[Federal Register Volume 84, Number 181 (Wednesday, September 18, 2019)]
[Notices]
[Pages 49138-49141]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20156]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86943; File No. SR-NYSENAT-2019-20]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its
Schedule of Fees
September 12, 2019.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on September 4, 2019, NYSE National, Inc. (``NYSE National'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described
[[Page 49139]]
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.
---------------------------------------------------------------------------
\1\ 15 U.S.C.78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Schedule of Fees and Rebates
(``Fee Schedule'') to specify that the Exchange may exclude from its
average daily volume and quoting calculations the date of the annual
reconstitution of the Russell Investments Indexes. 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 Fee Schedule to specify that the
Exchange may exclude from its average daily volume and quoting
calculations the date of the annual reconstitution of the Russell
Investments Indexes (the ``Russell Rebalance'').
Proposed Rule Change
The Exchange's Fee Schedule currently provides that, for purposes
of determining transaction fees and credits based on quoting levels,
average daily volume (``ADV''), and consolidated ADV (``CADV''), the
Exchange may exclude shares traded any day that (1) the Exchange is not
open for the entire trading day and/or (2) a disruption affects an
Exchange system that lasts for more than 60 minutes during regular
trading hours. The Exchange proposes to specify that the Exchange may
also exclude from its quoting levels, ADV, and CADV calculations the
date of the annual Russell Rebalance.
The Russell Rebalance, which typically occurs in June, is
characterized by high trading volumes, much of which derive from market
participants who are not generally as active entering the market to
rebalance their holdings in-line with the Russell Rebalance.\4\ The
Exchange believes that the high trading volumes during the Russell
Rebalance can significantly impact ADV, CADV and quoting calculations.
The Exchange believes that excluding the date of the Russell Rebalance
will mitigate the uncertainty faced by ETP Holders as to their quoting,
ADV, and CADV levels and the corresponding rebate amounts during the
month of the Russell Rebalance, thereby providing ETP Holders with an
increased certainty as to that month's cost for trades executed on the
Exchange. The Exchange further believes that removing this uncertainty
will encourage ETP Holders to participate in trading on the Exchange
during the remaining trading days in the month of the Russell Rebalance
in a manner intended to be incented by the Exchange's Fee Schedule.
---------------------------------------------------------------------------
\4\ See, e.g., Securities Exchange Act Release No. 69793 (July
18, 2013), 78 FR 37865, 37866 (July 24, 2013) (SR-BATS-2013-034)
(excluding the Russell Reconstitution Day from the definition of
ADV); Securities Exchange Act Release No. 72002 (April 23, 2014), 79
FR 24028, 24029 (April 29, 2014) (SR-EDGX-2014-10) (same).
---------------------------------------------------------------------------
To effectuate this change, the Exchange proposes to add a new
subsection (2) to the second bullet under Section I, heading B titled
``General.'' As proposed, the new clause would provide that the
Exchange may exclude shares traded any day that ``is the date of the
annual reconstitution of the Russell Investments Indexes.'' The
proposed change is similar to, and consistent with, the rules of the
Exchange's affiliates and other self-regulatory organizations.\5\
---------------------------------------------------------------------------
\5\ See, e.g., NYSE Arca Equities Fees and Charges, available at
https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf (``the date of the annual
reconstitution of the Russell Investments Indexes does not count
toward volume tiers''); Cboe BZX U.S. Equities Exchange Fee
Schedule, available at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/(``The Exchange excludes from its
calculation of ADAV and ADV shares added or removed on . . . the
last Friday in June (the `Russell Reconstitution Day')'').
---------------------------------------------------------------------------
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 6(b)(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. The Exchange notes that
it operates in a highly fragmented and competitive market in which
competitive forces constrain the Exchange's transaction fees, and
market participants can readily trade on competing venues if they deem
pricing levels at those other venues to be more favorable.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4) & (5).
---------------------------------------------------------------------------
The Proposed Change Is Reasonable
The Exchange believes that it is reasonable to permit the Exchange
to eliminate from the calculation of quoting levels, ADV, and CADV the
date of the annual Russell Rebalance because it will provide ETP
Holders with a greater level of certainty as to their level of rebates
and fees for trading in the month of the Russell Rebalance. By
eliminating a trading day that would almost certainly lower an ETP
Holder's ADV as a percentage of CADV, the Exchange believes that the
proposal will make the majority of ETP Holders more likely to meet the
minimum thresholds of higher tiers, which will provide additional
incentive for ETP Holders to increase their participation on the
Exchange and earn more favorable rates. As noted above, other self-
regulatory organizations have adopted rules that are substantially
similar to the change being proposed by the Exchange.\8\
---------------------------------------------------------------------------
\8\ See notes 4-5, supra.
---------------------------------------------------------------------------
The Proposal Is an Equitable Allocation of Fees
The Exchange believes its proposal equitably allocates its fees
among its market participants. Specifically, the Exchange believes that
the proposal constitutes an equitable allocation of fees because the
exclusion would apply equally to all ETP Holders and market
participants and to all volume tiers. Further, the Exchange believes
that removing a single known day of atypical trading behavior would
allow all ETP Holders to more predictably calculate the costs
associated with their trading activity on the Exchange on the Russell
Rebalance day, thereby enabling such participants to operate their
business without concern of unpredictable and potentially significant
changes in revenues and expenses.
The Proposal Is Not Unfairly Discriminatory
The Exchange believes that the proposal is not unfairly
discriminatory because the exclusion would apply
[[Page 49140]]
equally to all permit holders, to all market participants and to all
volume tiers. Moreover, the proposal neither targets nor will it have a
disparate impact on any particular category of market participant.
Rather, as discussed above, the Exchange believes that removing a
single known day of atypical trading behavior would allow all ETP
Holders to more predictably calculate the credits and fees associated
with their trading activity on the Russell Rebalance day, thereby
enabling such participants to operate their business without concern of
unpredictable and potentially significant changes in expenses.
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. Rather, as noted above, by eliminating a trading
day that would almost certainly result in lowering an ETP Holder's ADV
as a percentage of CADV, the Exchange believes that the proposal will
benefit the majority of ETP Holders by making it more likely for them
to meet the minimum thresholds of higher tiers, which will provide
additional incentive for ETP Holders to increase their participation on
the Exchange and earn more favorable rates. The Exchange believes that
the proposal thus fosters competition by providing an additional
incentive to ETP Holders to submit orders to the Exchange. The proposed
exclusion 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.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
Intramarket Competition. The proposed change is designed to
eliminate a trading day that would almost certainly result in lowering
an ETP Holder's ADV as a percentage of CADV. The Exchange believes that
the proposal would provide additional incentive for ETP Holders to
increase their participation on 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. The proposed exclusion 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. In such an
environment, the Exchange must continually adjust its fees and rebates
to remain competitive with other exchanges and with off-exchange
venues. By providing ETP Holders with a greater level of certainty as
to their level of rebates and costs for trading in the month of the
Russell Rebalance, the Exchange believes that the proposed change could
promote competition between the Exchange and other execution venues by
encouraging ETP Holders to their participation on the Exchange in order
to earn more favorable rates.
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.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
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-NYSENAT-2019-20 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-NYSENAT-2019-20. 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 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-NYSENAT-2019-20, and should be submitted
on or before October 9, 2019.
[[Page 49141]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-20156 Filed 9-17-19; 8:45 am]
BILLING CODE 8011-01-P