Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees and Rebates, 53041-53045 [2020-18831]

Download as PDF Federal Register / Vol. 85, No. 167 / Thursday, August 27, 2020 / Notices The amendments to Form N–14 to permit BDCs to incorporate certain information by reference into that form to the same extent as registered closedend fund are expected to decrease the burden and costs for BDCs that prepare and file Forms N–14. As summarized in Table 1 above, we estimate that the total internal burden associated with N–14 will be 125,260 hours, at a cost of approximately $37,856,382. Estimates of average burden hours are made solely for the purposes of the Paperwork Reduction Act and are not derived from a comprehensive or even representative survey or study of the costs of Commission rules and forms. The collection of information under Form N–14 is mandatory. The information provided under Form N–14 will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the Commission’s estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Please direct your written comments to David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, C/O Cynthia Roscoe, 100 F Street NE, Washington, DC 20549; or send an email to: PRA_ Mailbox@sec.gov. Dated: August 21, 2020. J. Matthew DeLesDernier, Assistant Secretary. khammond on DSKJM1Z7X2PROD with NOTICES [FR Doc. 2020–18808 Filed 8–26–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–89640; File No. SR– NYSENAT–2020–27] Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees and Rebates August 21, 2020. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on August 12, 2020, NYSE National, Inc. (‘‘NYSE National’’ 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 Schedule of Fees and Rebates (‘‘Fee Schedule’’) to (1) eliminate the fee currently charged for non-tiered orders removing liquidity in securities priced at or above $1.00; (2) modify the Adding Tiers; and (3) modify the Removing Tiers. 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. 1 2 VerDate Sep<11>2014 18:16 Aug 26, 2020 Jkt 250001 PO 00000 15 U.S.C. 78s(b)(1). 17 CFR 240.19b–4. Frm 00100 Fmt 4703 Sfmt 4703 53041 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: (1) Eliminate the fee currently charged for non-tiered orders removing liquidity in securities priced at or above $1.00; (2) modify the Adding Tiers; and (3) modify the Removing Tiers. The proposed changes respond to the current competitive environment where order flow providers have a choice of where to direct liquidity-providing and liquidity-removing orders by offering further incentives for ETP Holders to send additional displayed and nondisplayed liquidity to the Exchange. The proposed changes also respond to the current volatile market environment that has resulted in unprecedented average daily volumes, which is related to the ongoing spread of the novel coronavirus (‘‘COVID–19’’). The Exchange proposes to implement the rule change on August 12, 2020.3 Current Market and Competitive Environment The Exchange operates in a highly competitive market. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 4 As the Commission itself recognized, the market for trading services in NMS stocks has become ‘‘more fragmented and competitive.’’ 5 Indeed, equity trading is currently dispersed across 13 exchanges,6 31 alternative trading 3 The Exchange originally filed to amend the Fee Schedule on August 3, 2020 (SR–NYSENat–2020– 25). SR–NYSENat–2020–25 was subsequently withdrawn and replaced by this filing. 4 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (S7–10–04) (Final Rule) (‘‘Regulation NMS’’). 5 See Securities Exchange Act Release No. 51808, 84 FR 5202, 5253 (February 20, 2019) (File No. S7– 05–18) (Transaction Fee Pilot for NMS Stocks Final Rule) (‘‘Transaction Fee Pilot’’). 6 See Cboe Global Markets, U.S. Equities Market Volume Summary, available at https:// markets.cboe.com/us/equities/market_share/. See generally https://www.sec.gov/fast-answers/ divisionsmarketregmrexchangesshtml.html. E:\FR\FM\27AUN1.SGM 27AUN1 53042 Federal Register / Vol. 85, No. 167 / Thursday, August 27, 2020 / Notices systems,7 and numerous broker-dealer internalizers and wholesalers. Based on publicly-available information, no single exchange has more than 20% of the market share of executed volume of equity trades (whether excluding or including auction volume).8 Therefore, no exchange possesses significant pricing power in the execution of equity order flow. More specifically, the Exchange’s share of executed volume of equity trades in Tapes A, B and C securities is less than 2%.9 The Exchange believes that the evershifting market share among the exchanges from month to month demonstrates that market participants can move order flow, or discontinue or reduce use of certain products, in response to fee changes. While it is not possible to know a firm’s reason for moving order flow, the Exchange believes that one such reason is because of fee changes at any of the registered exchanges or non-exchange trading venues to which a firm routes order flow. These fees vary month to month, and not all are publicly available. With respect to non-marketable order flow that would provide liquidity on an exchange, ETP Holders can choose from any one of the 13 currently operating registered exchanges to route such order flow. Accordingly, 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 Exchange utilizes a ‘‘takermaker’’ or inverted fee model to attract orders that provide liquidity at the most competitive prices. Under the takermaker model, offering rebates for taking (or removing) liquidity increases the likelihood that market participants will send orders to the Exchange to trade with liquidity providers’ orders. This increased taker order flow provides an incentive for market participants to send orders that provide liquidity. The Exchange generally charges fees for order flow that provides liquidity. These fees are reasonable due to the additional marketable interest (in part attracted by the Exchange’s rebate to remove liquidity) with which those order flow providers can trade. Proposed Rule Change To respond to this competitive environment, the Exchange proposes the following changes to its Fee Schedule designed to provide order flow providers with incentives to route liquidity-providing order flow to the Exchange. As described above, ETP Holders with liquidity-providing order flow have a choice of where to send that order flow. Elimination of Fee for Non-Tiered Orders Removing Liquidity The Exchange proposes to eliminate the $0.0005 per share fee currently charged for non-tiered orders removing liquidity in securities priced at or above $1.00.10 The Exchange believes that eliminating the per share charge for orders that remove liquidity from the Exchange will incentivize ETP Holders to send liquidity-removing orders to the Exchange, thereby enhancing order execution opportunities to the benefit of all market participants. In addition, by eliminating this charge in its General Rates, the Exchange believes that ETP Holders may be more likely to submit liquidity-removing orders to the Exchange even if they do not qualify for a Removing Tier. Proposed Changes to Adding Tiers The Exchange proposes to modify the Adding Tiers by (1) creating a new Adding Tier 1 for adding displayed and non-displayed liquidity in Tape A, Tape B, and Tape C securities; (2) increasing the current Adding Rates for the current Adding Tier 1 and Adding Tier 2; (3) modifying the requirements to qualify for current Adding Tier 2; and (4) and renumbering the Adding Tiers, as follows (proposed additions underlined, deletions bracketed): Tier requirement Adding rate Adding Tier 1: At least 0.25% or more Adding ADV as a % of US CADV ..................................... khammond on DSKJM1Z7X2PROD with NOTICES Adding Tier 2 [1]: At least 0.15% or more Adding ADV as a % of US CADV ..................................... Adding Tier 3 [2]: At least 0.075% [0.10%] or more Adding ADV as a % of US CADV and at least 0.15% or more Adding ADV and Removing ADV combined as a % of US CADV. Adding Tier 4 [3]: At least 0.05% or more Adding ADV as a % of US CADV ..................................... Displayed liquidity: Tapes A, B and C: $0.0020 Non-Displayed liquidity: Tapes A, B and C: $0.0024 Displayed liquidity: Tapes A, B and C: $0.0022 [20] Displayed liquidity: Tapes A, B and C: $0.0025 [24] Displayed liquidity: Tapes A, B and C: $0.0026 The Exchange does not propose any changes to the Adding MPL Rate for the Adding Tiers, and the proposed rate for MPL Orders under the new Adding Tier 1 would also be no charge. The Exchange believes that the addition of new proposed Adding Tier 1 with a higher ADV requirement than the current Adding Tier 1 will incentivize ETP Holders to submit additional liquidity to the Exchange to qualify for the Exchange’s lowest fees for adding displayed liquidity and nondisplayed liquidity. This in turn would support the quality of price discovery on the Exchange and provide additional price improvement opportunities for incoming orders. The Exchange believes that by correlating the amount of the fee to the level of orders sent by an ETP Holder that add liquidity, the Exchange’s fee structure would incentivize ETP Holders to submit more orders that add liquidity to the Exchange, thereby increasing the potential for price improvement to incoming marketable orders submitted to the Exchange. Similarly, the Exchange believes that increasing the current Adding Rates for current Adding Tier 1 and Adding Tier 2 while lowering the Adding ADV requirement to qualify for current Adding Tier 2 and adding a second requirement of at least 0.15% or more Adding ADV and Removing ADV 7 See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otc transparency/AtsIssueData. Although 54 alternative trading systems were registered with the Commission as of July 29, 2019, only 31 are currently trading. A list of alternative trading systems registered with the Commission is available at https://www.sec.gov/foia/docs/atslist.htm. 8 See Cboe Global Markets U.S. Equities Market Volume Summary, available at https:// markets.cboe.com/us/equities/market_share/. 9 See id. 10 As noted, the Exchange previously charged a small fee as opposed to offering a rebate for nontiered orders removing liquidity in securities priced at or above $1.00 but is now proposing not to charge for non-tiered orders that remove liquidity. VerDate Sep<11>2014 18:16 Aug 26, 2020 Jkt 250001 PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 E:\FR\FM\27AUN1.SGM 27AUN1 khammond on DSKJM1Z7X2PROD with NOTICES Federal Register / Vol. 85, No. 167 / Thursday, August 27, 2020 / Notices combined as a percentage of US CADV, more ETP Holders will choose to route their liquidity-providing order flow to the Exchange in order to qualify for those tiers. The Exchange also believes that adding the proposed second requirement to current Adding Tier 2 of a combination of Adding and Removing ADV will expand the ADV eligible to qualify for the tier, thereby allowing greater number of ETP Holders to potentially qualify for the tier. For example, in a month where US CADV was 10 billion shares, assume ETP Holder A has an Adding ADV of 12 million shares for an Adding ADV of 0.12% of US CADV. On that basis alone, ETP Holder A would qualify for the proposed Adding Tier 4, which has an Adding ADV requirement of 0.05% of US CADV. Further assume in that same billing month, ETP Holder A has Removing ADV of 5 million shares, for a Removing ADV of 0.05% of US CADV. ETP Holder A would have an Adding and Removing ADV combined of 0.17% (12 million Adding shares plus 5 million Removing shares combined, divided by US CADV of 10 billion shares). ETP Holder A would thereby qualify for proposed Adding Tier 3, which has requirements of 0.075% or more Adding ADV as a percentage of US CADV and 0.15% Adding ADV and Removing ADV combined as a percentage of US CADV. As noted above, the Exchange operates in a competitive environment, particularly as it relates to attracting non-marketable orders, which add liquidity to the Exchange. Since the proposed Adding Tier 1 would be new, no member organization currently qualifies for it. Also, currently five ETP Holders qualify for current Adding Tiers 1 and 2 (revised Adding Tiers 2 and 3). The Exchange does not know how much order flow ETP Holders choose to route to other exchanges or to off-exchange venues. There are approximately five additional ETP Holders that could qualify for the revised Adding Tiers 2 and 3 based on their current trading profile on the Exchange if they so choose. However, without having a view of ETP Holder’s activity on other exchanges and off-exchange venues, the Exchange has no way of knowing whether this proposed rule change would result in any member organization directing orders to the Exchange in order to qualify for the new tier credits. Proposed Changes to Removing Tiers The Exchange proposes to modify the Removing Tiers by (1) revising the requirements for the current removing tier fees (for current Removing Tier 1 VerDate Sep<11>2014 18:16 Aug 26, 2020 Jkt 250001 53043 Exchange by offering an intermediate credit for half the amount of Removing ADV as current Removing Tier 2 and 50,000 Adding ADV requirement. The Exchange believes that the combination of removing and adding requirements for the proposed new tier will allow Tier requirement Removing rate greater number of ETP Holders to potentially qualify for the tier. Removing Tier 1: At least 0.20% [0.10%] As described above, ETP Holders with Adding ADV and Reliquidity-removing order flow have a moving ADV comchoice of where to send that order flow. bined as a % of US The Exchange believes that as a result CADV and 250,000 Adding ADV ............... ($0.0030) of the proposed changes to the removing tiers, more ETP Holders will choose to Removing Tier 2: route their liquidity-removing order At least 0.10% [0.04%] Removing ADV as a flow to the Exchange in order to interact % of US CADV and with the increased liquidity-providing 100,000 Adding ADV ($0.00275) order flow the Exchange anticipates Removing Tier 3: from its proposed changes to the Adding At least 0.02% RemovTiers. ing ADV as a % of US CADV and 50,000 The Exchange does not know how Adding ADV ............... ($0.0023) much order flow ETP Holders choose to Removing Tier 4 [3]: route to other exchanges or to offAt least 50,000 Adding exchange venues. There are currently 25 ADV ............................ ($0.0015 [25]) ETP Holders that qualify for the current fees for current Removing Tiers 1, 2, and The Exchange does not propose any changes to the Removing Rate for Orders 3 for removing liquidity based on their current trading profile on the Exchange. that Execute at a Price Better than Since the proposed Removing Tier 3 Contra-Side NBBO for the Removing would be new, no ETP Holder currently Tiers, and the proposed rate for such qualifies for it. The Exchange believes orders under the new Removing Tier 3 that many ETP Holders could qualify for would also be no charge. The Exchange believes that these proposed modified Removing Tiers if changes to the Removing Tiers will they so choose. However, without incentivize ETP Holders to remove having a view of ETP Holder’s activity additional liquidity from the Exchange on other exchanges and off-exchange to qualify for the Exchange’s lowest fees venues, the Exchange has no way of for removing liquidity. This is turn knowing whether this proposed rule would support the quality of price change would result in any ETP Holders discovery on the Exchange and provide directing orders to the Exchange in additional liquidity for incoming orders. order to qualify for the modified Specifically, the Exchange believes Removing Tiers. that requiring a higher Adding ADV and The proposed changes are not Removing ADV combined for Removing otherwise intended to address any other Tier 1, increasing the Removing ADV issues, and the Exchange is not aware of requirement for Removing Tier 2, introducing a new Removing Tier 3, and any problems that ETP Holders would have in complying with the proposed lowering the corresponding credit for changes. current Removing Tier 3 (now Removing Tier 4) will incentivize more 2. Statutory Basis ETP Holders to route liquidity removing The Exchange believes that the order flow to the Exchange to meet the proposed rule change is consistent with higher requirements. Further, the Section 6(b) of the Act,11 in general, and Exchange also believes that adding the proposed second requirement to current furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,12 in Removing Tier 1 of a combination of Adding and Removing ADV will expand particular, because it provides for the equitable allocation of reasonable dues, the ADV eligible to qualify for the tier, thereby allowing greater number of ETP fees, and other charges among its Holders to potentially qualify for it by members, issuers and other persons giving them the flexibility of meeting using its facilities and does not unfairly the requirement using Adding ADV, discriminate between customers, Removing ADV, or both. Finally, the issuers, brokers or dealers. Exchange believes that the proposed 11 15 U.S.C. 78f(b). new Removing Tier 3 will encourage 12 15 U.S.C. 78f(b)(4) & (5). additional removing order flow to the and Removing Tier 2); (2) creating a new Removing Tier 3; (3) decreasing the removing rate for current Removing Tier 3; and (4) renumbering the Removing Tiers, as follows (proposed additions underlined, deletions in brackets): PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 E:\FR\FM\27AUN1.SGM 27AUN1 53044 Federal Register / Vol. 85, No. 167 / Thursday, August 27, 2020 / Notices The Proposed Change Is Reasonable khammond on DSKJM1Z7X2PROD with NOTICES As discussed above, the Exchange operates in a highly fragmented and competitive market. The Exchange believes that the ever-shifting market share among the exchanges from month to month demonstrates that market participants can move order flow, or discontinue or reduce use of certain categories of products, in response to fee changes. While it is not possible to know a firm’s reason for shifting order flow, the Exchange believes that one such reason is because of fee changes at any one of the registered exchanges or non-exchange trading venues that a firm routes order flow to, which vary month to month, and not all of which are publicly known. With respect to nonmarketable order flow that would provide liquidity on an Exchange, ETP Holders can choose from any one of the 13 currently operating registered exchanges to route such order flow. Accordingly, competitive forces constrain exchange transaction fees that relate to orders that would provide liquidity on an exchange. Given the current competitive environment, the Exchange believes that the proposal represents a reasonable attempt to attract additional order flow to the Exchange. Specifically, eliminating the fee currently charged for non-tiered orders removing liquidity in securities priced at or above $1.00, as described above, is reasonable because ETP Holders will have an incentive to route additional liquidity-removing orders to the Exchange without incurring any transaction fees, thereby increasing the opportunity for contraside order flow to receive price improvement. In addition, the Exchange believes that the proposed changes to the Adding Tiers and Removing Tiers are reasonable because they would promote execution opportunities for ETP Holders routing order flow to the Exchange. The Exchange believes that the proposal as a whole represents a reasonable effort to promote price improvement and enhanced order execution opportunities for ETP Holders. All ETP Holders would benefit from the greater amounts of liquidity on the Exchange, which would represent a wider range of execution opportunities. The Proposal Is an Equitable Allocation of Fees The Exchange believes its proposed change equitably allocates its fees among its market participants. The proposed change would continue to encourage ETP Holders to both submit additional liquidity to the Exchange and VerDate Sep<11>2014 17:09 Aug 26, 2020 Jkt 250001 execute orders on the Exchange, thereby contributing to robust levels of liquidity, to the benefit of all market participants. The Exchange believes that eliminating the fee currently charged for non-tiered orders removing liquidity in securities priced at or above $1.00 and modifying the Adding Tiers and Removing Tiers would encourage the submission and removal of additional liquidity from the Exchange, thus enhancing order execution opportunities for ETP Holders from the substantial amounts of liquidity present on the Exchange. All ETP Holders would benefit from the greater amounts of liquidity that would be present on the Exchange, which would provide greater execution opportunities. The Exchange believes the proposed rule change would also improve market quality for all market participants seeking to remove liquidity on the Exchange and, as a consequence, attract more liquidity to the Exchange, thereby improving market-wide quality. The proposal neither targets nor will it have a disparate impact on any particular category of market participant. Specifically, the Exchange believes that the proposal constitutes an equitable allocation of fees because all similarly situated ETP Holders and other market participants would be eligible for the same general and tiered rates and would be eligible for the same fees and credits. Moreover, the proposed change is equitable because the revised fees would apply equally to all similarly situated ETP Holders. The Proposal Is Not Unfairly Discriminatory The Exchange believes that the proposal is not unfairly discriminatory. In the prevailing competitive environment, ETP Holders are free to disfavor the Exchange’s pricing if they believe that alternatives offer them better value. Moreover, the proposal neither targets nor will it have a disparate impact on any particular category of market participant. The Exchange believes that the proposal does not permit unfair discrimination because the proposal would be applied to all similarly situated ETP Holders and all ETP Holders would be subject to the same modified Adding Tiers and Removing Tiers. Similarly, all ETP Holders would benefit from the elimination of the fee currently charged for non-tiered orders removing liquidity in securities priced at or above $1.00. Accordingly, no ETP Holder already operating on the Exchange would be disadvantaged by the proposed allocation of fees. PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 The Exchange further believes that the proposed changes would not permit unfair discrimination among ETP Holders because the general and tiered rates are available equally to all ETP Holders. As described above, in today’s competitive marketplace, order flow providers have a choice of where to direct liquidity-providing order flow, and the Exchange believes there are additional ETP Holders that could qualify if they chose to direct their order flow to the Exchange. 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,13 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, as discussed above, the Exchange believes that the proposed change would encourage the submission of additional liquidity and order flow to a public exchange, thereby enhancing order execution opportunities for ETP Holders. As a result, the Exchange believes that the proposed change furthers the Commission’s goal in adopting Regulation NMS of fostering competition among orders, which promotes ‘‘more efficient pricing of individual stocks for all types of orders, large and small.’’ 14 Intramarket Competition. The proposed change is designed to attract additional order flow to the Exchange. As described above, the Exchange believes that the proposed changes would provide additional incentives for market participants to route liquidity providing and liquidity removing orders to 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. The proposed revised fees would be available to all similarly-situated market participants, and thus, 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 13 14 15 U.S.C. 78f(b)(8). Regulation NMS, 70 FR at 37498–99. E:\FR\FM\27AUN1.SGM 27AUN1 Federal Register / Vol. 85, No. 167 / Thursday, August 27, 2020 / Notices competitive market in which market participants can readily choose to send their orders to other exchanges and offexchange venues if they deem fee levels at those other venues to be more favorable. As noted above, the Exchange’s market share of intraday trading in Tapes A, B and C securities is less than 2%. In such an environment, the Exchange must continually adjust its fees and rebates to remain competitive with other exchanges and off-exchange venues. 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 does not believe its proposed fee change can impose any burden on intermarket competition. The Exchange believes that the proposed change could promote competition between the Exchange and other execution venues, including those that currently offer similar order types and comparable transaction pricing, by encouraging additional orders to be sent to the Exchange for execution. 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. khammond on DSKJM1Z7X2PROD with NOTICES 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) 15 of the Act and subparagraph (f)(2) of Rule 19b–4 16 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) 17 of the Act to determine whether the proposed rule change should be approved or disapproved. 15 U.S.C. 78s(b)(3)(A). 17 CFR 240.19b–4(f)(2). 17 15 U.S.C. 78s(b)(2)(B). 15 16 VerDate Sep<11>2014 17:09 Aug 26, 2020 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–2020–27 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–2020–27. 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–NYSENAT–2020–27 and should be submitted on or before September 17, 2020. 53045 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–18831 Filed 8–26–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–89638; File No. SR–CBOE– 2020–052] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing of Amendment No. 1 and Order Instituting Proceedings To Determine Whether to Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Rules 5.37, 5.38, and 5.73 Related to Auction Notification Messages and Index Combo Orders in SPX in the Automated Improvement Mechanism, Complex Automated Improvement Mechanism, and FLEX Automated Improvement Mechanism August 21, 2020. I. Introduction On June 3, 2020, Cboe Exchange, Inc. (‘‘Exchange’’ or ‘‘Cboe’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend Rules 5.37, 5.38, and 5.73 to (1) allow the Exchange to determine to disseminate the stop price in auction notification messages for Automated Improvement Mechanism (‘‘AIM’’), Complex Automated Improvement Mechanism (‘‘C–AIM’’), and FLEX AIM auctions in S&P 500® Index options (‘‘SPX’’); and (2) modify the minimum increment for C–AIM and FLEX AIM auction responses for Index Combo Orders in SPX. The proposed rule change was published for comment in the Federal Register on June 18, 2020.3 On July 22, 2020, the Exchange submitted Amendment No. 1 to the proposed rule change, which replaced and superseded the proposed rule change in its entirety.4 On July 27, 2020, 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 89063 (June 12, 2020), 85 FR 36923. Comments received on the proposed rule change are available on the Commission’s website at: https://www.sec.gov/ comments/sr-cboe-2020-052/srcboe2020052.htm. 4 In Amendment No. 1, the Exchange amended the proposal to: (1) To add that, when the proposed stop price dissemination in auction notification 18 1 15 Continued Jkt 250001 PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 E:\FR\FM\27AUN1.SGM 27AUN1

Agencies

[Federal Register Volume 85, Number 167 (Thursday, August 27, 2020)]
[Notices]
[Pages 53041-53045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18831]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89640; File No. SR-NYSENAT-2020-27]


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

August 21, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on August 12, 2020, NYSE National, Inc. (``NYSE National'' 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\ 17 CFR 240.19b-4.
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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 (1) eliminate the fee currently charged for non-
tiered orders removing liquidity in securities priced at or above 
$1.00; (2) modify the Adding Tiers; and (3) modify the Removing Tiers. 
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: (1) Eliminate 
the fee currently charged for non-tiered orders removing liquidity in 
securities priced at or above $1.00; (2) modify the Adding Tiers; and 
(3) modify the Removing Tiers.
    The proposed changes respond to the current competitive environment 
where order flow providers have a choice of where to direct liquidity-
providing and liquidity-removing orders by offering further incentives 
for ETP Holders to send additional displayed and non-displayed 
liquidity to the Exchange. The proposed changes also respond to the 
current volatile market environment that has resulted in unprecedented 
average daily volumes, which is related to the ongoing spread of the 
novel coronavirus (``COVID-19'').
    The Exchange proposes to implement the rule change on August 12, 
2020.\3\
---------------------------------------------------------------------------

    \3\ The Exchange originally filed to amend the Fee Schedule on 
August 3, 2020 (SR-NYSENat-2020-25). SR-NYSENat-2020-25 was 
subsequently withdrawn and replaced by this filing.
---------------------------------------------------------------------------

Current Market and Competitive Environment
    The Exchange operates in a highly competitive market. The 
Commission has repeatedly expressed its preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. Specifically, in Regulation NMS, the 
Commission highlighted the importance of market forces in determining 
prices and SRO revenues and, also, recognized that current regulation 
of the market system ``has been remarkably successful in promoting 
market competition in its broader forms that are most important to 
investors and listed companies.'' \4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (S7-10-04) (Final Rule) (``Regulation 
NMS'').
---------------------------------------------------------------------------

    As the Commission itself recognized, the market for trading 
services in NMS stocks has become ``more fragmented and competitive.'' 
\5\ Indeed, equity trading is currently dispersed across 13 
exchanges,\6\ 31 alternative trading

[[Page 53042]]

systems,\7\ and numerous broker-dealer internalizers and wholesalers. 
Based on publicly-available information, no single exchange has more 
than 20% of the market share of executed volume of equity trades 
(whether excluding or including auction volume).\8\ Therefore, no 
exchange possesses significant pricing power in the execution of equity 
order flow. More specifically, the Exchange's share of executed volume 
of equity trades in Tapes A, B and C securities is less than 2%.\9\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 51808, 84 FR 5202, 
5253 (February 20, 2019) (File No. S7-05-18) (Transaction Fee Pilot 
for NMS Stocks Final Rule) (``Transaction Fee Pilot'').
    \6\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at https://markets.cboe.com/us/equities/market_share/. See generally https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \7\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. Although 54 
alternative trading systems were registered with the Commission as 
of July 29, 2019, only 31 are currently trading. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \8\ See Cboe Global Markets U.S. Equities Market Volume Summary, 
available at https://markets.cboe.com/us/equities/market_share/.
    \9\ See id.
---------------------------------------------------------------------------

    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
move order flow, or discontinue or reduce use of certain products, in 
response to fee changes. While it is not possible to know a firm's 
reason for moving order flow, the Exchange believes that one such 
reason is because of fee changes at any of the registered exchanges or 
non-exchange trading venues to which a firm routes order flow. These 
fees vary month to month, and not all are publicly available. With 
respect to non-marketable order flow that would provide liquidity on an 
exchange, ETP Holders can choose from any one of the 13 currently 
operating registered exchanges to route such order flow. Accordingly, 
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 Exchange utilizes a ``taker-maker'' or inverted fee model to 
attract orders that provide liquidity at the most competitive prices. 
Under the taker-maker model, offering rebates for taking (or removing) 
liquidity increases the likelihood that market participants will send 
orders to the Exchange to trade with liquidity providers' orders. This 
increased taker order flow provides an incentive for market 
participants to send orders that provide liquidity. The Exchange 
generally charges fees for order flow that provides liquidity. These 
fees are reasonable due to the additional marketable interest (in part 
attracted by the Exchange's rebate to remove liquidity) with which 
those order flow providers can trade.
Proposed Rule Change
    To respond to this competitive environment, the Exchange proposes 
the following changes to its Fee Schedule designed to provide order 
flow providers with incentives to route liquidity-providing order flow 
to the Exchange. As described above, ETP Holders with liquidity-
providing order flow have a choice of where to send that order flow.
Elimination of Fee for Non-Tiered Orders Removing Liquidity
    The Exchange proposes to eliminate the $0.0005 per share fee 
currently charged for non-tiered orders removing liquidity in 
securities priced at or above $1.00.\10\
---------------------------------------------------------------------------

    \10\ As noted, the Exchange previously charged a small fee as 
opposed to offering a rebate for non-tiered orders removing 
liquidity in securities priced at or above $1.00 but is now 
proposing not to charge for non-tiered orders that remove liquidity.
---------------------------------------------------------------------------

    The Exchange believes that eliminating the per share charge for 
orders that remove liquidity from the Exchange will incentivize ETP 
Holders to send liquidity-removing orders to the Exchange, thereby 
enhancing order execution opportunities to the benefit of all market 
participants. In addition, by eliminating this charge in its General 
Rates, the Exchange believes that ETP Holders may be more likely to 
submit liquidity-removing orders to the Exchange even if they do not 
qualify for a Removing Tier.
Proposed Changes to Adding Tiers
    The Exchange proposes to modify the Adding Tiers by (1) creating a 
new Adding Tier 1 for adding displayed and non-displayed liquidity in 
Tape A, Tape B, and Tape C securities; (2) increasing the current 
Adding Rates for the current Adding Tier 1 and Adding Tier 2; (3) 
modifying the requirements to qualify for current Adding Tier 2; and 
(4) and renumbering the Adding Tiers, as follows (proposed additions 
underlined, deletions bracketed):

------------------------------------------------------------------------
            Tier requirement                        Adding rate
------------------------------------------------------------------------
Adding Tier 1:
    At least 0.25% or more Adding ADV as  Displayed liquidity: Tapes A,
     a % of US CADV.                       B and C: $0.0020 Non-
                                           Displayed liquidity: Tapes A,
                                           B and C: $0.0024
Adding Tier 2 [1]:
    At least 0.15% or more Adding ADV as  Displayed liquidity: Tapes A,
     a % of US CADV.                       B and C: $0.0022 [20]
Adding Tier 3 [2]:
    At least 0.075% [0.10%] or more       Displayed liquidity: Tapes A,
     Adding ADV as a % of US CADV and at   B and C: $0.0025 [24]
     least 0.15% or more Adding ADV and
     Removing ADV combined as a % of US
     CADV.
Adding Tier 4 [3]:
    At least 0.05% or more Adding ADV as  Displayed liquidity: Tapes A,
     a % of US CADV.                       B and C: $0.0026
------------------------------------------------------------------------

    The Exchange does not propose any changes to the Adding MPL Rate 
for the Adding Tiers, and the proposed rate for MPL Orders under the 
new Adding Tier 1 would also be no charge.
    The Exchange believes that the addition of new proposed Adding Tier 
1 with a higher ADV requirement than the current Adding Tier 1 will 
incentivize ETP Holders to submit additional liquidity to the Exchange 
to qualify for the Exchange's lowest fees for adding displayed 
liquidity and non-displayed liquidity. This in turn would support the 
quality of price discovery on the Exchange and provide additional price 
improvement opportunities for incoming orders. The Exchange believes 
that by correlating the amount of the fee to the level of orders sent 
by an ETP Holder that add liquidity, the Exchange's fee structure would 
incentivize ETP Holders to submit more orders that add liquidity to the 
Exchange, thereby increasing the potential for price improvement to 
incoming marketable orders submitted to the Exchange.
    Similarly, the Exchange believes that increasing the current Adding 
Rates for current Adding Tier 1 and Adding Tier 2 while lowering the 
Adding ADV requirement to qualify for current Adding Tier 2 and adding 
a second requirement of at least 0.15% or more Adding ADV and Removing 
ADV

[[Page 53043]]

combined as a percentage of US CADV, more ETP Holders will choose to 
route their liquidity-providing order flow to the Exchange in order to 
qualify for those tiers. The Exchange also believes that adding the 
proposed second requirement to current Adding Tier 2 of a combination 
of Adding and Removing ADV will expand the ADV eligible to qualify for 
the tier, thereby allowing greater number of ETP Holders to potentially 
qualify for the tier.
    For example, in a month where US CADV was 10 billion shares, assume 
ETP Holder A has an Adding ADV of 12 million shares for an Adding ADV 
of 0.12% of US CADV. On that basis alone, ETP Holder A would qualify 
for the proposed Adding Tier 4, which has an Adding ADV requirement of 
0.05% of US CADV. Further assume in that same billing month, ETP Holder 
A has Removing ADV of 5 million shares, for a Removing ADV of 0.05% of 
US CADV. ETP Holder A would have an Adding and Removing ADV combined of 
0.17% (12 million Adding shares plus 5 million Removing shares 
combined, divided by US CADV of 10 billion shares). ETP Holder A would 
thereby qualify for proposed Adding Tier 3, which has requirements of 
0.075% or more Adding ADV as a percentage of US CADV and 0.15% Adding 
ADV and Removing ADV combined as a percentage of US CADV.
    As noted above, the Exchange operates in a competitive environment, 
particularly as it relates to attracting non-marketable orders, which 
add liquidity to the Exchange. Since the proposed Adding Tier 1 would 
be new, no member organization currently qualifies for it. Also, 
currently five ETP Holders qualify for current Adding Tiers 1 and 2 
(revised Adding Tiers 2 and 3). The Exchange does not know how much 
order flow ETP Holders choose to route to other exchanges or to off-
exchange venues. There are approximately five additional ETP Holders 
that could qualify for the revised Adding Tiers 2 and 3 based on their 
current trading profile on the Exchange if they so choose. However, 
without having a view of ETP Holder's activity on other exchanges and 
off-exchange venues, the Exchange has no way of knowing whether this 
proposed rule change would result in any member organization directing 
orders to the Exchange in order to qualify for the new tier credits.
Proposed Changes to Removing Tiers
    The Exchange proposes to modify the Removing Tiers by (1) revising 
the requirements for the current removing tier fees (for current 
Removing Tier 1 and Removing Tier 2); (2) creating a new Removing Tier 
3; (3) decreasing the removing rate for current Removing Tier 3; and 
(4) renumbering the Removing Tiers, as follows (proposed additions 
underlined, deletions in brackets):

------------------------------------------------------------------------
                    Tier requirement                       Removing rate
------------------------------------------------------------------------
Removing Tier 1:
    At least 0.20% [0.10%] Adding ADV and Removing ADV         ($0.0030)
     combined as a % of US CADV and 250,000 Adding ADV..
Removing Tier 2:
    At least 0.10% [0.04%] Removing ADV as a % of US          ($0.00275)
     CADV and 100,000 Adding ADV........................
Removing Tier 3:
    At least 0.02% Removing ADV as a % of US CADV and          ($0.0023)
     50,000 Adding ADV..................................
Removing Tier 4 [3]:
    At least 50,000 Adding ADV..........................  ($0.0015 [25])
------------------------------------------------------------------------

    The Exchange does not propose any changes to the Removing Rate for 
Orders that Execute at a Price Better than Contra-Side NBBO for the 
Removing Tiers, and the proposed rate for such orders under the new 
Removing Tier 3 would also be no charge.
    The Exchange believes that these changes to the Removing Tiers will 
incentivize ETP Holders to remove additional liquidity from the 
Exchange to qualify for the Exchange's lowest fees for removing 
liquidity. This is turn would support the quality of price discovery on 
the Exchange and provide additional liquidity for incoming orders.
    Specifically, the Exchange believes that requiring a higher Adding 
ADV and Removing ADV combined for Removing Tier 1, increasing the 
Removing ADV requirement for Removing Tier 2, introducing a new 
Removing Tier 3, and lowering the corresponding credit for current 
Removing Tier 3 (now Removing Tier 4) will incentivize more ETP Holders 
to route liquidity removing order flow to the Exchange to meet the 
higher requirements. Further, the Exchange also believes that adding 
the proposed second requirement to current Removing Tier 1 of a 
combination of Adding and Removing ADV will expand the ADV eligible to 
qualify for the tier, thereby allowing greater number of ETP Holders to 
potentially qualify for it by giving them the flexibility of meeting 
the requirement using Adding ADV, Removing ADV, or both. Finally, the 
Exchange believes that the proposed new Removing Tier 3 will encourage 
additional removing order flow to the Exchange by offering an 
intermediate credit for half the amount of Removing ADV as current 
Removing Tier 2 and 50,000 Adding ADV requirement. The Exchange 
believes that the combination of removing and adding requirements for 
the proposed new tier will allow greater number of ETP Holders to 
potentially qualify for the tier.
    As described above, ETP Holders with liquidity-removing order flow 
have a choice of where to send that order flow. The Exchange believes 
that as a result of the proposed changes to the removing tiers, more 
ETP Holders will choose to route their liquidity-removing order flow to 
the Exchange in order to interact with the increased liquidity-
providing order flow the Exchange anticipates from its proposed changes 
to the Adding Tiers.
    The Exchange does not know how much order flow ETP Holders choose 
to route to other exchanges or to off-exchange venues. There are 
currently 25 ETP Holders that qualify for the current fees for current 
Removing Tiers 1, 2, and 3 for removing liquidity based on their 
current trading profile on the Exchange. Since the proposed Removing 
Tier 3 would be new, no ETP Holder currently qualifies for it. The 
Exchange believes that many ETP Holders could qualify for proposed 
modified Removing Tiers if they so choose. However, without having a 
view of ETP Holder's activity on other exchanges and off-exchange 
venues, the Exchange has no way of knowing whether this proposed rule 
change would result in any ETP Holders directing orders to the Exchange 
in order to qualify for the modified Removing Tiers.
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any problems that ETP 
Holders would have in complying with the proposed changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\11\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\12\ 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) & (5).

---------------------------------------------------------------------------

[[Page 53044]]

The Proposed Change Is Reasonable
    As discussed above, the Exchange operates in a highly fragmented 
and competitive market. The Exchange believes that the ever-shifting 
market share among the exchanges from month to month demonstrates that 
market participants can move order flow, or discontinue or reduce use 
of certain categories of products, in response to fee changes. While it 
is not possible to know a firm's reason for shifting order flow, the 
Exchange believes that one such reason is because of fee changes at any 
one of the registered exchanges or non-exchange trading venues that a 
firm routes order flow to, which vary month to month, and not all of 
which are publicly known. With respect to non-marketable order flow 
that would provide liquidity on an Exchange, ETP Holders can choose 
from any one of the 13 currently operating registered exchanges to 
route such order flow. Accordingly, competitive forces constrain 
exchange transaction fees that relate to orders that would provide 
liquidity on an exchange.
    Given the current competitive environment, the Exchange believes 
that the proposal represents a reasonable attempt to attract additional 
order flow to the Exchange. Specifically, eliminating the fee currently 
charged for non-tiered orders removing liquidity in securities priced 
at or above $1.00, as described above, is reasonable because ETP 
Holders will have an incentive to route additional liquidity-removing 
orders to the Exchange without incurring any transaction fees, thereby 
increasing the opportunity for contra-side order flow to receive price 
improvement. In addition, the Exchange believes that the proposed 
changes to the Adding Tiers and Removing Tiers are reasonable because 
they would promote execution opportunities for ETP Holders routing 
order flow to the Exchange.
    The Exchange believes that the proposal as a whole represents a 
reasonable effort to promote price improvement and enhanced order 
execution opportunities for ETP Holders. All ETP Holders would benefit 
from the greater amounts of liquidity on the Exchange, which would 
represent a wider range of execution opportunities.
The Proposal Is an Equitable Allocation of Fees
    The Exchange believes its proposed change equitably allocates its 
fees among its market participants. The proposed change would continue 
to encourage ETP Holders to both submit additional liquidity to the 
Exchange and execute orders on the Exchange, thereby contributing to 
robust levels of liquidity, to the benefit of all market participants.
    The Exchange believes that eliminating the fee currently charged 
for non-tiered orders removing liquidity in securities priced at or 
above $1.00 and modifying the Adding Tiers and Removing Tiers would 
encourage the submission and removal of additional liquidity from the 
Exchange, thus enhancing order execution opportunities for ETP Holders 
from the substantial amounts of liquidity present on the Exchange. All 
ETP Holders would benefit from the greater amounts of liquidity that 
would be present on the Exchange, which would provide greater execution 
opportunities.
    The Exchange believes the proposed rule change would also improve 
market quality for all market participants seeking to remove liquidity 
on the Exchange and, as a consequence, attract more liquidity to the 
Exchange, thereby improving market-wide quality. The proposal neither 
targets nor will it have a disparate impact on any particular category 
of market participant.
    Specifically, the Exchange believes that the proposal constitutes 
an equitable allocation of fees because all similarly situated ETP 
Holders and other market participants would be eligible for the same 
general and tiered rates and would be eligible for the same fees and 
credits. Moreover, the proposed change is equitable because the revised 
fees would apply equally to all similarly situated ETP Holders.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, ETP Holders 
are free to disfavor the Exchange's pricing if they believe that 
alternatives offer them better value.
    Moreover, the proposal neither targets nor will it have a disparate 
impact on any particular category of market participant. The Exchange 
believes that the proposal does not permit unfair discrimination 
because the proposal would be applied to all similarly situated ETP 
Holders and all ETP Holders would be subject to the same modified 
Adding Tiers and Removing Tiers. Similarly, all ETP Holders would 
benefit from the elimination of the fee currently charged for non-
tiered orders removing liquidity in securities priced at or above 
$1.00. Accordingly, no ETP Holder already operating on the Exchange 
would be disadvantaged by the proposed allocation of fees.
    The Exchange further believes that the proposed changes would not 
permit unfair discrimination among ETP Holders because the general and 
tiered rates are available equally to all ETP Holders. As described 
above, in today's competitive marketplace, order flow providers have a 
choice of where to direct liquidity-providing order flow, and the 
Exchange believes there are additional ETP Holders that could qualify 
if they chose to direct their order flow to the Exchange.
    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,\13\ 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, as discussed above, the Exchange believes 
that the proposed change would encourage the submission of additional 
liquidity and order flow to a public exchange, thereby enhancing order 
execution opportunities for ETP Holders. As a result, the Exchange 
believes that the proposed change furthers the Commission's goal in 
adopting Regulation NMS of fostering competition among orders, which 
promotes ``more efficient pricing of individual stocks for all types of 
orders, large and small.'' \14\
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b)(8).
    \14\ Regulation NMS, 70 FR at 37498-99.
---------------------------------------------------------------------------

    Intramarket Competition. The proposed change is designed to attract 
additional order flow to the Exchange. As described above, the Exchange 
believes that the proposed changes would provide additional incentives 
for market participants to route liquidity providing and liquidity 
removing orders to 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. The proposed revised fees would be 
available to all similarly-situated market participants, and thus, 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

[[Page 53045]]

competitive market in which market participants can readily choose to 
send their orders to other exchanges and off-exchange venues if they 
deem fee levels at those other venues to be more favorable. As noted 
above, the Exchange's market share of intraday trading in Tapes A, B 
and C securities is less than 2%. In such an environment, the Exchange 
must continually adjust its fees and rebates to remain competitive with 
other exchanges and off-exchange venues. 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 does not believe its proposed fee change can impose any burden 
on intermarket competition.
    The Exchange believes that the proposed change could promote 
competition between the Exchange and other execution venues, including 
those that currently offer similar order types and comparable 
transaction pricing, by encouraging additional orders to be sent to the 
Exchange for execution.

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) \15\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \16\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 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) \17\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \17\ 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-2020-27 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-2020-27. 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-NYSENAT-2020-27 and should be submitted 
on or before September 17, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-18831 Filed 8-26-20; 8:45 am]
BILLING CODE 8011-01-P
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