Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Equities Fees and Charges, 11027-11031 [2021-03547]

Download as PDF Federal Register / Vol. 86, No. 34 / Tuesday, February 23, 2021 / Notices believes that a waiver of the operative delay is consistent with the protection of investors and the public interest because the proposal was published previously for a substantial period time for public comment and no comments were received on the proposal, and because a waiver will allow the proposed rules to become effective in time for the Exchange to implement its related technological changes. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.19 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) 20 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–2021–13 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. Exchange Act Release No. 90363 (Nov. 5, 2020), 85 FR 71964 (Nov. 12, 2020). The comment period for SR–NYSE–2020–89 was extended to February 10, 2021. See Securities Exchange Act Release No. 90726 (Dec. 18, 2020), 85 FR 84431 (Dec. 28, 2020). The Exchange amended SR–NYSE–2020–89 on February 5, 2021 to remove the proposal from that filing, see Securities Exchange Act Release No. 91095 (Feb. 10, 2021), 86 FR 9978 (Feb. 17, 2021), and then subsequently filed the proposal as SR– NYSE–2021–13 on February 13, 2021. The Commission notes that it received no comments on the proposal under SR–NYSE–2020–89. 19 For purposes only of accelerating the operative date of this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 20 15 U.S.C. 78s(b)(2)(B). VerDate Sep<11>2014 18:36 Feb 22, 2021 Jkt 253001 All submissions should refer to File Number SR–NYSE–2021–13. 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–2021–13 and should be submitted on or before March 16, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–03545 Filed 2–22–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91147; File No. SR– NYSEARCA–2021–12] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Equities Fees and Charges February 17, 2021. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b 4 thereunder,3 notice is hereby given that, on February 10, 2021, NYSE Arca, Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE Arca Equities Fees and Charges (‘‘Fee Schedule’’) to adopt a new pricing tier, Tape B Tier 3, and make nonsubstantive changes to the Fee Schedule. The Exchange proposes to implement the fee changes effective February 10, 2021. 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 adopt a new pricing tier, Tape B Tier 3, and make non-substantive changes to the Fee Schedule. The proposed change to adopt a new pricing tier responds to the current competitive environment where order flow providers have a choice of where to direct liquidity-providing orders by offering further incentives for ETP 21 17 2 15 1 15 3 17 PO 00000 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). Frm 00109 Fmt 4703 Sfmt 4703 11027 E:\FR\FM\23FEN1.SGM U.S.C. 78a. CFR 240.19b–4. 23FEN1 11028 Federal Register / Vol. 86, No. 34 / Tuesday, February 23, 2021 / Notices Holders 4 to send additional liquidity to the Exchange. The Exchange proposes to implement the fee changes effective February 10, 2021.5 Background 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.’’ 6 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.’’ 7 Indeed, equity trading is currently dispersed across 16 exchanges,8 numerous alternative trading systems,9 and broker-dealer internalizers and wholesalers, all competing for order flow. Based on publicly-available information, no single exchange currently has more than 18% market share.10 Therefore, no exchange possesses significant pricing power in the execution of equity order flow. More specifically, the Exchange currently has less than 10% market 4 All references to ETP Holders in connection with this proposed fee change include Market Makers. 5 The Exchange originally filed to amend the Fee Schedule on February 1, 2021 (SR–NYSEArca– 2021–10). SR–NYSEArca–2021–10 was subsequently withdrawn and replaced by this filing. 6 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7–10–04) (Final Rule) (‘‘Regulation NMS’’). 7 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). 8 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. 9 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. 10 See Cboe Global Markets, U.S. Equities Market Volume Summary, available at https:// markets.cboe.com/us/equities/market_share/. VerDate Sep<11>2014 18:36 Feb 22, 2021 Jkt 253001 share of executed volume of equities trading.11 The Exchange believes that the evershifting market share among the exchanges from month to month demonstrates that market participants can move order flow, or discontinue or reduce use of certain categories of products. While it is not possible to know a firm’s reason for shifting order flow, the Exchange believes that one such reason is because of fee changes at any of the registered exchanges or nonexchange venues to which a firm routes order flow. With respect to nonmarketable order flow that would provide liquidity on an Exchange against which market makers can quote, ETP Holders can choose from any one of the 16 currently operating registered exchanges to route such order flow. Accordingly, competitive forces constrain exchange transaction fees that relate to orders that would provide liquidity on an exchange. Proposed Rule Change Tape B Tier 3 The Exchange proposes to introduce a new pricing tier—Tape B Tier 3—for securities with a per share price of $1.00 and above. The proposed rule change is designed to be available to ETP Holders that are affiliated with an OTP Holder or OTP Firm that has a market maker account on the Exchange’s options platform (‘‘NYSE Arca Options’’) and is intended to provide such ETP Holders with an incentive to direct their liquidity-providing orders in Tape B securities to the Exchange. As proposed, ETP Holders would qualify for the new Tape B Tier 3 pricing tier if, on a daily basis, measured monthly, they directly execute providing volume in Tape B Securities during the billing month that is equal to 0.20% or more of the US consolidated average daily volume (‘‘US CADV’’) 12 in Tape B Securities and are affiliated with an OTP Holder or OTP Firm that provides an ADV of electronic posted executions for the account of a market maker in all issues on NYSE Arca Options of at least 0.50% of total Customer equity and ETF option ADV as reported by The Options Clearing Corporation (‘‘OCC’’). ETP Holders that 11 See id. CADV means the United States Consolidated Average Daily Volume for transactions reported to the Consolidated Tape, excluding odd lots through January 31, 2014 (except for purposes of Lead Market Maker pricing), and excludes volume on days when the market closes early and on the date of the annual reconstitution of the Russell Investments Indexes. Transactions that are not reported to the Consolidated Tape are not included in US CADV. See Fee Schedule, footnote 3. 12 US PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 qualify for the proposed Tape B Tier 3 would receive a credit of $0.0025 per share for orders that provide liquidity in Tape B securities. As with the current Tape B Tier 1 and Tape B Tier 2 pricing tiers, Lead Market Makers (‘‘LMMs’’) cannot qualify for the proposed Tape B Tier 3 pricing tier. For all other fees and credits, tiered or basic rates would apply based on a firm’s qualifying levels. The purpose of this proposed rule change is to incentivize ETP Holders to increase the liquidity-providing orders they send to the Exchange, which would support the quality of price discovery on the Exchange and provide additional liquidity for incoming orders. The Exchange believes that the proposal would create an added incentive for ETP Holders to bring additional order flow to a public market. The Exchange further believes that providing credits to ETP Holders that are affiliated with an OTP Holder or OTP Firm could lead to increased trading on the Exchange’s equities and options markets.13 The Exchange believes that the proposed pricing tier would provide an incentive for a greater number of ETP Holders to send additional liquidity to the Exchange in order to qualify for the proposed new credit because, although the proposed pricing tier has a requirement of a minimum of options volume, it also requires an ETP Holder to provide liquidity in Tape B securities at a level below the requirement under both the Tape B Tier 1 and Tape B Tier 2 pricing tiers.14 The Exchange believes that this proposed change will provide a greater incentive to attract additional liquidity from additional ETP Holders so as to qualify for the Tape B Tier 3 credit. The Exchange anticipates a small number of ETP Holders could qualify for Tape B Tier 3 if they choose to route their orders to the Exchange. The Exchange does not know how much order flow ETP Holders choose to route to other exchanges or to off-exchange venues. Without having a view of ETP Holders’ activity on other exchanges and offexchange venues, the Exchange has no way of knowing whether this proposed rule change would result in any ETP Holder directing orders to the Exchange 13 There are currently 54 firms that are both ETP Holders and OTP Holders. 14 For example, Tape B Tier 1 requires ETP Holders to execute providing volume in Tape B Securities that is equal to at least 1.50% of US Tape B CADV. While Tape B Tier 2 provides ETP Holders multiple ways to earn Tape B Tier 2 credit, at a minimum, ETP Holders must execute providing volume equal to at least 0.20% of the US Tape B CADV over the ETP Holder’s baseline, which for Tape B Tier 2 is the ETP Holder’s Q2 2015 providing ADV. E:\FR\FM\23FEN1.SGM 23FEN1 Federal Register / Vol. 86, No. 34 / Tuesday, February 23, 2021 / Notices in order to qualify for the proposed new pricing tier. Non-Substantive Change The Exchange proposes to make a non-substantive change by deleting the words ‘‘to the Book,’’ ‘‘from the Book,’’ and ‘‘outside the Book’’ from the Fee Schedule. Specifically, in the context of a credit provided by the Exchange, a fee charged by the Exchange, or routing fees charged by the Exchange, the Fee Schedule currently utilizes the words ‘‘to the Book,’’ ‘‘from the Book,’’ and ‘‘outside the Book,’’ respectively. The Exchange believes these phrases are superfluous. ETP Holders understand that when they provide liquidity, they provide it ‘‘to the Book.’’ And when they take liquidity, they take it ‘‘from the Book.’’ Similarly, when their orders are routed, they are routed ‘‘outside the Book.’’ Therefore, the Exchange proposes to delete these three phrases from the Fee Schedule. The Exchange believes this non-substantive change would streamline the Fee Schedule and promote clarity. The proposed changes are not otherwise intended to address any other issues, and the Exchange is not aware of any significant problems that market participants would have in complying with the proposed changes. broader forms that are most important to investors and listed companies.’’ 17 The Exchange believes that the evershifting market share among the exchanges from month to month demonstrates that market participants can shift order flow, or discontinue to reduce use of certain categories of products, in response to fee changes. With respect to non-marketable orders that provide liquidity on an Exchange, ETP Holders can choose from any one of the 16 currently operating registered exchanges to route such order flow. Accordingly, competitive forces reasonably constrain exchange transaction fees that relate to orders that would provide liquidity on an exchange. Stated otherwise, changes to exchange transaction fees can have a direct effect on the ability of an exchange to compete for order flow. Tape B Tier 3 Given this competitive environment, the proposed rule change represents a reasonable attempt to attract additional order flow to the Exchange. In particular, the Exchange believes the proposed introduction of the Tape B Tier 3 pricing tier is reasonable because it provides ETP Holders affiliated with an OTP Holder or OTP Firm that has a market maker account on NYSE Arca Options with an opportunity to qualify for the Tape B Tier 3 credit through 2. Statutory Basis equity and options orders. The The Exchange believes that the Exchange believes that the proposed proposed rule change is consistent with pricing tier utilizing a lower equity Section 6(b) of the Act,15 in general, and adding volume requirement coupled furthers the objectives of Sections with a minimum options volume 6(b)(4) and (5) of the Act,16 in particular, requirement is reasonable because the because it provides for the equitable proposal provides firms with greater allocation of reasonable dues, fees, and flexibility to reach volume tiers across other charges among its members, asset classes, thereby creating an added issuers and other persons using its incentive for ETP Holders affiliated with facilities and does not unfairly an OTP Holder or OTP Firm that has a discriminate between customers, market maker account on NYSE Arca issuers, brokers or dealers. Options to bring additional order flow The Proposed Fee Change Is Reasonable to a public exchange, consequently encouraging greater participation and As discussed above, the Exchange liquidity. operates in a highly fragmented and The Exchange notes that volumecompetitive market. The Commission based incentives and discounts have has repeatedly expressed its preference been widely adopted by exchanges, for competition over regulatory including the Exchange. They also intervention in determining prices, provide additional benefits or discounts products, and services in the securities that are reasonably related to the value markets. Specifically, in Regulation of the Exchange’s market quality and NMS, the Commission highlighted the associated higher levels of market importance of market forces in activity, such as higher levels of determining prices and SRO revenues liquidity provision and/or growth and, also, recognized that current patterns. Additionally, as noted above, regulation of the market system ‘‘has the Exchange operates in a highly been remarkably successful in competitive market. The Exchange is promoting market competition in its one of many venues and off-exchange venues to which market participants 15 15 16 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). VerDate Sep<11>2014 18:36 Feb 22, 2021 17 See Jkt 253001 PO 00000 Regulation NMS, 70 FR at 37499. Frm 00111 Fmt 4703 Sfmt 4703 11029 may direct their order flow, and it represents a small percentage of the overall market. Competing exchanges offer similar tiered pricing structures to that of the Exchange, including schedules of rebates and fees that apply based on members achieving certain volume thresholds across asset classes. Moreover, the Exchange believes the proposed pricing tier is a reasonable means to encourage ETP Holders affiliated with an OTP Holder or OTP Firm that has a market maker account on NYSE Arca Options to increase their liquidity on the Exchange and their participation on NYSE Arca Options. The Exchange believes adopting the proposed pricing tier may encourage those ETP Holders who could not previously achieve the requirements to qualify for Tape B credits to increase their order flow on both the Exchange and on NYSE Arca Options. Increased liquidity benefits all investors by deepening the Exchange’s liquidity pool, offering additional flexibility for all investors to enjoy cost savings, supporting the quality of price discovery, promoting market transparency and improving investor protection. Non-Substantive Change The Exchange believes that the proposed rule change to delete the phrases ‘‘to the Book,’’ ‘‘from the Book,’’ and ‘‘outside the Book’’ from the Fee Schedule is reasonable because each of the phrases are superfluous and extraneous. As noted above, ETP Holders understand that when they provide liquidity, they provide it ‘‘to the Book,’’ when they take liquidity, they take it ‘‘from the Book,’’ and when their orders are routed, they are routed ‘‘outside the Book.’’ The Exchange believes it is reasonable to delete these phrases in an effort to streamline the Fee Schedule. The Exchange believes deleting these phrases would also promote clarity to the Fee Schedule and simplify the Fee Schedule. The Proposed Fee Change Is an Equitable Allocation of Fees and Credits Tape B Tier 3 The Exchange believes the proposed rule change to adopt a new pricing tier equitably allocates its fees and credits among market participants because it is reasonably related to the value of the Exchange’s market quality associated with higher equities and options volume. The proposed pricing tier would be available to ETP Holders that are affiliated with OTP Holders or OTP Firms that have a market maker account E:\FR\FM\23FEN1.SGM 23FEN1 11030 Federal Register / Vol. 86, No. 34 / Tuesday, February 23, 2021 / Notices on NYSE Arca Options. A number of ETP Holders have a reasonable opportunity to satisfy the tier’s criteria.18 The Exchange does not know how much order flow ETP Holders choose to route to other exchanges or to off-exchange venues. Without having a view of an ETP Holder’s activity on other markets and off-exchange venues, the Exchange has no way of knowing whether this proposed rule change would result in any ETP Holder affiliated with an OTP Holder or OTP Firm that has a market maker account on NYSE Arca Options to increase participation in the Exchange’s equities and options markets to qualify for the proposed Tape B Tier 3 credit. The Exchange believes the proposed pricing tier could provide an incentive for other ETP Holders that are affiliated with an OTP Holder or OTP Firm that has a market maker account on NYSE Arca Options to submit additional liquidity on the Exchange and on NYSE Arca Options to qualify for the Tape B Tier 3 credit. To the extent that such participants direct significant order flow to the Exchange’s equities and options markets, the Exchange believes such participants should receive the credit proposed by the new pricing tier. To the extent an ETP Holder participates on the Exchange but not on NYSE Arca Options, the Exchange believes that the proposal is still reasonable, equitable and not unfairly discriminatory with respect to such ETP Holder based on the overall benefit to the Exchange resulting from the success of NYSE Arca Options. In particular, such success would allow the Exchange to continue to provide and potentially expand its existing incentive programs to the benefit of all participants on the Exchange, whether they participate on NYSE Arca Options or not. While the proposal is intended to incentivize ETP Holders that are affiliated with an OTP Holder or OTP Firm that has a market maker account on NYSE Arca Options, ETP Holders that do not meet the criteria for the proposed tier can still qualify for credits available under the other Tape B pricing tiers which do not require it to have any affiliation with an OTP Holder or OTP Firm and conduct options trading on NYSE Arca Options. would continue to apply to ETP Holders as it does currently because the Exchange is not adopting any new fees or credits or removing any current fees or credits from the Fee Schedule. All ETP Holders would continue to be subject to the same fees and credits that currently apply to them. Non-Substantive Change The Exchange believes that the proposed rule change to delete the phrases ‘‘to the Book,’’ ‘‘from the Book,’’ and ‘‘outside the Book’’ from the Fee Schedule is equitable because the resulting streamlined Fee Schedule Non-Substantive Change 18 See supra note 13. VerDate Sep<11>2014 18:36 Feb 22, 2021 Jkt 253001 The Proposed Fee Change Is Not Unfairly Discriminatory Tape B Tier 3 The Exchange believes that the proposal is not unfairly discriminatory. In the prevailing competitive environment, ETP Holders are free to disfavor the Exchange’s pricing if they believe that alternatives offer them better value. The Exchange believes it is not unfairly discriminatory to adopt the Tape B Tier 3 pricing tier as it would be available on an equal basis to ETP Holders that are affiliated with an OTP Holder or OTP Firm that has a market maker account on NYSE Arca Options that meet the requirement of the proposed Tape B Tier 3 pricing tier. Further, the Exchange believes the proposed pricing tier would incentivize such ETP Holders to send their options orders to the Exchange to qualify for the proposed new credit. The Exchange believes that, to the extent that ETP Holders affiliated with an OTP Holder or OTP Firm that has a market maker account on NYSE Arca Options, direct significant order flow to the Exchange’s equities and options markets, such participants should receive the credit proposed by the new pricing tier. The Exchange also believes that the proposed change is not unfairly discriminatory because it is reasonably related to the value to the Exchange’s market quality associated with higher volume. The proposed rule change is intended to incentivize ETP Holders that are affiliated with an OTP Holder or OTP Firm that has a market maker account on NYSE Arca Options. As such, it does not permit unfair discrimination because the requirement to qualify for the new pricing tier would be applied to all similarly situated ETP Holders, who would all be eligible for the same credit on an equal basis. The Exchange believes that the proposed rule change to delete the phrases ‘‘to the Book,’’ ‘‘from the Book,’’ and ‘‘outside the Book’’ from the Fee Schedule is not unfairly discriminatory because the resulting streamlined Fee Schedule would continue to apply to ETP Holders as it does currently PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 because the Exchange is not adopting any new fees or credits or removing any current fees or credits from the Fee Schedule. All ETP Holders would continue to be subject to the same fees and credits that currently apply to them. Finally, the submission of orders to the Exchange is optional for ETP Holders in that they could choose whether to submit orders to the Exchange and, if they do, the extent of its activity in this regard. The Exchange believes that it is subject to significant competitive forces, as described below in the Exchange’s statement regarding the burden on competition. For the foregoing reasons, the Exchange believes that the proposal is consistent with the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,19 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 submission of additional liquidity to a public exchange, thereby promoting market depth, price discovery and transparency and enhancing order execution opportunities for ETP Holders. As a result, the Exchange believes that the proposed change furthers the Commission’s goal in adopting Regulation NMS of fostering integrated competition among orders, which promotes ‘‘more efficient pricing of individual stocks for all types of orders, large and small.’’ 20 Intramarket Competition. The proposed change is designed to attract additional equities and options order flow to the Exchange. The Exchange believes that the proposed introduction of the Tape B Tier 3 pricing tier would incentivize market participants to direct providing order flow to the Exchange and greater participation on NYSE Arca Options. Greater liquidity benefits all market participants on the Exchange by providing more trading opportunities and encourages ETP Holders affiliated with an OTP Holder or OTP Firm that has a market maker account on NYSE Arca Options to send orders to the Exchange, thereby contributing to robust levels of liquidity, which benefits all market participants. The proposed volume requirement would be applicable to all similarly-situated market participants, and, as such, the 19 15 U.S.C. 78f(b)(8). Regulation NMS, 70 FR at 37498–99. 20 See E:\FR\FM\23FEN1.SGM 23FEN1 Federal Register / Vol. 86, No. 34 / Tuesday, February 23, 2021 / Notices proposed change would not impose a disparate burden on competition among market participants on the Exchange. As such, the Exchange believes the proposed new pricing tier would not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe the proposed rule change places a burden on competition among participants that are not affiliated with an OTP Holder or OTP Firm with a market maker account on NYSE Arca Options because such participants can avail themselves to credits available under other Tape B pricing tiers that do not require participation on NYSE Arca Options. Additionally, the Exchange’s proposal to delete the phrases ‘‘to the Book,’’ ‘‘from the Book,’’ and ‘‘outside the Book’’ from the Fee Schedule will not place any undue burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed change does not impact any fees charged or credits provided by the Exchange. All ETP Holders would continue to be subject to the same fees and credits that currently apply to them. 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. As noted above, the Exchange’s market share of intraday trading (i.e., excluding auctions) is currently less than 10%. In such an environment, the Exchange must continually adjust its fees and rebates to remain competitive with other exchanges and with off-exchange venues. Because competitors are free to modify their own fees and credits in response, and because market participants may readily adjust their order routing practices, the Exchange does not believe its proposed fee change can impose any burden on intermarket competition. The Exchange believes that the proposed rule change could promote competition between the Exchange and other execution venues, including those that currently offer similar order types and comparable transaction pricing, by encouraging additional orders to be sent to the Exchange for execution. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) 21 of the Act and subparagraph (f)(2) of Rule 19b–4 22 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) 23 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– NYSEARCA–2021–12 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–NYSEARCA–2021–12 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 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 23 15 U.S.C. 78s(b)(2)(B). VerDate Sep<11>2014 18:36 Feb 22, 2021 Jkt 253001 internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSEARCA–2021–12 and should be submitted on or before March 16, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.24 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–03547 Filed 2–22–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91142; File No. SR–Phlx– 2021–08] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 3304 February 17, 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 4, 2021, Nasdaq PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit 21 15 24 17 22 17 1 15 PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 11031 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. E:\FR\FM\23FEN1.SGM 23FEN1

Agencies

[Federal Register Volume 86, Number 34 (Tuesday, February 23, 2021)]
[Notices]
[Pages 11027-11031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-03547]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91147; File No. SR-NYSEARCA-2021-12]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Arca Equities Fees and Charges

February 17, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b 4 thereunder,\3\ notice is hereby given 
that, on February 10, 2021, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``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.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend the NYSE Arca Equities Fees and 
Charges (``Fee Schedule'') to adopt a new pricing tier, Tape B Tier 3, 
and make non-substantive changes to the Fee Schedule. The Exchange 
proposes to implement the fee changes effective February 10, 2021. 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 adopt a new pricing tier, Tape B Tier 3, 
and make non-substantive changes to the Fee Schedule.
    The proposed change to adopt a new pricing tier responds to the 
current competitive environment where order flow providers have a 
choice of where to direct liquidity-providing orders by offering 
further incentives for ETP

[[Page 11028]]

Holders \4\ to send additional liquidity to the Exchange.
---------------------------------------------------------------------------

    \4\ All references to ETP Holders in connection with this 
proposed fee change include Market Makers.
---------------------------------------------------------------------------

    The Exchange proposes to implement the fee changes effective 
February 10, 2021.\5\
---------------------------------------------------------------------------

    \5\ The Exchange originally filed to amend the Fee Schedule on 
February 1, 2021 (SR-NYSEArca-2021-10). SR-NYSEArca-2021-10 was 
subsequently withdrawn and replaced by this filing.
---------------------------------------------------------------------------

Background
    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.'' \6\
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    \6\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (File No. 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.'' \7\ Indeed, equity trading is currently dispersed across 
16 exchanges,\8\ numerous alternative trading systems,\9\ and broker-
dealer internalizers and wholesalers, all competing for order flow. 
Based on publicly-available information, no single exchange currently 
has more than 18% market share.\10\ Therefore, no exchange possesses 
significant pricing power in the execution of equity order flow. More 
specifically, the Exchange currently has less than 10% market share of 
executed volume of equities trading.\11\
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    \7\ 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).
    \8\ 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.
    \9\ 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.
    \10\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at https://markets.cboe.com/us/equities/market_share/.
    \11\ See id.
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
move order flow, or discontinue or reduce use of certain categories of 
products. While it is not possible to know a firm's reason for shifting 
order flow, the Exchange believes that one such reason is because of 
fee changes at any of the registered exchanges or non-exchange venues 
to which a firm routes order flow. With respect to non-marketable order 
flow that would provide liquidity on an Exchange against which market 
makers can quote, ETP Holders can choose from any one of the 16 
currently operating registered exchanges to route such order flow. 
Accordingly, competitive forces constrain exchange transaction fees 
that relate to orders that would provide liquidity on an exchange.
Proposed Rule Change
Tape B Tier 3
    The Exchange proposes to introduce a new pricing tier--Tape B Tier 
3--for securities with a per share price of $1.00 and above. The 
proposed rule change is designed to be available to ETP Holders that 
are affiliated with an OTP Holder or OTP Firm that has a market maker 
account on the Exchange's options platform (``NYSE Arca Options'') and 
is intended to provide such ETP Holders with an incentive to direct 
their liquidity-providing orders in Tape B securities to the Exchange.
    As proposed, ETP Holders would qualify for the new Tape B Tier 3 
pricing tier if, on a daily basis, measured monthly, they directly 
execute providing volume in Tape B Securities during the billing month 
that is equal to 0.20% or more of the US consolidated average daily 
volume (``US CADV'') \12\ in Tape B Securities and are affiliated with 
an OTP Holder or OTP Firm that provides an ADV of electronic posted 
executions for the account of a market maker in all issues on NYSE Arca 
Options of at least 0.50% of total Customer equity and ETF option ADV 
as reported by The Options Clearing Corporation (``OCC''). ETP Holders 
that qualify for the proposed Tape B Tier 3 would receive a credit of 
$0.0025 per share for orders that provide liquidity in Tape B 
securities.
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    \12\ US CADV means the United States Consolidated Average Daily 
Volume for transactions reported to the Consolidated Tape, excluding 
odd lots through January 31, 2014 (except for purposes of Lead 
Market Maker pricing), and excludes volume on days when the market 
closes early and on the date of the annual reconstitution of the 
Russell Investments Indexes. Transactions that are not reported to 
the Consolidated Tape are not included in US CADV. See Fee Schedule, 
footnote 3.
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    As with the current Tape B Tier 1 and Tape B Tier 2 pricing tiers, 
Lead Market Makers (``LMMs'') cannot qualify for the proposed Tape B 
Tier 3 pricing tier. For all other fees and credits, tiered or basic 
rates would apply based on a firm's qualifying levels.
    The purpose of this proposed rule change is to incentivize ETP 
Holders to increase the liquidity-providing orders they send to the 
Exchange, which would support the quality of price discovery on the 
Exchange and provide additional liquidity for incoming orders. The 
Exchange believes that the proposal would create an added incentive for 
ETP Holders to bring additional order flow to a public market. The 
Exchange further believes that providing credits to ETP Holders that 
are affiliated with an OTP Holder or OTP Firm could lead to increased 
trading on the Exchange's equities and options markets.\13\
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    \13\ There are currently 54 firms that are both ETP Holders and 
OTP Holders.
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    The Exchange believes that the proposed pricing tier would provide 
an incentive for a greater number of ETP Holders to send additional 
liquidity to the Exchange in order to qualify for the proposed new 
credit because, although the proposed pricing tier has a requirement of 
a minimum of options volume, it also requires an ETP Holder to provide 
liquidity in Tape B securities at a level below the requirement under 
both the Tape B Tier 1 and Tape B Tier 2 pricing tiers.\14\
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    \14\ For example, Tape B Tier 1 requires ETP Holders to execute 
providing volume in Tape B Securities that is equal to at least 
1.50% of US Tape B CADV. While Tape B Tier 2 provides ETP Holders 
multiple ways to earn Tape B Tier 2 credit, at a minimum, ETP 
Holders must execute providing volume equal to at least 0.20% of the 
US Tape B CADV over the ETP Holder's baseline, which for Tape B Tier 
2 is the ETP Holder's Q2 2015 providing ADV.
---------------------------------------------------------------------------

    The Exchange believes that this proposed change will provide a 
greater incentive to attract additional liquidity from additional ETP 
Holders so as to qualify for the Tape B Tier 3 credit. The Exchange 
anticipates a small number of ETP Holders could qualify for Tape B Tier 
3 if they choose to route their orders to the Exchange. The Exchange 
does not know how much order flow ETP Holders choose to route to other 
exchanges or to off-exchange venues. Without having a view of ETP 
Holders' activity on other exchanges and off-exchange venues, the 
Exchange has no way of knowing whether this proposed rule change would 
result in any ETP Holder directing orders to the Exchange

[[Page 11029]]

in order to qualify for the proposed new pricing tier.
Non-Substantive Change
    The Exchange proposes to make a non-substantive change by deleting 
the words ``to the Book,'' ``from the Book,'' and ``outside the Book'' 
from the Fee Schedule. Specifically, in the context of a credit 
provided by the Exchange, a fee charged by the Exchange, or routing 
fees charged by the Exchange, the Fee Schedule currently utilizes the 
words ``to the Book,'' ``from the Book,'' and ``outside the Book,'' 
respectively. The Exchange believes these phrases are superfluous. ETP 
Holders understand that when they provide liquidity, they provide it 
``to the Book.'' And when they take liquidity, they take it ``from the 
Book.'' Similarly, when their orders are routed, they are routed 
``outside the Book.'' Therefore, the Exchange proposes to delete these 
three phrases from the Fee Schedule. The Exchange believes this non-
substantive change would streamline the Fee Schedule and promote 
clarity.
    The proposed changes are not otherwise intended to address any 
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,\15\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\16\ 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.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

The Proposed Fee Change Is Reasonable
    As discussed above, the Exchange operates in a highly fragmented 
and competitive market. The Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \17\
---------------------------------------------------------------------------

    \17\ See Regulation NMS, 70 FR at 37499.
---------------------------------------------------------------------------

    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow, or discontinue to reduce use of certain categories of 
products, in response to fee changes. With respect to non-marketable 
orders that provide liquidity on an Exchange, ETP Holders can choose 
from any one of the 16 currently operating registered exchanges to 
route such order flow. Accordingly, competitive forces reasonably 
constrain exchange transaction fees that relate to orders that would 
provide liquidity on an exchange. Stated otherwise, changes to exchange 
transaction fees can have a direct effect on the ability of an exchange 
to compete for order flow.
Tape B Tier 3
    Given this competitive environment, the proposed rule change 
represents a reasonable attempt to attract additional order flow to the 
Exchange. In particular, the Exchange believes the proposed 
introduction of the Tape B Tier 3 pricing tier is reasonable because it 
provides ETP Holders affiliated with an OTP Holder or OTP Firm that has 
a market maker account on NYSE Arca Options with an opportunity to 
qualify for the Tape B Tier 3 credit through equity and options orders. 
The Exchange believes that the proposed pricing tier utilizing a lower 
equity adding volume requirement coupled with a minimum options volume 
requirement is reasonable because the proposal provides firms with 
greater flexibility to reach volume tiers across asset classes, thereby 
creating an added incentive for ETP Holders affiliated with an OTP 
Holder or OTP Firm that has a market maker account on NYSE Arca Options 
to bring additional order flow to a public exchange, consequently 
encouraging greater participation and liquidity.
    The Exchange notes that volume-based incentives and discounts have 
been widely adopted by exchanges, including the Exchange. They also 
provide additional benefits or discounts that are reasonably related to 
the value of the Exchange's market quality and associated higher levels 
of market activity, such as higher levels of liquidity provision and/or 
growth patterns. Additionally, as noted above, the Exchange operates in 
a highly competitive market. The Exchange is one of many venues and 
off-exchange venues to which market participants may direct their order 
flow, and it represents a small percentage of the overall market. 
Competing exchanges offer similar tiered pricing structures to that of 
the Exchange, including schedules of rebates and fees that apply based 
on members achieving certain volume thresholds across asset classes. 
Moreover, the Exchange believes the proposed pricing tier is a 
reasonable means to encourage ETP Holders affiliated with an OTP Holder 
or OTP Firm that has a market maker account on NYSE Arca Options to 
increase their liquidity on the Exchange and their participation on 
NYSE Arca Options. The Exchange believes adopting the proposed pricing 
tier may encourage those ETP Holders who could not previously achieve 
the requirements to qualify for Tape B credits to increase their order 
flow on both the Exchange and on NYSE Arca Options. Increased liquidity 
benefits all investors by deepening the Exchange's liquidity pool, 
offering additional flexibility for all investors to enjoy cost 
savings, supporting the quality of price discovery, promoting market 
transparency and improving investor protection.
Non-Substantive Change
    The Exchange believes that the proposed rule change to delete the 
phrases ``to the Book,'' ``from the Book,'' and ``outside the Book'' 
from the Fee Schedule is reasonable because each of the phrases are 
superfluous and extraneous. As noted above, ETP Holders understand that 
when they provide liquidity, they provide it ``to the Book,'' when they 
take liquidity, they take it ``from the Book,'' and when their orders 
are routed, they are routed ``outside the Book.'' The Exchange believes 
it is reasonable to delete these phrases in an effort to streamline the 
Fee Schedule. The Exchange believes deleting these phrases would also 
promote clarity to the Fee Schedule and simplify the Fee Schedule.
The Proposed Fee Change Is an Equitable Allocation of Fees and Credits
Tape B Tier 3
    The Exchange believes the proposed rule change to adopt a new 
pricing tier equitably allocates its fees and credits among market 
participants because it is reasonably related to the value of the 
Exchange's market quality associated with higher equities and options 
volume.
    The proposed pricing tier would be available to ETP Holders that 
are affiliated with OTP Holders or OTP Firms that have a market maker 
account

[[Page 11030]]

on NYSE Arca Options. A number of ETP Holders have a reasonable 
opportunity to satisfy the tier's criteria.\18\ The Exchange does not 
know how much order flow ETP Holders choose to route to other exchanges 
or to off-exchange venues. Without having a view of an ETP Holder's 
activity on other markets and off-exchange venues, the Exchange has no 
way of knowing whether this proposed rule change would result in any 
ETP Holder affiliated with an OTP Holder or OTP Firm that has a market 
maker account on NYSE Arca Options to increase participation in the 
Exchange's equities and options markets to qualify for the proposed 
Tape B Tier 3 credit. The Exchange believes the proposed pricing tier 
could provide an incentive for other ETP Holders that are affiliated 
with an OTP Holder or OTP Firm that has a market maker account on NYSE 
Arca Options to submit additional liquidity on the Exchange and on NYSE 
Arca Options to qualify for the Tape B Tier 3 credit. To the extent 
that such participants direct significant order flow to the Exchange's 
equities and options markets, the Exchange believes such participants 
should receive the credit proposed by the new pricing tier. To the 
extent an ETP Holder participates on the Exchange but not on NYSE Arca 
Options, the Exchange believes that the proposal is still reasonable, 
equitable and not unfairly discriminatory with respect to such ETP 
Holder based on the overall benefit to the Exchange resulting from the 
success of NYSE Arca Options. In particular, such success would allow 
the Exchange to continue to provide and potentially expand its existing 
incentive programs to the benefit of all participants on the Exchange, 
whether they participate on NYSE Arca Options or not.
---------------------------------------------------------------------------

    \18\ See supra note 13.
---------------------------------------------------------------------------

    While the proposal is intended to incentivize ETP Holders that are 
affiliated with an OTP Holder or OTP Firm that has a market maker 
account on NYSE Arca Options, ETP Holders that do not meet the criteria 
for the proposed tier can still qualify for credits available under the 
other Tape B pricing tiers which do not require it to have any 
affiliation with an OTP Holder or OTP Firm and conduct options trading 
on NYSE Arca Options.
Non-Substantive Change
    The Exchange believes that the proposed rule change to delete the 
phrases ``to the Book,'' ``from the Book,'' and ``outside the Book'' 
from the Fee Schedule is equitable because the resulting streamlined 
Fee Schedule would continue to apply to ETP Holders as it does 
currently because the Exchange is not adopting any new fees or credits 
or removing any current fees or credits from the Fee Schedule. All ETP 
Holders would continue to be subject to the same fees and credits that 
currently apply to them.
The Proposed Fee Change Is Not Unfairly Discriminatory
Tape B Tier 3
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, ETP Holders 
are free to disfavor the Exchange's pricing if they believe that 
alternatives offer them better value.
    The Exchange believes it is not unfairly discriminatory to adopt 
the Tape B Tier 3 pricing tier as it would be available on an equal 
basis to ETP Holders that are affiliated with an OTP Holder or OTP Firm 
that has a market maker account on NYSE Arca Options that meet the 
requirement of the proposed Tape B Tier 3 pricing tier. Further, the 
Exchange believes the proposed pricing tier would incentivize such ETP 
Holders to send their options orders to the Exchange to qualify for the 
proposed new credit. The Exchange believes that, to the extent that ETP 
Holders affiliated with an OTP Holder or OTP Firm that has a market 
maker account on NYSE Arca Options, direct significant order flow to 
the Exchange's equities and options markets, such participants should 
receive the credit proposed by the new pricing tier. The Exchange also 
believes that the proposed change is not unfairly discriminatory 
because it is reasonably related to the value to the Exchange's market 
quality associated with higher volume.
    The proposed rule change is intended to incentivize ETP Holders 
that are affiliated with an OTP Holder or OTP Firm that has a market 
maker account on NYSE Arca Options. As such, it does not permit unfair 
discrimination because the requirement to qualify for the new pricing 
tier would be applied to all similarly situated ETP Holders, who would 
all be eligible for the same credit on an equal basis.
Non-Substantive Change
    The Exchange believes that the proposed rule change to delete the 
phrases ``to the Book,'' ``from the Book,'' and ``outside the Book'' 
from the Fee Schedule is not unfairly discriminatory because the 
resulting streamlined Fee Schedule would continue to apply to ETP 
Holders as it does currently because the Exchange is not adopting any 
new fees or credits or removing any current fees or credits from the 
Fee Schedule. All ETP Holders would continue to be subject to the same 
fees and credits that currently apply to them.
    Finally, the submission of orders to the Exchange is optional for 
ETP Holders in that they could choose whether to submit orders to the 
Exchange and, if they do, the extent of its activity in this regard. 
The Exchange believes that it is subject to significant competitive 
forces, as described below in the Exchange's statement regarding the 
burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\19\ 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 submission of additional 
liquidity to a public exchange, thereby promoting market depth, price 
discovery and transparency and enhancing order execution opportunities 
for ETP Holders. As a result, the Exchange believes that the proposed 
change furthers the Commission's goal in adopting Regulation NMS of 
fostering integrated competition among orders, which promotes ``more 
efficient pricing of individual stocks for all types of orders, large 
and small.'' \20\
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    \19\ 15 U.S.C. 78f(b)(8).
    \20\ See Regulation NMS, 70 FR at 37498-99.
---------------------------------------------------------------------------

    Intramarket Competition. The proposed change is designed to attract 
additional equities and options order flow to the Exchange. The 
Exchange believes that the proposed introduction of the Tape B Tier 3 
pricing tier would incentivize market participants to direct providing 
order flow to the Exchange and greater participation on NYSE Arca 
Options. Greater liquidity benefits all market participants on the 
Exchange by providing more trading opportunities and encourages ETP 
Holders affiliated with an OTP Holder or OTP Firm that has a market 
maker account on NYSE Arca Options to send orders to the Exchange, 
thereby contributing to robust levels of liquidity, which benefits all 
market participants. The proposed volume requirement would be 
applicable to all similarly-situated market participants, and, as such, 
the

[[Page 11031]]

proposed change would not impose a disparate burden on competition 
among market participants on the Exchange. As such, the Exchange 
believes the proposed new pricing tier would not impose any burden on 
intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
the proposed rule change places a burden on competition among 
participants that are not affiliated with an OTP Holder or OTP Firm 
with a market maker account on NYSE Arca Options because such 
participants can avail themselves to credits available under other Tape 
B pricing tiers that do not require participation on NYSE Arca Options. 
Additionally, the Exchange's proposal to delete the phrases ``to the 
Book,'' ``from the Book,'' and ``outside the Book'' from the Fee 
Schedule will not place any undue burden on intramarket competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act because the proposed change does not impact any fees charged or 
credits provided by the Exchange. All ETP Holders would continue to be 
subject to the same fees and credits that currently apply to them.
    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. As noted 
above, the Exchange's market share of intraday trading (i.e., excluding 
auctions) is currently less than 10%. In such an environment, the 
Exchange must continually adjust its fees and rebates to remain 
competitive with other exchanges and with off-exchange venues. Because 
competitors are free to modify their own fees and credits in response, 
and because market participants may readily adjust their order routing 
practices, the Exchange does not believe its proposed fee change can 
impose any burden on intermarket competition.
    The Exchange believes that the proposed rule change could promote 
competition between the Exchange and other execution venues, including 
those that currently offer similar order types and comparable 
transaction pricing, by encouraging additional orders to be sent to the 
Exchange for execution.

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

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

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \21\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \22\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 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) \23\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \23\ 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-NYSEARCA-2021-12 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-NYSEARCA-2021-12 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-NYSEARCA-2021-12 and should be submitted 
on or before March 16, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
---------------------------------------------------------------------------

    \24\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-03547 Filed 2-22-21; 8:45 am]
BILLING CODE 8011-01-P
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