Notice2021-16678
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Reformat the Basic Rates Section of the NYSE Arca Equities Fees and Charges
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Published
August 5, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 148 (Thursday, August 5, 2021)</title>
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[Federal Register Volume 86, Number 148 (Thursday, August 5, 2021)]
[Notices]
[Pages 42907-42911]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-16678]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92536; File No. SR-NYSEARCA-2021-66]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Reformat the
Basic Rates Section of the NYSE Arca Equities Fees and Charges
July 30, 2021.
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 20, 2021, NYSE Arca, Inc. (``NYSE Arca'' 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 reformat the Basic rates section of the
NYSE Arca Equities Fees and Charges (``Fee Schedule'') applicable to
securities priced at or above $1.00 and the rates applicable to
securities priced below $1.00 without making any substantive changes to
the current fees and credits for each group of securities. The Exchange
proposes to implement the fee changes effective July 20, 2021.\4\ The
proposed rule change is available on the Exchange's website at
<a href="http://www.nyse.com">www.nyse.com</a>, 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
July 1, 2021 (SR-NYSEArca-2021-59). SR-NYSEArca-2021-59 was
subsequently withdrawn and replaced by SR-NYSEArca-2021-62. SR-
NYSEArca-2021-62 was subsequently withdrawn and replaced by this
filing.
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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 reformat the Basic rates section of the
Fee Schedule applicable to securities priced at or above $1.00 and the
rates applicable to securities priced below $1.00 without making any
substantive changes to the current fees and credits for each group of
securities. The Exchange proposes to implement the fee changes
effective July 20, 2021.
The Exchange proposes the following non-substantive changes to
reorganize the presentation of the Fee Schedule in order to enhance its
clarity and transparency, thereby making the Fee Schedule easier to
navigate.
In connection with the proposed rule change, the Exchange would add
new section I titled ``Definitions'' that would adopt several
definitions that would apply only for purposes of the fees and credits
on the Fee Schedule. As proposed, section I would set forth the
following twelve definitions applicable to Exchange Transactions:
<bullet> ``ADV'' would mean average daily volume.
<bullet> ``Adding Liquidity'' would mean the execution of an order
on the Exchange that provided liquidity.
[[Page 42908]]
<bullet> ``Auction'' would mean Early Open Auction, Core Open
Auction, Trading Halt Auction and Closing Auction on NYSE Arca.
<bullet> ``Auction Orders'' would mean Market Orders, Market-On-
Close Orders, Limit-On-Close Orders and Auction-Only Orders executed in
a NYSE Arca auction.
<bullet> ``Cboe BZX Auction'' would mean orders routed for
execution in the open or closing auction on Cboe BZX.
<bullet> ``Closing Orders'' would mean Market, Market-On-Close,
Limit-On-Close, and Auction-Only Orders executed in a Closing Auction.
<bullet> ``Nasdaq Auction'' would mean orders routed for execution
in the open or closing auction on Nasdaq.
<bullet> ``NYSE American Auction'' would mean orders routed for
execution in the open or closing auction on NYSE American.
<bullet> ``NYSE Auction'' would mean orders routed for execution in
the open or closing auction on NYSE.
<bullet> ``Opening Orders'' would mean Market and Auction-Only
Orders executed in an Early Open Auction, Core Open Auction or Trading
Halt Auction.
<bullet> ``Removing Liquidity'' would mean the execution of an
order that removed liquidity.
<bullet> ``US CADV'' would mean the United States consolidated
average daily volume of transactions reported to a securities
information processor (``SIP''). Transactions that are not reported to
a SIP are not included in the US CADV.\5\
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\5\ The proposed definition differs from the definition in
current footnote 3, which is marked for deletion under this proposed
rule change. The current definition includes a reference to odd lots
that is no longer applicable. The current definition also includes
references to exclusion of volume on days when the market closes
early and the date of the annual reconstitution of the Russell
Investments Indexes. The references to exclusion of volume appear in
current footnote 1 and would therefore continue to apply to Exchange
Transactions.
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The Exchange proposes these definitions to use consistent terms
throughout the Fee Schedule relating to Exchange Transactions.
Specifically, the Exchange proposes to use the term ``Adding
Liquidity'' when referring to an order that when executed, provides
liquidity, and to use the term ``Removing Liquidity'' when referring to
an order that when executed, takes liquidity. By consolidating
definitions used in this part of the Fee Schedule, the Exchange would
eliminate the need to separately define these terms within the tables
of the Fee Schedule or in footnotes. Additionally, with the proposed
adoption of the terms ADV and US CADV in proposed Section I of the Fee
Schedule, the Exchange proposes to delete references to current
footnotes 3 and 4 throughout the Fee Schedule, where footnote 3 of the
Fee Schedule currently defines the term US CADV and footnote 4 of the
Fee Schedule currently defines the term ADV. The Exchange further
proposes to amend current footnote 1 to delete an internal reference to
footnote 3 and delete the words ``average daily volume'' as the
definition for ADV now appears in proposed Section I titled
Definitions. The Exchange also proposes to renumber footnotes through
the Fee Schedule in conjunction to the changes discussed herein.\6\
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\6\ In connection with the proposed renumbering of footnotes,
the Exchange also proposes to delete current footnote 6 in its
entirety because the Exchange previously removed the term ``Allied
Person'' from its rules. See Securities Exchange Act Release No.
84857 (December 19, 2018), 83 FR 66824 (December 27, 2018) (SR-
NYSEArca-2018-97).
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Next, the Exchange proposes to add new section II titled
``General'' that would set forth general information regarding the way
the Exchange has always interpreted and applied fees and credits to
Exchange Transactions. As proposed, this section would contain the
following general information applicable to Exchange Transactions:
<bullet> Rebates indicated by parentheses ( ).
<bullet> All fees and credits and tier requirements apply to ETP
Holders and Market Makers.
<bullet> All fees and credits are per share unless noted otherwise.
Next, the Exchange proposes a non-substantive change to the
presentation of the Basic rates applicable to securities priced at or
above $1.00 and the rates applicable to securities priced below
$1.00.\7\ The Exchange proposes a table presentation. The proposed
changes would appear in the Fee Schedule in two tables, one that would
appear under proposed new section III titled ``Standard Rates--
Transactions'' and a second table that would appear under proposed new
section V titled ``Standard Rates--Routing.'' \8\ The Exchange also
proposes to simplify the presentation in each table by using sub-titles
to identify the type of activity (i.e., Adding Liquidity, Adding
Liquidity--Retail Orders, Adding Liquidity--MPL Orders, Removing
Liquidity, Opening Orders and Closing Orders in the table titled
``Standard Rates--Transactions'') and then listing the corresponding
rates under each category. The proposed changes would appear as follows
in the Fee Schedule:
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\7\ In connection with this change, the Exchange proposes to
amend the description of Rounds Lots and Odd Lots under Exchange
Transactions to include both securities with a Per Share Price $1.00
or Above and securities with a Per Share Price Below $1.00. This
proposed change would provide consistency between the description
and the table presentation which includes rates for both groups of
securities.
\8\ With this proposed rule change, the Exchange also proposes
to use the term ``Standard'' rates rather than ``Basic'' rates.
Standard Rates--Transactions
[Applicable when Tier Rates do not apply]
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Adding
Adding liquidity liquidity-- Adding Removing liquidity Opening orders Closing orders
Category (a)(b) retail orders liquidity-- MPL (d) (e)(g) (f)(g)
(c) orders
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Securities priced at or above ($0.0020) ($0.0032) ($0.0010) $0.0030............. $0.0015; $0.0005 for $0.0012; $0.0008
$1.00. Retail Orders. for Retail Orders.
Securities priced below $1.00.... ($0.00004) ($0.00004) ($0.00004) 0.295% of Dollar 0.1% of Dollar Value 0.1% of Dollar
Value. Value.
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[[Page 42909]]
Standard Rates--Routing
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Primary until
9:45 orders and Primary only
primary after (``PO'') orders PO orders in PO orders in PO orders in PO orders in PO orders in
3:55 orders in tape A tape B tape A tape B tape B tape C
Category Orders routed that remove designated as securities securities securities securities securities securities
liquidity retail orders routed to NYSE routed to NYSE routed to NYSE routed to NYSE routed to Cboe routed to
and routed to that add American that auction American auction BZX auction NASDAQ auction
the primary liquidity add liquidity
market
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Securities priced at or above $1.00....... $0.0035..................... $0.0010 ($0.0012) No Credit $0.0010 $0.0005 $0.0030 $0.0030
Securities priced below $1.00............. 0.3% of Dollar Value (a).... n/a n/a n/a n/a n/a n/a n/a
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The Exchange notes that each of the rates that currently appear in
the Basic rates section of the Fee Schedule, with one exception
discussed below, and in the section of the Fee Schedule applicable to
securities priced below $1.00 have been relocated in the tables
proposed above and in proposed footnotes (a) through (g) for the table
under proposed section III titled ``Standard Rates--Transactions'' and
in proposed footnote (a) for the table under proposed section V titled
``Standard Rates--Routing.'' The Exchange proposes to relocate certain
of these rates in footnotes because these rates do not have a logical
place in the proposed tables. The proposed footnotes under proposed
section III titled ``Standard Rates--Transactions'' would be as
follows:
<SUP>(a)</SUP> For securities priced at or above $1.00, an
additional credit in Tape B Securities shall apply to LMMs and to
Market Makers affiliated with LMMs that provide displayed liquidity
based on the number of Less Active ETP Securities in which the LMM
is registered as the LMM. The applicable tiered-credits are noted
below (See LMM Transaction Fees and Credits).
<SUP>(b)</SUP> In securities priced below $1.00, this credit
applies to all orders that provide liquidity.
<SUP>(c)</SUP> Retail Order means an order as defined in Rule
7.44-E(a)(3).
<SUP>(d)</SUP> In securities priced at or above $1.00, this fee
also applies to Non-Displayed Limit Orders that remove liquidity.
<SUP>(e)</SUP> In securities priced at or above $1.00, this fee
is capped at $20,000 per month per Equity Trading Permit ID.
<SUP>(f)</SUP> Fee applies to orders in Tape A Securities, Tape
C Securities, and NYSE Arca primary listed securities (includes all
ETFs/ETNs).
<SUP>(g)</SUP> In securities priced at or above $1.00, this fee
applies to executions resulting from Auction Orders. In securities
priced below $1.00, this fee applies to all orders executed in the
Early Open Auction, Core Open Auction, Trading Halt Auction or
Closing Auction.
Additionally, the proposed footnote under proposed section V titled
``Standard Rates--Routing'' would be as follows:
<SUP>(a)</SUP> Applicable to orders of listed and Nasdaq
securities routed away and executed by another market center or
participant.
As noted above, each of the rates that currently appear in the
Basic rates section of the Fee Schedule have been relocated in the
proposed new table format. With respect to MPL orders, the Exchange
proposes to relocate the base credit of $0.0010 per share for MPL
orders that provide liquidity \9\ to the table titled ``Standard
Rates--Transactions'' and relocate the remaining two tiers of MPL order
credits to the Tier Rates section of the Fee Schedule. The Exchange
believes the proposed new location for these credits is a logical place
as they would appear along with tiered pricing related to MPL Orders,
i.e., MPL Orders Step Up Tier 1 and MPL Orders Step Up Tier 2.
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\9\ The base credit of $0.0010 per share applies for MPL orders
providing liquidity when MPL Adding ADV during the billing month is
less than 1.5 million shares.
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Further, the Exchange proposes to relocate and display certain
rates in bullet form because these rates do not have a logical place in
the proposed tables. Accordingly, the Exchange proposes new section IV
titled ``Other Standard Rates for Securities with a Per Share Price
$1.00 or Above'' that would provide these additional rates, as follows:
<bullet> No fee or credit for Non-Displayed Limit Orders that add
liquidity.
<bullet> $0.0030 fee for MPL Orders removing liquidity; $0.0010 if
such orders are designated as Retail Orders.
<bullet> $0.0006 fee for executions in an Auction other than for
executions from Auction Orders.
Next, the Exchange proposes to adopt the heading ``Tier Rates--
Round Lots and Odd Lots (Per Share Price $1.00 or Above)'' under
proposed new section VI that would appear at the end of the proposed
new section V titled ``Standard Rates--Routing'' to distinguish
Standard Rates from Tier Rates, which begin on the Fee Schedule with
Tier 1.
Finally, with the proposed relocation of the rates applicable to
securities priced below $1.00 from their current location on the Fee
Schedule to the proposed table presentation, the Exchange proposes to
adopt the heading ``Tier Rates--Round Lots and Odd Lots (Per Share
Price below $1.00)'' under proposed new section VII and keep the Sub-
Dollar Adding Step Up Tier where it currently appears and that pricing
tier would be the only pricing tier under this section.
As noted above, the Exchange is not proposing any substantive
change to any current fee or credit. The purpose of the proposed rule
change is to make a non-substantive change to reorganize the
presentation of the Fee Schedule in order to enhance its clarity and
transparency, thereby making the Fee Schedule easier to navigate.
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 the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\10\ Specifically, the
Exchange believes the proposed rule change is consistent with Section
6(b)(4) of the Act,\11\ which provides that Exchange rules may provide
for the equitable allocation of reasonable dues, fees, and other
charges among its members and other persons using its facilities.
Additionally, the Exchange believes the proposed rule change is
[[Page 42910]]
consistent with the Section 6(b)(5) \12\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4).
\12\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed changes are reasonable and
equitable because they are clarifying, and non-substantive and the
Exchange is not changing any current fees or credits that apply to
trading activity on the Exchange or to routed executions. Further, the
changes are designed to make the Fee Schedule easier to read and make
it more user-friendly to better display the allocation of fees and
credits among Exchange members. The Exchange believes that this
proposed format will provide additional transparency of Exchange fees
and credits. The Exchange also believes that the proposal is non-
discriminatory because it applies uniformly to all ETP Holders, and
again, the Exchange is not making any changes to existing fees and
credits. Finally, the Exchange believes that the reformatted Fee
Schedule, as proposed herein, will be clearer and less confusing for
investors and will 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 general, protecting
investors and the public interest.
The Exchange believes that the proposed reformatted the Fee
Schedule is equitable and not unfairly discriminatory because the
resulting streamlined Fee Schedule would continue to apply to ETP
Holders as it does currently because the Exchange is not adopting any
new fees or credits or removing any current fees or credits from the
Fee Schedule that impact ETP Holders. All ETP Holders would continue to
be subject to the same fees and credits that currently apply to them.
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,\13\ 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.
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\13\ 15 U.S.C. 78f(b)(8).
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Intramarket Competition. The Exchange's proposal to reformat its
Fee Schedule will not place any undue burden on intramarket competition
that is not necessary or appropriate in furtherance of the purposes of
the Act because all ETP Holders would continue to be subject to the
same fees and credits that currently apply to them. The Exchange notes
that the proposal does not change the amount of any current fees or
rebates, but rather makes clarifying and formatting changes, and
therefore does not raise any competitive issues. To the extent the
proposed rule change places a burden on competition, any such burden
would be outweighed by the fact that a streamlined Fee Schedule would
promote clarity and reduce confusion with respect to the fees and
credits that ETP Holders would be subject to.
Intermarket Competition. The Exchange believes the proposed rule
change does not impose any burden on intermarket competition that is
not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange operates in a highly competitive market in which market
participants can readily choose to send their orders to other exchanges
and off-exchange venues if they deem fee levels at those other venues
to be more favorable. Market share statistics provide ample evidence
that price competition between exchanges is fierce, with liquidity and
market share moving freely from one execution venue to another in
reaction to pricing changes.
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) \14\ of the Act and subparagraph (f)(2) of Rule
19b-4 \15\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 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) \16\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\16\ 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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#3745425b521a54585a5a525943447744525419505841"><span class="__cf_email__" data-cfemail="3f4d4a535a125c5052525a514b4c7f4c5a5c11585049">[email protected]</span></a>. Please include
File Number SR-NYSEARCA-2021-66 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to: Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number SR-NYSEARCA-2021-66. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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-NYSEARCA-2021-66 and
[[Page 42911]]
should be submitted on or before August 26, 2021.
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\17\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-16678 Filed 8-4-21; 8:45 am]
BILLING CODE 8011-01-P
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