[Federal Register Volume 86, Number 153 (Thursday, August 12, 2021)]
[Notices]
[Pages 44446-44448]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-17176]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92592; File No. SR-NYSEAMER-2021-35]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Change To Amend the NYSE 
American Equities Price List and Fee Schedule

August 6, 2021.
    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 July 30, 2021, NYSE American LLC (``NYSE American'' or 
``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 the NYSE American Equities Price 
List and Fee Schedule (``Price List'') to offer an optional monthly per 
security credit to Electronic Designated Market Makers (``eDMM'') that 
elect to receive a lower transaction credit per share credit for adding 
liquidity to the Exchange. The proposed 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 the Price List to offer an optional 
monthly per security credit to eDMMs that elect to receive a lower 
transaction credit per share credit for adding liquidity to the 
Exchange.
    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 eDMMs to increase 
quoting on, and send additional displayed liquidity to, the Exchange.
    The Exchange proposes to implement the fee changes effective August 
2, 2021.
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 37496, 37499 (June 29, 2005) (File No. 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, cash equity trading is currently dispersed 
across 16 exchanges,\6\ numerous alternative trading systems,\7\ and 
broker-dealer internalizers and wholesalers, all competing for order 
flow. Based on publicly-available information, no single exchange 
currently has more than 17% market share.\8\ Therefore, no exchange 
possesses significant pricing power in the execution of cash equity 
order flow. More specifically, the Exchange currently has less than 1% 
market share of executed volume of cash equities trading.\9\
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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 U.S Equities Market Volume Summary, available at 
https://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/.
    \9\ See id.
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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. While it is not possible to know a firm's reason for shifting 
order flow, the Exchange believes that one such reason is because of 
fee changes at any of the registered exchanges or non-exchange venues 
to which the firm

[[Page 44447]]

routes order flow. Accordingly, competitive forces compel the Exchange 
to use exchange transaction fees and credits because market 
participants can readily trade on competing venues if they deem pricing 
levels at those other venues to be more favorable.
Proposed Rule Change
    The Exchange proposes an optional monthly credit per security 
(``Credit Per Security'') to eDMMs, up to a maximum credit of $550 per 
month across all assigned securities, provided that the eDMM agrees to 
a lower transaction credit of $0.0030, from $0.0045 currently, for 
adding displayed liquidity for all assigned securities. An eDMM 
electing the additional Credit Per Security must notify the Exchange 
prior to the start of a month if the eDMM elects to change their credit 
either to or from the Credit Per Security for all the eDMM's assigned 
securities.
    The Credit Per Security will be available for the following month 
for each assigned security where the eDMM meets the following quoting 
requirements:
     An eDMM quoting at the National Best Bid or Offer 
(``NBBO'') for a minimum average of 25% of the time would be entitled a 
$100 Credit Per Security per month, or
     An eDMM quoting at the NBBO for a minimum average of 40% 
of the time would be entitled a $250 Credit Per Security per month, or
     Finally, an eDMM quoting at the NBBO for a minimum average 
of 50% of the time would be entitled to the maximum $550 Credit Per 
Security per month.
    The Exchange believes that providing Exchange eDMMs with the option 
to receive a lower per share transaction credit for increased quoting 
and adding displayed liquidity in exchange for monthly rebates per 
assigned security would foster liquidity provision and stability in the 
marketplace and lessen eDMM reliance on transaction fees, to the 
benefit of the marketplace and all market participants.
    The proposed changes are not otherwise intended to address any 
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, is designed to prevent fraudulent and 
manipulative acts and practices and to promote just and equitable 
principles of trade, 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) and (5).
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The Proposed Fee Change Is Reasonable
    As discussed above, the Exchange operates in a highly fragmented 
and competitive market. The Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
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\
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    \12\ See Regulation NMS, supra note 6, 70 FR at 37499.
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    Given this competitive environment, the proposal represents a 
reasonable attempt to attract additional order flow to the Exchange by 
offering further incentives for eDMMs to quote on, and send additional 
displayed liquidity to, the Exchange.
    The Exchange believes that providing eDMMs with the option to 
receive a lower per share transaction credit for adding displayed 
liquidity in exchange for monthly rebates per assigned security, up to 
a maximum credit of $550 per month across all eDMM assigned securities, 
is reasonable because it would foster liquidity provision and stability 
in the marketplace and lessen eDMM reliance on transaction fees, to the 
benefit of the marketplace and all market participants. Moreover, the 
proposal is reasonable because it would balance the increased risks and 
heightened quoting and other obligations that eDMMs on the Exchange 
have and that other market participants do not. The Exchange also 
believes that assigning a maximum credit of $550 per month for the 
Credit Per Security is reasonable and will provide a further incentive 
for eDMMs to quote and trade a greater number of securities on the 
Exchange and will generally allow the Exchange and eDMMs to better 
compete for order flow, and thus enhance competition.
The Proposed Fee Change Is an Equitable Allocation of Fees and Credits
    The Exchange believes its proposal equitably allocates its fees and 
credits among its market participants. The Exchange believes that it is 
equitable to offer eDMMs the option to receive a lower per share 
transaction credit for adding displayed liquidity in exchange for 
monthly rebates per assigned security because it would balance the 
increased risks and heightened quoting and other obligations that eDMMs 
on the Exchange have and that other market participants do not have. As 
such, it is equitable to offer eDMMs the option to receive a flat per 
security credit based on the eDMM's quoting in that symbol, coupled 
with a lower transaction fee. The requirement is also equitable because 
it would apply equally to all eDMM firms, who would have the option to 
elect (or not elect) to participate on a monthly basis. Moreover, the 
Exchange believes that the proposal is equitable because eDMMs would be 
required to meet prescribed quoting requirements in order to qualify 
for the payments, as described above. All eDMMs would be eligible to 
elect to receive a Credit Per Security and could do so by notifying the 
Exchange and meeting the per symbol quoting requirement.
The Proposed Fee Change Is Not Unfairly Discriminatory
    The Exchange believes that the proposed rule change is not unfairly 
discriminatory. In the prevailing competitive environment, market 
participants, including eDMMs, are free to disfavor the Exchange's 
pricing if they believe that alternatives offer them better value.
    The Exchange believes it is not unfairly discriminatory to offer 
eDMMs the option to receive a flat per security credit coupled with a 
lower transaction fee for orders that provide displayed liquidity 
assigned securities as the proposed credits would be provided on an 
equal basis to all such participants. The Credit Per Security would 
apply equally to all eDMM firms, who would have the option to elect (or 
not elect) to participate on a monthly basis. Further, the Exchange 
believes the proposed incremental credits would incentivize eDMMs that 
meet the proposed quoting requirements to send more orders to the 
Exchange to qualify for a higher Credit Per Security. The proposal to 
introduce an additional eDMM credit neither targets nor will it have a 
disparate impact on any particular category of market participant. The 
proposal does not permit unfair discrimination

[[Page 44448]]

because the proposed threshold would be applied to all similarly 
situated eDMMs, who would all be eligible for the same credit on an 
equal basis. Accordingly, no eDMM already operating on the Exchange 
would be disadvantaged by this allocation of fees.
    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,\13\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, as discussed above, the Exchange believes 
that the proposed fee change 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 market participants. 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.'' \14\
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    \13\ 15 U.S.C. 78f(b)(8).
    \14\ See Securities Exchange Act Release No. 51808, 70 FR 37495, 
37498-99 (June 29, 2005) (S7-10-04) (Final Rule).
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    Intramarket Competition. The Exchange believes the proposed change 
would not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
change is designed to attract additional liquidity to the Exchange. The 
Exchange believes that the proposed credit and lower fee would 
incentivize eDMMs to increase quoting on the Exchange in assigned 
securities and to direct liquidity providing orders to the Exchange. 
Increased eDMM quoting and greater overall order flow, trading 
opportunities, and pricing transparency benefit all market participants 
on the Exchange by enhancing market quality and continuing to encourage 
ETP Holders to send orders, thereby contributing towards a robust and 
well-balanced market ecosystem.
    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. As noted 
above, the Exchange currently has less than 1% market share of executed 
volume of equities trading. In such an environment, the Exchange must 
continually adjust its fees and credits 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.
    The Exchange believes that the proposed change could promote 
competition between the Exchange and other execution venues, including 
those that currently offer similar order types and comparable 
transaction pricing, by encouraging greater quoting on, and additional 
orders being sent to, the Exchange.

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) \15\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \16\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 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) \17\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \17\ 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-NYSEAMER-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-NYSEAMER-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-NYSEAMER-2021-35 and should be submitted 
on or before September 2, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-17176 Filed 8-11-21; 8:45 am]
BILLING CODE 8011-01-P