Notice2024-00497
Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Amend Certain Transaction Fees and Credits in the NYSE American Equities Price List and Fee Schedule
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Published
January 12, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 9 (Friday, January 12, 2024)</title>
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[Federal Register Volume 89, Number 9 (Friday, January 12, 2024)]
[Notices]
[Pages 2294-2297]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-00497]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99282; File No. SR-NYSEAMER-2024-01]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Change To Amend Certain
Transaction Fees and Credits in the NYSE American Equities Price List
and Fee Schedule
January 8, 2024.
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 January 2, 2024, NYSE American LLC (``NYSE American'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
and II 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 certain transaction fees and credits
in the NYSE American Equities Price List and Fee Schedule (``Price
List'') pertaining to its optional monthly credits applicable to
Electronic Designated Market Makers (``eDMM'') in assigned securities.
The Exchange proposes to implement the fee changes effective January 2,
2024. 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.
[[Page 2295]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend certain transaction fees and credits
in the NYSE American Equities Price List and Fee Schedule (``Price
List'') pertaining to its optional monthly credits applicable to
Electronic Designated Market Makers (``eDMM'') in assigned securities.
The proposed changes respond to the current competitive environment
where order flow providers have a choice of where to direct liquidity-
providing orders by offering further incentives for ETP Holders to send
additional adding and removing liquidity to the Exchange.
The Exchange proposes to implement the fee changes effective
January 2, 2024.
Competitive Environment
The Exchange operates in a highly competitive market. The
Commission has repeatedly expressed its preference for competition over
regulatory intervention in determining prices, products, and services
in the securities markets. In Regulation NMS, the Commission
highlighted the importance of market forces in determining prices and
SRO revenues and, also, recognized that current regulation of the
market system ``has been remarkably successful in promoting market
competition in its broader forms that are most important to investors
and listed companies.'' \4\
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\4\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7-10-04) (Final
Rule) (``Regulation NMS'').
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While Regulation NMS has enhanced competition, it has also fostered
a ``fragmented'' market structure where trading in a single stock can
occur across multiple trading centers. When multiple trading centers
compete for order flow in the same stock, the Commission has recognized
that ``such competition can lead to the fragmentation of order flow in
that stock.'' \5\ Indeed, cash equity trading is currently dispersed
across 16 exchanges,\6\ numerous alternative trading systems,\7\ and
broker-dealer internalizers and wholesalers, all competing for order
flow. Based on publicly-available information, no single exchange
currently has more than 17% market share.\8\ Therefore, no exchange
possesses significant pricing power in the execution of cash equity
order flow. More specifically, the Exchange currently has less than 1%
market share of executed volume of cash equities trading.\9\
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\5\ See Securities Exchange Act Release No. 61358, 75 FR 3594,
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on
Equity Market Structure).
\6\ See Cboe U.S. Equities Market Volume Summary, available at
<a href="https://markets.cboe.com/us/equities/market_share">https://markets.cboe.com/us/equities/market_share</a>. See generally
<a href="https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html">https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html</a>.
\7\ See FINRA ATS Transparency Data, available at <a href="https://otctransparency.finra.org/otctransparency/AtsIssueData">https://otctransparency.finra.org/otctransparency/AtsIssueData</a>. A list of
alternative trading systems registered with the Commission is
available at <a href="https://www.sec.gov/foia/docs/atslist.htm">https://www.sec.gov/foia/docs/atslist.htm</a>.
\8\ See Cboe Global Markets U.S. Equities Market Volume Summary,
available at <a href="http://markets.cboe.com/us/equities/market_share/">http://markets.cboe.com/us/equities/market_share/</a>.
\9\ See id.
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The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
move order flow, or discontinue or reduce use of certain categories of
products. While it is not possible to know a firm's reason for shifting
order flow, the Exchange believes that one such reason is because of
fee changes at any of the registered exchanges or non-exchange venues
to which the firm routes order flow. Accordingly, competitive forces
compel the Exchange to use exchange transaction fees and credits
because market participants can readily trade on competing venues if
they deem pricing levels at those other venues to be more favorable.
Proposed Rule Change
Currently, the Exchange offers eDMMs an optional monthly credit per
security (``Credit Per Security'') up to a maximum credit of $850 per
month per assigned security, provided that eDMMs agree to a credit of
$0.0020 per share for orders adding displayed liquidity instead of the
otherwise-applicable credit of $0.0045 per share. Specifically, for
eDMMs agreeing to a $0.0020 credit per share for orders adding
displayed liquidity, the Exchange currently offers a Credit Per
Security of $100 for an eDMM quoting at the National Best Bid or Offer
(``NBBO'') for a minimum average of 25% of the time; a Credit Per
Security of $350 for an eDMM quoting at the NBBO for a minimum average
of 40% of the time; and a Credit Per Security of $850 for an eDMM
quoting at the NBBO for a minimum average of 50% of the time.\10\
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\10\ See Securities Exchange Act Release No. 95106 (June 15,
2022), 87 FR 37364 (June 22, 2022) (SR-NYSEAMER-2022-24).
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The Exchange proposes to add a new Credit Per Security level,
offering a Credit Per Security of $1,000 for an eDMM quoting at the
NBBO for a minimum average of 70% of the time.
The proposed change responds to the current competitive environment
where order flow providers have a choice of where to direct liquidity-
providing orders by offering further incentives for eDMMs to increase
quoting on, and send additional displayed liquidity to, the Exchange.
The Exchange believes that offering Exchange eDMMs the option to
receive a new higher monthly rebate across all eDMM securities would
foster liquidity provision, increased quoting, and stability in the
marketplace and lessen eDMM reliance on transaction fees, to the
benefit of the marketplace and all market participants.
The Exchange does not propose any other changes to its rates to
eDMMs on transactions in assigned securities.
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, is designed to prevent fraudulent and
manipulative acts and practices and to promote just and equitable
principles of trade, and does not unfairly 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 Proposed Fee Change Is Reasonable
As discussed above, the Exchange operates in a highly fragmented
and competitive market. The Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
in Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \13\
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\13\ See Regulation NMS, supra note 4, 70 FR at 37499.
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The Exchange believes that the ever-shifting market share among the
exchanges from month to month
[[Page 2296]]
demonstrates that market participants can shift order flow, or
discontinue to reduce use of certain categories of products, in
response to fee changes. ETP Holders can choose from any one of the 16
currently operating registered exchanges, and numerous off-exchange
venues, to route such order flow. Accordingly, competitive forces
constrain exchange transaction fees that relate to orders on an
exchange. Stated otherwise, changes to exchange transaction fees can
have a direct effect on the ability of an exchange to compete for order
flow.
Given this competitive environment, the proposal represents a
reasonable attempt to attract additional order flow to the Exchange.
Providing eDMMs with the option to receive a lower per share
transaction credit for adding displayed liquidity in exchange for
higher monthly rebates per assigned liquidity for higher quoting
levels, up to a maximum credit of $1,000 per month across all eDMM
assigned securities, is reasonable because it would foster liquidity
provision, improved quoting, and stability in the marketplace and
lessen eDMM reliance on transaction fees, to the benefit of the
marketplace and all market participants. Moreover, the proposal is
reasonable because it would balance the increased risks and heightened
quoting and other obligations that eDMMs on the Exchange have and that
other market participants do not. The Exchange believes that increasing
the maximum Credit Per Security level to $1,000 (from $850) per month
is reasonable and will provide a further incentive for eDMMs to quote
and to quote at higher levels in a greater number of securities on the
Exchange and will generally allow the Exchange and eDMMs to better
compete for order flow, and thus enhance competition.
The Proposed Change Is an Equitable Allocation of Fees and Credits
The Exchange believes its proposal equitably allocates its fees
among its market participants by fostering liquidity provision and
stability in the marketplace. The Exchange believes that it is
equitable to offer eDMMs the option to receive a lower per-share
transaction credit for adding displayed liquidity in exchange for
monthly rebates per assigned security because it would balance the
increased risks and heightened quoting and other obligations that eDMMs
on the Exchange have and that other market participants do not have. As
such, it is equitable to offer eDMMs the option to receive a flat per-
security credit based on the eDMM's quoting in that symbol, coupled
with a lower transaction fee.
The Exchange believes that increasing the maximum Credit Per
Security level to $1,000 (from $850) per month is equitable because it
would apply equally to all eDMM firms, each of whom would have the
option to elect to participate (or not participate) on a monthly basis.
Any eDMM wishing to receive the Credit Per Security would be required
to meet the prescribed quoting requirements in order to qualify for the
payments, as described above. All eDMMs would be eligible to elect to
receive a Credit Per Security and could do so by notifying the Exchange
and meeting the per symbol quoting requirements.
The Proposed Fee Change Is Not Unfairly Discriminatory
The Exchange believes it is not unfairly discriminatory to offer
eDMMs the option to receive a flat per-security credit coupled with a
lower transaction fee for orders that provide displayed liquidity in
assigned securities as the proposed credits would be provided on an
equal basis to all such participants. The proposed $1,000 maximum
Credit Per Security level would apply equally to all eDMM firms, who
would have the option to elect to participate on a monthly basis.
Further, the Exchange believes the new proposed maximum credit would
incentivize eDMMs that meet the proposed quoting requirement to send
more orders to the Exchange to qualify for a higher Credit Per
Security.
The proposal neither targets nor will it have a disparate impact on
any particular category of market participant. The proposal does not
permit unfair discrimination because the proposed thresholds would be
applied to all similarly situated eDMMs, who would all be eligible for
the same credit on an equal basis. Accordingly, no eDMM already
operating on the Exchange would be disadvantaged by this allocation of
fees.
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, as discussed above, the Exchange believes
that the proposed fee change would encourage the submission of
additional liquidity to a public exchange, thereby promoting market
depth, price discovery, and transparency and enhancing order execution
opportunities for market participants. As a result, the Exchange
believes that the proposed change furthers the Commission's goal in
adopting Regulation NMS of fostering integrated competition among
orders, which promotes ``more efficient pricing of individual stocks
for all types of orders, large and small.'' \15\
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\14\ 15 U.S.C. 78f(b)(8).
\15\ See Securities Exchange Act Release No. 51808, 70 FR 37495,
37498-99 (June 29, 2005) (S7-10-04) (Final Rule).
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Intramarket Competition. The Exchange believes the proposed change
would not impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The proposed
change is designed to attract additional orders to the Exchange. The
Exchange believes that the proposed changes would incentivize market
participants to direct their orders to the Exchange. Greater overall
order flow, trading opportunities, and pricing transparency benefit all
market participants on the Exchange by enhancing market quality and
continuing to encourage ETP Holders to send orders, thereby
contributing towards a robust and well-balanced market ecosystem.
Intermarket Competition. The Exchange operates in a highly
competitive market in which market participants can readily choose to
send their orders to other exchange and off-exchange venues if they
deem fee levels at those other venues to be more favorable. As noted
above, the Exchange currently has less than 1% market share of executed
volume of equities trading. In such an environment, the Exchange must
continually adjust its fees and credits to remain competitive with
other exchanges and with off-exchange venues. 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 does not believe its proposed fee change can impose any
burden on intermarket competition.
The Exchange believes that the proposed change 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.
[[Page 2297]]
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) \16\ of the Act and subparagraph (f)(2) of Rule
19b-4 \17\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(2).
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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. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \18\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\18\ 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="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#453730292068262a2828202b3136053620266b222a33"><span class="__cf_email__" data-cfemail="aedcdbc2cb83cdc1c3c3cbc0daddeeddcbcd80c9c1d8">[email protected]</span></a>. Please include
file number SR-NYSEAMER-2024-01 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-NYSEAMER-2024-01. 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-NYSEAMER-2024-01 and should
be submitted on or before February 2, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-00497 Filed 1-11-24; 8:45 am]
BILLING CODE 8011-01-P
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