Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Amend Its Equities Price List, 57948-57951 [2022-20504]

Download as PDF 57948 Federal Register / Vol. 87, No. 183 / Thursday, September 22, 2022 / Notices intra-market competition as all Members that submit market orders to the Exchange will be treated equally and the Rules of the Exchange apply equally to all Exchange Members. Additionally, the proposal allows each Member to determine the pre-set value to be used as the Threshold Setting and allows each Member to align their Threshold Setting to their risk tolerance. The Exchange’s proposal does not impose a burden on intra-market competition as all Members have the flexibility to determine their own Threshold Setting and the application of the rule is applied uniformly to all Members. The Exchange does not believe that its proposal will impose any burden on inter-market competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange’s proposal is not a competitive filing but one that provides Members the flexibility to determine their own Threshold Setting and also provides additional detail regarding the Exchange’s process for reevaluating market orders to sell when the national bid becomes zero. Other options exchanges have an equal opportunity to modify their systems to offer similar functionality. Additionally, the non-substantive changes proposed by the Exchange will have no impact on competition as they provide additional clarity and detail in the Exchange’s rules and are not changes made for any competitive purpose. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. jspears on DSK121TN23PROD with NOTICES III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate, it has become effective pursuant to 19(b)(3)(A) of the Act 37 and Rule 19b–4(f)(6) 38 thereunder. 37 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 38 17 VerDate Sep<11>2014 17:32 Sep 21, 2022 Jkt 256001 At any time within 60 days of the filing of the 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– EMERALD–2022–28 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–EMERALD–2022–28. 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 such 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 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 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–EMERALD–2022–28 and should be submitted on or before October 13, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.39 J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2022–20502 Filed 9–21–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–95813; File No. SR– NYSEAMER–2022–40] Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Amend Its Equities Price List September 16, 2022. 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 September 2, 2022, NYSE American LLC (‘‘NYSE American’’ 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE American Equities Price List (‘‘Price List’’) to reflect the fee for Directed Orders routed directly by the Exchange to an alternative trading system (‘‘ATS’’). The proposed 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. 39 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 E:\FR\FM\22SEN1.SGM 22SEN1 Federal Register / Vol. 87, No. 183 / Thursday, September 22, 2022 / Notices 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 the Price List to reflect the fee for Directed Orders routed directly by the Exchange to an ATS. The Exchange proposes to implement the fee change effective September 2, 2022. jspears on DSK121TN23PROD with NOTICES Background The Exchange operates in a highly competitive market. The Securities and Exchange Commission (‘‘Commission’’) has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 4 While Regulation NMS has enhanced competition, it has also fostered a ‘‘fragmented’’ market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that ‘‘such competition can lead to the fragmentation of order flow in that stock.’’ 5 Indeed, equity trading is currently dispersed across 16 exchanges,6 numerous alternative 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/ VerDate Sep<11>2014 17:32 Sep 21, 2022 Jkt 256001 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 currently has less than 1% market share of executed volume of cash equities trading.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 a firm routes order flow. Accordingly, competitive forces constrain exchange transaction fees because market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. Proposed Rule Change Pursuant to Commission approval, the Exchange adopted a new order type known as Directed Orders.10 A Directed Order is a Limit Order 11 with instructions to route on arrival at its limit price to a specified ATS with which the Exchange maintains an electronic linkage. Under Exchange rules, the ATS to which a Directed Order is routed would be responsible for validating whether the order is eligible to be accepted, and if such ATS determines to reject the order, the order would be cancelled. Directed Orders must be designated with a Time in 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 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 See Rule 7.31E(f)(4). See also Securities Exchange Act Release No. 95424 (August 4, 2022), 87 FR 48716 (August 10, 2022) (SR–NYSEAMER– 2022–19). 11 A Limit Order is defined in Rule 7.31E(a)(2) as an order to buy or sell a stated amount of a security at a specified price or better. PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 57949 Force modifier of Day 12 or IOC 13 and are eligible to be designated for the Core Trading Session 14 only. Directed Orders that are the subject of this proposed rule change would be routed to OneChronos LLC (‘‘OneChronos’’). In anticipation of the scheduled implementation of routing functionality to One Chronos,15 the Exchange proposes to amend the Price List to state that the Exchange will not charge a fee for Directed Orders routed to OneChronos. To reflect the no fee, the Exchange proposes to amend current Section III. Fees for Routing for all ETP Holders—to state ‘‘No fee for Directed Orders routed to OneChronos LLC’’ for securities priced at or above $1.00. The Exchange also proposes to amend rule text regarding the current routing fee of $0.0030 per share to state that the fee would apply to ‘‘all other executions’’. Additionally, the Exchange proposes to adopt a definition of the term ‘‘Directed Orders’’ on the Price List. As proposed, ‘‘Directed Orders’’ would mean a Limit Order with instructions to route on arrival at its limit price to a specified alternative trading system (‘‘ATS’’) with which the Exchange maintains an electronic linkage. The Exchange believes that the Directed Orders functionality would facilitate additional trading opportunities by offering ETP Holders the ability to designate orders submitted to the Exchange to be routed to OneChronos for execution. The Exchange believes the functionality could create efficiencies for ETP Holders that choose to use the functionality by enabling them to send orders that they wish to route to OneChronos through the Exchange by leveraging order entry protocols already configured for their interaction with the Exchange. ETP Holders that choose not to utilize Directed Orders would continue to be able to trade on the Exchange as they currently do. 12 Pursuant to Rule 7.31E(b)(1), any order to buy or sell designated Day, if not traded, will expire at the end of the designated session on the day on which it was entered. 13 Pursuant to Rule 7.31E(b)(2), a Limit Order may be designated with an Immediate-or-Cancel (‘‘IOC’’) modifier. 14 The Core Trading Session for each security begins at 9:30 a.m. Eastern Time and ends at the conclusion of Core Trading Hours. See Rule 7.34E(a)(2). The term ‘‘Core Trading Hours’’ means the hours of 9:30 a.m. Eastern Time through 4:00 p.m. Eastern Time or such other hours as may be determined by the Exchange from time to time. See Rule 1.1E. 15 See https://www.nyse.com/publicdocs/nyse/ notifications/trader-update/110000456275/ OneChronos_August_2022_Trader_Update_ Final.pdf. E:\FR\FM\22SEN1.SGM 22SEN1 jspears on DSK121TN23PROD with NOTICES 57950 Federal Register / Vol. 87, No. 183 / Thursday, September 22, 2022 / Notices 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 and does not unfairly discriminate between customers, issuers, brokers or dealers. 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 can shift order flow, or discontinue or reduce use of certain categories of products, in response to fee changes. Accordingly, changes to exchange transaction fees can have a direct effect on the ability of an exchange to compete for order flow. In particular, the Exchange believes the proposed rule change is a reasonable means to incent ETP Holders to utilize the Directed Orders functionality and allow ETP Holders to evaluate its efficacy. The proposed routing of orders to OneChronos is provided by the Exchange on a voluntary basis and no rule or regulation requires that the Exchange offer it. Nor does any rule or regulation require market participants to send orders to an ATS generally, let alone to OneChronos. The routing of orders to OneChronos would operate similarly to the Primary Only Order already offered by the Exchange, which is an order that is routed directly to the primary listing market on arrival, without interacting with the interest on the Exchange Book.19 The Exchange believes its proposal equitably allocates its fees among its market participants. The Exchange 16 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 18 See supra note 4. 19 See Rule 7.31E(f)(1). 17 15 VerDate Sep<11>2014 17:32 Sep 21, 2022 Jkt 256001 believes that the proposal represents an equitable allocation of fees because it would apply uniformly to all ETP Holders, in that all ETP Holders will have the ability to designate orders submitted to the Exchange to be routed to OneChronos, and each such ETP Holder would not be charged a fee when utilizing the new functionality. While the Exchange has no way of knowing whether this proposed rule change would serve as an incentive to utilize the new order type, the Exchange expects that a number of ETP Holders will utilize the new functionality because it would create efficiencies for ETP Holders by enabling them to send orders that they wish to route to OneChronos through the Exchange, thereby enabling them to leverage order entry protocols already configured for their interactions with the Exchange. The Exchange believes that the proposal is not unfairly discriminatory. The Exchange believes it is not unfairly discriminatory as the proposal to not charge a fee would be assessed on an equal basis to all ETP Holders that use the Directed Order functionality. The proposal to not charge a fee would also enable ETP Holders to evaluate the efficacy of the new functionality. Moreover, this proposed rule change neither targets nor will it have a disparate impact on any particular category of market participant. The Exchange believes that this proposal does not permit unfair discrimination because the changes described in this proposal would be applied to all similarly situated ETP Holders. Accordingly, no ETP Holder already operating on the Exchange would be disadvantaged by the proposed allocation of fees. The Exchange further believes that the proposed rule change would not permit unfair discrimination among ETP Holders because the Directed Order functionality would be available to all ETP Holders on an equal basis and each such participant would not be charged a fee for using the functionality. Finally, the submission of orders to the Exchange is optional for ETP Holders in that they could choose whether to submit orders to the Exchange and, if they do, the extent of its activity in this regard. The Exchange believes that it is subject to significant competitive forces, as described below in the Exchange’s statement regarding the burden on competition. For the foregoing reasons, the Exchange believes that the proposal is consistent with the Act. PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 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. 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 amendment to its Price List would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes the proposed rule change is a reasonable means to incent ETP Holders to utilize the Directed Orders functionality and allow ETP Holders to evaluate its efficacy. The Directed Orders functionality would be available to all ETP Holders and all ETP Holders that use the Directed Orders functionality to route their orders to OneChronos will not be charged a routing fee. The proposed routing of orders to OneChronos is provided by the Exchange on a voluntary basis and no rule or regulation requires that the Exchange offer it. ETP Holders have the choice whether or not to use the Directed Orders functionality and those that choose not to utilize it will not be impacted by the proposed rule change. The Exchange also does not believe the proposed rule change would impact intramarket competition as the proposed rule change would apply to all ETP Holders equally that choose to utilize the Directed Orders functionality, and therefore 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. As noted above, the Exchange’s market share of intraday trading is currently less than 1%. 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 20 15 U.S.C. 78f(b)(8). supra note 4. 21 See E:\FR\FM\22SEN1.SGM 22SEN1 Federal Register / Vol. 87, No. 183 / Thursday, September 22, 2022 / Notices modify their own fees and credits in response, and because market participants may readily adjust their order routing practices, the Exchange does not believe its proposed fee change can impose any burden on intermarket competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) 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– NYSEAMER–2022–40 on the subject line. jspears on DSK121TN23PROD with NOTICES Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. 22 15 U.S.C. 78s(b)(3)(A). 23 17 CFR 240.19b–4(f)(2). 24 15 U.S.C. 78s(b)(2)(B). VerDate Sep<11>2014 17:32 Sep 21, 2022 All submissions should refer to File Number SR–NYSEAMER–2022–40. 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–NYSEAMER–2022–40, and should be submitted on or before October 13, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2022–20504 Filed 9–21–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–95811; File No. SR– NASDAQ–2022–027] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 2, To Modify Certain Pricing Limitations for Companies Listing in Connection With a Direct Listing With a Capital Raise September 16, 2022. On March 21, 2022, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) 25 Jkt 256001 PO 00000 17 CFR 200.30–3(a)(12). Frm 00088 Fmt 4703 Sfmt 4703 57951 filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to allow companies to modify certain pricing limitations for companies listing in connection with a Direct Listing with a Capital Raise in which the company will sell shares itself in the opening auction on the first day of trading on Nasdaq. The proposed rule change was published for comment in the Federal Register on April 8, 2022.3 On May 19, 2022, pursuant to Section 19(b)(2) of the Act,4 the Commission designated a longer period within which to either approve or disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.5 On May 23, 2022, the Exchange filed Amendment No. 1 to the proposed rule change, which superseded the proposed rule change as originally filed. Amendment No. 1 was published for comment in the Federal Register on June 2, 2022.6 On July 7, 2022, the Commission instituted proceedings under Section 19(b)(2)(B) of the Act 7 to determine whether to approve or disapprove the proposed rule change.8 On May 23, 2022, the Exchange filed Amendment No. 1 to the proposed rule change, which superseded the proposed rule change as originally filed. Amendment No. 1 to the proposed rule change is described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change, as modified by Amendment No. 1, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to modify certain pricing limitations for 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 94592 (April 4, 2022), 87 FR 20905 (April 8, 2022). 4 15 U.S.C. 78s(b)(2). 5 See Securities Exchange Act Release No. 94947 (May 19, 2022), 87 FR 31915 (May 25, 2022). The Commission designated July 7, 2022, as the date by which it should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change. 6 See Securities Exchange Act Release No. 94989 (May 26, 2022), 87 FR 33558 (June 2, 2022). 7 15 U.S.C. 78s(b)(2)(B). 8 See Securities Exchange Act Release No. 95220 (July 7, 2022), 87 FR 41780 (July 13, 2022). Comments received on the proposal are available on the Commission’s website at: https://www.sec.gov/ comments/sr-nasdaq-2022-027/ srnasdaq2022027.htm. 2 17 E:\FR\FM\22SEN1.SGM 22SEN1

Agencies

[Federal Register Volume 87, Number 183 (Thursday, September 22, 2022)]
[Notices]
[Pages 57948-57951]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20504]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95813; File No. SR-NYSEAMER-2022-40]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Change To Amend Its 
Equities Price List

September 16, 2022.
    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 September 2, 2022, NYSE American LLC (``NYSE American'' 
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.
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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 the NYSE American Equities Price 
List (``Price List'') to reflect the fee for Directed Orders routed 
directly by the Exchange to an alternative trading system (``ATS''). 
The proposed 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.

[[Page 57949]]

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 the Price List to reflect the fee 
for Directed Orders routed directly by the Exchange to an ATS. The 
Exchange proposes to implement the fee change effective September 2, 
2022.
Background
    The Exchange operates in a highly competitive market. The 
Securities and Exchange Commission (``Commission'') has repeatedly 
expressed its preference for competition over regulatory intervention 
in determining prices, products, and services in the securities 
markets. In Regulation NMS, the Commission highlighted the importance 
of market forces in determining prices and SRO revenues and, also, 
recognized that current regulation of the market system ``has been 
remarkably successful in promoting market competition in its broader 
forms that are most important to investors and listed companies.'' \4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7-10-04) (Final 
Rule) (``Regulation NMS'').
---------------------------------------------------------------------------

    While Regulation NMS has enhanced competition, it has also fostered 
a ``fragmented'' market structure where trading in a single stock can 
occur across multiple trading centers. When multiple trading centers 
compete for order flow in the same stock, the Commission has recognized 
that ``such competition can lead to the fragmentation of order flow in 
that stock.'' \5\ Indeed, 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 currently has less than 1% market share 
of executed volume of cash equities trading.\9\
---------------------------------------------------------------------------

    \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 a firm routes order flow. Accordingly, competitive forces 
constrain exchange transaction fees because market participants can 
readily trade on competing venues if they deem pricing levels at those 
other venues to be more favorable.
Proposed Rule Change
    Pursuant to Commission approval, the Exchange adopted a new order 
type known as Directed Orders.\10\ A Directed Order is a Limit Order 
\11\ with instructions to route on arrival at its limit price to a 
specified ATS with which the Exchange maintains an electronic linkage. 
Under Exchange rules, the ATS to which a Directed Order is routed would 
be responsible for validating whether the order is eligible to be 
accepted, and if such ATS determines to reject the order, the order 
would be cancelled. Directed Orders must be designated with a Time in 
Force modifier of Day \12\ or IOC \13\ and are eligible to be 
designated for the Core Trading Session \14\ only. Directed Orders that 
are the subject of this proposed rule change would be routed to 
OneChronos LLC (``OneChronos'').
---------------------------------------------------------------------------

    \10\ See Rule 7.31E(f)(4). See also Securities Exchange Act 
Release No. 95424 (August 4, 2022), 87 FR 48716 (August 10, 2022) 
(SR-NYSEAMER-2022-19).
    \11\ A Limit Order is defined in Rule 7.31E(a)(2) as an order to 
buy or sell a stated amount of a security at a specified price or 
better.
    \12\ Pursuant to Rule 7.31E(b)(1), any order to buy or sell 
designated Day, if not traded, will expire at the end of the 
designated session on the day on which it was entered.
    \13\ Pursuant to Rule 7.31E(b)(2), a Limit Order may be 
designated with an Immediate-or-Cancel (``IOC'') modifier.
    \14\ The Core Trading Session for each security begins at 9:30 
a.m. Eastern Time and ends at the conclusion of Core Trading Hours. 
See Rule 7.34E(a)(2). The term ``Core Trading Hours'' means the 
hours of 9:30 a.m. Eastern Time through 4:00 p.m. Eastern Time or 
such other hours as may be determined by the Exchange from time to 
time. See Rule 1.1E.
---------------------------------------------------------------------------

    In anticipation of the scheduled implementation of routing 
functionality to One Chronos,\15\ the Exchange proposes to amend the 
Price List to state that the Exchange will not charge a fee for 
Directed Orders routed to OneChronos. To reflect the no fee, the 
Exchange proposes to amend current Section III. Fees for Routing for 
all ETP Holders--to state ``No fee for Directed Orders routed to 
OneChronos LLC'' for securities priced at or above $1.00. The Exchange 
also proposes to amend rule text regarding the current routing fee of 
$0.0030 per share to state that the fee would apply to ``all other 
executions''. Additionally, the Exchange proposes to adopt a definition 
of the term ``Directed Orders'' on the Price List. As proposed, 
``Directed Orders'' would mean a Limit Order with instructions to route 
on arrival at its limit price to a specified alternative trading system 
(``ATS'') with which the Exchange maintains an electronic linkage.
---------------------------------------------------------------------------

    \15\ See https://www.nyse.com/publicdocs/nyse/notifications/trader-update/110000456275/OneChronos_August_2022_Trader_Update_Final.pdf.
---------------------------------------------------------------------------

    The Exchange believes that the Directed Orders functionality would 
facilitate additional trading opportunities by offering ETP Holders the 
ability to designate orders submitted to the Exchange to be routed to 
OneChronos for execution. The Exchange believes the functionality could 
create efficiencies for ETP Holders that choose to use the 
functionality by enabling them to send orders that they wish to route 
to OneChronos through the Exchange by leveraging order entry protocols 
already configured for their interaction with the Exchange. ETP Holders 
that choose not to utilize Directed Orders would continue to be able to 
trade on the Exchange as they currently do.

[[Page 57950]]

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 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).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \18\ See supra note 4.
---------------------------------------------------------------------------

    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 or reduce use of certain categories of 
products, in response to fee changes. Accordingly, changes to exchange 
transaction fees can have a direct effect on the ability of an exchange 
to compete for order flow.
    In particular, the Exchange believes the proposed rule change is a 
reasonable means to incent ETP Holders to utilize the Directed Orders 
functionality and allow ETP Holders to evaluate its efficacy. The 
proposed routing of orders to OneChronos is provided by the Exchange on 
a voluntary basis and no rule or regulation requires that the Exchange 
offer it. Nor does any rule or regulation require market participants 
to send orders to an ATS generally, let alone to OneChronos. The 
routing of orders to OneChronos would operate similarly to the Primary 
Only Order already offered by the Exchange, which is an order that is 
routed directly to the primary listing market on arrival, without 
interacting with the interest on the Exchange Book.\19\
---------------------------------------------------------------------------

    \19\ See Rule 7.31E(f)(1).
---------------------------------------------------------------------------

    The Exchange believes its proposal equitably allocates its fees 
among its market participants. The Exchange believes that the proposal 
represents an equitable allocation of fees because it would apply 
uniformly to all ETP Holders, in that all ETP Holders will have the 
ability to designate orders submitted to the Exchange to be routed to 
OneChronos, and each such ETP Holder would not be charged a fee when 
utilizing the new functionality. While the Exchange has no way of 
knowing whether this proposed rule change would serve as an incentive 
to utilize the new order type, the Exchange expects that a number of 
ETP Holders will utilize the new functionality because it would create 
efficiencies for ETP Holders by enabling them to send orders that they 
wish to route to OneChronos through the Exchange, thereby enabling them 
to leverage order entry protocols already configured for their 
interactions with the Exchange.
    The Exchange believes that the proposal is not unfairly 
discriminatory. The Exchange believes it is not unfairly discriminatory 
as the proposal to not charge a fee would be assessed on an equal basis 
to all ETP Holders that use the Directed Order functionality. The 
proposal to not charge a fee would also enable ETP Holders to evaluate 
the efficacy of the new functionality. Moreover, this proposed rule 
change neither targets nor will it have a disparate impact on any 
particular category of market participant. The Exchange believes that 
this proposal does not permit unfair discrimination because the changes 
described in this proposal would be applied to all similarly situated 
ETP Holders. Accordingly, no ETP Holder already operating on the 
Exchange would be disadvantaged by the proposed allocation of fees. The 
Exchange further believes that the proposed rule change would not 
permit unfair discrimination among ETP Holders because the Directed 
Order functionality would be available to all ETP Holders on an equal 
basis and each such participant would not be charged a fee for using 
the functionality.
    Finally, the submission of orders to the Exchange is optional for 
ETP Holders in that they could choose whether to submit orders to the 
Exchange and, if they do, the extent of its activity in this regard. 
The Exchange believes that it is subject to significant competitive 
forces, as described below in the Exchange's statement regarding the 
burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\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. 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\
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78f(b)(8).
    \21\ See supra note 4.
---------------------------------------------------------------------------

    Intramarket Competition. The Exchange believes the proposed 
amendment to its Price List would not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. The Exchange believes the proposed rule change is a reasonable 
means to incent ETP Holders to utilize the Directed Orders 
functionality and allow ETP Holders to evaluate its efficacy. The 
Directed Orders functionality would be available to all ETP Holders and 
all ETP Holders that use the Directed Orders functionality to route 
their orders to OneChronos will not be charged a routing fee. The 
proposed routing of orders to OneChronos is provided by the Exchange on 
a voluntary basis and no rule or regulation requires that the Exchange 
offer it. ETP Holders have the choice whether or not to use the 
Directed Orders functionality and those that choose not to utilize it 
will not be impacted by the proposed rule change. The Exchange also 
does not believe the proposed rule change would impact intramarket 
competition as the proposed rule change would apply to all ETP Holders 
equally that choose to utilize the Directed Orders functionality, and 
therefore 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. As noted 
above, the Exchange's market share of intraday trading is currently 
less than 1%. 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

[[Page 57951]]

modify their own fees and credits in response, and because market 
participants may readily adjust their order routing practices, the 
Exchange does not believe its proposed fee change can impose any burden 
on intermarket competition.

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

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

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \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.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78s(b)(3)(A).
    \23\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \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-NYSEAMER-2022-40 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-NYSEAMER-2022-40. 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-NYSEAMER-2022-40, and should be 
submitted on or before October 13, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
---------------------------------------------------------------------------

    \25\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20504 Filed 9-21-22; 8:45 am]
BILLING CODE 8011-01-P
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