[Federal Register Volume 86, Number 115 (Thursday, June 17, 2021)]
[Notices]
[Pages 32292-32298]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-12747]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92160; File No. SR-NYSE-2021-35]


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

June 11, 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 May 27, 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) introduce 
three adding credit tiers (Tiers 3, 5 and 6 Adding Credits) and re-
number current Tier 3, and (2) relocate and modify certain fees, and 
introduce new fees, for transactions that remove liquidity from the 
Exchange in Tape A, B and C securities. The Exchange proposes to 
implement the fee changes effective June 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.

[[Page 32293]]

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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Price List to (1) introduce 
three adding credit tiers (Tiers 3, 5 and 6 Adding Credits) and re-
number current Tier 3, and (2) relocate and modify certain fees, and 
introduce new fees, for transactions that remove liquidity from the 
Exchange in Tape A, B and C securities.
    The proposed changes respond to the current competitive environment 
where order flow providers have a choice of where to direct liquidity-
providing orders by offering further incentives for member 
organizations to send additional liquidity to the Exchange.
    The Exchange proposes to implement the fee changes effective June 
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. With respect to non-marketable 
order flow that would provide displayed liquidity on an Exchange, 
member organizations can choose from any one of the numerous currently 
operating registered exchanges to route such order flow. Accordingly, 
competitive forces constrain exchange transaction fees that relate to 
orders that would provide liquidity on an exchange.
    In response to this competitive environment, the Exchange has 
established incentives for its member organizations who submit orders 
that provide liquidity on the Exchange. The proposed fee change is 
designed to attract additional order flow to the Exchange by 
incentivizing member organizations to submit additional displayed 
liquidity to the Exchange.
Proposed Rule Change
Adding Tiers
    The Exchange currently offers three adding tiers (Tier 1 Adding 
Credit, Tier 2 Adding Credit, and Tier 3 Adding Credit) that provide 
credits of $0.0022, $0.0020, and $0.0018 per share, respectively, for 
all orders, other than MPL and Non-Display Reserve orders, that add 
liquidity to the NYSE when certain requirements are met. The Exchange 
proposes to introduce three similar adding credit tiers numbered 3, 5 
and 6 and re-number current Tier 3 as Tier 4, as follows.
Tier 3 Adding Credit
    The Exchange proposes a new Tier 3 Adding Credit for orders, other 
than MPL and Non-Display Reserve orders, that add liquidity to the 
Exchange. As proposed, the Exchange would provide a $0.0019 credit in 
Tape A securities if a member organization has an average daily volume 
(``ADV'') that adds liquidity to the Exchange during the billing month 
(``Adding ADV''),\9\ excluding Supplemental Liquidity Provider 
(``SLP'') and Designated Market Maker (``DMM'') Adding ADV, that is at 
least 0.35% of NYSE CADV. In addition, member organizations that meet 
the above requirements and add liquidity, excluding liquidity added as 
an SLP, in Tape B and C Securities of at least 0.20% of Tape B and Tape 
C CADV combined, would receive an additional $0.0001 per share.
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    \9\ The terms ``ADV'' and ``CADV'' are defined in footnote * of 
the Price List.
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    The purpose of this proposed change is to incentivize member 
organizations to increase the liquidity-providing orders in the Tape A 
securities they send to the Exchange, which would support the quality 
of price discovery on the Exchange and provide additional liquidity for 
incoming orders. As noted above, the Exchange operates in a competitive 
environment, particularly as it relates to attracting non-marketable 
orders, which add liquidity to the Exchange. Because the proposed tier 
requires a member organization to achieve a minimum volume of its 
trades in orders that add liquidity, the Exchange believes that the 
proposed credits would provide an incentive for all member 
organizations to send additional liquidity to the Exchange in order to 
qualify for them. The Exchange does not know how much order flow member 
organizations choose to route to other exchanges or to off-exchange 
venues. Since the proposed tier is new, the Exchange does not know how 
many member organizations could qualify for the new tiered rate based 
on their current trading profile on the Exchange and if they choose to 
direct order flow to the NYSE. However, without having a view of member 
organization's activity on other exchanges and off-exchange venues, the 
Exchange has no way of knowing whether this proposed rule

[[Page 32294]]

change would result in any member organization directing orders to the 
Exchange in order to qualify for the new tier.
    In connection with this proposed change, current Tier 3 Adding 
Credit would become Tier 4 Adding Credit. The next proposed tier would 
follow current Tier 3 Adding Credit as renumbered in the Price List.
Tier 5 Adding Credit
    The Exchange proposes a new Tier 5 Adding Credit for orders, other 
than MPL and Non-Display Reserve orders, that add liquidity to the 
Exchange. As proposed, the Exchange would provide a $0.0017 credit in 
Tape A securities if a member organization's Adding ADV, excluding 
liquidity added as an SLP and as a DMM, is at least 0.29% of NYSE CADV. 
Further, member organizations that meet the above requirements and add 
liquidity, excluding liquidity added as an SLP, in Tape B and C 
Securities of at least 0.20% of Tape B and Tape C CADV combined, would 
receive an additional $0.0001 per share.
    The purpose of this proposed change is to incentivize member 
organizations to increase the liquidity-providing orders in the Tape A 
securities they send to the Exchange, which would support the quality 
of price discovery on the Exchange and provide additional liquidity for 
incoming orders. As noted above, the Exchange operates in a competitive 
environment, particularly as it relates to attracting non-marketable 
orders, which add liquidity to the Exchange. Because the proposed tier 
requires a member organization to achieve a minimum volume of its 
trades in orders that add liquidity, the Exchange believes that the 
proposed credits would provide an incentive for all member 
organizations to send additional liquidity to the Exchange in order to 
qualify for them. The Exchange does not know how much order flow member 
organizations choose to route to other exchanges or to off-exchange 
venues. Since the proposed tier is new, the Exchange does not know how 
many member organizations could qualify for the new tiered rate based 
on their current trading profile on the Exchange and if they choose to 
direct order flow to the NYSE. However, without having a view of member 
organization's activity on other exchanges and off-exchange venues, the 
Exchange has no way of knowing whether this proposed rule change would 
result in any member organization directing orders to the Exchange in 
order to qualify for the new tier.
Tier 6 Adding Credit
    The Exchange proposes a new Tier 6 Adding Credit for orders, other 
than MPL and Non-Display Reserve orders, that add liquidity to the 
Exchange. As proposed, the Exchange would provide a $0.0015 credit in 
Tape A securities if a member organization's Adding ADV, excluding 
liquidity added as an SLP and as a DMM, is at least either:
     0.22% of NYSE CADV, or
     0.15% of NYSE CADV that is at least 0.05% of NYSE CADV 
above the member organization's first quarter 2021 adding liquidity as 
a percentage of NYSE CADV.
    In addition, member organizations that meet the above requirements 
and add liquidity, excluding liquidity added as an SLP, in Tape B and C 
Securities of at least 0.20% of Tape B and Tape C CADV combined, would 
receive an additional $0.0001 per share.
    The following example illustrates how all of the proposed adding 
tiers would operate.
    Assume Member Organization A has an Adding ADV as a percentage of 
Tape A CADV of 0.45% in the billing month of which 0.10% was DMM Adding 
ADV and 0.05% was SLP Adding ADV:
     Member Organization A would qualify for adding credit of 
$0.0017 for displayed adding liquidity, based on the Adding ADV of 
0.30%, exceeding the 0.29% requirement.
    If Member Organization A instead had Adding ADV as a percentage of 
Tape A CADV of 0.55% in the billing month, of which 0.10% was DMM 
Adding ADV and 0.05% was SLP Adding ADV:
     Member Organization A would qualify for adding credit of 
$0.0019 for displayed adding liquidity, based on the Adding ADV of 
0.40%, exceeding the 0.35% requirement.
    Also assume that Member Organization A had an Adding ADV, excluding 
SLP and DMM Adding ADV, of 0.05% in the baseline quarter of the first 
quarter 2021. If in another billing month, Member Organization A had an 
Adding ADV, excluding SLP and DMM Adding ADV, of 0.17%:
     Member Organization A would qualify for a credit of 
$0.0015 for displayed adding liquidity, exceeding the 0.05% step up 
with 0.12% over first quarter 2021 baseline and meeting the 0.015% 
Adding ADV requirement.
    The purpose of this proposed change is also to incentivize member 
organizations to increase the liquidity-providing orders in the Tape A 
securities they send to the Exchange, which would support the quality 
of price discovery on the Exchange and provide additional liquidity for 
incoming orders. As noted above, the Exchange operates in a competitive 
environment, particularly as it relates to attracting non-marketable 
orders, which add liquidity to the Exchange. Because the proposed tier 
requires a member organization to achieve a minimum volume of its 
trades in orders that add liquidity, the Exchange believes that the 
proposed credits would provide an incentive for all member 
organizations to send additional liquidity to the Exchange in order to 
qualify for them. The Exchange does not know how much order flow member 
organizations choose to route to other exchanges or to off-exchange 
venues. Since the proposed tier is new, the Exchange does not know how 
many member organizations could qualify for the new tiered rate based 
on their current trading profile on the Exchange and if they choose to 
direct order flow to the NYSE. However, without having a view of member 
organization's activity on other exchanges and off-exchange venues, the 
Exchange has no way of knowing whether this proposed rule change would 
result in any member organization directing orders to the Exchange in 
order to qualify for the new tier.
Charges for Removing Liquidity
    Currently, the Exchange sets forth the fees for removing liquidity 
from the Exchange in Tape A securities in a different section of the 
Price List from fees for removing liquidity in Tape B and C securities, 
which are grouped with credits for adding liquidity in Tape B and C 
securities under their own heading in the Price List. The Exchange 
proposes to modify certain fees for removing liquidity in Tapes B and C 
securities and relocate them to section of the Price List setting forth 
the current fees for removing liquidity in Tape A securities. In 
addition, other fees for removing liquidity in Tape B and C securities 
would be deleted or relocated within the current section of the Price 
List where remove fees and adding credits in Tapes B and C securities 
are set forth.
    First, the current base rate charged for non-Floor broker 
transactions that remove liquidity from the Exchange (i.e., unless one 
of the charges set forth immediately below this charge applies) is a 
fee of $0.0030. The Exchange proposes that this fee would apply to Tape 
B and C securities in addition to Tape A securities.
    Second, under Remove Tier 2 for Tape B and C securities, the 
Exchange currently charges a per tape fee of $0.00285 per share to 
remove liquidity from the Exchange for member

[[Page 32295]]

organizations with an at least 50,000 shares Per Tape of Non-SLP and 
Floor broker Adding ADV. This fee would be deleted from Remove Tier 2 
and incorporated into a new section under Tape A securities setting 
forth rates and new requirements for removing liquidity in Tape A, B 
and C securities, as follows.
    As proposed, for non-Floor broker transactions if the member 
organization has an Adding ADV, excluding liquidity added by a DMM, 
that is at least 250,000 ADV on the NYSE in Tape A securities, the 
Exchange would offer a fee of $0.00295 for Tape A securities and 
$0.00285 for Tape B and C securities. For non-Floor broker transactions 
if the member organization has an Adding ADV, excluding liquidity added 
by a DMM, that is at least 3,500,000 ADV on the NYSE in Tape A 
securities, the Exchange would offer a fee of $0.00290 in Tape A 
securities and a fee of $0.00285 for Tape B and C securities.
    Further, the Exchange currently charges $0.00285 for non-Floor 
broker transactions that remove liquidity from the Exchange by member 
organizations with an Adding ADV, excluding any liquidity added by a 
DMM, that is more than 250,000 ADV on the NYSE in Tape A Securities and 
less than 500,000 ADV on the NYSE in Tape B and Tape C securities 
combined during the billing month.
    The Exchange proposes to revise the requirements and extend the 
same fee to Tape A, B and C securities. Specifically, the Exchange 
proposes a fee of $0.00285 in Tape A, B and C securities for non-Floor 
broker transactions if the member organization has Adding ADV, 
excluding liquidity added by a DMM, that is at least 7,000,000 ADV in 
Tape A securities and 500,000 ADV in Tape B and Tape C securities 
combined.
    Similarly, the Exchange currently charges $0.00275 for non-Floor 
broker transactions that remove liquidity from the Exchange by member 
organizations with an Adding ADV, excluding any liquidity added by a 
DMM, that is at least 250,000 ADV on the NYSE in Tape A securities and 
at least 500,000 ADV on the NYSE in Tape B and C securities combined 
during the billing month.
    The Exchange proposes new fees and revised requirements. As 
proposed, the Exchange proposes a fee of $0.0028 in Tape A securities 
and a fee of $0.00285 Tape B and C securities for non-Floor broker 
transactions if the member organization has Adding ADV, excluding 
liquidity added by a DMM, that is at least 14,000,000 ADV in Tape A 
securities and 750,000 ADV in Tape B and Tape C securities combined.
    Finally, in the section of the Price List setting forth fees for 
removing liquidity in Tape B and C securities, the Exchange would make 
the following additional changes.
    First, for executions on the Exchange in Tape B and C securities 
that remove liquidity, the Exchange currently charges $0.0030 per share 
for securities priced at or above $1.00, including MPL Orders, unless 
the Floor broker fee or the Remove Tier fees applies. The Exchange 
proposes to delete this fee since it would be referenced in the above 
section.
    Second, following the current $0.0026 fee for Floor broker Tape B 
and C executions that remove liquidity from the Exchange, which would 
remain unchanged, the Exchange would clarify that remove rates listed 
in the Tape A section of the Price List would apply unless a better 
rate set forth below apply.
    Finally, the current Remove Tier 1 for Tape B and C securities, 
which provides a per tape fee of $0.0026 per share to remove liquidity 
from the Exchange for member organizations meeting its requirements, 
would be moved from its current place and moved up within the same 
section. The rate and requirements would remain unchanged.
    As noted, the current Remove Tier 2 for Tape B and C securities 
would be deleted from its current place. The heading titled ``Remove 
Tiers For Securities At or Above $1.00 Requirement Rate'' would also be 
deleted.
    The Exchange believes that the proposed changes, taken together, 
will incentivize submission of additional liquidity in Tape A, B and 
Tape C securities to a public exchange, thereby promoting price 
discovery and transparency and enhancing order execution opportunities 
for member organizations. As noted above, the Exchange operates in a 
competitive environment, particularly as it relates to attracting non-
marketable orders, which add liquidity to the Exchange. The Exchange 
does not know how much order flow member organizations choose to route 
to other exchanges or to off-exchange venues. Because the proposed 
reconfiguration of the fees involves the introduction of new fees and/
or new requirements, the Exchange does not know how many member 
organizations could qualify for the new remove fees based on their 
current trading profile on the Exchange and if they choose to direct 
order flow to the NYSE. However, without having a view of member 
organization's activity on other exchanges and off-exchange venues, the 
Exchange has no way of knowing whether this proposed rule change would 
result in any member organization directing orders to the Exchange.
    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,\10\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\11\ 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4) & (5).
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    As discussed above, 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.'' \12\ 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.'' \13\
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    \12\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule) 
(``Regulation NMS'').
    \13\ 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).
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    Given this competitive environment, the proposal represents a 
reasonable attempt to attract additional order flow to the Exchange.
The Proposed Change Is Reasonable
Adding Tiers
    The proposed new Adding Tier Credits are reasonable. Specifically, 
the

[[Page 32296]]

Exchange believes that the proposed adding tiers would provide 
additional incentives for member organizations to send additional 
liquidity providing orders to the Exchange in Tape A securities. As 
noted above, the Exchange operates in a highly competitive environment, 
particularly for attracting non-marketable order flow that provides 
liquidity on an exchange.
    The Exchange believes that the requirements for the proposed Tier 1 
Adding Credit, Tier 2 Adding Credit, and Tier 3 Adding Credit are 
reasonable because each would encourage additional displayed and non-
displayed liquidity on the Exchange and because market participants 
benefit from the greater amounts of displayed and non-displayed 
liquidity present on the Exchange. Further, the Exchange believes it's 
reasonable to provide credits of $0.0019, $0.0017 and $0.0015 when the 
current adding tiers offer credits of $0.0018 (current Tier 3, proposed 
Tier 4 Adding Credit) and $0.0020 (Tier 2 Adding Credit) because the 
proposal would provide additional ways for member organizations to 
qualify for a tiered credit by adding liquidity, thereby encouraging 
member organizations to send orders that provide liquidity to the 
Exchange which in turn contributes to robust levels of liquidity and 
promoting price discovery and transparency which benefits all market 
participants. In addition, the Exchange believes that the additional 
credit of $0.0001 per share for member organizations that meet the 
proposed tier requirements and add liquidity, excluding liquidity added 
as an Supplemental Liquidity Provider, in Tape B and C Securities of at 
least 0.20% of Tape B and Tape C CADV combined is reasonable as a 
similar incentive is offered in the NYSE's other adding tiers (Tier 1-3 
Adding Credits). Since the proposed Adding Tiers would be new, no 
member organization currently qualifies for the proposed pricing tiers. 
As previously noted, without a view of member organization activity on 
other exchanges and off-exchange venues, the Exchange has no way of 
knowing whether the proposed rule change would result in any member 
organization qualifying for the tier. The Exchange believes the 
proposed credit is reasonable as it would provide an incentive for 
member organizations to direct their order flow to the Exchange and 
provide meaningful added levels of liquidity in order to qualify for 
the credits, thereby contributing to depth and market quality on the 
Exchange.
Charges for Removing Liquidity
    The Exchange believes that the proposal to relocate and modify 
certain fees, and introduce new fees, for transactions that remove 
liquidity from the Exchange in Tape A, B and C securities are 
reasonable. The purpose of these changes is to encourage additional 
liquidity on the Exchange because market participants benefit from the 
greater amounts of displayed liquidity present on a public exchange. 
The Exchange believes that the proposed new fees and modifications to 
qualification requirements will incentivize additional liquidity in 
Tape A, B and Tape C securities to a public exchange to qualify for 
lower fees for removing liquidity, thereby promoting price discovery 
and transparency and enhancing order execution opportunities for member 
organizations. The proposal is thus reasonable because all member 
organizations would benefit from such increased levels of liquidity.
Non-Substantive Changes
    Finally, the Exchange believes the proposed non-substantive 
clarifying and conforming changes are reasonable and would not be 
inconsistent with the public interest and the protection of investors 
because investors will not be harmed and in fact would benefit from 
increased clarity and transparency on the Price List, thereby reducing 
potential confusion.
The Proposal Is an Equitable Allocation of Fees
    The Exchange believes its proposal equitably allocates its fees 
among its market participants. The Exchange believes its proposal 
equitably allocates its fees among its market participants by fostering 
liquidity provision and stability in the marketplace.
Adding Tiers
    The Exchange believes that the proposal to provide additional 
incremental tiered credits for adding liquidity to the Exchange in Tape 
A securities is equitable because it would encourage additional 
displayed liquidity on the Exchange and because market participants 
benefit from the greater amounts of displayed liquidity present on the 
Exchange. The Exchange believes that the magnitude of the additional 
credit is not unreasonably high compared to the current adding tier 
credits and also relative to the other adding tier credits, which range 
from $0.0015 to $0.0031, in comparison to the credits paid by other 
exchanges for orders that provide additional step up liquidity.\14\
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    \14\ See Cboe BZX Fee Schedule, which has adding credits ranging 
from $0.0025 to $0.0032, at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/.
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    The Exchange believes the proposed rule change would improve market 
quality for all market participants on the Exchange and, as a 
consequence, attract more liquidity to the Exchange, thereby improving 
market-wide quality and price discovery. Since the proposed Adding 
Tiers would be new, no member organization currently qualifies for 
them. The Exchange does not know how much order flow member 
organizations choose to route to other exchanges or to off-exchange 
venues. As described above, member organizations with liquidity-
providing orders have a choice of where to send those orders. The 
Exchange believes that by offering alternate credits for member 
organizations to qualify for a tiered credit, more member organizations 
will be able to choose to route their liquidity-providing orders to the 
Exchange to qualify for one of the proposed credits. However, without 
having a view of member organization's activity on other exchanges and 
off-exchange venues, the Exchange has no way of knowing whether this 
proposed rule change would result in any member organization directing 
orders to the Exchange in order to qualify for the new credits.
    The Exchange believes the proposed credits are reasonable as they 
would provide an additional incentive for member organizations to 
direct their order flow to the Exchange and provide meaningful added 
levels of liquidity in order to qualify for the higher credits, thereby 
contributing to depth and market quality on the Exchange. The proposal 
neither targets nor will it have a disparate impact on any particular 
category of market participant. All member organizations would be 
eligible to qualify for the proposed credits if they meet the proposed 
adding liquidity requirements for each proposed tier. The Exchange 
believes that offering credits for providing liquidity will continue to 
attract order flow and liquidity to the Exchange, thereby providing 
additional price improvement opportunities on the Exchange and 
benefiting investors generally. As to those market participants that do 
not presently qualify for the adding liquidity credits, the proposal 
would provide a lower entry point and revised requirements that could 
allow those member organizations to qualify for a credit. The proposal 
will also not

[[Page 32297]]

adversely impact their ability to qualify for other credits provided by 
the Exchange.
Charges for Removing Liquidity
    The Exchange believes that, for the reasons discussed above, the 
proposed changes taken together, will incentivize member organizations 
to send additional adding liquidity to achieve lower fees when removing 
liquidity in Tape A, B and Tape C securities from the Exchange, thereby 
increasing the number of orders that are executed on the Exchange, 
promoting price discovery and transparency and enhancing order 
execution opportunities and improving overall liquidity on a public 
exchange. The Exchange also believes that the proposed change is 
equitable because it would apply to all similarly situated member 
organizations that remove liquidity in Tape A, B or Tape C securities. 
The proposed change also is equitable because it would be consistent 
with the applicable rate on other marketplaces. For example, Nasdaq PSX 
provides a fee per share for removing liquidity, $0.0028 in Tape A and 
B securities and $0.0029 in Tape C securities, if a firm removes 0.065% 
or more of Consolidated Volume; otherwise, Nasdaq PSX imposes a charge 
of $0.0030 per share for removing liquidity.\15\ The Exchange notes 
that since the requirement is for Tape B and Tape C securities 
combined, member organizations can meet the requirement by adding 
liquidity in either Tape B or Tape C securities, or both. The Exchange 
further notes that other marketplaces have tiers with adding 
requirements in specific tapes to qualify for a rate in securities on 
another tape. For example, to be eligible for a $0.0020 adding credit 
in Tape C securities on Nasdaq, firms are required to average a minimum 
of 250,000 shares added per day in Tape A or Tape B securities 
(combined); otherwise, the Tape C credit for adding liquidity is 
$0.0015.\16\
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    \15\ See https://www.nasdaqtrader.com/Trader.aspx?id=PSX_Pricing.
    \16\ See https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
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    As previously noted, the Exchange operates in a competitive 
environment, particularly as it relates to attracting non-marketable 
orders, which add liquidity to the Exchange. The Exchange does not know 
how much order flow member organizations choose to route to other 
exchanges or to off-exchange venues. Because the proposed 
reconfiguration of the fees involves the introduction of new fees and/
or new requirements, the Exchange does not know how many member 
organizations could qualify for the new remove fees based on their 
current trading profile on the Exchange and if they choose to direct 
order flow to the NYSE. However, without having a view of member 
organization's activity on other exchanges and off-exchange venues, the 
Exchange has no way of knowing whether this proposed rule change would 
result in any member organization directing orders to the Exchange.
The Proposal Is Not Unfairly Discriminatory
Adding Tiers
    The Exchange believes it is not unfairly discriminatory to provide 
an additional adding tiers and corresponding credits as the proposed 
credits would be provided on an equal basis to all member organizations 
that add liquidity by meeting the new proposed adding tier 
requirements. For the same reason, the Exchange believes it is not 
unfairly discriminatory to provide an additional credit of $0.0001 per 
share for member organizations that meet the proposed tier requirements 
and add a minimum liquidity as a percentage of Tape B and Tape C CADV. 
Further, the Exchange believes the proposed adding tier credits would 
incentivize member organizations that meet the new tiered requirements 
to send more orders to the Exchange. Since the proposed credits would 
be new, no member organization currently qualifies for them. As noted, 
without a view of member organization activity on other exchanges and 
off-exchange venues, the Exchange has no way of knowing whether this 
proposed rule change would result in any member organization qualifying 
for the tier. The Exchange believes the proposed credit is reasonable 
as it would provide an incentive for member organizations to direct 
their order flow to the Exchange and provide meaningful added levels of 
liquidity in order to qualify for the credits, thereby contributing to 
depth and market quality on the Exchange. The proposal neither targets 
nor will it have a disparate impact on any particular category of 
market participant. All member organizations that provide liquidity 
could be eligible to qualify for the proposed credit if meet the 
proposed adding liquidity requirements. The Exchange believes that 
offering credits for providing liquidity will continue to attract order 
flow and liquidity to the Exchange, thereby providing additional price 
improvement opportunities on the Exchange and benefiting investors 
generally. As to those market participants that do not presently 
qualify for the adding liquidity credits, the proposal will not 
adversely impact their existing pricing or their ability to qualify for 
other credits provided by the Exchange.
Charges for Removing Liquidity
    The Exchange believes that that reconfiguring the charges for 
member organizations that remove liquidity in all three tapes will 
incentivize submission of additional liquidity in Tape A, B and Tape C 
securities to a public exchange to qualify for the fees for removing 
liquidity, thereby promoting price discovery and transparency and 
enhancing order execution opportunities for member organizations.
    The proposal does not permit unfair discrimination because the new 
rates for removing liquidity in Tape A, B and C securities would be 
applied to all similarly situated member organizations and other market 
participants, who would all be eligible for the same credit on an equal 
basis. Accordingly, no member organization already operating on the 
Exchange would be disadvantaged by this allocation of fees. The 
Exchange believes it is not unfairly discriminatory to provide lower 
fees for removing liquidity as the proposed fee and credits would be 
provided on an equal basis to all member organizations that remove 
liquidity by meeting the tiered requirements. Further, the Exchange 
believes the proposed fee would provide an incentive for member 
organizations to remove additional liquidity from the Exchange in Tape 
A, B and C securities. The Exchange also believes that the proposed 
change is not unfairly discriminatory because it is reasonably related 
to the value to the Exchange's market quality associated with higher 
volume. As noted, the proposed change also is not unfairly 
discriminatory because it would be consistent with the applicable rate 
on other marketplaces.
    Finally, the submission of orders to the Exchange is optional for 
member organizations in that they could choose whether to submit orders 
to the Exchange and, if they do, the extent of its activity in this 
regard.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

[[Page 32298]]

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

    In accordance with Section 6(b)(8) of the Act,\17\ 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 submission of additional 
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.'' \18\
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    \17\ 15 U.S.C. 78f(b)(8).
    \18\ Regulation NMS, 70 FR at 37498-99.
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    Intramarket Competition. The proposed changes are designed to 
attract additional order flow to the Exchange. The Exchange believes 
that the proposed changes would continue to incentivize market 
participants to direct displayed and non-displayed order flow to the 
Exchange. Greater liquidity benefits all market participants on the 
Exchange by providing more trading opportunities and encourages member 
organizations to send orders, thereby contributing to robust levels of 
liquidity, which benefits all market participants on the Exchange. The 
current and proposed fees and credits 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) \19\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \20\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 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) \21\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \21\ 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-2021-35 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-2021-35. 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-2021-35, and should be submitted on 
or before July 8, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12), (59).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2021-12747 Filed 6-16-21; 8:45 am]
BILLING CODE 8011-01-P