82 FR 60782 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List To Adopt a Rebate for the NYSE BondsSM

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 245 (December 22, 2017)

[Federal Register Volume 82, Number 245 (Friday, December 22, 2017)]
[Notices]
[Pages 60782-60784]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-27561]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82343; File No. SR-NYSE-2017-68]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Price List To Adopt a Rebate for the NYSE Bonds\SM\ System

December 18, 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 December 14, 2017, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
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 its Price List to adopt a rebate for 
the NYSE Bonds\SM\ system. The proposed rule change is available on the 
Exchange's website at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend its Price List to provide a rebate 
for the NYSE Bonds system.\4\
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    \4\ The Exchange originally filed to amend the Fee Schedule on 
December 1, 2017 (SR-NYSE-2017-65) and withdrew such filing on 
December 14, 2017.
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    The Exchange currently does not charge any execution fee for orders 
in bonds that take liquidity from the NYSE Bonds Book. For orders in 
bonds that provide liquidity, the Exchange currently provides a rebate 
of $0.05 per bond, with a maximum rebate of $50 per execution, for bond 
liquidity providers that meet the requirements of Rule 88.\5\ The 
Exchange also currently provides rebates under the Liquidity Provider 
Incentive Program \6\ pursuant to which the Exchange pays a daily 
rebate to a User \7\ that is a Member or Member Organization based on 
the number of Qualifying CUSIPs on the NYSE Bonds Book for which a 
Unique User \8\ meets prescribed quoting requirements. The Exchange is 
not proposing any change to the bond liquidity provider rebate

[[Page 60783]]

program or the Liquidity Provider Incentive Program.
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    \5\ There are currently no bond liquidity providers who meet the 
requirements of Rule 88 and therefore no rebates are currently 
provided under the program.
    \6\ See Securities Exchange Act Release Nos 77591 (April 12, 
2016), 81 FR 22656 (April 18, 2016) (SR-NYSE-2016-26); 77812 (May 
11, 2016), 81 FR 30594 (May 17, 2016) (SR-NYSE-2016-34); and 79210 
(November 1, 2016), 81 FR 78213 (November 7, 2016) (SR-NYSE-2016-
68).
    \7\ Rule 86(b)(2)(M) defines a User as any Member or Member 
Organization, Sponsored Participant, or Authorized Trader that is 
authorized to access NYSE Bonds.
    \8\ For purposes of the Liquidity Provider Incentive Program, 
the term `Unique User' means a User, a trading desk of a User, or a 
customer of a User, on whose behalf a Member or Member Organization 
enters quotes or orders under a Unique User ID that such User 
requests from and is provided by the Exchange. See Securities 
Exchange Act Release No. 80934 (June 15, 2017), 82 FR 28173 (June 
20, 2017) (SR-NYSE-2017-27).
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    The Exchange proposes to adopt the Agency Order Incentive Program. 
As proposed, a monthly rebate of $4,000 would be payable to a User that 
submits an average of 400 resting limit orders of any size per trading 
day \9\ during the month and that are submitted as Agency Orders by the 
User. For purposes of the proposed Agency Order Incentive Program, an 
Agency Order is any order submitted by a User that it represents as 
agent on NYSE Bonds. For example, assume a User submits 10,000 orders 
during January 2018, which has 21 trading days. Of the 10,000 orders, 
if 8,500 orders are resting limit orders that are represented as agent 
by the User, the average for the purposes of the proposed rebate would 
be 405 orders per trading day (8,500 orders/21 trading days). In this 
instance the User will have met the average orders per day requirement 
to qualify for the proposed rebate. The Exchange believes that the 
proposed rebate program would encourage additional displayed liquidity 
in bonds on the Exchange.
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    \9\ A trading day is any day that NYSE Bonds is available for 
trading, as determined by Securities Industry and Financial Market 
Association (``SIFMA''), which annually provides recommendations for 
early and full market closes that the bond market, including NYSE 
Bonds, follows. The current SIFMA holiday schedule is available at 
http://www.sifma.org/services/holiday-schedule/#us2016.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\10\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\11\ in 
particular, because it provides for the equitable allocation of 
reasonable dues, fees, and other charges among its members, issuers and 
other persons using its facilities and does not unfairly discriminate 
between customers, issuers, brokers or dealers. The Exchange believes 
that it is reasonable and equitable to adopt the Agency Order Incentive 
Program for the bonds trading platform, which would provide rebates for 
member organizations that provide liquidity to bonds traded on the 
Exchange. This proposed rule change targets a particular segment in 
which the Exchange seeks to attract greater order flow. The proposed 
rebate program would provide an incentive for additional liquidity at 
the Exchange. The Exchange further believes Agency Orders are becoming 
an increasingly important segment of bonds trading and the proposed 
rebate seeks to incentivize market participants to direct a greater 
number of such orders to the Exchange.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4), (5).
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    The Exchange believes the proposed fee change would provide an 
incentive for Users to provide additional liquidity to the market and 
add competition to the existing group of liquidity providers. Finally, 
the Exchange believes that the proposed rule change is not unfairly 
discriminatory in that it would apply uniformly to all Users accessing 
NYSE Bonds. All similarly situated Users would be subject to the same 
rebate structure, and each User would have the ability to determine the 
extent to which the Exchange's proposed rebate structure will provide 
it with an economic incentive to use NYSE Bonds, and model its business 
accordingly.

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

    In accordance with Section 6(b)(8) of the Act,\12\ 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. Debt securities typically trade in a decentralized 
OTC dealer market that is less liquid and transparent than the equities 
markets. The Exchange believes that the proposed change would increase 
competition with these OTC venues by creating incentives to engage in 
bonds transactions on the Exchange and rewarding market participants 
for actively quoting and providing liquidity in the only transparent 
bond market, which the Exchange believes will enhance market quality.
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    \12\ 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 that 
are not transparent. In such an environment, the Exchange must 
continually review, and consider adjusting its fees and rebates to 
remain competitive with other exchanges as well as with alternative 
trading systems and other venues that are not required to comply with 
the statutory standards applicable to exchanges. Because competitors 
are free to modify their own fees and credits in response, and because 
market participants may readily adjust their order routing practices, 
the Exchange believes that the degree to which fee changes in this 
market may impose any burden on competition is extremely limited. As a 
result of all of these considerations, the Exchange does not believe 
that the proposed change will impair the ability of member 
organizations or competing order execution venues to maintain their 
competitive standing in the financial markets.

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) \13\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \14\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \15\ 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-NYSE-2017-68 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-NYSE-2017-68. 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

[[Page 60784]]

only one method. The Commission will post all comments on the 
Commission's internet website (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 website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSE-2017-68, and should be submitted on 
or before January 12, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-27561 Filed 12-21-17; 8:45 am]
 BILLING CODE 8011-01-P