Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List, 66370-66373 [2020-23013]

Download as PDF 66370 Federal Register / Vol. 85, No. 202 / Monday, October 19, 2020 / Notices By the Commission. Erica A. Barker, Secretary. 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. [FR Doc. 2020–23000 Filed 10–16–20; 8:45 am] BILLING CODE 7710–FW–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–90161; File No. SR–NYSE– 2020–81] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List October 13, 2020. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on September 30, 2020, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. jbell on DSKJLSW7X2PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its Price List to extend through October 2020 the waiver of equipment and related service charges and trading license fees for NYSE Trading Floorbased member organizations implemented for April through September 2020. The Exchange proposes to implement the fee changes effective October 1, 2020. 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 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 VerDate Sep<11>2014 18:05 Oct 16, 2020 Jkt 253001 A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Price List to extend through October 2020 the waiver of equipment and related service charges and trading license fees for NYSE Trading Floorbased member organizations implemented for April through September 2020. The proposed changes respond to the current volatile market environment that has resulted in unprecedented average daily volumes and the temporary closure of the Trading Floor, which are both related to the ongoing spread of the novel coronavirus (‘‘COVID–19’’). The Exchange proposes to implement the fee changes effective October 1, 2020. Background Beginning on March 16, 2020, in order to slow the spread of COVID–19 through social distancing measures, significant limitations were placed on large gatherings throughout the country. As a result, on March 18, 2020, the Exchange determined that beginning March 23, 2020, the physical Trading Floor facilities located at 11 Wall Street in New York City would close and that the Exchange would move, on a temporary basis, to fully electronic trading.4 Following the temporary closure of the Trading Floor, the Exchange waived certain equipment fees for the booth telephone system on the Trading Floor and associated service charges for the months of April and May.5 On May 14, 2020, the Exchange announced that on May 26, 2020 trading operations on the Trading Floor would resume on a limited basis to a subset of Floor brokers, subject to health and safety measures designed to prevent the 4 See Press Release, dated March 18, 2020, available here: https://ir.theice.com/press/pressreleases/allcategories/2020/03-18-2020-204202110. 5 See Securities Exchange Act Release No. 88602 (April 8, 2020), 85 FR 20730 (April 14, 2020) (SR– NYSE–2020–27); Securities Exchange Act Release No. 88874 (May 14, 2020), 85 FR 30743 (May 20, 2020) (SR–NYSE–2020–29). See footnote 11 of the Price List. PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 spread of COVID–19.6 On June 15, 2020, the Exchange announced that on June 17, 2020, the Trading Floor would reintroduce a subset of DMMs, also subject to health and safety measures designed to prevent the spread of COVID–19.7 Following this partial reopening of the Trading Floor, the Exchange extended the equipment fee waiver for the months of June, July, August and September.8 The Trading Floor continues to operate with reduced headcount and additional health and safety precautions.9 Proposed Rule Change The proposed rule change responds to the unprecedented events surrounding the spread of COVID–19 by extending the waiver of equipment and related service charges and trading license fees for NYSE Trading Floor-based member organizations for October 2020. As noted, for the months of April, May, June, July, August and September, the Exchange waived the Annual Telephone Line Charge of $400 per phone number and the $129 fee for a single line phone, jack, and data jack. The Exchange also waived related service charges, as follows: $161.25 to install single jack (voice or data); $107.50 to relocate a jack; $53.75 to remove a jack; $107.50 to install voice or data line; $53.75 to disconnect data line; $53.75 to change a phone line subscriber; and miscellaneous telephone charges billed at $106 per hour in 15 minute increments.10 These fees were waived for (1) member organizations with at least one trading license, a physical Trading Floor presence, and Floor broker executions accounting for 40% or more of the member organization’s combined adding, taking, and auction volumes during March 1 to March 20, 2020, or, beginning in August 6 See Trader Update, dated May 14, 2020, available here: https://www.nyse.com/traderupdate/ history#110000251588. 7 See Trader Update, dated June 15, 2020, available here: https://www.nyse.com/traderupdate/history#110000272018. 8 See Securities Exchange Act Release No. 89050 (June 11, 2020), 85 FR 36637 (June 17, 2020) (SR– NYSE–2020–49); Securities Exchange Act Release No. 89324 (July 15, 2020), 85 FR 44129 (July 21, 2020) (SR–NYSE–2020–59); Securities Exchange Act Release No. 89754 (September 2, 2020), 85 FR 55550 (September 8, 2020) (SR–NYSE–2020–71); and Securities Exchange Act Release No. 89798 (September 9, 2020), 85 FR 57263 (September 15, 2020) (SR–NYSE–2020–72). 9 See Trader Update, dated June 15, 2020, available here: https://www.nyse.com/traderupdate/history#110000272018. DMMs continue to support a subset of NYSE-listed securities remotely. 10 The Service Charges also include an internet Equipment Monthly Hosting Fee that the Exchange did not waive for April, May, June, July, August and September 2020 and that the Exchange does not propose to waive for October 2020. E:\FR\FM\19OCN1.SGM 19OCN1 Federal Register / Vol. 85, No. 202 / Monday, October 19, 2020 / Notices 2020, if not a member organization during March 1 to March 20, 2020, based on the member organization’s combined adding, taking, and auction volumes during its first month as a member organization on or after May 26, 2020, i.e., the date the Trading Floor reopened on a limited basis,11 and (2) member organizations with at least one trading license that are Designated Market Makers with 30 or fewer assigned securities for the billing month of March 2020. Because the Trading Floor continues to operate with reduced capacity, the Exchange proposes to extend the waiver of these Trading Floor-based fees through October 2020. To effectuate this change, the Exchange proposes to delete ‘‘, May, June, July, August, and September’’ and add ‘‘through October’’ after ‘‘April’’ in footnote 11 to the Price List. In order to further reduce costs for member organizations with a Trading Floor presence, the Exchange also waived the April, May, June, July, August and September 2020 monthly portion of all applicable annual fees for (1) member organizations with at least one trading license, a physical Trading Floor presence and Floor broker executions accounting for 40% or more of the member organization’s combined adding, taking, and auction volumes during March 1 to March 20, 2020, or, beginning in August 2020, if not a member organization during March 1 to March 20, 2020, based on the member organization’s combined adding, taking, and auction volumes during its first month as a member organization on or after May 26, 2020, and (2) member organizations with at least one trading license that are DMMs with 30 or fewer assigned securities for the billing month of March 2020.12 The Exchange proposes to also waive the October 2020 monthly portion of all applicable annual fees for member organizations with at least one trading jbell on DSKJLSW7X2PROD with NOTICES 11 Beginning August 2020, member organizations with a physical trading Floor presence that became member organizations on or after April 1, 2020 are eligible for a one-time credit for the member organization’s Booth Telephone System charges and all Service Charges except the internet Equipment Monthly Hosting Fee for the months of April through July 2020 if the member organization meets the other requirements for the waiver described in footnote 11 of the Price List. 12 See notes 5–8, supra. See footnote 15 of the Price List. Beginning in August 2020, member organizations with a physical trading Floor presence that became member organizations on or after April 1, 2020 are eligible for a one-time credit for the member organization’s indicated annual trading license fee for the months of April through July 2020 if the member organization meets the other requirements for the waiver described in footnote 15 of the Price List. VerDate Sep<11>2014 18:05 Oct 16, 2020 Jkt 253001 license, a physical Trading Floor presence and Floor broker executions accounting for 40% or more of the member organization’s combined adding, taking, and auction volumes during March 1 to March 20, 2020 or, if not a member organization during March 1 to March 20, 2020, based on the member organization’s combined adding, taking, and auction volumes during its first month as a member organization on or after May 26, 2020. The indicated annual trading license fees would also be waived for October 2020 for member organizations with at least one trading license that are DMMs with 30 or fewer assigned securities for the billing month of March 2020. To effectuate this change, the Exchange proposes to delete ‘‘,May, June, July, August, and September’’ and add ‘‘through October’’ in footnote 15 of the Price List. The proposed extension of the fee waivers would reduce monthly costs for member organizations with a Trading Floor presence whose operations were disrupted by the Floor closure, which lasted approximately two months, and remains partially closed. The Exchange believes that extension of the fee waiver would ease the financial burden associated with the ongoing partial Trading Floor closure. The Exchange believes that all member organization that conduct a significant portion of trading on the Trading Floor would benefit from this proposed fee change. The proposed changes are not otherwise intended to address other issues, and the Exchange is not aware of any significant problems that market participants 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,13 in general, and furthers the objectives of Sections 6(b)(4) and (5) of the Act,14 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 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. In Regulation NMS, the Commission highlighted the importance 13 15 14 15 PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(4) & (5). Frm 00072 Fmt 4703 Sfmt 4703 66371 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.’’ 15 As the Commission itself recognized, the market for trading services in NMS stocks has become ‘‘more fragmented and competitive.’’ 16 Indeed, equity trading is currently dispersed across 15 exchanges,17 31 alternative trading systems,18 and numerous broker-dealer internalizers and wholesalers, all competing for order flow. Based on publicly-available information, no single exchange has more than 20% market share (whether including or excluding auction volume).19 Therefore, no exchange possesses significant pricing power in the execution of equity order flow. More specifically, the Exchange’s market share of trading in Tape A, B and C securities combined is less than 14%. The Proposed Change is Reasonable The proposed extension of the waiver of equipment and related service fees and the applicable monthly trading license fee for Trading Floor-based member organizations is reasonable in light of the partial continued closure of the NYSE Trading Floor. Beginning March 2020, markets worldwide experienced unprecedented declines and volatility because of the ongoing spread of COVID–19 also resulted in the temporary closure of the NYSE Trading Floor. As noted, the Trading Floor was recently partially reopened on a limited basis to a subset of Floor brokers and DMMs, subject to health and safety measures designed to prevent the spread of COVID–19. The proposed change is designed to reduce costs for Floor participants for the month of October 2020 and therefore ease the financial burden faced by member organizations 15 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37495, 37499 (June 29, 2005) (S7–10–04) (Final Rule) (‘‘Regulation NMS’’). 16 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’’). 17 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. 18 See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/ otctransparency/AtsIssueData. A list of alternative trading systems registered with the Commission is available at https://www.sec.gov/foia/docs/ atslist.htm. 19 See Cboe Global Markets U.S. Equities Market Volume Summary, available at https:// markets.cboe.com/us/equities/market_share/. E:\FR\FM\19OCN1.SGM 19OCN1 66372 Federal Register / Vol. 85, No. 202 / Monday, October 19, 2020 / Notices that conduct business on the Trading Floor while it continues to operate with reduced capacity. The Proposal Is an Equitable Allocation of Fees The Exchange believes the proposed extension of the waiver of equipment and related service fees and the applicable monthly trading license fee for Trading Floor-based member organizations to October 2020 are an equitable allocation of fees. The proposed waivers apply to all Trading Floor-based firms meeting specific requirements during the period that the Trading Floor remains partially open. The proposed change is equitable as it merely continues the fee waiver granted in April, May, June, July, August and September 2020, and is designed to reduce monthly costs for Trading Floorbased member organizations that are unable to fully conduct Floor operations while the Trading Floor remains partially open during the ongoing COVID–19 pandemic. jbell on DSKJLSW7X2PROD with NOTICES The Proposal Is Not Unfairly Discriminatory The Exchange believes that the proposed continuation of the waiver of equipment and related service fees and the applicable monthly trading license fee for Trading Floor-based member organizations during October 2020 is not unfairly discriminatory because the proposed waivers would benefit all similarly-situated market participants on an equal and non-discriminatory basis. The Exchange is not proposing to waive the Floor-related fees indefinitely, but rather during the period that the Trading Floor is not fully open. The proposed fee change is designed to ease the financial burden on Trading Floorbased member organizations that cannot fully conduct Floor operations. 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,20 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 changes would encourage the continued participation of member organizations on the Exchange by providing certainty and fee relief during the unprecedented volatility and market declines caused by the continued spread of COVID–19. As a result, the Exchange believes that the proposed change furthers the Commission’s goal in adopting Regulation NMS of fostering integrated competition among orders, which promotes ‘‘more efficient pricing of individual stocks for all types of orders, large and small.’’ 21 Intramarket Competition. The proposed continued waiver of equipment and related service fees and the applicable monthly trading license fee for Trading Floor-based member organizations during October 2020 is designed to reduce monthly costs for those Floor participants whose operations continue to be impacted by the spread of COVID–19 despite the fact that the Trading Floor has partially reopened. In reducing this monthly financial burden, the proposed change would provide a degree of certainty and ease the financial burden on Trading Floor-based member organizations impacted by the temporary closing and partial reopening of the Trading Floor. As noted, the proposal would apply to all similarly situated member organizations on the same and equal terms, who would benefit from the changes on the same basis. Accordingly, 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. The Exchange believes that the proposed rule change reflects this competitive environment because it permits impacted member organizations to continue to conduct market-making operations on the Exchange and avoid unintended costs of doing business on the Exchange while the Trading Floor is not fully open, which could make the Exchange a less competitive venue on which to trade as compared to other equities markets. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) 22 of the Act and subparagraph (f)(2) of Rule 19b–4 23 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) 24 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSE–2020–81 on the subject line. Paper Comments • Send paper comments in triplicate to: Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSE–2020–81. 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 22 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 24 15 U.S.C. 78s(b)(2)(B). 23 17 20 15 U.S.C. 78f(b)(8). VerDate Sep<11>2014 18:05 Oct 16, 2020 21 Regulation Jkt 253001 PO 00000 Frm 00073 NMS, 70 FR at 37498–99. Fmt 4703 Sfmt 4703 E:\FR\FM\19OCN1.SGM 19OCN1 Federal Register / Vol. 85, No. 202 / Monday, October 19, 2020 / Notices Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE–2020–81 and should be submitted on or before November 9, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–23013 Filed 10–16–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–90159; File No. SR–MEMX– 2020–12] Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Pilot Related to the Market-Wide Circuit Breaker in Rule 11.16 and Amend Rule 11.16(b)(2) Concerning the Resumption of Trading Following a Level 3 Market-Wide Circuit Breaker Halt jbell on DSKJLSW7X2PROD with NOTICES October 13, 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 October 9, 2020, MEMX LLC (‘‘MEMX’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II, below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ‘‘non-controversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 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 is filing with the Commission a proposed rule change to: (i) Extend the pilot related to the market-wide circuit breaker in Rule 11.16 and (ii) amend Rule 11.16(b)(2) concerning the resumption of trading following a Level 3 market-wide circuit breaker halt. The text of the proposed rule change is provided in Exhibit 5. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Extend the Market-Wide Circuit Breaker Pilot The Exchange proposes to extend the effectiveness of the Exchange’s current rule applicable to market-wide circuit breakers (‘‘MWCB’’) to the close of business on October 18, 2021. Portions of Rule 11.16, explained in further detail below, are currently operating as a pilot program which is currently set to expire at the close of business on October 18, 2020.5 Rule 11.16 provides a methodology for determining when to halt trading in all stocks due to extraordinary market volatility (i.e., market-wide circuit breakers). The MWCB mechanism adopted by other national securities exchanges was originally approved by the Commission to operate on a pilot basis,6 the term of which was to coincide with the pilot period for the Plan to Address Extraordinary Market 4 17 CFR 240.19b–4. Exchange Rule 11.16. 6 See, e.g., Securities Exchange Act Release No. 67090 (May 31, 2012), 77 FR 33531 (June 6, 2012) (SR–NYSE–2011–48). 25 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). VerDate Sep<11>2014 18:05 Oct 16, 2020 5 See Jkt 253001 PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 66373 Volatility Pursuant to Rule 608 of Regulation NMS (the ‘‘LULD Plan’’),7 including any extensions to the pilot period for the LULD Plan.8 In April 2019, the Commission approved an amendment to the LULD Plan for it to operate on a permanent, rather than pilot, basis.9 In light of the proposal to make the LULD Plan permanent, all U.S. equity exchanges and the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) amended their rules 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, 2019.10 The pilot’s effectiveness was subsequently extended for an additional year to the close of business on October 18, 2020.11 On May 4, 2020, the Commission approved MEMX’s Form 1 Application to register as a national securities exchange with rules including, on a pilot basis expiring on October 18, 2020, certain portions of MEMX Rule 11.16.12 The Exchange now proposes to amend Rule 11.16 to extend the pilot to the close of business on October 18, 2021. This filing does not propose any substantive or additional changes to Rule 11.16 other than the proposed change to Rule 11.16(b)(2) concerning the resumption of trading following a Level 3 market-wide circuit breaker halt as further described below. The market-wide circuit breaker under Rule 11.16 provides 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 declines. All U.S. equity exchanges and FINRA adopted uniform rules on a pilot basis relating to market-wide circuit breakers in 2012, which are designed to slow the effects of extreme price movement through coordinated trading halts across securities markets when 7 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. 8 See, e.g., Securities Exchange Act Release Nos. 67090 (May 31, 2012), 77 FR 33531 (June 6, 2012) (SR–NYSE–2011–48) (Approval Order); and 68784 (January 31, 2013), 78 FR 8662 (February 6, 2013) (SR–NYSE–2013–10) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change Delaying the Operative Date of a Rule Change to NYSE Rule 80B). 9 See Securities Exchange Act Release No. 85623 (April 11, 2019), 84 FR 16086 (April 17, 2019). 10 See, e.g., Securities Exchange Act Release No. 85560 (April 9, 2019), 84 FR 15247 (April 15, 2019) (SR–NYSE–2019–19). 11 See, e.g., Securities Exchange Act Release No. 87016 (September 19, 2019), 84 FR 50502 (September 25, 2019) (SR–NYSE–2019–51). 12 See Securities Exchange Release No. 88806 (May 4, 2020), 85 FR 27451 (May 8, 2020). E:\FR\FM\19OCN1.SGM 19OCN1

Agencies

[Federal Register Volume 85, Number 202 (Monday, October 19, 2020)]
[Notices]
[Pages 66370-66373]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-23013]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90161; File No. SR-NYSE-2020-81]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Price List

October 13, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on September 30, 2020, New York Stock Exchange LLC 
(``NYSE'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I, II, and III below, which Items have been prepared by the 
self-regulatory organization. The Commission is publishing this notice 
to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 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 Price List to extend through 
October 2020 the waiver of equipment and related service charges and 
trading license fees for NYSE Trading Floor-based member organizations 
implemented for April through September 2020. The Exchange proposes to 
implement the fee changes effective October 1, 2020. The proposed rule 
change is available on the Exchange's website at www.nyse.com, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Price List to extend through 
October 2020 the waiver of equipment and related service charges and 
trading license fees for NYSE Trading Floor-based member organizations 
implemented for April through September 2020.
    The proposed changes respond to the current volatile market 
environment that has resulted in unprecedented average daily volumes 
and the temporary closure of the Trading Floor, which are both related 
to the ongoing spread of the novel coronavirus (``COVID-19'').
    The Exchange proposes to implement the fee changes effective 
October 1, 2020.
Background
    Beginning on March 16, 2020, in order to slow the spread of COVID-
19 through social distancing measures, significant limitations were 
placed on large gatherings throughout the country. As a result, on 
March 18, 2020, the Exchange determined that beginning March 23, 2020, 
the physical Trading Floor facilities located at 11 Wall Street in New 
York City would close and that the Exchange would move, on a temporary 
basis, to fully electronic trading.\4\ Following the temporary closure 
of the Trading Floor, the Exchange waived certain equipment fees for 
the booth telephone system on the Trading Floor and associated service 
charges for the months of April and May.\5\
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    \4\ See Press Release, dated March 18, 2020, available here: 
https://ir.theice.com/press/press-releases/allcategories/2020/03-18-2020-204202110.
    \5\ See Securities Exchange Act Release No. 88602 (April 8, 
2020), 85 FR 20730 (April 14, 2020) (SR-NYSE-2020-27); Securities 
Exchange Act Release No. 88874 (May 14, 2020), 85 FR 30743 (May 20, 
2020) (SR-NYSE-2020-29). See footnote 11 of the Price List.
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    On May 14, 2020, the Exchange announced that on May 26, 2020 
trading operations on the Trading Floor would resume on a limited basis 
to a subset of Floor brokers, subject to health and safety measures 
designed to prevent the spread of COVID-19.\6\ On June 15, 2020, the 
Exchange announced that on June 17, 2020, the Trading Floor would 
reintroduce a subset of DMMs, also subject to health and safety 
measures designed to prevent the spread of COVID-19.\7\ Following this 
partial reopening of the Trading Floor, the Exchange extended the 
equipment fee waiver for the months of June, July, August and 
September.\8\ The Trading Floor continues to operate with reduced 
headcount and additional health and safety precautions.\9\
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    \6\ See Trader Update, dated May 14, 2020, available here: 
https://www.nyse.com/traderupdate/history#110000251588.
    \7\ See Trader Update, dated June 15, 2020, available here: 
https://www.nyse.com/trader-update/history#110000272018.
    \8\ See Securities Exchange Act Release No. 89050 (June 11, 
2020), 85 FR 36637 (June 17, 2020) (SR-NYSE-2020-49); Securities 
Exchange Act Release No. 89324 (July 15, 2020), 85 FR 44129 (July 
21, 2020) (SR-NYSE-2020-59); Securities Exchange Act Release No. 
89754 (September 2, 2020), 85 FR 55550 (September 8, 2020) (SR-NYSE-
2020-71); and Securities Exchange Act Release No. 89798 (September 
9, 2020), 85 FR 57263 (September 15, 2020) (SR-NYSE-2020-72).
    \9\ See Trader Update, dated June 15, 2020, available here: 
https://www.nyse.com/trader-update/history#110000272018. DMMs 
continue to support a subset of NYSE-listed securities remotely.
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Proposed Rule Change
    The proposed rule change responds to the unprecedented events 
surrounding the spread of COVID-19 by extending the waiver of equipment 
and related service charges and trading license fees for NYSE Trading 
Floor-based member organizations for October 2020.
    As noted, for the months of April, May, June, July, August and 
September, the Exchange waived the Annual Telephone Line Charge of $400 
per phone number and the $129 fee for a single line phone, jack, and 
data jack. The Exchange also waived related service charges, as 
follows: $161.25 to install single jack (voice or data); $107.50 to 
relocate a jack; $53.75 to remove a jack; $107.50 to install voice or 
data line; $53.75 to disconnect data line; $53.75 to change a phone 
line subscriber; and miscellaneous telephone charges billed at $106 per 
hour in 15 minute increments.\10\ These fees were waived for (1) member 
organizations with at least one trading license, a physical Trading 
Floor presence, and Floor broker executions accounting for 40% or more 
of the member organization's combined adding, taking, and auction 
volumes during March 1 to March 20, 2020, or, beginning in August

[[Page 66371]]

2020, if not a member organization during March 1 to March 20, 2020, 
based on the member organization's combined adding, taking, and auction 
volumes during its first month as a member organization on or after May 
26, 2020, i.e., the date the Trading Floor re-opened on a limited 
basis,\11\ and (2) member organizations with at least one trading 
license that are Designated Market Makers with 30 or fewer assigned 
securities for the billing month of March 2020.
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    \10\ The Service Charges also include an internet Equipment 
Monthly Hosting Fee that the Exchange did not waive for April, May, 
June, July, August and September 2020 and that the Exchange does not 
propose to waive for October 2020.
    \11\ Beginning August 2020, member organizations with a physical 
trading Floor presence that became member organizations on or after 
April 1, 2020 are eligible for a one-time credit for the member 
organization's Booth Telephone System charges and all Service 
Charges except the internet Equipment Monthly Hosting Fee for the 
months of April through July 2020 if the member organization meets 
the other requirements for the waiver described in footnote 11 of 
the Price List.
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    Because the Trading Floor continues to operate with reduced 
capacity, the Exchange proposes to extend the waiver of these Trading 
Floor-based fees through October 2020. To effectuate this change, the 
Exchange proposes to delete ``, May, June, July, August, and 
September'' and add ``through October'' after ``April'' in footnote 11 
to the Price List.
    In order to further reduce costs for member organizations with a 
Trading Floor presence, the Exchange also waived the April, May, June, 
July, August and September 2020 monthly portion of all applicable 
annual fees for (1) member organizations with at least one trading 
license, a physical Trading Floor presence and Floor broker executions 
accounting for 40% or more of the member organization's combined 
adding, taking, and auction volumes during March 1 to March 20, 2020, 
or, beginning in August 2020, if not a member organization during March 
1 to March 20, 2020, based on the member organization's combined 
adding, taking, and auction volumes during its first month as a member 
organization on or after May 26, 2020, and (2) member organizations 
with at least one trading license that are DMMs with 30 or fewer 
assigned securities for the billing month of March 2020.\12\
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    \12\ See notes 5-8, supra. See footnote 15 of the Price List. 
Beginning in August 2020, member organizations with a physical 
trading Floor presence that became member organizations on or after 
April 1, 2020 are eligible for a one-time credit for the member 
organization's indicated annual trading license fee for the months 
of April through July 2020 if the member organization meets the 
other requirements for the waiver described in footnote 15 of the 
Price List.
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    The Exchange proposes to also waive the October 2020 monthly 
portion of all applicable annual fees for member organizations with at 
least one trading license, a physical Trading Floor presence and Floor 
broker executions accounting for 40% or more of the member 
organization's combined adding, taking, and auction volumes during 
March 1 to March 20, 2020 or, if not a member organization during March 
1 to March 20, 2020, based on the member organization's combined 
adding, taking, and auction volumes during its first month as a member 
organization on or after May 26, 2020. The indicated annual trading 
license fees would also be waived for October 2020 for member 
organizations with at least one trading license that are DMMs with 30 
or fewer assigned securities for the billing month of March 2020. To 
effectuate this change, the Exchange proposes to delete ``,May, June, 
July, August, and September'' and add ``through October'' in footnote 
15 of the Price List.
    The proposed extension of the fee waivers would reduce monthly 
costs for member organizations with a Trading Floor presence whose 
operations were disrupted by the Floor closure, which lasted 
approximately two months, and remains partially closed. The Exchange 
believes that extension of the fee waiver would ease the financial 
burden associated with the ongoing partial Trading Floor closure. The 
Exchange believes that all member organization that conduct a 
significant portion of trading on the Trading Floor would benefit from 
this proposed fee change.
    The proposed changes are not otherwise intended to address other 
issues, and the Exchange is not aware of any significant problems that 
market participants 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,\13\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\14\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4) & (5).
---------------------------------------------------------------------------

    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. 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.'' \15\
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    \15\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule) 
(``Regulation NMS'').
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    As the Commission itself recognized, the market for trading 
services in NMS stocks has become ``more fragmented and competitive.'' 
\16\ Indeed, equity trading is currently dispersed across 15 
exchanges,\17\ 31 alternative trading systems,\18\ and numerous broker-
dealer internalizers and wholesalers, all competing for order flow. 
Based on publicly-available information, no single exchange has more 
than 20% market share (whether including or excluding auction 
volume).\19\ Therefore, no exchange possesses significant pricing power 
in the execution of equity order flow. More specifically, the 
Exchange's market share of trading in Tape A, B and C securities 
combined is less than 14%.
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    \16\ 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'').
    \17\ 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.
    \18\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \19\ See Cboe Global Markets U.S. Equities Market Volume 
Summary, available at https://markets.cboe.com/us/equities/market_share/.
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The Proposed Change is Reasonable
    The proposed extension of the waiver of equipment and related 
service fees and the applicable monthly trading license fee for Trading 
Floor-based member organizations is reasonable in light of the partial 
continued closure of the NYSE Trading Floor. Beginning March 2020, 
markets worldwide experienced unprecedented declines and volatility 
because of the ongoing spread of COVID-19 also resulted in the 
temporary closure of the NYSE Trading Floor. As noted, the Trading 
Floor was recently partially reopened on a limited basis to a subset of 
Floor brokers and DMMs, subject to health and safety measures designed 
to prevent the spread of COVID-19. The proposed change is designed to 
reduce costs for Floor participants for the month of October 2020 and 
therefore ease the financial burden faced by member organizations

[[Page 66372]]

that conduct business on the Trading Floor while it continues to 
operate with reduced capacity.
The Proposal Is an Equitable Allocation of Fees
    The Exchange believes the proposed extension of the waiver of 
equipment and related service fees and the applicable monthly trading 
license fee for Trading Floor-based member organizations to October 
2020 are an equitable allocation of fees. The proposed waivers apply to 
all Trading Floor-based firms meeting specific requirements during the 
period that the Trading Floor remains partially open. The proposed 
change is equitable as it merely continues the fee waiver granted in 
April, May, June, July, August and September 2020, and is designed to 
reduce monthly costs for Trading Floor-based member organizations that 
are unable to fully conduct Floor operations while the Trading Floor 
remains partially open during the ongoing COVID-19 pandemic.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposed continuation of the waiver 
of equipment and related service fees and the applicable monthly 
trading license fee for Trading Floor-based member organizations during 
October 2020 is not unfairly discriminatory because the proposed 
waivers would benefit all similarly-situated market participants on an 
equal and non-discriminatory basis. The Exchange is not proposing to 
waive the Floor-related fees indefinitely, but rather during the period 
that the Trading Floor is not fully open. The proposed fee change is 
designed to ease the financial burden on Trading Floor-based member 
organizations that cannot fully conduct Floor operations.
    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,\20\ 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 changes would encourage the continued participation 
of member organizations on the Exchange by providing certainty and fee 
relief during the unprecedented volatility and market declines caused 
by the continued spread of COVID-19. As a result, the Exchange believes 
that the proposed change furthers the Commission's goal in adopting 
Regulation NMS of fostering integrated competition among orders, which 
promotes ``more efficient pricing of individual stocks for all types of 
orders, large and small.'' \21\
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    \20\ 15 U.S.C. 78f(b)(8).
    \21\ Regulation NMS, 70 FR at 37498-99.
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    Intramarket Competition. The proposed continued waiver of equipment 
and related service fees and the applicable monthly trading license fee 
for Trading Floor-based member organizations during October 2020 is 
designed to reduce monthly costs for those Floor participants whose 
operations continue to be impacted by the spread of COVID-19 despite 
the fact that the Trading Floor has partially reopened. In reducing 
this monthly financial burden, the proposed change would provide a 
degree of certainty and ease the financial burden on Trading Floor-
based member organizations impacted by the temporary closing and 
partial reopening of the Trading Floor. As noted, the proposal would 
apply to all similarly situated member organizations on the same and 
equal terms, who would benefit from the changes on the same basis. 
Accordingly, 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. The 
Exchange believes that the proposed rule change reflects this 
competitive environment because it permits impacted member 
organizations to continue to conduct market-making operations on the 
Exchange and avoid unintended costs of doing business on the Exchange 
while the Trading Floor is not fully open, which could make the 
Exchange a less competitive venue on which to trade as compared to 
other equities markets.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \22\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \23\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \22\ 15 U.S.C. 78s(b)(3)(A).
    \23\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \24\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \24\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSE-2020-81 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2020-81. 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

[[Page 66373]]

Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for website viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE, Washington, DC 20549 on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
the filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change. Persons submitting comments are cautioned that we do 
not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSE-2020-81 and should be submitted on or before November 9, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-23013 Filed 10-16-20; 8:45 am]
BILLING CODE 8011-01-P
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