Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List, 63431-63436 [2021-24897]
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Federal Register / Vol. 86, No. 218 / Tuesday, November 16, 2021 / Notices
A proposed rule change filed under
Rule 19b–4(f)(6) 14 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),15 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposed
rule change may take effect upon filing.
The Exchange states that the proposed
rule change raises no novel regulatory
issues because the Funds will continue
to comply with the requirements of BZX
Rule 14.11(m). The Exchange also notes
that a similar proposal to amend the
listing rules of other shares that BZX
also lists and trades pursuant to Rule
14.11(m) is currently in effect.16 For
these reasons, the Commission believes
that waiver of the 30-day operative
delay is consistent with the protection
of investors and the public interest.
Accordingly, the Commission waives
the 30-day operative delay and
designates the proposal operative upon
filing.17
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
to determine whether the proposed rule
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–
CboeBZX–2021–075 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–CboeBZX–2021–075. 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–CboeBZX–2021–075 and
should be submitted on or before
December 7, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–24896 Filed 11–15–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
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Sunshine Act Meetings
14 17
CFR 240.19b–4(f)(6).
15 17 CFR 240.19b–4(f)(6)(iii).
16 See Securities and Exchange Act No. 92946
(September 13, 2021) 86 FR 51941 (September 17,
2021) (SR–CboeBZX–2021–060).
17 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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Notice is hereby given,
pursuant to the provisions of the
Government in the Sunshine Act, Public
Law 94–409, that the Securities and
Exchange Commission will hold an
TIME AND DATE:
Open Meeting on Wednesday,
November 17, 2021 at 11:00 a.m.
The meeting will be webcast on
the Commission’s website at
www.sec.gov.
PLACE:
This meeting will begin at 11:00
a.m. (ET) and will be open to the public
via webcast on the Commission’s
website at www.sec.gov.
STATUS:
MATTERS TO BE CONSIDERED:
1. The Commission will consider
whether to adopt amendments to the
proxy rules relating to the use of
universal proxy cards and related
disclosures in director elections.
2. The Commission will consider
whether to propose amendments to the
proxy rules governing proxy voting
advice.
CONTACT PERSON FOR MORE INFORMATION:
For further information and to ascertain
what, if any, matters have been added,
deleted or postponed, please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
Authority: 5 U.S.C. 552b.
Dated: November 10, 2021.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2021–25030 Filed 11–12–21; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93545; File No. SR–NYSE–
2021–65]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Its
Price List
November 9, 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
November 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 Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
18 17
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CFR 200.30–3(a)(12).
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Federal Register / Vol. 86, No. 218 / Tuesday, November 16, 2021 / Notices
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to to[sic]
amend its Price List to (1) eliminate the
underutilized additional credits for
member organizations that add liquidity
in Tape B and C Securities when
qualifying for certain non-tier and tiered
credits by adding liquidity in Tape A
Securities; (2) eliminate the
underutilized Adding Tier for NonDisplayed Providers in Tape A
Securities; and (3) revise the
requirements to qualify for the Tier 5
Adding Credit in Tape A Securities. The
Exchange proposes to implement the
rule change on November 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
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1. Purpose
The Exchange proposes to amend its
Price List to (1) eliminate the
underutilized additional credits for
member organizations that add liquidity
in Tape B and C Securities when
qualifying for certain non-tier and tiered
credits by adding liquidity in Tape A
Securities; (2) eliminate the
underutilized Adding Tier for NonDisplayed Providers in Tape A
Securities; and (3) revise the
requirements to qualify for the Tier 5
Adding Credit in Tape A Securities.
The proposed revision to the Tier 5
Adding Credit 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 member
organizations to send additional
displayed liquidity to the Exchange.
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The Exchange proposes to implement
the rule change on November 1, 2021.
Current Market and Competitive
Environment
The Exchange operates in a highly
competitive market. The Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 4
As the Commission itself has
recognized, the market for trading
services in NMS stocks has become
‘‘more fragmented and competitive.’’ 5
Indeed, equity trading is currently
dispersed across 16 exchanges,6 31
alternative trading systems,7 and
numerous broker-dealer internalizers
and wholesalers. Based on publiclyavailable information, no single
exchange has more than 18% of the
market.8 Therefore, no exchange
possesses significant pricing power in
the execution of equity order flow. More
specifically, the Exchange’s share of
executed volume of equity trades in
Tapes A, B and C securities is less than
12%.9
The Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can move order flow, or discontinue or
reduce use of certain 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
4 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(S7–10–04) (Final Rule) (‘‘Regulation NMS’’).
5 See Securities Exchange Act Release No.
51808[sic], 84FR 5202, 5253 (February 20, 2019)
(File No. S7–05–18) (Transaction Fee Pilot for NMS
Stocks Final Rule) (‘‘Transaction Fee Pilot’’).
6 See Cboe Global Markets, U.S. Equities Market
Volume Summary, available at https://
markets.cboe.com/us/equities/market_share/. See
generally https://www.sec.gov/fast-answers/
divisionsmarketregmrexchangesshtml.html.
7 See FINRA ATS Transparency Data, available at
https://otctransparency.finra.org/otctransparency/
AtsIssueData. A list of alternative trading systems
registered with the Commission is available at
https://www.sec.gov/foia/docs/atslist.htm.
8 See Cboe Global Markets U.S. Equities Market
Volume Summary, available at https://
markets.cboe.com/us/equities/market_share/.
9 See id.
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of the numerous 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
The Exchange proposes to eliminate
certain underutilized additional credits
for adding liquidity in Tape B and C
Securities and the underutilized Adding
Tier for Non-Displayed Providers in
Tape A Securities, as follows.
Underutilized Additional Credits
Member organizations adding
liquidity in Tape A Securities and
meeting all of the requirements of the
Non-Tier Adding Credit, the Tier 1
Adding Credit, the Tier 2 Adding Credit,
the Tier 3 Adding Credit, the Tier 4
Adding Credit, the Tier 5 Adding Credit,
the Tier 6 Adding Credit, the Step Up
Tier 1 Adding Credit, the Step Up Tier
2 Adding Credit and the Step Up Tier
4 Adding Credit are currently eligible
for an additional credit of $0.0001 per
share (under the Non-Tier Adding
Credit, Tier 3 Adding Credit, Tier 4
Adding Credit, Tier 5 Adding Credit,
Tier 6 Adding Credit, and Step Up Tier
4 Adding Credit) or $0.0005 per share
(under the Tier 1 Adding Credit, Tier 2
Adding Credit, Step Up Tier 1 Adding
Credit, and Step Up Tier 2 Adding
Credit) if the member organization also
adds a specified amount of liquidity,
excluding liquidity added as an
Supplemental Liquidity Provider
(‘‘SLP’’), in Tapes B and C Securities.
The Exchange proposes to eliminate
and remove these additional credits
from the Non-Tier Adding Credit, Tier
1 Adding Credit, Tier 2 Adding Credit,
Tier 3 Adding Credit, Tier 4 Adding
Credit, Tier 5 Adding Credit, Tier 6
Adding Credit, Step Up Tier 1 Adding
Credit, Step Up Tier 2 Adding Credit
and Step Up Tier 4 Adding Credit
sections of the Price List. The additional
credit has been underutilized by
member organizations insofar as no
member organization qualified for an
additional credit year to date in any of
the non-tier or tiers in which it is
offered. As such, Exchange does not
anticipate that any member organization
in the near future would qualify for the
additional credits that are the subject of
this proposed rule change.
Underutilized Adding Tier for NonDisplayed Providers in Tape A
Securities
Under the current Adding Tier for
Non-Displayed Providers, the Exchange
provides credits in Tape A securities for
all orders, other than MPL Orders, from
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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’’); 10
and
• 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 receives 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, Member Organizations
meeting the above requirements and
adding 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 will
receive an additional $0.00005 per
share.
The Exchange proposes to eliminate
the Adding Tier for Non-Displayed
Providers in its entirety and remove it
from the Price List. The tier, including
the additional $0.00005 per share credit,
has been underutilized by member
organizations insofar as no member
organization has qualified for the tier
since its introduction in April 2021. As
such, Exchange does not anticipate any
member organization in the near future
would qualify for the credit that is the
subject of this proposed rule change.
Alternative Qualification for Tier 5
Adding Credit
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
also designed to attract additional order
flow to the Exchange by incentivizing
member organizations to submit
additional displayed liquidity to the
Exchange.
Under the current Tier 5 Adding
Credit, the Exchange provides a $0.0017
10 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.
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credit in Tape A securities for orders,
other than MPL and Non-Display
Reserve orders, that add liquidity to the
Exchange where a member
organization’s Adding ADV, excluding
liquidity added as an SLP and as a
DMM, is at least 0.29% of NYSE CADV.
Further, member organizations that
meet the above requirements and add
liquidity, excluding liquidity added as
an SLP, in Tape B and C Securities of
at least 0.20% of Tape B and Tape C
CADV combined, would receive an
additional $0.0001 per share. As
discussed above, the Exchange proposes
to delete this additional credit as
underutilized.
The Exchange further proposes to
provide an alternative way for member
organizations to qualify for the Tier 5
Adding Credit. As proposed, as an
alternative to where a member
organization’s Adding ADV, excluding
liquidity added as an SLP and as a
DMM, is at least 0.29% of NYSE CADV,
member organizations that have an
Adding ADV, excluding liquidity added
as an SLP and as a DMM, of at least
0.125% of NYSE CADV and two times
more than the Member Organization’s
Adding ADV in Tape A Securities in Q1
2021 11 as a percentage of NYSE CADV
would also qualify for the $0.0017
credit.
The Exchange believes that the
alternative way to qualify for the Tier 5
Adding Credit will incentivize greater
participation from member
organizations to increase liquidityproviding orders in the Tape A
securities they send to the Exchange to
qualify for the Tier 5 Adding Credit,
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. The
Exchange does not know how much
order flow member organizations choose
to route to other exchanges or to offexchange venues. Based on the profile
of liquidity-adding firms generally, the
Exchange believes that additional
member organizations could qualify for
the tier under the revised qualification
criteria if they choose to 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
11 The current Tier 6 Adding Credit uses ‘‘1Q’’,
which the Exchange proposes to change to ‘‘Q1’’ for
consistency and clarity.
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63433
change would result in any member
organization directing orders to the
Exchange in order to qualify for the new
tier.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,12 in general, and
furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,13 in
particular, because it provides for the
equitable allocation of reasonable dues,
fees, and other charges among its
members, issuers and other persons
using its facilities and does not unfairly
discriminate between customers,
issuers, brokers or dealers.
The Proposed Change Is Reasonable
Elimination of Underutilized Credits
and Adding Tier in Tape A Securities
The Exchange believes that the
proposed elimination of the
underutilized additional credits for
member organizations that add liquidity
in Tape B and C Securities when
qualifying for certain non-tier and tiered
credits by adding liquidity in Tape A
Securities is reasonable because member
organizations have underutilized this
incentive. No member organization has
qualified for an additional credit year to
date in any of the non-tier or tiers in
which it is offered. The Exchange does
not anticipate any member organization
in the near future qualifying for the
rebate that is the subject of this
proposed rule change. Similarly, the
Exchange believes that the proposed
elimination of the Adding Tier for NonDisplayed Providers in Tape A
Securities is reasonable. No member
organization has qualified for the rebate
since it was adopted in April 2021, and
the Exchange does not anticipate any
member organization in the near future
qualifying for the tier. The Exchange
believes it is reasonable to eliminate
credits when such incentives become
underutilized. The Exchange also
believes eliminating underutilized
incentives would add clarity and
transparency to the Price List.
Alternative Qualification for Tier 5
Adding Credit in Tape A Securities
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
services in the securities markets. In
Regulation NMS, the Commission
highlighted the importance of market
12 15
13 15
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U.S.C. 78f(b)(4) & (5).
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Federal Register / Vol. 86, No. 218 / Tuesday, November 16, 2021 / Notices
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.’’ 14
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.’’ 15
Given the current competitive
environment, the Exchange believes that
the proposed revision to the
requirements for member organizations
to qualify for Tier 5 Adding Credit
represents a reasonable attempt to
attract additional order flow to the
Exchange. Specifically, the Exchange
believes that the proposed revision is
reasonable because it would provide
further incentives for member
organizations to route additional
liquidity-providing orders to a public
exchange, thereby promoting price
discovery and transparency and
enhancing order execution
opportunities for member organizations.
All member organizations would benefit
from the greater amounts of liquidity
that will be present on the Exchange,
which would provide greater execution
opportunities.
As noted above, the Exchange
operates in a competitive environment,
particularly as relates to attracting nonmarketable orders, which add liquidity
to the Exchange. The Exchange believes
that an alternative method to qualify for
the tier will provide greater incentives
for member organizations 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. Based on the profile of
liquidity-adding firms generally, the
Exchange believes that additional
member organizations could qualify for
the tier under the revised qualification
criteria if they choose to direct order
flow to, and increase quoting on, the
Exchange. However, without having a
view of member organizations’ activity
on other exchanges and off-exchange
venues, the Exchange has no way of
14 See
Regulation NMS, supra note 4, at 37499.
Securities Exchange Act Release No. 61358,
75 FR 3594, 3597 (January 21, 2010) (File No. S7–
02–10) (Concept Release on Equity Market
Structure).
15 See
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knowing whether this proposed rule
change would result in any additional
member organizations directing orders
to the Exchange in order to qualify for
the Tier 5 Adding Credit.
The Proposal Is an Equitable Allocation
of Fees
Elimination of Underutilized Credits
and Adding Tier in Tape A Securities
The Exchange believes the proposal
equitably allocates fees among its
market participants because the
underutilized additional credits and
Adding Tier the Exchange proposes to
eliminate would be eliminated in their
entirety, and would no longer be
available to any member organization in
any form. Similarly, the Exchange
believes the proposal equitably allocates
fees among its market participants
because elimination of the underutilized
credits would apply to all similarlysituated member organizations on an
equal basis. All such member
organizations would continue to be
subject to the same fee structure, and
access to the Exchange’s market would
continue to be offered on fair and
nondiscriminatory terms.
Alternative Qualification for Tier 5
Adding Credit in Tape A Securities
The Exchange believes the proposed
rule change equitably allocates its fees
among its market participants. The
proposed change would continue to
encourage member organizations to
submit additional liquidity to the
Exchange and execute orders on the
Exchange, thereby contributing to robust
levels of liquidity, to the benefit of all
market participants.
The Exchange believes that providing
an additional way to qualify for the Tier
5 Adding Credit would encourage the
submission of additional liquidity to the
Exchange, thereby providing customers
with a higher quality venue for price
discovery, liquidity, competitive quotes
and price improvement. The proposed
change will thereby encourage the
submission of additional liquidity to a
national securities exchange, thus
promoting price discovery and
transparency and enhancing order
execution opportunities for member
organizations from the substantial
amounts of liquidity present on the
Exchange. All member organizations
would benefit from the greater amounts
of liquidity that will be present on the
Exchange, which would provide greater
execution opportunities.
The proposal neither targets nor will
it have a disparate impact on any
particular category of market
participant. Specifically, the Exchange
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believes that the proposal constitutes an
equitable allocation of fees because all
similarly situated member organizations
would be eligible for the same credits if
they meet the revised requirements for
the tier. As to those member
organizations that do not presently
qualify for the adding liquidity credit,
the proposal will not adversely impact
their existing pricing or their ability to
qualify for other credits provided by the
Exchange.
The Proposal Is Not Unfairly
Discriminatory
Elimination of Underutilized Credits
and Adding Tier in Tape A Securities
The Exchange believes that the
proposal is not unfairly discriminatory.
The proposal is not unfairly
discriminatory because it neither targets
nor will it have a disparate impact on
any particular category of market
participant. The Exchange believes that
the proposal is not unfairly
discriminatory because the proposed
elimination of the underutilized
additional credits and Adding Tier
would affect all similarly-situated
market participants on an equal and
non-discriminatory basis. The Exchange
believes that eliminating credits that are
underutilized and ineffective would no
longer be available to any member
organization on an equal basis. The
Exchange also believes that the
proposed change would protect
investors and the public interest
because the deletion of underutilized
fees would make the Price List more
accessible and transparent and facilitate
market participants’ understanding of
the fees charged for services currently
offered by the Exchange.
Alternative Qualification for Tier 5
Adding Credit in Tape A Securities
The Exchange believes that the
proposal is not unfairly discriminatory.
In the prevailing competitive
environment, member organizations are
free to disfavor the Exchange’s pricing if
they believe that alternatives offer them
better value.
The proposed changes to the Tier 5
Adding Credit are not unfairly
discriminatory because the alternate
requirements to achieve the credit
would be applied to all similarly
situated member organizations and
other market participants, who would
all be subject to the same modified
requirements to qualify for the tier and
the same credits on an equal basis. For
the same reason, the proposal neither
targets nor will it have a disparate
impact on any particular category of
market participant. Accordingly, no
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member organization already operating
on the Exchange would be
disadvantaged by this allocation of fees.
Further, the Exchange believes the
proposal would incentivize member
organizations to send more orders to the
Exchange to qualify for higher credits.
The Exchange believes that the
proposed changes would not permit
unfair discrimination among member
organizations because the tiered rates
are available equally to all member
organizations. As described above, in
today’s competitive marketplace, order
flow providers have a choice of where
to direct liquidity-providing order flow,
and the Exchange believes there are
additional member organizations that
could qualify if they chose to direct
their order flow to the Exchange.
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.
Finally, the Exchange believes that it
is subject to significant competitive
forces, as described below in the
Exchange’s statement regarding the
burden on competition.
For the foregoing reasons, the
Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,16 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 proposal relates to
the elimination of an underutilized
credits and an adding tier and, as such,
would not have any impact on intra- or
inter-market competition because the
proposed change is solely designed to
accurately reflect the services that the
Exchange currently offers, thereby
adding clarity to the Price List.
In accordance with Section 6(b)(8) of
the Act,17 the Exchange further believes
that the proposed rule change offering
an alternative method to qualify for the
Tier 5 Adding Credit would not impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Instead, as
discussed above, the Exchange believes
that the proposed change would
encourage the submission of additional
liquidity and order flow to a public
exchange, thereby enhancing order
execution opportunities for member
U.S.C. 78f(b)(8).
17 15 U.S.C. 78f(b)(8).
organizations. As a result, the Exchange
believes that the proposed change
furthers the Commission’s goal in
adopting Regulation NMS of fostering
competition among orders, which
promotes ‘‘more efficient pricing of
individual stocks for all types of orders,
large and small.’’ 18
Intramarket Competition. The
proposed change is designed to attract
additional order flow to the Exchange.
As described above, the Exchange
believes that the proposed change
would provide additional incentives for
market participants to route liquidityproviding orders 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 and proposed 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.
Intermarket Competition. The
Exchange operates in a highly
competitive market in which market
participants can readily choose to send
their orders to other exchanges and offexchange venues if they deem fee levels
at those other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees and rebates to remain competitive
with other exchanges and off-exchange
venues. Because competitors are free to
modify their own fees and credits in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
does not believe its proposed fee change
can impose any burden on intermarket
competition.
The Exchange believes that the
proposed change could promote
competition between the Exchange and
other execution venues, including those
that currently offer similar order types
and comparable transaction pricing, by
encouraging additional orders to be sent
to the Exchange for execution.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
16 15
VerDate Sep<11>2014
17:03 Nov 15, 2021
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 19 of the Act and
subparagraph (f)(2) of Rule 19b–4 20
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 21 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSE–2021–65 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSE–2021–65. 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
19 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
21 15 U.S.C. 78s(b)(2)(B).
20 17
18 Regulation
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63435
E:\FR\FM\16NON1.SGM
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63436
Federal Register / Vol. 86, No. 218 / Tuesday, November 16, 2021 / Notices
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSE–2021–65, and
should be submitted on or before
December 7, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–24897 Filed 11–15–21; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Docket No. SBA–2020–0048]
Termination of Nonmanufacturer Rule
Class Waiver
U.S. Small Business
Administration.
ACTION: Notification of intent to
terminate the class waiver to the
Nonmanufacturer Rule for radiology
equipment.
AGENCY:
The U.S. Small Business
Administration (SBA) is considering
terminating a class waiver of the
Nonmanufacturer Rule (NMR) for
irradiation apparatus manufacturing,
computerized axial tomography (CT/
CAT) scanners manufacturing; CT/CAT
(computerized axial tomography)
scanners manufacturing; fluoroscopes
manufacturing; fluoroscopic X-ray
apparatus and tubes manufacturing;
generators, X-ray, manufacturing;
irradiation equipment manufacturing;
X-ray generators manufacturing; and Xray irradiation equipment
manufacturing under manufacturing
categorized under North American
Industry Classification System (NAICS)
code 334517 and Product Service Code
(PSC) 6525.
lotter on DSK11XQN23PROD with NOTICES1
SUMMARY:
22 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
17:03 Nov 15, 2021
Jkt 256001
Comments and source
information must be submitted on or
before xx/xx/xxxx.
ADDRESSES: You may submit comments
and source information via the Federal
Rulemaking Portal at https://
www.regulations.gov under Docket ID
SBA–2020–1148]. If you wish to submit
confidential business information (CBI)
as defined in the User Notice at https://
www.regulations.gov, please submit the
information to Carol Hulme, Attorney
Advisor, Office of Government
Contracting, U.S. Small Business
Administration, 409 Third Street SW,
8th Floor, Washington, DC 20416.
Highlight the information that you
consider to be CBI and explain why you
believe this information should be held
confidential. SBA will review the
information and make a final
determination as to whether the
information will be published.
FOR FURTHER INFORMATION CONTACT:
Carol Hulme, Attorney Advisor, by
telephone at 202–205–6347 or by email
at Carol-Ann.Hulme@sba.gov.
SUPPLEMENTARY INFORMATION: An
awardee of a Federal small business setaside contract valued over $250,000.00,
service-disabled veteran-owned small
business contract, HUBZone contract,
women-owned small business contract,
or 8(a) contract must provide its own
product or that of a small business
manufacturer unless a waiver is in
place. If the above-identified class
waiver is terminated, small businesses
will no longer be authorized to provide
the product of any manufacturer
regardless of size on the identified
items, unless a Federal contracting
officer obtains an individual waiver to
the NMR.
Section 8(a)(17) and 46 of the Small
Business Act (Act), 15 U.S.C. 637(a)(17)
and 657s, and SBA’s implementing
regulations, found at 13 CFR 121.406(b),
require that recipients of Federal supply
contracts issued as a small business setaside (except as stated below), servicedisabled veteran-owned small business
(SDVO SB) set-aside or sole source
contract, Historically Underutilized
Business Zone (HUBZone) set-aside or
sole source contract, WOSB (womenowned small business) or economically
disadvantaged women-owned small
business (EDWOSB) set-aside or sole
source contract, 8(a) set-aside or sole
source contract, partial set-aside, or set
aside of an order against a multiple
award contract provide the product of a
small business manufacturer or
processor if the recipient is other than
the actual manufacturer or processor of
the product. This requirement is
commonly referred to as the
DATES:
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Fmt 4703
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Nonmanufacturer Rule (NMR). 13 CFR
121.406(b). Note that the NMR does not
apply to small business set-aside
acquisitions with an estimated value
between the micro-purchase threshold
and the simplified acquisition threshold
but continues to apply to socioeconomic
categories over the micropurchase
threshold.
Sections 8(a)(17)(B)(iv)(II) and
46(a)(4)(B) of the Act authorize SBA to
waive the NMR for a ‘‘class of products’’
for which there are no small business
manufacturers or processors available to
participate in the Federal market. The
SBA defines ‘‘class of products’’ based
on a combination of (1) the six-digit
NAICS code, (2) the four-digit PSC, and
(3) a description of the class of products.
As implemented in SBA’s regulations at
13 CFR 121.1202(c), in order to be
considered available to participate in
the Federal market for a class of
products, a small business manufacturer
must have submitted a proposal for a
contract solicitation or been awarded a
contract to supply the class of products
within the last 24 months.
In accordance with the SBA’s
regulations at 13 CFR 121.1204(a)(7),
SBA will periodically review existing
class waivers to the NMR to determine
whether small business manufacturers
or processors have become available to
participate in the Federal market. Upon
receipt of information that such a small
business manufacturer or processor
exists, the SBA will announce its intent
to terminate the NMR waiver for a class
of products. 13 CFR 121.1204(a)(7)(ii).
Unless public comment reveals no small
business exists for the class of products
in question, SBA will publish a Final
Notice of Termination in the Federal
Register.
On October 31, 2007, the SBA
published in the Federal Register a
notice of intent to waiver the
Nonmanufacturer Rule for Irradiation
Apparatus Manufacturing (X-Ray
Equipment and Supplies). The
comments submitted in response failed
to establish the existence of a small
business manufacturer of these
products. As such, on December 26,
2007, after the comment and notice
period passed, SBA issued a class
waiver for those products effective
January 10, 2008. That notice can be
found at 77 FR 73057.
On April 20, 2020, SBA received a
request to terminate the previously
issued waiver. The requester provided
information that established the
existence of a small business
manufacturer of the identified products.
Thus SBA is proposing to terminate the
class waiver for irradiation apparatus
manufacturing, computerized axial
E:\FR\FM\16NON1.SGM
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Agencies
[Federal Register Volume 86, Number 218 (Tuesday, November 16, 2021)]
[Notices]
[Pages 63431-63436]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-24897]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93545; File No. SR-NYSE-2021-65]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Price List
November 9, 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 November 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 Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
[[Page 63432]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to to[sic] amend its Price List to (1)
eliminate the underutilized additional credits for member organizations
that add liquidity in Tape B and C Securities when qualifying for
certain non-tier and tiered credits by adding liquidity in Tape A
Securities; (2) eliminate the underutilized Adding Tier for Non-
Displayed Providers in Tape A Securities; and (3) revise the
requirements to qualify for the Tier 5 Adding Credit in Tape A
Securities. The Exchange proposes to implement the rule change on
November 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 (1) eliminate the
underutilized additional credits for member organizations that add
liquidity in Tape B and C Securities when qualifying for certain non-
tier and tiered credits by adding liquidity in Tape A Securities; (2)
eliminate the underutilized Adding Tier for Non-Displayed Providers in
Tape A Securities; and (3) revise the requirements to qualify for the
Tier 5 Adding Credit in Tape A Securities.
The proposed revision to the Tier 5 Adding Credit 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 member organizations to send additional
displayed liquidity to the Exchange.
The Exchange proposes to implement the rule change on November 1,
2021.
Current Market and Competitive Environment
The Exchange operates in a highly competitive market. The
Commission has repeatedly expressed its preference for competition over
regulatory intervention in determining prices, products, and services
in the securities markets. Specifically, in Regulation NMS, the
Commission highlighted the importance of market forces in determining
prices and SRO revenues and, also, recognized that current regulation
of the market system ``has been remarkably successful in promoting
market competition in its broader forms that are most important to
investors and listed companies.'' \4\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04) (Final Rule)
(``Regulation NMS'').
---------------------------------------------------------------------------
As the Commission itself has recognized, the market for trading
services in NMS stocks has become ``more fragmented and competitive.''
\5\ Indeed, equity trading is currently dispersed across 16
exchanges,\6\ 31 alternative trading systems,\7\ and numerous broker-
dealer internalizers and wholesalers. Based on publicly-available
information, no single exchange has more than 18% of the market.\8\
Therefore, no exchange possesses significant pricing power in the
execution of equity order flow. More specifically, the Exchange's share
of executed volume of equity trades in Tapes A, B and C securities is
less than 12%.\9\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 51808[sic], 84FR
5202, 5253 (February 20, 2019) (File No. S7-05-18) (Transaction Fee
Pilot for NMS Stocks Final Rule) (``Transaction Fee Pilot'').
\6\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at https://markets.cboe.com/us/equities/market_share/. See generally https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
\7\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of
alternative trading systems registered with the Commission is
available at https://www.sec.gov/foia/docs/atslist.htm.
\8\ See Cboe Global Markets U.S. Equities Market Volume Summary,
available at https://markets.cboe.com/us/equities/market_share/.
\9\ See id.
---------------------------------------------------------------------------
The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
move order flow, or discontinue or reduce use of certain 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 numerous 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
The Exchange proposes to eliminate certain underutilized additional
credits for adding liquidity in Tape B and C Securities and the
underutilized Adding Tier for Non-Displayed Providers in Tape A
Securities, as follows.
Underutilized Additional Credits
Member organizations adding liquidity in Tape A Securities and
meeting all of the requirements of the Non-Tier Adding Credit, the Tier
1 Adding Credit, the Tier 2 Adding Credit, the Tier 3 Adding Credit,
the Tier 4 Adding Credit, the Tier 5 Adding Credit, the Tier 6 Adding
Credit, the Step Up Tier 1 Adding Credit, the Step Up Tier 2 Adding
Credit and the Step Up Tier 4 Adding Credit are currently eligible for
an additional credit of $0.0001 per share (under the Non-Tier Adding
Credit, Tier 3 Adding Credit, Tier 4 Adding Credit, Tier 5 Adding
Credit, Tier 6 Adding Credit, and Step Up Tier 4 Adding Credit) or
$0.0005 per share (under the Tier 1 Adding Credit, Tier 2 Adding
Credit, Step Up Tier 1 Adding Credit, and Step Up Tier 2 Adding Credit)
if the member organization also adds a specified amount of liquidity,
excluding liquidity added as an Supplemental Liquidity Provider
(``SLP''), in Tapes B and C Securities.
The Exchange proposes to eliminate and remove these additional
credits from the Non-Tier Adding Credit, Tier 1 Adding Credit, Tier 2
Adding Credit, Tier 3 Adding Credit, Tier 4 Adding Credit, Tier 5
Adding Credit, Tier 6 Adding Credit, Step Up Tier 1 Adding Credit, Step
Up Tier 2 Adding Credit and Step Up Tier 4 Adding Credit sections of
the Price List. The additional credit has been underutilized by member
organizations insofar as no member organization qualified for an
additional credit year to date in any of the non-tier or tiers in which
it is offered. As such, Exchange does not anticipate that any member
organization in the near future would qualify for the additional
credits that are the subject of this proposed rule change.
Underutilized Adding Tier for Non-Displayed Providers in Tape A
Securities
Under the current Adding Tier for Non-Displayed Providers, the
Exchange provides credits in Tape A securities for all orders, other
than MPL Orders, from
[[Page 63433]]
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''); \10\ and
---------------------------------------------------------------------------
\10\ 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.
---------------------------------------------------------------------------
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 receives 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, Member Organizations meeting the above requirements
and adding 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
will receive an additional $0.00005 per share.
The Exchange proposes to eliminate the Adding Tier for Non-
Displayed Providers in its entirety and remove it from the Price List.
The tier, including the additional $0.00005 per share credit, has been
underutilized by member organizations insofar as no member organization
has qualified for the tier since its introduction in April 2021. As
such, Exchange does not anticipate any member organization in the near
future would qualify for the credit that is the subject of this
proposed rule change.
Alternative Qualification for Tier 5 Adding Credit
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 also designed to attract additional order flow to the
Exchange by incentivizing member organizations to submit additional
displayed liquidity to the Exchange.
Under the current Tier 5 Adding Credit, the Exchange provides a
$0.0017 credit in Tape A securities for orders, other than MPL and Non-
Display Reserve orders, that add liquidity to the Exchange where a
member organization's Adding ADV, excluding liquidity added as an SLP
and as a DMM, is at least 0.29% of NYSE CADV. Further, member
organizations that meet the above requirements and add liquidity,
excluding liquidity added as an SLP, in Tape B and C Securities of at
least 0.20% of Tape B and Tape C CADV combined, would receive an
additional $0.0001 per share. As discussed above, the Exchange proposes
to delete this additional credit as underutilized.
The Exchange further proposes to provide an alternative way for
member organizations to qualify for the Tier 5 Adding Credit. As
proposed, as an alternative to where a member organization's Adding
ADV, excluding liquidity added as an SLP and as a DMM, is at least
0.29% of NYSE CADV, member organizations that have an Adding ADV,
excluding liquidity added as an SLP and as a DMM, of at least 0.125% of
NYSE CADV and two times more than the Member Organization's Adding ADV
in Tape A Securities in Q1 2021 \11\ as a percentage of NYSE CADV would
also qualify for the $0.0017 credit.
---------------------------------------------------------------------------
\11\ The current Tier 6 Adding Credit uses ``1Q'', which the
Exchange proposes to change to ``Q1'' for consistency and clarity.
---------------------------------------------------------------------------
The Exchange believes that the alternative way to qualify for the
Tier 5 Adding Credit will incentivize greater participation from member
organizations to increase liquidity-providing orders in the Tape A
securities they send to the Exchange to qualify for the Tier 5 Adding
Credit, 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. 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 tier under the revised qualification criteria if they choose to
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.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\12\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\13\ 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.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4) & (5).
---------------------------------------------------------------------------
The Proposed Change Is Reasonable
Elimination of Underutilized Credits and Adding Tier in Tape A
Securities
The Exchange believes that the proposed elimination of the
underutilized additional credits for member organizations that add
liquidity in Tape B and C Securities when qualifying for certain non-
tier and tiered credits by adding liquidity in Tape A Securities is
reasonable because member organizations have underutilized this
incentive. No member organization has qualified for an additional
credit year to date in any of the non-tier or tiers in which it is
offered. The Exchange does not anticipate any member organization in
the near future qualifying for the rebate that is the subject of this
proposed rule change. Similarly, the Exchange believes that the
proposed elimination of the Adding Tier for Non-Displayed Providers in
Tape A Securities is reasonable. No member organization has qualified
for the rebate since it was adopted in April 2021, and the Exchange
does not anticipate any member organization in the near future
qualifying for the tier. The Exchange believes it is reasonable to
eliminate credits when such incentives become underutilized. The
Exchange also believes eliminating underutilized incentives would add
clarity and transparency to the Price List.
Alternative Qualification for Tier 5 Adding Credit in Tape A Securities
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 services in the securities markets. In Regulation NMS,
the Commission highlighted the importance of market
[[Page 63434]]
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.'' \14\ 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.'' \15\
---------------------------------------------------------------------------
\14\ See Regulation NMS, supra note 4, at 37499.
\15\ 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).
---------------------------------------------------------------------------
Given the current competitive environment, the Exchange believes
that the proposed revision to the requirements for member organizations
to qualify for Tier 5 Adding Credit represents a reasonable attempt to
attract additional order flow to the Exchange. Specifically, the
Exchange believes that the proposed revision is reasonable because it
would provide further incentives for member organizations to route
additional liquidity-providing orders to a public exchange, thereby
promoting price discovery and transparency and enhancing order
execution opportunities for member organizations. All member
organizations would benefit from the greater amounts of liquidity that
will be present on the Exchange, which would provide greater execution
opportunities.
As noted above, the Exchange operates in a competitive environment,
particularly as relates to attracting non-marketable orders, which add
liquidity to the Exchange. The Exchange believes that an alternative
method to qualify for the tier will provide greater incentives for
member organizations 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. Based on the
profile of liquidity-adding firms generally, the Exchange believes that
additional member organizations could qualify for the tier under the
revised qualification criteria if they choose to direct order flow to,
and increase quoting on, the Exchange. However, without having a view
of member organizations' activity on other exchanges and off-exchange
venues, the Exchange has no way of knowing whether this proposed rule
change would result in any additional member organizations directing
orders to the Exchange in order to qualify for the Tier 5 Adding
Credit.
The Proposal Is an Equitable Allocation of Fees
Elimination of Underutilized Credits and Adding Tier in Tape A
Securities
The Exchange believes the proposal equitably allocates fees among
its market participants because the underutilized additional credits
and Adding Tier the Exchange proposes to eliminate would be eliminated
in their entirety, and would no longer be available to any member
organization in any form. Similarly, the Exchange believes the proposal
equitably allocates fees among its market participants because
elimination of the underutilized credits would apply to all similarly-
situated member organizations on an equal basis. All such member
organizations would continue to be subject to the same fee structure,
and access to the Exchange's market would continue to be offered on
fair and nondiscriminatory terms.
Alternative Qualification for Tier 5 Adding Credit in Tape A Securities
The Exchange believes the proposed rule change equitably allocates
its fees among its market participants. The proposed change would
continue to encourage member organizations to submit additional
liquidity to the Exchange and execute orders on the Exchange, thereby
contributing to robust levels of liquidity, to the benefit of all
market participants.
The Exchange believes that providing an additional way to qualify
for the Tier 5 Adding Credit would encourage the submission of
additional liquidity to the Exchange, thereby providing customers with
a higher quality venue for price discovery, liquidity, competitive
quotes and price improvement. The proposed change will thereby
encourage the submission of additional liquidity to a national
securities exchange, thus promoting price discovery and transparency
and enhancing order execution opportunities for member organizations
from the substantial amounts of liquidity present on the Exchange. All
member organizations would benefit from the greater amounts of
liquidity that will be present on the Exchange, which would provide
greater execution opportunities.
The proposal neither targets nor will it have a disparate impact on
any particular category of market participant. Specifically, the
Exchange believes that the proposal constitutes an equitable allocation
of fees because all similarly situated member organizations would be
eligible for the same credits if they meet the revised requirements for
the tier. As to those member organizations that do not presently
qualify for the adding liquidity credit, the proposal will not
adversely impact their existing pricing or their ability to qualify for
other credits provided by the Exchange.
The Proposal Is Not Unfairly Discriminatory
Elimination of Underutilized Credits and Adding Tier in Tape A
Securities
The Exchange believes that the proposal is not unfairly
discriminatory. The proposal is not unfairly discriminatory because it
neither targets nor will it have a disparate impact on any particular
category of market participant. The Exchange believes that the proposal
is not unfairly discriminatory because the proposed elimination of the
underutilized additional credits and Adding Tier would affect all
similarly-situated market participants on an equal and non-
discriminatory basis. The Exchange believes that eliminating credits
that are underutilized and ineffective would no longer be available to
any member organization on an equal basis. The Exchange also believes
that the proposed change would protect investors and the public
interest because the deletion of underutilized fees would make the
Price List more accessible and transparent and facilitate market
participants' understanding of the fees charged for services currently
offered by the Exchange.
Alternative Qualification for Tier 5 Adding Credit in Tape A Securities
The Exchange believes that the proposal is not unfairly
discriminatory. In the prevailing competitive environment, member
organizations are free to disfavor the Exchange's pricing if they
believe that alternatives offer them better value.
The proposed changes to the Tier 5 Adding Credit are not unfairly
discriminatory because the alternate requirements to achieve the credit
would be applied to all similarly situated member organizations and
other market participants, who would all be subject to the same
modified requirements to qualify for the tier and the same credits on
an equal basis. For the same reason, the proposal neither targets nor
will it have a disparate impact on any particular category of market
participant. Accordingly, no
[[Page 63435]]
member organization already operating on the Exchange would be
disadvantaged by this allocation of fees. Further, the Exchange
believes the proposal would incentivize member organizations to send
more orders to the Exchange to qualify for higher credits.
The Exchange believes that the proposed changes would not permit
unfair discrimination among member organizations because the tiered
rates are available equally to all member organizations. As described
above, in today's competitive marketplace, order flow providers have a
choice of where to direct liquidity-providing order flow, and the
Exchange believes there are additional member organizations that could
qualify if they chose to direct their order flow to the Exchange.
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.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
For the foregoing reasons, the Exchange believes that the proposal
is consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\16\ 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 proposal relates
to the elimination of an underutilized credits and an adding tier and,
as such, would not have any impact on intra- or inter-market
competition because the proposed change is solely designed to
accurately reflect the services that the Exchange currently offers,
thereby adding clarity to the Price List.
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\16\ 15 U.S.C. 78f(b)(8).
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In accordance with Section 6(b)(8) of the Act,\17\ the Exchange
further believes that the proposed rule change offering an alternative
method to qualify for the Tier 5 Adding Credit would not impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. Instead, as discussed above,
the Exchange believes that the proposed change would encourage the
submission of additional liquidity and order flow to a public exchange,
thereby enhancing order execution opportunities for member
organizations. As a result, the Exchange believes that the proposed
change furthers the Commission's goal in adopting Regulation NMS of
fostering competition among orders, which promotes ``more efficient
pricing of individual stocks for all types of orders, large and
small.'' \18\
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\17\ 15 U.S.C. 78f(b)(8).
\18\ Regulation NMS, 70 FR at 37498-99.
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Intramarket Competition. The proposed change is designed to attract
additional order flow to the Exchange. As described above, the Exchange
believes that the proposed change would provide additional incentives
for market participants to route liquidity-providing orders 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 and proposed 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.
Intermarket Competition. The Exchange operates in a highly
competitive market in which market participants can readily choose to
send their orders to other exchanges and off-exchange venues if they
deem fee levels at those other venues to be more favorable. In such an
environment, the Exchange must continually adjust its fees and rebates
to remain competitive with other exchanges and off-exchange venues.
Because competitors are free to modify their own fees and credits in
response, and because market participants may readily adjust their
order routing practices, the Exchange does not believe its proposed fee
change can impose any burden on intermarket competition.
The Exchange believes that the proposed change could promote
competition between the Exchange and other execution venues, including
those that currently offer similar order types and comparable
transaction pricing, by encouraging additional orders to be sent to the
Exchange for execution.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \19\ of the Act and subparagraph (f)(2) of Rule
19b-4 \20\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \21\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\21\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSE-2021-65 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2021-65. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the
[[Page 63436]]
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-2021-65, and should be submitted on or before December 7, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-24897 Filed 11-15-21; 8:45 am]
BILLING CODE 8011-01-P