Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing of Proposed Change To Amend the NYSE National Schedule of Fees and Rebates, 67414-67418 [2023-21339]
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Federal Register / Vol. 88, No. 188 / Friday, September 29, 2023 / Notices
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A proposed rule change filed under
Rule 19b–4(f)(6) 23 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b4(f)(6)(iii),24 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
Exchange has asked the Commission to
waive the 30-day operative delay so that
the proposal may become operative
immediately upon filing. MIAX Emerald
has indicated that the immediate
operation of the proposed rule change is
appropriate because it would allow the
Exchange to implement the proposed
changes to its continuing education
rules without delay, thereby eliminating
the possibility of a significant regulatory
gap between the FINRA rules and the
Exchange rules, providing more uniform
standards across the securities industry,
and helping to avoid confusion for
Exchange members that are also FINRA
members. MIAX Emerald also noted that
FINRA plans to conduct additional
public outreach efforts to promote
awareness of the MQP and the
availability of the Second Enrollment
Period among Look-Back Individuals.
Therefore, MIAX Emerald indicated that
the immediate operation of the
proposed rule change is also appropriate
because it would help to further notify
Look-Back Individuals of their options
and provide additional time for them to
consider whether they wish to
participate in the MQP before the
December 31, 2023 deadline. For these
reasons, the Commission believes that
waiver of the 30-day operative delay for
this proposal is consistent with the
protection of investors and the public
interest. Accordingly, the Commission
hereby waives the 30-day operative
delay and designates the proposal
operative upon filing.25
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
23 17
CFR 240.19b–4(f)(6).
CFR 240.19b–4(f)(6)(iii).
25 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule change’s impact on efficiency,
competition, and capital formation. See 15 U.S.C.
78c(f).
24 17
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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–
EMERALD–2023–25 on the subject line.
Paper Comments
All submissions should refer to file
number SR–EMERALD–2023–25. 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 the filing also
will be available for inspection and
copying at the principal office of the
Exchange. 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–EMERALD–2023–25 and
should be submitted on or before
October 20, 2023.
Fmt 4703
BILLING CODE 8011–01–P
[Release No. 34–98495; File No. SR–
NYSENAT–2023–20]
Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing of
Proposed Change To Amend the NYSE
National Schedule of Fees and Rebates
September 25, 2023.
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
Frm 00190
[FR Doc. 2023–21348 Filed 9–28–23; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
PO 00000
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
Sherry R. Haywood,
Assistant Secretary.
Sfmt 4703
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
September 12, 2023, NYSE National,
Inc. (‘‘NYSE National’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. 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 National Schedule of Fees and
Rebates (‘‘Fee Schedule’’) to reflect fees
and credits relating to the NYSE
National Retail Liquidity Program. The
proposed change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
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,
26 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 88, No. 188 / Friday, September 29, 2023 / Notices
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Fee Schedule to reflect fees and credits
relating to the newly implemented
NYSE National Retail Liquidity Program
(the ‘‘RLP’’ or ‘‘Program’’).3 The
Exchange proposes to implement the fee
change effective September 12, 2023.4
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Background
The Exchange operates in a highly
competitive market. The Securities and
Exchange Commission (‘‘Commission’’)
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, the
Commission highlighted the importance
of market forces in determining prices
and SRO revenues and, also, recognized
that current regulation of the market
system ‘‘has been remarkably successful
in promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 5
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.’’ 6 Indeed, equity trading is
currently dispersed across 16
exchanges,7 numerous alternative
trading systems,8 and broker-dealer
3 See Securities Exchange Act Release No. 98169
(August 18, 2023), 88 FR 57508 (August 23, 2023)
(SR–NYSENAT–2023–17) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
to Amend Rule 7.44).
4 The Exchange previously filed to amend the Fee
Schedule on August 28, 2023 (SR–NYSENAT–
2023–19) and withdrew such filing on September
12, 2023.
5 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’’).
6 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).
7 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/divisionsmarketregmr
exchangesshtml.html.
8 See FINRA ATS Transparency Data, available at
https://otctransparency.finra.org/otctransparency/
AtsIssueData. A list of alternative trading systems
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internalizers and wholesalers, all
competing for order flow. Based on
publicly available information, no single
exchange currently has more than 18%
market share.9 Therefore, no exchange
possesses significant pricing power in
the execution of equity order flow. More
specifically, the Exchange’s share of
executed volume of equity trades in
Tapes A, B and C securities combined
is less than 1%.10
The Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can move order flow, or discontinue or
reduce use of certain categories of
products. While it is not possible to
know a firm’s reason for shifting order
flow, the Exchange believes that one
such reason is because of fee changes at
any of the registered exchanges or nonexchange venues to which a firm routes
order flow. Accordingly, competitive
forces constrain exchange transaction
fees, and market participants can readily
trade on competing venues if they deem
pricing levels at those other venues to
be more favorable.
The Exchange utilizes a ‘‘takermaker’’ or inverted fee model to attract
orders that provide liquidity at the most
competitive prices. Under the takermaker model, offering rebates for taking
(or removing) liquidity increases the
likelihood that market participants will
send orders to the Exchange to trade
with liquidity providers’ orders. This
increased taker order flow provides an
incentive for market participants to send
orders that provide liquidity. The
Exchange generally charges fees for
order flow that provides liquidity. These
fees are reasonable due to the additional
marketable interest (in part attracted by
the Exchange’s rebate to remove
liquidity) with which those order flow
providers can trade.
Proposed Rule Change
The Commission recently noticed for
immediate effectiveness the Exchange’s
proposed rule change to introduce the
RLP.11 The purpose of the program is to
attract retail order flow to the Exchange
and allow such order flow to receive
potential price improvement at the
midpoint or better. The RLP allows ETP
Holders to provide potential price
improvement to retail investor orders in
the form of a non-displayed order that
is priced at the less aggressive of the
registered with the Commission is available at
https://www.sec.gov/foia/docs/atslist.htm.
9 See Cboe Global Markets U.S. Equities Market
Volume Summary, available at https://
markets.cboe.com/us/equities/market_share/.
10 See id.
11 See note 4, supra. See also Rule 7.44.
PO 00000
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67415
midpoint of the PBBO or its limit price,
called a Retail Price Improvement Order
(‘‘RPI Order’’).12 When there is an RPI
Order in a particular security that is
eligible to trade at the midpoint of the
PBBO, the Exchange disseminates an
indicator, known as the Retail Liquidity
Identifier, that such interest exists.13
Retail Member Organizations (‘‘RMOs’’)
would be able to submit a Retail Order
to the Exchange, which interacts, to the
extent possible, with available contraside RPI Orders and may interact with
other liquidity on the Exchange,
depending on the Retail Order’s
instructions.14 The segmentation in the
Program would allow retail order flow
to receive potential price improvement
as a result of that order flow being
deemed more desirable by liquidity
providers.
In connection with the
implementation of the RLP,15 the
Exchange proposes to amend the Fee
Schedule to provide for fees and credits
for orders executed in the Program. The
Exchange proposes to modify the Fee
Schedule to add new Section D.3., ‘‘Fees
and credits applicable to executions in
the Retail Liquidity Program,’’ and
proposes that Section D.3. would
provide for the following fees and
credits:
• For RPI Orders that execute against
a Retail Order submitted by an RMO: no
fee or credit will apply.
• For other (non-RPI Order) liquidity
that executes against a Retail Order
submitted by an RMO: the existing
Tiered or Basic Rates set forth in the Fee
Schedule, based on a firm’s qualifying
levels, will apply.
• For a Retail Order submitted by an
RMO that executes against an RPI Order
or against other non-RPI Order interest
that is priced better than the PBBO
(‘‘price-improving interest’’): a ($0.0003)
credit will apply.
• For a Type 2 Retail Order submitted
by an RMO that executes against nonprice-improving interest: the existing
Tiered or Basic Rates set forth in the Fee
Schedule, based on a firm’s qualifying
levels, will apply.
The Program is intended to attract
retail order flow to the Exchange,
including by facilitating opportunities
for such order flow to receive potential
price improvement at the midpoint or
better, and to promote competition for
retail order flow among execution
venues (including those that also offer
12 See
Rule 7.44(a)(3).
Rule 7.44(e).
14 See Rules 7.44(a)(1) (defining RMO), 7.44(a)(2)
(defining Retail Order), and 7.44(f) (describing the
operation and designation of Retail Orders).
15 See https://www.nyse.com/trader-update/
history#110000643248.
13 See
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Federal Register / Vol. 88, No. 188 / Friday, September 29, 2023 / Notices
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retail price improvement programs),
which would benefit retail investors by
creating additional price improvement
opportunities for marketable retail order
flow on a public exchange. ETP Holders
are not required to submit Retail Orders
or RPI Orders, and all ETP Holders that
participate in the Program would be
subject to the same fees and credits, as
outlined above. The Exchange believes
that the proposed credits offered to
Retail Orders that execute against RPI
Orders or other price-improving interest
would encourage ETP Holders to direct
retail order flow to the Exchange, and
that the amounts of those credits are
reasonable and consistent with the
range of credits currently offered to nonRetail Orders that remove liquidity on
the Exchange.16 The Exchange notes
that this proposed credit for Retail
Orders is also comparable to the credit
previously offered by the Exchange’s
affiliate, NYSE Arca, Inc. (‘‘NYSE
Arca’’), for orders in its nowdiscontinued Retail Liquidity
Program.17 The Exchange also believes
that its proposal to not apply any fee or
credit to RPI Orders that execute against
Retail Orders could encourage ETP
Holders to submit RPI Orders for
execution against Retail Orders, thereby
promoting additional trading
opportunities for retail order flow on the
Exchange. The Exchange notes that not
applying any fee or credit to RPI Orders
is also consistent with pricing in the
Retail Liquidity Program offered by its
affiliate, New York Stock Exchange LLC
(‘‘NYSE’’).18 Finally, the Exchange
believes that applying existing Tiered or
Basic Rates, based on a firm’s qualifying
levels, to non-RPI Order interest that
executes against a Retail Order and to
Type 2 Retail Orders 19 that execute
16 See NYSE National Fee Schedule, Section D.2.
(Rates for Removing Liquidity (Per Share)).
17 See Securities Exchange Act Release No. 98347
(September 11, 2023) (SR–NYSEARCA–2023–59)
(describing fee structure for former NYSE Arca
Retail Liquidity Program, in which NYSE Arca—as
a maker-taker market—conversely offered a $0.0003
credit to RPI Order executions against Retail
Orders).
18 See NYSE Price List, Fees and Credits
Applicable to Executions in the Retail Liquidity
Program (no charge for a Retail Order submitted by
a Retail Member Organization that executes against
an RPI or MPL Order).
19 A Type 2 Retail Order trades first with
available RPI Orders and all other orders with a
working price below (above) the PBO (PBB) on the
Exchange Book. Any remaining quantity of a Type
2 Retail Order may then trade with orders on the
Exchange Book at prices equal to or above (below)
the PBO (PBB). Type 2 Retail Orders differ from
Type 1 Retail Orders (which trade only with
available RPI Orders and all other orders with a
working price below (above) or equal to the
midpoint of the PBBO on the Exchange Book)
because they would be able to trade first with all
contra-side orders inside the PBBO and then would
have the opportunity to trade as a Limit IOC Order,
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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.’’ 24
The Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can shift order flow, or discontinue or
reduce use of certain categories of
products, in response to fee changes.
Accordingly, changes to exchange
transaction fees can have a direct effect
on the ability of an exchange to compete
for order flow.
In particular, the Exchange believes
the proposed rule change is a reasonable
means to encourage ETP Holders to
participate in the RLP. The Program is
offered by the Exchange on a voluntary
basis; no rule or regulation requires that
2. Statutory Basis
the Exchange offer it, and nor does any
rule or regulation require market
The Exchange believes that the
proposed rule change is consistent with participants to participate in it. Instead,
Section 6(b) of the Act,22 in general, and the Program is intended to encourage
opportunities for retail order flow to
furthers the objectives of Sections
6(b)(4) and (5) of the Act,23 in particular, receive price improvement at the
midpoint or better, including by offering
because it provides for the equitable
credits to Retail Orders submitted by
allocation of reasonable dues, fees, and
RMOs for execution in the Program (and
other charges among its members,
consistent with the Exchange’s takerissuers and other persons using its
maker model, in which offering rebates
facilities and does not unfairly
for taking (or removing) liquidity
discriminate between customers,
increases the likelihood that market
issuers, brokers or dealers.
participants will direct order flow to the
As discussed above, the Exchange
Exchange). The Exchange further
operates in a highly fragmented and
believes that its proposal to apply
competitive market. The Commission
Tiered or Basic rates to the portion of
has repeatedly expressed its preference
Type 2 Retail Orders that execute
for competition over regulatory
against non-price-improving interest is
intervention in determining prices,
reasonable, as it would apply standard
products, and services in the securities
pricing to the portion of the order that
executes outside of the Retail Liquidity
as such order is defined in Rule 7.31. See Rules
Program (and is consistent with the
7.44(f)(1) (defining Type 1 Retail Order) and
7.44(f)(2) (defining Type 2 Retail Order). Thus, a
Exchange’s current pricing for liquidity
Type 2 Retail Order may be subject to two different
removing orders that do not receive
rates, as proposed. If, for example, 100 shares of a
price improvement). The Exchange also
Type 2 Retail Order for 200 shares executes against
an RPI Order, a ($0.0003) credit would apply to that believes the amounts of the credits
portion of the order; if the remaining 100 shares of
offered are reasonable and consistent
the Type Retail Order then executes against nonwith the Exchange’s existing fee
price-improving interest on the Exchange Book, that
structure, and are in line with credits
portion of the order would receive the Tiered or
currently offered by the Exchange to
Basic rates for which the entering firm qualifies.
20 See note 18, supra (describing fee structure for
other non-retail liquidity removing
NYSE Arca Retail Liquidity Program, in which non- orders.25 The Exchange also believes
displayed liquidity and displayable odd lot interest
that the proposed fees and credits that
priced better than the PBBO (i.e., non-RPI Order
would apply to RPI Orders and other
interest) that executes against a Retail Order would
receive Tiered or Basic Rates based on the firm’s
(non-RPI Order) price-improving
qualification for such levels).
interest that executes against Retail
21 See id. (‘‘An RMO Retail Order that executes
Orders are reasonable and designed to
outside of the Retail Liquidity Program . . .
encourage ETP Holders to direct orders
receives pricing applicable to Tiered or Standard
against non-price-improving interest is
reasonable, as those ETP Holders would
continue to receive the rates for which
they qualify under the current Fee
Schedule. The Exchange notes that
applying Tiered or Basic rates to nonRPI Order interest that executes against
a Retail Order is consistent with pricing
previously associated with the NYSE
Arca Retail Liquidity Program.20 With
respect to Type 2 Retail Orders, because
a remainder quantity of the order may
execute against non-price-improving
interest on the Exchange Book outside
of the Program, the Exchange believes it
is reasonable to apply Tiered or Basic
rates to such portion of the Retail Order,
consistent with the pricing currently
offered to other removing orders that do
not receive price improvement. The
Exchange notes that this treatment of
Type 2 Retail Orders is also consistent
with the fee structure that was in place
for the NYSE Arca Retail Liquidity
Program, which offered an identical
Type 2 Retail Order.21
Rates in the Fee Schedule.’’)
22 15 U.S.C. 78f(b).
23 15 U.S.C. 78f(b)(4) and (5).
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24 See
25 See
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note 6, supra.
note 17, supra.
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Federal Register / Vol. 88, No. 188 / Friday, September 29, 2023 / Notices
to the Exchange to interact with retail
order flow. Finally, as noted above, the
Exchange’s proposed fees and credits
are consistent with the fee structures
associated with the Retail Liquidity
Programs currently or previously offered
by its affiliated exchanges.26
The Exchange believes its proposal
equitably allocates its fees among its
market participants. The Exchange
believes that the proposal represents an
equitable allocation of fees because it
would apply uniformly to all ETP
Holders, in that all ETP Holders that
participate in the RLP would be subject
to the same fees and credits. While the
Exchange has no way of knowing
whether this proposed rule change
would encourage ETP Holders to
participate in the Program, the Exchange
believes that the fees and credits
associated with the Program are
designed to incentivize ETP Holders to
direct both Retail Orders and RPI Orders
to the Program by offering credits to
Retail Orders that execute against RPI
Orders or other price-improving
interest, applying the Tiered or Basic
Rates for which an ETP Holder qualifies
to non-RPI Order executions against
Retail Orders and Type 2 Retail Order
executions against non-price-improving
interest, and not applying any fee or
credit to RPI Orders that execute against
Retail Orders. The Exchange further
notes that, as discussed above, the
proposed fee structure for the Program
is consistent with the fees and credits
associated with the Retail Liquidity
Programs currently or previously offered
by its affiliated exchanges.27
The Exchange believes that the
proposal is not unfairly discriminatory,
as the proposed fees and credits would
apply to all similarly situated ETP
Holders. Moreover, this proposed rule
change neither targets nor will it have
a disparate impact on any particular
category of market participant. Instead,
the proposed changes are designed to
encourage ETP Holders to participate in
the Program, which could promote
additional price improvements for retail
order flow as well as competition
between the Exchange and other
execution venues. The Exchange
believes that this proposal does not
permit unfair discrimination because
the changes described in this proposal
would be applied to all ETP Holders
that participate in the Program.
Accordingly, no ETP Holder already
operating on the Exchange would be
disadvantaged by the proposed
allocation of fees, and any ETP Holder’s
participation in the Program is
voluntary. The Exchange further
believes that the proposed rule change
would not permit unfair discrimination
among ETP Holders because the
Program would be available to all ETP
Holders on an equal basis. The
Exchange believes that the fees and
credits associated with the Program are
designed to incentivize ETP Holders to
participate in the Program by offering
credits to Retail Orders that execute
against RPI Orders or other priceimproving interest and not applying any
fee or credit to RPI Orders that execute
against Retail Orders. The Exchange also
believes it is not unfairly discriminatory
to apply Tiered or Basic rates to non-RPI
Order executions against Retail Orders
and to the portion of Type 2 Retail
Orders that execute against non-priceimproving interest outside of the
Program, as those ETP Holders would
receive existing pricing for which they
qualify. The Exchange also notes that
the proposed fees and credits for the
Program are, as discussed above,
consistent with the fees and credits
associated with the Retail Liquidity
Programs currently or previously offered
by the Exchange’s affiliates.28
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,29 the Exchange believes that the
proposed rule change would not impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the proposed
change furthers the Commission’s goal
in adopting Regulation NMS of fostering
integrated competition among orders,
which promotes ‘‘more efficient pricing
of individual stocks for all types of
orders, large and small.’’ 30
Intramarket Competition. The
Exchange believes the proposed
amendment to its Fee Schedule would
not impose any burden on competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
28 See
26 See
also notes 18, 19, 21 & 22, supra.
27 See also id.
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21:46 Sep 28, 2023
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also note 27, supra.
U.S.C. 78f(b)(8).
30 See note 6, supra.
The Exchange believes the proposed
rule change is a reasonable means to
encourage ETP Holders to participate in
the RLP. All ETP Holders that qualify as
RMOs may send Retail Orders to the
Exchange, and all ETP Holders may
direct RPI Orders or other interest to the
Exchange. The Program is offered by the
Exchange on a voluntary basis, and no
rule or regulation requires that the
Exchange offer it. Likewise, ETP
Holders have the choice whether or not
to participate in the Program and those
that choose not to participate will not be
impacted by the proposed rule change.
The Exchange also does not believe the
proposed rule change would impact
intramarket competition, as the
proposed rule change would apply
equally to all ETP Holders that choose
to direct order flow to the Program, and
therefore the proposed change would
not impose a disparate burden on
competition among market participants
on the Exchange.
Intermarket Competition. The
Exchange operates in a highly
competitive market in which market
participants can readily choose to send
their orders to other exchange and offexchange venues if they deem fee levels
at those other venues to be more
favorable. As noted above, the
Exchange’s market share of intraday
trading is currently less than 1%. In
such an environment, the Exchange
must continually adjust its fees and
rebates to remain competitive with other
exchanges and with off-exchange
venues. Because competitors are free to
modify their own fees and credits in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
does not believe its proposed fee change
can impose any burden on intermarket
competition. In addition, as noted
above, the Exchange believes that the
Program could promote competition
between the Exchange and other
execution venues.
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) 31 of the Act and paragraph
29 15
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67417
31 15
E:\FR\FM\29SEN1.SGM
U.S.C. 78s(b)(3)(A).
29SEN1
67418
Federal Register / Vol. 88, No. 188 / Friday, September 29, 2023 / Notices
lotter on DSK11XQN23PROD with NOTICES1
(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.
submissions should refer to file number
SR–NYSENAT–2023–20 and should be
submitted on or before October 20,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
Sherry R. Haywood,
Assistant Secretary.
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:
[FR Doc. 2023–21339 Filed 9–28–23; 8:45 am]
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–
NYSENAT–2023–20 on the subject line.
AGENCY:
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–2023–20. 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 the filing also
will be available for inspection and
copying at the principal office of the
Exchange. 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
VerDate Sep<11>2014
21:46 Sep 28, 2023
Jkt 259001
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
Information on SBA Secondary Market
Program
Small Business Administration.
Update to secondary market
program.
ACTION:
The purpose of this Notice is
to inform the public that the Small
Business Administration (SBA) is
making no change to the current
minimum maturity ratio of 92.0% for
both SBA Standard Pools and WeightedAverage Coupon (WAC) Pools. The
minimum maturity ratio covers the
estimated cost of the timely payment
guaranty for newly formed SBA 7(a)
loan pools. This update will be
incorporated, as needed, into the SBA
Secondary Market Program Guide and
all other appropriate SBA Secondary
Market documents.
DATES: The update will apply to SBA
7(a) loan pools with an issue date on or
after October 1, 2023.
ADDRESSES: Address comments
concerning this Notice to David Parrish,
Chief Secondary Market Division, Office
of Financial Assistance, U.S. Small
Business Administration, 409 3rd Street
SW, Washington, DC 20416; or
david.parrish@sba.gov.
FOR FURTHER INFORMATION CONTACT:
David Parrish, Chief Secondary Market
Division, Office of Financial Assistance
at (202) 205–6346; or david.parrish@
sba.gov. If you are deaf, hard of hearing,
or have a speech disability, please dial
7–1–1 to access telecommunications
relay services.
SUPPLEMENTARY INFORMATION: The
Secondary Market Improvements Act of
1984, 15 U.S.C. 634(f) through (h),
authorized SBA to guarantee the timely
payment of principal and interest on
Pool Certificates. A Pool Certificate
represents a fractional undivided
interest in a ‘‘Pool,’’ which is an
aggregation of SBA guaranteed portions
of loans made by SBA Lenders under
section 7(a) of the Small Business Act,
SUMMARY:
32 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00194
Fmt 4703
Sfmt 4703
15 U.S.C. 636(a). In order to support the
timely payment guaranty requirement,
SBA established the Master Reserve
Fund (MRF), which serves as a
mechanism to cover the cost of SBA’s
timely payment guaranty. Borrower
payments on the guaranteed portions of
pooled loans, as well as SBA guaranty
payments on defaulted pooled loans, are
deposited into the MRF. Funds are held
in the MRF until distributions are made
to investors (Registered Holders) of Pool
Certificates. The interest earned on the
borrower payments and the SBA
guaranty payments deposited into the
MRF supports the timely payments
made to Registered Holders.
From time to time, SBA provides
guidance to SBA Pool Assemblers on
the required loan and pool
characteristics necessary to form a Pool.
These characteristics include, among
other things, the minimum number of
guaranteed portions of loans required to
form a Pool, the allowable difference
between the highest and lowest gross
and net note rates of the guaranteed
portions of loans in a Pool, and the
minimum maturity ratio of the
guaranteed portions of loans in a Pool.
The minimum maturity ratio is equal to
the ratio of the shortest and the longest
remaining term to maturity of the
guaranteed portions of loans in a Pool.
Based on SBA’s expectations as to the
performance of future Pools, SBA has
determined that no change is necessary
to the minimum maturity ratio from
fiscal year 2023 for Pools formed on or
after October 1, 2023. The minimum
maturity ratio will remain at 92.0%.
Therefore, effective October 1, 2023, all
guaranteed portions of loans in
Standard Pools and WAC Pools
presented for settlement with SBA’s
Fiscal Transfer Agent will be required to
have a minimum maturity ratio of at
least 92.0%.
SBA will continue to monitor loan
and pool characteristics and will
provide notification of additional
changes as necessary. It is important to
note that there is no change to SBA’s
obligation to honor its guaranty of the
amounts owed to Registered Holders of
Pool Certificates and that such guaranty
continues to be backed by the full faith
and credit of the United States.
This program change will be
incorporated as necessary into SBA’s
Secondary Market Guide and all other
appropriate SBA Secondary Market
documents. As indicated above, this
change will be effective for Standard
E:\FR\FM\29SEN1.SGM
29SEN1
]]>Agencies
[Federal Register Volume 88, Number 188 (Friday, September 29, 2023)]
[Notices]
[Pages 67414-67418]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21339]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98495; File No. SR-NYSENAT-2023-20]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing of Proposed Change To Amend the NYSE National Schedule of Fees
and Rebates
September 25, 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 September 12, 2023, NYSE National, Inc. (``NYSE National'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. 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 National Schedule of Fees
and Rebates (``Fee Schedule'') to reflect fees and credits relating to
the NYSE National Retail Liquidity Program. The proposed change is
available on the Exchange's website at www.nyse.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
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,
[[Page 67415]]
of the most significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Fee Schedule to reflect fees and
credits relating to the newly implemented NYSE National Retail
Liquidity Program (the ``RLP'' or ``Program'').\3\ The Exchange
proposes to implement the fee change effective September 12, 2023.\4\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 98169 (August 18,
2023), 88 FR 57508 (August 23, 2023) (SR-NYSENAT-2023-17) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Amend
Rule 7.44).
\4\ The Exchange previously filed to amend the Fee Schedule on
August 28, 2023 (SR-NYSENAT-2023-19) and withdrew such filing on
September 12, 2023.
---------------------------------------------------------------------------
Background
The Exchange operates in a highly competitive market. The
Securities and Exchange Commission (``Commission'') has repeatedly
expressed its preference for competition over regulatory intervention
in determining prices, products, and services in the securities
markets. In Regulation NMS, the Commission highlighted the importance
of market forces in determining prices and SRO revenues and, also,
recognized that current regulation of the market system ``has been
remarkably successful in promoting market competition in its broader
forms that are most important to investors and listed companies.'' \5\
---------------------------------------------------------------------------
\5\ 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.'' \6\ Indeed, equity trading is currently dispersed across
16 exchanges,\7\ numerous alternative trading systems,\8\ and broker-
dealer internalizers and wholesalers, all competing for order flow.
Based on publicly available information, no single exchange currently
has more than 18% market share.\9\ Therefore, no exchange possesses
significant pricing power in the execution of equity order flow. More
specifically, the Exchange's share of executed volume of equity trades
in Tapes A, B and C securities combined is less than 1%.\10\
---------------------------------------------------------------------------
\6\ 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).
\7\ 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.
\8\ 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.
\9\ See Cboe Global Markets U.S. Equities Market Volume Summary,
available at https://markets.cboe.com/us/equities/market_share/.
\10\ See id.
---------------------------------------------------------------------------
The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
move order flow, or discontinue or reduce use of certain categories of
products. While it is not possible to know a firm's reason for shifting
order flow, the Exchange believes that one such reason is because of
fee changes at any of the registered exchanges or non-exchange venues
to which a firm routes order flow. Accordingly, competitive forces
constrain exchange transaction fees, and market participants can
readily trade on competing venues if they deem pricing levels at those
other venues to be more favorable.
The Exchange utilizes a ``taker-maker'' or inverted fee model to
attract orders that provide liquidity at the most competitive prices.
Under the taker-maker model, offering rebates for taking (or removing)
liquidity increases the likelihood that market participants will send
orders to the Exchange to trade with liquidity providers' orders. This
increased taker order flow provides an incentive for market
participants to send orders that provide liquidity. The Exchange
generally charges fees for order flow that provides liquidity. These
fees are reasonable due to the additional marketable interest (in part
attracted by the Exchange's rebate to remove liquidity) with which
those order flow providers can trade.
Proposed Rule Change
The Commission recently noticed for immediate effectiveness the
Exchange's proposed rule change to introduce the RLP.\11\ The purpose
of the program is to attract retail order flow to the Exchange and
allow such order flow to receive potential price improvement at the
midpoint or better. The RLP allows ETP Holders to provide potential
price improvement to retail investor orders in the form of a non-
displayed order that is priced at the less aggressive of the midpoint
of the PBBO or its limit price, called a Retail Price Improvement Order
(``RPI Order'').\12\ When there is an RPI Order in a particular
security that is eligible to trade at the midpoint of the PBBO, the
Exchange disseminates an indicator, known as the Retail Liquidity
Identifier, that such interest exists.\13\ Retail Member Organizations
(``RMOs'') would be able to submit a Retail Order to the Exchange,
which interacts, to the extent possible, with available contra-side RPI
Orders and may interact with other liquidity on the Exchange, depending
on the Retail Order's instructions.\14\ The segmentation in the Program
would allow retail order flow to receive potential price improvement as
a result of that order flow being deemed more desirable by liquidity
providers.
---------------------------------------------------------------------------
\11\ See note 4, supra. See also Rule 7.44.
\12\ See Rule 7.44(a)(3).
\13\ See Rule 7.44(e).
\14\ See Rules 7.44(a)(1) (defining RMO), 7.44(a)(2) (defining
Retail Order), and 7.44(f) (describing the operation and designation
of Retail Orders).
---------------------------------------------------------------------------
In connection with the implementation of the RLP,\15\ the Exchange
proposes to amend the Fee Schedule to provide for fees and credits for
orders executed in the Program. The Exchange proposes to modify the Fee
Schedule to add new Section D.3., ``Fees and credits applicable to
executions in the Retail Liquidity Program,'' and proposes that Section
D.3. would provide for the following fees and credits:
---------------------------------------------------------------------------
\15\ See https://www.nyse.com/trader-update/history#110000643248.
---------------------------------------------------------------------------
For RPI Orders that execute against a Retail Order
submitted by an RMO: no fee or credit will apply.
For other (non-RPI Order) liquidity that executes against
a Retail Order submitted by an RMO: the existing Tiered or Basic Rates
set forth in the Fee Schedule, based on a firm's qualifying levels,
will apply.
For a Retail Order submitted by an RMO that executes
against an RPI Order or against other non-RPI Order interest that is
priced better than the PBBO (``price-improving interest''): a ($0.0003)
credit will apply.
For a Type 2 Retail Order submitted by an RMO that
executes against non-price-improving interest: the existing Tiered or
Basic Rates set forth in the Fee Schedule, based on a firm's qualifying
levels, will apply.
The Program is intended to attract retail order flow to the
Exchange, including by facilitating opportunities for such order flow
to receive potential price improvement at the midpoint or better, and
to promote competition for retail order flow among execution venues
(including those that also offer
[[Page 67416]]
retail price improvement programs), which would benefit retail
investors by creating additional price improvement opportunities for
marketable retail order flow on a public exchange. ETP Holders are not
required to submit Retail Orders or RPI Orders, and all ETP Holders
that participate in the Program would be subject to the same fees and
credits, as outlined above. The Exchange believes that the proposed
credits offered to Retail Orders that execute against RPI Orders or
other price-improving interest would encourage ETP Holders to direct
retail order flow to the Exchange, and that the amounts of those
credits are reasonable and consistent with the range of credits
currently offered to non-Retail Orders that remove liquidity on the
Exchange.\16\ The Exchange notes that this proposed credit for Retail
Orders is also comparable to the credit previously offered by the
Exchange's affiliate, NYSE Arca, Inc. (``NYSE Arca''), for orders in
its now-discontinued Retail Liquidity Program.\17\ The Exchange also
believes that its proposal to not apply any fee or credit to RPI Orders
that execute against Retail Orders could encourage ETP Holders to
submit RPI Orders for execution against Retail Orders, thereby
promoting additional trading opportunities for retail order flow on the
Exchange. The Exchange notes that not applying any fee or credit to RPI
Orders is also consistent with pricing in the Retail Liquidity Program
offered by its affiliate, New York Stock Exchange LLC (``NYSE'').\18\
Finally, the Exchange believes that applying existing Tiered or Basic
Rates, based on a firm's qualifying levels, to non-RPI Order interest
that executes against a Retail Order and to Type 2 Retail Orders \19\
that execute against non-price-improving interest is reasonable, as
those ETP Holders would continue to receive the rates for which they
qualify under the current Fee Schedule. The Exchange notes that
applying Tiered or Basic rates to non-RPI Order interest that executes
against a Retail Order is consistent with pricing previously associated
with the NYSE Arca Retail Liquidity Program.\20\ With respect to Type 2
Retail Orders, because a remainder quantity of the order may execute
against non-price-improving interest on the Exchange Book outside of
the Program, the Exchange believes it is reasonable to apply Tiered or
Basic rates to such portion of the Retail Order, consistent with the
pricing currently offered to other removing orders that do not receive
price improvement. The Exchange notes that this treatment of Type 2
Retail Orders is also consistent with the fee structure that was in
place for the NYSE Arca Retail Liquidity Program, which offered an
identical Type 2 Retail Order.\21\
---------------------------------------------------------------------------
\16\ See NYSE National Fee Schedule, Section D.2. (Rates for
Removing Liquidity (Per Share)).
\17\ See Securities Exchange Act Release No. 98347 (September
11, 2023) (SR-NYSEARCA-2023-59) (describing fee structure for former
NYSE Arca Retail Liquidity Program, in which NYSE Arca--as a maker-
taker market--conversely offered a $0.0003 credit to RPI Order
executions against Retail Orders).
\18\ See NYSE Price List, Fees and Credits Applicable to
Executions in the Retail Liquidity Program (no charge for a Retail
Order submitted by a Retail Member Organization that executes
against an RPI or MPL Order).
\19\ A Type 2 Retail Order trades first with available RPI
Orders and all other orders with a working price below (above) the
PBO (PBB) on the Exchange Book. Any remaining quantity of a Type 2
Retail Order may then trade with orders on the Exchange Book at
prices equal to or above (below) the PBO (PBB). Type 2 Retail Orders
differ from Type 1 Retail Orders (which trade only with available
RPI Orders and all other orders with a working price below (above)
or equal to the midpoint of the PBBO on the Exchange Book) because
they would be able to trade first with all contra-side orders inside
the PBBO and then would have the opportunity to trade as a Limit IOC
Order, as such order is defined in Rule 7.31. See Rules 7.44(f)(1)
(defining Type 1 Retail Order) and 7.44(f)(2) (defining Type 2
Retail Order). Thus, a Type 2 Retail Order may be subject to two
different rates, as proposed. If, for example, 100 shares of a Type
2 Retail Order for 200 shares executes against an RPI Order, a
($0.0003) credit would apply to that portion of the order; if the
remaining 100 shares of the Type Retail Order then executes against
non-price-improving interest on the Exchange Book, that portion of
the order would receive the Tiered or Basic rates for which the
entering firm qualifies.
\20\ See note 18, supra (describing fee structure for NYSE Arca
Retail Liquidity Program, in which non-displayed liquidity and
displayable odd lot interest priced better than the PBBO (i.e., non-
RPI Order interest) that executes against a Retail Order would
receive Tiered or Basic Rates based on the firm's qualification for
such levels).
\21\ See id. (``An RMO Retail Order that executes outside of the
Retail Liquidity Program . . . receives pricing applicable to Tiered
or Standard Rates in the Fee Schedule.'')
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\22\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\23\ 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.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78f(b).
\23\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
As discussed above, the Exchange operates in a highly fragmented
and competitive market. The Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
in Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \24\
---------------------------------------------------------------------------
\24\ See note 6, supra.
---------------------------------------------------------------------------
The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
shift order flow, or discontinue or reduce use of certain categories of
products, in response to fee changes. Accordingly, changes to exchange
transaction fees can have a direct effect on the ability of an exchange
to compete for order flow.
In particular, the Exchange believes the proposed rule change is a
reasonable means to encourage ETP Holders to participate in the RLP.
The Program is offered by the Exchange on a voluntary basis; no rule or
regulation requires that the Exchange offer it, and nor does any rule
or regulation require market participants to participate in it.
Instead, the Program is intended to encourage opportunities for retail
order flow to receive price improvement at the midpoint or better,
including by offering credits to Retail Orders submitted by RMOs for
execution in the Program (and consistent with the Exchange's taker-
maker model, in which offering rebates for taking (or removing)
liquidity increases the likelihood that market participants will direct
order flow to the Exchange). The Exchange further believes that its
proposal to apply Tiered or Basic rates to the portion of Type 2 Retail
Orders that execute against non-price-improving interest is reasonable,
as it would apply standard pricing to the portion of the order that
executes outside of the Retail Liquidity Program (and is consistent
with the Exchange's current pricing for liquidity removing orders that
do not receive price improvement). The Exchange also believes the
amounts of the credits offered are reasonable and consistent with the
Exchange's existing fee structure, and are in line with credits
currently offered by the Exchange to other non-retail liquidity
removing orders.\25\ The Exchange also believes that the proposed fees
and credits that would apply to RPI Orders and other (non-RPI Order)
price-improving interest that executes against Retail Orders are
reasonable and designed to encourage ETP Holders to direct orders
[[Page 67417]]
to the Exchange to interact with retail order flow. Finally, as noted
above, the Exchange's proposed fees and credits are consistent with the
fee structures associated with the Retail Liquidity Programs currently
or previously offered by its affiliated exchanges.\26\
---------------------------------------------------------------------------
\25\ See note 17, supra.
\26\ See also notes 18, 19, 21 & 22, supra.
---------------------------------------------------------------------------
The Exchange believes its proposal equitably allocates its fees
among its market participants. The Exchange believes that the proposal
represents an equitable allocation of fees because it would apply
uniformly to all ETP Holders, in that all ETP Holders that participate
in the RLP would be subject to the same fees and credits. While the
Exchange has no way of knowing whether this proposed rule change would
encourage ETP Holders to participate in the Program, the Exchange
believes that the fees and credits associated with the Program are
designed to incentivize ETP Holders to direct both Retail Orders and
RPI Orders to the Program by offering credits to Retail Orders that
execute against RPI Orders or other price-improving interest, applying
the Tiered or Basic Rates for which an ETP Holder qualifies to non-RPI
Order executions against Retail Orders and Type 2 Retail Order
executions against non-price-improving interest, and not applying any
fee or credit to RPI Orders that execute against Retail Orders. The
Exchange further notes that, as discussed above, the proposed fee
structure for the Program is consistent with the fees and credits
associated with the Retail Liquidity Programs currently or previously
offered by its affiliated exchanges.\27\
---------------------------------------------------------------------------
\27\ See also id.
---------------------------------------------------------------------------
The Exchange believes that the proposal is not unfairly
discriminatory, as the proposed fees and credits would apply to all
similarly situated ETP Holders. Moreover, this proposed rule change
neither targets nor will it have a disparate impact on any particular
category of market participant. Instead, the proposed changes are
designed to encourage ETP Holders to participate in the Program, which
could promote additional price improvements for retail order flow as
well as competition between the Exchange and other execution venues.
The Exchange believes that this proposal does not permit unfair
discrimination because the changes described in this proposal would be
applied to all ETP Holders that participate in the Program.
Accordingly, no ETP Holder already operating on the Exchange would be
disadvantaged by the proposed allocation of fees, and any ETP Holder's
participation in the Program is voluntary. The Exchange further
believes that the proposed rule change would not permit unfair
discrimination among ETP Holders because the Program would be available
to all ETP Holders on an equal basis. The Exchange believes that the
fees and credits associated with the Program are designed to
incentivize ETP Holders to participate in the Program by offering
credits to Retail Orders that execute against RPI Orders or other
price-improving interest and not applying any fee or credit to RPI
Orders that execute against Retail Orders. The Exchange also believes
it is not unfairly discriminatory to apply Tiered or Basic rates to
non-RPI Order executions against Retail Orders and to the portion of
Type 2 Retail Orders that execute against non-price-improving interest
outside of the Program, as those ETP Holders would receive existing
pricing for which they qualify. The Exchange also notes that the
proposed fees and credits for the Program are, as discussed above,
consistent with the fees and credits associated with the Retail
Liquidity Programs currently or previously offered by the Exchange's
affiliates.\28\
---------------------------------------------------------------------------
\28\ See also note 27, supra.
---------------------------------------------------------------------------
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,\29\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. The Exchange believes that the proposed change
furthers the Commission's goal in adopting Regulation NMS of fostering
integrated competition among orders, which promotes ``more efficient
pricing of individual stocks for all types of orders, large and
small.'' \30\
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\29\ 15 U.S.C. 78f(b)(8).
\30\ See note 6, supra.
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Intramarket Competition. The Exchange believes the proposed
amendment to its Fee Schedule would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. The Exchange believes the proposed rule change is
a reasonable means to encourage ETP Holders to participate in the RLP.
All ETP Holders that qualify as RMOs may send Retail Orders to the
Exchange, and all ETP Holders may direct RPI Orders or other interest
to the Exchange. The Program is offered by the Exchange on a voluntary
basis, and no rule or regulation requires that the Exchange offer it.
Likewise, ETP Holders have the choice whether or not to participate in
the Program and those that choose not to participate will not be
impacted by the proposed rule change. The Exchange also does not
believe the proposed rule change would impact intramarket competition,
as the proposed rule change would apply equally to all ETP Holders that
choose to direct order flow to the Program, and therefore the proposed
change would not impose a disparate burden on competition among market
participants on the Exchange.
Intermarket Competition. The Exchange operates in a highly
competitive market in which market participants can readily choose to
send their orders to other exchange and off-exchange venues if they
deem fee levels at those other venues to be more favorable. As noted
above, the Exchange's market share of intraday trading is currently
less than 1%. In such an environment, the Exchange must continually
adjust its fees and rebates to remain competitive with other exchanges
and with off-exchange venues. Because competitors are free to modify
their own fees and credits in response, and because market participants
may readily adjust their order routing practices, the Exchange does not
believe its proposed fee change can impose any burden on intermarket
competition. In addition, as noted above, the Exchange believes that
the Program could promote competition between the Exchange and other
execution venues.
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) \31\ of the Act and paragraph
[[Page 67418]]
(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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\31\ 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-NYSENAT-2023-20 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-2023-20. 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 the filing also will be available for
inspection and copying at the principal office of the Exchange. 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-NYSENAT-2023-20 and should
be submitted on or before October 20, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
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\32\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21339 Filed 9-28-23; 8:45 am]
BILLING CODE 8011-01-P
