83 FR 16909 - 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 83, Issue 74 (April 17, 2018)
Federal Register Volume 83, Issue 74 (April 17, 2018)
| Page Range | 16909-16912 | |
| FR Document | 2018-07931 |
[Federal Register Volume 83, Number 74 (Tuesday, April 17, 2018)] [Notices] [Pages 16909-16912] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-07931] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83032; File No. SR-NYSEArca-2018-20] 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 April 11, 2018. 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 March 30, 2018, 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE Arca Equities Fees and Charges (``Fee Schedule'') to (i) revise the requirements to qualify for the Step-Up Tier; (ii) adopt a new pricing tier, BBO Setter Tier; (iii) delete the Tape A and Tape C Tier; (iv) eliminate the credits associated with indications of interest (``IOIs''); (v) delete obsolete language related to an Exchange Traded Product (``ETP'') Incentive Program; and (vi) modify the credit the Exchange provides for orders with the Self Trade Prevention (``STP'') Cancel Both (``STPC'') and STP Decrement and Cancel (``STPD'') Modifiers. The Exchange proposes to implement the fee changes effective April 2, 2018. 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 Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the Fee Schedule, as described below, to (i) revise the requirements for the Step-Up Tier; (ii) adopt a new pricing tier, BBO Setter Tier; (iii) delete the Tape A and Tape C Tier; (iv) eliminate the credits associated with IOIs; (v) delete obsolete language related to an ETP Incentive Program; and (vi) modify the credit the Exchange provides for orders with the STPC and STPD Modifiers. The Exchange proposes to implement the fee changes on April 2, 2018. Step-Up Tier In September 2016, the Exchange filed a proposed rule change to adopt a new Step-Up pricing tier that was intended to incentivize ETP Holders and Market Makers to increase order flow and provide additional liquidity.\4\ In September 2017, the Exchange filed a proposed rule change to adopt a second way by which an ETP Holder or Market Maker could qualify for the Step-Up Tier.\5\ Currently, to qualify for the Step-Up Tier, ETP 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 (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 can alternatively 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 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. ETP Holders and Market Makers that qualify for the Step-Up Tier receive a credit of $0.0029 per share for orders that provide liquidity to the Book in Tape A and Tape C Securities and $0.0028 per share for orders that provide liquidity to the Book in Tape B Securities. --------------------------------------------------------------------------- \4\ See Securities Exchange Act Release No. 78892 (September 21, 2016), 81 FR 66315 (September 27, 2016) (SR-NYSEArca-2016-128). \5\ See Securities Exchange Act Release No. 81601 (September 13, 2017), 82 FR 43633 (September 18, 2017) (SR-NYSEArca-2017-104). \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. --------------------------------------------------------------------------- The Step-Up Tier has not encouraged ETP Holders and Market Makers to increase their activity to qualify for this pricing tier as significantly as the Exchange had anticipated that it would. As a result, the Exchange proposes to revise the current requirements to qualify for the Step-Up Tier. As proposed, ETP Holders and Market Makers would qualify for the Step-Up Tier if they directly execute providing average daily volume per month of 0.50% or more but less than 0.70% of the US CADV, and directly execute providing ADV 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 ADV in Q1 2018. ETP Holders and Market Makers that qualify for the Step-Up Tier would receive a credit of $0.0030 per share for orders that provide displayed liquidity to the Book in Tape A Securities, $0.0023 per share for orders that provide displayed liquidity to the Book in Tape B Securities, and $0.0031 per share for orders that provide displayed liquidity in Tape C Securities. The goal of the Step-Up Tier remains the same, i.e., 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 [[Page 16910]] and promotes market transparency.\7\ The Exchange believes that the proposed new qualifying requirement for the Step-Up Tier will provide an 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. --------------------------------------------------------------------------- \7\ See supra, note 5, at 43634. --------------------------------------------------------------------------- BBO Setter Tier The Exchange proposes a new pricing tier--BBO Setter Tier--for securities with a per share price of $1.00 or above. As proposed, a new BBO Setter Tier credit of $0.0004 per share for orders that set a new NYSE Arca BBO in Tape A and Tape C Securities and $0.0002 per share for orders that set a new NYSE Arca BBO in Tape B Securities would apply to ETP Holders and Market Makers that directly execute providing ADV per month of 0.70% or more of the US CADV, and provided that an ETP ID \8\ associated with an ETP Holder or Market Maker, on a daily basis, measured monthly (1) Directly executes providing ADV of at least 0.20% of US CADV, (2) sets a new NYSE Arca BBO with at least 0.10% of US CADV; and (3) sets a new NYSE Arca BBO of at least 40% of that ETP Holder's or Market Maker's ETP ID providing ADV. The proposed credit would be in addition to the ETP Holder's or Market Maker's Tiered or Basic Rate credit(s), and for Tape B and Tape C Securities, the proposed credit would be in addition to any capped credit.\9\ --------------------------------------------------------------------------- \8\ ETP Holders enter orders and order instructions by using communication protocols that map to the order types and modifiers described in Exchange rules. The Exchange makes available ports that communicate with the Exchange using Pillar phase I protocols and Pillar phase II protocols. For purposes of the BBO Setter Tier, references to ETP ID means an ETP ID when using Pillar phase I protocols to communicate with the NYSE Arca Marketplace or an MPID when using Pillar phase II protocols to communicate with the NYSE Arca Marketplace. \9\ The Exchange does not have any capped credits for trading in Tape A Securities. --------------------------------------------------------------------------- For example, assume an ETP Holder or Market Maker qualifies for the Tape C Tier 1 credit of $0.0032 per share for orders that provide liquidity to the Book. Assume further that the same ETP Holder or Market Maker also qualifies for the Tape C Tier 2 incremental credit of $0.0002 per share. Pursuant to the Tape C Tier 2 pricing tier, the ETP Holder or Market Maker's credit cannot exceed $0.0033 per share. In this example, the ETP Holder or Market Maker's credit would be capped at $0.0033 per share. Assume further that the ETP Holder or Market Maker has an ETP ID that qualifies for the proposed BBO Setter Tier, which would provide an additional credit of $0.0004 per share to the qualifying ETP ID, and combined with the ETP Holder or Market Maker's credit of $0.0033 per share, the ETP Holder or Market Maker in this example would receive a total credit of $0.0037 per share for orders that set a new NYSE Arca BBO. The ETP ID's orders that do not set a new NYSE Arca BBO would not receive the proposed BBO Setter Tier credit. Tape A and Tape C Tier In July 2017, the Exchange filed a proposed rule change to adopt a new pricing tier--Tape A and Tape C Tier--as an incentive for ETP Holders and Market Makers to provide liquidity in Tape A and Tape C Securities.\10\ The Tape A and Tape C Tier has not encouraged ETP Holders and Market Makers to increase their activity to qualify for this pricing tier as significantly as the Exchange had anticipated they would. As a result, the Exchange proposes to remove this pricing tier from the Fee Schedule. --------------------------------------------------------------------------- \10\ See Securities Exchange Act Release No. 81134 (July 12, 2017), 82 FR 32911 (July 18, 2017) (SR-NYSEArca-2017-72). --------------------------------------------------------------------------- IOI Credit In August 2008, the Exchange filed a proposed rule change to adopt credits that apply to indications of interest (``IOIs'') submitted by ETP Holders that result in routed and executed orders.\11\ IOIs are non-displayed indications of symbol, size and side, which do not interact with the NYSE Arca Book. At their discretion, participating ETP Holders may send an IOI to the Exchange, which in turn considers the IOI when determining potential destinations for outbound routes. The purpose for adopting IOI Credits was to incentivize ETP Holders to participate in the Exchange's IOI program and provide additional liquidity to the marketplace. The IOI Credits have not incentivized ETP Holders to participate in the IOI program as anticipated by the Exchange. As a result, the Exchange proposes to eliminate the credits associated with IOIs by deleting IOI Credit Tier 2 and IOI Credit Tier 3 entirely and renaming IOI Credit Tier 1 as IOI Credit. With this proposed rule change, the Exchange would no longer provide credits associated with IOIs. The Exchange proposes to reflect the elimination of the credits by adopting rule text on the Fee Schedule that would replace the current tiered credits with ``No Credit.'' --------------------------------------------------------------------------- \11\ See Securities Exchange Act Release Nos. 58397 (August 20, 2008), 73 FR 50389 (August 26, 2008) (SR-NYSEArca-2008-83); 59521 (March 5, 2009), 74 FR 10640 (March 11, 2009) (SR-NYSEArca-2009-15); 60495 (August 13, 2009), 74 FR 41957 (August 19, 2009) (SR-NYSEArca- 2009-72); and 66379 (February 10, 2012), 77 FR 9277 (February 16, 2012) (SR-NYSEArca-2012-11). --------------------------------------------------------------------------- ETP Incentive Program The Exchange proposes to amend the Fee Schedule to reflect the termination of a pilot program designed to incentivize quoting and trading in Exchange Traded Products (``ETPs'') and to add competition among existing qualified Market Makers \12\ (``ETP Incentive Program''). The ETP Incentive Program was also designed to enhance the market quality for ETPs by incentivizing Market Makers to take Lead Market Maker (``LMM'') \13\ assignments in certain lower-volume ETPs by offering an alternative fee structure for such LMMs.\14\ The ETP Incentive Program was established in 2013.\15\ The Exchange subsequently filed to extend it in 2014,\16\ in 2015,\17\ and finally in 2016.\18\ However, the Exchange did not extend the program and it expired on July 31, 2017. The Exchange proposes to remove reference to the ETP Incentive Program from the Fee Schedule. --------------------------------------------------------------------------- \12\ With respect to equities traded on the Exchange, the term Market Maker refers to an ETP Holder that acts as a Market Maker pursuant to NYSE Arca Rule 7-E. See NYSE Arca Rule 1.1(z). An ETP Holder is a sole proprietorship, partnership, corporation, limited liability company, or other organization in good standing that has been issued an ETP. See NYSE Arca Rule 1.1(o). \13\ With respect to equities traded on the Exchange, the term Lead Market Maker refers to registered Market Maker that is the exclusive Designated Market Maker in listings for which the Exchange is the primary listing market. See NYSE Arca Rule 1.1(w). \14\ The LMM program was 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 provided LMMs with an opportunity to receive incrementally higher transaction credits and incur incrementally lower transaction fees compared to standard liquidity maker-taker rates. \15\ See Securities Exchange Act Release No. 69706 (June 6, 2013), 78 FR 35340 (June 12, 2013) (SR-NYSEArca-2013-34) (``ETP Incentive Program Approval''). \16\ See Securities Exchange Act Release No. 72963 (September 3, 2014), 79 FR 53492 (September 9, 2014) (SR-NYSEArca-2014-99). \17\ See Securities Exchange Act Release No. 75846 (September 4, 2015), 80 FR 54646 (September 10, 2015) (SR-NYSEArca-2015-78). \18\ See Securities Exchange Act Release No. 78497 (August 8, 2016), 81 FR 53524 (August 12, 2016) (SR-NYSEArca-2016-110). --------------------------------------------------------------------------- STP Modifier The Exchange currently provides STP Modifiers that allow ETP Holders entering orders to elect to prevent those orders from executing against other orders entered on the Exchange by the [[Page 16911]] same ETP Holder.\19\ In connection with the STP functionality, the Exchange adopted credits and fees for orders returned to an ETP Holder using the STP Modifiers.\20\ Currently, ETP Holders entering an incoming order with either the STP Cancel Both (``STPC'') or the STP Decrement and Cancel (``STPD'') Modifier are charged $0.0030 per share for orders returned to the ETP Holder. The ETP Holder's corresponding resting order marked with any of the STP Modifiers that interacts with an incoming STPC or STPD Modifier is credited $0.0029 per share for orders returned to the ETP Holder. The Exchange proposes to modify the credit from $0.0029 per share to $0.0030 per share for an ETP Holder's resting order that is returned to the ETP Holder. The Exchange is not proposing any change to the fees and credits applicable to orders with the STP Cancel Newest and the STP Cancel Oldest Modifiers. --------------------------------------------------------------------------- \19\ See Securities Exchange Act Release No. 60191 (June 30, 2009), 74 FR 32660 (July 8, 2009) (SR-NYSEArca-2009-58). \20\ See Securities Exchange Act Release No. 60322 (July 16, 2009), 74 FR 36794 (July 24, 2009) (SR-NYSEArca-2009-68). The incoming order (last received order) marked with one of the STP Modifiers controls the billing treatment of both interacting orders marked with STP Modifiers. See Schedule of Fees, Self Trade Prevention Modifiers, footnote 6. --------------------------------------------------------------------------- On incoming orders marked with the STPD Modifier, both orders are cancelled back to the ETP Holder if the orders are equivalent in size. If the orders are not equivalent in size, the equivalent size is cancelled back to the ETP Holder and the larger order is decremented by the size of the smaller order with the balance remaining on the NYSE Arca Book. For billing purposes, only the size of the portion of the orders cancelled back to the ETP Holder is charged or credited. On incoming orders marked with the STPC Modifier, the entire size of both orders is cancelled back to ETP Holder. However, for billing purposes, incoming orders marked with the STPC Modifier are only charged or credited up to the equivalent size of both orders.\21\ --------------------------------------------------------------------------- \21\ See supra, note 19. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,\22\ in general, and furthers the objectives of Sections 6(b)(4) and (5) of the Act,\23\ 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. --------------------------------------------------------------------------- \22\ 15 U.S.C. 78f(b). \23\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Exchange believes that the proposed revised Step-Up Tier is equitable because it is open to all ETP Holders and Market Makers 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 is intended to incentivize market participants to increase the orders sent directly to NYSE Arca and therefore provide liquidity that supports the quality of price discovery and promotes market transparency. Moreover, the addition of the Step-Up Tier would benefit market participants whose increased order flow provides meaningful added levels of liquidity thereby contributing to the depth and market quality on the Exchange. 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 believes that the proposed NBBO Setter Tier is reasonable because it provides an opportunity for ETP Holders and Market Makers that qualify to receive an incremental per share credit if the ETP ID associated with an ETP Holder or Market Maker meets certain trading qualifications and establishes the BBO on the Exchange.\24\ Thus the credit provides incentive to members to provide aggressively priced orders that improve the market by setting the BBO on the Exchange. The Exchange believes that it is reasonable to adopt higher credit to Tape A and Tape C securities because it desires to improve the market on the Exchange in those securities in terms of setting the BBO, which is currently not as robust as price setting in Tape B securities. The Exchange further believes that providing a credit for qualifying orders in Tape C securities beyond the Tape C Tier 2 cap is reasonable as it would create an additional incentive for participants to quote aggressively on the Exchange, which would benefit all investors by deepening the Exchange's liquidity pool, improving displayed prices and promoting market transparency. The Exchange believes the proposed pricing tier is equitable and not unfairly discriminatory because the per share credit(s) under the BBO Setter Tier would be available to all ETP Holders' and Market Makers' ETP IDs on an equal basis and provides an incremental credit for activity that improves the Exchange's market quality through increased activity and by encouraging the setting of the BBO. In this regard, the BBO Setter Tier is intended to encourage higher levels of liquidity provision into the price discovery process and is consistent with the overall goals of enhancing market quality. --------------------------------------------------------------------------- \24\ This is similar to programs currently in place on other exchanges. See NBBO Program, Nasdaq Stock Market, at https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2. --------------------------------------------------------------------------- The Exchange believes that it is reasonable to delete obsolete pricing tiers from the Fee Schedule because ETP Holders and Market Makers have not increased their activity to qualify for the Tape A and Tape C Tier as significantly as the Exchange anticipated they would. The Exchange believes that it is equitable and not unfairly discriminatory to eliminate the Tape A and Tape C Tier because, as proposed, such pricing tier would be eliminated entirely--ETP Holders and Market Makers would no longer be able to qualify for this pricing tier. This aspect of the proposed rule change would result in the removal of obsolete text from the Fee Schedule and therefore add greater clarity to the Fee Schedule. The Exchange believes that it is reasonable to eliminate the credits that apply to IOIs submitted by ETP Holders that result in routed and executed orders because the IOI Credits have not incentivized ETP Holders to participate in the IOI program as anticipated by the Exchange. The Exchange believes that it is equitable and not unfairly discriminatory to eliminate the IOI Credits because, as proposed, such credits would be eliminated entirely--ETP Holders would no longer be able to qualify for such credits. The Exchange believes it is equitable, reasonable and not unfairly discriminatory to remove reference to the ETP Pilot from the Fee Schedule because the ETP Pilot expired in July 2017 and deleting rules that no longer apply will bring clarity to the Fee Schedule. The Exchange believes the proposed rule change will make the Fee Schedule clearer and eliminate potential investor confusion, thereby removing impediments to and perfecting the mechanism of a free and open market and a national market system, and in [[Page 16912]] general, protecting investors and the public interest. The Exchange believes it is reasonable to modify the credit provided to an ETP Holder's resting STP order that is returned to the ETP Holder. The Exchange believes standardizing the fees and credits applicable to orders marked with the STPC and STPD Modifier would encourage ETP Holders to increase their utilization of the STP functionality in order to better manage order flow and prevent undesirable or unexpected executions with themselves. The Exchange further believes the proposed increased credit is equitable and not unfairly discriminatory because it would be available to all similarly situated ETP Holders on an equal basis. For the foregoing reasons, the Exchange believes that the proposal is consistent with the Act. B. Self-Regulatory Organization's Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,\25\ 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 proposal to add new pricing tiers would 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. In addition, the removal of pricing tiers and fee credits, and deletion of obsolete text from the Fee Schedule would not have any impact on inter- or intra-market competition because the proposed change would result in a streamlined Fee Schedule. Also, the Exchange believes the proposed increased credit for resting STP orders returned to an ETP Holder would encourage ETP Holders to increase their utilization of the STP functionality in order to better manage order flow and prevent undesirable or unexpected executions with themselves and thus would enhance order execution opportunities for ETP Holders. The Exchange believes that this could promote competition between the Exchange and other execution venues, including those that currently offer similar STP functionality and comparable transaction pricing. --------------------------------------------------------------------------- \25\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees and rebates to remain competitive with other exchanges and to attract order flow to the Exchange. 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 changes will impair the ability of ETP Holders 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) \26\ of the Act and subparagraph (f)(2) of Rule 19b-4 \27\ thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. --------------------------------------------------------------------------- \26\ 15 U.S.C. 78s(b)(3)(A). \27\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- 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) \28\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \28\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- 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 CommentsUse 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-2018-20 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-2018-20. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (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-NYSEArca-2018-20, and should be submitted on or before May 8, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\29\ --------------------------------------------------------------------------- \29\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-07931 Filed 4-16-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 74 / Tuesday, April 17, 2018 / Notices 16909
Dated: April 11, 2018. II. Self-Regulatory Organization’s Holder’s or Market Maker’s providing
Eduardo A. Aleman, Statement of the Purpose of, and average daily volume in July 2016, and
Assistant Secretary. Statutory Basis for, the Proposed Rule (ii) sets a new NYSE Arca Best Bid or
[FR Doc. 2018–07960 Filed 4–16–18; 8:45 am]
Change Offer with at least 25% in each of the
In its filing with the Commission, the ETP Holder’s or Market Maker’s Tape A,
BILLING CODE 8011–01–P
self-regulatory organization included Tape B and Tape C providing ADV. ETP
statements concerning the purpose of, Holders and Market Makers can
SECURITIES AND EXCHANGE and basis for, the proposed rule change alternatively qualify for the Step-Up
COMMISSION and discussed any comments it received Tier if such ETP Holder or Market
on the proposed rule change. The text Maker, on a daily basis, measured
of those statements may be examined at monthly: (i) Directly execute providing
[Release No. 34–83032; File No. SR– average daily volume that is an increase
the places specified in Item IV below.
NYSEArca–2018–20]
The Exchange has prepared summaries, of no less than 0.15% of US CADV for
set forth in sections A, B, and C below, that month over the ETP Holder’s or
Self-Regulatory Organizations; NYSE
of the most significant parts of such Market Maker’s providing average daily
Arca, Inc.; Notice of Filing and
statements. volume in July 2016, and (ii) sets a new
Immediate Effectiveness of Proposed
NYSE Arca Best Bid or Offer with at
Rule Change To Amend the NYSE Arca A. Self-Regulatory Organization’s
least 20% in the ETP Holder’s or Market
Equities Fees and Charges Statement of the Purpose of, and
Maker’s Tape A providing ADV, at least
Statutory Basis for, the Proposed Rule
April 11, 2018. Change 25% in the ETP Holder’s or Market
Maker’s Tape B providing ADV, and at
Pursuant to Section 19(b)(1) 1 of the 1. Purpose least 30% in the ETP Holder’s or Market
Securities Exchange Act of 1934 (the Maker’s Tape C providing ADV, and (iii)
The Exchange proposes to amend the
‘‘Act’’) 2 and Rule 19b–4 thereunder, 3 directly execute taking average daily
Fee Schedule, as described below, to (i)
notice is hereby given that, on March revise the requirements for the Step-Up volume of at least 15 million shares.
30, 2018, NYSE Arca, Inc. (the Tier; (ii) adopt a new pricing tier, BBO ETP Holders and Market Makers that
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with Setter Tier; (iii) delete the Tape A and qualify for the Step-Up Tier receive a
the Securities and Exchange Tape C Tier; (iv) eliminate the credits credit of $0.0029 per share for orders
Commission (the ‘‘Commission’’) the associated with IOIs; (v) delete obsolete that provide liquidity to the Book in
proposed rule change as described in language related to an ETP Incentive Tape A and Tape C Securities and
Items I, II, and III below, which Items Program; and (vi) modify the credit the $0.0028 per share for orders that
have been prepared by the self- Exchange provides for orders with the provide liquidity to the Book in Tape B
regulatory organization. The STPC and STPD Modifiers. The Securities.
Commission is publishing this notice to Exchange proposes to implement the fee The Step-Up Tier has not encouraged
solicit comments on the proposed rule changes on April 2, 2018. ETP Holders and Market Makers to
change from interested persons. increase their activity to qualify for this
Step-Up Tier
I. Self-Regulatory Organization’s In September 2016, the Exchange filed pricing tier as significantly as the
Statement of the Terms of the Substance a proposed rule change to adopt a new Exchange had anticipated that it would.
of the Proposed Rule Change Step-Up pricing tier that was intended As a result, the Exchange proposes to
to incentivize ETP Holders and Market revise the current requirements to
The Exchange proposes to amend the Makers to increase order flow and qualify for the Step-Up Tier. As
NYSE Arca Equities Fees and Charges provide additional liquidity.4 In proposed, ETP Holders and Market
(‘‘Fee Schedule’’) to (i) revise the September 2017, the Exchange filed a Makers would qualify for the Step-Up
requirements to qualify for the Step-Up proposed rule change to adopt a second Tier if they directly execute providing
Tier; (ii) adopt a new pricing tier, BBO way by which an ETP Holder or Market average daily volume per month of
Setter Tier; (iii) delete the Tape A and Maker could qualify for the Step-Up 0.50% or more but less than 0.70% of
Tape C Tier; (iv) eliminate the credits Tier.5 Currently, to qualify for the Step- the US CADV, and directly execute
associated with indications of interest Up Tier, ETP Holders and Market providing ADV that is an increase of no
(‘‘IOIs’’); (v) delete obsolete language Makers, on a daily basis, measured less than 0.10% of US CADV for that
related to an Exchange Traded Product monthly must: (i) directly execute month over the ETP Holder’s or Market
(‘‘ETP’’) Incentive Program; and (vi) providing average daily volume that is Maker’s providing ADV in Q1 2018. ETP
modify the credit the Exchange provides an increase of no less than 0.15% of US Holders and Market Makers that qualify
for orders with the Self Trade CADV 6 for that month over the ETP for the Step-Up Tier would receive a
Prevention (‘‘STP’’) Cancel Both credit of $0.0030 per share for orders
(‘‘STPC’’) and STP Decrement and 4 See Securities Exchange Act Release No. 78892 that provide displayed liquidity to the
Cancel (‘‘STPD’’) Modifiers. The (September 21, 2016), 81 FR 66315 (September 27, Book in Tape A Securities, $0.0023 per
Exchange proposes to implement the fee
2016) (SR–NYSEArca–2016–128). share for orders that provide displayed
5 See Securities Exchange Act Release No. 81601
liquidity to the Book in Tape B
changes effective April 2, 2018. The (September 13, 2017), 82 FR 43633 (September 18,
Securities, and $0.0031 per share for
proposed rule change is available on the 2017) (SR–NYSEArca–2017–104).
6 US CADV means United States Consolidated orders that provide displayed liquidity
Exchange’s website at www.nyse.com, at
in Tape C Securities.
daltland on DSKBBV9HB2PROD with NOTICES
Average Daily Volume for transactions reported to
the principal office of the Exchange, and the Consolidated Tape, excluding odd lots through
at the Commission’s Public Reference January 31, 2014 (except for purposes of Lead
The goal of the Step-Up Tier remains
Room. Market Maker pricing), and excludes volume on the same, i.e., to incentivize ETP
days when the market closes early and on the date Holders and Market Makers to increase
of the annual reconstitution of the Russell the orders sent directly to NYSE Arca
1 15 U.S.C. 78s(b)(1). Investments Indexes. Transactions that are not
2 15 U.S.C. 78a. reported to the Consolidated Tape are not included
and therefore provide liquidity that
3 17 CFR 240.19b–4. in US CADV. supports the quality of price discovery
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![16912 Federal Register / Vol. 83, No. 74 / Tuesday, April 17, 2018 / Notices
general, protecting investors and the available at other venues to be more Electronic Comments
public interest. favorable. In such an environment, the
The Exchange believes it is reasonable Exchange must continually adjust its • Use the Commission’s internet
to modify the credit provided to an ETP fees and rebates to remain competitive comment form (http://www.sec.gov/
Holder’s resting STP order that is with other exchanges and to attract rules/sro.shtml); or
returned to the ETP Holder. The order flow to the Exchange. Because • Send an email to rule-comments@
Exchange believes standardizing the competitors are free to modify their own sec.gov. Please include File Number SR–
fees and credits applicable to orders fees and credits in response, and NYSEArca–2018–20 on the subject line.
marked with the STPC and STPD because market participants may readily
Modifier would encourage ETP Holders adjust their order routing practices, the Paper Comments
to increase their utilization of the STP Exchange believes that the degree to
functionality in order to better manage • Send paper comments in triplicate
which fee changes in this market may
order flow and prevent undesirable or to Brent J. Fields, Secretary, Securities
impose any burden on competition is
unexpected executions with themselves. and Exchange Commission, 100 F Street
extremely limited. As a result of all of
The Exchange further believes the NE, Washington, DC 20549–1090.
these considerations, the Exchange does
proposed increased credit is equitable not believe that the proposed changes All submissions should refer to File
and not unfairly discriminatory because will impair the ability of ETP Holders or Number SR–NYSEArca–2018–20. This
it would be available to all similarly competing order execution venues to file number should be included on the
situated ETP Holders on an equal basis. maintain their competitive standing in
For the foregoing reasons, the subject line if email is used. To help the
the financial markets. Commission process and review your
Exchange believes that the proposal is
consistent with the Act. C. Self-Regulatory Organization’s comments more efficiently, please use
Statement on Comments on the only one method. The Commission will
B. Self-Regulatory Organization’s post all comments on the Commission’s
Proposed Rule Change Received From
Statement on Burden on Competition internet website (http://www.sec.gov/
Members, Participants, or Others
In accordance with Section 6(b)(8) of rules/sro.shtml). Copies of the
the Act,25 the Exchange believes that the No written comments were solicited submission, all subsequent
proposed rule change would not impose or received with respect to the proposed amendments, all written statements
any burden on competition that is not rule change. with respect to the proposed rule
necessary or appropriate in furtherance change that are filed with the
of the purposes of the Act. Instead, the III. Date of Effectiveness of the
Proposed Rule Change and Timing for Commission, and all written
Exchange believes that the proposal to communications relating to the
add new pricing tiers would encourage Commission Action
proposed rule change between the
the submission of additional liquidity to The foregoing rule change is effective Commission and any person, other than
a public exchange, thereby promoting upon filing pursuant to Section those that may be withheld from the
price discovery and transparency and 19(b)(3)(A) 26 of the Act and
enhancing order execution public in accordance with the
subparagraph (f)(2) of Rule 19b–4 27 provisions of 5 U.S.C. 552, will be
opportunities for ETP Holders and thereunder, because it establishes a due,
Market Makers. In addition, the removal available for website viewing and
fee, or other charge imposed by the printing in the Commission’s Public
of pricing tiers and fee credits, and Exchange.
deletion of obsolete text from the Fee Reference Room, 100 F Street NE,
Schedule would not have any impact on At any time within 60 days of the Washington, DC 20549 on official
inter- or intra-market competition filing of such proposed rule change, the business days between the hours of
because the proposed change would Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of such
result in a streamlined Fee Schedule. temporarily suspend such rule change if filing also will be available for
Also, the Exchange believes the it appears to the Commission that such inspection and copying at the principal
proposed increased credit for resting action is necessary or appropriate in the office of the Exchange. All comments
STP orders returned to an ETP Holder public interest, for the protection of received will be posted without change.
would encourage ETP Holders to investors, or otherwise in furtherance of Persons submitting comments are
increase their utilization of the STP the purposes of the Act. If the cautioned that we do not redact or edit
functionality in order to better manage Commission takes such action, the
personal identifying information from
order flow and prevent undesirable or Commission shall institute proceedings
comment submissions. You should
unexpected executions with themselves under Section 19(b)(2)(B) 28 of the Act to
determine whether the proposed rule submit only information that you wish
and thus would enhance order to make available publicly. All
execution opportunities for ETP change should be approved or
disapproved. submissions should refer to File
Holders. The Exchange believes that this Number SR–NYSEArca–2018–20, and
could promote competition between the IV. Solicitation of Comments should be submitted on or before May
Exchange and other execution venues, 8, 2018.
including those that currently offer Interested persons are invited to
similar STP functionality and submit written data, views, and For the Commission, by the Division of
comparable transaction pricing. arguments concerning the foregoing, Trading and Markets, pursuant to delegated
The Exchange notes that it operates in including whether the proposed rule authority.29
daltland on DSKBBV9HB2PROD with NOTICES
a highly competitive market in which change is consistent with the Act. Eduardo A. Aleman,
market participants can readily favor Comments may be submitted by any of Assistant Secretary.
competing venues if they deem fee the following methods: [FR Doc. 2018–07931 Filed 4–16–18; 8:45 am]
levels at a particular venue to be
BILLING CODE 8011–01–P
excessive or rebate opportunities 26 15 U.S.C. 78s(b)(3)(A).
27 17 CFR 240.19b–4(f)(2).
25 15 U.S.C. 78f(b)(8). 28 15 U.S.C. 78s(b)(2)(B). 29 17 CFR 200.30–3(a)(12).
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Document Created: 2018-04-17 02:51:58
Document Modified: 2018-04-17 02:51:58
| 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 | 83 FR 16909 |
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