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, 42548-42552 [2024-10587]
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set forth in sections A, B, and C below,
of the most significant parts of such
statements.
also call the SEC’s Public Reference
Room at (202) 551–8090.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Sherry R. Haywood,
Assistant Secretary.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2024–10580 Filed 5–14–24; 8:45 am]
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. The Exchange proposes
to implement the fee changes effective
May 1, 2024.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100083; File No. SR–
NYSEARCA–2024–37]
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
May 9, 2024.
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 May 1,
2024, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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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
May 1, 2024. 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,
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Background
The Exchange operates in a highly
competitive market. The Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, the
Commission highlighted the importance
of market forces in determining prices
and SRO revenues and, also, recognized
that current regulation of the market
system ‘‘has been remarkably successful
in promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 4
While Regulation NMS has enhanced
competition, it has also fostered a
‘‘fragmented’’ market structure where
trading in a single stock can occur
across multiple trading centers. When
multiple trading centers compete for
order flow in the same stock, the
Commission has recognized that ‘‘such
competition can lead to the
fragmentation of order flow in that
stock.’’ 5 Indeed, equity trading is
currently dispersed across 16
exchanges,6 numerous alternative
trading systems,7 and broker-dealer
internalizers and wholesalers, all
competing for order flow. Based on
publicly available information, no single
exchange currently has more than 20%
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).
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.
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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 12% market share of executed
volume of equities trading.9
The Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can move order flow, or discontinue or
reduce use of certain categories of
products. While it is not possible to
know a firm’s reason for shifting order
flow, the Exchange believes that one
such reason is because of fee changes at
any of the registered exchanges or nonexchange venues to which the firm
routes order flow. Accordingly,
competitive forces compel the Exchange
to use exchange transaction fees and
credits because 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.
As noted above, the Exchange
currently provides multiple levels of
credits, ranging from $0.0015 per share
to $0.0028 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’’).
Under current MPL Tier 6, for ETP
Holders that have MPL Adding ADV
during a billing month of at least 1.5
million shares, the Exchange currently
8 See Cboe Global Markets U.S. Equities Market
Volume Summary, available at https://markets.
cboe.com/us/equities/market_share/.
9 See id.
10 See, e.g., Securities Exchange Act Release No.
54511 (September 26, 2006), 71 FR 58460, 58461
(October 3, 2006) (SR–PCX–2005–53).
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provides a credit of $0.0015 per share in
Tape A, Tape B and Tape C securities.
Under current MPL Tier 5, for ETP
Holders with MPL Adding ADV during
a billing month of at least 2 million
shares, the Exchange currently provides
a credit of $0.0020 per share in Tape A,
Tape B and Tape C securities. Under
current MPL Tier 4, the Exchange
provides 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 can
alternatively qualify for the 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%. Under current MPL Tier 3,
the Exchange provides 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 can alternatively
qualify for the 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%.
Under MPL Tier 2, for ETP Holders with
MPL Adding ADV during a billing
month of at least 13 million shares, the
Exchange currently provides a credit of
$0.0027 per share in Tape A, Tape B
and Tape C securities. Finally, under
MPL Tier 1, for ETP Holders with MPL
Adding ADV during a billing month of
at least 15 million shares, the Exchange
currently provides a credit of $0.0028
per share in Tape A, Tape B and Tape
C securities.11
The Exchange now proposes to adopt
new MPL Order pricing tiers, MPL Tiers
1 and 2. Under proposed new MPL Tier
1, the Exchange would provide a credit
of $0.0030 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 30 million
shares.
Next, under proposed new MPL Tier
2, the Exchange would provide a credit
of $0.0029 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 25 million
shares.
Finally, in connection with the
proposed addition of new MPL Tiers 1
and 2, the Exchange proposes to rename
current MPL Tier 1, MPL Tier 2, MPL
Tier 3, MPL Tier 4, MPL Tier 5 and MPL
Tier 6 as MPL Tier 3, MPL Tier 4, MPL
Tier 5, MPL Tier 6, MPL Tier 7 and MPL
Tier 8, respectively, without any change
to the volume requirements or credits
payable under each of the pricing tiers.
With this proposed change, the MPL
Order Tiers pricing tier would appear as
follows:
MPL order tiers
Minimum Requirement
Tier
MPL
MPL
MPL
MPL
MPL
Tier
Tier
Tier
Tier
Tier
1
2
3
4
5
............................
............................
............................
............................
............................
MPL Tier 6 ............................
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MPL Tier 7 ............................
MPL Tier 8 ............................
Credit for MPL adding
MPL adding ADV
MPL adding ADV as percent
of adding ADV
30 Million ..............................
25 Million ..............................
15 Million ..............................
13 Million ..............................
5 Million or ............................
2 Million ................................
3 Million or ............................
1 Million ................................
2 Million ................................
1.5 Million .............................
..................................................
..................................................
..................................................
..................................................
..................................................
50
..................................................
50
..................................................
..................................................
Tape A
Tape B and Tape C
(0.0030)
(0.0029)
(0.0028)
(0.0027)
(0.0026)
(0.0030)
(0.0029)
(0.0028)
(0.0027)
(0.0026)
(0.0025)
(0.0025)
(0.0020)
(0.0015)
(0.0020)
(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 liquidityproviding 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 liquidityproviding 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 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
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,
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.
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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.
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
20% 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 is reasonable because
the increased credits under the
proposed MPL Tier 1 and MPL Tier 2
2. Statutory Basis
would provide an incentive for ETP
Holders to route greater amounts of
The Exchange believes that the
proposed rule change is consistent with liquidity-providing orders to the
Section 6(b) of the Act,12 in general, and Exchange. As noted above, the Exchange
operates in a highly competitive
furthers the objectives of Sections
6(b)(4) and (5) of the Act,13 in particular, environment, particularly for attracting
order flow that provides liquidity on an
because it provides for the equitable
exchange. The Exchange believes it is
allocation of reasonable dues, fees, and
reasonable to provide the higher credits
other charges among its members,
under the proposed MPL Tier 1 and
issuers and other persons using its
MPL Tier 2 for orders that provide
facilities and does not unfairly
liquidity if an ETP Holder meets the
discriminate between customers,
qualification for such pricing tiers.
issuers, brokers or dealers.
Because the proposed MPL Tier 1 and
The Proposed Fee Change Is Reasonable MPL Tier 2 would be new with a
requirement to submit greater amounts
As discussed above, the Exchange
of MPL Adding ADV, no ETP Holder
operates in a highly fragmented and
currently qualifies for the proposed new
competitive market. The Commission
pricing tiers. The Exchange believes the
has repeatedly expressed its preference
proposed increased credits are
for competition over regulatory
reasonable as they would provide an
intervention in determining prices,
additional incentive for ETP Holders to
products, and services in the securities
qualify for these new tiers and direct
markets. Specifically, in Regulation
their order flow to the Exchange and
NMS, the Commission highlighted the
importance of market forces in
15 See Securities Exchange Act Release No. 51808,
determining prices and SRO revenues
84 FR 5202, 5253 (February 20, 2019) (File No. S7–
and, also, recognized that current
05–18) (Final Rule).
16 See Cboe U.S Equities Market Volume
regulation of the market system ‘‘has
Summary, available at https://markets.cboe.com/us/
been remarkably successful in
equities/market_share. See generally https://
promoting market competition in its
www.sec.gov/fast-answers/divisionsmarketregmr
broader forms that are most important to exchangesshtml.html.
14
17 See FINRA ATS Transparency Data, available
investors and listed companies.’’
at https://otctransparency.finra.org/
As the Commission itself recognized,
otctransparency/AtsIssueData. A list of alternative
the market for trading services in NMS
12 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
14 See Regulation NMS, supra note 5, 70 FR at
37499.
13 15
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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/.
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provide meaningful added levels of
liquidity, thereby contributing to the
depth and market quality on the
Exchange.
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 adoption of increased
credits under proposed MPL Tier 1 and
MPL Tier 2 pricing tiers 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 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 $0.0038 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
NYSE American LLC, an affiliate of
the Exchange, currently provides a
credit of $0.0030 per share to add MPL
liquidity on that market for members
that add greater than 3.5 million
shares.20
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.
19 See Rebate to Add Non-Displayed Midpoint
Liquidity, at https://nasdaqtrader.com/
Trader.aspx?id=PriceListTrading2.
20 See Standard Rates under I. Transaction Fees
(other than for Transactions by an eDMM in
Securities Assigned to an eDMM), at https://
www.nyse.com/publicdocs/nyse/markets/nyseamerican/NYSE_America_Equities_Price_List.pdf.
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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.
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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 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 proposed new MPL Order pricing
tiers. 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 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 proposed
higher credits 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.
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,21 the Exchange believes that the
proposed rule change would not impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. 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.’’ 22
Intramarket Competition. The
proposed changes are designed to attract
additional order flow to the Exchange.
The Exchange believes that 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
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 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 12%. 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
21 15
U.S.C. 78f(b)(8).
Regulation NMS, supra note 5, 70 FR at
37498–99.
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.
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) 23 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–2024–37 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–2024–37. 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
22 See
PO 00000
Frm 00132
Fmt 4703
Sfmt 4703
42551
23 15
E:\FR\FM\15MYN1.SGM
U.S.C. 78s(b)(3)(A).
15MYN1
42552
Federal Register / Vol. 89, No. 95 / Wednesday, May 15, 2024 / Notices
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. 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–NYSEARCA–2024–
37, and should be submitted on or
before June 5, 2024.
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 29,
2024 The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘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
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Sherry R. Haywood,
Assistant Secretary.
Equity Rules
[FR Doc. 2024–10587 Filed 5–14–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100093; File No. SR–
NASDAQ–2024–018]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Relating to
Connectivity, Surveillance and Risk
Management Services
May 9, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
lotter on DSK11XQN23PROD with NOTICES1
24 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
19:12 May 14, 2024
Jkt 262001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to rule amend
Equity 7, Sections 70, 115 116, 149 and
161, and to remove Sections 116–A and
149–A of the Exchange’s pricing
schedule to retire services and products
that have been replaced by enhanced
services.
The text of the proposed rule change
is set forth below. Proposed new
language is italicized; deleted text is in
brackets.
*
*
*
*
*
THE NASDAQ STOCK MARKET LLC RULES
*
*
*
*
*
*
*
*
*
*
*
Equity 7: Pricing Schedule
*
*
*
the 15th of the month, or the following
business day if the 15th is not a business day,
and the amount in dispute is at least $10,000
or greater. The 8000 Series Rules and the
following Rules will be subject to this
Section: Equity 7, Section 10 (Membership
Fees), Equity 7, Section 114 (Market Quality
Incentive Programs Investor Support
Program), Equity 7, Section 115 (Ports and
other Services), Equity 7, Section 116
(Nasdaq Post-Trade Risk Management),
Equity 7, Section 118 (Nasdaq Market Center
Order Execution and Routing), Equity 7,
Section 121 (NasdaqTrader.com Trading and
Compliance Data Package Fee), Equity 7,
Section 124 (Clearly Erroneous Module),
Equity 7, Section 127 (Aggregation of
Activity of Affiliated Members), Equity 7,
Section 129 (Installation, Removal or
Relocation), Equity 7, Section 130 (Other
Services), General 8, Section 1 (Co-Location
Services), Equity 7, Section 138 (Step-Outs
and Sales Fees Transfers), Equity 7, Section
141 (Nasdaq Regulation Reconnaissance
Service), Equity 7, Section 142 (Non-Tape
Riskless Submissions), Equity 7, Section 143
(Inclusion of Transaction Fees in Clearing
Reports Submitted to ACT), Equity 7, Section
149 (Nasdaq Real-Time Stats[InterACT]),
General 8, Section 2 (Direct Connectivity),
Equity 7, Section 155 (Short Sale Monitor),
Equity 7, Section 158 (QView), Equity 7,
Section 160 (Equity Trade Journal for
Clearing Firms) and Equity 7, Section 161
(Limit Locator).
(b) No change.
*
*
Section 70. Collection of Exchange Fees and
Other Claims and Billing Policy
(a) Each Nasdaq member, and all
applicants for registration as such, shall be
required to provide a clearing account
number for an account at the National
Securities Clearing Corporation (‘‘NSCC’’) for
purposes of permitting the Exchange to debit
any undisputed or final fees, fines, charges
and/or other monetary sanctions or other
monies due and owing to the Exchange or
other charges related to the rules, as specified
below, and 8000 series rules which are due
and owing to Nasdaq. If a Nasdaq member
disputes an invoice, the Exchange will not
include the disputed amount in the debit if
the member has disputed the amount in
writing to the Exchange’s designated staff by
*
*
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
PO 00000
Frm 00133
Fmt 4703
Sfmt 4703
*
*
Section 115. Ports and Services †
The charges under this section are assessed
by Nasdaq for connectivity to services and
the following systems operated by Nasdaq or
FINRA: the Nasdaq Market Center, FINRA
Trade Reporting and Compliance Engine
(TRACE), the FINRA/Nasdaq Trade Reporting
Facility, and the FINRA OTC Reporting
Facility (ORF). The following fees are not
applicable to The Nasdaq Options Market
LLC. For related options fees for Ports and
other Services refer to Options 7, Section 3
of the Options Rules.
(a)–(c) No change.
(d) Reserved[New Nasdaq Workstation]
E:\FR\FM\15MYN1.SGM
15MYN1
]]>Agencies
[Federal Register Volume 89, Number 95 (Wednesday, May 15, 2024)]
[Notices]
[Pages 42548-42552]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-10587]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100083; File No. SR-NYSEARCA-2024-37]
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
May 9, 2024.
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 May 1, 2024, NYSE Arca, Inc. (``NYSE Arca'' or the ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Equities Fees and
Charges (``Fee Schedule'') to amend the Mid-Point Liquidity (``MPL'')
Order pricing tiers. The Exchange proposes to implement the fee changes
effective May 1, 2024. 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. The Exchange proposes to implement the fee
changes effective May 1, 2024.
---------------------------------------------------------------------------
\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 20% 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 12% market share of
executed volume of equities trading.\9\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 61358, 75 FR 3594,
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on
Equity Market Structure).
\6\ See Cboe U.S Equities Market Volume Summary, available at
https://markets.cboe.com/us/equities/market_share.
\7\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of
alternative trading systems registered with the Commission is
available at https://www.sec.gov/foia/docs/atslist.htm.
\8\ See Cboe Global Markets U.S. Equities Market Volume Summary,
available at https://markets.cboe.com/us/equities/market_share/.
\9\ See id.
---------------------------------------------------------------------------
The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
move order flow, or discontinue or reduce use of certain categories of
products. While it is not possible to know a firm's reason for shifting
order flow, the Exchange believes that one such reason is because of
fee changes at any of the registered exchanges or non-exchange venues
to which the firm routes order flow. Accordingly, competitive forces
compel the Exchange to use exchange transaction fees and credits
because 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 $0.0015 per share to $0.0028 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'').
Under current MPL Tier 6, for ETP Holders that have MPL Adding ADV
during a billing month of at least 1.5 million shares, the Exchange
currently
[[Page 42549]]
provides a credit of $0.0015 per share in Tape A, Tape B and Tape C
securities. Under current MPL Tier 5, for ETP Holders with MPL Adding
ADV during a billing month of at least 2 million shares, the Exchange
currently provides a credit of $0.0020 per share in Tape A, Tape B and
Tape C securities. Under current MPL Tier 4, the Exchange provides 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 can alternatively qualify for the 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%. Under current MPL Tier 3, the Exchange
provides 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 can alternatively
qualify for the 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%. Under MPL Tier 2, for ETP
Holders with MPL Adding ADV during a billing month of at least 13
million shares, the Exchange currently provides a credit of $0.0027 per
share in Tape A, Tape B and Tape C securities. Finally, under MPL Tier
1, for ETP Holders with MPL Adding ADV during a billing month of at
least 15 million shares, the Exchange currently provides a credit of
$0.0028 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.
---------------------------------------------------------------------------
The Exchange now proposes to adopt new MPL Order pricing tiers, MPL
Tiers 1 and 2. Under proposed new MPL Tier 1, the Exchange would
provide a credit of $0.0030 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 30 million shares.
Next, under proposed new MPL Tier 2, the Exchange would provide a
credit of $0.0029 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
25 million shares.
Finally, in connection with the proposed addition of new MPL Tiers
1 and 2, the Exchange proposes to rename current MPL Tier 1, MPL Tier
2, MPL Tier 3, MPL Tier 4, MPL Tier 5 and MPL Tier 6 as MPL Tier 3, MPL
Tier 4, MPL Tier 5, MPL Tier 6, MPL Tier 7 and MPL Tier 8,
respectively, without any change to the volume requirements or credits
payable under each of the pricing tiers.
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 as percent of
MPL adding ADV adding ADV Tape A Tape B and Tape C
--------------------------------------------------------------------------------------------------------------------------------------------------------
MPL Tier 1.................................. 30 Million.................... ............................ (0.0030) (0.0030)
MPL Tier 2.................................. 25 Million.................... ............................ (0.0029) (0.0029)
MPL Tier 3.................................. 15 Million.................... ............................ (0.0028) (0.0028)
MPL Tier 4.................................. 13 Million.................... ............................ (0.0027) (0.0027)
MPL Tier 5.................................. 5 Million or.................. ............................ (0.0026) (0.0026)
2 Million..................... 50
MPL Tier 6.................................. 3 Million or.................. ............................ (0.0025) (0.0025)
1 Million..................... 50
MPL Tier 7.................................. 2 Million..................... ............................ (0.0020) (0.0020)
MPL Tier 8.................................. 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 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,
[[Page 42550]]
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 5, 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 20% 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 is
reasonable because 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 provide 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.
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
adoption of increased credits under proposed MPL Tier 1 and MPL Tier 2
pricing tiers 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 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 $0.0038 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.
---------------------------------------------------------------------------
NYSE American LLC, an affiliate of the Exchange, currently provides
a credit of $0.0030 per share to add MPL liquidity on that market for
members that add greater than 3.5 million shares.\20\
---------------------------------------------------------------------------
\20\ See Standard Rates under I. Transaction Fees (other than
for Transactions by an eDMM in Securities Assigned to an eDMM), at
https://www.nyse.com/publicdocs/nyse/markets/nyse-american/NYSE_America_Equities_Price_List.pdf.
---------------------------------------------------------------------------
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.
[[Page 42551]]
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 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
proposed new MPL Order pricing tiers. 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 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 proposed higher credits 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,\21\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. 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.'' \22\
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\21\ 15 U.S.C. 78f(b)(8).
\22\ See Regulation NMS, supra note 5, 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 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 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 12%. 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.
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) \23\ 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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\23\ 15 U.S.C. 78s(b)(3)(A).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-NYSEARCA-2024-37 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-2024-37. 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
[[Page 42552]]
only one method. The Commission will post all comments on the
Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. 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-NYSEARCA-2024-37, and should be
submitted on or before June 5, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-10587 Filed 5-14-24; 8:45 am]
BILLING CODE 8011-01-P
