Notice2025-18678
Self-Regulatory Organizations; NYSE Texas, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend its Fee Schedule To Introduce Transaction Fees, Credits and Performance-Based Financial Incentives for Lead Market Makers
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 26, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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[Federal Register Volume 90, Number 185 (Friday, September 26, 2025)]
[Notices]
[Pages 46430-46437]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-18678]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104027; File No. SR-NYSETEX-2025-34]
Self-Regulatory Organizations; NYSE Texas, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend its Fee
Schedule To Introduce Transaction Fees, Credits and Performance-Based
Financial Incentives for Lead Market Makers
September 23, 2025.
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 September 15, 2025, the NYSE Texas, Inc. (``NYSE Texas'' 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 Exchange. 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 its Fee Schedule to introduce
transaction fees and credits and performance-based financial incentives
for Lead Market Makers. 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
[[Page 46431]]
of those statements may be examined at the places specified in Item IV
below. The Exchange has prepared summaries, set forth in sections A, B,
and C below, of the most significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fee Schedule to introduce
transaction fees and credits and performance-based financial incentives
for Lead Market Makers (``LMMs'').\3\ The Exchange believes that the
proposed rule change would encourage Participants to become LMMs and
encourage LMMs to maintain high levels of market quality in NYSE Texas-
listed Exchange Traded Products (``ETPs'') in which they are
registered, including in lower volume securities.
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\3\ The term ``Lead Market Maker'' is defined in Rule 1.1(m) to
mean a registered Market Maker that is the exclusive Designated
Market Maker in listings for which the Exchange is the primary
market.
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The proposed change responds to the current competitive environment
where market participants, including issuers of securities, LMMs, and
other liquidity providers, can readily transfer their listings, or
direct order flow to competing venues if they deem fee levels,
liquidity provision incentive programs, or other factors at a
particular venue to be insufficient or excessive. The proposed rule
change reflects the current competitive pricing environment and is
designed to incentivize market participants to participate on the
Exchange as LMMs, thereby further enhancing the market quality of
securities listed on the Exchange and encouraging issuers to list new
securities on the Exchange.
The Exchange proposes to implement the fee changes effective
September 15, 2025.\4\
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\4\ The Exchange originally filed to amend the Fee Schedule on
September 2, 2025 (SR-NYSETEX-2025-32). SR-NYSETEX-2025-32 was
withdrawn on September 15, 2025, and replaced by this filing.
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Background
Current Market and 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. 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.'' \5\
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\5\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04) (Final Rule)
(``Regulation NMS'').
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As the Commission itself has recognized, the market for trading
services in NMS stocks has become ``more fragmented and competitive.''
\6\ Indeed, equity trading is currently dispersed across 16
exchanges,\7\ 31 alternative trading systems,\8\ and numerous broker-
dealer internalizers and wholesalers. Based on publicly-available
information, no single exchange has more than 20% of the market.\9\
Therefore, no exchange possesses significant pricing power in the
execution of equity order flow. More specifically, the Exchange's share
of executed volume of equity trades in Tapes A, B and C securities is
less than 1.0%.\10\
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\6\ See Securities Exchange Act Release No. 51808, 84 FR 5202,
5253 (February 20, 2019) (File No. S7-05-18) (Transaction Fee Pilot
for NMS Stocks Final Rule) (``Transaction Fee Pilot'').
\7\ 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>. See generally <a href="https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html">https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html</a>.
\8\ 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>.
\9\ 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>.
\10\ See id.
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The Exchange believes that the ever-shifting market share among
exchanges from month to month demonstrates that market participants can
move order flow or discontinue or reduce use of certain categories of
products, in response to fee changes. 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 a firm routes order flow.
With respect to non-marketable order flow that would provide displayed
liquidity on an Exchange, Participants can choose from any one of the
many currently operating registered exchanges to route such order flow.
Accordingly, competitive forces constrain exchange transaction fees
that relate to orders that would provide liquidity on an exchange.
Proposed Rule Change
In order to encourage quoting on the Exchange in listed ETPs and
high levels of market quality, the Exchange proposes certain financial
incentives for LMMs, including incentives based on whether the LMM
meets certain performance metrics described more fully below.
The Exchange proposes to locate market maker fees and credits in
Section G of the Fee Schedule, which is currently for ``Listing and
Related Fees for Exchange Traded Products and Structured Products,''
that would be renumbered as Section H. The Exchange would also add
three new sections applicable to LMM Transaction Fees and Credits, as
follows.
Definitions
Proposed Section GI. would be titled ``Definitions for Purposes of
LMM Transaction Fees and Credits'' and would set forth the following
definitions.
``Leveraged Security'' would mean a Security that tracks an
underlying index by a ratio other than on a one-to-one basis.
``Maximum LMM Spread'' would mean time-weighted average LMM spread
(LMM Offer minus LMM Bid) divided by the average of the LMM Bid and LMM
Offer, in basis points.
``Minimum LMM Shares within 1% of NBBO'' would mean the average
number of LMM shares quoted throughout the trading day that are within
1% of the National Best Bid and Best Offer divided by two.
``Minimum LMM Shares at the Core Open Auction within 1.5% of the
Auction Reference Price'' means the average of LMM buy shares and LMM
sell shares for Limit Orders quoted within 1.5% of the Auction
Reference Price divided by two.
``Minimum LMM Shares at the Closing Auction within 1% of the NBBO''
means the average number of LMM buy shares and LMM sell shares for
Limit Orders quoted within 1% of the National Best Bid and Best Offer
before the end of Core Trading Hours divided by two.
Base Fees and Credits
Proposed Section GII. would be titled ``LMM Base Fees and Credits
per Share.''
The base rates would be for LMMs in NYSE Texas listed ETPs in which
the LMM is registered as an LMM for the billing month and would be for
executions resulting from single-sided orders. The base fees and
credits would apply to all trading sessions and be divided into
securities priced at or above $1.00 and those below $1.00.
[[Page 46432]]
Liquidity Providing Credit
For orders that provide liquidity in securities priced at $1.00 or
more per share, the Exchange would offer a $0.0035 per share credit for
orders providing displayed liquidity and a $0.0030 per share credit for
orders providing non-displayed liquidity (including MPL Orders).
For orders that provide liquidity in securities priced below $1.00
per share, the Exchange would offer a credit of 0.10% of the trade
value.
Liquidity Removing Fee
For orders that remove liquidity in securities priced at $1.00 or
more per share, the Exchange proposes to charge a fee of $0.0030 per
share.
For orders that remove liquidity in securities priced less than
$1.00 per share, the Exchange would charge LMMs a base fee equivalent
to 0.10% of the trade.
Routing Fee
Orders routed away from the Exchange in securities priced at $1.00
or more per share would be charged a base fee of $0.0030 per share.
For orders routed away from the Exchange in securities priced below
$1.00, the Exchange would charge LMMs a base fee of 0.30% of the trade
value.
In addition, as set forth in footnote * in Section II of the Fee
Schedule, Directed Orders routed to OneChronos LLC would be charged
$0.0015 per share. Directed Orders are Limit Orders with instructions
to route on arrival at its limit price to a specified alternative
trading system (``ATS'') with which the Exchange maintains an
electronic linkage.
Closing Auction Fee
The Exchange does not propose to charge LMMs a fee for orders
priced at $1.00 or more per share and below $1.00 per share that are
executed in an Opening or Closing Auction.
Performance Metrics-Based Monthly Credits
In addition, the Exchange proposes to adopt certain market quality
metrics to be set forth in Section III titled ``LMM Performance
Metrics-Based Monthly Credit.'' LMMs that meet the proposed metrics
would receive a $600 credit per registered symbols in a month that a
security is assigned to an LMM.
The four proposed Performance Metrics for LMMs are Maximum LMM
Spread, Minimum LMM Shares within 1% of National BBO, Minimum LMM
Shares in Core Open Auction within 1.5% of Auction Reference Price; and
Minimum LMM Shares at the Closing Auction within 1% of the National
BBO.
As set forth above, Maximum LMM Spread means time-weighted average
LMM spread (LMM Offer minus LMM Bid) divided by the average of the LMM
Bid and LMM Offer, in basis points. Minimum LMM Shares within 1% of
NBBO means the average number of LMM shares quoted throughout the
trading day that are within 1% of the National Best Bid and Best Offer
divided by two.
As proposed, an LMM would be considered to have met the Performance
Metrics for an assigned security for a billing month if the LMM meets
at least two of the four following Performance Metrics, or the assigned
security is a ``Leveraged Security'' in that the assigned security
tracks an underlying index by a ratio other than on a one-to-one basis.
Monthly Average LMM Performance Metrics
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Minimum LMM shares in Minimum LMM shares at
Minimum LMM shares core open auction within the closing auction Monthly LMM performance
Maximum LMM spread (bps) within 1% of National 1.5% of auction within 1% of the credit per registered
BBO reference price National BBO LMM security
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55.............................................. 2,400 2,050 2,500 $600
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The following example illustrates how a LMM can earn an incremental
credit by meeting the Performance Metrics.
The following example illustrates how a LMM can earn per symbol
credits by meeting the Performance Metrics. The LMM would have to meet
the following Performance Metrics to earn an incremental credit (as
illustrated in the LMM Performance Metrics table above):
<bullet> Maximum LMM Spread (``Spread''): 55 basis points (``bps'')
<bullet> Minimum LMM Shares within 1% of Last Bid and Offer
(``Depth''): 2,400 shares
<bullet> Minimum LMM Shares at the Core Open Auction within 1.5% of the
Auction Reference Price (``Open Depth''): 2,050 shares
<bullet> Minimum LMM Shares at the Closing Auction within 1% of the
Last Bid & Offer (``Closing Depth''): 2,500 shares
Assume in the billing month, the LMM in this ETP had a Spread of 30
bps, Depth of 1,000 shares, Open Depth of 4,500 shares, and Closing
Depth of 5,000 shares. The LMM in this example met 3 of the 4
Performance Metrics (Spread, Open Depth, and Closing Depth) but did not
meet Depth. As a result, the LMM has qualified to earn a month credit
of $600 in that registered symbol for that month.
The proposed fees and credits are based on the LMM Performance
Metrics applicable to LMMs on the Exchange's affiliate NYSE Arca,
Inc.\11\
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\11\ See NYSE Arca Equities Fees and Charges, at 21-23,
available at <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf</a>.
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The proposed change is not otherwise intended to address 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,\12\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\13\ in particular,
because it provides for the equitable allocation of reasonable dues,
fees, and other charges among its members, issuers and other persons
using its facilities and does not unfairly discriminate between
customers, issuers, brokers or dealers.
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\12\ 15 U.S.C. 78f(b).
\13\ 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. The Commission has repeatedly
[[Page 46433]]
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.'' \14\
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.'' \15\
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\14\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule)
(``Regulation NMS'').
\15\ 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).
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Base Fees and Credits
The Exchange believes that the proposal reflects a reasonable and
competitive pricing structure designed to incentivize Participants to
become LMMs and to incentivize liquidity provision in ETPs listed on
the Exchange. The marketplace for listings is extremely competitive and
the Exchange is not the only venue for listing ETPs. Competition in
ETPs is further exacerbated by the fact that listings can and do
transfer from one listing market to another. The proposed rule change
is intended to help the Exchange compete as a listing venue. The
Exchange believes providing rebates and per symbol credits that are
based on the quality of the market in individual securities will allow
Participants to anticipate their revenue and incentivize them to
provide tight and deep markets in those securities.
Since the proposed credits and fees would be new and the Exchange
does not yet have operational LMMs, no Participant currently qualifies
for any of the proposed rates. Without a view of Participant activity
on other exchanges and off-exchange venues, the Exchange has no way of
knowing whether the proposed rule change would result in any LMM
qualifying for the any of the rates or, where applicable, adding or
removing any liquidity from the Exchange.
Liquidity Providing Credits
The Exchange believes that the proposed credits for providing
displayed liquidity in securities priced at or above $1.00 and below
$1.00 are reasonable means to incentivize LMMs to direct adding
liquidity to the Exchange. The Exchange believes that the proposed
credits are reasonable because they would encourage displayed and non-
displayed providing liquidity on the Exchange and because market
participants benefit from the greater amounts of displayed and non-
displayed liquidity present on the Exchange. The Exchange believes it's
reasonable to provide credits of $0.0035 for displayed orders and
$0.0030 for non-displayed orders because the proposal would provide for
two ways for LMMs to qualify for a credit by adding liquidity, thereby
encouraging LMMs to send orders that provide liquidity to the Exchange,
which in turn contributes to robust levels of liquidity and promoting
price discovery and transparency which benefits all market
participants. The Exchange further believes that the proposed rate for
orders that provide liquidity in securities priced below $1.00 based on
a percentage of the trade value is reasonable because it would
encourage price discovery and enhance market quality by encouraging
more competitive quoting of orders that add liquidity. Finally, the
Exchange believes that the proposed credits are reasonable because they
would be comparable to credits provided by other exchanges.\16\
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\16\ For instance, the Exchange's affiliate NYSE Arca, Inc.
(``NYSE Arca'') offers a $0.0015 credit for adding non-displayed
limit orders. See NYSE Arca Equities Fees and Charges, Section II
(LMM Base Fees and Credits per Share), available at <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf</a>.
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Liquidity Removing Fee
The Exchange believes that the proposed fees for removing liquidity
in securities priced at or above $1.00 and securities priced below
$1.00 are reasonable because it would provide a financial incentive to
bring additional removing flow to a public market. The purpose of these
fees is to encourage additional liquidity on the Exchange because
market participants benefit from the greater amounts of displayed
liquidity present on a public exchange. The Exchange believes the
proposed fees will incentivize additional liquidity to a public
exchange to qualify for lower fees for removing liquidity, thereby
promoting price discovery and transparency and enhancing order
execution opportunities for Participants. The proposal is thus
reasonable because all market participants would benefit from such
increased levels of liquidity. Moreover, the Exchange notes that these
proposed fees are also in line with those charged by other
exchanges.\17\
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\17\ For instance, on NYSE Arca, the fee for LMM removing
liquidity is $.0029 and the base fee for removing liquidity for
securities priced below $1.00 is 0.30% if the dollar value. See NYSE
Arca Equities Fees and Charges, Sections II (LMM Base Fees and
Credits per Share) & III (Standard Rates--Transactions (applicable
when Tier Rates do not apply), available at <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf</a>.
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Routing Fee
The Exchange believes that its proposal to charge a fee of $0.0030
per share for all executions that route to and execute on away markets
in securities priced at or above $1.00 is reasonable because it is
consistent with fees charged on other exchanges.\18\ The proposal to
charge a fee for all executions of 0.30% of total dollar value for
transactions in securities with a price under $1.00 that route to and
execute on away markets is similarly reasonable because it is
consistent with fees charged on other exchanges.\19\ In addition, the
Exchange believes that the proposal to charge a fee of 0.0015 per share
for Directed Orders routed to OneChronos LLC is also reasonable because
the fee is the same charged on the Exchange's affiliates for routing to
OneChronos LLC.\20\ The Exchange notes that routing functionality
offered by the Exchange is optional and Participants can readily select
between various providers of routing services, including other
exchanges and non-exchange venues. Participants that choose not to
utilize Directed Orders would continue to be able to trade on the
Exchange in the same manner.
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\18\ On NYSE Arca, the routing fee is $0.0035 for orders routed
that remove liquidity in securities priced at or above $1.00 and
0.35% of the dollar value for securities priced below $1.00. See
NYSE Arca Equities Fees and Charges, Sections V (Standard Rates--
Routing), available at <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf</a>.
\19\ Nasdaq, for example, charges a fee of 0.30% (i.e., 30 basis
points) of total dollar volume to remove liquidity for shares
executed below $1.00. See NASDAQ Fee Schedule at <a href="http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2">http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2</a>.
\20\ NYSE Arca, for example, charges the same fee for routing to
OneChronos LLC. See <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf</a>.
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Auction Fees
The Exchange believes that not charging auction fees is reasonable
because it would reduce costs for market participants and investors and
would facilitate execution of, and enhance trading opportunities for,
[[Page 46434]]
orders in the Auction. The Exchange notes that market participants are
free to direct their order flow to competing venues if they believe
other markets offer more favorable fees and credits. On the backdrop of
the competitive environment in which the Exchange currently operates,
the proposed rule change is a reasonable attempt to encourage order
flow to the Exchange to participate in Auctions. The Exchange notes
that this is consistent with other marketplaces also do not charge LMMs
for orders in assigned securities in the Auction.\21\
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\21\ See NYSE Arca Equities Fees and Charges, at 21, available
at <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf</a>; Cboe BZX Equities Fee Schedule,
available at <a href="https://www.cboe.com/us/equities/membership/fee_schedule/bzx/">https://www.cboe.com/us/equities/membership/fee_schedule/bzx/</a>.
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Performance-Metrics Based Monthly Credits
The Exchange believes providing rebates based on the quality of the
market in individual securities will allow Participants to anticipate
their revenue and will incentivize them to provide tight and deep
markets in those securities, especially in low volume securities. The
Exchange believes the proposed per symbol credits, which would
compensate LMMs as long as they meet the prescribed Performance
Metrics, is reasonable because it is a more deterministic program from
a n Participant's perspective. The Exchange believes the proposed rule
change is intended to encourage LMMs to promote price discovery and
market quality in assigned securities for the benefit of all market
participants. The Exchange believes the proposed rule change is
reasonable and appropriate in that the credits are based on the quoting
performance on the Exchange. The Exchange notes that the proposed per
symbol credits offered by the Exchange is similar to market quality
incentive programs already in place on other markets, such as the LMM
Performance Metrics-based Incremental Base Credit Adjustments and the
Designated Liquidity Provider incentives on the Nasdaq, which requires
a member on that exchange to provide meaningful and consistent support
to market quality and price discovery in low volume exchange-traded
products by quoting at the National Best Bid and Offer and adding
liquidity in a minimum number of such securities. In return, Nasdaq
provides the member with an incremental rebate.\22\
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\22\ The Exchange's proposal is modeled on NYSE Arca's current
fees. See NYSE Arca Equities Fees and Charges, at 21-22, available
at <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf</a>. See also Nasdaq Equity 7, Section
114(f).
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The Exchange believes that the proposed credit for adding liquidity
is also reasonable because it will encourage liquidity and competition
in assigned securities quoted and traded on the Exchange. Submission of
additional liquidity to the Exchange would promote price discovery and
transparency and enhance order execution opportunities for LMMs from
the substantial amounts of liquidity present on the Exchange. All
Participants would benefit from the greater amounts of liquidity that
will be present on the Exchange, which would provide greater execution
opportunities. Moreover, the Exchange believes that the proposed fee
change will incentivize Participants to register as an LMM in listed
ETPs, which the Exchange believes would benefit all market
participants. The Exchange believes per symbol incentives tied to
Performance Metrics will allow the Exchange to better maintain and
increase its competitive standing. On the backdrop of the competitive
environment in which the Exchange currently operates, the proposed rule
change is a reasonable attempt to increase liquidity on the Exchange
and improve the Exchange's market share relative to its competitors.
The Proposal Is an Equitable Allocation of Fees
The Exchange believes its proposal to establish base fees and
credits and market quality-based incentives for LMMs equitably
allocates its fees among its market participants because all LMMs may
qualify for the proposed credits and fees on an equal basis. The
Exchange believes its proposal equitably allocates its fees and credits
among its market participants by fostering liquidity provision and
stability in the marketplace.
Base Fees and Credits
Liquidity Providing Credits
The Exchange believes that the proposed credits for providing
displayed and non-displayed liquidity in securities priced at or above
$1.00 are equitable because the credits would encourage additional
displayed and non-displayed liquidity on the Exchange and because
market participants benefit from the greater amounts of displayed
liquidity present on the Exchange. The Exchange believes the proposed
rule change would improve market quality for all market participants on
the Exchange and, as a consequence, attract more liquidity, thereby
improving market-wide quality and price discovery. The Exchange further
believes that the magnitude of the proposed credits is not unreasonably
high compared to the credits offered on other marketplaces, keeping in
mind that LMMs are subject to additional requirements and obligations
(such as quoting requirements) that do not apply to other market
participants.\23\
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\23\ See note 15, supra.
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The proposal neither targets nor will it have a disparate impact on
any particular category of market participant. All Participants that
choose to become LMMs would be eligible to qualify for the proposed
credits by providing liquidity to the Exchange. The Exchange believes
that offering credits to LMMs for providing liquidity will attract
order flow and liquidity to the Exchange, thereby providing additional
price improvement opportunities on the Exchange and benefiting
investors generally. As to those market participants that would not
qualify for the adding liquidity credits, the proposal represents an
equitable allocation of payments because Participants would not be
required to meet prescribed quoting, volume or other requirements in
order to qualify for the payments other than becoming an LMM. The
Exchange thus believes the proposed credits could thus provide an
incentive for market participants to become LMMs on the Exchange.
Liquidity Removing Fee
The Exchange believes that, for the reasons discussed above, the
proposed changes taken together will incentivize LMMs to send
additional liquidity to achieve lower fees when removing liquidity from
the Exchange, thereby increasing the number of orders that are executed
on the Exchange, promoting price discovery and transparency and
enhancing order execution opportunities and improving overall liquidity
on a public exchange. The Exchange also believes that the proposed
change is equitable because it would apply to all similarly situated
LMMs that remove liquidity from the Exchange. The proposed change also
is equitable because it would be in line with the applicable rates on
other marketplaces.\24\
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\24\ See note 16, supra.
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Routing Fee
The Exchange believes that its proposed routing fees, including the
fee to route to OneChronos LLC, equitably allocates fees among market
participants because the fees would be applicable to all LMMs in an
equivalent manner. Moreover, as noted above, the proposed
[[Page 46435]]
fees for routing shares are also consistent with fees charged on other
exchanges.\25\
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\25\ See notes 16 & 17, supra.
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Auction Fee
The Exchange believes that not charging a fee for orders in an
Auction is an equitable allocation of fees and credits among its market
participants because the proposal would apply uniformly to all LMMs
that execute orders in auctions on the Exchange. As noted above, in
today's competitive marketplace, market participants have a choice of
where to direct their order flow or which market to transact on. In the
prevailing competitive environment, Exchange members are free to
disfavor the Exchange's pricing if they believe that alternatives offer
them better value. Accordingly, no Exchange member already operating on
the Exchange would be disadvantaged by the proposed allocation of the
Exchange's fees and credits.
Performance-Metrics Based Monthly Credits
The Exchange believes the proposed rule change is equitable because
the proposal would provide discounts that are reasonably related to the
value to the Exchange's market quality associated with higher volumes
in listed securities. The Exchange further believes that the proposed
incremental rebate is equitable because it is consistent with the
market quality and competitive benefits associated with the fee program
and because the magnitude of the additional rebate is not unreasonably
high in comparison to the rebate paid with respect to other displayed
liquidity-providing orders. The Exchange believes that it is equitable
to offer increased rebates to LMMs that are subject to obligations
specified in Rule 7.23 and they would be subject to additional
requirements and obligations (such as meeting Performance Metrics) that
other market participants are not. The Exchange believes that the
proposal to offer rebates tied to market quality metrics represents an
equitable allocation of payments because LMMs would be required to not
only meet their Rule 7.23 obligations, but also meet prescribed quoting
requirements in order to qualify for the payments, as described above.
Where an LMM does not meet at least two Performance Metrics or if the
assigned security is not a Leveraged Security, that member will not
receive any additional financial benefit. Further, all Participants on
the Exchange are eligible to participate and could do so by simply
registering as an LMM and meeting the proposed market quality metrics.
The Exchange has designed the proposed pricing incentives to be
sustainable over the long-term and generally expects that payments made
to LMMs will be comparable to payments the Exchange currently makes to
its members and comparable to pricing incentives offered by the
Exchange's competitors. As such, the Exchange believes that the
proposal represents an equitable allocation of dues, fees and credits.
The Proposal is Not Unfairly Discriminatory
The Exchange believes that the proposed rule change is not unfairly
discriminatory. In the prevailing competitive environment, LMMs and
Market Makers are free to disfavor the Exchange's pricing if they
believe that alternatives offer them better value.
Base Fees and Credits
Liquidity Providing Credits
The Exchange believes it is not unfairly discriminatory to adopt
credits applicable to LMMs for orders that provide displayed liquidity
in listed securities for which they are registered as the LMM, as the
proposed credits would be provided on an equal basis to all such
Participants. Further, the Exchange believes the proposed additional
incremental credit would incentivize LMMs to send orders to the
Exchange to qualify for the credits. The Exchange also believes that
the proposed change is not unfairly discriminatory because it is
reasonably related to the value to the Exchange's market quality
associated with higher volume.
Liquidity Removing Fee
The Exchange believes that it is not unfairly discriminatory to
adopt fees applicable to LMMs for orders that remove liquidity from the
Exchange because it will incentivize submission of additional liquidity
to a public exchange to qualify for the lower fees for removing
liquidity, thereby promoting price discovery and transparency and
enhancing order execution opportunities for Participants. The proposal
does not permit unfair discrimination because the new rates for
removing liquidity would be applied to all similarly situated LMMs, who
would all be eligible for the same credit on an equal basis.
Accordingly, no Participant already operating on the Exchange would be
disadvantaged by this allocation of fees. Lastly, the Exchange believes
that it is subject to significant competitive forces, as described
below in the Exchange's statement regarding the burden on competition.
Routing Fee
The Exchange believes that its proposed routing fees, including the
fee to route to OneChronos LLC, is not unfairly discriminatory because
the proposed fees would be applicable to all Participants in an
equivalent manner. Moreover, the proposed rule change neither targets
nor will it have a disparate impact on any particular category of
market participant. The Exchange believes that this proposal does not
permit unfair discrimination because the changes described in this
proposal would be applied to all similarly situated Participants.
Moreover, as previously noted, the proposed routing fees are not
unfairly discriminatory because they are consistent with fees charged
on other exchanges.\26\
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\26\ See note 17, supra.
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Auction Fee
The Exchange believes that not charging a fee for orders in an
Auction is not unfairly discriminatory because the proposal would apply
to all LMMs that execute orders in auctions on the Exchange in an equal
and non-discriminatory manner.
Performance-Metrics Based Monthly Credits
The Exchange believes it is not unfairly discriminatory to adopt an
incremental credit applicable to LMMs because both are already subject
to additional obligations, as specified in Rule 7.23, and the proposed
additional credit would be provided on an equal basis to all similarly
situated participant provided each such participant meets the
prescribed market quality metrics. If an LMM does not meet the required
number of Performance Metrics, the member would not receive any
incremental credit. Further, the Exchange believes the incremental
credit would incentivize each of these Participants to register as an
LMM in listed ETPs and send more orders to the Exchange to qualify for
higher credits. The Exchange also believes that the proposed rule
change is not unfairly discriminatory because it is reasonably related
to the value to the Exchange's market quality associated with higher
volume. The proposal to offer an additional credit tied to meeting
certain market quality requirements neither targets nor will it have a
disparate impact on any particular category of market participant. The
proposal does not permit unfair discrimination
[[Page 46436]]
because LMMs already have increased obligations vis-[agrave]-vis non-
LMM Participants as specified in Rule 7.23, and the proposed
requirements would be applied to all similarly-situated LMMs equally.
The Exchange believes that the proposed rule change is not unfairly
discriminatory because all LMMs and Market Makers that choose to
qualify for the incremental credits would be required to meet a minimum
number of Performance Metrics in order to receive the credits. Where a
Participant does not achieve a certain number of Performance Metrics,
it will not receive any incremental credits. Further, all LMMs on the
Exchange would be eligible to participate in the program and could do
so by simply registering as an LMM and in individual securities and
meeting a minimum number of Performance Metrics. As such, the Exchange
believes that the proposal is not unfairly discriminatory.
Finally, subject to their obligations specified in Rule 7.23, the
submission of additional orders to the Exchange is optional for LMMs in
that they could choose the level of trading activity on the Exchange.
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,\27\ 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 changes 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 LMMs and 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.'' \28\
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\27\ 15 U.S.C. 78f(b)(8).
\28\ Regulation NMS, 70 FR at 37498-99.
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Intramarket Competition. The proposed changes are designed to
incentivize market participants to direct displayed order flow to the
Exchange. Greater liquidity benefits all market participants on the
Exchange by providing more trading opportunities and encourages
Participants to send orders, thereby contributing to robust levels of
liquidity, which benefits all market participants on the Exchange. The
proposed fees and credits would be available to all similarly-situated
market participants, and, as such, the proposed change would not impose
a disparate burden on competition among market participants on the
Exchange. As noted, the proposal would apply to all similarly situated
Participants that have obligations under Rule 7.23 to meet specified
obligations, and, as such, on the same and equal terms, who would
benefit from the change on the same basis. The Exchange believes the
proposed adoption of Performance Metrics would enhance competition as
it is intended to increase the Exchange's competitiveness in listed
ETPs, and all LMMs would be able to participate on an equal basis.
Further, the Directed Order functionality is also available to all
Participants and all Participants that will use the functionality to
route orders to OneChronos LLC would be charged the proposed fee. The
routing of orders to OneChronos LLC is provided by the Exchange on a
voluntary basis and no rule or regulation requires that the Exchange
offer it or Participants to utilize it, and those that choose not to
utilize the functionality would not be impacted by the proposed change.
The Exchange also does not believe that the proposed change will impair
the ability of Participants to maintain their competitive standing.
Accordingly, the proposed change would not impose a disparate burden on
competition among market participants on the Exchange.
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. In such an
environment, the Exchange must continually adjust its fees and rebates
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.
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
Pursuant to Section 19(b)(3)(A)(ii) of the Act,\29\ and Rule 19b-
4(f)(2) thereunder \30\ the Exchange has designated this proposal as
establishing or changing a due, fee, or other charge imposed on any
person, whether or not the person is a member of the self-regulatory
organization, which renders the proposed rule change effective upon
filing. 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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\29\ 15 U.S.C. 78s(b)(3)(A)(ii).
\30\ 17 CFR 240.19b-4.
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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#c4b6b1a8a1e9a7aba9a9a1aab0b784b7a1a7eaa3abb2"><span class="__cf_email__" data-cfemail="483a3d242d652b2725252d263c3b083b2d2b662f273e">[email protected]</span></a>. Please include
file number SR-NYSETEX-2025-34 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-NYSETEX-2025-34. 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 filing will be available for inspection and
copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should
[[Page 46437]]
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-NYSETEX-2025-34 and should
be submitted on or before October 17, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-18678 Filed 9-25-25; 8:45 am]
BILLING CODE 8011-01-P
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