Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List, 53142-53148 [2024-13827]
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Federal Register / Vol. 89, No. 122 / Tuesday, June 25, 2024 / Notices
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange operates in a highly
competitive environment in which the
Exchange must continually adjust its
fees to remain competitive. Because
competitors are free to modify their own
fees in response, the Exchange believes
that the degree to which fee changes in
this market may impose any burden on
competition is extremely limited. As
discussed above, Open-Close Data is
subject to direct competition from
several other options exchanges that
offer substitutes to Open-Close Data.
Moreover, purchase of Open-Close Data
is optional. It is designed to help
investors understand underlying market
trends to improve the quality of
investment decisions, but is not
necessary to execute a trade.
The proposed rule changes are
grounded in the Exchange’s efforts to
compete more effectively. In this
competitive environment, potential
purchasers are free to choose which, if
any, similar product to purchase to
satisfy their need for market
information. As a result, the Exchange
believes this proposed rule change
permits fair competition among national
securities exchanges. Further, the
Exchange believes that these changes
will not cause any unnecessary or
inappropriate burden on intermarket
competition, as the proposed incentive
program applies uniformly to any
purchaser of historical Open-Close Data.
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on 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 pursuant to section 19(b)(3)(A)
of the Act 14 and paragraph (f) of Rule
19b–4 15 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
14
15
15 U.S.C. 78s(b)(3)(A).
17 CFR 240.19b–4(f).
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the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–13829 Filed 6–24–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100378; File No. SR–NYSE–
2024–34]
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–
CboeBZX–2024–047 on the subject line.
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Its
Price List
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–CboeBZX–2024–047. 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–CboeBZX–2024–047 and should be
submitted on or before July 16, 2024.
Pursuant to section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on June 3,
2024, New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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June 18, 2024.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Price List to (1) revise the requirements
for market at-the-close (‘‘MOC’’) and
limit at the close (‘‘LOC’’) orders on
MOC/LOC Tier 1 and Tier 2; (2) modify
the requirements and charges for D
Orders at the close based on time of
entry or last modification; and (3)
introduce incremental per share credits
for orders entered and executed by a
Floor broker that add liquidity to the
Exchange and for D Orders at the close.
The Exchange proposes to implement
the fee changes effective June 3, 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.
17 CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
16
1 15
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Federal Register / Vol. 89, No. 122 / Tuesday, June 25, 2024 / Notices
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Price List to (1) revise the requirements
for MOC and LOC orders on MOC/LOC
Tier 1 and Tier 2; (2) modify the
requirements and charges for D Orders
at the close based on time of entry or
last modification; and (3) introduce
incremental per share credits for orders
entered and executed by a Floor broker
that add liquidity to the Exchange and
for D Orders at the close.
The proposed change responds to the
current competitive environment where
order flow providers have a choice of
where to direct liquidity-providing
orders and closing price orders by
revising the requirements and offering
additional incentives for member
organizations to send liquidity to the
Exchange, especially during the Closing
Auction. The purpose of the proposed
rule change is also to encourage efficient
usage of Exchange systems by member
organizations by continuing to
encourage all member organizations to
enter or modify D Orders as early
possible, which the Exchange believes is
in the best interests of all member
organizations and investors who access
the Exchange.
The Exchange proposes to implement
the fee changes effective June 3, 2024.
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Background
Current Market and Competitive
Environment
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
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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, cash 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 cash equity
order flow. More specifically, the
Exchange’s share of executed volume of
equity trades in Tapes A, B and C
securities is less than 12%.9 It should
also be noted that, in the currently
highly competitive national market
system, numerous exchanges and other
order execution venues compete for
order flow at the close, and competition
for closing orders is robust.10
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. See generally https://
www.sec.gov/fast-answers/divisionsmarket
regmrexchangesshtml.html.
7 See FINRA ATS Transparency Data, available at
https://otctransparency.finra.org/otctransparency/
AtsIssueData. A list of alternative trading systems
registered with the Commission is available at
https://www.sec.gov/foia/docs/atslist.htm.
8 See Cboe Global Markets U.S. Equities Market
Volume Summary, available at https://
markets.cboe.com/us/equities/market_share/.
9 See id.
10 There are at least seven broker-dealer
sponsored products competing for volume at the
close, including Credit Suisse’s CLOSEX; Instinet’s
Market-onClose Cross; Morgan Stanley’s Market-onClose Aggregator (MOCHA); Bank of America’s
Instinct X® and Global Conditional Cross; JP
Morgan’s JPB–X; Piper Sandler’s On-Close Match
Book; and Goldman Sachs’ One Delta Close Facility
(ODCF). Moreover, the percentage of volume at the
NYSE closing price in NYSE-listed securities
executed off-exchange has been steadily increasing
since before the pandemic. In 2018, the percentage
of volume at the NYSE closing price in NYSE-listed
securities executed off-exchange was 21.3%. In
2019, the percentage increased to 23.5%. After
dipping briefly to 22.1% in 2020, the percentage
resumed its upward trend and increased to 25.2%
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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.
In response to this competitive
environment, the Exchange has
established incentives for member
organizations who submit orders on the
Exchange. The proposed fee change is
designed to provide incentives to
member organizations to submit
additional such liquidity to the
Exchange, including during closing
auctions.
Proposed Rule Change
MOC/LOC Tiers 1 and 2
Currently, for MOC/LOC Tier 1, the
Exchange charges $0.0007 per share for
MOC orders and $0.0007 per share for
LOC orders from any member
organization in the prior three billing
months executing (1) an average daily
trading volume (‘‘ADV’’) of MOC
activity on the NYSE of at least 0.45%
of NYSE consolidated ADV (‘‘CADV’’),11
(2) an ADV of total close activity (MOC/
LOC and executions at the close) on the
NYSE of at least 0.7% of NYSE CADV,
and (3) whose MOC activity comprised
at least 35% of the member
organization’s total close activity (MOC/
LOC and other executions at the close).
Similarly, for MOC/LOC Tier 2, the
Exchange charges $0.0008 per share for
MOC orders and $0.0008 per share for
LOC orders from any member
organization in the prior three billing
months executing (1) an ADV of MOC
activity on the NYSE of at least 0.35%
of NYSE CADV,12 (2) an ADV of total
in 2021. The percentage was 24.1% and 23.8% in
2022 and 2023, respectively, and has increased
again in 2024 to 26.1% through May 31.
11 ADV and CADV are defined in footnote * of the
Price List. The Exchange would delete ‘‘[Tape A]’’
between NYSE and CADV in one place in the tier
as redundant. The Exchange would also add ‘‘and
an’’ between the remaining requirements to qualify
for the tier.
12 The Exchange would similarly delete ‘‘[Tape
A]’’ between NYSE and CADV in two places in the
tier as redundant and add ‘‘and an’’ between the
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close activity (MOC/LOC and
executions at the close) on the NYSE of
at least 0.525% of NYSE CADV, and (3)
whose MOC activity comprised at least
35% of the member organization’s total
close activity (MOC/LOC and other
executions at the close).
The Exchange proposes to eliminate
the third requirement from both tiers.
As proposed for MOC/LOC Tier 1, the
Exchange would charge $0.0007 per
share for MOC orders and $0.0007 per
share for LOC orders from any member
organization in the prior three billing
months executing an (1) ADV of MOC
activity on the NYSE of at least 0.45%
of NYSE CADV), and (2) ADV of total
close activity (MOC/LOC and
executions at the close) on the NYSE of
at least 0.7% of NYSE CADV. The
current rates would remain the same.
As proposed for MOC/LOC Tier 2, the
Exchange would charge $0.0008 per
share for MOC orders and $0.0008 per
share for LOC orders from any member
organization in the prior three billing
months executing an (1) an ADV of
MOC activity on the NYSE of at least
0.35% of NYSE CADV, and (2) an ADV
of total close activity (MOC/LOC and
executions at the close) on the NYSE of
at least 0.525% of NYSE CADV. The
current rates would also remain the
same.
The proposed change responds to the
current competitive environment where
order flow providers have a choice of
where to direct orders in NYSE-listed
securities, including at the close, by
modifying requirements in order to
facilitate member organizations
qualifying for a MOC/LOC tier and
encourage additional liquidity to the
Exchange. Higher volumes of MOC and
LOC orders contribute to the quality of
the Exchange’s closing auction and
provide market participants whose
orders are executed at the close with a
greater opportunity for execution, which
benefits all market participants.
D Orders
Currently, the Exchange does not
charge member organizations for the
first 750,000 ADV of the aggregate of
executions at the close for D Orders,
Floor broker executions swept into the
close, and executions at the close,
excluding MOC Orders, LOC Orders and
Closing Offset (‘‘CO’’) Orders. Further,
the Exchange currently charges certain
fees differentiated by time of entry (or
last modification) for D Orders at the
close after the first 750,000 ADV of
aggregate of executions at the close by
a member organization.
remaining requirements to qualify for this tier as
proposed for Tier 1.
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The Exchange proposes to no longer
exclude the first 750,000 ADV of the
aggregate of executions at the close by
member organizations for D Orders,
Floor broker executions swept into the
close, and executions at the close,
excluding MOC Orders, LOC Orders and
CO Orders. As discussed below, the
Exchange would waive fees for member
organizations with an ADV of at least
10,000 shares entered and executed by
an affiliated Floor broker up to specific
ADV levels based on time of entry (or
last modification) in an effort to
encourage additional liquidity on the
trading floor of a national securities
exchange.
The Exchange also proposes to modify
the time of entry (or last modification)
for D Order fee determination in order
to encourage member organizations to
enter D Orders earlier in the trading day,
thereby increasing transparency in the
Closing Auction and reducing member
organization’s operational risk.
Consistent with this purpose, the
current rates for D Orders would not
change with the exception of D Orders
entered in the final minute of trading,
which the Exchange proposes to label as
‘‘Late D Orders.’’
The Exchange would modify the
current requirements and charges for D
Orders as follows:
• The Exchange currently charges
$0.0003 per share for executed D Orders
last modified 13 by the member
organization earlier than 25 minutes
before the scheduled close of trading.
The Exchange proposes to charge the
current rate to D Orders last modified
earlier than 10 minutes before the
scheduled close of trading. The
Exchange would define these orders as
‘‘Early D Orders.’’
• The Exchange currently charges
$0.0007 per share for executed D Orders
last modified by the member
organization from 25 minutes up to but
not including 3 minutes before the
scheduled close of trading. The
Exchange proposes to charge the current
rate to D Orders last modified from 10
minutes up to but not including 1
minute before the scheduled close of
trading. The Exchange would define
these orders as ‘‘Mid D Orders.’’
• For D Orders last modified in the
last 3 minutes before the scheduled
close of trading, the Exchange charges
three different fees. The Exchange
proposes to charge these fees, as
modified, for D Orders last modified by
13 As set forth in footnote 10 to the Price List, as
used in the Price List, the phrase ‘‘last modified’’
means the later of the order’s entry time or the final
modification or cancellation time for any D Order
designated for the close with the same broker badge,
entering firm mnemonic, symbol, and side.
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the member organization in the last 1
minute before the scheduled close of
trading, which the Exchange would
define as ‘‘Late D Orders.’’
Æ The Exchange currently charges
$0.0008 per share for executed D Orders
last modified in the last 3 minutes
before the scheduled close of trading for
member organizations in MOC/LOC
Tiers 1 and 2, both with Adding ADV
of at least 0.50% of Tape A CADV or
MOC/LOC Tiers 1, 2 or 3 with Adding
ADV of at least 1.05% of Tape A CADV.
The Exchange would eliminate the
limitation to member organizations in
MOC/LOC Tiers 1 and 2 and would
charge $0.0011 per share for executed D
Orders last modified in the last 1 minute
before the scheduled close of trading for
member organizations with Adding
ADV of at least 0.50% of Tape A CADV
(unchanged from the current
requirement) and total close activity of
a least 1.75% of Tape A CADV.
Æ The Exchange currently charges
$0.0009 per share for executed D Orders
last modified in the last 3 minutes
before the scheduled close of trading for
member organizations in MOC/LOC
Tiers 1, 2 and 3 with Adding ADV of at
least 0.65% of Tape A CADV. The
Exchange would eliminate this fee.
Æ The Exchange currently charges
$0.0010 per share for executed D Orders
last modified in the last 3 minutes
before the scheduled close of trading for
all other member organizations. The
Exchange proposes to charge all other
member organizations $0.0012 per share
for executed D Orders last modified one
minute before the scheduled close of
trading.
• For member organizations with an
ADV of at least 10,000 shares entered
and executed by an affiliated Floor
broker,14 the Exchange proposes that
Early, Mid- and Late D Orders up to
specific ADV levels would be free.
Qualifying member organizations would
be charged the previously described
rates for all volume for each D Order
type above the proposed thresholds.
As proposed, qualifying member
organizations would not be charged for
the first 500,000 shares of Early D
Orders, with the above rates for Early D
Orders applicable to all volume above
that threshold.
For Mid D Orders, qualifying member
organizations would not be charged for
the first 750,000 shares, with the above
14 For purposes of the proposed change, an
affiliated Floor broker would be a Floor broker
under 75% common ownership or control of the
member organization. The Price List defines
‘‘affiliate’’ as any member organization under 75%
common ownership or control of that member
organization. See Price List, General, Section I
(Billing Disputes).
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Federal Register / Vol. 89, No. 122 / Tuesday, June 25, 2024 / Notices
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rates for Mid D Orders applicable to all
volume above that threshold.
Finally, for Late D Orders, qualifying
member organizations would not be
charged for the first 250,000 shares,
with the above rates for Late D Orders
applicable to all volume above that
threshold.
• Orders from continuous trading
swept into the close would continue to
be charged the current rate of $0.0008.
The purpose of these changes is to
continue to encourage additional
liquidity on the Exchange. The
Exchange does not know how much
order flow member organizations choose
to route to other exchanges or to offexchange venues. Since the proposal not
to charge Early, Mid- and Late D Orders
up to specific ADV levels for member
organizations with a minimum ADV
entered and executed by an affiliated
Floor broker would be new, the
Exchange does not know how many
member organizations could qualify
based on their current trading profile
and if they choose to direct order flow
to the Exchange. Based on the profile of
member organizations and their
liquidity provision, the Exchange
believes that additional member
organizations could qualify for the
discounts if they choose to direct order
flow to the Exchange. However, without
having a view of member organization’s
activity on other exchanges and offexchange venues, the Exchange has no
way of knowing whether this proposed
rule change would result in any member
organization directing orders to the
Exchange in order to qualify for the
discounts.
Incremental Floor Broker Credits
As part of what the Exchange
proposes to call the ‘‘Floor Broker
Incentive and Rebate Program,’’ the
Exchange proposes an incremental per
share credit for orders executed by a
Floor broker in addition to the
preceding fees and credits specified in
the Price List. Specifically, the
Exchange proposes that orders executed
by a member organization’s Floor broker
would receive an additional $0.0002 per
share for orders that add liquidity to the
Exchange, other than MPL and NonDisplayed Limit Orders, and/or (2) an
additional $0.000025 per share for the
proposed Early, Mid-and Late D Orders
where the member organization has (1)
an ADV of at least 10,000 shares entered
and executed by its Floor broker, and (2)
an ADV comprised of at least 50% Floor
broker ADV of the member
organization’s total ADV, excluding
routing.
For example, assume that Member
Organization A enters and executes 2
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million shares that add liquidity on the
trading Floor though its Floor broker.
Further assume that a second member
organization, Member Organization B,
enters 10 million shares that add
liquidity and routes it flow to Member
Organization A for execution on the
trading Floor though Member
Organization A’s Floor broker. Both
member organizations receive the
current rate for adding liquidity on the
trading Floor of at least $0.0019 per
share for their shares entered as the
entering firm, unless a better current
tiered rate applies. Under the proposed
pricing, Member Organization A would
also receive an additional credit of
$0.0002 for executing the 10 million
shares for adding liquidity on the
trading Floor on behalf of Member
Organization B.
The purpose of the proposed
incremental Floor broker credits is to
continue to encourage member
organizations to send orders to trading
Floor for execution, thereby
contributing to robust levels of liquidity,
especially for adding liquidity and
during the Closing Auction, which
benefits all market participants.
Members and member organizations
benefit from the substantial amounts of
liquidity present on the Exchange
during the close. The Exchange believes
the proposed change would also thereby
promote price discovery and
transparency, and enhance order
execution opportunities for member
organizations from the substantial
amounts of liquidity that are present on
the Exchange both intraday and during
the close.
Since the proposed incremental
credits are new, the Exchange does not
know how many member organizations
could qualify for the new discounts
based on their current trading profile
and if they choose to direct order flow
to the Exchange. Based on the profile of
liquidity-adding firms generally, the
Exchange believes that a number of
member organizations could qualify for
the credits if they choose to direct order
flow to the Exchange. However, without
having a view of member organization’s
activity on other exchanges and offexchange venues, the Exchange has no
way of knowing whether this proposed
rule change would result in any member
organization directing orders to the
Exchange in order to qualify for the
discounts.
The proposed changes are not
otherwise intended to address other
issues, and the Exchange is not aware of
any significant problems that market
participants would have in complying
with the proposed changes.
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2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
section 6(b) of the Act,15 in general, and
furthers the objectives of sections 6(b)(4)
and (5) of the Act,16 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.
As discussed above, 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.’’ 17
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.’’ 18
The Proposed Change Is Reasonable
In light of the competitive
environment in which the Exchange
currently operates, the proposed rule
change is a reasonable attempt to
increase liquidity to the Exchange,
especially during the Closing Auction,
and improve the Exchange’s market
share relative to its competitors. The
Exchange believes the proposed change
is also reasonable because it is designed
to attract higher volumes of orders
transacted on the Exchange by member
organizations, which would benefit all
market participants by offering greater
price discovery and an increased
opportunities to trade on the Exchange,
both intraday and during the Closing
Auction. The proposed rule change also
15 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) & (5).
17 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37495, 37499 (June 29, 2005)
(S7–10–04) (Final Rule) (‘‘Regulation NMS’’).
18 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).
16 15
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Federal Register / Vol. 89, No. 122 / Tuesday, June 25, 2024 / Notices
represents a reasonable attempt to
encourage efficient usage of Exchange
systems by member organizations by
continuing to encourage all member
organizations to enter or modify D
Orders as early possible, which the
Exchange believes is in the best interests
of all member organizations and
investors who access the Exchange.
khammond on DSKJM1Z7X2PROD with NOTICES
MOC/LOC Tiers 1 and 2
The Exchange believes that
eliminating the requirement that a
member organization’s MOC activity
comprise at least 35% of the member
organization’s total close activity (MOC/
LOC and other executions at the close)
in order to qualify for to qualify for
MOC/LOC Tier 1 and Tier 2 is a
reasonable way to encourage greater
participation which leads to greater
marketable and other liquidity at the
Closing Auction. MOC and LOC orders
contribute meaningfully to the price and
size discovery, which is the hallmark of
the closing auction process. Higher
volumes of MOC orders contribute to
the quality of the Exchange’s Closing
Auction and provide market
participants whose orders are executed
at the close with a greater opportunity
for execution, which benefits all market
participants. Further, as noted above, in
the currently highly competitive
national market system, competition for
closing orders among exchanges, ATSs
and other market execution venues is
robust.
D Orders
The Exchange believes that it [sic]
proposal would encourage additional
liquidity on the Exchange from multiple
sources, which helps to maintain the
quality of the Exchange’s Closing
Auction for the benefit of all market
participants.
Specifically, the Exchange believes
that no longer exempting the first
750,000 ADV of the aggregate of
executions at the close from fees is
reasonable as it has not operated as
originally intended. Member
organizations that currently reach the
750,000 ADV threshold are generally
larger member organizations that would
continue to derive a substantial benefit
from the high volume of closing
executions on the Exchange and the
Exchange believes would continue to
send orders to send orders to the
Exchange. While the Exchange is
removing the first 750,000 ADV
exemption, it notes that it is introducing
a new exemption for qualifying member
organizations with a Floor broker,
which totals 1.5 million shares across
Early-, Mid- and Late D Orders.
Similarly, the Exchange believes that
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not charging Early, Mid- and Late D
Orders up to specific ADV levels for
member organizations with a minimum
ADV entered and executed by an
affiliated Floor broker would encourage
additional liquidity for execution on the
trading Floor in the Closing Auction,
thereby contributing to robust levels of
liquidity on the Floor and at the close,
which benefits all market participants.
Moreover, the proposed fee exemptions
for Early, Mid- and Late D Orders would
incentivize qualifying member
organizations to enter or modify D
Orders as early as possible in order to
avoid fees for Early, Mid-, and Late D
Orders up to the proposed thresholds
for each.
Similarly, the Exchange believes that
modifying the time of entry for last
modification for member organizations
to qualify for the existing fees for Early,
Mid- and Late D Orders encourages all
member organizations to enter or
modify D Orders as early possible,
beginning with as early as up to 10
minutes before the close of trading, in
order to build up liquidity going into
the Closing Auction. Member
organizations are waiting until later in
the trading day to enter and/or modify
D Orders than the current 25 minutes.
By expanding the time period to enter
Early D Orders to up to 10 minutes
before the close, the Exchange hopes to
encourage member organizations to
send D Orders earlier in order to qualify
for lower fees. Moreover, the Exchange
hopes thereby to incentivize more
member organizations to send adding
liquidity to the Exchange, which in turn
supports the quality of price discovery
on the Exchange. In addition, charging
member organizations higher rates for
entering or modifying their interest in
the final minute of regular trading hours
reflects a risk premium for delaying
entry or modification until nearly the
end of trading, while reducing the time
entry which results in fewer trades
qualifying for these higher fees. Further,
it is reasonable to charge member
organizations a lower rate based on a
higher percentage of Adding ADV of
Tape A CADV and total close activity of
Tape A CADV for entering or modifying
their interest in the final minute of
regular trading hours because such
interest most benefits from the
flexibility afforded the order type. The
Exchange notes that while the proposed
fee for Late D-Orders is higher than the
current fee, the proposed increase in
time of order entry or last modified to
qualify for Early- and Mid D Orders,
which have lower rates than Late D
Orders, will result in lower overall fees
for member organizations, and
PO 00000
Frm 00109
Fmt 4703
Sfmt 4703
incentivize greater liquidity in the
Closing Auction, which benefits all
market participants.
Incremental Floor Broker Credits
The Exchange believes that the
proposed additional credits for orders
executed by a Floor broker for
representation on the Exchange is a
reasonable way to encourage additional
liquidity, including D Orders, on the
Exchange both during intraday and in
Closing Auction because member
organizations benefit from the
substantial amounts of liquidity that are
present on the Exchange during such
times. The Exchange believes the
proposed change would encourage
member organizations to send orders to
the trading Floor for execution, thereby
contributing to robust levels of liquidity
on the trading Floor both intraday and
during the Closing Auction, which
benefits all market participants. The
proposed fee would also encourage the
submission of additional liquidity to a
national securities exchange, thereby
promoting price discovery and
transparency and enhancing order
execution opportunities for member
organizations from the substantial
amounts of liquidity that are present on
the Exchange during the closing. The
proposed change would also encourage
the execution of such transactions on a
public exchange, thereby promoting
price discovery and transparency.
Moreover, the Exchange believes that
requiring an ADV comprised of at least
50% Floor broker ADV of the member
organization’s total ADV is reasonable
because it would encourage member
organizations that make a substantial
contribution to trading Floor liquidity
without excluding smaller member
organizations.
The Proposal Is an Equitable Allocation
of Fees
The Exchange believes the proposal
equitably allocates fees and credits
among market participants because all
member organizations that participate
on the Exchange may qualify for the
proposed credits and fees on an equal
basis. The Exchange believes its
proposal equitably allocates its fees and
credits among its market participants by
fostering liquidity provision and
stability in the marketplace.
MOC/LOC Tiers 1 and 2
The Exchange believes that the
proposed elimination of the requirement
that a member organization’s MOC
activity comprise at least 35% of the
member organization’s total close
activity (MOC/LOC and other
executions at the close) in order to
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Federal Register / Vol. 89, No. 122 / Tuesday, June 25, 2024 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
qualify for to qualify for MOC/LOC Tier
1 and Tier 2 will incentivize member
organizations to send additional
liquidity to achieve lower fees and
encourage greater marketable and other
liquidity at the closing auction. Higher
volumes of MOC and LOC orders
contribute to the quality of the
Exchange’s Closing Auction and provide
market participants whose orders are
executed in the close with a greater
opportunity for execution of orders on
the Exchange, thereby promoting price
discovery and transparency and
enhancing order execution
opportunities and improving overall
liquidity on a public exchange. The
Exchange also believes that the
proposed change is equitable because it
would apply to all similarly situated
member organizations that utilize MOC
and LOC orders on the Exchange on an
equal basis.
D Orders
The Exchange believes that the
proposed changes to D Orders are an
equitable allocation of fees because the
proposed changes, taken together, will
incentivize member organizations to
enter or modify D Orders as early
possible, beginning with as early as up
to 10 minutes before the close of
trading, in order to build up liquidity
going into the closing auction. The
Exchange’s closing auction is a
recognized industry benchmark,19 and
member organizations receive a
substantial benefit from the Exchange in
obtaining high levels of executions at
the Exchange’s closing price on a daily
basis. The Exchange also believes that it
is equitable to charge member
organizations a higher rate for entering
or modifying their interest in the final
minute of regular trading hours because
such interest most benefits from the
flexibility afforded the order type.
Moreover, the proposed fees are
equitable because all similarly situated
member organizations will be subject to
the same fee structure that would be
available on an equal basis to all
similarly situated member organizations
that utilize D Orders on the Exchange.
In this regard, the proposed changes are
equitable because any member
organization can choose to send D
Orders earlier than 10 minutes or 1
minute prior to the close in order to
qualify for lower fees, and any member
organization can choose to have an
affiliated Floor broker in order to qualify
for the lower fee for Late D Orders or to
exclude volume from fees up to the
19 For example, the pricing and valuation of
certain indices, funds, and derivative products
require primary market prints.
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17:03 Jun 24, 2024
Jkt 262001
proposed specified thresholds for Early,
Mid- and Late D Orders.
Incremental Floor Broker Credits
The proposed incremental credits for
orders executed by a member
organization’s Floor broker that add
liquidity to the Exchange and D Orders
during the close, are equitable because
the incremental fees would be available
on an equal basis to all similarly
situated member organizations that
operate a Floor brokerage business. In
this regard, the proposed discounts and
requirements are equitable because any
member organization can choose to
increase their adding volume entered
and executed by its Floor broker,
excluding routing, in order to qualify for
the proposed incremental credits and
any member organization can choose to
operate as a Floor broker in order to
qualify for the additional credits on an
equal basis. The Exchanges notes that
the current Incremental Discounts on
MOC Orders utilize similar
requirements.20
The Proposal Is Not Unfairly
Discriminatory
The Exchange believes that the
proposal is not unfairly discriminatory.
In the prevailing competitive
environment, member organizations are
free to disfavor the Exchange’s pricing if
they believe that alternatives offer them
better value.
MOC/LOC Tiers 1 and 2
The proposed streamlined
requirements for MOC orders to qualify
for MOC/LOC Tiers 1 and 2 are not
unfairly discriminatory because the
requirements would be applied to all
similarly situated member organizations
and other market participants, who
would all be subject to the same fees,
requirements and discounts on a full
and equal basis. For the same reason,
the proposal neither targets nor will it
have a disparate impact on any
particular category of market
participant. Accordingly, no member
organization already operating on the
Exchange would be disadvantaged by
this allocation of fees. Finally, the
submission of orders to the Exchange is
optional for member organizations in
that they could choose whether to
submit orders to the Exchange and, if
they do, the extent of its activity in this
regard.
D Orders
The Exchange believes that the
proposed changes to D Orders to modify
20 See NYSE Price List at p. 4, available at https://
www.nyse.com/publicdocs/nyse/markets/nyse/
NYSE_Price_List.pdf.
PO 00000
Frm 00110
Fmt 4703
Sfmt 4703
53147
the time periods by which such orders
are considered early, mid-or late is not
unfairly discriminatory because the
proposed change would because the
proposed changes, will incentivize
member organizations to enter or
modify D Orders as early possible,
beginning with as early as up to 10
minutes before the close of trading, in
order to build up liquidity going into
the closing auction. The Exchange also
believes that it is not unfairly
discriminatory to charge member
organizations a higher rate for entering
or modifying their interest in the final
minute of regular trading hours because
all member organizations can utilize D
Orders and all have an equal choice as
to when to submit those order to benefit
most from the flexibility afforded the
order type. The Exchange believes that
the proposal is not unfairly
discriminatory because all similarly
situated member organizations that
submit D Orders last modified in the
last 10 minutes and less before the
scheduled close of trading will be
subject to the same fee structure based
on time of entry (or last modification).
Incremental Floor Broker Credits
The proposed incremental Floor
broker credits are not unfairly
discriminatory because the proposed
fees would be applied to all similarly
situated member organizations and
other market participants operating a
Floor brokerage business, who would all
be subject to the same fees,
requirements, and discounts on an equal
basis. For the same reason, the proposal
neither targets nor will it have a
disparate impact on any particular
category of market participant.
Accordingly, no member organization
already operating on the Exchange
would be disadvantaged by this
allocation of fees. Further, the Exchange
believes the proposal would incentivize
member organizations to send more
orders to the Floor in order to qualify for
incremental credits. Finally, the
submission of orders to the Exchange is
optional for member organizations in
that they could choose whether to
submit orders to the Exchange and, if
they do, the extent of its activity in this
regard.
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
21 15
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U.S.C. 78f(b)(8).
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Federal Register / Vol. 89, No. 122 / Tuesday, June 25, 2024 / Notices
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 member organizations.
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 change is designed to attract
additional order flow to the Exchange.
The Exchange believes that the
proposed changes would continue to
incentivize market participants to direct
order flow to the Exchange. Greater
liquidity benefits all market participants
on the Exchange by providing more
trading opportunities and encourages
member organizations to send orders,
thereby contributing to robust levels of
liquidity, which benefits all market
participants on the Exchange. The
proposed credits would be available to
all similarly-situated market
participants, and, as such, the proposed
change would not impose a disparate
burden on competition among market
participants on the Exchange. As noted,
the proposal would apply to all
similarly situated member organizations
on the same and equal terms, who
would benefit from the changes on the
same basis. Accordingly, 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. In such an environment, the
Exchange must continually adjust its
fees and rebates to remain competitive
with other exchanges and with offexchange venues. Because competitors
are free to modify their own fees and
credits in response, and because market
participants may readily adjust their
order routing practices, the Exchange
does not believe its proposed fee change
can impose any burden on intermarket
competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change 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–
NYSE–2024–34 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–NYSE–2024–34. 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–NYSE–2024–34 and should be
submitted on or before July 16, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–13827 Filed 6–24–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100370; File No. SR–
CBOE–2024–025]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fee
Schedule
June 18, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 3,
2024, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
its Fee Schedule. The text of the
proposed rule change is provided in
Exhibit 5.
24 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
22 See
Regulation NMS, 70 FR at 37498–99.
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17:03 Jun 24, 2024
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23 15
PO 00000
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]]>Agencies
[Federal Register Volume 89, Number 122 (Tuesday, June 25, 2024)]
[Notices]
[Pages 53142-53148]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-13827]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100378; File No. SR-NYSE-2024-34]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Price List
June 18, 2024.
Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on June 3, 2024, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Price List to (1) revise the
requirements for market at-the-close (``MOC'') and limit at the close
(``LOC'') orders on MOC/LOC Tier 1 and Tier 2; (2) modify the
requirements and charges for D Orders at the close based on time of
entry or last modification; and (3) introduce incremental per share
credits for orders entered and executed by a Floor broker that add
liquidity to the Exchange and for D Orders at the close. The Exchange
proposes to implement the fee changes effective June 3, 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.
[[Page 53143]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Price List to (1) revise the
requirements for MOC and LOC orders on MOC/LOC Tier 1 and Tier 2; (2)
modify the requirements and charges for D Orders at the close based on
time of entry or last modification; and (3) introduce incremental per
share credits for orders entered and executed by a Floor broker that
add liquidity to the Exchange and for D Orders at the close.
The proposed change responds to the current competitive environment
where order flow providers have a choice of where to direct liquidity-
providing orders and closing price orders by revising the requirements
and offering additional incentives for member organizations to send
liquidity to the Exchange, especially during the Closing Auction. The
purpose of the proposed rule change is also to encourage efficient
usage of Exchange systems by member organizations by continuing to
encourage all member organizations to enter or modify D Orders as early
possible, which the Exchange believes is in the best interests of all
member organizations and investors who access the Exchange.
The Exchange proposes to implement the fee changes effective June
3, 2024.
Background
Current Market and Competitive Environment
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, cash 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 cash equity
order flow. More specifically, the Exchange's share of executed volume
of equity trades in Tapes A, B and C securities is less than 12%.\9\ It
should also be noted that, in the currently highly competitive national
market system, numerous exchanges and other order execution venues
compete for order flow at the close, and competition for closing orders
is robust.\10\
---------------------------------------------------------------------------
\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. See generally
https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
\7\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of
alternative trading systems registered with the Commission is
available at https://www.sec.gov/foia/docs/atslist.htm.
\8\ See Cboe Global Markets U.S. Equities Market Volume Summary,
available at https://markets.cboe.com/us/equities/market_share/.
\9\ See id.
\10\ There are at least seven broker-dealer sponsored products
competing for volume at the close, including Credit Suisse's CLOSEX;
Instinet's Market-onClose Cross; Morgan Stanley's Market-on-Close
Aggregator (MOCHA); Bank of America's Instinct X[supreg] and Global
Conditional Cross; JP Morgan's JPB-X; Piper Sandler's On-Close Match
Book; and Goldman Sachs' One Delta Close Facility (ODCF). Moreover,
the percentage of volume at the NYSE closing price in NYSE-listed
securities executed off-exchange has been steadily increasing since
before the pandemic. In 2018, the percentage of volume at the NYSE
closing price in NYSE-listed securities executed off-exchange was
21.3%. In 2019, the percentage increased to 23.5%. After dipping
briefly to 22.1% in 2020, the percentage resumed its upward trend
and increased to 25.2% in 2021. The percentage was 24.1% and 23.8%
in 2022 and 2023, respectively, and has increased again in 2024 to
26.1% through May 31.
---------------------------------------------------------------------------
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.
In response to this competitive environment, the Exchange has
established incentives for member organizations who submit orders on
the Exchange. The proposed fee change is designed to provide incentives
to member organizations to submit additional such liquidity to the
Exchange, including during closing auctions.
Proposed Rule Change
MOC/LOC Tiers 1 and 2
Currently, for MOC/LOC Tier 1, the Exchange charges $0.0007 per
share for MOC orders and $0.0007 per share for LOC orders from any
member organization in the prior three billing months executing (1) an
average daily trading volume (``ADV'') of MOC activity on the NYSE of
at least 0.45% of NYSE consolidated ADV (``CADV''),\11\ (2) an ADV of
total close activity (MOC/LOC and executions at the close) on the NYSE
of at least 0.7% of NYSE CADV, and (3) whose MOC activity comprised at
least 35% of the member organization's total close activity (MOC/LOC
and other executions at the close). Similarly, for MOC/LOC Tier 2, the
Exchange charges $0.0008 per share for MOC orders and $0.0008 per share
for LOC orders from any member organization in the prior three billing
months executing (1) an ADV of MOC activity on the NYSE of at least
0.35% of NYSE CADV,\12\ (2) an ADV of total
[[Page 53144]]
close activity (MOC/LOC and executions at the close) on the NYSE of at
least 0.525% of NYSE CADV, and (3) whose MOC activity comprised at
least 35% of the member organization's total close activity (MOC/LOC
and other executions at the close).
---------------------------------------------------------------------------
\11\ ADV and CADV are defined in footnote * of the Price List.
The Exchange would delete ``[Tape A]'' between NYSE and CADV in one
place in the tier as redundant. The Exchange would also add ``and
an'' between the remaining requirements to qualify for the tier.
\12\ The Exchange would similarly delete ``[Tape A]'' between
NYSE and CADV in two places in the tier as redundant and add ``and
an'' between the remaining requirements to qualify for this tier as
proposed for Tier 1.
---------------------------------------------------------------------------
The Exchange proposes to eliminate the third requirement from both
tiers.
As proposed for MOC/LOC Tier 1, the Exchange would charge $0.0007
per share for MOC orders and $0.0007 per share for LOC orders from any
member organization in the prior three billing months executing an (1)
ADV of MOC activity on the NYSE of at least 0.45% of NYSE CADV), and
(2) ADV of total close activity (MOC/LOC and executions at the close)
on the NYSE of at least 0.7% of NYSE CADV. The current rates would
remain the same.
As proposed for MOC/LOC Tier 2, the Exchange would charge $0.0008
per share for MOC orders and $0.0008 per share for LOC orders from any
member organization in the prior three billing months executing an (1)
an ADV of MOC activity on the NYSE of at least 0.35% of NYSE CADV, and
(2) an ADV of total close activity (MOC/LOC and executions at the
close) on the NYSE of at least 0.525% of NYSE CADV. The current rates
would also remain the same.
The proposed change responds to the current competitive environment
where order flow providers have a choice of where to direct orders in
NYSE-listed securities, including at the close, by modifying
requirements in order to facilitate member organizations qualifying for
a MOC/LOC tier and encourage additional liquidity to the Exchange.
Higher volumes of MOC and LOC orders contribute to the quality of the
Exchange's closing auction and provide market participants whose orders
are executed at the close with a greater opportunity for execution,
which benefits all market participants.
D Orders
Currently, the Exchange does not charge member organizations for
the first 750,000 ADV of the aggregate of executions at the close for D
Orders, Floor broker executions swept into the close, and executions at
the close, excluding MOC Orders, LOC Orders and Closing Offset (``CO'')
Orders. Further, the Exchange currently charges certain fees
differentiated by time of entry (or last modification) for D Orders at
the close after the first 750,000 ADV of aggregate of executions at the
close by a member organization.
The Exchange proposes to no longer exclude the first 750,000 ADV of
the aggregate of executions at the close by member organizations for D
Orders, Floor broker executions swept into the close, and executions at
the close, excluding MOC Orders, LOC Orders and CO Orders. As discussed
below, the Exchange would waive fees for member organizations with an
ADV of at least 10,000 shares entered and executed by an affiliated
Floor broker up to specific ADV levels based on time of entry (or last
modification) in an effort to encourage additional liquidity on the
trading floor of a national securities exchange.
The Exchange also proposes to modify the time of entry (or last
modification) for D Order fee determination in order to encourage
member organizations to enter D Orders earlier in the trading day,
thereby increasing transparency in the Closing Auction and reducing
member organization's operational risk. Consistent with this purpose,
the current rates for D Orders would not change with the exception of D
Orders entered in the final minute of trading, which the Exchange
proposes to label as ``Late D Orders.''
The Exchange would modify the current requirements and charges for
D Orders as follows:
The Exchange currently charges $0.0003 per share for
executed D Orders last modified \13\ by the member organization earlier
than 25 minutes before the scheduled close of trading. The Exchange
proposes to charge the current rate to D Orders last modified earlier
than 10 minutes before the scheduled close of trading. The Exchange
would define these orders as ``Early D Orders.''
---------------------------------------------------------------------------
\13\ As set forth in footnote 10 to the Price List, as used in
the Price List, the phrase ``last modified'' means the later of the
order's entry time or the final modification or cancellation time
for any D Order designated for the close with the same broker badge,
entering firm mnemonic, symbol, and side.
---------------------------------------------------------------------------
The Exchange currently charges $0.0007 per share for
executed D Orders last modified by the member organization from 25
minutes up to but not including 3 minutes before the scheduled close of
trading. The Exchange proposes to charge the current rate to D Orders
last modified from 10 minutes up to but not including 1 minute before
the scheduled close of trading. The Exchange would define these orders
as ``Mid D Orders.''
For D Orders last modified in the last 3 minutes before
the scheduled close of trading, the Exchange charges three different
fees. The Exchange proposes to charge these fees, as modified, for D
Orders last modified by the member organization in the last 1 minute
before the scheduled close of trading, which the Exchange would define
as ``Late D Orders.''
[cir] The Exchange currently charges $0.0008 per share for executed
D Orders last modified in the last 3 minutes before the scheduled close
of trading for member organizations in MOC/LOC Tiers 1 and 2, both with
Adding ADV of at least 0.50% of Tape A CADV or MOC/LOC Tiers 1, 2 or 3
with Adding ADV of at least 1.05% of Tape A CADV. The Exchange would
eliminate the limitation to member organizations in MOC/LOC Tiers 1 and
2 and would charge $0.0011 per share for executed D Orders last
modified in the last 1 minute before the scheduled close of trading for
member organizations with Adding ADV of at least 0.50% of Tape A CADV
(unchanged from the current requirement) and total close activity of a
least 1.75% of Tape A CADV.
[cir] The Exchange currently charges $0.0009 per share for executed
D Orders last modified in the last 3 minutes before the scheduled close
of trading for member organizations in MOC/LOC Tiers 1, 2 and 3 with
Adding ADV of at least 0.65% of Tape A CADV. The Exchange would
eliminate this fee.
[cir] The Exchange currently charges $0.0010 per share for executed
D Orders last modified in the last 3 minutes before the scheduled close
of trading for all other member organizations. The Exchange proposes to
charge all other member organizations $0.0012 per share for executed D
Orders last modified one minute before the scheduled close of trading.
For member organizations with an ADV of at least 10,000
shares entered and executed by an affiliated Floor broker,\14\ the
Exchange proposes that Early, Mid- and Late D Orders up to specific ADV
levels would be free. Qualifying member organizations would be charged
the previously described rates for all volume for each D Order type
above the proposed thresholds.
---------------------------------------------------------------------------
\14\ For purposes of the proposed change, an affiliated Floor
broker would be a Floor broker under 75% common ownership or control
of the member organization. The Price List defines ``affiliate'' as
any member organization under 75% common ownership or control of
that member organization. See Price List, General, Section I
(Billing Disputes).
---------------------------------------------------------------------------
As proposed, qualifying member organizations would not be charged
for the first 500,000 shares of Early D Orders, with the above rates
for Early D Orders applicable to all volume above that threshold.
For Mid D Orders, qualifying member organizations would not be
charged for the first 750,000 shares, with the above
[[Page 53145]]
rates for Mid D Orders applicable to all volume above that threshold.
Finally, for Late D Orders, qualifying member organizations would
not be charged for the first 250,000 shares, with the above rates for
Late D Orders applicable to all volume above that threshold.
Orders from continuous trading swept into the close would
continue to be charged the current rate of $0.0008.
The purpose of these changes is to continue to encourage additional
liquidity on the Exchange. The Exchange does not know how much order
flow member organizations choose to route to other exchanges or to off-
exchange venues. Since the proposal not to charge Early, Mid- and Late
D Orders up to specific ADV levels for member organizations with a
minimum ADV entered and executed by an affiliated Floor broker would be
new, the Exchange does not know how many member organizations could
qualify based on their current trading profile and if they choose to
direct order flow to the Exchange. Based on the profile of member
organizations and their liquidity provision, the Exchange believes that
additional member organizations could qualify for the discounts if they
choose to direct order flow to the Exchange. However, without having a
view of member organization's activity on other exchanges and off-
exchange venues, the Exchange has no way of knowing whether this
proposed rule change would result in any member organization directing
orders to the Exchange in order to qualify for the discounts.
Incremental Floor Broker Credits
As part of what the Exchange proposes to call the ``Floor Broker
Incentive and Rebate Program,'' the Exchange proposes an incremental
per share credit for orders executed by a Floor broker in addition to
the preceding fees and credits specified in the Price List.
Specifically, the Exchange proposes that orders executed by a member
organization's Floor broker would receive an additional $0.0002 per
share for orders that add liquidity to the Exchange, other than MPL and
Non-Displayed Limit Orders, and/or (2) an additional $0.000025 per
share for the proposed Early, Mid-and Late D Orders where the member
organization has (1) an ADV of at least 10,000 shares entered and
executed by its Floor broker, and (2) an ADV comprised of at least 50%
Floor broker ADV of the member organization's total ADV, excluding
routing.
For example, assume that Member Organization A enters and executes
2 million shares that add liquidity on the trading Floor though its
Floor broker. Further assume that a second member organization, Member
Organization B, enters 10 million shares that add liquidity and routes
it flow to Member Organization A for execution on the trading Floor
though Member Organization A's Floor broker. Both member organizations
receive the current rate for adding liquidity on the trading Floor of
at least $0.0019 per share for their shares entered as the entering
firm, unless a better current tiered rate applies. Under the proposed
pricing, Member Organization A would also receive an additional credit
of $0.0002 for executing the 10 million shares for adding liquidity on
the trading Floor on behalf of Member Organization B.
The purpose of the proposed incremental Floor broker credits is to
continue to encourage member organizations to send orders to trading
Floor for execution, thereby contributing to robust levels of
liquidity, especially for adding liquidity and during the Closing
Auction, which benefits all market participants. Members and member
organizations benefit from the substantial amounts of liquidity present
on the Exchange during the close. The Exchange believes the proposed
change would also thereby promote price discovery and transparency, and
enhance order execution opportunities for member organizations from the
substantial amounts of liquidity that are present on the Exchange both
intraday and during the close.
Since the proposed incremental credits are new, the Exchange does
not know how many member organizations could qualify for the new
discounts based on their current trading profile and if they choose to
direct order flow to the Exchange. Based on the profile of liquidity-
adding firms generally, the Exchange believes that a number of member
organizations could qualify for the credits if they choose to direct
order flow to the Exchange. However, without having a view of member
organization's activity on other exchanges and off-exchange venues, the
Exchange has no way of knowing whether this proposed rule change would
result in any member organization directing orders to the Exchange in
order to qualify for the discounts.
The proposed changes are not otherwise intended to address 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,\15\ in general, and furthers the
objectives of sections 6(b)(4) and (5) of the Act,\16\ 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.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4) & (5).
---------------------------------------------------------------------------
As discussed above, 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.'' \17\ 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.'' \18\
---------------------------------------------------------------------------
\17\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule)
(``Regulation NMS'').
\18\ 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).
---------------------------------------------------------------------------
The Proposed Change Is Reasonable
In light of the competitive environment in which the Exchange
currently operates, the proposed rule change is a reasonable attempt to
increase liquidity to the Exchange, especially during the Closing
Auction, and improve the Exchange's market share relative to its
competitors. The Exchange believes the proposed change is also
reasonable because it is designed to attract higher volumes of orders
transacted on the Exchange by member organizations, which would benefit
all market participants by offering greater price discovery and an
increased opportunities to trade on the Exchange, both intraday and
during the Closing Auction. The proposed rule change also
[[Page 53146]]
represents a reasonable attempt to encourage efficient usage of
Exchange systems by member organizations by continuing to encourage all
member organizations to enter or modify D Orders as early possible,
which the Exchange believes is in the best interests of all member
organizations and investors who access the Exchange.
MOC/LOC Tiers 1 and 2
The Exchange believes that eliminating the requirement that a
member organization's MOC activity comprise at least 35% of the member
organization's total close activity (MOC/LOC and other executions at
the close) in order to qualify for to qualify for MOC/LOC Tier 1 and
Tier 2 is a reasonable way to encourage greater participation which
leads to greater marketable and other liquidity at the Closing Auction.
MOC and LOC orders contribute meaningfully to the price and size
discovery, which is the hallmark of the closing auction process. Higher
volumes of MOC orders contribute to the quality of the Exchange's
Closing Auction and provide market participants whose orders are
executed at the close with a greater opportunity for execution, which
benefits all market participants. Further, as noted above, in the
currently highly competitive national market system, competition for
closing orders among exchanges, ATSs and other market execution venues
is robust.
D Orders
The Exchange believes that it [sic] proposal would encourage
additional liquidity on the Exchange from multiple sources, which helps
to maintain the quality of the Exchange's Closing Auction for the
benefit of all market participants.
Specifically, the Exchange believes that no longer exempting the
first 750,000 ADV of the aggregate of executions at the close from fees
is reasonable as it has not operated as originally intended. Member
organizations that currently reach the 750,000 ADV threshold are
generally larger member organizations that would continue to derive a
substantial benefit from the high volume of closing executions on the
Exchange and the Exchange believes would continue to send orders to
send orders to the Exchange. While the Exchange is removing the first
750,000 ADV exemption, it notes that it is introducing a new exemption
for qualifying member organizations with a Floor broker, which totals
1.5 million shares across Early-, Mid- and Late D Orders. Similarly,
the Exchange believes that not charging Early, Mid- and Late D Orders
up to specific ADV levels for member organizations with a minimum ADV
entered and executed by an affiliated Floor broker would encourage
additional liquidity for execution on the trading Floor in the Closing
Auction, thereby contributing to robust levels of liquidity on the
Floor and at the close, which benefits all market participants.
Moreover, the proposed fee exemptions for Early, Mid- and Late D Orders
would incentivize qualifying member organizations to enter or modify D
Orders as early as possible in order to avoid fees for Early, Mid-, and
Late D Orders up to the proposed thresholds for each.
Similarly, the Exchange believes that modifying the time of entry
for last modification for member organizations to qualify for the
existing fees for Early, Mid- and Late D Orders encourages all member
organizations to enter or modify D Orders as early possible, beginning
with as early as up to 10 minutes before the close of trading, in order
to build up liquidity going into the Closing Auction. Member
organizations are waiting until later in the trading day to enter and/
or modify D Orders than the current 25 minutes. By expanding the time
period to enter Early D Orders to up to 10 minutes before the close,
the Exchange hopes to encourage member organizations to send D Orders
earlier in order to qualify for lower fees. Moreover, the Exchange
hopes thereby to incentivize more member organizations to send adding
liquidity to the Exchange, which in turn supports the quality of price
discovery on the Exchange. In addition, charging member organizations
higher rates for entering or modifying their interest in the final
minute of regular trading hours reflects a risk premium for delaying
entry or modification until nearly the end of trading, while reducing
the time entry which results in fewer trades qualifying for these
higher fees. Further, it is reasonable to charge member organizations a
lower rate based on a higher percentage of Adding ADV of Tape A CADV
and total close activity of Tape A CADV for entering or modifying their
interest in the final minute of regular trading hours because such
interest most benefits from the flexibility afforded the order type.
The Exchange notes that while the proposed fee for Late D-Orders is
higher than the current fee, the proposed increase in time of order
entry or last modified to qualify for Early- and Mid D Orders, which
have lower rates than Late D Orders, will result in lower overall fees
for member organizations, and incentivize greater liquidity in the
Closing Auction, which benefits all market participants.
Incremental Floor Broker Credits
The Exchange believes that the proposed additional credits for
orders executed by a Floor broker for representation on the Exchange is
a reasonable way to encourage additional liquidity, including D Orders,
on the Exchange both during intraday and in Closing Auction because
member organizations benefit from the substantial amounts of liquidity
that are present on the Exchange during such times. The Exchange
believes the proposed change would encourage member organizations to
send orders to the trading Floor for execution, thereby contributing to
robust levels of liquidity on the trading Floor both intraday and
during the Closing Auction, which benefits all market participants. The
proposed fee would also encourage the submission of additional
liquidity to a national securities exchange, thereby promoting price
discovery and transparency and enhancing order execution opportunities
for member organizations from the substantial amounts of liquidity that
are present on the Exchange during the closing. The proposed change
would also encourage the execution of such transactions on a public
exchange, thereby promoting price discovery and transparency. Moreover,
the Exchange believes that requiring an ADV comprised of at least 50%
Floor broker ADV of the member organization's total ADV is reasonable
because it would encourage member organizations that make a substantial
contribution to trading Floor liquidity without excluding smaller
member organizations.
The Proposal Is an Equitable Allocation of Fees
The Exchange believes the proposal equitably allocates fees and
credits among market participants because all member organizations that
participate on the Exchange may qualify for the proposed credits and
fees on an equal basis. The Exchange believes its proposal equitably
allocates its fees and credits among its market participants by
fostering liquidity provision and stability in the marketplace.
MOC/LOC Tiers 1 and 2
The Exchange believes that the proposed elimination of the
requirement that a member organization's MOC activity comprise at least
35% of the member organization's total close activity (MOC/LOC and
other executions at the close) in order to
[[Page 53147]]
qualify for to qualify for MOC/LOC Tier 1 and Tier 2 will incentivize
member organizations to send additional liquidity to achieve lower fees
and encourage greater marketable and other liquidity at the closing
auction. Higher volumes of MOC and LOC orders contribute to the quality
of the Exchange's Closing Auction and provide market participants whose
orders are executed in the close with a greater opportunity for
execution of orders on the Exchange, thereby promoting price discovery
and transparency and enhancing order execution opportunities and
improving overall liquidity on a public exchange. The Exchange also
believes that the proposed change is equitable because it would apply
to all similarly situated member organizations that utilize MOC and LOC
orders on the Exchange on an equal basis.
D Orders
The Exchange believes that the proposed changes to D Orders are an
equitable allocation of fees because the proposed changes, taken
together, will incentivize member organizations to enter or modify D
Orders as early possible, beginning with as early as up to 10 minutes
before the close of trading, in order to build up liquidity going into
the closing auction. The Exchange's closing auction is a recognized
industry benchmark,\19\ and member organizations receive a substantial
benefit from the Exchange in obtaining high levels of executions at the
Exchange's closing price on a daily basis. The Exchange also believes
that it is equitable to charge member organizations a higher rate for
entering or modifying their interest in the final minute of regular
trading hours because such interest most benefits from the flexibility
afforded the order type. Moreover, the proposed fees are equitable
because all similarly situated member organizations will be subject to
the same fee structure that would be available on an equal basis to all
similarly situated member organizations that utilize D Orders on the
Exchange. In this regard, the proposed changes are equitable because
any member organization can choose to send D Orders earlier than 10
minutes or 1 minute prior to the close in order to qualify for lower
fees, and any member organization can choose to have an affiliated
Floor broker in order to qualify for the lower fee for Late D Orders or
to exclude volume from fees up to the proposed specified thresholds for
Early, Mid- and Late D Orders.
---------------------------------------------------------------------------
\19\ For example, the pricing and valuation of certain indices,
funds, and derivative products require primary market prints.
---------------------------------------------------------------------------
Incremental Floor Broker Credits
The proposed incremental credits for orders executed by a member
organization's Floor broker that add liquidity to the Exchange and D
Orders during the close, are equitable because the incremental fees
would be available on an equal basis to all similarly situated member
organizations that operate a Floor brokerage business. In this regard,
the proposed discounts and requirements are equitable because any
member organization can choose to increase their adding volume entered
and executed by its Floor broker, excluding routing, in order to
qualify for the proposed incremental credits and any member
organization can choose to operate as a Floor broker in order to
qualify for the additional credits on an equal basis. The Exchanges
notes that the current Incremental Discounts on MOC Orders utilize
similar requirements.\20\
---------------------------------------------------------------------------
\20\ See NYSE Price List at p. 4, available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf.
---------------------------------------------------------------------------
The Proposal Is Not Unfairly Discriminatory
The Exchange believes that the proposal is not unfairly
discriminatory. In the prevailing competitive environment, member
organizations are free to disfavor the Exchange's pricing if they
believe that alternatives offer them better value.
MOC/LOC Tiers 1 and 2
The proposed streamlined requirements for MOC orders to qualify for
MOC/LOC Tiers 1 and 2 are not unfairly discriminatory because the
requirements would be applied to all similarly situated member
organizations and other market participants, who would all be subject
to the same fees, requirements and discounts on a full and equal basis.
For the same reason, the proposal neither targets nor will it have a
disparate impact on any particular category of market participant.
Accordingly, no member organization already operating on the Exchange
would be disadvantaged by this allocation of fees. Finally, the
submission of orders to the Exchange is optional for member
organizations in that they could choose whether to submit orders to the
Exchange and, if they do, the extent of its activity in this regard.
D Orders
The Exchange believes that the proposed changes to D Orders to
modify the time periods by which such orders are considered early, mid-
or late is not unfairly discriminatory because the proposed change
would because the proposed changes, will incentivize member
organizations to enter or modify D Orders as early possible, beginning
with as early as up to 10 minutes before the close of trading, in order
to build up liquidity going into the closing auction. The Exchange also
believes that it is not unfairly discriminatory to charge member
organizations a higher rate for entering or modifying their interest in
the final minute of regular trading hours because all member
organizations can utilize D Orders and all have an equal choice as to
when to submit those order to benefit most from the flexibility
afforded the order type. The Exchange believes that the proposal is not
unfairly discriminatory because all similarly situated member
organizations that submit D Orders last modified in the last 10 minutes
and less before the scheduled close of trading will be subject to the
same fee structure based on time of entry (or last modification).
Incremental Floor Broker Credits
The proposed incremental Floor broker credits are not unfairly
discriminatory because the proposed fees would be applied to all
similarly situated member organizations and other market participants
operating a Floor brokerage business, who would all be subject to the
same fees, requirements, and discounts on an equal basis. For the same
reason, the proposal neither targets nor will it have a disparate
impact on any particular category of market participant. Accordingly,
no member organization already operating on the Exchange would be
disadvantaged by this allocation of fees. Further, the Exchange
believes the proposal would incentivize member organizations to send
more orders to the Floor in order to qualify for incremental credits.
Finally, the submission of orders to the Exchange is optional for
member organizations in that they could choose whether to submit orders
to the Exchange and, if they do, the extent of its activity in this
regard.
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
[[Page 53148]]
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 member
organizations. 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\
---------------------------------------------------------------------------
\21\ 15 U.S.C. 78f(b)(8).
\22\ See Regulation NMS, 70 FR at 37498-99.
---------------------------------------------------------------------------
Intramarket Competition. The proposed change is designed to attract
additional order flow to the Exchange. The Exchange believes that the
proposed changes would continue to incentivize market participants to
direct order flow to the Exchange. Greater liquidity benefits all
market participants on the Exchange by providing more trading
opportunities and encourages member organizations to send orders,
thereby contributing to robust levels of liquidity, which benefits all
market participants on the Exchange. The proposed credits would be
available to all similarly-situated market participants, and, as such,
the proposed change would not impose a disparate burden on competition
among market participants on the Exchange. As noted, the proposal would
apply to all similarly situated member organizations on the same and
equal terms, who would benefit from the changes on the same basis.
Accordingly, 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. In such an
environment, the Exchange must continually adjust its fees and rebates
to remain competitive with other exchanges and with off-exchange
venues. Because competitors are free to modify their own fees and
credits in response, and because market participants may readily adjust
their order routing practices, the Exchange does not believe its
proposed fee change can impose any burden on intermarket competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change 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.
---------------------------------------------------------------------------
\23\ 15 U.S.C. 78s(b)(3)(A).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-NYSE-2024-34 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-NYSE-2024-34. 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-NYSE-2024-34 and should be
submitted on or before July 16, 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. 2024-13827 Filed 6-24-24; 8:45 am]
BILLING CODE 8011-01-P
