Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services, 14775-14778 [2017-05605]

Download as PDF asabaliauskas on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 82, No. 54 / Wednesday, March 22, 2017 / Notices restrictions of the Securities Act of 1933 (15 U.S.C. 77) (the ‘‘Securities Act’’). In recognition of the particular problems faced by funds that continually offer securities and wish to advertise their securities, the Commission has previously adopted advertising safe harbor rules. The most important of these is rule 482 (17 CFR 230.482) under the Securities Act, which, under certain circumstances, permits funds to advertise investment performance data, as well as other information. Rule 482 advertisements are deemed to be ‘‘prospectuses’’ under Section 10(b) of the Securities Act.2 Rule 482 contains certain requirements regarding the disclosure that funds are required to provide in qualifying advertisements. These requirements are intended to encourage the provision to investors of information that is balanced and informative, particularly in the area of investment performance. For example, a fund is required to include disclosure advising investors to consider the fund’s investment objectives, risks, charges and expenses, and other information described in the fund’s prospectus, and highlighting the availability of the fund’s prospectus and, if applicable, its summary prospectus. In addition, rule 482 advertisements that include performance data of open-end funds or insurance company separate accounts offering variable annuity contracts are required to include certain standardized performance information, information about any sales loads or other nonrecurring fees, and a legend warning that past performance does not guarantee future results. Such funds including performance information in rule 482 advertisements are also required to make available to investors month-end performance figures via Web site disclosure or by a toll-free telephone number, and to disclose the availability of the month-end performance data in the advertisement. The rule also sets forth requirements regarding the prominence of certain disclosures, requirements regarding advertisements that make tax representations, requirements regarding advertisements used prior to the effectiveness of the fund’s registration statement, requirements regarding the timeliness of performance data, and certain required disclosures by money market funds. Rule 482 advertisements must be filed with the Commission or, in the alternative, with the Financial Industry 2 15 U.S.C. 77j(b). VerDate Sep<11>2014 18:14 Mar 21, 2017 Jkt 241001 Regulatory Authority (‘‘FINRA’’).3 This information collection differs from many other federal information collections that are primarily for the use and benefit of the collecting agency. Rule 482 contains requirements that are intended to encourage the provision to investors of information that is balanced and informative, particularly in the area of investment performance. The Commission is concerned that in the absence of such provisions fund investors may be misled by deceptive rule 482 advertisements and may rely on less-than-adequate information when determining in which funds they should invest money. As a result, the Commission believes it is beneficial for funds to provide investors with balanced information in fund advertisements in order to allow investors to make better-informed decisions. The Commission estimates that 53,907 4 responses to rule 482 are filed annually by 3,278 investment companies offering approximately 15,494 portfolios, or approximately 3.5 responses per portfolio annually.5 The burden associated with rule 482 is presently estimated to be 5.16 hours per response. The annual hourly burden is therefore approximately 278,161 hours.6 The estimate of average burden hours is made solely for the purposes of the Paperwork Reduction Act and is not derived from a comprehensive or even a representative survey or study of the costs of Commission rules and forms. The provision of information under rule 482 is necessary to obtain the benefits of the safe harbor offered by the rule. The information provided under rule 482 will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency’s estimate 3 See rule 24b–3 under the Investment Company Act (17 CFR 270.24b–3), which provides that any sales material, including rule 482 advertisements, shall be deemed filed with the Commission for purposes of Section 24(b) of the Investment Company Act upon filing with FINRA. 4 This estimated number of responses to rule 482 is composed of 53,746 responses filed with FINRA and 161 responses filed with the Commission in 2016. 5 53,907 responses ÷ 15,494 portfolios = 3.5 responses per portfolio. 6 53,907 responses × 5.16 hours per response = 278,161 hours. PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 14775 of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Please direct your written comments to Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, C/O Remi Pavlik-Simon, 100 F Street NE., Washington, DC 20549; or send an email to: PRA_Mailbox@sec.gov. Dated: March 16, 2017. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–05712 Filed 3–21–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80258; File No. SR– NYSEArca–2017–28] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services March 16, 2017. 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 March 13, 2017, 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 and II 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. 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 proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, and at 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 E:\FR\FM\22MRN1.SGM 22MRN1 14776 Federal Register / Vol. 82, No. 54 / Wednesday, March 22, 2017 / Notices the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change asabaliauskas on DSK3SPTVN1PROD with NOTICES 1. Purpose The Exchange proposes to amend the Fee Schedule to adopt the Exchange Traded Fund Liquidity Provider Program pursuant to which the Exchange will adopt an incremental per share credit payable to ETP Holders and Market Makers (collectively, the ‘‘ELPs’’) that provide displayed liquidity to the NYSE Arca Book in NYSE Arcalisted Tape B Securities (‘‘ELP Program’’). As proposed, the Exchange would provide an incremental credit of $0.0001 per share for providing displayed liquidity that result in an execution to ELPs that meet prescribed quoting standards in NYSE-Arca listed Tape B securities that have a consolidated average daily volume (‘‘CADV’’) in the previous month of less than 250,000 shares (‘‘ELP Securities’’).4 Under the proposal, an ELP must quote at the National Best Bid or Offer (‘‘NBBO’’) for at least an average of 15% of the time for the billing month in at least 50 ELP Securities for each billing month (‘‘Quoting Standard’’).5 If the ELP meets the Quoting Standard, the Exchange would provide the ELP with 4 NYSE–Arca listed Tape B securities that did not trade in prior month would be assigned a CADV of 0 and would be included as an ELP Security in the current billing month. 5 An ELP would meet the Quoting Standard if the average of the percentage of time during regular trading hours during which the ELP maintains a quote at each of the NBB and NBO equals at least 15%. As an example, where the ELP maintains a quote for any number of shares at the NBB for 20% of the time during regular trading hours in at least 50 ELP Securities and maintains a quote for any number of shares at the NBO for 10% of the time during regular trading hours in the same ELP Securities, the ELP would be deemed to be at the NBBO for the required time period of 15% ((20% + 10%)/2). VerDate Sep<11>2014 18:14 Mar 21, 2017 Jkt 241001 the stated incremental credit in their Tape B executions that add liquidity. ELP Securities in which the ELP is registered as a Lead Market Maker (‘‘LMM’’) 6 are excluded from the minimum 50 ELP Securities that an ELP must quote in to qualify for the proposed credit. ELPs are not required to quote in all ELP Securities. The proposed incremental credit provided under the ELP Program is in addition to the ETP Holder and Market Maker’s Tiered or Basic Rate credit(s); provided, however, that such combined credit may not exceed $0.0030 per share. For example, an ELP that qualifies for the ELP credit in a billing month and also qualifies for the Tape B Tier 2 credit of $0.0028 per share will receive a combined credit of $0.0029 for executions that add liquidity to the Book. However, an ELP that qualifies for the same ELP credit in the billing month and also qualifies for the Tape B Tier 1 credit of $0.0030 per share will not receive the ELP credit in that billing month as such combined credit would exceed $0.0030 per share. An ELP that qualifies for the ELP Program credit in a billing month that is also an LMM would not receive the ELP Program credit on the ELP’s LMM adding liquidity as that liquidity receives credits of $0.0033 per share, $0.0040 per share, and $0.0045 per share. However, that ELP may receive the ELP Program credit on non-LMM adding liquidity so long as such combined credit does not exceed $0.0030 per share. In addition to the percentage of time that an ELP must provide a quote at the NBBO in ELP Securities, the Exchange also proposes to adopt an additional requirement that an ELP displays a minimum number of shares of adding volume at or near the NBBO, except that this additional requirement would be applicable beginning May 1, 2017. As proposed, beginning May 1, 2017, in order for the ELP to qualify for the credit proposed herein, the ELP must, in at least 50 ELP Securities: • Quote at the NBBO for at least an average of 15% of the time for the billing month, and, • Display at least 2,500 shares that are priced no more than 2% away from the NBBO at least 90% of the time for the billing month (‘‘Quoting and Depth Standard’’). The Exchange would calculate each participating ELP’s Quoting Standard and Quoting and Depth Standard, as applicable, beginning each month on a 6 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. PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 daily basis, up to and including the last trading day of a calendar month, to determine at the end of each month whether the ELP is meeting the requirements of the ELP Program. As proposed, ELPs may join the ELP Program on a rolling basis on any day of the month and the ELP’s obligations would begin on the first day that the ELP is enrolled in the ELP Program. Once an ELP is enrolled in the ELP Program, the ELP is enrolled in all ELP Securities and would be required to meet the Quoting Standard (for March 2017 and April 2017) and the Quoting and Depth Standard (for May 2017 and each month thereafter) in at least 50 ELP Securities for the billing month to be eligible for the proposed incremental credit. If an ELP is enrolled for the ELP Program after the first trading day of the month, the ELP’s requirement to qualify for the proposed incremental credit would be measured from the day the ELP is enrolled and if the ELP meets the requirements of the ELP Program, the proposed credit would be applied to those ELP executions that add displayed liquidity from the day the ELP is enrolled. As an example, suppose that an ELP enrolls in the ELP Program on March 15, 2017. The ELP would be required to meet the requirements of the ELP Program for the billing month, from March 15, 2017 through the end of the month, March 31, 2017, and if the ELP quotes an average of at least 15% in at least 50 ELP Securities for that period from March 15, 2017 through March 31, 2017, the ELP will receive the proposed additional ELP credit, subject to the combined credit limit of $0.0030 per share. Under the proposal, each participating ELP must provide a unique Equity Trading Permit ID (‘‘ETPID’’) that the ELP would use for all ELP Securities. Since ETP Holders are often assigned multiple ETPIDs on NYSE Arca, an ELP would be required to use a unique ETPID for all ELP Securities. As proposed, the ELP Program is a voluntary program. An ETP Holder or Market Maker that wishes to participate in the ELP Program would be required to complete an enrollment form and submit it to the Exchange via electronic mail to participate as an ELP. With this proposed rule change, the Exchange hopes to provide incentives for increased trading in ELP Securities for market participants. The proposed rule change is intended to provide incentives for quoting and to add competition to the existing group of liquidity providers in ELP Securities. The Exchange believes the proposed rule change will strengthen market quality in ELP Securities. By E:\FR\FM\22MRN1.SGM 22MRN1 Federal Register / Vol. 82, No. 54 / Wednesday, March 22, 2017 / Notices asabaliauskas on DSK3SPTVN1PROD with NOTICES establishing the ELP Program, the Exchange is rewarding liquidity providers who improve displayed liquidity and the size of such liquidity in the market. The Exchange believes that the ELP Program will encourage the additional utilization of, and interaction with, the Exchange and provide customers with the premier venue for price discovery, liquidity, competitive quotes and price improvement. 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,7 in general, and furthers the objectives of Sections 6(b)(4) of the Act,8 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. The Exchange further believes that the proposed rule change is also consistent with Section 6(b)(5) of the Act,9 in that is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange believes that the proposed rule change would encourage increased participation by ELPs in the trading of ETP Securities. The Exchange also believes that the proposed rule change would encourage the submission of additional liquidity to a public exchange, thereby promoting price discovery and transparency and enhancing order execution opportunities for all market participants on the Exchange. The Exchange believes the proposed ELP Program will provide an incentive for ELPs to quote and trade a greater number of securities on the Exchange and will generally allow the Exchange and ELPs to better compete for order flow and thus enhance competition. Further, the ELP program is intended to provide ELPs with an incentive to increase displayed quoting on NYSE Arca and thereby provide liquidity and better quoting that supports the quality of price discovery and promotes market 7 15 U.S.C. 78f(b). U.S.C. 78f(b)(4). 9 15 U.S.C. 78f(b)(5). 8 15 VerDate Sep<11>2014 18:14 Mar 21, 2017 Jkt 241001 transparency. The Exchange also believes that the proposed incremental credit for ELPs that meet the requirements of the ELP Program is equitable and not unfairly discriminatory because it would apply uniformly to all ELPs. The Exchange believes allocating pricing benefits to ELPs that commit to meet the requirements of the ELP Program will provide a better trading environment for investors in ELP Securities, and encourage greater competition between listing venues for ELP Securities. The Exchange also believes that the proposal will promote tighter spreads and deeper liquidity for all market participants by requiring ELPs to meet the requirements of the ELP Program. As proposed, the ELP Program is designed to enhance the Exchange’s competitiveness as a listing venue and to strengthen its market quality for NYSE Arca-listed securities. The Exchange believes that the proposed change would increase competition with its competitors by incenting ETP Holders to volunteer for the ELP Program, which will enhance the quality of quoting in NYSE Arca-listed securities. The Exchange believes that adopting only the Quoting Standard for March 2017 and April 2017 is reasonable because it may allow a greater number of ELPs to qualify for the proposed credit while also providing ELPs the opportunity to gradually increase their activity in order to qualify for the proposed credit. The Exchange believes that adopting the Quoting Standard for March 2017 and April 2017 is also equitable and not unfairly discriminatory because the Quoting Standard would apply uniformly to all ELPs that enroll in the ELP Program. The Exchange believes that adopting the Quoting and Depth Standard beginning May 2017 is also reasonable because the additional requirement would ensure that liquidity displayed on the Exchange by ELPs is available for a greater period of time during the trading day to provide market participants an adequate opportunity to transact against such liquidity. The Exchange believes that adopting the Quoting and Depth Standard beginning May 2017 is also equitable and not unfairly discriminatory because the additional criteria would apply uniformly to all ELPs beginning May 2017. 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 PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 14777 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,10 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. In this regard and as indicated above, the proposed rule change would encourage the submission of additional liquidity to a public exchange, thereby promoting price discovery and transparency and enhancing order execution opportunities for market participants on the Exchange. The Exchange believes that this could promote competition between the Exchange and other execution venues, including those that currently offer comparable transaction pricing, by encouraging additional orders to be sent to the Exchange for execution. 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. Further, the Exchange believes that the proposed changes as a whole will contribute to tighter spreads and additional liquidity on the Exchange in NYSE Arca-listed securities, which will, in turn, benefit competition due to the improvements to the overall market quality of the Exchange. 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 Because the foregoing 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, it has become effective pursuant to Section 10 15 E:\FR\FM\22MRN1.SGM U.S.C. 78f(b)(8). 22MRN1 14778 Federal Register / Vol. 82, No. 54 / Wednesday, March 22, 2017 / Notices 19(b)(3)(A)(iii) of the Act 11 and subparagraph (f)(6) of Rule 19b–4 thereunder.12 A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative prior to 30 days after the date of filing.13 Rule 19b–4(f)(6)(iii), however, permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest.14 The Exchange has requested that the Commission waive the 30-day operative delay. The Exchange asserts that the proposed rule change does not present any new, unique, or substantive issues and that the proposal is substantially similar to a program in place at Bats BZX Exchange, Inc.15 Based on the foregoing, the Commission believes that it is consistent with the protection of investors and the public interest to waive the 30-day operative delay so that the proposal may take effect upon filing.16 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. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–2017–28 on the subject line. 11 15 U.S.C. 78s(b)(3)(a)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file 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. The Commission has waived the prefiling requirement. 13 17 CFR 240.19b–4(f)(6)(iii). 14 Id. 15 See Securities Exchange Act Release No. 77846 (May 17, 2016), 81 FR 32356 (May 23, 2016) (SR– BatsBZX–2016–018). 16 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). asabaliauskas on DSK3SPTVN1PROD with NOTICES 12 17 VerDate Sep<11>2014 18:14 Mar 21, 2017 Jkt 241001 Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2017–28. 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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for 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 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– NYSEArca–2017–28, and should be submitted on or before April 12, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–05605 Filed 3–21–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80265; File No. SR– NYSEArca–2017–05] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Designation of a Longer Period for Commission Action on a Proposed Rule Change Relating to the Listing and Trading of Shares of the Direxion Daily Crude Oil Bull 3x Shares and Direxion Daily Crude Oil Bear 3x Shares Under NYSE Arca Equities Rule 8.200 March 16, 2017. On January 23, 2017, NYSE Arca, Inc. (‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list and trade shares of the Direxion Daily Crude Oil Bull 3x Shares and Direxion Daily Crude Oil Bear 3x Shares under NYSE Arca Equities Rule 8.200. The proposed rule change was published for comment in the Federal Register on February 7, 2017.3 The Commission received no comments on the proposed rule change. Section 19(b)(2) of the Act 4 provides that, within 45 days of the publication of notice of the filing of a proposed rule change, or within such longer period up to 90 days as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or as to which the self-regulatory organization consents, the Commission shall either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved. The Commission is extending this 45-day time period. The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,5 designates May 8, 2017 as the date by which the Commission should either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change (File No. SR–NYSEArca–2017–05). 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 79916 (February 1, 2017), 82 FR 9608. 4 15 U.S.C. 78s(b)(2). 5 15 U.S.C. 78s(b)(2). 2 17 17 17 PO 00000 CFR 200.30–3(a)(12). Frm 00106 Fmt 4703 Sfmt 4703 E:\FR\FM\22MRN1.SGM 22MRN1

Agencies

[Federal Register Volume 82, Number 54 (Wednesday, March 22, 2017)]
[Notices]
[Pages 14775-14778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-05605]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80258; File No. SR-NYSEArca-2017-28]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the NYSE 
Arca Equities Schedule of Fees and Charges for Exchange Services

March 16, 2017.
    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 March 13, 2017, 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 and II 
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 proposed 
rule change is available on the Exchange's Web site at www.nyse.com, at 
the principal office of the Exchange, and at

[[Page 14776]]

the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the Fee Schedule to adopt the 
Exchange Traded Fund Liquidity Provider Program pursuant to which the 
Exchange will adopt an incremental per share credit payable to ETP 
Holders and Market Makers (collectively, the ``ELPs'') that provide 
displayed liquidity to the NYSE Arca Book in NYSE Arca-listed Tape B 
Securities (``ELP Program'').
    As proposed, the Exchange would provide an incremental credit of 
$0.0001 per share for providing displayed liquidity that result in an 
execution to ELPs that meet prescribed quoting standards in NYSE-Arca 
listed Tape B securities that have a consolidated average daily volume 
(``CADV'') in the previous month of less than 250,000 shares (``ELP 
Securities'').\4\ Under the proposal, an ELP must quote at the National 
Best Bid or Offer (``NBBO'') for at least an average of 15% of the time 
for the billing month in at least 50 ELP Securities for each billing 
month (``Quoting Standard'').\5\ If the ELP meets the Quoting Standard, 
the Exchange would provide the ELP with the stated incremental credit 
in their Tape B executions that add liquidity. ELP Securities in which 
the ELP is registered as a Lead Market Maker (``LMM'') \6\ are excluded 
from the minimum 50 ELP Securities that an ELP must quote in to qualify 
for the proposed credit. ELPs are not required to quote in all ELP 
Securities.
---------------------------------------------------------------------------

    \4\ NYSE-Arca listed Tape B securities that did not trade in 
prior month would be assigned a CADV of 0 and would be included as 
an ELP Security in the current billing month.
    \5\ An ELP would meet the Quoting Standard if the average of the 
percentage of time during regular trading hours during which the ELP 
maintains a quote at each of the NBB and NBO equals at least 15%. As 
an example, where the ELP maintains a quote for any number of shares 
at the NBB for 20% of the time during regular trading hours in at 
least 50 ELP Securities and maintains a quote for any number of 
shares at the NBO for 10% of the time during regular trading hours 
in the same ELP Securities, the ELP would be deemed to be at the 
NBBO for the required time period of 15% ((20% + 10%)/2).
    \6\ 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.
---------------------------------------------------------------------------

    The proposed incremental credit provided under the ELP Program is 
in addition to the ETP Holder and Market Maker's Tiered or Basic Rate 
credit(s); provided, however, that such combined credit may not exceed 
$0.0030 per share. For example, an ELP that qualifies for the ELP 
credit in a billing month and also qualifies for the Tape B Tier 2 
credit of $0.0028 per share will receive a combined credit of $0.0029 
for executions that add liquidity to the Book. However, an ELP that 
qualifies for the same ELP credit in the billing month and also 
qualifies for the Tape B Tier 1 credit of $0.0030 per share will not 
receive the ELP credit in that billing month as such combined credit 
would exceed $0.0030 per share. An ELP that qualifies for the ELP 
Program credit in a billing month that is also an LMM would not receive 
the ELP Program credit on the ELP's LMM adding liquidity as that 
liquidity receives credits of $0.0033 per share, $0.0040 per share, and 
$0.0045 per share. However, that ELP may receive the ELP Program credit 
on non-LMM adding liquidity so long as such combined credit does not 
exceed $0.0030 per share.
    In addition to the percentage of time that an ELP must provide a 
quote at the NBBO in ELP Securities, the Exchange also proposes to 
adopt an additional requirement that an ELP displays a minimum number 
of shares of adding volume at or near the NBBO, except that this 
additional requirement would be applicable beginning May 1, 2017. As 
proposed, beginning May 1, 2017, in order for the ELP to qualify for 
the credit proposed herein, the ELP must, in at least 50 ELP 
Securities:
     Quote at the NBBO for at least an average of 15% of the 
time for the billing month, and,
     Display at least 2,500 shares that are priced no more than 
2% away from the NBBO at least 90% of the time for the billing month 
(``Quoting and Depth Standard'').
    The Exchange would calculate each participating ELP's Quoting 
Standard and Quoting and Depth Standard, as applicable, beginning each 
month on a daily basis, up to and including the last trading day of a 
calendar month, to determine at the end of each month whether the ELP 
is meeting the requirements of the ELP Program.
    As proposed, ELPs may join the ELP Program on a rolling basis on 
any day of the month and the ELP's obligations would begin on the first 
day that the ELP is enrolled in the ELP Program. Once an ELP is 
enrolled in the ELP Program, the ELP is enrolled in all ELP Securities 
and would be required to meet the Quoting Standard (for March 2017 and 
April 2017) and the Quoting and Depth Standard (for May 2017 and each 
month thereafter) in at least 50 ELP Securities for the billing month 
to be eligible for the proposed incremental credit. If an ELP is 
enrolled for the ELP Program after the first trading day of the month, 
the ELP's requirement to qualify for the proposed incremental credit 
would be measured from the day the ELP is enrolled and if the ELP meets 
the requirements of the ELP Program, the proposed credit would be 
applied to those ELP executions that add displayed liquidity from the 
day the ELP is enrolled. As an example, suppose that an ELP enrolls in 
the ELP Program on March 15, 2017. The ELP would be required to meet 
the requirements of the ELP Program for the billing month, from March 
15, 2017 through the end of the month, March 31, 2017, and if the ELP 
quotes an average of at least 15% in at least 50 ELP Securities for 
that period from March 15, 2017 through March 31, 2017, the ELP will 
receive the proposed additional ELP credit, subject to the combined 
credit limit of $0.0030 per share.
    Under the proposal, each participating ELP must provide a unique 
Equity Trading Permit ID (``ETPID'') that the ELP would use for all ELP 
Securities. Since ETP Holders are often assigned multiple ETPIDs on 
NYSE Arca, an ELP would be required to use a unique ETPID for all ELP 
Securities.
    As proposed, the ELP Program is a voluntary program. An ETP Holder 
or Market Maker that wishes to participate in the ELP Program would be 
required to complete an enrollment form and submit it to the Exchange 
via electronic mail to participate as an ELP.
    With this proposed rule change, the Exchange hopes to provide 
incentives for increased trading in ELP Securities for market 
participants. The proposed rule change is intended to provide 
incentives for quoting and to add competition to the existing group of 
liquidity providers in ELP Securities. The Exchange believes the 
proposed rule change will strengthen market quality in ELP Securities. 
By

[[Page 14777]]

establishing the ELP Program, the Exchange is rewarding liquidity 
providers who improve displayed liquidity and the size of such 
liquidity in the market. The Exchange believes that the ELP Program 
will encourage the additional utilization of, and interaction with, the 
Exchange and provide customers with the premier venue for price 
discovery, liquidity, competitive quotes and price improvement.
    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,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) of the Act,\8\ 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. The Exchange further believes that the 
proposed rule change is also consistent with Section 6(b)(5) of the 
Act,\9\ in that is designed to promote just and equitable principles of 
trade, to remove impediments to and perfect the mechanism of a free and 
open market and a national market system, and, in general, to protect 
investors and the public interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change would encourage 
increased participation by ELPs in the trading of ETP Securities. The 
Exchange also believes that the proposed rule change would encourage 
the submission of additional liquidity to a public exchange, thereby 
promoting price discovery and transparency and enhancing order 
execution opportunities for all market participants on the Exchange.
    The Exchange believes the proposed ELP Program will provide an 
incentive for ELPs to quote and trade a greater number of securities on 
the Exchange and will generally allow the Exchange and ELPs to better 
compete for order flow and thus enhance competition. Further, the ELP 
program is intended to provide ELPs with an incentive to increase 
displayed quoting on NYSE Arca and thereby provide liquidity and better 
quoting that supports the quality of price discovery and promotes 
market transparency. The Exchange also believes that the proposed 
incremental credit for ELPs that meet the requirements of the ELP 
Program is equitable and not unfairly discriminatory because it would 
apply uniformly to all ELPs.
    The Exchange believes allocating pricing benefits to ELPs that 
commit to meet the requirements of the ELP Program will provide a 
better trading environment for investors in ELP Securities, and 
encourage greater competition between listing venues for ELP 
Securities. The Exchange also believes that the proposal will promote 
tighter spreads and deeper liquidity for all market participants by 
requiring ELPs to meet the requirements of the ELP Program.
    As proposed, the ELP Program is designed to enhance the Exchange's 
competitiveness as a listing venue and to strengthen its market quality 
for NYSE Arca-listed securities. The Exchange believes that the 
proposed change would increase competition with its competitors by 
incenting ETP Holders to volunteer for the ELP Program, which will 
enhance the quality of quoting in NYSE Arca-listed securities.
    The Exchange believes that adopting only the Quoting Standard for 
March 2017 and April 2017 is reasonable because it may allow a greater 
number of ELPs to qualify for the proposed credit while also providing 
ELPs the opportunity to gradually increase their activity in order to 
qualify for the proposed credit. The Exchange believes that adopting 
the Quoting Standard for March 2017 and April 2017 is also equitable 
and not unfairly discriminatory because the Quoting Standard would 
apply uniformly to all ELPs that enroll in the ELP Program.
    The Exchange believes that adopting the Quoting and Depth Standard 
beginning May 2017 is also reasonable because the additional 
requirement would ensure that liquidity displayed on the Exchange by 
ELPs is available for a greater period of time during the trading day 
to provide market participants an adequate opportunity to transact 
against such liquidity. The Exchange believes that adopting the Quoting 
and Depth Standard beginning May 2017 is also equitable and not 
unfairly discriminatory because the additional criteria would apply 
uniformly to all ELPs beginning May 2017.
    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.

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

    In accordance with Section 6(b)(8) of the Act,\10\ 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. In this regard and as indicated above, the 
proposed rule change would encourage the submission of additional 
liquidity to a public exchange, thereby promoting price discovery and 
transparency and enhancing order execution opportunities for market 
participants on the Exchange. The Exchange believes that this could 
promote competition between the Exchange and other execution venues, 
including those that currently offer comparable transaction pricing, by 
encouraging additional orders to be sent to the Exchange for execution.
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    \10\ 15 U.S.C. 78f(b)(8).
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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. Further, the Exchange believes that the proposed changes as 
a whole will contribute to tighter spreads and additional liquidity on 
the Exchange in NYSE Arca-listed securities, which will, in turn, 
benefit competition due to the improvements to the overall market 
quality of the Exchange. 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

    Because the foregoing 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, it has become 
effective pursuant to Section

[[Page 14778]]

19(b)(3)(A)(iii) of the Act \11\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(a)(iii).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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. 
The Commission has waived the pre-filing requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of filing.\13\ 
Rule 19b-4(f)(6)(iii), however, permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest.\14\
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    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ Id.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Exchange asserts that the proposed rule change 
does not present any new, unique, or substantive issues and that the 
proposal is substantially similar to a program in place at Bats BZX 
Exchange, Inc.\15\ Based on the foregoing, the Commission believes that 
it is consistent with the protection of investors and the public 
interest to waive the 30-day operative delay so that the proposal may 
take effect upon filing.\16\ 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.
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    \15\ See Securities Exchange Act Release No. 77846 (May 17, 
2016), 81 FR 32356 (May 23, 2016) (SR-BatsBZX-2016-018).
    \16\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2017-28 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2017-28. 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 (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for 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 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-NYSEArca-2017-28, and should 
be submitted on or before April 12, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Eduardo A. Aleman,
Assistant Secretary.
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    \17\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2017-05605 Filed 3-21-17; 8:45 am]
 BILLING CODE 8011-01-P