83 FR 52579 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Fees for Routing Orders in UTP Securities Priced Below $1.00

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 201 (October 17, 2018)

Page Range		52579-52581
FR Document		2018-22539
Federal Register, Volume 83 Issue 201 (Wednesday, October 17, 2018)
[Federal Register Volume 83, Number 201 (Wednesday, October 17, 2018)]
[Notices]
[Pages 52579-52581]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-22539]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84411; File No. SR-NYSE-2018-47]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Fees for Routing Orders in UTP Securities Priced Below $1.00

October 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 October 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.
---------------------------------------------------------------------------

    \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 Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Price List to amend the fees for 
routing orders in UTP Securities priced below $1.00. The Exchange 
proposes to implement these changes to its Price List effective October 
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 amend the fees for 
routing orders in UTP Securities priced below $1.00.
    The Exchange proposes to implement these changes to its Price List 
effective October 1, 2018.
    Currently, for executions in securities with a price below $1.00 
that route to and execute on an Away Market,\4\ the Exchange charges a 
fee of 0.30% of the total dollar value of the transaction for 
executions in an Away Market auction as well as all other executions.
---------------------------------------------------------------------------

    \4\ The term ``Away Market'' is defined in Rule 1.1(ff) to mean 
any exchange, alternative trading system (``ATS'') or other broker-
dealer (1) with which the Exchange maintains an electronic linkage, 
and (2) that provides instantaneous responses to orders routed from 
the Exchange.
---------------------------------------------------------------------------

    The Exchange proposes to amend this fee to charge $0.0005 per share 
execution in an NYSE American auction, $0.0010 per share execution in 
an Away Market auction at venues other than NYSE American, and 0.30% of 
total dollar value of the transaction for all other executions.
* * * * *
    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

[[Page 52580]]

Section 6(b) of the Act,\5\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(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.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) & (5).
---------------------------------------------------------------------------

    The Exchange believes that its proposed routing fees of $0.0005 per 
share for NYSE American and $0.0010 per share for venues other than 
NYSE American for securities with a price under $1.00 are reasonable, 
equitable and not an unfairly discriminatory allocation of fees because 
the fees would be applicable to all member organizations in an 
equivalent manner. Moreover, the proposed fees for routing shares are 
also reasonable, equitable and not unfairly discriminatory because the 
proposal would align routing fees with fees for away market auctions. 
For example, NYSE American charges $0.0005 per share for executions at 
the open and close for securities below $1.00 \7\ and BZX charges 
0.00100 per share for closing auctions in BZX listed securities.\8\ 
Further, the proposal to charge a fee of 0.30% of total dollar value 
for transactions for all other executions in securities with a price 
under $1.00 is reasonable, equitable and not unfairly discriminatory 
because it is consistent with fees charged on other exchanges.\9\
---------------------------------------------------------------------------

    \7\ See https://www.nyse.com/publicdocs/nyse/markets/nyse-american/NYSE_America_Equities_Price_List.pdf.
    \8\ See https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/.
    \9\ NASDAQ, for example, charges a fee of 0.30% (i.e. 30 basis 
points) of total dollar volume to remove liquidity for shares 
executed below $1.00. See NASDAQ Fee Schedule at http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
---------------------------------------------------------------------------

    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,\10\ 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 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    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 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) \11\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \12\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \13\ 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 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-2018-47 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-2018-47. 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

[[Page 52581]]

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-2018-47 
and should be submitted on or before November 7, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-22539 Filed 10-16-18; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 201 / Wednesday, October 17, 2018 / Notices 52581

office of the Exchange. All comments discussed below, the Commission is the EEP would validate and check
received will be posted without change. approving the proposed rule change. exercise decisions and facilitate the
Persons submitting comments are anonymous exercise of CDS Options.
II. Description of the Proposed Rule The proposed rule change would
cautioned that we do not redact or edit
Change create and implement the EEP through
personal identifying information from
comment submissions. You should The proposed rule change would amendments to LCH SA’s Rule Book,
submit only information that you wish create an EEP for CDS Options to Supplement, and Procedures. These
to make available publicly. All capture and support decisions to amendments are summarized below
submissions should refer to File exercise CDS Options by Clearing according to how they affect: (i) The
Number SR–NYSE–2018–47 and should Members and their Clients.4 Currently, exercise of CDS Options directly by
be submitted on or before November 7, LCH SA matches a Clearing Member or Clients; (ii) the operational process for
2018. Client holding the option to either buy the exercise of CDS Options in the EEP;
or sell protection on the underlying and (iii) technical specifications of the
For the Commission, by the Division of
index credit default swap (‘‘CDS’’) EEP. The proposed rule change would
Trading and Markets, pursuant to delegated
(‘‘CDS Option buyer’’), with a Clearing also make other changes to the Rule
authority.14
Member or Client obligated to either buy Book, Supplement, and Procedures, as
Eduardo A. Aleman, or sell protection, as applicable, on the discussed below.
Assistant Secretary. underlying index CDS (‘‘CDS Option A. Exercise of CDS Options Directly by
[FR Doc. 2018–22539 Filed 10–16–18; 8:45 am] seller’’) (this transaction is a ‘‘matched Clients
BILLING CODE 8011–01–P pair’’).5 The creation of the matched
pair allows the CDS Option buyer to The proposed rule change would add
exercise or abandon the CDS Option. If new provisions to allow for the exercise
SECURITIES AND EXCHANGE the CDS Option buyer exercises the CDS of CDS Options in the EEP directly by
COMMISSION Option, the CDS Option buyer must Clients.6 Specifically, with respect to
notify the CDS Option seller manually those CDS Options transactions that are
via email and then inform LCH SA that Client Cleared Transactions, new
[Release No. 34–84410; File No. SR–LCH
the exercise notice has been Section 6.4 of the Supplement would
SA–2018–004]
successfully delivered. LCH SA then require Clearing Members to designate
Self-Regulatory Organizations; LCH manually executes the exercise their relevant Clients to act on their
SA; Order Approving Proposed Rule decisions and updates its risk system. behalf via the EEP.7 The Client so
Change Relating to Implementation of Under the proposed rule change, LCH designated would be the Exercise
Electronic Exercise Platform would still create matched pairs to Delegation Beneficiary. Moreover, the
allow the exercise or abandonment of a proposed rule change would amend the
October 11, 2018. CDS Option. The proposed rule change Rule Book to require that Clearing
would, however, eliminate the manual Members delegate to their Clients
I. Introduction sufficient power to act on their behalf
notification process between the CDS
On August 24, 2018, Banque Centrale Option buyer and CDS Option seller by via the EEP and to ensure that their
de Compensation, which conducts providing, through the EEP, an Clients have created an account in the
business under the name LCH SA (‘‘LCH electronic process for exercising CDS LCH Portal for use of the EEP (‘‘Client
SA’’), filed with the Securities and Options. Specifically, a CDS Option Portal Account’’) before delegating such
Exchange Commission (‘‘Commission’’), buyer would submit an intent through power.8 Finally, the proposed rule
pursuant to Section 19(b)(1) of the the EEP to either exercise or abandon change would amend the Rule Book to
the CDS Option (‘‘Option Intent’’). If require Clients to exercise their
Securities Exchange Act of 1934
validly submitted before the expiration delegated power only through their
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 a
date of the CDS Option, the Option Client Portal Account unless the EEP is
proposed rule change (the ‘‘Proposed
Intent would serve as notice to the CDS or will be unavailable for the exercise of
Rule Change’’) to amend its (i) CDS
Option seller that the CDS Option buyer CDS Options (an ‘‘EEP Failure Event’’).9
Clearing Rule Book (‘‘Rule Book’’), (ii) The proposed rule change would add
CDS Clearing Supplement is going to exercise or abandon the CDS
similar provisions to Appendix VIII of
(‘‘Supplement’’), and (iii) CDS Clearing Option. The proposed rule change
the Supplement. Appendix VIII
Procedures (‘‘Procedures’’) to would require Clearing Members and provides mandatory provisions that are
incorporate new terms and to make Clients to use the EEP system to exercise incorporated into transactions between
conforming, clarifying, and clean-up CDS Options. The proposed rule change a Clearing Member and its Client.
changes to implement a new electronic would also require Clearing Members to Changes to Appendix VIII are necessary
exercise platform (‘‘EEP’’) for the delegate to Clients the ability to directly to incorporate the conditions described
exercise of options on index credit exercise CDS Options related to their above directly into the terms of the
default swaps (‘‘CDS Options’’) by cleared transactions (‘‘Client Cleared transaction between a Clearing Member
Clearing Members and their Clients. The Transactions’’). The EEP would capture and its Client. Specifically, the
proposed rule change was published for CDS Option buyers’ exercise decisions proposed rule change would add new
comment in the Federal Register on in real time and notify the relevant CDS Section 5, which would provide that the
September 5, 2018.3 The Commission Option sellers in real time. In addition, Clearing Member and its Client agree
has not received any comments on the that the Clearing Member will designate
daltland on DSKBBV9HB2PROD with NOTICES

proposed rule change. For the reasons 4 Capitalized terms used herein but not otherwise

defined have the meaning set forth in the Rule
6 The proposed rule change would also apply
Book, Supplement, and Procedures, which are
14 17 CFR 200.30–3(a)(12). these provisions to FCM Clearing Members who
available at https://www.lch.com/resources/rules-
1 15 U.S.C. 78s(b)(1).
and-regulations/sa-rulebooks. clear credit-default swaps and CDS Options for
2 17 CFR 240.19b–4. 5 For more information regarding the operation of their Clients. Notice, 83 FR at 45156.
3 Securities Exchange Act Release No. 34–83983 7 Notice, 83 FR at 45158.
CDS Options, see Exchange Act Release No. 34–
8 Notice, 83 FR at 45156.
(Aug. 29, 2018), 83 FR 45155 (Sept. 5, 2018) (SR– 82109 (Nov. 17, 2017), 82 FR 55905 (Nov. 24, 2017)
LCH SA–2018–004) (‘‘Notice’’). (SR–LCH SA 2017–006; SR–LCH SA–2017–007). 9 Id.

VerDate Sep<11>2014 19:46 Oct 16, 2018 Jkt 247001 PO 00000 Frm 00206 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1
Document Created: 2018-10-17 01:46:43
Document Modified: 2018-10-17 01:46:43
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 52579