Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List, 78397-78401 [2024-21882]

Download as PDF Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Notices Specifically, the Exchange believes that the proposed fees do not impose a burden on competition or on other exchanges that is not necessary or appropriate because of the availability of substitute partial depth of book market data products. Many other exchanges offer proprietary data feeds like the NYSE Agg Lite data feed, supplying partial depth of book order data, security status updates, stock summary messages, and the exchange’s best bid and offer at any given time, on a real-time basis. Because market data users can find suitable substitute feeds, an exchange that overprices its market data products stands a high risk that users may purchase another market’s market data product. These competitive pressures ensure that no one exchange’s market data fees can impose an unnecessary burden on competition, and the Exchange’s proposed fees do not do so here. 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. ddrumheller on DSK120RN23PROD with NOTICES1 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) 44 of the Act and subparagraph (f)(2) of Rule 19b–4 45 thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 46 of the Act 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: 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–2024–54 on the subject line. U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 46 15 U.S.C. 78s(b)(2)(B). 17:28 Sep 24, 2024 [Release No. 34–101111; File No. SR–NYSE– 2024–59] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List September 19, 2024. • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. 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 September 13, 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 and II 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. All submissions should refer to file number SR–NYSE–2024–54. 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–2024–54 and should be submitted on or before October 16, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.47 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–21878 Filed 9–24–24; 8:45 am] 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) eliminate the current Step Up Tier 3 Adding Credit, and (2) adopt a new pricing tier for Supplemental Liquidity Providers (‘‘SLP’’) based on Step Up Tier 3 that offers incremental tiered credits for SLP orders providing displayed liquidity in Tapes A, B and C Securities that set the National Best Bid and Offer (‘‘NBBO’’) or BBO. The Exchange proposes to implement the fee changes effective September 13, 2024. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, 1 15 45 17 VerDate Sep<11>2014 SECURITIES AND EXCHANGE COMMISSION Paper Comments BILLING CODE 8011–01–P 44 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 47 17 Jkt 262001 78397 PO 00000 CFR 200.30–3(a)(12). Frm 00119 Fmt 4703 Sfmt 4703 E:\FR\FM\25SEN1.SGM 25SEN1 78398 Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Notices of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Price List to (1) eliminate the current Step Up Tier 3 Adding Credit, and (2) adopt a new pricing tier for SLPs based on Step Up Tier 3 that offers incremental tiered credits for SLP orders providing displayed liquidity in Tapes A, B and C Securities that set the NBBO or BBO. The proposed changes respond to the current competitive environment where order flow providers have a choice of where to direct liquidity-providing orders by offering further incentives for member organizations to send additional liquidity to the Exchange, especially aggressively priced orders that improve the market by setting the NBBO or BBO on the Exchange. The Exchange proposes to implement the fee changes effective September 13, 2024.4 Background ddrumheller on DSK120RN23PROD with NOTICES1 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.’’ 5 While Regulation NMS has enhanced competition, it has also fostered a ‘‘fragmented’’ market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that ‘‘such competition can lead to the fragmentation of order flow in that 4 The Exchange originally filed to amend the Price List on September 3, 2024 (SR–NYSE–2024– 52). SR–NYSE–2024–52 was withdrawn on September 13, 2024 and replaced by this filing. 5 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7–10–04) (Final Rule) (‘‘Regulation NMS’’). VerDate Sep<11>2014 17:28 Sep 24, 2024 Jkt 262001 stock.’’ 6 Indeed, cash equity trading is currently dispersed across 16 exchanges,7 numerous alternative trading systems,8 and broker-dealer internalizers and wholesalers, all competing for order flow. Based on publicly-available information, no single exchange currently has more than 20% market share.9 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%.10 The Exchange believes that the evershifting market share among the exchanges from month to month demonstrates that market participants can move order flow, or discontinue or reduce use of certain categories of products. While it is not possible to know a firm’s reason for shifting order flow, the Exchange believes that one such reason is because of fee changes at any of the registered exchanges or nonexchange venues to which 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 its member organizations who submit orders that provide liquidity on the Exchange. The proposed change is designed to continue to attract additional order flow to the Exchange by further incentivizing member organizations that are SLPs to submit additional displayed liquidity to, and quote aggressively in support of the price discovery process on, the Exchange. Proposed Rule Change The Exchange proposes to eliminate and remove the Step Up Tier 3 Adding Credit from the Price List and adopt tiered incremental credits for SLPs 6 See Securities Exchange Act Release No. 61358, 75 FR 3594, 3597 (January 21, 2010) (File No. S7– 02–10) (Concept Release on Equity Market Structure). 7 See Cboe U.S. Equities Market Volume Summary, available at https://markets.cboe.com/us/ equities/market_share. See generally https:// www.sec.gov/fast-answers/divisionsmarketregmr exchangesshtml.html. 8 See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/ AtsIssueData. A list of alternative trading systems registered with the Commission is available at https://www.sec.gov/foia/docs/atslist.htm. 9 See Cboe Global Markets U.S. Equities Market Volume Summary, available at https:// markets.cboe.com/us/equities/market_share/. 10 See id. PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 based on the Step Up Tier 3 Adding Credit that reflect streamlined requirements and higher credits. Currently, the Exchange provides an incremental $0.0006 credit in Tapes A, B and C securities for all orders from a qualifying member organization market participant identifier (‘‘MPID’’) 11 or mnemonic that sets the NBBO 12 or a new BBO 13 if the MPID or mnemonic: • has adding average daily volume (‘‘ADV’’) in Tapes A, B and C Securities as a percentage of Tapes A, B and C CADV,14 excluding any liquidity added by a DMM, that is at least 50% more than the MPID’s or mnemonic’s Adding ADV in Tapes A, B and C securities in June 2020 as a percentage of Tapes A, B and C CADV, and • is affiliated with an SLP that has an Adding ADV in Tape A securities at least 0.10% of NYSE CADV, and • has Adding ADV in Tape A securities as a percentage of NYSE CADV, excluding any liquidity added by a DMM, that is at least 0.20% The credit is in addition to the MPID’s or mnemonic’s current credit for adding liquidity and does not count toward the combined limit on SLP credits of $0.0032 per share provided for in the incremental credit per share for affiliated SLPs whereby SLPs can qualify for incremental credits of $0.0001, $0.0002 or $0.0003. As noted above, the Exchange proposes to eliminate this credit and related requirements in their entirety and adopt a more streamlined SLP incremental credit that would be set forth in the section of the Price List titled ‘‘Credit Applicable to Supplemental Liquidity Providers (‘‘SLPs’’)’’ under the new proposed heading titled ‘‘SLP Incremental Credit.’’ As proposed, there would be two SLP setter tiers. Under proposed SLP Setter Tier 1, an SLP that has • Adding ADV in Tape A securities of at least 0.08% of NYSE CADV, and • Adding ADV setting the NBBO or BBO as a percentage of Tape A, B and C CADV combined of at least 0.35% would be eligible to receive an incremental credit of $0.0008 per share for adding orders that set the NBBO or BBO in Tape A securities and an incremental credit of $0.0006 per share 11 The Exchange proposes to relocate the definition of MPID from the Step Up Tier 3 Adding Credit to the current Step Up Tier 5 Adding Credit. 12 See Rule 1.1(q) (defining ‘‘NBBO’’ to mean the national best bid or offer). 13 See Rule 1.1(c) (defining ‘‘BBO’’ to mean the best bid or offer on the Exchange). 14 The terms ‘‘ADV’’ and ‘‘CADV’’ are defined in footnote * of the Price List. E:\FR\FM\25SEN1.SGM 25SEN1 ddrumheller on DSK120RN23PROD with NOTICES1 Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Notices for adding orders that set the NBBO or BBO in Tape B and C Securities. Under proposed SLP Setter Tier 2, an SLP that has Adding ADV in Tape A securities of at least 0.08% of NYSE CADV would receive an incremental credit of $0.0007 per share for adding orders that set the NBBO or BBO in Tape A securities and an incremental credit of $0.0006 per share for adding orders that set the NBBO or BBO in Tape B and C Securities. Like the Step Up Tier 3 Adding Credit the Exchange would eliminate, the proposed incremental credits do not count toward the combined limit on SLP credits of $0.0032 per share provided for in the SLP Adding Tiers whereby SLPs can qualify for incremental credits of $0.0001, $0.0002 or $0.0003. The purpose of this proposed change is to incentivize member organizations that are SLPs to increase aggressively priced liquidity-providing orders that improve the market by setting the NBBO or BBO. The proposed SLP Incremental Credit is thus intended to encourage higher levels of liquidity, which would support the quality of price discovery on the Exchange and is consistent with the overall goals of enhancing market quality. As noted above, the Exchange operates in a competitive environment, particularly as it relates to attracting non-marketable orders, which add liquidity to the Exchange. Because the proposed tier enables an SLP to receive an per share credit if the SLP meets certain trading qualifications and establishes the NBBO or BBO on the Exchange, the Exchange believes that the proposed credit would provide an incentive for SLPs and their affiliates to send additional liquidity to the Exchange to set the NBBO or BBO in order to qualify for it. The Exchange does not know how much order flow member organizations choose to route to other exchanges or to off-exchange venues. Since the proposed SLP incremental credit is new, the Exchange does not know how many SLPs could qualify for the proposed tiered credits based on their current trading profile on the Exchange. 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 SLP directing orders to the Exchange in order to qualify for the new setting tier. Finally, the Exchange would relocate the cap for the maximum average number of shares per day for the billing month in calculating the average VerDate Sep<11>2014 17:28 Sep 24, 2024 Jkt 262001 monthly CADV for purposes of the Step Up Adding Tier 3 to the General section at the end of the SLP section of the Price List without substantive change. 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. 78399 an additional incentive for more SLPs to receive an incremental per share credit if the SLP sets the NBBO or BBO on the Exchange and meet certain Adding ADV requirements. The proposed incremental credit would thus provide incentives to member organizations that are SLPs to provide aggressively priced orders that improve the market by setting the NBBO or BBO on the Exchange and to send additional 2. Statutory Basis liquidity providing orders to the The Exchange believes that the Exchange in Tape A, B and C securities. proposed rule change is consistent with To the extent that the proposed change Section 6(b) of the Act,15 in general, and leads to an increase in overall liquidity furthers the objectives of Sections activity on the Exchange and more 6(b)(4) and (5) of the Act,16 in particular, competitive pricing, this will improve because it provides for the equitable the quality of the Exchange’s market, allocation of reasonable dues, fees, and improve quote spreads and increase its other charges among its members, attractiveness to existing and issuers and other persons using its prospective participants. As noted above, the Exchange facilities and does not unfairly operates in a highly competitive discriminate between customers, environment, particularly for attracting issuers, brokers or dealers. non-marketable order flow that provides As discussed above, the Exchange operates in a highly competitive market. liquidity on a public exchange. The Exchange believes it is reasonable to The Commission has repeatedly expressed its preference for competition provide higher credits for orders that provide additional liquidity. Moreover, over regulatory intervention in the Exchange believes that providing an determining prices, products, and incrementally higher credit for adding services in the securities markets. In orders that set the NBBO or the BBO is Regulation NMS, the Commission reasonable because it would encourage highlighted the importance of market additional aggressively priced displayed forces in determining prices and SRO liquidity on the Exchange and because revenues and, also, recognized that market participants benefit from the current regulation of the market system greater amounts of liquidity and ‘‘has been remarkably successful in narrower spreads present on the promoting market competition in its broader forms that are most important to Exchange. Further, the Exchange believes that requiring member investors and listed companies.’’ 17 organizations to meet specific Adding While Regulation NMS has enhanced ADV requirements as an SLP in order to competition, it has also fostered a qualify for the incremental credit is also ‘‘fragmented’’ market structure where reasonable because it would encourage trading in a single stock can occur additional displayed liquidity on the across multiple trading centers. When Exchange and because market multiple trading centers compete for participants benefit from the greater order flow in the same stock, the amounts of liquidity and narrower Commission has recognized that ‘‘such spreads present on the Exchange. competition can lead to the Since the proposed SLP Incremental fragmentation of order flow in that Credit would be new, no member 18 stock.’’ organization currently qualifies for the The Proposed Change Is Reasonable proposed pricing tiers. As previously The Exchange believes that a new SLP noted, without a view of member organization activity on other exchanges Incremental Credit is reasonable. and off-exchange venues, the Exchange Specifically, the Exchange believes that has no way of knowing whether the the proposed incremental credits offer proposed rule change would result in streamlined requirements and higher any SLP qualifying for the tiers. The credits than the current Step Up Tier 3 Exchange believes the proposed credit is Adding Credit, and thus would provide reasonable as it would provide an additional incentive for SLPs to direct 15 15 U.S.C. 78f(b). 16 15 U.S.C. 78f(b)(4) & (5). their order flow to the Exchange and 17 See Securities Exchange Act Release No. 51808 provide meaningful added levels of (June 9, 2005), 70 FR 37495, 37499 (June 29, 2005) liquidity in order to qualify for the (S7–10–04) (Final Rule) (‘‘Regulation NMS’’). higher incremental credits, thereby 18 See Securities Exchange Act Release No. 61358, contributing to depth and market 75 FR 3594, 3597 (January 21, 2010) (File No. S7– quality on the Exchange. Finally, the 02–10) (Concept Release on Equity Market Structure). Exchange believes that excluding the PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 E:\FR\FM\25SEN1.SGM 25SEN1 78400 Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Notices ddrumheller on DSK120RN23PROD with NOTICES1 proposed incremental credits for NBBO and BBO setting adding volume from the $0.0032 limit for SLP credits will continue to incentivize improved quoting and tighter spreads. The Exchange notes that all other adding orders from those qualifying SLPs will continue to subject to the $0.0032 limit. 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. The Exchange believes that by streamlining the requirements, the proposed SLP Incremental Credit will better allocate the proposed credits fairly among market participants and will incentivize more member organizations to send adding SLP liquidity to the Exchange, which in turn supports the quality of price discovery on the Exchange. The proposed tier will allow SLPs to qualify for a credit by adding liquidity and setting the NBBO or BBO at the stated levels in the requirements. The Exchange believes the proposed rule change would improve market quality for all market participants on the Exchange and, as a consequence, attract more liquidity to the Exchange, thereby improving market-wide quality and price discovery. It is equitable for the Exchange to add additional incentives for member organizations to receive a credit when their orders add liquidity to the Exchange as a means of incentivizing increased liquidity adding activity. An increase in overall liquidity on the Exchange will improve the quality of the Exchange’s market and increase its attractiveness to existing and prospective participants. The Exchange believes that requiring a member organization’s SLP to have specific Adding and Setting ADV requirements in order to qualify for the proposed credits would also encourage additional displayed liquidity on the Exchange. Since the proposed SLP Incentive Tier would be new, no SLP currently qualifies for it. As noted, without a view of member organization activity on other exchanges and offexchange venues, the Exchange has no way of knowing whether this proposed rule change would result in any SLP qualifying for the tiers. All member organizations that are SLPs or apply to VerDate Sep<11>2014 17:28 Sep 24, 2024 Jkt 262001 be SLPs would be eligible to qualify for the proposed incremental credits if their SLP liquidity meets the Adding ADV requirements in Tapes A, B and C securities. Any market participant that is dissatisfied with the proposed new credit is free to shift order flow to competing venues that provide more favorable pricing or less stringent qualifying criteria. All such member organizations would continue to be subject to the same fee structure, and access to the Exchange’s market would continue to be offered on fair and nondiscriminatory terms. The Exchange believes that offering an incremental credit for setting the NBBO or BBO will encourage higher levels of liquidity provision in the price discovery process and is consistent with the overall goals of enhancing market quality, thereby providing additional price improvement opportunities on the Exchange and benefiting investors generally. As to those market participants that do not presently qualify for the adding liquidity credits, the proposal will not adversely impact their existing pricing or their ability to qualify for other credits provided by the Exchange. 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. The Exchange believes it is not unfairly discriminatory to provide additional per share credits for activity that encourages the setting of the NBBO or BBO on the Exchange as the proposed credits would be provided on an equal basis to all member organizations that are SLPs or that choose to become SLPs and that add liquidity by meeting the new proposed requirements, who would all be eligible for the same credits on an equal and non-discriminatory basis. Accordingly, no member organization already operating on the Exchange would be disadvantaged by the proposed allocation of fees. As noted, the Exchange intends for the proposal to improve market quality on the Exchange and by extension attract more liquidity to the market, thereby improving market wide quality and price discovery. The Exchange also believes that the proposed change is not unfairly discriminatory because it is reasonably related to the value to the Exchange’s market quality associated with higher volume. Further, as noted, the Exchange believes the proposal would provide an PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 incentive for member organizations that are SLPs to continue to send orders that provide liquidity to the Exchange, to the benefit of all market participants. Further, it should be noted that 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. Finally, 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,19 the Exchange believes that the proposed rule change would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Instead, as discussed above, the Exchange believes that the proposed changes would encourage the submission of additional liquidity to a public exchange, thereby promoting market depth, price discovery and transparency and enhancing order execution opportunities for 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.’’ 20 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 19 15 U.S.C. 78f(b)(8). Regulation NMS, 70 FR at 37498–99. 20 See E:\FR\FM\25SEN1.SGM 25SEN1 Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Notices 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) 21 of the Act and paragraph (f)(2) of Rule 19b–4 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: 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–2024–59. 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–2024–59 and should be submitted on or before October 16, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–21882 Filed 9–24–24; 8:45 am] BILLING CODE 8011–01–P ddrumheller on DSK120RN23PROD with NOTICES1 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–2024–59 on the subject line. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–101099; File No. SR–Phlx– 2024–48] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Codify the Definition of Phlx Options Trade Outline September 19, 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 September 6, 2024, Nasdaq PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II 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 codify the definition of Phlx Options Trade Outline in the Phlx rulebook. This filing also incorporates a previous proposal to adjust fees for Phlx Options Trade Outline for both the End of Day and Intra-Day product. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/phlx/rules, 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 Exchange 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 these 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 aspects of such statements. 1 15 21 15 U.S.C. 78s(b)(3)(A). VerDate Sep<11>2014 17:28 Sep 24, 2024 22 17 Jkt 262001 PO 00000 CFR 200.30–3(a)(12). Frm 00123 Fmt 4703 Sfmt 4703 78401 2 17 E:\FR\FM\25SEN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 25SEN1

Agencies

[Federal Register Volume 89, Number 186 (Wednesday, September 25, 2024)]
[Notices]
[Pages 78397-78401]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-21882]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101111; File No. SR-NYSE-2024-59]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Price List

September 19, 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 September 13, 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 
and II 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 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 its Price List to (1) eliminate the 
current Step Up Tier 3 Adding Credit, and (2) adopt a new pricing tier 
for Supplemental Liquidity Providers (``SLP'') based on Step Up Tier 3 
that offers incremental tiered credits for SLP orders providing 
displayed liquidity in Tapes A, B and C Securities that set the 
National Best Bid and Offer (``NBBO'') or BBO. The Exchange proposes to 
implement the fee changes effective September 13, 2024. The proposed 
rule change is available on the Exchange's website at www.nyse.com, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

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

[[Page 78398]]

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) eliminate the 
current Step Up Tier 3 Adding Credit, and (2) adopt a new pricing tier 
for SLPs based on Step Up Tier 3 that offers incremental tiered credits 
for SLP orders providing displayed liquidity in Tapes A, B and C 
Securities that set the NBBO or BBO.
    The proposed changes respond to the current competitive environment 
where order flow providers have a choice of where to direct liquidity-
providing orders by offering further incentives for member 
organizations to send additional liquidity to the Exchange, especially 
aggressively priced orders that improve the market by setting the NBBO 
or BBO on the Exchange.
    The Exchange proposes to implement the fee changes effective 
September 13, 2024.\4\
---------------------------------------------------------------------------

    \4\ The Exchange originally filed to amend the Price List on 
September 3, 2024 (SR-NYSE-2024-52). SR-NYSE-2024-52 was withdrawn 
on September 13, 2024 and replaced by this filing.
---------------------------------------------------------------------------

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.'' \5\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7-10-04) (Final 
Rule) (``Regulation NMS'').
---------------------------------------------------------------------------

    While Regulation NMS has enhanced competition, it has also fostered 
a ``fragmented'' market structure where trading in a single stock can 
occur across multiple trading centers. When multiple trading centers 
compete for order flow in the same stock, the Commission has recognized 
that ``such competition can lead to the fragmentation of order flow in 
that stock.'' \6\ Indeed, cash equity trading is currently dispersed 
across 16 exchanges,\7\ numerous alternative trading systems,\8\ and 
broker-dealer internalizers and wholesalers, all competing for order 
flow. Based on publicly-available information, no single exchange 
currently has more than 20% market share.\9\ 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%.\10\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 61358, 75 FR 3594, 
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on 
Equity Market Structure).
    \7\ See Cboe U.S. Equities Market Volume Summary, available at 
https://markets.cboe.com/us/equities/market_share. See generally 
https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \8\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \9\ See Cboe Global Markets U.S. Equities Market Volume Summary, 
available at https://markets.cboe.com/us/equities/market_share/.
    \10\ See id.
---------------------------------------------------------------------------

    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
move order flow, or discontinue or reduce use of certain categories of 
products. While it is not possible to know a firm's reason for shifting 
order flow, the Exchange believes that one such reason is because of 
fee changes at any of the registered exchanges or non-exchange venues 
to which 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 its member organizations who submit orders 
that provide liquidity on the Exchange. The proposed change is designed 
to continue to attract additional order flow to the Exchange by further 
incentivizing member organizations that are SLPs to submit additional 
displayed liquidity to, and quote aggressively in support of the price 
discovery process on, the Exchange.
Proposed Rule Change
    The Exchange proposes to eliminate and remove the Step Up Tier 3 
Adding Credit from the Price List and adopt tiered incremental credits 
for SLPs based on the Step Up Tier 3 Adding Credit that reflect 
streamlined requirements and higher credits.
    Currently, the Exchange provides an incremental $0.0006 credit in 
Tapes A, B and C securities for all orders from a qualifying member 
organization market participant identifier (``MPID'') \11\ or mnemonic 
that sets the NBBO \12\ or a new BBO \13\ if the MPID or mnemonic:
---------------------------------------------------------------------------

    \11\ The Exchange proposes to relocate the definition of MPID 
from the Step Up Tier 3 Adding Credit to the current Step Up Tier 5 
Adding Credit.
    \12\ See Rule 1.1(q) (defining ``NBBO'' to mean the national 
best bid or offer).
    \13\ See Rule 1.1(c) (defining ``BBO'' to mean the best bid or 
offer on the Exchange).
---------------------------------------------------------------------------

     has adding average daily volume (``ADV'') in Tapes A, B 
and C Securities as a percentage of Tapes A, B and C CADV,\14\ 
excluding any liquidity added by a DMM, that is at least 50% more than 
the MPID's or mnemonic's Adding ADV in Tapes A, B and C securities in 
June 2020 as a percentage of Tapes A, B and C CADV, and
---------------------------------------------------------------------------

    \14\ The terms ``ADV'' and ``CADV'' are defined in footnote * of 
the Price List.
---------------------------------------------------------------------------

     is affiliated with an SLP that has an Adding ADV in Tape A 
securities at least 0.10% of NYSE CADV, and
     has Adding ADV in Tape A securities as a percentage of 
NYSE CADV, excluding any liquidity added by a DMM, that is at least 
0.20%
    The credit is in addition to the MPID's or mnemonic's current 
credit for adding liquidity and does not count toward the combined 
limit on SLP credits of $0.0032 per share provided for in the 
incremental credit per share for affiliated SLPs whereby SLPs can 
qualify for incremental credits of $0.0001, $0.0002 or $0.0003.
    As noted above, the Exchange proposes to eliminate this credit and 
related requirements in their entirety and adopt a more streamlined SLP 
incremental credit that would be set forth in the section of the Price 
List titled ``Credit Applicable to Supplemental Liquidity Providers 
(``SLPs'')'' under the new proposed heading titled ``SLP Incremental 
Credit.''
    As proposed, there would be two SLP setter tiers. Under proposed 
SLP Setter Tier 1, an SLP that has
     Adding ADV in Tape A securities of at least 0.08% of NYSE 
CADV, and
     Adding ADV setting the NBBO or BBO as a percentage of Tape 
A, B and C CADV combined of at least 0.35%

would be eligible to receive an incremental credit of $0.0008 per share 
for adding orders that set the NBBO or BBO in Tape A securities and an 
incremental credit of $0.0006 per share

[[Page 78399]]

for adding orders that set the NBBO or BBO in Tape B and C Securities.

    Under proposed SLP Setter Tier 2, an SLP that has Adding ADV in 
Tape A securities of at least 0.08% of NYSE CADV would receive an 
incremental credit of $0.0007 per share for adding orders that set the 
NBBO or BBO in Tape A securities and an incremental credit of $0.0006 
per share for adding orders that set the NBBO or BBO in Tape B and C 
Securities.

    Like the Step Up Tier 3 Adding Credit the Exchange would eliminate, 
the proposed incremental credits do not count toward the combined limit 
on SLP credits of $0.0032 per share provided for in the SLP Adding 
Tiers whereby SLPs can qualify for incremental credits of $0.0001, 
$0.0002 or $0.0003.
    The purpose of this proposed change is to incentivize member 
organizations that are SLPs to increase aggressively priced liquidity-
providing orders that improve the market by setting the NBBO or BBO. 
The proposed SLP Incremental Credit is thus intended to encourage 
higher levels of liquidity, which would support the quality of price 
discovery on the Exchange and is consistent with the overall goals of 
enhancing market quality. As noted above, the Exchange operates in a 
competitive environment, particularly as it relates to attracting non-
marketable orders, which add liquidity to the Exchange. Because the 
proposed tier enables an SLP to receive an per share credit if the SLP 
meets certain trading qualifications and establishes the NBBO or BBO on 
the Exchange, the Exchange believes that the proposed credit would 
provide an incentive for SLPs and their affiliates to send additional 
liquidity to the Exchange to set the NBBO or BBO in order to qualify 
for it.
    The Exchange does not know how much order flow member organizations 
choose to route to other exchanges or to off-exchange venues. Since the 
proposed SLP incremental credit is new, the Exchange does not know how 
many SLPs could qualify for the proposed tiered credits based on their 
current trading profile on the Exchange. 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 SLP directing orders to the Exchange in 
order to qualify for the new setting tier.
    Finally, the Exchange would relocate the cap for the maximum 
average number of shares per day for the billing month in calculating 
the average monthly CADV for purposes of the Step Up Adding Tier 3 to 
the General section at the end of the SLP section of the Price List 
without substantive change.
    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
    The Exchange believes that a new SLP Incremental Credit is 
reasonable. Specifically, the Exchange believes that the proposed 
incremental credits offer streamlined requirements and higher credits 
than the current Step Up Tier 3 Adding Credit, and thus would provide 
an additional incentive for more SLPs to receive an incremental per 
share credit if the SLP sets the NBBO or BBO on the Exchange and meet 
certain Adding ADV requirements. The proposed incremental credit would 
thus provide incentives to member organizations that are SLPs to 
provide aggressively priced orders that improve the market by setting 
the NBBO or BBO on the Exchange and to send additional liquidity 
providing orders to the Exchange in Tape A, B and C securities. To the 
extent that the proposed change leads to an increase in overall 
liquidity activity on the Exchange and more competitive pricing, this 
will improve the quality of the Exchange's market, improve quote 
spreads and increase its attractiveness to existing and prospective 
participants.
    As noted above, the Exchange operates in a highly competitive 
environment, particularly for attracting non-marketable order flow that 
provides liquidity on a public exchange. The Exchange believes it is 
reasonable to provide higher credits for orders that provide additional 
liquidity. Moreover, the Exchange believes that providing an 
incrementally higher credit for adding orders that set the NBBO or the 
BBO is reasonable because it would encourage additional aggressively 
priced displayed liquidity on the Exchange and because market 
participants benefit from the greater amounts of liquidity and narrower 
spreads present on the Exchange. Further, the Exchange believes that 
requiring member organizations to meet specific Adding ADV requirements 
as an SLP in order to qualify for the incremental credit is also 
reasonable because it would encourage additional displayed liquidity on 
the Exchange and because market participants benefit from the greater 
amounts of liquidity and narrower spreads present on the Exchange.
    Since the proposed SLP Incremental Credit would be new, no member 
organization currently qualifies for the proposed pricing tiers. As 
previously noted, without a view of member organization activity on 
other exchanges and off-exchange venues, the Exchange has no way of 
knowing whether the proposed rule change would result in any SLP 
qualifying for the tiers. The Exchange believes the proposed credit is 
reasonable as it would provide an additional incentive for SLPs to 
direct their order flow to the Exchange and provide meaningful added 
levels of liquidity in order to qualify for the higher incremental 
credits, thereby contributing to depth and market quality on the 
Exchange. Finally, the Exchange believes that excluding the

[[Page 78400]]

proposed incremental credits for NBBO and BBO setting adding volume 
from the $0.0032 limit for SLP credits will continue to incentivize 
improved quoting and tighter spreads. The Exchange notes that all other 
adding orders from those qualifying SLPs will continue to subject to 
the $0.0032 limit.
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.
    The Exchange believes that by streamlining the requirements, the 
proposed SLP Incremental Credit will better allocate the proposed 
credits fairly among market participants and will incentivize more 
member organizations to send adding SLP liquidity to the Exchange, 
which in turn supports the quality of price discovery on the Exchange. 
The proposed tier will allow SLPs to qualify for a credit by adding 
liquidity and setting the NBBO or BBO at the stated levels in the 
requirements. The Exchange believes the proposed rule change would 
improve market quality for all market participants on the Exchange and, 
as a consequence, attract more liquidity to the Exchange, thereby 
improving market-wide quality and price discovery. It is equitable for 
the Exchange to add additional incentives for member organizations to 
receive a credit when their orders add liquidity to the Exchange as a 
means of incentivizing increased liquidity adding activity. An increase 
in overall liquidity on the Exchange will improve the quality of the 
Exchange's market and increase its attractiveness to existing and 
prospective participants.
    The Exchange believes that requiring a member organization's SLP to 
have specific Adding and Setting ADV requirements in order to qualify 
for the proposed credits would also encourage additional displayed 
liquidity on the Exchange. Since the proposed SLP Incentive Tier would 
be new, no SLP currently qualifies for it. As noted, without a view of 
member organization activity on other exchanges and off-exchange 
venues, the Exchange has no way of knowing whether this proposed rule 
change would result in any SLP qualifying for the tiers. All member 
organizations that are SLPs or apply to be SLPs would be eligible to 
qualify for the proposed incremental credits if their SLP liquidity 
meets the Adding ADV requirements in Tapes A, B and C securities. Any 
market participant that is dissatisfied with the proposed new credit is 
free to shift order flow to competing venues that provide more 
favorable pricing or less stringent qualifying criteria. All such 
member organizations would continue to be subject to the same fee 
structure, and access to the Exchange's market would continue to be 
offered on fair and nondiscriminatory terms.
    The Exchange believes that offering an incremental credit for 
setting the NBBO or BBO will encourage higher levels of liquidity 
provision in the price discovery process and is consistent with the 
overall goals of enhancing market quality, thereby providing additional 
price improvement opportunities on the Exchange and benefiting 
investors generally. As to those market participants that do not 
presently qualify for the adding liquidity credits, the proposal will 
not adversely impact their existing pricing or their ability to qualify 
for other credits provided by the Exchange.
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.
    The Exchange believes it is not unfairly discriminatory to provide 
additional per share credits for activity that encourages the setting 
of the NBBO or BBO on the Exchange as the proposed credits would be 
provided on an equal basis to all member organizations that are SLPs or 
that choose to become SLPs and that add liquidity by meeting the new 
proposed requirements, who would all be eligible for the same credits 
on an equal and non-discriminatory basis. Accordingly, no member 
organization already operating on the Exchange would be disadvantaged 
by the proposed allocation of fees. As noted, the Exchange intends for 
the proposal to improve market quality on the Exchange and by extension 
attract more liquidity to the market, thereby improving market wide 
quality and price discovery. The Exchange also believes that the 
proposed change is not unfairly discriminatory because it is reasonably 
related to the value to the Exchange's market quality associated with 
higher volume. Further, as noted, the Exchange believes the proposal 
would provide an incentive for member organizations that are SLPs to 
continue to send orders that provide liquidity to the Exchange, to the 
benefit of all market participants. Further, it should be noted that 
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. 
Finally, 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,\19\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, as discussed above, the Exchange believes 
that the proposed changes would encourage the submission of additional 
liquidity to a public exchange, thereby promoting market depth, price 
discovery and transparency and enhancing order execution opportunities 
for 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.'' \20\
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f(b)(8).
    \20\ 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

[[Page 78401]]

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) \21\ of the Act and paragraph (f)(2) of Rule 
19b-4 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.
---------------------------------------------------------------------------

    \21\ 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-2024-59 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-2024-59. 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-2024-59 and should be 
submitted on or before October 16, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-21882 Filed 9-24-24; 8:45 am]
BILLING CODE 8011-01-P
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