Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Its Price List, 14528-14530 [2018-06775]
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14528
Federal Register / Vol. 83, No. 65 / Wednesday, April 4, 2018 / Notices
of the most significant parts of such
statements.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82965; File No. SR–NYSE–
2018–10]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Amending Its
Price List
March 29, 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 March
16, 2018, 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 selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Price List for equity transactions in
stocks with a per share stock price of
$1.00 or more to introduce (1) a new fee
for Floor broker executions at the open,
and (2) different charges for
Discretionary e-Quotes (‘‘d-Quotes’’)
above the first 750,000 average daily
volume (‘‘ADV’’) of aggregate executions
at the close based on the time of dQuote entry. The Exchange proposes to
implement these changes to its Price
List effective April 1, 2018. 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.
amozie on DSK30RV082PROD with NOTICES
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,
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
18:12 Apr 03, 2018
1. Purpose
The Exchange proposes to amend its
Price List to introduce (1) a new fee for
Floor broker executions at the open, and
(2) different charges for d-Quotes above
the first 750,000 ADV of aggregate
executions at the close based on time of
d-Quote entry or modification.
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
April 1, 2018.
Executions at the Open
For securities priced $1.00 or more,
the Exchange currently charges a fee of
$0.0010 per share for executions at the
open, subject to a monthly fee cap of
$30,000 per member organization
provided the member organization
executes an ADV that adds liquidity to
the Exchange during the billing month
(‘‘Adding ADV’’), excluding liquidity
added by a Designated Market Maker, of
at least five million shares.
For securities priced $1.00 or more,
the Exchange proposes to introduce a
fee of $0.0003 per share for executions
at the open by Floor brokers which, as
proposed, would also be subject to the
$30,000 per member organization
monthly fee cap for executions at the
open.4 The $0.0010 per share fee for
executions at the opening would not be
changed. DMMs currently are not
charged for executions at the opening
and would continue to not be charged.
Executions at the Close
For d-Quotes above the first 750,000
ADV of the aggregate of executions at
the close by a member organization, the
Exchange proposes new charges
differentiated by the last time such dQuotes are last modified.
Currently, the Exchange does 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. For
d-Quote, Floor broker executions swept
into the close, excluding verbal interest,
4 The existing pricing for executions at the
opening in securities priced below $1.00 would
remain unchanged (i.e., 0.3% of the total dollar
value of the transaction).
1 15
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
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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
charges $0.0007 per share.
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
executions at the close, excluding MOC
Orders, LOC Orders and CO Orders.
The Exchange proposes the following
fees differentiated by time of entry (or
last modification) for d-Quotes at the
close after the first 750,000 ADV of the
aggregate of executions at the close by
a member organization:
• $0.0003 per share for executed dQuotes last modified 5 by the member
organization earlier than 25 minutes
before the scheduled close of trading.
• $0.0007 per share for executed dQuotes last modified from 25 minutes
up to but not including 3 minutes before
the scheduled close of trading.
• $0.0008 per share for executed dQuotes last modified in the last 3
minutes before the scheduled close of
trading for firms in MOC/LOC Tiers 1
and 2; all other firms, $0.0010 per share.
All other orders from continuous
trading swept into the close would
continue to be charged the existing rate
of $0.0007.
The Exchange proposes to add a new
footnote 9 to the Price List that would
provide that, for member organizations
that execute an ADV on the NYSE
during a billing month in excess of
750,000 shares, the Exchange would
determine the average fee applicable to
that member organization based on all
executions at the close for that month
and would not charge that average fee
for executions below the 750,000 ADV.
The following example demonstrates
the operation of the new fee structure
for executions at the close.
• Assume that Member Organization
A has a combined ADV of d-Quote,
Floor broker and other orders executed
at the close of 5 million shares in a 20
day month, or 100 million shares for the
month. Further assume that Member
Organization A is not at MOC/LOC Tier
1 or 2. Assume a regular 4:00 p.m. close
of trading and that the firm therefore
does not qualify for a MOC/LOC Tier.
• Assume further that a total of 75
million shares were d-Quotes last
5 As set forth in proposed footnote 10 to the Price
List, as used in the Price List, the phrase ‘‘last
modified’’ would mean the later of the order’s entry
time or the final modification or cancellation time
for any d-Quote order with the same broker badge,
entering firm mnemonic, symbol, and side.
E:\FR\FM\04APN1.SGM
04APN1
Federal Register / Vol. 83, No. 65 / Wednesday, April 4, 2018 / Notices
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.
2. Statutory Basis
amozie on DSK30RV082PROD with NOTICES
modified before 3:35 p.m., and therefore
subject to a fee of $0.0003; 5 million
shares were d-Quotes last modified from
3:35 p.m. and prior to 3:57 p.m., and
therefore subject to a fee of $0.0007; 15
million shares were d-Quotes last
modified from 3:57 p.m. up to the
close., and therefore subject to a fee of
$0.0010; and 5 million shares were
other executions at the close, and
therefore subject to a fee of $0.0007.
• Member Organization A’s combined
initial fee for that month would be
$44,500.00 an average fee of $0.000445
per share ($44,500.00 divided by 100
million shares).
• Since under the proposed Price
List, the first 750,000 shares ADV would
not be charged, the Exchange would
reduce the initial $44,500.00 fee by
$6,675.00, which is the product of
750,000 shares multiplied by 20 days
multiplied by the average fee of
$0.000445.
• Member Organization A’s net fee for
the month would thus be $37,825.00
($44,500.00 minus $6,675.00 for the
750,000 ADV that is not charged).
• If Member Organization A was at
MOC/LOC Tier 1 or MOC/LOC Tier 2,
Member Organization A’s monthly fee
would be $35,275.00, representing an
initial $41,500.00 fee reduced by
$6,225.00 based on 750,000 ADV
without charge for 20 days on the
average initial fee of $0.0004150 per
share.
*
*
*
*
*
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.
Executions at the Close
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,6 in general, and
furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,7 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,8 and
The Exchange believes that charging
different rates for d-Quotes that execute
in the close based on time of entry or
last modification is reasonable and not
unfairly discriminatory because it
encourages all member organizations to
enter or modify d-Quotes as early
possible, beginning with as early as 25
minutes before the close of trading, in
order to build up liquidity going into
the closing auction. Further, it is
reasonable to charge member
organizations a higher rate for entering
or modifying their interest in the final
minute of regular trading hours because
such interest most benefits from the
flexibility afforded the order type.
6 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) & (5).
8 For example, the pricing and valuation of
certain indices, funds, and derivative products
require primary market prints.
7 15
VerDate Sep<11>2014
18:12 Apr 03, 2018
Jkt 244001
Executions at the Open
The Exchange believes that the
proposed fee for executions at the open
sent to a Floor broker for representation
on the Exchange is reasonable because
it would encourage additional liquidity
on the Exchange’s opening auction and
because members and member
organizations benefit from the
substantial amounts of liquidity that are
present on the Exchange during such
time.
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 proposed fee
will encourage the submission of
additional liquidity to a national
securities exchange, thereby promoting
price discovery and transparency and
enhancing order execution
opportunities for member organizations
from the substantial amounts of
liquidity that are present on the
Exchange during the opening. Moreover,
the requirement is equitable and not
unfairly discriminatory because it
would apply equally to all similarly
situated member organizations. Finally,
the Exchange notes that the proposed
fee and the current cap together are
comparable to those for executions at
the opening on other markets.9
9 For example, NASDAQ charges $0.0015 per
share for certain orders executed in the NASDAQ
Opening Cross and applies at $35,000 fee cap per
month per firm for such executions. See Nasdaq
Rule 7018(e).
PO 00000
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Sfmt 4703
14529
Similarly, the Exchange believes that
calculating how a member organization
that executes an ADV on the Exchange
during a billing month in excess of
750,000 shares is not charged for those
first 750,000 shares is reasonable
because the Exchange would reduce a
member organization’s total charges for
d-Quote and other executions at the
close by the average fee applicable to
the member organization for that month
for executions at the close times 750,000
shares per day. The Exchange believes
it is reasonable to reduce the fee by the
average fee applicable to that member
organization because the Exchange
would now charge four rates for dQuotes and other executions at the close
($0.0003, $0.0007, $0.0008 or $0.0010).
The average rate would therefore be the
member organization’s weighted average
of those three rates and the Exchange
would not charge that average price for
the first 750,000 shares per day.
The Exchange believes that offering a
lower fee for members at MOC/LOC Tier
1 and 2 of $0.0008 for d-Quotes
executed from 3:57 p.m. up to the close
is reasonable and not unfairly
discriminatory because the proposed
change would encourage greater
marketable and other liquidity at the
closing auction, and higher volumes of
MOC and LOC orders contribute to the
quality of the Exchange’s closing
auction and provide market participants
whose orders are swept into the close
with a greater opportunity for execution.
The Exchange believes that the
proposed fee for MOC/LOC Tier 1 and
2 is equitable and not unfairly
discriminatory because all similarly
situated member organizations will be
subject to the same fee structure, which
will automatically adjust based on
prevailing market conditions.
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,10 the Exchange believes that the
proposed rule change would not impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Instead, the
Exchange believes that the proposed
changes would encourage the
submission of additional liquidity to a
public exchange, thereby promoting
10 15
E:\FR\FM\04APN1.SGM
U.S.C. 78f(b)(8).
04APN1
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Federal Register / Vol. 83, No. 65 / Wednesday, April 4, 2018 / Notices
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.
amozie on DSK30RV082PROD with NOTICES
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) 11 of the Act and
subparagraph (f)(2) of Rule 19b–4 12
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
11 15
12 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
VerDate Sep<11>2014
18:12 Apr 03, 2018
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) 13 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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Brent J. Fields,
Secretary.
[FR Doc. 2018–06775 Filed 4–3–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSE–2018–10 on the subject line.
Submission for OMB Review;
Comment Request
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE, Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSE–2018–10. 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.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
Extension:
Rule 12d1–1, SEC File No. 270–526, OMB
Control No. 3235–0584.
13 15
Jkt 244001
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSE–2018–10 and should
be submitted on or before April 25,
2018.
PO 00000
U.S.C. 78s(b)(2)(B).
Frm 00121
Fmt 4703
Sfmt 4703
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission (the
‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
An investment company (‘‘fund’’) is
generally limited in the amount of
securities the fund (‘‘acquiring fund’’)
can acquire from another fund
(‘‘acquired fund’’). Section 12(d) of the
Investment Company Act of 1940 (the
‘‘Investment Company Act’’ or ‘‘Act’’) 1
provides that a registered fund (and
companies it controls) cannot:
• Acquire more than three percent of
another fund’s securities;
• Invest more than five percent of its
own assets in another fund; or
• Invest more than ten percent of its
own assets in other funds in the
aggregate.2
In addition, a registered open-end
fund, its principal underwriter, and any
registered broker or dealer cannot sell
that fund’s shares to another fund if, as
a result:
• The acquiring fund (and any
companies it controls) owns more than
three percent of the acquired fund’s
stock; or
14 17
CFR 200.30–3(a)(12).
15 U.S.C. 80a.
2 See 15 U.S.C. 80a–12(d)(1)(A). If an acquiring
fund is not registered, these limitations apply only
with respect to the acquiring fund’s acquisition of
registered funds.
1 See
E:\FR\FM\04APN1.SGM
04APN1
Agencies
[Federal Register Volume 83, Number 65 (Wednesday, April 4, 2018)]
[Notices]
[Pages 14528-14530]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06775]
[[Page 14528]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82965; File No. SR-NYSE-2018-10]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending Its Price List
March 29, 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 March 16, 2018, 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 for equity
transactions in stocks with a per share stock price of $1.00 or more to
introduce (1) a new fee for Floor broker executions at the open, and
(2) different charges for Discretionary e-Quotes (``d-Quotes'') above
the first 750,000 average daily volume (``ADV'') of aggregate
executions at the close based on the time of d-Quote entry. The
Exchange proposes to implement these changes to its Price List
effective April 1, 2018. 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 introduce (1) a
new fee for Floor broker executions at the open, and (2) different
charges for d-Quotes above the first 750,000 ADV of aggregate
executions at the close based on time of d-Quote entry or modification.
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 April 1, 2018.
Executions at the Open
For securities priced $1.00 or more, the Exchange currently charges
a fee of $0.0010 per share for executions at the open, subject to a
monthly fee cap of $30,000 per member organization provided the member
organization executes an ADV that adds liquidity to the Exchange during
the billing month (``Adding ADV''), excluding liquidity added by a
Designated Market Maker, of at least five million shares.
For securities priced $1.00 or more, the Exchange proposes to
introduce a fee of $0.0003 per share for executions at the open by
Floor brokers which, as proposed, would also be subject to the $30,000
per member organization monthly fee cap for executions at the open.\4\
The $0.0010 per share fee for executions at the opening would not be
changed. DMMs currently are not charged for executions at the opening
and would continue to not be charged.
---------------------------------------------------------------------------
\4\ The existing pricing for executions at the opening in
securities priced below $1.00 would remain unchanged (i.e., 0.3% of
the total dollar value of the transaction).
---------------------------------------------------------------------------
Executions at the Close
For d-Quotes above the first 750,000 ADV of the aggregate of
executions at the close by a member organization, the Exchange proposes
new charges differentiated by the last time such d-Quotes are last
modified.
Currently, the Exchange does 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. 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 charges $0.0007 per share.
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 executions at the close, excluding MOC
Orders, LOC Orders and CO Orders.
The Exchange proposes the following fees differentiated by time of
entry (or last modification) for d-Quotes at the close after the first
750,000 ADV of the aggregate of executions at the close by a member
organization:
$0.0003 per share for executed d-Quotes last modified \5\
by the member organization earlier than 25 minutes before the scheduled
close of trading.
---------------------------------------------------------------------------
\5\ As set forth in proposed footnote 10 to the Price List, as
used in the Price List, the phrase ``last modified'' would mean the
later of the order's entry time or the final modification or
cancellation time for any d-Quote order with the same broker badge,
entering firm mnemonic, symbol, and side.
---------------------------------------------------------------------------
$0.0007 per share for executed d-Quotes last modified from
25 minutes up to but not including 3 minutes before the scheduled close
of trading.
$0.0008 per share for executed d-Quotes last modified in
the last 3 minutes before the scheduled close of trading for firms in
MOC/LOC Tiers 1 and 2; all other firms, $0.0010 per share.
All other orders from continuous trading swept into the close would
continue to be charged the existing rate of $0.0007.
The Exchange proposes to add a new footnote 9 to the Price List
that would provide that, for member organizations that execute an ADV
on the NYSE during a billing month in excess of 750,000 shares, the
Exchange would determine the average fee applicable to that member
organization based on all executions at the close for that month and
would not charge that average fee for executions below the 750,000 ADV.
The following example demonstrates the operation of the new fee
structure for executions at the close.
Assume that Member Organization A has a combined ADV of d-
Quote, Floor broker and other orders executed at the close of 5 million
shares in a 20 day month, or 100 million shares for the month. Further
assume that Member Organization A is not at MOC/LOC Tier 1 or 2. Assume
a regular 4:00 p.m. close of trading and that the firm therefore does
not qualify for a MOC/LOC Tier.
Assume further that a total of 75 million shares were d-
Quotes last
[[Page 14529]]
modified before 3:35 p.m., and therefore subject to a fee of $0.0003; 5
million shares were d-Quotes last modified from 3:35 p.m. and prior to
3:57 p.m., and therefore subject to a fee of $0.0007; 15 million shares
were d-Quotes last modified from 3:57 p.m. up to the close., and
therefore subject to a fee of $0.0010; and 5 million shares were other
executions at the close, and therefore subject to a fee of $0.0007.
Member Organization A's combined initial fee for that
month would be $44,500.00 an average fee of $0.000445 per share
($44,500.00 divided by 100 million shares).
Since under the proposed Price List, the first 750,000
shares ADV would not be charged, the Exchange would reduce the initial
$44,500.00 fee by $6,675.00, which is the product of 750,000 shares
multiplied by 20 days multiplied by the average fee of $0.000445.
Member Organization A's net fee for the month would thus
be $37,825.00 ($44,500.00 minus $6,675.00 for the 750,000 ADV that is
not charged).
If Member Organization A was at MOC/LOC Tier 1 or MOC/LOC
Tier 2, Member Organization A's monthly fee would be $35,275.00,
representing an initial $41,500.00 fee reduced by $6,225.00 based on
750,000 ADV without charge for 20 days on the average initial fee of
$0.0004150 per share.
* * * * *
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,\6\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\7\ in
particular, because it provides for the equitable allocation of
reasonable dues, fees, and other charges among its members, issuers and
other persons using its facilities and does not unfairly discriminate
between customers, issuers, brokers or dealers.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4) & (5).
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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,\8\ 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.
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\8\ For example, the pricing and valuation of certain indices,
funds, and derivative products require primary market prints.
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Executions at the Open
The Exchange believes that the proposed fee for executions at the
open sent to a Floor broker for representation on the Exchange is
reasonable because it would encourage additional liquidity on the
Exchange's opening auction and because members and member organizations
benefit from the substantial amounts of liquidity that are present on
the Exchange during such time.
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 proposed fee will
encourage the submission of additional liquidity to a national
securities exchange, thereby promoting price discovery and transparency
and enhancing order execution opportunities for member organizations
from the substantial amounts of liquidity that are present on the
Exchange during the opening. Moreover, the requirement is equitable and
not unfairly discriminatory because it would apply equally to all
similarly situated member organizations. Finally, the Exchange notes
that the proposed fee and the current cap together are comparable to
those for executions at the opening on other markets.\9\
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\9\ For example, NASDAQ charges $0.0015 per share for certain
orders executed in the NASDAQ Opening Cross and applies at $35,000
fee cap per month per firm for such executions. See Nasdaq Rule
7018(e).
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Executions at the Close
The Exchange believes that charging different rates for d-Quotes
that execute in the close based on time of entry or last modification
is reasonable and not unfairly discriminatory because it encourages all
member organizations to enter or modify d-Quotes as early possible,
beginning with as early as 25 minutes before the close of trading, in
order to build up liquidity going into the closing auction. Further, it
is reasonable to charge member organizations a higher rate for entering
or modifying their interest in the final minute of regular trading
hours because such interest most benefits from the flexibility afforded
the order type.
Similarly, the Exchange believes that calculating how a member
organization that executes an ADV on the Exchange during a billing
month in excess of 750,000 shares is not charged for those first
750,000 shares is reasonable because the Exchange would reduce a member
organization's total charges for d-Quote and other executions at the
close by the average fee applicable to the member organization for that
month for executions at the close times 750,000 shares per day. The
Exchange believes it is reasonable to reduce the fee by the average fee
applicable to that member organization because the Exchange would now
charge four rates for d-Quotes and other executions at the close
($0.0003, $0.0007, $0.0008 or $0.0010). The average rate would
therefore be the member organization's weighted average of those three
rates and the Exchange would not charge that average price for the
first 750,000 shares per day.
The Exchange believes that offering a lower fee for members at MOC/
LOC Tier 1 and 2 of $0.0008 for d-Quotes executed from 3:57 p.m. up to
the close is reasonable and not unfairly discriminatory because the
proposed change would encourage greater marketable and other liquidity
at the closing auction, and higher volumes of MOC and LOC orders
contribute to the quality of the Exchange's closing auction and provide
market participants whose orders are swept into the close with a
greater opportunity for execution. The Exchange believes that the
proposed fee for MOC/LOC Tier 1 and 2 is equitable and not unfairly
discriminatory because all similarly situated member organizations will
be subject to the same fee structure, which will automatically adjust
based on prevailing market conditions.
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,\10\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, the Exchange believes that the proposed
changes would encourage the submission of additional liquidity to a
public exchange, thereby promoting
[[Page 14530]]
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.
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\10\ 15 U.S.C. 78f(b)(8).
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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) \11\ of the Act and subparagraph (f)(2) of Rule
19b-4 \12\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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) \13\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\13\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSE-2018-10 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2018-10. 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. 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-2018-10 and should be submitted on
or before April 25, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2018-06775 Filed 4-3-18; 8:45 am]
BILLING CODE 8011-01-P