10368 Federal Register / Vol. 86, No. 32 / Friday, February 19, 2021 / Notices 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37495, 37499 (June 29, 2005) 

(S7–10–04) (Final Rule) (‘‘Regulation NMS’’). 

5See Securities Exchange Act Release No. 61358, 

75 FR 3594, 3597 (January 21, 2010) (File No. S7– 

02–10) (Concept Release on Equity Market 

Structure). 

6See Cboe Global Markets, U.S. Equities Market 

Volume Summary, available at http://

markets.cboe.com/us/equities/market_share/. See 

generally https://www.sec.gov/fast-answers/ 

divisionsmarketregmrexchangesshtml.html. 

7See FINRA ATS Transparency Data, available at 

https://otctransparency.finra.org/otctransparency/ 

AtsIssueData. A list of alternative trading systems 

registered with the Commission is available at 

https://www.sec.gov/foia/docs/atslist.htm. 

8See Cboe Global Markets U.S. Equities Market 

Volume Summary, available at http://

markets.cboe.com/us/equities/market_share/. 

9The terms ‘‘ADV’’ and ‘‘CADV’’ are defined in 

footnote * of the Price List. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91123; File No. SR–NYSE– 

2021–11] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend Its 

Price List 

February 12, 2021. 

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 February 

1, 2021, New York Stock Exchange LLC 

(‘‘NYSE’’ 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

Price List to (1) introduce a new Step 

Up Adding Tier 5, and (2) modify the 

incremental step up tier for 

Supplemental Liquidity Providers 

(‘‘SLPs’’) (‘‘Incremental SLP Step Up 

Tier’’). The Exchange proposes to 

implement the fee changes effective 

February 1, 2021. 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 its 

Price List to (1) introduce a new Step 

Up Adding Tier 5, and (2) modify the 

Incremental SLP Step Up Tier. 

The proposed changes respond to the 

current competitive environment where 

order flow providers have a choice of 

where to direct liquidity-providing 

orders by offering further incentives for 

member organizations to send 

additional displayed liquidity to the 

Exchange. 

The Exchange proposes to implement 

the fee changes effective February 1, 

2021. 

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. In Regulation NMS, the 

Commission highlighted the importance 

of market forces in determining prices 

and SRO revenues and, also, recognized 

that current regulation of the market 

system ‘‘has been remarkably successful 

in promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 4

While Regulation NMS has enhanced 

competition, it has also fostered a 

‘‘fragmented’’ market structure where 

trading in a single stock can occur 

across multiple trading centers. When 

multiple trading centers compete for 

order flow in the same stock, the 

Commission has recognized that ‘‘such 

competition can lead to the 

fragmentation of order flow in that 

stock.’’ 5 Indeed, equity trading is 

currently dispersed across 16 

exchanges,6 31 alternative trading 

systems,7 and numerous broker-dealer 

internalizers and wholesalers, all 

competing for order flow. Based on 

publicly-available information, no 

single exchange has more than 16% 

market share.8 Therefore, no exchange 

possesses significant pricing power in 

the execution of equity order flow. More 

specifically, the Exchange’s market 

share of trading in Tape A, B and C 

securities combined is less than 10%. 

The Exchange believes that the evershifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can move order flow, or discontinue or 

reduce use of certain categories of 

products, in response to fee changes. 

With respect to non-marketable order 

flow that would provide displayed 

liquidity on an Exchange, member 

organizations can choose from any one 

of the 16 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. 

In response to the competitive 

environment described above, the 

Exchange has established incentives for 

its member organizations who submit 

orders that provide liquidity on the 

Exchange. The proposed fee change is 

designed to attract additional order flow 

to the Exchange by incentivizing 

member organizations to submit 

additional displayed liquidity to, and 

quote aggressively in support of the 

price discovery process on, the 

Exchange. 

Proposed Rule Change 

New Step Up Tier 5 Adding Credit 

The Exchange proposes to adopt a 

new ‘‘Step Up Tier 5 Adding Credit’’ 

that would offer incremental credits for 

providing displayed liquidity to the 

Exchange in Tape A securities. 

As proposed, the Exchange would 

provide incremental credits in Tape A 

securities for all orders, other than MPL 

and Non-Displayed Limit Orders, from a 

qualifying member organization’s 

market participant identifier (‘‘MPID’’) 

or mnemonic if the member 

organization has Adding ADV, 

excluding any liquidity added by a 

Designated Market Maker (‘‘DMM’’), 

that is at least 1.00% of Tape A CADV,9

and if the MPID or mnemonic has an 

Adding ADV as a percentage of Tape A 


tkelley on DSKBCP9HB2PROD with NOTICES
Federal Register / Vol. 86, No. 32 / Friday, February 19, 2021 / Notices 10369 

CADV, excluding any liquidity added 

by a DMM, that is: 

• At least two times more than that 

MPID’s or mnemonic’s Adding ADV in 

January 2021 (‘‘Baseline Month’’) as a 

percentage of Tape A CADV, and 

• at least 0.10% of Tape A CADV over 

that MPID’s or mnemonic’s Adding 

ADV in in the Baseline Month as a 

percentage of Tape A CADV. 

A member organizations that meets 

the above requirements would receive a 

$0.0001 incremental credit for an 

increase of at least 0.10% and less than 

0.175% of Tape A CADV over the 

Baseline Month. Member organizations 

would receive a $0.0002 incremental 

credit for an increase of at least 0.175% 

of Tape A CADV over the Baseline 

Month. 

For example, assume a member 

organization has an Adding ADV as a 

percentage of Tape A CADV of 1.10% in 

the billing month, and qualified for an 

Adding Tier 2 credit of $0.0020 per 

share. Further assume that one of the 

member organization’s MPIDs, MPID1, 

had an Adding ADV of 0.25% of Tape 

A CADV. Further assume that MPID1 

has an Adding ADV of 0.10% in the 

Baseline Month. Because that MPID1’s 

Adding ADV was 2.5 times its Baseline 

Month with a step up of 0.15%, MPID1 

would qualify for an incremental credit 

of $0.0001, for a combined credit of 

$0.0021, based on the member 

organization’s Adding Tier 2 credit. 

If in the following billing month the 

member organization again had an 

Adding ADV as a percentage of Tape A 

CADV of 1.10%, and MPID1 had an 

Adding ADV of 0.30% of Tape A CADV, 

for step up in Adding ADV of 0.20% of 

Tape A CADV, MPID 1 would qualify 

for an incremental credit of $0.0002, for 

a combined credit of $0.0022 based on 

the member organization’s Adding Tier 

2 credit. If in the third billing month, 

the member organization had an Adding 

ADV as a percentage of Tape A CADV 

of 0.95%, MPID1would not qualify for 

the Adding Step Up 5 as the member 

organization’s Adding ADV was below 

the 1.0% requirement. 

The purpose of this proposed change 

is to incentivize member organizations 

to increase the liquidity-providing 

orders in the Tape A securities they 

send to the Exchange, which would 

support the quality of price discovery 

on the Exchange and provide additional 

liquidity for incoming orders. As noted 

above, the Exchange operates in a 

competitive environment, particularly 

as it relates to attracting non-marketable 

orders, which add liquidity to the 

Exchange. Because the proposed tier 

requires a member organization’s MPID 

or mnemonic to increase the volume of 

its trades in orders that add liquidity 

over that MPID or mnemonic’s January 

2021 Adding ADV baseline, the 

Exchange believes that the proposed 

credits would provide an incentive for 

all member organizations to send 

additional liquidity to the Exchange in 

order to qualify for them. The Exchange 

does not know how much order flow 

member organizations choose to route to 

other exchanges or to off-exchange 

venues. Based on the profile of 

liquidity-adding firms generally, the 

Exchange believes that additional 

member organizations could qualify for 

the tiered rate under the new 

qualification criteria if they choose to 

direct order flow to, and increase 

quoting on, the Exchange. However, 

without having a view of member 

organization’s activity on other 

exchanges and off-exchange venues, the 

Exchange has no way of knowing 

whether this proposed rule change 

would result in any member 

organization directing orders to the 

Exchange in order to qualify for the new 

tier. 

Incremental SLP Step Up Tier 

Pursuant to the Incremental SLP Step 

Up Tier, the Exchange currently 

provides an incremental credit to a SLP 

in addition to the SLP’s tiered or nontiered credit for adding displayed 

liquidity if the SLP (1) meets the 10% 

average or more quoting requirement in 

an assigned security pursuant to Rule 

107B (quotes of an SLP-Prop and an 

SLMM of the same member organization 

shall not be aggregated) (the ‘‘Quoting 

Requirement’’), and (2) adds liquidity 

for all assigned SLP securities in the 

aggregate (including shares of both an 

SLP-Prop and an SLMM of the same or 

an affiliated member organization) in 

the billing month over the SLP’s adding 

liquidity for all assigned SLP securities 

in the aggregate (including shares of 

both an SLP-Prop and an SLMM of the 

same or an affiliated member 

organization) as a percent of NYSE 

CADV in the second quarter of 2018 or 

the third quarter of 2018, whichever is 

lower, as follows: 

• SLPs that (1) meet the Quoting 

Requirement, and (2) add liquidity for 

all assigned SLP securities in the 

aggregate (including shares of both an 

SLP- Prop and an SLMM of the same or 

an affiliated member organization) of an 

ADV of more than 0.10% of NYSE 

CADV in the billing month over the 

SLP’s adding liquidity for all assigned 

SLP securities in the aggregate 

(including shares of both an SLP-Prop 

and an SLMM of the same or an 

affiliated member organization) as a 

percent of NYSE CADV in the second 

quarter of 2018 or the third quarter of 

2018, whichever is lower, receive an 

incremental credit of $0.0001 per share. 

• SLPs that (1) meet the Quoting 

Requirement, and (2) add liquidity for 

all assigned SLP securities in the 

aggregate (including shares of both an 

SLP-Prop and an SLMM of the same or 

an affiliated member organization) of an 

ADV of more than 0.15% of NYSE 

CADV in the billing month over the 

SLP’s adding liquidity for all assigned 

SLP securities in the aggregate 

(including shares of both an SLP-Prop 

and an SLMM of the same or an 

affiliated member organization) as a 

percent of NYSE CADV in the second 

quarter of 2018 or the third quarter of 

2018, whichever is lower, receive an 

incremental credit of $0.0002 per share. 

• SLPs that (1) meet the Quoting 

Requirement, and (2) add liquidity for 

all assigned SLP securities in the 

aggregate (including shares of both an 

SLP-Prop and an SLMM of the same or 

an affiliated member organization) of an 

ADV of more than 0.25% of NYSE 

CADV in the billing month over the 

SLP’s adding liquidity for all assigned 

SLP securities in the aggregate 

(including shares of both an SLP-Prop 

and an SLMM of the same or an 

affiliated member organization) as a 

percent of NYSE CADV in the second 

quarter of 2018 or the third quarter of 

2018, whichever is lower, receive an 

incremental credit of $0.0003 per share. 

SLPs can only qualify for one of the 

three credits in a billing month. Further, 

the combined SLP credits are currently 

capped at $0.0032 per share in a billing 

month. 

The Exchange proposes to modify the 

second prong of the Incremental SLP 

Step Up Tier by adopting an alternative 

qualification basis for SLPs to qualify 

for the incremental credit. As proposed, 

SLPs would continue to qualify for the 

one of the incremental credits if the SLP 

adds liquidity for all assigned SLP 

securities in the aggregate (including 

shares of both an SLP-Prop and an 

SLMM of the same or an affiliated 

member organization) of an ADV of 

more than 0.10%, 0.15%, or 0.25% of 

NYSE CADV in the billing month over 

the SLP’s adding liquidity for all 

assigned SLP securities in the aggregate 

(including shares of both an SLP-Prop 

and an SLMM of the same or an 

affiliated member organization) as a 

percent of NYSE CADV in either the 

second quarter of 2018, the third quarter 

of 2018 or the month of January 2021, 

whichever is lowest. 

The proposed change, which would 

allow the Exchange to use the lowest or 

more favorable (to the SLP) of the three 

baseline benchmarks, is intended to 


tkelley on DSKBCP9HB2PROD with NOTICES
10370 Federal Register / Vol. 86, No. 32 / Friday, February 19, 2021 / Notices 

10 15 U.S.C. 78f(b). 

11 15 U.S.C. 78f(b)(4) & (5). 

12See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37495, 37499 (June 29, 2005) 

(S7–10–04) (Final Rule) (‘‘Regulation NMS’’). 

13See Securities Exchange Act Release No. 61358, 

75 FR 3594, 3597 (January 21, 2010) (File No. S7– 

02–10) (Concept Release on Equity Market 

Structure). 

allow a greater number of SLPs to 

qualify for the incremental credits. 

The proposed changes are 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,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 

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. 

The Proposed Change Is Reasonable 

As discussed above, the Exchange 

operates in a highly competitive market. 

The Commission has repeatedly 

expressed its preference for competition 

over regulatory intervention in 

determining prices, products, and 

services in the securities markets. In 

Regulation NMS, the Commission 

highlighted the importance of market 

forces in determining prices and SRO 

revenues and, also, recognized that 

current regulation of the market system 

‘‘has been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 12

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.’’ 13

New Step UP Tier 5 Adding Credit 

The new proposed Step Up Tier 5 

Adding Credit is reasonable. 

Specifically, the Exchange believes that 

the proposed Step Up Tier 5 Adding 

Credit would provide an incentive for 

member organizations to send 

additional liquidity providing orders to 

the Exchange in Tape A securities. As 

noted above, the Exchange operates in a 

highly competitive environment, 

particularly for attracting nonmarketable order flow that provides 

liquidity on an exchange. 

The Exchange believes that requiring 

member organization to have Adding 

ADV, excluding any liquidity added by 

a DMM, that is at least 1.00% of Tape 

A CADV, and if the MPID or mnemonic 

has an Adding ADV as a percentage of 

Tape A CADV, excluding any liquidity 

added by a DMM, that is at least two 

times more than that MPID’s or 

mnemonic’s Adding ADV in January 

2021 as a percentage of Tapes A CADV, 

and at least 0.10% of Tape A CADV over 

that MPID’s or mnemonic’s Adding 

ADV in in January 2021 as a percentage 

of Tape A CADV, in order to qualify for 

the proposed Step Up Tier 5 Adding 

Credit is reasonable because it would 

encourage additional displayed 

liquidity on the Exchange and because 

market participants benefit from the 

greater amounts of displayed liquidity 

present on the Exchange. Further, the 

Exchange believes it’s reasonable to 

provide a $0.0001 incremental credit to 

the qualifying MPID or mnemonic for an 

increase of at least 0.10% and less than 

0.175% of Tape A CADV or a $0.0002 

incremental credit if an increase of at 

least 0.175% of Tape A CADV because 

this would encourage individual MPIDs 

or mnemonics of a member organization 

to send orders that provide liquidity to 

the Exchange, thereby contributing to 

robust levels of liquidity, which benefits 

all market participants, and promoting 

price discovery and transparency. Since 

the proposed Step Up Tier 5 would be 

new with a step up requirement, no 

member organization’s MPID or 

mnemonic currently qualifies for the 

proposed pricing tier. As previously 

noted, without a view of member 

organization activity on other exchanges 

and off-exchange venues, the Exchange 

has no way of knowing whether the 

proposed rule change would result in 

any member organization’s MPID or 

mnemonic qualifying for the tier. The 

Exchange believes the proposed credit is 

reasonable as it would provide an 

additional incentive for member 

organization’s MPID or mnemonic to 

direct their order flow to the Exchange 

and provide meaningful added levels of 

liquidity in order to qualify for the 

higher credit, thereby contributing to 

depth and market quality on the 

Exchange. 

Incremental SLP Step Up Tier 

The Exchange believes that providing 

an additional way to qualify for the 

Incremental SLP Step Up Tier is 

reasonable because it would encourage 

additional liquidity on the Exchange 

and because members and member 

organizations benefit from the 

substantial amounts of liquidity that are 

present on the Exchange. The Exchange 

believes the proposed change to adopt 

an alternate baseline benchmark for the 

Incremental SLP Step Up Tier is 

reasonable because it provides existing 

SLPs (including SLPs that are also 

DMMs) with added incentive to bring 

additional order flow to a public market. 

In particular, the Exchange believes that 

making a third alternate baseline 

benchmark available to SLPs would 

provide SLPs with an increased 

opportunity to qualify for the 

incremental credit, and would continue 

to provide an incentive for SLPs to add 

liquidity to the Exchange, to the benefit 

of the investing public and all market 

participants. 

The Proposal Is an Equitable Allocation 

of Fees 

New Step UP Tier 5 Adding Credit 

The Exchange believes that the 

proposed Step Up Tier 5 is equitable 

because the magnitude of the additional 

credit is less than the current Step Up 

Tier 2 credit in Tape A securities. 

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 to the Exchange, thereby 

improving market wide quality and 

price discovery. Since the proposed 

Step Up Tier 5 would be new and 

includes a step up Adding ADV 

requirement, no member organization’s 

MPID or mnemonic currently qualifies 

for it. As noted, without a view of 

member organization activity on other 

exchanges and off-exchange venues, the 

Exchange has no way of knowing 

whether this proposed rule change 

would result in any member 

organization’s MPID or mnemonic 

qualifying for the tier. The Exchange 

believes the proposed credit is 

reasonable as it would provide an 

additional incentive for member 

organization’s MPID or mnemonic to 

direct their order flow to the Exchange 

and provide meaningful added levels of 

liquidity in order to qualify for the 

credit, thereby contributing to depth 

and market quality on the Exchange. 

The proposal neither targets nor will it 

have a disparate impact on any 

particular category of market 

participant. All member organization’s 

MPID or mnemonic that provide 

liquidity could be eligible to qualify for 

the credit proposed in Step Up Tier 5 

if they increase their Adding ADV over 


tkelley on DSKBCP9HB2PROD with NOTICES
Federal Register / Vol. 86, No. 32 / Friday, February 19, 2021 / Notices 10371 

14 15 U.S.C. 78f(b)(8). 15Regulation NMS, 70 FR at 37498–99. 

their own baseline of order flow and the 

member organization meets the 1.0% 

Adding ADV of Tape CADV 

requirement. The Exchange believes that 

offering a step up credit for providing 

liquidity if the step up requirements for 

Tape A securities are met will continue 

to 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 do not presently 

qualify for the adding liquidity credits, 

the proposal will not adversely impact 

their existing pricing or their ability to 

qualify for other credits provided by the 

Exchange. 

Incremental SLP Step Up Tier 

The Exchange believes its proposal to 

offer an alternative way for member 

organizations to qualify for the 

Incremental SLP Step Up Tier equitably 

allocates its fees among its market 

participants. The Exchange is not 

proposing to adjust the amount of the 

Incremental SLP Step Up Tier, which 

will remain at the current level for all 

market participants. Rather, by 

providing an additional alternative way 

for member organizations to qualify for 

the adding credit, the proposal would 

continue to encourage member 

organizations to send orders that 

provide liquidity to the Exchange, 

thereby contributing to robust levels of 

liquidity, which benefits all market 

participants, and promoting price 

discovery and transparency. The 

proposed changes would also encourage 

the submission of additional liquidity to 

a national securities exchange, thereby 

promoting price discovery and 

transparency and enhancing order 

execution opportunities for member 

organizations from the substantial 

amounts of liquidity that are present on 

the Exchange. The proposed changes 

would also encourage the submission of 

additional orders that add liquidity, 

thus providing price improving 

liquidity to market participants and 

increasing the quality of order execution 

on the Exchange’s market, which would 

benefit all market participants. 

Moreover, the proposed changes are 

equitable because they would apply 

equally to all qualifying SLPs that 

submit orders to the NYSE and add 

liquidity to the Exchange. 

The Proposal Is Not Unfairly 

Discriminatory 

New Step Up Tier 5 Adding Credit 

The Exchange believes it is not 

unfairly discriminatory to provide an 

additional per share step up credit, as 

the proposed credit would be provided 

on an equal basis to all member 

organizations and their MPIDs or 

mnemonics that add liquidity by 

meeting the new proposed Step Up Tier 

5’s requirements and would equally 

encourage all member organizations and 

their MPIDs or mnemonics to provide 

additional displayed liquidity on the 

Exchange. As noted, the Exchange 

believes that the proposed credit would 

provide an incentive for member 

organizations and their MPIDs or 

mnemonics to send additional liquidity 

to the Exchange in order to qualify for 

the additional 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. Finally, the 

submission of orders to the Exchange is 

optional for member organizations and 

their MPIDs or mnemonics in that they 

could choose whether to submit orders 

to the Exchange and, if they do, the 

extent of its activity in this regard. 

Incremental SLP Step Up Tier 

The Exchange believes its proposal to 

offer an alternative way for member 

organizations to qualify for the 

Incremental SLP Step Up Tier is not 

unfairly discriminatory because the 

proposal would be provided on an equal 

basis to all member organizations that 

add liquidity by meeting the new 

proposed alternative requirements, who 

would all be eligible for the same credit 

on an equal basis. Accordingly, no 

member organization already operating 

on the Exchange would be 

disadvantaged by this allocation of fees. 

The proposal neither targets nor will it 

have a disparate impact on any 

particular category of market 

participant. The proposal does not 

permit unfair discrimination because 

the qualification criteria would be 

applied to all similarly situated member 

organizations, who would all be eligible 

for the same credit on an equal basis. 

Finally, as noted, the Exchange believes 

the proposal would provide an 

incentive for member organizations to 

continue to send orders that provide 

liquidity to the Exchange, to the benefit 

of all market participants. 

For the foregoing reasons, the 

Exchange believes that the proposal is 

consistent with the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with Section 6(b)(8) of 

the Act,14 the Exchange believes that the 

proposed rule change would not impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Instead, as 

discussed above, the Exchange believes 

that the proposed 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 member organizations. 

As a result, the Exchange believes that 

the proposed change furthers the 

Commission’s goal in adopting 

Regulation NMS of fostering integrated 

competition among orders, which 

promotes ‘‘more efficient pricing of 

individual stocks for all types of orders, 

large and small.’’ 15

Intramarket Competition. The 

proposed changes are designed to attract 

additional order flow to the Exchange. 

The Exchange believes that the 

proposed changes would continue 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 member organizations 

to send orders, thereby contributing to 

robust levels of liquidity, which benefits 

all market participants on the Exchange. 

The current 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 member organizations 

on the same and equal terms, who 

would benefit from the changes on the 

same basis. 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 offexchange 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 offexchange 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. 


tkelley on DSKBCP9HB2PROD with NOTICES
10372 Federal Register / Vol. 86, No. 32 / Friday, February 19, 2021 / Notices 

16 15 U.S.C. 78s(b)(3)(A). 

17 17 CFR 240.19b–4(f)(2). 

18 15 U.S.C. 78s(b)(2)(B). 

19 17 CFR 200.30–3(a)(12). 

1The independent public accountant must be 

qualified and independent in accordance with Rule 

2–01 of Regulation S–X and must be registered with 

the Public Company Accounting Oversight Board 

(‘‘PCAOB’’) if required by the Sarbanes-Oxley Act 

of 2002 (‘‘Sarbanes-Oxley Act’’). See Public Law 

107–204, 116 Stat. 745 (2002); 17 CFR 240.17a– 

5(f)(1). 

2See 17 CFR 240.17a–5(d)(5). 

3See 17 CFR 240.17a–5(m)(3) (stating that on 

written request of any national securities exchange, 

registered national securities association, brokerdealer, or on its own motion, the Commission may 

grant an extension of time or an exemption from 

any of the requirements of Rule 17a–5 either 

unconditionally or on specified terms and 

conditions). 

4See Letter from Kris Dailey, Vice President, 

Office of Financial and Operational Risk Policy, 

FINRA to Michael A. Macchiaroli, Associate 

Director, SEC (February 11, 2021). 

5See id. at 2. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 16 of the Act and 

subparagraph (f)(2) of Rule 19b–4 17

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

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) 18 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– 

NYSE–2021–11 on the subject line. 

Paper Comments 

• 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–NYSE–2021–11. 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/ 

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–NYSE–2021–11 and should 

be submitted on or before March 12, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–03340 Filed 2–18–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91128] 

Order Extending the Annual Reports 

Filing Deadline for Certain Smaller 

Broker-Dealers 

February 12, 2021. 

I. Introduction 

Broker-dealers registered with the 

U.S. Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

are generally required to file with the 

Commission, within 60 calendar days 

after the end of the fiscal year of the 

broker-dealer, a financial report and 

either a compliance report or exemption 

report, along with reports prepared by 

an independent public accountant 1

covering the financial report and, as 

applicable, the compliance or 

exemption report (collectively the 

‘‘annual reports’’).2 Pursuant to 

paragraph (m)(3) of Exchange Act Rule 

17a–5 (‘‘Rule 17a–5’’), the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) has requested that the 

Commission extend by 30 calendar days 

the deadline for certain smaller brokerdealers to file the annual reports.3 This 

order grants such an extension to certain 

smaller broker-dealers, subject to the 

conditions described in section III 

below. 

II. Discussion 

A. FINRA’s Request 

In a letter dated February 11, 2021, 

FINRA requested that the Commission 

issue an order pursuant to paragraph 

(m)(3) of Rule 17a–5 to extend by 30 

calendar days the deadline for certain 

smaller broker-dealers to file their 

annual reports.4 In FINRA’s request, it 

indicated that it had been informed by 

smaller broker-dealers and auditors that 

permitting an additional 30 days for 

filing of the annual reports may help to 

reduce the burdens in obtaining audit 

services by providing an expanded time 

frame for the completion of such audits 

thereby easing the availability of 

auditors.5 FINRA stated in the letter that 

the fiscal year for most broker-dealers 

ends on the last calendar day of the year 

(December 31), which results in the 

greatest demand for audit services in the 

60 calendar days following that date. 

Further, much of the work required to 

complete these audits is performed after 

the broker-dealer files the final FOCUS 

Report (Form X–17A–5 Part II or IIA) for 

the audit year, which is due to be filed 

with the Commission 17 business days 

after the end of the prior month (i.e., 

January 27 for broker-dealers with 

December 31 fiscal year ends). As a 

result, the required audit work is 

conducted within a compressed period 

when audit services are in greatest 

demand and the availability of 

independent public accountants and 


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