Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List, 3799-3804 [2018-01417]

Download as PDF Federal Register / Vol. 83, No. 18 / Friday, January 26, 2018 / Notices proposed rule’s impact on efficiency, competition, and capital formation.11 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule 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: daltland on DSKBBV9HB2PROD with NOTICES Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– CboeBZX–2018–002 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 CboeBZX–2018–002. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal 11 See 15 U.S.C. 78c(f). VerDate Sep<11>2014 20:14 Jan 25, 2018 Jkt 244001 office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number CboeBZX–2018–002 and should be submitted on or before February 16, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–01361 Filed 1–25–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82563; File No. SR–NYSE– 2018–03] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List January 22, 2018. 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 January 8, 2018, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘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 to amend its Price List for equity transactions in stocks with a per share stock price of $1.00 or more to (1) revise the Non-Tier Adding Credit; (2) modify the market atthe-close (‘‘MOC’’) and limit at-the-close (‘‘LOC’’) tier and non-tier rates and add a new Floor broker MOC fee; (3) modify the fee for executions at the close (except MOC, LOC and Closing Offset (‘‘CO’’) Orders), and Floor broker executions swept into the close, 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00127 Fmt 4703 Sfmt 4703 3799 excluding verbal interest above the first 750,000 average daily volume (‘‘ADV’’) of aggregate executions at the close; (4) introduce a Tier 4 Adding Credit; (5) introduce tiered trading license fees; and (6) make certain non-substantive organizational and clarifying changes, including grouping fees for all executions at the close together. The Exchange proposes to implement these changes to its Price List effective January 8, 2018.4 The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Price List to (1) revise the Non-Tier Adding Credit; (2) modify the MOC and LOC tier and non-tier rates and add a Floor broker MOC fee; (3) modify the fee for executions at the close (except MOC, LOC and CO Orders), and Floor broker executions swept into the close, excluding verbal interest above the first 750,000 average daily volume (‘‘ADV’’) of aggregate executions at the close; (4) introduce a Tier 4 Adding Credit; (5) introduce tiered trading license fees; and (6) make certain non-substantive organizational and clarifying changes, including grouping fees for all executions at the close together. The proposed changes would only apply to fees and credits in transactions in securities priced $1.00 or more. The Exchange proposes to implement these changes to its Price List effective January 8, 2018. 4 The Exchange originally filed to amend the Price List on December 28, 2017 (SR–NYSE–2017– 73). SR–NYSE–2017–73 was subsequently withdrawn and replaced by this filing. E:\FR\FM\26JAN1.SGM 26JAN1 3800 Federal Register / Vol. 83, No. 18 / Friday, January 26, 2018 / Notices Member Organization Non-Tier Adding Credit Member organizations are currently eligible for the Non-Tier Adding Credit for all orders in securities priced $1.00 or more, other than Midpoint Passive Liquidity (‘‘MPL’’) 5 and Non-Display Reserve orders, that add liquidity to the NYSE unless a higher credit applies. The applicable rate for the Non-Tier Adding Credit is $0.0014 per share. The Exchange proposes to lower this credit to $0.0012 per share. The credits applicable to MPL orders and NonDisplay Reserve orders would be unchanged. Executions at the Close Overview The Exchange proposes to group all fees relating to executions at the close together in a table under a new proposed heading titled ‘‘Executions at the Close Equity Per Share Charge—per transaction (both sides).’’ The current entries relating to charges for executions at the close, including verbal interest and MOC/LOC Tiers 1 and 2, would be moved and/or replaced with modified entries, as described more fully below. The Exchange also proposes modifications to the rates for non-tier MOC orders and a new fee for MOC order executed by Floor brokers. Finally, the Exchange proposes modifications for charges for executions at the close (except MOC, LOC and CO Orders), and Floor broker executions swept into the close, excluding verbal interest above the first 750,000 ADV of the aggregate of executions at the close by a member organization.6 MOC/LOC Tiers and Non-Tier MOC/ LOC MOC/LOC Tier 1 daltland on DSKBBV9HB2PROD with NOTICES For MOC/LOC Tier 1, the Exchange currently charges $0.0007 per share for all MOC and LOC orders from any member organization executing ADV of MOC and LOC activity on the NYSE in that month of at least 0.575% of consolidated average daily volume (‘‘CADV’’) in NYSE-listed securities (i.e., Tape A securities) during the billing month (‘‘NYSE CADV’’). 5 An MPL Order is an undisplayed limit order that automatically executes at the mid-point of the best protected bid (‘‘PBB’’) or best protected offer (‘‘PBO’’), as such terms are defined in Regulation NMS Rule 600(b)(57) (together, ‘‘PBBO’’). See Rule 13. See also 17 CFR 242.600(b)(57). 6 The Exchange is not proposing to change the fees for verbal interest at the close and for CO Orders. The Exchange proposes non-substantive differences to describe these fees as the first and second entries on the table with the fees associated with executions at the close. VerDate Sep<11>2014 20:14 Jan 25, 2018 Jkt 244001 The Exchange proposes to move the MOC/LOC Tier 1 as the third [sic] entry on the table with the charges associated with executions at the close and modify it to provide that the MOC/LOC Tier 1 rates would be available for all MOC and LOC orders from any member organization in the prior three billing months executing (1) an ADV of MOC activity on the NYSE of at least 0.45% of NYSE CADV, (2) an ADV of total close activity (MOC/LOC and executions at the close) on the NYSE of at least 0.7% of NYSE CADV, and (3) whose MOC activity comprised at least 35% of the member organization’s total close activity (MOC/LOC and other executions at the close). For member organizations qualifying for the MOC/LOC Tier 1 requirements, the Exchange proposes to retain the $0.0007 per share charge for LOC executions and to lower the per share charge for MOC executions to $0.0004 per share. MOC/LOC Tier 2 Frm 00128 Fmt 4703 The Exchange proposes to move fees for Non-Tier MOC/LOC rates, which as proposed would include MOC Orders, LOC Orders, and MOC Orders entered by a Floor broker, as the fifth [sic] entry on the table with the charges associated with executions at the close. For Non-Tier MOC/LOC, the Exchange currently charges member organizations $0.0011 per share for MOC and LOC executions, unless a member organization meets specified thresholds set forth in the Price List for MOC and LOC activity. The Exchange proposes that the Non-Tier MOC/LOC rates would be available for any member organization not meeting the above requirements for MOC/LOC Tier 1 or MOC/LOC Tier 2. For member organizations that qualify for Non-Tier MOC/LOC, the Exchange proposes to lower the fee for MOC executions to $0.0010 per share. The charge for Non-Tier LOC executions would remain the same at $0.0011. Floor Broker MOC Orders For MOC/LOC Tier 2, the Exchange currently charges $0.0008 per share for all MOC and LOC orders from any member organization executing (i) an ADV of MOC and LOC activity on the Exchange in that month of at least 0.375% of NYSE CADV; or (ii) an ADV of MOC and LOC activity on the Exchange in that month of at least 0.300% of NYSE CADV plus an ADV of total close (MOC/LOC and executions at the close) activity on the Exchange in that month of at least 0.475% of NYSE CADV. The Exchange proposes to move the MOC/LOC Tier 2 as the fourth [sic] entry on the table with the charges associated with executions at the close and modify it to provide that the MOC/ LOC Tier 2 rates would be available for all MOC and LOC orders from any member organization in the prior three billing months executing (1) an ADV of MOC activity on the NYSE of at least 0.35% of NYSE CADV, (2) an ADV of total close activity (MOC/LOC and other executions at the close) on the NYSE of at least 0.525% of NYSE CADV, and (3) whose MOC activity comprised at least 35% of the member organization’s total close activity (MOC/LOC and other executions at the close). For member organizations qualifying for the MOC/LOC Tier 2 requirements, the Exchange proposes to retain the $0.0008 per share charge for LOC executions and to lower the per share charge for MOC executions to $0.0005 per share. PO 00000 Non-Tier MOC/LOC Sfmt 4703 The Exchange propose [sic] a new fee for the execution of MOC orders sent to a Floor broker for representation on the Exchange of $0.0005 per share unless a lower tiered fee applies. The proposed fee would appear in the table as part of the Non-Tier MOC/LOC entries. Fees for d-Quotes and Other Executions at the Close The Exchange proposes to move charges for d-Quotes and other executions at the close, which as proposed would include d-Quotes, Floor broker executions swept into the close, excluding verbal interest, and executions at the close but excluding MOC Orders, LOC Orders, and CO Orders, as the sixth [sic] entry on the table with the charges associated with executions at the close. Currently, the Exchange charges $0.0005 per share if a member organization executes an ADV on the NYSE during the billing month in excess of 750,000 shares in (1) executions at the close (except MOC and LOC executions), and/or (2) Floor broker executions swept into the close, excluding verbal interest. The fee is applicable to shares executed in excess of 750,000 ADV, while no charge is applicable to shares executed below 750,000 ADV. The Exchange proposes to continue not to charge member organizations for the first 750,000 ADV of the aggregate of executions at the close for d-Quote, Floor broker executions swept into the close, excluding verbal interest, and E:\FR\FM\26JAN1.SGM 26JAN1 Federal Register / Vol. 83, No. 18 / Friday, January 26, 2018 / Notices executions at the close, excluding MOC Orders, LOC Orders and CO Orders. For d-Quote, Floor broker executions swept into the close, excluding verbal interest, and executions at the close, excluding MOC Orders, LOC Orders and CO Orders after the first 750,000 ADV of the aggregate of executions at the close by a member organization, the Exchange proposes to change the rate to $0.0007 per share. Tier 4 Adding Credit The Exchange proposes to establish a new adding credit tier titled the ‘‘Tier 4 Adding Credit’’ that would provide a credit of $0.0015 per share for all orders, other than MPL and Non-Display Reserve orders, that add liquidity to the NYSE if: (i) The member organization has Adding ADV in MPL orders that is at least 4 million shares ADV, excluding any liquidity added by a DMM, and (ii) the member organization executes MOC and LOC orders of at least 0.10% of NYSE CADV. daltland on DSKBBV9HB2PROD with NOTICES Trading License Fees Rule 300(b) provides, among other things, that the price per trading license will be published in the Exchange’s price list and that a tiered pricing structure based on the number of trading licenses held by a member organization may be utilized. The current trading license fee in place since 2016 7 is $50,000 per trading license and no charge for additional licenses held by a member organization. Regulated Only Members, as defined in Rule 2(b)(ii), are charged an annual administration fee of $25,000. The Exchange proposes to introduce tiered trading license fees and group all charges relating to trading license fees in a table under the ‘‘Trading License’’ heading.8 For all member organizations, including Floor brokers with more than ten trading licenses but excluding Regulated Only Members, the trading license fee would remain unchanged at $50,000 for the first license held by the member organization unless one of the other rates is deemed applicable. For member organizations with 3–9 trading licenses, the Exchange proposes a fee of $35,000 for the first license held by a member organization that has Floor broker executions accounting for 40% or more of the member organization’s 7 See Securities Exchange Act Release No. 78233 (July 6, 2016), 81 FR 45190 (July 12, 2016) (SR– NYSE–2016–47). 8 The Exchange also proposes to correct a typographical error in the heading and change ‘‘Licences’’ to ‘‘Licenses.’’ VerDate Sep<11>2014 20:14 Jan 25, 2018 Jkt 244001 combined adding and taking volumes during the billing month. For Floor brokers with 1–2 trading licenses, the Exchange proposes a fee of $25,000 for the first license held by a member organization that has Floor broker executions accounting for 40% or more of the member organization’s combined adding and taking volumes during the billing month. As set forth in proposed footnote 15, there would continue to be no charge for additional licenses held by a member organization. In addition, the Exchange proposes not to charge for a trading license in place for 10 calendar days or less in a calendar month and eliminate the flat rate of $100 per day for such license. Further, a trading license in place for 11 calendar days or more in a calendar month will be charged the applicable license fee for that month. Finally, for calculating the number of licenses described above, for the lower rates, the number of licenses will be based on those held by the member organization for 10 or more days in the billing month (including days the Exchange is not open for the entire trading day).9 For example, assume a member organization has 10 trading licenses in a given billing month with 9 licenses being held for 10 or more days that month and the tenth license being held for less than ten days. Further assume that the member organization also had Floor broker executions accounting for 40% or more of the member organization’s combined adding and taking volumes during that billing month. In such a case, the member organization would qualify for the lower license fee of $35,000 in that billing month, prorated monthly. If that same member organization in the following billing month held the same number of licenses, but with all 10 being held for 10 or more days, then the member organization would be billed the full rate of $50,000 for that next billing month, prorated monthly, regardless of whether that member organization had Floor broker executions accounting for 40% or more of the member organization’s combined adding and taking volumes during that next billing month. 9 The Exchange also proposes non-substantive, clarifying changes to the current first sentence of footnote 15 to delete ‘‘indicated above’’ and add ‘‘indicated’’ before ‘‘annual,’’ ‘‘trading license’’ before ‘‘fee,’’ and ‘‘on a monthly basis’’ after ‘‘will be prorated.’’ Footnote 15 as amended would continue to apply to the first license held by a member organization in each category. PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 3801 The annual administration fee for Regulated Only Members, as defined in Rule 2(b)(ii), would remain $25,000. * * * * * 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,10 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,11 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 believes that the proposed fee changes for certain executions at the close are reasonable. The Exchange’s closing auction is a recognized industry benchmark,12 and member organizations receive a substantial benefit from the Exchange in obtaining high levels of executions at the Exchange’s closing price on a daily basis. Member Organization Non-Tier Adding Credit The Exchange believes that the change to the Member Organization Non-Tier Adding Credit for executions of orders in securities with a per share price of $1.00 or more is reasonable, equitable and not unfairly discriminatory because it is intended to incentivize member organizations to submit additional amounts of liquidity to the Exchange to be eligible to receive the higher credits available from the Tier 1 Adding Credit, the Tier 2 Adding Credit, the Tier 3 Adding Credit and the proposed Tier 4 Adding Credit. The Exchange believes that the proposed lower credit for the Member Organization Non-Tier Adding Credit is equitable and not unfairly discriminatory because it would apply equally to all member organizations. MOC/LOC Tiers and Non-Tier MOC/ LOC The Exchange believes that requiring an ADV of MOC activity on the NYSE of at least 0.45% of NYSE CADV, an 10 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) & (5). 12 For example, the pricing and valuation of certain indices, funds, and derivative products require primary market prints. 11 15 E:\FR\FM\26JAN1.SGM 26JAN1 daltland on DSKBBV9HB2PROD with NOTICES 3802 Federal Register / Vol. 83, No. 18 / Friday, January 26, 2018 / Notices ADV of Total Close activity on the NYSE of at least 0.7% of NYSE CADV, and MOC activity comprised at least 35% of the member organization’s total close activity (MOC/LOC and other executions at the close) for the MOC/ LOC Tier 1 fee, as well the requiring an ADV of MOC activity on the NYSE of at least 0.35% of NYSE CADV, an ADV of Total Close activity on the NYSE of at least 0.525% of NYSE CADV, and MOC activity comprised at least 35% of the member’s total close activity (MOC/LOC and other executions at the close) for the MOC/LOC Tier 2 fee, is reasonable and not unfairly discriminatory because the proposed changes would encourage greater marketable and other liquidity at the closing auction. The Exchange believes that charging a lower rate for MOC executions than LOC executions is reasonable and not unfairly discriminatory because MOC orders are always marketable and therefore have a higher likelihood of execution at the close. Charging a lower fee will encourage higher volumes of MOC orders at the close, which should result in a higher level of orders matched and greater liquidity for all Exchange auction participants. The Exchange believes that introducing a requirement that at least 35% of the member organization’s total close activity be comprised of MOC activity in order to qualify for MOC/ LOC Tier 1 or 2 rates is reasonable and not unfairly discriminatory because MOC orders contribute meaningfully to the price and size discovery, which is the hallmark of the closing auction process. Charging a lower fee to member organizations utilizing MOC orders as a significant component of their closing auction participation will encourage higher volumes of MOC orders at the close, which should result in robust price discovery, a higher level of orders matched and greater liquidity for all Exchange auction participants. The Exchange believes that lowering the MOC/LOC Non-Tier fee for MOC orders is reasonable as it is comparable to the above change in MOC rates for MOC/LOC Tier 1 and MOC/LOC Tier 2, and that MOC orders contribute meaningfully to the price and size discovery, which is the hallmark of the closing auction process. Charging a lower fee will encourage higher volumes of MOC orders at the close, which should result in a higher level of orders matched and greater liquidity for all Exchange auction participants. Floor Broker MOC Orders The Exchange believes that the proposed fee for executions of MOC orders sent to a Floor broker for VerDate Sep<11>2014 20:14 Jan 25, 2018 Jkt 244001 representation on the Exchange is reasonable because it would encourage additional displayed liquidity on the Exchange’s closing auction. The Exchange believes the proposed change is equitable and not unfairly discriminatory because it would continue to encourage member organizations to send orders to the trading Floor for execution, thereby contributing to robust levels of liquidity on the trading Floor, which benefits all market participants. The Exchange further notes that the $0.0005 fee for Floor broker MOC orders executed at the close is in line with the $0.0007 fee for Floor broker executions swept into the close, excluding verbal interest. Charges for d-Quotes and Other Executions at the Close The Exchange believes it is appropriate to continue to not charge member organizations for the first 750,000 ADV of the aggregate of executions at the close for d-Quote, Floor broker executions swept into the close, excluding verbal interest, and executions at the close, excluding MOC Orders, LOC Orders, and CO Orders, as this will continue to provide less active member organizations a no-cost mechanism to participate in the closing auction. The proposed fee change for executions above 750,000 ADV is also reasonable, in that it is lower than applicable closing rates on the NASDAQ Stock Market, LLC (‘‘NASDAQ’’). For example, the default fee for Continuous Book executions in NASDAQ’s ‘‘Closing Cross’’ is $0.00085 per share, compared with the proposed $0.0007 fee for dQuote, Floor broker executions at the close, excluding verbal interest, and executions at the close, excluding MOC Orders, LOC Orders, and CO Orders.13 Tier 4 Adding Credit The Exchange believes that the new Tier 4 Adding Credit of $0.0015 per share for transactions in stocks with a per share stock price of $1.00 or more when adding liquidity is reasonable because it would further contribute to incenting member organizations to provide additional liquidity to a public exchange, thereby promoting price discovery and transparency and enhancing order execution opportunities for member organizations. The Exchange believes that introducing a requirement for Adding ADV in MPL Orders that is at least 4 million shares ADV, excluding any liquidity added by a DMM is reasonable and not unfairly discriminatory because MPL orders provide opportunities for market 13 See PO 00000 NASDAQ Rule 7018(d). Frm 00130 Fmt 4703 Sfmt 4703 participants to interact with orders priced at the midpoint of the PBBO, thus providing price improving liquidity to market participants and increasing the quality of order execution on the Exchange’s market, which benefits all market participants. These changes should encourage additional utilization of MPL Orders on the Exchange. The Exchange further believes that introducing a requirement for executions of MOC and LOC orders of at least 0.10% of NYSE CADV is reasonable and not unfairly discriminatory because it will encourage higher volumes of MOC and LOC orders at the close, which should result in a higher level of orders matched and greater liquidity for all Exchange auction participants. The Exchange further believes that the proposed new Tier 4 Adding Credit of $0.0015 is equitable and not unfairly discriminatory because all member organizations would benefit from such increased levels of liquidity. In addition, the new Tier 4 Adding Credit would provide a higher credit to member organizations that is reasonably related to the value to the Exchange’s market quality associated with higher volumes of liquidity. The Exchange also believes that the proposed new Tier 4 Adding Credit is equitable and not unfairly discriminatory because it would provide several methods of qualifying for the credit, which would attract multiple sources of liquidity to the Exchange. Trading License Fees The Exchange believes that the proposal to maintain the current trading license fee, including the fee for Regulated Only Members, and lower the fee for member organizations with 9 or less trading licenses who have Floor broker executions accounting for 40% or more of the member organization’s combined adding and taking volumes during the billing month as well as basing the requirement on licenses held 10 or more days in the billing month, is equitable and not unfairly discriminatory because all similarly situated member organizations would continue to be subject to the same trading license fee structure and because access to the Exchange’s market would continue to be offered on fair and nondiscriminatory terms. The Exchange also believes that the proposal is equitable and not unfairly discriminatory because all member organizations would continue to have the opportunity to enjoy the benefits of the fee relief with respect to additional trading licenses. The Exchange believes that allowing member organizations E:\FR\FM\26JAN1.SGM 26JAN1 Federal Register / Vol. 83, No. 18 / Friday, January 26, 2018 / Notices with 9 or less trading licenses that have the requisite Floor broker volumes to obtain a license at a lower cost will help preserve the diversity of the Exchange’s membership and encourage smaller member organizations to send orders to the Exchange. The Exchange believes that the threshold it has selected will continue to incent order flow from multiple sources and help maintain the quality of the Exchange’s executions, which benefits all market participants. The Exchange further believes that continuing to not charge for additional licenses above the first license held by a member organization, not charging for a trading license in place for 10 calendar days or less, and charging the applicable trading license fee for a trading license in place for 11 calendar days or more is reasonable because it will continue to encourage member organizations to hold additional trading licenses, which will increase the number of market participants on the Exchange trading Floor, thereby promoting liquidity, price discovery, and the opportunity for price improvement for the benefit of all market participants. The proposal is also equitable and not unfairly discriminatory because it would apply equally to all license holders over the same number of days. daltland on DSKBBV9HB2PROD with NOTICES Non-Substantive Changes The Exchange believes that the proposed non-substantive changes to consolidate and streamline the presentation of charges for executions at the close and trading license fees into a table, correct a typographical error and clarify the first sentence of footnote 15 are reasonable because they are designed to provide greater specificity and clarity to the Price List, thereby removing impediments to and perfecting the mechanism of a free and open market and a national market system, and, in general, protecting investors and the public interest. 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 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 Exchange believes that the proposed changes would 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 similar order types and 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 15 15 14 15 U.S.C. 78f(b)(8). VerDate Sep<11>2014 20:14 Jan 25, 2018 16 17 Jkt 244001 PO 00000 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). Frm 00131 Fmt 4703 Sfmt 4703 3803 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 (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSE–2018–03 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–2018–03. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. 17 15 E:\FR\FM\26JAN1.SGM U.S.C. 78s(b)(2)(B). 26JAN1 3804 Federal Register / Vol. 83, No. 18 / Friday, January 26, 2018 / Notices Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE–2018–03 and should be submitted on or before February16, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–01417 Filed 1–25–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82544; File No. SR–NSCC– 2017–019] Self-Regulatory Organizations; National Securities Clearing Corporation; Order Approving Proposed Rule Change To Enhance the Process for Submitting and Accepting ETF Creations and Redemptions January 19, 2018. On November 28, 2017, National Securities Clearing Corporation (‘‘NSCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) proposed rule change SR–NSCC–2017– 019, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder.2 The proposed rule change was published for comment in the Federal Register on December 7, 2017.3 The Commission did not receive any comment letters on the proposed rule change. For the reasons discussed below, the Commission approves the proposed rule change. I. Description of the Proposed Rule Change daltland on DSKBBV9HB2PROD with NOTICES This proposed rule change would modify NSCC’s Rules & Procedures (‘‘Rules’’) 4 to add two new time frames during which exchange traded fund (‘‘ETF’’) agents may submit creation and redemption instructions, including as-of instructions, reversals, and corrections 18 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 82193 (December 1, 2017), 82 FR 57791 (December 7, 2017) (SR–NSCC–2017–019) (‘‘Notice’’). 4 Available at https://www.dtcc.com/en/legal/ rules-and-procedures. VerDate Sep<11>2014 20:14 Jan 25, 2018 Jkt 244001 (‘‘ETF Instructions’’) 5 to NSCC on behalf of ETF sponsors and ETF authorized participants.6 The existing time frame during which ETF agents can submit ETF Instructions to NSCC extends from 2:00 p.m. to 8:00 p.m. (the ‘‘Primary Cycle’’).7 The two proposed time frames would extend from 12:30 a.m. to 2:00 p.m. (the ‘‘Intraday Cycle’’) and from 9:00 p.m. to 11:30 p.m. (the ‘‘Supplemental Cycle’’).8 The two proposed cycles would enable ETF agents to submit ETF Instructions to NSCC later in the day, or earlier on the following day than currently possible, in order to make corrections to prior submissions.9 The ability to make such new submission would help to avoid a situation where the NSCC member (‘‘Member’’) would need to post margin 10 to cover exposures from the prior erroneous submission.11 Specifically, the proposed Intraday Cycle would enable NSCC to receive, on an intraday basis, (1) ETF Instructions that are marked as-of a prior trade date,12 and (2) ETF Instructions for same-day settlement until the designated cut-off time of 11:30 a.m.13 Meanwhile, the proposed 5 An as-of instruction is an instruction that is submitted with a trade date as of an earlier date. As-of reversal instructions and as-of corrections are types of as-of instructions. An as-of reversal instruction is an instruction that is submitted with a trade date as of an earlier date that reverses an instruction that was already processed by NSCC. Reversals and corrections are submitted on the same business day as the incorrect instruction, whereas as-of reversal instructions and as-of correction instructions are submitted on a business day after the date on which the incorrect instruction was submitted (but they would have the same trade date as the incorrect instruction). Notice, 82 FR at 57792. 6 ETF sponsors are issuers of ETFs. ETF authorized participants are (1) broker/dealers that have authorized participant agreements with ETF sponsors, and/or (2) broker/dealers that are NSCC members with an established ETF trading relationship with an ETF agent that is representing the ETF. See Rule 2, supra note 4. 7 All times referenced herein are Eastern Standard Time. 8 Notice, 82 FR at 57792–94. 9 Id. at 57793. 10 Rules, supra note 4. One way that NSCC mitigates its risk exposure to its Members is through a number of risk-based component charges (such as margin) that are calculated and assessed on Members daily. Each of the component charges collectively constitutes a Member’s daily required deposit (‘‘Required Deposit’’). The objective of the Required Deposit is to mitigate potential losses to NSCC associated with liquidation of the Member’s portfolio in the event that NSCC ceases to act for a Member (hereinafter referred to as a ‘‘Default’’). The aggregate of all Members’ Required Deposits constitutes the Clearing Fund, which NSCC would be able to access should a defaulting Member’s own Required Deposit be insufficient to satisfy losses to NSCC caused by the liquidation of that Member’s portfolio. 11 Notice, 82 FR at 57793. 12 Id. 13 Id. PO 00000 Frm 00132 Fmt 4703 Sfmt 4703 Supplemental Cycle would enable ETF agents to submit ETF Instructions later than the Primary Cycle cut-off of 8:00 p.m.14 In connection with the two proposed cycles, NSCC also proposes to revise the standardized input files, which are submitted by ETF agents to NSCC, and the output files, which are sent by NSCC to ETF agents and ETF authorized participants, to include additional information, such as a reversal/ correction indicator and transaction time.15 NSCC also proposes an ‘‘automated threshold value reasonability check.’’ This check would hold any ETF Instructions in a ‘‘pending’’ status if such instructions exceed certain thresholds established by NSCC when compared to the most recent closing price.16 Finally, NSCC proposes a technical correction to the Rules to clarify that next-day settling ETF Instructions are no longer processed differently than other ETF Instructions when submitted to NSCC.17 A. Current ETF Submission Processes According to NSCC, ETF sponsors have processes outside of NSCC that allow the sponsors to create or redeem ETF shares with ETF authorized participants intraday. The details of the creations or redemptions are then recorded by ETF agents.18 The processes conducted outside of NSCC are not uniformly automated and may involve manual data entry that the ETF agent eventually submits to NSCC using the standardized ETF create-and-redeem input file.19 Currently, the Primary Cycle is the only time in which ETF agents can submit the input file to NSCC.20 However, according to NSCC, a risk exists that the manually entered data may contain errors that could result in incorrectly valued transactions.21 NSCC states that any errors in the manually entered data contained in the input file may result in NSCC recording ETF Instructions that may be materially different than the value upon which the ETF sponsor and ETF authorized participant agreed.22 Nevertheless, NSCC uses that information when calculating both the ETF agent’s and the ETF authorized participant’s daily 14 Id. at 57792. at 57794. 16 Id. at 57795–96. 17 Id. at 57794–95. 18 Id. at 57791. 19 Id. 20 Id. at 57792. 21 Id. at 57791–92. 22 Id. at 57792. 15 Id. E:\FR\FM\26JAN1.SGM 26JAN1

Agencies

[Federal Register Volume 83, Number 18 (Friday, January 26, 2018)]
[Notices]
[Pages 3799-3804]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-01417]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82563; File No. SR-NYSE-2018-03]


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

January 22, 2018.
    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 January 8, 2018, New York Stock Exchange LLC (``NYSE'' 
or the ``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.
---------------------------------------------------------------------------

    \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 for equity 
transactions in stocks with a per share stock price of $1.00 or more to 
(1) revise the Non-Tier Adding Credit; (2) modify the market at-the-
close (``MOC'') and limit at-the-close (``LOC'') tier and non-tier 
rates and add a new Floor broker MOC fee; (3) modify the fee for 
executions at the close (except MOC, LOC and Closing Offset (``CO'') 
Orders), and Floor broker executions swept into the close, excluding 
verbal interest above the first 750,000 average daily volume (``ADV'') 
of aggregate executions at the close; (4) introduce a Tier 4 Adding 
Credit; (5) introduce tiered trading license fees; and (6) make certain 
non-substantive organizational and clarifying changes, including 
grouping fees for all executions at the close together. The Exchange 
proposes to implement these changes to its Price List effective January 
8, 2018.\4\ The proposed rule change is available on the Exchange's 
website at www.nyse.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.
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    \4\ The Exchange originally filed to amend the Price List on 
December 28, 2017 (SR-NYSE-2017-73). SR-NYSE-2017-73 was 
subsequently withdrawn and replaced by this filing.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

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

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

1. Purpose
    The Exchange proposes to amend its Price List to (1) revise the 
Non-Tier Adding Credit; (2) modify the MOC and LOC tier and non-tier 
rates and add a Floor broker MOC fee; (3) modify the fee for executions 
at the close (except MOC, LOC and CO Orders), and Floor broker 
executions swept into the close, excluding verbal interest above the 
first 750,000 average daily volume (``ADV'') of aggregate executions at 
the close; (4) introduce a Tier 4 Adding Credit; (5) introduce tiered 
trading license fees; and (6) make certain non-substantive 
organizational and clarifying changes, including grouping fees for all 
executions at the close together.
    The proposed changes would only apply to fees and credits in 
transactions in securities priced $1.00 or more.
    The Exchange proposes to implement these changes to its Price List 
effective January 8, 2018.

[[Page 3800]]

Member Organization Non-Tier Adding Credit
    Member organizations are currently eligible for the Non-Tier Adding 
Credit for all orders in securities priced $1.00 or more, other than 
Midpoint Passive Liquidity (``MPL'') \5\ and Non-Display Reserve 
orders, that add liquidity to the NYSE unless a higher credit applies. 
The applicable rate for the Non-Tier Adding Credit is $0.0014 per 
share. The Exchange proposes to lower this credit to $0.0012 per share. 
The credits applicable to MPL orders and Non-Display Reserve orders 
would be unchanged.
---------------------------------------------------------------------------

    \5\ An MPL Order is an undisplayed limit order that 
automatically executes at the mid-point of the best protected bid 
(``PBB'') or best protected offer (``PBO''), as such terms are 
defined in Regulation NMS Rule 600(b)(57) (together, ``PBBO''). See 
Rule 13. See also 17 CFR 242.600(b)(57).
---------------------------------------------------------------------------

Executions at the Close
Overview
    The Exchange proposes to group all fees relating to executions at 
the close together in a table under a new proposed heading titled 
``Executions at the Close Equity Per Share Charge--per transaction 
(both sides).'' The current entries relating to charges for executions 
at the close, including verbal interest and MOC/LOC Tiers 1 and 2, 
would be moved and/or replaced with modified entries, as described more 
fully below. The Exchange also proposes modifications to the rates for 
non-tier MOC orders and a new fee for MOC order executed by Floor 
brokers. Finally, the Exchange proposes modifications for charges for 
executions at the close (except MOC, LOC and CO Orders), and Floor 
broker executions swept into the close, excluding verbal interest above 
the first 750,000 ADV of the aggregate of executions at the close by a 
member organization.\6\
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    \6\ The Exchange is not proposing to change the fees for verbal 
interest at the close and for CO Orders. The Exchange proposes non-
substantive differences to describe these fees as the first and 
second entries on the table with the fees associated with executions 
at the close.
---------------------------------------------------------------------------

MOC/LOC Tiers and Non-Tier MOC/LOC
MOC/LOC Tier 1
    For MOC/LOC Tier 1, the Exchange currently charges $0.0007 per 
share for all MOC and LOC orders from any member organization executing 
ADV of MOC and LOC activity on the NYSE in that month of at least 
0.575% of consolidated average daily volume (``CADV'') in NYSE-listed 
securities (i.e., Tape A securities) during the billing month (``NYSE 
CADV'').
    The Exchange proposes to move the MOC/LOC Tier 1 as the third [sic] 
entry on the table with the charges associated with executions at the 
close and modify it to provide that the MOC/LOC Tier 1 rates would be 
available for all MOC and LOC orders from any member organization in 
the prior three billing months executing (1) an ADV of MOC activity on 
the NYSE of at least 0.45% of NYSE CADV, (2) an ADV of total close 
activity (MOC/LOC and executions at the close) on the NYSE of at least 
0.7% of NYSE CADV, and (3) whose MOC activity comprised at least 35% of 
the member organization's total close activity (MOC/LOC and other 
executions at the close).
    For member organizations qualifying for the MOC/LOC Tier 1 
requirements, the Exchange proposes to retain the $0.0007 per share 
charge for LOC executions and to lower the per share charge for MOC 
executions to $0.0004 per share.
MOC/LOC Tier 2
    For MOC/LOC Tier 2, the Exchange currently charges $0.0008 per 
share for all MOC and LOC orders from any member organization executing 
(i) an ADV of MOC and LOC activity on the Exchange in that month of at 
least 0.375% of NYSE CADV; or (ii) an ADV of MOC and LOC activity on 
the Exchange in that month of at least 0.300% of NYSE CADV plus an ADV 
of total close (MOC/LOC and executions at the close) activity on the 
Exchange in that month of at least 0.475% of NYSE CADV.
    The Exchange proposes to move the MOC/LOC Tier 2 as the fourth 
[sic] entry on the table with the charges associated with executions at 
the close and modify it to provide that the MOC/LOC Tier 2 rates would 
be available for all MOC and LOC orders from any member organization in 
the prior three billing months executing (1) an ADV of MOC activity on 
the NYSE of at least 0.35% of NYSE CADV, (2) an ADV of total close 
activity (MOC/LOC and other executions at the close) on the NYSE of at 
least 0.525% of NYSE CADV, and (3) whose MOC activity comprised at 
least 35% of the member organization's total close activity (MOC/LOC 
and other executions at the close).
    For member organizations qualifying for the MOC/LOC Tier 2 
requirements, the Exchange proposes to retain the $0.0008 per share 
charge for LOC executions and to lower the per share charge for MOC 
executions to $0.0005 per share.
Non-Tier MOC/LOC
    The Exchange proposes to move fees for Non-Tier MOC/LOC rates, 
which as proposed would include MOC Orders, LOC Orders, and MOC Orders 
entered by a Floor broker, as the fifth [sic] entry on the table with 
the charges associated with executions at the close.
    For Non-Tier MOC/LOC, the Exchange currently charges member 
organizations $0.0011 per share for MOC and LOC executions, unless a 
member organization meets specified thresholds set forth in the Price 
List for MOC and LOC activity. The Exchange proposes that the Non-Tier 
MOC/LOC rates would be available for any member organization not 
meeting the above requirements for MOC/LOC Tier 1 or MOC/LOC Tier 2.
    For member organizations that qualify for Non-Tier MOC/LOC, the 
Exchange proposes to lower the fee for MOC executions to $0.0010 per 
share. The charge for Non-Tier LOC executions would remain the same at 
$0.0011.
Floor Broker MOC Orders
    The Exchange propose [sic] a new fee for the execution of MOC 
orders sent to a Floor broker for representation on the Exchange of 
$0.0005 per share unless a lower tiered fee applies. The proposed fee 
would appear in the table as part of the Non-Tier MOC/LOC entries.
Fees for d-Quotes and Other Executions at the Close
    The Exchange proposes to move charges for d-Quotes and other 
executions at the close, which as proposed would include d-Quotes, 
Floor broker executions swept into the close, excluding verbal 
interest, and executions at the close but excluding MOC Orders, LOC 
Orders, and CO Orders, as the sixth [sic] entry on the table with the 
charges associated with executions at the close.
    Currently, the Exchange charges $0.0005 per share if a member 
organization executes an ADV on the NYSE during the billing month in 
excess of 750,000 shares in (1) executions at the close (except MOC and 
LOC executions), and/or (2) Floor broker executions swept into the 
close, excluding verbal interest. The fee is applicable to shares 
executed in excess of 750,000 ADV, while no charge is applicable to 
shares executed below 750,000 ADV.
    The Exchange proposes to continue not to charge member 
organizations for the first 750,000 ADV of the aggregate of executions 
at the close for d-Quote, Floor broker executions swept into the close, 
excluding verbal interest, and

[[Page 3801]]

executions at the close, excluding MOC Orders, LOC Orders and CO 
Orders. For d-Quote, Floor broker executions swept into the close, 
excluding verbal interest, and executions at the close, excluding MOC 
Orders, LOC Orders and CO Orders after the first 750,000 ADV of the 
aggregate of executions at the close by a member organization, the 
Exchange proposes to change the rate to $0.0007 per share.
Tier 4 Adding Credit
    The Exchange proposes to establish a new adding credit tier titled 
the ``Tier 4 Adding Credit'' that would provide a credit of $0.0015 per 
share for all orders, other than MPL and Non-Display Reserve orders, 
that add liquidity to the NYSE if:
    (i) The member organization has Adding ADV in MPL orders that is at 
least 4 million shares ADV, excluding any liquidity added by a DMM, and
    (ii) the member organization executes MOC and LOC orders of at 
least 0.10% of NYSE CADV.
Trading License Fees
    Rule 300(b) provides, among other things, that the price per 
trading license will be published in the Exchange's price list and that 
a tiered pricing structure based on the number of trading licenses held 
by a member organization may be utilized. The current trading license 
fee in place since 2016 \7\ is $50,000 per trading license and no 
charge for additional licenses held by a member organization. Regulated 
Only Members, as defined in Rule 2(b)(ii), are charged an annual 
administration fee of $25,000.
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 78233 (July 6, 
2016), 81 FR 45190 (July 12, 2016) (SR-NYSE-2016-47).
---------------------------------------------------------------------------

    The Exchange proposes to introduce tiered trading license fees and 
group all charges relating to trading license fees in a table under the 
``Trading License'' heading.\8\
---------------------------------------------------------------------------

    \8\ The Exchange also proposes to correct a typographical error 
in the heading and change ``Licences'' to ``Licenses.''
---------------------------------------------------------------------------

    For all member organizations, including Floor brokers with more 
than ten trading licenses but excluding Regulated Only Members, the 
trading license fee would remain unchanged at $50,000 for the first 
license held by the member organization unless one of the other rates 
is deemed applicable.
    For member organizations with 3-9 trading licenses, the Exchange 
proposes a fee of $35,000 for the first license held by a member 
organization that has Floor broker executions accounting for 40% or 
more of the member organization's combined adding and taking volumes 
during the billing month.
    For Floor brokers with 1-2 trading licenses, the Exchange proposes 
a fee of $25,000 for the first license held by a member organization 
that has Floor broker executions accounting for 40% or more of the 
member organization's combined adding and taking volumes during the 
billing month.
    As set forth in proposed footnote 15, there would continue to be no 
charge for additional licenses held by a member organization. In 
addition, the Exchange proposes not to charge for a trading license in 
place for 10 calendar days or less in a calendar month and eliminate 
the flat rate of $100 per day for such license. Further, a trading 
license in place for 11 calendar days or more in a calendar month will 
be charged the applicable license fee for that month. Finally, for 
calculating the number of licenses described above, for the lower 
rates, the number of licenses will be based on those held by the member 
organization for 10 or more days in the billing month (including days 
the Exchange is not open for the entire trading day).\9\
---------------------------------------------------------------------------

    \9\ The Exchange also proposes non-substantive, clarifying 
changes to the current first sentence of footnote 15 to delete 
``indicated above'' and add ``indicated'' before ``annual,'' 
``trading license'' before ``fee,'' and ``on a monthly basis'' after 
``will be prorated.'' Footnote 15 as amended would continue to apply 
to the first license held by a member organization in each category.
---------------------------------------------------------------------------

    For example, assume a member organization has 10 trading licenses 
in a given billing month with 9 licenses being held for 10 or more days 
that month and the tenth license being held for less than ten days. 
Further assume that the member organization also had Floor broker 
executions accounting for 40% or more of the member organization's 
combined adding and taking volumes during that billing month. In such a 
case, the member organization would qualify for the lower license fee 
of $35,000 in that billing month, prorated monthly.
    If that same member organization in the following billing month 
held the same number of licenses, but with all 10 being held for 10 or 
more days, then the member organization would be billed the full rate 
of $50,000 for that next billing month, prorated monthly, regardless of 
whether that member organization had Floor broker executions accounting 
for 40% or more of the member organization's combined adding and taking 
volumes during that next billing month.
    The annual administration fee for Regulated Only Members, as 
defined in Rule 2(b)(ii), would remain $25,000.
* * * * *
    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,\10\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\11\ 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4) & (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed fee changes for certain 
executions at the close are reasonable. The Exchange's closing auction 
is a recognized industry benchmark,\12\ and member organizations 
receive a substantial benefit from the Exchange in obtaining high 
levels of executions at the Exchange's closing price on a daily basis.
---------------------------------------------------------------------------

    \12\ For example, the pricing and valuation of certain indices, 
funds, and derivative products require primary market prints.
---------------------------------------------------------------------------

Member Organization Non-Tier Adding Credit
    The Exchange believes that the change to the Member Organization 
Non-Tier Adding Credit for executions of orders in securities with a 
per share price of $1.00 or more is reasonable, equitable and not 
unfairly discriminatory because it is intended to incentivize member 
organizations to submit additional amounts of liquidity to the Exchange 
to be eligible to receive the higher credits available from the Tier 1 
Adding Credit, the Tier 2 Adding Credit, the Tier 3 Adding Credit and 
the proposed Tier 4 Adding Credit. The Exchange believes that the 
proposed lower credit for the Member Organization Non-Tier Adding 
Credit is equitable and not unfairly discriminatory because it would 
apply equally to all member organizations.
MOC/LOC Tiers and Non-Tier MOC/LOC
    The Exchange believes that requiring an ADV of MOC activity on the 
NYSE of at least 0.45% of NYSE CADV, an

[[Page 3802]]

ADV of Total Close activity on the NYSE of at least 0.7% of NYSE CADV, 
and MOC activity comprised at least 35% of the member organization's 
total close activity (MOC/LOC and other executions at the close) for 
the MOC/LOC Tier 1 fee, as well the requiring an ADV of MOC activity on 
the NYSE of at least 0.35% of NYSE CADV, an ADV of Total Close activity 
on the NYSE of at least 0.525% of NYSE CADV, and MOC activity comprised 
at least 35% of the member's total close activity (MOC/LOC and other 
executions at the close) for the MOC/LOC Tier 2 fee, is reasonable and 
not unfairly discriminatory because the proposed changes would 
encourage greater marketable and other liquidity at the closing 
auction.
    The Exchange believes that charging a lower rate for MOC executions 
than LOC executions is reasonable and not unfairly discriminatory 
because MOC orders are always marketable and therefore have a higher 
likelihood of execution at the close. Charging a lower fee will 
encourage higher volumes of MOC orders at the close, which should 
result in a higher level of orders matched and greater liquidity for 
all Exchange auction participants.
    The Exchange believes that introducing a requirement that at least 
35% of the member organization's total close activity be comprised of 
MOC activity in order to qualify for MOC/LOC Tier 1 or 2 rates is 
reasonable and not unfairly discriminatory because MOC orders 
contribute meaningfully to the price and size discovery, which is the 
hallmark of the closing auction process. Charging a lower fee to member 
organizations utilizing MOC orders as a significant component of their 
closing auction participation will encourage higher volumes of MOC 
orders at the close, which should result in robust price discovery, a 
higher level of orders matched and greater liquidity for all Exchange 
auction participants.
    The Exchange believes that lowering the MOC/LOC Non-Tier fee for 
MOC orders is reasonable as it is comparable to the above change in MOC 
rates for MOC/LOC Tier 1 and MOC/LOC Tier 2, and that MOC orders 
contribute meaningfully to the price and size discovery, which is the 
hallmark of the closing auction process. Charging a lower fee will 
encourage higher volumes of MOC orders at the close, which should 
result in a higher level of orders matched and greater liquidity for 
all Exchange auction participants.
Floor Broker MOC Orders
    The Exchange believes that the proposed fee for executions of MOC 
orders sent to a Floor broker for representation on the Exchange is 
reasonable because it would encourage additional displayed liquidity on 
the Exchange's closing auction. The Exchange believes the proposed 
change is equitable and not unfairly discriminatory because it would 
continue to encourage member organizations to send orders to the 
trading Floor for execution, thereby contributing to robust levels of 
liquidity on the trading Floor, which benefits all market participants. 
The Exchange further notes that the $0.0005 fee for Floor broker MOC 
orders executed at the close is in line with the $0.0007 fee for Floor 
broker executions swept into the close, excluding verbal interest.
Charges for d-Quotes and Other Executions at the Close
    The Exchange believes it is appropriate to continue to not charge 
member organizations for the first 750,000 ADV of the aggregate of 
executions at the close for d-Quote, Floor broker executions swept into 
the close, excluding verbal interest, and executions at the close, 
excluding MOC Orders, LOC Orders, and CO Orders, as this will continue 
to provide less active member organizations a no-cost mechanism to 
participate in the closing auction. The proposed fee change for 
executions above 750,000 ADV is also reasonable, in that it is lower 
than applicable closing rates on the NASDAQ Stock Market, LLC 
(``NASDAQ''). For example, the default fee for Continuous Book 
executions in NASDAQ's ``Closing Cross'' is $0.00085 per share, 
compared with the proposed $0.0007 fee for d-Quote, Floor broker 
executions at the close, excluding verbal interest, and executions at 
the close, excluding MOC Orders, LOC Orders, and CO Orders.\13\
---------------------------------------------------------------------------

    \13\ See NASDAQ Rule 7018(d).
---------------------------------------------------------------------------

Tier 4 Adding Credit
    The Exchange believes that the new Tier 4 Adding Credit of $0.0015 
per share for transactions in stocks with a per share stock price of 
$1.00 or more when adding liquidity is reasonable because it would 
further contribute to incenting member organizations to provide 
additional liquidity to a public exchange, thereby promoting price 
discovery and transparency and enhancing order execution opportunities 
for member organizations. The Exchange believes that introducing a 
requirement for Adding ADV in MPL Orders that is at least 4 million 
shares ADV, excluding any liquidity added by a DMM is reasonable and 
not unfairly discriminatory because MPL orders provide opportunities 
for market participants to interact with orders priced at the midpoint 
of the PBBO, thus providing price improving liquidity to market 
participants and increasing the quality of order execution on the 
Exchange's market, which benefits all market participants. These 
changes should encourage additional utilization of MPL Orders on the 
Exchange. The Exchange further believes that introducing a requirement 
for executions of MOC and LOC orders of at least 0.10% of NYSE CADV is 
reasonable and not unfairly discriminatory because it will encourage 
higher volumes of MOC and LOC orders at the close, which should result 
in a higher level of orders matched and greater liquidity for all 
Exchange auction participants.
    The Exchange further believes that the proposed new Tier 4 Adding 
Credit of $0.0015 is equitable and not unfairly discriminatory because 
all member organizations would benefit from such increased levels of 
liquidity. In addition, the new Tier 4 Adding Credit would provide a 
higher credit to member organizations that is reasonably related to the 
value to the Exchange's market quality associated with higher volumes 
of liquidity. The Exchange also believes that the proposed new Tier 4 
Adding Credit is equitable and not unfairly discriminatory because it 
would provide several methods of qualifying for the credit, which would 
attract multiple sources of liquidity to the Exchange.
Trading License Fees
    The Exchange believes that the proposal to maintain the current 
trading license fee, including the fee for Regulated Only Members, and 
lower the fee for member organizations with 9 or less trading licenses 
who have Floor broker executions accounting for 40% or more of the 
member organization's combined adding and taking volumes during the 
billing month as well as basing the requirement on licenses held 10 or 
more days in the billing month, is equitable and not unfairly 
discriminatory because all similarly situated member organizations 
would continue to be subject to the same trading license fee structure 
and because access to the Exchange's market would continue to be 
offered on fair and non-discriminatory terms. The Exchange also 
believes that the proposal is equitable and not unfairly discriminatory 
because all member organizations would continue to have the opportunity 
to enjoy the benefits of the fee relief with respect to additional 
trading licenses. The Exchange believes that allowing member 
organizations

[[Page 3803]]

with 9 or less trading licenses that have the requisite Floor broker 
volumes to obtain a license at a lower cost will help preserve the 
diversity of the Exchange's membership and encourage smaller member 
organizations to send orders to the Exchange. The Exchange believes 
that the threshold it has selected will continue to incent order flow 
from multiple sources and help maintain the quality of the Exchange's 
executions, which benefits all market participants. The Exchange 
further believes that continuing to not charge for additional licenses 
above the first license held by a member organization, not charging for 
a trading license in place for 10 calendar days or less, and charging 
the applicable trading license fee for a trading license in place for 
11 calendar days or more is reasonable because it will continue to 
encourage member organizations to hold additional trading licenses, 
which will increase the number of market participants on the Exchange 
trading Floor, thereby promoting liquidity, price discovery, and the 
opportunity for price improvement for the benefit of all market 
participants. The proposal is also equitable and not unfairly 
discriminatory because it would apply equally to all license holders 
over the same number of days.
Non-Substantive Changes
    The Exchange believes that the proposed non-substantive changes to 
consolidate and streamline the presentation of charges for executions 
at the close and trading license fees into a table, correct a 
typographical error and clarify the first sentence of footnote 15 are 
reasonable because they are designed to provide greater specificity and 
clarity to the Price List, thereby removing impediments to and 
perfecting the mechanism of a free and open market and a national 
market system, and, in general, protecting investors and the public 
interest.
    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 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 Exchange believes that the proposed 
changes would 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 similar order types and comparable transaction pricing, by 
encouraging additional orders to be sent to the Exchange for execution.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSE-2018-03 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-2018-03. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change.

[[Page 3804]]

Persons submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly.
    All submissions should refer to File Number SR-NYSE-2018-03 and 
should be submitted on or before February 16, 2018.
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-01417 Filed 1-25-18; 8:45 am]
 BILLING CODE 8011-01-P
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