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Notice2023-19949

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

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Published
September 15, 2023

Issuing agencies

Securities and Exchange Commission

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<title>Federal Register, Volume 88 Issue 178 (Friday, September 15, 2023)</title>
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[Federal Register Volume 88, Number 178 (Friday, September 15, 2023)]
[Notices]
[Pages 63636-63638]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-19949]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98347; File No. SR-NYSEARCA-2023-59]


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

September 11, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on August 28, 2023, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') 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\ 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 the NYSE Arca Equities Fees and 
Charges (``Fee Schedule'') to eliminate the fees and credits applicable 
to the Retail Liquidity Program. The Exchange proposes to implement the 
fee change effective August 28, 2023. 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.

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 the Fee Schedule to eliminate the 
fees and credits applicable to the Retail Liquidity Program. The 
Exchange proposes to implement the fee change effective August 28, 
2023.
    The Retail Liquidity Program (``Program'') is designed to attract 
retail order flow in NYSE Arca-listed securities and securities traded 
pursuant to unlisted trading privileges while also providing the 
potential for price improvement to this order flow.\3\ Under the 
Program, a class of market participant called Retail Liquidity 
Providers (``RLPs'') are able to provide potential price improvement to 
retail investor orders in the form of a non-displayed order that is 
priced better than the best protected bid or offer, called a Retail 
Price Improvement Order (``RPI Order'').\4\ When there is an RPI Order 
in a particular security, the Exchange disseminates an indicator, known 
as the Retail Liquidity Identifier, that such interest exists.\5\ 
Retail Member Organizations (``RMOs'') can submit a Retail Order to the 
Exchange, which interacts, to the extent possible, with available 
contra-side RPI Orders and then may interact with other liquidity on 
the Exchange or elsewhere, depending on the Retail Order's 
instructions.\6\ The segmentation in the Program is intended to allow 
retail order flow to receive potential price improvement as a result of 
their order flow being deemed more desirable by liquidity providers. 
ETP Holders other than RLPs are also permitted, but not required, to 
submit RPIs.
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    \3\ The Retail Liquidity Program was established on a pilot 
basis in 2013 and was approved by the Commission to operate on a 
permanent basis in 2019. See Securities Exchange Act Release No. 
87350 (October 18, 2019), 84 FR 57106 (October 24, 2019) (SR-
NYSEArca-2019-63).
    \4\ See Rules 7.44-E(a)(1) (defining an RLP) and 7.44-E(a)(4) 
(defining RPI Order).
    \5\ See Rule 7.44-E(j).
    \6\ See Rule 7.44-E(a)(2) (defining RMO); Rules 7.44-E(a)(3) and 
7.44-E(k) (describing Retail Orders).
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    The Exchange currently provides RLP executions of RPIs against 
Retail Orders with a credit of $0.0003 per share.\7\ An RMO Retail 
Order that executes outside of the Retail Liquidity Program is 
considered just a Retail Order (not an ``RMO'' Retail Order) and 
receives pricing applicable to Tiered or Standard Rates in the Fee 
Schedule.\8\ In addition, RMOs are not currently charged a fee or 
provided with a credit for executions of Retail Orders if executed 
against RPIs and other price-improving interest.
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    \7\ See Securities Exchange Act Release No. 71722 (March 13, 
2014), 79 FR 15376 (March 19, 2014) (NYSEARCA-2014-22); See also 
Securities Exchange Act Release No. 73013 (September 5, 2014), 79 FR 
54322 (September 11, 2014) (NYSEARCA-2014-95).
    \8\ As is currently the case, applicable charges are based on an 
ETP Holder's qualifying levels, and if an ETP Holder qualifies for 
more than one tier in the Fee Schedule, the Exchange applies the 
most favorable rate available under such tiers.
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    The Exchange recently filed a proposed rule change to discontinue 
the Retail Liquidity Program on the Exchange,\9\ effective August 28, 
2023.\10\ As a result, the Retail Liquidity Program has become 
obsolete. Therefore, the Exchange proposes to eliminate the Retail 
Liquidity Program and remove it, along with references to RPI and RMO 
in footnote 2, from the Fee Schedule.
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    \9\ See Securities Exchange Act Release No. 98168 (August 18, 
2023) (SR-NYSEARCA-2023-55).
    \10\ See <a href="https://www.nyse.com/publicdocs/nyse/notifications/trader-update/110000633192/NYSE_National_Retail_Liquidity_Program_August_2023.pdf">https://www.nyse.com/publicdocs/nyse/notifications/trader-update/110000633192/NYSE_National_Retail_Liquidity_Program_August_2023.pdf</a>.
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    The proposed rule changes are intended to streamline the Fee 
Schedule by eliminating credits and fees that have become obsolete.
    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,\11\ in general, and furthers the 
objectives of Sections 6(b)(4) and(5) of the Act,\12\ 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

[[Page 63637]]

discriminate between customers, issuers, brokers or dealers.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes it is reasonable to eliminate credits and 
fees associated with the Retail Liquidity Program when such fees and 
credits become obsolete. In particular, the Exchange believes that the 
proposed rule change to eliminate the fees and credits associated with 
the Retail Liquidity Program is reasonable because the Exchange intends 
to no longer operate this activity thus rendering the financial 
incentives associated with the Retail Liquidity Program as unnecessary. 
The Exchange believes that amending the Fee Schedule to remove fees and 
credits associated with the Retail Liquidity Program would promote the 
protection of investors and the public interest because it would 
promote clarity and transparency in the Fee Schedule.
    The Exchange believes that the proposed rule change is reasonable 
because it would also streamline the Fee Schedule by deleting obsolete 
rule text. The Exchange believes deleting obsolete rule text would 
promote clarity to the Fee Schedule and reduce confusion to ETP Holders 
as to which fees and credits are applicable to their trading activity 
on the Exchange. The Exchange believes it is reasonable to delete the 
obsolete fees and credits from the Fee Schedule and thereby, streamline 
the Fee Schedule, to promote clarity and reduce confusion as to the 
applicability of fees and credits that ETP Holders would be subject to. 
The Exchange believes deleting obsolete fees and credits would also 
simplify the Fee Schedule.
    The Exchange believes that deleting obsolete fees and credits from 
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 delete obsolete 
fees and credits from the 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. 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 has become effective upon filing pursuant 
to Section 19(b)(3)(A) \14\ of the Act and paragraph (f) thereunder. At 
any time within 60 days of the filing of the 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.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
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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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#4b393e272e66282426262e253f380b382e28652c243d"><span class="__cf_email__" data-cfemail="90e2e5fcf5bdf3fffdfdf5fee4e3d0e3f5f3bef7ffe6">[email&#160;protected]</span></a>. Please include 
file number SR-NYSEARCA-2023-59 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-2023-59. 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="https://www.sec.gov/rules/sro.shtml">https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-NYSEARCA-2023-59 and should 
be submitted on or before October 6, 2023.


[[Page 63638]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-19949 Filed 9-14-23; 8:45 am]
BILLING CODE 8011-01-P


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