Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Fee Schedule of NYSE Chicago, Inc. To Reflect the Fee for Directed Orders Routed by the Exchange to an Alternative Trading System, 75113-75116 [2022-26541]

Download as PDF Federal Register / Vol. 87, No. 234 / Wednesday, December 7, 2022 / Notices to result in fewer and lower ECP charges. Further, NSCC does not believe the proposed rule change to improve the clarity and predictability of the calculation of the ECP charge would impact competition because this proposed change would not impact the calculation of Members’ Required Fund Deposits. Therefore, this proposed change would not affect NSCC’s operations or the rights and obligations of membership. As such, NSCC believes the proposed rule change to improve the transparency of the Rules would not have any impact on competition. ddrumheller on DSK6VXHR33PROD with NOTICES C. Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others NSCC has not received or solicited any written comments relating to this proposal. If any written comments are received, they will be publicly filed as an Exhibit 2 to this filing, as required by Form 19b–4 and the General Instructions thereto. Persons submitting comments are cautioned that, according to Section IV (Solicitation of Comments) of the Exhibit 1A in the General Instructions to Form 19b–4, the Commission does not edit personal identifying information from comment submissions. Commenters should submit only information that they wish to make available publicly, including their name, email address, and any other identifying information. All prospective commenters should follow the Commission’s instructions on how to submit comments, available at https://www.sec.gov/regulatory-actions/ how-to-submit-comments. General questions regarding the rule filing process or logistical questions regarding this filing should be directed to the Main Office of the Commission’s Division of Trading and Markets at tradingandmarkets@sec.gov or 202– 551–5777. NSCC reserves the right to not respond to any comments received. III. Date of Effectiveness of the Proposed Rule Change, and Timing for Commission Action Section 19(b)(2) of the Act 49 provides that proceedings to determine whether to approve or disapprove a proposed rule change must be concluded within 180 days of the date of publication of notice of filing of the proposed rule change. The time for conclusion of the proceedings may be extended for up to 60 days if the Commission determines that a longer period is appropriate and publishes the reasons for such determination.50 The 180th day after publication of the Notice in the Federal Register is December 5, 2022. The Commission is extending the period for Commission action on the Proposed Rule Change. The Commission finds that it is appropriate to designate a longer period within which to take action on the Proposed Rule Change so that the Commission has sufficient time to consider the issues raised by the Proposed Rule Change and to take action on the Proposed Rule Change. Accordingly, pursuant to Section 19(b)(2)(B)(ii)(II) of the Act,51 the Commission designates February 3, 2023, as the date by which the Commission should either approve or disapprove the Proposed Rule Change SR–NSCC–2022–005. 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– NSCC–2022–005 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–NSCC–2022–005. 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 U.S.C. 78s(b)(2). VerDate Sep<11>2014 19:54 Dec 06, 2022 U.S.C. 78s(b)(2)(B)(ii)(II). 51 Id. Jkt 259001 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 NSCC and on DTCC’s website (https://dtcc.com/legal/secrulefilings.aspx). 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–NSCC– 2022–005 and should be submitted on or before December 22, 2022. Any person who wishes to file a rebuttal to any other person’s submission must file that rebuttal on or before December 28, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.52 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2022–26535 Filed 12–6–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96433; File No. SR– NYSECHX–2022–27] Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Fee Schedule of NYSE Chicago, Inc. To Reflect the Fee for Directed Orders Routed by the Exchange to an Alternative Trading System December 1, 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 November 21, 2022, the NYSE Chicago, Inc. (‘‘NYSE Chicago’’ 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 Commission is publishing this notice to solicit 52 17 CFR 200.30–3(a)(57). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 50 15 49 15 PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 75113 E:\FR\FM\07DEN1.SGM 07DEN1 75114 Federal Register / Vol. 87, No. 234 / Wednesday, December 7, 2022 / Notices 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 Fee Schedule of NYSE Chicago, Inc. (the ‘‘Fee Schedule’’) to reflect the fee for Directed Orders routed directly by the Exchange to an alternative trading system (‘‘ATS’’). The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change ddrumheller on DSK6VXHR33PROD with NOTICES 1. Purpose The Exchange proposes to amend the Fee Schedule to reflect the fee for Directed Orders routed directly by the Exchange to an ATS. The Exchange proposes to implement the fee change effective November 21, 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’’). VerDate Sep<11>2014 19:54 Dec 06, 2022 Jkt 259001 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 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 1%.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, and 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 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. 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 7.31(f)(4). See also Securities Exchange Act Release No. 95425 (August 4, 2022), 87 FR 48735 (August 10, 2022) (SR–NYSECHX– 2022–06). 11 A Limit Order is defined in Rule 7.31(a)(2) as an order to buy or sell a stated amount of a security at a specified price or better. PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 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’’). In anticipation of the scheduled implementation of routing functionality to OneChronos,15 the Exchange proposes to amend the Fee Schedule 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 E. Transaction and Order Processing Fees. More specifically, the Exchange proposes to adopt footnote 1 and append it to the stated fee of $0.0030/share for securities priced at or above $1.00 under Routing Fee. Proposed footnote 1 would state ‘‘No fee for Directed Orders routed to OneChronos LLC.’’ Additionally, the Exchange proposes to define ‘‘Directed Orders’’ in proposed footnote 1. As proposed, the term ‘‘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 Participants 16 12 Pursuant to Rule 7.31(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 7.31(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 7.34(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 1.1. 15 See https://www.nyse.com/publicdocs/nyse/ notifications/trader-update/110000486743/ALO_ MPL_One_Chronos_Chicago.pdf. 16 A ‘‘Participant’’ is, except as otherwise described in the Rules of the Exchange, ‘‘any Participant Firm that holds a valid Trading Permit and any person associated with a Participant Firm who is registered with the Exchange under Articles 16 and 17 as a Market Maker Authorized Trader or Institutional Broker Representative, respectively.’’ See Article 1, Rule 1(s). E:\FR\FM\07DEN1.SGM 07DEN1 Federal Register / Vol. 87, No. 234 / Wednesday, December 7, 2022 / Notices 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.20 The Exchange believes its proposal equitably allocates its fees among its market participants. The Exchange believes that the proposal represents an 2. Statutory Basis equitable allocation of fees because it The Exchange believes that the would apply uniformly to all proposed rule change is consistent with Participants, in that all Participants will Section 6(b) of the Act,17 in general, and have the ability to designate orders furthers the objectives of Sections submitted to the Exchange to be routed 6(b)(4) and (5) of the Act,18 in particular, to OneChronos, and each such because it provides for the equitable Participant would not be charged a fee allocation of reasonable dues, fees, and when utilizing the new functionality. other charges among its members, While the Exchange has no way of knowing whether this proposed rule issuers and other persons using its change would serve as an incentive to facilities and does not unfairly utilize the new order type, the Exchange discriminate between customers, expects that a number of Participants issuers, brokers or dealers. As discussed above, the Exchange will utilize the new functionality operates in a highly fragmented and because it would create efficiencies for competitive market. The Commission Participants by enabling them to send has repeatedly expressed its preference orders that they wish to route to OneChronos through the Exchange, for competition over regulatory thereby enabling them to leverage order intervention in determining prices, entry protocols already configured for products, and services in the securities their interactions with the Exchange. markets. Specifically, in Regulation The Exchange believes that the NMS, the Commission highlighted the proposal is not unfairly discriminatory. importance of market forces in The Exchange believes it is not unfairly determining prices and SRO revenues discriminatory as the proposal to not and, also, recognized that current charge a fee would be assessed on an regulation of the market system ‘‘has equal basis to all Participants that use been remarkably successful in the Directed Order functionality. The promoting market competition in its broader forms that are most important to proposal to not charge a fee would also enable Participants to evaluate the investors and listed companies.’’ 19 efficacy of the new functionality. The Exchange believes that the everMoreover, this proposed rule change shifting market share among the neither targets nor will it have a exchanges from month to month disparate impact on any particular demonstrates that market participants category of market participant. The can shift order flow, or discontinue or Exchange believes that this proposal reduce use of certain categories of does not permit unfair discrimination products, in response to fee changes. because the changes described in this Accordingly, changes to exchange proposal would be applied to all transaction fees can have a direct effect on the ability of an exchange to compete similarly situated Participants. Accordingly, no Participant already for order flow. operating on the Exchange would be In particular, the Exchange believes the proposed rule change is a reasonable disadvantaged by the proposed allocation of fees. The Exchange further means to incent Participants to utilize believes that the proposed rule change the Directed Orders functionality and would not permit unfair discrimination allow Participants to evaluate its efficacy. The proposed routing of orders among Participants because the Directed Order functionality would be available to OneChronos is provided by the to all Participants on an equal basis and Exchange on a voluntary basis and no each such member would not be 17 15 U.S.C. 78f(b). charged a fee for using the functionality. ddrumheller on DSK6VXHR33PROD with NOTICES 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 Participants 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. Participants that choose not to utilize Directed Orders would continue to be able to trade on the Exchange as they currently do. 18 15 U.S.C. 78f(b)(4) and (5). supra note 4. VerDate Sep<11>2014 19:54 Dec 06, 2022 Finally, the submission of orders to the Exchange is optional for Participants 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,21 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.’’ 22 Intramarket Competition. The Exchange believes the proposed amendment 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 believes the proposed rule change is a reasonable means to incent Participants to utilize the Directed Orders functionality and allow Participants to evaluate its efficacy. The Directed Orders functionality would be available to all Participants and all Participants 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. Participants 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 Participants 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 21 15 19 See 20 See Jkt 259001 PO 00000 Rule 7.31(f)(1). Frm 00094 Fmt 4703 U.S.C. 78f(b)(8). supra note 4. 22 See Sfmt 4703 75115 E:\FR\FM\07DEN1.SGM 07DEN1 75116 Federal Register / Vol. 87, No. 234 / Wednesday, December 7, 2022 / Notices 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 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) 23 of the Act and subparagraph (f)(2) of Rule 19b–4 24 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) 25 of the Act to determine whether the proposed rule change should be approved or disapproved. ddrumheller on DSK6VXHR33PROD with NOTICES 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 SMALL BUSINESS ADMINISTRATION • 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– NYSECHX–2022–27 on the subject line. [Disaster Declaration #17723; Alaska Disaster Number AK–00056 Declaration of Economic Injury] Paper Comments AGENCY: • 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–NYSECHX–2022–27. 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–NYSECHX–2022–27 and should be submitted on or before December 28, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2022–26541 Filed 12–6–22; 8:45 am] BILLING CODE 8011–01–P 23 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 25 15 U.S.C. 78s(b)(2)(B). 19:54 Dec 06, 2022 ACTION: Small Business Administration. Notice. This is a notice of an Economic Injury Disaster Loan (EIDL) declaration for the State of Alaska dated 12/01/2022. Incident: White Pass and Yukon Route Railroad Dock Rockslide and Closure. Incident Period: 08/03/2022 and continuing. DATES: Issued on 12/01/2022. Economic Injury (EIDL) Loan Application Deadline Date: 09/01/2023. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205–6734. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the Administrator’s EIDL declaration, applications for economic injury disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties: Haines Borough, Municipality Of Skagway. Contiguous Counties: Alaska: Chatham Reaa, City and Borough of Juneau. The Interest Rates are: SUMMARY: Percent Businesses and Small Agricultural Cooperatives without Credit Available Elsewhere .................. Non-Profit Organizations without Credit Available Elsewhere ....... 26 17 Jkt 259001 PO 00000 CFR 200.30–3(a)(12). Frm 00095 Fmt 4703 Sfmt 9990 3.040 1.875 The number assigned to this disaster for economic injury is 177230. The States which received an EIDL Declaration #17723 are Alaska. (Catalog of Federal Domestic Assistance Number 59008) Isabella Guzman, Administrator. [FR Doc. 2022–26548 Filed 12–6–22; 8:45 am] 24 17 VerDate Sep<11>2014 Administrative Declaration of an Economic Injury Disaster for the State of Alaska BILLING CODE 8026–09–P E:\FR\FM\07DEN1.SGM 07DEN1

Agencies

[Federal Register Volume 87, Number 234 (Wednesday, December 7, 2022)]
[Notices]
[Pages 75113-75116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-26541]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96433; File No. SR-NYSECHX-2022-27]


Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the 
Fee Schedule of NYSE Chicago, Inc. To Reflect the Fee for Directed 
Orders Routed by the Exchange to an Alternative Trading System

December 1, 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 November 21, 2022, the NYSE Chicago, Inc. (``NYSE 
Chicago'' 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 Commission is publishing this notice to solicit

[[Page 75114]]

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.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Fee Schedule of NYSE Chicago, 
Inc. (the ``Fee Schedule'') to reflect the fee for Directed Orders 
routed directly by the Exchange to an alternative trading system 
(``ATS''). The proposed rule change is available on the Exchange's 
website at www.nyse.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.

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

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

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

1. Purpose
    The Exchange proposes to amend the Fee Schedule to reflect the fee 
for Directed Orders routed directly by the Exchange to an ATS. The 
Exchange proposes to implement the fee change effective November 21, 
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 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 1%.\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.
    \7\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \8\ See Cboe Global Markets U.S. Equities Market Volume Summary, 
available at https://markets.cboe.com/us/equities/market_share/.
    \9\ See id.
---------------------------------------------------------------------------

    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
move order flow, or discontinue or reduce use of certain categories of 
products. 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, and 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 7.31(f)(4). See also Securities Exchange Act 
Release No. 95425 (August 4, 2022), 87 FR 48735 (August 10, 2022) 
(SR-NYSECHX-2022-06).
    \11\ A Limit Order is defined in Rule 7.31(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 7.31(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 7.31(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 7.34(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 1.1.
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    In anticipation of the scheduled implementation of routing 
functionality to OneChronos,\15\ the Exchange proposes to amend the Fee 
Schedule 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 E. Transaction and Order Processing 
Fees. More specifically, the Exchange proposes to adopt footnote 1 and 
append it to the stated fee of $0.0030/share for securities priced at 
or above $1.00 under Routing Fee. Proposed footnote 1 would state ``No 
fee for Directed Orders routed to OneChronos LLC.'' Additionally, the 
Exchange proposes to define ``Directed Orders'' in proposed footnote 1. 
As proposed, the term ``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.''
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    \15\ See https://www.nyse.com/publicdocs/nyse/notifications/trader-update/110000486743/ALO_MPL_One_Chronos_Chicago.pdf.
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    The Exchange believes that the Directed Orders functionality would 
facilitate additional trading opportunities by offering Participants 
\16\

[[Page 75115]]

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 Participants 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. 
Participants that choose not to utilize Directed Orders would continue 
to be able to trade on the Exchange as they currently do.
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    \16\ A ``Participant'' is, except as otherwise described in the 
Rules of the Exchange, ``any Participant Firm that holds a valid 
Trading Permit and any person associated with a Participant Firm who 
is registered with the Exchange under Articles 16 and 17 as a Market 
Maker Authorized Trader or Institutional Broker Representative, 
respectively.'' See Article 1, Rule 1(s).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\17\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\18\ 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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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(4) and (5).
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    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.'' \19\
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    \19\ See supra note 4.
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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. 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 Participants to utilize the Directed Orders 
functionality and allow Participants 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.\20\
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    \20\ See Rule 7.31(f)(1).
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    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 Participants, in that all Participants will have the 
ability to designate orders submitted to the Exchange to be routed to 
OneChronos, and each such Participant 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 
Participants will utilize the new functionality because it would create 
efficiencies for Participants 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 Participants that use the Directed Order functionality. The 
proposal to not charge a fee would also enable Participants 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 
Participants. Accordingly, no Participant 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 Participants because the Directed 
Order functionality would be available to all Participants on an equal 
basis and each such member would not be charged a fee for using the 
functionality.
    Finally, the submission of orders to the Exchange is optional for 
Participants 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,\21\ 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.'' \22\
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    \21\ 15 U.S.C. 78f(b)(8).
    \22\ See supra note 4.
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    Intramarket Competition. The Exchange believes the proposed 
amendment 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 believes the proposed rule change is 
a reasonable means to incent Participants to utilize the Directed 
Orders functionality and allow Participants to evaluate its efficacy. 
The Directed Orders functionality would be available to all 
Participants and all Participants 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. Participants 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 
Participants 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

[[Page 75116]]

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 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) \23\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \24\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \23\ 15 U.S.C. 78s(b)(3)(A).
    \24\ 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) \25\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \25\ 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-NYSECHX-2022-27 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-NYSECHX-2022-27. 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-NYSECHX-2022-27 and should be submitted 
on or before December 28, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-26541 Filed 12-6-22; 8:45 am]
BILLING CODE 8011-01-P
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