Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Equities Fees and Charges, 16909-16912 [2018-07931]

Download as PDF Federal Register / Vol. 83, No. 74 / Tuesday, April 17, 2018 / Notices Dated: April 11, 2018. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–07960 Filed 4–16–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83032; File No. SR– NYSEArca–2018–20] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Equities Fees and Charges April 11, 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 30, 2018, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. daltland on DSKBBV9HB2PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE Arca Equities Fees and Charges (‘‘Fee Schedule’’) to (i) revise the requirements to qualify for the Step-Up Tier; (ii) adopt a new pricing tier, BBO Setter Tier; (iii) delete the Tape A and Tape C Tier; (iv) eliminate the credits associated with indications of interest (‘‘IOIs’’); (v) delete obsolete language related to an Exchange Traded Product (‘‘ETP’’) Incentive Program; and (vi) modify the credit the Exchange provides for orders with the Self Trade Prevention (‘‘STP’’) Cancel Both (‘‘STPC’’) and STP Decrement and Cancel (‘‘STPD’’) Modifiers. The Exchange proposes to implement the fee changes effective April 2, 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. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 VerDate Sep<11>2014 19:20 Apr 16, 2018 Jkt 244001 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 Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the Fee Schedule, as described below, to (i) revise the requirements for the Step-Up Tier; (ii) adopt a new pricing tier, BBO Setter Tier; (iii) delete the Tape A and Tape C Tier; (iv) eliminate the credits associated with IOIs; (v) delete obsolete language related to an ETP Incentive Program; and (vi) modify the credit the Exchange provides for orders with the STPC and STPD Modifiers. The Exchange proposes to implement the fee changes on April 2, 2018. Step-Up Tier In September 2016, the Exchange filed a proposed rule change to adopt a new Step-Up pricing tier that was intended to incentivize ETP Holders and Market Makers to increase order flow and provide additional liquidity.4 In September 2017, the Exchange filed a proposed rule change to adopt a second way by which an ETP Holder or Market Maker could qualify for the Step-Up Tier.5 Currently, to qualify for the StepUp Tier, ETP Holders and Market Makers, on a daily basis, measured monthly must: (i) directly execute providing average daily volume that is an increase of no less than 0.15% of US CADV 6 for that month over the ETP 4 See Securities Exchange Act Release No. 78892 (September 21, 2016), 81 FR 66315 (September 27, 2016) (SR–NYSEArca–2016–128). 5 See Securities Exchange Act Release No. 81601 (September 13, 2017), 82 FR 43633 (September 18, 2017) (SR–NYSEArca–2017–104). 6 US CADV means United States Consolidated Average Daily Volume for transactions reported to the Consolidated Tape, excluding odd lots through January 31, 2014 (except for purposes of Lead Market Maker pricing), and excludes volume on days when the market closes early and on the date of the annual reconstitution of the Russell Investments Indexes. Transactions that are not reported to the Consolidated Tape are not included in US CADV. PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 16909 Holder’s or Market Maker’s providing average daily volume in July 2016, and (ii) sets a new NYSE Arca Best Bid or Offer with at least 25% in each of the ETP Holder’s or Market Maker’s Tape A, Tape B and Tape C providing ADV. ETP Holders and Market Makers can alternatively qualify for the Step-Up Tier if such ETP Holder or Market Maker, on a daily basis, measured monthly: (i) Directly execute providing average daily volume that is an increase of no less than 0.15% of US CADV for that month over the ETP Holder’s or Market Maker’s providing average daily volume in July 2016, and (ii) sets a new NYSE Arca Best Bid or Offer with at least 20% in the ETP Holder’s or Market Maker’s Tape A providing ADV, at least 25% in the ETP Holder’s or Market Maker’s Tape B providing ADV, and at least 30% in the ETP Holder’s or Market Maker’s Tape C providing ADV, and (iii) directly execute taking average daily volume of at least 15 million shares. ETP Holders and Market Makers that qualify for the Step-Up Tier receive a credit of $0.0029 per share for orders that provide liquidity to the Book in Tape A and Tape C Securities and $0.0028 per share for orders that provide liquidity to the Book in Tape B Securities. The Step-Up Tier has not encouraged ETP Holders and Market Makers to increase their activity to qualify for this pricing tier as significantly as the Exchange had anticipated that it would. As a result, the Exchange proposes to revise the current requirements to qualify for the Step-Up Tier. As proposed, ETP Holders and Market Makers would qualify for the Step-Up Tier if they directly execute providing average daily volume per month of 0.50% or more but less than 0.70% of the US CADV, and directly execute providing ADV that is an increase of no less than 0.10% of US CADV for that month over the ETP Holder’s or Market Maker’s providing ADV in Q1 2018. ETP Holders and Market Makers that qualify for the Step-Up Tier would receive a credit of $0.0030 per share for orders that provide displayed liquidity to the Book in Tape A Securities, $0.0023 per share for orders that provide displayed liquidity to the Book in Tape B Securities, and $0.0031 per share for orders that provide displayed liquidity in Tape C Securities. The goal of the Step-Up Tier remains the same, i.e., to incentivize ETP Holders and Market Makers to increase the orders sent directly to NYSE Arca and therefore provide liquidity that supports the quality of price discovery E:\FR\FM\17APN1.SGM 17APN1 16910 Federal Register / Vol. 83, No. 74 / Tuesday, April 17, 2018 / Notices and promotes market transparency.7 The Exchange believes that the proposed new qualifying requirement for the Step-Up Tier will provide an incentive for ETP Holders or Market Makers that are active traders on the Exchange to increase the orders sent to the Exchange that would provide liquidity. BBO Setter Tier The Exchange proposes a new pricing tier—BBO Setter Tier—for securities with a per share price of $1.00 or above. As proposed, a new BBO Setter Tier credit of $0.0004 per share for orders that set a new NYSE Arca BBO in Tape A and Tape C Securities and $0.0002 per share for orders that set a new NYSE Arca BBO in Tape B Securities would apply to ETP Holders and Market Makers that directly execute providing ADV per month of 0.70% or more of the US CADV, and provided that an ETP ID 8 associated with an ETP Holder or Market Maker, on a daily basis, measured monthly (1) Directly executes providing ADV of at least 0.20% of US CADV, (2) sets a new NYSE Arca BBO with at least 0.10% of US CADV; and (3) sets a new NYSE Arca BBO of at least 40% of that ETP Holder’s or Market Maker’s ETP ID providing ADV. The proposed credit would be in addition to the ETP Holder’s or Market Maker’s Tiered or Basic Rate credit(s), and for Tape B and Tape C Securities, the proposed credit would be in addition to any capped credit.9 For example, assume an ETP Holder or Market Maker qualifies for the Tape C Tier 1 credit of $0.0032 per share for orders that provide liquidity to the Book. Assume further that the same ETP Holder or Market Maker also qualifies for the Tape C Tier 2 incremental credit of $0.0002 per share. Pursuant to the Tape C Tier 2 pricing tier, the ETP Holder or Market Maker’s credit cannot exceed $0.0033 per share. In this example, the ETP Holder or Market Maker’s credit would be capped at $0.0033 per share. Assume further that the ETP Holder or Market Maker has an ETP ID that qualifies for the proposed 7 See supra, note 5, at 43634. Holders enter orders and order instructions by using communication protocols that map to the order types and modifiers described in Exchange rules. The Exchange makes available ports that communicate with the Exchange using Pillar phase I protocols and Pillar phase II protocols. For purposes of the BBO Setter Tier, references to ETP ID means an ETP ID when using Pillar phase I protocols to communicate with the NYSE Arca Marketplace or an MPID when using Pillar phase II protocols to communicate with the NYSE Arca Marketplace. 9 The Exchange does not have any capped credits for trading in Tape A Securities. daltland on DSKBBV9HB2PROD with NOTICES 8 ETP VerDate Sep<11>2014 19:20 Apr 16, 2018 Jkt 244001 BBO Setter Tier, which would provide an additional credit of $0.0004 per share to the qualifying ETP ID, and combined with the ETP Holder or Market Maker’s credit of $0.0033 per share, the ETP Holder or Market Maker in this example would receive a total credit of $0.0037 per share for orders that set a new NYSE Arca BBO. The ETP ID’s orders that do not set a new NYSE Arca BBO would not receive the proposed BBO Setter Tier credit. Tape A and Tape C Tier In July 2017, the Exchange filed a proposed rule change to adopt a new pricing tier—Tape A and Tape C Tier— as an incentive for ETP Holders and Market Makers to provide liquidity in Tape A and Tape C Securities.10 The Tape A and Tape C Tier has not encouraged ETP Holders and Market Makers to increase their activity to qualify for this pricing tier as significantly as the Exchange had anticipated they would. As a result, the Exchange proposes to remove this pricing tier from the Fee Schedule. IOI Credit In August 2008, the Exchange filed a proposed rule change to adopt credits that apply to indications of interest (‘‘IOIs’’) submitted by ETP Holders that result in routed and executed orders.11 IOIs are non-displayed indications of symbol, size and side, which do not interact with the NYSE Arca Book. At their discretion, participating ETP Holders may send an IOI to the Exchange, which in turn considers the IOI when determining potential destinations for outbound routes. The purpose for adopting IOI Credits was to incentivize ETP Holders to participate in the Exchange’s IOI program and provide additional liquidity to the marketplace. The IOI Credits have not incentivized ETP Holders to participate in the IOI program as anticipated by the Exchange. As a result, the Exchange proposes to eliminate the credits associated with IOIs by deleting IOI Credit Tier 2 and IOI Credit Tier 3 entirely and renaming IOI Credit Tier 1 as IOI Credit. With this proposed rule change, the Exchange would no longer provide credits associated with IOIs. The Exchange proposes to reflect the 10 See Securities Exchange Act Release No. 81134 (July 12, 2017), 82 FR 32911 (July 18, 2017) (SR– NYSEArca–2017–72). 11 See Securities Exchange Act Release Nos. 58397 (August 20, 2008), 73 FR 50389 (August 26, 2008) (SR–NYSEArca–2008–83); 59521 (March 5, 2009), 74 FR 10640 (March 11, 2009) (SR– NYSEArca–2009–15); 60495 (August 13, 2009), 74 FR 41957 (August 19, 2009) (SR–NYSEArca–2009– 72); and 66379 (February 10, 2012), 77 FR 9277 (February 16, 2012) (SR–NYSEArca–2012–11). PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 elimination of the credits by adopting rule text on the Fee Schedule that would replace the current tiered credits with ‘‘No Credit.’’ ETP Incentive Program The Exchange proposes to amend the Fee Schedule to reflect the termination of a pilot program designed to incentivize quoting and trading in Exchange Traded Products (‘‘ETPs’’) and to add competition among existing qualified Market Makers 12 (‘‘ETP Incentive Program’’). The ETP Incentive Program was also designed to enhance the market quality for ETPs by incentivizing Market Makers to take Lead Market Maker (‘‘LMM’’) 13 assignments in certain lower-volume ETPs by offering an alternative fee structure for such LMMs.14 The ETP Incentive Program was established in 2013.15 The Exchange subsequently filed to extend it in 2014,16 in 2015,17 and finally in 2016.18 However, the Exchange did not extend the program and it expired on July 31, 2017. The Exchange proposes to remove reference to the ETP Incentive Program from the Fee Schedule. STP Modifier The Exchange currently provides STP Modifiers that allow ETP Holders entering orders to elect to prevent those orders from executing against other orders entered on the Exchange by the 12 With respect to equities traded on the Exchange, the term Market Maker refers to an ETP Holder that acts as a Market Maker pursuant to NYSE Arca Rule 7–E. See NYSE Arca Rule 1.1(z). An ETP Holder is a sole proprietorship, partnership, corporation, limited liability company, or other organization in good standing that has been issued an ETP. See NYSE Arca Rule 1.1(o). 13 With respect to equities traded on the Exchange, the term Lead Market Maker refers to registered Market Maker that is the exclusive Designated Market Maker in listings for which the Exchange is the primary listing market. See NYSE Arca Rule 1.1(w). 14 The LMM program was designed to incentivize firms to take on the LMM designation and foster liquidity provision and stability in the market. In order to accomplish this, the Exchange provided LMMs with an opportunity to receive incrementally higher transaction credits and incur incrementally lower transaction fees compared to standard liquidity maker-taker rates. 15 See Securities Exchange Act Release No. 69706 (June 6, 2013), 78 FR 35340 (June 12, 2013) (SR– NYSEArca–2013–34) (‘‘ETP Incentive Program Approval’’). 16 See Securities Exchange Act Release No. 72963 (September 3, 2014), 79 FR 53492 (September 9, 2014) (SR–NYSEArca–2014–99). 17 See Securities Exchange Act Release No. 75846 (September 4, 2015), 80 FR 54646 (September 10, 2015) (SR–NYSEArca–2015–78). 18 See Securities Exchange Act Release No. 78497 (August 8, 2016), 81 FR 53524 (August 12, 2016) (SR–NYSEArca–2016–110). E:\FR\FM\17APN1.SGM 17APN1 Federal Register / Vol. 83, No. 74 / Tuesday, April 17, 2018 / Notices facilities and does not unfairly discriminate between customers, issuers, brokers or dealers. The Exchange believes that the proposed revised Step-Up Tier is equitable because it is open to all ETP Holders and Market Makers on an equal basis and provides credits that are reasonably related to the value to an exchange’s market quality associated with higher volumes. As stated above, the Exchange believes that the Step-Up Tier is intended to incentivize market participants to increase the orders sent directly to NYSE Arca and therefore provide liquidity that supports the quality of price discovery and promotes market transparency. Moreover, the addition of the Step-Up Tier would benefit market participants whose increased order flow provides meaningful added levels of liquidity thereby contributing to the depth and market quality on the Exchange. The Exchange believes that the proposed change is equitable and not unfairly discriminatory because providing incentives for orders that are executed on a registered national securities exchange would contribute to investors’ confidence in the fairness of their transactions and would benefit all investors by deepening the Exchange’s liquidity pool, supporting the quality of price discovery, promoting market transparency and improving investor protection. The Exchange believes that the proposed NBBO Setter Tier is reasonable because it provides an opportunity for ETP Holders and Market Makers that qualify to receive an incremental per share credit if the ETP ID associated with an ETP Holder or Market Maker meets certain trading qualifications and establishes the BBO 2. Statutory Basis on the Exchange.24 Thus the credit The Exchange believes that the provides incentive to members to proposed rule change is consistent with provide aggressively priced orders that Section 6(b) of the Act,22 in general, and improve the market by setting the BBO furthers the objectives of Sections on the Exchange. The Exchange believes 6(b)(4) and (5) of the Act,23 in particular, that it is reasonable to adopt higher because it provides for the equitable credit to Tape A and Tape C securities allocation of reasonable dues, fees, and because it desires to improve the market other charges among its members, on the Exchange in those securities in issuers and other persons using its terms of setting the BBO, which is currently not as robust as price setting 19 See Securities Exchange Act Release No. 60191 in Tape B securities. The Exchange (June 30, 2009), 74 FR 32660 (July 8, 2009) (SR– further believes that providing a credit NYSEArca–2009–58). 20 See Securities Exchange Act Release No. 60322 for qualifying orders in Tape C (July 16, 2009), 74 FR 36794 (July 24, 2009) (SR– securities beyond the Tape C Tier 2 cap NYSEArca–2009–68). The incoming order (last is reasonable as it would create an received order) marked with one of the STP additional incentive for participants to Modifiers controls the billing treatment of both quote aggressively on the Exchange, interacting orders marked with STP Modifiers. See daltland on DSKBBV9HB2PROD with NOTICES same ETP Holder.19 In connection with the STP functionality, the Exchange adopted credits and fees for orders returned to an ETP Holder using the STP Modifiers.20 Currently, ETP Holders entering an incoming order with either the STP Cancel Both (‘‘STPC’’) or the STP Decrement and Cancel (‘‘STPD’’) Modifier are charged $0.0030 per share for orders returned to the ETP Holder. The ETP Holder’s corresponding resting order marked with any of the STP Modifiers that interacts with an incoming STPC or STPD Modifier is credited $0.0029 per share for orders returned to the ETP Holder. The Exchange proposes to modify the credit from $0.0029 per share to $0.0030 per share for an ETP Holder’s resting order that is returned to the ETP Holder. The Exchange is not proposing any change to the fees and credits applicable to orders with the STP Cancel Newest and the STP Cancel Oldest Modifiers. On incoming orders marked with the STPD Modifier, both orders are cancelled back to the ETP Holder if the orders are equivalent in size. If the orders are not equivalent in size, the equivalent size is cancelled back to the ETP Holder and the larger order is decremented by the size of the smaller order with the balance remaining on the NYSE Arca Book. For billing purposes, only the size of the portion of the orders cancelled back to the ETP Holder is charged or credited. On incoming orders marked with the STPC Modifier, the entire size of both orders is cancelled back to ETP Holder. However, for billing purposes, incoming orders marked with the STPC Modifier are only charged or credited up to the equivalent size of both orders.21 Schedule of Fees, Self Trade Prevention Modifiers, footnote 6. 21 See supra, note 19. 22 15 U.S.C. 78f(b). 23 15 U.S.C. 78f(b)(4) and (5). VerDate Sep<11>2014 19:20 Apr 16, 2018 Jkt 244001 24 This is similar to programs currently in place on other exchanges. See NBBO Program, Nasdaq Stock Market, at https://www.nasdaqtrader.com/ Trader.aspx?id=PriceListTrading2. PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 16911 which would benefit all investors by deepening the Exchange’s liquidity pool, improving displayed prices and promoting market transparency. The Exchange believes the proposed pricing tier is equitable and not unfairly discriminatory because the per share credit(s) under the BBO Setter Tier would be available to all ETP Holders’ and Market Makers’ ETP IDs on an equal basis and provides an incremental credit for activity that improves the Exchange’s market quality through increased activity and by encouraging the setting of the BBO. In this regard, the BBO Setter Tier is intended to encourage higher levels of liquidity provision into the price discovery process and is consistent with the overall goals of enhancing market quality. The Exchange believes that it is reasonable to delete obsolete pricing tiers from the Fee Schedule because ETP Holders and Market Makers have not increased their activity to qualify for the Tape A and Tape C Tier as significantly as the Exchange anticipated they would. The Exchange believes that it is equitable and not unfairly discriminatory to eliminate the Tape A and Tape C Tier because, as proposed, such pricing tier would be eliminated entirely—ETP Holders and Market Makers would no longer be able to qualify for this pricing tier. This aspect of the proposed rule change would result in the removal of obsolete text from the Fee Schedule and therefore add greater clarity to the Fee Schedule. The Exchange believes that it is reasonable to eliminate the credits that apply to IOIs submitted by ETP Holders that result in routed and executed orders because the IOI Credits have not incentivized ETP Holders to participate in the IOI program as anticipated by the Exchange. The Exchange believes that it is equitable and not unfairly discriminatory to eliminate the IOI Credits because, as proposed, such credits would be eliminated entirely— ETP Holders would no longer be able to qualify for such credits. The Exchange believes it is equitable, reasonable and not unfairly discriminatory to remove reference to the ETP Pilot from the Fee Schedule because the ETP Pilot expired in July 2017 and deleting rules that no longer apply will bring clarity to the Fee Schedule. The Exchange believes the proposed rule change will make the Fee Schedule clearer and eliminate potential investor confusion, thereby removing impediments to and perfecting the mechanism of a free and open market and a national market system, and in E:\FR\FM\17APN1.SGM 17APN1 16912 Federal Register / Vol. 83, No. 74 / Tuesday, April 17, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES general, protecting investors and the public interest. The Exchange believes it is reasonable to modify the credit provided to an ETP Holder’s resting STP order that is returned to the ETP Holder. The Exchange believes standardizing the fees and credits applicable to orders marked with the STPC and STPD Modifier would encourage ETP Holders to increase their utilization of the STP functionality in order to better manage order flow and prevent undesirable or unexpected executions with themselves. The Exchange further believes the proposed increased credit is equitable and not unfairly discriminatory because it would be available to all similarly situated ETP Holders on an equal basis. 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,25 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 proposal to add new pricing tiers would encourage the submission of additional liquidity to a public exchange, thereby promoting price discovery and transparency and enhancing order execution opportunities for ETP Holders and Market Makers. In addition, the removal of pricing tiers and fee credits, and deletion of obsolete text from the Fee Schedule would not have any impact on inter- or intra-market competition because the proposed change would result in a streamlined Fee Schedule. Also, the Exchange believes the proposed increased credit for resting STP orders returned to an ETP Holder would encourage ETP Holders to increase their utilization of the STP functionality in order to better manage order flow and prevent undesirable or unexpected executions with themselves and thus would enhance order execution opportunities for ETP Holders. The Exchange believes that this could promote competition between the Exchange and other execution venues, including those that currently offer similar STP functionality and comparable transaction pricing. 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 25 15 U.S.C. 78f(b)(8). VerDate Sep<11>2014 19:20 Apr 16, 2018 Jkt 244001 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 to attract order flow to the Exchange. 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 ETP Holders 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) 26 of the Act and subparagraph (f)(2) of Rule 19b–4 27 thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 28 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– NYSEArca–2018–20 on the subject line. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2018–20. 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 such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. 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–NYSEArca–2018–20, and should be submitted on or before May 8, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.29 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–07931 Filed 4–16–18; 8:45 am] BILLING CODE 8011–01–P 26 15 U.S.C. 78s(b)(3)(A). 27 17 CFR 240.19b–4(f)(2). 28 15 U.S.C. 78s(b)(2)(B). PO 00000 Frm 00090 Fmt 4703 Sfmt 9990 29 17 E:\FR\FM\17APN1.SGM CFR 200.30–3(a)(12). 17APN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 83, Number 74 (Tuesday, April 17, 2018)]
[Notices]
[Pages 16909-16912]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-07931]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83032; File No. SR-NYSEArca-2018-20]


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

April 11, 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 30, 2018, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Equities Fees and 
Charges (``Fee Schedule'') to (i) revise the requirements to qualify 
for the Step-Up Tier; (ii) adopt a new pricing tier, BBO Setter Tier; 
(iii) delete the Tape A and Tape C Tier; (iv) eliminate the credits 
associated with indications of interest (``IOIs''); (v) delete obsolete 
language related to an Exchange Traded Product (``ETP'') Incentive 
Program; and (vi) modify the credit the Exchange provides for orders 
with the Self Trade Prevention (``STP'') Cancel Both (``STPC'') and STP 
Decrement and Cancel (``STPD'') Modifiers. The Exchange proposes to 
implement the fee changes effective April 2, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule, as described 
below, to (i) revise the requirements for the Step-Up Tier; (ii) adopt 
a new pricing tier, BBO Setter Tier; (iii) delete the Tape A and Tape C 
Tier; (iv) eliminate the credits associated with IOIs; (v) delete 
obsolete language related to an ETP Incentive Program; and (vi) modify 
the credit the Exchange provides for orders with the STPC and STPD 
Modifiers. The Exchange proposes to implement the fee changes on April 
2, 2018.
Step-Up Tier
    In September 2016, the Exchange filed a proposed rule change to 
adopt a new Step-Up pricing tier that was intended to incentivize ETP 
Holders and Market Makers to increase order flow and provide additional 
liquidity.\4\ In September 2017, the Exchange filed a proposed rule 
change to adopt a second way by which an ETP Holder or Market Maker 
could qualify for the Step-Up Tier.\5\ Currently, to qualify for the 
Step-Up Tier, ETP Holders and Market Makers, on a daily basis, measured 
monthly must: (i) directly execute providing average daily volume that 
is an increase of no less than 0.15% of US CADV \6\ for that month over 
the ETP Holder's or Market Maker's providing average daily volume in 
July 2016, and (ii) sets a new NYSE Arca Best Bid or Offer with at 
least 25% in each of the ETP Holder's or Market Maker's Tape A, Tape B 
and Tape C providing ADV. ETP Holders and Market Makers can 
alternatively qualify for the Step-Up Tier if such ETP Holder or Market 
Maker, on a daily basis, measured monthly: (i) Directly execute 
providing average daily volume that is an increase of no less than 
0.15% of US CADV for that month over the ETP Holder's or Market Maker's 
providing average daily volume in July 2016, and (ii) sets a new NYSE 
Arca Best Bid or Offer with at least 20% in the ETP Holder's or Market 
Maker's Tape A providing ADV, at least 25% in the ETP Holder's or 
Market Maker's Tape B providing ADV, and at least 30% in the ETP 
Holder's or Market Maker's Tape C providing ADV, and (iii) directly 
execute taking average daily volume of at least 15 million shares. ETP 
Holders and Market Makers that qualify for the Step-Up Tier receive a 
credit of $0.0029 per share for orders that provide liquidity to the 
Book in Tape A and Tape C Securities and $0.0028 per share for orders 
that provide liquidity to the Book in Tape B Securities.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 78892 (September 21, 
2016), 81 FR 66315 (September 27, 2016) (SR-NYSEArca-2016-128).
    \5\ See Securities Exchange Act Release No. 81601 (September 13, 
2017), 82 FR 43633 (September 18, 2017) (SR-NYSEArca-2017-104).
    \6\ US CADV means United States Consolidated Average Daily 
Volume for transactions reported to the Consolidated Tape, excluding 
odd lots through January 31, 2014 (except for purposes of Lead 
Market Maker pricing), and excludes volume on days when the market 
closes early and on the date of the annual reconstitution of the 
Russell Investments Indexes. Transactions that are not reported to 
the Consolidated Tape are not included in US CADV.
---------------------------------------------------------------------------

    The Step-Up Tier has not encouraged ETP Holders and Market Makers 
to increase their activity to qualify for this pricing tier as 
significantly as the Exchange had anticipated that it would. As a 
result, the Exchange proposes to revise the current requirements to 
qualify for the Step-Up Tier. As proposed, ETP Holders and Market 
Makers would qualify for the Step-Up Tier if they directly execute 
providing average daily volume per month of 0.50% or more but less than 
0.70% of the US CADV, and directly execute providing ADV that is an 
increase of no less than 0.10% of US CADV for that month over the ETP 
Holder's or Market Maker's providing ADV in Q1 2018. ETP Holders and 
Market Makers that qualify for the Step-Up Tier would receive a credit 
of $0.0030 per share for orders that provide displayed liquidity to the 
Book in Tape A Securities, $0.0023 per share for orders that provide 
displayed liquidity to the Book in Tape B Securities, and $0.0031 per 
share for orders that provide displayed liquidity in Tape C Securities.
    The goal of the Step-Up Tier remains the same, i.e., to incentivize 
ETP Holders and Market Makers to increase the orders sent directly to 
NYSE Arca and therefore provide liquidity that supports the quality of 
price discovery

[[Page 16910]]

and promotes market transparency.\7\ The Exchange believes that the 
proposed new qualifying requirement for the Step-Up Tier will provide 
an incentive for ETP Holders or Market Makers that are active traders 
on the Exchange to increase the orders sent to the Exchange that would 
provide liquidity.
---------------------------------------------------------------------------

    \7\ See supra, note 5, at 43634.
---------------------------------------------------------------------------

BBO Setter Tier
    The Exchange proposes a new pricing tier--BBO Setter Tier--for 
securities with a per share price of $1.00 or above.
    As proposed, a new BBO Setter Tier credit of $0.0004 per share for 
orders that set a new NYSE Arca BBO in Tape A and Tape C Securities and 
$0.0002 per share for orders that set a new NYSE Arca BBO in Tape B 
Securities would apply to ETP Holders and Market Makers that directly 
execute providing ADV per month of 0.70% or more of the US CADV, and 
provided that an ETP ID \8\ associated with an ETP Holder or Market 
Maker, on a daily basis, measured monthly (1) Directly executes 
providing ADV of at least 0.20% of US CADV, (2) sets a new NYSE Arca 
BBO with at least 0.10% of US CADV; and (3) sets a new NYSE Arca BBO of 
at least 40% of that ETP Holder's or Market Maker's ETP ID providing 
ADV. The proposed credit would be in addition to the ETP Holder's or 
Market Maker's Tiered or Basic Rate credit(s), and for Tape B and Tape 
C Securities, the proposed credit would be in addition to any capped 
credit.\9\
---------------------------------------------------------------------------

    \8\ ETP Holders enter orders and order instructions by using 
communication protocols that map to the order types and modifiers 
described in Exchange rules. The Exchange makes available ports that 
communicate with the Exchange using Pillar phase I protocols and 
Pillar phase II protocols. For purposes of the BBO Setter Tier, 
references to ETP ID means an ETP ID when using Pillar phase I 
protocols to communicate with the NYSE Arca Marketplace or an MPID 
when using Pillar phase II protocols to communicate with the NYSE 
Arca Marketplace.
    \9\ The Exchange does not have any capped credits for trading in 
Tape A Securities.
---------------------------------------------------------------------------

    For example, assume an ETP Holder or Market Maker qualifies for the 
Tape C Tier 1 credit of $0.0032 per share for orders that provide 
liquidity to the Book. Assume further that the same ETP Holder or 
Market Maker also qualifies for the Tape C Tier 2 incremental credit of 
$0.0002 per share. Pursuant to the Tape C Tier 2 pricing tier, the ETP 
Holder or Market Maker's credit cannot exceed $0.0033 per share. In 
this example, the ETP Holder or Market Maker's credit would be capped 
at $0.0033 per share. Assume further that the ETP Holder or Market 
Maker has an ETP ID that qualifies for the proposed BBO Setter Tier, 
which would provide an additional credit of $0.0004 per share to the 
qualifying ETP ID, and combined with the ETP Holder or Market Maker's 
credit of $0.0033 per share, the ETP Holder or Market Maker in this 
example would receive a total credit of $0.0037 per share for orders 
that set a new NYSE Arca BBO. The ETP ID's orders that do not set a new 
NYSE Arca BBO would not receive the proposed BBO Setter Tier credit.
Tape A and Tape C Tier
    In July 2017, the Exchange filed a proposed rule change to adopt a 
new pricing tier--Tape A and Tape C Tier--as an incentive for ETP 
Holders and Market Makers to provide liquidity in Tape A and Tape C 
Securities.\10\ The Tape A and Tape C Tier has not encouraged ETP 
Holders and Market Makers to increase their activity to qualify for 
this pricing tier as significantly as the Exchange had anticipated they 
would. As a result, the Exchange proposes to remove this pricing tier 
from the Fee Schedule.
---------------------------------------------------------------------------

    \10\ See Securities Exchange Act Release No. 81134 (July 12, 
2017), 82 FR 32911 (July 18, 2017) (SR-NYSEArca-2017-72).
---------------------------------------------------------------------------

IOI Credit
    In August 2008, the Exchange filed a proposed rule change to adopt 
credits that apply to indications of interest (``IOIs'') submitted by 
ETP Holders that result in routed and executed orders.\11\ IOIs are 
non-displayed indications of symbol, size and side, which do not 
interact with the NYSE Arca Book. At their discretion, participating 
ETP Holders may send an IOI to the Exchange, which in turn considers 
the IOI when determining potential destinations for outbound routes. 
The purpose for adopting IOI Credits was to incentivize ETP Holders to 
participate in the Exchange's IOI program and provide additional 
liquidity to the marketplace. The IOI Credits have not incentivized ETP 
Holders to participate in the IOI program as anticipated by the 
Exchange. As a result, the Exchange proposes to eliminate the credits 
associated with IOIs by deleting IOI Credit Tier 2 and IOI Credit Tier 
3 entirely and renaming IOI Credit Tier 1 as IOI Credit. With this 
proposed rule change, the Exchange would no longer provide credits 
associated with IOIs. The Exchange proposes to reflect the elimination 
of the credits by adopting rule text on the Fee Schedule that would 
replace the current tiered credits with ``No Credit.''
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release Nos. 58397 (August 20, 
2008), 73 FR 50389 (August 26, 2008) (SR-NYSEArca-2008-83); 59521 
(March 5, 2009), 74 FR 10640 (March 11, 2009) (SR-NYSEArca-2009-15); 
60495 (August 13, 2009), 74 FR 41957 (August 19, 2009) (SR-NYSEArca-
2009-72); and 66379 (February 10, 2012), 77 FR 9277 (February 16, 
2012) (SR-NYSEArca-2012-11).
---------------------------------------------------------------------------

ETP Incentive Program
    The Exchange proposes to amend the Fee Schedule to reflect the 
termination of a pilot program designed to incentivize quoting and 
trading in Exchange Traded Products (``ETPs'') and to add competition 
among existing qualified Market Makers \12\ (``ETP Incentive 
Program''). The ETP Incentive Program was also designed to enhance the 
market quality for ETPs by incentivizing Market Makers to take Lead 
Market Maker (``LMM'') \13\ assignments in certain lower-volume ETPs by 
offering an alternative fee structure for such LMMs.\14\ The ETP 
Incentive Program was established in 2013.\15\ The Exchange 
subsequently filed to extend it in 2014,\16\ in 2015,\17\ and finally 
in 2016.\18\ However, the Exchange did not extend the program and it 
expired on July 31, 2017. The Exchange proposes to remove reference to 
the ETP Incentive Program from the Fee Schedule.
---------------------------------------------------------------------------

    \12\ With respect to equities traded on the Exchange, the term 
Market Maker refers to an ETP Holder that acts as a Market Maker 
pursuant to NYSE Arca Rule 7-E. See NYSE Arca Rule 1.1(z). An ETP 
Holder is a sole proprietorship, partnership, corporation, limited 
liability company, or other organization in good standing that has 
been issued an ETP. See NYSE Arca Rule 1.1(o).
    \13\ With respect to equities traded on the Exchange, the term 
Lead Market Maker refers to registered Market Maker that is the 
exclusive Designated Market Maker in listings for which the Exchange 
is the primary listing market. See NYSE Arca Rule 1.1(w).
    \14\ The LMM program was designed to incentivize firms to take 
on the LMM designation and foster liquidity provision and stability 
in the market. In order to accomplish this, the Exchange provided 
LMMs with an opportunity to receive incrementally higher transaction 
credits and incur incrementally lower transaction fees compared to 
standard liquidity maker-taker rates.
    \15\ See Securities Exchange Act Release No. 69706 (June 6, 
2013), 78 FR 35340 (June 12, 2013) (SR-NYSEArca-2013-34) (``ETP 
Incentive Program Approval'').
    \16\ See Securities Exchange Act Release No. 72963 (September 3, 
2014), 79 FR 53492 (September 9, 2014) (SR-NYSEArca-2014-99).
    \17\ See Securities Exchange Act Release No. 75846 (September 4, 
2015), 80 FR 54646 (September 10, 2015) (SR-NYSEArca-2015-78).
    \18\ See Securities Exchange Act Release No. 78497 (August 8, 
2016), 81 FR 53524 (August 12, 2016) (SR-NYSEArca-2016-110).
---------------------------------------------------------------------------

STP Modifier
    The Exchange currently provides STP Modifiers that allow ETP 
Holders entering orders to elect to prevent those orders from executing 
against other orders entered on the Exchange by the

[[Page 16911]]

same ETP Holder.\19\ In connection with the STP functionality, the 
Exchange adopted credits and fees for orders returned to an ETP Holder 
using the STP Modifiers.\20\ Currently, ETP Holders entering an 
incoming order with either the STP Cancel Both (``STPC'') or the STP 
Decrement and Cancel (``STPD'') Modifier are charged $0.0030 per share 
for orders returned to the ETP Holder. The ETP Holder's corresponding 
resting order marked with any of the STP Modifiers that interacts with 
an incoming STPC or STPD Modifier is credited $0.0029 per share for 
orders returned to the ETP Holder. The Exchange proposes to modify the 
credit from $0.0029 per share to $0.0030 per share for an ETP Holder's 
resting order that is returned to the ETP Holder. The Exchange is not 
proposing any change to the fees and credits applicable to orders with 
the STP Cancel Newest and the STP Cancel Oldest Modifiers.
---------------------------------------------------------------------------

    \19\ See Securities Exchange Act Release No. 60191 (June 30, 
2009), 74 FR 32660 (July 8, 2009) (SR-NYSEArca-2009-58).
    \20\ See Securities Exchange Act Release No. 60322 (July 16, 
2009), 74 FR 36794 (July 24, 2009) (SR-NYSEArca-2009-68). The 
incoming order (last received order) marked with one of the STP 
Modifiers controls the billing treatment of both interacting orders 
marked with STP Modifiers. See Schedule of Fees, Self Trade 
Prevention Modifiers, footnote 6.
---------------------------------------------------------------------------

    On incoming orders marked with the STPD Modifier, both orders are 
cancelled back to the ETP Holder if the orders are equivalent in size. 
If the orders are not equivalent in size, the equivalent size is 
cancelled back to the ETP Holder and the larger order is decremented by 
the size of the smaller order with the balance remaining on the NYSE 
Arca Book. For billing purposes, only the size of the portion of the 
orders cancelled back to the ETP Holder is charged or credited. On 
incoming orders marked with the STPC Modifier, the entire size of both 
orders is cancelled back to ETP Holder. However, for billing purposes, 
incoming orders marked with the STPC Modifier are only charged or 
credited up to the equivalent size of both orders.\21\
---------------------------------------------------------------------------

    \21\ See supra, note 19.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\22\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\23\ 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.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78f(b).
    \23\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed revised Step-Up Tier is 
equitable because it is open to all ETP Holders and Market Makers on an 
equal basis and provides credits that are reasonably related to the 
value to an exchange's market quality associated with higher volumes. 
As stated above, the Exchange believes that the Step-Up Tier is 
intended to incentivize market participants to increase the orders sent 
directly to NYSE Arca and therefore provide liquidity that supports the 
quality of price discovery and promotes market transparency. Moreover, 
the addition of the Step-Up Tier would benefit market participants 
whose increased order flow provides meaningful added levels of 
liquidity thereby contributing to the depth and market quality on the 
Exchange. The Exchange believes that the proposed change is equitable 
and not unfairly discriminatory because providing incentives for orders 
that are executed on a registered national securities exchange would 
contribute to investors' confidence in the fairness of their 
transactions and would benefit all investors by deepening the 
Exchange's liquidity pool, supporting the quality of price discovery, 
promoting market transparency and improving investor protection.
    The Exchange believes that the proposed NBBO Setter Tier is 
reasonable because it provides an opportunity for ETP Holders and 
Market Makers that qualify to receive an incremental per share credit 
if the ETP ID associated with an ETP Holder or Market Maker meets 
certain trading qualifications and establishes the BBO on the 
Exchange.\24\ Thus the credit provides incentive to members to provide 
aggressively priced orders that improve the market by setting the BBO 
on the Exchange. The Exchange believes that it is reasonable to adopt 
higher credit to Tape A and Tape C securities because it desires to 
improve the market on the Exchange in those securities in terms of 
setting the BBO, which is currently not as robust as price setting in 
Tape B securities. The Exchange further believes that providing a 
credit for qualifying orders in Tape C securities beyond the Tape C 
Tier 2 cap is reasonable as it would create an additional incentive for 
participants to quote aggressively on the Exchange, which would benefit 
all investors by deepening the Exchange's liquidity pool, improving 
displayed prices and promoting market transparency. The Exchange 
believes the proposed pricing tier is equitable and not unfairly 
discriminatory because the per share credit(s) under the BBO Setter 
Tier would be available to all ETP Holders' and Market Makers' ETP IDs 
on an equal basis and provides an incremental credit for activity that 
improves the Exchange's market quality through increased activity and 
by encouraging the setting of the BBO. In this regard, the BBO Setter 
Tier is intended to encourage higher levels of liquidity provision into 
the price discovery process and is consistent with the overall goals of 
enhancing market quality.
---------------------------------------------------------------------------

    \24\ This is similar to programs currently in place on other 
exchanges. See NBBO Program, Nasdaq Stock Market, at https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
---------------------------------------------------------------------------

    The Exchange believes that it is reasonable to delete obsolete 
pricing tiers from the Fee Schedule because ETP Holders and Market 
Makers have not increased their activity to qualify for the Tape A and 
Tape C Tier as significantly as the Exchange anticipated they would. 
The Exchange believes that it is equitable and not unfairly 
discriminatory to eliminate the Tape A and Tape C Tier because, as 
proposed, such pricing tier would be eliminated entirely--ETP Holders 
and Market Makers would no longer be able to qualify for this pricing 
tier. This aspect of the proposed rule change would result in the 
removal of obsolete text from the Fee Schedule and therefore add 
greater clarity to the Fee Schedule.
    The Exchange believes that it is reasonable to eliminate the 
credits that apply to IOIs submitted by ETP Holders that result in 
routed and executed orders because the IOI Credits have not 
incentivized ETP Holders to participate in the IOI program as 
anticipated by the Exchange. The Exchange believes that it is equitable 
and not unfairly discriminatory to eliminate the IOI Credits because, 
as proposed, such credits would be eliminated entirely--ETP Holders 
would no longer be able to qualify for such credits.
    The Exchange believes it is equitable, reasonable and not unfairly 
discriminatory to remove reference to the ETP Pilot from the Fee 
Schedule because the ETP Pilot expired in July 2017 and deleting rules 
that no longer apply will bring clarity to the Fee Schedule. The 
Exchange believes the proposed rule change will make the Fee Schedule 
clearer and eliminate potential investor confusion, thereby removing 
impediments to and perfecting the mechanism of a free and open market 
and a national market system, and in

[[Page 16912]]

general, protecting investors and the public interest.
    The Exchange believes it is reasonable to modify the credit 
provided to an ETP Holder's resting STP order that is returned to the 
ETP Holder. The Exchange believes standardizing the fees and credits 
applicable to orders marked with the STPC and STPD Modifier would 
encourage ETP Holders to increase their utilization of the STP 
functionality in order to better manage order flow and prevent 
undesirable or unexpected executions with themselves. The Exchange 
further believes the proposed increased credit is equitable and not 
unfairly discriminatory because it would be available to all similarly 
situated ETP Holders on an equal basis.
    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,\25\ 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 proposal 
to add new pricing tiers would encourage the submission of additional 
liquidity to a public exchange, thereby promoting price discovery and 
transparency and enhancing order execution opportunities for ETP 
Holders and Market Makers. In addition, the removal of pricing tiers 
and fee credits, and deletion of obsolete text from the Fee Schedule 
would not have any impact on inter- or intra-market competition because 
the proposed change would result in a streamlined Fee Schedule. Also, 
the Exchange believes the proposed increased credit for resting STP 
orders returned to an ETP Holder would encourage ETP Holders to 
increase their utilization of the STP functionality in order to better 
manage order flow and prevent undesirable or unexpected executions with 
themselves and thus would enhance order execution opportunities for ETP 
Holders. The Exchange believes that this could promote competition 
between the Exchange and other execution venues, including those that 
currently offer similar STP functionality and comparable transaction 
pricing.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    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 to attract order 
flow to the Exchange. 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 ETP Holders 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) \26\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \27\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(3)(A).
    \27\ 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) \28\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \28\ 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-NYSEArca-2018-20 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2018-20. 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 such filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. 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-NYSEArca-2018-20, and should be 
submitted on or before May 8, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
---------------------------------------------------------------------------

    \29\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-07931 Filed 4-16-18; 8:45 am]
 BILLING CODE 8011-01-P

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