credits under the current Cross-Asset
Tier 1, Cross-Asset Tier 2, and Cross-Asset Tier 3 pricing tiers and if
these firms were to submit
[[Page 41792]]
more of their liquidity-providing orders to the Exchange, each could
qualify for the proposed new incremental credit. However, without
having a view of an ETP Holder's activity on other markets and off-
exchange venues, the Exchange believes the proposed new incremental
credit would provide an incentive for market participants to increase
liquidity in order to qualify for the proposed new incremental credit,
thereby encouraging submission of additional liquidity to the Exchange.
The proposed change will thereby encourage the submission of additional
liquidity to a national securities exchange, thus promoting price
discovery and transparency and enhancing order execution opportunities
for ETP Holders from the substantial amounts of liquidity present on
the Exchange. All ETP Holders would benefit from the greater amounts of
liquidity that will be present on the Exchange, which would provide
greater execution opportunities.
The Exchange believes the proposed rule change would improve market
quality for all market participants on the Exchange and, as a
consequence, attract more liquidity to the Exchange thereby improving
market-wide quality. The proposal neither targets nor will it have a
disparate impact on any particular category of market participant. ETP
Holders that currently qualify for credits associated with Cross-Asset
pricing tiers on the Exchange will continue to receive credits when
they provide liquidity to the Exchange. The Exchange believes that
recalibrating the credits for providing liquidity will continue to
attract order flow and liquidity to the Exchange for the benefit of
investors generally. As to those market participants that do not
presently qualify for the credits associated with Cross-Asset Tier 3,
the proposal will not adversely impact their existing pricing or their
ability to qualify for other credits provided by the Exchange.
The Proposed Fee Change is not Unfairly Discriminatory
The Exchange believes it is not unfairly discriminatory to provide
an incremental per share credit as the proposed increased credit would
be provided on an equal basis to all ETP Holders that add liquidity by
meeting the increased volume requirements under the Cross-Asset Tier 3
pricing tier. Further, the Exchange believes the proposed incremental
per share credit would incentivize ETP Holders that meet the current
Cross-Asset Tier 3 pricing tier requirements to execute more of their
liquidity-providers orders on the Exchange to qualify for the proposed
incremental credit. The Exchange also believes that the proposed change
is not unfairly discriminatory because it is reasonably related to the
value of the Exchange's market quality associated with higher volume.
The proposed incremental per share credit would apply equally to all
ETP Holders as each would be required to execute providing volume in
Tapes A, B and C Securities during the billing month equal to at least
0.65% of US CADV regardless of whether an ETP Holder currently meets
the requirement of another pricing tier.
Similarly, the Exchange believes it is not unfairly discriminatory
to provide an incremental credit for liquidity providing orders in
Tapes A and B Securities under the current Cross-Asset Tier 3 pricing
tier because the proposed credit would be provided on an equal basis to
all ETP Holders that add liquidity by meeting the proposed new volume
requirements. Further, the Exchange believes the proposed incremental
credit would incentivize ETP Holders to send more orders to the
Exchange to qualify for the higher credit.
Finally, the submission of orders to the Exchange is optional for
ETP Holders in that they could choose whether to submit orders to the
Exchange and, if they do, the extent of its activity in this regard.
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,\26\ 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, as discussed above, the Exchange believes
that the proposed rule change would encourage the submission of
additional liquidity to a public exchange, thereby promoting market
depth, price discovery and transparency and enhancing order execution
opportunities for ETP Holders. As a result, the Exchange believes that
the proposed change furthers the Commission's goal in adopting
Regulation NMS of fostering integrated competition among orders, which
promotes ``more efficient pricing of individual stocks for all types of
orders, large and small.'' \27\
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\26\ 15 U.S.C. 78f(b)(8).
\27\ Regulation NMS, 70 FR at 37498-99.
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Intramarket Competition. The proposed change is designed to attract
additional order flow to the Exchange. The Exchange believes that the
proposed incremental credit would continue to incentivize market
participants to direct and execute more orders to the Exchange. Greater
liquidity benefits all market participants on the Exchange by providing
more trading opportunities and encourages ETP Holders to send orders,
thereby contributing to robust levels of liquidity, which benefits all
market participants on the Exchange. The proposed incremental credit
would be available to all similarly-situated market participants, and,
as such, the proposed change would not impose a disparate burden on
competition among market participants on the Exchange.
Intermarket Competition. The Exchange operates in a highly
competitive market in which market participants can readily choose to
send their orders to other exchange and off-exchange venues if they
deem fee levels at those other venues to be more favorable. As noted,
the Exchange's market share of intraday trading (i.e., excluding
auctions) declined from March 2019 to June 2019. In such an
environment, the Exchange must continually adjust its fees and rebates
to remain competitive with other exchanges and with off-exchange
venues. 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 does not believe its
proposed fee change can impose any burden on intermarket competition.
The Exchange believes that the proposed change 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.
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.
[[Page 41793]]
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) \28\ of the Act and subparagraph (f)(2) of Rule
19b-4 \29\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\28\ 15 U.S.C. 78s(b)(3)(A).
\29\ 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) \30\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\30\ 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-2019-56 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-2019-56. 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 a.m. and 3 p.m.
Copies of the filing also will be available for inspection and copying
at the principal offices 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-2019-56, and should be submitted on or before September 5,
2019.
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\31\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-17491 Filed 8-14-19; 8:45 am]
BILLING CODE 8011-01-P