83 FR 28479 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 118 (June 19, 2018)

[Federal Register Volume 83, Number 118 (Tuesday, June 19, 2018)]
[Notices]
[Pages 28479-28481]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-13083]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83424; File No. SR-NYSE-2018-27]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Price List

June 13, 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, 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 (1) add a new 
incentive for member organizations and Supplemental Liquidity Providers 
(``SLP'') in Tape A securities when adding liquidity in securities 
traded pursuant to Unlisted Trading Privileges (``UTP'') (Tapes B and 
C) on the Pillar Trading Platform; (2) add a new Tier 4 for SLPs; and 
(3) make non-substantive changes to eliminate obsolete footnotes. The 
Exchange proposes to implement these changes to its Price List 
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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Price List to (1) add a new 
incentive for member organizations and SLPs on Tape A when adding 
liquidity in UTP Securities (Tapes B and C) on the Pillar Trading 
Platform; (2) add a new Tier 4 for SLPs; and (3) make non-substantive 
changes to eliminate obsolete footnotes.
    The Exchange proposes to implement these changes to its Price List 
effective June 1, 2018.
New Cross Tape Incentive
    The Exchange proposes an additional incentive to member 
organizations and SLPs in Tape A securities that add liquidity to the 
Exchange in UTP Securities, as follows.
    As proposed, member organizations that meet the current 
requirements for the Non-Tier Adding Credit, Tier 3 Adding Credit, and 
Tier 4 Adding Credit on Tape A would be eligible to receive an 
additional $0.0001 per share if the member organization adds liquidity, 
excluding liquidity added as an SLP, in UTP Securities of at least 
0.20% of Tape B and Tape C consolidated average daily volume (``CADV'') 
combined.
    Similarly, SLPs that (1) meet the current requirements for SLP Tier 
3, SLP Tier 2 and SLP Tier 1A credits, and (2) add liquidity in UTP 
Securities of at least 0.30% of Tape B and Tape C CADV combined, would 
be eligible for an additional $0.0001 per share in securities with a 
per share price of $1.00 or more that meet the 10% average or more 
quoting requirement in an assigned security pursuant to Rule 107B 
(quotes of an SLP-Prop and an SLMM of the same member organization 
would not be aggregated).
New SLP Tier 4
    The Exchange proposes a new, fifth SLP Tier designated ``4'' that 
would provide that an SLP that either (1) is in the first two calendar 
months as an SLP, or (2) adds liquidity for all assigned SLP securities 
in the aggregate (including shares of both an SLP-Prop and an SLMM \4\ 
of the same or an affiliated member organization) of an ADV of more 
than 0.03% of NYSE CADV after averaging less an adding ADV \5\ of than 
0.01% in each of the prior 3 months, after a discount of the percentage 
for the prior quarter of NYSE CADV in DMM assigned securities as of the 
last business day of the prior month, would receive a credit of 
$0.0029, or $0.00105 if a Non-Displayed Reserve Order, if the SLP meets 
the 10% average or more quoting requirement in an assigned security 
pursuant to Rule 107B when adding liquidity to the NYSE with orders, 
other than Mid-Point Liquidity (``MPL'') orders, in securities with a 
per share price of $1.00 or more. For

[[Page 28480]]

purposes of qualifying for the proposed Tier, quotes of an SLP-Prop and 
an SLMM of the same member organization would not be aggregated. The 
Exchange believes that the new tier will provide greater incentives for 
newer and less active SLPs to add liquidity to the Exchange.
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    \4\ Under Rule 107B, an SLP can be either a proprietary trading 
unit of a member organization (``SLP-Prop'') or a registered market 
maker at the Exchange (``SLMM''). For purposes of the 10% average or 
more quoting requirement in assigned securities pursuant to Rule 
107B, quotes of an SLP-Prop and an SLMM of the same member 
organization are not aggregated. However, for purposes of adding 
liquidity for assigned SLP securities in the aggregate, shares of 
both an SLP-Prop and an SLMM of the same member organization are 
included.
    \5\ The phrase ``Adding ADV'' in the proposed tier would have a 
citation to footnote 4 in the current Price List, which provides 
``For purposes of transaction fees and Supplemental Liquidity 
Provider liquidity credits, ADV calculations exclude early closing 
days.'' The text of current footnote 4 would remain unchanged.
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Non-Substantive Changes
    Currently, as reflected in footnote * to the section of the Price 
List setting forth adding tiers for trading UTP Securities,\6\ the 
Exchange waives the Tier 1 adding tier requirement and the remove tier 
requirements for securities priced at or above $1.00 until June 1, 
2018. Similarly, as reflected in footnote ** of the section of the 
Price List setting forth the SLP Provide Tiers for trading in UTP 
Securities, the Exchange also currently waives the provide volume 
component of the SLP Tier requirements for securities priced at or 
above $1.00 until June 1, 2018. Because the waivers set forth in 
footnotes * and ** expire on June 1, 2018, and the Exchange does not 
propose to extend the waivers, the Exchange accordingly proposes to 
delete footnotes * and ** as obsolete.
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    \6\ The term ``UTP Security'' means a security that is listed on 
a national securities exchange other than the Exchange and that 
trades on the Exchange pursuant to unlisted trading privileges. See 
Rule 1.1(ii).
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* * * * *
    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 6(b)(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) & (5).
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New Cross Tape Incentive
    The Exchange believes that providing an additional incentive in 
Tape A securities for member organizations that add liquidity in UTP 
Securities is reasonable because it would further contribute to 
incenting member organizations to provide additional liquidity to a 
public exchange in UTP Securities, thereby promoting price discovery 
and transparency and enhancing order execution opportunities for member 
organizations. The Exchange believes that that the proposal is 
reasonable and not unfairly discriminatory because it would apply to 
all member organizations eligible for the relevant Tape A tier credits 
equally. The Exchange further believes that limiting the additional 
credit to Non-Tier, Adding Tier 3 and Adding Tier 4 is reasonable 
because members qualifying for Adding Tier 1 and Adding Tier 2 would 
already receive a higher credit for such executions. Similarly, the 
Exchange believes that limiting the additional credit to SLP Tier 3, 
SLP Tier 2 and SLP Tier 1A is reasonable because SLPs qualifying for 
SLP Tier 1 would already receive a higher credit for such executions.
New SLP Tier 4
    The Exchange believes that the proposal to introduce a new SLP Tier 
4 is reasonable because it provides SLPs as well as SLPs that are also 
DMMs with an additional way to qualify for a rebate, thereby providing 
SLPs with greater flexibility and creating an added incentive for SLPs 
to bring additional order flow to a public market. In particular, as 
noted above, the Exchange believes that the new tier will provide 
greater incentives for newer and less active SLPs to add liquidity to 
the Exchange, to the benefit of the investing public and all market 
participants. Moreover, offering a higher credit for the first two 
months would provide an incentive for new and less active SLPs to add 
liquidity and meet the SLP quoting requirements, thereby contributing 
to additional levels of liquidity at the Exchange, which benefits all 
market participants. The Exchange also believes that the two-month 
period for new SLPs and inactive SLPs to qualify for the new tier is 
reasonable because it will allow newer and less active SLPs more time 
to meet the SLP volume requirements while building up the SLPs' 
liquidity providing activities during the first two months. Finally, 
the Exchange believes that the proposed tier is equitable and not 
unfairly discriminatory because it would apply equally to all SLPs and 
because there are two ways to qualify for the proposed tier.
Non-Substantive Changes
    The Exchange believes that the proposed deletion of footnotes * and 
** removes impediments to and perfects the mechanism of a free and open 
market by adding clarity as to whether waivers are operative and when, 
thereby reducing potential confusion, and making the Exchange's rules 
easier to navigate. The Exchange also believes that eliminating 
obsolete material from its rulebook also removes impediments to and 
perfects the mechanism of a free and open market by removing confusion 
that may result from having obsolete material in the Exchange's 
rulebook. The Exchange believes that eliminating such obsolete material 
would not be inconsistent with the public interest and the protection 
of investors because investors will not be harmed and in fact would 
benefit from increased transparency, thereby reducing potential 
confusion.
    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,\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 
change would foster liquidity provision and stability in the 
marketplace, thereby promoting price discovery and transparency and 
enhancing order execution opportunities for member organizations. In 
this regard, the Exchange believes that the transparency and 
competitiveness of attracting additional executions on an exchange 
market would encourage competition. The Exchange also believes that the 
proposed rule change is designed to provide the public and investors 
with a Price List that is clear and consistent, thereby reducing 
burdens on the marketplace and facilitating investor protection.
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    \9\ 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 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

[[Page 28481]]

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 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) \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-NYSE-2018-27 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-2018-27. 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 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. 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-2018-27 and should be submitted on 
or before July 10, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-13083 Filed 6-18-18; 8:45 am]
 BILLING CODE 8011-01-P