Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees, 49138-49141 [2019-20156]

Download as PDF khammond on DSKJM1Z7X2PROD with NOTICES 49138 Federal Register / Vol. 84, No. 181 / Wednesday, September 18, 2019 / Notices regarding trading in such securities and financial instruments from such markets and other entities. The Exchange may obtain information regarding trading in such securities and financial instruments from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees. As noted above, options on the Indexes are highly liquid and derive their value from the actively traded Index components. The Exchange believes the highly regulated options markets and the broad base and scope of the Indexes make securities that derive their value from the Indexes less susceptible to market manipulation in view of market capitalization and liquidity of the components of the Indexes, price and quote transparency, and arbitrage opportunities. The Exchange believes that the liquidity of the markets for securities in the Indexes, options on the Indexes, and other related derivatives is sufficiently great to deter fraudulent or manipulative acts associated with the Funds’ Shares price. The Exchange also believes that such liquidity is sufficient to support the creation and redemption mechanism. Coupled with the extensive surveillance programs of the SROs described above, the Exchange does not believe that trading in the Funds’ Shares would present manipulation concerns. The Exchange represents that, except as described above, the Funds will meet and be subject to all other requirements of the Generic Listing Standards and other applicable continued listing requirements for Managed Fund Shares under Rule 8.600–E, including those requirements regarding the Disclosed Portfolio, Portfolio Indicative Value, suspension of trading or removal, trading halts, disclosure, and firewalls. The Trust is required to comply with Rule 10A–3 under the Act for the initial and continued listing of the Shares of each Fund. Moreover, all of the options contracts held by the Funds will trade on markets that are a member of ISG or affiliated with a member of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. For the above reasons, the Exchange believes that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act. VerDate Sep<11>2014 19:01 Sep 17, 2019 Jkt 247001 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 that is not necessary or appropriate in furtherance of the purpose of the Act. The Exchange notes that the proposed rule change will allow the listing and trading of additional types of Managed Fund Shares that will enhance competition among market participants, to the benefit of investors and the marketplace. 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 Within 45 days of the date of publication of this notice in the Federal Register or up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. 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–NYSEArca–2019–62 and should be submitted on or before October 9, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.31 Jill M. Peterson, Assistant Secretary. 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: [FR Doc. 2019–20157 Filed 9–17–19; 8:45 am] 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–2019–62 on the subject line. Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees 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–NYSEArca–2019–62. 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 PO 00000 Frm 00051 Fmt 4703 Sfmt 4703 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–86943; File No. SR– NYSENAT–2019–20] September 12, 2019. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’),2 and Rule 19b–4 thereunder,3 notice is hereby given that on September 4, 2019, NYSE National, Inc. (‘‘NYSE National’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described 31 17 CFR 200.30–3(a)(12). U.S.C.78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 E:\FR\FM\18SEN1.SGM 18SEN1 Federal Register / Vol. 84, No. 181 / Wednesday, September 18, 2019 / Notices in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its Schedule of Fees and Rebates (‘‘Fee Schedule’’) to specify that the Exchange may exclude from its average daily volume and quoting calculations the date of the annual reconstitution of the Russell Investments Indexes. 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 Fee Schedule to specify that the Exchange may exclude from its average daily volume and quoting calculations the date of the annual reconstitution of the Russell Investments Indexes (the ‘‘Russell Rebalance’’). khammond on DSKJM1Z7X2PROD with NOTICES Proposed Rule Change The Exchange’s Fee Schedule currently provides that, for purposes of determining transaction fees and credits 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 Exchange proposes to specify that the Exchange may also exclude from its quoting levels, ADV, VerDate Sep<11>2014 19:01 Sep 17, 2019 Jkt 247001 and CADV calculations the date of the annual Russell Rebalance. The Russell Rebalance, which typically occurs in June, is characterized by high trading volumes, much of which derive from market participants who are not generally as active entering the market to rebalance their holdings inline with the Russell Rebalance.4 The Exchange believes that the high trading volumes during the Russell Rebalance can significantly impact ADV, CADV and quoting calculations. The Exchange believes that excluding the date of the Russell Rebalance will mitigate the uncertainty faced by ETP Holders as to their quoting, ADV, and CADV levels and the corresponding rebate amounts during the month of the Russell Rebalance, thereby providing ETP Holders with an increased certainty as to that month’s cost for trades executed on the Exchange. The Exchange further believes that removing this uncertainty will encourage ETP Holders to participate in trading on the Exchange during the remaining trading days in the month of the Russell Rebalance in a manner intended to be incented by the Exchange’s Fee Schedule. To effectuate this change, the Exchange proposes to add a new subsection (2) to the second bullet under Section I, heading B titled ‘‘General.’’ As proposed, the new clause would provide that the Exchange may exclude shares traded any day that ‘‘is the date of the annual reconstitution of the Russell Investments Indexes.’’ The proposed change is similar to, and consistent with, the rules of the Exchange’s affiliates and other selfregulatory organizations.5 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,6 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,7 in particular, because it provides for the 4 See, e.g., Securities Exchange Act Release No. 69793 (July 18, 2013), 78 FR 37865, 37866 (July 24, 2013) (SR–BATS–2013–034) (excluding the Russell Reconstitution Day from the definition of ADV); Securities Exchange Act Release No. 72002 (April 23, 2014), 79 FR 24028, 24029 (April 29, 2014) (SR– EDGX–2014–10) (same). 5 See, e.g., NYSE Arca Equities Fees and Charges, available at https://www.nyse.com/publicdocs/nyse/ markets/nyse-arca/NYSE_Arca_Marketplace_ Fees.pdf (‘‘the date of the annual reconstitution of the Russell Investments Indexes does not count toward volume tiers’’); Cboe BZX U.S. Equities Exchange Fee Schedule, available at https:// markets.cboe.com/us/equities/membership/fee_ schedule/bzx/(‘‘The Exchange excludes from its calculation of ADAV and ADV shares added or removed on . . . the last Friday in June (the ‘Russell Reconstitution Day’)’’). 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(4) & (5). PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 49139 equitable allocation of reasonable dues, fees, and other charges among its members, issuers and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers or dealers. The Exchange notes that it operates in a highly fragmented and competitive market in which competitive forces constrain the Exchange’s transaction fees, and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. The Proposed Change Is Reasonable The Exchange believes that it is reasonable to permit the Exchange to eliminate from the calculation of quoting levels, ADV, and CADV the date of the annual Russell Rebalance because it will provide ETP Holders with a greater level of certainty as to their level of rebates and fees for trading in the month of the Russell Rebalance. By eliminating a trading day that would almost certainly lower an ETP Holder’s ADV as a percentage of CADV, the Exchange believes that the proposal will make the majority of ETP Holders more likely to meet the minimum thresholds of higher tiers, which will provide additional incentive for ETP Holders to increase their participation on the Exchange and earn more favorable rates. As noted above, other self-regulatory organizations have adopted rules that are substantially similar to the change being proposed by the Exchange.8 The Proposal Is an Equitable Allocation of Fees The Exchange believes its proposal equitably allocates its fees among its market participants. Specifically, the Exchange believes that the proposal constitutes an equitable allocation of fees because the exclusion would apply equally to all ETP Holders and market participants and to all volume tiers. Further, the Exchange believes that removing a single known day of atypical trading behavior would allow all ETP Holders to more predictably calculate the costs associated with their trading activity on the Exchange on the Russell Rebalance day, thereby enabling such participants to operate their business without concern of unpredictable and potentially significant changes in revenues and expenses. The Proposal Is Not Unfairly Discriminatory The Exchange believes that the proposal is not unfairly discriminatory because the exclusion would apply 8 See E:\FR\FM\18SEN1.SGM notes 4–5, supra. 18SEN1 49140 Federal Register / Vol. 84, No. 181 / Wednesday, September 18, 2019 / Notices khammond on DSKJM1Z7X2PROD with NOTICES equally to all permit holders, to all market participants and to all volume tiers. Moreover, the proposal neither targets nor will it have a disparate impact on any particular category of market participant. Rather, as discussed above, the Exchange believes that removing a single known day of atypical trading behavior would allow all ETP Holders to more predictably calculate the credits and fees associated with their trading activity on the Russell Rebalance day, thereby enabling such participants to operate their business without concern of unpredictable and potentially significant changes in expenses. Finally, the Exchange believes that it is subject to significant competitive forces, as described below in the Exchange’s statement regarding the burden on competition. For the foregoing reasons, the Exchange believes that the proposal is consistent with the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,9 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. Rather, as noted above, by eliminating a trading day that would almost certainly result in lowering an ETP Holder’s ADV as a percentage of CADV, the Exchange believes that the proposal will benefit the majority of ETP Holders by making it more likely for them to meet the minimum thresholds of higher tiers, which will provide additional incentive for ETP Holders to increase their participation on the Exchange and earn more favorable rates. The Exchange believes that the proposal thus fosters competition by providing an additional incentive to ETP Holders to submit orders to the Exchange. The proposed exclusion would be available to all similarly-situated market participants, and, as such, the proposed change would not impose a disparate burden on competition among market participants on the Exchange. Intramarket Competition. The proposed change is designed to eliminate a trading day that would almost certainly result in lowering an ETP Holder’s ADV as a percentage of CADV. The Exchange believes that the proposal would provide additional incentive for ETP Holders to increase their participation on the Exchange. Greater liquidity benefits all market participants on the Exchange by providing more trading opportunities and encourages ETP Holders to send orders, thereby contributing to robust levels of liquidity, which benefits all market participants. The proposed exclusion would be available to all similarly-situated market participants, and, as such, the proposed change would not impose a disparate burden on competition among market participants on the Exchange. Intermarket Competition. The Exchange operates in a highly competitive market in which market participants can readily choose to send their orders to other exchange and offexchange venues if they deem fee levels at those 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 offexchange venues. By providing ETP Holders with a greater level of certainty as to their level of rebates and costs for trading in the month of the Russell Rebalance, the Exchange believes that the proposed change could promote competition between the Exchange and other execution venues by encouraging ETP Holders to their participation on the Exchange in order to earn more favorable rates. 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) 10 of the Act and subparagraph (f)(2) of Rule 19b–4 11 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) 12 of the Act to determine whether the proposed rule 10 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 12 15 U.S.C. 78s(b)(2)(B). 11 17 9 15 U.S.C. 78f(b)(8). VerDate Sep<11>2014 19:01 Sep 17, 2019 Jkt 247001 PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 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– NYSENAT–2019–20 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–NYSENAT–2019–20. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal offices 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–NYSENAT–2019–20, and should be submitted on or before October 9, 2019. E:\FR\FM\18SEN1.SGM 18SEN1 Federal Register / Vol. 84, No. 181 / Wednesday, September 18, 2019 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–20156 Filed 9–17–19; 8:45 am] 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 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–86944; File No. SR– NASDAQ–2019–072] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Pilot Related to the Market-Wide Circuit Breaker in Rule 4121 September 12, 2019. 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 September 5, 2019, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to extend the pilot related to the market-wide circuit breaker in Rule 4121. 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. khammond on DSKJM1Z7X2PROD with NOTICES II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the 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 13 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 19:01 Sep 17, 2019 Jkt 247001 1. Purpose Rule 4121 provides a methodology for determining when to halt trading in all stocks due to extraordinary market volatility (i.e., market-wide circuit breakers). The market-wide circuit breaker (‘‘MWCB’’) mechanism under Rule 4121 was approved by the Commission to operate on a pilot basis,3 the term of which was to coincide with the pilot period for the Plan to Address Extraordinary Market Volatility Pursuant to Rule 608 of Regulation NMS (the ‘‘LULD Plan’’),4 including any extensions to the pilot period for the LULD Plan.5 The Commission recently approved an amendment to the LULD Plan for it to operate on a permanent, rather than pilot, basis.6 In light of the proposal to make the LULD Plan permanent, the Exchange amended Rule 4121 to untie the pilot’s effectiveness from that of the LULD Plan and to extend the pilot’s effectiveness to the close of business on October 18, 2019.7 The Exchange now proposes to amend Rule 4121 to extend the pilot to the close of business on October 18, 2020. This filing does not propose any substantive or additional changes to Rule 4121. The Exchange will use the extension period to develop with the other SROs rules and procedures that would allow for the periodic testing of the performance of the MWCB mechanism, with industry member participation in such testing. The extension will also permit the exchanges to consider enhancements to the MWCB processes such as modifications to the Level 3 process. The market-wide circuit breaker under Rule 4121 provides an important, 3 See Securities Exchange Act Release No. 67090 (May 31, 2012), 77 FR 33531 (June 6, 2012) (SR– NASDAQ–2011–131). 4 See Securities Exchange Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012). The LULD Plan provides a mechanism to address extraordinary market volatility in individual securities. 5 See Securities Exchange Act Release Nos. 67090 (May 31, 2012), 77 FR 33531 (June 6, 2012) (SR– NASDAQ–2011–131) (Approval Order); and 68786 (January 31, 2013), 78 FR 8666 (February 6, 2013) (SR–NASDAQ–2013–021) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Delay the Operative Date of a Rule Change to Nasdaq Rule 4121). 6 See Securities Exchange Act Release No. 85623 (April 11, 2019), 84 FR 16086 (April 17, 2019). 7 See Securities Exchange Act Release No. 85578 (April 9, 2019), 84 FR 15271 (April 15, 2019) (SR– NASDAQ–2019–027). PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 49141 automatic mechanism that is invoked to promote stability and investor confidence during a period of significant stress when securities markets experience extreme broad-based declines. All U.S. equity exchanges and FINRA adopted uniform rules on a pilot basis relating to market-wide circuit breakers in 2012 (‘‘MWCB Rules’’), which are designed to slow the effects of extreme price movement through coordinated trading halts across securities markets when severe price declines reach levels that may exhaust market liquidity.8 Market-wide circuit breakers provide for trading halts in all equities and options markets during a severe market decline as measured by a single-day decline in the S&P 500 Index. Pursuant to Rule 4121, a market-wide trading halt will be triggered if the S&P 500 Index declines in price by specified percentages from the prior day’s closing price of that index. Currently, the triggers are set at three circuit breaker thresholds: 7% (Level 1), 13% (Level 2), and 20% (Level 3). A market decline that triggers a Level 1 or Level 2 halt after 9:30 a.m. ET and before 3:25 p.m. ET would halt market-wide trading for 15 minutes, while a similar market decline at or after 3:25 p.m. ET would not halt market-wide trading. A market decline that triggers a Level 3 halt, at any time during the trading day, would halt market-wide trading until the primary listing market opens the next trading day. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,9 in general, and furthers the objectives of Section 6(b)(5) of the Act,10 in particular, in that it is designed 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. The market-wide circuit breaker mechanism under Rule 4121 is an important, automatic mechanism that is invoked to promote stability and investor confidence during a period of significant stress when securities markets experience extreme broad-based 8 See Securities Exchange Act Release No. 67090 (May 31, 2012), 77 FR 33531 (June 6, 2012) (SR– BATS–2011–038; SR–BYX–2011–025; SR–BX– 2011–068; SR–CBOE–2011–087; SR–C2–2011–024; SR–CHX–2011–30; SR–EDGA–2011–31; SR–EDGX– 2011–30; SR–FINRA–2011–054; SR–ISE–2011–61; SR–NASDAQ–2011–131; SR–NSX–2011–11; SR– NYSE–2011–48; SR–NYSEAmex–2011–73; SR– NYSEArca–2011–68; SR–Phlx–2011–129) (‘‘MWCB Approval Order’’). 9 15 U.S.C. 78f(b). 10 15 U.S.C. 78f(b)(5). E:\FR\FM\18SEN1.SGM 18SEN1

Agencies

[Federal Register Volume 84, Number 181 (Wednesday, September 18, 2019)]
[Notices]
[Pages 49138-49141]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20156]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86943; File No. SR-NYSENAT-2019-20]


Self-Regulatory Organizations; NYSE National, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its 
Schedule of Fees

September 12, 2019.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on September 4, 2019, NYSE National, Inc. (``NYSE National'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described

[[Page 49139]]

in Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to amend its Schedule of Fees and Rebates 
(``Fee Schedule'') to specify that the Exchange may exclude from its 
average daily volume and quoting calculations the date of the annual 
reconstitution of the Russell Investments Indexes. 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 Fee Schedule to specify that the 
Exchange may exclude from its average daily volume and quoting 
calculations the date of the annual reconstitution of the Russell 
Investments Indexes (the ``Russell Rebalance'').
Proposed Rule Change
    The Exchange's Fee Schedule currently provides that, for purposes 
of determining transaction fees and credits 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 Exchange proposes to specify that the Exchange may 
also exclude from its quoting levels, ADV, and CADV calculations the 
date of the annual Russell Rebalance.
    The Russell Rebalance, which typically occurs in June, is 
characterized by high trading volumes, much of which derive from market 
participants who are not generally as active entering the market to 
rebalance their holdings in-line with the Russell Rebalance.\4\ The 
Exchange believes that the high trading volumes during the Russell 
Rebalance can significantly impact ADV, CADV and quoting calculations. 
The Exchange believes that excluding the date of the Russell Rebalance 
will mitigate the uncertainty faced by ETP Holders as to their quoting, 
ADV, and CADV levels and the corresponding rebate amounts during the 
month of the Russell Rebalance, thereby providing ETP Holders with an 
increased certainty as to that month's cost for trades executed on the 
Exchange. The Exchange further believes that removing this uncertainty 
will encourage ETP Holders to participate in trading on the Exchange 
during the remaining trading days in the month of the Russell Rebalance 
in a manner intended to be incented by the Exchange's Fee Schedule.
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    \4\ See, e.g., Securities Exchange Act Release No. 69793 (July 
18, 2013), 78 FR 37865, 37866 (July 24, 2013) (SR-BATS-2013-034) 
(excluding the Russell Reconstitution Day from the definition of 
ADV); Securities Exchange Act Release No. 72002 (April 23, 2014), 79 
FR 24028, 24029 (April 29, 2014) (SR-EDGX-2014-10) (same).
---------------------------------------------------------------------------

    To effectuate this change, the Exchange proposes to add a new 
subsection (2) to the second bullet under Section I, heading B titled 
``General.'' As proposed, the new clause would provide that the 
Exchange may exclude shares traded any day that ``is the date of the 
annual reconstitution of the Russell Investments Indexes.'' The 
proposed change is similar to, and consistent with, the rules of the 
Exchange's affiliates and other self-regulatory organizations.\5\
---------------------------------------------------------------------------

    \5\ See, e.g., NYSE Arca Equities Fees and Charges, available at 
https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf (``the date of the annual 
reconstitution of the Russell Investments Indexes does not count 
toward volume tiers''); Cboe BZX U.S. Equities Exchange Fee 
Schedule, available at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/(``The Exchange excludes from its 
calculation of ADAV and ADV shares added or removed on . . . the 
last Friday in June (the `Russell Reconstitution Day')'').
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\7\ in 
particular, because it provides for the equitable allocation of 
reasonable dues, fees, and other charges among its members, issuers and 
other persons using its facilities and does not unfairly discriminate 
between customers, issuers, brokers or dealers. The Exchange notes that 
it operates in a highly fragmented and competitive market in which 
competitive forces constrain the Exchange's transaction fees, and 
market participants can readily trade on competing venues if they deem 
pricing levels at those other venues to be more favorable.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) & (5).
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The Proposed Change Is Reasonable
    The Exchange believes that it is reasonable to permit the Exchange 
to eliminate from the calculation of quoting levels, ADV, and CADV the 
date of the annual Russell Rebalance because it will provide ETP 
Holders with a greater level of certainty as to their level of rebates 
and fees for trading in the month of the Russell Rebalance. By 
eliminating a trading day that would almost certainly lower an ETP 
Holder's ADV as a percentage of CADV, the Exchange believes that the 
proposal will make the majority of ETP Holders more likely to meet the 
minimum thresholds of higher tiers, which will provide additional 
incentive for ETP Holders to increase their participation on the 
Exchange and earn more favorable rates. As noted above, other self-
regulatory organizations have adopted rules that are substantially 
similar to the change being proposed by the Exchange.\8\
---------------------------------------------------------------------------

    \8\ See notes 4-5, supra.
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The Proposal Is an Equitable Allocation of Fees
    The Exchange believes its proposal equitably allocates its fees 
among its market participants. Specifically, the Exchange believes that 
the proposal constitutes an equitable allocation of fees because the 
exclusion would apply equally to all ETP Holders and market 
participants and to all volume tiers. Further, the Exchange believes 
that removing a single known day of atypical trading behavior would 
allow all ETP Holders to more predictably calculate the costs 
associated with their trading activity on the Exchange on the Russell 
Rebalance day, thereby enabling such participants to operate their 
business without concern of unpredictable and potentially significant 
changes in revenues and expenses.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory because the exclusion would apply

[[Page 49140]]

equally to all permit holders, to all market participants and to all 
volume tiers. Moreover, the proposal neither targets nor will it have a 
disparate impact on any particular category of market participant. 
Rather, as discussed above, the Exchange believes that removing a 
single known day of atypical trading behavior would allow all ETP 
Holders to more predictably calculate the credits and fees associated 
with their trading activity on the Russell Rebalance day, thereby 
enabling such participants to operate their business without concern of 
unpredictable and potentially significant changes in expenses.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\9\ 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. Rather, as noted above, by eliminating a trading 
day that would almost certainly result in lowering an ETP Holder's ADV 
as a percentage of CADV, the Exchange believes that the proposal will 
benefit the majority of ETP Holders by making it more likely for them 
to meet the minimum thresholds of higher tiers, which will provide 
additional incentive for ETP Holders to increase their participation on 
the Exchange and earn more favorable rates. The Exchange believes that 
the proposal thus fosters competition by providing an additional 
incentive to ETP Holders to submit orders to the Exchange. The proposed 
exclusion would be available to all similarly-situated market 
participants, and, as such, the proposed change would not impose a 
disparate burden on competition among market participants on the 
Exchange.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    Intramarket Competition. The proposed change is designed to 
eliminate a trading day that would almost certainly result in lowering 
an ETP Holder's ADV as a percentage of CADV. The Exchange believes that 
the proposal would provide additional incentive for ETP Holders to 
increase their participation on the Exchange. Greater liquidity 
benefits all market participants on the Exchange by providing more 
trading opportunities and encourages ETP Holders to send orders, 
thereby contributing to robust levels of liquidity, which benefits all 
market participants. The proposed exclusion would be available to all 
similarly-situated market participants, and, as such, the proposed 
change would not impose a disparate burden on competition among market 
participants on the Exchange.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily choose to 
send their orders to other exchange and off-exchange venues if they 
deem fee levels at those 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 off-exchange 
venues. By providing ETP Holders with a greater level of certainty as 
to their level of rebates and costs for trading in the month of the 
Russell Rebalance, the Exchange believes that the proposed change could 
promote competition between the Exchange and other execution venues by 
encouraging ETP Holders to their participation on the Exchange in order 
to earn more favorable rates.

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) \10\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \11\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSENAT-2019-20 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-NYSENAT-2019-20. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal offices 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-NYSENAT-2019-20, and should be submitted 
on or before October 9, 2019.


[[Page 49141]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-20156 Filed 9-17-19; 8:45 am]
 BILLING CODE 8011-01-P
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