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, 56903-56908 [2023-17858]

Download as PDF Federal Register / Vol. 88, No. 160 / Monday, August 21, 2023 / Notices Rule 17Ad–22(e)(2) provides that ‘‘[e]ach covered clearing agency shall establish, implement, maintain and enforce written policies and procedures reasonable designed to, as applicable [. . .] provide for governance arrangements that are clear and transparent’’ 16 and ‘‘[s]pecify clear and direct lines of responsibility’’.17 The amendments to the Policy would extend the existing responsibilities of the Clearing House’s committees, management and the Board with respect to models to also apply to risk frameworks. The amendments would also clarify certain responsibilities of the Board and other relevant committees and personnel as they relate to BAU and Non-BAU changes to risk parameters. In ICE Clear Europe’s view, the amendments are therefore consistent with the requirements of Rule 17Ad– 22(e)(2).18 (B) Clearing Agency’s Statement on Burden on Competition ICE Clear Europe does not believe the proposed amendments would have any impact, or impose any burden, on competition not necessary or appropriate in furtherance of the purposes of the Act. The amendments are being adopted to update and expand the Clearing House’s Model Risk Policy, which relate to the Clearing House’s internal processes for model and risk framework review, and overall risk management. The amendments will not change the Clearing House Rules or Procedures and will not change the rights or obligations of the Clearing House or Clearing Members. ICE Clear Europe does not believe the amendments and adoption would affect the costs of clearing, the ability of market participants to access clearing, or the market for clearing services generally. Therefore, ICE Clear Europe does not believe the proposed rule change imposes any burden on competition that is inappropriate in furtherance of the purposes of the Act. ddrumheller on DSK120RN23PROD with NOTICES1 (C) Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments relating to the proposed amendments have not been solicited or received by ICE Clear Europe. ICE Clear Europe will notify the Commission of any written comments received with respect to the proposed rule change. 16 17 CFR 240.17 Ad–22(e)(2)(i). CFR 240.17 Ad–22(e)(2)(v). 18 17 CFR 240.17 Ad–22(e)(2). 17 17 VerDate Sep<11>2014 18:17 Aug 18, 2023 Jkt 259001 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) by order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml) or • Send an email to rule-comments@ sec.gov. Please include File Number SR– ICEEU–2023–019 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–ICEEU–2023–019. 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 a.m. and 3 p.m. Copies of such filings will also be available for inspection and PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 56903 copying at the principal office of ICE Clear Europe and on ICE Clear Europe’s website at https://www.ice.com/cleareurope/regulation. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to File Number SR–ICEEU–2023–019 and should be submitted on or before September 11, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–17860 Filed 8–18–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–98136; File No. SR– NYSEARCA–2023–52] 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 August 15, 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 August 1, 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. 19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\21AUN1.SGM 21AUN1 56904 Federal Register / Vol. 88, No. 160 / Monday, August 21, 2023 / Notices 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 MidPoint Liquidity (‘‘MPL’’) Order pricing tiers. The Exchange proposes to implement the fee changes effective August 1, 2023. 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 ddrumheller on DSK120RN23PROD with NOTICES1 1. Purpose The Exchange proposes to amend the Fee Schedule to amend the MPL Order 3 pricing tiers. More specifically, the Exchange proposes to adopt new MPL Tiers 1 and 2, replace current MPL Orders Step Up Tier 1 with MPL Tier 3, replace current MPL Orders Step Up Tier 2 with MPL Tier 4, and separate current MPL Orders tier into MPL Tier 5 and MPL Tier 6. The Exchange proposes to implement the fee changes effective August 1, 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 3 A MPL Order is a limit order that is not displayed and does not route, with a working price at the midpoint of the Protected Best Bid/Offer. See NYSE Arca Rule 7.31–E(d)(3). VerDate Sep<11>2014 18:17 Aug 18, 2023 Jkt 259001 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 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, based on transaction fees and credits. Accordingly, the Exchange’s fees are reasonably constrained by competitive alternatives 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 In response to this competitive environment, the Exchange has already established multiple levels of credits for MPL Orders that allow ETP Holders to passively interact with trading interest on the Exchange and offer potential price improvement to incoming marketable orders submitted to the 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/. 9 See id. PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 Exchange.10 In order to provide an incentive for ETP Holders to provide such liquidity, the credits increase based on increased levels of volume directed to the Exchange. The MPL Order pricing tiers are intended to incentivize ETP Holders to earn increased credits by sending greater amounts of liquidity-providing MPL Orders in Tapes A, B and C securities to the Exchange. As noted above, the Exchange currently provides multiple levels of credits, ranging from $0.0010 per share to $0.0026 per share, to ETP Holders that send MPL Orders that provide liquidity to the Exchange. For the current MPL Order pricing tier, the amount of the per share credit is based on an ETP Holder’s ADV of provided liquidity in MPL Orders for Tape A, Tape B and Tape C Securities combined (‘‘MPL Adding ADV’’). For ETP Holders that have MPL Adding ADV during a billing month of at least 3 million shares, the Exchange currently provides a credit of $0.0015 per share in Tape A securities and $0.0020 per share in Tape B and Tape C securities. For ETP Holders with MPL Adding ADV during a billing month of at least 1.5 million shares but less than 3 million shares, the Exchange currently provides a credit of $0.0015 per share in Tape A, Tape B and Tape C securities. For ETP Holders with MPL Adding ADV during a billing month of less than 1.5 million shares, the Exchange currently provides a credit of $0.0010 per share in Tape A, Tape B and Tape C securities.11 For the current MPL Orders Step Up Tier 1 and MPL Orders Step Up Tier 2, the amount of the per share credit is based on an ETP Holder’s MPL Adding ADV as compared to such orders sent in May 2019. Under MPL Order Step Up Tier 1, if an ETP Holder’s traded volume against its MPL Orders that provide liquidity is 2 million shares more than such ETP Holder’s baseline of MPL liquidity-providing ADV, as measured in May 2019, the Exchange currently provides a credit of $0.0026 per share in Tape A, Tape B and Tape C securities. Under MPL Orders Step Up Tier 2, if an ETP Holder’s traded volume against its MPL Orders that provide liquidity is 1 million shares more than such ETP Holder’s baseline of MPL liquidity10 See, e.g., Securities Exchange Act Release No. 54511 (September 26, 2006), 71 FR 58460, 58461 (October 3, 2006) (SR–PCX–2005–53). 11 The Exchange charges a fee of $0.0030 per share for MPL Orders in Tape A, Tape B and Tape C Securities that remove liquidity from the Exchange that are not designated as ‘‘Retail Orders.’’ MPL Orders removing liquidity from the Exchange that are designated as Retail Orders are subject to a fee of $0.0010 per share. See Fee Schedule. E:\FR\FM\21AUN1.SGM 21AUN1 Federal Register / Vol. 88, No. 160 / Monday, August 21, 2023 / Notices providing ADV, as measured in May 2019, the Exchange currently provides a credit of $0.0025 per share in Tape A, Tape B and Tape C securities. The Exchange now proposes to adopt new MPL Tiers 1 and 2, replace current MPL Orders Step Up Tier 1 with proposed MPL Tier 3, replace current MPL Orders Step Up Tier 2 with proposed MPL Tier 4, and separate current MPL Orders tier into proposed MPL Tier 5 and proposed MPL Tier 6. The proposed changes are described more fully below. First, the Exchange proposes to adopt two new MPL Order pricing tiers. Under proposed new MPL Tier 1, the Exchange would provide a credit of $0.0028 per share in Tape A, Tape B and Tape C securities to ETP Holders that have MPL Adding ADV during a billing month of at least 15 million shares. Next, under proposed new MPL Tier 2, the Exchange would provide a credit of $0.0027 per share in Tape A, Tape B and Tape C securities to ETP Holders that have MPL Adding ADV during a billing month of at least 13 million shares. Next, the Exchange proposes to replace current MPL Orders Step Up 56905 MPL Tier 6. Under current MPL Orders tier, ETP Holders that have MPL Adding ADV during a billing month of at least 3 million shares currently qualify for a credit of $0.0015 per share in Tape A securities and $0.0020 per share in Tape B and Tape C securities. The Exchange proposes the following changes to the current pricing tier: • Rename the tier as MPL Tier 5; • Lower the MPL Adding ADV requirement to qualify for the renamed tier, from 3 million shares to 2 million shares; and • Increase the credit applicable to the renamed tier in Tape A securities, from $0.0015 per share to $0.0020 per share. Finally, under current MPL Orders Tier, ETP Holders that have MPL Adding ADV during a billing month of at least 1.5 million shares currently qualify for a credit off $0.0015 per share in Tape A, Tape B and Tape C securities. The Exchange proposes to rename the current pricing tier as MPL Tier 6 without any change to the volume requirement or credits payable under the pricing tier. With this proposed change, the MPL Order Tiers pricing tier would appear as follows: Tier 1 with proposed MPL Tier 3. Under proposed MPL Tier 3, the Exchange would provide a credit of $0.0026 per share in Tape A, Tape B and Tape C securities to ETP Holders that have MPL Adding ADV during a billing month of at least 5 million shares. ETP Holders may alternatively qualify for the proposed MPL Tier 3 credit if they have MPL Adding ADV during the billing month of at least 2 million shares and have MPL Adding ADV, as a percent of Adding ADV, of at least 50%. Next, the Exchange proposes to replace current MPL Orders Step Up Tier 2 with proposed MPL Tier 4. Under proposed MPL Tier 4, the Exchange would provide a credit of $0.0025 per share in Tape A, Tape B and Tape C securities to ETP Holders that have MPL Adding ADV during a billing month of at least 3 million shares. ETP Holders may alternatively qualify for the proposed MPL Tier 4 credit if they have MPL Adding ADV during the billing month of at least 1 million shares and have MPL Adding ADV, as a percent of Adding ADV, of at least 50%. Next, the Exchange proposes to separate current MPL Orders tier into proposed MPL Tier 5 and proposed MPL order tiers Minimum requirement Credit for MPL adding Tier MPL adding ADV as percent of adding ADV MPL adding ADV ddrumheller on DSK120RN23PROD with NOTICES1 MPL MPL MPL MPL MPL MPL Tier Tier Tier Tier Tier Tier 1 2 3 4 5 6 ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... The goal of the proposed rule change is to incentivize ETP Holders with higher per share credits to increase the number of MPL Orders they post on the Exchange’s Book, which would provide additional price improvement opportunities for incoming orders. MPL Orders allow for additional opportunities for passive interaction with trading interest on the Exchange and are designed to offer potential price improvement to incoming marketable orders submitted to the Exchange. The Exchange believes that by correlating the level of the credit to the level of MPL Adding ADV, the Exchange’s fee structure would incentivize ETP Holders to submit more liquidityproviding MPL Orders to the Exchange, thereby increasing the potential for price improvement to incoming VerDate Sep<11>2014 18:17 Aug 18, 2023 Jkt 259001 15 Million ........................................................ 13 Million ........................................................ 5 Million or 2 Million ....................................... 3 Million or 1 Million ....................................... 2 Million .......................................................... 1.5 Million ....................................................... 50 50 ........................ ........................ marketable orders submitted to the Exchange. The Exchange believes adopting increased credits payable under the proposed MPL Tiers 1 and 2 would provide an incentive for ETP Holders to send increased order flow to qualify for these tiers. As noted above, the Exchange operates in a competitive environment, particularly as it relates to attracting MPL Orders that are posted on the Exchange’s Book. Because each of the proposed MPL Tiers 1 and 2 pricing tiers would require ETP Holders to provide increased liquidity, the Exchange believes that the proposed higher credits would incentivize ETP Holders to route additional liquidityproviding orders to the Exchange to qualify for the proposed pricing tiers. PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 Tape A ($0.0028) (0.0027) (0.0026) (0.0025) (0.0020) (0.0015) Tape B and tape C ($0.0028) (0.0027) (0.0026) (0.0025) (0.0020) (0.0015) The Exchange does not know how much order flow ETP Holders choose to route to other exchanges or to offexchange venues. Without having a view of ETP Holders’ activity on other markets and off-exchange venues, the Exchange has no way of knowing whether the proposed new pricing tiers would result in any ETP Holders sending more of their liquidityproviding orders to the Exchange to qualify for the proposed new credits. The Exchange cannot predict with certainty how many ETP Holders would avail themselves of this opportunity, but additional liquidity-providing orders would benefit all market participants because it would provide greater execution opportunities on the Exchange. The Exchange believes the proposed higher credits would provide E:\FR\FM\21AUN1.SGM 21AUN1 56906 Federal Register / Vol. 88, No. 160 / Monday, August 21, 2023 / Notices broader forms that are most important to investors and listed companies.’’ 14 As the Commission itself recognized, the market for trading services in NMS stocks has become ‘‘more fragmented and competitive.’’ 15 Indeed, equity trading is currently dispersed across 16 exchanges,16 numerous alternative trading systems,17 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 (whether including or excluding auction volume).18 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, the Exchange’s fees are reasonably constrained by competitive alternatives and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. The Exchange believes the proposed changes to the MPL Order pricing tiers, including the adoption of new MPL Tier 1 and MPL Tier 2 and the proposed adoption of an alternative criteria to qualify for proposed MPL Tier 3 and MPL Tier 4, are reasonable because the current credits and the increased credits 2. Statutory Basis under the proposed MPL Tier 1 and The Exchange believes that the MPL Tier 2 would provide an incentive proposed rule change is consistent with for ETP Holders to route greater Section 6(b) of the Act,12 in general, and amounts of liquidity-providing orders to furthers the objectives of Sections the Exchange. As noted above, the 6(b)(4) and (5) of the Act,13 in particular, Exchange operates in a highly because it provides for the equitable competitive environment, particularly allocation of reasonable dues, fees, and for attracting order flow that provides other charges among its members, liquidity on an exchange. The Exchange issuers and other persons using its believes it is reasonable to continue to facilities and does not unfairly provide the current level of credits and discriminate between customers, the higher credits under the proposed issuers, brokers or dealers. MPL Tier 1 and MPL Tier 2 for orders The Proposed Fee Change Is Reasonable that provide liquidity if an ETP Holder meets the qualification for such pricing As discussed above, the Exchange tiers. operates in a highly fragmented and competitive market. The Commission 14 See Regulation NMS, supra note 4, 70 FR at 37499. has repeatedly expressed its preference 15 See Securities Exchange Act Release No. 51808, for competition over regulatory 84 FR 5202, 5253 (February 20, 2019) (File No. S7– intervention in determining prices, 05–18) (Final Rule). products, and services in the securities 16 See Cboe U.S Equities Market Volume markets. Specifically, in Regulation Summary, available at https://markets.cboe.com/us/ equities/market_share. See generally https:// NMS, the Commission highlighted the www.sec.gov/fast-answers/ importance of market forces in divisionsmarketregmrexchangesshtml.html. determining prices and SRO revenues 17 See FINRA ATS Transparency Data, available and, also, recognized that current at https://otctransparency.finra.org/ regulation of the market system ‘‘has otctransparency/AtsIssueData. A list of alternative trading systems registered with the Commission is been remarkably successful in available at https://www.sec.gov/foia/docs/ promoting market competition in its ddrumheller on DSK120RN23PROD with NOTICES1 an incentive for ETP Holders to submit additional MPL Orders to the Exchange to qualify for such credits. As noted above, the Exchange operates in a competitive environment, particularly as it relates to attracting non-marketable, providing liquidity that would be displayed on the Exchange. The proposed rule change is designed to incentivize ETP Holders to increase the orders sent to the Exchange that would provide displayed liquidity, which would support the quality of price discovery and transparency on the Exchange. The Exchange believes that by correlating the level of the credit to the level of executed providing volume on the Exchange, the Exchange’s fee structure would incentivize ETP Holders to submit more displayed, liquidity-providing orders to the Exchange that are likely to be executed (i.e., are not orders that are intended to be displayed, but are priced such that they are not likely to be executed), thereby increasing the potential for incoming marketable orders submitted to the Exchange to receive an execution. 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. 12 15 13 15 atslist.htm. 18 See Cboe Global Markets U.S. Equities Market Volume Summary, available at https:// markets.cboe.com/us/equities/market_share/. U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). VerDate Sep<11>2014 18:17 Aug 18, 2023 Jkt 259001 PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 Because the proposed MPL Tier 1 and MPL Tier 2 would be new with a requirement to submit greater amounts of MPL Adding ADV, no ETP Holder currently qualifies for the proposed new pricing tiers. The Exchange believes the proposed increased credits are reasonable as they would provide an additional incentive for ETP Holders to qualify for these new tiers and direct their order flow to the Exchange and provide meaningful added levels of liquidity, thereby contributing to the depth and market quality on the Exchange. The Exchange believes that the proposed alternative to qualify for MPL Tier 3 and MPL Tier 4 by utilizing a lower MPL adding volume requirement coupled with a MPL Adding ADV, as a percent of Adding ADV, of at least 50%, is reasonable because the proposed adoption of an alternative criteria would provide ETP Holders with greater flexibility to reach these tiers, thereby creating an added incentive for ETP Holders to bring additional order flow to a public exchange, thereby encouraging greater participation and liquidity. The Exchange believes amending the current pricing tier by adopting an alternative requirement may encourage those ETP Holders who could not previously achieve the volume requirement an incentive to increase their order flow on the Exchange. Increased liquidity would benefit all investors by deepening the Exchange’s liquidity pool, supporting the quality of price discovery, promoting market transparency and improving investor protection. On the backdrop of the competitive environment in which the Exchange currently operates, the proposed rule change is a reasonable attempt by the Exchange to increase its liquidity and improve its market share relative to its competitors. The Proposed Fee Change Is An Equitable Allocation of Credits and Fees The Exchange believes the proposed fee change is an equitable allocation of its fees and credits. The Exchange believes that the proposed changes to the MPL Order pricing tiers, including the adoption of increased credits under the proposed MPL Tier 1 and MPL Tier 2 pricing tiers and the proposed adoption of an alternative criteria to qualify for proposed MPL Tier 3 and MPL Tier 4, is equitable because the magnitude of the additional credit is not unreasonably high in comparison to the credit paid with respect to other pricing tiers on the Exchange, and in comparison to the credits paid by other exchanges for orders that provide E:\FR\FM\21AUN1.SGM 21AUN1 ddrumheller on DSK120RN23PROD with NOTICES1 Federal Register / Vol. 88, No. 160 / Monday, August 21, 2023 / Notices midpoint liquidity. For example, ETP Holders currently receive credits in Tape A, Tape B and Tape C securities that range between $0.0010 per share and $0.0026 per share under Standard and Tiered rates. With respect to credits paid by the Exchange’s competitors, the Nasdaq Stock Market LLC provides a credit of $0.0025 per share to add nondisplayed midpoint liquidity in Tape A, Tape B and Tape C Securities on that market for members that add greater than 5 million shares of midpoint liquidity and add 8 million shares on non-displayed liquidity.19 The Exchange believes the proposed rule change would improve market quality for all market participants on the Exchange and, as a consequence, attract more liquidity to the Exchange thereby improving market-wide quality. ETP Holders that currently qualify for credits associated with MPL Orders will continue to receive credits when they provide liquidity to the Exchange. With the proposed new MPL Tier 1 and MPL Tier 2, all ETP Holders would be eligible to qualify for the higher credit if they increase their MPL Adding ADV. The Exchange believes that recalibrating the credits for providing liquidity will continue to attract order flow and liquidity to the Exchange, thereby providing additional price improvement opportunities on the Exchange and benefiting investors generally. As to those market participants that do not presently qualify for the credits associated with MPL Orders, the proposal will not adversely impact their existing pricing or their ability to qualify for other credits provided by the Exchange. current tiered requirements to send more of their MPL Orders to the Exchange to qualify for such credits. The Exchange further believes it is not unfairly discriminatory to adopt an alternative requirement to qualify for the current level of credits under proposed MPL Tier 3 and MPL Tier 4 as each such credit would be provided on an equal basis to all ETP Holders and each such ETP Holder would have an opportunity to qualify for the current level of credit by utilizing a mix of MPL Adding ADV and Adding ADV in Tape A, Tape B and Tape C securities. The Exchange also believes that the proposed changes are not unfairly discriminatory because they are reasonably related to the value of the Exchange’s market quality associated with higher volume. The credits, both existing and the proposed higher ones, would apply equally to all ETP Holders as each would be required to provide liquidity in MPL Orders for Tape A, Tape B and Tape C Securities combined during the billing month regardless of whether an ETP Holder currently meets the requirement of another pricing tier. Finally, the submission of orders to the Exchange is optional for ETP Holders in that they could choose whether to submit orders to the Exchange and, if they do, the extent of its activity in this regard. The Exchange believes that it is subject to significant competitive forces, as described below in the Exchange’s statement regarding the burden on competition. For the foregoing reasons, the Exchange believes that the proposal is consistent with the Act. The Proposed Fee Change Is Not Unfairly Discriminatory The Exchange believes that the proposal is not unfairly discriminatory. Moreover, this proposed rule change neither targets nor will it have a disparate impact on any particular category of market participant. The Exchange believes it is not unfairly discriminatory to provide the current level of credits and the increased per share credits under proposed MPL Tier 1 and MPL Tier 2 as each such credit would be provided on an equal basis to all ETP Holders that add liquidity by meeting the requirements of the existing MPL Order pricing tiers, including the proposed MPL Tier 1 and MPL Tier 2. The Exchange believes the proposed increased per share credits would incentivize ETP Holders that meet the B. Self-Regulatory Organization’s Statement on Burden on Competition 19 See Rebate to Add Non-Displayed Midpoint Liquidity, at https://nasdaqtrader.com/ Trader.aspx?id=PriceListTrading2. VerDate Sep<11>2014 18:17 Aug 18, 2023 Jkt 259001 In accordance with Section 6(b)(8) of the Act,20 the Exchange believes that the proposed rule change would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Instead, as discussed above, the Exchange believes that the proposed 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 20 15 PO 00000 U.S.C. 78f(b)(8). Frm 00116 Fmt 4703 individual stocks for all types of orders, large and small.’’ 21 Intramarket Competition. The proposed changes are designed to attract additional order flow to the Exchange. The Exchange believes that the proposed changes to the MPL Order pricing tiers, including the adoption of higher credits under proposed MPL Tier 1 and MPL Tier 2, would continue to incentivize market participants to direct more orders to the Exchange, and in particular, liquidity-providing MPL Orders. Greater liquidity benefits all market participants on the Exchange by providing more trading opportunities. The proposed changes to the MPL Order pricing tier should incentivize ETP Holders to send liquidity-providing orders to the Exchange, thereby contributing to robust levels of liquidity, which would benefit all market participants on the Exchange. The current and proposed new credits would be available to all similarlysituated market participants, and, as such, the proposed changes would not impose a disparate burden on competition among market participants on the Exchange. Intermarket Competition. The Exchange operates in a highly competitive market in which market participants can readily choose to send their orders to other exchange and offexchange venues if they deem fee levels at those other venues to be more favorable. As noted above, the Exchange’s market share of intraday trading (i.e., excluding auctions) is currently less than 10%. In such an environment, the Exchange must continually review, and consider adjusting 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, the Exchange does not believe its proposed fee change can impose any burden on intermarket competition. The Exchange believes that the proposed changes could promote competition between the Exchange and other execution venues, including those that currently offer similar order types and comparable transaction pricing, by encouraging additional orders to be sent to the Exchange for execution. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. 21 Regulation Sfmt 4703 56907 E:\FR\FM\21AUN1.SGM NMS, 70 FR at 37498–99. 21AUN1 56908 Federal Register / Vol. 88, No. 160 / Monday, August 21, 2023 / Notices 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) 22 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 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: 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–2023–52 on the subject line. ddrumheller on DSK120RN23PROD with NOTICES1 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–2023–52. 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 22 15 U.S.C. 78s(b)(3)(A). VerDate Sep<11>2014 20:08 Aug 18, 2023 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–2023–52, and should be submitted on or before September 11, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–17858 Filed 8–18–23; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #18061 and #18062; HAWAII Disaster Number HI–00073] Presidential Declaration of a Major Disaster for the State of HAWAII ACTION: This is a Notice of the Presidential declaration of a major disaster for the State of Hawaii (FEMA– 4724–DR), dated 08/10/2023. Incident: Wildfires. Incident Period: 08/08/2023 and continuing. DATES: Issued on 08/10/2023. Physical Loan Application Deadline Date: 10/10/2023. Economic Injury (EIDL) Loan Application Deadline Date: 05/10/2024. 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 Recovery & Resilience, 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 President’s major disaster declaration on 08/10/2023, applications for 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: SUMMARY: 23 17 Jkt 259001 Small Business Administration. Notice. AGENCY: PO 00000 CFR 200.30–3(a)(12). Frm 00117 Fmt 4703 Sfmt 4703 Primary Counties (Physical Damage and Economic Injury Loans): Maui Contiguous Counties (Economic Injury Loans Only): Hawaii: Kalawao The Interest Rates are: Percent For Physical Damage: Homeowners with Credit Available Elsewhere ...................... Homeowners without Credit Available Elsewhere .............. Businesses with Credit Available Elsewhere ...................... Businesses without Credit Available Elsewhere .............. Non-Profit Organizations with Credit Available Elsewhere ... Non-Profit Organizations without Credit Available Elsewhere ..................................... For Economic Injury: Businesses & Small Agricultural Cooperatives without Credit Available Elsewhere .............. Non-Profit Organizations without Credit Available Elsewhere ..................................... 5.000 2.500 8.000 4.000 2.375 2.375 4.000 2.375 The number assigned to this disaster for physical damage is 18061 5 and for economic injury is 18062 0. (Catalog of Federal Domestic Assistance Number 59008) Francisco Sa´nchez, Jr., Associate Administrator, Office of Disaster Recovery & Resilience. [FR Doc. 2023–17935 Filed 8–18–23; 8:45 am] BILLING CODE 8026–09–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #18067 and #18068; MISSISSIPPI Disaster Number MS–00154] Presidential Declaration of a Major Disaster for the State of MISSISSIPPI Small Business Administration. Notice. AGENCY: ACTION: This is a Notice of the Presidential declaration of a major disaster for the State of Mississippi (FEMA–4727–DR), dated 08/12/2023. Incident: Severe Storms, Straight-line Winds, and Tornadoes. Incident Period: 06/14/2023 through 06/19/2023. DATES: Issued on 08/12/2023. Physical Loan Application Deadline Date: 10/11/2023. Economic Injury (EIDL) Loan Application Deadline Date: 05/13/2024. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. SUMMARY: E:\FR\FM\21AUN1.SGM 21AUN1

Agencies

[Federal Register Volume 88, Number 160 (Monday, August 21, 2023)]
[Notices]
[Pages 56903-56908]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17858]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98136; File No. SR-NYSEARCA-2023-52]


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

August 15, 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 August 1, 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.

---------------------------------------------------------------------------

[[Page 56904]]

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 Mid-Point Liquidity (``MPL'') 
Order pricing tiers. The Exchange proposes to implement the fee changes 
effective August 1, 2023. 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 MPL 
Order \3\ pricing tiers. More specifically, the Exchange proposes to 
adopt new MPL Tiers 1 and 2, replace current MPL Orders Step Up Tier 1 
with MPL Tier 3, replace current MPL Orders Step Up Tier 2 with MPL 
Tier 4, and separate current MPL Orders tier into MPL Tier 5 and MPL 
Tier 6. The Exchange proposes to implement the fee changes effective 
August 1, 2023.
---------------------------------------------------------------------------

    \3\ A MPL Order is a limit order that is not displayed and does 
not route, with a working price at the midpoint of the Protected 
Best Bid/Offer. See NYSE Arca Rule 7.31-E(d)(3).
---------------------------------------------------------------------------

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, based on transaction fees and credits. Accordingly, the 
Exchange's fees are reasonably constrained by competitive alternatives 
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
    In response to this competitive environment, the Exchange has 
already established multiple levels of credits for MPL Orders that 
allow ETP Holders to passively interact with trading interest on the 
Exchange and offer potential price improvement to incoming marketable 
orders submitted to the Exchange.\10\ In order to provide an incentive 
for ETP Holders to provide such liquidity, the credits increase based 
on increased levels of volume directed to the Exchange. The MPL Order 
pricing tiers are intended to incentivize ETP Holders to earn increased 
credits by sending greater amounts of liquidity-providing MPL Orders in 
Tapes A, B and C securities to the Exchange.
---------------------------------------------------------------------------

    \10\ See, e.g., Securities Exchange Act Release No. 54511 
(September 26, 2006), 71 FR 58460, 58461 (October 3, 2006) (SR-PCX-
2005-53).
---------------------------------------------------------------------------

    As noted above, the Exchange currently provides multiple levels of 
credits, ranging from $0.0010 per share to $0.0026 per share, to ETP 
Holders that send MPL Orders that provide liquidity to the Exchange. 
For the current MPL Order pricing tier, the amount of the per share 
credit is based on an ETP Holder's ADV of provided liquidity in MPL 
Orders for Tape A, Tape B and Tape C Securities combined (``MPL Adding 
ADV''). For ETP Holders that have MPL Adding ADV during a billing month 
of at least 3 million shares, the Exchange currently provides a credit 
of $0.0015 per share in Tape A securities and $0.0020 per share in Tape 
B and Tape C securities. For ETP Holders with MPL Adding ADV during a 
billing month of at least 1.5 million shares but less than 3 million 
shares, the Exchange currently provides a credit of $0.0015 per share 
in Tape A, Tape B and Tape C securities. For ETP Holders with MPL 
Adding ADV during a billing month of less than 1.5 million shares, the 
Exchange currently provides a credit of $0.0010 per share in Tape A, 
Tape B and Tape C securities.\11\
---------------------------------------------------------------------------

    \11\ The Exchange charges a fee of $0.0030 per share for MPL 
Orders in Tape A, Tape B and Tape C Securities that remove liquidity 
from the Exchange that are not designated as ``Retail Orders.'' MPL 
Orders removing liquidity from the Exchange that are designated as 
Retail Orders are subject to a fee of $0.0010 per share. See Fee 
Schedule.
---------------------------------------------------------------------------

    For the current MPL Orders Step Up Tier 1 and MPL Orders Step Up 
Tier 2, the amount of the per share credit is based on an ETP Holder's 
MPL Adding ADV as compared to such orders sent in May 2019. Under MPL 
Order Step Up Tier 1, if an ETP Holder's traded volume against its MPL 
Orders that provide liquidity is 2 million shares more than such ETP 
Holder's baseline of MPL liquidity-providing ADV, as measured in May 
2019, the Exchange currently provides a credit of $0.0026 per share in 
Tape A, Tape B and Tape C securities. Under MPL Orders Step Up Tier 2, 
if an ETP Holder's traded volume against its MPL Orders that provide 
liquidity is 1 million shares more than such ETP Holder's baseline of 
MPL liquidity-

[[Page 56905]]

providing ADV, as measured in May 2019, the Exchange currently provides 
a credit of $0.0025 per share in Tape A, Tape B and Tape C securities.
    The Exchange now proposes to adopt new MPL Tiers 1 and 2, replace 
current MPL Orders Step Up Tier 1 with proposed MPL Tier 3, replace 
current MPL Orders Step Up Tier 2 with proposed MPL Tier 4, and 
separate current MPL Orders tier into proposed MPL Tier 5 and proposed 
MPL Tier 6. The proposed changes are described more fully below.
    First, the Exchange proposes to adopt two new MPL Order pricing 
tiers. Under proposed new MPL Tier 1, the Exchange would provide a 
credit of $0.0028 per share in Tape A, Tape B and Tape C securities to 
ETP Holders that have MPL Adding ADV during a billing month of at least 
15 million shares.
    Next, under proposed new MPL Tier 2, the Exchange would provide a 
credit of $0.0027 per share in Tape A, Tape B and Tape C securities to 
ETP Holders that have MPL Adding ADV during a billing month of at least 
13 million shares.
    Next, the Exchange proposes to replace current MPL Orders Step Up 
Tier 1 with proposed MPL Tier 3. Under proposed MPL Tier 3, the 
Exchange would provide a credit of $0.0026 per share in Tape A, Tape B 
and Tape C securities to ETP Holders that have MPL Adding ADV during a 
billing month of at least 5 million shares. ETP Holders may 
alternatively qualify for the proposed MPL Tier 3 credit if they have 
MPL Adding ADV during the billing month of at least 2 million shares 
and have MPL Adding ADV, as a percent of Adding ADV, of at least 50%.
    Next, the Exchange proposes to replace current MPL Orders Step Up 
Tier 2 with proposed MPL Tier 4. Under proposed MPL Tier 4, the 
Exchange would provide a credit of $0.0025 per share in Tape A, Tape B 
and Tape C securities to ETP Holders that have MPL Adding ADV during a 
billing month of at least 3 million shares. ETP Holders may 
alternatively qualify for the proposed MPL Tier 4 credit if they have 
MPL Adding ADV during the billing month of at least 1 million shares 
and have MPL Adding ADV, as a percent of Adding ADV, of at least 50%.
    Next, the Exchange proposes to separate current MPL Orders tier 
into proposed MPL Tier 5 and proposed MPL Tier 6. Under current MPL 
Orders tier, ETP Holders that have MPL Adding ADV during a billing 
month of at least 3 million shares currently qualify for a credit of 
$0.0015 per share in Tape A securities and $0.0020 per share in Tape B 
and Tape C securities. The Exchange proposes the following changes to 
the current pricing tier:
     Rename the tier as MPL Tier 5;
     Lower the MPL Adding ADV requirement to qualify for the 
renamed tier, from 3 million shares to 2 million shares; and
     Increase the credit applicable to the renamed tier in Tape 
A securities, from $0.0015 per share to $0.0020 per share.
    Finally, under current MPL Orders Tier, ETP Holders that have MPL 
Adding ADV during a billing month of at least 1.5 million shares 
currently qualify for a credit off $0.0015 per share in Tape A, Tape B 
and Tape C securities. The Exchange proposes to rename the current 
pricing tier as MPL Tier 6 without any change to the volume requirement 
or credits payable under the pricing tier.
    With this proposed change, the MPL Order Tiers pricing tier would 
appear as follows:

----------------------------------------------------------------------------------------------------------------
                                                                     MPL order tiers
                                       -------------------------------------------------------------------------
                                                   Minimum requirement                 Credit for MPL adding
                 Tier                  -------------------------------------------------------------------------
                                                                  MPL adding ADV
                                             MPL adding ADV        as percent of      Tape A        Tape B and
                                                                    adding ADV                        tape C
----------------------------------------------------------------------------------------------------------------
MPL Tier 1............................  15 Million..............  ..............       ($0.0028)       ($0.0028)
MPL Tier 2............................  13 Million..............                        (0.0027)        (0.0027)
MPL Tier 3............................  5 Million or 2 Million..              50        (0.0026)        (0.0026)
MPL Tier 4............................  3 Million or 1 Million..              50        (0.0025)        (0.0025)
MPL Tier 5............................  2 Million...............  ..............        (0.0020)        (0.0020)
MPL Tier 6............................  1.5 Million.............  ..............        (0.0015)        (0.0015)
----------------------------------------------------------------------------------------------------------------

    The goal of the proposed rule change is to incentivize ETP Holders 
with higher per share credits to increase the number of MPL Orders they 
post on the Exchange's Book, which would provide additional price 
improvement opportunities for incoming orders. MPL Orders allow for 
additional opportunities for passive interaction with trading interest 
on the Exchange and are designed to offer potential price improvement 
to incoming marketable orders submitted to the Exchange. The Exchange 
believes that by correlating the level of the credit to the level of 
MPL Adding ADV, the Exchange's fee structure would incentivize ETP 
Holders to submit more liquidity-providing MPL Orders to the Exchange, 
thereby increasing the potential for price improvement to incoming 
marketable orders submitted to the Exchange.
    The Exchange believes adopting increased credits payable under the 
proposed MPL Tiers 1 and 2 would provide an incentive for ETP Holders 
to send increased order flow to qualify for these tiers. As noted 
above, the Exchange operates in a competitive environment, particularly 
as it relates to attracting MPL Orders that are posted on the 
Exchange's Book. Because each of the proposed MPL Tiers 1 and 2 pricing 
tiers would require ETP Holders to provide increased liquidity, the 
Exchange believes that the proposed higher credits would incentivize 
ETP Holders to route additional liquidity-providing orders to the 
Exchange to qualify for the proposed pricing tiers.
    The Exchange does not know how much 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 the proposed new pricing 
tiers would result in any ETP Holders sending more of their liquidity-
providing orders to the Exchange to qualify for the proposed new 
credits. The Exchange cannot predict with certainty how many ETP 
Holders would avail themselves of this opportunity, but additional 
liquidity-providing orders would benefit all market participants 
because it would provide greater execution opportunities on the 
Exchange. The Exchange believes the proposed higher credits would 
provide

[[Page 56906]]

an incentive for ETP Holders to submit additional MPL Orders to the 
Exchange to qualify for such credits.
    As noted above, the Exchange operates in a competitive environment, 
particularly as it relates to attracting non-marketable, providing 
liquidity that would be displayed on the Exchange. The proposed rule 
change is designed to incentivize ETP Holders to increase the orders 
sent to the Exchange that would provide displayed liquidity, which 
would support the quality of price discovery and transparency on the 
Exchange. The Exchange believes that by correlating the level of the 
credit to the level of executed providing volume on the Exchange, the 
Exchange's fee structure would incentivize ETP Holders to submit more 
displayed, liquidity-providing orders to the Exchange that are likely 
to be executed (i.e., are not orders that are intended to be displayed, 
but are priced such that they are not likely to be executed), thereby 
increasing the potential for incoming marketable orders submitted to 
the Exchange to receive an execution.
    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,\12\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\13\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 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.'' \14\
---------------------------------------------------------------------------

    \14\ See Regulation NMS, supra note 4, 70 FR at 37499.
---------------------------------------------------------------------------

    As the Commission itself recognized, the market for trading 
services in NMS stocks has become ``more fragmented and competitive.'' 
\15\ Indeed, equity trading is currently dispersed across 16 
exchanges,\16\ numerous alternative trading systems,\17\ 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 (whether including or excluding auction 
volume).\18\ 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, the Exchange's fees are reasonably constrained by 
competitive alternatives and market participants can readily trade on 
competing venues if they deem pricing levels at those other venues to 
be more favorable.
---------------------------------------------------------------------------

    \15\ See Securities Exchange Act Release No. 51808, 84 FR 5202, 
5253 (February 20, 2019) (File No. S7-05-18) (Final Rule).
    \16\ See Cboe U.S Equities Market Volume Summary, available at 
https://markets.cboe.com/us/equities/market_share. See generally 
https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \17\ 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.
    \18\ See Cboe Global Markets U.S. Equities Market Volume 
Summary, available at https://markets.cboe.com/us/equities/market_share/.
---------------------------------------------------------------------------

    The Exchange believes the proposed changes to the MPL Order pricing 
tiers, including the adoption of new MPL Tier 1 and MPL Tier 2 and the 
proposed adoption of an alternative criteria to qualify for proposed 
MPL Tier 3 and MPL Tier 4, are reasonable because the current credits 
and the increased credits under the proposed MPL Tier 1 and MPL Tier 2 
would provide an incentive for ETP Holders to route greater amounts of 
liquidity-providing orders to the Exchange. As noted above, the 
Exchange operates in a highly competitive environment, particularly for 
attracting order flow that provides liquidity on an exchange. The 
Exchange believes it is reasonable to continue to provide the current 
level of credits and the higher credits under the proposed MPL Tier 1 
and MPL Tier 2 for orders that provide liquidity if an ETP Holder meets 
the qualification for such pricing tiers.
    Because the proposed MPL Tier 1 and MPL Tier 2 would be new with a 
requirement to submit greater amounts of MPL Adding ADV, no ETP Holder 
currently qualifies for the proposed new pricing tiers. The Exchange 
believes the proposed increased credits are reasonable as they would 
provide an additional incentive for ETP Holders to qualify for these 
new tiers and direct their order flow to the Exchange and provide 
meaningful added levels of liquidity, thereby contributing to the depth 
and market quality on the Exchange.
    The Exchange believes that the proposed alternative to qualify for 
MPL Tier 3 and MPL Tier 4 by utilizing a lower MPL adding volume 
requirement coupled with a MPL Adding ADV, as a percent of Adding ADV, 
of at least 50%, is reasonable because the proposed adoption of an 
alternative criteria would provide ETP Holders with greater flexibility 
to reach these tiers, thereby creating an added incentive for ETP 
Holders to bring additional order flow to a public exchange, thereby 
encouraging greater participation and liquidity.
    The Exchange believes amending the current pricing tier by adopting 
an alternative requirement may encourage those ETP Holders who could 
not previously achieve the volume requirement an incentive to increase 
their order flow on the Exchange. Increased liquidity would benefit all 
investors by deepening the Exchange's liquidity pool, supporting the 
quality of price discovery, promoting market transparency and improving 
investor protection.
    On the backdrop of the competitive environment in which the 
Exchange currently operates, the proposed rule change is a reasonable 
attempt by the Exchange to increase its liquidity and improve its 
market share relative to its competitors.
The Proposed Fee Change Is An Equitable Allocation of Credits and Fees
    The Exchange believes the proposed fee change is an equitable 
allocation of its fees and credits. The Exchange believes that the 
proposed changes to the MPL Order pricing tiers, including the adoption 
of increased credits under the proposed MPL Tier 1 and MPL Tier 2 
pricing tiers and the proposed adoption of an alternative criteria to 
qualify for proposed MPL Tier 3 and MPL Tier 4, is equitable because 
the magnitude of the additional credit is not unreasonably high in 
comparison to the credit paid with respect to other pricing tiers on 
the Exchange, and in comparison to the credits paid by other exchanges 
for orders that provide

[[Page 56907]]

midpoint liquidity. For example, ETP Holders currently receive credits 
in Tape A, Tape B and Tape C securities that range between $0.0010 per 
share and $0.0026 per share under Standard and Tiered rates. With 
respect to credits paid by the Exchange's competitors, the Nasdaq Stock 
Market LLC provides a credit of $0.0025 per share to add non-displayed 
midpoint liquidity in Tape A, Tape B and Tape C Securities on that 
market for members that add greater than 5 million shares of midpoint 
liquidity and add 8 million shares on non-displayed liquidity.\19\
---------------------------------------------------------------------------

    \19\ See Rebate to Add Non-Displayed Midpoint Liquidity, at 
https://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
---------------------------------------------------------------------------

    The Exchange believes the proposed rule change would improve market 
quality for all market participants on the Exchange and, as a 
consequence, attract more liquidity to the Exchange thereby improving 
market-wide quality. ETP Holders that currently qualify for credits 
associated with MPL Orders will continue to receive credits when they 
provide liquidity to the Exchange. With the proposed new MPL Tier 1 and 
MPL Tier 2, all ETP Holders would be eligible to qualify for the higher 
credit if they increase their MPL Adding ADV. The Exchange believes 
that recalibrating the credits for providing liquidity will continue to 
attract order flow and liquidity to the Exchange, thereby providing 
additional price improvement opportunities on the Exchange and 
benefiting investors generally. As to those market participants that do 
not presently qualify for the credits associated with MPL Orders, the 
proposal will not adversely impact their existing pricing or their 
ability to qualify for other credits provided by the Exchange.
The Proposed Fee Change Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. Moreover, this proposed rule change neither targets nor 
will it have a disparate impact on any particular category of market 
participant. The Exchange believes it is not unfairly discriminatory to 
provide the current level of credits and the increased per share 
credits under proposed MPL Tier 1 and MPL Tier 2 as each such credit 
would be provided on an equal basis to all ETP Holders that add 
liquidity by meeting the requirements of the existing MPL Order pricing 
tiers, including the proposed MPL Tier 1 and MPL Tier 2. The Exchange 
believes the proposed increased per share credits would incentivize ETP 
Holders that meet the current tiered requirements to send more of their 
MPL Orders to the Exchange to qualify for such credits. The Exchange 
further believes it is not unfairly discriminatory to adopt an 
alternative requirement to qualify for the current level of credits 
under proposed MPL Tier 3 and MPL Tier 4 as each such credit would be 
provided on an equal basis to all ETP Holders and each such ETP Holder 
would have an opportunity to qualify for the current level of credit by 
utilizing a mix of MPL Adding ADV and Adding ADV in Tape A, Tape B and 
Tape C securities. The Exchange also believes that the proposed changes 
are not unfairly discriminatory because they are reasonably related to 
the value of the Exchange's market quality associated with higher 
volume. The credits, both existing and the proposed higher ones, would 
apply equally to all ETP Holders as each would be required to provide 
liquidity in MPL Orders for Tape A, Tape B and Tape C Securities 
combined during the billing month regardless of whether an ETP Holder 
currently meets the requirement of another pricing tier.
    Finally, the submission of orders to the Exchange is optional for 
ETP Holders in that they could choose whether to submit orders to the 
Exchange and, if they do, the extent of its activity in this regard. 
The Exchange believes that it is subject to significant competitive 
forces, as described below in the Exchange's statement regarding the 
burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\20\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. 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.'' \21\
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    \20\ 15 U.S.C. 78f(b)(8).
    \21\ Regulation NMS, 70 FR at 37498-99.
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    Intramarket Competition. The proposed changes are designed to 
attract additional order flow to the Exchange. The Exchange believes 
that the proposed changes to the MPL Order pricing tiers, including the 
adoption of higher credits under proposed MPL Tier 1 and MPL Tier 2, 
would continue to incentivize market participants to direct more orders 
to the Exchange, and in particular, liquidity-providing MPL Orders. 
Greater liquidity benefits all market participants on the Exchange by 
providing more trading opportunities. The proposed changes to the MPL 
Order pricing tier should incentivize ETP Holders to send liquidity-
providing orders to the Exchange, thereby contributing to robust levels 
of liquidity, which would benefit all market participants on the 
Exchange. The current and proposed new credits would be available to 
all similarly-situated market participants, and, as such, the proposed 
changes would not impose a disparate burden on competition among market 
participants on the Exchange.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily choose to 
send their orders to other exchange and off-exchange venues if they 
deem fee levels at those other venues to be more favorable. As noted 
above, the Exchange's market share of intraday trading (i.e., excluding 
auctions) is currently less than 10%. In such an environment, the 
Exchange must continually review, and consider adjusting 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, the Exchange does not believe its proposed fee 
change can impose any burden on intermarket competition.
    The Exchange believes that the proposed changes could promote 
competition between the Exchange and other execution venues, including 
those that currently offer similar order types and comparable 
transaction pricing, by encouraging additional orders to be sent to the 
Exchange for execution.

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

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

[[Page 56908]]

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) \22\ 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 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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    \22\ 15 U.S.C. 78s(b)(3)(A).
---------------------------------------------------------------------------

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-2023-52 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-2023-52. 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-2023-52, and should be 
submitted on or before September 11, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-17858 Filed 8-18-23; 8:45 am]
BILLING CODE 8011-01-P
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