Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Equities Fees and Charges, 4047-4051 [2023-01120]
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Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Notices
January 2023, as is proposed by the
Exchange.
Electronic Comments
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with section 6(b)(8) of
the Act,13 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. Specifically,
the Exchange believes that the proposed
change will reflect fees that will be
assessed by FINRA as of January 2023
and will thus result in the same
regulatory fees being charged to all ETP
Holders required to report information
to the CRD system and for services
performed by FINRA, regardless of
whether or not such ETP Holders are
FINRA members.
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) 14 of the Act and
subparagraph (f)(2) of Rule 19b–4 15
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) 16 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
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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:
• 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–
NYSENAT–2023–01 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–NYSENAT–2023–01. 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–NYSENAT–2023–01, and
should be submitted on or before
February 13, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–01121 Filed 1–20–23; 8:45 am]
13 See
15 U.S.C. 78f(b)(8).
14 15 U.S.C. 78s(b)(3)(A).
15 17 CFR 240.19b–4(f)(2).
16 15 U.S.C. 78s(b)(2)(B).
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96680; File No. SR–
NYSEARCA–2023–01]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the NYSE Arca
Equities Fees and Charges
January 17, 2023.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January 3,
2023, 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.
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’’) to amend the fee for
Retail Orders with a time-in-force of Day
that remove liquidity. 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 to amend the fee for Retail
1 15
17 17
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U.S.C. 78s(b)(1).
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Orders 3 with a time-in-force of Day that
remove liquidity. The proposed change
responds to the current competitive
environment where ETP Holders have a
choice among both exchange and offexchange venues of where to route
marketable retail flow.
The Exchange proposes to implement
the fee change effective January 3, 2023.
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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.’’ 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
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
3 A Retail Order is an agency order that originates
from a natural person and is submitted to the
Exchange by an ETP Holder, provided that no
change is made to the terms of the order to price
or side of market and the order does not originate
from a trading algorithm or any other computerized
methodology. See Securities Exchange Act Release
No. 67540 (July 30, 2012), 77 FR 46539 (August 3,
2012) (SR–NYSEArca–2012–77).
4 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(File No. S7–10–04) (Final Rule) (‘‘Regulation
NMS’’).
5 See Securities Exchange Act Release No. 61358,
75 FR 3594, 3597 (January 21, 2010) (File No. S7–
02–10) (Concept Release on Equity Market
Structure).
6 See Cboe U.S Equities Market Volume
Summary, available at https://markets.cboe.com/us/
equities/market_share.
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/.
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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.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. The competition for Retail
Orders is even more stark, particularly
as it relates to exchange versus offexchange venues.
The Exchange thus needs to compete
in the first instance with non-exchange
venues for Retail Order flow, and with
the 15 other exchange venues for that
Retail Order flow that is not directed
off-exchange. Accordingly, competitive
forces compel the Exchange to use
exchange transaction fees and credits,
particularly as they relate to competing
for Retail Order flow, because market
participants can readily trade on
competing venues if they deem pricing
levels at those other venues to be more
favorable.
To respond to this competitive
environment, the Exchange has
established a number of Retail Tiers,
which are designed to provide an
incentive for ETP Holders to route Retail
Orders to the Exchange by providing
higher credits for adding liquidity
correlated to an ETP Holder’s higher
trading volume in Retail Orders on the
Exchange. Under three of these four
tiers, i.e., Retail Tier 1, Retail Tier 2,
Retail Tier 3 and Retail Step-Up Tier,
ETP Holders also do not pay a fee when
such Retail Orders have a time-in-force
of Day that remove liquidity from the
Exchange. Under Retail Tier 4, ETP
Holders currently pay a standard fee of
$0.0030 per share for Retail Orders that
that remove liquidity.10
Proposed Rule Change
The proposed rule change is designed
to be available to all ETP Holders on the
Exchange and is intended to provide
ETP Holders an opportunity to not pay
a fee for Retail Orders with a time-inforce of Day that remove liquidity from
the Exchange. Specifically, the
Exchange proposes to adopt new
9 See
id.
Fee Schedule, Section III. Standard Rates—
Transactions (applicable when Tier Rates do not
apply).
10 See
PO 00000
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footnote (f) under the Retail Tiers
table.11 Proposed footnote (f) would
state that ‘‘ETP Holders that increase
Retail Orders with a time-in-force of Day
that add and remove that is an increase
over May 2022 of at least 0.05% of
CADV would not pay a fee for Retail
Removing with a time-in-force of Day.’’
As noted above, ETP Holders that
qualify for Retail Tiers 1, 2, 3 and Retail
Step-Up Tier currently do not pay a fee
for Retail Orders with a time-in-force of
Day that remove liquidity from the
Exchange. ETP Holders that do not
currently qualify for Retail Tiers 1, 2, 3
and Retail Step-Up Tier would benefit
from this proposed rule change by
increasing the amount of Retail Orders
with a time-in-force of Day that add and
remove liquidity by 0.05% over their
May 2022 CADV. ETP Holders that meet
the proposed lower volume requirement
would qualify to not pay a fee for Retail
Orders with a time-in-force of Day that
remove liquidity. ETP Holders that
qualify for the proposed no fee would
also continue to receive the standard
credit of ($0.0032) per share for Retail
Orders that add liquidity.12
To illustrate the application of the
proposed fee reduction, assume an ETP
Holder’s activity of Retail Orders with a
time-in-force of Day in the current
month is equal to 0.08% of CADV,
which is less than Retail Tier 4’s
requirement of 0.10% of CADV. Assume
further that this ETP Holder has a StepUp of Retail Orders with a time-in-force
of Day from April 2018 of 0.02% of
CADV, which is less than Retail StepUp Tier’s requirement of 0.075% of
CADV. Based on this activity, the ETP
Holder in this example would receive
the standard credit of ($0.0032) per
share for adding Retail liquidity and
would pay the standard fee of $0.0030
per share for removing Retail liquidity,
unless the ETP Holder qualifies for
better rates under other pricing tiers.
Assume further that the same ETP
Holder’s activity of Retail Orders with a
time-in-force of Day in May 2022 was
equal to 0.02% of CADV. Under the
proposed rule change, this ETP Holder
would qualify for the proposed no fee
because it had an increase of Retail
Orders with a time-in-force of Day that
add and remove liquidity over May
2022 of 0.06% (0.08% in the current
month minus 0.02% in May 2022),
which meets the proposed requirement
that an ETP Holder’s increase of Retail
11 With the proposed adoption of new footnote (f)
under the Retail Tiers table, the Exchange proposes
to renumber current footnote (f) under the Tape B
Tiers table as footnote (g) and renumber current
footnote (g) under the Tape B Tiers table as footnote
(h).
12 See supra note 10.
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Orders with a time-in-force of Day that
add or remove must be at least 0.05%
of CADV over the ETP Holder’s May
2022 CADV. Under the proposed rule
change, this ETP Holder would continue
to receive the standard credit of
($0.0032) per share for adding Retail
liquidity and would not pay a fee for
Retail Orders with a time-in-force of Day
that remove liquidity.
The purpose of the proposed rule
change is to encourage greater
participation from ETP Holders and
promote additional liquidity in Retail
Orders. The Exchange believes that the
proposed rule change to adopt a lower
volume requirement to qualify for the
proposed fee reduction would
incentivize ETP Holders to direct a
greater number of Retail Orders to the
Exchange that add and remove liquidity.
As described above, ETP Holders have
a choice of where to send their Retail
Orders that add and remove liquidity.
The Exchange believes that the
proposed rule change to reduce fees
paid by ETP Holders for Retail Orders
could lead to more ETP Holders
choosing to route such orders for
execution to the Exchange rather than to
a competing exchange.
The Exchange does not know how
much Retail Order flow ETP Holders
choose to route to other exchanges or to
off-exchange venues. Without having a
view of ETP Holders’ activity on other
markets and off-exchange venues, the
Exchange has no way of knowing
whether this proposed rule change
would result in any ETP Holder sending
more of its Retail Orders to the
Exchange. The Exchange cannot predict
with certainty how many ETP Holders
would avail themselves of this
opportunity, but additional liquidity of
Retail Orders would benefit all market
participants because it would provide
greater execution opportunities on the
Exchange.
The proposed changes are not
otherwise intended to address any other
issues, and the Exchange is not aware of
any significant problems that market
participants would have in complying
with the proposed changes.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
section 6(b) of the Act,13 in general, and
furthers the objectives of sections 6(b)(4)
and (5) of the Act,14 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
13 15
14 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
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facilities and does not unfairly
discriminate between customers,
issuers, brokers or dealers.
The Proposed Fee Change Is Reasonable
As discussed above, the Exchange
operates in a highly fragmented and
competitive market. The Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 15
Given this competitive environment,
the proposal represents a reasonable
attempt to attract additional order flow
to the Exchange.
As noted above, the competition for
Retail Order flow is stark given the
amount of retail limit orders that are
routed to non-exchange venues. 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. ETP Holders can choose from
any one of the 16 currently operating
registered exchanges, and numerous offexchange venues, to route such order
flow. Accordingly, competitive forces
constrain exchange transaction fees,
particularly as they relate to competing
for retail orders. Stated otherwise,
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
that the proposal to adopt lower volume
requirement to qualify for the proposed
fee reduction is reasonable because it is
designed to encourage greater
participation from ETP Holders and
promote additional liquidity in Retail
Orders. The Exchange believes it is
reasonable to require ETP Holders to
meet the applicable volume threshold to
qualify for the proposed no fee for Retail
Orders with a time-in-force of Day that
remove liquidity, which the Exchange
believes will encourage ETP Holders to
direct more of their Retail Orders to the
Exchange. Further, the proposed change
is reasonable as it would allow ETP
Holders that do not presently qualify for
Retail Tiers 1, 2, 3 and Retail Step-Up
Tier an additional opportunity to
15 See
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4049
qualify and not pay a fee for Retail
Orders with a time-in-force of Day that
remove liquidity.
The Exchange believes that the
proposal to adopt reduced fees for ETP
Holders that meet the proposed volume
requirement is a reasonable means to
encourage additional liquidity on the
Exchange because ETP Holders would
benefit from the greater amounts of
displayed liquidity present on a public
exchange. The Exchange believes that
the proposed lower volume requirement
would incentivize additional liquidity
to a public exchange to qualify for lower
fees for Retail Orders with a time-inforce of Day that remove liquidity,
thereby promoting price discovery and
transparency and enhancing order
execution opportunities for ETP
Holders. The proposal is thus
reasonable because all ETP Holders
would benefit from such increased
levels of liquidity. The Exchange notes
that ETP Holders are free to shift their
order flow to competing venues if they
believe other markets offer more
favorable fees and credits.
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 that, for the
reasons discussed above, the proposed
rule change is an equitable allocation of
its fees and credits. The proposed rule
change is intended to provide ETP
Holders an incentive to send a greater
number of Retail Orders to the Exchange
in order to qualify and not pay a fee for
such orders when removing liquidity
from the Exchange, thereby increasing
the number of orders that are executed
on the Exchange, promoting price
discovery and transparency and
enhancing order execution
opportunities and improving overall
liquidity on a public exchange. The
Exchange also believes that the
proposed change is equitable because it
would apply to all similarly situated
ETP Holders that remove liquidity. As
previously noted, the Exchange operates
in a competitive environment,
particularly as it relates to attracting
Retail Orders 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. The Exchange believes that
pricing is just one of the factors that ETP
Holders consider when determining
where to direct their order flow. Among
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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 that
a number of ETP Holders could qualify
for the proposed no fee based on their
current trading profile on the Exchange
if they choose to direct more of their
order flow to the Exchange. However,
without having a view of an ETP
Holder’s activity on other exchanges
and off-exchange venues, the Exchange
has no way of knowing whether this
proposed rule change would result in
any ETP Holder directing Retail Orders
to the Exchange in order to qualify for
the proposed no fee.
The Exchange believes the proposed
rule change would improve market
quality for all market participants on the
Exchange and, as a consequence, attract
more Retail Orders to the Exchange,
thereby improving market-wide quality
and price discovery.
The Proposed Fee Change Is Not
Unfairly Discriminatory
The Exchange believes that the
proposal to adopt a lower volume
requirement to qualify for the proposed
fee reduction 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 proposed
rule change will incentivize ETP
Holders to direct a greater number of
Retail Orders to a public exchange to
qualify for the proposed reduced fee for
removing liquidity, thereby promoting
price discovery and transparency and
enhancing order execution
opportunities for ETP Holders. The
proposal does not permit unfair
discrimination because the proposed
volume requirement for removing
liquidity would be applied to all
similarly situated ETP Holders, who
would all be eligible to not pay a fee on
an equal basis. Accordingly, no ETP
Holder already operating on the
Exchange would be disadvantaged by
this allocation of fees. The Exchange
believes it is not unfairly discriminatory
to provide lower fees for removing
liquidity as the proposed fee would be
provided on an equal basis to all ETP
Holders that remove liquidity by
meeting the proposed volume
requirement. Further, the Exchange
believes the proposed reduced fee
would provide an incentive for ETP
Holders to execute more of their Retail
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Orders on the Exchange. The Exchange
also believes that the proposed change
is not unfairly discriminatory because it
is reasonably related to the value to the
Exchange’s market quality associated
with higher volume.
In addition, 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.
Finally, the Exchange believes that it
is subject to significant competitive
forces, as described below in the
Exchange’s statement regarding the
burden on competition.
For the foregoing reasons, the
Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with section 6(b)(8) of
the Act,16 the Exchange believes that the
proposed rule change would not impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Instead, as
discussed above, the 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.’’ 17
Intramarket Competition. The
Exchange believes the proposed rule
change does not impose any burden on
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed change is designed to attract
Retail Orders to the Exchange. The
Exchange believes that the proposed
change would incentivize market
participants to direct retail order flow to
the Exchange. Greater overall order
flow, trading opportunities, and pricing
transparency would benefit all market
participants on the Exchange by
enhancing market quality and would
continue to encourage ETP Holders to
send their orders to the Exchange,
thereby contributing towards a robust
and well-balanced market ecosystem.
The proposed fee reduction would be
16 15
U.S.C. 78f(b)(8).
supra note 3.
17 See
PO 00000
Frm 00085
Fmt 4703
available to all similarly situated market
participants, and, as such, the proposed
change would not impose a disparate
burden on competition among market
participants on the Exchange.
Additionally, the proposed change
would apply to all ETP Holders equally
in that all ETP Holders would have a
reasonable opportunity to meet the
volume requirement to qualify for the
proposed fee reduction and would not
pay a fee for removing liquidity if such
criteria is met.
Intermarket Competition. The
Exchange believes the proposed rule
change does not impose any burden on
intermarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange operates in a highly
competitive market in which market
participants can readily choose to send
their orders to other exchanges and offexchange venues if they deem fee levels
at those other venues to be more
favorable. 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 this proposed fee
change would impose any burden on
intermarket competition.
The Exchange believes that the
proposed change could promote
competition between the Exchange and
other execution venues, including those
that currently offer similar order types
and comparable transaction pricing, by
encouraging additional orders to be sent
to the Exchange for execution.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective upon filing pursuant to section
19(b)(3)(A) 18 of the Act and paragraph
(f) thereunder. At any time within 60
days of the filing of the proposed rule
change, the Commission summarily may
18 15
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E:\FR\FM\23JAN1.SGM
U.S.C. 78s(b)(3)(A).
23JAN1
Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Notices
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.
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:
khammond on DSKJM1Z7X2PROD with NOTICES
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–
NYSEARCA–2023–01 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–2023–01. 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–2023–01, and
VerDate Sep<11>2014
16:44 Jan 20, 2023
Jkt 259001
should be submitted on or before
February 13, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–01120 Filed 1–20–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96673; File No. SR–
CboeBZX–2023–001]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule
January 17, 2023.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January 3,
2023, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) 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
Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX Options’’)
proposes to amend its Fee Schedule.
The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/bzx/), at
the Exchange’s Office of the Secretary,
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
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
4051
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Fee Schedule, effective January 3, 2023.
The Exchange proposes to modify its
market data fees for BZX Options Top.3
Particularly, the Exchange proposes to
modify the Professional and NonProfessional User Fees and the
Enterprise Fee for BXZ Options Top.
The Exchange first proposes to reduce
the Professional and Non-Professional
User fees for BZX Options Top. The
Exchange currently charges Internal
Distributors and External Distributors
that redistribute any of the BZX Options
Data Feeds different fees for their
Professional Users 4 and NonProfessional Users.5 The Exchange
currently assesses a monthly fee for
Professional Users of $30.00 per User
and a monthly fee of $1.00 per NonProfessional User.6 One User fee allows
access to the BZX Options Top Feed and
the BZX Options Depth Feed.7 The
Exchange proposes to reduce the User
fees for BZX Options Top. Particularly,
3 BZX Options Top is an uncompressed data feed
that offers top of book quotations and execution
information based on options orders entered into
the System.
4 A Professional User of an Exchange Market Data
product is any User other than a Non-Professional
User.
5 A ‘‘Non-Professional User’’ of an Exchange
Market Data product is a natural person or
qualifying trust that uses Data only for personal
purposes and not for any commercial purpose and,
for a natural person who works in the United States,
is not: (i) registered or qualified in any capacity
with the Securities and Exchange Commission, the
Commodities Futures Trading Commission, any
state securities agency, any securities exchange or
association, or any commodities or futures contract
market or association; (ii) engaged as an
‘‘investment adviser’’ as that term is defined in
section 202(a)(11) of the Investment Advisors Act
of 1940 (whether or not registered or qualified
under that Act); or (iii) employed by a bank or other
organization exempt from registration under federal
or state securities laws to perform functions that
would require registration or qualification if such
functions were performed for an organization not so
exempt; or, for a natural person who works outside
of the United States, does not perform the same
functions as would disqualify such person as a
Non-Professional User if he or she worked in the
United States.
6 Distributors that receive BZX Options Data
Feeds are required to count every Professional User
and Non-Professional User to which they provide
the market data product(s).
7 BZX Options Depth is an uncompressed data
feed that offers depth of book quotations and
execution information based on options orders
entered into the System.
E:\FR\FM\23JAN1.SGM
23JAN1
]]>Agencies
[Federal Register Volume 88, Number 14 (Monday, January 23, 2023)]
[Notices]
[Pages 4047-4051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-01120]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96680; File No. SR-NYSEARCA-2023-01]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE
Arca Equities Fees and Charges
January 17, 2023.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 3, 2023, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 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 NYSE Arca Equities Fees and
Charges (``Fee Schedule'') to amend the fee for Retail Orders with a
time-in-force of Day that remove liquidity. 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 to amend the fee
for Retail
[[Page 4048]]
Orders \3\ with a time-in-force of Day that remove liquidity. The
proposed change responds to the current competitive environment where
ETP Holders have a choice among both exchange and off-exchange venues
of where to route marketable retail flow.
---------------------------------------------------------------------------
\3\ A Retail Order is an agency order that originates from a
natural person and is submitted to the Exchange by an ETP Holder,
provided that no change is made to the terms of the order to price
or side of market and the order does not originate from a trading
algorithm or any other computerized methodology. See Securities
Exchange Act Release No. 67540 (July 30, 2012), 77 FR 46539 (August
3, 2012) (SR-NYSEArca-2012-77).
---------------------------------------------------------------------------
The Exchange proposes to implement the fee change effective January
3, 2023.
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.'' \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 currently has less than 10% market share of
executed volume of 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.
\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. The competition for Retail Orders is
even more stark, particularly as it relates to exchange versus off-
exchange venues.
The Exchange thus needs to compete in the first instance with non-
exchange venues for Retail Order flow, and with the 15 other exchange
venues for that Retail Order flow that is not directed off-exchange.
Accordingly, competitive forces compel the Exchange to use exchange
transaction fees and credits, particularly as they relate to competing
for Retail Order flow, because market participants can readily trade on
competing venues if they deem pricing levels at those other venues to
be more favorable.
To respond to this competitive environment, the Exchange has
established a number of Retail Tiers, which are designed to provide an
incentive for ETP Holders to route Retail Orders to the Exchange by
providing higher credits for adding liquidity correlated to an ETP
Holder's higher trading volume in Retail Orders on the Exchange. Under
three of these four tiers, i.e., Retail Tier 1, Retail Tier 2, Retail
Tier 3 and Retail Step-Up Tier, ETP Holders also do not pay a fee when
such Retail Orders have a time-in-force of Day that remove liquidity
from the Exchange. Under Retail Tier 4, ETP Holders currently pay a
standard fee of $0.0030 per share for Retail Orders that that remove
liquidity.\10\
---------------------------------------------------------------------------
\10\ See Fee Schedule, Section III. Standard Rates--Transactions
(applicable when Tier Rates do not apply).
---------------------------------------------------------------------------
Proposed Rule Change
The proposed rule change is designed to be available to all ETP
Holders on the Exchange and is intended to provide ETP Holders an
opportunity to not pay a fee for Retail Orders with a time-in-force of
Day that remove liquidity from the Exchange. Specifically, the Exchange
proposes to adopt new footnote (f) under the Retail Tiers table.\11\
Proposed footnote (f) would state that ``ETP Holders that increase
Retail Orders with a time-in-force of Day that add and remove that is
an increase over May 2022 of at least 0.05% of CADV would not pay a fee
for Retail Removing with a time-in-force of Day.''
---------------------------------------------------------------------------
\11\ With the proposed adoption of new footnote (f) under the
Retail Tiers table, the Exchange proposes to renumber current
footnote (f) under the Tape B Tiers table as footnote (g) and
renumber current footnote (g) under the Tape B Tiers table as
footnote (h).
---------------------------------------------------------------------------
As noted above, ETP Holders that qualify for Retail Tiers 1, 2, 3
and Retail Step-Up Tier currently do not pay a fee for Retail Orders
with a time-in-force of Day that remove liquidity from the Exchange.
ETP Holders that do not currently qualify for Retail Tiers 1, 2, 3 and
Retail Step-Up Tier would benefit from this proposed rule change by
increasing the amount of Retail Orders with a time-in-force of Day that
add and remove liquidity by 0.05% over their May 2022 CADV. ETP Holders
that meet the proposed lower volume requirement would qualify to not
pay a fee for Retail Orders with a time-in-force of Day that remove
liquidity. ETP Holders that qualify for the proposed no fee would also
continue to receive the standard credit of ($0.0032) per share for
Retail Orders that add liquidity.\12\
---------------------------------------------------------------------------
\12\ See supra note 10.
---------------------------------------------------------------------------
To illustrate the application of the proposed fee reduction, assume
an ETP Holder's activity of Retail Orders with a time-in-force of Day
in the current month is equal to 0.08% of CADV, which is less than
Retail Tier 4's requirement of 0.10% of CADV. Assume further that this
ETP Holder has a Step-Up of Retail Orders with a time-in-force of Day
from April 2018 of 0.02% of CADV, which is less than Retail Step-Up
Tier's requirement of 0.075% of CADV. Based on this activity, the ETP
Holder in this example would receive the standard credit of ($0.0032)
per share for adding Retail liquidity and would pay the standard fee of
$0.0030 per share for removing Retail liquidity, unless the ETP Holder
qualifies for better rates under other pricing tiers.
Assume further that the same ETP Holder's activity of Retail Orders
with a time-in-force of Day in May 2022 was equal to 0.02% of CADV.
Under the proposed rule change, this ETP Holder would qualify for the
proposed no fee because it had an increase of Retail Orders with a
time-in-force of Day that add and remove liquidity over May 2022 of
0.06% (0.08% in the current month minus 0.02% in May 2022), which meets
the proposed requirement that an ETP Holder's increase of Retail
[[Page 4049]]
Orders with a time-in-force of Day that add or remove must be at least
0.05% of CADV over the ETP Holder's May 2022 CADV. Under the proposed
rule change, this ETP Holder would continue to receive the standard
credit of ($0.0032) per share for adding Retail liquidity and would not
pay a fee for Retail Orders with a time-in-force of Day that remove
liquidity.
The purpose of the proposed rule change is to encourage greater
participation from ETP Holders and promote additional liquidity in
Retail Orders. The Exchange believes that the proposed rule change to
adopt a lower volume requirement to qualify for the proposed fee
reduction would incentivize ETP Holders to direct a greater number of
Retail Orders to the Exchange that add and remove liquidity. As
described above, ETP Holders have a choice of where to send their
Retail Orders that add and remove liquidity. The Exchange believes that
the proposed rule change to reduce fees paid by ETP Holders for Retail
Orders could lead to more ETP Holders choosing to route such orders for
execution to the Exchange rather than to a competing exchange.
The Exchange does not know how much Retail Order flow ETP Holders
choose to route to other exchanges or to off-exchange venues. Without
having a view of ETP Holders' activity on other markets and off-
exchange venues, the Exchange has no way of knowing whether this
proposed rule change would result in any ETP Holder sending more of its
Retail Orders to the Exchange. The Exchange cannot predict with
certainty how many ETP Holders would avail themselves of this
opportunity, but additional liquidity of Retail Orders would benefit
all market participants because it would provide greater execution
opportunities on the Exchange.
The proposed changes are not otherwise intended to address any
other issues, and the Exchange is not aware of any significant problems
that market participants would have in complying with the proposed
changes.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act,\13\ in general, and furthers the
objectives of sections 6(b)(4) and (5) of the Act,\14\ 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.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Proposed Fee Change Is Reasonable
As discussed above, the Exchange operates in a highly fragmented
and competitive market. The Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
in Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \15\
---------------------------------------------------------------------------
\15\ See supra note 3.
---------------------------------------------------------------------------
Given this competitive environment, the proposal represents a
reasonable attempt to attract additional order flow to the Exchange.
As noted above, the competition for Retail Order flow is stark
given the amount of retail limit orders that are routed to non-exchange
venues. 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. ETP Holders can
choose from any one of the 16 currently operating registered exchanges,
and numerous off-exchange venues, to route such order flow.
Accordingly, competitive forces constrain exchange transaction fees,
particularly as they relate to competing for retail orders. Stated
otherwise, 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 that the proposal to adopt
lower volume requirement to qualify for the proposed fee reduction is
reasonable because it is designed to encourage greater participation
from ETP Holders and promote additional liquidity in Retail Orders. The
Exchange believes it is reasonable to require ETP Holders to meet the
applicable volume threshold to qualify for the proposed no fee for
Retail Orders with a time-in-force of Day that remove liquidity, which
the Exchange believes will encourage ETP Holders to direct more of
their Retail Orders to the Exchange. Further, the proposed change is
reasonable as it would allow ETP Holders that do not presently qualify
for Retail Tiers 1, 2, 3 and Retail Step-Up Tier an additional
opportunity to qualify and not pay a fee for Retail Orders with a time-
in-force of Day that remove liquidity.
The Exchange believes that the proposal to adopt reduced fees for
ETP Holders that meet the proposed volume requirement is a reasonable
means to encourage additional liquidity on the Exchange because ETP
Holders would benefit from the greater amounts of displayed liquidity
present on a public exchange. The Exchange believes that the proposed
lower volume requirement would incentivize additional liquidity to a
public exchange to qualify for lower fees for Retail Orders with a
time-in-force of Day that remove liquidity, thereby promoting price
discovery and transparency and enhancing order execution opportunities
for ETP Holders. The proposal is thus reasonable because all ETP
Holders would benefit from such increased levels of liquidity. The
Exchange notes that ETP Holders are free to shift their order flow to
competing venues if they believe other markets offer more favorable
fees and credits.
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 that, for the reasons discussed above, the
proposed rule change is an equitable allocation of its fees and
credits. The proposed rule change is intended to provide ETP Holders an
incentive to send a greater number of Retail Orders to the Exchange in
order to qualify and not pay a fee for such orders when removing
liquidity from the Exchange, thereby increasing the number of orders
that are executed on the Exchange, promoting price discovery and
transparency and enhancing order execution opportunities and improving
overall liquidity on a public exchange. The Exchange also believes that
the proposed change is equitable because it would apply to all
similarly situated ETP Holders that remove liquidity. As previously
noted, the Exchange operates in a competitive environment, particularly
as it relates to attracting Retail Orders 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. The Exchange believes that pricing
is just one of the factors that ETP Holders consider when determining
where to direct their order flow. Among
[[Page 4050]]
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 that a number of
ETP Holders could qualify for the proposed no fee based on their
current trading profile on the Exchange if they choose to direct more
of their order flow to the Exchange. However, without having a view of
an ETP Holder's activity on other exchanges and off-exchange venues,
the Exchange has no way of knowing whether this proposed rule change
would result in any ETP Holder directing Retail Orders to the Exchange
in order to qualify for the proposed no fee.
The Exchange believes the proposed rule change would improve market
quality for all market participants on the Exchange and, as a
consequence, attract more Retail Orders to the Exchange, thereby
improving market-wide quality and price discovery.
The Proposed Fee Change Is Not Unfairly Discriminatory
The Exchange believes that the proposal to adopt a lower volume
requirement to qualify for the proposed fee reduction 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 proposed rule
change will incentivize ETP Holders to direct a greater number of
Retail Orders to a public exchange to qualify for the proposed reduced
fee for removing liquidity, thereby promoting price discovery and
transparency and enhancing order execution opportunities for ETP
Holders. The proposal does not permit unfair discrimination because the
proposed volume requirement for removing liquidity would be applied to
all similarly situated ETP Holders, who would all be eligible to not
pay a fee on an equal basis. Accordingly, no ETP Holder already
operating on the Exchange would be disadvantaged by this allocation of
fees. The Exchange believes it is not unfairly discriminatory to
provide lower fees for removing liquidity as the proposed fee would be
provided on an equal basis to all ETP Holders that remove liquidity by
meeting the proposed volume requirement. Further, the Exchange believes
the proposed reduced fee would provide an incentive for ETP Holders to
execute more of their Retail Orders on the Exchange. The Exchange also
believes that the proposed change is not unfairly discriminatory
because it is reasonably related to the value to the Exchange's market
quality associated with higher volume.
In addition, 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.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
For the foregoing reasons, the Exchange believes that the proposal
is consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with section 6(b)(8) of the Act,\16\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, as discussed above, the 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.'' \17\
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b)(8).
\17\ See supra note 3.
---------------------------------------------------------------------------
Intramarket Competition. The Exchange believes the proposed rule
change does not impose any burden on intramarket competition that is
not necessary or appropriate in furtherance of the purposes of the Act.
The proposed change is designed to attract Retail Orders to the
Exchange. The Exchange believes that the proposed change would
incentivize market participants to direct retail order flow to the
Exchange. Greater overall order flow, trading opportunities, and
pricing transparency would benefit all market participants on the
Exchange by enhancing market quality and would continue to encourage
ETP Holders to send their orders to the Exchange, thereby contributing
towards a robust and well-balanced market ecosystem. The proposed fee
reduction would be available to all similarly situated market
participants, and, as such, the proposed change would not impose a
disparate burden on competition among market participants on the
Exchange. Additionally, the proposed change would apply to all ETP
Holders equally in that all ETP Holders would have a reasonable
opportunity to meet the volume requirement to qualify for the proposed
fee reduction and would not pay a fee for removing liquidity if such
criteria is met.
Intermarket Competition. The Exchange believes the proposed rule
change does not impose any burden on intermarket competition that is
not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange operates in a highly competitive market in which market
participants can readily choose to send their orders to other exchanges
and off-exchange venues if they deem fee levels at those other venues
to be more favorable. 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
this proposed fee change would impose any burden on intermarket
competition.
The Exchange believes that the proposed change could promote
competition between the Exchange and other execution venues, including
those that currently offer similar order types and comparable
transaction pricing, by encouraging additional orders to be sent to the
Exchange for execution.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective upon filing pursuant
to section 19(b)(3)(A) \18\ of the Act and paragraph (f) thereunder. At
any time within 60 days of the filing of the proposed rule change, the
Commission summarily may
[[Page 4051]]
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.
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\18\ 15 U.S.C. 78s(b)(3)(A).
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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-2023-01 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-2023-01. 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-2023-01, and should be
submitted on or before February 13, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-01120 Filed 1-20-23; 8:45 am]
BILLING CODE 8011-01-P
