[Federal Register Volume 85, Number 67 (Tuesday, April 7, 2020)]
[Notices]
[Pages 19541-19545]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07231]



[[Page 19541]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88538; File No. SR-NYSENAT-2020-05]


Self-Regulatory Organizations; NYSE National, Inc.; Suspension of 
and Order Instituting Proceedings To Determine Whether To Approve or 
Disapprove a Proposed Rule Change To Establish Fees for the NYSE 
National Integrated Feed

April 1, 2020.

I. Introduction

    On February 3, 2020, NYSE National, Inc. (``NYSE National'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to establish fees for the NYSE National Integrated 
Feed. The proposed rule change was immediately effective upon filing 
with the Commission pursuant to Section 19(b)(3)(A) of the Act.\3\ The 
proposed rule change was published for comment in the Federal Register 
on February 20, 2020.\4\ Pursuant to Section 19(b)(3)(C) of the Act,\5\ 
the Commission is hereby: (1) Temporarily suspending the proposed rule 
change; and (2) instituting proceedings to determine whether to approve 
or disapprove the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A). A proposed rule change may take 
effect upon filing with the Commission if it is designated by the 
exchange as ``establishing or changing a due, fee, or other charge 
imposed by the self-regulatory organization on any person, whether 
or not the person is a member of the self-regulatory organization.'' 
15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ See Securities Exchange Act Release No. 88211 (February 14, 
2020), 85 FR 9847 (``Notice''). Comments received on the Notice are 
available on the Commission's website at https://www.sec.gov/comments/sr-nysenat-2020-05/srnysenat202005.htm. The Commission 
notes that, on December 4, 2019, NYSE National filed a proposed rule 
change to establish fees for the NYSE National Integrated Feed that 
are identical to the fees proposed in this filing. See Securities 
Exchange Act Release No. 87797 (December 18, 2019), 84 FR 71025 
(December 26, 2019) (SR-NYSENAT-2019-31). Comments received on SR-
NYSENAT-2019-31 are available on the Commission's website at https://www.sec.gov/comments/sr-nysenat-2019-31/srnysenat201931.htm. On 
January 31, 2020, the Commission temporarily suspended SR-NYSENAT-
2019-31 and instituted proceedings to determine whether to approve 
or disapprove that proposed rule change. See Securities Exchange Act 
Release No. 88109, 85 FR 6982 (February 6, 2020) (``SR-NYSENAT-2019-
31 OIP''). On February 3, 2020, NYSE National withdrew SR-NYSENAT-
2019-31. See Securities Exchange Act Release No. 88118 (February 4, 
2020), 85 FR 7611 (February 10, 2020).
    \5\ 15 U.S.C. 78s(b)(3)(C).
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II. Description of the Proposed Rule Change

    NYSE National proposes to establish fees for the NYSE National 
Integrated Feed, which became effective on February 3, 2020.\6\ 
According to NYSE National, the NYSE National Integrated Feed is a NYSE 
National-only market data feed that provides vendors and subscribers on 
a real-time basis with a unified view of events, in sequence, as they 
appear on the NYSE National matching engine.\7\ The NYSE National 
Integrated Feed includes depth-of-book order data, last sale data, 
security status updates (e.g., trade corrections and trading halts), 
and stock summary messages.\8\ It also includes information about NYSE 
National's best bid or offer at any given time.\9\ NYSE National 
proposes the following fees for the NYSE National Integrated Feed:
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    \6\ Prior to February 3, 2020, NYSE National did not charge any 
fees for the NYSE National Integrated Feed. See Notice, supra note 
4, at 9847.
    \7\ See id.
    \8\ See id.
    \9\ See id.
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     $2,500 per month access fee, which would be charged (once 
per firm) to any data recipient that receives a data feed of the NYSE 
National Integrated Feed; \10\
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    \10\ Data recipients that only use display devices to view NYSE 
National Integrated Feed data and do not separately receive a data 
feed would not be charged an access fee. See id. at 9848.
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     $1,500 per month redistribution fee, which would be 
charged (once per redistributor account) to any redistributor \11\ of 
the NYSE National Integrated Feed;
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    \11\ A redistributor would be a vendor or person that provides a 
real-time NYSE National market data product externally to a data 
recipient that is not its affiliate or wholly-owned subsidiary, or 
to any system that an external data recipient uses, irrespective of 
the means of transmission or access. See id.
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     $10 per month professional per user fee and $1 per month 
non-professional per user fee, which would apply to each display device 
that has access to the NYSE National Integrated Feed; \12\
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    \12\ See id.
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     Non-display use \13\ fees:
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    \13\ Non-display use would mean accessing, processing, or 
consuming the NYSE National Integrated Feed, delivered directly or 
through a redistributor, for a purpose other than in support of a 
data recipient's display or further internal or external 
redistribution. See id. As proposed, non-display use would include 
trading uses such as high frequency or algorithmic trading, as well 
as any trading in any asset class, automated order or quote 
generation and order pegging, price referencing for algorithmic 
trading or smart order routing, operations controls programs, 
investment analysis, order verification, surveillance programs, risk 
management, compliance, and portfolio management. See id. One, two, 
or three categories of non-display use may apply to a data 
recipient. See id. Moreover, data recipients that receive the NYSE 
National Integrated Feed for non-display use would be required to 
complete and submit a non-display use declaration before they would 
be authorized to receive the feed. See id. at 9849. In addition, if 
a data recipient's use of the NYSE National Integrated Feed data 
changes at any time after the data recipient submits a non-display 
use declaration, the data recipient must inform NYSE National of the 
change by completing and submitting an updated declaration 
reflecting the change of use at the time of the change. See id.
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    [cir] $5,000 per month category 1 non-display fee, which would 
apply when a data recipient's non-display use of real-time market data 
is on its own behalf;
    [cir] $5,000 per month category 2 non-display fee, which would 
apply when a data recipient's non-display use of real-time market data 
is on behalf of its clients;
    [cir] $5,000 per platform per month category 3 non-display fee 
(capped at $15,000), which would apply when a data recipient's non-
display use of real-time market data is for the purpose of internally 
matching buy and sell orders within an organization, including matching 
customer orders on a data recipient's own behalf and on behalf of its 
clients; \14\
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    \14\ According to NYSE National, category 3 non-display fees 
would apply to non-display use in trading platforms, such as, but 
not limited to, alternative trading systems (``ATSs''), broker 
crossing networks, broker crossing systems not filed as ATSs, dark 
pools, multilateral trading facilities, exchanges, and systematic 
internalization systems. See id. at 9848-49.
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     $1,000 per month non-display use declaration late fee, 
which would apply to any data recipient that is paying an access fee 
for the NYSE National Integrated Feed and that fails to complete and 
submit the annual non-display use declaration by December 31 of the 
year, and would apply beginning January 1 and for each month thereafter 
until the data recipient has completed and submitted the annual non-
display use declaration; \15\ and
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    \15\ See id. at 9849.
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     $200 per month multiple data feed fee, which would apply 
to any data recipient that takes a data feed for a market data product 
in more than two locations, and would apply to each location, beyond 
the first two locations, where the data recipient receives a data 
feed.\16\
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    \16\ See id.
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    The access fees, professional user fees, and non-display fees would 
not apply to Federal agencies \17\ that

[[Page 19542]]

subscribe to the products listed on the proposed fee schedule that 
includes such fees.\18\
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    \17\ The term ``Federal agencies'' as used in the proposed fee 
schedule would include all Federal agencies subject to the Federal 
Acquisition Regulation (``FAR''), as well as any Federal agency not 
subject to FAR that has promulgated its own procurement rules. See 
id. All Federal agencies that subscribe to the NYSE National real-
time proprietary market data products would continue to be required 
to execute the appropriate subscriber agreement, which includes, 
among other things, provisions against the redistribution of data. 
See id.
    \18\ The proposed fee schedule lists NYSE National BBO, NYSE 
National Trades, and NYSE National Integrated Feed, and specifies 
that there would be no fees for NYSE National BBO and NYSE National 
Trades.
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    Finally, first-time subscribers \19\ would be eligible for a free 
trial by contacting NYSE National and would not be charged the access 
fee, the non-display fee, any applicable professional and non-
professional user fee, and the redistribution fee for one calendar 
month for each of the products listed on the proposed fee schedule.\20\ 
The free trial would be for the first full calendar month following the 
date a subscriber is approved to receive trial access to NYSE National 
market data.\21\ As proposed, NYSE National would provide the one-month 
free trial for a particular product to each subscriber only once.\22\
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    \19\ A first-time subscriber would be any firm that has not 
previously subscribed to a particular product listed on the proposed 
fee schedule. See Notice, supra note 4, at 9849.
    \20\ See id.
    \21\ See id. at 9849-50.
    \22\ See id. at 9850.
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III. Suspension of the Proposed Rule Change

    Pursuant to Section 19(b)(3)(C) of the Act,\23\ at any time within 
60 days of the date of filing of an immediately effective proposed rule 
change pursuant to Section 19(b)(1) of the Act,\24\ the Commission 
summarily may temporarily suspend the change in the rules of a self-
regulatory organization (``SRO'') 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. The Commission believes a temporary suspension of the proposed 
rule change is necessary and appropriate to allow for additional 
analysis of the proposed rule change's consistency with the Act and the 
rules thereunder.
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    \23\ 15 U.S.C. 78s(b)(3)(C).
    \24\ 15 U.S.C. 78s(b)(1).
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    NYSE National proposes to adopt fees for the NYSE National 
Integrated Feed and provides various arguments to support the 
proposal's consistency with the Act. With respect to whether the 
proposed fees are reasonable, NYSE National states that exchanges in 
general function as platforms between consumers of market data and 
consumers of trading services, and that overall competition between 
exchanges will limit their overall profitability.\25\ In connection 
with these arguments, NYSE National also provides a report by Marc 
Rysman,\26\ which finds that the introduction of the NYSE Integrated 
Feed in 2015 attracted more trading to NYSE by both subscribers and 
non-subscribers to the NYSE Integrated Feed,\27\ and concludes that 
overall competition between exchanges will limit their overall 
profitability (not margins on any particular side of the platform).\28\ 
According to NYSE National, given the conclusion in the Rysman Paper 
that exchanges are platforms for market data and transaction services, 
competition for order flow on the trading side of the platform acts to 
constrain the pricing of market data on the other side of the 
platform.\29\
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    \25\ See Notice, supra note 4, at 9852.
    \26\ See Marc Rysman, Stock Exchanges as Platforms for Data and 
Trading (December 2, 2019) (``Rysman Paper''), available at https://www.sec.gov/rules/sro/nysenat/2020/34-88211-ex3b.pdf.
    \27\ See Notice, supra note 4, at 9852. NYSE National also 
states that, since May 2018, when NYSE National relaunched trading, 
it has observed a direct correlation between the steady increase of 
subscribers to the NYSE National Integrated Feed and the increase in 
NYSE National's transaction market share volume over the same 
period. See id. at 9850. NYSE National states that, between May 2018 
and October 2019, it has grown from 0% to nearly 2% market share of 
consolidated trading volume and, between May 2018 and November 2019, 
the number of NYSE National Integrated Feed subscribers increased 
from 12 to 57. See id. at 9847-48, 9852.
    \28\ See id. at 9852.
    \29\ See id. at 9853.
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    In addition, NYSE National argues that, due to the ready 
availability of substitutes and the low cost to move order flow to the 
substitute trading venues, an exchange setting market data fees that 
are not at competitive levels would expect to quickly lose business to 
alternative platforms with more attractive pricing.\30\ NYSE National 
argues that subscribing to the NYSE National Integrated Feed is 
optional, that its customers may choose to discontinue using the feed 
once the proposed fees are effective, and that any customers who choose 
to discontinue using the feed may choose to shift order flow away from 
NYSE National.\31\ Similarly, NYSE National argues that its market data 
pricing is constrained by the availability of numerous substitute 
platforms offering competing proprietary market data products and 
trading services.\32\
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    \30\ See id.
    \31\ See id. at 9850, 9853.
    \32\ See id. at 9853.
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    In addition to its ``platform''-based arguments, NYSE National 
presents an alternative competition-based argument, asserting that the 
NYSE National Integrated Feed is sold in a competitive market.\33\ NYSE 
National provides a report by Charles M. Jones,\34\ which concludes 
that exchanges compete with each other in selling proprietary market 
data products, as well as with consolidated data feeds and with data 
provided by ATSs.\35\ NYSE National also more specifically argues that 
NYSE National BBO (which includes best bid and offer information for 
NYSE National on a real-time basis), NYSE National Trades (which 
includes NYSE National last sale information on a real-time basis), and 
consolidated data feeds are substitutes for the NYSE National 
Integrated Feed and constrain NYSE National's ability to charge 
supracompetitive prices for the feed.\36\ In addition, NYSE National 
states that, since the date of filing of SR-NYSENAT-2019-31 and before 
the proposed fees went into effect on February 3, 2020, five 
subscribers to the NYSE National Integrated Feed (i.e., nearly nine 
percent of the prior subscriber base) have cancelled their 
subscriptions due to the imminent imposition of the fees.\37\ Moreover, 
NYSE National states that a sixth customer informed NYSE National that 
if NYSE National is permitted to impose the fees, the customer would 
cancel its subscription to the NYSE National Integrated Feed and 
instead subscribe to the NYSE National BBO feed.\38\
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    \33\ See id. at 9851.
    \34\ See Charles M. Jones, Understanding the Market for U.S. 
Equity Market Data (August 31, 2018) (``Jones Paper''), available at 
https://www.sec.gov/rules/sro/nysenat/2020/34-88211-ex3a.pdf.
    \35\ See Notice, supra note 4, at 9851. The Jones Paper also 
states that the market for order flow and the market for market data 
are closely linked, and that an exchange needs to consider the 
negative impact on its order flow if it raises the price of market 
data. See id.
    \36\ See id. at 9854.
    \37\ See id. at 9848.
    \38\ NYSE National states that six lost subscribers constitute 
10.5 percent of the prior NYSE National Integrated Feed subscriber 
base. See id.
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    With respect to the other requirements under the Act, NYSE National 
argues that the proposed fees are equitably allocated and are not 
unfairly discriminatory because they would apply on an equal basis to 
all data recipients that choose to subscribe to the data in a manner 
that is subject to an applicable fee and because any differences among 
categories of users are justified.\39\ Specifically, NYSE National 
argues that the professional and non-professional user fee structure 
has long been used by NYSE National to reduce the price of data to non-
professional users and make it more broadly available, and that the 
non-display fee structure results in

[[Page 19543]]

subscribers with greater uses of the data paying higher fees and 
subscribers with fewer uses of the data paying lower fees.\40\ For 
similar reasons, and because it claims numerous substitute market data 
products are available, NYSE National argues that the proposed fees do 
not impose an unnecessary or inappropriate burden on competition.\41\
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    \39\ See id. at 9856-58.
    \40\ See id. at 9856-57.
    \41\ See id. at 9858-59.
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    With respect to the redistribution fee, NYSE National argues that 
the proposed fee is reasonable because vendors that would be charged 
the proposed fee would profit by re-transmitting NYSE National's market 
data to their customers,\42\ and that the proposed fee is equitable and 
not unfairly discriminatory because the fees would be charged on an 
equal basis to those vendors that choose to redistribute the feed.\43\ 
Similarly, with respect to category 3 non-display fees, which would be 
charged to each trading platform on which the customer uses non-display 
data (capped at three platforms), NYSE National argues that the 
proposal is reasonable, equitable, and not unfairly discriminatory 
because such use of data is directly in competition with NYSE National 
and NYSE National should be permitted to recoup some of its lost 
trading revenue by charging for the data that makes such competition 
possible.\44\
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    \42\ See id. at 9854.
    \43\ See id. at 9856-57.
    \44\ See id. at 9855-58.
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    Finally, with respect to the non-display use declaration late fee 
and the multiple data feed fee, NYSE National claims that these fees 
are reasonable, equitable, and not unfairly discriminatory because they 
would offset NYSE National's administrative burdens and costs 
associated with incorrect billing, late payments, and tracking data 
usage locations.\45\
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    \45\ See id.
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    The Commission received comment letters that express concerns 
regarding the proposed rule change. One commenter states that NYSE 
National fails to provide the necessary information for the Commission 
to determine whether the proposed fees meet the requirements of the 
Act.\46\ This commenter argues that the NYSE National Integrated Feed 
is not subject to competitive forces because there are no available 
substitutes to NYSE National's depth-of-book product.\47\ This 
commenter also argues that competition for order flow under the 
``platform theory'' does not constrain the cost of market data, but 
instead results in supra-monopoly prices for market data products.\48\ 
In addition, this commenter argues that NYSE National makes an 
unpersuasive attempt to show an elasticity of demand for the NYSE 
National Integrated Feed (i.e., in response to the fee increase, 5 of 
the 57 subscribers notified NYSE National of their intent to cancel 
their subscriptions before the fees went into effect).\49\ Moreover, 
this commenter argues that exchanges have yet to show an increase (or 
decrease) in trading volume after reducing (or increasing) a respective 
exchange's price of market data, and that NYSE National does not state 
the anticipated impact on order flow from losing subscribers to the 
NYSE National Integrated Feed.\50\ Finally, the commenter argues that, 
because it believes competitive forces have not constrained the cost of 
market data, NYSE National should provide additional information on 
cost.\51\
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    \46\ See letter from Ellen Greene, Managing Director, Equities & 
Options Market Structure, Securities Industry and Financial Markets 
Association (``SIFMA''), to Vanessa Countryman, Secretary, 
Commission, dated March 11, 2020 (``SIFMA Letter''). This commenter 
also refers to the comment letter it submitted on SR-NYSENAT-2019-31 
in stating that the proposal does not meet the requirements of the 
Act. See id. at 2. See also SR-NYSENAT-2019-31 OIP, supra note 4, at 
6984-85 (describing the commenter's letter on SR-NYSENAT-2019-31); 
letter from Robert Toomey, Managing Director and Associate General 
Counsel, SIFMA, to Vanessa Countryman, Secretary, Commission, dated 
January 21, 2020, available at https://www.sec.gov/comments/sr-nysenat-2019-31/srnysenat201931-6678406-204968.pdf.
    \47\ See SIFMA Letter, supra note 46, at 2.
    \48\ See id.
    \49\ See id.
    \50\ See id.
    \51\ See id.
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    Another commenter also states that the information provided by NYSE 
National is not adequate to establish that the proposed fees are 
consistent with the Act and Commission rules.\52\ This commenter 
questions whether third parties can compete with NYSE National in 
offering data related to activity on NYSE National.\53\ This commenter 
also questions NYSE National's assertion that market participants have 
a meaningful ability to choose whether or not to connect to the NYSE 
National Integrated Feed and believes instead that many market 
participants must buy the feed.\54\ This commenter acknowledges that 
NYSE National provides the number of customers that discontinued using 
the NYSE National Integrated Feed in response to the proposed fees, but 
expresses concern that NYSE National has not provided any relevant 
information about these customers (e.g., why they subscribed to the 
NYSE National Integrated Feed in the first place; whether they were 
proprietary trading firms, agency brokers, or data vendors; and whether 
and how often they sent orders to NYSE National).\55\ This commenter 
also states that NYSE National should update and further elaborate on 
information about the remaining subscribers.\56\
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    \52\ See letter from Tyler Gellasch, Executive Director, The 
Healthy Markets Association, to Vanessa Countryman, Office of the 
Secretary, Commission, dated March 12, 2020 (``Healthy Markets 
Letter''). See also SR-NYSENAT-2019-31 OIP, supra note 4, at 6984 
(describing the commenter's letter on SR-NYSENAT-2019-31); letter 
from Tyler Gellasch, Executive Director, The Healthy Markets 
Association, to Vanessa Countryman, Office of the Secretary, 
Commission, dated January 16, 2020, available at https://www.sec.gov/comments/sr-nysenat-2019-31/srnysenat201931-6663540-203934.pdf.
    \53\ See Healthy Markets Letter, supra note 52, at 6-8. This 
commenter states that NYSE National controls who, under what terms, 
and when anyone other than NYSE National can obtain order-related 
information about NYSE National. See id. at 7.
    \54\ See id. at 4-5. According to this commenter, if one set of 
market participants has access to a faster, richer data set, then 
those without that information will not be as competitive and may 
not be able to quote or otherwise route orders in a manner that 
could effectively achieve best execution. See id. at 8.
    \55\ See id. at 5-6.
    \56\ See id. at 6.
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    Moreover, this commenter argues that NYSE National's discussions 
regarding the reasonableness of the proposed fees (i.e., the comparison 
to similar fees charged by affiliated exchanges, the nature of the 
market for order flow, the availability of other data options, and the 
lack of a relation between the proposed fees and the costs of 
production) do not support a finding that the proposed fees are 
reasonable.\57\ This commenter also states that NYSE National does not 
provide any information about the costs of production for the NYSE 
National Integrated Feed, the expected revenue NYSE National projects 
to generate from the proposed fees, the impact of the proposed fees on 
subscribers, the competition between subscribers and non-subscribers, 
and whether the proposed fees would be equitably allocated and would 
not impose any undue burden on competition.\58\ In addition, the 
commenter states that NYSE National does not provide any information 
about the latency difference between the NYSE National Integrated Feed 
and the consolidated data feed or other methods of transmitting 
data.\59\ Finally, this commenter objects to NYSE National's platform-
based arguments, stating that the supply and demand

[[Page 19544]]

functions for order flow and market data are separate.\60\
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    \57\ See id. at 8-9.
    \58\ See id. at 9.
    \59\ See id.
    \60\ See id. at 9-10.
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    When exchanges file their proposed rule changes with the 
Commission, including fee filings like NYSE National's present 
proposal, they are required to provide a statement supporting the 
proposal's basis under the Act and the rules and regulations thereunder 
applicable to the exchange.\61\ The instructions to Form 19b-4, on 
which exchanges file their proposed rule changes, specify that such 
statement ``should be sufficiently detailed and specific to support a 
finding that the proposed rule change is consistent with [those] 
requirements.'' \62\
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    \61\ See 17 CFR 240.19b-4 (Item 3 entitled ``Self-Regulatory 
Organization's Statement of the Purpose of, and Statutory Basis for, 
the Proposed Rule Change'').
    \62\ See id.
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    Section 6 of the Act, including Sections 6(b)(4), (5), and (8), 
require the rules of an exchange to: (1) Provide for the equitable 
allocation of reasonable fees among members, issuers, and other persons 
using the exchange's facilities; \63\ (2) perfect the mechanism of a 
free and open market and a national market system, protect investors 
and the public interest, and not be designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers; \64\ 
and (3) not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.\65\
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    \63\ 15 U.S.C. 78f(b)(4).
    \64\ 15 U.S.C. 78f(b)(5).
    \65\ 15 U.S.C. 78f(b)(8).
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    In temporarily suspending NYSE National's proposed rule change, the 
Commission intends to further consider whether the proposal to 
establish fees for the NYSE National Integrated Feed is consistent with 
the statutory requirements applicable to a national securities exchange 
under the Act. In particular, the Commission will consider whether the 
proposed rule change satisfies the standards under the Act and the 
rules thereunder requiring, among other things, that an exchange's 
rules provide for the equitable allocation of reasonable fees among 
members, issuers, and other persons using its facilities; not permit 
unfair discrimination between customers, issuers, brokers or dealers; 
and do not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.\66\
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    \66\ See 15 U.S.C. 78f(b)(4), (5), and (8), respectively.
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    Therefore, the Commission finds that it is appropriate in the 
public interest, for the protection of investors, and otherwise in 
furtherance of the purposes of the Act, to temporarily suspend the 
proposed rule change.\67\
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    \67\ For purposes of temporarily suspending the proposed rule 
change, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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IV. Proceedings To Determine Whether To Approve or Disapprove the 
Proposed Rule Change

    In addition to temporarily suspending the proposal, the Commission 
also hereby institutes proceedings pursuant to Sections 19(b)(3)(C) 
\68\ and 19(b)(2)(B) of the Act \69\ to determine whether NYSE 
National's proposed rule change should be approved or disapproved. 
Institution of proceedings does not indicate that the Commission has 
reached any conclusions with respect to any of the issues involved. 
Rather, the Commission seeks and encourages interested persons to 
provide additional comment on the proposed rule change to inform the 
Commission's analysis of whether to approve or disapprove the proposed 
rule change.
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    \68\ 15 U.S.C. 78s(b)(3)(C). Once the Commission temporarily 
suspends a proposed rule change, Section 19(b)(3)(C) of the Act 
requires that the Commission institute proceedings under Section 
19(b)(2)(B) to determine whether a proposed rule change should be 
approved or disapproved.
    \69\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act,\70\ the Commission is 
providing notice of the grounds for possible disapproval under 
consideration:
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    \70\ Id. Section 19(b)(2)(B) of the Act also provides that 
proceedings to determine whether to disapprove a proposed rule 
change must be concluded within 180 days of the date of publication 
of notice of the filing of the proposed rule change. See id. The 
time for conclusion of the proceedings may be extended for up to 60 
days if the Commission finds good cause for such extension and 
publishes its reasons for so finding, or if the exchange consents to 
the longer period. See id.
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     Whether NYSE National has demonstrated how its proposed 
fees are consistent with Section 6(b)(4) of the Act, which requires 
that the rules of a national securities exchange ``provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members and issuers and other persons using its facilities''; \71\
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    \71\ 15 U.S.C. 78f(b)(4).
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     Whether NYSE National has demonstrated how its proposed 
fees are consistent with Section 6(b)(5) of the Act, which requires, 
among other things, that the rules of a national securities exchange 
not be ``designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers''; \72\ and
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    \72\ 15 U.S.C. 78f(b)(5).
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     Whether NYSE National has demonstrated how its proposed 
fees are consistent with Section 6(b)(8) of the Act, which requires 
that the rules of a national securities exchange ``not impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of [the Act].'' \73\
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    \73\ 15 U.S.C. 78f(b)(8).
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    As discussed in Section III above, NYSE National made various 
arguments in support of its proposal and the Commission received 
comment letters that expressed concerns regarding the proposal, 
including in particular that NYSE National did not provide sufficient 
information to establish that the proposed fees are consistent with the 
Act and the rules thereunder.
    Under the Commission's Rules of Practice, the ``burden to 
demonstrate that a proposed rule change is consistent with the [Act] 
and the rules and regulations issued thereunder . . . is on the [SRO] 
that proposed the rule change.'' \74\ The description of a proposed 
rule change, its purpose and operation, its effect, and a legal 
analysis of its consistency with applicable requirements must all be 
sufficiently detailed and specific to support an affirmative Commission 
finding,\75\ and any failure of an SRO to provide this information may 
result in the Commission not having a sufficient basis to make an 
affirmative finding that a proposed rule change is consistent with the 
Act and the applicable rules and regulations.\76\
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    \74\ 17 CFR 201.700(b)(3).
    \75\ See id.
    \76\ See id.
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    The Commission is instituting proceedings to allow for additional 
consideration and comment on the issues raised herein, including as to 
whether the proposed fees are consistent with the Act, and 
specifically, with its requirements that exchange fees be reasonable 
and equitably allocated, not be unfairly discriminatory, and not impose 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.\77\
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    \77\ See 15 U.S.C. 78f(b)(4), (5), and (8).
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V. Commission's Solicitation of Comments

    The Commission requests written views, data, and arguments with 
respect to the concerns identified above as well as any other relevant 
concerns. Such comments should be submitted by April 28, 2020. Rebuttal 
comments should be submitted by May 12, 2020. Although there do not 
appear to be any issues relevant to approval or disapproval that would 
be facilitated by an oral presentation of views, data, and

[[Page 19545]]

arguments, the Commission will consider, pursuant to Rule 19b-4, any 
request for an opportunity to make an oral presentation.\78\
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    \78\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by an SRO. See Securities 
Acts Amendments of 1975, Report of the Senate Committee on Banking, 
Housing and Urban Affairs to Accompany S. 249, S. Rep. No. 75, 94th 
Cong., 1st Sess. 30 (1975).
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    The Commission asks that commenters address the sufficiency and 
merit of NYSE National's statements in support of the proposal, in 
addition to any other comments they may wish to submit about the 
proposed rule change.
    Interested persons are invited to submit written data, views, and 
arguments concerning the proposed rule change, 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-NYSENAT-2020-05 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-NYSENAT-2020-05. The 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 such filing also will be available for inspection 
and copying at the principal office of NYSE National. 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 publicly available. All submissions 
should refer to File No. SR-NYSENAT-2020-05 and should be submitted on 
or before April 28, 2020. Rebuttal comments should be submitted by May 
12, 2020.

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(3)(C) of the 
Act,\79\ that File No. SR-NYSENAT-2020-05, be and hereby is, 
temporarily suspended. In addition, the Commission is instituting 
proceedings to determine whether the proposed rule change should be 
approved or disapproved.
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    \79\ 15 U.S.C. 78s(b)(3)(C).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\80\
J. Matthew DeLesDernier,
Assistant Secretary.
     
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    \80\ 17 CFR 200.30-3(a)(57) and (58).
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[FR Doc. 2020-07231 Filed 4-6-20; 8:45 am]
BILLING CODE 8011-01-P