[Federal Register Volume 89, Number 153 (Thursday, August 8, 2024)]
[Notices]
[Pages 64974-64980]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-17505]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100643; File No. SR-NYSE-2024-42]


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

August 2, 2024.
    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 26, 2024, 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) revise the 
requirements for market at-the-close (``MOC'') and limit at the close 
(``LOC'') orders on MOC/LOC Tier 1 and Tier 2; (2) modify the 
requirements and charges for D Orders at the close based on time of 
entry or last modification; and (3) introduce incremental per share 
credits for orders entered and executed by a Floor broker that add 
liquidity to the Exchange and for D Orders at the close. The Exchange 
proposes to implement the fee changes effective July 26, 2024. The 
proposed rule change is available on the Exchange's website at 
www.nyse.com, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Price List to (1) revise the 
requirements for MOC and LOC orders on MOC/LOC Tier 1 and Tier 2; (2) 
modify the requirements and charges for D Orders at the close based on 
time of entry or last modification; and (3) introduce incremental per 
share credits for orders entered and executed by a Floor broker that 
add liquidity to the Exchange and for D Orders at the close.
    The proposed change responds to the current competitive environment 
where order flow providers have a choice of where to direct liquidity-
providing orders and closing price orders by revising the requirements 
and offering additional incentives for member organizations to send 
liquidity to the Exchange, especially during the Closing Auction. The 
purpose of the proposed rule change is also to encourage efficient 
usage of Exchange systems by member organizations by continuing to 
encourage all member organizations to enter or modify D Orders as early 
possible, which the Exchange believes is in the best interests of all 
member organizations and investors who access the Exchange.
    The Exchange proposes to implement the fee changes effective July 
26, 2024.\4\
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    \4\ The Exchange originally filed to amend the Price List on 
June 3, 2024 (SR-NYSE-2024-34). SR-NYSE-2024-34 was withdrawn on 
July 26, 2024 and replaced by this filing.
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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.'' \5\
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    \5\ 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.'' \6\ Indeed, cash equity trading is currently dispersed 
across 16 exchanges,\7\ numerous alternative trading systems,\8\ and 
broker-dealer internalizers and wholesalers, all competing for order 
flow. Based on publicly-available information, no single exchange 
currently has more than 20% market share.\9\ Therefore, no exchange 
possesses significant pricing power in the execution of cash equity 
order flow. More specifically, the Exchange's share of executed volume 
of equity trades in Tapes A, B and C securities is less than 12%.\10\ 
It should also be noted that, in the currently highly competitive 
national market system, numerous exchanges and other order execution 
venues compete for order flow at the close, and competition for closing 
orders is robust.\11\
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    \6\ 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).
    \7\ 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.
    \8\ 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.
    \9\ See Cboe Global Markets U.S. Equities Market Volume Summary, 
available at https://markets.cboe.com/us/equities/market_share/.
    \10\ See id.
    \11\ There are at least seven broker-dealer sponsored products 
competing for volume at the close, including Credit Suisse's CLOSEX; 
Instinet's Market-onClose Cross; Morgan Stanley's Market-on-Close 
Aggregator (MOCHA); Bank of America's Instinct X[supreg] and Global 
Conditional Cross; JP Morgan's JPB-X; Piper Sandler's On-Close Match 
Book; and Goldman Sachs' One Delta Close Facility (ODCF). Moreover, 
the percentage of volume at the NYSE closing price in NYSE-listed 
securities executed off-exchange has been steadily increasing since 
before the pandemic. In 2018, the percentage of volume at the NYSE 
closing price in NYSE-listed securities executed off-exchange was 
21.3%. In 2019, the percentage increased to 23.5%. After dipping 
briefly to 22.1% in 2020, the percentage resumed its upward trend 
and increased to 25.2% in 2021. The percentage was 24.1% and 23.8% 
in 2022 and 2023, respectively, and has increased again in 2024 to 
26.1% through May 31.

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[[Page 64975]]

    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. 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.
    In response to this competitive environment, the Exchange has 
established incentives for member organizations who submit orders on 
the Exchange. The proposed fee change is designed to provide incentives 
to member organizations to submit additional such liquidity to the 
Exchange, including during closing auctions.
Proposed Rule Change
MOC/LOC Tiers 1 and 2
    Currently, for MOC/LOC Tier 1, the Exchange charges $0.0007 per 
share for MOC orders and $0.0007 per share for LOC orders from any 
member organization in the prior three billing months executing (1) an 
average daily trading volume (``ADV'') of MOC activity on the NYSE of 
at least 0.45% of NYSE consolidated ADV (``CADV''),\12\ (2) an ADV of 
total close activity (MOC/LOC and executions at the close) on the NYSE 
of at least 0.7% of NYSE CADV, and (3) whose MOC activity comprised at 
least 35% of the member organization's total close activity (MOC/LOC 
and other executions at the close). Similarly, for MOC/LOC Tier 2, the 
Exchange charges $0.0008 per share for MOC orders and $0.0008 per share 
for LOC orders from any member organization in the prior three billing 
months executing (1) an ADV of MOC activity on the NYSE of at least 
0.35% of NYSE CADV,\13\ (2) an ADV of total close activity (MOC/LOC and 
executions at the close) on the NYSE of at least 0.525% of NYSE CADV, 
and (3) whose MOC activity comprised at least 35% of the member 
organization's total close activity (MOC/LOC and other executions at 
the close).
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    \12\ ADV and CADV are defined in footnote * of the Price List. 
The Exchange would delete ``[Tape A]'' between NYSE and CADV in one 
place in the tier as redundant. The Exchange would also add ``and 
an'' between the remaining requirements to qualify for the tier.
    \13\ The Exchange would similarly delete ``[Tape A]'' between 
NYSE and CADV in two places in the tier as redundant and add ``and 
an'' between the remaining requirements to qualify for this tier as 
proposed for Tier 1.
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    The Exchange proposes to eliminate the third requirement from both 
tiers.
    As proposed for MOC/LOC Tier 1, the Exchange would charge $0.0007 
per share for MOC orders and $0.0007 per share for LOC orders from any 
member organization in the prior three billing months executing an (1) 
ADV of MOC activity on the NYSE of at least 0.45% of NYSE CADV), and 
(2) ADV of total close activity (MOC/LOC and executions at the close) 
on the NYSE of at least 0.7% of NYSE CADV. The current rates would 
remain the same.
    As proposed for MOC/LOC Tier 2, the Exchange would charge $0.0008 
per share for MOC orders and $0.0008 per share for LOC orders from any 
member organization in the prior three billing months executing an (1) 
an ADV of MOC activity on the NYSE of at least 0.35% of NYSE CADV, and 
(2) an ADV of total close activity (MOC/LOC and executions at the 
close) on the NYSE of at least 0.525% of NYSE CADV. The current rates 
would also remain the same.
    The proposed change responds to the current competitive environment 
where order flow providers have a choice of where to direct orders in 
NYSE-listed securities, including at the close, by modifying 
requirements in order to facilitate member organizations qualifying for 
a MOC/LOC tier and encourage additional liquidity to the Exchange. 
Higher volumes of MOC and LOC orders contribute to the quality of the 
Exchange's closing auction and provide market participants whose orders 
are executed at the close with a greater opportunity for execution, 
which benefits all market participants.
D Orders
    Currently, the Exchange does not charge member organizations for 
the first 750,000 ADV of the aggregate of executions at the close for D 
Orders, Floor broker executions swept into the close, and executions at 
the close, excluding MOC Orders, LOC Orders and Closing Offset (``CO'') 
Orders. Further, the Exchange currently charges certain fees 
differentiated by time of entry (or last modification) for D Orders at 
the close after the first 750,000 ADV of aggregate of executions at the 
close by a member organization.
    The Exchange proposes to no longer exclude the first 750,000 ADV of 
the aggregate of executions at the close by member organizations for D 
Orders, Floor broker executions swept into the close, and executions at 
the close, excluding MOC Orders, LOC Orders and CO Orders. As discussed 
below, the Exchange would waive fees for member organizations with an 
ADV of at least 10,000 shares entered and executed by its Floor broker 
up to specific monthly ADV levels based on time of entry (or last 
modification) in an effort to encourage additional liquidity on the 
trading floor of a national securities exchange.
    The Exchange also proposes to modify the time of entry (or last 
modification) for D Order fee determination in order to encourage 
member organizations to enter D Orders earlier in the trading day, 
thereby increasing transparency in the Closing Auction and reducing 
member organization's operational risk. Consistent with this purpose, 
the current rates for D Orders would not change with the exception of D 
Orders entered in the final minute of trading, which the Exchange 
proposes to label as ``Late D Orders.''
    The Exchange would modify the current requirements and charges for 
D Orders as follows:
     The Exchange currently charges $0.0003 per share for 
executed D Orders last modified \14\ by the member organization earlier 
than 25 minutes before the scheduled close of trading. The Exchange 
proposes to charge the current rate to D Orders last modified earlier 
than 10 minutes before the scheduled close of trading. The Exchange 
would define these orders as ``Early D Orders.''
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    \14\ As set forth in footnote 10 to the Price List, as used in 
the Price List, the phrase ``last modified'' means the later of the 
order's entry time or the final modification or cancellation time 
for any D Order designated for the close with the same broker badge, 
entering firm mnemonic, symbol, and side.
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     The Exchange currently charges $0.0007 per share for 
executed D Orders last modified by the member organization from 25 
minutes up to but not including 3 minutes before the scheduled close of 
trading. The Exchange proposes to charge the current rate to D Orders 
last modified from 10 minutes up to but not including 1 minute before 
the scheduled close of trading. The Exchange would define these orders 
as ``Mid D Orders.''
     For D Orders last modified in the last 3 minutes before 
the scheduled

[[Page 64976]]

close of trading, the Exchange charges three different fees. The 
Exchange proposes to charge these fees, as modified, for D Orders last 
modified by the member organization in the last 1 minute before the 
scheduled close of trading, which the Exchange would define as ``Late D 
Orders.''
    [cir] The Exchange currently charges $0.0008 per share for executed 
D Orders last modified in the last 3 minutes before the scheduled close 
of trading for member organizations in MOC/LOC Tiers 1 and 2, both with 
Adding ADV of at least 0.50% of Tape A CADV or MOC/LOC Tiers 1, 2 or 3 
with Adding ADV of at least 1.05% of Tape A CADV. The Exchange would 
eliminate the limitation to member organizations in MOC/LOC Tiers 1 and 
2 and would charge $0.0011 per share for executed D Orders last 
modified in the last 1 minute before the scheduled close of trading for 
member organizations with Adding ADV of at least 0.50% of Tape A CADV 
(unchanged from the current requirement) and total close activity of a 
least 1.75% of Tape A CADV.
    [cir] The Exchange currently charges $0.0009 per share for executed 
D Orders last modified in the last 3 minutes before the scheduled close 
of trading for member organizations in MOC/LOC Tiers 1, 2 and 3 with 
Adding ADV of at least 0.65% of Tape A CADV. The Exchange would 
eliminate this fee.
    [cir] The Exchange currently charges $0.0010 per share for executed 
D Orders last modified in the last 3 minutes before the scheduled close 
of trading for all other member organizations. The Exchange proposes to 
charge all other member organizations $0.0012 per share for executed D 
Orders last modified one minute before the scheduled close of trading.
     For member organizations with an ADV of at least 10,000 
shares entered and executed by its Floor broker, the Exchange proposes 
that Early, Mid- and Late D Orders up to specific monthly ADV levels 
would be free.\15\ Qualifying member organizations would be charged the 
previously described rates for all volume for each D Order type above 
the proposed thresholds.
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    \15\ For the avoidance of doubt, the member organization 
eligible for the proposed fee waiver for D Orders up to the specific 
monthly ADV levels would be the same legal entity as the member 
organization operating the Floor broker.
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    As proposed, qualifying member organizations would not be charged 
for the first 500,000 shares of Early D Orders, with the above rates 
for Early D Orders applicable to all volume above that threshold.
    For Mid D Orders, qualifying member organizations would not be 
charged for the first 750,000 shares, with the above rates for Mid D 
Orders applicable to all volume above that threshold.
    Finally, for Late D Orders, qualifying member organizations would 
not be charged for the first 250,000 shares, with the above rates for 
Late D Orders applicable to all volume above that threshold.
     Orders from continuous trading swept into the close would 
continue to be charged the current rate of $0.0008.
    The purpose of these changes is to continue to encourage additional 
liquidity on the Exchange. The Exchange does not know how much order 
flow member organizations choose to route to other exchanges or to off-
exchange venues. Since the proposal not to charge Early, Mid- and Late 
D Orders up to specific monthly ADV levels for member organizations 
with a minimum ADV entered and executed by its Floor broker would be 
new, the Exchange does not know how many member organizations could 
qualify based on their current trading profile and if they choose to 
direct order flow to the Exchange. Based on the profile of member 
organizations and their liquidity provision, the Exchange believes that 
additional member organizations could qualify for the discounts if they 
choose to direct order flow to the Exchange. 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 discounts.
    The Exchange believes that it is reasonable to not charge member 
organizations for Early, Mid- and Late D Orders up to specific monthly 
ADV levels if the member organization has an ADV of at least 10,000 
shares executed by its Floor broker. The Exchange notes that other 
marketplaces offer various incentives to only certain members based on 
ADV and/or heightened quoting requirements. For instance, marketplaces 
offer incremental credits to members that are lead market makers 
(``LMM'') registered in a minimum number of securities and that add a 
specified percentage of displayed liquidity \16\ as well as discounted 
remove fees for market makers meeting certain heightened quoting 
requirements that also meet specific trading obligations.\17\ Moreover, 
the proposed ADV of at least 10,000 shares executed by its Floor broker 
requirement is low relative to these other markets' requirements for 
market maker-only incentives.\18\ The Exchange further believes that 
eligibility for the proposed fee waiver for member organizations that 
have a Floor broker plus an adding volume requirement is not unfairly 
discriminatory because member organizations that do not operate a Floor 
brokerage business can still qualify for the fee waiver by choosing to 
add a Floor broker on the Exchange. Indeed, to the extent that member 
organizations add Floor brokers to qualify for the proposed fee waiver 
for D Orders, the proposal would have the added benefit of potentially 
attracting new Floor brokers to the Exchange.
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    \16\ Cboe BZX offers a higher tiered rebate based on a lower 
adding requirement if the member is enrolled in a minimum number of 
LMM securities. See Cboe BZX Equities Fee Schedule, available at 
https://www.cboe.com/us/equities/membership/fee_schedule/bzx/.
    \17\ Nasdaq offers discounted remove fees in Tape A and Tape B 
securities for market makers meeting the requirements to qualify as 
Qualified Market Makers (QMMs) in addition to QMM rebate incentives 
if they execute shares of liquidity representing 1.00% or more of 
Consolidated Volume during the month for shares executed (in 
securities priced at or greater than $1). See Nasdaq Price List, 
available at https://nasdaqtrader.com/
Trader.aspx?id=PriceListTrading2#:~:text=Qualified%20Market%20Makers,
certain%20quoting%20requirements%20each%20month.
    \18\ For instance, Nasdaq's discounted remove fees in Tape A and 
Tape B securities for QMMs in addition to QMM rebate incentives are 
available if they execute shares of liquidity representing 1.00% or 
more of Consolidated Volume during the month for shares executed (in 
securities priced at or greater than $1), which is a much higher bar 
than the proposed ADV requirement for Floor brokers. See generally 
id.
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Incremental Floor Broker Credits
    As part of what the Exchange proposes to call the ``Floor Broker 
Incentive and Rebate Program,'' the Exchange proposes an incremental 
per share credit for orders executed by a Floor broker in addition to 
the preceding fees and credits specified in the Price List. 
Specifically, the Exchange proposes that orders executed by a member 
organization's Floor broker would receive an additional $0.0002 per 
share for orders that add liquidity to the Exchange, other than MPL and 
Non-Displayed Limit Orders, and/or (2) an additional $0.000025 per 
share for the proposed Early, Mid-and Late D Orders where the member 
organization has (1) an ADV of at least 10,000 shares entered and 
executed by its Floor broker, and (2) an ADV comprised of at least 50% 
Floor broker ADV of the member organization's total ADV, excluding 
routing.
    For example, assume that Member Organization A enters and executes 
2 million shares that add liquidity on the trading Floor though its 
Floor broker. Further assume that a second member

[[Page 64977]]

organization, Member Organization B, enters 10 million shares that add 
liquidity and routes it flow to Member Organization A for execution on 
the trading Floor though Member Organization A's Floor broker. Both 
member organizations receive the current rate for adding liquidity on 
the trading Floor of at least $0.0019 per share for their shares 
entered as the entering firm, unless a better current tiered rate 
applies. Under the proposed pricing, Member Organization A would also 
receive an additional credit of $0.0002 for executing the 10 million 
shares for adding liquidity on the trading Floor on behalf of Member 
Organization B.
    The purpose of the proposed incremental Floor broker credits is to 
continue to encourage member organizations to send orders to trading 
Floor for execution, thereby contributing to robust levels of 
liquidity, especially for adding liquidity and during the Closing 
Auction, which benefits all market participants. Members and member 
organizations benefit from the substantial amounts of liquidity present 
on the Exchange during the close. The Exchange believes the proposed 
change would also thereby promote price discovery and transparency, and 
enhance order execution opportunities for member organizations from the 
substantial amounts of liquidity that are present on the Exchange both 
intraday and during the close.
    Since the proposed incremental credits are new, the Exchange does 
not know how many member organizations could qualify for the new 
discounts based on their current trading profile and if they choose to 
direct order flow to the Exchange. Based on the profile of liquidity-
adding firms generally, the Exchange believes that a number of member 
organizations could qualify for the credits if they choose to direct 
order flow to the Exchange. 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 discounts.
    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,\19\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\20\ 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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    \19\ 15 U.S.C. 78f(b).
    \20\ 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.'' \21\ 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.'' \22\
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    \21\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule) 
(``Regulation NMS'').
    \22\ 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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The Proposed 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 to the Exchange, especially during the Closing 
Auction, 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 member organizations, which would benefit 
all market participants by offering greater price discovery and an 
increased opportunities to trade on the Exchange, both intraday and 
during the Closing Auction. The proposed rule change also represents a 
reasonable attempt to encourage efficient usage of Exchange systems by 
member organizations by continuing to encourage all member 
organizations to enter or modify D Orders as early possible, which the 
Exchange believes is in the best interests of all member organizations 
and investors who access the Exchange.
MOC/LOC Tiers 1 and 2
    The Exchange believes that eliminating the requirement that a 
member organization's MOC activity comprise at least 35% of the member 
organization's total close activity (MOC/LOC and other executions at 
the close) in order to qualify for to qualify for MOC/LOC Tier 1 and 
Tier 2 is a reasonable way to encourage greater participation which 
leads to greater marketable and other liquidity at the Closing Auction. 
MOC and LOC orders contribute meaningfully to the price and size 
discovery, which is the hallmark of the closing auction process. Higher 
volumes of MOC orders contribute to the quality of the Exchange's 
Closing Auction and provide market participants whose orders are 
executed at the close with a greater opportunity for execution, which 
benefits all market participants. Further, as noted above, in the 
currently highly competitive national market system, competition for 
closing orders among exchanges, ATSs and other market execution venues 
is robust.
D Orders
    The Exchange believes that it proposal would encourage additional 
liquidity on the Exchange from multiple sources, which helps to 
maintain the quality of the Exchange's Closing Auction for the benefit 
of all market participants.
    Specifically, the Exchange believes that no longer exempting the 
first 750,000 ADV of the aggregate of executions at the close from fees 
is reasonable as it has not operated as originally intended. Member 
organizations that currently reach the 750,000 ADV threshold are 
generally larger member organizations that would continue to derive a 
substantial benefit from the high volume of closing executions on the 
Exchange and the Exchange believes would continue to send orders to 
send orders to the Exchange. While the Exchange is removing the first 
750,000 ADV exemption, it notes that it is introducing a new exemption 
for qualifying member organizations with a Floor broker, which totals 
1.5 million shares across Early-, Mid- and Late D Orders. Further, the 
Exchange believes that not charging Early, Mid- and Late D Orders up to 
specific monthly ADV levels for member organizations with a minimum

[[Page 64978]]

ADV entered and executed by its Floor broker would encourage additional 
liquidity for execution on the trading Floor in the Closing Auction, 
thereby contributing to robust levels of liquidity on the Floor and at 
the close, which benefits all market participants. Moreover, the 
proposed fee waiver for Early, Mid- and Late D Orders would incentivize 
qualifying member organizations to enter or modify D Orders as early as 
possible in order to avoid fees for Early, Mid-, and Late D Orders up 
to the proposed thresholds for each.
    Similarly, the Exchange believes that modifying the time of entry 
for last modification for member organizations to qualify for the 
existing fees for Early, Mid- and Late D Orders encourages all member 
organizations to enter or modify D Orders as early possible, beginning 
with as early as up to 10 minutes before the close of trading, in order 
to build up liquidity going into the Closing Auction. Member 
organizations are waiting until later in the trading day to enter and/
or modify D Orders than the current 25 minutes. By expanding the time 
period to enter Early D Orders to up to 10 minutes before the close, 
the Exchange hopes to encourage member organizations to send D Orders 
earlier in order to qualify for lower fees. Moreover, the Exchange 
hopes thereby to incentivize more member organizations to send adding 
liquidity to the Exchange, which in turn supports the quality of price 
discovery on the Exchange. In addition, charging member organizations 
higher rates for entering or modifying their interest in the final 
minute of regular trading hours reflects a risk premium for delaying 
entry or modification until nearly the end of trading, while reducing 
the time entry which results in fewer trades qualifying for these 
higher fees. Further, it is reasonable to charge member organizations a 
lower rate based on a higher percentage of Adding ADV of Tape A CADV 
and total close activity of Tape A CADV for entering or modifying their 
interest in the final minute of regular trading hours because such 
interest most benefits from the flexibility afforded the order type. 
The Exchange notes that while the proposed fee for Late D-Orders is 
higher than the current fee, the proposed increase in time of order 
entry or last modified to qualify for Early- and Mid D Orders, which 
have lower rates than Late D Orders, will result in lower overall fees 
for member organizations, and incentivize greater liquidity in the 
Closing Auction, which benefits all market participants.
Incremental Floor Broker Credits
    The Exchange believes that the proposed additional credits for 
orders executed by a Floor broker for representation on the Exchange is 
a reasonable way to encourage additional liquidity, including D Orders, 
on the Exchange both during intraday and in Closing Auction because 
member organizations benefit from the substantial amounts of liquidity 
that are present on the Exchange during such times. The Exchange 
believes the proposed change would encourage member organizations to 
send orders to the trading Floor for execution, thereby contributing to 
robust levels of liquidity on the trading Floor both intraday and 
during the Closing Auction, which benefits all market participants. The 
proposed fee would also encourage the submission of additional 
liquidity to a national securities exchange, thereby promoting price 
discovery and transparency and enhancing order execution opportunities 
for member organizations from the substantial amounts of liquidity that 
are present on the Exchange during the closing. The proposed change 
would also encourage the execution of such transactions on a public 
exchange, thereby promoting price discovery and transparency. Moreover, 
the Exchange believes that requiring an ADV comprised of at least 50% 
Floor broker ADV of the member organization's total ADV is reasonable 
because it would encourage member organizations that make a substantial 
contribution to trading Floor liquidity without excluding smaller 
member organizations.
The Proposal Is an Equitable Allocation of Fees
    The Exchange believes the proposal equitably allocates fees and 
credits among market participants because all member organizations that 
participate on the Exchange may qualify for the proposed credits and 
fees on an equal basis. The Exchange believes its proposal equitably 
allocates its fees and credits among its market participants by 
fostering liquidity provision and stability in the marketplace.
MOC/LOC Tiers 1 and 2
    The Exchange believes that the proposed elimination of the 
requirement that a member organization's MOC activity comprise at least 
35% of the member organization's total close activity (MOC/LOC and 
other executions at the close) in order to qualify for to qualify for 
MOC/LOC Tier 1 and Tier 2 will incentivize member organizations to send 
additional liquidity to achieve lower fees and encourage greater 
marketable and other liquidity at the closing auction. Higher volumes 
of MOC and LOC orders contribute to the quality of the Exchange's 
Closing Auction and provide market participants whose orders are 
executed in the close with a greater opportunity for execution of 
orders on the Exchange, thereby 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 utilize MOC and LOC orders 
on the Exchange on an equal basis.
D Orders
    The Exchange believes that the proposed changes to D Orders are an 
equitable allocation of fees because the proposed changes, taken 
together, will incentivize member organizations to enter or modify D 
Orders as early possible, beginning with as early as up to 10 minutes 
before the close of trading, in order to build up liquidity going into 
the closing auction. The Exchange's closing auction is a recognized 
industry benchmark,\23\ and member organizations receive a substantial 
benefit from the Exchange in obtaining high levels of executions at the 
Exchange's closing price on a daily basis. The Exchange also believes 
that it is equitable to charge member organizations a higher rate for 
entering or modifying their interest in the final minute of regular 
trading hours because such interest most benefits from the flexibility 
afforded the order type. Moreover, the proposed fees are equitable 
because all similarly situated member organizations will be subject to 
the same fee structure that would be available on an equal basis to all 
similarly situated member organizations that utilize D Orders on the 
Exchange. In this regard, the proposed changes are equitable because 
any member organization can choose to send D Orders earlier than 10 
minutes or 1 minute prior to the close in order to qualify for lower 
fees, and any member organization can choose to have a Floor broker in 
order to qualify for the lower fee for Late D Orders or to exclude 
volume from fees up to the proposed specified thresholds for Early, 
Mid- and Late D Orders. Similarly, the proposal to waive fees for 
Early, Mid- and Late D

[[Page 64979]]

Orders for member organizations that have a Floor broker plus an adding 
volume requirement is equitable because a member organization that 
would not qualify for the fee waiver because the member organization 
does not operate a Floor brokerage business can still qualify for the 
fee waiver by adding a Floor broker. Indeed, to the extent that member 
organizations bring on Floor brokers to qualify for the fee waiver, the 
proposal would have the added benefit of potentially attracting new 
Floor brokers to the Exchange.
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    \23\ For example, the pricing and valuation of certain indices, 
funds, and derivative products require primary market prints.
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Incremental Floor Broker Credits
    The proposed incremental credits for orders executed by a member 
organization's Floor broker that add liquidity to the Exchange and D 
Orders during the close, are equitable because the incremental fees 
would be available on an equal basis to all similarly situated member 
organizations that operate a Floor brokerage business. In this regard, 
the proposed discounts and requirements are equitable because any 
member organization can choose to increase their adding volume entered 
and executed by its Floor broker, excluding routing, in order to 
qualify for the proposed incremental credits and any member 
organization can choose to operate as a Floor broker in order to 
qualify for the additional credits on an equal basis. The Exchanges 
notes that the current Incremental Discounts on MOC Orders utilize 
similar requirements.\24\
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    \24\ See NYSE Price List at p. 4, available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf.
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The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, member 
organizations are free to disfavor the Exchange's pricing if they 
believe that alternatives offer them better value.
MOC/LOC Tiers 1 and 2
    The proposed streamlined requirements for MOC orders to qualify for 
MOC/LOC Tiers 1 and 2 are not unfairly discriminatory because the 
requirements would be applied to all similarly situated member 
organizations and other market participants, who would all be subject 
to the same fees, requirements and discounts on a full and equal basis. 
For the same reason, the proposal neither targets nor will it have a 
disparate impact on any particular category of market participant. 
Accordingly, no member organization already operating on the Exchange 
would be disadvantaged by this allocation of fees. 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.
D Orders
    The Exchange believes that the proposed changes to D Orders to 
modify the time periods by which such orders are considered early, mid-
or late is not unfairly discriminatory because the proposed changes 
will incentivize member organizations to enter or modify D Orders as 
early as possible, beginning with as early as up to 10 minutes before 
the close of trading, in order to build up liquidity going into the 
closing auction. The Exchange also believes that it is not unfairly 
discriminatory to charge member organizations a higher rate for 
entering or modifying their interest in the final minute of regular 
trading hours because all member organizations can utilize D Orders and 
all have an equal choice as to when to submit those orders to benefit 
most from the flexibility afforded the order type. The Exchange 
believes that the proposal is not unfairly discriminatory because all 
similarly situated member organizations that submit D Orders last 
modified in the last 10 minutes and less before the scheduled close of 
trading will be subject to the same fee structure based on time of 
entry (or last modification). In addition, the Exchange believes that 
waiving fees for Early, Mid- and Late D Orders for member organizations 
with a Floor broker plus an adding volume requirement is equitable 
because the proposed fee waiver would apply equally to all similarly 
situated member organizations. Moreover, the proposed fee waiver is not 
unfairly discriminatory because member organizations that do not 
operate a Floor brokerage business can still qualify for the fee waiver 
by choosing to add a Floor broker on the Exchange. Indeed, to the 
extent that member organizations add Floor brokers to qualify for the 
proposed fee waiver for D Orders, the proposal would have the added 
benefit of potentially attracting new Floor brokers to the Exchange. In 
addition, the Exchange believes that it is reasonable to not charge 
member organizations for Early, Mid- and Late D Orders up to specific 
monthly ADV levels if the member organization has an ADV of at least 
10,000 shares executed by a Floor broker. As noted, other marketplaces 
offer various incentives to only certain members based on ADV and/or 
heightened quoting requirements.\25\
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    \25\ See notes 16 & 17, supra.
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Incremental Floor Broker Credits
    The proposed incremental Floor broker credits are not unfairly 
discriminatory because the proposed fees would be applied to all 
similarly situated member organizations and other market participants 
operating a Floor brokerage business, who would all be subject to the 
same fees, requirements, and discounts on an equal basis. For the same 
reason, the proposal neither targets nor will it have a disparate 
impact on any particular category of market participant. Accordingly, 
no member organization already operating on the Exchange would be 
disadvantaged by this allocation of fees. Further, the Exchange 
believes the proposal would incentivize member organizations to send 
more orders to the Floor in order to qualify for incremental credits. 
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.
    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,\26\ 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.'' \27\
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    \26\ 15 U.S.C. 78f(b)(8).
    \27\ See Regulation NMS, 70 FR at 37498-99.
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    Intramarket Competition. The proposed change is designed to attract 
additional order flow to the Exchange. The Exchange believes that the 
proposed changes would continue to incentivize market participants to 
direct

[[Page 64980]]

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 proposed 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 has become effective upon filing pursuant 
to Section 19(b)(3)(A) \28\ of the Act and paragraph (f) thereunder. At 
any time within 60 days of the filing of the 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.
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    \28\ 15 U.S.C. 78s(b)(3)(A).
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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-NYSE-2024-42 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-2024-42. 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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-NYSE-2024-42 and should be 
submitted on or before August 29, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
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    \29\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-17505 Filed 8-7-24; 8:45 am]
BILLING CODE 8011-01-P