Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Adopt Transaction Fees In Connection with the Exchange's Trading of UTP Securities on Pillar, 19376-19381 [2018-09258]
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19376
Federal Register / Vol. 83, No. 85 / Wednesday, May 2, 2018 / Notices
III. Proceedings To Determine Whether
To Approve or Disapprove SR–
NYSEArca–2018–04 and Grounds for
Disapproval Under Consideration
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act 38 to
determine whether the proposed rule
change should be approved or
disapproved. Institution of such
proceedings is appropriate at this time
in view of the legal and policy issues
raised by the proposed rule change.
Institution of proceedings does not
indicate that the Commission has
reached any conclusions with respect to
any of the issues involved. Rather, as
described below, the Commission seeks
and encourages interested persons to
provide comments on the proposed rule
change.
Pursuant to Section 19(b)(2)(B) of the
Exchange Act,39 the Commission is
providing notice of the grounds for
disapproval under consideration. The
Commission is instituting proceedings
to allow for additional analysis of the
proposed rule change’s consistency with
Section 6(b)(5) of the Exchange Act,
which requires, among other things, that
the rules of a national securities
exchange be ‘‘designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, . . . to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest.’’ 40
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IV. Procedure: Request for Written
Comments
The Commission requests that
interested persons provide written
submissions of their views, data, and
arguments with respect to the issues
identified above, as well as any other
concerns they may have with the
proposal. In particular, the Commission
invites the written views of interested
persons concerning whether the
proposal is consistent with Section
6(b)(5) or any other provision of the
Exchange Act, or the rules and
regulations thereunder. Although there
do not appear to be any issues relevant
to approval or disapproval that would
be facilitated by an oral presentation of
views, data, and arguments, the
Commission will consider, pursuant to
Rule 19b–4, any request for an
38 15
U.S.C. 78s(b)(2)(B).
39 Id.
40 15
U.S.C. 78f(b)(5).
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opportunity to make an oral
presentation.41
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposal should be approved or
disapproved by May 23, 2018. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by June 6, 2018.
The Commission asks that
commenters address the sufficiency of
the Exchange’s statements in support of
the proposal, which are set forth in the
Notice,42 the issues raised by the
commenters, and any other issues raised
by the proposed rule change under the
Exchange Act. In particular, the
Commission seeks commenters’ views
regarding the concerns raised with
respect to selective disclosure of
confidential portfolio information,
namely, whether such disclosure is
consistent with the requirement of
Section 6(b)(5) that the rules of the
exchange be designed to prevent
fraudulent and manipulative acts and
practices. The Commission also seeks
commenters’ views regarding the
various concerns raised about how the
Shares may trade in the secondary
market, including the potential for
frequent trading halts and poor trading
performance during times of market
volatility and stress. In this regard, the
Commission specifically seeks
commenters’ views on whether the
proposal is consistent with the
maintenance of a fair and orderly
market.
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–2018–04 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Numbers SR–NYSEArca-2018–04. This
41 Section 19(b)(2) of the Exchange Act, as
amended by the Securities Act Amendments of
1975, Public Law 94–29 (June 4, 1975), grants the
Commission flexibility to determine what type of
proceeding—either oral or notice and opportunity
for written comments—is appropriate for
consideration of a particular proposal by a selfregulatory organization. See Securities Act
Amendments of 1975, Senate Comm. on Banking,
Housing & Urban Affairs, S. Rep. No. 75, 94th
Cong., 1st Sess. 30 (1975).
42 See supra note 3.
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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 these
filings 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–2018–04 and
should be submitted on or before May
23, 2018. Rebuttal comments should be
submitted by June 6, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.43
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–09265 Filed 5–1–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83113; File No. SR–NYSE–
2018–15]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Adopt
Transaction Fees In Connection with
the Exchange’s Trading of UTP
Securities on Pillar
April 26, 2018.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
43 17
1 15
CFR 200.30–3(a)(57).
U.S.C.78s(b)(1).
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Federal Register / Vol. 83, No. 85 / Wednesday, May 2, 2018 / Notices
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on April 17,
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.
Exchange will continue to trade NYSElisted securities on its current trading
platform without any changes.6
In connection with the offering of
trading in UTP Securities, the Exchange
proposes to amend its Price List to
adopt a new pricing for trading UTP
Securities on the Pillar platform.
The proposed changes would apply to
transactions executed in securities
priced at or above and below $1.00.
The Exchange proposes to implement
these changes effective April 17, 2018.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt
transaction fees in connection with the
Exchange’s trading of UTP Securities on
Pillar, the Exchange’s new trading
technology platform. The Exchange
proposes to implement these changes to
its Price List effective April 17, 2018.4
The proposed rule change is available
on the Exchange’s website at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
Proposed Rule Change
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
On April 9, 2018, the Exchange will
introduce trading of UTP Securities on
the Exchange on the Pillar trading
platform.5 As described in the UTP
Trading Rules Filing, with Pillar, the
2 15
U.S.C. 78a.
CFR 240.19b–4.
4 The Exchange originally filed to amend the
Price List on April 9, 2018 (SR–NYSE–2018–13)
and withdrew such filing on April 17, 2018.
5 See Securities Exchange Act Release No.82945
(March 26, 2018), 83 FR 13553 (March 29, 2018)
(SR–NYSE–2017–36) (the ‘‘UTP Trading Rules
Filing’’). The term ‘‘UTP Security’’ means a security
that is listed on a national securities exchange other
than the Exchange and that trades on the Exchange
pursuant to unlisted trading privileges. See Rule
1.1(ii).
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The Exchange proposes the following
transaction fees for UTP trading on its
Pillar trading platform.
The Exchange proposes to add the
following heading immediately after the
crossing session fees and credits in the
current fee schedule: ‘‘Transaction Fees
and Credits For Securities Traded
Pursuant to Unlisted Trading Privileges
(Tapes B and C) on the Pillar Trading
Platform.’’ The Exchange believes that
the proposed legend would clarify
which fees and credits in the current fee
schedule would be applicable to trading
UTP Securities on the Pillar platform,
and thus add clarity and promote
transparency.
Immediately below this proposed
heading, the Exchange proposes a
second heading titled ‘‘Fees and Credits
applicable to Market Participants.’’
General Information Applicable to the
Price List
The Exchange proposes to summarize
general information applicable to fees
for trading UTP Securities on the Pillar
trading platform in two bullets under
the second heading in the proposed
Price List.
The first bullet would provide that
rebates are indicated by parentheses.
The second bullet would provide that,
for purposes of determining transaction
fees and credits based on requirements
based on quoting levels, average daily
volume (‘‘ADV’’), and consolidated ADV
(‘‘CADV’’), the Exchange may exclude
shares traded any day that (1) the
Exchange is not open for the entire
trading day and/or (2) a disruption
affects an Exchange system that lasts for
more than 60 minutes during regular
trading hours. The second proposed
bullet would reproduce the language in
footnote 6 of the current Price List.
Transaction Fees
The Exchange proposes the following
fees and credits for all transactions in
UTP Securities:
6 See UTP Trading Rules Filing, 83 FR at 13554,
n.17.
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19377
Liquidity Adding Non-Displayed Order
Fees
The Exchange does not propose to
charge a fee for UTP executions on the
Exchange of non-displayed orders 7 that
add liquidity to the Exchange in
securities priced at or above $1.00.
The Exchange also does not propose
to charge a fee for UTP executions on
the Exchange of non-displayed orders
that add liquidity to the Exchange in
securities priced below $1.00.
Liquidity Adding Displayed Order
Credits and Fees
For securities priced at or above
$1.00, the Exchange proposes a rebate of
$0.0020 per share for UTP executions on
the Exchange of displayed orders that
add liquidity to the Exchange.
For UTP executions on the Exchange
of displayed orders that add liquidity to
the Exchange by Floor brokers, the
Exchange proposes a rebate of $0.0026
per share.
The Exchange does not propose to
charge a fee for UTP executions on the
Exchange of displayed orders that add
liquidity to the Exchange in securities
priced below $1.00.
For securities priced at or above
$1.00, the Exchange proposes a credit of
$0.0010 per share for UTP executions in
each tape for MPL orders that add
liquidity to the Exchange, unless a
specific credit for SLP Provide Tiers or
Adding Tiers applies.
For securities priced at or above
$1.00, the Exchange proposes a rebate of
$0.0006 per share for cross trades 8 in
UTP Securities that add liquidity to the
Exchange.
Liquidity Removing Order Fees
For UTP executions on the Exchange
that remove liquidity from the
Exchange, the Exchange proposes to
charge $0.0030 per share for securities
priced at or above $1.00, including MPL
Orders, unless the Floor broker fee
applies, and to charge 0.3% of the total
dollar value of the transaction for
securities priced below $1.00.
For Floor broker UTP executions that
remove liquidity from the Exchange, the
Exchange proposes a fee $0.0026 per
share for securities priced at or above
$1.00.
7 These rates are client rates. The Exchange
proposes separate provide rates for non-displayed
orders by SLPs, discussed below.
8 For purposes of the Price List, cross trades are
trades where a Floor broker executes customer
orders to buy and sell an equivalent amount of the
same security pursuant to Rule 76.
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Federal Register / Vol. 83, No. 85 / Wednesday, May 2, 2018 / Notices
Adding and Remove Tiers for Securities
at or Above $1.00
The Exchange proposes tiered adding
requirements for displayed orders in
securities priced at or above $1.00, as
follows.
Under the proposed Tier 1 Adding
Credit, the Exchange would offer a per
tape credit of $0.0026 per share ($0.0025
if an MPL order) on a per tape basis for
transactions in stocks with a per share
price of $1.00 or more when adding
liquidity to the Exchange if the member
organization has at least 0.05% of
Adding CADV in Tape B or C. For
purposes of qualifying for this tier, the
0.05% of Adding CADV could include
shares of both an SLP-Prop and an
SLMM 9 of the same or an affiliated
member organization. The Exchange
also proposes to waive the Tier 1 add
and remove tier requirements until June
1, 2018, which would be reflected in
footnote *.
Under the proposed Tier 2 Adding
Credit, the Exchange would offer a per
tape credit of $0.0023 per share for
transactions in stocks with a per share
price of $1.00 or more when adding
liquidity to the Exchange if the member
organization has at least 0.01% of
Adding CADV in Tape B or C. For
purposes of qualifying for this tier, the
0.01% of Adding CADV could include
shares of both an SLP-Prop and an
SLMM of the same or an affiliated
member organization.
Finally, for UTP Securities, the
Exchange proposes to charge a per tape
fee of $0.0028 per share to remove
liquidity from the Exchange for member
organizations with an Adding ADV 10 of
at least 50,000 shares for that respective
tape.
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SLP Provide Tiers
The Exchange proposes tiered and
non-tiered rates for displayed and nondisplayed orders by SLPs that add
liquidity to the Exchange in UTP
Securities priced at or above $1.00, as
follows:
9 Under Rule 107B, a Supplemental Liquidity
Provider (‘‘SLP’’) can be either a proprietary trading
unit of a member organization (‘‘SLP-Prop’’) or a
registered market maker at the Exchange (‘‘SLMM’’).
For purposes of the 10% average or more quoting
requirement in assigned securities pursuant to Rule
107B, quotes of an SLP-Prop and an SLMM of the
same member organization are not aggregated.
However, for purposes of adding liquidity for
assigned SLP securities in the aggregate, shares of
both an SLP-Prop and an SLMM of the same
member organization are included.
10 The phrase ‘‘Adding ADV’’ in the proposed tier
would have a citation to footnote 4 in the current
Price List, which provides ‘‘For purposes of
transaction fees and Supplemental Liquidity
Provider liquidity credits, ADV calculations
exclude early closing days.’’ The text of current
footnote 4 would remain unchanged.
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Non-Tiered Rates
For displayed orders in UTP
Securities that add liquidity to the
Exchange, the Exchange proposes a nontiered credit of $0.0026 per share per
tape in an assigned UTP Security where
the SLP meets the 10% average or more
quoting requirement in an assigned
security pursuant to Rule 107B.11 For
non-displayed orders in UTP Securities
that add liquidity to the Exchange, the
Exchange proposes a non-tiered credit
of $0.0008 per share per tape in an
assigned UTP Security if the SLP meets
the 10% average or more quoting
requirement in an assigned security
pursuant to Rule 107B.
Tier 2
Proposed Tier 2 would provide a
$0.0029 per share credit per tape in an
assigned UTP Security for SLPs adding
displayed liquidity to the Exchange if
the SLP (1) adds liquidity for all
assigned UTP Securities in the aggregate
of an CADV of at least 0.01% per tape,
and meets the 10% average or more
quoting requirement in 250 or more
assigned UTP Securities in Tapes B and
C combined pursuant to Rule 107B, and
(2) meets the 10% average or more
quoting requirement in an assigned UTP
Security pursuant to Rule 107B.
Proposed Tier 2 would provide a
$0.0011 per share credit per tape in an
assigned UTP Security for SLPs adding
non-displayed liquidity to the Exchange
if the SLP meets the 10% average or
more quoting requirement in an
assigned UTP Security pursuant to Rule
107B.
Tier 1
Proposed Tier 1 would provide a
$0.0032 per share credit per tape in an
assigned UTP Security for SLPs adding
displayed liquidity to the Exchange if
the SLP (1) adds liquidity for all
assigned UTP Securities in the aggregate
of an CADV of at least 0.05% per tape,
and (2) meets the 10% average or more
quoting requirement in 500 or more
assigned UTP Securities in Tapes B and
C combined pursuant to Rule 107B, and
(2) meets the 10% average or more
quoting requirement in an assigned UTP
Security pursuant to Rule 107B.
Proposed Tier 1 would provide a
$0.0014 per share credit per tape for
SLPs adding non-displayed liquidity to
the Exchange, and a $0.0025 per share
credit for MPL Orders adding liquidity,
in an assigned UTP Security if the SLP
meets the 10% average or more quoting
requirement in an assigned UTP
Security pursuant to Rule 107B.
11 See
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note 9, supra.
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Tape A Tier
The proposed Tape A Tier would
provide a $0.00005 per share in an
assigned UTP Security in addition to the
Tape A SLP credit in Tape A assigned
securities for SLPs adding displayed
liquidity to the Exchange if the SLP (1)
qualifies for the SLP Tier 1 provide rate
in both Tape B and C or quotes in excess
of the 10% average quoting requirement
in 300 or more assigned securities
separately in Tapes B and Tape C
pursuant to Rule 107B, and (2) where
the SLP meets the 10% average quoting
requirement pursuant to Rule 107B.
Finally, the Exchange proposes to
waive the provide volume component of
the SLP Tier requirements until June 1,
2018, which would be reflected in
footnote **.
Routing Fees
Under a new heading titled ‘‘Routing
Fees,’’ the Exchange proposes the
following fees for routing, which would
be applicable to all orders in UTP
Securities that are routed.
For executions in securities with a
price at or above $1.00 that route to and
execute in an auction on the Exchange’s
affiliate NYSE American, the Exchange
proposes to charge a fee of $0.0005 per
share. For executions in securities with
a price at or above $1.00 that route to
and execute in an auction on an Away
Market 12 other than NYSE American,
the Exchange proposes to charge a fee of
$0.0010 per share, and a fee of $0.0030
per share for all other executions.
For securities priced below $1.00 that
route to and execute on an Away
Market, the Exchange proposes to
charge a fee of 0.30% of the total dollar
value of the transaction for executions
in an Away Market auction as well as
all other executions.
*
*
*
*
*
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,13 in general, and
furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,14 in
particular, because it provides for the
12 The term ‘‘Away Market’’ is defined in Rule
1.1(ff) to mean any exchange, alternative trading
system (‘‘ATS’’) or other broker-dealer (1) with
which the Exchange maintains an electronic
linkage, and (2) that provides instantaneous
responses to orders routed from the Exchange.
13 15 U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(4) & (5).
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Federal Register / Vol. 83, No. 85 / Wednesday, May 2, 2018 / Notices
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.
Adding Liquidity Credits and Fees
Liquidity Adding Non-Displayed Order
Fees
The Exchange believes that not
charging a fee for liquidity adding nondisplayed orders in UTP Securities is
reasonable, equitable and not unfairly
discriminatory because it is designed to
facilitate execution of, and enhance
trading opportunities for, nondisplayable orders, thereby further
incentivizing entry of non-displayed
orders on the Exchange. The Exchange
notes that other markets charge fees for
non-displayed orders.15
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Liquidity Adding Displayed Order
Credits and Fees
The Exchange believes that rebates of
$0.0020 per share for UTP executions on
the Exchange of displayed orders that
add liquidity to the Exchange (unless
another credit applies) and $0.0026 per
share for UTP executions on the
Exchange of displayed orders that add
liquidity to the Exchange by Floor
brokers are reasonable, equitable and
not unfairly discriminatory because it
will encourage submission of additional
displayed liquidity to a public
exchange, thereby promoting price
discovery and transparency.
The Exchange further believes the
proposed rebate for Floor brokers 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. Further, the
proposed Floor broker credit is also
equitable and not unfairly
discriminatory because those member
organizations that make significant
contributions to market quality and that
contribute to price discovery by
providing higher volumes of liquidity
would be allocated a higher credit. The
Exchange believes that any member
organizations that would qualify for the
proposed $0.0020 per share for UTP
executions that add liquidity could
15 IEX, for instance, charges a fee of $0.0009 per
share for providing non-displayed liquidity for
securities priced at or above $1.00 and 0.30% of
TDVT (i.e., the total dollar value of the transaction
calculated as the execution price) for securities
below $1.00. See Investors Exchange Fee Schedule
2017, available at https://www.iextrading.com/
trading/fees/.
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qualify for the higher rate based on the
levels of activity sent to Floor brokers.
For the same reasons, the Exchange
believes the proposed credits for MPL
orders and cross trades in UTP
Securities that add liquidity to the
Exchange are reasonable and not
unfairly discriminatory.
The Exchange believes that not
charging UTP executions on the
Exchange of displayed orders that add
liquidity to the Exchange in securities
priced below $1.00 would encourage
price discovery and enhance market
quality by encouraging more
competitive pricing of displayed orders
in low-priced UTP Securities. The
Exchange believes that not charging a
fee for liquidity adding displayed orders
is equitable and not unfairly
discriminatory because it is designed to
facilitate execution of, and enhance
trading opportunities for, displayable
orders, thereby further incentivizing
entry of displayed orders on the
Exchange.
Liquidity Removing Fees
The Exchange believes that charging
$0.0030 per share for securities priced at
or above $1.00, including MPL Orders
unless the Floor broker fee applies, and
0.3% of the total dollar value of the
transaction for securities priced below
$1.00 for executions on the Exchange in
UTP Securities that remove liquidity is
reasonable and consistent with the Act.
The Exchange notes that the proposed
fees are in line with the fees the
Exchange currently charges for
removing liquidity from the Exchange in
Tape A securities.16
Adding Tier Credits and Remove Tier
Fees
The Exchange believes that that the
proposed tiered adding requirements for
displayed orders in securities priced at
or above $1.00 are reasonable, equitable
and not unfairly discriminatory, as
follows.
The proposed Tier 1 ($0.0026 per
share, $0.0025 if an MPL order) and Tier
2 ($0.0023 per share) Adding Credits per
share for transactions in UTP Securities
with a per share stock price of $1.00 or
more when adding liquidity are
reasonable because it would further
contribute to incenting member
organizations to provide additional
amounts of liquidity on the Exchange.
The Exchange believes that the
proposed Tier 1 and Tier 2 Adding
Credits are reasonable, equitable and not
unfairly discriminatory because all
16 See page 5 of the current NYSE Price List,
available at https://www.nyse.com/publicdocs/nyse/
markets/nyse/NYSE_Price_List.pdf.
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19379
member organizations would benefit
from such increased levels of liquidity.
In addition, the Tier 1 and Tier 2
Adding Credits would provide a higher
credit to member organizations that is
reasonably related to the value to the
Exchange’s market quality associated
with higher volumes of liquidity. In
addition, the Exchange believes that the
proposed Tier 1 and Tier 2 Adding
Credits are equitable and not unfairly
discriminatory as all similarly situated
market participants will be subject to
the same credits on an equal and nondiscriminatory basis.
Further, the Exchange believes that
proposed Tier 1 charge of $0.0028 per
share in UTP Securities for member
organizations with an Adding ADV of at
least 50,000 shares that removes
liquidity from the Exchange is
reasonable, equitable and not unfairly
discriminatory because the proposed
fees are in line with the fees the
Exchange currently charges for
removing liquidity from the Exchange in
Tape A securities.17
Finally, the Exchange believes it is
reasonable and not unfairly
discriminatory to waive the Tier 1
requirements until June 1, 2018, because
the proposed credits and fees will apply
to all similarly situated member
organizations.
SLP Provide Tiers
The Exchange believes that higher
rebates for SLPs discussed below are
reasonable, equitable and not unfairly
discriminatory because SLPs have
monthly quoting requirements that nonSLP market participants do not have. As
discussed below, the Exchange believes
that the proposed rebates for SLPs are
commensurate with the SLP’s quoting
requirement, are consistent with rebates
charged on other markets, and will
encourage the SLPs to add liquidity to
the market in UTP Securities, thereby
providing customers with a higher
quality venue for price discovery,
liquidity, competitive quotes and price
improvement.
Non-Tiered Credits
The Exchange believes that the
proposed non-tiered credit of $0.0026
per share for displayed orders, and the
proposed non-tiered credit of $0.0008
per share for non-displayed orders, for
SLPs that add liquidity to the Exchange
are reasonable, equitable and not
unfairly discriminatory because,
although slightly higher than the nontiered SLP rates applicable to Tape A
securities, would encourage submission
of additional liquidity to a public
17 See
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exchange, thereby promoting price
discovery and transparency and
enhancing order execution
opportunities for member organizations.
Tiers 1 and 2
The Exchange believes the proposed
credits for SLPs adding displayed
liquidity to the Exchange (proposed Tier
2 credit of $0.0029 per share and Tier
1 credit of $0.0032 per share) and nondisplayed liquidity to the Exchange
(proposed Tier 2 credit of $0.0011 per
share, Tier 1 credit of $0.0014 per share
credit, and $0.0025 per share credit for
MPL Orders), are reasonable, equitable
and not unfairly discriminatory because
the proposed credits are in line with the
fees the Exchange currently charges
SLPs for adding displayed and nondisplayed liquidity in Tape A
securities.18
daltland on DSKBBV9HB2PROD with NOTICES
Tape A Tier
The Exchange believes that proposed
SLP Tier A Tier is reasonable because it
would provide SLPs with an additional
way to qualify for a rebate, thereby
providing SLPs with greater flexibility
and creating an added incentive for
SLPs to bring additional order flow to a
public market in UTP Securities.
Finally, the Exchange believes it is
reasonable and not unfairly
discriminatory to waive the provide
volume component of the SLP Tier
requirements until June 1, 2018, because
the proposed credits and fees will apply
to all similarly situated SLPs.
Routing Fees
The Exchange believes that its
proposed routing fees are a reasonable,
equitable and not an unfairly
discriminatory allocation of fees
because the fee would be applicable to
all member organizations in an
equivalent manner. Moreover, the
proposed fees for routing shares are also
reasonable, equitable and not unfairly
discriminatory because they are
consistent with fees charged on other
exchanges. In particular, the Exchange’s
proposal to charge a fee of $0.0005 per
share for executions that route to and
execute on an NYSE American auction
in securities priced at or above $1.00 is
the same as the fee charged by the
Exchange’s affiliate NYSE Arca, Inc.
(‘‘NYSE Arca’’), to route orders to NYSE
American auctions.19 Moreover, the
Exchange believes that the proposed
18 See page 5 of the current NYSE Price List,
available at https://www.nyse.com/publicdocs/nyse/
markets/nyse/NYSE_Price_List.pdf.
19 See page 4 of the NYSE Arca, Inc., Schedule
of Fees and Charges, available at https://
www.nyse.com/publicdocs/nyse/markets/nyse-arca/
NYSE_Arca_Marketplace_Fees.pdf.
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$0.0005 per share routing fee is
reasonable and not unfairly
discriminatory because it is the same as
NYSE American’s fee for executions in
the opening and closing auctions.20 The
Exchange notes that the proposed
$0.0005 routing fee is at least half the
base rate charged for auction orders on
most other markets, including the
NYSE.21
The proposal to charge $0.0010 per
share for executions that route to and
execute on Away Market auctions other
than NYSE American in securities
priced at or above $1.00 is reasonable
and not unfairly discriminatory because
it is consistent with fees charged on
other exchanges. The Exchange notes
that the proposed fee is the same, and
in some cases lower than, the fees
charged on other exchanges.22
The proposal to charge $0.0030 for all
other executions in securities priced at
or above $1.00 that route to and execute
on Away Market auctions is reasonable,
equitable and not unfairly
discriminatory because it is consistent
with fees charged on other exchanges.23
Further, the proposal to charge a fee
of 0.30% of total dollar value for
transactions in securities with a price
under $1.00 are reasonable, equitable
and not unfairly discriminatory because
it is consistent with fees charged on
other exchanges.24
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
20 See page 1 of NYSE American’s Price List,
available at https://www.nyse.com/publicdocs/nyse/
markets/nyse-american/NYSE_America_Equities_
Price_List.pdf.
21 The NYSE’s base rate is $0.0010. See note 18,
supra. The NASDAQ Stock Market’s (‘‘NASDAQ’’)
base rate, in contrast, is $0.0016. See note 22, infra.
22 For example, NASDAQ charges a rate of
$0.0016 per executed share for Tier F. See NASDAQ
Fee Schedule at https://www.nasdaqtrader.com/
Trader.aspx?id=PriceListTrading2.
23 For example, NASDAQ charges a rate of
$0.0030 to remove liquidity for shares executed at
or above $1.00. See NASDAQ Fee Schedule at
https://www.nasdaqtrader.com/Trader.aspx?id=
PriceListTrading2.
24 NASDAQ, for example, charges a fee of 0.30%
(i.e. 30 basis points) of total dollar volume to
remove liquidity for shares executed below $1.00.
See NASDAQ Fee Schedule at https://
www.nasdaqtrader.com/Trader.aspx?id=
PriceListTrading2.
PO 00000
Frm 00170
Fmt 4703
Sfmt 4703
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.
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 proposed
changes would encourage the
submission of additional liquidity to a
public exchange, thereby promoting
price discovery and transparency and
enhancing order execution
opportunities for member organizations.
The Exchange believes that this could
promote competition between the
Exchange and other execution venues,
including those that currently offer
similar order types and comparable
transaction pricing, by encouraging
additional orders to be sent to the
Exchange for execution. The Exchange
believes that providing higher rebates
and credits to SLPs and Floor brokers
could similarly promote competition
because the higher rates would
encourage submission of additional
liquidity by member organizations with
enhanced quoting obligations (SLPs)
and those that make significant
contributions to market quality and
contribute to price discovery by
providing higher volumes of liquidity
(Floor brokers).
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
25 15
E:\FR\FM\02MYN1.SGM
U.S.C. 78f(b)(8).
02MYN1
Federal Register / Vol. 83, No. 85 / Wednesday, May 2, 2018 / Notices
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) 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:
daltland on DSKBBV9HB2PROD with NOTICES
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSE–2018–15 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–2018–15. 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–2018–15 and should
be submitted on or before May 23, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–09258 Filed 5–1–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
26 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
28 15 U.S.C. 78s(b)(2)(B).
27 17
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29 17
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PO 00000
CFR 200.30–3(a)(12).
Frm 00171
Fmt 4703
Sfmt 4703
19381
Rule 17a–5(c), SEC File No. 270–199, OMB
Control No. 3235–0199
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 17a–5(c) (17 CFR
240.17a–5(c)), under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.). The Commission plans to submit
this existing collection of information to
the Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 17a–5(c) generally requires
broker-dealers who carry customer
accounts to provide statements of the
broker-dealer’s financial condition to
their customers. Paragraph (c)(5) of Rule
17a–5 provides a conditional exemption
from this requirement. A broker-dealer
that elects to take advantage of the
exemption must publish its statements
on its website in a prescribed manner,
and must maintain a toll-free number
that customers can call to request a copy
of the statements.
The purpose of the Rule is to ensure
that customers of broker-dealers are
provided with information concerning
the financial condition of the firm that
may be holding the customers’ cash and
securities. The Commission, when
adopting the Rule in 1972, stated that
the goal was to ‘‘directly’’ send a
customer essential information so that
the customer could ‘‘judge whether his
broker or dealer is financially sound.’’
The Commission adopted the Rule in
response to the failure of several brokerdealers holding customer funds and
securities in the period between 1968
and 1971.
The Commission estimates that
approximately 162 broker-dealer
respondents carrying approximately 132
million public customer accounts incur
a burden of approximately 161,037
hours per year to comply with the Rule.
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
E:\FR\FM\02MYN1.SGM
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]]>Agencies
[Federal Register Volume 83, Number 85 (Wednesday, May 2, 2018)]
[Notices]
[Pages 19376-19381]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09258]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83113; File No. SR-NYSE-2018-15]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Adopt Transaction Fees In Connection with the Exchange's Trading of UTP
Securities on Pillar
April 26, 2018.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the
[[Page 19377]]
``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that,
on April 17, 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 adopt transaction fees in connection with
the Exchange's trading of UTP Securities on Pillar, the Exchange's new
trading technology platform. The Exchange proposes to implement these
changes to its Price List effective April 17, 2018.\4\ The proposed
rule change is available on the Exchange's website at www.nyse.com, at
the principal office of the Exchange, and at the Commission's Public
Reference Room.
---------------------------------------------------------------------------
\4\ The Exchange originally filed to amend the Price List on
April 9, 2018 (SR-NYSE-2018-13) and withdrew such filing on April
17, 2018.
---------------------------------------------------------------------------
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
On April 9, 2018, the Exchange will introduce trading of UTP
Securities on the Exchange on the Pillar trading platform.\5\ As
described in the UTP Trading Rules Filing, with Pillar, the Exchange
will continue to trade NYSE-listed securities on its current trading
platform without any changes.\6\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No.82945 (March 26,
2018), 83 FR 13553 (March 29, 2018) (SR-NYSE-2017-36) (the ``UTP
Trading Rules Filing''). The term ``UTP Security'' means a security
that is listed on a national securities exchange other than the
Exchange and that trades on the Exchange pursuant to unlisted
trading privileges. See Rule 1.1(ii).
\6\ See UTP Trading Rules Filing, 83 FR at 13554, n.17.
---------------------------------------------------------------------------
In connection with the offering of trading in UTP Securities, the
Exchange proposes to amend its Price List to adopt a new pricing for
trading UTP Securities on the Pillar platform.
The proposed changes would apply to transactions executed in
securities priced at or above and below $1.00.
The Exchange proposes to implement these changes effective April
17, 2018.
Proposed Rule Change
The Exchange proposes the following transaction fees for UTP
trading on its Pillar trading platform.
The Exchange proposes to add the following heading immediately
after the crossing session fees and credits in the current fee
schedule: ``Transaction Fees and Credits For Securities Traded Pursuant
to Unlisted Trading Privileges (Tapes B and C) on the Pillar Trading
Platform.'' The Exchange believes that the proposed legend would
clarify which fees and credits in the current fee schedule would be
applicable to trading UTP Securities on the Pillar platform, and thus
add clarity and promote transparency.
Immediately below this proposed heading, the Exchange proposes a
second heading titled ``Fees and Credits applicable to Market
Participants.''
General Information Applicable to the Price List
The Exchange proposes to summarize general information applicable
to fees for trading UTP Securities on the Pillar trading platform in
two bullets under the second heading in the proposed Price List.
The first bullet would provide that rebates are indicated by
parentheses.
The second bullet would provide that, for purposes of determining
transaction fees and credits based on requirements based on quoting
levels, average daily volume (``ADV''), and consolidated ADV
(``CADV''), the Exchange may exclude shares traded any day that (1) the
Exchange is not open for the entire trading day and/or (2) a disruption
affects an Exchange system that lasts for more than 60 minutes during
regular trading hours. The second proposed bullet would reproduce the
language in footnote 6 of the current Price List.
Transaction Fees
The Exchange proposes the following fees and credits for all
transactions in UTP Securities:
Liquidity Adding Non-Displayed Order Fees
The Exchange does not propose to charge a fee for UTP executions on
the Exchange of non-displayed orders \7\ that add liquidity to the
Exchange in securities priced at or above $1.00.
---------------------------------------------------------------------------
\7\ These rates are client rates. The Exchange proposes separate
provide rates for non-displayed orders by SLPs, discussed below.
---------------------------------------------------------------------------
The Exchange also does not propose to charge a fee for UTP
executions on the Exchange of non-displayed orders that add liquidity
to the Exchange in securities priced below $1.00.
Liquidity Adding Displayed Order Credits and Fees
For securities priced at or above $1.00, the Exchange proposes a
rebate of $0.0020 per share for UTP executions on the Exchange of
displayed orders that add liquidity to the Exchange.
For UTP executions on the Exchange of displayed orders that add
liquidity to the Exchange by Floor brokers, the Exchange proposes a
rebate of $0.0026 per share.
The Exchange does not propose to charge a fee for UTP executions on
the Exchange of displayed orders that add liquidity to the Exchange in
securities priced below $1.00.
For securities priced at or above $1.00, the Exchange proposes a
credit of $0.0010 per share for UTP executions in each tape for MPL
orders that add liquidity to the Exchange, unless a specific credit for
SLP Provide Tiers or Adding Tiers applies.
For securities priced at or above $1.00, the Exchange proposes a
rebate of $0.0006 per share for cross trades \8\ in UTP Securities that
add liquidity to the Exchange.
---------------------------------------------------------------------------
\8\ For purposes of the Price List, cross trades are trades
where a Floor broker executes customer orders to buy and sell an
equivalent amount of the same security pursuant to Rule 76.
---------------------------------------------------------------------------
Liquidity Removing Order Fees
For UTP executions on the Exchange that remove liquidity from the
Exchange, the Exchange proposes to charge $0.0030 per share for
securities priced at or above $1.00, including MPL Orders, unless the
Floor broker fee applies, and to charge 0.3% of the total dollar value
of the transaction for securities priced below $1.00.
For Floor broker UTP executions that remove liquidity from the
Exchange, the Exchange proposes a fee $0.0026 per share for securities
priced at or above $1.00.
[[Page 19378]]
Adding and Remove Tiers for Securities at or Above $1.00
The Exchange proposes tiered adding requirements for displayed
orders in securities priced at or above $1.00, as follows.
Under the proposed Tier 1 Adding Credit, the Exchange would offer a
per tape credit of $0.0026 per share ($0.0025 if an MPL order) on a per
tape basis for transactions in stocks with a per share price of $1.00
or more when adding liquidity to the Exchange if the member
organization has at least 0.05% of Adding CADV in Tape B or C. For
purposes of qualifying for this tier, the 0.05% of Adding CADV could
include shares of both an SLP-Prop and an SLMM \9\ of the same or an
affiliated member organization. The Exchange also proposes to waive the
Tier 1 add and remove tier requirements until June 1, 2018, which would
be reflected in footnote *.
---------------------------------------------------------------------------
\9\ Under Rule 107B, a Supplemental Liquidity Provider (``SLP'')
can be either a proprietary trading unit of a member organization
(``SLP-Prop'') or a registered market maker at the Exchange
(``SLMM''). For purposes of the 10% average or more quoting
requirement in assigned securities pursuant to Rule 107B, quotes of
an SLP-Prop and an SLMM of the same member organization are not
aggregated. However, for purposes of adding liquidity for assigned
SLP securities in the aggregate, shares of both an SLP-Prop and an
SLMM of the same member organization are included.
---------------------------------------------------------------------------
Under the proposed Tier 2 Adding Credit, the Exchange would offer a
per tape credit of $0.0023 per share for transactions in stocks with a
per share price of $1.00 or more when adding liquidity to the Exchange
if the member organization has at least 0.01% of Adding CADV in Tape B
or C. For purposes of qualifying for this tier, the 0.01% of Adding
CADV could include shares of both an SLP-Prop and an SLMM of the same
or an affiliated member organization.
Finally, for UTP Securities, the Exchange proposes to charge a per
tape fee of $0.0028 per share to remove liquidity from the Exchange for
member organizations with an Adding ADV \10\ of at least 50,000 shares
for that respective tape.
---------------------------------------------------------------------------
\10\ The phrase ``Adding ADV'' in the proposed tier would have a
citation to footnote 4 in the current Price List, which provides
``For purposes of transaction fees and Supplemental Liquidity
Provider liquidity credits, ADV calculations exclude early closing
days.'' The text of current footnote 4 would remain unchanged.
---------------------------------------------------------------------------
SLP Provide Tiers
The Exchange proposes tiered and non-tiered rates for displayed and
non-displayed orders by SLPs that add liquidity to the Exchange in UTP
Securities priced at or above $1.00, as follows:
Non-Tiered Rates
For displayed orders in UTP Securities that add liquidity to the
Exchange, the Exchange proposes a non-tiered credit of $0.0026 per
share per tape in an assigned UTP Security where the SLP meets the 10%
average or more quoting requirement in an assigned security pursuant to
Rule 107B.\11\ For non-displayed orders in UTP Securities that add
liquidity to the Exchange, the Exchange proposes a non-tiered credit of
$0.0008 per share per tape in an assigned UTP Security if the SLP meets
the 10% average or more quoting requirement in an assigned security
pursuant to Rule 107B.
---------------------------------------------------------------------------
\11\ See note 9, supra.
---------------------------------------------------------------------------
Tier 2
Proposed Tier 2 would provide a $0.0029 per share credit per tape
in an assigned UTP Security for SLPs adding displayed liquidity to the
Exchange if the SLP (1) adds liquidity for all assigned UTP Securities
in the aggregate of an CADV of at least 0.01% per tape, and meets the
10% average or more quoting requirement in 250 or more assigned UTP
Securities in Tapes B and C combined pursuant to Rule 107B, and (2)
meets the 10% average or more quoting requirement in an assigned UTP
Security pursuant to Rule 107B.
Proposed Tier 2 would provide a $0.0011 per share credit per tape
in an assigned UTP Security for SLPs adding non-displayed liquidity to
the Exchange if the SLP meets the 10% average or more quoting
requirement in an assigned UTP Security pursuant to Rule 107B.
Tier 1
Proposed Tier 1 would provide a $0.0032 per share credit per tape
in an assigned UTP Security for SLPs adding displayed liquidity to the
Exchange if the SLP (1) adds liquidity for all assigned UTP Securities
in the aggregate of an CADV of at least 0.05% per tape, and (2) meets
the 10% average or more quoting requirement in 500 or more assigned UTP
Securities in Tapes B and C combined pursuant to Rule 107B, and (2)
meets the 10% average or more quoting requirement in an assigned UTP
Security pursuant to Rule 107B.
Proposed Tier 1 would provide a $0.0014 per share credit per tape
for SLPs adding non-displayed liquidity to the Exchange, and a $0.0025
per share credit for MPL Orders adding liquidity, in an assigned UTP
Security if the SLP meets the 10% average or more quoting requirement
in an assigned UTP Security pursuant to Rule 107B.
Tape A Tier
The proposed Tape A Tier would provide a $0.00005 per share in an
assigned UTP Security in addition to the Tape A SLP credit in Tape A
assigned securities for SLPs adding displayed liquidity to the Exchange
if the SLP (1) qualifies for the SLP Tier 1 provide rate in both Tape B
and C or quotes in excess of the 10% average quoting requirement in 300
or more assigned securities separately in Tapes B and Tape C pursuant
to Rule 107B, and (2) where the SLP meets the 10% average quoting
requirement pursuant to Rule 107B.
Finally, the Exchange proposes to waive the provide volume
component of the SLP Tier requirements until June 1, 2018, which would
be reflected in footnote **.
Routing Fees
Under a new heading titled ``Routing Fees,'' the Exchange proposes
the following fees for routing, which would be applicable to all orders
in UTP Securities that are routed.
For executions in securities with a price at or above $1.00 that
route to and execute in an auction on the Exchange's affiliate NYSE
American, the Exchange proposes to charge a fee of $0.0005 per share.
For executions in securities with a price at or above $1.00 that route
to and execute in an auction on an Away Market \12\ other than NYSE
American, the Exchange proposes to charge a fee of $0.0010 per share,
and a fee of $0.0030 per share for all other executions.
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\12\ The term ``Away Market'' is defined in Rule 1.1(ff) to mean
any exchange, alternative trading system (``ATS'') or other broker-
dealer (1) with which the Exchange maintains an electronic linkage,
and (2) that provides instantaneous responses to orders routed from
the Exchange.
---------------------------------------------------------------------------
For securities priced below $1.00 that route to and execute on an
Away Market, the Exchange proposes to charge a fee of 0.30% of the
total dollar value of the transaction for executions in an Away Market
auction as well as all other executions.
* * * * *
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,\13\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\14\ in
particular, because it provides for the
[[Page 19379]]
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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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4) & (5).
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Adding Liquidity Credits and Fees
Liquidity Adding Non-Displayed Order Fees
The Exchange believes that not charging a fee for liquidity adding
non-displayed orders in UTP Securities is reasonable, equitable and not
unfairly discriminatory because it is designed to facilitate execution
of, and enhance trading opportunities for, non-displayable orders,
thereby further incentivizing entry of non-displayed orders on the
Exchange. The Exchange notes that other markets charge fees for non-
displayed orders.\15\
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\15\ IEX, for instance, charges a fee of $0.0009 per share for
providing non-displayed liquidity for securities priced at or above
$1.00 and 0.30% of TDVT (i.e., the total dollar value of the
transaction calculated as the execution price) for securities below
$1.00. See Investors Exchange Fee Schedule 2017, available at
https://www.iextrading.com/trading/fees/.
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Liquidity Adding Displayed Order Credits and Fees
The Exchange believes that rebates of $0.0020 per share for UTP
executions on the Exchange of displayed orders that add liquidity to
the Exchange (unless another credit applies) and $0.0026 per share for
UTP executions on the Exchange of displayed orders that add liquidity
to the Exchange by Floor brokers are reasonable, equitable and not
unfairly discriminatory because it will encourage submission of
additional displayed liquidity to a public exchange, thereby promoting
price discovery and transparency.
The Exchange further believes the proposed rebate for Floor brokers
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. Further, the
proposed Floor broker credit is also equitable and not unfairly
discriminatory because those member organizations that make significant
contributions to market quality and that contribute to price discovery
by providing higher volumes of liquidity would be allocated a higher
credit. The Exchange believes that any member organizations that would
qualify for the proposed $0.0020 per share for UTP executions that add
liquidity could qualify for the higher rate based on the levels of
activity sent to Floor brokers. For the same reasons, the Exchange
believes the proposed credits for MPL orders and cross trades in UTP
Securities that add liquidity to the Exchange are reasonable and not
unfairly discriminatory.
The Exchange believes that not charging UTP executions on the
Exchange of displayed orders that add liquidity to the Exchange in
securities priced below $1.00 would encourage price discovery and
enhance market quality by encouraging more competitive pricing of
displayed orders in low-priced UTP Securities. The Exchange believes
that not charging a fee for liquidity adding displayed orders is
equitable and not unfairly discriminatory because it is designed to
facilitate execution of, and enhance trading opportunities for,
displayable orders, thereby further incentivizing entry of displayed
orders on the Exchange.
Liquidity Removing Fees
The Exchange believes that charging $0.0030 per share for
securities priced at or above $1.00, including MPL Orders unless the
Floor broker fee applies, and 0.3% of the total dollar value of the
transaction for securities priced below $1.00 for executions on the
Exchange in UTP Securities that remove liquidity is reasonable and
consistent with the Act. The Exchange notes that the proposed fees are
in line with the fees the Exchange currently charges for removing
liquidity from the Exchange in Tape A securities.\16\
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\16\ See page 5 of the current NYSE Price List, available at
https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf.
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Adding Tier Credits and Remove Tier Fees
The Exchange believes that that the proposed tiered adding
requirements for displayed orders in securities priced at or above
$1.00 are reasonable, equitable and not unfairly discriminatory, as
follows.
The proposed Tier 1 ($0.0026 per share, $0.0025 if an MPL order)
and Tier 2 ($0.0023 per share) Adding Credits per share for
transactions in UTP Securities with a per share stock price of $1.00 or
more when adding liquidity are reasonable because it would further
contribute to incenting member organizations to provide additional
amounts of liquidity on the Exchange. The Exchange believes that the
proposed Tier 1 and Tier 2 Adding Credits are reasonable, equitable and
not unfairly discriminatory because all member organizations would
benefit from such increased levels of liquidity. In addition, the Tier
1 and Tier 2 Adding Credits would provide a higher credit to member
organizations that is reasonably related to the value to the Exchange's
market quality associated with higher volumes of liquidity. In
addition, the Exchange believes that the proposed Tier 1 and Tier 2
Adding Credits are equitable and not unfairly discriminatory as all
similarly situated market participants will be subject to the same
credits on an equal and non-discriminatory basis.
Further, the Exchange believes that proposed Tier 1 charge of
$0.0028 per share in UTP Securities for member organizations with an
Adding ADV of at least 50,000 shares that removes liquidity from the
Exchange is reasonable, equitable and not unfairly discriminatory
because the proposed fees are in line with the fees the Exchange
currently charges for removing liquidity from the Exchange in Tape A
securities.\17\
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\17\ See id.
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Finally, the Exchange believes it is reasonable and not unfairly
discriminatory to waive the Tier 1 requirements until June 1, 2018,
because the proposed credits and fees will apply to all similarly
situated member organizations.
SLP Provide Tiers
The Exchange believes that higher rebates for SLPs discussed below
are reasonable, equitable and not unfairly discriminatory because SLPs
have monthly quoting requirements that non-SLP market participants do
not have. As discussed below, the Exchange believes that the proposed
rebates for SLPs are commensurate with the SLP's quoting requirement,
are consistent with rebates charged on other markets, and will
encourage the SLPs to add liquidity to the market in UTP Securities,
thereby providing customers with a higher quality venue for price
discovery, liquidity, competitive quotes and price improvement.
Non-Tiered Credits
The Exchange believes that the proposed non-tiered credit of
$0.0026 per share for displayed orders, and the proposed non-tiered
credit of $0.0008 per share for non-displayed orders, for SLPs that add
liquidity to the Exchange are reasonable, equitable and not unfairly
discriminatory because, although slightly higher than the non-tiered
SLP rates applicable to Tape A securities, would encourage submission
of additional liquidity to a public
[[Page 19380]]
exchange, thereby promoting price discovery and transparency and
enhancing order execution opportunities for member organizations.
Tiers 1 and 2
The Exchange believes the proposed credits for SLPs adding
displayed liquidity to the Exchange (proposed Tier 2 credit of $0.0029
per share and Tier 1 credit of $0.0032 per share) and non-displayed
liquidity to the Exchange (proposed Tier 2 credit of $0.0011 per share,
Tier 1 credit of $0.0014 per share credit, and $0.0025 per share credit
for MPL Orders), are reasonable, equitable and not unfairly
discriminatory because the proposed credits are in line with the fees
the Exchange currently charges SLPs for adding displayed and non-
displayed liquidity in Tape A securities.\18\
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\18\ See page 5 of the current NYSE Price List, available at
https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf.
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Tape A Tier
The Exchange believes that proposed SLP Tier A Tier is reasonable
because it would provide SLPs with an additional way to qualify for a
rebate, thereby providing SLPs with greater flexibility and creating an
added incentive for SLPs to bring additional order flow to a public
market in UTP Securities.
Finally, the Exchange believes it is reasonable and not unfairly
discriminatory to waive the provide volume component of the SLP Tier
requirements until June 1, 2018, because the proposed credits and fees
will apply to all similarly situated SLPs.
Routing Fees
The Exchange believes that its proposed routing fees are a
reasonable, equitable and not an unfairly discriminatory allocation of
fees because the fee would be applicable to all member organizations in
an equivalent manner. Moreover, the proposed fees for routing shares
are also reasonable, equitable and not unfairly discriminatory because
they are consistent with fees charged on other exchanges. In
particular, the Exchange's proposal to charge a fee of $0.0005 per
share for executions that route to and execute on an NYSE American
auction in securities priced at or above $1.00 is the same as the fee
charged by the Exchange's affiliate NYSE Arca, Inc. (``NYSE Arca''), to
route orders to NYSE American auctions.\19\ Moreover, the Exchange
believes that the proposed $0.0005 per share routing fee is reasonable
and not unfairly discriminatory because it is the same as NYSE
American's fee for executions in the opening and closing auctions.\20\
The Exchange notes that the proposed $0.0005 routing fee is at least
half the base rate charged for auction orders on most other markets,
including the NYSE.\21\
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\19\ See page 4 of the NYSE Arca, Inc., Schedule of Fees and
Charges, available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf.
\20\ See page 1 of NYSE American's Price List, available at
https://www.nyse.com/publicdocs/nyse/markets/nyse-american/NYSE_America_Equities_Price_List.pdf.
\21\ The NYSE's base rate is $0.0010. See note 18, supra. The
NASDAQ Stock Market's (``NASDAQ'') base rate, in contrast, is
$0.0016. See note 22, infra.
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The proposal to charge $0.0010 per share for executions that route
to and execute on Away Market auctions other than NYSE American in
securities priced at or above $1.00 is reasonable and not unfairly
discriminatory because it is consistent with fees charged on other
exchanges. The Exchange notes that the proposed fee is the same, and in
some cases lower than, the fees charged on other exchanges.\22\
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\22\ For example, NASDAQ charges a rate of $0.0016 per executed
share for Tier F. See NASDAQ Fee Schedule at https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
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The proposal to charge $0.0030 for all other executions in
securities priced at or above $1.00 that route to and execute on Away
Market auctions is reasonable, equitable and not unfairly
discriminatory because it is consistent with fees charged on other
exchanges.\23\
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\23\ For example, NASDAQ charges a rate of $0.0030 to remove
liquidity for shares executed at or above $1.00. See NASDAQ Fee
Schedule at https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
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Further, the proposal to charge a fee of 0.30% of total dollar
value for transactions in securities with a price under $1.00 are
reasonable, equitable and not unfairly discriminatory because it is
consistent with fees charged on other exchanges.\24\
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\24\ NASDAQ, for example, charges a fee of 0.30% (i.e. 30 basis
points) of total dollar volume to remove liquidity for shares
executed below $1.00. See NASDAQ Fee Schedule at https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
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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.
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 proposed
changes would encourage the submission of additional liquidity to a
public exchange, thereby promoting price discovery and transparency and
enhancing order execution opportunities for member organizations. The
Exchange believes that this could promote competition between the
Exchange and other execution venues, including those that currently
offer similar order types and comparable transaction pricing, by
encouraging additional orders to be sent to the Exchange for execution.
The Exchange believes that providing higher rebates and credits to SLPs
and Floor brokers could similarly promote competition because the
higher rates would encourage submission of additional liquidity by
member organizations with enhanced quoting obligations (SLPs) and those
that make significant contributions to market quality and contribute to
price discovery by providing higher volumes of liquidity (Floor
brokers).
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\25\ 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
[[Page 19381]]
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) \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.
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\26\ 15 U.S.C. 78s(b)(3)(A).
\27\ 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) \28\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\28\ 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-2018-15 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-2018-15. 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-2018-15 and should be submitted on
or before May 23, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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\29\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-09258 Filed 5-1-18; 8:45 am]
BILLING CODE 8011-01-P
