Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List To Permit Affiliated Member Organizations That Are Supplemental Liquidity Providers, 46845-46848 [2017-21535]

Download as PDF asabaliauskas on DSKBBXCHB2PROD with NOTICES Federal Register / Vol. 82, No. 193 / Friday, October 6, 2017 / Notices responsible. Rule 17Ad–22(b)(3) 13 requires, inter alia, that a registered clearing agency acting as a central counterparty for security-based swaps shall establish, implement, maintain, and enforce written policies and procedures reasonably designed to maintain sufficient financial resources to withstand, at a minimum, a default by the two participant families to which it has the largest exposures in extreme but plausible market conditions, in its capacity as a central counterparty for security-based swaps. The Commission finds that the proposed rule change, which enhances ICC’s Stress Testing Framework and Liquidity Risk Management Framework, is consistent with section 17A 14 of the Act and Rule 17Ad–22 15 thereunder. As noted above, in response to the clearing of SN CDS referencing CPs, the proposed change would expand the range of stress tests that ICC considers to be extreme but plausible. The Commission has reviewed the Notice and ICC’s rules, policies, and procedures, and believes that the expanded range of extreme but plausible scenarios, supplemented by the information that will be provided by certain additional GWWR and contagion stress scenarios considered to be extreme but implausible, enhance ICC’s processes for estimating the amount of financial resources ICC should collect. Additionally, while adoption of the sensitivity analyses described above will not immediately require ICC to collect additional financial resources, it will provide ICC with additional risk management information. Further, ICC stated that at least in some cases, one of the newly added analyses could provide a potential remedy where deficiencies are identified in ICC’s current sizing methodology.16 Consequently, the Commission believes that the proposed rule change is reasonably designed to ensure that ICC maintains sufficient financial resources in accordance with the requirements of Rule 17Ad–22(b)(3) and will thereby enhance ICC’s ability to safeguard the securities and funds of CPs in the event of participant defaults. As a result, the Commission finds that the proposed change is consistent with the requirements of section 17A of the Act and the relevant provisions of Rule 17Ad–22. IV. Conclusion It is therefore ordered pursuant to section 19(b)(2) of the Act that the 13 17 CFR 240.17Ad–22(b)(3). U.S.C. 78q–1. 15 17 CFR 240.17Ad–22. 16 Notice, 82 FR at 41455. 14 15 VerDate Sep<11>2014 18:40 Oct 05, 2017 Jkt 244001 proposed rule change (SR–ICC–2017– 012) be, and hereby is, approved.17 For the Commission by the Division of Trading and Markets, pursuant to delegated authority.18 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–21540 Filed 10–5–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81791; File No. SR–NYSE– 2017–50] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List To Permit Affiliated Member Organizations That Are Supplemental Liquidity Providers October 2, 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 September 25, 2017, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its Price List to permit affiliated member organizations that are Supplemental Liquidity Providers (‘‘SLPs’’) on the Exchange to obtain the most favorable rate when (1) at least one affiliate satisfies the quoting requirements for SLPs in assigned securities, and (2) the combined SLPs’ aggregate volumes satisfy the adding liquidity volume requirements for SLP tiered and nontiered rates. The Exchange proposes to implement the proposed changes on September 25, 2017.4 The proposed rule 17 In approving the proposed rule change, the Commission considered the proposal’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 18 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 4 The Exchange originally filed to amend the Price List on August 31, 2017 (SR–NYSE–2017–46), PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 46845 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, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Price List to permit affiliated member organizations that are SLPs on the Exchange to obtain the most favorable rate when (1) at least one affiliate satisfies the quoting requirements for SLPs in assigned securities, and (2) the combined SLPs’ aggregate volumes satisfy the adding liquidity volume requirements for SLP tiered and nontiered rates. The proposed changes would be applicable to all SLP transactions, regardless of price of the security. The Exchange proposes to implement these changes to its Price List effective September 25, 2017. Proposed Rule Change SLPs are eligible for certain credits when adding liquidity to the Exchange. The amount of the credit is currently determined by the ‘‘tier’’ for which the SLP qualifies, which is based on the SLP’s level of quoting and ADV of liquidity added by the SLP in assigned securities. Currently, SLP Tier 3 provides that when adding liquidity to the NYSE in securities with a share price of $1.00 or more, an SLP is eligible for a credit of $0.0023 per share traded if the SLP (1) meets the 10% average or more quoting requirement in an assigned security pursuant to Rule 107B and (2) adds liquidity for all assigned SLP securities withdrew such filing on September 13, 2017, and refiled the same day (SR–NYSE–2017–48). SR– NYSE–48 [sic] was subsequently withdrawn and replaced by this filing. E:\FR\FM\06OCN1.SGM 06OCN1 46846 Federal Register / Vol. 82, No. 193 / Friday, October 6, 2017 / Notices asabaliauskas on DSKBBXCHB2PROD with NOTICES in the aggregate 5 of an ADV of more than 0.20% of NYSE consolidated ADV (‘‘CADV’’),6 or with respect to an SLP that is also a DMM and subject to Rule 107B(i)(2)(a),7 more than 0.20% of NYSE CADV after a discount of the percentage for the prior quarter of NYSE CADV in DMM assigned securities as of the last business day of the prior month. The SLP Tier 3 credit in the case of Non-Displayed Reserve Orders is $0.0006. SLP Tier 2 provides that an SLP adding liquidity in securities with a per share price of $1.00 or more is eligible for a per share credit of $0.0026 if the SLP: (1) Meets the 10% average or more quoting requirement in an assigned security pursuant to Rule 107B; and (2) adds liquidity for all assigned SLP securities in the aggregate of an ADV of more than 0.45% of NYSE CADV, or with respect to an SLP that is also a DMM and subject to Rule 107B(i)(2)(a), more than 0.45% of NYSE CADV after a discount of the percentage for the prior quarter of NYSE CADV in DMM assigned securities as of the last business day of the prior month.8 The SLP Tier 2 credit in the case of NonDisplayed Reserve Orders is $0.0009. SLP Tier 1A provides that an SLP adding liquidity in securities with a per share price of $1.00 or more is eligible for a per share credit of $0.00275 if the SLP: (1) Meets the 10% average or more quoting requirement in an assigned security pursuant to Rule 107B; and (2) adds liquidity for all for assigned SLP securities in the aggregate of an ADV of more than 0.60% of NYSE CADV, or with respect to an SLP that is also a DMM and subject to Rule 107B(i)(2)(a), more than 0.60% after a discount of the percentage for the prior quarter of NYSE CADV in DMM assigned securities as of the last business day of the prior month. The SLP Tier 1A credit in the case of 5 Under Rule 107B, an SLP can be either a proprietary trading unit of a member organization (‘‘SLP-Prop’’) or a registered market maker at the Exchange (‘‘SLMM’’). For purposes of the 10% average or more quoting requirement in assigned securities pursuant to Rule 107B, quotes of an SLPProp and an SLMM of the same member organization are not aggregated. However, for purposes of adding liquidity for assigned SLP securities in the aggregate, shares of both an SLPProp and an SLMM of the same member organization are included. 6 NYSE CADV is defined in the Price List as the consolidated average daily volume of NYSE-listed securities. 7 Rule 107B(i)(2)(A) prohibits a DMM from acting as a SLP in the same securities in which it is a DMM. 8 In determining whether an SLP meets the requirement to add liquidity in the aggregate of an ADV of more than 0.20% depending on whether the SLP is also a DMM, the SLP may include shares of both an SLP-Prop and an SLMM of the same member organization. VerDate Sep<11>2014 18:40 Oct 05, 2017 Jkt 244001 Non-Displayed Reserve Orders is $0.00105. SLP Tier 1 provides that an SLP adding liquidity in securities with a per share price of $1.00 or more is eligible for a per share credit of $0.0029 if the SLP: (1) Meets the 10% average or more quoting requirement in an assigned security pursuant to Rule 107B; and (2) adds liquidity for all for assigned SLP securities in the aggregate of an ADV of more than 0.90% of NYSE CADV, or with respect to an SLP that is also a DMM and subject to Rule 107B(i)(2)(a), more than 0.90% after a discount of the percentage for the prior quarter of NYSE CADV in DMM assigned securities as of the last business day of the prior month. The SLP Tier 1 credit in the case of Non-Displayed Reserve Orders is $0.0012. Finally, a SLP adding liquidity in securities with a per share price of less than $1.00 is eligible for a per share credit of $0.0005 if the SLP: (1) Meets the 10% average or more quoting requirement in an assigned security pursuant to Rule 107B; and (2) adds liquidity for all for assigned SLP securities in the aggregate of an ADV of more than 0.22% of NYSE CADV in the applicable month. The Exchange proposes to amend the Price List to permit affiliated member organizations that are SLPs to obtain the most favorable rate when (1) at least one affiliate satisfies the quoting requirements for SLPs in assigned securities, and (2) the combined SLPs’ aggregate volumes satisfy the adding liquidity volume requirements for SLP tiered (i.e., SLP Tier 1, SLP Tier 1A, SLP Tier 2 and SLP Tier 3) and non-tiered rates. To effect this change, for each of the SLP tiered and non-tiered rates, the Exchange proposes to: (i) Replace the phrase ‘‘Credit per share—per transaction—for SLPs’’ with the phrase ‘‘Credit per share—per transaction for affiliated SLPs;’’ (ii) add a footnote that provides that affiliated member organizations that are SLPs would be eligible for the most favorable rate for any such security traded in an applicable month provided that one or both affiliated member organizations request and are approved for aggregation of eligible activity pursuant to the requirements set forth in the Price List; (iii) replace the phrase ‘‘the SLP,’’ with the phrase ‘‘an SLP;’’ and (iv) add the phrase ‘‘or an affiliated’’ before the term ‘‘member organization.’’ 9 9 The Exchange also proposes to add a hyphen between ‘‘SLP’’ and ‘‘Prop’’ following ‘‘quotes of an’’ in the SLP Tier 2 fee. PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 In order to qualify as affiliates for purposes of obtaining the more favorable rate and aggregating the adding liquidity of an ADV volumes, one or both member organizations that are SLPs would be required to follow the procedures set forth in the Price List for requesting that the Exchange aggregate its eligible activity with the eligible activity of its affiliates.10 For example, assume a member organization with a SLP (SLP1) is affiliated with another member organization that also has a SLP (SLP2). If the adding liquidity for all for assigned SLP securities is 0.40% of NYSE CADV for SLP1 in the billing month and 0.10% of NYSE CADV for SLP2, the combined adding liquidity for SLP1 and SLP2 would be 0.50% of NYSE CADV, and both SLP1 and SLP2 would meet the 0.45% NYSE CADV adding requirement. If in that same billing month, SLP1 has 8.0% quoting in SLP symbol XYZ and SLP2 has 12.0% quoting in that same symbol XYZ, both SLP1 and SLP2 would qualify for the SLP Tier 2 credit of $0.0026 in symbol XYZ, by way of SLP2’s 12.0% quoting and the combined adding liquidity of SLP1 and SLP 2 of 0.50% of NYSE CADV. If SLP2 did not quote in symbol XYZ at least 10%, then SLP1 would not qualify for the SLP Tier 2 credit due to their 8.0% quoting being short of the 10% requirement, and then SLP1 and SLP2 would instead receive the applicable non-Tier Adding Credit, Tier 3 Adding Credit, Tier 2 Adding Credit or Tier 1 Adding Credit. The proposed changes are not otherwise intended to address any other issues, and the Exchange is not aware of any problems that member organizations would have in complying with the proposed change. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act,11 in general, and furthers the objectives of sections 6(b)(4) and (5) of the Act,12 in particular, because it provides for the equitable allocation of reasonable dues, fees, and 10 For purposes of applying any provision of the Exchange’s Price List where the charge assessed, or credit provided, by the Exchange depends on the volume of a member organization’s activity, a member organization may request that the Exchange aggregate its eligible activity with activity of such member organization’s affiliates. A member organization requesting aggregation of eligible affiliate activity is required to (1) certify to the Exchange the affiliate status of member organizations whose activity it seeks to aggregate prior to receiving approval for aggregation, and (2) inform the Exchange immediately of any event that causes an entity to cease being an affiliate. 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(4) & (5). E:\FR\FM\06OCN1.SGM 06OCN1 asabaliauskas on DSKBBXCHB2PROD with NOTICES Federal Register / Vol. 82, No. 193 / Friday, October 6, 2017 / Notices other charges among its members, issuers and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers or dealers and is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, 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 is reasonable because the SLP credit rates, established in previous rule filings, would remain the same.13 The Exchange further believes that the proposed rule change is equitable because it establishes a manner for the Exchange to treat affiliated member organizations that are approved as SLPs for purposes of assessing charges or credits that are based on volume. The provision is also equitable because all member organizations seeking to aggregate their activity are subject to the same parameters, in accordance with established procedures set forth on the Price List regarding aggregation across affiliated member organizations. The Exchange further believes that the proposal is not unfairly discriminatory because it would serve to reduce disparity of treatment between member organizations with regard to the pricing of different services and reduce any potential for confusion on how SLP activity can be aggregated. The Exchange believes that the proposed rule change avoids disparate treatment of member organizations that have divided their various business activities between separate corporate entities as compared to member organizations that operate those business activities within a single corporate entity. The Exchange further believes that the proposed rule change is designed to remove impediments to and perfect the mechanism of a free and open market because it aligns how affiliated member organizations that are approved as SLPs may aggregate volume in the same manner that affiliated member organizations currently aggregate nonSLP trading volume. The Exchange believes that it is subject to significant competitive forces, as described below in the Exchange’s 13 See, e.g., Securities Exchange Act Release No. 77604 (April 13, 2016), 81 FR 23043 (April 19, 2016) (SR–NYSE–2016–29), for the most recent pricing changes applicable to SLPs. VerDate Sep<11>2014 18:40 Oct 05, 2017 Jkt 244001 statement regarding the burden on competition. For the foregoing reasons, the Exchange believes that the proposal is consistent with the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with section 6(b)(8) of the Act,14 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 proposed rule change is designed to encourage the submission of additional liquidity to a public exchange, thereby promoting price discovery and transparency and enhancing order execution opportunities for member organizations. 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. Finally, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees and rebates to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees and credits in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. As a result of all of these considerations, the Exchange does not believe that the proposed changes will impair the ability of member organizations or competing order execution venues to maintain their competitive standing in the financial markets. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to section 19(b)(3)(A) 15 of the Act and subparagraph (f)(2) of Rule 19b–4 16 thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under section 19(b)(2)(B) 17 of the Act to determine whether the proposed rule change should be approved or disapproved. 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– NYSE–2017–50 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSE–2017–50. 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 15 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 17 15 U.S.C. 78s(b)(2)(B). 16 17 14 15 PO 00000 U.S.C. 78f(b)(8). Frm 00095 Fmt 4703 Sfmt 4703 46847 E:\FR\FM\06OCN1.SGM 06OCN1 46848 Federal Register / Vol. 82, No. 193 / Friday, October 6, 2017 / Notices 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–NYSE– 2017–50 and should be submitted on or before October 27, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–21535 Filed 10–5–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81795; File No. SR–MRX– 2017–18] Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing of Proposed Rule Change To Adopt New Corporate Governance and Related Process Similar to Those of the Nasdaq Exchanges asabaliauskas on DSKBBXCHB2PROD with NOTICES October 2, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on September 19, 2017, Nasdaq MRX, LLC (‘‘MRX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. 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 a rule change (the ‘‘Proposed Rule Change’’) in connection with the proposed merger (the ‘‘Merger’’) with a newly-formed Delaware limited liability company under the Exchange’s ultimate parent, Nasdaq, Inc., resulting in the Exchange as the surviving entity. Following the Merger, the Exchange’s board and committee structure, and all related corporate governance processes, will be harmonized with that of the three other registered national securities exchanges and self-regulatory organizations owned by Nasdaq, Inc., namely: The NASDAQ Stock Market LLC (‘‘NSM’’), NASDAQ PHLX LLC (‘‘Phlx’’), and NASDAQ BX, Inc. (‘‘BX’’ and together with NSM and Phlx, the ‘‘Nasdaq Exchanges’’). In connection with the Merger and as discussed more fully below, the Exchange proposes to adopt new organizational documents that set forth a corporate governance framework and related processes that are substantially similar in all material respects to those of the Nasdaq Exchanges. The Exchange intends to implement the Proposed Rule Change no later than by the end of Q4 2017. The Exchange will alert its members in the form of a Regulatory Alert to provide notification of the implementation date. The text of the proposed rule change is available on the Exchange’s Web site at www.ise.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 Exchange 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 these 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 aspects of such statements. 18 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 18:40 Oct 05, 2017 Jkt 244001 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange was recently acquired by Nasdaq, Inc. (‘‘HoldCo’’).3 Following the acquisition, the Exchange has continued to operate as a separate selfregulatory organization (‘‘SRO’’) and continues to have separate rules, membership rosters, and listings, distinct from the rules, membership rosters, and listings of the Nasdaq Exchanges as well as from ISE and GEMX. The Exchange now proposes to harmonize the corporate governance framework of the Exchange with that of the Nasdaq Exchanges, and submits this Proposed Rule Change to seek the Commission’s approval of various changes to the Exchange’s organizational documents and Rules that are necessary in connection with the Merger, as described below. The proposed changes consist of: (1) Deleting the Exchange’s current Limited Liability Company Agreement (the ‘‘Current LLC Agreement’’) in its entirety and replacing it with a new limited liability company agreement (the ‘‘LLC Agreement’’) that is based on the limited liability company agreement of NSM, (2) deleting the Exchange’s current Constitution (‘‘Current Constitution’’ and together with the Current LLC Agreement, the ‘‘Current Governing Documents’’) in its entirety and replacing it with a new set of bylaws (the ‘‘Bylaws’’ and together with the LLC Agreement, the ‘‘New Governing Documents’’) that is based on the by-laws of NSM, and (3) making minor clarifying changes to its rules, as discussed below.4 All of the proposed changes are designed to align the Exchange’s corporate governance framework to the existing structure at the Nasdaq Exchanges, particularly as it relates to 3 On June 30, 2016, HoldCo acquired all of the capital stock of U.S. Exchange Holdings, Inc., the Exchange’s indirect parent company (the ‘‘Acquisition’’). As a result, the Exchange, in addition to its affiliates Nasdaq ISE, LLC (‘‘ISE’’) and Nasdaq GEMX, LLC (‘‘GEMX’’), became a wholly-owned subsidiary of HoldCo, and also became an affiliate of NSM, Phlx, and BX through common, ultimate ownership by HoldCo. HoldCo is the ultimate parent of the Exchange. See Securities Exchange Act Release No. 78119 (June 21, 2016), 81 FR 41611 (June 27, 2016) (SR–ISEMercury-2016– 10). 4 The Exchange’s affiliates, ISE and GEMX, have submitted nearly identical proposed rule changes. See Securities Exchange Release No. 81263 (July 31, 2017), 82 FR 36497 (August 4, 2017) (SR–ISE–2017– 32) (ISE Approval Order) and Securities Exchange Release No. 81422 (August 17, 2017), 82 FR 40026 (August 23, 2017) (SR–GEMX–2017–37) (GEMX Notice of Filing). E:\FR\FM\06OCN1.SGM 06OCN1

Agencies

[Federal Register Volume 82, Number 193 (Friday, October 6, 2017)]
[Notices]
[Pages 46845-46848]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21535]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81791; File No. SR-NYSE-2017-50]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Price List To Permit Affiliated Member Organizations That Are 
Supplemental Liquidity Providers

October 2, 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 September 25, 2017, New York Stock Exchange LLC 
(``NYSE'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I, II, and III below, which Items have been prepared by the 
self-regulatory organization. The Commission is publishing this notice 
to solicit comments on the proposed rule change from interested 
persons.
---------------------------------------------------------------------------

    \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 its Price List to permit affiliated 
member organizations that are Supplemental Liquidity Providers 
(``SLPs'') on the Exchange to obtain the most favorable rate when (1) 
at least one affiliate satisfies the quoting requirements for SLPs in 
assigned securities, and (2) the combined SLPs' aggregate volumes 
satisfy the adding liquidity volume requirements for SLP tiered and 
non-tiered rates. The Exchange proposes to implement the proposed 
changes on September 25, 2017.\4\ 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.
---------------------------------------------------------------------------

    \4\ The Exchange originally filed to amend the Price List on 
August 31, 2017 (SR-NYSE-2017-46), withdrew such filing on September 
13, 2017, and refiled the same day (SR-NYSE-2017-48). SR-NYSE-48 
[sic] was subsequently withdrawn and replaced by this filing.
---------------------------------------------------------------------------

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

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

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

1. Purpose
    The Exchange proposes to amend its Price List to permit affiliated 
member organizations that are SLPs on the Exchange to obtain the most 
favorable rate when (1) at least one affiliate satisfies the quoting 
requirements for SLPs in assigned securities, and (2) the combined 
SLPs' aggregate volumes satisfy the adding liquidity volume 
requirements for SLP tiered and non-tiered rates.
    The proposed changes would be applicable to all SLP transactions, 
regardless of price of the security.
    The Exchange proposes to implement these changes to its Price List 
effective September 25, 2017.
Proposed Rule Change
    SLPs are eligible for certain credits when adding liquidity to the 
Exchange. The amount of the credit is currently determined by the 
``tier'' for which the SLP qualifies, which is based on the SLP's level 
of quoting and ADV of liquidity added by the SLP in assigned 
securities.
    Currently, SLP Tier 3 provides that when adding liquidity to the 
NYSE in securities with a share price of $1.00 or more, an SLP is 
eligible for a credit of $0.0023 per share traded if the SLP (1) meets 
the 10% average or more quoting requirement in an assigned security 
pursuant to Rule 107B and (2) adds liquidity for all assigned SLP 
securities

[[Page 46846]]

in the aggregate \5\ of an ADV of more than 0.20% of NYSE consolidated 
ADV (``CADV''),\6\ or with respect to an SLP that is also a DMM and 
subject to Rule 107B(i)(2)(a),\7\ more than 0.20% of NYSE CADV after a 
discount of the percentage for the prior quarter of NYSE CADV in DMM 
assigned securities as of the last business day of the prior month. The 
SLP Tier 3 credit in the case of Non-Displayed Reserve Orders is 
$0.0006.
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    \5\ Under Rule 107B, an SLP can be either a proprietary trading 
unit of a member organization (``SLP-Prop'') or a registered market 
maker at the Exchange (``SLMM''). For purposes of the 10% average or 
more quoting requirement in assigned securities pursuant to Rule 
107B, quotes of an SLP-Prop and an SLMM of the same member 
organization are not aggregated. However, for purposes of adding 
liquidity for assigned SLP securities in the aggregate, shares of 
both an SLP-Prop and an SLMM of the same member organization are 
included.
    \6\ NYSE CADV is defined in the Price List as the consolidated 
average daily volume of NYSE-listed securities.
    \7\ Rule 107B(i)(2)(A) prohibits a DMM from acting as a SLP in 
the same securities in which it is a DMM.
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    SLP Tier 2 provides that an SLP adding liquidity in securities with 
a per share price of $1.00 or more is eligible for a per share credit 
of $0.0026 if the SLP: (1) Meets the 10% average or more quoting 
requirement in an assigned security pursuant to Rule 107B; and (2) adds 
liquidity for all assigned SLP securities in the aggregate of an ADV of 
more than 0.45% of NYSE CADV, or with respect to an SLP that is also a 
DMM and subject to Rule 107B(i)(2)(a), more than 0.45% of NYSE CADV 
after a discount of the percentage for the prior quarter of NYSE CADV 
in DMM assigned securities as of the last business day of the prior 
month.\8\ The SLP Tier 2 credit in the case of Non-Displayed Reserve 
Orders is $0.0009.
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    \8\ In determining whether an SLP meets the requirement to add 
liquidity in the aggregate of an ADV of more than 0.20% depending on 
whether the SLP is also a DMM, the SLP may include shares of both an 
SLP-Prop and an SLMM of the same member organization.
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    SLP Tier 1A provides that an SLP adding liquidity in securities 
with a per share price of $1.00 or more is eligible for a per share 
credit of $0.00275 if the SLP: (1) Meets the 10% average or more 
quoting requirement in an assigned security pursuant to Rule 107B; and 
(2) adds liquidity for all for assigned SLP securities in the aggregate 
of an ADV of more than 0.60% of NYSE CADV, or with respect to an SLP 
that is also a DMM and subject to Rule 107B(i)(2)(a), more than 0.60% 
after a discount of the percentage for the prior quarter of NYSE CADV 
in DMM assigned securities as of the last business day of the prior 
month. The SLP Tier 1A credit in the case of Non-Displayed Reserve 
Orders is $0.00105.
    SLP Tier 1 provides that an SLP adding liquidity in securities with 
a per share price of $1.00 or more is eligible for a per share credit 
of $0.0029 if the SLP: (1) Meets the 10% average or more quoting 
requirement in an assigned security pursuant to Rule 107B; and (2) adds 
liquidity for all for assigned SLP securities in the aggregate of an 
ADV of more than 0.90% of NYSE CADV, or with respect to an SLP that is 
also a DMM and subject to Rule 107B(i)(2)(a), more than 0.90% after a 
discount of the percentage for the prior quarter of NYSE CADV in DMM 
assigned securities as of the last business day of the prior month. The 
SLP Tier 1 credit in the case of Non-Displayed Reserve Orders is 
$0.0012.
    Finally, a SLP adding liquidity in securities with a per share 
price of less than $1.00 is eligible for a per share credit of $0.0005 
if the SLP: (1) Meets the 10% average or more quoting requirement in an 
assigned security pursuant to Rule 107B; and (2) adds liquidity for all 
for assigned SLP securities in the aggregate of an ADV of more than 
0.22% of NYSE CADV in the applicable month.
    The Exchange proposes to amend the Price List to permit affiliated 
member organizations that are SLPs to obtain the most favorable rate 
when (1) at least one affiliate satisfies the quoting requirements for 
SLPs in assigned securities, and (2) the combined SLPs' aggregate 
volumes satisfy the adding liquidity volume requirements for SLP tiered 
(i.e., SLP Tier 1, SLP Tier 1A, SLP Tier 2 and SLP Tier 3) and non-
tiered rates.
    To effect this change, for each of the SLP tiered and non-tiered 
rates, the Exchange proposes to: (i) Replace the phrase ``Credit per 
share--per transaction--for SLPs'' with the phrase ``Credit per share--
per transaction for affiliated SLPs;'' (ii) add a footnote that 
provides that affiliated member organizations that are SLPs would be 
eligible for the most favorable rate for any such security traded in an 
applicable month provided that one or both affiliated member 
organizations request and are approved for aggregation of eligible 
activity pursuant to the requirements set forth in the Price List; 
(iii) replace the phrase ``the SLP,'' with the phrase ``an SLP;'' and 
(iv) add the phrase ``or an affiliated'' before the term ``member 
organization.'' \9\
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    \9\ The Exchange also proposes to add a hyphen between ``SLP'' 
and ``Prop'' following ``quotes of an'' in the SLP Tier 2 fee.
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    In order to qualify as affiliates for purposes of obtaining the 
more favorable rate and aggregating the adding liquidity of an ADV 
volumes, one or both member organizations that are SLPs would be 
required to follow the procedures set forth in the Price List for 
requesting that the Exchange aggregate its eligible activity with the 
eligible activity of its affiliates.\10\
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    \10\ For purposes of applying any provision of the Exchange's 
Price List where the charge assessed, or credit provided, by the 
Exchange depends on the volume of a member organization's activity, 
a member organization may request that the Exchange aggregate its 
eligible activity with activity of such member organization's 
affiliates. A member organization requesting aggregation of eligible 
affiliate activity is required to (1) certify to the Exchange the 
affiliate status of member organizations whose activity it seeks to 
aggregate prior to receiving approval for aggregation, and (2) 
inform the Exchange immediately of any event that causes an entity 
to cease being an affiliate.
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    For example, assume a member organization with a SLP (SLP1) is 
affiliated with another member organization that also has a SLP (SLP2). 
If the adding liquidity for all for assigned SLP securities is 0.40% of 
NYSE CADV for SLP1 in the billing month and 0.10% of NYSE CADV for 
SLP2, the combined adding liquidity for SLP1 and SLP2 would be 0.50% of 
NYSE CADV, and both SLP1 and SLP2 would meet the 0.45% NYSE CADV adding 
requirement. If in that same billing month, SLP1 has 8.0% quoting in 
SLP symbol XYZ and SLP2 has 12.0% quoting in that same symbol XYZ, both 
SLP1 and SLP2 would qualify for the SLP Tier 2 credit of $0.0026 in 
symbol XYZ, by way of SLP2's 12.0% quoting and the combined adding 
liquidity of SLP1 and SLP 2 of 0.50% of NYSE CADV. If SLP2 did not 
quote in symbol XYZ at least 10%, then SLP1 would not qualify for the 
SLP Tier 2 credit due to their 8.0% quoting being short of the 10% 
requirement, and then SLP1 and SLP2 would instead receive the 
applicable non-Tier Adding Credit, Tier 3 Adding Credit, Tier 2 Adding 
Credit or Tier 1 Adding Credit.
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any problems that member 
organizations would have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\11\ in general, and furthers the 
objectives of sections 6(b)(4) and (5) of the Act,\12\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and

[[Page 46847]]

other charges among its members, issuers and other persons using its 
facilities and does not unfairly discriminate between customers, 
issuers, brokers or dealers and is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, 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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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) & (5).
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    The Exchange believes that the proposed rule change is reasonable 
because the SLP credit rates, established in previous rule filings, 
would remain the same.\13\ The Exchange further believes that the 
proposed rule change is equitable because it establishes a manner for 
the Exchange to treat affiliated member organizations that are approved 
as SLPs for purposes of assessing charges or credits that are based on 
volume. The provision is also equitable because all member 
organizations seeking to aggregate their activity are subject to the 
same parameters, in accordance with established procedures set forth on 
the Price List regarding aggregation across affiliated member 
organizations.
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    \13\ See, e.g., Securities Exchange Act Release No. 77604 (April 
13, 2016), 81 FR 23043 (April 19, 2016) (SR-NYSE-2016-29), for the 
most recent pricing changes applicable to SLPs.
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    The Exchange further believes that the proposal is not unfairly 
discriminatory because it would serve to reduce disparity of treatment 
between member organizations with regard to the pricing of different 
services and reduce any potential for confusion on how SLP activity can 
be aggregated. The Exchange believes that the proposed rule change 
avoids disparate treatment of member organizations that have divided 
their various business activities between separate corporate entities 
as compared to member organizations that operate those business 
activities within a single corporate entity. The Exchange further 
believes that the proposed rule change is designed to remove 
impediments to and perfect the mechanism of a free and open market 
because it aligns how affiliated member organizations that are approved 
as SLPs may aggregate volume in the same manner that affiliated member 
organizations currently aggregate non-SLP trading volume.
    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 the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    In accordance with section 6(b)(8) of the Act,\14\ 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 proposed rule change is designed to 
encourage the submission of additional liquidity to a public exchange, 
thereby promoting price discovery and transparency and enhancing order 
execution opportunities for member organizations. 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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    \14\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive or rebate opportunities available at other venues to be more 
favorable. In such an environment, the Exchange must continually adjust 
its fees and rebates to remain competitive with other exchanges and 
with alternative trading systems that have been exempted from 
compliance with the statutory standards applicable to exchanges. 
Because competitors are free to modify their own fees and credits in 
response, and because market participants may readily adjust their 
order routing practices, the Exchange believes that the degree to which 
fee changes in this market may impose any burden on competition is 
extremely limited. As a result of all of these considerations, the 
Exchange does not believe that the proposed changes will impair the 
ability of member organizations or competing order execution venues to 
maintain their competitive standing in the financial markets.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change is effective upon filing pursuant to 
section 19(b)(3)(A) \15\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \16\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
section 19(b)(2)(B) \17\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \17\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-NYSE-2017-50 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2017-50. 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

[[Page 46848]]

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-NYSE-2017-50 and should be submitted on or before 
October 27, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21535 Filed 10-5-17; 8:45 am]
 BILLING CODE 8011-01-P