Notice2024-00849
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees and Charges
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Published
January 18, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 12 (Thursday, January 18, 2024)</title>
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[Federal Register Volume 89, Number 12 (Thursday, January 18, 2024)]
[Notices]
[Pages 3473-3476]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-00849]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99327; File No. SR-NYSEARCA-2024-03]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Its
Schedule of Fees and Charges
January 11, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on January 10, 2024, 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 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 its Schedule of Fees and Charges
(the ``Fee Schedule'') regarding annual fees applicable to Exchange
Traded Products. The Exchange proposes to implement the fee changes
effective January 10, 2024.\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 previously filed to amend the Fee Schedule on
December 27, 2023, for January 2, 2024 effectiveness (SR-NYSEARCA-
2023-86), and withdrew such filing on January 10, 2024.
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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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Fee Schedule regarding annual
fees for Exchange Traded Products (``ETPs'').\5\
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\5\ ``Exchange Traded Products'' is defined in footnote 3 of the
current Schedule of Fees and Charges.
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The proposed change responds to the current extremely competitive
environment for ETP listings, in which issuers can readily favor
competing venues or transfer their listings if they deem fee levels at
a particular venue to be excessive or discount opportunities available
at other venues to be more favorable. In response to the competitive
environment for listings, the Exchange proposes to amend the Fee
Schedule to (1) modify the annual fees for ETPs set forth in the tables
in Sections 6.a. and 6.b. of the Annual Fee section of the Fee
Schedule; (2) provide for reduced annual fees for qualifying ETPs; and
(3) provide for discounted annual fees for fund families with ETPs
exclusively listed on the Exchange.
The Exchange proposes to implement the fee changes effective
January 2, 2024.
Proposed Rule Change
Annual fees are assessed each January in the first full calendar
year following the year of listing. Currently, the Exchange's annual
fees for ETPs are based on the number of shares outstanding per issue
and then are further differentiated based on whether or not the ETP
tracks an index, has a maturity date, or provides an expected return
over a specific outcome period.\6\ The aggregate total shares
outstanding is calculated based on the total shares outstanding as
reported by the fund issuer or fund ``family'' in its most recent
periodic filing with the Commission or other publicly available
information. Annual fees apply regardless of whether any of these funds
are listed elsewhere.
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\6\ See Fee Schedule, ANNUAL FEE (PAYABLE JANUARY IN EACH
CALENDAR YEAR), Section 6.a. & Section 6.b.
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Currently, Section 6.a. provides for annual fees as follows for
ETPs (excluding Managed Fund Shares, Active Proxy Portfolio Shares,
Managed Trust Securities, and Managed Portfolio Shares) and Exchange-
Traded Fund Shares listed under Rule 5.2-E(j)(8) that track an index,
have a maturity date, or provide an expected return over a specific
outcome period:
[[Page 3474]]
------------------------------------------------------------------------
Number of shares outstanding (each issue) Annual fee
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Less than 25 million.................................... $7,500
25 million up to 49,999,999............................. 10,000
50 million up to 99,999,999............................. 15,000
100 million up to 249,999,999........................... 20,000
250 million up to 499,999,999........................... 25,000
500 million and over.................................... 30,000
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Section 6.b. sets forth the following annual fees for Managed Fund
Shares, Managed Trust Securities, Active Proxy Portfolio Shares,
Managed Portfolio Shares, and Exchange-Traded Fund Shares listed under
Rule 5.2-E(j)(8) that do not track an index:
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Number of shares outstanding (each issue) Annual fee
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Less than 25 million.................................... $10,000
25 million up to 49,999,999............................. 12,500
50 million up to 99,999,999............................. 20,000
100 million up to 249,999,999........................... 25,000
250 million and over.................................... 30,000
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As noted above, the Exchange proposes to amend the annual fees
reflected in Sections 6.a. and 6.b. As proposed, annual fees would
continue to be based on the number of shares outstanding, but the
Exchange proposes certain changes to both the number of shares
outstanding corresponding to each level of annual fee and the annual
fee amounts. The proposed change is intended to simplify the Fee
Schedule by largely harmonizing the annual fees set forth in Sections
6.a. and 6.b. Except for ETPs with fewer than 25 million shares
outstanding, the Exchange proposes that the annual fees for ETPs listed
on the Exchange would be the same for ETPs that fall under either
Section 6.a. or 6.b.
The Exchange proposes to amend the fees set forth in Section 6.a.
as follows:
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Number of shares outstanding (each issue) Annual fee
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Less than 25 million.................................... $8,500
25 million up to 99,999,999............................. 15,000
100 million up to 199,999,999........................... 25,000
200 million up to 599,999,999........................... 35,000
600 million and over.................................... 30,000
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The Exchange similarly proposes to amend the fees set forth in
Section 6.b. as below:
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Number of shares outstanding (each issue) Annual fee
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Less than 25 million.................................... $10,000
25 million up to 99,999,999............................. 15,000
100 million up to 199,999,999........................... 25,000
200 million up to 599,999,999........................... 35,000
600 million and over.................................... 30,000
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The Exchange believes it is reasonable to continue to differentiate
between ETPs in Sections 6.a. and 6.b. when an ETP has fewer than 25
million shares outstanding. The Exchange currently provides for lower
fees for ETPs under Section 6.a., which are those that track an index,
have a maturity date, or provide an expected return over a specific
outcome period, given that such products generally require less
Exchange resources associated with listing and trading such products
(e.g., costs related to issuer services, listing administration,
product development, and regulatory oversight). The Exchange believes
it is reasonable to retain a comparatively lower listing fee for ETPs
that track an index, have a maturity date, or provide an expected
return over a specific outcome period when such products have fewer
than 25 million shares outstanding, but to otherwise conform annual
fees in Sections 6.a. and 6.b. to streamline the Fee Schedule.
The Exchange believes the proposed change would simplify and
improve the clarity of the Fee Schedule by aligning the annual fees
applicable to all ETPs, based on the number of outstanding shares. As
currently, the Exchange proposes that annual fees would generally
increase as the number of shares outstanding increases. However, the
Exchange proposes that the annual fee for ETPs with 600 million or more
shares outstanding would be $30,000 (lower than the annual fee for ETPs
with 200 million to 599,999,999 shares outstanding), which the Exchange
believes could further incentivize issuers to list multiple series of
certain securities on the Exchange. Although the proposed change would,
in some cases, increase the annual fee for certain ETPs based on the
number of shares outstanding, the Exchange believes that the proposed
fees would continue to encourage issuers to list ETPs on the Exchange
and represents a reasonable effort by the Exchange to respond to the
competitive environment for ETP listings, particularly in conjunction
with the incentives proposed below that would offer issuers additional
opportunities to qualify for lower annual fees.
The Exchange proposes to offer two new alternative methods through
which ETPs could qualify for reduced annual fees in new Section 6.c.
First, proposed Section 6.c.i. would provide that ETPs with at
least $50 billion in assets under management, at the time the annual
fee is billed, would be subject to an annual fee of $5,000 (regardless
of number of shares outstanding).
Proposed Section 6.c.ii. would provide that ETPs could instead
qualify for reduced annual fees (as set forth in the table below) by
achieving certain primary listing market auction volume, measured by
ADV. For purposes of qualifying for this incentive, ADV would be
calculated based on combined volume executed in the Exchange's opening
and closing auctions in the preceding calendar year.
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Primary listing market ETF auction volume (ADV) Annual fee
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50,000 shares........................................... $10,000
75,000 shares........................................... 7,500
100,000 shares.......................................... 6,500
150,000 shares.......................................... 6,000
200,000 shares.......................................... 5,000
------------------------------------------------------------------------
The Exchange also proposes to add an Exclusive Listing Discount to
Section 9 (Additional Annual Fee Discounts for Exchange Traded Products
and Structured Products) of the Fee Schedule.\7\ The Exclusive Listing
Discount would, as proposed, provide fund families with 50 or more ETPs
exclusively listed on NYSE Arca with a 12.5% discount off the annual
fee applicable to each fund. The Exchange further proposes that the
Exclusive Listing Discount could be combined with the Product Family
and High Volume Products \8\ discounts already offered in the Fee
Schedule, but that the discounts together may not exceed a 35% discount
on annual fees.\9\
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\7\ See Fee Schedule, ANNUAL FEE (PAYABLE JANUARY IN EACH
CALENDAR YEAR), Section 9.
\8\ The Product Family and High Volume Products discounts are
described in Section 9, subparagraphs (ii) and (iii), respectively.
\9\ Currently, subparagraph (iv) of Section 9 sets forth various
limitations on annual fee discounts. Item 1. under subparagraph (iv)
currently provides that the Product Family and High Volume Products
discounts may be combined. The Exchange proposes to describe the
Exclusive Listing Discount in subparagraph (iv) of Section 9 and to
renumber current subparagraph (iv) to be subparagraph (v). Item 1.
under new subparagraph (v) of Section 9 would provide for the
combination of the Exclusive Listing Discount with the Product
Family and High Volume Products discounts and specify that the
discounts could not combine to provide more than a 35% discount on
annual fees.
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The Exchange believes these proposed discounts on annual fees could
incentivize issuers to list or transfer to list ETPs on the Exchange,
thereby promoting competition among exchanges that list ETPs, to the
benefit of market participants, and, together with the proposed changes
to annual fees described above, represent an effort by the Exchange to
compete with other venues that list ETPs.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\10\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\11\ in particular,
because it provides for the equitable
[[Page 3475]]
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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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4) & (5).
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The Proposed Change Is Reasonable
As discussed above, the Exchange operates in a highly competitive
market for the listing of ETPs. Specifically, ETP issuers can readily
favor competing venues or transfer listings if they deem fee levels at
a particular venue to be excessive, or discount opportunities available
at other venues to be more favorable. 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.'' \12\
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\12\ See Regulation NMS, 70 FR at 37499.
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The Exchange believes that the ongoing competition among the
exchanges with respect to new listings and the transfer of existing
listings among competitor exchanges demonstrates that issuers can
choose different listing markets in response to fee changes.
Accordingly, competitive forces constrain exchange listing fees. Stated
otherwise, changes to exchange listing fees can have a direct effect on
the ability of an exchange to compete for new listings and retain
existing listings.
The Exchange's current annual fees for ETPs are based on the number
of shares outstanding per issuer and provide incentives for issuers to
list multiple series of certain securities on the Exchange. The
Exchange believes the proposed changes to the annual fees set forth in
Sections 6.a. and 6.b. are reasonable because they are intended to
simplify the Fee Schedule by promoting consistency in the annual fees
that would apply to all ETPs. The Exchange proposes that, as currently,
annual fees would generally increase as the number of shares
outstanding increases (which would continue to reduce the barriers to
entry and incentivize enhanced competition among issuers of ETPs), but
proposes to eliminate differences in annual fees based on whether or
not the ETP tracks an index, has a maturity date, or provides an
expected return over a specific outcome period, except in the case of
issues with 25 million shares or fewer outstanding. The Exchange
believes that retaining this differentiation is reasonable because it
would continue to reflect that fewer Exchange resources may be needed
to support the listing and administration of ETPs that track an index,
have a maturity date, or provide an expected return over a specific
outcome period as an initial matter, but that such difference is
generally more significant when there are fewer shares outstanding. The
Exchange further believes that the proposed changes to annual fees are
reasonable taken together with the proposed incentives that would offer
various methods for ETPs to qualify for lower annual fees by achieving
qualifying levels of assets under management, achieving primary listing
market auction volume, or exclusively listing on the Exchange.
The Exchange believes that the proposal would continue to encourage
issuers to list ETPs on the Exchange, even though it would, in some
cases, increase the annual fee for certain ETPs and reflects a
competitive pricing structure designed to incentivize issuers to list
new products and transfer existing products to the Exchange, which the
Exchange believes will enhance competition both among ETP issuers and
listing venues, to the benefit of investors. The Exchange also believes
the proposed changes are a reasonable effort by the Exchange to respond
to the current competitive environment in which it operates.
The Proposal Is an Equitable Allocation of Fees
The Exchange believes the proposal equitably allocates its fees
among its market participants. In the prevailing competitive
environment, issuers can readily favor competing venues or transfer
listings if they deem fee levels at a particular venue to be excessive,
or discount opportunities available at other venues to be more
favorable. The Exchange believes that the proposed change is equitable
because the proposed annual fees would apply uniformly to all similarly
situated issuers. The Exchange also believes that it is equitable to
continue to provide for a slightly lower annual fee for ETPs that track
an index, have a maturity date, or provide an expected return over a
specific outcome period when such ETPs have a smaller number of shares
outstanding, to reasonably reflect the difference in Exchange resources
required to support the listing and administration of such ETPs in
those circumstances. The proposal is also an equitable allocation of
fees because all issuers would be eligible to qualify for reduced
annual fees by meeting the same qualifying criteria. Moreover, the
proposed fees would be equitably allocated among issuers because
issuers would continue to qualify for an annual fee under criteria
applied uniformly to all such issuers. For the same reasons, the
proposal neither targets nor will it have a disparate impact on any
particular category of market participant.
The Proposal Is Not Unfairly Discriminatory
The Exchange believes that the proposal is not unfairly
discriminatory. In the prevailing competitive environment, issuers are
free to list elsewhere if they believe that alternative venues offer
them better value. The Exchange believes the proposed change is not
unfairly discriminatory because it is intended to provide for
simplified annual fees that would generally apply equally to all ETPs
listed on the Exchange, based on the number of shares outstanding. The
Exchange believes that it is not unfairly discriminatory to maintain
certain differentiation in annual fees for ETPs that track an index,
have a maturity date, or provide an expected return over a specific
outcome period as an initial matter and those that do not, to reflect
the difference in Exchange resources required to support the listing
and administration of such ETPs. The proposed methods through which
issuer could qualify for reduced annual fees are also not unfairly
discriminatory, as all issuers would be eligible to qualify for reduced
annual fees based on the same criteria.
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,\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. Instead, as discussed above, the Exchange believes
that the proposed change would encourage competition by generally
harmonizing the annual fees for all ETPs listed on the Exchange,
thereby incentivizing issuers to list such
[[Page 3476]]
products on the Exchange and enhancing competition among issuers and
listing venues, to the benefit of investors. The Exchange believes that
the proposed opportunities to qualify for lower annual fees could
incentivize enhanced competition among issuers of ETPs and could
encourage issuers to list additional products on the Exchange. The
proposed rule changes reflect a competitive pricing structure designed
to incentivize issuers to list and transfer new products on the
Exchange, which the Exchange believes will enhance competition both
among ETP issuers and listing venues, to the benefit of investors. As
noted, the market for listing services is extremely competitive.
Issuers have the option to list their securities on these alternative
venues based on the fees charged and the value provided by each listing
exchange. Because issuers have a choice to list their securities on a
different national securities exchange, the Exchange does not believe
that the proposed change imposes a burden on competition.
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\13\ 15 U.S.C. 78f(b)(8).
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Intramarket Competition. The proposed change is a competitive
pricing structure designed to encourage issuers to list and transfer
ETPs to list on the Exchange. The Exchange believes the proposal would
enhance competition among ETP issuers, to the benefit of investors. The
Exchange does not believe the proposed change would burden intramarket
competition, as it seeks to harmonize the fees for all ETPs listed on
the Exchange and offer the same opportunities to qualify for reduced
annual fees to all issuers. Accordingly, the Exchange believes that the
proposed change would apply to and potentially benefit all issuers
equally and thus would not impose a disparate burden on competition
among market participants on the Exchange.
Intermarket Competition. The Exchange operates in a highly
competitive listings market in which issuers can readily choose
alternative listing venues. In such an environment, the Exchange must
adjust its fees and discounts to remain competitive with other
exchanges competing for the same listings. The Exchange believes that
the proposed rule change could enhance competition among ETP listing
venues by simplifying the annual fees for listing ETPs on the Exchange
and offering issuers new opportunities to qualify for reduced annual
fees. The Exchange believes that the proposal is a competitive proposal
designed to enhance pricing competition among listing venues. Because
competitors are free to modify their own fees and discounts in
response, and because issuers may readily adjust their listing
decisions and practices, the Exchange does not believe its proposed
change would impose any burden on intermarket competition.
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 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) \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="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#ef9d9a838ac28c8082828a819b9caf9c8a8cc1888099"><span class="__cf_email__" data-cfemail="1e6c6b727b337d7173737b706a6d5e6d7b7d30797168">[email protected]</span></a>. Please include
file number SR-NYSEARCA-2024-03 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-2024-03. 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-2024-03 and should
be submitted on or before February 8, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-00849 Filed 1-17-24; 8:45 am]
BILLING CODE 8011-01-P
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