83 FR 28282 - 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 117 (June 18, 2018)

[Federal Register Volume 83, Number 117 (Monday, June 18, 2018)]
[Notices]
[Pages 28282-28284]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-12934]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83418; File No. SR-NYSEArca-2018-41]


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

June 12, 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 June 1, 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.
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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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Equities Fees and 
Charges (``Fee Schedule'') to (i) introduce a new pricing tier, Step Up 
Tier 2, and (ii) adopt an incremental credit for the Tape B Tier 2 
pricing tier. The Exchange proposes to implement the fee changes 
effective June 1, 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 to: (i) Introduce a 
new pricing tier, Step Up Tier 2, and (ii) adopt an incremental credit 
for Tape B Tier 2. The Exchange proposes to implement the fee changes 
effective June 1, 2018.
Step Up Tier 2
    The Exchange proposes a new pricing tier--Step Up Tier 2--for 
securities with a per share price of $1.00 or above.
    The Exchange currently has a Step Up Tier pursuant to which 
qualifying ETP Holders and Market Makers 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 to the Book in Tape C 
Securities if such ETP Holders and Market Makers directly execute 
providing average daily volume (``ADV'') 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.\4\
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    \4\ See Securities Exchange Act Release No. 83032 (April 11, 
2018), 83 FR 16909 (April 17, 2018) (SR-NYSEArca-2018-20).
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    As proposed, ETP Holders and Market Makers would qualify for the 
new Step Up Tier 2 if they directly execute providing ADV per month of 
0.22% or more but less than 0.30% of the US CADV, and directly execute 
providing ADV that is an increase of no less than

[[Page 28283]]

0.06% of US CADV for that month over the ETP Holder's or Market Maker's 
providing ADV in May 2018. ETP Holders and Market Makers that qualify 
for Step Up Tier 2 would receive a credit of $0.0028 per share for 
orders that provide displayed liquidity to the Book in Tape A and Tape 
C Securities and $0.0022 per share for orders that provide displayed 
liquidity to the Book in Tape B Securities.
    The goal of the proposed Step Up Tier 2 pricing tier remains the 
same as that of the Step Up Tier, i.e., to incentivize ETP Holders and 
Market Makers to increase the orders sent directly to the Exchange and 
therefore provide liquidity that supports the quality of price 
discovery and promotes market transparency. The Exchange believes that 
the proposed new pricing tier will provide a further incentive for ETP 
Holders and Market Makers to direct order flow to the Exchange.
Tape B Tier 2
    The Exchange proposes to adopt an incremental credit for a current 
pricing tier--Tape B Tier 2--for securities with a per share price 
$1.00 or above.
    Currently, a Tape B Tier 2 credit of $0.0028 per share applies to 
ETP Holders and Market Makers, that, on daily basis, measured monthly, 
directly execute providing volume in Tape B Securities during the 
billing month (``Tape B Adding ADV'') that is either (1) equal to at 
least 1.0% of the US Tape B CADV or (2) equal to at least 0.20% of the 
US Tape B CADV for the billing month over the ETP Holder's or Market 
Maker's Q2 2015 Tape B Adding ADV taken as a percentage of Tape B CADV 
(``Tape B Baseline % CADV'').
    The Exchange proposes to adopt an incremental credit of $0.0001 per 
share for orders that provide liquidity to the order book in Tape B 
Securities that would be payable to ETP Holders and Market Makers who 
meet the requirements of Tape B Tier 2 and execute adding ADV in Tape B 
Securities during the billing month equal to at least 0.40% of Tape B 
CADV over the ETP Holder's or Market Maker's Q1 2018 Tape B adding ADV 
taken as a percentage of Tape B CADV. The proposed incremental credit 
would be in addition to the ETP Holder's or Market Maker's Tiered or 
Basic Rate credit(s) except that such combined credit(s) shall not 
exceed $0.0030 per share.
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any significant problems 
that market participants would have in complying with the proposed 
changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\6\ 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the Step Up Tier 2 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 2 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 new Step Up Tier 2 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.
    The Exchange believes that the proposed modification to adopt an 
incremental Tape B Tier 2 credit is reasonable, fair, and equitable 
because the proposed credit is designed to encourage increased trading 
by ETP Holders and Market Makers in Tape B Securities. The Exchange 
notes that ETP Holders and Market Makers that do not meet the 
requirements to qualify for the incremental credit may still qualify 
for Tape B Tier 2 credits if they meet the Tape B Tier 2 requirements.
    The Exchange further believes the proposed incremental credit is 
reasonable and appropriate in that it is based on the amount of 
business transacted on the Exchange. The Exchange 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.
    The Exchange also believes the proposed incremental credit is 
equitable and not unfairly discriminatory because it is open to all ETP 
Holders and Market Makers on an equal basis and provides discounts that 
are reasonably related to the value to the Exchange's market quality 
associated with higher volumes. The Exchange further believes that the 
proposed incremental credit is not unfairly discriminatory because the 
magnitude of the additional credit is not unreasonably high in 
comparison to the credit paid with respect to other displayed 
liquidity-providing orders. The Exchange does not believe that it is 
unfairly discriminatory to offer increased credits to ETP Holders and 
Market Makers as these participants would be subject to additional 
volume requirements in Tape B Securities.
    The Exchange believes that the proposed fee changes are equitable 
and not unfairly discriminatory because providing incentives for orders 
in exchange-listed securities that are executed on a registered 
national securities exchange (rather than relying on certain available 
off-exchange execution methods) would contribute to investors' 
confidence in the fairness of their transactions and would benefit all 
investors by deepening the Exchange's liquidity pool, supporting the 
quality of price discovery, promoting market transparency and improving 
investor protection.
    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 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,\7\ 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 a new pricing tier and adopting incremental credits for an 
existing pricing tier 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. The Exchange believes that this could 
promote competition between the Exchange and other execution venues, 
including those that currently offer similar order types and comparable 
transaction pricing, by encouraging additional orders to be sent to the 
Exchange for execution.
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    \7\ 15 U.S.C. 78f(b)(8).
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    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they

[[Page 28284]]

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 with alternative 
trading systems that have been exempted from compliance 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 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) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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) \10\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \10\ 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-2018-41 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-2018-41. 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-2018-41, and should be 
submitted on or before July 9, 2018

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-12934 Filed 6-15-18; 8:45 am]
 BILLING CODE 8011-01-P