[Federal Register Volume 85, Number 12 (Friday, January 17, 2020)]
[Notices]
[Pages 3089-3091]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00684]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87952; File No. SR-NYSE-2019-73]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Price List To Extend a Waiver of New Firm Application Fees 
for Certain Applications and of Bond Trading License Fees and To 
Discontinue the Liquidity Provider Incentive Program and the Agency 
Order Rebate Program

January 13, 2020.
    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 December 31, 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 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 its Price List to (1) extend a fee 
waiver for new firm application fees for applicants seeking only to 
obtain a bond trading license (``BTL'') for 2020; (2) waive the BTL fee 
for 2020; and (3) discontinue the Liquidity Provider Incentive Program 
and the Agency Order Rebate Program. The Exchange proposes to implement 
the fee changes effective January 2, 2020. 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 (1) extend a fee 
waiver for new firm application fees for applicants seeking only to 
obtain a BTL for 2020; (2) waive the BTL fee for 2020; \4\ and (3) 
discontinue the Liquidity Provider Incentive Program and the Agency 
Order Rebate Program. The Exchange proposes to implement the fee 
changes effective January 2, 2020.
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    \4\ The Exchange initially filed to adopt the fee waiver and 
waive the BTL fee in 2015. See Securities Exchange Act Release No. 
74031 (January 12, 2015), 80 FR 2462 (January 16, 2015) (SR-NYSE-
2014-78). The Exchange has filed to extend the fee waiver and waive 
the BTL fee for each calendar year since 2017. See Securities 
Exchange Act Release Nos. 79710 (December 29, 2016), 82 FR 1395 
(January 5, 2017) (SR-NYSE-2016-89); 82418 (December 28, 2017), 83 
FR 568 (January 4, 2018) (SR-NYSE-2017-70); and 84899 (December 20, 
2018), 83 FR 67395 (December 28, 2018) (SR-NYSE-2018-65).
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    The Exchange currently charges a New Firm Fee ranging from $2,500 
to $20,000, depending on the type of firm, which is charged per 
application for any broker-dealer that applies to be approved as an 
Exchange member organization. The Exchange proposes to amend the Price 
List to waive the New Firm Fee for 2020 for new member organization 
applicants that are seeking only to obtain a BTL and not trade equities 
at the Exchange. The proposed waiver of the New Firm Fee would be 
available only to applicants seeking approval as a new member 
organization, including carrying firms, introducing firms, or non-
public organizations, which would be seeking to obtain a BTL at the 
Exchange and not trade equities. Further, if a new firm that is 
approved as a member organization and has had the New Firm Fee waived 
converts a BTL to a full trading license within one year of approval, 
the New Firm Fee would be charged in full retroactively. The Exchange 
believes that charging the New Firm Fee retroactively within a year of 
approval is appropriate because it would discourage applicants to claim 
that they are applying for a BTL solely to avoid New Firm Fees.
    Additionally, the Exchange currently charges a BTL fee of $1,000 
per year. The Exchange proposes to amend the Price List to waive the 
BTL fee for 2020 for all member organizations.
    The Exchange believes that the proposed fee changes would provide 
increased incentives for bond trading firms that are not currently 
Exchange member organizations to apply for Exchange membership and a 
BTL. The Exchange believes that having more member organizations 
trading on the Exchange's bond platform would benefit investors through 
the additional display of liquidity and increased execution 
opportunities in Exchange-traded bonds at the Exchange.
    The Exchange proposes to discontinue the Liquidity Provider 
Incentive Program and the Agency Order Rebate Program because both 
programs are underutilized by member organizations. The Liquidity 
Provider Incentive Program, a voluntary rebate program, was adopted by 
the Exchange in 2016.\5\ Pursuant to the program, the Exchange pays 
Users \6\ of NYSE Bonds a monthly [sic], tiered rebate provided Users 
who opt into the program meet specified quoting requirements. Under the 
program, the rebate payable is based on the number of CUSIPs \7\ a User 
quotes. The Agency Order Rebate Program was adopted by the Exchange

[[Page 3090]]

in 2017.\8\ Pursuant to the program, the Exchange pays a monthly rebate 
to a User that submits an average of 400 resting limit orders of any 
size per trading day \9\ during the month and that are submitted as 
Agency Orders \10\ by the User. The Exchange proposes to remove both 
the Liquidity Provider Incentive Program and the Agency Order Rebate 
Program from the Price List.
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    \5\ See Securities Exchange Act Release No. 77591 (April 12, 
2016), 81 FR 22656 (April 18, 2016) (SR-NYSE-2016-26). See also 
Securities Exchange Act Release Nos. 77812 (May 11, 2016), 81 FR 
30594 (May 17, 2016) (SR-NYSE-2016-34); 78108 (June 21, 2016), 81 FR 
41636 (June 27, 2016) (SR-NYSE-2016-42); 79210 (November 1, 2016), 
81 FR 78213 (November 7, 2016) (SR-NYSE-2016-68); 80934 (June 15, 
2017), 82 FR 28173 (June 20, 2017) (SR-NYSE-2017-27); and 84100 
(September 12, 2018), 83 FR 47230 (September 18, 2018) (SR-NYSE-
2018-39).
    \6\ Rule 86(b)(2)(I) defines a User as any Member or Member 
Organization, Sponsored Participant, or Authorized Trader that is 
authorized to access NYSE Bonds.
    \7\ CUSIP stands for Committee on Uniform Securities 
Identification Procedures. A CUSIP number identifies most financial 
instruments, including: Stocks of all registered U.S. and Canadian 
companies, commercial paper, and U.S. government and municipal 
bonds. The CUSIP system--owned by the American Bankers Association 
and managed by Standard & Poor's--facilitates the clearance and 
settlement process of securities. See https://www.sec.gov/answers/cusip.htm.
    \8\ See Securities Exchange Act Release No. 82343 (December 18, 
2017), 82 FR 60782 (December 22, 2017) (SR-NYSE-2017-68).
    \9\ A trading day is any day that NYSE Bonds is available for 
trading, as determined by Securities Industry and Financial Market 
Association (``SIFMA''), which annually provides recommendations for 
early and full market closes that the bond market, including NYSE 
Bonds, follows. See note 8, supra.
    \10\ An Agency Order is any order submitted by a User that it 
represents as agent on NYSE Bonds. See note 8, supra.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\11\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\12\ 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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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4), (5).
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    The Exchange believes that it is reasonable to waive the New Firm 
Fee and the annual BTL fee for 2020 to provide an incentive for bond 
trading firms to apply for Exchange membership and a BTL. The Exchange 
believes that providing an incentive for bond trading firms that are 
not currently Exchange member organizations to apply for membership and 
a BTL would encourage market participants to become members of the 
Exchange and bring additional liquidity to a transparent bond market. 
To the extent the existing New Firm Fees or the BTL fee serves as a 
disincentive for bond trading firms to become Exchange member 
organizations, the Exchange believes that the proposed fee change could 
expand the number of firms eligible to trade bonds on the Exchange. The 
Exchange believes creating incentives for bond trading firms to trade 
bonds on the Exchange protects investors and the public interest by 
increasing the competition and liquidity on a transparent market for 
bond trading. The proposed waiver of the New Firm Fee and BTL fee is 
equitable and not unfairly discriminatory because it would be offered 
to all market participants that wish to trade at the Exchange the 
narrower class of debt securities only.
    The Exchange believes that the proposed rule change to eliminate 
the Liquidity Provider Incentive Program and the Agency Order Rebate 
Program from the Price List is reasonable because both programs are 
underutilized and have generally not incentivized member organizations 
to bring liquidity and increase trading on the Exchange. Of the 31 
member organizations that currently have the ability to trade on NYSE 
Bonds, only 5 have established connectivity to NYSE Bonds in the past 
year. Of those 5 members, only one firm participated in the Liquidity 
Provider Incentive Program, and did so for only a short period of time, 
from May 2019 through October 2019. With respect to the Agency Order 
Rebate Program, no member organization ever participated in that 
program. The Exchange does not anticipate any member organization to 
participate in either the Liquidity Provider Incentive Program or the 
Agency Order Rebate Program in the near future. Therefore, the Exchange 
believes it is reasonable to eliminate both programs. The Exchange 
believes eliminating underutilized incentive programs would simplify 
the Price List. The Exchange further believes that removing reference 
to the incentive programs from the Price List would also add clarity to 
the Price List. The Exchange believes that eliminating the Liquidity 
Provider Incentive Program and the Agency Order Rebate Program from the 
Price List is equitable and not unfairly discriminatory because both 
programs would be eliminated in their entirety and would no longer be 
available to any member organization.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\13\ 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. Debt securities typically trade in a decentralized 
over-the-counter (``OTC'') dealer market that is less liquid and 
transparent than the equities markets. The Exchange believes that the 
proposed change would increase competition with these OTC venues by 
reducing the cost of being approved as and operating as an Exchange 
member organization that solely trades bonds at the Exchange, which the 
Exchange believes will enhance market quality through the additional 
display of liquidity and increased execution opportunities in Exchange-
traded bonds at the Exchange. The Exchange believes that elimination of 
the Liquidity Provider Incentive Program and the Agency Order Rebate 
Program from the Price List would not affect intramarket competition 
because both programs have generally not incentivized member 
organizations to add liquidity or increase trading on the Exchange.
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    \13\ 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 that 
are not transparent. In such an environment, the Exchange must 
continually review, and consider adjusting its fees and rebates to 
remain competitive with other exchanges as well as with alternative 
trading systems and other venues that are not required to comply 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 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) \14\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \15\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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

[[Page 3091]]

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) \16\ of the Act to determine 
whether the proposed rule change should be approved or disapproved.
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    \16\ 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 No. SR-NYSE-2019-73 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 No. SR-NYSE-2019-73. 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 No. SR-NYSE-2019-73, and should be submitted on or 
before February 7, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-00684 Filed 1-16-20; 8:45 am]
BILLING CODE 8011-01-P