[Federal Register Volume 89, Number 12 (Thursday, January 18, 2024)]
[Notices]
[Pages 3473-3476]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-00849]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99327; File No. SR-NYSEARCA-2024-03]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Its 
Schedule of Fees and Charges

January 11, 2024.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on January 10, 2024, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Schedule of Fees and Charges 
(the ``Fee Schedule'') regarding annual fees applicable to Exchange 
Traded Products. The Exchange proposes to implement the fee changes 
effective January 10, 2024.\4\ The proposed rule change is available on 
the Exchange's website at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.
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    \4\ The Exchange previously filed to amend the Fee Schedule on 
December 27, 2023, for January 2, 2024 effectiveness (SR-NYSEARCA-
2023-86), and withdrew such filing on January 10, 2024.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule regarding annual 
fees for Exchange Traded Products (``ETPs'').\5\
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    \5\ ``Exchange Traded Products'' is defined in footnote 3 of the 
current Schedule of Fees and Charges.
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    The proposed change responds to the current extremely competitive 
environment for ETP listings, in which issuers can readily favor 
competing venues or transfer their listings if they deem fee levels at 
a particular venue to be excessive or discount opportunities available 
at other venues to be more favorable. In response to the competitive 
environment for listings, the Exchange proposes to amend the Fee 
Schedule to (1) modify the annual fees for ETPs set forth in the tables 
in Sections 6.a. and 6.b. of the Annual Fee section of the Fee 
Schedule; (2) provide for reduced annual fees for qualifying ETPs; and 
(3) provide for discounted annual fees for fund families with ETPs 
exclusively listed on the Exchange.
    The Exchange proposes to implement the fee changes effective 
January 2, 2024.
Proposed Rule Change
    Annual fees are assessed each January in the first full calendar 
year following the year of listing. Currently, the Exchange's annual 
fees for ETPs are based on the number of shares outstanding per issue 
and then are further differentiated based on whether or not the ETP 
tracks an index, has a maturity date, or provides an expected return 
over a specific outcome period.\6\ The aggregate total shares 
outstanding is calculated based on the total shares outstanding as 
reported by the fund issuer or fund ``family'' in its most recent 
periodic filing with the Commission or other publicly available 
information. Annual fees apply regardless of whether any of these funds 
are listed elsewhere.
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    \6\ See Fee Schedule, ANNUAL FEE (PAYABLE JANUARY IN EACH 
CALENDAR YEAR), Section 6.a. & Section 6.b.
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    Currently, Section 6.a. provides for annual fees as follows for 
ETPs (excluding Managed Fund Shares, Active Proxy Portfolio Shares, 
Managed Trust Securities, and Managed Portfolio Shares) and Exchange-
Traded Fund Shares listed under Rule 5.2-E(j)(8) that track an index, 
have a maturity date, or provide an expected return over a specific 
outcome period:

[[Page 3474]]



------------------------------------------------------------------------
        Number of shares outstanding (each issue)           Annual fee
------------------------------------------------------------------------
Less than 25 million....................................          $7,500
25 million up to 49,999,999.............................          10,000
50 million up to 99,999,999.............................          15,000
100 million up to 249,999,999...........................          20,000
250 million up to 499,999,999...........................          25,000
500 million and over....................................          30,000
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    Section 6.b. sets forth the following annual fees for Managed Fund 
Shares, Managed Trust Securities, Active Proxy Portfolio Shares, 
Managed Portfolio Shares, and Exchange-Traded Fund Shares listed under 
Rule 5.2-E(j)(8) that do not track an index:

------------------------------------------------------------------------
        Number of shares outstanding (each issue)           Annual fee
------------------------------------------------------------------------
Less than 25 million....................................         $10,000
25 million up to 49,999,999.............................          12,500
50 million up to 99,999,999.............................          20,000
100 million up to 249,999,999...........................          25,000
250 million and over....................................          30,000
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    As noted above, the Exchange proposes to amend the annual fees 
reflected in Sections 6.a. and 6.b. As proposed, annual fees would 
continue to be based on the number of shares outstanding, but the 
Exchange proposes certain changes to both the number of shares 
outstanding corresponding to each level of annual fee and the annual 
fee amounts. The proposed change is intended to simplify the Fee 
Schedule by largely harmonizing the annual fees set forth in Sections 
6.a. and 6.b. Except for ETPs with fewer than 25 million shares 
outstanding, the Exchange proposes that the annual fees for ETPs listed 
on the Exchange would be the same for ETPs that fall under either 
Section 6.a. or 6.b.
    The Exchange proposes to amend the fees set forth in Section 6.a. 
as follows:

------------------------------------------------------------------------
        Number of shares outstanding (each issue)           Annual fee
------------------------------------------------------------------------
Less than 25 million....................................          $8,500
25 million up to 99,999,999.............................          15,000
100 million up to 199,999,999...........................          25,000
200 million up to 599,999,999...........................          35,000
600 million and over....................................          30,000
------------------------------------------------------------------------

    The Exchange similarly proposes to amend the fees set forth in 
Section 6.b. as below:

------------------------------------------------------------------------
        Number of shares outstanding (each issue)           Annual fee
------------------------------------------------------------------------
Less than 25 million....................................         $10,000
25 million up to 99,999,999.............................          15,000
100 million up to 199,999,999...........................          25,000
200 million up to 599,999,999...........................          35,000
600 million and over....................................          30,000
------------------------------------------------------------------------

    The Exchange believes it is reasonable to continue to differentiate 
between ETPs in Sections 6.a. and 6.b. when an ETP has fewer than 25 
million shares outstanding. The Exchange currently provides for lower 
fees for ETPs under Section 6.a., which are those that track an index, 
have a maturity date, or provide an expected return over a specific 
outcome period, given that such products generally require less 
Exchange resources associated with listing and trading such products 
(e.g., costs related to issuer services, listing administration, 
product development, and regulatory oversight). The Exchange believes 
it is reasonable to retain a comparatively lower listing fee for ETPs 
that track an index, have a maturity date, or provide an expected 
return over a specific outcome period when such products have fewer 
than 25 million shares outstanding, but to otherwise conform annual 
fees in Sections 6.a. and 6.b. to streamline the Fee Schedule.
    The Exchange believes the proposed change would simplify and 
improve the clarity of the Fee Schedule by aligning the annual fees 
applicable to all ETPs, based on the number of outstanding shares. As 
currently, the Exchange proposes that annual fees would generally 
increase as the number of shares outstanding increases. However, the 
Exchange proposes that the annual fee for ETPs with 600 million or more 
shares outstanding would be $30,000 (lower than the annual fee for ETPs 
with 200 million to 599,999,999 shares outstanding), which the Exchange 
believes could further incentivize issuers to list multiple series of 
certain securities on the Exchange. Although the proposed change would, 
in some cases, increase the annual fee for certain ETPs based on the 
number of shares outstanding, the Exchange believes that the proposed 
fees would continue to encourage issuers to list ETPs on the Exchange 
and represents a reasonable effort by the Exchange to respond to the 
competitive environment for ETP listings, particularly in conjunction 
with the incentives proposed below that would offer issuers additional 
opportunities to qualify for lower annual fees.
    The Exchange proposes to offer two new alternative methods through 
which ETPs could qualify for reduced annual fees in new Section 6.c.
    First, proposed Section 6.c.i. would provide that ETPs with at 
least $50 billion in assets under management, at the time the annual 
fee is billed, would be subject to an annual fee of $5,000 (regardless 
of number of shares outstanding).
    Proposed Section 6.c.ii. would provide that ETPs could instead 
qualify for reduced annual fees (as set forth in the table below) by 
achieving certain primary listing market auction volume, measured by 
ADV. For purposes of qualifying for this incentive, ADV would be 
calculated based on combined volume executed in the Exchange's opening 
and closing auctions in the preceding calendar year.

------------------------------------------------------------------------
     Primary listing market ETF auction volume (ADV)        Annual fee
------------------------------------------------------------------------
50,000 shares...........................................         $10,000
75,000 shares...........................................           7,500
100,000 shares..........................................           6,500
150,000 shares..........................................           6,000
200,000 shares..........................................           5,000
------------------------------------------------------------------------

    The Exchange also proposes to add an Exclusive Listing Discount to 
Section 9 (Additional Annual Fee Discounts for Exchange Traded Products 
and Structured Products) of the Fee Schedule.\7\ The Exclusive Listing 
Discount would, as proposed, provide fund families with 50 or more ETPs 
exclusively listed on NYSE Arca with a 12.5% discount off the annual 
fee applicable to each fund. The Exchange further proposes that the 
Exclusive Listing Discount could be combined with the Product Family 
and High Volume Products \8\ discounts already offered in the Fee 
Schedule, but that the discounts together may not exceed a 35% discount 
on annual fees.\9\
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    \7\ See Fee Schedule, ANNUAL FEE (PAYABLE JANUARY IN EACH 
CALENDAR YEAR), Section 9.
    \8\ The Product Family and High Volume Products discounts are 
described in Section 9, subparagraphs (ii) and (iii), respectively.
    \9\ Currently, subparagraph (iv) of Section 9 sets forth various 
limitations on annual fee discounts. Item 1. under subparagraph (iv) 
currently provides that the Product Family and High Volume Products 
discounts may be combined. The Exchange proposes to describe the 
Exclusive Listing Discount in subparagraph (iv) of Section 9 and to 
renumber current subparagraph (iv) to be subparagraph (v). Item 1. 
under new subparagraph (v) of Section 9 would provide for the 
combination of the Exclusive Listing Discount with the Product 
Family and High Volume Products discounts and specify that the 
discounts could not combine to provide more than a 35% discount on 
annual fees.
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    The Exchange believes these proposed discounts on annual fees could 
incentivize issuers to list or transfer to list ETPs on the Exchange, 
thereby promoting competition among exchanges that list ETPs, to the 
benefit of market participants, and, together with the proposed changes 
to annual fees described above, represent an effort by the Exchange to 
compete with other venues that list ETPs.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\10\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\11\ in particular, 
because it provides for the equitable

[[Page 3475]]

allocation of reasonable dues, fees, and other charges among its 
members, issuers and other persons using its facilities and does not 
unfairly discriminate between customers, issuers, brokers or dealers.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4) & (5).
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The Proposed Change Is Reasonable
    As discussed above, the Exchange operates in a highly competitive 
market for the listing of ETPs. Specifically, ETP issuers can readily 
favor competing venues or transfer listings if they deem fee levels at 
a particular venue to be excessive, or discount opportunities available 
at other venues to be more favorable. The Commission has repeatedly 
expressed its preference for competition over regulatory intervention 
in determining prices, products, and services in the securities 
markets. Specifically, in Regulation NMS, the Commission highlighted 
the importance of market forces in determining prices and SRO revenues 
and, also, recognized that current regulation of the market system 
``has been remarkably successful in promoting market competition in its 
broader forms that are most important to investors and listed 
companies.'' \12\
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    \12\ See Regulation NMS, 70 FR at 37499.
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    The Exchange believes that the ongoing competition among the 
exchanges with respect to new listings and the transfer of existing 
listings among competitor exchanges demonstrates that issuers can 
choose different listing markets in response to fee changes. 
Accordingly, competitive forces constrain exchange listing fees. Stated 
otherwise, changes to exchange listing fees can have a direct effect on 
the ability of an exchange to compete for new listings and retain 
existing listings.
    The Exchange's current annual fees for ETPs are based on the number 
of shares outstanding per issuer and provide incentives for issuers to 
list multiple series of certain securities on the Exchange. The 
Exchange believes the proposed changes to the annual fees set forth in 
Sections 6.a. and 6.b. are reasonable because they are intended to 
simplify the Fee Schedule by promoting consistency in the annual fees 
that would apply to all ETPs. The Exchange proposes that, as currently, 
annual fees would generally increase as the number of shares 
outstanding increases (which would continue to reduce the barriers to 
entry and incentivize enhanced competition among issuers of ETPs), but 
proposes to eliminate differences in annual fees based on whether or 
not the ETP tracks an index, has a maturity date, or provides an 
expected return over a specific outcome period, except in the case of 
issues with 25 million shares or fewer outstanding. The Exchange 
believes that retaining this differentiation is reasonable because it 
would continue to reflect that fewer Exchange resources may be needed 
to support the listing and administration of ETPs that track an index, 
have a maturity date, or provide an expected return over a specific 
outcome period as an initial matter, but that such difference is 
generally more significant when there are fewer shares outstanding. The 
Exchange further believes that the proposed changes to annual fees are 
reasonable taken together with the proposed incentives that would offer 
various methods for ETPs to qualify for lower annual fees by achieving 
qualifying levels of assets under management, achieving primary listing 
market auction volume, or exclusively listing on the Exchange.
    The Exchange believes that the proposal would continue to encourage 
issuers to list ETPs on the Exchange, even though it would, in some 
cases, increase the annual fee for certain ETPs and reflects a 
competitive pricing structure designed to incentivize issuers to list 
new products and transfer existing products to the Exchange, which the 
Exchange believes will enhance competition both among ETP issuers and 
listing venues, to the benefit of investors. The Exchange also believes 
the proposed changes are a reasonable effort by the Exchange to respond 
to the current competitive environment in which it operates.
The Proposal Is an Equitable Allocation of Fees
    The Exchange believes the proposal equitably allocates its fees 
among its market participants. In the prevailing competitive 
environment, issuers can readily favor competing venues or transfer 
listings if they deem fee levels at a particular venue to be excessive, 
or discount opportunities available at other venues to be more 
favorable. The Exchange believes that the proposed change is equitable 
because the proposed annual fees would apply uniformly to all similarly 
situated issuers. The Exchange also believes that it is equitable to 
continue to provide for a slightly lower annual fee for ETPs that track 
an index, have a maturity date, or provide an expected return over a 
specific outcome period when such ETPs have a smaller number of shares 
outstanding, to reasonably reflect the difference in Exchange resources 
required to support the listing and administration of such ETPs in 
those circumstances. The proposal is also an equitable allocation of 
fees because all issuers would be eligible to qualify for reduced 
annual fees by meeting the same qualifying criteria. Moreover, the 
proposed fees would be equitably allocated among issuers because 
issuers would continue to qualify for an annual fee under criteria 
applied uniformly to all such issuers. For the same reasons, the 
proposal neither targets nor will it have a disparate impact on any 
particular category of market participant.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, issuers are 
free to list elsewhere if they believe that alternative venues offer 
them better value. The Exchange believes the proposed change is not 
unfairly discriminatory because it is intended to provide for 
simplified annual fees that would generally apply equally to all ETPs 
listed on the Exchange, based on the number of shares outstanding. The 
Exchange believes that it is not unfairly discriminatory to maintain 
certain differentiation in annual fees for ETPs that track an index, 
have a maturity date, or provide an expected return over a specific 
outcome period as an initial matter and those that do not, to reflect 
the difference in Exchange resources required to support the listing 
and administration of such ETPs. The proposed methods through which 
issuer could qualify for reduced annual fees are also not unfairly 
discriminatory, as all issuers would be eligible to qualify for reduced 
annual fees based on the same criteria.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\13\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, as discussed above, the Exchange believes 
that the proposed change would encourage competition by generally 
harmonizing the annual fees for all ETPs listed on the Exchange, 
thereby incentivizing issuers to list such

[[Page 3476]]

products on the Exchange and enhancing competition among issuers and 
listing venues, to the benefit of investors. The Exchange believes that 
the proposed opportunities to qualify for lower annual fees could 
incentivize enhanced competition among issuers of ETPs and could 
encourage issuers to list additional products on the Exchange. The 
proposed rule changes reflect a competitive pricing structure designed 
to incentivize issuers to list and transfer new products on the 
Exchange, which the Exchange believes will enhance competition both 
among ETP issuers and listing venues, to the benefit of investors. As 
noted, the market for listing services is extremely competitive. 
Issuers have the option to list their securities on these alternative 
venues based on the fees charged and the value provided by each listing 
exchange. Because issuers have a choice to list their securities on a 
different national securities exchange, the Exchange does not believe 
that the proposed change imposes a burden on competition.
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    \13\ 15 U.S.C. 78f(b)(8).
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    Intramarket Competition. The proposed change is a competitive 
pricing structure designed to encourage issuers to list and transfer 
ETPs to list on the Exchange. The Exchange believes the proposal would 
enhance competition among ETP issuers, to the benefit of investors. The 
Exchange does not believe the proposed change would burden intramarket 
competition, as it seeks to harmonize the fees for all ETPs listed on 
the Exchange and offer the same opportunities to qualify for reduced 
annual fees to all issuers. Accordingly, the Exchange believes that the 
proposed change would apply to and potentially benefit all issuers 
equally and thus would not impose a disparate burden on competition 
among market participants on the Exchange.
    Intermarket Competition. The Exchange operates in a highly 
competitive listings market in which issuers can readily choose 
alternative listing venues. In such an environment, the Exchange must 
adjust its fees and discounts to remain competitive with other 
exchanges competing for the same listings. The Exchange believes that 
the proposed rule change could enhance competition among ETP listing 
venues by simplifying the annual fees for listing ETPs on the Exchange 
and offering issuers new opportunities to qualify for reduced annual 
fees. The Exchange believes that the proposal is a competitive proposal 
designed to enhance pricing competition among listing venues. Because 
competitors are free to modify their own fees and discounts in 
response, and because issuers may readily adjust their listing 
decisions and practices, the Exchange does not believe its proposed 
change would impose any burden on intermarket competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \14\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \15\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#ef9d9a838ac28c8082828a819b9caf9c8a8cc1888099"><span class="__cf_email__" data-cfemail="1e6c6b727b337d7173737b706a6d5e6d7b7d30797168">[email protected]</span></a>. Please include 
file number SR-NYSEARCA-2024-03 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-NYSEARCA-2024-03. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-NYSEARCA-2024-03 and should 
be submitted on or before February 8, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-00849 Filed 1-17-24; 8:45 am]
BILLING CODE 8011-01-P


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