80 FR 54646 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Section 3 of NYSE Arca Equities Rule 8 To Extend the Effectiveness of the ETP Incentive Program for Additional One-Year Pilot Period, Ending September 4, 2016

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 175 (September 10, 2015)

Page Range		54646-54648
FR Document		2015-22845

Federal Register, Volume 80 Issue 175 (Thursday, September 10, 2015)

[Federal Register Volume 80, Number 175 (Thursday, September 10, 2015)]
[Notices]
[Pages 54646-54648]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-22845]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75846; File No. SR-NYSEArca-2015-78]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending Section 3
of NYSE Arca Equities Rule 8 To Extend the Effectiveness of the ETP
Incentive Program for Additional One-Year Pilot Period, Ending
September 4, 2016

September 4, 2015.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on September 3, 2015, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

The Exchange proposes to Section 3 of NYSE Arca Equities Rule 8
(Trading of Certain Equity Derivatives) to extend the effectiveness of
the ETP Incentive Program for additional one-year pilot period, ending
September 4, 2016. The text of the proposed rule change is available on
the Exchange's Web site at www.nyse.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
The Exchange proposes to amend Section 3 of NYSE Arca Equities Rule
8 (Trading of Certain Equity Derivatives) to extend the effectiveness
of the ETP Incentive Program \4\ for an additional one-year pilot
period, ending September 4, 2016.\5\
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\4\ The Commission approved the ETP Incentive Program on a pilot
basis in Securities Exchange Act Release No. 69706 (June 6, 2013),
78 FR 35340 (June 12, 2013) (SR-NYSEArca-2013-34) (``ETP Incentive
Program Release''). The Exchange subsequently filed to extend the
original pilot program for the ETP Incentive Program until September
4, 2015. See Securities Exchange Act Release No. 72963 (September 3,
2014), 79 FR 53492 (September 9, 2014) (SR-NYSEArca-2014-99) (notice
of filing and immediate effectiveness of proposed rule change
extending effectiveness of the ETP Incentive Program until September
4, 2015). In addition, the Exchange recently filed a proposed rule
change to amend Rules 7.25(c) and 8.800(b) to provide that exchange-
traded products (``ETPs'') already listed on the Exchange can be
admitted to the ETP Incentive Program on a monthly basis rather than
at the beginning of each quarter. See Securities Exchange Act
Release No. 75282 (June 24, 2015), 80 FR 37340 (June 30, 2015) (SR-
NYSEArca-2015-52) (notice of filing and immediate effectiveness of
proposed rule change amending NYSE Arca Equities Rules 7.25 and
8.800 to allow an issuer to elect for its ETP to participate in the
Crowd Participant Program or the ETP Incentive Program monthly
rather than quarterly and to extend the effectiveness of the Crowd
Participant Program until June 23, 2016). In SR-NYSEArca-2015-52,
the Exchange stated that the Exchange anticipates that expanding the
opportunity for issuers to enter the ETP Incentive Program will
facilitate the provision of extra liquidity to lower-volume ETPs by
incentivizing more Market Makers to take Lead Market Maker (``LMM'')
assignments in certain lower-volume ETPs.
\5\ The ETP Incentive Program is scheduled to end on September
4, 2015. For purposes of the ETP Incentive Program, ETPs include
securities listed on the Exchange under the following rules: NYSE
Arca Equities Rules 5.2(j)(3) (Investment Company Units), 5.2(j)(5)
(Equity Gold Shares), 8.100 (Portfolio Depositary Receipts), 8.200
(Trust Issued Receipts), 8.201 (Commodity-Based Trust Shares), 8.202
(Currency Trust Shares), 8.203 (Commodity Index Trust Shares), 8.204
(Commodity Futures Trust Shares), 8.300 (Partnership Units), 8.600
(Managed Fund Shares), and 8.700 (Managed Trust Securities).

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[[Page 54647]]

The ETP Incentive Program is a pilot program designed to
incentivize quoting and trading in ETPs and to add competition among
existing qualified Market Makers.\6\ In addition, the ETP Incentive
Program is designed to enhance the market quality for ETPs by
incentivizing Market Makers to take LMM \7\ assignments in certain
lower-volume ETPs by offering an alternative fee structure for such
LMMs that would be funded from the Exchange's general revenues. The ETP
Incentive Program is designed to improve the quality of market for
lower-volume ETPs, thereby incentivizing issuers to list them on the
Exchange. Moreover, as described in the ETP Incentive Program Release,
the Exchange believes that the ETP Incentive Program, which is entirely
voluntary, encourages competition among markets for issuers' listings
and among Market Makers for LMM assignments.
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\6\ A Market Maker is an Equity Trading Permit Holder that acts
as a Market Maker pursuant to NYSE Arca Equities Rule 7. See NYSE
Arca Equities Rule 1.1(v). An Equity Trading Permit Holder is a sole
proprietorship, partnership, corporation, limited liability company,
or other organization in good standing that has been issued an
Equity Trading Permit. See NYSE Arca Equities Rule 1.1(n).
\7\ The LMM program is designed to incentivize firms to take on
the LMM designation and foster liquidity provision and stability in
the market. In order to accomplish this, the Exchange currently
provides LMMs with an opportunity to receive incrementally higher
transaction credits and incur incrementally lower transaction fees
(``LMM Rates'') compared to standard liquidity maker-taker rates
(``Standard Rates''). The Exchange generally employs a maker-taker
transactional fee structure, whereby an Equity Trading Permit Holder
that removes liquidity is charged a fee (``Take Rate''), and an
Equity Trading Permit Holder that provides liquidity receives a
credit (``Make Rate''). See Trading Fee Schedule, available at
https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf.
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The Exchange proposes to extend the current operation of the ETP
Incentive Program for an additional year to allow the Commission, the
Exchange, LMMs, and issuers to further assess the impact of such
program before proposing to make it available to other securities and
implementing the programs on a permanent basis.\8\ Issuers began
participating in the ETP Incentive Program following the extension of
the first pilot period. The Exchange believes that extending the ETP
Incentive Program pilot period for an additional year will provide
additional time to assess the impact of the program for these issuers
and to provide time for additional issuers to participate in the ETP
Incentive Program so that the Commission, the Exchange, LMMs, and
issuers may assess the impact of the program before making it available
to other securities or implementing it on a permanent basis.\9\
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\8\ The Exchange notes that any proposed further continuance of
the ETP Incentive Program, a proposal to make the ETP Incentive
Program permanent, or a proposal to make such program available to
other securities would require a rule filing with the Commission
pursuant to Section 19(b) of the Act and Rule 19b-4 thereunder.
\9\ The Exchange has provided to the Commission monthly market
quality reports relating to the ETP Incentive Program for the period
October 2014 through July 2015, which are posted to the Exchange's
Web site at https://www.nyse.com/products/etp-incentive-program.
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Prior to the end of the pilot period ending September 4, 2016, the
Exchange proposes to post a report relating to the ETP Incentive
Program (the ``Assessment Report'') on its Web site five months before
the end of the pilot period or at the time it files to terminate the
pilot, whichever comes first. The proposed Assessment Report would list
the program objectives that are the focus of the pilot and, for each,
provide (a) a statistical analysis that includes evidence that is
sufficient to inform a reader about whether the program has met those
objectives during the pilot period, along with (b) a narrative
explanation of whether and how the evidence indicates the pilot has met
the objective, including both strengths and weaknesses of the evidence
in this regard. The Assessment Report also would include a discussion
of (a) the procedures used in selecting any samples that are used in
constructing tables or statistics for inclusion in the Assessment
Report, (b) the definitions of any variables and statistics reported in
the tables, including test statistics, (c) the statistical significance
levels of any test statistics and (d) other statistical or qualitative
information that may enhance the usefulness of the Assessment Report as
a basis for evaluating the performance of the program. The Assessment
Report would present statistics on product performance relative to the
performance of comparable or other suitable benchmark products
(including test statistics that permit the reader to evaluate the
statistical significance of any differences reported or discussed in
the report), along with information on the procedures that were used to
identify those comparable or benchmark products, the characteristics of
each comparable or benchmark products, the characteristics of each
product that is the focus of the pilot, the procedures used in
selecting the time horizon of the sample and the sensitivity of
reported statistics to changes in the time horizon of the sample.
This filing is not otherwise intended to address any other issues
and the Exchange is not aware of any problems that Equity Trading
Permit Holders or issuers would have in complying with the monthly
selection provision [sic] or the proposed extension of the pilot
program.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\10\ in general, and furthers the objectives of Section 6(b)(5) of
the Act,\11\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the ETP Incentive Program is designed to
enhance the market quality for ETPs by incentivizing Market Makers to
take LMM assignments in certain lower volume ETPs by offering an
alternative fee structure for such LMMs that would be funded from the
Exchange's general revenues. The ETP Incentive Program is designed to
improve the quality of market for lower-volume ETPs, thereby
incentivizing them to list on the Exchange. Moreover, as described in
the ETP Incentive Program Release, the Exchange believes that the ETP
Incentive Program, which is entirely voluntary, encourages competition
among markets for issuers' listings and among Market Makers for LMM
assignments.
The Exchange believes that, by providing additional time for
issuers to participate in the ETP Incentive Program, through an
extension of the pilot period until September 4, 2016, the ETP
Incentive Program would continue to provide an opportunity for
rewarding competitive liquidity-providing LMMs, with associated
requirements for quoting by LMMs at the National Best Bid or National
Best Offer. The ETP Incentive Program, therefore, has the potential to
enhance competition among liquidity providers and thereby improve
execution quality on the Exchange. An extension of such pilot period
will permit additional time for the Commission, the Exchange,

[[Page 54648]]

LMMs, and issuers to assess the impact of the ETP Incentive Program
before making it available to other securities. The Exchange will
continue to monitor the efficacy of the ETP Incentive Program during
the extended pilot period.
The Exchange will continue to monitor the efficacy of the ETP
Incentive Program during the extended pilot period. Prior to the end of
the pilot period ending September 4, 2016, the Exchange proposes to
post an Assessment Report on its Web site five months before the end of
the pilot period or at the time it files to terminate the pilot,
whichever comes first. The proposed Assessment Report would list the
program objectives that are the focus of the pilot as well as
additional information described above.

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

The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
The proposed extension to the pilot period for the ETP Incentive
Program is not designed to address any competitive issues but rather to
program [sic] additional time for the Commission, the Exchange, LMMs
and issuers to assess the impact of such program.

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

Because the proposed rule change does not: (i) Significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.
A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative prior to 30 days after the date of the filing.
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a
shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange requests that the
Commission waive the 30-day operative delay to allow the ETP Incentive
Program to continue without interruption after September 4, 2015. The
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public
interest.\12\ As stated in the proposal, the Exchange seeks to extend
the current operation of the ETP Incentive Program for an additional
year and does not propose any substantive changes to the program. The
Exchange states that issuers began participating in the ETP Incentive
Program following the extension of the first pilot period. The Exchange
believes that extending the ETP Incentive Program pilot period for an
additional year will provide additional time to assess the impact of
the program for these issuers and to provide time for additional
issuers to participate in the ETP Incentive Program so that the
Commission, the Exchange, LMMs, and issuers may assess the impact of
the program. The Commission notes that the Exchange will continue to
monitor the efficacy of the ETP Incentive Program during the extended
pilot period and will post the Assessment Report on its Web site prior
to the end of the pilot period. Because the proposed change does not
alter the substantive terms of the ETP Incentive Program and does not
raise any novel or unique regulatory issues, the Commission designates
the proposed rule change as operative upon filing.
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\12\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

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

Electronic Comments

Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2015-78 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-2015-78. 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 Web site (http://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 Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549-1090, on official business days between the hours
of 10:00 a.m. and 3:00 p.m. Copies of the filing will also be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2015-78 and should
be submitted on or before October 1, 2015.
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\13\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
Brent J. Fields,
Secretary.
[FR Doc. 2015-22845 Filed 9-9-15; 8:45 am]
BILLING CODE 8011-01-P

54646 Federal Register / Vol. 80, No. 175 / Thursday, September 10, 2015 / Notices

III. Date of Effectiveness of the Washington, DC 20549, on official period, ending September 4, 2016. The
Proposed Rule Change and Timing for business days between the hours of text of the proposed rule change is
Commission Action 10:00 a.m. and 3:00 p.m. Copies of the available on the Exchange’s Web site at
The foregoing rule change has become filing also will be available for www.nyse.com, at the principal office of
effective pursuant to Section inspection and copying at the principal the Exchange, and at the Commission’s
office of the Exchange. All comments Public Reference Room.
19(b)(3)(A)(ii) of the Act.33 At any time
received will be posted without change;
within 60 days of the filing of the II. Self-Regulatory Organization’s
the Commission does not edit personal
proposed rule change, the Commission Statement of the Purpose of, and
identifying information from
summarily may temporarily suspend Statutory Basis for, the Proposed Rule
submissions. You should submit only
such rule change if it appears to the Change
information that you wish to make
Commission that such action is In its filing with the Commission, the
available publicly.
necessary or appropriate in the public self-regulatory organization included
All submissions should refer to File
interest, for the protection of investors, statements concerning the purpose of,
Number SR–BX–2015–054 and should
or otherwise in furtherance of the and basis for, the proposed rule change
be submitted on or before October 1,
purposes of the Act. If the Commission and discussed any comments it received
2015.
takes such action, the Commission shall on the proposed rule change. The text
institute proceedings to determine For the Commission, by the Division of
Trading and Markets, pursuant to delegated of those statements may be examined at
whether the proposed rule should be the places specified in Item IV below.
authority.34
approved or disapproved. The Exchange has prepared summaries,
Robert W. Errett,
IV. Solicitation of Comments Deputy Secretary.
set forth in sections A, B, and C below,
of the most significant parts of such
Interested persons are invited to [FR Doc. 2015–22744 Filed 9–9–15; 8:45 am]
statements.
submit written data, views, and BILLING CODE 8011–01–P
arguments concerning the foregoing, A. Self-Regulatory Organization’s
including whether the proposed rule Statement of the Purpose of, and the
change is consistent with the Act. SECURITIES AND EXCHANGE Statutory Basis for, the Proposed Rule
Comments may be submitted by any of COMMISSION Change
the following methods: [Release No. 34–75846; File No. SR– 1. Purpose
NYSEArca–2015–78]
Electronic Comments The Exchange proposes to amend
• Use the Commission’s Internet Self-Regulatory Organizations; NYSE Section 3 of NYSE Arca Equities Rule 8
comment form (http://www.sec.gov/ Arca, Inc.; Notice of Filing and (Trading of Certain Equity Derivatives)
rules/sro.shtml); or Immediate Effectiveness of Proposed to extend the effectiveness of the ETP
• Send an email to rule-comments@ Rule Change Amending Section 3 of Incentive Program 4 for an additional
sec.gov. Please include File Number SR– NYSE Arca Equities Rule 8 To Extend one-year pilot period, ending September
BX–2015–054 on the subject line. the Effectiveness of the ETP Incentive 4, 2016.5
Program for Additional One-Year Pilot
Paper Comments Period, Ending September 4, 2016
4 The Commission approved the ETP Incentive

Program on a pilot basis in Securities Exchange Act
• Send paper comments in triplicate Release No. 69706 (June 6, 2013), 78 FR 35340 (June
to Secretary, Securities and Exchange September 4, 2015. 12, 2013) (SR–NYSEArca–2013–34) (‘‘ETP Incentive
Commission, 100 F Street NE., Pursuant to Section 19(b)(1) 1 of the Program Release’’). The Exchange subsequently
Washington, DC 20549–1090. Securities Exchange Act of 1934 (the filed to extend the original pilot program for the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3 ETP Incentive Program until September 4, 2015. See
All submissions should refer to File Securities Exchange Act Release No. 72963
notice is hereby given that, on (September 3, 2014), 79 FR 53492 (September 9,
Number SR–BX–2015–054. This file
September 3, 2015, NYSE Arca, Inc. (the 2014) (SR–NYSEArca–2014–99) (notice of filing and
number should be included on the
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with immediate effectiveness of proposed rule change
subject line if email is used. To help the extending effectiveness of the ETP Incentive
the Securities and Exchange
Commission process and review your Program until September 4, 2015). In addition, the
Commission (the ‘‘Commission’’) the Exchange recently filed a proposed rule change to
comments more efficiently, please use
proposed rule change as described in amend Rules 7.25(c) and 8.800(b) to provide that
only one method. The Commission will
Items I and II below, which Items have exchange-traded products (‘‘ETPs’’) already listed
post all comments on the Commission’s on the Exchange can be admitted to the ETP
been prepared by the self-regulatory
Internet Web site (http://www.sec.gov/ Incentive Program on a monthly basis rather than
organization. The Commission is at the beginning of each quarter. See Securities
rules/sro.shtml). Copies of the
publishing this notice to solicit Exchange Act Release No. 75282 (June 24, 2015), 80
submission, all subsequent
comments on the proposed rule change FR 37340 (June 30, 2015) (SR–NYSEArca–2015–52)
amendments, all written statements (notice of filing and immediate effectiveness of
from interested persons.
with respect to the proposed rule proposed rule change amending NYSE Arca
change that are filed with the I. Self-Regulatory Organization’s Equities Rules 7.25 and 8.800 to allow an issuer to
Statement of the Terms of Substance of elect for its ETP to participate in the Crowd
Commission, and all written Participant Program or the ETP Incentive Program
communications relating to the the Proposed Rule Change monthly rather than quarterly and to extend the
proposed rule change between the The Exchange proposes to Section 3 effectiveness of the Crowd Participant Program
Commission and any person, other than until June 23, 2016). In SR–NYSEArca–2015–52, the
of NYSE Arca Equities Rule 8 (Trading Exchange stated that the Exchange anticipates that
mstockstill on DSK4VPTVN1PROD with NOTICES

those that may be withheld from the of Certain Equity Derivatives) to extend expanding the opportunity for issuers to enter the
public in accordance with the the effectiveness of the ETP Incentive ETP Incentive Program will facilitate the provision
provisions of 5 U.S.C. 552, will be Program for additional one-year pilot of extra liquidity to lower-volume ETPs by
available for Web site viewing and incentivizing more Market Makers to take Lead
Market Maker (‘‘LMM’’) assignments in certain
printing in the Commission’s Public 34 17 CFR 200.30–3(a)(12). lower-volume ETPs.
Reference Room, 100 F Street NE., 1 15 U.S.C. 78s(b)(1). 5 The ETP Incentive Program is scheduled to end
2 15 U.S.C. 78a.
on September 4, 2015. For purposes of the ETP
33 15 U.S.C. 78s(b)(3)(A)(ii). 3 17 CFR 240.19b–4. Incentive Program, ETPs include securities listed on

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Federal Register / Vol. 80, No. 175 / Thursday, September 10, 2015 / Notices 54647

The ETP Incentive Program is a pilot participating in the ETP Incentive the focus of the pilot, the procedures
program designed to incentivize quoting Program following the extension of the used in selecting the time horizon of the
and trading in ETPs and to add first pilot period. The Exchange believes sample and the sensitivity of reported
competition among existing qualified that extending the ETP Incentive statistics to changes in the time horizon
Market Makers.6 In addition, the ETP Program pilot period for an additional of the sample.
Incentive Program is designed to year will provide additional time to This filing is not otherwise intended
enhance the market quality for ETPs by assess the impact of the program for to address any other issues and the
incentivizing Market Makers to take these issuers and to provide time for Exchange is not aware of any problems
LMM 7 assignments in certain lower- additional issuers to participate in the that Equity Trading Permit Holders or
volume ETPs by offering an alternative ETP Incentive Program so that the issuers would have in complying with
fee structure for such LMMs that would Commission, the Exchange, LMMs, and the monthly selection provision [sic] or
be funded from the Exchange’s general issuers may assess the impact of the the proposed extension of the pilot
revenues. The ETP Incentive Program is program before making it available to program.
designed to improve the quality of other securities or implementing it on a 2. Statutory Basis
market for lower-volume ETPs, thereby permanent basis.9
incentivizing issuers to list them on the Prior to the end of the pilot period The proposed rule change is
Exchange. Moreover, as described in the ending September 4, 2016, the Exchange consistent with Section 6(b) of the
ETP Incentive Program Release, the proposes to post a report relating to the Act,10 in general, and furthers the
Exchange believes that the ETP ETP Incentive Program (the objectives of Section 6(b)(5) of the Act,11
Incentive Program, which is entirely ‘‘Assessment Report’’) on its Web site in particular, in that it is designed to
voluntary, encourages competition five months before the end of the pilot prevent fraudulent and manipulative
among markets for issuers’ listings and period or at the time it files to terminate acts and practices, to promote just and
among Market Makers for LMM the pilot, whichever comes first. The equitable principles of trade, to remove
assignments. proposed Assessment Report would list impediments to and perfect the
The Exchange proposes to extend the the program objectives that are the focus mechanism of a free and open market
current operation of the ETP Incentive of the pilot and, for each, provide (a) a and a national market system, and, in
Program for an additional year to allow statistical analysis that includes general, to protect investors and the
the Commission, the Exchange, LMMs, evidence that is sufficient to inform a public interest.
and issuers to further assess the impact reader about whether the program has The Exchange believes that the ETP
of such program before proposing to met those objectives during the pilot Incentive Program is designed to
make it available to other securities and period, along with (b) a narrative enhance the market quality for ETPs by
implementing the programs on a explanation of whether and how the incentivizing Market Makers to take
permanent basis.8 Issuers began evidence indicates the pilot has met the LMM assignments in certain lower
objective, including both strengths and volume ETPs by offering an alternative
the Exchange under the following rules: NYSE Arca weaknesses of the evidence in this fee structure for such LMMs that would
Equities Rules 5.2(j)(3) (Investment Company regard. The Assessment Report also be funded from the Exchange’s general
Units), 5.2(j)(5) (Equity Gold Shares), 8.100 revenues. The ETP Incentive Program is
(Portfolio Depositary Receipts), 8.200 (Trust Issued
would include a discussion of (a) the
Receipts), 8.201 (Commodity-Based Trust Shares), procedures used in selecting any designed to improve the quality of
8.202 (Currency Trust Shares), 8.203 (Commodity samples that are used in constructing market for lower-volume ETPs, thereby
Index Trust Shares), 8.204 (Commodity Futures tables or statistics for inclusion in the incentivizing them to list on the
Trust Shares), 8.300 (Partnership Units), 8.600 Exchange. Moreover, as described in the
(Managed Fund Shares), and 8.700 (Managed Trust Assessment Report, (b) the definitions of
Securities). any variables and statistics reported in ETP Incentive Program Release, the
6 A Market Maker is an Equity Trading Permit the tables, including test statistics, (c) Exchange believes that the ETP
Holder that acts as a Market Maker pursuant to the statistical significance levels of any Incentive Program, which is entirely
NYSE Arca Equities Rule 7. See NYSE Arca Equities voluntary, encourages competition
Rule 1.1(v). An Equity Trading Permit Holder is a
test statistics and (d) other statistical or
sole proprietorship, partnership, corporation, qualitative information that may among markets for issuers’ listings and
limited liability company, or other organization in enhance the usefulness of the among Market Makers for LMM
good standing that has been issued an Equity Assessment Report as a basis for assignments.
Trading Permit. See NYSE Arca Equities Rule The Exchange believes that, by
1.1(n).
evaluating the performance of the
7 The LMM program is designed to incentivize program. The Assessment Report would providing additional time for issuers to
firms to take on the LMM designation and foster present statistics on product participate in the ETP Incentive
liquidity provision and stability in the market. In performance relative to the performance Program, through an extension of the
order to accomplish this, the Exchange currently of comparable or other suitable pilot period until September 4, 2016,
provides LMMs with an opportunity to receive
incrementally higher transaction credits and incur benchmark products (including test the ETP Incentive Program would
incrementally lower transaction fees (‘‘LMM Rates’’) statistics that permit the reader to continue to provide an opportunity for
compared to standard liquidity maker-taker rates evaluate the statistical significance of rewarding competitive liquidity-
(‘‘Standard Rates’’). The Exchange generally any differences reported or discussed in providing LMMs, with associated
employs a maker-taker transactional fee structure,
whereby an Equity Trading Permit Holder that the report), along with information on requirements for quoting by LMMs at
removes liquidity is charged a fee (‘‘Take Rate’’), the procedures that were used to the National Best Bid or National Best
and an Equity Trading Permit Holder that provides identify those comparable or benchmark Offer. The ETP Incentive Program,
liquidity receives a credit (‘‘Make Rate’’). See products, the characteristics of each therefore, has the potential to enhance
Trading Fee Schedule, available at https://
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www.nyse.com/publicdocs/nyse/markets/nyse-arca/
comparable or benchmark products, the competition among liquidity providers
NYSE_Arca_Marketplace_Fees.pdf. characteristics of each product that is and thereby improve execution quality
8 The Exchange notes that any proposed further on the Exchange. An extension of such
continuance of the ETP Incentive Program, a 9 The Exchange has provided to the Commission
pilot period will permit additional time
proposal to make the ETP Incentive Program monthly market quality reports relating to the ETP
permanent, or a proposal to make such program
for the Commission, the Exchange,
Incentive Program for the period October 2014
available to other securities would require a rule through July 2015, which are posted to the
10 15 U.S.C. 78f(b).
filing with the Commission pursuant to Section Exchange’s Web site at https://www.nyse.com/
19(b) of the Act and Rule 19b–4 thereunder. products/etp-incentive-program. 11 15 U.S.C. 78f(b)(5).

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54648 Federal Register / Vol. 80, No. 175 / Thursday, September 10, 2015 / Notices

LMMs, and issuers to assess the impact investors and the public interest. The • Send an email to rule-comments@
of the ETP Incentive Program before Exchange requests that the Commission sec.gov. Please include File Number SR–
making it available to other securities. waive the 30-day operative delay to NYSEArca–2015–78 on the subject line.
The Exchange will continue to monitor allow the ETP Incentive Program to
Paper Comments
the efficacy of the ETP Incentive continue without interruption after
Program during the extended pilot September 4, 2015. The Commission • Send paper comments in triplicate
period. believes that waiving the 30-day to Secretary, Securities and Exchange
The Exchange will continue to operative delay is consistent with the Commission, 100 F Street NE.,
monitor the efficacy of the ETP protection of investors and the public Washington, DC 20549–1090.
Incentive Program during the extended interest.12 As stated in the proposal, the All submissions should refer to File
pilot period. Prior to the end of the pilot Exchange seeks to extend the current Number SR–NYSEArca–2015–78. This
period ending September 4, 2016, the operation of the ETP Incentive Program file number should be included on the
Exchange proposes to post an for an additional year and does not subject line if email is used. To help the
Assessment Report on its Web site five propose any substantive changes to the Commission process and review your
months before the end of the pilot program. The Exchange states that comments more efficiently, please use
period or at the time it files to terminate issuers began participating in the ETP only one method. The Commission will
the pilot, whichever comes first. The Incentive Program following the post all comments on the Commission’s
proposed Assessment Report would list extension of the first pilot period. The Internet Web site (http://www.sec.gov/
the program objectives that are the focus Exchange believes that extending the rules/sro.shtml). Copies of the
of the pilot as well as additional ETP Incentive Program pilot period for submission, all subsequent
information described above. an additional year will provide amendments, all written statements
B. Self-Regulatory Organization’s additional time to assess the impact of with respect to the proposed rule
Statement on Burden on Competition the program for these issuers and to change that are filed with the
provide time for additional issuers to Commission, and all written
The Exchange does not believe that participate in the ETP Incentive communications relating to the
the proposed rule change will impose Program so that the Commission, the proposed rule change between the
any burden on competition that is not Exchange, LMMs, and issuers may Commission and any person, other than
necessary or appropriate in furtherance assess the impact of the program. The those that may be withheld from the
of the purposes of the Act. Commission notes that the Exchange public in accordance with the
The proposed extension to the pilot will continue to monitor the efficacy of provisions of 5 U.S.C. 552, will be
period for the ETP Incentive Program is the ETP Incentive Program during the available for Web site viewing and
not designed to address any competitive extended pilot period and will post the printing in the Commission’s Public
issues but rather to program [sic] Assessment Report on its Web site prior Reference Room, 100 F Street NE.,
additional time for the Commission, the to the end of the pilot period. Because Washington, DC 20549–1090, on official
Exchange, LMMs and issuers to assess the proposed change does not alter the business days between the hours of
the impact of such program. substantive terms of the ETP Incentive 10:00 a.m. and 3:00 p.m. Copies of the
C. Self-Regulatory Organization’s Program and does not raise any novel or filing will also be available for
Statement on Comments on the unique regulatory issues, the inspection and copying at the principal
Proposed Rule Change Received From Commission designates the proposed office of the Exchange. All comments
Members, Participants, or Others rule change as operative upon filing. received will be posted without change;
No written comments were solicited At any time within 60 days of the the Commission does not edit personal
or received with respect to the proposed filing of the proposed rule change, the identifying information from
rule change. Commission summarily may submissions. You should submit only
temporarily suspend such rule change if information that you wish to make
III. Date of Effectiveness of the it appears to the Commission that such available publicly. All submissions
Proposed Rule Change and Timing for action is necessary or appropriate in the should refer to File Number SR–
Commission Action public interest, for the protection of NYSEArca–2015–78 and should be
Because the proposed rule change investors, or otherwise in furtherance of submitted on or before October 1, 2015.
does not: (i) Significantly affect the the purposes of the Act. For the Commission, by the Division of
protection of investors or the public IV. Solicitation of Comments Trading and Markets, pursuant to delegated
interest; (ii) impose any significant authority.13
burden on competition; and (iii) become Interested persons are invited to Brent J. Fields,
operative prior to 30 days from the date submit written data, views, and Secretary.
on which it was filed, or such shorter arguments concerning the foregoing,
[FR Doc. 2015–22845 Filed 9–9–15; 8:45 am]
time as the Commission may designate, including whether the proposed rule
BILLING CODE 8011–01–P
if consistent with the protection of change is consistent with the Act.
investors and the public interest, the Comments may be submitted by any of
proposed rule change has become the following methods:
SMALL BUSINESS ADMINISTRATION
effective pursuant to Section 19(b)(3)(A) Electronic Comments
of the Act and Rule 19b–4(f)(6) [Disaster Declaration #14434 and #14435]
• Use the Commission’s Internet
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thereunder.
A proposed rule change filed under comment form (http://www.sec.gov/ New York Disaster #NY–00162
Rule 19b–4(f)(6) normally does not rules/sro.shtml); or
AGENCY: U.S. Small Business
become operative prior to 30 days after Administration.
12 For purposes only of waiving the 30-day
the date of the filing. However, Rule
operative delay, the Commission has also ACTION: Notice.
19b–4(f)(6)(iii) permits the Commission considered the proposed rule’s impact on
to designate a shorter time if such action efficiency, competition, and capital formation. See
is consistent with the protection of 15 U.S.C. 78c(f). 13 17 CFR 200.30–3(a)(12).

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Document Created: 2015-12-15 10:04:21
Document Modified: 2015-12-15 10:04:21

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 54646