Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amend the NYSE Arca Equities Fees and Charges, 63837-63842 [2022-22731]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 87, Number 202 (Thursday, October 20, 2022)]
[Notices]
[Pages 63837-63842]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-22731]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96086; File No. SR-NYSEARCA-2022-68]


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

October 14, 2022.
    Pursuant to FR 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 3, 2022, NYSE Arca, Inc. (``NYSE Arca'' or the ``Exchange'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 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 Arca Equities Fees and 
Charges (``Fee Schedule'') by introducing a minimum credit under Adding 
Tiers for Adding in Tape A, Tape B and Tape C securities. The Exchange 
also proposes to amend the equity and options volume requirement under 
the Cross Asset Tier. The Exchange proposes to implement the fee 
changes effective October 3, 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.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule by introducing a 
minimum credit under Adding Tiers for Adding in Tape A, Tape B and Tape 
C securities. The Exchange also proposes to amend the equity and 
options volume requirement under the Cross Asset Tier. The Exchange 
proposes to implement the fee changes effective October 3, 2022.
Background
    The Exchange operates in a highly competitive market. The 
Commission has repeatedly expressed its preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. In Regulation NMS, the Commission 
highlighted the importance of market forces in determining prices and 
SRO revenues and, also, recognized that current regulation of the 
market system ``has been remarkably successful in promoting market 
competition in its broader forms that are most important to investors 
and listed companies.'' \3\
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    \3\ 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

[[Page 63838]]

stock.'' \4\ Indeed, equity trading is currently dispersed across 16 
exchanges,\5\ numerous alternative trading systems,\6\ 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.\7\ Therefore, no exchange possesses 
significant pricing power in the execution of equity order flow. More 
specifically, the Exchange currently has less than 10% market share of 
executed volume of equities trading.\8\
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    \4\ 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).
    \5\ 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.
    \6\ 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.
    \7\ See Cboe Global Markets U.S. Equities Market Volume Summary, 
available at https://markets.cboe.com/us/equities/market_share/.
    \8\ See id.
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
move order flow, or discontinue or reduce use of certain categories of 
products. While it is not possible to know a firm's reason for shifting 
order flow, the Exchange believes that one such reason is because of 
fee changes at any of the registered exchanges or non-exchange venues 
to which a firm routes order flow. With respect to non-marketable order 
flow that would provide liquidity on an Exchange against which market 
makers can quote, ETP Holders can choose from any one of the 16 
currently operating registered exchanges to route such order flow. 
Accordingly, competitive forces constrain exchange transaction fees 
that relate to orders that would provide liquidity on an exchange.
Proposed Rule Change
Adding Tiers
    Currently, under the Adding Tiers table in FR VI. Tier Rates--Round 
Lots and Odd Lots (Per Share Price $1.00 or Above), the Exchange 
provides multiple tiers and associated credits for Adding liquidity on 
the Exchange. Specifically, under Tier 1, if an ETP Holder has Adding 
ADV that is equal to at least 0.70% of CADV, or has Adding ADV of 84 
million shares then that ETP Holder could qualify for a credit of 
$0.0031 per share for Adding in Tape A securities, $0.0023 per share 
for Adding in Tape B securities and $0.0032 per share for Adding in 
Tape C securities.
    Under Tier 2, if an ETP Holder has Adding ADV that is equal to at 
least 0.50% of CADV then that ETP Holder could qualify for a credit of 
$0.0030 per share for Adding in Tape A securities, $0.0023 per share 
for Adding in Tape B securities and $0.0031 per share for Adding in 
Tape C securities.
    Under Tier 3, if an ETP Holder has Adding ADV that is equal to at 
least 0.30% of CADV, or has Adding ADV that is equal to at least 0.25% 
of CADV plus Removing ADV that is equal to at least 0.40% of Tape B 
CADV and at least 0.25% of Customer and Professional Customer 
Electronic Posting Volume of TCADV on NYSE Arca Options by OTP Holder 
or OTP Firm affiliated with the ETP Holder then that ETP Holder could 
qualify for a credit of $0.0029 per share for Adding in Tape A 
securities, $0.0022 per share for Adding in Tape B securities and 
$0.0029 per share for Adding in Tape C securities.
    Finally, under Tier 4, if an ETP Holder has Adding ADV that is 
equal to at least 0.20% of CADV then that ETP Holder could qualify for 
a credit of $0.0025 per share for Adding in Tape A securities, $0.0022 
per share for Adding in Tape B securities and $0.0025 per share for 
Adding in Tape C securities.\9\
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    \9\ ETP Holders that qualify for Tier 4 and have Adding ADV that 
is equal to 0.05% of CADV above May 2019 receive an incremental 
credit of $0.0002 per share for Tape A and Tape C Adding. See Fee 
Schedule. This incremental credit is currently denoted on the Fee 
Schedule under footnote * and is appended to the credits applicable 
under Tier 4. Footnote * currently appears under Closing Orders. 
With this proposed rule change, the Exchange proposes to rename the 
footnote as ** and relocate it from its current location so it 
appears under Tier 4.
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    Additionally, ETP Holders that currently qualify for Tier 1, Tier 
2, Tier 3 and Tier 4 are subject to the following fees: $0.0030 per 
share for Routing, $0.0029 per share for Removing in Tape B securities, 
and $0.0010 per share for Closing Orders.\10\
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    \10\ See Fee Schedule.
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    The Exchange proposes that ETP Holders that qualify for Tier 1, 
Tier 2, Tier 3 and Tier 4 and also have combined Adding and Removing 
that is equal to 1.0% of CADV would receive a minimum credit of $0.0030 
per share for Adding in Tape A, Tape B and Tape C securities. The 
Exchange proposes to reflect the proposed minimum credit by adopting 
footnote * to the heading titled Tier under the Adding Tiers table.
    The Exchange believes that the proposed new minimum credit will 
incentivize ETP Holders to route their liquidity-providing order flow 
to the Exchange in order to qualify for the proposed credit, which 
would be higher than the credits currently available under current Tier 
3 and current Tier 4. The proposed credit is also higher than the 
credit currently provided for Adding in Tape B securities under each of 
the current tiers. The Exchange believes that by correlating the amount 
of the fee to the level of orders sent by an ETP Holder that add 
liquidity, the Exchange's fee structure would incentivize ETP Holders 
to submit more orders that add liquidity to the Exchange, thereby 
increasing the potential for price improvement to incoming marketable 
orders submitted to the Exchange.
    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 ETP Holders choose to route to other exchanges or to off-
exchange venues. Based on the profile of liquidity-adding firms 
generally, the Exchange believes that a number of ETP Holders could 
qualify for the proposed new credit if they choose to direct additional 
order flow to the Exchange. However, without having a view of ETP 
Holders' activity on other exchanges and off-exchange venues, the 
Exchange has no way of knowing whether this proposed rule change would 
result in ETP Holders directing more of their orders to the Exchange in 
order to qualify for the proposed new credit.
Cross Asset Tier
    The Exchange proposes to amend the volume requirement applicable to 
ETP Holders to qualify for the credits payable under the Cross-Asset 
Tier. The proposed rule change is designed to be available to all ETP 
Holders on the Exchange and is intended to both streamline the Fee 
Schedule by reducing the number of requirements and provide ETP Holders 
an opportunity to receive credits by trading equities and options on 
the Exchange.
    The Exchange currently offers tiered pricing that provides ETP 
Holders opportunities to qualify for higher rebates or reduced fees 
where certain volume criteria and thresholds are met. Tiered pricing 
provides an incremental incentive for ETP Holders to strive for higher 
tier levels, which provides increasingly higher discounts for 
satisfying more stringent criteria. More specifically, the Exchange 
currently has multiple levels of credits designed to incentivize ETP 
Holders to achieve certain levels of participation on both

[[Page 63839]]

the Exchange's equities and options platform.
    Specifically, FR VI. Tier Rates-Round Lots and Odd Lots (Per Share 
Price $1.00 or Above), provides a base Cross-Asset Tier credit of 
$0.0030 per share for Adding in Tape A, Tape B and Tape C securities if 
an ETP Holder has Adding ADV that is equal to at least 0.30% of CADV 
and has Customer and Professional Customer Electronic Posting Volume by 
an OTP Holder or OTP Firm affiliated with the ETP Holder that is equal 
to at least 0.80% of TCADV in all options classes and equal to at least 
0.20% of TCADV in Non-Penny options classes.
    With this proposed rule change, the Exchange proposes to eliminate 
the Non-Penny Issues requirement of 0.20% of TCADV. As proposed, to 
qualify for the base Cross-Asset Tier credit of $0.0030 per share in 
Tape A, Tape B and Tape C securities, an ETP Holder will be required to 
meet the current equity volume requirement, i.e., 0.30% Adding ADV of 
CADV and the current options requirement, i.e., 0.80% of TCADV in all 
options classes.\11\
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    \11\ To streamline the Fee Schedule, the Exchange proposes a 
non-substantive change to add the words ``Adding ADV of CADV'' to 
the heading titled ``Equity Volume'' under Minimum Requirement and 
delete the words ``Adding of CADV'' from the text of the various 
tiers.
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    Under the Cross-Asset Tier, ETP Holders are also currently eligible 
to receive an additional credit of $0.0004 per share in Tape C 
securities if the ETP Holder has Adding ADV that is equal to at least 
0.30% of CADV and Adding ADV in Tape C Securities that is equal to at 
least 0.35% of Tape C CADV, combined with Customer and Professional 
Customer Electronic Posting Volume by an OTP Holder or OTP Firm 
affiliated with the ETP Holder that is equal to at least 0.80% of TCADV 
in all options classes and equal to at least 0.20% of TCADV in Non-
Penny Issues. The Exchange proposes to amend the current Tape C equity 
volume requirement and eliminate the Non-Penny Issues requirement of 
0.20% of TCADV to qualify for the additional credit. As proposed, to 
qualify for the current additional credit of $0.0004 per share in Tape 
C securities, an ETP Holder will be required to meet an equity volume 
requirement that is equal to at least 0.50% Adding ADV of CADV and the 
current options requirement that is equal to at least 0.80% of TCADV in 
all options classes.
    Under the Cross-Asset Tier, ETP Holders are also currently eligible 
to receive an additional credit of $0.0002 per share in Tape A and Tape 
B securities if the ETP Holder has Adding ADV that is equal to at least 
0.65% of CADV, combined with Customer and Professional Customer 
Electronic Posting Volume by an OTP Holder or OTP Firm affiliated with 
the ETP Holder that is equal to at least 0.80% of TCADV in all options 
classes and equal to at least 0.20% of TCADV in Non-Penny Issues. The 
Exchange proposes to eliminate the Non-Penny Issues requirement of 
0.20% of TCADV to qualify for the additional credit. As proposed, to 
qualify for the current additional credit of $0.0002 per share in Tape 
A and Tape B securities, an ETP Holder will be required to meet the 
current equity volume requirement that is equal to at least 0.65% of 
Adding ADV of CADV and the current options requirement that is equal to 
at least 0.80% of TCADV in all options classes.
    Finally, under the Cross-Asset Tier, ETP Holders are also currently 
eligible to receive an additional credit of $0.0001 per share in Tape 
A, Tape B and Tape C securities if the ETP Holder has Adding ADV that 
is equal to at least 0.30% of CADV and has Adding and Removing ADV of 
CADV that is equal to at least 0.40% above the ETP Holder's Q1 2020 
Adding and Removing ADV of CADV, combined with Customer and 
Professional Customer Electronic Posting Volume by an OTP Holder or OTP 
Firm affiliated with the ETP Holder that is equal to at least 0.80% of 
TCADV in all options classes and equal to at least 0.20% of TCADV in 
Non-Penny Issues. The Exchange proposes to amend the current equity 
volume requirement and eliminate the Non-Penny Issues requirement of 
0.20% of TCADV to qualify for the additional credit. As proposed, to 
qualify for the current additional credit of $0.0001 per share in Tape 
A, Tape B and Tape C securities, an ETP Holder will be required to meet 
an equity volume requirement that is equal to at least 0.75% Adding ADV 
of CADV and the current options requirement that is equal to at least 
0.80% of TCADV in all options classes.
    The purpose of the proposed rule change is to encourage greater 
participation by ETP Holders on the Exchange's equities and options 
platforms. The Exchange believes the current requirements, some of 
which require ETP Holders to trade specific Tapes, increase adding and 
removing above a specific baseline and in both Penny and Non-Penny 
options classes, may have resulted in ETP Holders not aiming to achieve 
the pricing levels. The Exchange believes modifying and streamlining 
the requirements of the existing tiers should incentivize ETP Holders 
to direct more of their trading activity to the Exchange and thus 
qualify for the credits payable under the Cross-Asset Tier. As 
described above, ETP Holders with liquidity-providing orders have a 
choice of where to send those orders. The Exchange believes that the 
proposed amendment to the volume requirement could lead to more ETP 
Holders choosing to route their liquidity-providing equites and options 
orders to the Exchange rather than to a competing exchange.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with FR 6(b) of the Act,\12\ in general, and furthers the objectives of 
FRs 6(b)(4) and (5) of the Act,\13\ in particular, because it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among its members, issuers and other persons using its 
facilities and does not unfairly discriminate between customers, 
issuers, brokers or dealers.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
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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.'' \14\
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    \14\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
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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 or reduce use of certain categories of 
products, in response to fee changes. With respect to non-marketable 
orders that provide liquidity on an Exchange, ETP Holders can choose 
from any one of the 16 currently operating registered exchanges to 
route such order flow. Accordingly, competitive forces reasonably 
constrain exchange transaction fees that relate to orders that would 
provide displayed liquidity on an exchange. Stated otherwise, changes 
to exchange transaction fees can have a direct effect on the ability of 
an exchange to compete for order flow.

[[Page 63840]]

    Given this competitive environment, the proposal represents a 
reasonable attempt to attract additional order flow to the Exchange.
Adding Tiers
    The Exchange believes that the proposed new minimum credit is 
reasonable because it is designed to encourage increased trading 
activity on the Exchange. The Exchange believes it is reasonable to 
require ETP Holders to meet the applicable volume threshold as it 
offers liquidity providers an opportunity to receive an enhanced 
rebate. Further, the proposed new minimum credit is reasonable as it 
would provide ETP Holders an opportunity to qualify for an enhanced 
rebate, which in some cases is significantly higher than what the 
Exchange currently provides, by meeting a higher volume threshold than 
that required under the current pricing tiers. The Exchange believes 
that the proposal represents a reasonable effort to promote price 
improvement and enhanced order execution opportunities for ETP Holders. 
All ETP Holders would benefit from the greater amounts of liquidity on 
the Exchange, which would represent a wider range of execution 
opportunities. The Exchange believes the proposed new minimum credit is 
a reasonable means to encourage ETP Holders to increase their liquidity 
providing orders in Tape A, Tape B and Tape C securities.
    As noted above, the Exchange operates in a highly competitive 
environment, particularly for attracting order flow that provides 
liquidity on an exchange. More specifically, the Exchange notes that 
greater add volume order flow may provide for deeper, more liquid 
markets and execution opportunities at improved prices, which the 
Exchange believes would incentivize liquidity providers to submit 
additional liquidity and enhance execution opportunities.
Cross-Asset Tier
    The Exchange believes that the proposed modification and 
streamlining of the volume requirements to qualify for the Cross-Asset 
Tier is reasonable because it is designed to encourage greater 
participation by ETP Holders on the Exchange's equities and options 
platforms and promote additional liquidity in equity and options 
securities traded on those platforms. The Exchange believes it is 
reasonable to require ETP Holders to meet the applicable volume 
threshold to qualify for the Cross-Asset Tier credits. The Exchange 
believes it is reasonable to modify the volume requirement as it would 
simplify and streamline the pricing tier and make it easier for ETP 
Holders to qualify for the pricing tier.
    Further, the proposed change is reasonable as it would allow ETP 
Holders additional opportunities to qualify for the credit payable 
under the various tiers. The Exchange believes it is reasonable to 
modify two of the existing tiers to a straight volume requirement, 
without significantly modifying the volume requirement to qualify for 
those tiers. The Exchange believes replacing the `step-up' to a 
`straight' tier in one existing tier and eliminating the Tape C volume 
requirement in another existing tier with a higher equity volume 
requirement for both of those two tiers is reasonable because ETP 
Holders would no longer be required to trade a minimum amount in Tape C 
securities or `step-up' above a baseline period. The Exchange believes 
the revised criteria would allow ETP Holders that may have been unable 
to meet the existing requirement to reach the proposed volume 
requirement more easily.
    The Exchange believes that the proposal represents a reasonable 
effort to provide enhanced order execution opportunities for ETP 
Holders. All ETP Holders would benefit from the greater amounts of 
liquidity on the Exchange, which would represent a wider range of 
execution opportunities. The Exchange notes that market participants 
are free to shift their order flow to competing venues if they believe 
other markets offer more favorable fees and credits.
    The Exchange notes that volume-based incentives and discounts have 
been widely adopted by exchanges,\15\ including the Exchange,\16\ and 
are reasonable, equitable and non-discriminatory because they are open 
to all ETP Holders on an equal basis and provide additional credits 
that are reasonably related to the value to an exchange's market 
quality and associated higher levels of market activity.
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    \15\ See e.g., Cboe BZX U.S. Equities Exchange (``BZX'') Fee 
Schedule, Footnote 1, Add Volume Tiers which provide enhanced 
rebates between $0.0025 and $0.0033 per share for displayed orders 
where BZX members meet certain volume thresholds.
    \16\ See e.g., Fee Schedule, Step Up Tier 1, Step Up Tier 2 and 
Step Up Tier 3, which provide enhanced rebates between $0.0028 and 
$0.0033 per share in Tape A Securities, between $0.0022 and $0.0034 
per share in Tape B Securities, and between $0.0028 and $0.0033 per 
share in Tape C Securities for orders that provide displayed 
liquidity where ETP Holders meet certain volume thresholds.
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    The Exchange believes the proposed change is also reasonable 
because it is designed to attract higher volumes of equities and 
options orders transacted on the Exchange by ETP Holders which would 
benefit all market participants by offering greater price discovery, 
increased transparency, and an increased opportunity to trade on the 
Exchange.
    On the backdrop of the competitive environment in which the 
Exchange currently operates, the proposed rule change is a reasonable 
attempt to increase liquidity on the Exchange and improve the 
Exchange's market share relative to its competitors.
The Proposed Fee Change Is an Equitable Allocation of Fees and Credits
    The Exchange believes its proposal equitably allocates its fees and 
credits among its market participants.
Adding Tiers
    The Exchange believes the proposed rule change to introduce a new 
minimum credit for ETP Holders equitably allocates its fees among its 
market participants. The Exchange believes the proposed new minimum 
credit is equitable because it is open to all similarly situated ETP 
Holders on an equal basis and provides a per share credit that is 
reasonably related to the value of an exchange's market quality 
associated with higher volumes. The Exchange believes it is equitable 
to require ETP Holders to meet the applicable volume thresholds to 
qualify for the proposed new minimum credit, which, as noted above, is, 
in some cases, significantly higher than what the Exchange currently 
provides under the current pricing tiers. The Exchange believes the 
proposed change would continue to encourage ETP Holders to both submit 
additional liquidity to the Exchange and execute orders on the 
Exchange, thereby contributing to robust levels of liquidity, to the 
benefit of all market participants.
    The proposed change is designed as an incentive to any and all 
liquidity providers interested in meeting the criteria to submit order 
flow to the Exchange and each will receive the associated rebate if the 
criteria is met. The Exchange believes that the proposed new minimum 
credit could encourage the submission and removal of additional 
liquidity from the Exchange, thus enhancing order execution 
opportunities for ETP Holders from the substantial amounts of liquidity 
present on the Exchange. All ETP Holders would benefit from the greater 
amounts of liquidity that would be present on the Exchange, which would 
provide greater execution opportunities.
    The Exchange believes the proposed rule change would also improve 
market

[[Page 63841]]

quality for all market participants seeking to remove liquidity on the 
Exchange and, as a consequence, attract more liquidity to the Exchange, 
thereby improving market-wide quality. The Exchange believes that the 
proposal constitutes an equitable allocation of fees because all 
similarly situated ETP Holders would be eligible for the proposed new 
minimum credit if they meet the proposed volume threshold.
Cross-Asset Tier
    The Exchange believes that the proposed rule change to modify the 
volume requirement to qualify for the credits payable under the Cross-
Asset Tier equitably allocates fees and credits among its market 
participants because it is reasonably related to the value of the 
Exchange's market quality associated with higher volume. The Exchange 
believes that pricing is just one of the factors that ETP Holders 
consider when determining where to direct their order flow. Among other 
things, factors such as execution quality, fill rates, and volatility, 
are important and deterministic to ETP Holders in deciding where to 
send their order flow.
    The Exchange believes the proposed rule change would improve market 
quality for all market participants on the Exchange and, as a 
consequence, attract more liquidity to the Exchange thereby improving 
market-wide quality. The proposal neither targets nor will it have a 
disparate impact on any particular category of market participant. ETP 
Holders that currently qualify for credits associated with the Cross-
Asset Tier will continue to receive credits when they provide liquidity 
to the Exchange. The Exchange believes that recalibrating the volume 
requirement to qualify for the existing and established credits for 
providing liquidity will continue to attract order flow and liquidity 
to the Exchange for the benefit of investors generally. As to those 
market participants that do not presently qualify for the credits 
associated with the Cross-Asset Tier, the proposal will not adversely 
impact their existing pricing or their ability to qualify for other 
credits provided by the Exchange.
The Proposed Fee Change Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory.
Adding Tiers
    The Exchange believes that the proposed rule change to introduce 
the new minimum credit is not unfairly discriminatory. The Exchange 
believes that the proposal does not permit unfair discrimination 
because the proposed new credit would be applied to all similarly 
situated ETP Holders and all ETP Holders would be subject to the same 
requirement to qualify for the proposed new credit. Accordingly, no ETP 
Holder already operating on the Exchange would be disadvantaged by the 
proposed allocation of fees and credits under the proposal. The 
Exchange further believes that the proposed fee change would not permit 
unfair discrimination among ETP Holders because the general and tiered 
rates are available equally to all ETP Holders. As described above, in 
today's competitive marketplace, order flow providers have a choice of 
where to direct liquidity-providing order flow, and the Exchange 
believes there are a number of ETP Holders who could qualify for 
proposed new minimum credit if they chose to direct more of their order 
flow to the Exchange.
Cross-Asset Tier
    The Exchange believes that the proposed rule change to modify the 
requirement to qualify for the credits payable under the Cross-Asset 
Tier is not unfairly discriminatory. In the prevailing competitive 
environment, ETP Holders are free to disfavor the Exchange's pricing if 
they believe that alternatives offer them better value. Moreover, the 
proposal neither targets nor will it have a disparate impact on any 
particular category of market participant. The Exchange believes that 
the proposal does not permit unfair discrimination because the proposal 
would be applied to all similarly situated ETP Holders and all ETP 
Holders would be similarly subject to the proposed volume requirement 
to qualify for the credits payable under the Cross-Asset Tier. 
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 changes would not permit unfair 
discrimination among ETP Holders because the general and tiered rates 
are available equally to all ETP Holders.
    As described above, in today's competitive marketplace, order flow 
providers have a choice of where to direct liquidity-providing order 
flow, and the Exchange believes the proposed modification of the 
requirement to qualify for the credits payable under the Cross-Asset 
Tier will incentivize ETP Holders to direct more of their order flow to 
the Exchange. 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 FR 6(b)(8) of the Act,\17\ the Exchange believes 
that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, as discussed above, the Exchange believes 
that the proposed changes would encourage the submission of additional 
liquidity to a public exchange, thereby promoting market depth, price 
discovery and transparency and enhancing order execution opportunities 
for ETP Holders. As a result, the Exchange believes that the proposed 
change furthers the Commission's goal in adopting Regulation NMS of 
fostering integrated competition among orders, which promotes ``more 
efficient pricing of individual stocks for all types of orders, large 
and small.'' \18\
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    \17\ 15 U.S.C. 78f(b)(8).
    \18\ 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 
amendments to its Fee Schedule would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The Exchange does not believe that the proposed 
change represents a significant departure from previous pricing offered 
by the Exchange or its competitors. The proposed changes are designed 
to attract additional order flow to the Exchange. The Exchange believes 
that the proposed adoption of a minimum credit and amending volume 
criteria of established tiers, i.e., the Cross-Asset Tier, would 
incentivize market participants to direct liquidity adding order flow 
to the Exchange, bringing with it additional execution opportunities 
for market participants and improved price transparency. Greater 
overall order flow, trading opportunities, and pricing transparency 
benefits all market participants on the Exchange by enhancing market 
quality and continuing to encourage ETP Holders to send orders, thereby 
contributing towards a robust and well-balanced market ecosystem.

[[Page 63842]]

Additionally, the proposed changes would apply equally to all similarly 
situated ETP Holders equally in that they would all be eligible for the 
credits available under the Adding Tiers and the Cross-Asset Tier and 
each such ETP Holder has a reasonable opportunity to meet each tier's 
criteria.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily choose to 
send their orders to other exchange and off-exchange venues if they 
deem fee levels at those other venues to be more favorable. As noted 
above, the Exchange's market share of intraday trading (i.e., excluding 
auctions) is currently less than 10%. In such an environment, the 
Exchange must continually adjust its fees and rebates to remain 
competitive with other exchanges and with off-exchange venues. Because 
competitors are free to modify their own fees and credits in response, 
and because market participants may readily adjust their order routing 
practices, the Exchange does not believe its proposed fee change can 
impose any burden on intermarket competition.
    The Exchange believes that the proposed changes 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 FR 
19(b)(3)(A) \19\ of the Act and subparagraph (f)(2) of Rule 19b-4 \20\ 
thereunder, because it establishes a due, fee, or other charge imposed 
by the Exchange.
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under FR 
19(b)(2)(B) \21\ of the Act to determine whether the proposed rule 
change should be approved or disapproved.
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    \21\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEARCA-2022-68 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEARCA-2022-68. 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-2022-68, and should be 
submitted on or before November 10, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-22731 Filed 10-19-22; 8:45 am]
BILLING CODE 8011-01-P