Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend its Price List, 23313-23318 [2018-10606]
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Federal Register / Vol. 83, No. 97 / Friday, May 18, 2018 / Notices
the execution of order flow from broker
dealers’. . . .’’ 10 Although the court
and the SEC were discussing the cash
equities markets, the Exchange believes
that these views apply with equal force
to the options markets.
The Exchange believes that its
proposed fee is reasonable because it
benefits participants by providing a new
way in which members may qualify for
a reduced transaction fee, while also
incentivizing members to add liquidity
to the Exchange. It is also reasonable for
the Exchange to charge a higher fee for
a Midpoint pegging order that receives
price improvement relative to the
midpoint of the NBBO than it does for
a Midpoint pegging order that executes
at the Midpoint because the former
order receives a better price than the
latter one relative to the midpoint of the
NBBO.
The Exchange believes that the
proposed fee is an equitable allocation
and is not unfairly discriminatory
because the Exchange will apply the
same fee to all similarly situated
members.
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. In terms of
inter-market competition, 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 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 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.
In this instance, the proposed fee does
not impose a burden on competition
because the Exchange’s execution
services are completely voluntary and
subject to extensive competition both
10 Id. at 539 (quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
74770, 74782–83 (December 9, 2008) (SR–
NYSEArca–2006–21)).
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from other exchanges and from offexchange venues. The proposed fee will
apply to all similarly situated members.
Moreover, the proposal promotes
competition because the Exchange
intends for it to incentivize members to
add liquidity to the Exchange,
potentially attracting additional
participants to the Exchange.
In sum, if the change proposed herein
is unattractive to market participants, it
is likely that the Exchange will lose
market share as a result. Accordingly,
the Exchange does not believe that the
proposed change will impair the ability
of members 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 either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.11
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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–
BX–2018–018 on the subject line.
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BX–2018–018. 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–BX–2018–018 and should
be submitted on or before June 8, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–10600 Filed 5–17–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83230; File No. SR–NYSE–
2018–21]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend its
Price List
May 14, 2018.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
12 17
11 15
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U.S.C. 78s(b)(3)(A)(ii).
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1 15
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
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Federal Register / Vol. 83, No. 97 / Friday, May 18, 2018 / Notices
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on April 30,
2018, New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Price List to (1) amend the cap
applicable to certain transactions at the
open; (2) offer an optional monthly per
security credit to Designated Market
Makers (‘‘DMM’’) that elect to receive a
lower rebate per share credit; (3) amend
the NYSE Crossing Session II (‘‘NYSE
CSII’’) fee cap; (4) offer a rebate for UTP
executions in orders designated as
‘‘retail’’ that add liquidity to the
Exchange; and (5) modify the quoting
requirements for the Supplemental
Liquidity Provider (‘‘SLP’’) tiered rates
for displayed and non-displayed orders
in UTP securities. 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.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Price List to (1) amend the cap
applicable to certain transactions at the
open; (2) offer an optional monthly per
security credit to DMMs that elect to
2 15
3 17
U.S.C. 78a.
CFR 240.19b–4.
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receive a lower rebate per share credit;
(3) amend the NYSE CSII fee cap; (4)
offer a rebate for UTP executions in
orders designated as ‘‘retail’’ that add
liquidity to the Exchange; and (5)
modify the quoting requirements for the
SLP tiered rates for displayed and nondisplayed orders in UTP securities.
The Exchange proposes to implement
these changes to its Price List effective
May 1, 2018.
Executions at the Open
For securities priced $1.00 or more,
the Exchange currently charges fees of
$0.0010 per share for executions at
open, and $0.0003 per share for Floor
broker executions at the open, subject to
$30,000 cap per month per member
organization, provided the member
organization executes an ADV that adds
liquidity to the Exchange during the
billing month (‘‘Adding ADV’’),4
excluding liquidity added by a DMM, of
at least five million shares. The
Exchange proposes an alternative, lower
$20,000 monthly fee cap for member
organizations that execute an ADV that
takes liquidity from the NYSE during
the billing month (‘‘Taking ADV’’),
excluding liquidity taken by a DMM, of
at least 1.30% of NYSE CADV and an
ADV of orders for execution at the open
(‘‘Open ADV’’) of at least 8 million
shares. The $0.0010 per share fee for
executions at the open and $0.0003 per
share for Floor broker executions at the
open would not be changed. DMMs
currently are not charged for executions
at the opening and would continue to
not be charged.5
DMM Optional Monthly Rebate Per
Security Credit
The Exchange proposes an optional
monthly rebate per security (‘‘Rebate Per
Security’’) to DMMs with 100 or more
assigned securities, up to a maximum
credit of $100,000 per month across all
DMM assigned securities, that elect to
receive a lower monthly rebate per share
credit (‘‘Optional Credit’’) for all
assigned securities. DMMs electing the
Rebate per Security and corresponding
Optional Credit for all assigned
securities would be required to notify
the Exchange prior to the start of a
calendar quarter to be effective for that
and subsequent quarters. Similarly,
DMMs electing to suspend the Rebate
4 Footnote 2 to the Price List defines ADV as
‘‘average daily volume’’ and ‘‘Adding ADV’’ as ADV
that adds liquidity to the Exchange during the
billing month. The Exchange is not proposing to
change these definitions.
5 The existing pricing for executions at the
opening in securities priced below $1.00 would also
remain unchanged (i.e., 0.3% of the total dollar
value of the transaction).
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per Security and corresponding
Optional Credit for that suspension to
be effective for that and subsequent
quarters would be required to notify the
Exchange prior to the start of that
calendar quarter.
As proposed, the Rebate Per Security
would be available for the following
calendar quarter for assigned securities
that meet the following quoting
requirements:
First, in More Active Securities,6 if
the DMM that elects the Optional Credit
meets the More Active Securities
Quoting Requirement in an assigned
security,7 that DMM’s assigned security
would be eligible for a:
• $100.00 Rebate per Security if the
DMM quotes at the NBBO in the
applicable security 30% of the time or
more in the applicable month;
• $75.00 Rebate Per Security if the
DMM quotes at least 20% and up to
30% of the time in the applicable
month; and
• $50.00 if the DMM quotes at least
10% and up to 20% of the time in the
applicable month.
Second, in Less Active Securities,8 if
the DMM that elects the Optional Credit
meets the Less Active Securities
Quoting Requirement in an assigned
security,9 that DMM’s assigned security
would be eligible for a
• $200.00 Rebate per Security if the
DMM quotes at the NBBO in the
applicable security 60% of the time or
more in the applicable month;
• $125.00 if the DMM quotes at least
40% and up to 60% of the time in the
applicable month; and
6 ‘‘More Active Securities’’ are securities with an
average daily consolidated volume (‘‘Security
CADV’’) in the previous month equal to or greater
than 1,000,000 shares per month.
7 The ‘‘More Active Securities Quoting
Requirement’’ is met if the More Active Security
has a stock price of $1.00 or more and the DMM
quotes at the National Best Bid or Offer (‘‘NBBO’’)
in the applicable security at least 10% of the time
in the applicable month. Both ‘‘More Active
Securities’’ and the ‘‘More Active Securities
Quoting Requirement’’ are defined in the current
Price List. The Exchange is not proposing any
changes to these definitions and proposes to
relocate them to the new proposed text describing
the optional rebate.
8 ‘‘Less Active Securities’’ are securities with
Security CADV of less than 1,000,000 shares per
month in the previous month.
9 The ‘‘Less Active Securities Quoting
Requirement’’ is met if the Less Active Security has
a stock price of $1.00 or more and the DMM quotes
at the NBBO in the applicable security at least 15%
of the time in the applicable month. Both ‘‘Less
Active Securities’’ and the ‘‘Less Active Securities
Quoting Requirement’’ are defined in the current
Price List. As with the definitions of More Active
Securities and the More Active Securities Quoting
Requirement, the Exchange is not proposing any
changes to these definitions and proposes to
relocate them to the new proposed text describing
the optional rebate.
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• $100.00 if the DMM quotes at least
15% and up to 40% of the time in the
applicable month.
The Exchange proposes to amend the
current DMM rebates to reflect the
proposed corresponding lower Optional
Credits for DMMs that elect for the
Rebate per Security, as follows.
More Active Securities
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Currently, DMMs earn a rebate of
$0.0027 per share when adding liquidity
with orders, other than Mid-Point
Liquidity Orders (‘‘MPL Order’’), in
More Active Securities if the More
Active Security has a stock price of
$1.00 or more and the DMM meets the
More Active Securities Quoting
Requirement and has a DMM Quoted
Size for an applicable month that is at
least 5% of the NYSE Quoted Size,10
unless the more favorable rates set forth
below in the Price List apply. The
Exchange proposes that DMMs electing
the optional Rebate per Security would
instead receive an Optional Credit of
$0.0026 per share if the quoting
requirements are met.
Currently, DMMs earn a rebate of
$0.0031 per share when adding liquidity
with orders, other than MPL Orders, in
More Active Securities if the More
Active Security has a stock price of
$1.00 or more and the DMM meets (1)
the More Active Securities Quoting
Requirement, (2) has a DMM Quoted
Size for an applicable month that is at
least 10% of the NYSE Quoted Size, and
(3) the DMM quotes at the NBBO in the
applicable security at least 20% of the
time in the applicable month and for
providing liquidity that is more than 5%
of the NYSE’s total intraday adding
liquidity in each such security for that
month. The Exchange proposes that
DMMs electing the optional Rebate per
Security would instead receive an
Optional Credit of $0.0030 per share if
the quoting and providing requirements
are met.
Similarly, DMMs currently earn a
rebate of $0.0034 per share when adding
liquidity with orders, other than MPL
Orders, in More Active Securities if the
More Active Security has a stock price
of $1.00 or more and the DMM meets (1)
the More Active Securities Quoting
Requirement, (2) has a DMM Quoted
Size for an applicable month that is at
least 15% of the NYSE Quoted Size, for
10 The ‘‘NYSE Quoted Size’’ is calculated by
multiplying the average number of shares quoted on
the NYSE at the NBBO by the percentage of time
the NYSE had a quote posted at the NBBO. The
‘‘DMM Quoted Size’’ is calculated by multiplying
the average number of shares of the applicable
security quoted at the NBBO by the DMM by the
percentage of time during which the DMM quoted
at the NBBO. See Price List, n. 7.
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providing liquidity that is more than
15% of the NYSE’s total intraday adding
liquidity in each such security for that
month, and (3) the DMMs quotes at the
NBBO in the applicable security at least
30% of the time in the applicable
month. The Exchange proposes that
DMMs electing the optional Rebate per
Security would instead receive an
Optional Credit of $0.0033 per share if
the quoting and providing requirements
are met.
DMMs currently earn a $0.0035 per
share when adding liquidity with
orders, other than MPL Orders, in More
Active Securities if the More Active
Security has a stock price of $1.00 or
more and the DMM meets (1) the More
Active Securities Quoting Requirement,
(2) has a DMM Quoted Size for an
applicable month that is at least 25% of
the NYSE Quoted Size, for providing
liquidity that is more than 15% of the
NYSE’s total intraday adding liquidity
in each such security for that month,
and (3) the DMMs quotes at the NBBO
in the applicable security at least 50%
of the time in the applicable month. The
Exchange proposes that DMMs electing
the optional Rebate per Security would
instead receive an Optional Credit of
$0.0034 per share if the quoting and
providing requirements are met.
DMMs currently earn a rebate of
$0.0015 per share when adding liquidity
with orders, other than MPL orders, in
More Active Securities if the More
Active Security has a stock price of
$1.00 or more and the DMM does not
meet the More Active Securities
Quoting in the applicable month. The
Exchange proposes that DMMs electing
the optional Rebate per Security would
instead receive an Optional Credit of
$0.0014 per share if the quoting
requirements are met.
DMMs are currently eligible for a
rebate of $0.0035 per share when adding
liquidity with orders, other than MPL
orders, in Less Active Securities if the
Less Active Security has a stock price of
$1.00 or more and the DMM meets the
Less Active Securities Quoting in the
applicable month. The Exchange
proposes that DMMs electing the
optional Rebate per Security would
instead receive an Optional Credit of
$0.0031 per share if the quoting
requirements are met.
DMMs are currently eligible for a
rebate of $0.0045 per share when adding
liquidity with orders, other than MPL
orders, in Less Active Securities if the
Less Active Security has a stock price of
$1.00 or more and the DMM quotes at
the NBBO in the applicable security at
least 30% of the time in the applicable
month. The Exchange proposes that
DMMs electing the optional Rebate per
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23315
Security would instead receive an
Optional Credit of $0.0041 per share if
the quoting requirements are met.
Finally, DMMs are currently eligible
for a rebate of $0.0015 per share when
adding liquidity in shares of Less Active
Securities if the Less Active Security
has a stock price of $1.00 or more and
the DMM does not meet the Less Active
Securities Quoting Requirement in the
applicable security in the applicable
month. The Exchange proposes to move
this rate from its current position in the
Price List to directly following the
rebate described in the previous
paragraph and proposes that DMMs
electing the optional Rebate per Security
would instead receive an Optional
Credit of $0.0011 per share if the
quoting requirements are met.
NYSE CSII Fee Cap
Currently, the Exchange charges a fee
of $0.0004 per share (both sides) for
executions in NYSE CSII.11 Fees for
executions in CSII are capped at
$100,000 [sic] per month per member
organization. The Exchange proposes an
alternative, lower cap of $25,000 per
month per member organization for
member organizations that execute a
Taking ADV, excluding liquidity taken
by a DMM, of at least 1.30% of NYSE
CADV and Open ADV of at least 8
million shares. The $0.0004 per share
fee for executions in NYSE CSII would
remain unchanged.
Proposed Changes to Fees and Credits
for UTP Securities
On April 9, 2018, the Exchange began
trading UTP Securities on the Exchange
on the Pillar trading platform.12 The
Exchange proposes the following
changes to the fees and credits for UTP
Securities.
Retail Credit
For securities priced at or above
$1.00, the Exchange proposes a rebate of
$0.0030 per share for UTP executions in
orders designated as ‘‘retail’’ 13 that add
liquidity to the Exchange.
11 CSII runs on the Exchange from 4:00 p.m. to
6:30 p.m. Eastern Time and handles member
organization crosses of baskets of securities of
aggregate-priced buy and sell orders. See NYSE
Rules 900–907.
12 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).
13 Orders designated as ‘‘retail’’ are orders that
satisfy the Retail Modifier requirements of Rule 13.
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Quoting Requirements for SLP Tiered
Credits
organizations would have in complying
with the proposed change.
Currently, the Exchange offers tiered
rates for displayed and nondisplayed
orders by SLPs that add liquidity to the
Exchange in UTP Securities priced at or
above $1.00. Specifically, Tier 2
provides 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 (2) 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 (3) meets the 10% average or
more quoting requirement in an
assigned UTP Security pursuant to Rule
107B.
Similarly, Tier 1 provides 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
(3) meets the 10% average or more
quoting requirement in an assigned UTP
Security pursuant to Rule 107B.
Finally, the Tape A Tier provides 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 (2) 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 (3) where the SLP meets the
10% average quoting requirement
pursuant to Rule 107B.
The provide volume component of the
above SLP Tier requirements are waived
until June 1, 2018.
In each case, the Exchange proposes
to clarify that the quoting requirement
(item (2) in the above description of the
tier requirements) means quoting on an
average daily basis, calculated monthly.
To effectuate this change, the Exchange
proposes to add the phrase ‘‘, on an
average daily basis, calculated
monthly,’’ after ‘‘quotes’’ in Tier 2, Tier
1 and the Tape A Tier.
*
*
*
*
*
The proposed changes are not
otherwise intended to address any other
issues, and the Exchange is not aware of
any problems that member
2. Statutory Basis
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The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,14 in general, and
furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,15 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.
Executions at the Open
The Exchange believes that the
proposed additional $20,000 cap for
executions at the open for member
organizations executing a Taking ADV,
excluding liquidity taken by a DMM, of
at least 1.30% of NYSE CADV and Open
ADV of at least 8 million shares is
reasonable, equitable and not unfairly
discriminatory because it would
encourage additional liquidity on the
Exchange’s opening auction and
because members and member
organizations benefit from the
substantial amounts of liquidity that are
present on the Exchange during such
time.
The Exchange believes the proposed
change is equitable and not unfairly
discriminatory because it would
continue to encourage member
organizations to send orders to the open,
thereby contributing to robust levels of
liquidity in the open, which benefits all
market participants. The proposed fee
will encourage the submission of
additional liquidity to a national
securities exchange, thereby promoting
price discovery and transparency and
enhancing order execution
opportunities for member organizations
from the substantial amounts of
liquidity that are present on the
Exchange during the opening. Moreover,
the requirement is equitable and not
unfairly discriminatory because it
would apply equally to all similarly
situated member organizations. Finally,
the Exchange notes that the current fee
and current and proposed caps together
are comparable to those for executions
at the opening on other markets.16
14 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) & (5).
16 For example, NASDAQ charges $0.0015 per
share for certain orders executed in the NASDAQ
Opening Cross and applies at $35,000 fee cap per
month per firm for such executions. See Nasdaq
Rule 7018(e).
15 15
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DMM Optional Monthly Rebate Per
Security Credit
The Exchange believes that providing
Exchange DMMs with the option to
receive lower per share transaction
credits in exchange for monthly rebates
per assigned security, up to a maximum
credit of $100,000 per month across all
DMM assigned securities, is reasonable,
equitable and not unfairly
discriminatory because it would foster
liquidity provision and stability in the
marketplace and lessen DMM reliance
on transaction fees, to the benefit of the
marketplace and all market participants.
Moreover, the proposal is reasonable,
equitable and not unfairly
discriminatory because it would balance
the increased risks and heightened
quoting and other obligations that
DMMs on the Exchange have and that
other market participants do not have.
As such, it is equitable and not unfairly
discriminatory to offer DMMs the option
to receive a flat per security credit
coupled with lower transaction fees that
are in line with the best credit for other
member organizations that do not have
the same quoting and trading
obligations as DMMs.17 The
requirement is also equitable and not
unfairly discriminatory because it
would apply equally to all DMM firms,
who would have the option to elect (or
not elect) to participate on a quarterly
basis.
The Exchange also believes that
assigning a maximum credit of $100,000
per month for the Rebate Per Security is
reasonable, equitable and not unfairly
discriminatory. Further, the Exchange
believes offering this credit to DMMs
with 100 or more assigned securities
will provide a further incentive for
DMMs to quote and trade a greater
number of securities on the Exchange
and will generally allow the Exchange
and DMMs to better compete for order
flow, and thus enhance competition.
The Exchange also believes that
requirement of 100 or more assigned
securities to qualify for the credit is
equitable and not unfairly
discriminatory because it would apply
equally to all DMM firms.
NYSE CSII Fee Cap
The Exchange believes that the
proposed additional, lower monthly fee
17 The proposed lower transaction fees are in line
with the best credit for member organizations of
$0.0022 when the member organization has
‘‘Adding ADV’’ (i.e., when a member organization
has ADV that adds liquidity to the Exchange during
the billing month, excluding any liquidity added by
a DMM) of at least 1.10% of NYSE CADV (defined
in the Price List as the consolidated average daily
volume of NYSE-listed securities), and executes
MOC and LOC orders of at least 0.12% of NYSE
CADV.
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cap for CSII transactions is reasonable
and an equitable allocation of fees
because it would encourage the
execution of additional liquidity on a
public exchange, thereby promoting
price discovery and transparency. The
proposed change 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 executing higher volumes
would receive a lower fee. Further, the
Exchange believes that the proposed cap
is reasonable, equitable and not unfairly
discriminatory because all similarly
situated member organizations will be
subject to the same fee structure and
access to the Exchange’s market would
continue to be offered on fair and nondiscriminatory terms.
daltland on DSKBBV9HB2PROD with NOTICES
Retail Credit
The Exchange believes that the
proposed credit of $0.0030 per share for
UTP executions in orders designated as
‘‘retail’’ that add liquidity to the
Exchange is reasonable, equitable and
not unfairly discriminatory because it
will encourage member organizations to
provide additional retail order flow to a
public market, to the benefit of the
marketplace and all market participants.
The proposed credit is also equitable
and not unfairly discriminatory because
it would apply equally to all member
organizations with retail order flow.
Member organizations not wishing to be
eligible for the proposed pricing would
be free to not designate orders in UTP
Securities as ‘‘retail.’’
SLP Quoting Requirements
The believes that specifying that the
quoting requirement for SLP tiered
credits (Tier 2, Tier 1 and Tap A Tier)
are on an average daily basis calculated
monthly provides greater specificity and
clarity to the Price List, thereby
removing impediments to and
perfecting the mechanism of a free and
open market and a national market
system, and, in general, protecting
investors and the public interest.
The Exchange believes that it is
subject to significant competitive forces,
as described below in the Exchange’s
statement regarding the burden on
competition.
For the foregoing reasons, the
Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,18 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 foster liquidity provision
and stability in the marketplace, thereby
promoting price discovery and
transparency and enhancing order
execution opportunities for member
organizations. In this regard, the
Exchange believes that the transparency
and competitiveness of attracting
additional executions on an exchange
market would encourage competition.
The Exchange also believes that the
proposed rule change is designed to
provide the public and investors with a
Price List that is clear and transparent.
Finally, the Exchange notes that it
operates in a highly competitive market
in which market participants can
readily favor competing venues if they
deem fee levels at a particular venue to
be excessive or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees and rebates to remain competitive
with other exchanges and with
alternative trading systems that have
been exempted from compliance with
the statutory standards applicable to
exchanges. Because competitors are free
to modify their own fees and credits in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited. As a result of all of these
considerations, the Exchange does not
believe that the proposed changes will
impair the ability of member
organizations or competing order
execution venues to maintain their
competitive standing in the financial
markets.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 19 of the Act and
subparagraph (f)(2) of Rule 19b–4 20
thereunder, because it establishes a due,
19 15
18 15
U.S.C. 78f(b)(8).
VerDate Sep<11>2014
16:38 May 17, 2018
20 17
Jkt 244001
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
Frm 00066
Fmt 4703
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) 21 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSE–2018–21 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSE–2018–21. 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
21 15
Sfmt 4703
23317
E:\FR\FM\18MYN1.SGM
U.S.C. 78s(b)(2)(B).
18MYN1
23318
Federal Register / Vol. 83, No. 97 / Friday, May 18, 2018 / Notices
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–2018–21 and should
be submitted on or before June 8, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–10606 Filed 5–17–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83228; File No. SR–
NASDAQ–2018–037]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Market Order Spread Protection
May 14, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 30,
2018, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
daltland on DSKBBV9HB2PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes a proposal to
amend the Market Order Spread
Protection and reorganize Rule Chapter
VI, Section 18 entitled, ‘‘Order Price
Protections.’’
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaq.cchwallstreet.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
22 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
16:38 May 17, 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
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to amend Chapter VI, Section
18, entitled, ‘‘Order Price Protection’’ to
‘‘Risk Protections’’ and relocate all the
order protections into a single rule and
categorize them as either order
protections, order and quote protections
or market maker protections. The
Exchange believes that placing all the
order protections into a single rule will
provide market participants with
information as to the availability of
these protections, which are all
mandatory. The Exchange also proposes
to amend the Market Order Spread
Protection and Acceptable Trade Range
Rules to add more specificity.
Universal Amendments
The Exchange proposes to restructure
Chapter VI, Section 18 into three parts:
(1) Order protections; (2) order and
quote protections; and (3) market maker
protections. The Exchange proposes to
reletter and renumber the rule as well to
provide a more organized structure. The
Exchange believes that categorizing the
various protections provides more
information to market participants as to
each of the risk protections.
Order Price Protection
The Exchange proposes only to
reorganize the rule by adding new
lettering and numbering to conform to
the remainder of the proposed rule, no
other amendments are being made to
Order Price Protection.
Market Order Spread Protection
The Exchange proposes to relocate the
Market Order Spread Protection rule
from Chapter VI, Section 6(c) into
Chapter VI, Section 18. The Exchange
also proposes to amend the Market
Order Spread Protection at proposed
PO 00000
Frm 00067
Fmt 4703
Sfmt 4703
Chapter VI, Section 18(a)(2) by adding
an additional sentence stating, ‘‘Market
Order Spread Protection shall not apply
to the Opening Process and during a
halt.’’ Today, the Market Order Spread
Protection does not apply during the
Opening Process and during a trading
halt. The Exchange is adding this
additional specificity to the rule to make
clear when the protection is operative.
Both the Opening Process and trading
halts have the same or more restrictive
boundaries as those proposed for the
Market Order Spread Protection. With
respect to the Opening Process, a Valid
Width National Best Bid or Offer is
required. A Valid Width National Best
Bid or Offer’’ or ‘‘Valid Width NBBO’’
shall mean the combination of all away
market quotes and any combination of
NOM-registered Market Maker orders
and quotes received over the OTTO or
SQF Protocols within a specified bid/
ask differential as established and
published by the Exchange.3 The Valid
Width NBBO is configurable by
underlying, and tables with valid width
differentials are posted by Nasdaq on its
website.4 The Exchange’s threshold for
the Market Order Spread Protection is
currently set at $5.5 Today, the
maximum bid/ask differentials are more
restrictive for both Penny and NonPenny issues that are not LEAPS 6 (up to
$2.00 and $2.25, respectively, for the
bid/ask differentials). The maximum
bid/ask differentials are equal to or more
restrictive for both Penny and NonPenny issues that are LEAPS (up to a
$5.00 bid/ask differential.) The
Exchange believes that the Market Order
Spread Protection is unnecessary during
the Opening Process because other
protections are in place to ensure that
the best bid and offer displayed on the
Exchange are within a reasonable range.
As provided in Chapter V, Section 4
trading halts are subject to the
reopening process as provided for in
Chapter VI, Section 8. The same
protections noted for the Opening
Process above will apply for trading
halts. The Exchange believes that the
Market Order Spread Protection is
3 Away markets that are crossed will void all
Valid Width NBBO calculations. If any Market
Maker orders or quotes on NOM are crossed
internally, then all such orders and quotes will be
excluded from the Valid Width NBBO calculation.
See NOM Chapter VI, Section 8(a)(6).
4 The table with the differentials is published on
the Exchange’s website at: https://
www.nasdaqtrader.com/content/technicalsupport/
NOM_SystemSettings.pdf.
5 The current Market Order Spread Differential is
set at $5. The table in note 4 above notes the current
setting.
6 LEAPS are option series with a time to
expiration greater than nine (9) months. See
Chapter VI, Section 8.
E:\FR\FM\18MYN1.SGM
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Agencies
[Federal Register Volume 83, Number 97 (Friday, May 18, 2018)]
[Notices]
[Pages 23313-23318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-10606]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83230; File No. SR-NYSE-2018-21]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend its Price List
May 14, 2018.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the
[[Page 23314]]
``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that,
on April 30, 2018, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C.78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Price List to (1) amend the cap
applicable to certain transactions at the open; (2) offer an optional
monthly per security credit to Designated Market Makers (``DMM'') that
elect to receive a lower rebate per share credit; (3) amend the NYSE
Crossing Session II (``NYSE CSII'') fee cap; (4) offer a rebate for UTP
executions in orders designated as ``retail'' that add liquidity to the
Exchange; and (5) modify the quoting requirements for the Supplemental
Liquidity Provider (``SLP'') tiered rates for displayed and non-
displayed orders in UTP securities. The proposed rule change is
available on the Exchange's website at www.nyse.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Price List to (1) amend the cap
applicable to certain transactions at the open; (2) offer an optional
monthly per security credit to DMMs that elect to receive a lower
rebate per share credit; (3) amend the NYSE CSII fee cap; (4) offer a
rebate for UTP executions in orders designated as ``retail'' that add
liquidity to the Exchange; and (5) modify the quoting requirements for
the SLP tiered rates for displayed and non-displayed orders in UTP
securities.
The Exchange proposes to implement these changes to its Price List
effective May 1, 2018.
Executions at the Open
For securities priced $1.00 or more, the Exchange currently charges
fees of $0.0010 per share for executions at open, and $0.0003 per share
for Floor broker executions at the open, subject to $30,000 cap per
month per member organization, provided the member organization
executes an ADV that adds liquidity to the Exchange during the billing
month (``Adding ADV''),\4\ excluding liquidity added by a DMM, of at
least five million shares. The Exchange proposes an alternative, lower
$20,000 monthly fee cap for member organizations that execute an ADV
that takes liquidity from the NYSE during the billing month (``Taking
ADV''), excluding liquidity taken by a DMM, of at least 1.30% of NYSE
CADV and an ADV of orders for execution at the open (``Open ADV'') of
at least 8 million shares. The $0.0010 per share fee for executions at
the open and $0.0003 per share for Floor broker executions at the open
would not be changed. DMMs currently are not charged for executions at
the opening and would continue to not be charged.\5\
---------------------------------------------------------------------------
\4\ Footnote 2 to the Price List defines ADV as ``average daily
volume'' and ``Adding ADV'' as ADV that adds liquidity to the
Exchange during the billing month. The Exchange is not proposing to
change these definitions.
\5\ The existing pricing for executions at the opening in
securities priced below $1.00 would also remain unchanged (i.e.,
0.3% of the total dollar value of the transaction).
---------------------------------------------------------------------------
DMM Optional Monthly Rebate Per Security Credit
The Exchange proposes an optional monthly rebate per security
(``Rebate Per Security'') to DMMs with 100 or more assigned securities,
up to a maximum credit of $100,000 per month across all DMM assigned
securities, that elect to receive a lower monthly rebate per share
credit (``Optional Credit'') for all assigned securities. DMMs electing
the Rebate per Security and corresponding Optional Credit for all
assigned securities would be required to notify the Exchange prior to
the start of a calendar quarter to be effective for that and subsequent
quarters. Similarly, DMMs electing to suspend the Rebate per Security
and corresponding Optional Credit for that suspension to be effective
for that and subsequent quarters would be required to notify the
Exchange prior to the start of that calendar quarter.
As proposed, the Rebate Per Security would be available for the
following calendar quarter for assigned securities that meet the
following quoting requirements:
First, in More Active Securities,\6\ if the DMM that elects the
Optional Credit meets the More Active Securities Quoting Requirement in
an assigned security,\7\ that DMM's assigned security would be eligible
for a:
---------------------------------------------------------------------------
\6\ ``More Active Securities'' are securities with an average
daily consolidated volume (``Security CADV'') in the previous month
equal to or greater than 1,000,000 shares per month.
\7\ The ``More Active Securities Quoting Requirement'' is met if
the More Active Security has a stock price of $1.00 or more and the
DMM quotes at the National Best Bid or Offer (``NBBO'') in the
applicable security at least 10% of the time in the applicable
month. Both ``More Active Securities'' and the ``More Active
Securities Quoting Requirement'' are defined in the current Price
List. The Exchange is not proposing any changes to these definitions
and proposes to relocate them to the new proposed text describing
the optional rebate.
---------------------------------------------------------------------------
$100.00 Rebate per Security if the DMM quotes at the NBBO
in the applicable security 30% of the time or more in the applicable
month;
$75.00 Rebate Per Security if the DMM quotes at least 20%
and up to 30% of the time in the applicable month; and
$50.00 if the DMM quotes at least 10% and up to 20% of the
time in the applicable month.
Second, in Less Active Securities,\8\ if the DMM that elects the
Optional Credit meets the Less Active Securities Quoting Requirement in
an assigned security,\9\ that DMM's assigned security would be eligible
for a
---------------------------------------------------------------------------
\8\ ``Less Active Securities'' are securities with Security CADV
of less than 1,000,000 shares per month in the previous month.
\9\ The ``Less Active Securities Quoting Requirement'' is met if
the Less Active Security has a stock price of $1.00 or more and the
DMM quotes at the NBBO in the applicable security at least 15% of
the time in the applicable month. Both ``Less Active Securities''
and the ``Less Active Securities Quoting Requirement'' are defined
in the current Price List. As with the definitions of More Active
Securities and the More Active Securities Quoting Requirement, the
Exchange is not proposing any changes to these definitions and
proposes to relocate them to the new proposed text describing the
optional rebate.
---------------------------------------------------------------------------
$200.00 Rebate per Security if the DMM quotes at the NBBO
in the applicable security 60% of the time or more in the applicable
month;
$125.00 if the DMM quotes at least 40% and up to 60% of
the time in the applicable month; and
[[Page 23315]]
$100.00 if the DMM quotes at least 15% and up to 40% of
the time in the applicable month.
The Exchange proposes to amend the current DMM rebates to reflect
the proposed corresponding lower Optional Credits for DMMs that elect
for the Rebate per Security, as follows.
More Active Securities
Currently, DMMs earn a rebate of $0.0027 per share when adding
liquidity with orders, other than Mid-Point Liquidity Orders (``MPL
Order''), in More Active Securities if the More Active Security has a
stock price of $1.00 or more and the DMM meets the More Active
Securities Quoting Requirement and has a DMM Quoted Size for an
applicable month that is at least 5% of the NYSE Quoted Size,\10\
unless the more favorable rates set forth below in the Price List
apply. The Exchange proposes that DMMs electing the optional Rebate per
Security would instead receive an Optional Credit of $0.0026 per share
if the quoting requirements are met.
---------------------------------------------------------------------------
\10\ The ``NYSE Quoted Size'' is calculated by multiplying the
average number of shares quoted on the NYSE at the NBBO by the
percentage of time the NYSE had a quote posted at the NBBO. The
``DMM Quoted Size'' is calculated by multiplying the average number
of shares of the applicable security quoted at the NBBO by the DMM
by the percentage of time during which the DMM quoted at the NBBO.
See Price List, n. 7.
---------------------------------------------------------------------------
Currently, DMMs earn a rebate of $0.0031 per share when adding
liquidity with orders, other than MPL Orders, in More Active Securities
if the More Active Security has a stock price of $1.00 or more and the
DMM meets (1) the More Active Securities Quoting Requirement, (2) has a
DMM Quoted Size for an applicable month that is at least 10% of the
NYSE Quoted Size, and (3) the DMM quotes at the NBBO in the applicable
security at least 20% of the time in the applicable month and for
providing liquidity that is more than 5% of the NYSE's total intraday
adding liquidity in each such security for that month. The Exchange
proposes that DMMs electing the optional Rebate per Security would
instead receive an Optional Credit of $0.0030 per share if the quoting
and providing requirements are met.
Similarly, DMMs currently earn a rebate of $0.0034 per share when
adding liquidity with orders, other than MPL Orders, in More Active
Securities if the More Active Security has a stock price of $1.00 or
more and the DMM meets (1) the More Active Securities Quoting
Requirement, (2) has a DMM Quoted Size for an applicable month that is
at least 15% of the NYSE Quoted Size, for providing liquidity that is
more than 15% of the NYSE's total intraday adding liquidity in each
such security for that month, and (3) the DMMs quotes at the NBBO in
the applicable security at least 30% of the time in the applicable
month. The Exchange proposes that DMMs electing the optional Rebate per
Security would instead receive an Optional Credit of $0.0033 per share
if the quoting and providing requirements are met.
DMMs currently earn a $0.0035 per share when adding liquidity with
orders, other than MPL Orders, in More Active Securities if the More
Active Security has a stock price of $1.00 or more and the DMM meets
(1) the More Active Securities Quoting Requirement, (2) has a DMM
Quoted Size for an applicable month that is at least 25% of the NYSE
Quoted Size, for providing liquidity that is more than 15% of the
NYSE's total intraday adding liquidity in each such security for that
month, and (3) the DMMs quotes at the NBBO in the applicable security
at least 50% of the time in the applicable month. The Exchange proposes
that DMMs electing the optional Rebate per Security would instead
receive an Optional Credit of $0.0034 per share if the quoting and
providing requirements are met.
DMMs currently earn a rebate of $0.0015 per share when adding
liquidity with orders, other than MPL orders, in More Active Securities
if the More Active Security has a stock price of $1.00 or more and the
DMM does not meet the More Active Securities Quoting in the applicable
month. The Exchange proposes that DMMs electing the optional Rebate per
Security would instead receive an Optional Credit of $0.0014 per share
if the quoting requirements are met.
DMMs are currently eligible for a rebate of $0.0035 per share when
adding liquidity with orders, other than MPL orders, in Less Active
Securities if the Less Active Security has a stock price of $1.00 or
more and the DMM meets the Less Active Securities Quoting in the
applicable month. The Exchange proposes that DMMs electing the optional
Rebate per Security would instead receive an Optional Credit of $0.0031
per share if the quoting requirements are met.
DMMs are currently eligible for a rebate of $0.0045 per share when
adding liquidity with orders, other than MPL orders, in Less Active
Securities if the Less Active Security has a stock price of $1.00 or
more and the DMM quotes at the NBBO in the applicable security at least
30% of the time in the applicable month. The Exchange proposes that
DMMs electing the optional Rebate per Security would instead receive an
Optional Credit of $0.0041 per share if the quoting requirements are
met.
Finally, DMMs are currently eligible for a rebate of $0.0015 per
share when adding liquidity in shares of Less Active Securities if the
Less Active Security has a stock price of $1.00 or more and the DMM
does not meet the Less Active Securities Quoting Requirement in the
applicable security in the applicable month. The Exchange proposes to
move this rate from its current position in the Price List to directly
following the rebate described in the previous paragraph and proposes
that DMMs electing the optional Rebate per Security would instead
receive an Optional Credit of $0.0011 per share if the quoting
requirements are met.
NYSE CSII Fee Cap
Currently, the Exchange charges a fee of $0.0004 per share (both
sides) for executions in NYSE CSII.\11\ Fees for executions in CSII are
capped at $100,000 [sic] per month per member organization. The
Exchange proposes an alternative, lower cap of $25,000 per month per
member organization for member organizations that execute a Taking ADV,
excluding liquidity taken by a DMM, of at least 1.30% of NYSE CADV and
Open ADV of at least 8 million shares. The $0.0004 per share fee for
executions in NYSE CSII would remain unchanged.
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\11\ CSII runs on the Exchange from 4:00 p.m. to 6:30 p.m.
Eastern Time and handles member organization crosses of baskets of
securities of aggregate-priced buy and sell orders. See NYSE Rules
900-907.
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Proposed Changes to Fees and Credits for UTP Securities
On April 9, 2018, the Exchange began trading UTP Securities on the
Exchange on the Pillar trading platform.\12\ The Exchange proposes the
following changes to the fees and credits for UTP Securities.
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\12\ 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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Retail Credit
For securities priced at or above $1.00, the Exchange proposes a
rebate of $0.0030 per share for UTP executions in orders designated as
``retail'' \13\ that add liquidity to the Exchange.
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\13\ Orders designated as ``retail'' are orders that satisfy the
Retail Modifier requirements of Rule 13.
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[[Page 23316]]
Quoting Requirements for SLP Tiered Credits
Currently, the Exchange offers tiered rates for displayed and
nondisplayed orders by SLPs that add liquidity to the Exchange in UTP
Securities priced at or above $1.00. Specifically, Tier 2 provides 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 (2) 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 (3) meets the 10% average or
more quoting requirement in an assigned UTP Security pursuant to Rule
107B.
Similarly, Tier 1 provides 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 (3)
meets the 10% average or more quoting requirement in an assigned UTP
Security pursuant to Rule 107B.
Finally, the Tape A Tier provides 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 (2) 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 (3) where the SLP meets the 10% average
quoting requirement pursuant to Rule 107B.
The provide volume component of the above SLP Tier requirements are
waived until June 1, 2018.
In each case, the Exchange proposes to clarify that the quoting
requirement (item (2) in the above description of the tier
requirements) means quoting on an average daily basis, calculated
monthly. To effectuate this change, the Exchange proposes to add the
phrase ``, on an average daily basis, calculated monthly,'' after
``quotes'' in Tier 2, Tier 1 and the Tape A Tier.
* * * * *
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,\14\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\15\ in
particular, because it provides for the equitable allocation of
reasonable dues, fees, and other charges among its members, issuers and
other persons using its facilities and does not unfairly discriminate
between customers, issuers, brokers or dealers.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(4) & (5).
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Executions at the Open
The Exchange believes that the proposed additional $20,000 cap for
executions at the open for member organizations executing a Taking ADV,
excluding liquidity taken by a DMM, of at least 1.30% of NYSE CADV and
Open ADV of at least 8 million shares is reasonable, equitable and not
unfairly discriminatory because it would encourage additional liquidity
on the Exchange's opening auction and because members and member
organizations benefit from the substantial amounts of liquidity that
are present on the Exchange during such time.
The Exchange believes the proposed change is equitable and not
unfairly discriminatory because it would continue to encourage member
organizations to send orders to the open, thereby contributing to
robust levels of liquidity in the open, which benefits all market
participants. The proposed fee will encourage the submission of
additional liquidity to a national securities exchange, thereby
promoting price discovery and transparency and enhancing order
execution opportunities for member organizations from the substantial
amounts of liquidity that are present on the Exchange during the
opening. Moreover, the requirement is equitable and not unfairly
discriminatory because it would apply equally to all similarly situated
member organizations. Finally, the Exchange notes that the current fee
and current and proposed caps together are comparable to those for
executions at the opening on other markets.\16\
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\16\ For example, NASDAQ charges $0.0015 per share for certain
orders executed in the NASDAQ Opening Cross and applies at $35,000
fee cap per month per firm for such executions. See Nasdaq Rule
7018(e).
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DMM Optional Monthly Rebate Per Security Credit
The Exchange believes that providing Exchange DMMs with the option
to receive lower per share transaction credits in exchange for monthly
rebates per assigned security, up to a maximum credit of $100,000 per
month across all DMM assigned securities, is reasonable, equitable and
not unfairly discriminatory because it would foster liquidity provision
and stability in the marketplace and lessen DMM reliance on transaction
fees, to the benefit of the marketplace and all market participants.
Moreover, the proposal is reasonable, equitable and not unfairly
discriminatory because it would balance the increased risks and
heightened quoting and other obligations that DMMs on the Exchange have
and that other market participants do not have. As such, it is
equitable and not unfairly discriminatory to offer DMMs the option to
receive a flat per security credit coupled with lower transaction fees
that are in line with the best credit for other member organizations
that do not have the same quoting and trading obligations as DMMs.\17\
The requirement is also equitable and not unfairly discriminatory
because it would apply equally to all DMM firms, who would have the
option to elect (or not elect) to participate on a quarterly basis.
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\17\ The proposed lower transaction fees are in line with the
best credit for member organizations of $0.0022 when the member
organization has ``Adding ADV'' (i.e., when a member organization
has ADV that adds liquidity to the Exchange during the billing
month, excluding any liquidity added by a DMM) of at least 1.10% of
NYSE CADV (defined in the Price List as the consolidated average
daily volume of NYSE-listed securities), and executes MOC and LOC
orders of at least 0.12% of NYSE CADV.
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The Exchange also believes that assigning a maximum credit of
$100,000 per month for the Rebate Per Security is reasonable, equitable
and not unfairly discriminatory. Further, the Exchange believes
offering this credit to DMMs with 100 or more assigned securities will
provide a further incentive for DMMs to quote and trade a greater
number of securities on the Exchange and will generally allow the
Exchange and DMMs to better compete for order flow, and thus enhance
competition. The Exchange also believes that requirement of 100 or more
assigned securities to qualify for the credit is equitable and not
unfairly discriminatory because it would apply equally to all DMM
firms.
NYSE CSII Fee Cap
The Exchange believes that the proposed additional, lower monthly
fee
[[Page 23317]]
cap for CSII transactions is reasonable and an equitable allocation of
fees because it would encourage the execution of additional liquidity
on a public exchange, thereby promoting price discovery and
transparency. The proposed change 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 executing higher volumes would receive a lower fee. Further, the
Exchange believes that the proposed cap is reasonable, equitable and
not unfairly discriminatory because all similarly situated member
organizations will be subject to the same fee structure and access to
the Exchange's market would continue to be offered on fair and non-
discriminatory terms.
Retail Credit
The Exchange believes that the proposed credit of $0.0030 per share
for UTP executions in orders designated as ``retail'' that add
liquidity to the Exchange is reasonable, equitable and not unfairly
discriminatory because it will encourage member organizations to
provide additional retail order flow to a public market, to the benefit
of the marketplace and all market participants. The proposed credit is
also equitable and not unfairly discriminatory because it would apply
equally to all member organizations with retail order flow. Member
organizations not wishing to be eligible for the proposed pricing would
be free to not designate orders in UTP Securities as ``retail.''
SLP Quoting Requirements
The believes that specifying that the quoting requirement for SLP
tiered credits (Tier 2, Tier 1 and Tap A Tier) are on an average daily
basis calculated monthly provides greater specificity and clarity to
the Price List, thereby removing impediments to and perfecting the
mechanism of a free and open market and a national market system, and,
in general, protecting investors and the public interest.
The Exchange believes that it is subject to significant competitive
forces, as described below in the Exchange's statement regarding the
burden on competition.
For the foregoing reasons, the Exchange believes that the proposal
is consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\18\ 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 foster liquidity provision and stability in the
marketplace, thereby promoting price discovery and transparency and
enhancing order execution opportunities for member organizations. In
this regard, the Exchange believes that the transparency and
competitiveness of attracting additional executions on an exchange
market would encourage competition. The Exchange also believes that the
proposed rule change is designed to provide the public and investors
with a Price List that is clear and transparent.
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\18\ 15 U.S.C. 78f(b)(8).
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Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive or rebate opportunities available at other venues to be more
favorable. In such an environment, the Exchange must continually adjust
its fees and rebates to remain competitive with other exchanges and
with alternative trading systems that have been exempted from
compliance with the statutory standards applicable to exchanges.
Because competitors are free to modify their own fees and credits in
response, and because market participants may readily adjust their
order routing practices, the Exchange believes that the degree to which
fee changes in this market may impose any burden on competition is
extremely limited. As a result of all of these considerations, the
Exchange does not believe that the proposed changes will impair the
ability of member organizations or competing order execution venues to
maintain their competitive standing in the financial markets.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \19\ of the Act and subparagraph (f)(2) of Rule
19b-4 \20\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 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) \21\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\21\ 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-2018-21 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2018-21. 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
[[Page 23318]]
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-2018-21 and should be submitted on or before June 8, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-10606 Filed 5-17-18; 8:45 am]
BILLING CODE 8011-01-P