Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend its Price List To Extend the Waiver of Equipment and Related Service Charges and Trading License Fees, 9546-9549 [2021-02991]

Download as PDF 9546 Federal Register / Vol. 86, No. 29 / Tuesday, February 16, 2021 / Notices more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) and (10) and 17 CFR 200.402(a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and (a)(10), permit consideration of the scheduled matters at the closed meeting. The subject matter of the closed meeting will consist of the following topics: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; Resolution of litigation claims; and Other matters relating to examinations and enforcement proceedings. At times, changes in Commission priorities require alterations in the scheduling of meeting agenda items that may consist of adjudicatory, examination, litigation, or regulatory matters. CONTACT PERSON FOR MORE INFORMATION: For further information; please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551–5400. Dated: February 11, 2021. Vanessa A. Countryman, Secretary. [FR Doc. 2021–03161 Filed 2–11–21; 4:15 pm] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91082; File No. SR–NYSE– 2021–10] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend its Price List To Extend the Waiver of Equipment and Related Service Charges and Trading License Fees khammond on DSKJM1Z7X2PROD with NOTICES February 9, 2021. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 29, 2021, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Sep<11>2014 17:04 Feb 12, 2021 Jkt 253001 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 the waiver of equipment and related service charges and trading license fees for NYSE Trading Floor-based member organizations commencing January 1, 2021 through the earlier of the first full month of a full reopening of the Trading Floor facilities to Floor personnel or March 2021. The Exchange proposes to implement the fee changes effective February 1, 2021. The proposed rule change is available on the Exchange’s website at www.nys e.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 the waiver of equipment and related service charges and trading license fees for NYSE Trading Floor-based member organizations that have been unable to resume their Floor operations to a certain capacity level, as discussed below. The Exchange proposes to implement the fee change effective February 1, 2021. As proposed, the Exchange would continue to waive 50% of the Telephone System charges and Service Charges (except for the internet Equipment Monthly Hosting Fee) and trading license fees for member organizations that meet the waiver criteria set forth in footnotes 11 and 15 of the Price List, respectively, commencing January 1, 2021 through the earlier of the first full month of a full reopening of the Trading Floor facilities to Floor personnel or March 2021. PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 Background Beginning on March 16, 2020, in order to slow the spread of the novel coronavirus (‘‘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.3 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.4 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–19.5 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–19.6 Following this partial reopening of the Trading Floor, the Exchange extended the equipment fee waiver for the months of June 2020 through January 2021.7 The Trading Floor continues to operate with reduced 3 See Press Release, dated March 18, 2020, available here: https://ir.theice.com/press/pressreleases/allcategories/2020/03-18-2020-204202110 [sic]. 4 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 [sic]). See footnote 11 of the Price List. 5 See Trader Update, dated May 14, 2020, available here: https://www.nyse.com/traderupdate/ history#110000251588 [sic]. 6 See Trader Update, dated June 15, 2020, available here: https://www.nyse.com/traderupdate/history#110000272018. 7 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); Securities Exchange Act Release No. 89798 (September 9, 2020), 85 FR 57263 (September 15, 2020) (SR–NYSE–2020–72); Securities Exchange Act Release No. 90161 (October 13, 2020), 85 FR 66370 (October 19, 2020) (SR–NYSE–2020–81); Securities Exchange Act Release No. 90391 (November 10, 2020), 85 FR 73326 (November 17, 2020) (SR–NYSE–2020–92); Securities Exchange Act Release No. 90744 (December 21, 2020), 85 FR 85712 (December 29, 2020) (SR–NYSE–2020–102). E:\FR\FM\16FEN1.SGM 16FEN1 Federal Register / Vol. 86, No. 29 / Tuesday, February 16, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES headcount and additional health and safety precautions.8 Proposed Rule Change In response to the unprecedented events surrounding the spread of COVID–19 in 2020, the Exchange waived certain equipment and related service charges and trading license fees for NYSE Trading Floor-based member organizations through January 2021. Specifically, the Exchange extended the waiver of 50% of the Annual Telephone Line Charge of $400 per phone number; the $129 fee for a single line phone, jack, and data jack; the related service charges ($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); and the monthly portion of all applicable annual fees through January 2021 for member organizations that • meet the current requirements of having 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, and • are unable to operate at more than 50% of their March 2020 on-Floor staffing levels or, for member organizations that began Floor operations after March 2020, are unable to operate at more than 50% of their Exchange-approved on-Floor staffing levels, both excluding part-time Floor brokers known as ‘‘flex brokers’’ (hereinafter, ‘‘Qualifying Firms’’).9 Because the Trading Floor continues to operate with reduced capacity, and in order to further reduce costs for member organizations with a Trading Floor presence, the Exchange proposes to extend the fee waiver for Qualifying Firms commencing January 1, 2021 through the earlier of the first full month of a full reopening of the Trading Floor facilities to Floor personnel or 8 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. 9 See Securities Exchange Act Release No. 90744 (December 21, 2020), 85 FR 85712 (December 29, 2020) (SR–NYSE–2020–102). VerDate Sep<11>2014 17:04 Feb 12, 2021 Jkt 253001 March 2021. The proposed fee change is designed to reduce monthly costs for all Qualifying Firms whose operations continue to be disrupted even though the Trading Floor has partially reopened. The Exchange does not propose any substantive changes to the current waivers set forth in footnotes 11 and 15 of the Price List. The Exchange believes that all Qualifying Firms would benefit from the 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. 9547 systems,15 and numerous broker-dealer internalizers and wholesalers, all competing for order flow. Based on publicly-available information, no single exchange has more than 16% market share.16 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 12%. 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 Qualified Firms commencing January 1, 2021 through 2. Statutory Basis the earlier of the first full month of a full The Exchange believes that the reopening of the Trading Floor facilities proposed rule change is consistent with to Floor personnel or March 2021 is Section 6(b) of the Act,10 in general, and reasonable in light of the continued furthers the objectives of Sections partial closure of the NYSE Trading 6(b)(4) and (5) of the Act,11 in particular, Floor as a result of spread of COVID–19. because it provides for the equitable The proposed change is reasonable allocation of reasonable dues, fees, and because it would extend reduction of other charges among its members, monthly costs for all Qualifying Firms issuers and other persons using its whose operations have been disrupted facilities and does not unfairly despite the fact that the Trading Floor discriminate between customers, has partially reopened because of the issuers, brokers or dealers. social distancing requirements and/or The Exchange operates in a highly other health concerns related to competitive market. The Commission resuming operation on the Trading has repeatedly expressed its preference Floor. In reducing this monthly for competition over regulatory financial burden, the proposed change intervention in determining prices, would allow Qualifying Firms that that products, and services in the securities are unable to operate at more than 50% markets. In Regulation NMS, the of their March 2020 or ExchangeCommission highlighted the importance approved on-Floor staffing levels to of market forces in determining prices reallocate funds to assist with the cost and SRO revenues and, also, recognized of shifting and maintaining their prior that current regulation of the market fully-staffed on-Floor operations to offsystem ‘‘has been remarkably successful Floor and recoup losses resulting from in promoting market competition in its the partial reopening of the Trading broader forms that are most important to Floor. investors and listed companies.’’ 12 The Proposal Is an Equitable Allocation While Regulation NMS has enhanced of Fees competition, it has also fostered a ‘‘fragmented’’ market structure where The Exchange believes the proposed trading in a single stock can occur extension of the waiver of equipment across multiple trading centers. When and related service fees and the multiple trading centers compete for applicable monthly trading license fee order flow in the same stock, the for Qualified Members for the proposed Commission has recognized that ‘‘such time period is an equitable allocation of competition can lead to the fees. The proposed waivers apply to all fragmentation of order flow in that Trading Floor-based firms meeting stock.’’ 13 Indeed, equity trading is specific requirements during the currently dispersed across 16 specified period that the Trading Floor exchanges,14 31 alternative trading 10 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) & (5). 12 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37495, 37499 (June 29, 2005) (S7–10–04) (Final Rule) (‘‘Regulation NMS’’). 13 See Securities Exchange Act Release No. 61358, 75 FR 3594, 3597 (January 21, 2010) (File No. S7– 02–10) (Concept Release on Equity Market Structure). 14 See Cboe Global Markets, U.S. Equities Market Volume Summary, available at https:// 11 15 PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 markets.cboe.com/us/equities/market_share/. See generally https://www.sec.gov/fast-answers/ divisionsmarketregmrexchangesshtml.html. 15 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. 16 See Cboe Global Markets U.S. Equities Market Volume Summary, available at https:// markets.cboe.com/us/equities/market_share/. E:\FR\FM\16FEN1.SGM 16FEN1 9548 Federal Register / Vol. 86, No. 29 / Tuesday, February 16, 2021 / Notices remains partially open. The Exchange believes the proposed rule change is an equitable allocation of its fees and credits as it continues the previous fee waiver for Qualifying Firms, which affects fees charged only to Floor participants and does not apply to participants that conduct business offFloor. The Exchange believes it is an equitable allocation of fees and credits to extend the fee waiver for Qualifying Firms because such firms have no more than half of their Floor staff (as measured by either the March 2020 or Exchange-approved) levels, and this reduction in staffing levels on the Trading Floor impacts the speed, volume and efficiency with which these firms can operate, to their financial detriment. khammond on DSKJM1Z7X2PROD with NOTICES The Proposal Is Not Unfairly Discriminatory The Exchange believes that the proposal is not unfairly discriminatory because the proposed continuation of the fee waiver would affect all similarlysituated market participants on an equal and non-discriminatory basis. The Exchange is not proposing to waive the Trading Floor-related fees indefinitely, but rather during the specified period during which the Trading Floor is not fully open. As noted, 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,17 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 ongoing pandemic. 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.’’ 18 Intramarket Competition. The proposed continued waiver of 17 15 U.S.C. 78f(b)(8). 18 Regulation NMS, 70 FR at 37498–99. VerDate Sep<11>2014 17:04 Feb 12, 2021 Jkt 253001 equipment and related service fees and the applicable monthly trading license fee for Qualified Firms is designed to reduce monthly costs for those Floor participants whose operations continue to be impacted by the COVID–19 pandemic despite the fact that the Trading Floor has partially reopened. In reducing this monthly financial burden, the proposed change would allow Qualifying Firms that had Floor operations in March 2020 to reallocate funds to assist with the cost of shifting and maintaining their previously onFloor operations to off-Floor. Absent this change, all Qualifying Firms may experience an unintended increase in the cost of doing business on the Exchange, given that the Trading Floor has only reopened in a limited capacity. The Exchange believes that the proposed waiver of fees for Qualifying Firms would not impose a disparate burden on competition among market participants on the Exchange because off-Floor market participants are not subject to these Floor-based fixed fees. In addition, Floor-based firms that are not subject to the extent of staffing shortfalls as are Qualifying Firms, i.e., firms that have more than 50% of their March 2020, or Exchange-approved staffing levels on the Trading Floor, do not face the same operational level of disruption and potential financial impact during the 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. As described above, 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. In reducing this monthly financial burden, the proposed change would allow affected participants to reallocate funds to assist with the cost of shifting and PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 maintaining their prior fully-staffed onFloor operations to off-Floor. Absent this change, Qualifying Firms may experience an unintended increase in the cost of doing business on the Exchange, which would make the Exchange a less competitive venue on which to trade as compared to other options exchanges. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) 19 of the Act and subparagraph (f)(2) of Rule 19b–4 20 thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 21 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSE–2021–10 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. 19 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 21 15 U.S.C. 78s(b)(2)(B). 20 17 E:\FR\FM\16FEN1.SGM 16FEN1 Federal Register / Vol. 86, No. 29 / Tuesday, February 16, 2021 / Notices All submissions should refer to File Number SR–NYSE–2021–10. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE–2021–10, and should be submitted on or before March 9, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–02991 Filed 2–12–21; 8:45 am] khammond on DSKJM1Z7X2PROD with NOTICES BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91089; File No. SR– NASDAQ–2021–007] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To Adopt Additional Initial Listing Criteria for Companies Primarily Operating in Jurisdictions That Do Not Provide the PCAOB With the Ability To Inspect Public Accounting Firms February 9, 2021. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 1, 2021, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to adopt additional initial listing criteria for companies primarily operating in jurisdictions that do not currently provide the PCAOB with the ability to inspect public accounting firms. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/nasdaq/rules, 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 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. 1 15 22 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:04 Feb 12, 2021 2 17 Jkt 253001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00073 Fmt 4703 Sfmt 4703 9549 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose As described below, Nasdaq proposes to adopt additional initial listing criteria for companies primarily operating in jurisdictions that do not currently provide the Public Company Accounting Oversight Board (‘‘PCAOB’’) with the ability to inspect public accounting firms.3 Nasdaq rules 4 and federal securities laws 5 require a company’s financial statements included in its initial registration statement or annual report to be audited by an independent public accountant that is registered with the PCAOB. Company management is responsible for preparing the company’s financial statements and for establishing and maintaining disclosure controls and procedures and internal control over financial reporting. The company’s auditor, based on its independent audit of the evidence supporting the amounts and disclosures in the financial statements, expresses an opinion on whether the financial statements present fairly, in all material respects, the company’s financial position, results of operations and cash flows. ‘‘To form an appropriate basis for expressing an opinion on the financial statements, the auditor must plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement due to error or fraud.’’ 6 The auditor, in turn, is normally subject to inspection by the PCAOB, 3 Nasdaq proposed a similar rule change in May 2020, which was withdrawn by Nasdaq on February, 1, 2021. Securities Exchange Act Release No. 89027 (June 8, 2020), 85 FR 35962 (June 12, 2020) (SR–Nasdaq–2020–027). The Commission issued an Order Instituting Proceedings to Determine Whether to Approve or Disapprove this proposal. Securities Exchange Act Release No. 89799 (September 9, 2020), 85 FR 57282 (September 15, 2020). This revised proposal addresses the concerns raised by the Commission in its Order. 4 See Rule 5210(b) (‘‘Each Company applying for initial listing must be audited by an independent public accountant that is registered as a public accounting firm with the Public Company Accounting Oversight Board, as provided for in Section 102 of the Sarbanes-Oxley Act of 2002 [15 U.S.C. 7212].’’) and Rule 5250(c)(3) (‘‘Each listed Company shall be audited by an independent public accountant that is registered as a public accounting firm with the Public Company Accounting Oversight Board, as provided for in Section 102 of the Sarbanes-Oxley Act of 2002 [15 U.S.C. 7212].’’). 5 See Section 4100—Qualifications of Accountants, SEC Financial Reporting Manual (June 30, 2009), available at https://www.sec.gov/ corpfin/cf-manual/topic-4/. 6 See PCAOB Auditing Standard 1101.03—Audit Risk, available at https://pcaobus.org/Standards/ Auditing/Pages/AS1101.aspx. E:\FR\FM\16FEN1.SGM 16FEN1

Agencies

[Federal Register Volume 86, Number 29 (Tuesday, February 16, 2021)]
[Notices]
[Pages 9546-9549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02991]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91082; File No. SR-NYSE-2021-10]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend its Price List To Extend the Waiver of Equipment and Related 
Service Charges and Trading License Fees

February 9, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 29, 2021, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to amend its Price List to extend the waiver 
of equipment and related service charges and trading license fees for 
NYSE Trading Floor-based member organizations commencing January 1, 
2021 through the earlier of the first full month of a full reopening of 
the Trading Floor facilities to Floor personnel or March 2021. The 
Exchange proposes to implement the fee changes effective February 1, 
2021. The proposed rule change is available on the Exchange's website 
at www.nys e.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 the waiver 
of equipment and related service charges and trading license fees for 
NYSE Trading Floor-based member organizations that have been unable to 
resume their Floor operations to a certain capacity level, as discussed 
below. The Exchange proposes to implement the fee change effective 
February 1, 2021.
    As proposed, the Exchange would continue to waive 50% of the 
Telephone System charges and Service Charges (except for the internet 
Equipment Monthly Hosting Fee) and trading license fees for member 
organizations that meet the waiver criteria set forth in footnotes 11 
and 15 of the Price List, respectively, commencing January 1, 2021 
through the earlier of the first full month of a full reopening of the 
Trading Floor facilities to Floor personnel or March 2021.
Background
    Beginning on March 16, 2020, in order to slow the spread of the 
novel coronavirus (``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.\3\ 
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.\4\
---------------------------------------------------------------------------

    \3\ See Press Release, dated March 18, 2020, available here: 
https://ir.theice.com/press/press-releases/allcategories/2020/03-18-2020-204202110 [sic].
    \4\ 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 [sic]). See footnote 11 of the Price List.
---------------------------------------------------------------------------

    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.\5\ 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.\6\ Following this 
partial reopening of the Trading Floor, the Exchange extended the 
equipment fee waiver for the months of June 2020 through January 
2021.\7\ The Trading Floor continues to operate with reduced

[[Page 9547]]

headcount and additional health and safety precautions.\8\
---------------------------------------------------------------------------

    \5\ See Trader Update, dated May 14, 2020, available here: 
https://www.nyse.com/traderupdate/history#110000251588 [sic].
    \6\ See Trader Update, dated June 15, 2020, available here: 
https://www.nyse.com/trader-update/history#110000272018.
    \7\ 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); Securities Exchange Act Release No. 89798 (September 9, 
2020), 85 FR 57263 (September 15, 2020) (SR-NYSE-2020-72); 
Securities Exchange Act Release No. 90161 (October 13, 2020), 85 FR 
66370 (October 19, 2020) (SR-NYSE-2020-81); Securities Exchange Act 
Release No. 90391 (November 10, 2020), 85 FR 73326 (November 17, 
2020) (SR-NYSE-2020-92); Securities Exchange Act Release No. 90744 
(December 21, 2020), 85 FR 85712 (December 29, 2020) (SR-NYSE-2020-
102).
    \8\ 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.
---------------------------------------------------------------------------

Proposed Rule Change
    In response to the unprecedented events surrounding the spread of 
COVID-19 in 2020, the Exchange waived certain equipment and related 
service charges and trading license fees for NYSE Trading Floor-based 
member organizations through January 2021. Specifically, the Exchange 
extended the waiver of 50% of the Annual Telephone Line Charge of $400 
per phone number; the $129 fee for a single line phone, jack, and data 
jack; the related service charges ($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); and the 
monthly portion of all applicable annual fees through January 2021 for 
member organizations that
     meet the current requirements of having 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, and
     are unable to operate at more than 50% of their March 2020 
on-Floor staffing levels or, for member organizations that began Floor 
operations after March 2020, are unable to operate at more than 50% of 
their Exchange-approved on-Floor staffing levels, both excluding part-
time Floor brokers known as ``flex brokers'' (hereinafter, ``Qualifying 
Firms'').\9\
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 90744 (December 21, 
2020), 85 FR 85712 (December 29, 2020) (SR-NYSE-2020-102).
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    Because the Trading Floor continues to operate with reduced 
capacity, and in order to further reduce costs for member organizations 
with a Trading Floor presence, the Exchange proposes to extend the fee 
waiver for Qualifying Firms commencing January 1, 2021 through the 
earlier of the first full month of a full reopening of the Trading 
Floor facilities to Floor personnel or March 2021. The proposed fee 
change is designed to reduce monthly costs for all Qualifying Firms 
whose operations continue to be disrupted even though the Trading Floor 
has partially reopened. The Exchange does not propose any substantive 
changes to the current waivers set forth in footnotes 11 and 15 of the 
Price List. The Exchange believes that all Qualifying Firms would 
benefit from the 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,\10\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\11\ 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 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.'' \12\
---------------------------------------------------------------------------

    \12\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule) 
(``Regulation NMS'').
---------------------------------------------------------------------------

    While Regulation NMS has enhanced competition, it has also fostered 
a ``fragmented'' market structure where trading in a single stock can 
occur across multiple trading centers. When multiple trading centers 
compete for order flow in the same stock, the Commission has recognized 
that ``such competition can lead to the fragmentation of order flow in 
that stock.'' \13\ Indeed, equity trading is currently dispersed across 
16 exchanges,\14\ 31 alternative trading systems,\15\ and numerous 
broker-dealer internalizers and wholesalers, all competing for order 
flow. Based on publicly-available information, no single exchange has 
more than 16% market share.\16\ 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 12%.
---------------------------------------------------------------------------

    \13\ See Securities Exchange Act Release No. 61358, 75 FR 3594, 
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on 
Equity Market Structure).
    \14\ 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.
    \15\ 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.
    \16\ See Cboe Global Markets U.S. Equities Market Volume 
Summary, available at https://markets.cboe.com/us/equities/market_share/.
---------------------------------------------------------------------------

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 
Qualified Firms commencing January 1, 2021 through the earlier of the 
first full month of a full reopening of the Trading Floor facilities to 
Floor personnel or March 2021 is reasonable in light of the continued 
partial closure of the NYSE Trading Floor as a result of spread of 
COVID-19. The proposed change is reasonable because it would extend 
reduction of monthly costs for all Qualifying Firms whose operations 
have been disrupted despite the fact that the Trading Floor has 
partially reopened because of the social distancing requirements and/or 
other health concerns related to resuming operation on the Trading 
Floor. In reducing this monthly financial burden, the proposed change 
would allow Qualifying Firms that that are unable to operate at more 
than 50% of their March 2020 or Exchange-approved on-Floor staffing 
levels to reallocate funds to assist with the cost of shifting and 
maintaining their prior fully-staffed on-Floor operations to off-Floor 
and recoup losses resulting from the partial reopening of the Trading 
Floor.
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 Qualified Members for the proposed time period is an 
equitable allocation of fees. The proposed waivers apply to all Trading 
Floor-based firms meeting specific requirements during the specified 
period that the Trading Floor

[[Page 9548]]

remains partially open. The Exchange believes the proposed rule change 
is an equitable allocation of its fees and credits as it continues the 
previous fee waiver for Qualifying Firms, which affects fees charged 
only to Floor participants and does not apply to participants that 
conduct business off-Floor. The Exchange believes it is an equitable 
allocation of fees and credits to extend the fee waiver for Qualifying 
Firms because such firms have no more than half of their Floor staff 
(as measured by either the March 2020 or Exchange-approved) levels, and 
this reduction in staffing levels on the Trading Floor impacts the 
speed, volume and efficiency with which these firms can operate, to 
their financial detriment.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory because the proposed continuation of the fee waiver 
would affect all similarly-situated market participants on an equal and 
non-discriminatory basis. The Exchange is not proposing to waive the 
Trading Floor-related fees indefinitely, but rather during the 
specified period during which the Trading Floor is not fully open. As 
noted, 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,\17\ 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 ongoing pandemic. 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.'' \18\
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b)(8).
    \18\ Regulation NMS, 70 FR at 37498-99.
---------------------------------------------------------------------------

    Intramarket Competition. The proposed continued waiver of equipment 
and related service fees and the applicable monthly trading license fee 
for Qualified Firms is designed to reduce monthly costs for those Floor 
participants whose operations continue to be impacted by the COVID-19 
pandemic despite the fact that the Trading Floor has partially 
reopened. In reducing this monthly financial burden, the proposed 
change would allow Qualifying Firms that had Floor operations in March 
2020 to reallocate funds to assist with the cost of shifting and 
maintaining their previously on-Floor operations to off-Floor. Absent 
this change, all Qualifying Firms may experience an unintended increase 
in the cost of doing business on the Exchange, given that the Trading 
Floor has only reopened in a limited capacity. The Exchange believes 
that the proposed waiver of fees for Qualifying Firms would not impose 
a disparate burden on competition among market participants on the 
Exchange because off-Floor market participants are not subject to these 
Floor-based fixed fees. In addition, Floor-based firms that are not 
subject to the extent of staffing shortfalls as are Qualifying Firms, 
i.e., firms that have more than 50% of their March 2020, or Exchange-
approved staffing levels on the Trading Floor, do not face the same 
operational level of disruption and potential financial impact during 
the 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. As described above, 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. In reducing this monthly financial burden, the 
proposed change would allow affected participants to reallocate funds 
to assist with the cost of shifting and maintaining their prior fully-
staffed on-Floor operations to off-Floor. Absent this change, 
Qualifying Firms may experience an unintended increase in the cost of 
doing business on the Exchange, which would make the Exchange a less 
competitive venue on which to trade as compared to other options 
exchanges.

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

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

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \19\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \20\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 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) \21\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \21\ 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-NYSE-2021-10 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.


[[Page 9549]]


All submissions should refer to File Number SR-NYSE-2021-10. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSE-2021-10, and should be submitted on 
or before March 9, 2021.
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-02991 Filed 2-12-21; 8:45 am]
BILLING CODE 8011-01-P
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