[Federal Register Volume 85, Number 179 (Tuesday, September 15, 2020)]
[Notices]
[Pages 57263-57266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-20258]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89798; File No. SR-NYSE-2020-72]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Price List
September 9, 2020.
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 August 31, 2020, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Price List to extend through
September 2020 the waiver of equipment and related service charges and
trading license fees for NYSE Trading Floor-based member organizations
implemented for April through August 2020. The Exchange proposes to
implement the fee changes effective September 1, 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 extend through
September 2020 the waiver of equipment and related service charges and
trading license fees for NYSE Trading Floor-based member organizations
implemented for April through August 2020.
The proposed changes respond to the current volatile market
environment that has resulted in unprecedented average daily volumes
and the temporary closure of the Trading Floor, which are both related
to the ongoing spread of the novel coronavirus (``COVID-19'').
The Exchange proposes to implement the fee changes effective
September 1, 2020.
Background
Beginning on March 16, 2020, in order to slow the spread of COVID-
19 through social distancing measures, significant limitations were
placed on large gatherings throughout the country. As a result, on
March 18, 2020, the Exchange determined that beginning March 23, 2020,
the physical Trading Floor facilities located at 11 Wall Street in New
York City would close and that the Exchange would move, on a temporary
basis, to fully electronic trading.\4\ Following the temporary closure
of the Trading Floor, the Exchange waived certain equipment fees for
the booth telephone system on the Trading Floor and associated service
charges for the months of April and May.\5\
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\4\ See Press Release, dated March 18, 2020, available here:
https://ir.theice.com/press/press-releases/allcategories/2020/03-18-2020-204202110.
\5\ See Securities Exchange Act Release No. 88602 (April 8,
2020), 85 FR 20730 (April 14, 2020) (SR-NYSE-2020-27); Securities
Exchange Act Release No. 88874 (May 14, 2020), 85 FR 30743 (May 20,
2020) (SR-NYSE-2020-29). See footnote 11 of the Price List.
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On May 14, 2020, the Exchange announced that on May 26, 2020
trading operations on the Trading Floor would resume on a limited basis
to a subset of Floor brokers, subject to health and safety measures
designed to prevent the spread of COVID-19.\6\ On June 15, 2020, the
Exchange announced that on June 17, 2020, the Trading Floor would
reintroduce a subset of DMMs, also subject to health and safety
measures designed to prevent the spread of COVID-19.\7\ Following this
partial reopening of the Trading Floor, the Exchange extended the
equipment fee waiver for the months of June, July and August.\8\ The
Trading Floor continues to operate with reduced headcount and
additional health and safety precautions.\9\
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\6\ See Trader Update, dated May 14, 2020, available here:
https://www.nyse.com/traderupdate/history#110000251588.
\7\ See Trader Update, dated June 15, 2020, available here:
https://www.nyse.com/trader-update/history#110000272018.
\8\ See Securities Exchange Act Release No. 89050 (June 11,
2020), 85 FR 36637 (June 17, 2020) (SR-NYSE-2020-49); Securities
Exchange Act Release No. 89324 (July 15, 2020), 85 FR 44129 (July
21, 2020) (SR-NYSE-2020-59); SR-NYSE-2020-71.
\9\ See Trader Update, dated June 15, 2020, available here:
https://www.nyse.com/trader-update/history#110000272018. DMMs
continue to support a subset of NYSE-listed securities remotely.
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Proposed Rule Change
The proposed rule change responds to the unprecedented events
surrounding the spread of COVID-19 by extending the waiver of equipment
and related service charges and trading license fees for NYSE Trading
Floor-based member organizations for September 2020.
As noted, for the months of April, May, June, July and August, the
Exchange waived the Annual Telephone Line Charge of $400 per phone
number and the $129 fee for a single line phone, jack, and data jack.
The Exchange also waived related service charges, as follows: $161.25
to install single jack (voice or data); $107.50 to relocate a jack;
$53.75 to remove a jack; $107.50 to install voice or data line; $53.75
to disconnect data line; $53.75 to change a phone line subscriber; and
miscellaneous telephone charges billed at $106 per hour in 15 minute
increments.\10\ These fees were waived for (1) member organizations
with at least one trading license, a physical Trading Floor presence,
and Floor broker executions accounting for 40% or more of the member
organization's combined adding, taking, and auction volumes during
March 1 to March 20, 2020, or, beginning in August 2020, if not a
member organization during March 1 to March 20, 2020, based on the
[[Page 57264]]
member organization's combined adding, taking, and auction volumes
during its first month as a member organization on or after May 26,
2020, i.e., the date the Trading Floor re-opened on a limited
basis,\11\ and (2) member organizations with at least one trading
license that are Designated Market Makers with 30 or fewer assigned
securities for the billing month of March 2020.
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\10\ The Service Charges also include an internet Equipment
Monthly Hosting Fee that the Exchange did not waive for April, May,
June, July and August 2020 and that the Exchange does not propose to
waive for September 2020.
\11\ Beginning August 2020, member organizations with a physical
trading Floor presence that became member organizations on or after
April 1, 2020 are eligible for a one-time credit for the member
organization's Booth Telephone System charges and all Service
Charges except the Internet Equipment Monthly Hosting Fee for the
months of April through July 2020 if the member organization meets
the other requirements for the waiver described in footnote 11 of
the Price List.
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Because the Trading Floor continues to operate with reduced
capacity, the Exchange proposes to extend the waiver of these Trading
Floor-based fees through September 2020. To effectuate this change, the
Exchange proposes to add ``and September'' between ``August'' and
``2020'' in footnote 11 to the Price List.
In order to further reduce costs for member organizations with a
Trading Floor presence, the Exchange also waived the April, May, June,
July and August 2020 monthly portion of all applicable annual fees for
(1) member organizations with at least one trading license, a physical
Trading Floor presence and Floor broker executions accounting for 40%
or more of the member organization's combined adding, taking, and
auction volumes during March 1 to March 20, 2020, or, beginning in
August 2020, if not a member organization during March 1 to March 20,
2020, based on the member organization's combined adding, taking, and
auction volumes during its first month as a member organization on or
after May 26, 2020, and (2) member organizations with at least one
trading license that are DMMs with 30 or fewer assigned securities for
the billing month of March 2020.\12\
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\12\ See notes 5-8, supra. See footnote 15 of the Price List.
Beginning in August 2020, member organizations with a physical
trading Floor presence that became member organizations on or after
April 1, 2020 are eligible for a one-time credit for the member
organization's indicated annual trading license fee for the months
of April through July 2020 if the member organization meets the
other requirements for the waiver described in footnote 15 of the
Price List.
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The Exchange proposes to also waive the September 2020 monthly
portion of all applicable annual fees for member organizations with at
least one trading license, a physical Trading Floor presence and Floor
broker executions accounting for 40% or more of the member
organization's combined adding, taking, and auction volumes during
March 1 to March 20, 2020 or, if not a member organization during March
1 to March 20, 2020, based on the member organization's combined
adding, taking, and auction volumes during its first month as a member
organization on or after May 26, 2020. The indicated annual trading
license fees would also be waived for September 2020 for member
organizations with at least one trading license that are DMMs with 30
or fewer assigned securities for the billing month of March 2020. To
effectuate this change, the Exchange proposes to add ``and September''
between ``August'' and ``2020'' in footnote 15 of the Price List.
The proposed extension of the fee waivers would reduce monthly
costs for member organizations with a Trading Floor presence whose
operations were disrupted by the Floor closure, which lasted
approximately two months, and remains partially closed. The Exchange
believes that extension of the fee waiver would ease the financial
burden associated with the ongoing partial Trading Floor closure. The
Exchange believes that all member organization that conduct a
significant portion of trading on the Trading Floor would benefit from
this proposed fee change.
The proposed changes are not otherwise intended to address 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,\13\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\14\ 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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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4) & (5).
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The Exchange operates in a highly competitive market. 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.'' \15\
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\15\ 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.''
\16\ Indeed, equity trading is currently dispersed across 14
exchanges,\17\ 31 alternative trading systems,\18\ and numerous broker-
dealer internalizers and wholesalers, all competing for order flow.
Based on publicly-available information, no single exchange has more
than 20% market share (whether including or excluding auction
volume).\19\ Therefore, no exchange possesses significant pricing power
in the execution of equity order flow. More specifically, the
Exchange's market share of trading in Tape A, B and C securities
combined is less than 10%.
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\16\ 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'').
\17\ 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.
\18\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of
alternative trading systems registered with the Commission is
available at https://www.sec.gov/foia/docs/atslist.htm.
\19\ 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 Proposed Change is Reasonable
The proposed extension of the waiver of equipment and related
service fees and the applicable monthly trading license fee for Trading
Floor-based member organizations is reasonable in light of the partial
continued closure of the NYSE Trading Floor. Beginning March 2020,
markets worldwide experienced unprecedented declines and volatility
because of the ongoing spread of COVID-19 also resulted in the
temporary closure of the NYSE Trading Floor. As noted, the Trading
Floor was recently partially reopened on a limited basis to a subset of
Floor brokers and DMMs, subject to health and safety measures designed
to prevent the spread of COVID-19. The proposed change is designed to
reduce costs for Floor participants for the month of September 2020 and
therefore ease the financial burden faced by member organizations that
conduct business on the Trading Floor while it continues to operate
with reduced capacity.
[[Page 57265]]
The Proposal is an Equitable Allocation of Fees
The Exchange believes the proposed extension of the waiver of
equipment and related service fees and the applicable monthly trading
license fee for Trading Floor-based member organizations to September
2020 are an equitable allocation of fees. The proposed waivers apply to
all Trading Floor-based firms meeting specific requirements during the
period that the Trading Floor remains partially open. The proposed
change is equitable as it merely continues the fee waiver granted in
April, May, June, July and August 2020, and is designed to reduce
monthly costs for Trading Floor-based member organizations that are
unable to fully conduct Floor operations while the Trading Floor
remains partially open during the ongoing COVID-19 pandemic.
The Proposal is Not Unfairly Discriminatory
The Exchange believes that the proposed continuation of the waiver
of equipment and related service fees and the applicable monthly
trading license fee for Trading Floor-based member organizations during
July 2020 is not unfairly discriminatory because the proposed waivers
would benefit all similarly-situated market participants on an equal
and non-discriminatory basis. The Exchange is not proposing to waive
the Floor-related fees indefinitely, but rather during the period that
the Trading Floor is not fully open. The proposed fee change is
designed to ease the financial burden on Trading Floor-based member
organizations that cannot fully conduct Floor operations.
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,\20\ 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 changes would encourage the continued participation
of member organizations on the Exchange by providing certainty and fee
relief during the unprecedented volatility and market declines caused
by the continued spread of COVID-19. 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.'' \21\
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\20\ 15 U.S.C. 78f(b)(8).
\21\ Regulation NMS, 70 FR at 37498-99.
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Intramarket Competition. The proposed continued waiver of equipment
and related service fees and the applicable monthly trading license fee
for Trading Floor-based member organizations during September 2020 is
designed to reduce monthly costs for those Floor participants whose
operations continue to be impacted by the spread of COVID-19 despite
the fact that the Trading Floor has partially reopened. In reducing
this monthly financial burden, the proposed change would provide a
degree of certainty and ease the financial burden on Trading Floor-
based member organizations impacted by the temporary closing and
partial reopening of the Trading Floor. As noted, the proposal would
apply to all similarly situated member organizations on the same and
equal terms, who would benefit from the changes on the same basis.
Accordingly, 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. The
Exchange believes that the proposed rule change reflects this
competitive environment because it permits impacted member
organizations to continue to conduct market-making operations on the
Exchange and avoid unintended costs of doing business on the Exchange
while the Trading Floor is not fully open, which could make the
Exchange a less competitive venue on which to trade as compared to
other equities 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) \22\ of the Act and subparagraph (f)(2) of Rule
19b-4 \23\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\22\ 15 U.S.C. 78s(b)(3)(A).
\23\ 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) \24\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\24\ 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-NYSE-2020-72 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-NYSE-2020-72. 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,
[[Page 57266]]
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSE-2020-72 and should be
submitted on or before October 6, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-20258 Filed 9-14-20; 8:45 am]
BILLING CODE 8011-01-P