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, 86055-86061 [2024-25049]
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Federal Register / Vol. 89, No. 209 / Tuesday, October 29, 2024 / Notices
or Stockholder Nominees before a
special meeting. The informational
requirements are designed to enhance
investor protection by helping to ensure
among other things, that the Corporation
and its stockholders have full and
accurate information about nominating
stockholders and Stockholder Nominees
and that such stockholders and
nominees comply with applicable laws,
regulations and other requirements.
The changes that the Exchange is
proposing with regard to so-called
‘‘advance notice bylaws’’ in light of the
recent developments in Delaware law
are designed to help provide additional
clarity to stockholders wishing to bring
business before a stockholder meeting or
propose a Stockholder Nominee. The
Exchange believes that this filing
furthers the objectives of Section 6(b)(5)
by simplifying the requirements and
clarifying the information that must be
disclosed by stockholders. This furthers
the interests of investors and the public
by removing potential impediments to
raising business or proposing
Stockholder Nominees that may
otherwise restrict a stockholder’s ability
to participate in the corporate
governance of the Corporation.
Finally, the remaining changes to
existing provisions of the CGM Bylaws
are clarifying in nature, and they
enhance investor protection and the
public interest by preventing confusion
with respect to the operation of the
Bylaw provisions.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
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Because the proposed rule change
relates to the governance of the
Corporation and not to the operations of
the Exchange, the Exchange does not
believe that the proposed rule change
will impose any burden on competition
not necessary or appropriate in
furtherance of the purposes of the Act.
The proposed rule change is not
designed to address any competitive
issue or have any impact on
competition; rather, adoption of a
stockholder special meeting provision,
updating ‘‘advance notice bylaws,’’ and
other bylaws updates by the Corporation
are intended to enhance corporate
governance and accountability to
stockholders.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the Exchange consents, the Commission
will:
A. by order approve or disapprove
such proposed rule change, or
B. institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CboeBZX–2024–087 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–CboeBZX–2024–087. 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
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copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–CboeBZX–2024–087 and should be
submitted on or before November 19,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–25057 Filed 10–28–24; 8:45 am]
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:
PO 00000
86055
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101410; File No. SR–
NYSEARCA–2024–85]
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
October 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 October
10, 2024, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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 (1) increase the
credits payable under certain Mid-Point
Liquidity (‘‘MPL’’) Order pricing tiers,
and (2) adopt a lower fee for certain
Retail Orders that remove liquidity in
securities with a per share price below
$1.00. 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.
7 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 89, No. 209 / Tuesday, October 29, 2024 / Notices
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Fee Schedule to (1) increase the credits
payable under certain MPL Order 3
pricing tiers, and (2) adopt a lower fee
for certain Retail Orders 4 that remove
liquidity in securities with a per share
price below $1.00 (‘‘Sub-Dollar
Securities’’), as described below.
The Exchange proposes to implement
the fee changes effective October 10,
2024.5
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Background
The Exchange operates in a highly
competitive market. The Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, the
Commission highlighted the importance
of market forces in determining prices
and SRO revenues and, also, recognized
that current regulation of the market
system ‘‘has been remarkably successful
in promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 6
3 A MPL Order is a limit order that is not
displayed and does not route, with a working price
at the lower (higher) of the midpoint of the
Protected Best Bid/Offer or its limit price. See
NYSE Arca Rule 7.31–E(d)(3).
4 Rule 7.31–E(i)(4)(A) provides that an ‘‘order
designated with a ‘‘retail’’ modifier is an agency
order or a riskless principal order that meets the
criteria of FINRA Rule 5320.03 that originates from
a natural person and is submitted to the Exchange
by an ETP Holder, provided that no change is made
to the terms of the order with respect to price or
side of market and the order does not originate from
a trading algorithm or any other computerized
methodology.’’
5 The Exchange originally filed to amend the Fee
Schedule on October 1, 2024 (SR–NYSEARCA–
2024–82). SR–NYSEARCA–2024–82 was
subsequently withdrawn and replaced by this filing.
6 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
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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.’’ 7 Indeed, equity trading is
currently dispersed across 16
exchanges,8 numerous alternative
trading systems,9 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.10 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.11
The Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can move order flow, or discontinue or
reduce use of certain categories of
products. While it is not possible to
know a firm’s reason for shifting order
flow, the Exchange believes that one
such reason is because of fee changes at
any of the registered exchanges or nonexchange venues to which the firm
routes order flow. Accordingly,
competitive forces compel the Exchange
to use exchange transaction fees and
credits because market participants can
readily trade on competing venues if
they deem pricing levels at those other
venues to be more favorable.
Proposed Rule Change
MPL Orders
In response to this competitive
environment, the Exchange has already
established multiple levels of credits for
MPL Orders that allow ETP Holders to
passively interact with trading interest
on the Exchange and offer potential
(File No. S7–10–04) (Final Rule) (‘‘Regulation
NMS’’).
7 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).
8 See Cboe U.S Equities Market Volume
Summary, available at https://markets.cboe.com/us/
equities/market_share.
9 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.
10 See Cboe Global Markets U.S. Equities Market
Volume Summary, available at https://
markets.cboe.com/us/equities/market_share/.
11 See id.
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price improvement to incoming
marketable orders submitted to the
Exchange.12 In order to provide an
incentive for ETP Holders to provide
such liquidity, the credits increase
based on increased levels of volume
directed to the Exchange. The MPL
Order pricing tiers are intended to
incentivize ETP Holders to earn
increased credits by sending greater
amounts of liquidity-providing MPL
Orders in Tapes A, B and C securities
to the Exchange.
As noted above, the Exchange
currently provides multiple levels of
credits, ranging from $0.0015 per share
to $0.0030 per share, to ETP Holders
that send MPL Orders that provide
liquidity to the Exchange. For the
current MPL Order pricing tier, the
amount of the per share credit is based
on an ETP Holder’s ADV of provided
liquidity in MPL Orders for Tape A,
Tape B and Tape C Securities combined
(‘‘MPL Adding ADV’’).
Under current MPL Tier 8, for ETP
Holders that have MPL Adding ADV
during a billing month of at least 1.5
million shares, the Exchange currently
provides a credit of $0.0015 per share in
Tape A, Tape B and Tape C securities.
Under current MPL Tier 7, for ETP
Holders with MPL Adding ADV during
a billing month of at least 2 million
shares, the Exchange currently provides
a credit of $0.0020 per share in Tape A,
Tape B and Tape C securities. Under
current MPL Tier 6, the Exchange
provides a credit of $0.0025 per share in
Tape A, Tape B and Tape C securities
to ETP Holders that have MPL Adding
ADV during a billing month of at least
3 million shares. ETP Holders can
alternatively qualify for the MPL Tier 6
credit if they have MPL Adding ADV
during the billing month of at least 1
million shares and have MPL Adding
ADV, as a percent of Adding ADV, of at
least 50%. Under current MPL Tier 5,
the Exchange provides a credit of
$0.0026 per share in Tape A, Tape B
and Tape C securities to ETP Holders
that have MPL Adding ADV during a
billing month of at least 5 million
shares. ETP Holders can alternatively
qualify for the MPL Tier 5 credit if they
have MPL Adding ADV during the
billing month of at least 2 million shares
and have MPL Adding ADV, as a
percent of Adding ADV, of at least 50%.
Under MPL Tier 4, for ETP Holders with
MPL Adding ADV during a billing
month of at least 13 million shares, the
Exchange currently provides a credit of
$0.0027 per share in Tape A, Tape B
12 See, e.g., Securities Exchange Act Release No.
54511 (September 26, 2006), 71 FR 58460, 58461
(October 3, 2006) (SR–PCX–2005–53).
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and Tape C securities. Under MPL Tier
3, for ETP Holders with MPL Adding
ADV during a billing month of at least
15 million shares, the Exchange
currently provides a credit of $0.0028
per share in Tape A, Tape B and Tape
C securities. Under MPL Tier 2, for ETP
Holders with MPL Adding ADV during
a billing month of at least 25 million
shares, the Exchange currently provides
a credit of $0.0029 per share in Tape A,
Tape B and Tape C securities. Finally,
under MPL Tier 1, for ETP Holders with
MPL Adding ADV during a billing
month of at least 30 million shares, the
Exchange currently provides a credit of
$0.0030 per share in Tape A, Tape B
and Tape C securities.13
The Exchange now proposes to
increase the credits payable for MPL
Tier 1, MPL Tier 2, MPL Tier 3 and MPL
Tier 4, as follows:
• Increase the credit payable for MPL
Tier 1, from $0.0030 per share to
$0.0033 per share in Tape A, Tape B
and Tape C securities, without any
change to the volume requirement to
qualify for the proposed higher MPL
Tier 1 credit;
• Increase the credit payable for MPL
Tier 2, from $0.0029 per share to
$0.0032 per share in Tape A, Tape B
and Tape C securities, without any
change to the volume requirement to
qualify for the proposed higher MPL
Tier 2 credit;
• Increase the credit payable for MPL
Tier 3, from $0.0028 per share to
$0.0031 per share in Tape A, Tape B
and Tape C securities, without any
change to the volume requirement to
qualify for the proposed higher MPL
Tier 3 credit; and
• Increase the credit payable for MPL
Tier 4, from $0.0027 per share to
$0.0029 per share in Tape A, Tape B
and Tape C securities, without any
change to the volume requirement to
qualify for the proposed higher MPL
Tier 4 credit.
With this proposed change, the MPL
Order Tiers pricing tier would appear as
follows:
MPL order tiers
Minimum requirement
Tier
MPL
MPL
MPL
MPL
MPL
Tier
Tier
Tier
Tier
Tier
1
2
3
4
5
.............................................
.............................................
.............................................
.............................................
.............................................
MPL Tier 6 .............................................
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MPL Tier 7 .............................................
MPL Tier 8 .............................................
MPL adding
ADV
MPL adding ADV as
percent of adding ADV
30 Million ...............................................
25 Million ...............................................
15 Million ...............................................
13 Million ...............................................
5 Million or .............................................
2 Million .................................................
3 Million or .............................................
1 Million .................................................
2 Million .................................................
1.5 Million ..............................................
..........................................
..........................................
..........................................
..........................................
..........................................
50
..........................................
50
..........................................
..........................................
The goal of the proposed rule change
is to incentivize ETP Holders to increase
the number of MPL Orders they post on
the Exchange’s Book, which would
provide additional price improvement
opportunities for incoming orders, and
thus qualify for the proposed higher per
share credits. MPL Orders allow for
additional opportunities for passive
interaction with trading interest on the
Exchange and are designed to offer
potential price improvement to
incoming marketable orders submitted
to the Exchange. The Exchange believes
that by correlating the level of the credit
to the level of MPL Adding ADV, the
Exchange’s fee structure would
incentivize ETP Holders to submit more
liquidity-providing MPL Orders to the
Exchange, thereby increasing the
potential for price improvement to
incoming marketable orders submitted
to the Exchange.
The Exchange believes adopting
increased credits payable under the
MPL Tiers 1, 2, 3 and 4 would provide
an incentive for ETP Holders to send
increased order flow to qualify for these
tiers. As noted above, the Exchange
operates in a competitive environment,
particularly as it relates to attracting
MPL Orders that are posted on the
Exchange’s Book. Since the Exchange is
not amending the volume requirement
to qualify for MPL Tiers 1, 2, 3 and 4,
the Exchange believes that the proposed
higher credits would incentivize ETP
Holders to route a greater number of
liquidity-providing orders to the
Exchange to qualify for the proposed
higher credits.
The Exchange does not know how
much order flow ETP Holders choose to
route to other exchanges or to offexchange venues. Without having a
view of ETP Holders’ activity on other
markets and off-exchange venues, the
Exchange has no way of knowing
whether the proposed fee change would
result in any ETP Holder sending more
of its liquidity-providing orders to the
Exchange to qualify for the proposed
higher credits. The Exchange cannot
predict with certainty how many ETP
Holders would avail themselves of this
opportunity, but additional liquidity-
13 The Exchange charges a fee of $0.0030 per
share for MPL Orders in Tape A, Tape B and Tape
C Securities that remove liquidity from the
Exchange that are not designated as ‘‘Retail
Orders.’’ MPL Orders removing liquidity from the
Exchange that are designated as Retail Orders are
subject to a fee of $0.0010 per share. See Fee
Schedule.
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Credit for MPL adding
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Tape A
Tape B and
Tape C
($0.0033)
(0.0032)
(0.0031)
(0.0029)
(0.0026)
($0.0033)
(0.0032)
(0.0031)
(0.0029)
(0.0026)
(0.0025)
(0.0025)
(0.0020)
(0.0015)
(0.0020)
(0.0015)
providing orders would benefit all
market participants because it would
provide greater execution opportunities
on the Exchange. The Exchange believes
the proposed higher credits would
provide an incentive for ETP Holders to
submit additional MPL Orders to the
Exchange to qualify for such credits.
Sub-Dollar Retail Day Remove Tier
As described below, the Exchange
proposes to adopt a new pricing tier that
would provide ETP Holders the ability
to pay a lower fee for Retail Orders in
Sub-Dollar Securities with a time-inforce of Day that remove liquidity from
the Exchange. Currently, the Exchange
charges a fee equal to 0.3% of the total
dollar value for all orders in Sub-Dollar
Securities that remove liquidity.14
Specifically, the Exchange proposes to
adopt a new pricing tier titled SubDollar Retail Day Remove Tier under
Section VIII. Tier Rates—Round Lots
and Odd Lots (Per Share Price Below
$1.00). As proposed, ETP Holders that,
during the billing month, have Retail
Orders in Sub-Dollar Securities with a
14 See Fee Schedule, Section III. Standard Rates—
Transactions (applicable when Tier Rates do not
apply).
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time-in-force of Day equal to 0.20% of
CADV 15 in Sub-Dollar Securities that
remove liquidity would be charged a fee
of 0.20% of total dollar value. ETP
Holders that meet the proposed volume
requirement would qualify to pay the
proposed lower fee for Retail Orders in
Sub-Dollar Securities with a time-inforce of Day that remove liquidity.
The purpose of the proposed rule
change is to encourage greater
participation from ETP Holders and
promote liquidity in Retail Orders. The
Exchange believes that the proposed
rule change to adopt a volume
requirement to qualify for the proposed
fee reduction would incentivize ETP
Holders to direct a greater number of
Retail Orders in Sub-Dollar Securities to
the Exchange that remove liquidity. As
described above, ETP Holders have a
choice of where to send their Retail
Orders in Sub-Dollar Securities that
remove liquidity. The Exchange believes
that the proposed rule change to reduce
fees paid by ETP Holders for Retail
Orders in Sub-Dollar Securities could
lead to more ETP Holders choosing to
route such orders for execution to the
Exchange rather than to a competing
exchange.
While the Exchange proposes to adopt
a volume threshold for the proposed
new pricing tier, the Exchange believes
ETP Holders will to be able to meet the
proposed requirement given the
increased trading in Sub-Dollar
Securities in recent months. ETP
Holders that trade in Sub-Dollar
Securities would benefit by paying a
lower fee for Retail Orders with a timein-force of Day if they choose to send
such orders to the Exchange. Based on
their current trading profile on the
Exchange, a number of ETP Holders
would currently qualify for the
proposed lower fee. However, without
having a view of ETP Holders’ activity
on other markets and off-exchange
venues, the Exchange has no way of
knowing whether this proposed rule
change would result in other ETP
Holders directing orders to the
Exchange in order to qualify for the
proposed lower fee. The Exchange
cannot predict with certainty how many
ETP Holders would avail themselves of
this opportunity, but increased activity
of Retail Orders in Sub-Dollar Securities
15 Pursuant to Section I. of the Fee Schedule, the
term ‘‘CADV’’ means, unless otherwise stated, the
United States consolidated average daily volume of
transactions reported to a securities information
processor (‘‘SIP’’). Transactions that are not
reported to a SIP are not included in the CADV. If
CADV is preceded by a reference to a Tape or to
Sub-Dollar, then CADV would refer to all
consolidated average daily volume of transactions
reported to a SIP for all securities in that Tape or
to all Sub-Dollar securities.
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would benefit all market participants
because it would provide greater
execution opportunities on 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,16 in general, and
furthers the objectives of Sections
6(b)(4) and (5) of the Act,17 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.
The Proposed Fee Change Is Reasonable
As discussed above, the Exchange
operates in a highly fragmented and
competitive market. The Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 18
As the Commission itself recognized,
the market for trading services in NMS
stocks has become ‘‘more fragmented
and competitive.’’ 19 Indeed, equity
trading is currently dispersed across 16
exchanges,20 numerous alternative
trading systems,21 and broker-dealer
internalizers and wholesalers, all
competing for order flow. Based on
publicly-available information, no
16 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
18 See Regulation NMS, supra note 6, 70 FR at
37499.
19 See Securities Exchange Act Release No. 51808,
84 FR 5202, 5253 (February 20, 2019) (File No. S7–
05–18) (Final Rule).
20 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.
21 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.
17 15
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single exchange currently has more than
20% market share (whether including or
excluding auction volume).22 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.
MPL Orders
The Exchange believes the proposed
changes to MPL Tiers 1, 2, 3 and 4 are
reasonable because the increased credits
payable under these tiers would provide
an incentive for ETP Holders to route
greater amounts of liquidity-providing
orders to the Exchange. As noted above,
the Exchange operates in a highly
competitive environment, particularly
for attracting order flow that provides
liquidity on an exchange. The Exchange
believes it is reasonable to provide the
higher credits under MPL Tiers 1, 2, 3,
and 4 for orders that provide liquidity
if an ETP Holder meets the qualification
for such pricing tiers.
The Exchange believes the proposed
increased credits are reasonable as they
would provide an additional incentive
for ETP Holders to qualify for these new
tiers and direct their order flow to the
Exchange and provide meaningful
added levels of liquidity, thereby
contributing to the depth, market
quality, and price improvement on the
Exchange.
On the backdrop of the competitive
environment in which the Exchange
currently operates, the proposed rule
change is a reasonable attempt by the
Exchange to increase its liquidity and
improve its market share relative to its
competitors.
Sub-Dollar Retail Day Remove Tier
The Exchange believes it is reasonable
to adopt the proposed Sub-Dollar Retail
Day Remove pricing tier because the
Exchange believes the proposed lower
fee under the proposed pricing tier
would encourage greater participation
from ETP Holders, which could result in
increased execution of Retail Orders in
Sub-Dollar Securities. In this regard, an
ETP Holder that does not qualify for the
proposed lower fees would continue to
pay the current fee applicable to Retail
22 See Cboe Global Markets U.S. Equities Market
Volume Summary, available at https://
markets.cboe.com/us/equities/market_share/.
E:\FR\FM\29OCN1.SGM
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Federal Register / Vol. 89, No. 209 / Tuesday, October 29, 2024 / Notices
Orders in Sub-Dollar Securities that
remove liquidity. The proposed new
pricing tier would create an added
financial incentive for ETP Holders to
bring additional retail flow to a public
market. The proposed new pricing tier
is also reasonable because it would
reduce the costs of ETP Holders that
represent retail flow and potentially also
reduce costs to their customers.
The Exchange believes that it is
reasonable that only Retail Orders in
Sub-Dollar Securities with a time-inforce designation of Day that remove
liquidity would count toward qualifying
for the Sub-Dollar Retail Day Remove
Tier. The Exchange notes that it
currently offers lower fees for Retail
Orders with a time-in-force of Day that
remove liquidity in securities with a per
share price of $1.00 or above under
Retail Tiers 1, 2, and 3 and under Retail
Step-Up Tier.23 The Exchange believes
that the proposed volume requirement
to qualify for the proposed lower fee is
reasonable because it is within a range
that the Exchange believes would
continue to incentivize ETP Holders to
submit Retail Orders in Sub-Dollar
Securities to the Exchange to qualify for
the proposed lower fee.
khammond on DSKJM1Z7X2PROD with NOTICES
The Proposed Fee Change is an
Equitable Allocation of Credits and Fees
MPL Orders
The Exchange believes that the
adoption of increased credits under
MPL Tiers 1, 2, 3 and 4 is equitable
because the magnitude of the additional
credit is not unreasonably high in
comparison to the credit paid with
respect to other pricing tiers on the
Exchange, and in comparison to the
credits paid by other exchanges for
orders that provide midpoint liquidity.
For example, ETP Holders currently
receive credits in Tape A, Tape B and
Tape C securities that range between
$0.0010 per share and $0.0038 per share
under Standard and Tiered rates. With
respect to credits paid by the Exchange’s
competitors, the Nasdaq Stock Market
LLC provides a credit of $0.0028 per
share to add non-displayed midpoint
liquidity in Tape A, Tape B and Tape
C Securities on that market for firms
that add midpoint liquidity that
represents 0.30% TCV or more 24 NYSE
American LLC, an affiliate of the
Exchange, also currently provides a
credit of $0.0030 per share to add MPL
liquidity on that market for members
23 See Fee Schedule, Retail Tiers under Section
VII. Tier Rates—Round Lots and Odd Lots (Per
Share Price $1.00 or Above).
24 See Rebate to Add Non-Displayed Midpoint
Liquidity, at https://nasdaqtrader.com/Trader.
aspx?id=PriceListTrading2.
VerDate Sep<11>2014
17:34 Oct 28, 2024
Jkt 265001
that add greater than 3.5 million
shares.25
The Exchange believes the proposed
rule change would improve market
quality for all market participants on the
Exchange and, as a consequence, attract
more liquidity to the Exchange thereby
improving market-wide quality. ETP
Holders that currently qualify for credits
associated with MPL Orders will
continue to receive credits when they
provide liquidity to the Exchange. The
Exchange believes that recalibrating the
credits for providing liquidity will
continue to attract order flow and
liquidity to the Exchange, thereby
providing additional price improvement
opportunities on the Exchange and
benefiting investors generally. As to
those market participants that do not
presently qualify for the credits
associated with MPL Orders, the
proposal will not adversely impact their
existing pricing or their ability to
qualify for other credits provided by the
Exchange.
Sub-Dollar Retail Day Remove Tier
The Exchange believes that the
proposed adoption of the Sub-Dollar
Retail Day Remove pricing tier is
equitable. The proposed new pricing
tier is intended to provide ETP Holders
an incentive to send a greater number of
Retail Orders in Sub-Dollar Securities to
the Exchange in order to pay a lower fee
for such orders when removing liquidity
from the Exchange, thereby increasing
the number of orders that are executed
on the Exchange, promoting price
discovery and transparency and
enhancing order execution
opportunities and improving overall
liquidity on a public exchange. The
Exchange also believes that the
proposed change is equitable because
the proposed new pricing tier would
apply to all similarly situated ETP
Holders that remove liquidity. As
previously noted, the Exchange operates
in a competitive environment,
particularly as it relates to attracting
Retail Orders to the Exchange.
The Exchange believes that a number
of ETP Holders could qualify for the
proposed lower fee based on their
current trading profile on the Exchange
if they choose to direct more of their
order flow to the Exchange. However,
without having a view of an ETP
Holder’s activity on other exchanges
and off-exchange venues, the Exchange
has no way of knowing whether this
proposed rule change would result in
25 See Standard Rates under I. Transaction Fees
(other than for Transactions by an eDMM in
Securities Assigned to an eDMM), at https://
www.nyse.com/publicdocs/nyse/markets/nyseamerican/NYSE_America_Equities_Price_List.pdf.
PO 00000
Frm 00125
Fmt 4703
Sfmt 4703
86059
any ETP Holder directing Retail Orders
to the Exchange in order to qualify for
the proposed lower fee. The Exchange
believes the proposed rule change
would improve market quality for all
market participants on the Exchange
and, as a consequence, attract more
Retail Orders to the Exchange, thereby
improving market-wide quality and
price discovery.
The Exchange also believes the
proposed Sub-Dollar Retail Day Remove
Tier is equitable and not unfairly
discriminatory because it is available to
all ETP Holders on an equal basis. The
Exchange does not believe that it is
unfairly discriminatory to offer lower
fees to ETP Holders as these participants
would be subject to meeting prescribed
volume requirements. The Exchange
believes that the proposed rule change
is also equitable and not unfairly
discriminatory because maintaining or
increasing the proportion of Retail
Orders in exchange-listed securities that
are executed on a registered national
securities exchange (rather than relying
on certain available off-exchange
execution methods) would contribute to
investors’ confidence in the fairness of
their transactions and would benefit all
investors by deepening the Exchange’s
liquidity pool, supporting the quality of
price discovery, promoting market
transparency and improving investor
protection.
The Proposed Fee Change Is Not
Unfairly Discriminatory
MPL Orders
The Exchange believes that the
adoption of increased credits under
MPL Tiers 1, 2, 3 and 4 is not unfairly
discriminatory. Moreover, the proposed
higher credits neither targets nor will it
have a disparate impact on any
particular category of market
participant. The Exchange believes it is
not unfairly discriminatory to provide
the increased per share credits under
MPL Tiers 1, 2, 3, and 4 as each such
credit would be provided on an equal
basis to all ETP Holders that add
liquidity by meeting the volume
requirement of MPL Tiers 1, 2, 3, and
4. The Exchange believes the proposed
increased per share credits would
incentivize ETP Holders to send more of
their MPL Orders to the Exchange to
qualify for such credits. The proposed
higher credits would apply equally to
all ETP Holders as each would be
required to provide liquidity in MPL
Orders for Tape A, Tape B and Tape C
Securities combined during the billing
month regardless of whether an ETP
Holder currently meets the requirement
of another pricing tier.
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Federal Register / Vol. 89, No. 209 / Tuesday, October 29, 2024 / Notices
Sub-Dollar Retail Day Remove Tier
khammond on DSKJM1Z7X2PROD with NOTICES
The Exchange believes that the
adoption of the proposed Sub-Dollar
Retail Day Remove pricing tier is not
unfairly discriminatory. The Exchange
also believes that the proposal to adopt
a volume requirement to qualify for the
proposed fee reduction is not unfairly
discriminatory. In the prevailing
competitive environment, ETP Holders
are free to disfavor the Exchange’s
pricing if they view the proposed fee as
excessive. Moreover, the proposal
neither targets nor will it have a
disparate impact on any particular
category of market participant. The
Exchange believes that the proposed
rule change will incentivize ETP
Holders to direct a greater number of
Retail Orders to a public exchange to
qualify for the proposed reduced fee for
removing liquidity, thereby promoting
price discovery and transparency and
enhancing order execution
opportunities for ETP Holders. The
proposal does not permit unfair
discrimination because the proposed
volume requirement for removing
liquidity would be applied to all
similarly situated ETP Holders, who
would all be eligible to pay a reduced
fee on an equal basis. Accordingly, no
ETP Holder already operating on the
Exchange would be disadvantaged by
this allocation of fees. The Exchange
believes it is not unfairly discriminatory
to provide lower fees for removing
liquidity as the proposed fee would be
provided on an equal basis to all ETP
Holders that remove liquidity by
meeting the proposed volume
requirement. Further, the Exchange
believes the proposed reduced fee
would provide an incentive for ETP
Holders to execute more of their Retail
Orders on the Exchange.
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,26 the Exchange believes that the
proposed rule change would not impose
any burden on competition that is not
26 15
27 See Regulation NMS, supra note 6, 70 FR
37498–99.
U.S.C. 78f(b)(8).
VerDate Sep<11>2014
17:34 Oct 28, 2024
necessary or appropriate in furtherance
of the purposes of the Act. Instead, as
discussed above, the Exchange believes
that the proposed changes would
encourage the submission of additional
liquidity to a public exchange, thereby
promoting market depth, price
discovery and transparency and
enhancing order execution
opportunities for ETP Holders. As a
result, the Exchange believes that the
proposed change furthers the
Commission’s goal in adopting
Regulation NMS of fostering integrated
competition among orders, which
promotes ‘‘more efficient pricing of
individual stocks for all types of orders,
large and small.’’ 27
Intramarket Competition. The
proposed changes are designed to attract
additional order flow to the Exchange.
The Exchange believes that the adoption
of higher credits under MPL Tiers 1, 2,
3 and 4, would continue to incentivize
market participants to direct more
orders to the Exchange, and in
particular, liquidity-providing MPL
Orders. Greater liquidity benefits all
market participants on the Exchange by
providing more trading opportunities.
The proposed changes to the MPL Order
pricing tiers should incentivize ETP
Holders to send liquidity-providing
orders to the Exchange, thereby
contributing to robust levels of liquidity,
which would benefit all market
participants on the Exchange. The
proposed higher credits would be
available to all similarly-situated market
participants, and, as such, the proposed
changes would not impose a disparate
burden on competition among market
participants on the Exchange. The
proposed rule change is also designed to
attract Retail Orders in Sub-Dollar
Securities to the Exchange. The
Exchange believes that the proposed
change would incentivize market
participants to direct retail order flow to
a public market. 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 their orders to the Exchange,
thereby contributing towards a robust
and well-balanced market ecosystem.
The proposed fee reduction 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.
Additionally, the proposed change
would apply to all ETP Holders equally
Jkt 265001
PO 00000
Frm 00126
Fmt 4703
Sfmt 4703
in that all ETP Holders would have a
reasonable opportunity to meet the
volume requirement to qualify for the
proposed fee reduction and would pay
a lower fee for removing liquidity if
such criteria is met.
Intermarket Competition. The
Exchange operates in a highly
competitive market in which market
participants can readily choose to send
their orders to other exchange and offexchange venues if they deem fee levels
at those other venues to be more
favorable. As noted above, the
Exchange’s market share of intraday
trading (i.e., excluding auctions) is
currently less than 12%. In such an
environment, the Exchange must
continually review, and consider
adjusting its fees and rebates to remain
competitive with other exchanges and
with off-exchange venues. Because
competitors are free to modify their own
fees and credits in response, the
Exchange does not believe its proposed
fee change can impose any burden on
intermarket competition.
The Exchange believes that the
proposed changes could promote
competition between the Exchange and
other execution venues, including those
that currently offer similar order types
and comparable transaction pricing, by
encouraging additional orders to be sent
to the Exchange for execution.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A)(ii) of
the Act,28 and Rule 19b–4(f)(2)
thereunder 29 the Exchange has
designated this proposal as establishing
or changing a due, fee, or other charge
imposed on any person, whether or not
the person is a member of the selfregulatory organization, which renders
the proposed rule change effective upon
filing. 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.
28 15
29 17
E:\FR\FM\29OCN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4.
29OCN1
Federal Register / Vol. 89, No. 209 / Tuesday, October 29, 2024 / Notices
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–2024–85 on the subject
line.
Paper Comments
khammond on DSKJM1Z7X2PROD with NOTICES
• 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–2024–85. 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
obscene or subject to copyright
protection. All submissions should refer
to file number SR–NYSEARCA–2024–
85, and should be submitted on or
before November 19, 2024.
VerDate Sep<11>2014
17:34 Oct 28, 2024
Jkt 265001
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–25049 Filed 10–28–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101421; File No. SR–C2–
2024–016]
Self-Regulatory Organizations; Cboe
C2 Exchange, Inc.; Notice of Filing of
a Proposed Rule Change With Respect
to Amendments to the Seventh
Amended and Restated Bylaws (the
‘‘CGM Bylaws’’) of its Parent
Corporation, Cboe Global Markets, Inc.
(‘‘Cboe’’ or ‘‘Corporation’’)
October 23, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
11, 2024, Cboe C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) is filing with the
Securities and Exchange Commission
(the ‘‘Commission’’) a proposed rule
change with respect to amendments to
the Seventh Amended and Restated
Bylaws (the ‘‘CGM Bylaws’’) of its
parent corporation, Cboe Global
Markets, Inc. (‘‘Cboe’’ or ‘‘Corporation’’).
The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/ctwo/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
30 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00127
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86061
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.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
At Cboe’s annual meeting held on
May 16, 2024, Cboe’s stockholders
considered two advisory proposals that
would provide Cboe stockholders with
the right to call a special meeting of the
stockholders provided that a certain
threshold percentage of stockholders
propose to call such a meeting. The two
proposals were submitted separately.
One of the proposals was submitted by
an individual stockholder (‘‘Stockholder
Proposal’’). The other proposal was
submitted by Cboe Management
(‘‘Management Proposal’’). The
Stockholder Proposal, which did not
pass but received 45% of the votes cast,
requested that the CGM Board take steps
to enable stockholders having at least
10% of Cboe’s voting power to call a
special meeting of the stockholders. The
Management Proposal, which passed
with 65% of the votes cast, requested
that the CGM Board take steps to enable
stockholders having at least 25% of
Cboe’s voting power to call a special
meeting of the stockholders.
The Nominating & Governance
Committee of the CGM Board reviewed
the voting results of the Stockholder
Proposal and the Management Proposal
and discussed the stockholder voting
standards and rights contemplated by
the CGM Bylaws. Following this review,
the Nominating & Governance
Committee recommended to the CGM
Board, and the CGM Board approved,
certain changes to the CGM Bylaws to
implement the Management Proposal.
The CGM Board also approved
amending the CGM Bylaws to improve
the governance processes of Cboe, to
make certain provisions more consistent
with Delaware General Corporation Law
(‘‘DGCL’’), and to make clarifying and
cleanup changes to the CGM Bylaws.
The proposed rule change amends the
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]]>Agencies
[Federal Register Volume 89, Number 209 (Tuesday, October 29, 2024)]
[Notices]
[Pages 86055-86061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-25049]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101410; File No. SR-NYSEARCA-2024-85]
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
October 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 October 10, 2024, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Equities Fees and
Charges (``Fee Schedule'') to (1) increase the credits payable under
certain Mid-Point Liquidity (``MPL'') Order pricing tiers, and (2)
adopt a lower fee for certain Retail Orders that remove liquidity in
securities with a per share price below $1.00. The proposed rule change
is available on the Exchange's website at www.nyse.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
[[Page 86056]]
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 (1) increase the
credits payable under certain MPL Order \3\ pricing tiers, and (2)
adopt a lower fee for certain Retail Orders \4\ that remove liquidity
in securities with a per share price below $1.00 (``Sub-Dollar
Securities''), as described below.
---------------------------------------------------------------------------
\3\ A MPL Order is a limit order that is not displayed and does
not route, with a working price at the lower (higher) of the
midpoint of the Protected Best Bid/Offer or its limit price. See
NYSE Arca Rule 7.31-E(d)(3).
\4\ Rule 7.31-E(i)(4)(A) provides that an ``order designated
with a ``retail'' modifier is an agency order or a riskless
principal order that meets the criteria of FINRA Rule 5320.03 that
originates from a natural person and is submitted to the Exchange by
an ETP Holder, provided that no change is made to the terms of the
order with respect to price or side of market and the order does not
originate from a trading algorithm or any other computerized
methodology.''
---------------------------------------------------------------------------
The Exchange proposes to implement the fee changes effective
October 10, 2024.\5\
---------------------------------------------------------------------------
\5\ The Exchange originally filed to amend the Fee Schedule on
October 1, 2024 (SR-NYSEARCA-2024-82). SR-NYSEARCA-2024-82 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.'' \6\
---------------------------------------------------------------------------
\6\ 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.'' \7\ Indeed, equity trading is currently dispersed across
16 exchanges,\8\ numerous alternative trading systems,\9\ 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.\10\ 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.\11\
---------------------------------------------------------------------------
\7\ 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).
\8\ See Cboe U.S Equities Market Volume Summary, available at
https://markets.cboe.com/us/equities/market_share.
\9\ 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.
\10\ See Cboe Global Markets U.S. Equities Market Volume
Summary, available at https://markets.cboe.com/us/equities/market_share/.
\11\ See id.
---------------------------------------------------------------------------
The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
move order flow, or discontinue or reduce use of certain categories of
products. While it is not possible to know a firm's reason for shifting
order flow, the Exchange believes that one such reason is because of
fee changes at any of the registered exchanges or non-exchange venues
to which the firm routes order flow. Accordingly, competitive forces
compel the Exchange to use exchange transaction fees and credits
because market participants can readily trade on competing venues if
they deem pricing levels at those other venues to be more favorable.
Proposed Rule Change
MPL Orders
In response to this competitive environment, the Exchange has
already established multiple levels of credits for MPL Orders that
allow ETP Holders to passively interact with trading interest on the
Exchange and offer potential price improvement to incoming marketable
orders submitted to the Exchange.\12\ In order to provide an incentive
for ETP Holders to provide such liquidity, the credits increase based
on increased levels of volume directed to the Exchange. The MPL Order
pricing tiers are intended to incentivize ETP Holders to earn increased
credits by sending greater amounts of liquidity-providing MPL Orders in
Tapes A, B and C securities to the Exchange.
---------------------------------------------------------------------------
\12\ See, e.g., Securities Exchange Act Release No. 54511
(September 26, 2006), 71 FR 58460, 58461 (October 3, 2006) (SR-PCX-
2005-53).
---------------------------------------------------------------------------
As noted above, the Exchange currently provides multiple levels of
credits, ranging from $0.0015 per share to $0.0030 per share, to ETP
Holders that send MPL Orders that provide liquidity to the Exchange.
For the current MPL Order pricing tier, the amount of the per share
credit is based on an ETP Holder's ADV of provided liquidity in MPL
Orders for Tape A, Tape B and Tape C Securities combined (``MPL Adding
ADV'').
Under current MPL Tier 8, for ETP Holders that have MPL Adding ADV
during a billing month of at least 1.5 million shares, the Exchange
currently provides a credit of $0.0015 per share in Tape A, Tape B and
Tape C securities. Under current MPL Tier 7, for ETP Holders with MPL
Adding ADV during a billing month of at least 2 million shares, the
Exchange currently provides a credit of $0.0020 per share in Tape A,
Tape B and Tape C securities. Under current MPL Tier 6, the Exchange
provides a credit of $0.0025 per share in Tape A, Tape B and Tape C
securities to ETP Holders that have MPL Adding ADV during a billing
month of at least 3 million shares. ETP Holders can alternatively
qualify for the MPL Tier 6 credit if they have MPL Adding ADV during
the billing month of at least 1 million shares and have MPL Adding ADV,
as a percent of Adding ADV, of at least 50%. Under current MPL Tier 5,
the Exchange provides a credit of $0.0026 per share in Tape A, Tape B
and Tape C securities to ETP Holders that have MPL Adding ADV during a
billing month of at least 5 million shares. ETP Holders can
alternatively qualify for the MPL Tier 5 credit if they have MPL Adding
ADV during the billing month of at least 2 million shares and have MPL
Adding ADV, as a percent of Adding ADV, of at least 50%. Under MPL Tier
4, for ETP Holders with MPL Adding ADV during a billing month of at
least 13 million shares, the Exchange currently provides a credit of
$0.0027 per share in Tape A, Tape B
[[Page 86057]]
and Tape C securities. Under MPL Tier 3, for ETP Holders with MPL
Adding ADV during a billing month of at least 15 million shares, the
Exchange currently provides a credit of $0.0028 per share in Tape A,
Tape B and Tape C securities. Under MPL Tier 2, for ETP Holders with
MPL Adding ADV during a billing month of at least 25 million shares,
the Exchange currently provides a credit of $0.0029 per share in Tape
A, Tape B and Tape C securities. Finally, under MPL Tier 1, for ETP
Holders with MPL Adding ADV during a billing month of at least 30
million shares, the Exchange currently provides a credit of $0.0030 per
share in Tape A, Tape B and Tape C securities.\13\
---------------------------------------------------------------------------
\13\ The Exchange charges a fee of $0.0030 per share for MPL
Orders in Tape A, Tape B and Tape C Securities that remove liquidity
from the Exchange that are not designated as ``Retail Orders.'' MPL
Orders removing liquidity from the Exchange that are designated as
Retail Orders are subject to a fee of $0.0010 per share. See Fee
Schedule.
---------------------------------------------------------------------------
The Exchange now proposes to increase the credits payable for MPL
Tier 1, MPL Tier 2, MPL Tier 3 and MPL Tier 4, as follows:
Increase the credit payable for MPL Tier 1, from $0.0030
per share to $0.0033 per share in Tape A, Tape B and Tape C securities,
without any change to the volume requirement to qualify for the
proposed higher MPL Tier 1 credit;
Increase the credit payable for MPL Tier 2, from $0.0029
per share to $0.0032 per share in Tape A, Tape B and Tape C securities,
without any change to the volume requirement to qualify for the
proposed higher MPL Tier 2 credit;
Increase the credit payable for MPL Tier 3, from $0.0028
per share to $0.0031 per share in Tape A, Tape B and Tape C securities,
without any change to the volume requirement to qualify for the
proposed higher MPL Tier 3 credit; and
Increase the credit payable for MPL Tier 4, from $0.0027
per share to $0.0029 per share in Tape A, Tape B and Tape C securities,
without any change to the volume requirement to qualify for the
proposed higher MPL Tier 4 credit.
With this proposed change, the MPL Order Tiers pricing tier would
appear as follows:
----------------------------------------------------------------------------------------------------------------
MPL order tiers
-----------------------------------------------------------------------------------------------------------------
Minimum requirement Credit for MPL adding
------------------------------------------------------------------------------
Tier MPL adding ADV as Tape B and
MPL adding ADV percent of adding ADV Tape A Tape C
----------------------------------------------------------------------------------------------------------------
MPL Tier 1....................... 30 Million......... ........................ ($0.0033) ($0.0033)
MPL Tier 2....................... 25 Million......... ........................ (0.0032) (0.0032)
MPL Tier 3....................... 15 Million......... ........................ (0.0031) (0.0031)
MPL Tier 4....................... 13 Million......... ........................ (0.0029) (0.0029)
MPL Tier 5....................... 5 Million or....... ........................ (0.0026) (0.0026)
2 Million.......... 50
MPL Tier 6....................... 3 Million or....... ........................ (0.0025) (0.0025)
1 Million.......... 50
MPL Tier 7....................... 2 Million.......... ........................ (0.0020) (0.0020)
MPL Tier 8....................... 1.5 Million........ ........................ (0.0015) (0.0015)
----------------------------------------------------------------------------------------------------------------
The goal of the proposed rule change is to incentivize ETP Holders
to increase the number of MPL Orders they post on the Exchange's Book,
which would provide additional price improvement opportunities for
incoming orders, and thus qualify for the proposed higher per share
credits. MPL Orders allow for additional opportunities for passive
interaction with trading interest on the Exchange and are designed to
offer potential price improvement to incoming marketable orders
submitted to the Exchange. The Exchange believes that by correlating
the level of the credit to the level of MPL Adding ADV, the Exchange's
fee structure would incentivize ETP Holders to submit more liquidity-
providing MPL Orders to the Exchange, thereby increasing the potential
for price improvement to incoming marketable orders submitted to the
Exchange.
The Exchange believes adopting increased credits payable under the
MPL Tiers 1, 2, 3 and 4 would provide an incentive for ETP Holders to
send increased order flow to qualify for these tiers. As noted above,
the Exchange operates in a competitive environment, particularly as it
relates to attracting MPL Orders that are posted on the Exchange's
Book. Since the Exchange is not amending the volume requirement to
qualify for MPL Tiers 1, 2, 3 and 4, the Exchange believes that the
proposed higher credits would incentivize ETP Holders to route a
greater number of liquidity-providing orders to the Exchange to qualify
for the proposed higher credits.
The Exchange does not know how much order flow ETP Holders choose
to route to other exchanges or to off-exchange venues. Without having a
view of ETP Holders' activity on other markets and off-exchange venues,
the Exchange has no way of knowing whether the proposed fee change
would result in any ETP Holder sending more of its liquidity-providing
orders to the Exchange to qualify for the proposed higher credits. The
Exchange cannot predict with certainty how many ETP Holders would avail
themselves of this opportunity, but additional liquidity-providing
orders would benefit all market participants because it would provide
greater execution opportunities on the Exchange. The Exchange believes
the proposed higher credits would provide an incentive for ETP Holders
to submit additional MPL Orders to the Exchange to qualify for such
credits.
Sub-Dollar Retail Day Remove Tier
As described below, the Exchange proposes to adopt a new pricing
tier that would provide ETP Holders the ability to pay a lower fee for
Retail Orders in Sub-Dollar Securities with a time-in-force of Day that
remove liquidity from the Exchange. Currently, the Exchange charges a
fee equal to 0.3% of the total dollar value for all orders in Sub-
Dollar Securities that remove liquidity.\14\
---------------------------------------------------------------------------
\14\ See Fee Schedule, Section III. Standard Rates--Transactions
(applicable when Tier Rates do not apply).
---------------------------------------------------------------------------
Specifically, the Exchange proposes to adopt a new pricing tier
titled Sub-Dollar Retail Day Remove Tier under Section VIII. Tier
Rates--Round Lots and Odd Lots (Per Share Price Below $1.00). As
proposed, ETP Holders that, during the billing month, have Retail
Orders in Sub-Dollar Securities with a
[[Page 86058]]
time-in-force of Day equal to 0.20% of CADV \15\ in Sub-Dollar
Securities that remove liquidity would be charged a fee of 0.20% of
total dollar value. ETP Holders that meet the proposed volume
requirement would qualify to pay the proposed lower fee for Retail
Orders in Sub-Dollar Securities with a time-in-force of Day that remove
liquidity.
---------------------------------------------------------------------------
\15\ Pursuant to Section I. of the Fee Schedule, the term
``CADV'' means, unless otherwise stated, the United States
consolidated average daily volume of transactions reported to a
securities information processor (``SIP''). Transactions that are
not reported to a SIP are not included in the CADV. If CADV is
preceded by a reference to a Tape or to Sub-Dollar, then CADV would
refer to all consolidated average daily volume of transactions
reported to a SIP for all securities in that Tape or to all Sub-
Dollar securities.
---------------------------------------------------------------------------
The purpose of the proposed rule change is to encourage greater
participation from ETP Holders and promote liquidity in Retail Orders.
The Exchange believes that the proposed rule change to adopt a volume
requirement to qualify for the proposed fee reduction would incentivize
ETP Holders to direct a greater number of Retail Orders in Sub-Dollar
Securities to the Exchange that remove liquidity. As described above,
ETP Holders have a choice of where to send their Retail Orders in Sub-
Dollar Securities that remove liquidity. The Exchange believes that the
proposed rule change to reduce fees paid by ETP Holders for Retail
Orders in Sub-Dollar Securities could lead to more ETP Holders choosing
to route such orders for execution to the Exchange rather than to a
competing exchange.
While the Exchange proposes to adopt a volume threshold for the
proposed new pricing tier, the Exchange believes ETP Holders will to be
able to meet the proposed requirement given the increased trading in
Sub-Dollar Securities in recent months. ETP Holders that trade in Sub-
Dollar Securities would benefit by paying a lower fee for Retail Orders
with a time-in-force of Day if they choose to send such orders to the
Exchange. Based on their current trading profile on the Exchange, a
number of ETP Holders would currently qualify for the proposed lower
fee. However, without having a view of ETP Holders' activity on other
markets and off-exchange venues, the Exchange has no way of knowing
whether this proposed rule change would result in other ETP Holders
directing orders to the Exchange in order to qualify for the proposed
lower fee. The Exchange cannot predict with certainty how many ETP
Holders would avail themselves of this opportunity, but increased
activity of Retail Orders in Sub-Dollar Securities would benefit all
market participants because it would provide greater execution
opportunities on 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,\16\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\17\ 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.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Proposed Fee Change Is Reasonable
As discussed above, the Exchange operates in a highly fragmented
and competitive market. The Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
in Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \18\
---------------------------------------------------------------------------
\18\ See Regulation NMS, supra note 6, 70 FR at 37499.
---------------------------------------------------------------------------
As the Commission itself recognized, the market for trading
services in NMS stocks has become ``more fragmented and competitive.''
\19\ Indeed, equity trading is currently dispersed across 16
exchanges,\20\ numerous alternative trading systems,\21\ and broker-
dealer internalizers and wholesalers, all competing for order flow.
Based on publicly-available information, no single exchange currently
has more than 20% market share (whether including or excluding auction
volume).\22\ 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.
---------------------------------------------------------------------------
\19\ See Securities Exchange Act Release No. 51808, 84 FR 5202,
5253 (February 20, 2019) (File No. S7-05-18) (Final Rule).
\20\ 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.
\21\ 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.
\22\ See Cboe Global Markets U.S. Equities Market Volume
Summary, available at https://markets.cboe.com/us/equities/market_share/.
---------------------------------------------------------------------------
MPL Orders
The Exchange believes the proposed changes to MPL Tiers 1, 2, 3 and
4 are reasonable because the increased credits payable under these
tiers would provide an incentive for ETP Holders to route greater
amounts of liquidity-providing orders to the Exchange. As noted above,
the Exchange operates in a highly competitive environment, particularly
for attracting order flow that provides liquidity on an exchange. The
Exchange believes it is reasonable to provide the higher credits under
MPL Tiers 1, 2, 3, and 4 for orders that provide liquidity if an ETP
Holder meets the qualification for such pricing tiers.
The Exchange believes the proposed increased credits are reasonable
as they would provide an additional incentive for ETP Holders to
qualify for these new tiers and direct their order flow to the Exchange
and provide meaningful added levels of liquidity, thereby contributing
to the depth, market quality, and price improvement on the Exchange.
On the backdrop of the competitive environment in which the
Exchange currently operates, the proposed rule change is a reasonable
attempt by the Exchange to increase its liquidity and improve its
market share relative to its competitors.
Sub-Dollar Retail Day Remove Tier
The Exchange believes it is reasonable to adopt the proposed Sub-
Dollar Retail Day Remove pricing tier because the Exchange believes the
proposed lower fee under the proposed pricing tier would encourage
greater participation from ETP Holders, which could result in increased
execution of Retail Orders in Sub-Dollar Securities. In this regard, an
ETP Holder that does not qualify for the proposed lower fees would
continue to pay the current fee applicable to Retail
[[Page 86059]]
Orders in Sub-Dollar Securities that remove liquidity. The proposed new
pricing tier would create an added financial incentive for ETP Holders
to bring additional retail flow to a public market. The proposed new
pricing tier is also reasonable because it would reduce the costs of
ETP Holders that represent retail flow and potentially also reduce
costs to their customers.
The Exchange believes that it is reasonable that only Retail Orders
in Sub-Dollar Securities with a time-in-force designation of Day that
remove liquidity would count toward qualifying for the Sub-Dollar
Retail Day Remove Tier. The Exchange notes that it currently offers
lower fees for Retail Orders with a time-in-force of Day that remove
liquidity in securities with a per share price of $1.00 or above under
Retail Tiers 1, 2, and 3 and under Retail Step-Up Tier.\23\ The
Exchange believes that the proposed volume requirement to qualify for
the proposed lower fee is reasonable because it is within a range that
the Exchange believes would continue to incentivize ETP Holders to
submit Retail Orders in Sub-Dollar Securities to the Exchange to
qualify for the proposed lower fee.
---------------------------------------------------------------------------
\23\ See Fee Schedule, Retail Tiers under Section VII. Tier
Rates--Round Lots and Odd Lots (Per Share Price $1.00 or Above).
---------------------------------------------------------------------------
The Proposed Fee Change is an Equitable Allocation of Credits and Fees
MPL Orders
The Exchange believes that the adoption of increased credits under
MPL Tiers 1, 2, 3 and 4 is equitable because the magnitude of the
additional credit is not unreasonably high in comparison to the credit
paid with respect to other pricing tiers on the Exchange, and in
comparison to the credits paid by other exchanges for orders that
provide midpoint liquidity. For example, ETP Holders currently receive
credits in Tape A, Tape B and Tape C securities that range between
$0.0010 per share and $0.0038 per share under Standard and Tiered
rates. With respect to credits paid by the Exchange's competitors, the
Nasdaq Stock Market LLC provides a credit of $0.0028 per share to add
non-displayed midpoint liquidity in Tape A, Tape B and Tape C
Securities on that market for firms that add midpoint liquidity that
represents 0.30% TCV or more \24\ NYSE American LLC, an affiliate of
the Exchange, also currently provides a credit of $0.0030 per share to
add MPL liquidity on that market for members that add greater than 3.5
million shares.\25\
---------------------------------------------------------------------------
\24\ See Rebate to Add Non-Displayed Midpoint Liquidity, at
https://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
\25\ See Standard Rates under I. Transaction Fees (other than
for Transactions by an eDMM in Securities Assigned to an eDMM), at
https://www.nyse.com/publicdocs/nyse/markets/nyse-american/NYSE_America_Equities_Price_List.pdf.
---------------------------------------------------------------------------
The Exchange believes the proposed rule change would improve market
quality for all market participants on the Exchange and, as a
consequence, attract more liquidity to the Exchange thereby improving
market-wide quality. ETP Holders that currently qualify for credits
associated with MPL Orders will continue to receive credits when they
provide liquidity to the Exchange. The Exchange believes that
recalibrating the credits for providing liquidity will continue to
attract order flow and liquidity to the Exchange, thereby providing
additional price improvement opportunities on the Exchange and
benefiting investors generally. As to those market participants that do
not presently qualify for the credits associated with MPL Orders, the
proposal will not adversely impact their existing pricing or their
ability to qualify for other credits provided by the Exchange.
Sub-Dollar Retail Day Remove Tier
The Exchange believes that the proposed adoption of the Sub-Dollar
Retail Day Remove pricing tier is equitable. The proposed new pricing
tier is intended to provide ETP Holders an incentive to send a greater
number of Retail Orders in Sub-Dollar Securities to the Exchange in
order to pay a lower fee for such orders when removing liquidity from
the Exchange, thereby increasing the number of orders that are executed
on the Exchange, promoting price discovery and transparency and
enhancing order execution opportunities and improving overall liquidity
on a public exchange. The Exchange also believes that the proposed
change is equitable because the proposed new pricing tier would apply
to all similarly situated ETP Holders that remove liquidity. As
previously noted, the Exchange operates in a competitive environment,
particularly as it relates to attracting Retail Orders to the Exchange.
The Exchange believes that a number of ETP Holders could qualify
for the proposed lower fee based on their current trading profile on
the Exchange if they choose to direct more of their order flow to the
Exchange. However, without having a view of an ETP Holder'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 ETP
Holder directing Retail Orders to the Exchange in order to qualify for
the proposed lower fee. The Exchange believes the proposed rule change
would improve market quality for all market participants on the
Exchange and, as a consequence, attract more Retail Orders to the
Exchange, thereby improving market-wide quality and price discovery.
The Exchange also believes the proposed Sub-Dollar Retail Day
Remove Tier is equitable and not unfairly discriminatory because it is
available to all ETP Holders on an equal basis. The Exchange does not
believe that it is unfairly discriminatory to offer lower fees to ETP
Holders as these participants would be subject to meeting prescribed
volume requirements. The Exchange believes that the proposed rule
change is also equitable and not unfairly discriminatory because
maintaining or increasing the proportion of Retail Orders in exchange-
listed securities that are executed on a registered national securities
exchange (rather than relying on certain available off-exchange
execution methods) would contribute to investors' confidence in the
fairness of their transactions and would benefit all investors by
deepening the Exchange's liquidity pool, supporting the quality of
price discovery, promoting market transparency and improving investor
protection.
The Proposed Fee Change Is Not Unfairly Discriminatory
MPL Orders
The Exchange believes that the adoption of increased credits under
MPL Tiers 1, 2, 3 and 4 is not unfairly discriminatory. Moreover, the
proposed higher credits neither targets nor will it have a disparate
impact on any particular category of market participant. The Exchange
believes it is not unfairly discriminatory to provide the increased per
share credits under MPL Tiers 1, 2, 3, and 4 as each such credit would
be provided on an equal basis to all ETP Holders that add liquidity by
meeting the volume requirement of MPL Tiers 1, 2, 3, and 4. The
Exchange believes the proposed increased per share credits would
incentivize ETP Holders to send more of their MPL Orders to the
Exchange to qualify for such credits. The proposed higher credits would
apply equally to all ETP Holders as each would be required to provide
liquidity in MPL Orders for Tape A, Tape B and Tape C Securities
combined during the billing month regardless of whether an ETP Holder
currently meets the requirement of another pricing tier.
[[Page 86060]]
Sub-Dollar Retail Day Remove Tier
The Exchange believes that the adoption of the proposed Sub-Dollar
Retail Day Remove pricing tier is not unfairly discriminatory. The
Exchange also believes that the proposal to adopt a volume requirement
to qualify for the proposed fee reduction is not unfairly
discriminatory. In the prevailing competitive environment, ETP Holders
are free to disfavor the Exchange's pricing if they view the proposed
fee as excessive. Moreover, the proposal neither targets nor will it
have a disparate impact on any particular category of market
participant. The Exchange believes that the proposed rule change will
incentivize ETP Holders to direct a greater number of Retail Orders to
a public exchange to qualify for the proposed reduced fee for removing
liquidity, thereby promoting price discovery and transparency and
enhancing order execution opportunities for ETP Holders. The proposal
does not permit unfair discrimination because the proposed volume
requirement for removing liquidity would be applied to all similarly
situated ETP Holders, who would all be eligible to pay a reduced fee on
an equal basis. Accordingly, no ETP Holder already operating on the
Exchange would be disadvantaged by this allocation of fees. The
Exchange believes it is not unfairly discriminatory to provide lower
fees for removing liquidity as the proposed fee would be provided on an
equal basis to all ETP Holders that remove liquidity by meeting the
proposed volume requirement. Further, the Exchange believes the
proposed reduced fee would provide an incentive for ETP Holders to
execute more of their Retail Orders on the Exchange.
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,\26\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, as discussed above, the Exchange believes
that the proposed changes would encourage the submission of additional
liquidity to a public exchange, thereby promoting market depth, price
discovery and transparency and enhancing order execution opportunities
for ETP Holders. As a result, the Exchange believes that the proposed
change furthers the Commission's goal in adopting Regulation NMS of
fostering integrated competition among orders, which promotes ``more
efficient pricing of individual stocks for all types of orders, large
and small.'' \27\
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78f(b)(8).
\27\ See Regulation NMS, supra note 6, 70 FR 37498-99.
---------------------------------------------------------------------------
Intramarket Competition. The proposed changes are designed to
attract additional order flow to the Exchange. The Exchange believes
that the adoption of higher credits under MPL Tiers 1, 2, 3 and 4,
would continue to incentivize market participants to direct more orders
to the Exchange, and in particular, liquidity-providing MPL Orders.
Greater liquidity benefits all market participants on the Exchange by
providing more trading opportunities. The proposed changes to the MPL
Order pricing tiers should incentivize ETP Holders to send liquidity-
providing orders to the Exchange, thereby contributing to robust levels
of liquidity, which would benefit all market participants on the
Exchange. The proposed higher credits would be available to all
similarly-situated market participants, and, as such, the proposed
changes would not impose a disparate burden on competition among market
participants on the Exchange. The proposed rule change is also designed
to attract Retail Orders in Sub-Dollar Securities to the Exchange. The
Exchange believes that the proposed change would incentivize market
participants to direct retail order flow to a public market. 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
their orders to the Exchange, thereby contributing towards a robust and
well-balanced market ecosystem. The proposed fee reduction 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. Additionally, the proposed
change would apply to all ETP Holders equally in that all ETP Holders
would have a reasonable opportunity to meet the volume requirement to
qualify for the proposed fee reduction and would pay a lower fee for
removing liquidity if such criteria is met.
Intermarket Competition. The Exchange operates in a highly
competitive market in which market participants can readily choose to
send their orders to other exchange and off-exchange venues if they
deem fee levels at those other venues to be more favorable. As noted
above, the Exchange's market share of intraday trading (i.e., excluding
auctions) is currently less than 12%. In such an environment, the
Exchange must continually review, and consider adjusting its fees and
rebates to remain competitive with other exchanges and with off-
exchange venues. Because competitors are free to modify their own fees
and credits in response, the Exchange does not believe its proposed fee
change can impose any burden on intermarket competition.
The Exchange believes that the proposed changes could promote
competition between the Exchange and other execution venues, including
those that currently offer similar order types and comparable
transaction pricing, by encouraging additional orders to be sent to the
Exchange for execution.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A)(ii) of the Act,\28\ and Rule 19b-
4(f)(2) thereunder \29\ the Exchange has designated this proposal as
establishing or changing a due, fee, or other charge imposed on any
person, whether or not the person is a member of the self-regulatory
organization, which renders the proposed rule change effective upon
filing. 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.
---------------------------------------------------------------------------
\28\ 15 U.S.C. 78s(b)(3)(A)(ii).
\29\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
[[Page 86061]]
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-2024-85 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-2024-85. 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 obscene or subject to copyright protection.
All submissions should refer to file number SR-NYSEARCA-2024-85, and
should be submitted on or before November 19, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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\30\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-25049 Filed 10-28-24; 8:45 am]
BILLING CODE 8011-01-P
