Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services, 61529-61535 [2015-25863]
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Federal Register / Vol. 80, No. 197 / Tuesday, October 13, 2015 / Notices
B. Self-Regulatory Organization’s
Statement on Burden on Competition
to determine whether the proposed rule
should be approved or disapproved.
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. In this regard
and as indicated above, the Exchange
notes that the rule change is similar to
rules of the Exchange’s PIP and
Solicitation Auction. The Exchange
believes that the propose rule change
should incent OFPs to continue
submitting block trades to the
Facilitation Auction to the benefit of the
Exchange and its Participants and
public customers. The Exchange
believes that the proposal will enhance
competition by providing an
opportunity for Participants to receive a
greater allocation at the end of the
Facilitation Auction.
IV. Solicitation of Comments
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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Because the proposed rule change
does not (i) significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to section 19(b)(3)(A)
of the Act 9 and Rule 19b–4(f)(6)
thereunder.10
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. If the
Commission takes such action, the
Commission shall institute proceedings
9 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). As required under Rule
19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission.
10 17
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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:
61529
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–25865 Filed 10–9–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
[Release No. 34–76084; File No. SR–
NYSEARCA–2015–87]
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BOX–2015–33 on the subject line.
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending the NYSE Arca
Equities Schedule of Fees and
Charges for Exchange Services
Paper Comments
October 6, 2015.
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BOX–2015–33. 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 Web site (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 Web site 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 such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–BOX–
2015–33, and should be submitted on or
before November 3, 2015.
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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
September 22, 2015, NYSE Arca, Inc.
(the ‘‘Exchange’’ or ‘‘NYSE Arca’’) 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 selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
NYSE Arca Equities Schedule of Fees
and Charges for Exchange Services
(‘‘Fee Schedule’’). The text of the
proposed rule change is available on the
Exchange’s Web site 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,
11 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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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
Fee Schedule to (i) change certain rebate
and volume thresholds applicable to
Lead Market Makers (‘‘LMMs’’) 4 for
providing liquidity in primary listed
securities in which they are registered
as the LMM, (ii) adopt an incremental
tiered-rebate structure applicable to
LMMs and to ETP Holders and Market
Makers affiliated with the LMM that
provide liquidity in Tape B securities to
the NYSE Arca Book, (iii) increase the
fee charged to LMMs for removing
liquidity from the NYSE Arca Book, (iv)
revise the requirements, fees and credits
for Tier 1, (v) revise the requirements for
the current Cross Asset Tier, and
rename it Cross Asset Tier 1, (vi) adopt
a new pricing tier, Cross Asset Tier 2,
(vii) add two new Step Up Tiers for
Tape B Securities, (viii) eliminate
obsolete pricing tiers, and (ix) amend
Port Fees. The Exchange proposes to
implement the fee changes effective
October 1, 2015.
LMM Transaction Credits
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The Exchange proposes to amend the
Fee Schedule to modify the structure of
the transaction credits it provides to
LMMs for providing displayed liquidity
in the NYSE Arca Marketplace 5 primary
listed securities in which they are
registered as the LMM. The Exchange
has a tiered rebate structure that is
based on the consolidated average daily
volume (‘‘CADV’’) of the security in the
previous month. Specifically, the
current rebates are as follows:
• $0.0035 per share (credit) for orders
that provide displayed liquidity to the
Book in securities for which they are
registered as the LMM and which have
a CADV in the previous month greater
than 5,000,000 shares
• $0.004 per share (credit) for orders
that provide displayed liquidity to the
Book in securities for which they are
registered as the LMM and which have
4 The term ‘‘Lead Market Maker’’ is defined in
Rule 1.1(ccc) to mean a registered Market Maker
that is the exclusive Designated Market Maker in
listings for which the Exchange is the primary
market.
5 The term ‘‘NYSE Arca Marketplace’’ is defined
in Rule 1.1(e) to mean the electronic securities
communications and trading facility designated by
the Board of Directors through which orders of
Users are consolidated for execution and/or display.
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a CADV in the previous month of
between 1,000,000 and 5,000,000 shares
• $0.0045 per share (credit) for orders
that provide displayed liquidity to the
Book in securities for which they are
registered as the LMM and which have
a CADV in the previous month of less
than 1,000,000 shares
The Exchange proposes to lower the
credit for the tier requiring a CADV in
the previous month greater than
5,000,000 shares from $0.0035 per share
to $0.0033 per share. The Exchange is
not proposing any change to the credits
provided for the other two tiers. The
Exchange also proposes to lower the
volume threshold for the tier requiring
a CADV in the previous month greater
than 5,000,000 million shares from
5,000,000 shares to 3,000,000 shares,
and lower the volume threshold for the
tier requiring a CADV in the previous
month of between 1,000,000 shares and
5,000,000 to 1,000,000 shares and
3,000,000 shares. The Exchange is not
proposing any change to the volume
threshold for the remaining tier.
As proposed, the transaction credits
and volume thresholds would be as
follows:
• $0.0033 per share (credit) for orders
that provide displayed liquidity to the
Book in securities for which they are
registered as the LMM and which have
a CADV in the previous month greater
than 3,000,000 shares
• $0.004 per share (credit) for orders
that provide displayed liquidity to the
Book in securities for which they are
registered as the LMM and which have
a CADV in the previous month of
between 1,000,000 and 3,000,000 shares
• $0.0045 per share (credit) for orders
that provide displayed liquidity to the
Book in securities for which they are
registered as the LMM and which have
a CADV in the previous month of less
than 1,000,000 shares
LMMs and Affiliated ETP Holders and
Market Makers Incremental Transaction
Credits
The Exchange proposes to adopt tierbased incremental credits for orders that
provide displayed liquidity to the NYSE
Arca Book in Tape B Securities.
Specifically, LMMs that are registered as
the LMM in Tape B securities that have
a CADV in the previous month of less
than 100,000 shares (‘‘Less Active ETP
Securities’’), and the ETP Holders and
Market Makers affiliated with such
LMMs, would receive an additional
credit for orders that provide displayed
liquidity to the Book in any Tape B
Securities that trade on the Exchange.6
6 The Exchange defines ‘‘affiliate’’ to ‘‘mean any
ETP Holder under 75% common ownership or
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As proposed, the incremental credits
and volume thresholds would be as
follows:
• An additional credit of $0.0004 per
share if an LMM is registered as the
LMM in at least 300 Less Active ETP
Securities
• An additional credit of $0.0003 per
share if an LMM is registered as the
LMM in at least 200 but less than 300
Less Active ETP Securities
• An additional credit of $0.0002 per
share if an LMM is registered as the
LMM in at least 100 but less than 200
Less Active ETP Securities
The number of Less Active ETP
Securities for the billing month would
be based on the number of Less Active
ETP Securities in which an LMM is
registered as the LMM on the last
business day of the previous month. As
noted above, the proposed incremental
credits would also apply to ETP Holders
and Market Makers affiliated with the
LMM whose orders in Tape B Securities
provide displayed liquidity to the NYSE
Arca Book.
For example, a LMM that provides
liquidity to the NYSE Arca Book in a
security for which the LMM is
registered as the LMM which has a
CADV in the previous month of at least
1,000,000 shares would receive a credit
of $0.0045 per share. If that LMM is a
Tier 1 firm that is also registered as an
LMM in 250 Less Active ETP Securities,
the LMM would receive an incremental
credit of $0.0003 per share under the
proposed new rebate structure, for a
total credit of $0.0048 per share.
Additionally, affiliated ETP Holders and
Market Makers of such LMM that
provide displayed liquidity in Tape B
Securities would receive a total credit of
$0.0026 per share, i.e., $0.0023 per
share Tier 1 credit for orders that
provide liquidity to the NYSE Arca
Book plus $0.0003 per share for being
registered as a LMM in 250 Less Active
ETP Securities.
With this pricing incentive, the
Exchange hopes to provide incentives
for increased trading in Less Active ETP
Securities for market participants.
LMM Transaction Fees
The Exchange currently charges a fee
of $0.0025 per share to LMMs for orders
in primary listed securities that remove
liquidity from the NYSE Arca Book. The
Exchange proposes to increase this fee
to $0.0028 per share.
Tier 1
Currently, ETP Holders and Market
Makers qualify for Tier 1 fees and
control of that ETP Holder.’’ See Fee Schedule,
NYSE Arca Marketplace: General.
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credits by meeting one of two
requirements. These participants can
either provide liquidity an average daily
share volume per month of 0.70% or
more of the US CADV, or (a) provide
liquidity an average daily share volume
per month of 0.15% or more of the US
CADV and (b) are affiliated with an OTP
Holder or OTP Firm that provides an
ADV of electronic posted executions
(including all account types) in Penny
Pilot issues on NYSE Arca Options
(excluding mini options) of at least
100,000 contracts, of which at least
25,000 contracts must be for the account
of a market maker. In Tape A and Tape
C Securities, ETP Holders and Market
Makers currently receive a credit of
$0.0030 per share for orders that
provide liquidity to the Book and pay a
fee of $0.0030 per share for orders that
take liquidity from the Book. In Tape B
Securities, ETP Holders and Market
Makers receive a credit of $0.0023 per
share for orders that provide liquidity to
the Book.
The Exchange proposes to simplify
this pricing tier by removing the second
requirement. As proposed, ETP Holders
and Market Makers will qualify for Tier
1 fees and credits if they provide
liquidity an average daily share volume
per month of 0.70% or more of the US
CADV. Additionally, the Exchange
proposes distinct fees and credits
applicable to Tape A and Tape C
Securities. As proposed, ETP Holders
and Market Makers would receive an
increased credit of $0.0031 per share for
orders that provide liquidity to the Book
in Tape A Securities and will continue
to pay a fee of $0.0030 per share for
orders that take liquidity from the Book
in Tape A Securities. ETP Holders and
Market Makers would receive an
increased credit of $0.0033 per share for
orders that provide liquidity to the Book
in Tape C Securities and would pay a
lower fee of $0.0029 per share for orders
that take liquidity from the Book in
Tape C Securities. The Exchange is not
proposing any change to the per share
credit provided to ETP Holders and
Market Makers in Tape B Securities.
Cross-Asset Tier
Currently, ETP Holders and Market
Makers receive a credit of $0.0030 per
share in Tape A, Tape B and Tape C
Securities when such participants (1)
provide liquidity of 0.40% or more of
the US CADV per month, and (2) are
affiliated with an OTP Holder or OTP
Firm that provides an ADV of electronic
posted Customer executions in Penny
Pilot issues on NYSE Arca Options
(excluding mini options) of at least
0.95% of total Customer equity and ETF
option ADV as reported by OCC, or
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when such participants (1) provide
liquidity of 0.30% or more of the US
CADV per month, (2) are affiliated with
an OTP Holder or OTP Firm that
provides an ADV of electronic posted
Customer executions in all issues on
NYSE Arca Options (excluding mini
options) of at least 0.80% of total
Customer equity and ETF option ADV
as reported by OCC, and (3) execute an
ADV of Retail Orders that provide
liquidity during the month that is 0.10%
or more of the US CADV. Under the
current tier, participants receive a credit
of $0.0030 per share for providing
liquidity to the order book in Tape A,
Tape B and Tape C Securities.
The Exchange proposes to simplify
this pricing tier by removing the first
requirement. As proposed, ETP Holders
and Market Makers would receive a per
share credit when such participants (a)
provide liquidity of 0.30% or more of
the US CADV per month, (b) are
affiliated with an OTP Holder or OTP
Firm that provides an ADV of electronic
posted Customer executions in all issues
on NYSE Arca Options (excluding mini
options) of at least 0.80% of total
Customer equity and ETF option ADV
as reported by OCC, and (c) execute an
ADV of Retail Orders that provide
liquidity during the month that is 0.10%
or more of the US CADV. The Exchange
is not proposing any change to the
amount of the credit in Tape A, Tape B
and Tape C Securities, which will
remain at $0.0030 per share. The
Exchange also proposes to rename the
current tier to Cross Asset Tier 1 to
distinguish this pricing tier from Cross
Asset Tier 2, which the Exchange is
proposing to adopt with this proposed
rule change.
Cross Asset Tier 2
The Exchange proposes a new pricing
tier—Cross Asset Tier 2—for securities
with a per share price above $1.00.
As proposed, the Cross Asset Tier 2
would apply to ETP Holders and Market
Makers that (a) provide liquidity an
average daily volume share per month
of 0.30% or more of the US CADV and
(b) are affiliated with an OTP Holder or
OTP Firm that provides an ADV of
electronic posted executions for the
account of a market maker in Penny
Pilot issues on NYSE Arca Options
(excluding mini options) of at least
90,000 contracts. Such ETP Holders and
Market Makers would receive a credit of
$0.0031 per share for orders that
provide liquidity to the order book in
Tape A Securities; a credit of $0.0030
per share for providing liquidity to the
order book and a fee of $0.0028 per
share for taking liquidity from the order
book in Tape B Securities; and a credit
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61531
of $0.0033 per share for providing
liquidity to the order book and a fee of
$0.0029 per share for taking liquidity
from the order book in Tape C
Securities.
Tape B Tiers
The Exchange proposes to introduce
two new pricing tier levels—Tape B Tier
1 and Tape B Tier 2—for securities with
a per share price above $1.00.
As proposed, a new Tape B Tier 1
credit of $0.0030 per share 7 would be
applicable to ETP Holders, including
Market Makers, that, on a daily basis,
measured monthly, directly execute
providing volume in Tape B Securities
during the billing month (‘‘Tape B
Adding ADV’’) that is equal to at least
0.40% of US Tape B CADV over the ETP
Holder’s second quarter 2015 Tape B
Adding ADV taken as a percentage of
Tape B CADV (‘‘Tape B Baseline %
CADV’’). For example, if an ETP
Holder’s Tape B Baseline % CADV
during second quarter 2015 was 0.10%,
the ETP Holder would need a Tape B
Adding ADV of at least 0.50% in order
to qualify for the proposed Tape B Tier
1 credit of $0.0030 per share (i.e., 0.10%
Tape B Baseline % CADV plus 0.40% of
the US Tape B CADV for the billing
month).8 LMMs cannot qualify for the
Tape B Tier 1.
Additionally, a new Tape B Tier 2
credit of $0.0028 per share 9 would be
applicable to ETP Holders and Market
Makers, that, on a daily basis, measured
monthly, directly execute Tape B
Adding ADV that is equal to at least
0.20% of the US Tape B CADV over the
ETP Holder’s or Market Maker’s Tape B
Baseline % CADV. For example, if an
ETP Holder’s Tape B Baseline % CADV
during second quarter 2015 was 0.10%,
the ETP Holder would need to have a
Tape B Adding ADV of at least 0.30%
in order to qualify for the proposed
Tape B Tier 2 credit of $0.0028 per
share (i.e., 0.10% Tape B Baseline %
CADV plus 0.20% of the US Tape B
CADV for the billing month).10 LMMs
cannot qualify for the Tape B Tier 2.
7 Under the Basic Rate, ETP Holders receive a
credit of $0.0020 per share for Tape B orders that
provide liquidity to the Book.
8 The Exchange recognizes that a firm that
becomes an ETP Holder or Market Maker after the
Baseline Month would have a Tape B Baseline ADV
of zero. In this regard, a new ETP Holder or Market
Maker would need to have a Tape B Adding ADV
during the billing month of no less than 0.40% of
US Tape B CADV for the $0.0030 per share credit
to apply.
9 Under the Basic Rate, ETP Holders receive a
credit of $0.0020 per share for Tape B orders that
provide liquidity to the Book.
10 The Exchange recognizes that a firm that
becomes an ETP Holder or Market Maker after the
Baseline Month would have a Tape B Baseline ADV
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Federal Register / Vol. 80, No. 197 / Tuesday, October 13, 2015 / Notices
Elimination of Obsolete Pricing
The Fee Schedule currently includes
several pricing tiers that have not
encouraged ETP Holders and Market
Makers to increase their activity to
qualify for the tiers as significantly as
the Exchange anticipated they would.
These tiers are as follows: (i) Step Up
Tier 1, (ii) Step Up Tier 2, (iii) Step Up
Tier 3, (iv) Tape B Step Up Tier, (v)
Tape C Step Up Tier, (vi) Tape C Step
Up Tier 2, and (vii) Routable Order Tier.
The Exchange proposes to remove these
pricing tiers from the Fee Schedule as
well as any related cross references.
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Port Fees
The Exchange currently makes ports
available that provide connectivity to
the Exchange’s trading systems (i.e.,
ports for entry of orders and/or quotes
(‘‘order/quote entry ports’’)) and charges
$200 per port per month for users of 1–
5 ports, and $500 per port per month for
users of 6 or more ports.11 The Fee
Schedule currently provides that no fees
apply to ports in the backup datacenter
that are not utilized during the relevant
month. The Fee Schedule further
provides that no fees apply to ports in
the backup datacenter that are utilized
when the primary datacenter is
unavailable but that the fees would
apply if a port in the backup datacenter
is utilized when the primary datacenter
is available. The Exchange also
currently makes ports available for drop
copies and charges $500 per port per
month.12 The Fee Schedule provides
that no fees apply to ports in the backup
datacenter if configured such that it is
duplicative of another drop copy port of
the same user.
The Exchange proposes to standardize
the port fee and charge $550 per port
per month, regardless of the number of
users and whether the port is used for
order/quote entry or for drop copies.
The Exchange believes standardizing
the port fees will permit the Exchange
to offset, in part, its infrastructure costs
associated with making such ports
available. The proposed change would
also encourage users to become more
efficient with their usage of the ports
of zero. In this regard, a new ETP Holder or Market
Maker would need to have a Tape B Adding ADV
during the billing month of no less than 0.200% of
US Tape B CADV for the $0.0028 per share credit
to apply.
11 The Fee Schedule provides that users of the
Exchange’s Risk Management Gateway service are
not charged for order/quote entry ports if such ports
are designated as being used for RMG purposes. See
Securities Exchange Act Release No. 68227
(November 14, 2012), 77 FR 69679 (November 20,
2012) (SR–NYSEArca–2012–123).
12 Only one fee per drop copy port applies, even
if receiving drop copies from multiple order/quote
entry ports and/or from NYSE Arca Options.
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thereby resulting in a corresponding
increase in the efficiency that the
Exchange would be able to realize with
respect to managing its own
infrastructure. In this regard, as users
decrease the number of ports that they
utilize, the Exchange would similarly be
able to decrease the amount of its
hardware that it is required to support
to interface with such ports.
The proposed changes are not
otherwise intended to address any other
issues, and the Exchange is not aware of
any problems that ETP Holders would
have in complying with the proposed
changes.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
section 6(b) of the Act,13 in general, and
furthers the objectives of sections 6(b)(4)
and (5) of the Act,14 in particular,
because it provides for the equitable
allocation of reasonable dues, fees, and
other charges among its members,
issuers and other persons using its
facilities and does not unfairly
discriminate between customers,
issuers, brokers or dealers.
LMM Transaction Credits
The Exchange believes the proposed
new incremental tiered-rebates will
provide a further incentive for LMMs to
quote and trade a greater number of
securities on the Exchange and will
generally allow the Exchange and LMMs
to better compete for order flow and
thus enhance competition. Specifically,
the Exchange believes that its proposal,
which among other things, adjusts the
CADV and credits for LMMs based on
the CADV of the security in primary
listed securities in which they are
registered as the LMM, is reasonable as
it is still the highest credit in securities
with a CADV greater than 3,000,000
shares. The Exchange also believes that
the rebate for providing displayed
liquidity is equitable because it would
uniformly apply to all LMMs.
LMMs and Affiliated ETP Holders and
Market Makers Incremental Transaction
Credits
The proposed fee change is intended
to encourage ETP Holders to promote
price discovery and market quality in
Less Active ETP Securities for the
benefit of all market participants. The
Exchange believes the proposed credits
are reasonable and appropriate in that
they are based on the amount of
business transacted on the Exchange.
The Exchange notes that the proposed
13 15
14 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
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fee change is similar to market quality
incentive programs already in place on
other markets, such as the Qualified
Market Maker incentive on the
NASDAQ Stock Market LLC
(‘‘NASDAQ’’), which requires a member
on that exchange to provide meaningful
and consistent support to market quality
and price discovery by quoting at the
National Best Bid and Offer in a large
number of securities. In return,
NASDAQ provides such member with
an incremental rebate.15 NASDAQ OMX
PHLX LLC (‘‘PHLX’’) also provides
enhanced credits to Market Makers on
certain volumes based on an affiliate’s
activity. Specifically, PHLX offers a
tiered Customer Rebate Program that
qualifies either a Specialist or Market
Maker or its affiliate under Common
Ownership 16 to an additional rebate
provided the Specialist or Market Maker
has reached the Monthly Market Maker
Cap.17 The Exchange believes that
providing increased credits to ETP
Holders and Market Makers that are
affiliated with a LMM that add liquidity
in Tape B securities to the Exchange is
reasonable because the Exchange
believes that by providing increased
rebates to affiliated ETP Holders and
Market Makers of a LMM, more LMMs
will register to quote and trade in Less
Active ETP Securities. The Exchange
believes the proposed incremental
credit for adding liquidity is also
reasonable because it will encourage
liquidity and competition in Tape B
securities quoted and traded on the
Exchange. Moreover, the Exchange
believes that the proposed fee change
will incentivize LMMs to register as an
LMM in Less Active ETP Securities and
thus, add more liquidity in these and
other Tape B Securities to the benefit of
all market participants.
The Exchange believes the proposed
incremental credits are equitable and
not unfairly discriminatory because they
are open to all ETP Holders and Market
Makers affiliated with a LMM on an
equal basis and provide discounts that
are reasonably related to the value to the
Exchange’s market quality associated
with higher volumes. The Exchange
further believes that the proposed
incremental rebate is not unfairly
discriminatory because it is consistent
with the market quality and
15 See
NASDAQ Rule 7014.
term ‘‘Common Ownership’’ is defined as
meaning ‘‘members or member organizations under
75% common ownership or control.’’ See PHLX fee
schedule, at https://www.nasdaqtrader.com/
Micro.aspx?id=phlxpricing.
17 Id. (Section II, Monthly Market Maker Cap). See
also Securities Exchange Act Release No. 70969
(December 3, 2013), 78 FR 73906 (December 9,
2013) (SR–Phlx–2013–114).
16 The
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competitiveness benefits associated
with the proposed fee program and
because the magnitude of the additional
rebate is not unreasonably high in
comparison to the rebate paid with
respect to other displayed liquidityproviding orders. The Exchange does
not believe that it is unfairly
discriminatory to offer increased rebates
to LMMs as LMMs are subject to
additional requirements and obligations
(such as quoting requirements) that
other market participants are not. When
PHLX adopted its proposal to provide
enhanced credits, it noted its belief that
the additional rebate it provides was
equitable, and not unfairly
discriminatory because, among other
things, Specialists and Market Makers
‘‘have burdensome quoting obligations,’’
to the market that other market
participants do not; are subject to higher
transaction costs and incur higher costs
related to market making activities; and
‘‘also serve an important role on the
Exchange with regard to order
interaction and they provide liquidity in
the marketplace.’’ 18 PHLX further noted
that the ‘‘proposed differentiation as
between Specialists and Market Makers
as compared to other market
participants recognizes the differing
contributions made to the trading
environment on the Exchange by these
market participants.’’ The Exchange also
believes that allowing ETP Holders to
receive enhanced credits based on
activities of their affiliates is reasonable,
equitable and not unfairly
discriminatory because the Exchange
believes that ETP Holders affiliated with
LMMs may qualify to earn enhanced
credits in recognition of their shared
economic interest, which includes the
heightened obligations and costs
imposed on LMMs. ETP Holders
unaffiliated with LMMs do not share the
same type of economic interests.
Further, ETP Holders not affiliated with
a LMM have an opportunity to establish
such affiliation by several means,
including but not limited to, a business
combination or the establishment of
their own market making operation,
which each unaffiliated firm has the
potential to establish.
LMM Transaction Fees
The Exchange believes that it is
reasonable to increase the fee charged to
LMMs for orders in primary listed
securities that remove liquidity from the
NYSE Arca Book as this fee is same as
the fee charged by the Exchange to Tier
1, Tier 2 and Tier 3 ETP Holders and
18 See Securities Exchange Act Release No. 70969
(December 3, 2013), 78 FR 73906 (December 9,
2013) (SR–Phlx–2013–114).
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Market Makers that take liquidity in
Tape B securities.19 In addition, the
proposed fee change is equitable and
not unfairly discriminatory because it
would apply uniformly to all similarly
situated LMMs.
Tier 1
The Exchange believes that the
amendments to Tier 1 is reasonable,
equitable and not unfairly
discriminatory because the proposed
amendment would apply uniformly to
all similarly situated ETP Holders and
Market Makers that send orders to the
Exchange. The Exchange believes
providing increased credits and
charging lower fees for orders in Tape
A and Tape C Securities will incentivize
ETP Holders to increase the orders sent
to the Exchange and therefore provide
liquidity that supports the quality of
price discovery and promotes market
transparency. The Exchange believes
that by recalibrating the fees for taking
liquidity and credits for providing
liquidity will attract additional order
flow and liquidity to the Exchange,
thereby contributing to price discovery
on the Exchange and benefiting
investors generally. The Exchange also
believes it is reasonable to remove one
of the two current requirements for ETP
Holders and Market Makers to qualify
for Tier 1 fees and credits. The proposed
change will simplify the tier by
removing a multi-prong requirement.
The Exchange believes that the
proposed change is equitable and not
unfairly discriminatory because the
requirement would be eliminated
entirely—no ETP Holders would remain
able to qualify for the eliminated prong.
Cross Asset Tiers
The Exchange believes that the
amendments to the Cross Asset Tier is
reasonable, equitable and not unfairly
discriminatory because the proposed
amendment would continue to directly
relate to the activity of an ETP Holder
and the activity of an affiliated OTP
Holder or OTP Firm on NYSE Arca
Options, thereby encouraging increased
trading activity on both the NYSE Arca
equity and option markets. In this
regard, the proposal is designed to bring
additional posted order flow to NYSE
Arca Options, so as to provide
additional opportunities for all OTP
Holders and OTP Firms to trade on
NYSE Arca Options. Furthermore,
similar to the revised Cross Asset Tier,
the NYSE Arca Options Fee Schedule
19 See NYSE Arca Marketplace: Trade Related
Fees and Credits, Tier 1, Tier 2 and Tier 3, Tape
B Securities at https://www.nyse.com/publicdocs/
nyse/markets/nyse-arca/NYSE_Arca_Marketplace_
Fees.pdf.
PO 00000
Frm 00200
Fmt 4703
Sfmt 4703
61533
includes a credit for OTP Holders and
OTP Firms that is based on both equity
and options volume. Additionally, ETP
Holders that are not affiliated with an
NYSE Arca Options OTP Holder or OTP
Firm are still eligible for fees and credits
by means other than the Cross Asset
Tier. NASDAQ similarly charges certain
fees based on both equity and options
volume.20 Further, the Exchange
believes it is reasonable to remove one
of the two current requirements for ETP
Holders and Market Makers to qualify
for Cross Asset Tier fees and credits as
its removal would simplify the pricing
tier. The Exchange believes that the
proposed change is equitable and not
unfairly discriminatory because the
requirement would be eliminated
entirely—no ETP Holders would remain
able to qualify for the eliminated prong.
The Exchange believes the proposed
Cross Asset Tier 2 is reasonable and
equitably allocated because it would
apply to ETP Holders and Market
Makers that provide liquidity to the
Exchange and is designed to incentivize
these market participants to increase the
orders sent directly to the Exchange and
therefore provide liquidity that supports
the quality of price discovery and
promotes market transparency. The
Exchange believes the new Cross Asset
Tier 2 is equitable because it would be
available to all similarly situated ETP
Holders and Market Makers on an equal
basis and would provide credits that are
reasonably related to the value of an
exchange’s market quality associated
with higher volumes. The Exchange
further believes that the proposed Cross
Asset Tier 2 is reasonable, equitable and
not unfairly discriminatory because the
Exchange has previously implemented
cross asset tiers, including the current
Cross Asset Tier.
Tape B Tiers
The Exchange believes the proposed
Tape B Tiers are reasonable and
equitably allocated because they apply
to ETP Holders and Market Makers that
provide liquidity to the Exchange and
are designed to incentivize these market
participants to increase the orders sent
directly to the Exchange and therefore
provide liquidity that supports the
quality of price discovery and promotes
market transparency. The Exchange
believes the new Tape B Tiers are
equitable because they are open to all
similarly situated ETP Holders and
Market Makers on an equal basis and
provide credits that are reasonably
related to the value of an exchange’s
market quality associated with higher
volumes. The Exchange further believes
20 See
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NASDAQ Rule 7018.
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Federal Register / Vol. 80, No. 197 / Tuesday, October 13, 2015 / Notices
that the proposed Tape B Tier 1 and
Tape B Tier 2 are reasonable, equitable
and not unfairly discriminatory because
the Exchange has previously
implemented multiple step up tiers,
including Step Up Tier 1, Step Up Tier
2 and Step Up Tier 3.
mstockstill on DSK4VPTVN1PROD with NOTICES
Elimination of Obsolete Pricing
The Exchange believes that it is
reasonable to eliminate the obsolete
pricing tiers from the Fee Schedule
because ETP Holders have not increased
their activity to qualify for these tiers as
significantly as the Exchange
anticipated they would. The Exchange
believes that it is equitable and not
unfairly discriminatory to eliminate
these tiers because they would be
eliminated entirely—no ETP Holders
would remain able to qualify for the
eliminated tiers. This aspect of the
proposed change would therefore result
in a more streamlined Fee Schedule,
including with respect to removal of
related cross references.
Port Fees
The Exchange believes that the
proposal to amend the port fees
constitutes an equitable allocation of
fees because all similarly situated ETP
Holders and other market participants
would be charged the same amount. The
Exchange believes that the proposed
change to the monthly rates is
reasonable because the proposed port
fees are expected to permit the
Exchange to offset, in part, its
infrastructure costs associated with
making such ports available, including
costs based on gateway software and
hardware enhancements and resources
dedicated to gateway development,
quality assurance, and support. In this
regard, the Exchange believes that the
proposed fees are competitive with
those charged by other exchanges.21 The
proposed change is also reasonable
because the proposed per port rates
would encourage users to become more
efficient with, and reduce the number of
ports used, thereby resulting in a
corresponding increase in the efficiency
that the Exchange would be able to
realize with respect to managing its own
infrastructure.
Finally, the Exchange believes that it
is subject to significant competitive
forces, as described below in the
Exchange’s statement regarding the
burden on competition. For these
21 For example, the charge on the NASDAQ for a
FIX Trading Port is $550 per port per month. See
NASDAQ Rule 7015. A separate charge for PreTrade Risk Management ports also is applicable,
which ranges from $400 to $600 and is capped at
$25,000 per firm per month. See NASDAQ Rule
7016.
VerDate Sep<11>2014
21:23 Oct 09, 2015
Jkt 238001
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,22 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, the
Exchange believes that the proposed
change would encourage increased
participation by LMMs in the trading of
ETP securities generally and Less Active
ETP Securities, in particular. The
proposed change would also encourage
the submission of additional liquidity to
a public exchange, thereby promoting
price discovery and transparency and
enhancing order execution
opportunities for ETP Holders and
Market Makers affiliated with LMMs.
Further, the proposal to amend the
requirements to qualify for Tier 1 and
the Cross Asset Tier will not place an
undue burden on competition because
both pricing tiers would remain
available for all ETP Holders to satisfy,
except, with respect to the Cross Asset
Tier which would not be available for
those ETP Holders that are not affiliated
with an NYSE Arca Options OTP Holder
or OTP Firm. ETP Holders that are not
affiliated with an NYSE Arca Options
OTP Holder or OTP Firm are eligible for
fees and credits by others means than
the Cross Asset Tier. The Exchange
believes that the proposed change to
adopt the Tape B Tiers will encourage
competition by attracting additional
liquidity to the Exchange, which will
make the Exchange a more competitive
venue for, among other things, order
execution and price discovery. An ETP
Holder could qualify for the proposed
new Tape B Tiers by providing
sufficient adding liquidity to satisfy the
applicable proposed volume
requirements. The Exchange also notes
that the proposed Tape B Tiers would
be similar to existing pricing tiers and
applicable credits on the Exchange.
Also, the Exchange does not believe that
the proposed change will impair the
ability of ETP Holders or competing
order execution venues to maintain
their competitive standing in the
financial markets. In this regard, the
Exchange notes that existing pricing
tiers of other exchanges similarly
provide for credits for market
participants that provide certain levels
of liquidity on those exchanges.23 In
general, ETP Holders impacted by the
proposed change may readily adjust
their trading behavior to maintain or
increase their credits or decrease their
fees in a favorable manner, and will
therefore not be disadvantaged in their
ability to compete.
The removal of obsolete pricing tiers
is not competitive in nature, but would
result in a more streamlined Fee
Schedule.
The Exchange believes the proposed
change to the port fees sets the fees that
are competitive with those charges by
other exchanges,24 and would
encourage users to become more
efficient with, and reduce the number of
ports used, thereby resulting in a
corresponding increase in the efficiency
of the ports utilized by users.
The Exchange notes that it operates in
a highly competitive market in which
market participants can readily favor
competing venues. In such an
environment, the Exchange must
continually review, and consider
adjusting, its fees and credits to remain
competitive with other exchanges. For
the reasons described above, the
Exchange believes that this proposal
promotes a competitive environment.
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) 25 of the Act and
subparagraph (f)(2) of Rule 19b–4 26
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
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) 27 of the Act to
determine whether the proposed rule
24 See
22 15
U.S.C. 78f(b)(8).
23 See, e.g., the ‘‘Investor Support Program’’ under
NASDAQ Rule 7014.
PO 00000
Frm 00201
Fmt 4703
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supra note 21.
U.S.C. 78s(b)(3)(A).
26 17 CFR 240.19b–4(f)(2).
27 15 U.S.C. 78s(b)(2)(B).
25 15
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Federal Register / Vol. 80, No. 197 / Tuesday, October 13, 2015 / Notices
change should be approved or
disapproved.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–25863 Filed 10–9–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEARCA–2015–87 on the subject
line.
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE., Washington, DC
20549–2736
Paper Comments
mstockstill on DSK4VPTVN1PROD with NOTICES
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEARCA–2015–87. 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 Web site (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 Web site 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 will also be available for
inspection and copying at the NYSE’s
principal office and on its Internet Web
site at www.nyse.com. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEARCA–2015–87 and should be
submitted on or before November 3,
2015.
VerDate Sep<11>2014
21:23 Oct 09, 2015
Jkt 238001
Extension: Rule 22e–3,
SEC File No. 270–603, OMB Control No.
3235–0658.
Notice is hereby given that, under the
Paperwork Reduction Act of 1995 (44
U.S.C. 3501–3520), the Securities and
Exchange Commission (the
‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
Section 22(e) of the Investment
Company Act [15 U.S.C. 80a–22(e)]
(‘‘Act’’) generally prohibits funds,
including money market funds, from
suspending the right of redemption, and
from postponing the payment or
satisfaction upon redemption of any
redeemable security for more than seven
days. The provision was designed to
prevent funds and their investment
advisers from interfering with the
redemption rights of shareholders for
improper purposes, such as the
preservation of management fees.
Although section 22(e) permits funds to
postpone the date of payment or
satisfaction upon redemption for up to
seven days, it does not permit funds to
suspend the right of redemption for any
amount of time, absent certain specified
circumstances or a Commission order.
Rule 22e–3 under the Act [17 CFR
270.22e–3] exempts money market
funds from section 22(e) to permit them
to suspend redemptions in order to
facilitate an orderly liquidation of the
fund. Specifically, rule 22e–3 permits a
money market fund to suspend
redemptions and postpone the payment
of proceeds pending board-approved
liquidation proceedings if: (i) The fund’s
board of directors, including a majority
of disinterested directors, determines
pursuant to § 270.2a–7(c)(8)(ii)(C) that
the extent of the deviation between the
28 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00202
Fmt 4703
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61535
fund’s amortized cost price per share
and its current net asset value per share
calculated using available market
quotations (or an appropriate substitute
that reflects current market conditions)
may result in material dilution or other
unfair results to investors or existing
shareholders; (ii) the fund’s board of
directors, including a majority of
disinterested directors, irrevocably
approves the liquidation of the fund;
and (iii) the fund, prior to suspending
redemptions, notifies the Commission of
its decision to liquidate and suspend
redemptions. Rule 22e–3 also provides
an exemption from section 22(e) for
registered investment companies that
own shares of a money market fund
pursuant to section 12(d)(1)(E) of the
Act (‘‘conduit funds’’), if the underlying
money market fund has suspended
redemptions pursuant to the rule. A
conduit fund that suspends redemptions
in reliance on the exemption provided
by rule 22e–3 is required to provide
prompt notice of the suspension of
redemptions to the Commission. Notices
required by the rule must be provided
by electronic mail, directed to the
attention of the Director of the Division
of Investment Management or the
Director’s designee.1 Compliance with
the notification requirement is
mandatory for money market funds and
conduit funds that rely on rule 22e–3 to
suspend redemptions and postpone
payment of proceeds pending a
liquidation, and are not kept
confidential.
Commission staff estimates that, on
average, one money market fund would
break the buck and liquidate every six
years.2 In addition, Commission staff
estimates that there are an average of
two conduit funds that may be invested
in a money market fund that breaks the
buck.3 Commission staff further
estimates that a money market fund or
conduit fund would spend
approximately one hour of an in-house
attorney’s time to prepare and submit
1 See
rule 22e–3(a)(3).
estimate is based upon the Commission’s
experience with the frequency with which money
market funds have historically required sponsor
support. Although the vast majority of money
market fund sponsors have supported their money
market funds in times of market distress, for
purposes of this estimate Commission staff
conservatively estimates that one or more sponsors
may not provide support.
3 Based on a review of filings with the
Commission, Commission staff estimates that 2.3
conduit funds are invested in each master fund.
However, master funds account for only 11.3% of
all money market funds. Solely for the purposes of
this information collection, and to avoid
underestimating possible burdens, the Commission
conservatively assumes that any money market that
breaks the buck and liquidates would be a master
fund.
2 This
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]]>Agencies
[Federal Register Volume 80, Number 197 (Tuesday, October 13, 2015)]
[Notices]
[Pages 61529-61535]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-25863]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76084; File No. SR-NYSEARCA-2015-87]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE
Arca Equities Schedule of Fees and Charges for Exchange Services
October 6, 2015.
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 September 22, 2015, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C.78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Equities Schedule of
Fees and Charges for Exchange Services (``Fee Schedule''). The text of
the proposed rule change is available on the Exchange's Web site 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,
[[Page 61530]]
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 Fee Schedule to (i) change
certain rebate and volume thresholds applicable to Lead Market Makers
(``LMMs'') \4\ for providing liquidity in primary listed securities in
which they are registered as the LMM, (ii) adopt an incremental tiered-
rebate structure applicable to LMMs and to ETP Holders and Market
Makers affiliated with the LMM that provide liquidity in Tape B
securities to the NYSE Arca Book, (iii) increase the fee charged to
LMMs for removing liquidity from the NYSE Arca Book, (iv) revise the
requirements, fees and credits for Tier 1, (v) revise the requirements
for the current Cross Asset Tier, and rename it Cross Asset Tier 1,
(vi) adopt a new pricing tier, Cross Asset Tier 2, (vii) add two new
Step Up Tiers for Tape B Securities, (viii) eliminate obsolete pricing
tiers, and (ix) amend Port Fees. The Exchange proposes to implement the
fee changes effective October 1, 2015.
---------------------------------------------------------------------------
\4\ The term ``Lead Market Maker'' is defined in Rule 1.1(ccc)
to mean a registered Market Maker that is the exclusive Designated
Market Maker in listings for which the Exchange is the primary
market.
---------------------------------------------------------------------------
LMM Transaction Credits
The Exchange proposes to amend the Fee Schedule to modify the
structure of the transaction credits it provides to LMMs for providing
displayed liquidity in the NYSE Arca Marketplace \5\ primary listed
securities in which they are registered as the LMM. The Exchange has a
tiered rebate structure that is based on the consolidated average daily
volume (``CADV'') of the security in the previous month. Specifically,
the current rebates are as follows:
---------------------------------------------------------------------------
\5\ The term ``NYSE Arca Marketplace'' is defined in Rule 1.1(e)
to mean the electronic securities communications and trading
facility designated by the Board of Directors through which orders
of Users are consolidated for execution and/or display.
---------------------------------------------------------------------------
$0.0035 per share (credit) for orders that provide
displayed liquidity to the Book in securities for which they are
registered as the LMM and which have a CADV in the previous month
greater than 5,000,000 shares
$0.004 per share (credit) for orders that provide
displayed liquidity to the Book in securities for which they are
registered as the LMM and which have a CADV in the previous month of
between 1,000,000 and 5,000,000 shares
$0.0045 per share (credit) for orders that provide
displayed liquidity to the Book in securities for which they are
registered as the LMM and which have a CADV in the previous month of
less than 1,000,000 shares
The Exchange proposes to lower the credit for the tier requiring a
CADV in the previous month greater than 5,000,000 shares from $0.0035
per share to $0.0033 per share. The Exchange is not proposing any
change to the credits provided for the other two tiers. The Exchange
also proposes to lower the volume threshold for the tier requiring a
CADV in the previous month greater than 5,000,000 million shares from
5,000,000 shares to 3,000,000 shares, and lower the volume threshold
for the tier requiring a CADV in the previous month of between
1,000,000 shares and 5,000,000 to 1,000,000 shares and 3,000,000
shares. The Exchange is not proposing any change to the volume
threshold for the remaining tier.
As proposed, the transaction credits and volume thresholds would be
as follows:
$0.0033 per share (credit) for orders that provide
displayed liquidity to the Book in securities for which they are
registered as the LMM and which have a CADV in the previous month
greater than 3,000,000 shares
$0.004 per share (credit) for orders that provide
displayed liquidity to the Book in securities for which they are
registered as the LMM and which have a CADV in the previous month of
between 1,000,000 and 3,000,000 shares
$0.0045 per share (credit) for orders that provide
displayed liquidity to the Book in securities for which they are
registered as the LMM and which have a CADV in the previous month of
less than 1,000,000 shares
LMMs and Affiliated ETP Holders and Market Makers Incremental
Transaction Credits
The Exchange proposes to adopt tier-based incremental credits for
orders that provide displayed liquidity to the NYSE Arca Book in Tape B
Securities. Specifically, LMMs that are registered as the LMM in Tape B
securities that have a CADV in the previous month of less than 100,000
shares (``Less Active ETP Securities''), and the ETP Holders and Market
Makers affiliated with such LMMs, would receive an additional credit
for orders that provide displayed liquidity to the Book in any Tape B
Securities that trade on the Exchange.\6\ As proposed, the incremental
credits and volume thresholds would be as follows:
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\6\ The Exchange defines ``affiliate'' to ``mean any ETP Holder
under 75% common ownership or control of that ETP Holder.'' See Fee
Schedule, NYSE Arca Marketplace: General.
---------------------------------------------------------------------------
An additional credit of $0.0004 per share if an LMM is
registered as the LMM in at least 300 Less Active ETP Securities
An additional credit of $0.0003 per share if an LMM is
registered as the LMM in at least 200 but less than 300 Less Active ETP
Securities
An additional credit of $0.0002 per share if an LMM is
registered as the LMM in at least 100 but less than 200 Less Active ETP
Securities
The number of Less Active ETP Securities for the billing month
would be based on the number of Less Active ETP Securities in which an
LMM is registered as the LMM on the last business day of the previous
month. As noted above, the proposed incremental credits would also
apply to ETP Holders and Market Makers affiliated with the LMM whose
orders in Tape B Securities provide displayed liquidity to the NYSE
Arca Book.
For example, a LMM that provides liquidity to the NYSE Arca Book in
a security for which the LMM is registered as the LMM which has a CADV
in the previous month of at least 1,000,000 shares would receive a
credit of $0.0045 per share. If that LMM is a Tier 1 firm that is also
registered as an LMM in 250 Less Active ETP Securities, the LMM would
receive an incremental credit of $0.0003 per share under the proposed
new rebate structure, for a total credit of $0.0048 per share.
Additionally, affiliated ETP Holders and Market Makers of such LMM that
provide displayed liquidity in Tape B Securities would receive a total
credit of $0.0026 per share, i.e., $0.0023 per share Tier 1 credit for
orders that provide liquidity to the NYSE Arca Book plus $0.0003 per
share for being registered as a LMM in 250 Less Active ETP Securities.
With this pricing incentive, the Exchange hopes to provide
incentives for increased trading in Less Active ETP Securities for
market participants.
LMM Transaction Fees
The Exchange currently charges a fee of $0.0025 per share to LMMs
for orders in primary listed securities that remove liquidity from the
NYSE Arca Book. The Exchange proposes to increase this fee to $0.0028
per share.
Tier 1
Currently, ETP Holders and Market Makers qualify for Tier 1 fees
and
[[Page 61531]]
credits by meeting one of two requirements. These participants can
either provide liquidity an average daily share volume per month of
0.70% or more of the US CADV, or (a) provide liquidity an average daily
share volume per month of 0.15% or more of the US CADV and (b) are
affiliated with an OTP Holder or OTP Firm that provides an ADV of
electronic posted executions (including all account types) in Penny
Pilot issues on NYSE Arca Options (excluding mini options) of at least
100,000 contracts, of which at least 25,000 contracts must be for the
account of a market maker. In Tape A and Tape C Securities, ETP Holders
and Market Makers currently receive a credit of $0.0030 per share for
orders that provide liquidity to the Book and pay a fee of $0.0030 per
share for orders that take liquidity from the Book. In Tape B
Securities, ETP Holders and Market Makers receive a credit of $0.0023
per share for orders that provide liquidity to the Book.
The Exchange proposes to simplify this pricing tier by removing the
second requirement. As proposed, ETP Holders and Market Makers will
qualify for Tier 1 fees and credits if they provide liquidity an
average daily share volume per month of 0.70% or more of the US CADV.
Additionally, the Exchange proposes distinct fees and credits
applicable to Tape A and Tape C Securities. As proposed, ETP Holders
and Market Makers would receive an increased credit of $0.0031 per
share for orders that provide liquidity to the Book in Tape A
Securities and will continue to pay a fee of $0.0030 per share for
orders that take liquidity from the Book in Tape A Securities. ETP
Holders and Market Makers would receive an increased credit of $0.0033
per share for orders that provide liquidity to the Book in Tape C
Securities and would pay a lower fee of $0.0029 per share for orders
that take liquidity from the Book in Tape C Securities. The Exchange is
not proposing any change to the per share credit provided to ETP
Holders and Market Makers in Tape B Securities.
Cross-Asset Tier
Currently, ETP Holders and Market Makers receive a credit of
$0.0030 per share in Tape A, Tape B and Tape C Securities when such
participants (1) provide liquidity of 0.40% or more of the US CADV per
month, and (2) are affiliated with an OTP Holder or OTP Firm that
provides an ADV of electronic posted Customer executions in Penny Pilot
issues on NYSE Arca Options (excluding mini options) of at least 0.95%
of total Customer equity and ETF option ADV as reported by OCC, or when
such participants (1) provide liquidity of 0.30% or more of the US CADV
per month, (2) are affiliated with an OTP Holder or OTP Firm that
provides an ADV of electronic posted Customer executions in all issues
on NYSE Arca Options (excluding mini options) of at least 0.80% of
total Customer equity and ETF option ADV as reported by OCC, and (3)
execute an ADV of Retail Orders that provide liquidity during the month
that is 0.10% or more of the US CADV. Under the current tier,
participants receive a credit of $0.0030 per share for providing
liquidity to the order book in Tape A, Tape B and Tape C Securities.
The Exchange proposes to simplify this pricing tier by removing the
first requirement. As proposed, ETP Holders and Market Makers would
receive a per share credit when such participants (a) provide liquidity
of 0.30% or more of the US CADV per month, (b) are affiliated with an
OTP Holder or OTP Firm that provides an ADV of electronic posted
Customer executions in all issues on NYSE Arca Options (excluding mini
options) of at least 0.80% of total Customer equity and ETF option ADV
as reported by OCC, and (c) execute an ADV of Retail Orders that
provide liquidity during the month that is 0.10% or more of the US
CADV. The Exchange is not proposing any change to the amount of the
credit in Tape A, Tape B and Tape C Securities, which will remain at
$0.0030 per share. The Exchange also proposes to rename the current
tier to Cross Asset Tier 1 to distinguish this pricing tier from Cross
Asset Tier 2, which the Exchange is proposing to adopt with this
proposed rule change.
Cross Asset Tier 2
The Exchange proposes a new pricing tier--Cross Asset Tier 2--for
securities with a per share price above $1.00.
As proposed, the Cross Asset Tier 2 would apply to ETP Holders and
Market Makers that (a) provide liquidity an average daily volume share
per month of 0.30% or more of the US CADV and (b) are affiliated with
an OTP Holder or OTP Firm that provides an ADV of electronic posted
executions for the account of a market maker in Penny Pilot issues on
NYSE Arca Options (excluding mini options) of at least 90,000
contracts. Such ETP Holders and Market Makers would receive a credit of
$0.0031 per share for orders that provide liquidity to the order book
in Tape A Securities; a credit of $0.0030 per share for providing
liquidity to the order book and a fee of $0.0028 per share for taking
liquidity from the order book in Tape B Securities; and a credit of
$0.0033 per share for providing liquidity to the order book and a fee
of $0.0029 per share for taking liquidity from the order book in Tape C
Securities.
Tape B Tiers
The Exchange proposes to introduce two new pricing tier levels--
Tape B Tier 1 and Tape B Tier 2--for securities with a per share price
above $1.00.
As proposed, a new Tape B Tier 1 credit of $0.0030 per share \7\
would be applicable to ETP Holders, including Market Makers, that, on a
daily basis, measured monthly, directly execute providing volume in
Tape B Securities during the billing month (``Tape B Adding ADV'') that
is equal to at least 0.40% of US Tape B CADV over the ETP Holder's
second quarter 2015 Tape B Adding ADV taken as a percentage of Tape B
CADV (``Tape B Baseline % CADV''). For example, if an ETP Holder's Tape
B Baseline % CADV during second quarter 2015 was 0.10%, the ETP Holder
would need a Tape B Adding ADV of at least 0.50% in order to qualify
for the proposed Tape B Tier 1 credit of $0.0030 per share (i.e., 0.10%
Tape B Baseline % CADV plus 0.40% of the US Tape B CADV for the billing
month).\8\ LMMs cannot qualify for the Tape B Tier 1.
---------------------------------------------------------------------------
\7\ Under the Basic Rate, ETP Holders receive a credit of
$0.0020 per share for Tape B orders that provide liquidity to the
Book.
\8\ The Exchange recognizes that a firm that becomes an ETP
Holder or Market Maker after the Baseline Month would have a Tape B
Baseline ADV of zero. In this regard, a new ETP Holder or Market
Maker would need to have a Tape B Adding ADV during the billing
month of no less than 0.40% of US Tape B CADV for the $0.0030 per
share credit to apply.
---------------------------------------------------------------------------
Additionally, a new Tape B Tier 2 credit of $0.0028 per share \9\
would be applicable to ETP Holders and Market Makers, that, on a daily
basis, measured monthly, directly execute Tape B Adding ADV that is
equal to at least 0.20% of the US Tape B CADV over the ETP Holder's or
Market Maker's Tape B Baseline % CADV. For example, if an ETP Holder's
Tape B Baseline % CADV during second quarter 2015 was 0.10%, the ETP
Holder would need to have a Tape B Adding ADV of at least 0.30% in
order to qualify for the proposed Tape B Tier 2 credit of $0.0028 per
share (i.e., 0.10% Tape B Baseline % CADV plus 0.20% of the US Tape B
CADV for the billing month).\10\ LMMs cannot qualify for the Tape B
Tier 2.
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\9\ Under the Basic Rate, ETP Holders receive a credit of
$0.0020 per share for Tape B orders that provide liquidity to the
Book.
\10\ The Exchange recognizes that a firm that becomes an ETP
Holder or Market Maker after the Baseline Month would have a Tape B
Baseline ADV of zero. In this regard, a new ETP Holder or Market
Maker would need to have a Tape B Adding ADV during the billing
month of no less than 0.200% of US Tape B CADV for the $0.0028 per
share credit to apply.
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[[Page 61532]]
Elimination of Obsolete Pricing
The Fee Schedule currently includes several pricing tiers that have
not encouraged ETP Holders and Market Makers to increase their activity
to qualify for the tiers as significantly as the Exchange anticipated
they would. These tiers are as follows: (i) Step Up Tier 1, (ii) Step
Up Tier 2, (iii) Step Up Tier 3, (iv) Tape B Step Up Tier, (v) Tape C
Step Up Tier, (vi) Tape C Step Up Tier 2, and (vii) Routable Order
Tier. The Exchange proposes to remove these pricing tiers from the Fee
Schedule as well as any related cross references.
Port Fees
The Exchange currently makes ports available that provide
connectivity to the Exchange's trading systems (i.e., ports for entry
of orders and/or quotes (``order/quote entry ports'')) and charges $200
per port per month for users of 1-5 ports, and $500 per port per month
for users of 6 or more ports.\11\ The Fee Schedule currently provides
that no fees apply to ports in the backup datacenter that are not
utilized during the relevant month. The Fee Schedule further provides
that no fees apply to ports in the backup datacenter that are utilized
when the primary datacenter is unavailable but that the fees would
apply if a port in the backup datacenter is utilized when the primary
datacenter is available. The Exchange also currently makes ports
available for drop copies and charges $500 per port per month.\12\ The
Fee Schedule provides that no fees apply to ports in the backup
datacenter if configured such that it is duplicative of another drop
copy port of the same user.
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\11\ The Fee Schedule provides that users of the Exchange's Risk
Management Gateway service are not charged for order/quote entry
ports if such ports are designated as being used for RMG purposes.
See Securities Exchange Act Release No. 68227 (November 14, 2012),
77 FR 69679 (November 20, 2012) (SR-NYSEArca-2012-123).
\12\ Only one fee per drop copy port applies, even if receiving
drop copies from multiple order/quote entry ports and/or from NYSE
Arca Options.
---------------------------------------------------------------------------
The Exchange proposes to standardize the port fee and charge $550
per port per month, regardless of the number of users and whether the
port is used for order/quote entry or for drop copies. The Exchange
believes standardizing the port fees will permit the Exchange to
offset, in part, its infrastructure costs associated with making such
ports available. The proposed change would also encourage users to
become more efficient with their usage of the ports thereby resulting
in a corresponding increase in the efficiency that the Exchange would
be able to realize with respect to managing its own infrastructure. In
this regard, as users decrease the number of ports that they utilize,
the Exchange would similarly be able to decrease the amount of its
hardware that it is required to support to interface with such ports.
The proposed changes are not otherwise intended to address any
other issues, and the Exchange is not aware of any problems that ETP
Holders would have in complying with the proposed changes.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act,\13\ in general, and furthers the
objectives of sections 6(b)(4) and (5) of the Act,\14\ in particular,
because it provides for the equitable allocation of reasonable dues,
fees, and other charges among its members, issuers and other persons
using its facilities and does not unfairly discriminate between
customers, issuers, brokers or dealers.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
LMM Transaction Credits
The Exchange believes the proposed new incremental tiered-rebates
will provide a further incentive for LMMs to quote and trade a greater
number of securities on the Exchange and will generally allow the
Exchange and LMMs to better compete for order flow and thus enhance
competition. Specifically, the Exchange believes that its proposal,
which among other things, adjusts the CADV and credits for LMMs based
on the CADV of the security in primary listed securities in which they
are registered as the LMM, is reasonable as it is still the highest
credit in securities with a CADV greater than 3,000,000 shares. The
Exchange also believes that the rebate for providing displayed
liquidity is equitable because it would uniformly apply to all LMMs.
LMMs and Affiliated ETP Holders and Market Makers Incremental
Transaction Credits
The proposed fee change is intended to encourage ETP Holders to
promote price discovery and market quality in Less Active ETP
Securities for the benefit of all market participants. The Exchange
believes the proposed credits are reasonable and appropriate in that
they are based on the amount of business transacted on the Exchange.
The Exchange notes that the proposed fee change is similar to market
quality incentive programs already in place on other markets, such as
the Qualified Market Maker incentive on the NASDAQ Stock Market LLC
(``NASDAQ''), which requires a member on that exchange to provide
meaningful and consistent support to market quality and price discovery
by quoting at the National Best Bid and Offer in a large number of
securities. In return, NASDAQ provides such member with an incremental
rebate.\15\ NASDAQ OMX PHLX LLC (``PHLX'') also provides enhanced
credits to Market Makers on certain volumes based on an affiliate's
activity. Specifically, PHLX offers a tiered Customer Rebate Program
that qualifies either a Specialist or Market Maker or its affiliate
under Common Ownership \16\ to an additional rebate provided the
Specialist or Market Maker has reached the Monthly Market Maker
Cap.\17\ The Exchange believes that providing increased credits to ETP
Holders and Market Makers that are affiliated with a LMM that add
liquidity in Tape B securities to the Exchange is reasonable because
the Exchange believes that by providing increased rebates to affiliated
ETP Holders and Market Makers of a LMM, more LMMs will register to
quote and trade in Less Active ETP Securities. The Exchange believes
the proposed incremental credit for adding liquidity is also reasonable
because it will encourage liquidity and competition in Tape B
securities quoted and traded on the Exchange. Moreover, the Exchange
believes that the proposed fee change will incentivize LMMs to register
as an LMM in Less Active ETP Securities and thus, add more liquidity in
these and other Tape B Securities to the benefit of all market
participants.
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\15\ See NASDAQ Rule 7014.
\16\ The term ``Common Ownership'' is defined as meaning
``members or member organizations under 75% common ownership or
control.'' See PHLX fee schedule, at https://www.nasdaqtrader.com/Micro.aspx?id=phlxpricing.
\17\ Id. (Section II, Monthly Market Maker Cap). See also
Securities Exchange Act Release No. 70969 (December 3, 2013), 78 FR
73906 (December 9, 2013) (SR-Phlx-2013-114).
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The Exchange believes the proposed incremental credits are
equitable and not unfairly discriminatory because they are open to all
ETP Holders and Market Makers affiliated with a LMM on an equal basis
and provide discounts that are reasonably related to the value to the
Exchange's market quality associated with higher volumes. The Exchange
further believes that the proposed incremental rebate is not unfairly
discriminatory because it is consistent with the market quality and
[[Page 61533]]
competitiveness benefits associated with the proposed fee program and
because the magnitude of the additional rebate is not unreasonably high
in comparison to the rebate paid with respect to other displayed
liquidity-providing orders. The Exchange does not believe that it is
unfairly discriminatory to offer increased rebates to LMMs as LMMs are
subject to additional requirements and obligations (such as quoting
requirements) that other market participants are not. When PHLX adopted
its proposal to provide enhanced credits, it noted its belief that the
additional rebate it provides was equitable, and not unfairly
discriminatory because, among other things, Specialists and Market
Makers ``have burdensome quoting obligations,'' to the market that
other market participants do not; are subject to higher transaction
costs and incur higher costs related to market making activities; and
``also serve an important role on the Exchange with regard to order
interaction and they provide liquidity in the marketplace.'' \18\ PHLX
further noted that the ``proposed differentiation as between
Specialists and Market Makers as compared to other market participants
recognizes the differing contributions made to the trading environment
on the Exchange by these market participants.'' The Exchange also
believes that allowing ETP Holders to receive enhanced credits based on
activities of their affiliates is reasonable, equitable and not
unfairly discriminatory because the Exchange believes that ETP Holders
affiliated with LMMs may qualify to earn enhanced credits in
recognition of their shared economic interest, which includes the
heightened obligations and costs imposed on LMMs. ETP Holders
unaffiliated with LMMs do not share the same type of economic
interests. Further, ETP Holders not affiliated with a LMM have an
opportunity to establish such affiliation by several means, including
but not limited to, a business combination or the establishment of
their own market making operation, which each unaffiliated firm has the
potential to establish.
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\18\ See Securities Exchange Act Release No. 70969 (December 3,
2013), 78 FR 73906 (December 9, 2013) (SR-Phlx-2013-114).
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LMM Transaction Fees
The Exchange believes that it is reasonable to increase the fee
charged to LMMs for orders in primary listed securities that remove
liquidity from the NYSE Arca Book as this fee is same as the fee
charged by the Exchange to Tier 1, Tier 2 and Tier 3 ETP Holders and
Market Makers that take liquidity in Tape B securities.\19\ In
addition, the proposed fee change is equitable and not unfairly
discriminatory because it would apply uniformly to all similarly
situated LMMs.
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\19\ See NYSE Arca Marketplace: Trade Related Fees and Credits,
Tier 1, Tier 2 and Tier 3, Tape B Securities at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf.
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Tier 1
The Exchange believes that the amendments to Tier 1 is reasonable,
equitable and not unfairly discriminatory because the proposed
amendment would apply uniformly to all similarly situated ETP Holders
and Market Makers that send orders to the Exchange. The Exchange
believes providing increased credits and charging lower fees for orders
in Tape A and Tape C Securities will incentivize ETP Holders to
increase the orders sent to the Exchange and therefore provide
liquidity that supports the quality of price discovery and promotes
market transparency. The Exchange believes that by recalibrating the
fees for taking liquidity and credits for providing liquidity will
attract additional order flow and liquidity to the Exchange, thereby
contributing to price discovery on the Exchange and benefiting
investors generally. The Exchange also believes it is reasonable to
remove one of the two current requirements for ETP Holders and Market
Makers to qualify for Tier 1 fees and credits. The proposed change will
simplify the tier by removing a multi-prong requirement. The Exchange
believes that the proposed change is equitable and not unfairly
discriminatory because the requirement would be eliminated entirely--no
ETP Holders would remain able to qualify for the eliminated prong.
Cross Asset Tiers
The Exchange believes that the amendments to the Cross Asset Tier
is reasonable, equitable and not unfairly discriminatory because the
proposed amendment would continue to directly relate to the activity of
an ETP Holder and the activity of an affiliated OTP Holder or OTP Firm
on NYSE Arca Options, thereby encouraging increased trading activity on
both the NYSE Arca equity and option markets. In this regard, the
proposal is designed to bring additional posted order flow to NYSE Arca
Options, so as to provide additional opportunities for all OTP Holders
and OTP Firms to trade on NYSE Arca Options. Furthermore, similar to
the revised Cross Asset Tier, the NYSE Arca Options Fee Schedule
includes a credit for OTP Holders and OTP Firms that is based on both
equity and options volume. Additionally, ETP Holders that are not
affiliated with an NYSE Arca Options OTP Holder or OTP Firm are still
eligible for fees and credits by means other than the Cross Asset Tier.
NASDAQ similarly charges certain fees based on both equity and options
volume.\20\ Further, the Exchange believes it is reasonable to remove
one of the two current requirements for ETP Holders and Market Makers
to qualify for Cross Asset Tier fees and credits as its removal would
simplify the pricing tier. The Exchange believes that the proposed
change is equitable and not unfairly discriminatory because the
requirement would be eliminated entirely--no ETP Holders would remain
able to qualify for the eliminated prong.
---------------------------------------------------------------------------
\20\ See NASDAQ Rule 7018.
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The Exchange believes the proposed Cross Asset Tier 2 is reasonable
and equitably allocated because it would apply to ETP Holders and
Market Makers that provide liquidity to the Exchange and is designed to
incentivize these market participants to increase the orders sent
directly to the Exchange and therefore provide liquidity that supports
the quality of price discovery and promotes market transparency. The
Exchange believes the new Cross Asset Tier 2 is equitable because it
would be available to all similarly situated ETP Holders and Market
Makers on an equal basis and would provide credits that are reasonably
related to the value of an exchange's market quality associated with
higher volumes. The Exchange further believes that the proposed Cross
Asset Tier 2 is reasonable, equitable and not unfairly discriminatory
because the Exchange has previously implemented cross asset tiers,
including the current Cross Asset Tier.
Tape B Tiers
The Exchange believes the proposed Tape B Tiers are reasonable and
equitably allocated because they apply to ETP Holders and Market Makers
that provide liquidity to the Exchange and are designed to incentivize
these market participants to increase the orders sent directly to the
Exchange and therefore provide liquidity that supports the quality of
price discovery and promotes market transparency. The Exchange believes
the new Tape B Tiers are equitable because they are open to all
similarly situated ETP Holders and Market Makers on an equal basis and
provide credits that are reasonably related to the value of an
exchange's market quality associated with higher volumes. The Exchange
further believes
[[Page 61534]]
that the proposed Tape B Tier 1 and Tape B Tier 2 are reasonable,
equitable and not unfairly discriminatory because the Exchange has
previously implemented multiple step up tiers, including Step Up Tier
1, Step Up Tier 2 and Step Up Tier 3.
Elimination of Obsolete Pricing
The Exchange believes that it is reasonable to eliminate the
obsolete pricing tiers from the Fee Schedule because ETP Holders have
not increased their activity to qualify for these tiers as
significantly as the Exchange anticipated they would. The Exchange
believes that it is equitable and not unfairly discriminatory to
eliminate these tiers because they would be eliminated entirely--no ETP
Holders would remain able to qualify for the eliminated tiers. This
aspect of the proposed change would therefore result in a more
streamlined Fee Schedule, including with respect to removal of related
cross references.
Port Fees
The Exchange believes that the proposal to amend the port fees
constitutes an equitable allocation of fees because all similarly
situated ETP Holders and other market participants would be charged the
same amount. The Exchange believes that the proposed change to the
monthly rates is reasonable because the proposed port fees are expected
to permit the Exchange to offset, in part, its infrastructure costs
associated with making such ports available, including costs based on
gateway software and hardware enhancements and resources dedicated to
gateway development, quality assurance, and support. In this regard,
the Exchange believes that the proposed fees are competitive with those
charged by other exchanges.\21\ The proposed change is also reasonable
because the proposed per port rates would encourage users to become
more efficient with, and reduce the number of ports used, thereby
resulting in a corresponding increase in the efficiency that the
Exchange would be able to realize with respect to managing its own
infrastructure.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition. For these reasons, the Exchange
believes that the proposal is consistent with the Act.
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\21\ For example, the charge on the NASDAQ for a FIX Trading
Port is $550 per port per month. See NASDAQ Rule 7015. A separate
charge for Pre-Trade Risk Management ports also is applicable, which
ranges from $400 to $600 and is capped at $25,000 per firm per
month. See NASDAQ Rule 7016.
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B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with section 6(b)(8) of the Act,\22\ 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, the Exchange believes that the proposed
change would encourage increased participation by LMMs in the trading
of ETP securities generally and Less Active ETP Securities, in
particular. The proposed change would also encourage the submission of
additional liquidity to a public exchange, thereby promoting price
discovery and transparency and enhancing order execution opportunities
for ETP Holders and Market Makers affiliated with LMMs.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
Further, the proposal to amend the requirements to qualify for Tier
1 and the Cross Asset Tier will not place an undue burden on
competition because both pricing tiers would remain available for all
ETP Holders to satisfy, except, with respect to the Cross Asset Tier
which would not be available for those ETP Holders that are not
affiliated with an NYSE Arca Options OTP Holder or OTP Firm. ETP
Holders that are not affiliated with an NYSE Arca Options OTP Holder or
OTP Firm are eligible for fees and credits by others means than the
Cross Asset Tier. The Exchange believes that the proposed change to
adopt the Tape B Tiers will encourage competition by attracting
additional liquidity to the Exchange, which will make the Exchange a
more competitive venue for, among other things, order execution and
price discovery. An ETP Holder could qualify for the proposed new Tape
B Tiers by providing sufficient adding liquidity to satisfy the
applicable proposed volume requirements. The Exchange also notes that
the proposed Tape B Tiers would be similar to existing pricing tiers
and applicable credits on the Exchange. Also, the Exchange does not
believe that the proposed change will impair the ability of ETP Holders
or competing order execution venues to maintain their competitive
standing in the financial markets. In this regard, the Exchange notes
that existing pricing tiers of other exchanges similarly provide for
credits for market participants that provide certain levels of
liquidity on those exchanges.\23\ In general, ETP Holders impacted by
the proposed change may readily adjust their trading behavior to
maintain or increase their credits or decrease their fees in a
favorable manner, and will therefore not be disadvantaged in their
ability to compete.
---------------------------------------------------------------------------
\23\ See, e.g., the ``Investor Support Program'' under NASDAQ
Rule 7014.
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The removal of obsolete pricing tiers is not competitive in nature,
but would result in a more streamlined Fee Schedule.
The Exchange believes the proposed change to the port fees sets the
fees that are competitive with those charges by other exchanges,\24\
and would encourage users to become more efficient with, and reduce the
number of ports used, thereby resulting in a corresponding increase in
the efficiency of the ports utilized by users.
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\24\ See supra note 21.
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The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues. In
such an environment, the Exchange must continually review, and consider
adjusting, its fees and credits to remain competitive with other
exchanges. For the reasons described above, the Exchange believes that
this proposal promotes a competitive environment.
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) \25\ of the Act and subparagraph (f)(2) of Rule
19b-4 \26\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\25\ 15 U.S.C. 78s(b)(3)(A).
\26\ 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) \27\ of the Act to determine whether the proposed
rule
[[Page 61535]]
change should be approved or disapproved.
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\27\ 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 rule-comments@sec.gov. Please include
File Number SR-NYSEARCA-2015-87 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEARCA-2015-87. 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 Web site (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 Web site 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 will also be available
for inspection and copying at the NYSE's principal office and on its
Internet Web site at www.nyse.com. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NYSEARCA-2015-87 and should be submitted on or before
November 3, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-25863 Filed 10-9-15; 8:45 am]
BILLING CODE 8011-01-P
