[Federal Register Volume 86, Number 79 (Tuesday, April 27, 2021)]
[Notices]
[Pages 22287-22290]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08680]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91626; File No. SR-NYSE-2021-22]


Self-Regulatory Organizations; New York Stock Exchange, LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Price List

April 21, 2021.
    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 April 1, 2021, 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 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 (1) lower the new 
firm and the annual trading license fees and (2) introduce the NYSE 
Membership On-Ramp Program, which offers discounted membership fees, 
port fees and market data fees for up to 18 months for new member 
organizations. The Exchange proposes to implement the fee changes 
effective April 1, 2021. 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 (1) lower the new firm and the annual 
trading license fees and (2) introduce the NYSE Membership On-Ramp 
Program (the ``Program''), which offers discounted membership fees, 
port fees and market data fees for up to 18 months for new member 
organizations.
    The purpose of this filing is to encourage smaller, retail-oriented 
market participants that are not currently NYSE member organizations to 
become member organizations by discounting certain fixed costs 
associated with NYSE membership.
    The Exchange proposes to implement the fee changes effective April 
1, 2021.
Background
Current Market and Competitive Environment
    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.'' \4\
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    \4\ 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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    While Regulation NMS has enhanced competition, it has also fostered 
a ``fragmented'' market structure where trading in a single stock can 
occur across multiple trading centers. When multiple trading centers 
compete for order flow in the same stock, the Commission has recognized 
that ``such competition can lead to the fragmentation of order flow in 
that stock.'' \5\ Indeed, equity trading is currently dispersed across 
16 exchanges,\6\ 31 alternative trading systems,\7\ 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.\8\ 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 12%.
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    \5\ See Securities Exchange Act Release No. 61358, 75 FR 3594, 
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on 
Equity Market Structure).
    \6\ 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.
    \7\ 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.
    \8\ See Cboe Global Markets U.S. Equities Market Volume Summary, 
available at http://markets.cboe.com/us/equities/market_share/.
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
move order flow, or discontinue or reduce use of certain categories of 
products, in response to fee changes. Accordingly, competitive forces 
constrain exchange transaction fees that relate to orders that would 
provide liquidity on an exchange.
Proposed Rule Change
    The Exchange proposes to modify, and discount certain fixed costs 
related to Exchange membership in order to incentivize smaller, retail-
oriented market participants to consider NYSE membership. Specifically, 
as discussed more fully below, the Exchange proposes to lower the new 
firm fee for all member organizations and charge the annual trading 
license fee in 12 monthly installments, which will slightly reduce the 
current fees. In addition, the Exchange proposes to introduce a new 
NYSE Membership On-Ramp Program (the ``Program'') that offers 
significant discounts for up to 18 months on membership fees, port fees 
and market data fees for new member organizations, subject to specific 
restrictions.
Reduction of New Firm Fee
    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 a 
member organization. The Exchange proposes to lower the New Firm Fees 
as follows:
     The fee for carrying firms would be reduced from the 
current $20,000 to $4,000;
     The fee for introducing firms would be reduced from the 
current $7,500 to $4,000; and

[[Page 22288]]

     The fee for non-public organizations would be reduced from 
the current $2,500 to $2,000.
    The proposed reductions of the New Firm Fee would be available to 
all applicants seeking approval as a new member organization, including 
carrying firms, introducing firms, or non-public organizations, which 
would be seeking to obtain an equities trading license at the Exchange. 
The most significant fee reduction would be for carrying firms, which 
is designed to incentivize Exchange membership, and in particular 
incentivize smaller, retail-oriented firms to become Exchange member 
organizations.
    In conjunction with the discounts the Exchange proposes to 
introduce through the Program, discussed below, the Exchange believes 
that the proposed fee changes would provide increased incentives for 
equity trading firms that are not currently Exchange member 
organizations to apply for Exchange membership. The Exchange believes 
that having more member organizations trading on the Exchange would 
benefit investors through the additional display of liquidity and 
increased execution opportunities on the Exchange. In addition, the 
Exchange believes that incentivizing smaller broker-dealers to become 
member organizations could increase the amount of retail order flow 
sent to a public exchange, thereby encouraging greater participation 
and liquidity.
Annual Fee Billed Monthly
    Currently, for all member organizations, including Floor brokers 
with more than ten trading licenses but excluding Regulated Only 
Members,\9\ the Exchange charges $50,000 for the first license held by 
the member organization unless one of the other rates is deemed 
applicable. For member organizations with 3-9 trading licenses, the 
Exchange charges $35,000 for the first license held by a member 
organization that has Floor broker executions accounting for 40% or 
more of the member organization's combined adding and taking volumes 
during the billing month. For Floor brokers with 1-2 trading licenses, 
the Exchange charges a fee of $25,000 for the first license held by a 
member organization that has Floor broker executions accounting for 40% 
or more of the member organization's combined adding and taking volumes 
during the billing month. Finally, Regulated Only Members are charged 
an Annual Administrative Fee of $25,000. These fees can be prorated 
monthly as set forth in footnote 15 of the Price List.
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    \9\ See Rule 2(b)(ii) (a Regulated Only Member is a registered 
broker or dealer which does not own a trading license and agrees to 
be regulated by the Exchange as a member organization and which the 
Exchange has agreed to regulate).
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    The Exchange proposes to charge trading license fees on a monthly 
basis. Dividing the current annual fees into 12 equal amounts results 
in a $20 reduction per fee for the first two categories of member 
organizations and a $40 reduction for the remaining two categories of 
member organizations, as follows:
     The current $50,000 annual fee for the first license held 
by the member organization would become a $4,165 fee per month for the 
first trading license held by a member organization unless one of the 
other rates is deemed applicable, which translates into a $49,980 
annual fee.
     The current $35,000 annual fee for the first trading 
license held by a member organization that has Floor broker executions 
accounting for 40% or more of the member organization's combined adding 
and taking volumes during the billing month would become a $2,915 fee 
per month, which translates into a $34,980 annual fee.
     The current $25,000 for the first trading license held by 
a member organization that has Floor broker executions accounting for 
40% or more of the member organization's combined adding and taking 
volumes during the billing month would become a $2,080 fee per month, 
which translates into a $24,960 annual fee.
     Finally, the current $25,000 administrative fee for 
Regulated Only Members would be charged as a $2,080 per month fee, 
which translates into a $24,960 annual fee.
    In addition, the Exchange proposes conforming changes to footnote 
15 of the Price List. First, the Exchange proposes to delete the second 
sentence of the footnote that provides that the indicated annual 
trading license fee will be prorated on a monthly basis for the portion 
of the calendar year during which the trading license will be 
outstanding. Such a provision would be moot when fees are charged 
monthly, and footnote 15 already provides the applicable charges for 
trading licenses that are in place for 10 calendar days or less in a 
calendar month as well as 11 calendar days or more in a calendar month. 
Second, the Exchange would delete ``annual'' before trading license in 
the fifth sentence of footnote 15.
NYSE Membership On-Ramp Program
    The Exchange currently charges member organizations certain fixed 
costs related to Exchange membership, including the trading license 
fees described above, port fees, and fees for market data products, 
which are filed with the Commission and set forth on a separate Fee 
Schedule.\10\ Effective April 1, 2021, the Exchange proposes to 
discount these fees for new member organizations during the first 18 
months following approval as a new member organization to make Exchange 
membership easier for a greater number market participants.
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    \10\ The NYSE Proprietary Market Data Fee Schedule is available 
at https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf (``Market Data Fee Schedule'').
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Eligibility and Restrictions
    To be eligible, a new member organization may not have been, within 
the prior 18 months, approved as an NYSE member organization with an 
activated trading license. Eligibility for discounts begins in the 
month that a new membership application is approved. A new member 
organization is only eligible to enroll in the Program once. A new 
member organization that is an ``affiliate'' of an existing member 
organization, defined in the General section at the end of the Price 
List as any member organization under 75% common ownership or control 
of that member organization, is ineligible to participate in the 
Program. In addition, as proposed, Regulated Only Members would be 
ineligible to participate in the Program but could become eligible as 
of the month the Regulated Only Membership is converted into a full 
membership. Regulated Only Members are eligible to convert to a full 
membership at any time.
    The proposed monthly trading license fees described above based on 
a member organization's number of trading licenses would be eligible 
for the Program's proposed discounts during the 18-month period.
    Further, the NYSE offers the following Market Data products to new 
member organizations on a voluntary, subscription basis: the NYSE 
Integrated Feed, NYSE Best Quote and Trades (BQT) BQT Feed, NYSE Order 
Imbalances Feed, NYSE BBO, NYSE Trades, NYSE Openbook Ultra and NYSE 
Openbook Aggregated (``Market Data Product''). Each market data product 
allows a vendor to redistribute certain data elements included in the 
data feed on a real-time basis. For each product, the Exchange charges 
associated fees set forth on the Market Data Fee Schedule.\11\ The 
Exchange is not proposing any changes to the NYSE Proprietary Market 
Data Fee Schedule or the fees described therein.
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    \11\ See note 10, supra.
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    The Market Data Fees that would be eligible for the Program are the 
Access

[[Page 22289]]

Fees (general and Per User, if applicable), Professional User Fees 
(internal use only), Non-Professional User fee (for external use, 
including Enterprise Fees), Non-Display Fees, Redistribution Fee, and 
Multiple Data Feed Fee (``Eligible Market Data Fees'') for the market 
data products specified on the Market Data Fee Schedule. The Program's 
discounts are not available to a member organization subject to the 
Digital Media Enterprise Fee or the Professional User Fees for data 
externally distributed to professional subscribers. A firm that was a 
subscriber to any of the Eligible Market Data Fees within the prior 18 
months before becoming approved as a new member organization is 
ineligible for Program's Market Data fee discounts. Program discounts 
cannot be combined with any other discounts applicable to Eligible 
Market Data Fees. For example, the Exchange offers a one-month free 
trial to any firm that subscribes to a particular NYSE proprietary real 
time market data product for the first time. As proposed, this discount 
could not be combined with Program discounts to extend Phase 1 by one 
month.
    Finally, the Program would be available for fees charged for the 
first 10 ports that provide connectivity to the Exchange's trading 
systems (i.e., ports for entry of orders and/or quotes (``order/quote 
entry ports'')). The Exchange charges $550 per order/quote entry port 
per month. Designated Market Makers (``DMMs'') are not charged for the 
first 12 order/quote entry ports per month that connect to the 
Exchange. The Exchange also currently makes ports available for drop 
copies and charges $550 per port per month, except that DMMs are not 
charged for drop copy ports that connect to the Exchange. The Program 
would also be available for fees charged for a member organization's 
first 10 drop copy ports.\12\
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    \12\ Only one fee per drop copy port applies, even if receiving 
drop copies from multiple order/quote entry ports.
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    Because DMMs are not charged for first dozen order/quote entry 
ports and are not charged at all for drop copy ports, new member 
organizations that are DMMs would not be eligible for the discount for 
either order/quote entry ports or drop copy ports.
    The proposed discounts would be phased out over a period of 18 
months. Specifically, during Phase 1 (months 1-6) following approval of 
a new membership application, the applicable discount for Eligible 
Market Data Fees, trading license fees, and port fees would be 100% for 
each eligible product. During Phase 2 (months 7-12), the amount of the 
discount would become 50%. Finally, during Phase 3 (months 13-18), the 
amount of the discount will be 25%. The Program would terminate at the 
end of Phase 3 (18 months), and the discounted fees will be charged to 
that member organization at the regular rate set forth in the Price 
List or Market Data Fee Schedule, as applicable, from that point 
forward.
    For example, assume new member organization A approved in May 2021 
signs up for 20 order/quote entry ports. Currently, member organization 
A would be charged $550 per port, for a total of $11,000 per month. 
Under the Program, member organization A's first 10 ports would be free 
for the first 6 months, and the firm would only be charged for 10 ports 
at $550, for a total of $5,500 per month. In months 7 to 12, member 
organization A's first 10 ports would be billed at a 50% discount, or 
$275 per port per month, for a total of $2,750 per month. In the final 
6 months of the Program, member organization A's first 10 ports would 
be billed at a 25% discount, or $412.50 per port per month, for a total 
of $4,125 per month.
    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 Proposed Change Is Reasonable
    As discussed above, the Exchange operates in a highly fragmented 
and competitive market where market participants can and do move order 
flow, or discontinue or reduce use of certain categories of products, 
in response to fee changes. Moreover, in the current competitive market 
environment, market participants also have a choice of where to become 
members.
    In light of this, the Exchange believes that it is reasonable to 
lower the new firm and trading license fee for all member organizations 
and offer discounted membership fees, port fees and market data fees 
for up to 18 months for new member organizations in order to provide an 
incentive for smaller broker-dealers to apply for Exchange membership 
and a trading license. The Exchange believes that providing an 
incentive for broker-dealers that are not currently Exchange member 
organizations to apply for membership would encourage market 
participants to become members of the Exchange and bring additional 
liquidity to a public market. In addition, the Exchange believes that 
the proposal could result in additional retail liquidity to a public 
exchange, to the benefit of all market participants. The Exchange 
believes creating incentives and opportunities for new members on the 
Exchange protects investors and the public interest by increasing the 
competition and liquidity on a transparent public market.
The Proposal is an Equitable Allocation of Fees
    The Exchange believes the proposal constitutes an equitable 
allocation of fees because the proposed change would be offered to all 
market participants that wish to trade at the Exchange and all new 
member organizations, all of whom would continue to be subject to the 
same fee structure and access to the Exchange's market would continue 
to be offered on fair and nondiscriminatory terms.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, member 
organizations are free to disfavor Exchange membership and the 
Exchange's pricing if they believe that alternatives offer them better 
value.
    The proposal is not unfairly discriminatory because it neither 
targets nor uniquely impacts any particular category of market 
participant. The proposed lower member fees, monthly trading license 
fees and discounted access to Exchange services for up to 18 months 
does not permit unfair discrimination because the proposed changes 
would apply to all similarly situated member organizations, who would 
all benefit from the lower and discounted fees on an equal basis. The 
Exchange does not believe that excluding new DMM member organizations 
from the port fees discounts under the Program is unfairly 
discriminatory because DMM firms are not currently charged for drop 
copy

[[Page 22290]]

ports or the first 12 order/quote entry ports.
    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,\15\ 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 increase competition by reducing the 
cost of operating as an Exchange member organization, which the 
Exchange believes will enhance market quality through the submission of 
additional retail liquidity to a public exchange, thereby promoting 
market depth, price discovery and transparency and enhancing order 
execution opportunities for member organizations. 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.'' \16\
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    \15\ 15 U.S.C. 78f(b)(8).
    \16\ Regulation NMS, 70 FR at 37498-99.
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    Intramarket Competition. The proposed changes are designed to 
attract additional member organizations and order flow to the Exchange. 
The Exchange believes that the proposed changes would continue to 
incentivize market participants to become Exchange member organizations 
and direct order flow, especially retail order flow, to the Exchange. 
Greater liquidity benefits all market participants on the Exchange by 
encouraging market participants to become Exchange member organizations 
and send orders to the Exchange, thereby providing more trading 
opportunities and contributing to robust levels of liquidity on the 
Exchange, which benefits all market participants. The proposed lower 
fees and discounts 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. 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. In such an 
environment, the Exchange must continually adjust its fees and rebates 
to remain competitive with other exchanges and with off-exchange 
venues. Because competitors are free to modify their own fees and 
credits in response, and because market participants may readily adjust 
their order routing practices, the Exchange does not believe its 
proposed fee change can impose any burden on intermarket competition.

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) \17\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \18\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 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) \19\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \19\ 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-2021-22 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-2021-22. 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 Number SR-NYSE-2021-22 and should be submitted on 
or before May 18, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-08680 Filed 4-26-21; 8:45 am]
BILLING CODE 8011-01-P