Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Equities Fees and Charges, 70241-70246 [2024-19395]

Download as PDF lotter on DSK11XQN23PROD with NOTICES1 Federal Register / Vol. 89, No. 168 / Thursday, August 29, 2024 / Notices customers, issuers, brokers, or dealers’’; 184 and • Whether the Exchange has demonstrated how the proposed fees are consistent with Section 6(b)(8) of the Act, which requires that the rules of a national securities exchange ‘‘not impose any burden on competition not necessary or appropriate in furtherance of the purposes of [the Act].’’ 185 As discussed in Section III above, the Exchange made various arguments in support of the Proposal. There are questions as to whether the Exchange has provided sufficient information to demonstrate that the proposed fees are consistent with the Act and the rules thereunder. The Commission will specifically consider, among other things, whether the Exchange has provided sufficient evidence to demonstrate that the proposed fees are reasonable and equitably allocated, are not unfairly discriminatory, and do not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Under the Commission’s Rules of Practice, the ‘‘burden to demonstrate that a proposed rule change is consistent with the [Act] and the rules and regulations issued thereunder . . . is on the [SRO] that proposed the rule change.’’ 186 The description of a proposed rule change, its purpose and operation, its effect, and a legal analysis of its consistency with applicable requirements must all be sufficiently detailed and specific to support an affirmative Commission finding,187 and any failure of an SRO to provide this information may result in the Commission not having a sufficient basis to make an affirmative finding that a proposed rule change is consistent with the Act and the applicable rules and regulations.188 The Commission is instituting proceedings to allow for additional consideration and comment on the issues raised herein, including as to whether the proposed fees are consistent with the Act, and specifically, with its requirements that exchange fees be reasonable and equitably allocated, not be unfairly discriminatory, and not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.189 184 15 U.S.C. 78f(b)(5). U.S.C. 78f(b)(8). 186 17 CFR 201.700(b)(3). 187 See id. 188 See id. 189 See 15 U.S.C. 78f(b)(4), (5), and (8). 185 15 VerDate Sep<11>2014 19:16 Aug 28, 2024 Jkt 262001 V. Commission’s Solicitation of Comments The Commission requests written views, data, and arguments with respect to the concerns identified above as well as any other relevant concerns. Such comments should be submitted by September 19, 2024. Rebuttal comments should be submitted by October 3, 2024. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b–4, any request for an opportunity to make an oral presentation.190 The Commission asks that commenters address the sufficiency and merit of the Exchange’s statements in support of the Proposal, in addition to any other comments they may wish to submit about the proposed rule changes. 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– BX–2024–019 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to file number SR–BX–2024–019. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the 190 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants the Commission flexibility to determine what type of proceeding—either oral or notice and opportunity for written comments—is appropriate for consideration of a particular proposal by an SRO. See Securities Acts Amendments of 1975, Report of the Senate Committee on Banking, Housing and Urban Affairs to Accompany S. 249, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 70241 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–BX–2024–019 and should be submitted on or before September 19, 2024. Rebuttal comments should be submitted by October 3, 2024. VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(3)(C) of the Act,191 that File No. SR–BX–2024–019, be and hereby is, temporarily suspended. In addition, the Commission is instituting proceedings to determine whether the proposed rule change should be approved or disapproved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.192 Vanessa A. Countryman, Secretary. [FR Doc. 2024–19394 Filed 8–28–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–100811; File No. SR– NYSEARCA–2024–67] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Equities Fees and Charges August 23, 2024. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on August 14, 2024, NYSE Arca, Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission 191 15 U.S.C. 78s(b)(3)(C). CFR 200.30–3(a)(57). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 192 17 E:\FR\FM\29AUN1.SGM 29AUN1 70242 Federal Register / Vol. 89, No. 168 / Thursday, August 29, 2024 / Notices (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE Arca Equities Fees and Charges (‘‘Fee Schedule’’) to adopt an alternative requirement to qualify for the Tape B Tier 3 pricing tier and increase the cap of the additional credit payable for providing liquidity under the Tape B Tiers pricing tier. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change lotter on DSK11XQN23PROD with NOTICES1 1. Purpose The Exchange proposes to amend the Fee Schedule to adopt an alternative requirement to qualify for the Tape B Tier 3 pricing tier and increase the cap of the additional credit payable for providing liquidity under the Tape B Tiers pricing tier. The Exchange proposes to implement the fee changes effective August 14, 2024.3 Background The Exchange operates in a highly competitive market. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities 3 The Exchange originally filed to amend the Fee Schedule on August 1, 2024 (SR–NYSEARCA– 2024–64). SR–NYSEARCA–2024–64 was subsequently withdrawn and replaced by this filing. VerDate Sep<11>2014 19:16 Aug 28, 2024 Jkt 262001 markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 4 While Regulation NMS has enhanced competition, it has also fostered a ‘‘fragmented’’ market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that ‘‘such competition can lead to the fragmentation of order flow in that stock.’’ 5 Indeed, equity trading is currently dispersed across 16 exchanges,6 numerous alternative trading systems,7 and broker-dealer internalizers and wholesalers, all competing for order flow. Based on publicly available information, no single exchange currently has more than 20% market share.8 Therefore, no exchange possesses significant pricing power in the execution of equity order flow. More specifically, the Exchange currently has less than 12% market share of executed volume of equities trading.9 The Exchange believes that the evershifting market share among the exchanges from month to month demonstrates that market participants can move order flow, or discontinue or reduce use of certain categories of products. While it is not possible to know a firm’s reason for shifting order flow, the Exchange believes that one such reason is because of fee changes at any of the registered exchanges or nonexchange venues to which the firm routes order flow. With respect to nonmarketable order flow that would provide liquidity on an Exchange against which market makers can quote, ETP Holders can choose from any one of the 16 currently operating registered 4 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7–10–04) (Final Rule) (‘‘Regulation NMS’’). 5 See Securities Exchange Act Release No. 61358, 75 FR 3594, 3597 (January 21, 2010) (File No. S7– 02–10) (Concept Release on Equity Market Structure). 6 See Cboe U.S Equities Market Volume Summary, available at https://markets.cboe.com/us/ equities/market_share. 7 See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/ AtsIssueData. A list of alternative trading systems registered with the Commission is available at https://www.sec.gov/foia/docs/atslist.htm. 8 See Cboe Global Markets U.S. Equities Market Volume Summary, available at https:// markets.cboe.com/us/equities/market_share/. 9 See id. PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 exchanges to route such order flow. Accordingly, competitive forces compel the Exchange to use exchange transaction fees and credits because market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. Proposed Rule Change Tape B Tier 3 Currently, under the Tape B Tier 3 pricing tier, an ETP Holder could qualify for a credit of $0.0025 per share 10 for adding liquidity in Tape B Securities by meeting one of the following two requirements. An ETP Holder could qualify for the current credit if such ETP Holder (1) has Adding ADV of Tape B CADV that is equal to at least 0.20% of the Tape B CADV and (2) has Market Maker Electronic Posting Volume of TCADV of at least 0.50% by an OTP Holder or OTP Firm affiliated with the ETP Holder. Alternatively, the ETP Holder could qualify for the current credit if such ETP Holder has Adding ADV of Tape B CADV that is equal to at least 0.15% over the ETP Holder’s April 2020 Adding ADV taken as a percentage of Tape B CADV.11 The Exchange proposes to adopt another alternative method that ETP Holders could utilize to qualify for the Tape B Tier 3 credit. As proposed, an ETP Holder could qualify for the Tape B Tier 3 credit of $0.0025 per share for adding liquidity in Tape B securities if such ETP Holder is registered as a Lead Market Maker 12 or Market Maker 13 in at 10 Under Section III of the Fee Schedule— Standard Rates, ETP Holders receive a credit of $0.0020 per share for orders that add liquidity in Tape B securities. Additionally, in securities priced at or above $1.00, an additional credit in Tape B securities may be available to Lead Market Makers (‘‘LMMs’’) and to Market Makers affiliated with LMMs that add displayed liquidity based on the number of Less Active ETP Securities in which the LMM is registered as the LMM. The applicable tiered-credits are noted on the Fee Schedule under LMM Transaction Fees and Credits. 11 See Fee Schedule, Tier 3 under Tape B Tiers pricing table. 12 The term ‘‘Lead Market Maker’’ is defined in Rule 1.1(w) to mean a registered Market Maker that is the exclusive Designated Market Maker in listings for which the Exchange is the primary market. 13 Pursuant to Rule 7.23–E(a)(1), all registered Market Makers, including LMMs, have an obligation to maintain continuous, two-sided trading interest in those securities in which the Market Marker is registered to trade. In addition, pursuant to Rule 7.24–E(b), LMMs are held to higher performance standards in the securities in which they are registered as LMM. LMMs can earn additional financial incentives for meeting the higher performance standards specified from time to time in the Fee Schedule. Only one LMM can be registered in a NYSE-Arca listed security, but that security can have an unlimited number of registered Market Makers. Market Makers can also be E:\FR\FM\29AUN1.SGM 29AUN1 Federal Register / Vol. 89, No. 168 / Thursday, August 29, 2024 / Notices least 50 14 Less Active ETPs 15 in which it meets at least two Performance Metrics.16 The Exchange is not proposing any change to the level of Tape B Tier 3 credits.17 The proposed rule change to adopt the proposed alternative method to qualify for the existing credit is designed to incentivize ETP Holders to increase liquidity-providing orders in NYSE Arca-listed securities, including in lower volume securities, in which they are registered as a LMM or Market Maker, that they send to the Exchange, which would support the quality of price discovery on the Exchange and provide additional liquidity for incoming orders for the benefit of all market participants. The Exchange notes that its listing business operates in a highly competitive market in which market participants, including issuers of securities, LMMs, and other liquidity providers, can readily transfer their listings, or direct order flow to competing venues if they deem fee levels, liquidity provision incentive programs, or other factors at a particular venue to be insufficient or excessive. The proposed rule change reflects the current competitive pricing environment and is designed to incentivize market participants to participate as LMMs or Market Makers, especially in Less Active ETPs, and thereby, further enhance the market quality on such securities listed on the Exchange and encourage issuers to list new products on the Exchange. lotter on DSK11XQN23PROD with NOTICES1 Tape B—Additional Credit The Exchange currently provides an increased cap applicable under the Tape B Tiers pricing table. Specifically, if an ETP Holder is registered as a LMM or Market Maker in at least 100 Less Active ETPs in which it meets at least two Performance Metrics, where the ETP Holder, together with any affiliates, has registered in securities that trade on an unlisted trading privileges basis on the Exchange. 14 The number of Less Active ETPs for a billing month would be calculated as the average number of Less Active ETPs in which an ETP Holder is registered as a LMM or Market Maker on the first and last business day of the previous month. 15 Pursuant to Section I under the LMM Transaction Fees and Credits, the term ‘‘Less Active ETPs’’ means ETPs that have a CADV in the prior calendar quarter that is the greater of either less than 100,000 shares or less than 0.013% of Consolidated Tape B ADV. The term ‘‘ETP’’ means Exchange Traded Product listed on NYSE Arca. 16 The applicable Performance Metrics are specified in Section III under LMM Transaction Fees and Credits on the Fee Schedule. 17 With this proposed rule change, the Exchange also proposes to reformat the Tape B Tiers table by adopting a new column titled ‘‘NYSE Arca Listed Equities’’ with a description in the new column of the requirement as proposed in this filing. VerDate Sep<11>2014 19:16 Aug 28, 2024 Jkt 262001 Adding Tape B ADV that is an increase of at least 60% over the ETP Holder’s Adding ADV in Q3 2019, as a percentage of Tape B CADV, then such ETP Holder receives a combined credit of up to: • $0.0033 per share if the ETP Holder, together with any affiliates, has Tape B Adding ADV equal to at least 0.65% of Tape B CADV, or • $0.0034 per share if the ETP Holder, together with any affiliates, has Tape B Adding ADV equal to at least 0.70% of Tape B CADV. The Exchange proposes to increase the combined credit, from $0.0034 per share to $0.0035 per share, if a qualifying ETP Holder that, together with any affiliates, has Tape B Adding ADV equal to at least 0.70% of Tape B CADV. The Exchange believes increasing the combined credit payable to ETP Holders, from up to $0.0034 per share to up to $0.0035 per share would provide an incentive to ETP Holders to register as LMMs or Market Makers and incentivize such liquidity providers to increase the number of orders sent to the Exchange. The proposed changes are not otherwise intended to address any other issues, and the Exchange is not aware of any significant problems that market participants would have in complying with the proposed changes. 70243 investors and listed companies.’’ 20 As a threshold matter, the Exchange is subject to significant competitive forces in the market for equity securities transaction services that constrain its pricing determinations in that market. Numerous indicia demonstrate the competitive nature of this market. For example, clear substitutes to the Exchange exist in the market for equity security transaction services. The Exchange is only one of several equity venues to which market participants may direct their order flow. Competing equity exchanges offer similar tiered pricing structures to that of the Exchange, including credits and fees that apply based upon members achieving certain volume thresholds. The Exchange believes that the evershifting market share among the exchanges from month to month demonstrates that market participants can shift order flow, or discontinue or reduce use of certain categories of products, in response to fee changes. Accordingly, the Exchange’s fees are reasonably constrained by competitive alternatives and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. Tape B Tier 3 The Exchange believes that the proposal to adopt an alternative method to qualify for the Tape B Tier 3 credit 2. Statutory Basis is reasonable because it provides an The Exchange believes that the additional opportunity for ETP Holders proposed rule change is consistent with to receive an existing rebate on Section 6(b) of the Act,18 in general, and qualifying orders in a manner that furthers the objectives of Sections incentivizes order flow on the 6(b)(4) and (5) of the Act,19 in particular, Exchange. The Exchange believes the because it provides for the equitable proposed alternative method to qualify allocation of reasonable dues, fees, and for the Tape B Tier 3 pricing tier is other charges among its members, reasonable because it provides ETP issuers and other persons using its Holders with an additional way to facilities and does not unfairly qualify for the pricing tier’s credit by discriminate between customers, incentivizing ETP Holders to increase issuers, brokers or dealers. liquidity-providing orders in NYSE As discussed above, the Exchange Arca-listed securities, including in operates in a highly fragmented and lower volume securities, in which they competitive market. The Commission are registered as a LMM or Market has repeatedly expressed its preference Maker, that they send to the Exchange, for competition over regulatory which would support the quality of intervention in determining prices, price discovery on the Exchange and products, and services in the securities provide additional liquidity for markets. Specifically, in Regulation incoming orders for the benefit of all NMS, the Commission highlighted the market participants. The Exchange also importance of market forces in believes it is reasonable to require ETP determining prices and SRO revenues Holders to register as a LMM or Market and, also, recognized that current Maker in a minimum number of Less regulation of the market system ‘‘has Active ETPs and to meet at least two been remarkably successful in Performance Metrics in such securities promoting market competition in its as the Exchange believes this broader forms that are most important to requirement would enhance market 18 15 19 15 PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). Frm 00083 Fmt 4703 Sfmt 4703 20 See Regulation NMS, supra note 4, 70 FR at 37499. E:\FR\FM\29AUN1.SGM 29AUN1 lotter on DSK11XQN23PROD with NOTICES1 70244 Federal Register / Vol. 89, No. 168 / Thursday, August 29, 2024 / Notices quality in Less Active ETPs and support the quality of price discovery in such securities. The Exchange believes the proposed change to adopt an alternative method to qualify for existing credits is reasonable as these changes would provide an incentive for ETP Holders to direct their order flow to the Exchange and provide meaningful added levels of liquidity in order to qualify for the existing credit, thereby contributing to depth and market quality on the Exchange. As noted above, the Exchange operates in a highly competitive environment, particularly for attracting order flow that provides displayed liquidity on an exchange. More specifically, the Exchange notes that greater add volume order flow may provide for deeper, more liquid markets and execution opportunities at improved prices, which the Exchange believes would incentivize liquidity providers to submit additional liquidity and enhance execution opportunities. The Exchange believes that the proposal to adopt an alternative method to qualify for the Tape B Tier 3 credit represents an equitable allocation of fees and credits and is not unfairly discriminatory because it would apply uniformly to all ETP Holders, in that all ETP Holders would be eligible for the existing credit and have the opportunity to meet the tier’s criteria by registering as a LMM or Market Maker in a Less Active ETP and meeting the market quality metrics. The Exchange believes that the proposal to offer rebates tied to market quality metrics represents an equitable allocation of payments because LMMs and Market Makers would be required to not only meet their Rule 7.23–E obligations, but also meet prescribed quoting requirements in order to qualify for the credit. Further, all LMMs and Market Makers on the Exchange are eligible to participate and could do so by simply registering in a Less Active ETP and meeting the proposed market quality metrics. Under the proposal, the existing rebate would apply automatically and uniformly to all ETP Holders that register as a LMM or Market Maker in at least 50 Less Active ETPs in which it meets at least two Performance Metrics. While the Exchange has no way of knowing whether the proposed alternative method to qualify for the Tape B Tier 3 pricing tier would definitively result in any particular ETP Holder qualifying for the existing credit, the Exchange anticipates a number of ETP Holders will seek to qualify for the rebate by registering as a LMM or Market Maker in at least 50 Less Active VerDate Sep<11>2014 19:16 Aug 28, 2024 Jkt 262001 ETPs and meet the required performance metrics. The Exchange believes it is not unfairly discriminatory to provide an alternative way to qualify for the per share credit under the Tape B Tier 3 pricing tier, as the credit would be provided on an equal basis to all ETP Holders that meet the proposed requirement. Further, the Exchange believes the proposed alternative method would incentivize ETP Holders to register in Less Active ETPs and send more order to the Exchange to qualify for the Tape B Tier 3 credit. The Exchange believes that the proposed alternative method to qualify for the Tape B Tier 3 credit is not unfairly discriminatory because it would be available to all ETP Holders on an equal and non-discriminatory basis. In this regard, the Exchange notes that ETP Holders that do not meet the proposed alternative criteria would continue to have the opportunity to qualify for the Tape B Tier 3 credit by satisfying the two current requirements, which would not change as a result of this proposal. The Exchange also believes that the proposed rule change is not unfairly discriminatory because it is reasonably related to the value to the Exchange’s market quality associated with higher volumes. The Exchange believes that increased liquidity and higher volumes improves market quality on the Exchange, which increases the likelihood of orders being executed at prices desired by ETP Holders and thereby incentivizing ETP Holders to direct more order flow to the Exchange. The Exchange places a higher value on displayed liquidity because the Exchange believes that displayed liquidity is a public good that benefits investors generally by providing greater price transparency and enhancing price discovery on a public exchange, which ultimately lead to substantial reductions in transaction costs. The proposed change to the Tape B Tier 3 pricing tier is designed as an incentive to ETP Holders interested in meeting the tier criteria to submit additional order flow to the Exchange and each will receive the existing rebate if the tier criteria is met. The Exchange also notes that the proposed rule change will not adversely impact any ETP Holder’s pricing or its ability to qualify for other tiers. Rather, should an ETP Holder not meet the Tape B Tier 3 pricing tier’s criteria, the ETP Holder will merely not receive the corresponding rebate. PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 Tape B—Additional Credit The Exchange believes the proposed rule change to increase the combined credit, from up to $0.0034 per share to up to $0.0035 per share, payable to ETP Holders if an ETP Holder, together with any affiliates, has Tape B Adding ADV equal to at least 0.70% of Tape B CADV is a reasonable means of attracting additional liquidity to the Exchange. The Exchange believes the increased financial incentive, which is among the highest paid by the Exchange, would encourage ETP Holders to submit additional liquidity to a national securities exchange and receive the proposed higher rebate. The Exchange believes it is reasonable to require ETP Holders to meet the applicable volume threshold to qualify for the increased credit, given the higher combined credit up to of $0.0035 per share that the Exchange would pay if the tier criteria were met. The Exchange believes that submission of increased liquidity to the Exchange would promote price discovery and transparency and enhance order execution opportunities for ETP Holders from the substantial amounts of liquidity present on the Exchange. The Exchange also believes it is reasonable to require ETP Holders to register as a LMM or Market Maker in a minimum number of Less Active ETPs and to meet at least two Performance Metrics in such securities as the Exchange believes this requirement would enhance market quality in Less Active ETPs and support the quality of price discovery in such securities. The Exchange believes the proposed rule change to increase the combined credit, from up to $0.0034 per share to up to $0.0035 per share, payable to ETP Holders if a ETP Holder, together with any affiliates, has Tape B Adding ADV equal to at least 0.70% of Tape B CADV equitably allocates its fees and credits among market participants because it is reasonably related to the value of the Exchange’s market quality associated with higher equities volumes. The Exchange believes that increased liquidity and higher volumes improves market quality on the Exchange, which increases the likelihood of orders being executed at prices desired by ETP Holders and thereby incentivizing ETP Holders to direct more order flow to the Exchange. The Exchange places a higher value on displayed liquidity because the Exchange believes that displayed liquidity is a public good that benefits investors generally by providing greater price transparency and enhancing price discovery on a public exchange, which ultimately lead to substantial reductions E:\FR\FM\29AUN1.SGM 29AUN1 Federal Register / Vol. 89, No. 168 / Thursday, August 29, 2024 / Notices lotter on DSK11XQN23PROD with NOTICES1 in transaction costs. As proposed, the Exchange would continue to provide qualifying ETP Holders with some of the highest credits payable by the Exchange provided they continue to participate as LMMs or Market Makers and continue to provide increased Tape B adding ADV. The more an ETP Holder participates, the greater the credit that ETP Holder would receive. The Exchange believes the proposed increase credit would encourage ETP Holders to continue to send orders that add liquidity to the Exchange, thereby contributing to robust levels of liquidity, which would benefit all market participants. The Exchange believes it is not unfairly discriminatory to increase the combined credit payable to ETP Holders because the increased credits would be paid to all ETP Holders that qualify for the credit on an equal basis. Additionally, the proposed rule change to increase the combined credit payable to qualifying ETP Holders neither targets nor will it have a disparate impact on any particular category of market participant. On the backdrop of the competitive environment in which the Exchange currently operates, the proposed rule change is a reasonable attempt by the Exchange to maintain, if not improve its market share relative to its competitors. Finally, the submission of orders to the Exchange is optional for ETP Holders in that they could choose whether to submit orders to the Exchange and, if they do, the extent of its activity in this regard. The Exchange believes that it is subject to significant competitive forces, as described below in the Exchange’s statement regarding the burden on competition. For the foregoing reasons, the Exchange believes that the proposal is consistent with the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,21 the Exchange believes that the proposed rule change would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Intramarket Competition. The Exchange believes the proposed amendment to its Fee Schedule would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed change represents a significant departure from previous pricing offered by the Exchange or its competitors. The 21 15 U.S.C. 78f(b)(8). VerDate Sep<11>2014 19:16 Aug 28, 2024 proposed change is designed to attract additional order flow to the Exchange, in particular with respect to Tape B securities. The Exchange believes that the proposed adoption of an alternative method to qualify for an established credit under the Tape B Tier 3 pricing tier would incentivize market participants to participate as LMMs or Market Makers and direct liquidity adding order flow to the Exchange, bringing with it additional execution opportunities for market participants and improved price transparency. Greater overall order flow, trading opportunities, and pricing transparency would benefit all market participants on the Exchange by enhancing market quality and would continue to encourage ETP Holders to send orders to the Exchange, thereby contributing towards a robust and well-balanced market ecosystem. Intermarket Competition. The Exchange operates in a highly competitive market in which market participants can readily choose to send their orders to other exchanges and offexchange venues if they deem fee levels at those other venues to be more favorable. As noted above, the Exchange’s market share of intraday trading (i.e., excluding auctions) is currently less than 12%. In such an environment, the Exchange must continually review, and consider adjusting its fees and credits to remain competitive with other exchanges and with off-exchange venues. Because competitors are free to modify their own fees and credits in response, the Exchange does not believe its proposed fee change can impose any burden on intermarket competition. The Exchange believes that the proposed change could promote competition between the Exchange and other execution venues, including those that currently offer comparable transaction pricing, by encouraging additional orders to be sent to the Exchange for execution. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective upon filing pursuant to Section 19(b)(3)(A) 22 of the Act and paragraph 22 15 Jkt 262001 PO 00000 U.S.C. 78s(b)(3)(A). Frm 00085 Fmt 4703 Sfmt 4703 70245 (f) thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– NYSEARCA–2024–67 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to file number SR–NYSEARCA–2024–67. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. 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 E:\FR\FM\29AUN1.SGM 29AUN1 70246 Federal Register / Vol. 89, No. 168 / Thursday, August 29, 2024 / Notices obscene or subject to copyright protection. All submissions should refer to file number SR–NYSEARCA–2024– 67, and should be submitted on or before September 19, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Vanessa A. Countryman, Secretary. [FR Doc. 2024–19395 Filed 8–28–24; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION Data Collection Available for Public Comments 60-Day notice and request for comments. ACTION: In accordance with the Paperwork Reduction Act of 1995 (PRA), the Small Business Administration (SBA) intends to request approval from the Office of Management and Budget (OMB) for a new information collection described below. The PRA requires Federal agencies to publish a notice in the Federal Register concerning each proposed collection of information before submission to OMB, and to allow 60 days for public comment in response to the notice. This notice complies with that requirement. DATES: Submit comments on or before October 28, 2024. ADDRESSES: Send all comments to Donna Fudge, donna.fudge@sba.gov, (202) 205–6363, Office of Policy Planning and Liaison, Small Business Administration. FOR FURTHER INFORMATION CONTACT: Donna Fudge, donna.fudge@sba.gov, (202) 205–6363, Office of Policy Planning and Liaison, Small Business Administration or Alethea Ten EyckSanders, Agency Clearance Officer alethea.teneyck-sanders@sba.gov, 202– 996–4329. SUPPLEMENTARY INFORMATION: SBA requires this information from small business concerns to determine an applicants’ eligibility for recertification in the 8(a) Business Development, Veteran-Owned and Service-Disabled Veteran-Owned Small Business (VOSB/ SDVOSB), Historically Underutilized Business Zone (HUBZone), and WomenOwned Small Business (WOSB) programs. lotter on DSK11XQN23PROD with NOTICES1 SUMMARY: Solicitation of Public Comments SBA is requesting comments on (a) Whether the collection of information is 23 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:16 Aug 28, 2024 Jkt 262001 necessary for the agency to properly perform its functions; (b) whether the burden estimates are accurate; (c) whether there are ways to minimize the burden, including through the use of automated techniques or other forms of information technology; and (d) whether there are ways to enhance the quality, utility, and clarity of the information. Summary of Information Collection PRA Number: To Be Determined. Title: Business Development and Unified Certification Renewal. Description of Respondents: The SBA is required by statute to administer the 8(a), HUBZone, WOSB, and VOSB/ SDVOSB programs. To do this, SBA must recertify applicants eligibility to ensure continuing compliance with program eligibility requirements. The Business Development and Unified Certification Renewal information collection is used in execution of these requirements. Form Number: SBA Form 2539. Total Estimated Annual Responses: 14,400. Total Estimated Annual Hour Burden: 7,767. Alethea Ten Eyck-Sanders, Agency Clearance Officer. [FR Doc. 2024–19446 Filed 8–28–24; 8:45 am] BILLING CODE 8026–09–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #20578 and #20579; MONTANA Disaster Number MT–20011] Presidential Declaration of a Major Disaster for Public Assistance Only for the State of Montana U.S. Small Business Administration. ACTION: Notice. Notice is hereby given that as a result of the President’s major disaster declaration on 08/23/2024, Private Non-Profit organizations that provide essential services of a governmental nature may file disaster loan applications online using the MySBA Loan Portal https:// lending.sba.gov or other locally announced locations. Please contact the SBA disaster assistance customer service center by email at disastercustomerservice@sba.gov or by phone at 1–800–659–2955 for further assistance. The following areas have been determined to be adversely affected by the disaster: Primary Counties: Missoula, Powell. The Interest Rates are: SUPPLEMENTARY INFORMATION: Percent For Physical Damage: Non-Profit Organizations with Credit Available Elsewhere ... Non-Profit Organizations without Credit Available Elsewhere ..................................... For Economic Injury: Non-Profit Organizations without Credit Available Elsewhere ..................................... 3.250 3.250 3.250 The number assigned to this disaster for physical damage is 20578B and for economic injury is 205790. (Catalog of Federal Domestic Assistance Number 59008) Francisco Sánchez, Jr., Associate Administrator, Office of Disaster Recovery & Resilience. [FR Doc. 2024–19452 Filed 8–28–24; 8:45 am] BILLING CODE 8026–09–P AGENCY: SMALL BUSINESS ADMINISTRATION This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of Montana (FEMA–4813–DR), dated 08/23/2024. Incident: Straight-line Winds. Incident Period: 07/24/2024. DATES: Issued on 08/23/2024. Physical Loan Application Deadline Date: 10/22/2024. Economic Injury (EIDL) Loan Application Deadline Date: 05/23/2025. ADDRESSES: Visit the MySBA Loan Portal at https://lending.sba.gov to apply for a disaster assistance loan. FOR FURTHER INFORMATION CONTACT: Vanessa Morgan, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205–6734. SUMMARY: PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 SBA Invention, Innovation, and Entrepreneurship Advisory Committee Meeting U.S. Small Business Administration. ACTION: Notice of Federal advisory committee meeting: SBA Invention, Innovation, and Entrepreneurship Advisory Committee. AGENCY: The U.S. Small Business Administration (SBA) will hold a meeting of the SBA Invention, Innovation, and Entrepreneurship Advisory Committee on Tuesday, September 17, 2024. Members will convene as an independent source of advice and recommendations to SBA on matters supporting U.S. innovation, addressing commercialization hurdles and other vulnerabilities in the SUMMARY: E:\FR\FM\29AUN1.SGM 29AUN1

Agencies

[Federal Register Volume 89, Number 168 (Thursday, August 29, 2024)]
[Notices]
[Pages 70241-70246]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-19395]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100811; File No. SR-NYSEARCA-2024-67]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Arca Equities Fees and Charges

August 23, 2024.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on August 14, 2024, NYSE Arca, Inc. (``NYSE Arca'' or the ``Exchange'') 
filed with the Securities and Exchange Commission

[[Page 70242]]

(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Equities Fees and 
Charges (``Fee Schedule'') to adopt an alternative requirement to 
qualify for the Tape B Tier 3 pricing tier and increase the cap of the 
additional credit payable for providing liquidity under the Tape B 
Tiers pricing tier. The proposed rule change is available on the 
Exchange's website at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to adopt an 
alternative requirement to qualify for the Tape B Tier 3 pricing tier 
and increase the cap of the additional credit payable for providing 
liquidity under the Tape B Tiers pricing tier. The Exchange proposes to 
implement the fee changes effective August 14, 2024.\3\
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    \3\ The Exchange originally filed to amend the Fee Schedule on 
August 1, 2024 (SR-NYSEARCA-2024-64). SR-NYSEARCA-2024-64 was 
subsequently withdrawn and replaced by this filing.
---------------------------------------------------------------------------

Background
    The Exchange operates in a highly competitive market. The 
Commission has repeatedly expressed its preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. In Regulation NMS, the Commission 
highlighted the importance of market forces in determining prices and 
SRO revenues and, also, recognized that current regulation of the 
market system ``has been remarkably successful in promoting market 
competition in its broader forms that are most important to investors 
and listed companies.'' \4\
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    \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'').
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    While Regulation NMS has enhanced competition, it has also fostered 
a ``fragmented'' market structure where trading in a single stock can 
occur across multiple trading centers. When multiple trading centers 
compete for order flow in the same stock, the Commission has recognized 
that ``such competition can lead to the fragmentation of order flow in 
that stock.'' \5\ Indeed, equity trading is currently dispersed across 
16 exchanges,\6\ numerous alternative trading systems,\7\ and broker-
dealer internalizers and wholesalers, all competing for order flow. 
Based on publicly available information, no single exchange currently 
has more than 20% market share.\8\ Therefore, no exchange possesses 
significant pricing power in the execution of equity order flow. More 
specifically, the Exchange currently has less than 12% market share of 
executed volume of equities trading.\9\
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    \5\ See Securities Exchange Act Release No. 61358, 75 FR 3594, 
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on 
Equity Market Structure).
    \6\ See Cboe U.S Equities Market Volume Summary, available at 
https://markets.cboe.com/us/equities/market_share.
    \7\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \8\ See Cboe Global Markets U.S. Equities Market Volume Summary, 
available at https://markets.cboe.com/us/equities/market_share/.
    \9\ See id.
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    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. With respect to non-marketable 
order flow that would provide liquidity on an Exchange against which 
market makers can quote, ETP Holders can choose from any one of the 16 
currently operating registered exchanges to route such order flow. 
Accordingly, competitive forces compel the Exchange to use exchange 
transaction fees and credits because market participants can readily 
trade on competing venues if they deem pricing levels at those other 
venues to be more favorable.
Proposed Rule Change
Tape B Tier 3
    Currently, under the Tape B Tier 3 pricing tier, an ETP Holder 
could qualify for a credit of $0.0025 per share \10\ for adding 
liquidity in Tape B Securities by meeting one of the following two 
requirements. An ETP Holder could qualify for the current credit if 
such ETP Holder (1) has Adding ADV of Tape B CADV that is equal to at 
least 0.20% of the Tape B CADV and (2) has Market Maker Electronic 
Posting Volume of TCADV of at least 0.50% by an OTP Holder or OTP Firm 
affiliated with the ETP Holder. Alternatively, the ETP Holder could 
qualify for the current credit if such ETP Holder has Adding ADV of 
Tape B CADV that is equal to at least 0.15% over the ETP Holder's April 
2020 Adding ADV taken as a percentage of Tape B CADV.\11\
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    \10\ Under Section III of the Fee Schedule--Standard Rates, ETP 
Holders receive a credit of $0.0020 per share for orders that add 
liquidity in Tape B securities. Additionally, in securities priced 
at or above $1.00, an additional credit in Tape B securities may be 
available to Lead Market Makers (``LMMs'') and to Market Makers 
affiliated with LMMs that add displayed liquidity based on the 
number of Less Active ETP Securities in which the LMM is registered 
as the LMM. The applicable tiered-credits are noted on the Fee 
Schedule under LMM Transaction Fees and Credits.
    \11\ See Fee Schedule, Tier 3 under Tape B Tiers pricing table.
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    The Exchange proposes to adopt another alternative method that ETP 
Holders could utilize to qualify for the Tape B Tier 3 credit. As 
proposed, an ETP Holder could qualify for the Tape B Tier 3 credit of 
$0.0025 per share for adding liquidity in Tape B securities if such ETP 
Holder is registered as a Lead Market Maker \12\ or Market Maker \13\ 
in at

[[Page 70243]]

least 50 \14\ Less Active ETPs \15\ in which it meets at least two 
Performance Metrics.\16\ The Exchange is not proposing any change to 
the level of Tape B Tier 3 credits.\17\
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    \12\ The term ``Lead Market Maker'' is defined in Rule 1.1(w) to 
mean a registered Market Maker that is the exclusive Designated 
Market Maker in listings for which the Exchange is the primary 
market.
    \13\ Pursuant to Rule 7.23-E(a)(1), all registered Market 
Makers, including LMMs, have an obligation to maintain continuous, 
two-sided trading interest in those securities in which the Market 
Marker is registered to trade. In addition, pursuant to Rule 7.24-
E(b), LMMs are held to higher performance standards in the 
securities in which they are registered as LMM. LMMs can earn 
additional financial incentives for meeting the higher performance 
standards specified from time to time in the Fee Schedule. Only one 
LMM can be registered in a NYSE-Arca listed security, but that 
security can have an unlimited number of registered Market Makers. 
Market Makers can also be registered in securities that trade on an 
unlisted trading privileges basis on the Exchange.
    \14\ The number of Less Active ETPs for a billing month would be 
calculated as the average number of Less Active ETPs in which an ETP 
Holder is registered as a LMM or Market Maker on the first and last 
business day of the previous month.
    \15\ Pursuant to Section I under the LMM Transaction Fees and 
Credits, the term ``Less Active ETPs'' means ETPs that have a CADV 
in the prior calendar quarter that is the greater of either less 
than 100,000 shares or less than 0.013% of Consolidated Tape B ADV. 
The term ``ETP'' means Exchange Traded Product listed on NYSE Arca.
    \16\ The applicable Performance Metrics are specified in Section 
III under LMM Transaction Fees and Credits on the Fee Schedule.
    \17\ With this proposed rule change, the Exchange also proposes 
to reformat the Tape B Tiers table by adopting a new column titled 
``NYSE Arca Listed Equities'' with a description in the new column 
of the requirement as proposed in this filing.
---------------------------------------------------------------------------

    The proposed rule change to adopt the proposed alternative method 
to qualify for the existing credit is designed to incentivize ETP 
Holders to increase liquidity-providing orders in NYSE Arca-listed 
securities, including in lower volume securities, in which they are 
registered as a LMM or Market Maker, that they send to the Exchange, 
which would support the quality of price discovery on the Exchange and 
provide additional liquidity for incoming orders for the benefit of all 
market participants.
    The Exchange notes that its listing business operates in a highly 
competitive market in which market participants, including issuers of 
securities, LMMs, and other liquidity providers, can readily transfer 
their listings, or direct order flow to competing venues if they deem 
fee levels, liquidity provision incentive programs, or other factors at 
a particular venue to be insufficient or excessive. The proposed rule 
change reflects the current competitive pricing environment and is 
designed to incentivize market participants to participate as LMMs or 
Market Makers, especially in Less Active ETPs, and thereby, further 
enhance the market quality on such securities listed on the Exchange 
and encourage issuers to list new products on the Exchange.
Tape B--Additional Credit
    The Exchange currently provides an increased cap applicable under 
the Tape B Tiers pricing table. Specifically, if an ETP Holder is 
registered as a LMM or Market Maker in at least 100 Less Active ETPs in 
which it meets at least two Performance Metrics, where the ETP Holder, 
together with any affiliates, has Adding Tape B ADV that is an increase 
of at least 60% over the ETP Holder's Adding ADV in Q3 2019, as a 
percentage of Tape B CADV, then such ETP Holder receives a combined 
credit of up to:
     $0.0033 per share if the ETP Holder, together with any 
affiliates, has Tape B Adding ADV equal to at least 0.65% of Tape B 
CADV, or
     $0.0034 per share if the ETP Holder, together with any 
affiliates, has Tape B Adding ADV equal to at least 0.70% of Tape B 
CADV.
    The Exchange proposes to increase the combined credit, from $0.0034 
per share to $0.0035 per share, if a qualifying ETP Holder that, 
together with any affiliates, has Tape B Adding ADV equal to at least 
0.70% of Tape B CADV.
    The Exchange believes increasing the combined credit payable to ETP 
Holders, from up to $0.0034 per share to up to $0.0035 per share would 
provide an incentive to ETP Holders to register as LMMs or Market 
Makers and incentivize such liquidity providers to increase the number 
of orders sent to the Exchange.
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any significant problems 
that market participants would have in complying with the proposed 
changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\18\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\19\ 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.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    As discussed above, the Exchange operates in a highly fragmented 
and competitive market. The Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \20\ As a 
threshold matter, the Exchange is subject to significant competitive 
forces in the market for equity securities transaction services that 
constrain its pricing determinations in that market.
---------------------------------------------------------------------------

    \20\ See Regulation NMS, supra note 4, 70 FR at 37499.
---------------------------------------------------------------------------

    Numerous indicia demonstrate the competitive nature of this market. 
For example, clear substitutes to the Exchange exist in the market for 
equity security transaction services. The Exchange is only one of 
several equity venues to which market participants may direct their 
order flow. Competing equity exchanges offer similar tiered pricing 
structures to that of the Exchange, including credits and fees that 
apply based upon members achieving certain volume thresholds. The 
Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow, or discontinue or reduce use of certain categories of 
products, in response to fee changes. Accordingly, the Exchange's fees 
are reasonably constrained by competitive alternatives and market 
participants can readily trade on competing venues if they deem pricing 
levels at those other venues to be more favorable.
Tape B Tier 3
    The Exchange believes that the proposal to adopt an alternative 
method to qualify for the Tape B Tier 3 credit is reasonable because it 
provides an additional opportunity for ETP Holders to receive an 
existing rebate on qualifying orders in a manner that incentivizes 
order flow on the Exchange. The Exchange believes the proposed 
alternative method to qualify for the Tape B Tier 3 pricing tier is 
reasonable because it provides ETP Holders with an additional way to 
qualify for the pricing tier's credit by incentivizing ETP Holders to 
increase liquidity-providing orders in NYSE Arca-listed securities, 
including in lower volume securities, in which they are registered as a 
LMM or Market Maker, that they send to the Exchange, which would 
support the quality of price discovery on the Exchange and provide 
additional liquidity for incoming orders for the benefit of all market 
participants. The Exchange also believes it is reasonable to require 
ETP Holders to register as a LMM or Market Maker in a minimum number of 
Less Active ETPs and to meet at least two Performance Metrics in such 
securities as the Exchange believes this requirement would enhance 
market

[[Page 70244]]

quality in Less Active ETPs and support the quality of price discovery 
in such securities.
    The Exchange believes the proposed change to adopt an alternative 
method to qualify for existing credits is reasonable as these changes 
would provide an incentive for ETP Holders to direct their order flow 
to the Exchange and provide meaningful added levels of liquidity in 
order to qualify for the existing credit, thereby contributing to depth 
and market quality on the Exchange. As noted above, the Exchange 
operates in a highly competitive environment, particularly for 
attracting order flow that provides displayed liquidity on an exchange. 
More specifically, the Exchange notes that greater add volume order 
flow may provide for deeper, more liquid markets and execution 
opportunities at improved prices, which the Exchange believes would 
incentivize liquidity providers to submit additional liquidity and 
enhance execution opportunities.
    The Exchange believes that the proposal to adopt an alternative 
method to qualify for the Tape B Tier 3 credit represents an equitable 
allocation of fees and credits and is not unfairly discriminatory 
because it would apply uniformly to all ETP Holders, in that all ETP 
Holders would be eligible for the existing credit and have the 
opportunity to meet the tier's criteria by registering as a LMM or 
Market Maker in a Less Active ETP and meeting the market quality 
metrics. The Exchange believes that the proposal to offer rebates tied 
to market quality metrics represents an equitable allocation of 
payments because LMMs and Market Makers would be required to not only 
meet their Rule 7.23-E obligations, but also meet prescribed quoting 
requirements in order to qualify for the credit. Further, all LMMs and 
Market Makers on the Exchange are eligible to participate and could do 
so by simply registering in a Less Active ETP and meeting the proposed 
market quality metrics.
    Under the proposal, the existing rebate would apply automatically 
and uniformly to all ETP Holders that register as a LMM or Market Maker 
in at least 50 Less Active ETPs in which it meets at least two 
Performance Metrics.
    While the Exchange has no way of knowing whether the proposed 
alternative method to qualify for the Tape B Tier 3 pricing tier would 
definitively result in any particular ETP Holder qualifying for the 
existing credit, the Exchange anticipates a number of ETP Holders will 
seek to qualify for the rebate by registering as a LMM or Market Maker 
in at least 50 Less Active ETPs and meet the required performance 
metrics.
    The Exchange believes it is not unfairly discriminatory to provide 
an alternative way to qualify for the per share credit under the Tape B 
Tier 3 pricing tier, as the credit would be provided on an equal basis 
to all ETP Holders that meet the proposed requirement. Further, the 
Exchange believes the proposed alternative method would incentivize ETP 
Holders to register in Less Active ETPs and send more order to the 
Exchange to qualify for the Tape B Tier 3 credit.
    The Exchange believes that the proposed alternative method to 
qualify for the Tape B Tier 3 credit is not unfairly discriminatory 
because it would be available to all ETP Holders on an equal and non-
discriminatory basis. In this regard, the Exchange notes that ETP 
Holders that do not meet the proposed alternative criteria would 
continue to have the opportunity to qualify for the Tape B Tier 3 
credit by satisfying the two current requirements, which would not 
change as a result of this proposal.
    The Exchange also believes that the proposed rule change is not 
unfairly discriminatory because it is reasonably related to the value 
to the Exchange's market quality associated with higher volumes. The 
Exchange believes that increased liquidity and higher volumes improves 
market quality on the Exchange, which increases the likelihood of 
orders being executed at prices desired by ETP Holders and thereby 
incentivizing ETP Holders to direct more order flow to the Exchange. 
The Exchange places a higher value on displayed liquidity because the 
Exchange believes that displayed liquidity is a public good that 
benefits investors generally by providing greater price transparency 
and enhancing price discovery on a public exchange, which ultimately 
lead to substantial reductions in transaction costs.
    The proposed change to the Tape B Tier 3 pricing tier is designed 
as an incentive to ETP Holders interested in meeting the tier criteria 
to submit additional order flow to the Exchange and each will receive 
the existing rebate if the tier criteria is met. The Exchange also 
notes that the proposed rule change will not adversely impact any ETP 
Holder's pricing or its ability to qualify for other tiers. Rather, 
should an ETP Holder not meet the Tape B Tier 3 pricing tier's 
criteria, the ETP Holder will merely not receive the corresponding 
rebate.
Tape B--Additional Credit
    The Exchange believes the proposed rule change to increase the 
combined credit, from up to $0.0034 per share to up to $0.0035 per 
share, payable to ETP Holders if an ETP Holder, together with any 
affiliates, has Tape B Adding ADV equal to at least 0.70% of Tape B 
CADV is a reasonable means of attracting additional liquidity to the 
Exchange. The Exchange believes the increased financial incentive, 
which is among the highest paid by the Exchange, would encourage ETP 
Holders to submit additional liquidity to a national securities 
exchange and receive the proposed higher rebate. The Exchange believes 
it is reasonable to require ETP Holders to meet the applicable volume 
threshold to qualify for the increased credit, given the higher 
combined credit up to of $0.0035 per share that the Exchange would pay 
if the tier criteria were met.
    The Exchange believes that submission of increased liquidity to the 
Exchange would promote price discovery and transparency and enhance 
order execution opportunities for ETP Holders from the substantial 
amounts of liquidity present on the Exchange. The Exchange also 
believes it is reasonable to require ETP Holders to register as a LMM 
or Market Maker in a minimum number of Less Active ETPs and to meet at 
least two Performance Metrics in such securities as the Exchange 
believes this requirement would enhance market quality in Less Active 
ETPs and support the quality of price discovery in such securities.
    The Exchange believes the proposed rule change to increase the 
combined credit, from up to $0.0034 per share to up to $0.0035 per 
share, payable to ETP Holders if a ETP Holder, together with any 
affiliates, has Tape B Adding ADV equal to at least 0.70% of Tape B 
CADV equitably allocates its fees and credits among market participants 
because it is reasonably related to the value of the Exchange's market 
quality associated with higher equities volumes. The Exchange believes 
that increased liquidity and higher volumes improves market quality on 
the Exchange, which increases the likelihood of orders being executed 
at prices desired by ETP Holders and thereby incentivizing ETP Holders 
to direct more order flow to the Exchange. The Exchange places a higher 
value on displayed liquidity because the Exchange believes that 
displayed liquidity is a public good that benefits investors generally 
by providing greater price transparency and enhancing price discovery 
on a public exchange, which ultimately lead to substantial reductions

[[Page 70245]]

in transaction costs. As proposed, the Exchange would continue to 
provide qualifying ETP Holders with some of the highest credits payable 
by the Exchange provided they continue to participate as LMMs or Market 
Makers and continue to provide increased Tape B adding ADV. The more an 
ETP Holder participates, the greater the credit that ETP Holder would 
receive. The Exchange believes the proposed increase credit would 
encourage ETP Holders to continue to send orders that add liquidity to 
the Exchange, thereby contributing to robust levels of liquidity, which 
would benefit all market participants.
    The Exchange believes it is not unfairly discriminatory to increase 
the combined credit payable to ETP Holders because the increased 
credits would be paid to all ETP Holders that qualify for the credit on 
an equal basis. Additionally, the proposed rule change to increase the 
combined credit payable to qualifying ETP Holders neither targets nor 
will it have a disparate impact on any particular category of market 
participant.
    On the backdrop of the competitive environment in which the 
Exchange currently operates, the proposed rule change is a reasonable 
attempt by the Exchange to maintain, if not improve its market share 
relative to its competitors.
    Finally, the submission of orders to the Exchange is optional for 
ETP Holders in that they could choose whether to submit orders to the 
Exchange and, if they do, the extent of its activity in this regard. 
The Exchange believes that it is subject to significant competitive 
forces, as described below in the Exchange's statement regarding the 
burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\21\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act.
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    \21\ 15 U.S.C. 78f(b)(8).
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    Intramarket Competition. The Exchange believes the proposed 
amendment to its Fee Schedule would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The Exchange does not believe that the proposed 
change represents a significant departure from previous pricing offered 
by the Exchange or its competitors. The proposed change is designed to 
attract additional order flow to the Exchange, in particular with 
respect to Tape B securities. The Exchange believes that the proposed 
adoption of an alternative method to qualify for an established credit 
under the Tape B Tier 3 pricing tier would incentivize market 
participants to participate as LMMs or Market Makers and direct 
liquidity adding order flow to the Exchange, bringing with it 
additional execution opportunities for market participants and improved 
price transparency. Greater overall order flow, trading opportunities, 
and pricing transparency would benefit all market participants on the 
Exchange by enhancing market quality and would continue to encourage 
ETP Holders to send orders to the Exchange, thereby contributing 
towards a robust and well-balanced market ecosystem.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily choose to 
send their orders to other exchanges and off-exchange venues if they 
deem fee levels at those other venues to be more favorable. As noted 
above, the Exchange's market share of intraday trading (i.e., excluding 
auctions) is currently less than 12%. In such an environment, the 
Exchange must continually review, and consider adjusting its fees and 
credits to remain competitive with other exchanges and with off-
exchange venues. Because competitors are free to modify their own fees 
and credits in response, the Exchange does not believe its proposed fee 
change can impose any burden on intermarket competition.
    The Exchange believes that the proposed change could promote 
competition between the Exchange and other execution venues, including 
those that currently offer comparable transaction pricing, by 
encouraging additional orders to be sent to the Exchange for execution.

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

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

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A) \22\ of the Act and paragraph (f) thereunder. At 
any time within 60 days of the filing of the proposed rule change, the 
Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.
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    \22\ 15 U.S.C. 78s(b)(3)(A).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-NYSEARCA-2024-67 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-NYSEARCA-2024-67. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. 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

[[Page 70246]]

obscene or subject to copyright protection. All submissions should 
refer to file number SR-NYSEARCA-2024-67, and should be submitted on or 
before September 19, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-19395 Filed 8-28-24; 8:45 am]
BILLING CODE 8011-01-P
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