[Federal Register Volume 87, Number 13 (Thursday, January 20, 2022)]
[Notices]
[Pages 3143-3149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-00979]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93973; File No. SR-NYSEAMER-2021-54]
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
January 13, 2022.
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 December 30, 2021, NYSE American LLC (``NYSE American''
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 certain Standard Rates and
requirements for transaction fees and credits that add and remove
liquidity in securities at or above $1 and reformat the section of the
NYSE American Equities Price List and Fee Schedule (``Price List'')
setting forth transactions fees for all transactions other than
transactions using Retail Order Rates, transactions in securities below
$1, and transactions by an Electronic Designated Market Makers
(``eDMM'') in assigned securities. The Exchange proposes to implement
the fee changes effective January 3, 2022. 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 Standard Rates for transaction
fees and credits that add and remove liquidity in securities at or
above $1 and reformat the section of the Price List setting forth
transactions fees for all transactions other than transactions using
Retail Order Rates, transactions in securities below $1, and
transactions by an eDMM in assigned securities.
The proposed changes respond to the current competitive environment
where order flow providers have a choice of where to direct liquidity-
providing and liquidity-removing orders by offering further incentives
for ETP Holders to send additional adding and removing liquidity to the
Exchange.
The Exchange proposes to implement the fee changes effective
January 3, 2022.
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
[[Page 3144]]
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 routes order flow.
In response to this competitive environment, the Exchange has
established incentives for ETP Holders 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 ETP
Holders to send additional adding liquidity to the Exchange to qualify
for the liquidity removing tiers and fees. The Exchange has also
established incentives for ETP Holders to remove liquidity from the
Exchange. In addition, as detailed below, the proposed higher credits
for Mid-Point Liquidity Orders (``MPL Orders'') \10\ adding liquidity
to the Exchange are intended to create incentives for price improving
liquidity and increasing the quality of order execution on the
Exchange's market, which benefits all market participants, insofar as
MPL Orders provide opportunities for market participants to interact
with orders priced at the midpoint of the Protected Best Bid and Offer
(``PBBO'').\11\
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\10\ See Rule 7.31E(d)(3) (description of MPL Order).
\11\ See Rule 1.1E(dd) (definition of PBBO).
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Proposed Rule Change
Currently, for transactions in securities priced at or above $1.00,
other than transactions by eDMMs in assigned securities, the Exchange
offers the following credits for displayed orders that add liquidity to
the Exchange:
Displayed orders and MPL Orders that add liquidity to the
Exchange where the ETP Holder has an average daily volume (``ADV'') of
at least 2,500,000 shares (``Adding ADV'') \12\ currently receive a
credit of $0.0026 per share.
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\12\ As defined in the Fee Schedule, Adding ADV means an ETP
Holder's average daily volume of shares executed on the Exchange
that provided liquidity.
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Displayed orders and MPL Orders that add liquidity to the
Exchange where an ETP Holder has Adding ADV of at least 750,000 shares
currently receive a $0.0025 credit per displayed and MPL share. Where
an ETP Holder does not have an Adding ADV of at least 750,000 shares,
such orders currently receive a $0.0024 per share.
Orders that add displayed liquidity to the Exchange and
that set a new best bid or offer (``BBO'') on NYSE American \13\ where
an ETP Holder has an Adding ADV of at least 2,500,000 shares currently
receive a $0.0027 per share credit. Where an ETP Holder does not have
an Adding ADV of at least 2,500,000 shares, such orders currently
receive a $0.0026 per share credit.
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\13\ See Rule 1.1E(h) (definition of BBO).
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The current fee for orders removing liquidity from the
Exchange where an ETP Holder has an Adding ADV of at least 10,000
shares is $0.0026 per share. Where an ETP Holder does not have an
Adding ADV of at least 10,000 shares, the Exchange charges $0.0030 per
share for all executions that remove liquidity from the Exchange.
The Exchange proposes to restructure its tier requirements,
credits, and fees in order to attract liquidity to the Exchange. The
Exchange has not made substantial changes to its pricing in several
years and believes that some of the current tier requirements, credits,
and fees no longer incentivize ETP Holders to send liquidity to the
Exchange, and therefore should be modified. In addition, the Exchange
believes that harmonizing the tier requirements for orders that add
liquidity and orders that remove liquidity from the Exchange will make
its Price List clearer and more transparent for ETP Holders. The
Exchange believes that this combination of changes, taken together,
will cause ETP Holders to send more liquidity to the Exchange.
Specifically, the Exchange proposes to revise these fees and
credits by: (a) Reorganizing the fees as ``Tier 1,'' ``Tier 2,'' or
``Non-Tier''; (b) adjusting the Adding ADV levels required to qualify
for Tier 1 and Tier 2 fees and credits and harmonizing such levels for
orders adding liquidity and orders removing liquidity; (c) proposing
separate fees and credits for MPL Orders adding liquidity; and (d)
adjusting the fees and credits available for ETP Holders qualifying for
proposed Tier 1, Tier 2, and Non-Tier rates, as follows.
The Exchange proposes to define a ``Tier 1,'' pursuant to which it
would make its best rates available to ETP Holders with Adding ADV of
at least 3,500,000 shares. This Adding ADV requirement of 3,500,000
shares is an increase from the current Adding ADV level of 2,500,000
shares required for ETP Holders to access the Exchange's best rates for
orders adding liquidity, and from the current Adding ADV level of
10,000 shares required for ETP Holders to access the Exchange's best
rates for orders removing liquidity. As proposed, ETP Holders that
qualify for Tier 1 would be eligible for the following rates:
A credit of $0.0026 per share for orders adding displayed
liquidity (no change from the current rate);
A credit of $0.0030 per share for MPL Orders adding
liquidity (an increase from the current credit of $0.0026 per share);
A credit of $0.0029 per share for orders adding displayed
liquidity that set a new BBO on the Exchange (an increase from the
current credit of $0.0027 per share); and
A fee of $0.0026 per share for orders removing liquidity
(no change from the current rate).
The Exchange also proposes to define a ``Tier 2,'' setting out
rates available to ETP Holders with Adding ADV of at least 700,000
shares. This Adding ADV requirement of 700,000 is a decrease from the
current Adding ADV level of 750,000 shares required for ETP Holders to
access certain pricing for orders adding liquidity. (Currently, there
is no second-tier Adding ADV requirement for orders removing
liquidity.) As proposed, ETP Holders that qualify for Tier 2 would be
eligible for the following rates:
A credit of $0.0023 per share for orders adding displayed
liquidity (a decrease from the current credit of $0.0025 per share);
A credit of $0.0029 per share for MPL Orders adding
liquidity (an increase from the current credit of $0.0025 per share);
[[Page 3145]]
A credit of $0.0024 per share for orders adding liquidity
that set a new BBO on the Exchange (a decrease from the current credit
of $0.0026 per share); and
A fee of $0.0027 for orders removing liquidity (an
increase from the current fee of $0.0026 per share).
The Exchange also proposes to define ``Non-Tier'' rates, which
would specify the rates available to ETP Holders that do not qualify
for either Tier 1 or Tier 2, as follows:
A credit of $0.0020 per share for orders adding displayed
liquidity (a decrease from the current credit of $0.0024 per share);
A credit of $0.0024 per share for MPL Orders adding
liquidity (no change from the current rate);
A credit of $0.0020 per share for orders adding liquidity
that set a new BBO on the Exchange (a decrease from the current credit
of $0.0026 per share); and
A fee of $0.0030 per share for orders removing liquidity
(no change from the current rate).
The Exchange proposes to keep the current credit of $0.0020 per
share for non-displayed orders adding liquidity and the current fee of
$0.0005 per share for orders executing in the opening or closing
auctions, without any change. Neither of those rates depends on an ETP
Holder achieving a certain level of Adding ADV.
These proposed changes are intended to incentivize ETP Holders to
increase the liquidity-providing orders they send to the Exchange,
which would support the quality of price discovery on the Exchange and
provide additional liquidity for incoming orders. The Exchange believes
that by correlating the level of credits to the level of executed
adding volume on the Exchange, the Exchange's fee structure would
encourage ETP Holders to submit more liquidity-providing orders to the
Exchange that are likely to be executed, thereby increasing the
potential for incoming marketable orders submitted to the Exchange to
receive an execution. As noted above, the Exchange operates in a
competitive environment, particularly as it relates to attracting non-
marketable orders that add liquidity to the Exchange. The Exchange
believes that the proposed tiering of credits applicable to displayed
orders, MPL Orders, and orders setting a new NYSE American BBO for ETP
Holders that meet the proposed Adding ADV requirements would serve as
an additional incentive for ETP Holders to send liquidity to and
improve quoting on the Exchange in order to qualify for such credits.
In addition, the Exchange believes that the proposed changes to the
fees for removing liquidity, taken together, will incentivize
submission of additional liquidity to a public exchange, thereby
promoting price discovery and transparency and enhancing order
execution opportunities for ETP Holders. As 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 ETP Holders choose to
route to other exchanges or to off-exchange venues. Because the
proposed reconfiguration of fees for removing liquidity from the
Exchange involves the introduction of new fees and/or new requirements,
the Exchange does not know how many ETP Holders could qualify for such
new fees based on their current trading profile on the Exchange and if
they choose to direct order flow to the Exchange. Without having a view
of ETP Holder'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 ETP Holder directing orders to the Exchange.
The proposed rule change is designed to be available to all ETP
Holders on the Exchange and is intended to provide ETP Holders a
greater incentive to direct more of their orders to the Exchange.
Finally, the Exchange would delete the current presentation of the
Standard Rates for liquidity adding and removing orders and replace it
with the following table in the Price List, reflecting all of the rates
proposed above:
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Fees and credits per share
Minimum adding -----------------------------------------------------------------------------------------------
ADV Adding Setting new Adding
requirement liquidity-- NYSE American MPL adding liquidity-- Removing Executions at
(shares) displayed BBO liquidity non-displayed liquidity open and close
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Tier 1.................................. 3,500,000 $(0.0026) $(0.0029) $(0.0030) $(0.0020) $0.0026 $0.0005
Tier 2.................................. 700,000 (0.0023) (0.0024) (0.0029) (0.0020) 0.0027 0.0005
Non-Tier................................ N/A (0.0020) (0.0020) (0.0024) (0.0020) 0.0030 0.0005
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The Exchange proposes this non-substantive change to reorganize and
enhance the presentation in the Price List in order to add clarity and
transparency, thereby making the Price List easier to navigate.
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,\14\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\15\ 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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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(4) and (5).
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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.'' \16\
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\16\ See Regulation NMS, supra note 6, 70 FR at 37499.
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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
shift order flow, or discontinue to reduce use of certain categories of
products, in response to fee changes.
[[Page 3146]]
ETP Holders can choose from any one of the 16 currently operating
registered exchanges, and numerous off-exchange venues, to route such
order flow. Accordingly, competitive forces constrain exchange
transaction fees that relate to orders on an exchange. Stated
otherwise, changes to exchange transaction fees can have a direct
effect on the ability of an exchange to compete for order flow.
The Proposed Fee Change Is Reasonable
In light of the competitive environment in which the Exchange
currently operates, the proposed rule change is a reasonable attempt to
increase liquidity on the Exchange and improve the Exchange's market
share relative to its competitors. The Exchange believes the proposed
change is also reasonable because it is designed to attract higher
volumes of orders transacted on the Exchange by ETP Holders, which
would benefit all market participants by offering greater price
discovery and an increased opportunity to trade on the Exchange.
Proposed Tier Requirements
The Exchange believes that aligning the Adding ADV tier
requirements for Tier 1 and Tier 2 for orders adding liquidity and
orders removing liquidity will be clearer for investors and will
eliminate potential investor confusion, thereby removing impediments to
and perfecting the mechanism of a free and open market and a national
market system, and, in general, protecting investors and the public
interest.
The Exchange believes that the proposed change increasing to
3,500,000 shares the minimum Adding ADV required for ETP Holders to
access its best pricing for orders adding and removing liquidity under
proposed Tier 1 is a reasonable attempt to increase liquidity on the
Exchange and improve the Exchange's market share relative to its
competitors. Currently, ETP Holders may qualify for the Exchange's best
pricing for orders adding liquidity by achieving an Adding ADV of
2,500,000 shares, and may qualify for the Exchange's best pricing for
orders removing liquidity by achieving an Adding ADV of 10,000 shares.
The Exchange believes that these current levels are not a sufficient
incentive, and that raising these Adding ADV requirements to the
proposed level of 3,500,000 shares would incentivize ETP Holders to
send more of their liquidity-adding orders to the Exchange as opposed
to other venues, so that they may qualify for the Exchange's best
pricing for adding and removing liquidity.
Similarly, the Exchange believes that adjusting the current Adding
ADV requirement of 750,000 shares to 700,000 shares for orders adding
displayed liquidity under proposed Tier 2, and adding specified fees
under proposed Tier 2 for orders removing liquidity for ETP Holders
with at least 700,000 shares, will enable more ETP Holders to qualify
for this tier, thereby incentivizing more ETP Holders to send their
orders to the Exchange. This, in turn, would increase liquidity on the
Exchange and improve the Exchange's market share relative to its
competitors. The proposed 700,000 share Adding ADV requirement is a
reduction from the current requirement of 750,000 shares to qualify for
certain credits for orders adding liquidity, and would introduce a Tier
2 Adding ADV requirement for orders removing liquidity. The Exchange
believes that establishing the Tier 2 Adding ADV requirement at this
level would incentivize ETP Holders to send more of their liquidity-
adding orders to the Exchange, so that they may qualify for Tier 2
pricing for adding and removing liquidity.
Proposed Fees and Credits
The Exchange believes that the proposed changes to the credits
available for orders adding liquidity to the Exchange are reasonable.
The Exchange believes it is reasonable to increase the credits
available under Tier 1 and Tier 2 for MPL Orders adding liquidity as it
is expected to create incentives for ETP Holders to add price-improving
liquidity to the Exchange and increase the quality of order execution
on the Exchange's market, which benefits all market participants, as
MPL Orders provide opportunities for market participants to interact
with orders priced at the midpoint of the PBBO. The Exchange also
believes it is reasonable to increase the credits available under Tier
1 for orders setting a new BBO on the Exchange, as it is expected
provide incentives for ETP Holders to provide aggressively-priced
orders that improve the market by setting the BBO on the Exchange.
Similarly, the Exchange believes that lowering the credits available
under Tier 2 and at the Non-Tier level for orders adding displayed
liquidity and for orders setting a new BBO on the Exchange is
reasonable because the current higher credits did not result in greater
liquidity as the Exchange had anticipated. The Exchange believes it is
reasonable to revise credits when such incentives become underutilized.
The Exchange believes that the proposed changes to the fees for
orders removing liquidity to the Exchange 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 will incentivize additional liquidity on a
public exchange to qualify for lower fees for removing liquidity,
thereby promoting price discovery and transparency and enhancing order
execution opportunities for ETP Holders. The proposal is thus
reasonable because all ETP Holders would benefit from such increased
levels of liquidity.
Because the proposal involves the introduction of new requirements
as well as new fee and credit levels, the Exchange does not know how
many ETP Holders could qualify for the new fees and credits based on
their current trading profile on the Exchange and if they choose to
direct order flow to the Exchange. As previously noted, without a view
of ETP Holder activity on other exchanges and off-exchange venues, the
Exchange has no way of knowing whether the proposed rule change would
result in any ETP Holder qualifying for a particular tier, credit, or
fee. The Exchange believes the proposed changes are reasonable as it
would provide an incentive for ETP Holders 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.
Proposed Non-Substantive Reformatting
The Exchange believes that the proposed changes are reasonable
because they are clarifying and non-substantive. The changes are
designed to make the Price List easier to read and more user-friendly.
The Exchange believes that this proposed format will provide additional
transparency of Exchange fees and credits, to the benefit of market
participants and the investing public. The Exchange believes the change
is 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 Proposed Change Is an Equitable Allocation of Fees and Credits
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
[[Page 3147]]
fostering liquidity provision and stability in the marketplace.
Proposed Tier Requirements
The Exchange believes its proposal equitably allocates its fees and
credits among its market participants because all ETP Holders that
participate on the Exchange may receive the proposed fees and credits
if they elect to send their orders to the Exchange and meet the minimum
Adding ADV requirement corresponding to the fee or credit. Without
having a view of ETP Holders' activity on other markets and off-
exchange venues, the Exchange has no way of knowing whether this
proposed rule change would result in any ETP Holder sending more of
their orders to the Exchange. The Exchange cannot predict with
certainty how many ETP Holders would avail themselves of this
opportunity, but additional orders would benefit all market
participants because it would provide greater execution opportunities
on the Exchange. The Exchange anticipates that multiple ETP Holders
would endeavor to send more of their orders for execution on the
Exchange in order to meet the proposed requirements for Tier 1 and/or
Tier 2 pricing, thereby earning the proposed higher credits and paying
the proposed lower fees.
The Exchange further believes that the proposed change is equitable
because it is reasonably related to the value to the Exchange's market
quality associated with higher volume in orders. The Exchange believes
that the proposed pricing adjustments would attract order flow and
liquidity to the Exchange, thereby contributing to price discovery on
the Exchange and benefiting investors generally.
The Exchange believes that the proposed rule change is equitable
because maintaining or increasing the proportion of orders in exchange-
listed securities that are executed on a registered national securities
exchange (rather than relying on certain available off-exchange
execution methods) would contribute to investors' confidence in the
fairness of their transactions and would benefit all investors by
deepening the Exchange's liquidity pool, supporting the quality of
price discovery, promoting market transparency, and improving investor
protection.
The proposal neither targets nor will it have a disparate impact on
any particular category of market participant. All ETP Holders would be
eligible to qualify for the proposed credits if they meet the proposed
Adding ADV 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 meet the Adding ADV requirements to qualify for the
Exchange's best prices, the proposal would provide a second tier with
lower requirements that could allow those ETP Holders to still qualify
for preferential credits and fees. The proposal will also not adversely
impact their ability to qualify for other credits or fees provided by
the Exchange.
Proposed Fees and Credits
The Exchange believes the proposal equitably allocates fees and
credits among market participants because all ETP Holders that
participate on the Exchange may qualify for the proposed credits and
fees. The Exchange believes that the proposed changes, taken together,
will incentivize ETP Holders to send additional adding liquidity to
achieve lower fees when removing liquidity 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 ETP Holders
that add or remove liquidity. The proposed change also is equitable
because it would be consistent with the applicable rate on other
marketplaces.\17\
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\17\ For example, Cboe EDGX offers credits for adding non-retail
displayed liquidity ranging from $0.0016 to $0.0034 and fees for
removing liquidity from $0.00275 to $0.0030. See https://www.cboe.com/us/equities/membership/fee_schedule/edgx/.
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As previously noted, the Exchange operates in a competitive
environment, particularly as it relates to attracting orders that add
liquidity to the Exchange. The Exchange does not know how much order
flow ETP Holders choose to route to other exchanges or to off-exchange
venues. Because the proposed reconfiguration of the fees involves the
introduction of requirements as well as new fees and credits, the
Exchange does not know how many ETP Holders could qualify for the new
rates based on their current trading profiles on the Exchange and if
they choose to direct order flow to the Exchange. Without having a view
of ETP Holder'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 ETP Holder directing orders to the Exchange.
Proposed Non-Substantive Reformatting
The Exchange believes that the proposed changes are equitable
because they are clarifying and non-substantive. The changes are
designed to make the Price List easier to read and more user-friendly.
The Exchange believes that this proposed format will provide additional
transparency of Exchange fees and credits, to the benefit of market
participants and the investing public. The Exchange believes the change
is 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 Exchange
believes that the proposed reformatted the Price List is equitable
because the resulting streamlined Price List would continue to apply to
all ETP Holders on an equal basis.
The Proposed Fee Change Is Not Unfairly Discriminatory
Proposed Tier Requirements
The Exchange believes that the proposal is not unfairly
discriminatory. In the prevailing competitive environment, ETP Holders
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 provide revised requirements and
corresponding tiered fees and credits, as the proposed fees and credits
would be provided on an equal basis to all ETP Holders that meet the
proposed tier requirements. Further, the Exchange believes the proposed
fees and credits would incentivize ETP Holders that meet the new tiered
requirements to send more orders to the Exchange. Since the minimum
Adding ADV requirements and some of the proposed fees and credits would
be new, no ETP Holder currently qualifies for them. As noted, without a
view of ETP Holder activity on other exchanges and off-exchange venues,
the Exchange has no way of knowing whether this proposed rule change
would result in any ETP Holders qualifying for the proposed adding
tiers. The Exchange believes the proposal is reasonable as it would
provide an incentive for ETP Holders to direct their order flow to the
Exchange and provide meaningful added levels of liquidity in order to
qualify for the credits, thereby
[[Page 3148]]
contributing to depth and market quality on the Exchange.
In addition, the Exchange believes that the proposal is not
unfairly discriminatory because it neither targets nor will it have a
disparate impact on any particular category of market participant. All
ETP Holders that provide liquidity could be eligible to qualify for the
proposed credits under Tier 1 or Tier 2 if they meet the proposed
Adding ADV 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 ability to qualify for other credits provided by
the Exchange. Finally, the submission of orders is optional for ETP
Holders in that they could choose whether to submit orders to the
Exchange and, if they do, they can choose the extent of their activity
in this regard. The Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
Proposed Fees and Credits
The Exchange believes that that the proposed fees and credits for
ETP Holders that add or remove liquidity will incentivize submission of
additional liquidity to a public exchange to qualify for the revised
fees and credits, thereby promoting price discovery and transparency
and enhancing order execution opportunities for ETP Holders. The
proposal does not permit unfair discrimination because the proposed
rates would be applied to all similarly situated ETP Holders and other
market participants, who would all be eligible for the same rates on an
equal basis. Accordingly, no ETP Holder already operating on the
Exchange would be disadvantaged by this allocation of fees and credits.
Finally, the Exchange notes that the submission of orders to the
Exchange is optional for ETP Holders in that they could choose whether
to submit orders to the Exchange and, if they do, the extent of its
activity in this regard.
Proposed Non-Substantive Reformatting
The Exchange believes that the proposed reformatted the Price List
is not unfairly discriminatory because the resulting streamlined Price
List would continue to apply to all ETP Holders equally. The Exchange
believes that the reformatted Price List, as proposed, will be clearer
and less confusing for investors and will eliminate potential
confusion, thereby removing impediments to and perfecting the mechanism
of a free and open market and a national market system, and, in
general, protecting investors and the public interest. The Exchange
believes the change is 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.
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,\18\ 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 ETP Holders. 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.'' \19\
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\18\ 15 U.S.C. 78f(b)(8).
\19\ 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 orders to the Exchange. The
Exchange believes that the proposed changes would incentivize market
participants to direct their orders to the Exchange. 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 additional orders to be sent to the
Exchange for execution.
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) \20\ of the Act and subparagraph (f)(2) of Rule
19b-4 \21\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\20\ 15 U.S.C. 78s(b)(3)(A).
\21\ 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) \22\ of the Act to determine whether the proposed
rule
[[Page 3149]]
change should be approved or disapproved.
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\22\ 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEAMER-2021-54 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-2021-54. 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 (https://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-2021-54 and should
be submitted on or before February 10, 2022.
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\23\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-00979 Filed 1-19-22; 8:45 am]
BILLING CODE 8011-01-P