83 FR 35696 - Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees and Rebates To Adopt Two New Adding Tiers and Regulatory Fees in Connection With Use of the Central Registration Depository

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 145 (July 27, 2018)

[Federal Register Volume 83, Number 145 (Friday, July 27, 2018)]
[Notices]
[Pages 35696-35698]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-16023]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83687; File No. SR-NYSENAT-2018-16]


Self-Regulatory Organizations; NYSE National, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its 
Schedule of Fees and Rebates To Adopt Two New Adding Tiers and 
Regulatory Fees in Connection With Use of the Central Registration 
Depository

July 23, 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 July 9, 2018, NYSE National, Inc. (``Exchange'' or 
``NYSE National'') filed with the Securities and Exchange Commission 
(``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 Schedule of Fees and Rebates to 
adopt (1) two new adding tiers, and (2) regulatory fees in connection 
with use of the Central Registration Depository (``CRD'') by Exchange 
ETP Holders that are not also members of the Financial Industry 
Regulatory Authority, Inc. (``FINRA''). The Exchange proposes to 
implement the rule change on July 9, 2018.\4\ 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.
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    \4\ The Exchange originally filed to amend the Fee Schedule on 
June 27, 2018 (SR-NYSENAT-2018-14) and withdrew such filing on July 
9, 2018. This filing replaces SR-NYSENAT-2018-14 in its entirety.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

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

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

1. Purpose
    The Exchange proposes to amend its Schedule of Fees and Rebates to 
adopt (1) two new adding tiers, and (2) regulatory fees in connection 
with use of CRD.
    The Exchange proposes to implement the rule change on July 9, 2018.
Proposed Adding Tiers
    The Exchange proposes two new adding tiers for displayed and non-
displayed orders in securities priced at or above $1.00, as follows. 
Current Adding Tier would be re-named ``Adding Tier 1.''
Adding Tier 2
    Under proposed Adding Tier 2, the Exchange would offer the 
following fees for transactions in stocks with a per share price of 
$1.00 or more when adding liquidity to the Exchange if the ETP Holder 
quotes at least 5% of the NBBO \5\ in 1,000 or more symbols on an 
average daily basis, calculated monthly:
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    \5\ The Exchange would explain the proposed 5% requirement in a 
new footnote **. As proposed, ETP Holders would have to maintain a 
bid or an offer at the NBB or the NBO for at least 5% of the trading 
day in round lots in a security for that security to count toward 
the tier requirement. The terms ``NBB,'' ``NBO,'' ``NBBO,'' and 
``BBO'' are defined in NYSE National Rule 1.1. The Exchange believes 
that the proposed 5% threshold is appropriate for a market of NYSE 
National's size and trading volume.
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     $0.0005 per share for adding displayed orders;
     $0.0005 per share for orders that set a new Exchange BBO;
     $0.0007 per share for adding non-displayed orders; and
     $0.0005 per share for MPL orders.
    For example, in a given month, if an ETP Holder quotes at least 5% 
of the NBBO in 800 symbols in round lots on the first day of the month 
and 1,400 symbols on the second day of the month, the ETP Holder would 
have 1,100 securities on average daily basis that meet the 5% NBBO 
requirement after the second day, and would qualify for the proposed 
Adding Tier 2 after the second day. Further, in a given symbol on a 
given day, if the ETP Holder maintains a bid at the NBB for 4% of the 
trading day and an offer at the NBO for 8% of the trading day, that 
would result in the ETP Holder quoting 6% of the NBBO in that symbol 
for that day and that symbol meeting the 5% NBBO requirement for that 
day.
Adding Tier 3
    Under proposed Adding Tier 3, the Exchange would offer the 
following fees for transactions in stocks with a per share price of 
$1.00 or more when adding liquidity to the Exchange if the ETP Holder 
quotes at least 5% of the NBBO \6\ in 600 or more symbols on an average 
daily basis, calculated monthly:
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    \6\ See note 5, supra.
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     $0.0012 per share for adding displayed orders;
     $0.0012 per share for orders that set a new Exchange BBO;
     $0.0014 per share for adding non-displayed orders; and
     $0.0005 per share for MPL orders.
    Finally, as reflected in footnote * of the Schedule of Fees and 
Rebates, the volume requirements for the current

[[Page 35697]]

Adding Tier and the Taking Tier are waived until July 1, 2018. The 
Exchange proposes to extend the volume requirements [sic] for these 
tiers indefinitely. To effect this change, the Exchange would delete 
``until July 1, 2018'' from footnote *. As noted, the current Adding 
Tier would be re-named ``Adding Tier 1,'' which will also be reflected 
in footnote *.
CRD Fees
    The Exchange proposes to adopt regulatory fees related to CRD that 
would be collected by FINRA.\7\ As proposed, FINRA would collect and 
retain certain regulatory fees via CRD for the registration of persons 
associated with an Exchange ETP Holder that is not also a FINRA member. 
The CRD fees are use-based and there is no distinction in the cost 
incurred by FINRA if the user is a FINRA member or a member of an 
exchange but not a FINRA member. Accordingly, the Exchange proposes to 
adopt the following fees to mirror those assessed by FINRA pursuant to 
Section (4) of Schedule A to the FINRA By-Laws: \8\
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    \7\ CRD is the central licensing and registration system for the 
U.S. securities industry. The CRD system enables individuals and 
firms seeking registration with multiple states and self-regulatory 
organizations to do so by submitting a single form, fingerprint card 
and a combined payment of fees to FINRA. Through CRD, FINRA 
maintains the qualification, employment and disciplinary histories 
of registered associated persons of broker dealers.
    \8\ The proposed CRD fees are those charged by FINRA to non-
FINRA members when such fees are applicable. The Exchange notes that 
there are certain FINRA CRD fees and requirements that are specific 
to FINRA members but do not apply to Exchange ETP Holders that are 
not also FINRA members. Exchange ETP Holders that are also FINRA 
members would be charged CRD fees according to Section (4) of 
Schedule A to the FINRA By-Laws.
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    (1) $100 for each initial Form U4 filed for the registration of a 
representative or principal;
    (2) $110 for the additional processing of each initial or amended 
Form U4, Form U5 or Form BD that includes the initial reporting, 
amendment, or certification of one or more disclosure events or 
proceedings;
    (3) $15 for processing and posting to the CRD system each set of 
fingerprint cards submitted electronically by the Member, plus a pass-
through of any other charge imposed by the United States Department of 
Justice for processing each set of fingerprints;
    (4) $30 for processing and posting to the CRD system each set of 
fingerprint cards submitted in non-electronic format by the Member, 
plus a pass-through of any other charge imposed by the United States 
Department of Justice for processing each set of fingerprints;
    (5) $30 for processing and posting to the CRD system each set of 
fingerprint results and identifying information that has been processed 
through another self-regulatory organization and submitted to FINRA; 
and
    (6) $45 annually for system processing for each registered 
representative and principal.
* * * * *
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any problems that ETP 
Holders 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,\9\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\10\ 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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) & (5).
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New Adding Tiers
    The Exchange believes that the proposed Adding Tier 2 and Adding 
Tier 3 fees for ETP Holder with at least 5% of the NBBO in 1,000 or 
more symbols on an average daily basis, calculated monthly or 600 or 
more symbols on an average daily basis, calculated monthly, 
respectively, who maintain a bid or an offer at the NBB or NBO in each 
assigned security in round lots averaging at least 5% of the trading 
day on an average daily basis, calculated monthly, in securities with a 
per share price of $1.00 or more when adding liquidity are reasonable 
because the proposed tiers would further contribute to incentivizing 
ETP Holders to provide increased displayed liquidity on the Exchange, 
benefiting all ETP Holders. In addition, the Exchange believes that the 
proposed Adding Tier 2 and Adding Tier 3 fees are equitable and not 
unfairly discriminatory as all similarly situated market participants 
will be subject to the same fees on an equal and non-discriminatory 
basis. The Exchange further believes that providing the same fee for 
adding displayed orders as that for orders that set a new Exchange BBO 
under Adding Tier 2 and Adding Tier 3 is reasonable because the $0.0005 
and $0.0012 fee per share in Adding Tier 2 and Adding Tier 3, 
respectively, are sufficient incentive for providing liquidity.
    Finally, the Exchange believes it is reasonable to indefinitely 
waive the Adding Tier (which would be re-named Adding Tier 1) and 
Taking Tier volume requirements because the waiver will enable the 
Exchange to continue to improve its overall competitiveness and 
strengthen its market quality for all market participants. The proposed 
waiver is not unfairly discriminatory because it will apply equally to 
all similarly situated ETP Holders.
CRD Fees
    The proposed CRD fees are reasonable because they are identical to 
those adopted by FINRA for use of the CRD system for disclosure and the 
registration of associated persons of FINRA members.\11\ As FINRA noted 
in its filing adopting its existing fees, FINRA believes the fees are 
reasonable based on the increased costs associated with operating and 
maintaining the CRD system, and listed a number of enhancements made to 
the CRD system since the last fee increase, including: (1) 
Incorporation of various uniform registration form changes; (2) 
electronic fingerprint processing; (3) Web EFTTM, which 
allows subscribing firms to submit batch filings to the CRD system; (4) 
increases in the number and types of reports available through the CRD 
system; and (5) significant changes to BrokerCheck, including making 
BrokerCheck easier to use and expanding the amount of information made 
available through the system.\12\ These increased costs are similarly 
borne by FINRA when an Exchange ETP Holder that is not a FINRA member 
uses the CRD system, so the fees collected for such use should, as 
proposed by the Exchange, mirror the fees assessed on FINRA members. 
FINRA further noted that the proposed fees are reasonable because they 
help to ensure the integrity of the information in the CRD system, 
which is important because the Commission, FINRA, other self-regulatory 
organizations and state securities regulators use the CRD system to 
make licensing and registration decisions, among other things.\13\
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    \11\ See Securities Exchange Act Release No. 67247 (June 25, 
2012), 77 FR 38866 (June 29, 2012) (SR-FINRA-2012-30).
    \12\ See id., 77 FR at 38868.
    \13\ Id.
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    The Exchange similarly believes that the proposed fees, like 
FINRA's fees, are consistent with an equitable allocation of fees 
because the fees will apply equally to all individuals and firms 
required to report information to the

[[Page 35698]]

CRD system. Thus, those members that register more individuals or 
submit more filings through the CRD system will generally pay more in 
fees than those that use the CRD system to a lesser extent. In 
addition, the proposed fees, like FINRA's fees, are equitable and not 
unfairly discriminatory because they will result in the same regulatory 
fees being charged to all ETP Holders required to report information to 
the CRD system and for services performed by FINRA, regardless of 
whether or not such ETP Holder is a FINRA member.
    Further, the Exchange believes the proposed CRD fees provide for 
the equitable allocation of reasonable fees and other charges among its 
permit holders, and does not unfairly discriminate between customers, 
issuers, brokers and dealers. All similarly situated ETP Holders are 
subject to the same fee structure, and every Member firm must use the 
CRD system for registration and disclosure.
    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,\14\ 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 
changes 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. 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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    \14\ 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 
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) \15\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \16\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 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) \17\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \17\ 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-NYSENAT-2018-16 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-NYSENAT-2018-16. 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-NYSENAT-2018-16 and should be submitted 
on or before August 17, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-16023 Filed 7-26-18; 8:45 am]
 BILLING CODE 8011-01-P