65190 Federal Register / Vol. 83, No. 243 / Wednesday, December 19, 2018 / Notices 

12 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

13See Securities Exchange Act Release No. 80657 

(May 11, 2017), 82 FR 22702 (May 17, 2017) (SR– 

NYSEArca–2017–09). The Commission also notes 

that the proposed alternative limits are consistent 

with derivatives requirements in listing rules for 

another issue of Managed Fund Shares. See 

Securities Exchange Act Release No. 84047 

(September 6, 2018), 83 FR 46200 (September 12, 

2018) (SR–NASDAQ–2017–128). 

14See Securities Exchange Act Release No. 80657, 

supra note 13. The addition of duration risk to the 

uses of Hedging Derivative in the current proposal 

does not alter the Commission’s analysis. 

15 15 U.S.C. 78s(b)(2). 

16 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4A Retail Order is an agency order that originates 

from a natural person and is submitted to the 

Exchange by an ETP Holder, provided that no 

change is made to the terms of the order to price 

or side of market and the order does not originate 

from a trading algorithm or any other computerized 

methodology. See Securities Exchange Act Release 

No. 67540 (July 30, 2012), 77 FR 46539 (August 3, 

2012) (SR–NYSEArca–2012–77). 

5See Securities Exchange Act Release No. 83828 

(August 10, 2018), 83 FR 40816 (August 16, 2018) 

(SR–NYSEArca–2018–58). An ETP Holder that 

qualifies for the Retail Order Step-Up Tier 2 also 

receives a credit of $0.0035 per share for orders (not 

just Retail Orders) that provide displayed liquidity 

to the order book in Tape C Securities, and an 

incremental credit of $0.0002 per share for orders 

that provide non-displayed liquidity to the order 

book in Tape C Securities. The incremental credit 

is in addition to the ETP Holder’s or Market Maker’s 

Tiered or Basic Rate credit(s). Pursuant to the Retail 

Order Step-Up Tier 2, ETP Holders and Market 

Makers pay a fee of $0.0027 per share for orders that 

take liquidity from the order book in Tape C 

Securities. 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(4) and (5). 

thereunder applicable to a national 

securities exchange.12 The Exchange 

proposes to modify only the Listing 

Rule’s limit on OTC derivatives, and the 

proposed alternative limits are 

substantially similar to OTC derivatives 

limits for another issue of Managed 

Fund Shares that also invests 

principally in fixed-income securities.13

The Commission approved a listing rule 

allowing that fund to similarly invest up 

to: (1) 50% of its assets in OTC 

derivatives to reduce currency, interest 

rate, or credit risk arising from the 

fund’s investments; and (2) 20% of its 

assets in OTC derivatives other than 

OTC derivatives used to hedge the 

fund’s portfolio against currency, 

interest rate, or credit risk.14

For the foregoing reason, the 

Commission finds that the proposed 

rule change, as modified by Amendment 

No. 1, is consistent with of the Act and 

the rules and regulations thereunder 

applicable to a national securities 

exchange. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Exchange Act,15

that the proposed rule change (SR– 

NYSEArca–2018–75), as modified by 

Amendment No. 1 be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2018–27407 Filed 12–18–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84819; File No. SR– 

NYSEArca–2018–90] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending the NYSE Arca 

Equities Fees and Charges 

December 13, 2018. 

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 December 

3, 2018, NYSE Arca, Inc. (the 

‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

NYSE Arca Equities Fees and Charges 

(‘‘Fee Schedule’’). The proposed rule 

change is available on the Exchange’s 

website at www.nyse.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend the 

Fee Schedule by increasing the credit 

applicable to the Retail Order Step-Up 

Tier 2, as described below. 

The Exchange currently has a Retail 

Order Step-Up Tier 2 credit of $0.0035 

per share for Retail Orders 4 that provide 

displayed liquidity during the month in 

Tape A, Tape B and Tape C Securities 

that applies to ETP Holders, including 

Market Makers, that provide liquidity an 

average daily share volume per month 

of 1.10% or more of the U.S. CADV, and 

execute an ADV of Retail Orders with a 

time-in-force designation of Day that 

add or remove liquidity during the 

month that is an increase of 0.35% or 

more of the U.S. CADV above their 

April 2018 ADV taken as a percentage 

of U.S. CADV. Retail Orders with a 

time-in-force designation of Day that 

remove liquidity from the Book are not 

charged a fee.5 The Exchange proposes 

to increase the current credit for Retail 

Orders that provide displayed liquidity 

during the month in Tape A, Tape B and 

Tape C Securities to $0.0038 per share. 

The Exchange is not proposing any 

other change to the Retail Order StepUp Tier 2. 

For all other fees and credits, tiered or 

basic rates apply based on a firm’s 

qualifying levels. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,6 in general, and 

furthers the objectives of Sections 

6(b)(4) and (5) of the Act,7 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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Federal Register / Vol. 83, No. 243 / Wednesday, December 19, 2018 / Notices 65191 

8 15 U.S.C. 78f(b)(8). 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(2). 

11 15 U.S.C. 78s(b)(2)(B). 

The Exchange believes that the 

amendment to the Retail Order Step-Up 

Tier 2 is reasonable, equitable and not 

unfairly discriminatory because the 

proposed amendment would apply 

uniformly to all similarly situated ETP 

Holders and Market Makers that send 

orders to the Exchange. The Exchange 

believes providing increased credits for 

Retail Orders that provide displayed 

liquidity in Tape A, Tape B and Tape 

C Securities will incentivize ETP 

Holders to send a greater number of 

such orders to the Exchange and 

therefore provide greater liquidity that 

supports the quality of price discovery 

and promotes market transparency. The 

Exchange further believes that the 

proposed increased credit would create 

an added financial incentive for ETP 

Holders to bring additional retail order 

flow to a public market. The Exchange 

believes that by recalibrating the credits 

for providing liquidity will attract 

additional order flow and liquidity to 

the Exchange, thereby contributing to 

price discovery on the Exchange and 

benefiting investors generally. 

The Exchange believes the Retail 

Order Step-Up Tier 2 is equitable and 

not unfairly discriminatory because it is 

available to all ETP Holders and Market 

Makers on an equal basis and provides 

discounts that are reasonably related to 

the value to the Exchange’s market 

quality associated with higher volumes. 

The Exchange does not believe that it is 

unfairly discriminatory to offer 

increased credits to ETP Holders and 

Market Makers as these participants 

would be subject to additional volume 

requirements. 

The Exchange believes that the 

proposed rule change is equitable and 

not unfairly discriminatory because 

maintaining or increasing the 

proportion of Retail Orders in exchangelisted securities that are executed on a 

registered national securities exchange 

(rather than relying on certain available 

off-exchange execution methods) would 

contribute to investors’ confidence in 

the fairness of their transactions and 

would benefit all investors by 

deepening the Exchange’s liquidity 

pool, supporting the quality of price 

discovery, promoting market 

transparency and improving investor 

protection. This aspect of the proposed 

rule change also is consistent with the 

Act because all similarly situated ETP 

Holders would pay the same rate, as is 

currently the case, and because all ETP 

Holders would be eligible to qualify for 

the rates by satisfying the related 

threshold, where applicable. 

Furthermore, the submission of Retail 

Orders is optional for ETP Holders, in 

that an ETP Holder could choose 

whether to submit Retail Orders and, if 

it does, the extent of its activity in this 

regard. 

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,8 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, the 

Exchange believes that the proposed 

rule change would encourage the 

submission of additional liquidity to a 

public exchange, thereby promoting 

price discovery and transparency and 

enhancing order execution 

opportunities for ETP Holders and 

Market Makers. The Exchange believes 

that this could promote competition 

between the Exchange and other 

execution venues, including those that 

currently offer comparable transaction 

pricing, by encouraging additional 

orders to be sent to the Exchange for 

execution. The Exchange also believes 

that the proposed rule change is 

consistent with the Act because it 

strikes an appropriate balance between 

fees and credits, which will encourage 

submission of orders to the Exchange, 

thereby promoting competition. 

The Exchange notes that it operates in 

a highly competitive market in which 

market participants can readily favor 

competing venues if they deem fee 

levels at a particular venue to be 

excessive or rebate opportunities 

available at 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 to attract 

order flow to the Exchange. 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 believes that the degree to 

which fee changes in this market may 

impose any burden on competition is 

extremely limited. As a result of all of 

these considerations, the Exchange does 

not believe that the proposed changes 

will impair the ability of ETP Holders or 

competing order execution venues to 

maintain their competitive standing in 

the financial markets. 

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) 9 of the Act and 

subparagraph (f)(2) of Rule 19b–4 10

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 11 of the Act to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

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 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2018–90 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE, Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2018–90. 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 (http://www.sec.gov/ 


amozie on DSK3GDR082PROD with NOTICES1
65192 Federal Register / Vol. 83, No. 243 / Wednesday, December 19, 2018 / Notices 

12 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5Options overlying Standard and Poor’s 

Depositary Receipts/SPDRs (‘‘SPY’’) are based on 

the SPDR exchange-traded fund (‘‘ETF’’), which is 

designed to track the performance of the S&P 500 

Index. 

6Transactions executed through Price 

Improvement Period (‘‘PIP’’) and the Complex 

Order Price Improvement Period (‘‘COPIP’’) auction 

mechanisms. All COPIP transactions will be 

charged per contract per leg. 

7See Nasdaq Phlx LLC (‘‘Phlx’’) Pricing Schedule 

Section 3, Part C. Phlx assesses a $0.05 per contract 

fee for all PIXL Initiating Orders in SPY (PIXL is 

Phlx’s price improvement mechanism similar to 

BOX’s PIP mechanism). Further, Phlx assesses a 

$0.38 per contract fee to non-Customers when their 

PIXL Order is contra to an Initiating Order; unless 

the PIXL Order is a Public Customer, in which case 

the fee is $0.00 per contract. Next, the Exchange 

believes the $0.02 per contract Primary 

Improvement Order fee for SPY executions is 

reasonable when compared to Phlx’s fees for similar 

transactions. The Exchange also notes the proposed 

SPY PIP and COPIP Order Fees are identical to the 

PIP and COPIP Order Fees that currently apply to 

all options. The Exchange is simply carving out a 

separate section for all SPY PIP and COPIP 

transactions. 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSEArca–2018–90 and 

should be submitted on or before 

January 9, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2018–27408 Filed 12–18–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84814; File No. SR–BOX– 

2018–36] 

Self-Regulatory Organizations; BOX 

Exchange LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the Fee 

Schedule on the BOX Options Market 

LLC (‘‘BOX’’) Facility To Establish 

Separate Fees and Credits on PIP and 

COPIP Transactions for SPY Options 

December 13, 2018. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on November 

30, 2018, BOX Exchange LLC (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 

Exchange filed the proposed rule change 

pursuant to Section 19(b)(3)(A)(ii) of the 

Act,3 and Rule 19b–4(f)(2) thereunder,4

which renders the proposal effective 

upon filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The Exchange is filing with the 

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

to amend the Fee Schedule on the BOX 

Market LLC (‘‘BOX’’) options facility. 

While changes to the fee schedule 

pursuant to this proposal will be 

effective upon filing, the changes will 

become operative on December 1, 2018. 

The text of the proposed rule change is 

available from the principal office of the 

Exchange, at the Commission’s Public 

Reference Room and also on the 

Exchange’s internet website at http://

boxexchange.com. 

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 

Exchange 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 these 

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 aspects 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 

Section I.B, PIP and COPIP Transactions 

and Section III, Liquidity Fees and 

Credits of the BOX Fee Schedule. 

Specifically, the Exchange proposes to 

establish separate fees and credits on 

PIP and COPIP Transactions for options 

overlying the Standard and Poor’s 

Depositary Receipts Trust (‘‘SPY’’).5

First, the Exchange proposes to 

establish PIP and COPIP Transaction 6

fees for options overlying SPY. 

Specifically, the Exchange proposes a 

$0.05 fee for Professional Customers, 

Broker Dealers and Market Makers for 

SPY PIP or COPIP Orders. Public 

Customers will not be charged for SPY 

PIP or COPIP Orders. The Exchange 

notes that the proposed SPY fees are 

identical to the current PIP and COPIP 

Order fees. For SPY Improvement 

Orders, the Exchange proposes a $0.05 

fee for all account types. For SPY 

Primary Improvement Orders, the 

Exchange proposes to establish a flat per 

contract execution fee of $0.02. 

The Exchange notes that all SPY 

transactions executed through the PIP 

and COPIP auction mechanisms will be 

included in the calculation of Customer 

Volume in Multiply Listed Options 

Classes for purposes of the Primary 

Improvement Order tiered execution fee 

and BOX Volume Rebate in Section I.B 

of the BOX Fee Schedule. However, the 

tiered execution fee and rebates defined 

in Section I.B will not apply to 

executions in SPY. The Exchange 

believes that the proposed fees 

discussed above are reasonable as they 

are similar to another options 

exchange.7

Lastly, the Exchange proposes to 

establish liquidity fees and credits for 

SPY executions in the PIP or COPIP 

auction mechanisms. Currently, in 

Section III.A of the Fee Schedule, a 

Public Customer PIP or COPIP Order 

receives a ‘‘removal’’ credit while the 

corresponding Primary Improvement 

Order and any Improvement Order are 

charged an ‘‘add’’ fee. The Exchange 

proposes a $0.45 fee for all SPY PIP and 

COPIP transactions that add liquidity 

and a $0.45 credit for all SPY COPIP 

and PIP transactions that remove 

liquidity. 


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