Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List, 20544-20548 [2021-08043]

Download as PDF 20544 Federal Register / Vol. 86, No. 74 / Tuesday, April 20, 2021 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91561; File No. SR–NYSE– 2021–23] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List April 14, 2021. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on April 1, 2021, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its Price List to introduce (1) a new Adding Tier in Tape A securities, and (2) a new Tier 5 for Supplemental Liquidity Providers (‘‘SLP’’) in Tape A securities. The Exchange proposes to implement the fee changes effective April 1, 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. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 VerDate Sep<11>2014 17:10 Apr 19, 2021 Jkt 253001 A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Price List to introduce (1) a new Adding Tier in Tape A securities, and (2) a new Tier 5 for SLPs in Tape A Securities. The proposed changes respond to the current competitive environment where order flow providers have a choice of where to direct liquidity-providing orders by offering further incentives for member organizations to send additional displayed liquidity to the Exchange. The Exchange proposes to implement the fee changes effective April 1, 2021. Background Current Market and Competitive Environment The Exchange operates in a highly competitive market. 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.’’ 4 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.’’ 5 Indeed, equity trading is currently dispersed across 16 exchanges,6 31 alternative trading systems,7 and numerous broker-dealer 4 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37495, 37499 (June 29, 2005) (S7–10–04) (Final Rule) (‘‘Regulation NMS’’). 5 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). 6 See Cboe Global Markets, U.S. Equities Market Volume Summary, available at https:// markets.cboe.com/us/equities/market_share/. See generally https://www.sec.gov/fast-answers/ divisionsmarketregmrexchangesshtml.html. 7 See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/ AtsIssueData. A list of alternative trading systems PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 internalizers and wholesalers, all competing for order flow. Based on publicly available information, no single exchange has more than 20% market share.8 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 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, in response to fee changes. With respect to non-marketable order flow that would provide displayed liquidity on an Exchange, member organizations 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. In response to the competitive environment described above, the Exchange has established incentives for its member organizations who submit orders that provide liquidity on the Exchange. The proposed fee change is designed to attract additional order flow to the Exchange by incentivizing member organizations to submit additional displayed liquidity to the Exchange. Proposed Rule Change New Adding Tier for Non-Displayed Providers The Exchange proposes a new Adding Tier for Non-Displayed Providers. As proposed, the Exchange would provide credits in Tape A securities for all orders, other than MPL Orders, from qualifying member organizations that have at least • an average daily trading volume (‘‘ADV’’) that adds liquidity to the Exchange during the billing month (‘‘Adding ADV’’) of 0.35% of Tape A consolidated ADV (‘‘Tape A CADV’’), excluding any liquidity added by a Designated Market Maker (‘‘DMM’’); 9 and registered with the Commission is available at https://www.sec.gov/foia/docs/atslist.htm. 8 See Cboe Global Markets U.S. Equities Market Volume Summary, available at https:// markets.cboe.com/us/equities/market_share/. 9 Footnote 2 to the Price List defines ADV as ‘‘average daily volume’’ and ‘‘Adding ADV’’ as ADV that adds liquidity to the Exchange during the billing month. CADV is defined in footnote * of the Price List. E:\FR\FM\20APN1.SGM 20APN1 Federal Register / Vol. 86, No. 74 / Tuesday, April 20, 2021 / Notices • Adding ADV of Non-Displayed Limit Orders of at least 4 million shares; and • 35% of the Member Organization’s Total Adding ADV is comprised of NonDisplayed Limit Orders. A member organization that meets the above requirements would receive a credit of $0.0023 per share ($0.0006 per share for Non-Displayed Limit Orders) if the member organization has an Adding ADV of at least 0.35% of Tape A CADV or a credit of $0.0026 per share ($0.0007 per share for Non-Displayed Limit Orders) if the member organization has Adding ADV of at least 0.45% of Tape A CADV. In addition, the Exchange proposes that Member Organizations that meet the above requirements and add liquidity, excluding liquidity added as an SLP, in Tapes B and C Securities 10 of at least 0.20% of Tape B and Tape C CADV combined will receive an additional $0.00005 per share. For example, assume member organization A has an adding ADV of 20 million shares and 0.40% of Tape A CADV in a billing month when Tape A CADV was 5 billion shares. Further assume that 15 million shares of member organization A’s 40 million shares of Adding ADV were NonDisplayed Limit Orders, representing 37.5% of member organization A’s Total Adding ADV during the billing month. Member organization A would accordingly qualify for the proposed Adding Credit of $0.0023 per share (or $0.0006 per share for Non-Displayed Limit Orders). If that member organization A had an adding ADV of at least 0.45% of Tape A CADV, then that member organization would qualify for the proposed Adding Credit of $0.0026 per share (or $0.0007 per share for NonDisplayed Limit Orders). The purpose of this proposed change is to incentivize member organizations to increase the liquidity-providing orders in the Tape A securities they send to the Exchange, which would support the quality of price discovery on the Exchange and provide additional liquidity for incoming orders. As noted above, the Exchange operates in a competitive environment, particularly as it relates to attracting non-marketable orders, which add liquidity to the Exchange. Because the proposed tier requires a member organization to achieve a minimum volume of its trades in orders that add liquidity, the 10 The Exchange proposes the non-substantive change in the Tier 1 Adding Credit, Tier 2 Adding Credit and Tier 3 Adding Credit to replace the phrase ‘‘securities traded pursuant to Unlisted Trading Privileges (Tapes B and C) on the Pillar Trading Platform’’ with ‘‘Tape B and C Securities.’’ VerDate Sep<11>2014 17:10 Apr 19, 2021 Jkt 253001 Exchange believes that the proposed credits would provide an incentive for all member organizations to send additional liquidity to the Exchange in order to qualify for them. The Exchange does not know how much order flow member organizations choose to route to other exchanges or to off-exchange venues. Based on the profile of liquidity-adding firms generally, the Exchange believes that additional member organizations could qualify for the tiered rate under the new qualification criteria if they choose to direct order flow to the Exchange. However, without having a view of member organization’s activity on other exchanges and off-exchange venues, the Exchange has no way of knowing whether this proposed rule change would result in any member organization directing orders to the Exchange in order to qualify for the new tier. New SLP Tier 5 The Exchange proposes a new SLP Tier designated ‘‘5’’ that would provide that an SLP adding liquidity in securities with a per share price of $1.00 or more with orders, other than MidPoint Liquidity (‘‘MPL’’) orders, is eligible for a per share credit of $0.0031 (or $0.0012 if a Non-Displayed Reserve Order) if the SLP: (1) Meets the 10% average or more quoting requirement in an assigned security pursuant to Rule 107B; (2) adds liquidity for all assigned SLP securities in the aggregate (including shares of both an SLP-Prop and an SLMM of the same or an affiliated member organization) of an ADV of more than 0.65% of Tape A CADV (for SLPs that are also DMMs and subject to Rule 107B(i)(2)(A), more than 0.65% after a discount of the percentage for the prior quarter of Tape A CADV in DMM assigned securities as of the last business day of the prior month); (3) has Adding ADV, including non-SLP Adding ADV but excluding any liquidity added by a DMM, that is at least 0.85% of Tape A CADV; and (4) executes an ADV, including non-SLP Adding ADV but excluding any liquidity added by a DMM, of at least 250,000 shares in Retail Price Improvements Orders. In addition, the Exchange proposes that SLPs that meet the proposed requirements for SLP Tier 5 and add liquidity in Tape B and C securities of at least 0.25% of Tape B and Tape C CADV combined, will receive an additional $0.00005 per share in securities with a per share price of $1.00 that meet the 10% average or more quoting requirement in an assigned security pursuant to Rule 107B (quotes PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 20545 of an SLP-Prop and an SLMM of the same member organization shall not be aggregated). In addition, the Exchange proposes that SLPs would receive an additional $0.00005 per share for adding liquidity, other than MPL and NonDisplay Reserve orders, in securities where they are not assigned as an SLP or do not meet the 10% average or more quoting requirement in an assigned security pursuant to Rule 107B. The Exchange believes that the new tier will provide greater incentives for SLPs to add more liquidity to the Exchange. The Exchange does not know how much order flow member organizations choose to route to other exchanges or to off-exchange venues. Since the proposed tier is new, the Exchange does not know how many SLPs and their affiliates could qualify for the proposed tiered credits based on their current trading profile on the Exchange. However, without having a view of member organization’s activity on other exchanges and off-exchange venues, the Exchange believes that additional SLPs and affiliated firms could qualify for the new tier if they choose direct order flow to, and increase quoting on, the Exchange. However, without having a view of member organization’s activity on other exchanges and off-exchange venues, the Exchange has no way of knowing whether this proposed rule change would result in any member organization directing orders to the Exchange in order to qualify for the new tier. 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,11 in general, and furthers the objectives of Sections 6(b)(4) and (5) of the Act,12 in particular, because it provides for the equitable allocation of reasonable dues, fees, and other charges among its members, issuers and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers or dealers. As discussed above, 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 11 15 12 15 E:\FR\FM\20APN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(4) & (5). 20APN1 20546 Federal Register / Vol. 86, No. 74 / Tuesday, April 20, 2021 / Notices 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.’’ 13 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.’’ 14 The Proposed Change Is Reasonable New Adding Tier Credit The new proposed Adding Tier Credit is reasonable. Specifically, the Exchange believes that the proposed Adding Credit would provide an incentive for member organizations to send additional liquidity providing orders to the Exchange in Tape A securities. As noted above, the Exchange operates in a highly competitive environment, particularly for attracting nonmarketable order flow that provides liquidity on an exchange. The Exchange believes that requiring member organization to have at least an Adding ADV of 0.35% of Tape A CADV, Adding ADV of Non-Displayed Limit Orders of at least 4 million shares, and 35% of the member organization’s total Adding ADV is comprised of NonDisplayed Limit Orders, in order to qualify for the proposed Adding Credit is reasonable because it would encourage additional displayed and non-displayed liquidity on the Exchange and because market participants benefit from the greater amounts of displayed and nondisplayed liquidity present on the Exchange. Further, the Exchange believes it’s reasonable to provide credit of $0.0023 per share ($0.0006 per share for Non-Displayed Limit Orders) if the member organization has an Adding ADV of at least 0.35% of Tape A CADV or a credit of $0.0026 per share ($0.0007 per share for Non-Displayed Limit Orders) if the member organization has Adding ADV of at least 0.45% of Tape 13 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37495, 37499 (June 29, 2005) (S7–10–04) (Final Rule) (‘‘Regulation NMS’’). 14 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). VerDate Sep<11>2014 17:10 Apr 19, 2021 Jkt 253001 A CADV because this would encourage member organizations to send orders that provide liquidity to the Exchange, thereby contributing to robust levels of liquidity, which benefits all market participants, and promoting price discovery and transparency. In addition, the Exchange believes that the additional credit of $0.00005 per share for Member Organizations that meet the proposed tier requirements and add liquidity, excluding liquidity added as an SLP, in Tapes B and C Securities of at least 0.20% of Tape B and Tape C CADV combined is reasonable as a similar incentive is offered in the NYSE’s other adding tiers (Tier 1–3 Adding Credits). Since the proposed Adding Credit would be new, no member organization currently qualifies for the proposed pricing tier. As previously noted, without a view of member organization activity on other exchanges and offexchange venues, the Exchange has no way of knowing whether the proposed rule change would result in any member organization qualifying for the tier. The Exchange believes the proposed credit is reasonable as it would provide an incentive for member organizations to direct their order flow to the Exchange and provide meaningful added levels of liquidity in order to qualify for the credits, thereby contributing to depth and market quality on the Exchange. New SLP Tier 5 The Exchange believes that the proposal to introduce a new SLP Tier 5 is reasonable because it provides SLPs as well as SLPs that are also DMMs with an additional way to qualify for a rebate, thereby providing SLPs with greater flexibility and creating an added incentive for SLPs to bring additional order flow to a public market. In particular, as noted above, the Exchange believes that the new tier will provide greater incentives for SLPs to add more liquidity to the Exchange, to the benefit of the investing public and all market participants. Since the proposed tier would be new, no SLP currently qualifies for the proposed pricing tier. As previously noted, based on the profile of liquidity-providing SLPs generally, the Exchange believes that a number of SLPs and affiliated firms could qualify for the credits if they choose to direct order flow to, and increase quoting on, the Exchange. Finally, the Exchange also believes the proposed non-substantive change in the Tier 1 Adding Credit, Tier 2 Adding Credit and Tier 3 Adding Credit is reasonable and would not be inconsistent with the public interest and the protection of investors because PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 investors will not be harmed and in fact would benefit from increased clarity and transparency on the Price List, thereby reducing potential confusion. The Proposal Is an Equitable Allocation of Fees New Adding Tier Credit The Exchange believes that the proposed Adding Credit is equitable because the proposed rule change would improve market quality for all market participants on the Exchange and, as a consequence, attract more liquidity to the Exchange, thereby improving market wide quality and price discovery. Since the proposed Adding Credit would be new, no member organization currently qualifies for it. As noted, without a view of member organization activity on other exchanges and off-exchange venues, the Exchange has no way of knowing whether this proposed rule change would result in any member organization qualifying for the tier. The Exchange believes the proposed credit is reasonable as it would provide an incentive for member organizations to direct their order flow to the Exchange and provide meaningful added levels of liquidity in order to qualify for the credits, thereby contributing to depth and market quality on the Exchange. The proposal neither targets nor will it have a disparate impact on any particular category of market participant. All member organizations that provide liquidity could be eligible to qualify for the proposed credits if meet the proposed adding liquidity requirements. The Exchange believes that offering credits for providing liquidity will continue to attract order flow and liquidity to the Exchange, thereby providing additional price improvement opportunities on the Exchange and benefiting investors generally. As to those market participants that do not presently qualify for the adding liquidity credits, the proposal will not adversely impact their existing pricing or their ability to qualify for other credits provided by the Exchange. New SLP Tier 5 The Exchange believes its proposal to offer a new SLP tier equitably allocates its fees among its market participants. The proposed changes would encourage the submission of additional liquidity to a national securities exchange, thereby promoting price discovery and transparency and enhancing order execution opportunities for member organizations from the substantial amounts of liquidity that are present on E:\FR\FM\20APN1.SGM 20APN1 Federal Register / Vol. 86, No. 74 / Tuesday, April 20, 2021 / Notices the Exchange. The proposed changes would also encourage the submission of additional orders that add liquidity, thus providing price improving liquidity to market participants and increasing the quality of order execution on the Exchange’s market, which would benefit all market participants. Moreover, the proposed changes are equitable because they would apply equally to all qualifying SLPs that submit orders to the NYSE and add liquidity to the Exchange. The Proposal Is Not Unfairly Discriminatory New Adding Tier Credit The Exchange believes it is not unfairly discriminatory to provide credits for adding liquidity as the proposed credits would be provided on an equal basis to all member organizations that add liquidity by meeting the new proposed Adding Tier requirements and would equally encourage all member organizations to provide displayed and non-displayed liquidity on the Exchange. As noted, the Exchange believes that the proposed credits would provide an incentive for member organizations to send additional liquidity to the Exchange in order to qualify for the additional credits. 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. Finally, the submission of orders to the Exchange is optional for member organizations in that they could choose whether to submit orders to the Exchange and, if they do, the extent of its activity in this regard. New SLP Tier 5 The Exchange believes its proposal to offer an new SLP tier is not unfairly discriminatory because the proposal would be provided on an equal basis to all member organizations that add liquidity by meeting the new proposed alternative requirements, who would all be eligible for the same credit on an equal basis. Accordingly, no member organization already operating on the Exchange would be disadvantaged by this allocation of fees. The proposal neither targets nor will it have a disparate impact on any particular category of market participant. The proposal does not permit unfair discrimination because the qualification criteria would be applied to all similarly situated member organizations, who would all be eligible for the same credits on an equal basis. Finally, as noted, the Exchange believes the proposal would VerDate Sep<11>2014 17:10 Apr 19, 2021 Jkt 253001 provide an incentive for member organizations to continue to send orders that provide liquidity to the Exchange, to the benefit of all market participants. 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,15 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 member organizations. 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.’’ 16 Intramarket Competition. The proposed changes are designed to attract additional order flow to the Exchange. The Exchange believes that the proposed changes would continue to incentivize market participants to direct displayed and non-displayed order flow to the Exchange. Greater liquidity benefits all market participants on the Exchange by providing more trading opportunities and encourages member organizations to send orders, thereby contributing to robust levels of liquidity, which benefits all market participants on the Exchange. The current credits would be available to all similarly situated market participants, and, as such, the proposed change would not impose a disparate burden on competition among market participants on the Exchange. As noted, the proposal would apply to all similarly situated member organizations on the same and equal terms, who would benefit from the changes on the same basis. Accordingly, the proposed change would not impose a disparate burden on competition among market participants on the Exchange. Intermarket Competition. The Exchange operates in a highly competitive market in which market participants can readily choose to send their orders to other exchange and off- exchange venues if they deem fee levels at those other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees and rebates to remain competitive with other exchanges and with offexchange 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. 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) 17 of the Act and subparagraph (f)(2) of Rule 19b–4 18 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) 19 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–2021–23 on the subject line. 17 15 15 15 U.S.C. 78f(b)(8). 16 Regulation NMS, 70 FR at 37498–99. PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 20547 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 19 15 U.S.C. 78s(b)(2)(B). 18 17 E:\FR\FM\20APN1.SGM 20APN1 20548 Federal Register / Vol. 86, No. 74 / Tuesday, April 20, 2021 / Notices Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSE–2021–23. 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–2021–23, and should be submitted on or before May 11, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–08043 Filed 4–19–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91549; File No. SR– NYSENAT–2021–08] Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Current Pilot Program Related to Rule 7.10 April 14, 2021. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on April 2, 2021, NYSE National, Inc. (‘‘NYSE National’’ or the ‘‘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 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 extend the current pilot program related to Rule 7.10 (Clearly Erroneous Executions) to the close of business on October 20, 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 Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to extend the current pilot 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 20 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:10 Apr 19, 2021 Jkt 253001 PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 program related to Rule 7.10 (Clearly Erroneous Executions) to the close of business on October 20, 2021. The pilot program is currently due to expire on April 20, 2021. On September 10, 2010, the Commission approved, on a pilot basis, changes to Rule 11.19 (Clearly Erroneous Executions) that, among other things: (i) Provided for uniform treatment of clearly erroneous execution reviews in multi-stock events involving twenty or more securities; and (ii) reduced the ability of the Exchange to deviate from the objective standards set forth in the rule.4 In 2013, the Exchange adopted a provision designed to address the operation of the Plan.5 Finally, in 2014, the Exchange adopted two additional provisions providing that: (i) A series of transactions in a particular security on one or more trading days may be viewed as one event if all such transactions were effected based on the same fundamentally incorrect or grossly misinterpreted issuance information resulting in a severe valuation error for all such transactions; and (ii) in the event of any disruption or malfunction in the operation of the electronic communications and trading facilities of an Exchange, another SRO, or responsible single plan processor in connection with the transmittal or receipt of a trading halt, an Officer, acting on his or her own motion, shall nullify any transaction that occurs after a trading halt has been declared by the primary listing market for a security and before such trading halt has officially ended according to the primary listing market.6 Rule 11.19 is no longer applicable to any securities that trade on the Exchange and has been replaced with Rule 7.10, which is substantively identical to Rule 11.19.7 These changes were originally scheduled to operate for a pilot period to coincide with the pilot period for the Plan to Address Extraordinary Market Volatility (the ‘‘Limit Up-Limit Down Plan’’ or ‘‘LULD Plan’’),8 including any extensions to the pilot period for the 4 See Securities Exchange Act Release No. 62886 (Sept. 10, 2010), 75 FR 56613 (Sept. 16, 2010) (SR– NSX–2010–07). 5 See Securities Exchange Act Release No. 68803 (Feb. 1, 2013), 78 FR 9078 (Feb. 7, 2013) (SR–NSX– 2013–06). 6 See Securities Exchange Act Release No. 72434 (June 19, 2014), 79 FR 36110 (June 25, 2014) (SR– NSX–2014–08). 7 See Securities Exchange Act Release No. 83289 (May 17, 2018), 83 FR 23968 (May 23, 2018) (SR– NYSENAT–2018–02). 8 See Securities Exchange Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012) (the ‘‘Limit Up-Limit Down Release’’). E:\FR\FM\20APN1.SGM 20APN1

Agencies

[Federal Register Volume 86, Number 74 (Tuesday, April 20, 2021)]
[Notices]
[Pages 20544-20548]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08043]



[[Page 20544]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91561; File No. SR-NYSE-2021-23]


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

April 14, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on April 1, 2021, New York Stock Exchange LLC (``NYSE'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Price List to introduce (1) a 
new Adding Tier in Tape A securities, and (2) a new Tier 5 for 
Supplemental Liquidity Providers (``SLP'') in Tape A securities. The 
Exchange proposes to implement the fee changes effective April 1, 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 amend its Price List to introduce (1) a 
new Adding Tier in Tape A securities, and (2) a new Tier 5 for SLPs in 
Tape A Securities.
    The proposed changes respond to the current competitive environment 
where order flow providers have a choice of where to direct liquidity-
providing orders by offering further incentives for member 
organizations to send additional displayed liquidity to the Exchange.
    The Exchange proposes to implement the fee changes effective April 
1, 2021.
Background
Current Market and Competitive Environment
    The Exchange operates in a highly competitive market. 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.'' \4\
---------------------------------------------------------------------------

    \4\ 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.'' \5\ Indeed, equity trading is currently dispersed across 
16 exchanges,\6\ 31 alternative trading systems,\7\ and numerous 
broker-dealer internalizers and wholesalers, all competing for order 
flow. Based on publicly available information, no single exchange has 
more than 20% market share.\8\ 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%.
---------------------------------------------------------------------------

    \5\ 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).
    \6\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at https://markets.cboe.com/us/equities/market_share/. See generally https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \7\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \8\ See Cboe Global Markets U.S. Equities Market Volume Summary, 
available at https://markets.cboe.com/us/equities/market_share/.
---------------------------------------------------------------------------

    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
move order flow, or discontinue or reduce use of certain categories of 
products, in response to fee changes. With respect to non-marketable 
order flow that would provide displayed liquidity on an Exchange, 
member organizations 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.
    In response to the competitive environment described above, the 
Exchange has established incentives for its member organizations who 
submit orders that provide liquidity on the Exchange. The proposed fee 
change is designed to attract additional order flow to the Exchange by 
incentivizing member organizations to submit additional displayed 
liquidity to the Exchange.
Proposed Rule Change
New Adding Tier for Non-Displayed Providers
    The Exchange proposes a new Adding Tier for Non-Displayed 
Providers. As proposed, the Exchange would provide credits in Tape A 
securities for all orders, other than MPL Orders, from qualifying 
member organizations that have at least
     an average daily trading volume (``ADV'') that adds 
liquidity to the Exchange during the billing month (``Adding ADV'') of 
0.35% of Tape A consolidated ADV (``Tape A CADV''), excluding any 
liquidity added by a Designated Market Maker (``DMM''); \9\ and
---------------------------------------------------------------------------

    \9\ Footnote 2 to the Price List defines ADV as ``average daily 
volume'' and ``Adding ADV'' as ADV that adds liquidity to the 
Exchange during the billing month. CADV is defined in footnote * of 
the Price List.

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

[[Page 20545]]

     Adding ADV of Non-Displayed Limit Orders of at least 4 
million shares; and
     35% of the Member Organization's Total Adding ADV is 
comprised of Non-Displayed Limit Orders.
    A member organization that meets the above requirements would 
receive a credit of $0.0023 per share ($0.0006 per share for Non-
Displayed Limit Orders) if the member organization has an Adding ADV of 
at least 0.35% of Tape A CADV or a credit of $0.0026 per share ($0.0007 
per share for Non-Displayed Limit Orders) if the member organization 
has Adding ADV of at least 0.45% of Tape A CADV.
    In addition, the Exchange proposes that Member Organizations that 
meet the above requirements and add liquidity, excluding liquidity 
added as an SLP, in Tapes B and C Securities \10\ of at least 0.20% of 
Tape B and Tape C CADV combined will receive an additional $0.00005 per 
share.
---------------------------------------------------------------------------

    \10\ The Exchange proposes the non-substantive change in the 
Tier 1 Adding Credit, Tier 2 Adding Credit and Tier 3 Adding Credit 
to replace the phrase ``securities traded pursuant to Unlisted 
Trading Privileges (Tapes B and C) on the Pillar Trading Platform'' 
with ``Tape B and C Securities.''
---------------------------------------------------------------------------

    For example, assume member organization A has an adding ADV of 20 
million shares and 0.40% of Tape A CADV in a billing month when Tape A 
CADV was 5 billion shares. Further assume that 15 million shares of 
member organization A's 40 million shares of Adding ADV were Non-
Displayed Limit Orders, representing 37.5% of member organization A's 
Total Adding ADV during the billing month. Member organization A would 
accordingly qualify for the proposed Adding Credit of $0.0023 per share 
(or $0.0006 per share for Non-Displayed Limit Orders). If that member 
organization A had an adding ADV of at least 0.45% of Tape A CADV, then 
that member organization would qualify for the proposed Adding Credit 
of $0.0026 per share (or $0.0007 per share for Non-Displayed Limit 
Orders).
    The purpose of this proposed change is to incentivize member 
organizations to increase the liquidity-providing orders in the Tape A 
securities they send to the Exchange, which would support the quality 
of price discovery on the Exchange and provide additional liquidity for 
incoming orders. As noted above, the Exchange operates in a competitive 
environment, particularly as it relates to attracting non-marketable 
orders, which add liquidity to the Exchange. Because the proposed tier 
requires a member organization to achieve a minimum volume of its 
trades in orders that add liquidity, the Exchange believes that the 
proposed credits would provide an incentive for all member 
organizations to send additional liquidity to the Exchange in order to 
qualify for them. The Exchange does not know how much order flow member 
organizations choose to route to other exchanges or to off-exchange 
venues. Based on the profile of liquidity-adding firms generally, the 
Exchange believes that additional member organizations could qualify 
for the tiered rate under the new qualification criteria if they choose 
to direct order flow to the Exchange. However, without having a view of 
member organization's activity on other exchanges and off-exchange 
venues, the Exchange has no way of knowing whether this proposed rule 
change would result in any member organization directing orders to the 
Exchange in order to qualify for the new tier.
New SLP Tier 5
    The Exchange proposes a new SLP Tier designated ``5'' that would 
provide that an SLP adding liquidity in securities with a per share 
price of $1.00 or more with orders, other than Mid-Point Liquidity 
(``MPL'') orders, is eligible for a per share credit of $0.0031 (or 
$0.0012 if a Non-Displayed Reserve Order) if the SLP: (1) Meets the 10% 
average or more quoting requirement in an assigned security pursuant to 
Rule 107B; (2) adds liquidity for all assigned SLP securities in the 
aggregate (including shares of both an SLP-Prop and an SLMM of the same 
or an affiliated member organization) of an ADV of more than 0.65% of 
Tape A CADV (for SLPs that are also DMMs and subject to Rule 
107B(i)(2)(A), more than 0.65% after a discount of the percentage for 
the prior quarter of Tape A CADV in DMM assigned securities as of the 
last business day of the prior month); (3) has Adding ADV, including 
non-SLP Adding ADV but excluding any liquidity added by a DMM, that is 
at least 0.85% of Tape A CADV; and (4) executes an ADV, including non-
SLP Adding ADV but excluding any liquidity added by a DMM, of at least 
250,000 shares in Retail Price Improvements Orders.
    In addition, the Exchange proposes that SLPs that meet the proposed 
requirements for SLP Tier 5 and add liquidity in Tape B and C 
securities of at least 0.25% of Tape B and Tape C CADV combined, will 
receive an additional $0.00005 per share in securities with a per share 
price of $1.00 that meet the 10% average or more quoting requirement in 
an assigned security pursuant to Rule 107B (quotes of an SLP-Prop and 
an SLMM of the same member organization shall not be aggregated). In 
addition, the Exchange proposes that SLPs would receive an additional 
$0.00005 per share for adding liquidity, other than MPL and Non-Display 
Reserve orders, in securities where they are not assigned as an SLP or 
do not meet the 10% average or more quoting requirement in an assigned 
security pursuant to Rule 107B.
    The Exchange believes that the new tier will provide greater 
incentives for SLPs to add more liquidity to the Exchange. The Exchange 
does not know how much order flow member organizations choose to route 
to other exchanges or to off-exchange venues. Since the proposed tier 
is new, the Exchange does not know how many SLPs and their affiliates 
could qualify for the proposed tiered credits based on their current 
trading profile on the Exchange. However, without having a view of 
member organization's activity on other exchanges and off-exchange 
venues, the Exchange believes that additional SLPs and affiliated firms 
could qualify for the new tier if they choose direct order flow to, and 
increase quoting on, the Exchange. However, without having a view of 
member organization's activity on other exchanges and off-exchange 
venues, the Exchange has no way of knowing whether this proposed rule 
change would result in any member organization directing orders to the 
Exchange in order to qualify for the new tier.
    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,\11\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\12\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
---------------------------------------------------------------------------

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

    As discussed above, 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

[[Page 20546]]

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.'' \13\ 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.'' \14\
---------------------------------------------------------------------------

    \13\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule) 
(``Regulation NMS'').
    \14\ 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).
---------------------------------------------------------------------------

The Proposed Change Is Reasonable
New Adding Tier Credit
    The new proposed Adding Tier Credit is reasonable. Specifically, 
the Exchange believes that the proposed Adding Credit would provide an 
incentive for member organizations to send additional liquidity 
providing orders to the Exchange in Tape A securities. As noted above, 
the Exchange operates in a highly competitive environment, particularly 
for attracting non-marketable order flow that provides liquidity on an 
exchange.
    The Exchange believes that requiring member organization to have at 
least an Adding ADV of 0.35% of Tape A CADV, Adding ADV of Non-
Displayed Limit Orders of at least 4 million shares, and 35% of the 
member organization's total Adding ADV is comprised of Non-Displayed 
Limit Orders, in order to qualify for the proposed Adding Credit is 
reasonable because it would encourage additional displayed and non-
displayed liquidity on the Exchange and because market participants 
benefit from the greater amounts of displayed and non-displayed 
liquidity present on the Exchange. Further, the Exchange believes it's 
reasonable to provide credit of $0.0023 per share ($0.0006 per share 
for Non-Displayed Limit Orders) if the member organization has an 
Adding ADV of at least 0.35% of Tape A CADV or a credit of $0.0026 per 
share ($0.0007 per share for Non-Displayed Limit Orders) if the member 
organization has Adding ADV of at least 0.45% of Tape A CADV because 
this would encourage member organizations to send orders that provide 
liquidity to the Exchange, thereby contributing to robust levels of 
liquidity, which benefits all market participants, and promoting price 
discovery and transparency. In addition, the Exchange believes that the 
additional credit of $0.00005 per share for Member Organizations that 
meet the proposed tier requirements and add liquidity, excluding 
liquidity added as an SLP, in Tapes B and C Securities of at least 
0.20% of Tape B and Tape C CADV combined is reasonable as a similar 
incentive is offered in the NYSE's other adding tiers (Tier 1-3 Adding 
Credits).
    Since the proposed Adding Credit would be new, no member 
organization currently qualifies for the proposed pricing tier. As 
previously noted, without a view of member organization activity on 
other exchanges and off-exchange venues, the Exchange has no way of 
knowing whether the proposed rule change would result in any member 
organization qualifying for the tier. The Exchange believes the 
proposed credit is reasonable as it would provide an incentive for 
member organizations to direct their order flow to the Exchange and 
provide meaningful added levels of liquidity in order to qualify for 
the credits, thereby contributing to depth and market quality on the 
Exchange.
New SLP Tier 5
    The Exchange believes that the proposal to introduce a new SLP Tier 
5 is reasonable because it provides SLPs as well as SLPs that are also 
DMMs with an additional way to qualify for a rebate, thereby providing 
SLPs with greater flexibility and creating an added incentive for SLPs 
to bring additional order flow to a public market. In particular, as 
noted above, the Exchange believes that the new tier will provide 
greater incentives for SLPs to add more liquidity to the Exchange, to 
the benefit of the investing public and all market participants. Since 
the proposed tier would be new, no SLP currently qualifies for the 
proposed pricing tier. As previously noted, based on the profile of 
liquidity-providing SLPs generally, the Exchange believes that a number 
of SLPs and affiliated firms could qualify for the credits if they 
choose to direct order flow to, and increase quoting on, the Exchange.
    Finally, the Exchange also believes the proposed non-substantive 
change in the Tier 1 Adding Credit, Tier 2 Adding Credit and Tier 3 
Adding Credit is reasonable and would not be inconsistent with the 
public interest and the protection of investors because investors will 
not be harmed and in fact would benefit from increased clarity and 
transparency on the Price List, thereby reducing potential confusion.
The Proposal Is an Equitable Allocation of Fees
New Adding Tier Credit
    The Exchange believes that the proposed Adding Credit is equitable 
because the proposed rule change would improve market quality for all 
market participants on the Exchange and, as a consequence, attract more 
liquidity to the Exchange, thereby improving market wide quality and 
price discovery. Since the proposed Adding Credit would be new, no 
member organization currently qualifies for it. As noted, without a 
view of member organization activity on other exchanges and off-
exchange venues, the Exchange has no way of knowing whether this 
proposed rule change would result in any member organization qualifying 
for the tier. The Exchange believes the proposed credit is reasonable 
as it would provide an incentive for member organizations to direct 
their order flow to the Exchange and provide meaningful added levels of 
liquidity in order to qualify for the credits, thereby contributing to 
depth and market quality on the Exchange. The proposal neither targets 
nor will it have a disparate impact on any particular category of 
market participant. All member organizations that provide liquidity 
could be eligible to qualify for the proposed credits if meet the 
proposed adding liquidity requirements. The Exchange believes that 
offering credits for providing liquidity will continue to attract order 
flow and liquidity to the Exchange, thereby providing additional price 
improvement opportunities on the Exchange and benefiting investors 
generally. As to those market participants that do not presently 
qualify for the adding liquidity credits, the proposal will not 
adversely impact their existing pricing or their ability to qualify for 
other credits provided by the Exchange.
New SLP Tier 5
    The Exchange believes its proposal to offer a new SLP tier 
equitably allocates its fees among its market participants. The 
proposed changes would encourage the submission of additional liquidity 
to a national securities exchange, thereby promoting price discovery 
and transparency and enhancing order execution opportunities for member 
organizations from the substantial amounts of liquidity that are 
present on

[[Page 20547]]

the Exchange. The proposed changes would also encourage the submission 
of additional orders that add liquidity, thus providing price improving 
liquidity to market participants and increasing the quality of order 
execution on the Exchange's market, which would benefit all market 
participants. Moreover, the proposed changes are equitable because they 
would apply equally to all qualifying SLPs that submit orders to the 
NYSE and add liquidity to the Exchange.
The Proposal Is Not Unfairly Discriminatory
New Adding Tier Credit
    The Exchange believes it is not unfairly discriminatory to provide 
credits for adding liquidity as the proposed credits would be provided 
on an equal basis to all member organizations that add liquidity by 
meeting the new proposed Adding Tier requirements and would equally 
encourage all member organizations to provide displayed and non-
displayed liquidity on the Exchange. As noted, the Exchange believes 
that the proposed credits would provide an incentive for member 
organizations to send additional liquidity to the Exchange in order to 
qualify for the additional credits. 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. Finally, the submission of orders to the Exchange is 
optional for member organizations in that they could choose whether to 
submit orders to the Exchange and, if they do, the extent of its 
activity in this regard.
New SLP Tier 5
    The Exchange believes its proposal to offer an new SLP tier is not 
unfairly discriminatory because the proposal would be provided on an 
equal basis to all member organizations that add liquidity by meeting 
the new proposed alternative requirements, who would all be eligible 
for the same credit on an equal basis. Accordingly, no member 
organization already operating on the Exchange would be disadvantaged 
by this allocation of fees. The proposal neither targets nor will it 
have a disparate impact on any particular category of market 
participant. The proposal does not permit unfair discrimination because 
the qualification criteria would be applied to all similarly situated 
member organizations, who would all be eligible for the same credits on 
an equal basis. Finally, as noted, the Exchange believes the proposal 
would provide an incentive for member organizations to continue to send 
orders that provide liquidity to the Exchange, to the benefit of all 
market participants.
    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,\15\ 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 member organizations. 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.'' \16\
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b)(8).
    \16\ Regulation NMS, 70 FR at 37498-99.
---------------------------------------------------------------------------

    Intramarket Competition. The proposed changes are designed to 
attract additional order flow to the Exchange. The Exchange believes 
that the proposed changes would continue to incentivize market 
participants to direct displayed and non-displayed order flow to the 
Exchange. Greater liquidity benefits all market participants on the 
Exchange by providing more trading opportunities and encourages member 
organizations to send orders, thereby contributing to robust levels of 
liquidity, which benefits all market participants on the Exchange. The 
current credits would be available to all similarly situated market 
participants, and, as such, the proposed change would not impose a 
disparate burden on competition among market participants on the 
Exchange. As noted, the proposal would apply to all similarly situated 
member organizations on the same and equal terms, who would benefit 
from the changes on the same basis. Accordingly, the proposed change 
would not impose a disparate burden on competition among market 
participants on the Exchange.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily choose to 
send their orders to other exchange and off-exchange venues if they 
deem fee levels at those other venues to be more favorable. 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.

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) \17\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \18\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 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) \19\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \19\ 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-2021-23 on the subject line.

[[Page 20548]]

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2021-23. 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-2021-23, and should be submitted on 
or before May 11, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-08043 Filed 4-19-21; 8:45 am]
BILLING CODE 8011-01-P
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