Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List, 57233-57238 [2022-20150]

Download as PDF Federal Register / Vol. 87, No. 180 / Monday, September 19, 2022 / Notices order routing practices, the Exchange does not believe this proposed fee change would 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) 25 of the Act and subparagraph (f)(2) of Rule 19b–4 26 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) 27 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: lotter on DSK11XQN23PROD with NOTICES1 Electronic Comments Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEARCA–2022–59. 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 offices of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSEARCA–2022–59, and should be submitted on or before October 11, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2022–20145 Filed 9–16–22; 8:45 am] BILLING CODE 8011–01–P • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEARCA–2022–59 on the subject line. U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 27 15 U.S.C. 78s(b)(2)(B). SECURITIES AND EXCHANGE COMMISSION [Release No. 34–95761; File No. SR–NYSE– 2022–42] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List September 13, 2022. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on September 1, 2022, 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. 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 (1) increase the credit for orders designated as ‘‘retail’’ that add liquidity to the Exchange, and (2) amend the requirements for charges that remove liquidity from the Exchange. The Exchange proposes to implement the fee changes effective September 1, 2022. 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. 25 15 1 15 26 17 2 15 VerDate Sep<11>2014 17:37 Sep 16, 2022 28 17 Jkt 256001 PO 00000 CFR 200.30–3(a)(12). Frm 00066 Fmt 4703 Sfmt 4703 57233 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. E:\FR\FM\19SEN1.SGM 19SEN1 57234 Federal Register / Vol. 87, No. 180 / Monday, September 19, 2022 / Notices 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 it Price List to (1) increase the credit for orders designated as ‘‘retail’’ that add liquidity to the Exchange, and (2) amend the requirements for charges that remove liquidity from the Exchange. The proposed changes respond to the current competitive environment where order flow providers have a choice of where to direct liquidity-providing and liquidity-removing orders by offering further incentives for member organizations to send additional liquidity to the Exchange. The Exchange proposes to implement the fee changes effective September 1, 2022. 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. 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, cash equity trading is currently dispersed across 16 exchanges,6 numerous alternative trading systems,7 and broker-dealer lotter on DSK11XQN23PROD with NOTICES1 4 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7–10–04) (Final Rule) (‘‘Regulation NMS’’). 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 U.S. Equities Market Volume Summary, available at https://markets.cboe.com/us/ equities/market_share. See generally https:// www.sec.gov/fast-answers/divisionsmarketregmr exchangesshtml.html. 7 See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/ AtsIssueData. A list of alternative trading systems VerDate Sep<11>2014 17:37 Sep 16, 2022 Jkt 256001 internalizers and wholesalers, all competing for order flow. Based on publicly-available information, no single exchange currently has more than 17% market share.8 Therefore, no exchange possesses significant pricing power in the execution of cash 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. While it is not possible to know a firm’s reason for shifting order flow, the Exchange believes that one such reason is because of fee changes at any of the registered exchanges or nonexchange venues to which the firm routes order flow. Accordingly, competitive forces compel the Exchange to use exchange transaction fees and credits because market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. In response to this competitive environment, the Exchange has established incentives for member organizations who submit orders that provide liquidity on the Exchange. The Exchange has also established incentives for member organizations to remove liquidity from the Exchange. As detailed below, the proposed higher credits and revised requirements are intended to attract additional order flow to a public exchange and increase the quality of order execution on the Exchange’s marketplace, which benefits all market participants. Proposed Rule Change Proposed Increase to Credit for Retail Orders That Add Liquidity The Exchange currently provides a $0.0030 per share credit for all orders, other than MPL and Non-Display Reserve Orders,10 with a ‘‘retail’’ modifier 11 (‘‘Retail Order’’) that add liquidity to the Exchange. Similarly, the Exchange currently provides a $0.0030 per share for Supplementary Liquidity Providers (‘‘SLPs’’) adding liquidity to 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. 10 The Exchange proposes the non-substantive, clarifying change of adding a comma following ‘‘Non-Display Reserve orders’’ in this section of the Price List. 11 ‘‘Retail modifier’’ is defined in Rule 7.31(i)(6). PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 the NYSE with Retail Orders in securities with a per share price of $1.00 or more.12 Finally, the Exchange offers a $0.0030 per share rebate for executions in Retail Orders that add liquidity to the Exchange in Tape B and C securities. The Exchange proposes to increase the credit for Retail Orders that add liquidity to the Exchange to $0.0032 per share, from the current level of $0.0030 per share. The Exchange proposes this change in part because it would be consistent with the applicable rate on other marketplaces. For instance, the base credit for retail orders adding liquidity on Cboe BZX and Cboe EDGX is $0.0032 per share.13 The Exchange’s affiliates NYSE American LLC and NYSE Arca Equities also similarly offers the same non-tiered credit of $0.0032 per share for retail orders adding liquidity.14 In addition, the proposed change is intended to encourage greater participation from member organizations and to promote additional liquidity in Retail Orders. The competition for retail order flow between exchanges and off-exchange venues is fierce, and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. The Exchange believes that the proposed increase credit for orders that add liquidity to the Exchange could lead to more member organizations choosing to route their Retail Orders to the Exchange for execution rather than to a competing exchange. The Exchange, however, does not know how much Retail Order flow member organizations choose to route to other exchanges or to off-exchange venues. Without having a view of member organization’s activity on other markets and off-exchange venues, the Exchange has no way of knowing whether this proposed rule change would result in any member organizations sending more Retail Orders to the Exchange. The Exchange cannot predict with certainty how many 12 The Exchange proposes a second nonsubstantive clarifying change in this section of the Price List to replace the obsolete phrase ‘‘designated as ‘retail’ (i.e., orders that satisfy the Retail Modifier requirements of Rule 13’’ following ‘‘order’’ with the phrase ‘‘with a Retail Modifier’’. 13 See Cboe BZX Price List at https:// www.cboe.com/us/equities/membership/fee_ schedule/bzx/ and Cboe EDGX Price List at https:// www.cboe.com/us/equities/membership/fee_ schedule/edgx/. 14 See NYSE American Equities Price List at https://www.nyse.com/publicdocs/nyse/markets/ nyse-american/NYSE_America_Equities_Price_ List.pdf; NYSE Arca Equities Price List at https:// www.nyse.com/publicdocs/nyse/markets/nyse-arca/ NYSE_Arca_Marketplace_Fees.pdf. E:\FR\FM\19SEN1.SGM 19SEN1 Federal Register / Vol. 87, No. 180 / Monday, September 19, 2022 / Notices lotter on DSK11XQN23PROD with NOTICES1 member organizations would avail themselves of this opportunity, but additional Retail Orders would benefit all market participants because it would provide greater execution opportunities on the Exchange. The proposed rule change is designed to be available to all member organizations on the Exchange and is intended to provide member organizations a greater incentive to direct more of their Retail Orders to the Exchange. The Exchange does not propose any changes to its Retail Order rates. Charges for Removing Liquidity Currently, the Exchange offers a fee of $0.00295 for Tape A securities and $0.00285 for Tape B and C securities for non-Floor broker transactions where the member organization has an average daily volume (‘‘ADV’’) that adds liquidity to the Exchange during the billing month (‘‘Adding ADV’’),15 excluding liquidity added by a DMM, that is at least 250,000 ADV on the NYSE in Tape A securities. The Exchange proposes to delete this tier and its related fees in their entirety. In addition, the Exchange currently offers a fee of $0.00290 in Tape A securities and a fee of $0.00285 for Tape B and C securities for non-Floor broker transactions if the member organization has an Adding ADV, excluding liquidity added by a DMM, that is at least 3,500,000 ADV on the NYSE in Tape A securities. The Exchange proposes to lower the Tape A ADV requirement from the current 3,500,000 ADV on the NYSE in Tape A securities to 2,000,000 ADV on the NYSE in Tape A securities. The current fees would remain unchanged. Member organizations that do not qualify for the current fee based on the proposed lower ADV requirement receive the $0.0030 base remove rate for all tapes. The Exchange believes that the proposed changes, taken together, will incentivize submission of additional liquidity in Tape A, B and Tape C securities to a public exchange, thereby promoting price discovery and transparency and enhancing order execution opportunities for member organizations. 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. The Exchange does not know how much order flow member organizations choose to route to other exchanges or to off-exchange venues. The Exchange believes that 5 or more member organizations that don’t qualify today could qualify for the tiered rates if the volume requirement is lowered based on their current trading profile on the Exchange and if they choose to direct order flow to the NYSE. 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. The proposed changes are not otherwise intended to address any other issues, and the Exchange is not aware of any significant problems that market participants would have in complying with the proposed changes. can shift order flow, or discontinue to reduce use of certain categories of products, in response to fee changes. Member organizations can choose from any one of the 16 currently operating registered exchanges, and numerous offexchange venues, to route such order flow. Accordingly, competitive forces constrain exchange transaction fees that relate to orders on an exchange. Stated otherwise, changes to exchange transaction fees can have a direct effect on the ability of an exchange to compete for order flow. Given this competitive environment, the proposal represents a reasonable attempt to attract additional order flow to the Exchange by adjusting the incentives for all market participants to send additional order flow to a public exchange and increase the quality of order execution on the Exchange’s market, which benefits all market participants. 2. Statutory Basis Proposed Increase to Credit for Retail Orders That Add Liquidity The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,16 in general, and furthers the objectives of Sections 6(b)(4) and (5) of the Act,17 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, is designed to prevent fraudulent and manipulative acts and practices and to promote just and equitable principles of trade, and does not unfairly discriminate between customers, issuers, brokers or dealers. The Proposed Fee Change Is Reasonable As discussed above, the Exchange operates in a highly fragmented and competitive market. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 18 The Exchange believes that the evershifting market share among the exchanges from month to month demonstrates that market participants 16 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 18 See Regulation NMS, supra note 4, 70 FR at 37499. 17 15 15 The terms ‘‘ADV’’ and ‘‘CADV’’ are defined in footnote * of the Price List. VerDate Sep<11>2014 17:37 Sep 16, 2022 Jkt 256001 57235 PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 The Exchange believes that the proposed increase to the credit for Retail Orders that add liquidity to the Exchange is reasonable. The Exchange operates in a fiercely competitive environment, particularly with regard to retail orders. As noted above, several of the Exchange’s competitors offer base credits for retail orders adding liquidity that are higher (i.e., $0.0032 credit per share) than the Exchange’s current credit ($0.0030 credit per share). The Exchange believes that this proposal to increase its credit for Retail Orders adding liquidity to the Exchange represents a reasonable attempt to attract additional Retail Orders to the Exchange, thereby increasing liquidity on the Exchange, to the benefit of all market participants. In addition, the Exchange believes that attracting higher volumes of Retail Orders to be transacted on the Exchange by member organizations would benefit all market participants by offering greater price discovery and an increased opportunity to trade on the Exchange. Without having a view of member organization activity on other markets and off-exchange venues, the Exchange has no way of knowing whether this proposed rule change would result in any member organization sending more of Retail Orders to the Exchange, nor can the Exchange predict with certainty how many member organizations would avail themselves of the opportunity presented by the revised credit. Additional Retail Orders on the Exchange would benefit all market participants because they would E:\FR\FM\19SEN1.SGM 19SEN1 57236 Federal Register / Vol. 87, No. 180 / Monday, September 19, 2022 / Notices provide greater execution opportunities on the Exchange. Charges for Removing Liquidity The Exchange believes that the proposal to delete certain fees, and lowering the ADV requirement, for transactions that remove liquidity from the Exchange in Tape A, B and C securities are reasonable. The purpose of these changes is to encourage additional liquidity on the Exchange because market participants benefit from the greater amounts of displayed liquidity present on a public exchange. The Exchange believes that the proposed lower ADV requirement will incentivize additional liquidity to a public exchange to qualify for lower fees for removing liquidity in Tape A, B and Tape C securities, thereby promoting price discovery and transparency and enhancing order execution opportunities for member organizations. The proposal is thus reasonable because all member organizations would benefit from such increased levels of liquidity. Non-Substantive Changes Finally, the Exchange believes the proposed non-substantive clarifying and conforming changes described above 19 are 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. lotter on DSK11XQN23PROD with NOTICES1 The Proposed Change Is an Equitable Allocation of Fees and Credits The Exchange believes its proposal equitably allocates its fees among its market participants by fostering liquidity provision and stability in the marketplace. Proposed Increase to Credit for Retail Orders That Add Liquidity The Exchange believes that its proposal to increase the credit available for Retail Orders that add liquidity to the exchange equitably allocates its fees among market participants because all member organizations that participate on the Exchange may qualify for the proposed credit if they elect to send their Retail Orders to the Exchange and properly designate them as Retail Orders. The Exchange further believes that the proposed change is equitable because it is reasonably related to the value to the Exchange’s market quality associated with higher volume in Retail Orders. The Exchange believes that increasing 19 See notes 10 & 12, supra. VerDate Sep<11>2014 17:37 Sep 16, 2022 Jkt 256001 the credit available for orders designated as Retail Orders would attract additional order flow and liquidity to the Exchange, thereby contributing to price discovery on the Exchange and benefiting investors generally. The Exchange believes that the proposed rule change is equitable because maintaining or increasing the proportion of Retail Orders in exchangelisted securities that are executed on a registered national securities exchange (rather than relying on certain available off-exchange execution methods) would benefit all investors by deepening the Exchange’s liquidity pool, supporting the quality of price discovery, promoting market transparency, and improving investor protection. Charges for Removing Liquidity The Exchange believes that, for the reasons discussed above, the proposed changes taken together, will incentivize member organizations to send additional adding liquidity to achieve lower fees when removing liquidity in Tape A, B and Tape C securities from the Exchange, thereby increasing the number of orders that are executed on the Exchange, promoting price discovery and transparency and enhancing order execution opportunities and improving overall liquidity on a public exchange. The Exchange also believes that the proposed change is equitable because it would apply to all similarly situated member organizations that remove liquidity in Tape A, B or Tape C securities. As previously noted, 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. As noted above, the Exchange believes that additional member organizations could qualify for the tiered rates if the volume requirement is lowered based on their current trading profile on the Exchange and if they choose to direct order flow to the NYSE. 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. PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 The Proposed Fee Change Is Not Unfairly Discriminatory The Exchange believe that the proposed rule is not unfairly discriminatory, for the following reasons. Proposed Increase to Credit for Retail Orders That Add Liquidity The Exchange believes that its proposal to increase the credit for Retail Orders that add liquidity to the Exchange is not unfairly discriminatory because it would apply to all member organizations on an equal and nondiscriminatory basis, and all similarlysituated member organizations would earn the same credits and pay the same fees for Retail Orders executed on the Exchange. In addition, the submission of Retail Orders is optional for member organizations in that they could choose whether to submit Retail Orders to the Exchange and, if they do, they can choose the extent of their activity in this regard. The Exchange believes that the proposed change is not unfairly discriminatory because maintaining or increasing the proportion of Retail Orders in exchange-listed securities that are executed on a registered national securities exchange (rather than relying on certain available off-exchange execution methods) would contribute to investors’ confidence in the fairness of their transactions and would benefit all investors by deepening the Exchange’s liquidity pool, supporting the quality of price discovery, promoting market transparency, and improving investor protection. Charges for Removing Liquidity The Exchange believes that the proposed changes the charges for member organizations that remove liquidity in all three tapes will, taken together, incentivize submission of additional liquidity in Tape A, B and Tape C securities to a public exchange to qualify for the fees for removing liquidity, thereby promoting price discovery and transparency and enhancing order execution opportunities for member organizations. The proposal does not permit unfair discrimination because the new ADV requirement for removing liquidity in Tape A, B and C securities would be applied to all similarly situated member organizations and other market participants, 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 Exchange E:\FR\FM\19SEN1.SGM 19SEN1 Federal Register / Vol. 87, No. 180 / Monday, September 19, 2022 / Notices believes it is not unfairly discriminatory to provide lower fees for removing liquidity as the proposed fee and credits would be provided on an equal basis to all member organizations that remove liquidity by meeting the tiered requirements. Further, the Exchange believes the proposed fee would provide an incentive for member organizations to remove additional liquidity from the Exchange in Tape A, B and C securities. 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. As noted, the proposed change also is not unfairly discriminatory because it would be consistent with the applicable rate on other marketplaces. In addition, 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. lotter on DSK11XQN23PROD with NOTICES1 B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,20 the Exchange believes that the proposed rule change would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Instead, as discussed above, the Exchange believes that the proposed fee change 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 market participants. As a result, the Exchange believes that the proposed change furthers the Commission’s goal in adopting Regulation NMS of fostering integrated competition among orders, which promotes ‘‘more efficient pricing of individual stocks for all types of orders, large and small.’’ 21 Intramarket Competition. The Exchange believes the proposed change would not impose any burden on competition that is not necessary or appropriate in furtherance of the 20 15 U.S.C. 78f(b)(8). Securities Exchange Act Release No. 51808, 70 FR 37495, 37498–99 (June 29, 2005) (S7–10–04) (Final Rule). 21 See VerDate Sep<11>2014 17:37 Sep 16, 2022 Jkt 256001 purposes of the Act. The proposed change is designed to attract additional orders to the Exchange. The Exchange believes that the proposed changes would incentivize market participants to direct their orders to the Exchange. Greater overall order flow, trading opportunities, and pricing transparency benefit all market participants on the Exchange by enhancing market quality and continuing to encourage member organizations to send orders, thereby contributing towards a robust and wellbalanced market ecosystem. The current and proposed fees and 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 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 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. 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 PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 57237 19(b)(3)(A) 22 of the Act and subparagraph (f)(2) of Rule 19b–4 23 thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 24 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSE–2022–42 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–2022–42. 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 22 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 24 15 U.S.C. 78s(b)(2)(B). 23 17 E:\FR\FM\19SEN1.SGM 19SEN1 57238 Federal Register / Vol. 87, No. 180 / Monday, September 19, 2022 / Notices 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–2022–42 and should be submitted on or before October 11, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2022–20150 Filed 9–16–22; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–95754; File No. SR–MEMX– 2022–25] Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend MEMX Rule 11.15, Clearly Erroneous Executions lotter on DSK11XQN23PROD with NOTICES1 September 13, 2022. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on [insert date], MEMX LLC (‘‘MEMX’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ‘‘non-controversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). VerDate Sep<11>2014 17:37 Sep 16, 2022 Jkt 256001 The Exchange is filing with the Commission a proposed rule change to extend the current pilot program related to amend MEMX Rule 11.15, Clearly Erroneous Executions. The text of the proposed rule change is provided in Exhibit 5. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION 25 17 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to amend MEMX Rule 11.15, Clearly Erroneous Executions. On September 1, 2022, the Commission approved the proposal of Cboe BZX Exchange, Inc. (‘‘BZX’’), to adopt on a permanent basis the pilot program for Clearly Erroneous Executions in BZX Rule 11.17.5 Based on the BZX Approval, the Exchange proposes: (1) make the current clearly erroneous pilot program permanent; and (2) limit the circumstances where clearly erroneous review would continue to be available during Regular Trading Hours,6 when the LULD Plan to Address Extraordinary Market Volatility (the ‘‘LULD Plan’’) 7 already provides similar protections for trades occurring at prices that may be deemed erroneous. The Exchange believes that these changes are appropriate as the LULD Plan has been approved by the Commission on a permanent basis,8 and in light of 5 See Securities Exchange Act Release No. 95658 (September 1, 2022) (SR–CboeBZX–2022–037) (‘‘BZX Approval’’). 6 The term ‘‘Regular Trading Hours’’ means the time between 9:30 a.m. and 4 p.m. eastern time. See MEMX Rule 1.5(bb). 7 See Securities Exchange Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012). 8 See Securities Exchange Act Release No. 84843 (December 18, 2018), 83 FR 66464 (December 26, 2018) (‘‘Notice’’); 85623 (April 11, 2019), 84 FR PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 amendments to the LULD Plan, including changes to the applicable Price Bands 9 around the open and close of trading. Further, the proposed rule change is based on and substantively identical to BZX Rule 11.17. The only differences between proposed MEMX Rule 11.15 and BZX Rule 11.17 relate to different terms to define trading sessions (i.e., the Exchange uses the terms Pre-Market Session and PostMarket Session whereas BZX uses the terms Early Trading Session, PreOpening Session and After Hours Trading Session), minor language differences for clarity, and the omission of language related to halt auctions for securities listed on the Exchange, as the Exchange does not list any securities or conduct halt auctions while BZX does. Proposal To Make the Clearly Erroneous Pilot Permanent On May 4, 2020, the Commission approved MEMX’s Form 1 Application to register as a national securities exchange with rules including, on a pilot basis, MEMX Rule 11.15.10 Rule 11.15, among other things (i) provides for uniform treatment of clearly erroneous execution reviews in multistock events involving twenty or more securities; and (ii) reduces the ability of the Exchange to deviate from objective standards set forth in the rule. The rule further provides 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 the Exchange, another SRO, or responsible single plan processor in connection with the transmittal or receipt of a trading halt, an Officer of the Exchange or senior level employee designee, 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 a trading halt has officially ended according to the primary listing market.11 When it originally approved the clearly erroneous pilot, the Commission explained that the changes were ‘‘being 16086 (April 17, 2019) (File No. 4–631) (‘‘Amendment Eighteen’’). 9 ‘‘Price Bands’’ refers to the term provided in Section V of the LULD Plan. 10 See Securities Exchange Release No. 88806 (May 4, 2020), 85 FR 27451 (May 8, 2020). 11 See MEMX Rule 11.15. E:\FR\FM\19SEN1.SGM 19SEN1

Agencies

[Federal Register Volume 87, Number 180 (Monday, September 19, 2022)]
[Notices]
[Pages 57233-57238]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20150]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95761; File No. SR-NYSE-2022-42]


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

September 13, 2022.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on September 1, 2022, 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 (1) increase the 
credit for orders designated as ``retail'' that add liquidity to the 
Exchange, and (2) amend the requirements for charges that remove 
liquidity from the Exchange. The Exchange proposes to implement the fee 
changes effective September 1, 2022. 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.

[[Page 57234]]

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 it Price List to (1) increase the 
credit for orders designated as ``retail'' that add liquidity to the 
Exchange, and (2) amend the requirements for charges that remove 
liquidity from the Exchange.
    The proposed changes respond to the current competitive environment 
where order flow providers have a choice of where to direct liquidity-
providing and liquidity-removing orders by offering further incentives 
for member organizations to send additional liquidity to the Exchange.
    The Exchange proposes to implement the fee changes effective 
September 1, 2022.
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. 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\
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    \4\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7-10-04) (Final 
Rule) (``Regulation NMS'').
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    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, cash equity trading is currently dispersed 
across 16 exchanges,\6\ numerous alternative trading systems,\7\ and 
broker-dealer internalizers and wholesalers, all competing for order 
flow. Based on publicly-available information, no single exchange 
currently has more than 17% market share.\8\ Therefore, no exchange 
possesses significant pricing power in the execution of cash 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\
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    \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 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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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
move order flow, or discontinue or reduce use of certain categories of 
products. While it is not possible to know a firm's reason for shifting 
order flow, the Exchange believes that one such reason is because of 
fee changes at any of the registered exchanges or non-exchange venues 
to which the firm routes order flow. Accordingly, competitive forces 
compel the Exchange to use exchange transaction fees and credits 
because market participants can readily trade on competing venues if 
they deem pricing levels at those other venues to be more favorable.
    In response to this competitive environment, the Exchange has 
established incentives for member organizations who submit orders that 
provide liquidity on the Exchange. The Exchange has also established 
incentives for member organizations to remove liquidity from the 
Exchange. As detailed below, the proposed higher credits and revised 
requirements are intended to attract additional order flow to a public 
exchange and increase the quality of order execution on the Exchange's 
marketplace, which benefits all market participants.
Proposed Rule Change
Proposed Increase to Credit for Retail Orders That Add Liquidity
    The Exchange currently provides a $0.0030 per share credit for all 
orders, other than MPL and Non-Display Reserve Orders,\10\ with a 
``retail'' modifier \11\ (``Retail Order'') that add liquidity to the 
Exchange. Similarly, the Exchange currently provides a $0.0030 per 
share for Supplementary Liquidity Providers (``SLPs'') adding liquidity 
to the NYSE with Retail Orders in securities with a per share price of 
$1.00 or more.\12\ Finally, the Exchange offers a $0.0030 per share 
rebate for executions in Retail Orders that add liquidity to the 
Exchange in Tape B and C securities.
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    \10\ The Exchange proposes the non-substantive, clarifying 
change of adding a comma following ``Non-Display Reserve orders'' in 
this section of the Price List.
    \11\ ``Retail modifier'' is defined in Rule 7.31(i)(6).
    \12\ The Exchange proposes a second non-substantive clarifying 
change in this section of the Price List to replace the obsolete 
phrase ``designated as `retail' (i.e., orders that satisfy the 
Retail Modifier requirements of Rule 13'' following ``order'' with 
the phrase ``with a Retail Modifier''.
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    The Exchange proposes to increase the credit for Retail Orders that 
add liquidity to the Exchange to $0.0032 per share, from the current 
level of $0.0030 per share. The Exchange proposes this change in part 
because it would be consistent with the applicable rate on other 
marketplaces. For instance, the base credit for retail orders adding 
liquidity on Cboe BZX and Cboe EDGX is $0.0032 per share.\13\ The 
Exchange's affiliates NYSE American LLC and NYSE Arca Equities also 
similarly offers the same non-tiered credit of $0.0032 per share for 
retail orders adding liquidity.\14\
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    \13\ See Cboe BZX Price List at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/ and Cboe EDGX Price List at 
https://www.cboe.com/us/equities/membership/fee_schedule/edgx/.
    \14\ See NYSE American Equities Price List at https://www.nyse.com/publicdocs/nyse/markets/nyse-american/NYSE_America_Equities_Price_List.pdf; NYSE Arca Equities Price List 
at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf.
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    In addition, the proposed change is intended to encourage greater 
participation from member organizations and to promote additional 
liquidity in Retail Orders. The competition for retail order flow 
between exchanges and off-exchange venues is fierce, and market 
participants can readily trade on competing venues if they deem pricing 
levels at those other venues to be more favorable. The Exchange 
believes that the proposed increase credit for orders that add 
liquidity to the Exchange could lead to more member organizations 
choosing to route their Retail Orders to the Exchange for execution 
rather than to a competing exchange.
    The Exchange, however, does not know how much Retail Order flow 
member organizations choose to route to other exchanges or to off-
exchange venues. Without having a view of member organization's 
activity on other markets and off-exchange venues, the Exchange has no 
way of knowing whether this proposed rule change would result in any 
member organizations sending more Retail Orders to the Exchange. The 
Exchange cannot predict with certainty how many

[[Page 57235]]

member organizations would avail themselves of this opportunity, but 
additional Retail Orders would benefit all market participants because 
it would provide greater execution opportunities on the Exchange.
    The proposed rule change is designed to be available to all member 
organizations on the Exchange and is intended to provide member 
organizations a greater incentive to direct more of their Retail Orders 
to the Exchange.
    The Exchange does not propose any changes to its Retail Order 
rates.
Charges for Removing Liquidity
    Currently, the Exchange offers a fee of $0.00295 for Tape A 
securities and $0.00285 for Tape B and C securities for non-Floor 
broker transactions where the member organization has an average daily 
volume (``ADV'') that adds liquidity to the Exchange during the billing 
month (``Adding ADV''),\15\ excluding liquidity added by a DMM, that is 
at least 250,000 ADV on the NYSE in Tape A securities. The Exchange 
proposes to delete this tier and its related fees in their entirety.
---------------------------------------------------------------------------

    \15\ The terms ``ADV'' and ``CADV'' are defined in footnote * of 
the Price List.
---------------------------------------------------------------------------

    In addition, the Exchange currently offers a fee of $0.00290 in 
Tape A securities and a fee of $0.00285 for Tape B and C securities for 
non-Floor broker transactions if the member organization has an Adding 
ADV, excluding liquidity added by a DMM, that is at least 3,500,000 ADV 
on the NYSE in Tape A securities. The Exchange proposes to lower the 
Tape A ADV requirement from the current 3,500,000 ADV on the NYSE in 
Tape A securities to 2,000,000 ADV on the NYSE in Tape A securities. 
The current fees would remain unchanged. Member organizations that do 
not qualify for the current fee based on the proposed lower ADV 
requirement receive the $0.0030 base remove rate for all tapes.
    The Exchange believes that the proposed changes, taken together, 
will incentivize submission of additional liquidity in Tape A, B and 
Tape C securities to a public exchange, thereby promoting price 
discovery and transparency and enhancing order execution opportunities 
for member organizations. 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. The Exchange does not 
know how much order flow member organizations choose to route to other 
exchanges or to off-exchange venues. The Exchange believes that 5 or 
more member organizations that don't qualify today could qualify for 
the tiered rates if the volume requirement is lowered based on their 
current trading profile on the Exchange and if they choose to direct 
order flow to the NYSE. 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.
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any significant problems 
that market participants would have in complying with the proposed 
changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\16\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\17\ 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, is designed to prevent fraudulent and 
manipulative acts and practices and to promote just and equitable 
principles of trade, and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

The Proposed Fee Change Is Reasonable
    As discussed above, the Exchange operates in a highly fragmented 
and competitive market. The Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \18\
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    \18\ See Regulation NMS, supra note 4, 70 FR at 37499.
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow, or discontinue to reduce use of certain categories of 
products, in response to fee changes. Member organizations can choose 
from any one of the 16 currently operating registered exchanges, and 
numerous off-exchange venues, to route such order flow. Accordingly, 
competitive forces constrain exchange transaction fees that relate to 
orders on an exchange. Stated otherwise, changes to exchange 
transaction fees can have a direct effect on the ability of an exchange 
to compete for order flow.
    Given this competitive environment, the proposal represents a 
reasonable attempt to attract additional order flow to the Exchange by 
adjusting the incentives for all market participants to send additional 
order flow to a public exchange and increase the quality of order 
execution on the Exchange's market, which benefits all market 
participants.
Proposed Increase to Credit for Retail Orders That Add Liquidity
    The Exchange believes that the proposed increase to the credit for 
Retail Orders that add liquidity to the Exchange is reasonable. The 
Exchange operates in a fiercely competitive environment, particularly 
with regard to retail orders. As noted above, several of the Exchange's 
competitors offer base credits for retail orders adding liquidity that 
are higher (i.e., $0.0032 credit per share) than the Exchange's current 
credit ($0.0030 credit per share). The Exchange believes that this 
proposal to increase its credit for Retail Orders adding liquidity to 
the Exchange represents a reasonable attempt to attract additional 
Retail Orders to the Exchange, thereby increasing liquidity on the 
Exchange, to the benefit of all market participants. In addition, the 
Exchange believes that attracting higher volumes of Retail Orders to be 
transacted on the Exchange by member organizations would benefit all 
market participants by offering greater price discovery and an 
increased opportunity to trade on the Exchange.
    Without having a view of member organization activity on other 
markets and off-exchange venues, the Exchange has no way of knowing 
whether this proposed rule change would result in any member 
organization sending more of Retail Orders to the Exchange, nor can the 
Exchange predict with certainty how many member organizations would 
avail themselves of the opportunity presented by the revised credit. 
Additional Retail Orders on the Exchange would benefit all market 
participants because they would

[[Page 57236]]

provide greater execution opportunities on the Exchange.
Charges for Removing Liquidity
    The Exchange believes that the proposal to delete certain fees, and 
lowering the ADV requirement, for transactions that remove liquidity 
from the Exchange in Tape A, B and C securities are reasonable. The 
purpose of these changes is to encourage additional liquidity on the 
Exchange because market participants benefit from the greater amounts 
of displayed liquidity present on a public exchange. The Exchange 
believes that the proposed lower ADV requirement will incentivize 
additional liquidity to a public exchange to qualify for lower fees for 
removing liquidity in Tape A, B and Tape C securities, thereby 
promoting price discovery and transparency and enhancing order 
execution opportunities for member organizations. The proposal is thus 
reasonable because all member organizations would benefit from such 
increased levels of liquidity.
Non-Substantive Changes
    Finally, the Exchange believes the proposed non-substantive 
clarifying and conforming changes described above \19\ are 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.
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    \19\ See notes 10 & 12, supra.
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The Proposed Change Is an Equitable Allocation of Fees and Credits
    The Exchange believes its proposal equitably allocates its fees 
among its market participants by fostering liquidity provision and 
stability in the marketplace.
Proposed Increase to Credit for Retail Orders That Add Liquidity
    The Exchange believes that its proposal to increase the credit 
available for Retail Orders that add liquidity to the exchange 
equitably allocates its fees among market participants because all 
member organizations that participate on the Exchange may qualify for 
the proposed credit if they elect to send their Retail Orders to the 
Exchange and properly designate them as Retail Orders.
    The Exchange further believes that the proposed change is equitable 
because it is reasonably related to the value to the Exchange's market 
quality associated with higher volume in Retail Orders. The Exchange 
believes that increasing the credit available for orders designated as 
Retail Orders would attract additional order flow and liquidity to the 
Exchange, thereby contributing to price discovery on the Exchange and 
benefiting investors generally.
    The Exchange believes that the proposed rule change is equitable 
because maintaining or increasing the proportion of Retail Orders in 
exchange-listed securities that are executed on a registered national 
securities exchange (rather than relying on certain available off-
exchange execution methods) would benefit all investors by deepening 
the Exchange's liquidity pool, supporting the quality of price 
discovery, promoting market transparency, and improving investor 
protection.
Charges for Removing Liquidity
    The Exchange believes that, for the reasons discussed above, the 
proposed changes taken together, will incentivize member organizations 
to send additional adding liquidity to achieve lower fees when removing 
liquidity in Tape A, B and Tape C securities from the Exchange, thereby 
increasing the number of orders that are executed on the Exchange, 
promoting price discovery and transparency and enhancing order 
execution opportunities and improving overall liquidity on a public 
exchange. The Exchange also believes that the proposed change is 
equitable because it would apply to all similarly situated member 
organizations that remove liquidity in Tape A, B or Tape C securities. 
As previously noted, 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. As noted above, the Exchange 
believes that additional member organizations could qualify for the 
tiered rates if the volume requirement is lowered based on their 
current trading profile on the Exchange and if they choose to direct 
order flow to the NYSE. 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 Fee Change Is Not Unfairly Discriminatory
    The Exchange believe that the proposed rule is not unfairly 
discriminatory, for the following reasons.
Proposed Increase to Credit for Retail Orders That Add Liquidity
    The Exchange believes that its proposal to increase the credit for 
Retail Orders that add liquidity to the Exchange is not unfairly 
discriminatory because it would apply to all member organizations on an 
equal and non-discriminatory basis, and all similarly-situated member 
organizations would earn the same credits and pay the same fees for 
Retail Orders executed on the Exchange. In addition, the submission of 
Retail Orders is optional for member organizations in that they could 
choose whether to submit Retail Orders to the Exchange and, if they do, 
they can choose the extent of their activity in this regard.
    The Exchange believes that the proposed change is not unfairly 
discriminatory because maintaining or increasing the proportion of 
Retail Orders in exchange-listed securities that are executed on a 
registered national securities exchange (rather than relying on certain 
available off-exchange execution methods) would contribute to 
investors' confidence in the fairness of their transactions and would 
benefit all investors by deepening the Exchange's liquidity pool, 
supporting the quality of price discovery, promoting market 
transparency, and improving investor protection.
Charges for Removing Liquidity
    The Exchange believes that the proposed changes the charges for 
member organizations that remove liquidity in all three tapes will, 
taken together, incentivize submission of additional liquidity in Tape 
A, B and Tape C securities to a public exchange to qualify for the fees 
for removing liquidity, thereby promoting price discovery and 
transparency and enhancing order execution opportunities for member 
organizations. The proposal does not permit unfair discrimination 
because the new ADV requirement for removing liquidity in Tape A, B and 
C securities would be applied to all similarly situated member 
organizations and other market participants, 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 Exchange

[[Page 57237]]

believes it is not unfairly discriminatory to provide lower fees for 
removing liquidity as the proposed fee and credits would be provided on 
an equal basis to all member organizations that remove liquidity by 
meeting the tiered requirements. Further, the Exchange believes the 
proposed fee would provide an incentive for member organizations to 
remove additional liquidity from the Exchange in Tape A, B and C 
securities. 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. As 
noted, the proposed change also is not unfairly discriminatory because 
it would be consistent with the applicable rate on other marketplaces.
    In addition, 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,\20\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, as discussed above, the Exchange believes 
that the proposed fee change 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 market participants. As a result, the Exchange 
believes that the proposed change furthers the Commission's goal in 
adopting Regulation NMS of fostering integrated competition among 
orders, which promotes ``more efficient pricing of individual stocks 
for all types of orders, large and small.'' \21\
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    \20\ 15 U.S.C. 78f(b)(8).
    \21\ See Securities Exchange Act Release No. 51808, 70 FR 37495, 
37498-99 (June 29, 2005) (S7-10-04) (Final Rule).
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    Intramarket Competition. The Exchange believes the proposed change 
would not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
change is designed to attract additional orders to the Exchange. The 
Exchange believes that the proposed changes would incentivize market 
participants to direct their orders to the Exchange. Greater overall 
order flow, trading opportunities, and pricing transparency benefit all 
market participants on the Exchange by enhancing market quality and 
continuing to encourage member organizations to send orders, thereby 
contributing towards a robust and well-balanced market ecosystem. The 
current and proposed fees and 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.
    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) \22\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \23\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \22\ 15 U.S.C. 78s(b)(3)(A).
    \23\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \24\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \24\ 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-2022-42 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-2022-42. 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

[[Page 57238]]

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-2022-42 and should be 
submitted on or before October 11, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20150 Filed 9-16-22; 8:45 am]
BILLING CODE 8011-01-P
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