82_FR_43812 82 FR 43633 - 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

82 FR 43633 - 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

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 179 (September 18, 2017)

Page Range43633-43636
FR Document2017-19810

Federal Register, Volume 82 Issue 179 (Monday, September 18, 2017) 
[Federal Register Volume 82, Number 179 (Monday, September 18, 2017)]
[Notices]
[Pages 43633-43636]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-19810]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81601; File No. SR-NYSEARCA-2017-104]


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

September 13, 2017.
    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 1, 2017, 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, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Equities Fees and 
Charges (the ``Fee Schedule'') to (i) adopt an additional tiered credit 
applicable to Lead Market Makers (``LMMs'') \4\ and to ETP Holders and 
Market Makers affiliated with the LMM that provide displayed liquidity 
to the NYSE Arca Book in Tape B Securities; and (ii) add a second way 
by which an ETP Holder or Market Maker could qualify for the Step Up 
Tier. The Exchange proposes to implement the proposed fee change on 
September 1, 2017.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.
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    \4\ The term ``Lead Market Maker'' is defined in Rule 1.1(w) to 
mean a registered Market Maker that is the exclusive Designated 
Market Maker in listings for which the Exchange is the primary 
market.
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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 the Fee Schedule to adopt an 
additional tiered credit applicable to LMMs and to ETP Holders and 
Market Makers affiliated with the LMM that provide displayed liquidity 
to the NYSE Arca Book in Tape B Securities; and (ii) add a second way 
by which an ETP Holder or Market Maker could qualify for the Step Up 
Tier. The Exchange proposes to implement the proposed fee changes on 
September 1, 2017.
LMM Transaction Fees and Credits
    The Exchange proposes to amend the Fee Schedule to adopt an 
additional tiered credit applicable to LMMs and to ETP Holders and 
Market Makers affiliated with the LMM that provide displayed liquidity 
to the NYSE Arca Book in Tape B Securities. The Exchange currently 
provides tier-based incremental credits for orders that provide 
displayed liquidity to the NYSE Arca Book in Tape B Securities. 
Specifically, LMMs that are registered as the LMM in Tape B Securities 
that have a consolidated average daily volume (``CADV'') in the 
previous month of less than 100,000 shares, or 0.0070% of Consolidated 
Tape B ADV, whichever is greater (``Less Active ETP Securities''), and 
the ETP Holders and Market Makers affiliated with such LMMs, currently 
receive an additional credit for orders that provide displayed 
liquidity to the Book in any Tape B Securities that trade on the 
Exchange.\5\ The current incremental credits and volume thresholds are 
as follows:
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    \5\ The Exchange defines ``affiliate'' to ``mean any ETP Holder 
under 75% common ownership or control of that ETP Holder.'' See Fee 
Schedule, NYSE Arca Marketplace: General.
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     An additional credit of $0.0004 per share if an LMM is 
registered as the LMM in at least 300 Less Active ETP Securities
     An additional credit of $0.0003 per share if an LMM is 
registered as the LMM in at least 200 but less than 300 Less Active ETP 
Securities
     An additional credit of $0.0002 per share if an LMM is 
registered as the LMM in at least 100 but less than 200 Less Active ETP 
Securities
    The number of Less Active ETP Securities for the billing month is 
based on the number of Less Active ETP Securities in which an LMM is 
registered as the LMM on the last business day of the previous month. 
The incremental credits also apply to ETP Holders and Market Makers 
affiliated with the LMM whose orders in Tape B Securities provide 
displayed liquidity to the NYSE Arca Book.
    The Exchange proposes to adopt an additional tier pursuant to which 
LMMs and ETP Holders and Market Makers affiliated with the LMM that 
provide displayed liquidity to the NYSE Arca Book in Tape B Securities 
would receive an additional credit of $0.0001 per share if the LMM is 
registered as the LMM in at least 75 but less than 100 Less Active ETP 
Securities.
    For example, currently, a LMM that provides liquidity to the NYSE 
Arca Book in a security for which the LMM is registered as the LMM 
which has a CADV in the previous month of at least 5,000,000 shares 
would receive a credit of $0.0033 per share. If that LMM is also 
registered as an LMM in 80 Less Active ETP Securities, the LMM would 
receive an incremental credit of $0.0001 per share under the proposed 
new rebate structure, for a total credit of $0.0034 per share. 
Additionally, if the affiliated ETP Holders and Market Makers of such 
LMM that provide displayed liquidity in Tape B Securities are a Tier 1 
firm, they would receive a total credit of $0.0024 per share, i.e., 
$0.0023 per share Tier 1 credit for orders that provide liquidity to 
the NYSE Arca Book plus $0.0001 per share for being registered as a LMM 
in 80 Less Active ETP Securities.
    With the proposed additional tier, the Exchange hopes to provide 
incentives for increased trading in Less Active ETP Securities for the 
benefit of all market participants.
Step-Up Tier
    The Exchange proposes to add a second way by which an ETP Holder or 
Market Maker could qualify for the existing Step Up Tier. Currently, to 
qualify for the Step Up Tier, ETP

[[Page 43634]]

Holders and Market Makers, on a daily basis, measured monthly must:
    (i) Directly execute providing average daily volume that is an 
increase of no less than 0.15% of US CADV\6\ for that month over the 
ETP Holder's or Market Maker's providing average daily volume in July 
2016, and
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    \6\ US CADV means United States Consolidated Average Daily 
Volume for transactions reported to the Consolidated Tape, excluding 
odd lots through January 31, 2014 (except for purposes of Lead 
Market Maker pricing), and excludes volume on days when the market 
closes early and on the date of the annual reconstitution of the 
Russell Investments Indexes. Transactions that are not reported to 
the Consolidated Tape are not included in US CADV.
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    (ii) sets a new NYSE Arca Best Bid or Offer with at least 25% in 
each of the ETP Holder's or Market Maker's Tape A, Tape B and Tape C 
providing ADV.
    ETP Holders and Market Makers that qualify for the Step Up Tier 
receive a $0.0029 per share credit for orders that provide liquidity to 
the Book for Tape A and Tape C Securities and $0.0028 per share credit 
for orders that provide liquidity to the Book for Tape B Securities.
    As proposed, the Exchange would keep these qualifying requirements, 
and add a second way by which an ETP Holder or Market Maker could 
qualify for the Step Up Tier. As proposed, an ETP Holder or Market 
Maker could also qualify for the Step Up Tier if such ETP Holder or 
Market Maker, on a daily basis, measured monthly:
    (i) Directly execute providing average daily volume that is an 
increase of no less than 0.15% of US CADV\3\ for that month over the 
ETP Holder's or Market Maker's providing average daily volume in July 
2016, and
    (ii) sets a new NYSE Arca Best Bid or Offer with at least 20% in 
the ETP Holder's or Market Maker's Tape A providing ADV, at least 25% 
in the ETP Holder's or Market Maker's Tape B providing ADV, and at 
least 30% in the ETP Holder's or Market Maker's Tape C providing ADV, 
and
    (iii) directly execute taking average daily volume of at least 15 
million shares.
    For example, an ETP Holder that has a providing ADV of 15 million 
shares in the Baseline Month would be required to execute, at a 
minimum, an additional 9.75 million shares of providing ADV if CADV is 
6.5 billion shares in the billing month, or 0.15% over the Baseline 
Month, for a total providing ADV of 24.75 million shares for the 
billing month. Further, of the 24.75 million shares, assume 10.75 
million shares are in Tape A Securities, and 7 million shares are each 
in Tape B and Tape C Securities. The ETP Holder would be required to 
have a providing ADV that sets a new BBO on the Exchange of at least 
2.15 million shares in Tape A Securities, of at least 1.750 million 
shares in Tape B Securities, and of at least 2.1 million shares in Tape 
C Securities.
    The Exchange believes that combining the existing providing average 
daily volume requirement with both specified setting Exchange Best Bid 
or Offer requirements, depending on whether the securities are Tape A, 
B, or C, and a requirement to meet certain volume of executing taking 
volume on the Exchange would encourage ETP Holders or Market Makers 
that are active traders on the Exchange to step up their provide volume 
to qualify for the Step Up Tier.
    As an incentive for ETP Holders and Market Makers to direct their 
order flow to the Exchange, for the months of September 2017 and 
October 2017 only, the Exchange proposes adopting lower providing ADV 
criteria for ETP Holders and Market Makers to qualify for the Step Up 
Tier. For the month of September 2017 only, the ETP Holder or Market 
Maker would need to directly execute providing average daily volume 
that is an increase of no less than 0.05% of US CADV for that month 
over the ETP Holder's or Market Maker's providing average daily volume 
in July 2016.
    Using the previous example, that ETP Holder would be required to 
execute, at a minimum, an additional 3.25 million shares of providing 
ADV, or 0.05% over the Baseline Month, for a total providing ADV of 
18.25 million shares for that billing month. Further, of the 18.25 
million shares, assume 10 million shares are in Tape A Securities, 5 
million shares are in Tape B Securities and 3.25 million shares are in 
Tape C Securities. The ETP Holder would be required to have a providing 
ADV that sets a new BBO on the Exchange of at least 2 million shares in 
Tape A Securities, of at least 1.250 million shares in Tape B 
Securities, and of at least 0.975 million shares in Tape C Securities.
    For the month of October 2017 only, the ETP Holder or Market Maker 
would need to directly execute providing average daily volume that is 
an increase of no less than 0.10% of US CADV for that month over the 
ETP Holder's or Market Maker's providing average daily volume in July 
2016. For the months on and after November 2017, ETP Holders and Market 
Makers would need to meet the new proposed qualifying requirement of 
0.15% of CADV.
    Using the previous example, that ETP Holder would be required to 
execute, at a minimum, an additional 6.5 million shares of providing 
ADV, or 0.10% over the Baseline Month, for a total providing ADV of 
21.5 million shares for the billing month. Further, of the 21.5 million 
shares, assume 12 million shares are in Tape A Securities, 7 million 
shares are in Tape B Securities and 2.5 million shares are in Tape C 
Securities. The ETP Holder would be required to have a providing ADV 
that sets a new BBO on the Exchange of at least 2.4 million shares in 
Tape A Securities, of at least 1.75 million shares in Tape B 
Securities, and of at least 0.75 million shares in Tape C Securities.
    Because the goal of the Step-Up Tier is to incentivize ETP Holders 
and Market Makers to increase the orders sent directly to NYSE Arca and 
therefore provide liquidity that supports the quality of price 
discovery and promotes market transparency, the Exchange believes that 
the proposed new qualifying requirement for the Step Up Tier will 
provide an additional incentive for ETP Holders or Market Makers that 
are active traders on the Exchange to increase the orders sent to the 
Exchange that would provide liquidity.
* * * * *
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any problems that member 
organizations would have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\8\ 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.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed additional tier for Less 
Active ETP Securities is reasonable because the proposed credit of 
$0.0001 per share that would apply if an LMM is registered as the LMM 
in at least 75 but less than 100 Less Active ETP Securities would 
relate to displayed liquidity to the NYSE Arca Book in Tape B 
Securities, which would be identical to the type of volume to which the 
credit would apply.
    The Exchange believes it is equitable and not unfairly 
discriminatory to establish an additional tier applicable to

[[Page 43635]]

LMMs and to ETP Holders and Market Makers affiliated with the LMM, as 
all LMMs have the ability to qualify for the proposed rebate, and 
rebates would be provided equally to qualifying participants.
    The proposed fee change is intended to encourage LMMs to promote 
price discovery and market quality in Less Active ETP Securities for 
the benefit of all market participants. The Exchange believes the 
proposed additional tier to the current rebate structure would allow 
LMMs that are registered as the LMM in a fewer number of Less Active 
ETP Securities to qualify for a rebate. The Exchange believes the 
proposed credit is reasonable and appropriate in that it is based on 
the amount of business transacted on the Exchange. The Exchange 
believes that providing the proposed additional credit to ETP Holders 
and Market Makers that are affiliated with a LMM that add liquidity in 
Tape B Securities to the Exchange is reasonable because the Exchange 
believes that by providing increased rebates to affiliated ETP Holders 
and Market Makers of a LMM, more LMMs will register to quote and trade 
in Less Active ETP Securities. The Exchange further believes the 
proposed incremental credit for adding liquidity is also reasonable 
because it will encourage liquidity and competition in Tape B 
Securities quoted and traded on the Exchange. Moreover, the Exchange 
believes that the proposed fee change will incentivize LMMs to register 
as an LMM in Less Active ETP Securities and thus, add more liquidity in 
these and other Tape B Securities to the benefit of all market 
participants. The Exchange also believes the lower requirement of the 
additional tier is reasonable because it may allow a greater number of 
LMMs and their affiliated ETP Holders and Market Makers to qualify for 
the proposed additional credit.
    The Exchange believes the proposed incremental credit is equitable 
and not unfairly discriminatory because it is open to all ETP Holders 
and Market Makers affiliated with a LMM on an equal basis and provides 
a discount that is reasonably related to the value to the Exchange's 
market quality associated with higher volumes. The Exchange further 
believes that the proposed incremental rebate is not unfairly 
discriminatory because it is consistent with the market quality and 
competitiveness of benefits associated with the proposed fee program 
and because the magnitude of the additional rebate is not unreasonably 
high in comparison to the rebate paid with respect to other displayed 
liquidity-providing orders. The Exchange does not believe that it is 
unfairly discriminatory to offer increased rebates to LMMs as LMMs are 
subject to additional requirements and obligations (such as quoting 
requirements) that other market participants are not.
    The Exchange also believes that allowing ETP Holders to receive 
enhanced credits based on activities of their affiliates is reasonable, 
equitable and not unfairly discriminatory because the Exchange believes 
that ETP Holders affiliated with LMMs may qualify to earn enhanced 
credits in recognition of their shared economic interest, which 
includes the heightened obligations and costs imposed on LMMs. ETP 
Holders unaffiliated with LMMs do not share the same type of economic 
interests. Further, ETP Holders not affiliated with a LMM have an 
opportunity to establish such affiliation by several means, including 
but not limited to, a business combination or the establishment of 
their own market making operation, which each unaffiliated firm has the 
potential to establish.
    The Exchange believes that the proposed second way to qualify for 
the Step-Up Tier is equitable because it is open to all market 
participants on an equal basis and provides credits that are reasonably 
related to the value to an exchange's market quality associated with 
higher volumes. As stated above, the Exchange believes that the Step-Up 
Tier incentivizes market participants to increase the orders sent 
directly to NYSE Arca that would provide liquidity. Additional order 
flow that provides liquidity supports the quality of price discovery 
and promotes market transparency. The Exchange believes that adding a 
second way to qualify for the Step Up Tier would benefit market 
participants that already are active traders on the Exchange and whose 
increased order flow provides meaningful added levels of liquidity, 
thereby contributing to the depth and market quality on the Exchange. 
In addition, by offering a second way to qualify for the Step-Up Tier, 
the Exchange believes more market participants that are active traders 
on the Exchange may provide increased liquidity-providing order flow 
and more market participants would be eligible to receive the proposed 
credits for their orders.
    Further, the Exchange believes that the proposal is reasonable and 
would create an added incentive for ETP Holders and Market Makers to 
execute additional orders on the Exchange. The Exchange believes it is 
reasonable to require ETP Holders and Market Makers' providing ADV set 
a new BBO on the Exchange of at least 20% of their Tape A providing 
ADV, at least 25% of their Tape B providing ADV, and at least 30% of 
their Tape C providing ADV as it would create an incentive for ETP 
Holders and Market Makers to improve displayed quotes on the Exchange, 
which would benefit all market participants. The Exchange believes that 
the proposed change is equitable and not unfairly discriminatory 
because providing incentives for orders that are executed on a 
registered national securities exchange 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 Exchange further believes it is reasonable to 
require ETP Holders or Maker Makers to also directly execute taking 
average daily volume of at least 15 million shares because it would 
provide an incentive for market participants that are active traders on 
the Exchange to increase orders that provide liquidity on the Exchange, 
thereby further promoting price discovery on the Exchange.
    The Exchange believes that adopting lower providing ADV criteria 
for September 2017 and October 2017 is reasonable because it may allow 
a greater number of ETP Holders and Market Makers to qualify for the 
proposed credits while also providing ETP Holders and Market Makers the 
opportunity to gradually increase their activity in order to qualify 
for the Step Up Tier. The Exchange believes that adopting lower 
providing ADV criteria for September 2017 and October 2017 is also 
equitable and not unfairly discriminatory because the lower criteria 
would apply uniformly to all ETP Holders and Market Makers during 
September 2017 and October 2017.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition. For these 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,\9\ 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, the Exchange believes that the proposed 
fee change would encourage increased

[[Page 43636]]

participation by LMMs in the trading of ETP securities generally and 
Less Active ETP Securities, in particular. The proposed change would 
also encourage the submission of additional liquidity to a public 
exchange, thereby promoting price discovery and transparency and 
enhancing order execution opportunities for ETP Holders and Market 
Makers.
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    \9\ 15 U.S.C. 78f(b)(8).
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    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues. In 
such an environment, the Exchange must continually review, and consider 
adjusting, its fees and credits to remain competitive with other 
exchanges. For the reasons described above, the Exchange believes that 
this proposal promotes a competitive environment.

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

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

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \10\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \11\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \12\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEARCA-2017-104 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEARCA-2017-104. 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 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. 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-2017-104 and should 
be submitted on or before October 10, 2017.
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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\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-19810 Filed 9-15-17; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 82, No. 179 / Monday, September 18, 2017 / Notices 43633 2017–059, and should be submitted on the Commission’s Public Reference incremental credits and volume or before October 10, 2017. Room. thresholds are as follows: For the Commission, by the Division of • An additional credit of $0.0004 per II. Self-Regulatory Organization’s share if an LMM is registered as the Trading and Markets, pursuant to delegated Statement of the Purpose of, and authority.19 LMM in at least 300 Less Active ETP Statutory Basis for, the Proposed Rule Securities Eduardo A. Aleman, Change • An additional credit of $0.0003 per Assistant Secretary. In its filing with the Commission, the share if an LMM is registered as the [FR Doc. 2017–19712 Filed 9–15–17; 8:45 am] self-regulatory organization included LMM in at least 200 but less than 300 BILLING CODE 8011–01–P Less Active ETP Securities statements concerning the purpose of, and basis for, the proposed rule change • An additional credit of $0.0002 per and discussed any comments it received share if an LMM is registered as the SECURITIES AND EXCHANGE LMM in at least 100 but less than 200 COMMISSION on the proposed rule change. The text of those statements may be examined at Less Active ETP Securities the places specified in Item IV below. The number of Less Active ETP [Release No. 34–81601; File No. SR– The Exchange has prepared summaries, Securities for the billing month is based NYSEARCA–2017–104] on the number of Less Active ETP set forth in sections A, B, and C below, of the most significant parts of such Securities in which an LMM is Self-Regulatory Organizations; NYSE registered as the LMM on the last Arca, Inc.; Notice of Filing and statements. business day of the previous month. The Immediate Effectiveness of Proposed A. Self-Regulatory Organization’s incremental credits also apply to ETP Rule Change To Amend the NYSE Arca Statement of the Purpose of, and the Holders and Market Makers affiliated Equities Fees and Charges Statutory Basis for, the Proposed Rule with the LMM whose orders in Tape B September 13, 2017. Change Securities provide displayed liquidity to 1. Purpose the NYSE Arca Book. Pursuant to Section 19(b)(1) 1 of the The Exchange proposes to adopt an Securities Exchange Act of 1934 (the The Exchange proposes to amend the additional tier pursuant to which LMMs ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 Fee Schedule to adopt an additional and ETP Holders and Market Makers notice is hereby given that, on tiered credit applicable to LMMs and to affiliated with the LMM that provide September 1, 2017, NYSE Arca, Inc. (the ETP Holders and Market Makers displayed liquidity to the NYSE Arca ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with affiliated with the LMM that provide Book in Tape B Securities would receive the Securities and Exchange displayed liquidity to the NYSE Arca an additional credit of $0.0001 per share Commission (the ‘‘Commission’’) the Book in Tape B Securities; and (ii) add if the LMM is registered as the LMM in proposed rule change as described in a second way by which an ETP Holder at least 75 but less than 100 Less Active Items I, II, and III below, which Items or Market Maker could qualify for the ETP Securities. have been prepared by the self- For example, currently, a LMM that Step Up Tier. The Exchange proposes to regulatory organization. The provides liquidity to the NYSE Arca implement the proposed fee changes on Commission is publishing this notice to Book in a security for which the LMM September 1, 2017. solicit comments on the proposed rule is registered as the LMM which has a change from interested persons. LMM Transaction Fees and Credits CADV in the previous month of at least I. Self-Regulatory Organization’s The Exchange proposes to amend the 5,000,000 shares would receive a credit Statement of the Terms of Substance of Fee Schedule to adopt an additional of $0.0033 per share. If that LMM is also the Proposed Rule Change tiered credit applicable to LMMs and to registered as an LMM in 80 Less Active ETP Holders and Market Makers ETP Securities, the LMM would receive The Exchange proposes to amend the an incremental credit of $0.0001 per NYSE Arca Equities Fees and Charges affiliated with the LMM that provide displayed liquidity to the NYSE Arca share under the proposed new rebate (the ‘‘Fee Schedule’’) to (i) adopt an structure, for a total credit of $0.0034 additional tiered credit applicable to Book in Tape B Securities. The Exchange currently provides tier-based per share. Additionally, if the affiliated Lead Market Makers (‘‘LMMs’’) 4 and to ETP Holders and Market Makers of such ETP Holders and Market Makers incremental credits for orders that provide displayed liquidity to the NYSE LMM that provide displayed liquidity in affiliated with the LMM that provide Tape B Securities are a Tier 1 firm, they displayed liquidity to the NYSE Arca Arca Book in Tape B Securities. Specifically, LMMs that are registered as would receive a total credit of $0.0024 Book in Tape B Securities; and (ii) add per share, i.e., $0.0023 per share Tier 1 a second way by which an ETP Holder the LMM in Tape B Securities that have a consolidated average daily volume credit for orders that provide liquidity or Market Maker could qualify for the to the NYSE Arca Book plus $0.0001 per Step Up Tier. The Exchange proposes to (‘‘CADV’’) in the previous month of less than 100,000 shares, or 0.0070% of share for being registered as a LMM in implement the proposed fee change on 80 Less Active ETP Securities. September 1, 2017.The proposed rule Consolidated Tape B ADV, whichever is greater (‘‘Less Active ETP Securities’’), With the proposed additional tier, the change is available on the Exchange’s Exchange hopes to provide incentives Web site at www.nyse.com, at the and the ETP Holders and Market Makers affiliated with such LMMs, currently for increased trading in Less Active ETP principal office of the Exchange, and at Securities for the benefit of all market receive an additional credit for orders sradovich on DSKBBY8HB2PROD with NOTICES that provide displayed liquidity to the participants. 19 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). Book in any Tape B Securities that trade Step-Up Tier 2 15 U.S.C. 78a. on the Exchange.5 The current The Exchange proposes to add a 3 17 CFR 240.19b–4. 4 The term ‘‘Lead Market Maker’’ is defined in 5 The Exchange defines ‘‘affiliate’’ to ‘‘mean any second way by which an ETP Holder or Rule 1.1(w) to mean a registered Market Maker that ETP Holder under 75% common ownership or Market Maker could qualify for the is the exclusive Designated Market Maker in listings control of that ETP Holder.’’ See Fee Schedule, existing Step Up Tier. Currently, to for which the Exchange is the primary market. NYSE Arca Marketplace: General. qualify for the Step Up Tier, ETP VerDate Sep<11>2014 16:54 Sep 15, 2017 Jkt 241001 PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 E:\FR\FM\18SEN1.SGM 18SEN1

43634 Federal Register / Vol. 82, No. 179 / Monday, September 18, 2017 / Notices Holders and Market Makers, on a daily required to have a providing ADV that shares of providing ADV, or 0.10% over basis, measured monthly must: sets a new BBO on the Exchange of at the Baseline Month, for a total providing (i) Directly execute providing average least 2.15 million shares in Tape A ADV of 21.5 million shares for the daily volume that is an increase of no Securities, of at least 1.750 million billing month. Further, of the 21.5 less than 0.15% of US CADV6 for that shares in Tape B Securities, and of at million shares, assume 12 million month over the ETP Holder’s or Market least 2.1 million shares in Tape C shares are in Tape A Securities, 7 Maker’s providing average daily volume Securities. million shares are in Tape B Securities in July 2016, and The Exchange believes that combining and 2.5 million shares are in Tape C (ii) sets a new NYSE Arca Best Bid or the existing providing average daily Securities. The ETP Holder would be Offer with at least 25% in each of the volume requirement with both specified required to have a providing ADV that ETP Holder’s or Market Maker’s Tape A, setting Exchange Best Bid or Offer sets a new BBO on the Exchange of at Tape B and Tape C providing ADV. requirements, depending on whether least 2.4 million shares in Tape A ETP Holders and Market Makers that the securities are Tape A, B, or C, and Securities, of at least 1.75 million shares qualify for the Step Up Tier receive a a requirement to meet certain volume of in Tape B Securities, and of at least 0.75 $0.0029 per share credit for orders that executing taking volume on the million shares in Tape C Securities. provide liquidity to the Book for Tape Exchange would encourage ETP Holders Because the goal of the Step-Up Tier A and Tape C Securities and $0.0028 or Market Makers that are active traders is to incentivize ETP Holders and per share credit for orders that provide on the Exchange to step up their provide Market Makers to increase the orders liquidity to the Book for Tape B volume to qualify for the Step Up Tier. sent directly to NYSE Arca and Securities. As an incentive for ETP Holders and therefore provide liquidity that supports As proposed, the Exchange would Market Makers to direct their order flow the quality of price discovery and keep these qualifying requirements, and to the Exchange, for the months of promotes market transparency, the add a second way by which an ETP September 2017 and October 2017 only, Exchange believes that the proposed Holder or Market Maker could qualify the Exchange proposes adopting lower new qualifying requirement for the Step for the Step Up Tier. As proposed, an providing ADV criteria for ETP Holders Up Tier will provide an additional ETP Holder or Market Maker could also and Market Makers to qualify for the incentive for ETP Holders or Market qualify for the Step Up Tier if such ETP Step Up Tier. For the month of Makers that are active traders on the Holder or Market Maker, on a daily September 2017 only, the ETP Holder or Exchange to increase the orders sent to basis, measured monthly: Market Maker would need to directly the Exchange that would provide (i) Directly execute providing average execute providing average daily volume liquidity. daily volume that is an increase of no that is an increase of no less than 0.05% * * * * * less than 0.15% of US CADV3 for that of US CADV for that month over the The proposed changes are not month over the ETP Holder’s or Market ETP Holder’s or Market Maker’s otherwise intended to address any other Maker’s providing average daily volume providing average daily volume in July issues, and the Exchange is not aware of in July 2016, and 2016. any problems that member (ii) sets a new NYSE Arca Best Bid or Using the previous example, that ETP organizations would have in complying Offer with at least 20% in the ETP Holder would be required to execute, at with the proposed change. Holder’s or Market Maker’s Tape A a minimum, an additional 3.25 million providing ADV, at least 25% in the ETP shares of providing ADV, or 0.05% over 2. Statutory Basis Holder’s or Market Maker’s Tape B the Baseline Month, for a total providing The Exchange believes that the providing ADV, and at least 30% in the ADV of 18.25 million shares for that proposed rule change is consistent with ETP Holder’s or Market Maker’s Tape C billing month. Further, of the 18.25 Section 6(b) of the Act,7 in general, and providing ADV, and million shares, assume 10 million furthers the objectives of Sections (iii) directly execute taking average shares are in Tape A Securities, 5 6(b)(4) and (5) of the Act,8 in particular, daily volume of at least 15 million million shares are in Tape B Securities because it provides for the equitable shares. and 3.25 million shares are in Tape C allocation of reasonable dues, fees, and For example, an ETP Holder that has Securities. The ETP Holder would be other charges among its members, a providing ADV of 15 million shares in required to have a providing ADV that issuers and other persons using its the Baseline Month would be required sets a new BBO on the Exchange of at facilities and does not unfairly to execute, at a minimum, an additional least 2 million shares in Tape A discriminate between customers, 9.75 million shares of providing ADV if Securities, of at least 1.250 million issuers, brokers or dealers. CADV is 6.5 billion shares in the billing shares in Tape B Securities, and of at The Exchange believes that the month, or 0.15% over the Baseline least 0.975 million shares in Tape C proposed additional tier for Less Active Month, for a total providing ADV of Securities. ETP Securities is reasonable because the 24.75 million shares for the billing For the month of October 2017 only, proposed credit of $0.0001 per share month. Further, of the 24.75 million the ETP Holder or Market Maker would that would apply if an LMM is shares, assume 10.75 million shares are need to directly execute providing registered as the LMM in at least 75 but in Tape A Securities, and 7 million average daily volume that is an increase less than 100 Less Active ETP Securities shares are each in Tape B and Tape C of no less than 0.10% of US CADV for would relate to displayed liquidity to Securities. The ETP Holder would be that month over the ETP Holder’s or the NYSE Arca Book in Tape B Market Maker’s providing average daily Securities, which would be identical to 6 US CADV means United States Consolidated volume in July 2016. For the months on sradovich on DSKBBY8HB2PROD with NOTICES Average Daily Volume for transactions reported to the type of volume to which the credit the Consolidated Tape, excluding odd lots through and after November 2017, ETP Holders would apply. January 31, 2014 (except for purposes of Lead and Market Makers would need to meet The Exchange believes it is equitable Market Maker pricing), and excludes volume on the new proposed qualifying and not unfairly discriminatory to days when the market closes early and on the date requirement of 0.15% of CADV. of the annual reconstitution of the Russell establish an additional tier applicable to Investments Indexes. Transactions that are not Using the previous example, that ETP reported to the Consolidated Tape are not included Holder would be required to execute, at 7 15 U.S.C. 78f(b). in US CADV. a minimum, an additional 6.5 million 8 15 U.S.C. 78f(b)(4) and (5). VerDate Sep<11>2014 19:07 Sep 15, 2017 Jkt 241001 PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 E:\FR\FM\18SEN1.SGM 18SEN1

Federal Register / Vol. 82, No. 179 / Monday, September 18, 2017 / Notices 43635 LMMs and to ETP Holders and Market not believe that it is unfairly Tape A providing ADV, at least 25% of Makers affiliated with the LMM, as all discriminatory to offer increased rebates their Tape B providing ADV, and at LMMs have the ability to qualify for the to LMMs as LMMs are subject to least 30% of their Tape C providing proposed rebate, and rebates would be additional requirements and obligations ADV as it would create an incentive for provided equally to qualifying (such as quoting requirements) that ETP Holders and Market Makers to participants. other market participants are not. improve displayed quotes on the The proposed fee change is intended The Exchange also believes that Exchange, which would benefit all to encourage LMMs to promote price allowing ETP Holders to receive market participants. The Exchange discovery and market quality in Less enhanced credits based on activities of believes that the proposed change is Active ETP Securities for the benefit of their affiliates is reasonable, equitable equitable and not unfairly all market participants. The Exchange and not unfairly discriminatory because discriminatory because providing believes the proposed additional tier to the Exchange believes that ETP Holders incentives for orders that are executed the current rebate structure would allow affiliated with LMMs may qualify to on a registered national securities LMMs that are registered as the LMM in earn enhanced credits in recognition of exchange would contribute to investors’ a fewer number of Less Active ETP their shared economic interest, which confidence in the fairness of their Securities to qualify for a rebate. The includes the heightened obligations and transactions and would benefit all Exchange believes the proposed credit is costs imposed on LMMs. ETP Holders investors by deepening the Exchange’s reasonable and appropriate in that it is unaffiliated with LMMs do not share the liquidity pool, supporting the quality of based on the amount of business same type of economic interests. price discovery, promoting market transacted on the Exchange. The Further, ETP Holders not affiliated with transparency and improving investor Exchange believes that providing the a LMM have an opportunity to establish protection. The Exchange further proposed additional credit to ETP such affiliation by several means, believes it is reasonable to require ETP Holders and Market Makers that are including but not limited to, a business Holders or Maker Makers to also affiliated with a LMM that add liquidity combination or the establishment of directly execute taking average daily in Tape B Securities to the Exchange is their own market making operation, volume of at least 15 million shares reasonable because the Exchange which each unaffiliated firm has the because it would provide an incentive believes that by providing increased potential to establish. for market participants that are active rebates to affiliated ETP Holders and The Exchange believes that the traders on the Exchange to increase Market Makers of a LMM, more LMMs proposed second way to qualify for the orders that provide liquidity on the will register to quote and trade in Less Step-Up Tier is equitable because it is Exchange, thereby further promoting Active ETP Securities. The Exchange open to all market participants on an price discovery on the Exchange. further believes the proposed equal basis and provides credits that are The Exchange believes that adopting incremental credit for adding liquidity reasonably related to the value to an lower providing ADV criteria for is also reasonable because it will exchange’s market quality associated September 2017 and October 2017 is encourage liquidity and competition in with higher volumes. As stated above, reasonable because it may allow a Tape B Securities quoted and traded on the Exchange believes that the Step-Up greater number of ETP Holders and the Exchange. Moreover, the Exchange Tier incentivizes market participants to Market Makers to qualify for the believes that the proposed fee change increase the orders sent directly to proposed credits while also providing will incentivize LMMs to register as an NYSE Arca that would provide ETP Holders and Market Makers the LMM in Less Active ETP Securities and liquidity. Additional order flow that opportunity to gradually increase their thus, add more liquidity in these and provides liquidity supports the quality activity in order to qualify for the Step other Tape B Securities to the benefit of of price discovery and promotes market Up Tier. The Exchange believes that all market participants. The Exchange transparency. The Exchange believes adopting lower providing ADV criteria also believes the lower requirement of that adding a second way to qualify for for September 2017 and October 2017 is the additional tier is reasonable because the Step Up Tier would benefit market also equitable and not unfairly it may allow a greater number of LMMs participants that already are active discriminatory because the lower and their affiliated ETP Holders and traders on the Exchange and whose criteria would apply uniformly to all Market Makers to qualify for the increased order flow provides ETP Holders and Market Makers during proposed additional credit. meaningful added levels of liquidity, September 2017 and October 2017. The Exchange believes the proposed thereby contributing to the depth and Finally, the Exchange believes that it incremental credit is equitable and not market quality on the Exchange. In is subject to significant competitive unfairly discriminatory because it is addition, by offering a second way to forces, as described below in the open to all ETP Holders and Market qualify for the Step-Up Tier, the Exchange’s statement regarding the Makers affiliated with a LMM on an Exchange believes more market burden on competition. For these equal basis and provides a discount that participants that are active traders on reasons, the Exchange believes that the is reasonably related to the value to the the Exchange may provide increased proposal is consistent with the Act. Exchange’s market quality associated liquidity-providing order flow and more with higher volumes. The Exchange market participants would be eligible to B. Self-Regulatory Organization’s further believes that the proposed receive the proposed credits for their Statement on Burden on Competition incremental rebate is not unfairly orders. In accordance with Section 6(b)(8) of discriminatory because it is consistent Further, the Exchange believes that the Act,9 the Exchange believes that the with the market quality and the proposal is reasonable and would proposed rule change would not impose sradovich on DSKBBY8HB2PROD with NOTICES competitiveness of benefits associated create an added incentive for ETP any burden on competition that is not with the proposed fee program and Holders and Market Makers to execute necessary or appropriate in furtherance because the magnitude of the additional additional orders on the Exchange. The of the purposes of the Act. Instead, the rebate is not unreasonably high in Exchange believes it is reasonable to Exchange believes that the proposed fee comparison to the rebate paid with require ETP Holders and Market change would encourage increased respect to other displayed liquidity- Makers’ providing ADV set a new BBO providing orders. The Exchange does on the Exchange of at least 20% of their 9 15 U.S.C. 78f(b)(8). VerDate Sep<11>2014 16:54 Sep 15, 2017 Jkt 241001 PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 E:\FR\FM\18SEN1.SGM 18SEN1

43636 Federal Register / Vol. 82, No. 179 / Monday, September 18, 2017 / Notices participation by LMMs in the trading of Electronic Comments SMALL BUSINESS ADMINISTRATION ETP securities generally and Less Active ETP Securities, in particular. The • Use the Commission’s Internet [Disaster Declaration #15302 and #15303; proposed change would also encourage comment form (http://www.sec.gov/ FLORIDA Disaster Number FL–00130] the submission of additional liquidity to rules/sro.shtml); or a public exchange, thereby promoting • Send an email to rule-comments@ Presidential Declaration Amendment of price discovery and transparency and sec.gov. Please include File Number SR– a Major Disaster for the State of Florida enhancing order execution NYSEARCA–2017–104 on the subject opportunities for ETP Holders and line. AGENCY:U.S. Small Business Market Makers. Administration. The Exchange notes that it operates in Paper Comments a highly competitive market in which ACTION: Amendment 1. • Send paper comments in triplicate market participants can readily favor to Brent J. Fields, Secretary, Securities SUMMARY: This is an amendment of the competing venues. In such an and Exchange Commission, 100 F Street Presidential declaration of a major environment, the Exchange must NE., Washington, DC 20549–1090. disaster for the State of Florida (FEMA– continually review, and consider adjusting, its fees and credits to remain All submissions should refer to File 4337–DR), dated 09/10/2017. competitive with other exchanges. For Number SR–NYSEARCA–2017–104. Incident: Hurricane Irma. the reasons described above, the This file number should be included on Incident Period: 09/04/2017 and Exchange believes that this proposal the subject line if email is used. To help continuing. promotes a competitive environment. the Commission process and review C. Self-Regulatory Organization’s your comments more efficiently, please DATES: Issued on 09/11/2017. Statement on Comments on the use only one method. The Commission Physical Loan Application Deadline Proposed Rule Change Received From will post all comments on the Date: 11/09/2017. Members, Participants, or Others Commission’s Internet Web site (http:// Economic Injury (EIDL) Loan www.sec.gov/rules/sro.shtml). Copies of No written comments were solicited Application Deadline Date: 06/11/2018. the submission, all subsequent or received with respect to the proposed amendments, all written statements ADDRESSES: Submit completed loan rule change. with respect to the proposed rule applications to: U.S. Small Business III. Date of Effectiveness of the change that are filed with the Administration, Processing and Proposed Rule Change and Timing for Commission, and all written Disbursement Center, 14925 Kingsport Commission Action communications relating to the Road, Fort Worth, TX 76155. The foregoing rule change is effective proposed rule change between the FOR FURTHER INFORMATION CONTACT: A. upon filing pursuant to Section Commission and any person, other than Escobar, Office of Disaster Assistance, 19(b)(3)(A) 10 of the Act and those that may be withheld from the U.S. Small Business Administration, subparagraph (f)(2) of Rule 19b–4 11 public in accordance with the 409 3rd Street SW., Suite 6050, thereunder, because it establishes a due, provisions of 5 U.S.C. 552, will be Washington, DC 20416, (202) 205–6734. fee, or other charge imposed by the available for Web site viewing and Exchange. printing in the Commission’s Public SUPPLEMENTARY INFORMATION: The notice At any time within 60 days of the Reference Room, 100 F Street NE., of the President’s major disaster filing of such proposed rule change, the Washington, DC 20549 on official declaration for the State of Florida, Commission summarily may business days between the hours of dated 09/10/2017, is hereby amended to temporarily suspend such rule change if 10:00 a.m. and 3:00 p.m. Copies of the include the following areas as adversely it appears to the Commission that such filing also will be available for affected by the disaster: action is necessary or appropriate in the inspection and copying at the principal Primary Counties (Physical Damage and public interest, for the protection of office of the Exchange. All comments Economic Injury Loans): Broward, investors, or otherwise in furtherance of received will be posted without change; Clay, Duval, Flagler, Palm Beach, the purposes of the Act. If the the Commission does not edit personal Putnam, Saint Johns Commission takes such action, the identifying information from Commission shall institute proceedings submissions. You should submit only Contiguous Counties (Economic Injury under Section 19(b)(2)(B) 12 of the Act to information that you wish to make Loans Only): determine whether the proposed rule available publicly. All submissions Florida: Alachua, Baker, Bradford, change should be approved or should refer to File Number SR– Marion, Martin, Nassau, disapproved. NYSEARCA–2017–104 and should be Okeechobee, Volusia IV. Solicitation of Comments submitted on or before October 10, All other information in the original 2017. declaration remains unchanged. Interested persons are invited to submit written data, views, and For the Commission, by the Division of (Catalog of Federal Domestic Assistance arguments concerning the foregoing, Trading and Markets, pursuant to delegated Number 59008) authority.13 sradovich on DSKBBY8HB2PROD with NOTICES including whether the proposed rule change is consistent with the Act. Eduardo A. Aleman, James E. Rivera, Comments may be submitted by any of Assistant Secretary. Associate Administrator for Disaster the following methods: [FR Doc. 2017–19810 Filed 9–15–17; 8:45 am] Assistance. [FR Doc. 2017–19734 Filed 9–15–17; 8:45 am] BILLING CODE 8011–01–P 10 15 U.S.C. 78s(b)(3)(A). BILLING CODE 8025–01–P 11 17 CFR 240.19b–4(f)(2). 12 15 U.S.C. 78s(b)(2)(B). 13 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 16:54 Sep 15, 2017 Jkt 241001 PO 00000 Frm 00123 Fmt 4703 Sfmt 9990 E:\FR\FM\18SEN1.SGM 18SEN1


Document Created: 2017-09-16 00:51:34
Document Modified: 2017-09-16 00:51:34
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 43633 
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