[Federal Register Volume 89, Number 18 (Friday, January 26, 2024)]
[Notices]
[Pages 5285-5295]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01508]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99406; File No. SR-NYSE-2024-04]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Price List

January 22, 2024.
    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 January 12, 2024, 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.
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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 Price List to (1) offer credits 
to member organizations providing non-displayed liquidity in Tape A, B, 
and C securities with a per share stock price below $1.00; (2) modify 
the requirements and charges for D Orders above the first 750,000 
average daily volume (``ADV'') of aggregate executions at the close 
last modified in the last 3 minutes before the scheduled close of 
trading and make a non-substantive conforming change in the same 
section of the Price List; (3) offer additional monthly rebates and 
incentives for Designated Market Maker (``DMM'') units with 150 or 
fewer assigned securities; (4) eliminate underutilized fees for 
transactions designated with a Retail Modifier as defined in Rule 13 
(``Retail Modifier''); and (5) modify the rates for routing to NYSE 
American LLC in Tape B and C securities below $1.00. The Exchange 
proposes to implement the rule change on January 12, 2024. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Price List to (1) offer credits 
to member organizations providing non-displayed liquidity in Tape A, B, 
and C securities with a per share stock price below $1.00; (2) modify 
the requirements and charges for D orders above the first

[[Page 5286]]

750,000 ADV of aggregate executions at the close last modified in the 
last 3 minutes before the scheduled close of trading and make a non-
substantive conforming change in the same section of the Price List; 
(3) offer an additional monthly rebate and incentive for DMM units with 
150 or fewer assigned securities; (4) eliminate underutilized fees for 
transactions designated with a Retail Modifier; and (5) modify the 
rates for routing to NYSE American LLC (``NYSE American'') in Tape B 
and C securities below $1.00.
    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 liquidity to the Exchange, including 
an additional incentive to smaller DMM units to increase quoting on the 
Exchange.
    The Exchange proposes to implement the rule change on January 12, 
2024.\4\
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    \4\ The Exchange originally filed to amend the Price List on 
January 2, 2024 (SR-NYSE-2024-01). SR-NYSE-2024-01 was withdrawn on 
January 12, 2024 and replaced by this filing.
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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.'' \5\
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    \5\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7-10-04) (Final 
Rule) (``Regulation NMS'').
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    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.'' \6\ Indeed, cash equity trading is currently dispersed 
across 16 exchanges,\7\ numerous alternative trading systems,\8\ and 
broker-dealer internalizers and wholesalers, all competing for order 
flow. Based on publicly-available information, no single exchange 
currently has more than 17% market share.\9\ Therefore, no exchange 
possesses significant pricing power in the execution of cash 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 12%.\10\
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    \6\ 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).
    \7\ See Cboe U.S Equities Market Volume Summary, available at 
https://markets.cboe.com/us/equities/market_share. See generally 
https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \8\ See 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.
    \9\ See Cboe Global Markets U.S. Equities Market Volume Summary, 
available at https://markets.cboe.com/us/equities/market_share/.
    \10\ See id.
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    The Exchange believes that the ever-shifting 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. 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 the firm routes order flow. Accordingly, competitive forces 
compel the Exchange to use exchange transaction fees and credits 
because market participants can readily trade on competing venues if 
they deem pricing levels at those other venues to be more favorable.
    In response to this competitive environment, the Exchange has 
established incentives for member organizations who submit orders that 
provide liquidity on the Exchange. The Exchange has also established 
incentives for DMM units to quote at specified levels. The proposed fee 
change is designed to encourage market maker quoting by offering 
additional incentives to smaller DMM units to increase quoting on the 
Exchange.
Proposed Rule Change
    The Exchange proposes to offer credits to member organizations 
providing non-displayed liquidity in Tape A, B, and C securities with a 
per share stock price below $1.00. The Exchange also proposes to modify 
the requirements and charges for D Orders above the first 750,000 ADV 
of aggregate executions at the close last modified in the last 3 
minutes before the scheduled close of trading and to provide an 
additional monthly rebate and incentive for DMM units with 150 or fewer 
assigned securities based on time at the National Best Bid (``NBB'') 
and National Best Offer (``NBO,'' together the ``NBBO'') in the 
applicable security in the applicable month. The Exchange further 
proposes to eliminate underutilized fees for transactions designated 
with a Retail Modifier as defined as defined in Rule 13 and to make 
non-substantive conforming changes. Finally, the Exchange proposes to 
modify the rates for routing to NYSE American in securities below $1.00 
to 0.08% of total dollar value of the transaction.
Credits for Non-Displayed Limit Orders
    The Exchange currently provides a $0.0010 credit to member 
organizations that send orders that add liquidity to the Exchange in 
Non-Displayed Limit Orders and that have Adding ADV \11\ in Non-
Displayed Limit Orders that is at least 0.12% of Tapes A, B, and C CADV 
combined, excluding any liquidity added by a DMM. The Exchange proposes 
that member organizations sending orders that add liquidity to the 
Exchange in Non-Displayed Limit Orders and that have Adding ADV in Non-
Displayed Limit Orders that is at least 0.12% of Tapes A, B, and C CADV 
combined, excluding any liquidity added by a DMM, would also be 
eligible for a credit equal to 0.10% of the total dollar value of the 
transaction for securities with a per share stock price below $1.00. In 
addition, the Exchange proposes to designate this credit as ``Non 
Display Tier 2.''
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    \11\ Footnote 2 to the Price List defines ADV as ``average daily 
volume'' and ``Adding ADV'' as ADV that adds liquidity to the 
Exchange during the billing month.
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    Similarly, the Exchange currently provides a $0.0018 credit to 
member organizations that send orders that add liquidity to the 
Exchange in Non-Displayed Limit Orders and that have Adding ADV in Non-
Displayed Limit Orders that is at least 0.15% of Tapes A, B, and C CADV 
combined, excluding any liquidity added by a DMM. The Exchange proposes 
that member organizations sending orders that add liquidity to the 
Exchange in Non-Displayed Limit Orders and that have Adding ADV in Non-
Displayed Limit Orders that is at least 0.15% of Tapes A, B, and C CADV 
combined, excluding any liquidity added by a DMM, would also be 
eligible for a credit equal to 0.18% of the total dollar value of the 
transaction for securities with a per share stock price below $1.00. In

[[Page 5287]]

addition, the Exchange proposes to designate this credit as ``Non 
Display Tier 1.''
    In addition, as described more fully below, member organizations 
operating a DMM unit would be eligible for Non Display Tier 1 and 2 
credits for Non Display Limit Order volume sent to the Exchange on all 
Tapes when the DMM unit meets the incentive quoting requirements 
described in the Small DMM Incentive section of the Price List.
    The following example demonstrates operation of the Non Display 
Tier credits as modified by the proposal.
    Assume Member Organization A has Adding ADV in Non-Displayed Limit 
Orders of 14 million shares in Tape A, B and C securities, in a month 
where Tape A, B and C CADV is a combined 10 billion shares. Member 
Organization A would thus have Adding ADV in Non-Displayed Limit Orders 
of 0.14% of Tapes A, B, and C CADV combined, and would qualify for the 
credits under Non Display Tier 2 for the qualifying 14 million shares 
of Non-Displayed Limit Orders. Further, assume that 4 million of Member 
Organization A's 14 million Adding ADV was in securities with a per 
share stock price below $1.00. As a result, that 4 million Adding ADV 
would receive a credit equal to 0.10% of the total dollar value of the 
transaction, and the remaining 10 million ADV would receive a credit of 
$0.0010 per share for securities with a per share stock price of $1.00 
or more.
    The purpose of the proposed changes to credits for non-displayed 
orders is to incentivize member organizations to increase the 
liquidity-providing Non-Displayed Limit Orders in the Tapes A, B and C 
securities with a per share stock price below $1.00 that they send to 
the Exchange, which would improve liquidity on the Exchange and provide 
additional price improvement opportunities for incoming orders. The 
Exchange believes that by correlating the amount of the credit to the 
level of orders sent by a member organization that adds non-displayed 
liquidity, the Exchange's fee structure would incentivize member 
organizations to submit more of those orders that add liquidity to the 
Exchange, thereby increasing the potential for price improvement to 
other incoming marketable orders. The Exchange does not know how much 
order flow member organizations choose to route to other exchanges or 
to off-exchange venues. There are currently 1-2 member organizations 
that could qualify for the proposed credits based on their current 
trading profile 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 credit in sub-dollar 
securities.
D Orders at the Close
    Currently, the Exchange does not charge member organizations for 
the first 750,000 ADV of the aggregate of executions at the close for D 
Orders, Floor broker executions swept into the close, including verbal 
interest, and executions at the close, excluding market at-the-close 
(``MOC'') Orders, limit at-the-close (``LOC'') Orders and Closing 
Offset (``CO'') Orders. In 2020, the ability of Floor brokers to 
represent verbal interest intended for the Closing Auction was 
eliminated.\12\ The Exchange accordingly proposes to delete the phrase 
``including verbal interest'' from this section of the Price List as 
obsolete.
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    \12\ See Securities Exchange Act Release No. 92480 (July 23, 
2021), 86 FR 40885 (July 29, 2021) (SR-NYSE-2020-95) (Notice of 
Filing of Amendment No. 2 and Order Granting Accelerated Approval of 
Proposed Rule Change, as Modified by Amendment No. 2, To Make 
Permanent Commentaries to Rule 7.35A and Commentaries to Rule 7.35B 
and To Make Related Changes to Rules 7.32, 7.35C, 46B, and 47).
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    Further, the Exchange currently charges certain fees differentiated 
by time of entry (or last modification) for D Orders at the close after 
the first 750,000 ADV of aggregate of executions at the close by a 
member organization. Specifically, the Exchange currently charges 
$0.0008 per share for executed D Orders last modified in the last 3 
minutes before the scheduled close of trading for firms in MOC/LOC 
Tiers 1 and 2, both with Adding ADV of at least 0.50% of Tape A CADV; 
all other firms are charged $0.0010 per share.
    The Exchange proposes to add an alternative way to qualify for the 
$0.0008 per share fee for executed D Orders last modified in the last 3 
minutes before the scheduled close of trading. As proposed, member 
organizations in MOC/LOC Tiers 1, 2 or 3 that have Adding ADV of at 
least 1.05% of Tape A CADV would also be eligible for the $0.0008 per 
share fee.
    In addition, the Exchange proposes a new fee of $0.0009 for 
executed D Orders last modified in the last 3 minutes before the 
scheduled close of trading for member organizations in MOC/LOC Tiers 1, 
2 and 3 and that have Adding ADV of at least 0.65% of Tape A CADV.
    All other member organizations with executed D Orders last modified 
in the last 3 minutes before the scheduled close of trading would 
continue to be charged the current rate of $0.0010.
    The purpose of this change is to continue to encourage additional 
liquidity provision on the Exchange both during the trading day and in 
the Closing Auction. The Exchange believes that it is reasonable to 
offer member organizations in MOC/LOC Tiers 1, 2 and 3 2 differentiated 
fees based on the percentage of Adding ADV of Tape A CADV because it 
would encourage member organizations to direct their liquidity-
providing orders in Tape A securities to the Exchange, as well as 
encourage greater marketable and other liquidity at the closing 
auction. The Exchange believes that providing an alternative way for 
member organizations to qualify for lower fees for executed D Orders 
last modified in the last 3 minutes before the scheduled close of 
trading as proposed will allow a greater number of member organizations 
to qualify for the lower fees, and will incentivize more member 
organizations to send adding liquidity to the Exchange, which in turn 
supports the quality of price discovery on the Exchange.
Small DMM Incentive
    The Exchange currently pays DMM units with 150 or fewer assigned 
securities a monthly rebate based on the number of assigned securities 
and time at the NBBO in the applicable security in the applicable 
month. The rebate is payable for each security assigned to such a DMM 
in the previous month (regardless of whether the stock price exceeds 
$1.00) for which that DMM provides quotes at the NBBO at least 15% of 
the time in the applicable month, defined in the Price List as the 
``Incentive Quoting Requirement'').\13\ This monthly rebate is in 
addition to the rate on transactions and is be prorated to the number 
of trading days in a month that an eligible security is assigned to a 
DMM.
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    \13\ For purposes of the Price List, DMM NBBO Quoting means DMM 
quoting at the NBBO. See NYSE Price List, General, third bullet, 
available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf. Time at the NBBO or ``inside'' is calculated as 
the average of the percentage of time the DMM unit has a bid or 
offer at the inside. Reserve or other non-displayed orders entered 
by the DMM are not included in the inside quote calculations.
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    The Exchange propose an additional monthly rebate for DMM units 
with 150 or fewer assigned securities in the previous month for 
assigned securities payable per symbol in securities where qualified 
DMMs quote at the NBBO 25% of the time. The new proposed incentive 
quoting requirement would be defined

[[Page 5288]]

in the Price List as ``Incentive Quoting Requirement 2'' and the 
current incentive quoting requirement would be re-named ``Incentive 
Quoting Requirement 1.'' Conforming changes would also be made to the 
Price List. In addition, the Exchange would delete ``at least'' before 
``15% of the time'' in the current incentive quoting requirement as 
unnecessary in light of the proposed incentives for quoting at the NBBO 
25% of the time. In addition, the Exchange proposes an alternative way 
for member organizations that operate DMM units of a certain size to 
qualify for the Non-Display Tiers described above as modified by this 
proposal.
    As proposed, a DMM unit that has at least 1 and not more than 24 
assigned securities that meets proposed Incentive Quoting Requirement 2 
would be eligible for a monthly rebate of $250 per qualifying symbol.
    A DMM unit that has a least 25 and no more than 74 assigned 
securities that meets Incentive Quoting Requirement 1 or 2 would be 
eligible for a monthly rebate of $1,250 per symbol that qualifies for 
Incentive Quoting Requirement 2, instead of the current $500 per symbol 
credit, and symbols qualifying for Incentive Quoting Requirement 1 
would receive $500 per symbol credit. In addition, the Exchange 
proposes that a member organization that operates a DMM unit that has a 
least 25 and no more than 74 assigned securities meeting these 
requirements would qualify for proposed ``Non Display Tier 2'' as 
described above.
    Finally, a DMM unit that has at least 75 but no more than 150 
assigned securities that meets Incentive Quoting Requirement 1 or 2 
would be eligible for a monthly rebate of $1,500 per symbol that 
qualifies for Incentive Quoting Requirement 2, instead of the current 
$1,000 per symbol credit, and symbols qualifying for Incentive Quoting 
Requirement 1 would receive $1,000 per symbol credit. In addition, the 
Exchange proposes that such that a member organization that operates a 
DMM unit that has a least 75 and no more than 150 assigned securities 
meeting these requirements would be eligible for proposed ``Non Display 
Tier 1'' as described above.
    For example, assume DMM unit A has 35 assigned securities. Further 
assume the DMM quotes at the NBBO 25% of the time in 30 of those 
assigned securities and quotes at the NBBO 15% of the time in the 
remaining 5 assigned securities. For a billable month in those 30 
assigned securities that meet the Incentive Quoting Requirement 2, DMM 
unit A would receive a per qualified symbol credit of $1,250, with a 
total combined credit of $37,500 (30 securities x $1,250). In addition, 
for the billable month in the 5 assigned securities that meet current 
Incentive Quoting Requirement 1, DMM unit A would receive a per 
qualified symbol credit of $500, with a total combined credit of $2,500 
(5 securities x $500). In addition, the member organization operating 
such a qualifying DMM unit A would be eligible for a $0.0010 credit and 
the proposed credit equivalent to 0.10% of the total dollar value of 
the transaction for securities with a per share stock price below $1.00 
under Non Display Tier 2 credits for that member organization's Non 
Display Limit Order volume in all Tapes.
    The proposed rule change is designed to provide smaller market 
makers (i.e., DMM units with 150 or fewer assigned securities) with an 
added incentive to quote in their assigned securities at the NBBO at 
least 25% of the time in a given month and increase SLP displayed 
adding volume. As described above, member organizations have a choice 
of where to send order flow. The Exchange believes that incentivizing 
DMM units on the Exchange to quote at the NBBO more frequently could 
attract additional orders to the Exchange and contribute to price 
discovery which benefits all market participants. In addition, 
additional liquidity-providing quotes benefit all market participants 
because they provide greater execution opportunities on the Exchange 
and improve the public quotation.
    Moreover, the Exchange believes the proposed change could have the 
added benefit of attracting additional DMM units to the Exchange by 
providing an incentive for member organizations that operate a DMM unit 
to qualify for the Non-Display Tiers rates as modified by this 
proposal. The Exchange believes that eligibility for the Non Display 
Tier rates for member organizations that operate a DMM unit with a 
certain number of registrations that meet the incentive quoting 
requirements is not unfairly discriminatory because member 
organizations that do not operate a DMM unit can still qualify for the 
Non-Display Tiers rates by sending adding liquidity to the Exchange and 
meeting the ADV requirements set out in the Price List.
    Currently, the Exchange has three DMM units, only one of which has 
fewer than 150 assigned securities and therefore could qualify for the 
rebate.\14\ The Exchange cannot predict with certainty whether and how 
many member organizations would avail themselves of the opportunity to 
become an Exchange DMM unit and qualify for the proposed tiers. 
However, the Exchange believes that the proposed additional rebate for 
higher quoting in assigned securities, along with the proposed rebate 
for adding non-displayed liquidity for member organizations that 
operate a qualifying DMM unit, could incentivize additional firms to 
become DMM units on the Exchange by increasing incentives for new and 
smaller entrants. The Exchange notes that the small DMM incentive 
currently includes an incentive for non-DMM adding liquidity (e.g., SLP 
Minimum Add Credit).
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    \14\ In contrast, there are 14 competing Lead Marker Makers on 
NYSE Arca, Inc. (``NYSE Arca''). See https://www.nyse.com/markets/nyse-arca/membership.
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Deletion of Underutilized Fees for Orders With a Retail Modifier
    In May 2021, the Exchange introduced a fee of $0.0005 for 
executions at the open designated with a Retail Modifier as defined in 
Rule 13.1.\15\ In addition, the Exchange introduced a $0.0008 fee per 
share for MOC and LOC Orders with a Retail Modifier, unless a lower 
tiered fee applies.\16\ The purpose of the change was to incentivize 
member organizations to submit additional displayed retail liquidity to 
the Exchange.
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    \15\ As Rule 13 makes clear, orders with a ``retail'' modifier 
are separate and distinct from a ``Retail Order'' under Rule 7.44. 
The Exchange proposes to relocate the definition of Retail Modifier 
to the section of the Price List setting forth the fee for MPL 
orders that remove liquidity from the NYSE immediately following the 
section setting forth the rates for executions at the close.
    \16\ See Securities Exchange Act Release No. 91948 (May 20, 
2021), 86 FR 28399 (May 26, 2021) (SR-NYSE-2021-33).
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    The Exchange proposes to eliminate and remove both fees per share 
and the associated requirements. The fees have been underutilized by 
member organizations insofar as they have not encouraged member 
organizations to increase their retail liquidity volume in response to 
these lower fees as the Exchange had anticipated it would since the 
fees were adopted. The Exchange does not anticipate that any additional 
member organization in the near future would increase their retail 
liquidity volume in response to either fee that is the subject of this 
proposed rule change.
Routing Fees to NYSE American for Tape B and C Securities Below $1.00
    Currently, the Exchange charges a fee of $0.0005 per share for 
executions in securities with a price below $1.00 that route to and 
execute in an NYSE American auction and 0.30% of total dollar value of 
the transaction for all

[[Page 5289]]

other orders routed to and executed on NYSE American (i.e., non-
auction).
    The Exchange proposes to charge a fee equivalent to 0.08% of total 
dollar value of the transaction for all orders in securities below 
$1.00 that route to NYSE American (i.e., both auction and non-
auction).\17\ The proposed fee is intended to simplify the Price List 
by charging one rate for both types of executions routed to NYSE 
American. The Exchange notes that the fee of 0.008% is at or lower than 
other routing fees charged by other Exchanges for securities with a 
price below $1.00.\18\
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    \17\ The Exchange would also add a missing period at the end of 
the preceding full paragraph after the word ``combined.''
    \18\ For example, NYSE Arca charges a routing fee of 0.35% of 
the dollar value of the transaction for securities below $1.00. See 
https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf, at 3.
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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,\19\ in general, and furthers the 
objectives of sections 6(b)(4) and 6(b)(5) of the Act,\20\ 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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    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(4) & (5).
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The Proposed Change Is Reasonable
    In light 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 Exchange believes the proposed 
change is also reasonable because it is designed to attract higher 
volumes of orders transacted on the Exchange by member organizations by 
aligning incentives for trading both on the close and intraday, which 
would benefit all market participants by offering greater price 
discovery and an increased opportunity to trade on the Exchange, both 
intraday and during the closing auction.
Credits for Non-Displayed Limit Orders
    As described 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. 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.'' \21\
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    \21\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7-10-04) (Final 
Rule) (``Regulation NMS'').
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    The Exchange believes that the ever-shifting 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 liquidity on the Exchange, member 
organizations can choose from any one of currently operating registered 
exchanges to route such order flow. Accordingly, competitive forces 
constrain exchange fees that relate to providing incentives for such 
order flow. Given this competitive environment, the proposal to offer 
tiered credits for member organizations providing non-displayed 
liquidity in Tape A, B, and C securities with a per share stock price 
below $1.00 equal to a percentage of the total dollar value of the 
transaction for those securities is a reasonable means to improve 
opportunities for price improvement, attract additional order flow to a 
public market, and enhance execution opportunities for member 
organizations on the Exchange, to the benefit of all market 
participants.
D Orders at the Close
    The Exchange believes that charging different rates for D Orders 
that execute in the close based on time of entry or last modification 
encourages all member organizations to enter or modify d-Quotes as 
early possible, beginning with as early as 25 minutes before the close 
of trading, in order to build up liquidity going into the closing 
auction. Further, it is reasonable to charge member organizations a 
higher rate for entering or modifying their interest in the final 
minutes of regular trading hours because such interest most benefits 
from the flexibility afforded the order type.
    The Exchange believes that offering an alternative way to qualify 
for the $0.0008 per share fee for executed D Orders last modified in 
the last 3 minutes before the scheduled close of trading and a new fee 
of $0.0009 for member organizations in MOC/LOC Tiers 1, 2 and 3 and 
that have Adding ADV of at least 0.65% of Tape A CADV is reasonable 
because the proposed change would encourage greater marketable and 
other liquidity at the closing auction, and encourage better liquidity 
and price discovery during the trading day.
Small DMM Incentive
    The Exchange believes that offering DMMs with 150 or fewer assigned 
securities an additional monthly rebate for assigned securities payable 
per symbol in securities where qualified DMMs quote at the NBBO 25% of 
the time, as well as making them eligible for the Non Display Tier 1 
and 2 is a reasonable means to improve market quality, attract 
additional order flow to a public market, and enhance execution 
opportunities for member organizations on the Exchange, to the benefit 
of all market participants. The Exchange notes that the proposal would 
also foster liquidity provision and stability in the marketplace and 
further reduce smaller DMM's reliance on transaction fees. The proposal 
would also reward DMM units, who have greater risks and heightened 
quoting and other obligations than other market participants. The 
proposed change is also a reasonable attempt to potentially attract 
additional DMM units to the Exchange by providing additional financial 
incentives for smaller firms to become DMM units.
Deletion of Underutilized Fees for Orders With a Retail Modifier
    The Exchange believes that the proposed elimination of the 
underutilized fees for orders designated with a Retail Modifier is 
reasonable because member organizations have underutilized these fees. 
As noted, the fees have been underutilized by member organizations 
insofar as they have not encouraged member organizations to increase 
their retail liquidity in response to these lower fees as the Exchange 
had anticipated it would since they were adopted . The Exchange does 
not anticipate that any additional member organization in the near 
future would increase their retail liquidity in response to either fee 
that is the subject of this proposed rule change. The Exchange believes 
it is reasonable to eliminate fees when such incentives become 
underutilized. The Exchange also believes eliminating underutilized 
incentives would add clarity and transparency to the Price List.

[[Page 5290]]

Routing Fees to NYSE American for Tape B and C Securities Below $1.00
    The Exchange believes that its proposed routing fee of 0.08% of 
total dollar value of the transaction for orders that route to NYSE 
American is reasonable because the fee would be comparable to the 
current fee of $0.0005 per share for orders that route to the 
Exchange's affiliate NYSE American. Moreover, the proposed fee would be 
consistent with or lower than fees charged on other exchanges.\22\ The 
Exchange notes that operates in a highly competitive market in which 
market participants can readily select between various providers of 
routing services with different product offerings and different 
pricing.
---------------------------------------------------------------------------

    \22\ See note 17, supra.
---------------------------------------------------------------------------

The Proposal Is an Equitable Allocation of Fees
    The Exchange believes the proposal equitably allocates fees and 
credits among market participants because all member organizations that 
participate on the Exchange 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.
Credits for Non-Displayed Limit Orders
    The Exchange believes the proposal equitably allocates its fees 
among its market participants by fostering liquidity provision and 
stability in the marketplace. The Exchange believes that the proposed 
tiered credits for member organizations adding non-displayed liquidity 
in Tape A, B, and C securities with a per share stock price below $1.00 
is equitable because the proposed credits would create incentives for 
adding greater liquidity and providing price improvement. The Exchange 
believes the proposed rule change would attract more liquidity to the 
Exchange, thereby improving market-wide liquidity.
D Orders at the Close
    The Exchange believes that offering an alternative way to qualify 
for the $0.0008 per share fee for executed D Orders last modified in 
the last 3 minutes before the scheduled close of trading and a new fee 
of $0.0009 for member organizations in MOC/LOC Tiers 1, 2 and 3 and 
that have Adding ADV of at least 0.65% of Tape A CADV is not unfairly 
discriminatory because the proposed change would encourage greater 
marketable and other liquidity at the closing auction. Moreover, the 
proposed fees are equitable because all similarly situated member 
organizations will be subject to the same fee structure, which will 
automatically adjust based on prevailing market conditions.
Small DMM Incentive
    The Exchange believes the proposal equitably allocates its fees 
among its market participants by fostering liquidity provision and 
stability in the marketplace and reducing smaller DMM's reliance on 
transaction fees. Moreover, the proposal is an equitable allocation of 
fees because it would reward DMM units for their increased risks and 
heightened quoting and other obligations. As such, it is equitable to 
offer smaller DMM units an additional flat, per security credit for 
orders that add liquidity. The proposed rebate is also equitable 
because it would apply equally to any DMM unit of a certain size. In 
addition, the proposed alternative way for member organizations that 
operate a DMM unit to qualify for the Non Display Tier rebates is 
equitable because a member organization that would not qualify for the 
rebates operation of a DMM unit with a certain number of registrations 
that meet the incentive quoting requirements would have the ability to 
qualify for the rebates based on adding volume in Non-Displayed Limit 
Orders in Tapes A, B and C as set forth under the modified 
qualification criteria.
    The Exchange notes that at this time there is currently only one 
DMM unit that could qualify for the proposed rebate based on its number 
of assigned securities. The Exchange believes that the proposal would 
provide an equal incentive to any member organization to maintain a DMM 
unit, and that the proposal constitutes an equitable allocation of fees 
because all similarly situated member organizations would be eligible 
for the same rebate.
Deletion of Underutilized Fees for Orders With a Retail Modifier
    The Exchange believes the proposal equitably allocates fees among 
its market participants because the underutilized fees the Exchange 
proposes to eliminate would be eliminated in their entirety, and would 
no longer be available to any member organization in any form. 
Similarly, the Exchange believes the proposal equitably allocates fees 
among its market participants because elimination of the underutilized 
fees would apply to all similarly-situated member organizations that 
send orders, including MOC and LOC orders, to the Exchange with a 
Retail Modifier on an equal basis. All such member organizations would 
continue to be subject to the same fee structure, and access to the 
Exchange's market would continue to be offered on fair and 
nondiscriminatory terms.
Routing Fees to NYSE American for Tape B and C Securities Below $1.00
    The Exchange believes its proposal equitably allocates its fees 
among market participants. The Exchange believes that the proposal 
represents an equitable allocation of fees because it would apply 
uniformly to all member organizations that route orders in securities 
below $1.00 to NYSE American, and each such member organization would 
be charged the proposed fee when utilizing the functionality. Without 
having a view of member organizations' activity on other exchanges and 
off-exchange venues, the Exchange has no way of knowing whether the 
proposed fee would result in any member organization from reducing or 
discontinuing its use of the routing functionality. Moreover, the 
proposed fee would be equitable because it is consistent with or lower 
than fees charged on other exchanges.\23\
---------------------------------------------------------------------------

    \23\ See note 17, supra.
---------------------------------------------------------------------------

The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, member 
organizations are free to disfavor the Exchange's pricing if they 
believe that alternatives offer them better value.
Credits for Non-Displayed Limit Orders
    The Exchange believes that offering the proposed credits to member 
organizations based on the amount of liquidity provided to the Exchange 
in non-displayed liquidity in Tape A, B, and C securities with a per 
share stock price below $1.00 would provide a further incentive for all 
member organizations to provide additional liquidity to the Exchange.
D Orders at the Close
    The Exchange believes that offering an alternative way to qualify 
for the lower $0.0008 per share fee for executed D Orders last modified 
in the last 3 minutes before the scheduled close of trading and a new 
fee of $0.0009 for member organizations in MOC/LOC Tiers 1, 2 and 3 and 
that have Adding ADV of at least 0.65% of Tape A CADV is not unfairly 
discriminatory because the proposed change would encourage greater 
marketable and other liquidity at the closing auction. The Exchange

[[Page 5291]]

believes that the proposal is not unfairly discriminatory because all 
similarly situated member organizations that submit D Orders last 
modified in the last 3 minutes before the scheduled close of trading 
above the first 750,000 ADV of the aggregate of executions at the close 
by a member organization will be subject to the same fee structure, 
which will automatically adjust based on prevailing market conditions.
Small DMM Incentive
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, member 
organizations are free to disfavor the Exchange's pricing if they 
believe that alternatives offer them better value. For example, member 
organizations could display quotes on competing exchanges rather than 
quoting sufficiently on the Exchange to meet the proposed 25% NBBO 
quoting requirement. The Exchange believes that offering an additional 
rebate for DMM units with 150 or fewer assigned securities in the 
previous month would provide a further incentive for smaller DMM units 
to quote and trade their assigned securities on the Exchange, and will 
generally allow the Exchange and DMM units to better compete for order 
flow, thus enhancing competition. The Exchange also believes that the 
requirement of 150 or fewer assigned securities to qualify for the 
credit is not unfairly discriminatory because it would apply equally to 
all existing and prospective member organizations with 150 or fewer 
assigned securities that choose to maintain a DMM unit on the Exchange. 
The Exchange does not believe that it is unfairly discriminatory to 
offer incentives based on a maximum threshold. The Exchange notes that 
it currently offers incentives that apply equally to all member 
organizations that cannot or choose not to exceed a certain volume 
threshold.\24\ The Exchange believes that the proposal would provide an 
equal incentive to any member organization to operate and maintain a 
DMM unit, and that the proposal would not be unfairly discriminatory 
because the threshold-based incentive would be offered on equal terms 
to all similarly situated member organizations. Similarly, the proposal 
does not permit unfair discrimination because the proposed alternative 
way for member organizations that operate a DMM unit to qualify for the 
Non Display Tier rebates would be applied to all similarly situated 
member organizations, who would all be eligible for the same credits on 
an equal basis. Member organizations could qualify the Non Display Tier 
rebates either by operating a DMM unit that meets the existing and 
proposed incentive quoting requirements at the NBBO or meeting the 
requirements of the Non Display Tiers as modified by this proposal. In 
both cases, the proposal does not permit unfair discrimination because 
the proposed criteria apply equally to all similarly situated member 
organizations, and all member organizations eligible for the rebates 
under either criteria would be eligible for the same credits on an 
equal and non-discriminatory basis. Moreover, the Exchange does not 
believe that offering a lower remove fee to member organizations that 
operate a DMM unit and meet Adding ADV requirements would be unfairly 
discriminatory given that member organizations operating a DMM unit 
have greater risks and heightened quoting and other obligations than 
other market participants. As such, it is equitable and not unfairly 
discriminatory to offer member organizations operating a DMM unit that 
also meet incentive quoting requirements the ability to receive the Non 
Display Tier rebates as other member organizations that do not operate 
a DMM unit and thus do not have the same quoting and trading 
obligations as DMM units. Accordingly, no member organization already 
operating on the Exchange would be disadvantaged by the proposed 
allocation of fees.
---------------------------------------------------------------------------

    \24\ For instance, as noted above, the first 750,000 ADV of the 
aggregate of executions at the close by a member organization are 
not charged. See NYSE Price List, available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf.
---------------------------------------------------------------------------

Deletion of Underutilized Fees for Orders With a Retail Modifier
    The Exchange believes that the proposal is not unfairly 
discriminatory because it neither targets nor will it have a disparate 
impact on any particular category of market participant. The Exchange 
believes that the proposal is not unfairly discriminatory because the 
proposed elimination of the underutilized fees would affect all 
similarly-situated market participants on an equal and non-
discriminatory basis. The Exchange believes that eliminating fees that 
are underutilized and ineffective would no longer be available to any 
member organization on an equal basis. The Exchange also believes that 
the proposed change would protect investors and the public interest 
because the deletion of an underutilized fee would make the Price List 
more accessible and transparent.
Routing Fees to NYSE American for Tape B and C Securities Below $1.00
    The Exchange believes its proposed routing fee is not unfairly 
discriminatory because the fee would be applicable to all member 
organizations on an equal and non-discriminatory basis.
    The Exchange believes that the proposal is not unfairly 
discriminatory. The Exchange believes it is not unfairly discriminatory 
as the proposal to charge a fee would be assessed on an equal basis to 
all member organizations that route orders in securities below $1.00 to 
NYSE American. 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 member organizations. 
Accordingly, no member organization already operating on the Exchange 
would be disadvantaged by the proposed allocation of fees. The Exchange 
further believes that the proposed rule change would not permit unfair 
discrimination among member organizations because the ability to route 
to NYSE American would remain available to all member organizations on 
an equal basis and each such participant would be charged the same fee 
for using the functionality.
    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

    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\25\ in general, and furthers the 
objectives of sections 6(b)(4) and 6(b)(5) of the Act,\26\ 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.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78f(b).
    \26\ 15 U.S.C. 78f(b)(4) & (5).
---------------------------------------------------------------------------

The Proposed Change Is Reasonable
    In light 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 Exchange believes the proposed 
change is also reasonable because it is designed

[[Page 5292]]

to attract higher volumes of orders transacted on the Exchange by 
member organizations by aligning incentives for trading both on the 
close and intraday, which would benefit all market participants by 
offering greater price discovery and an increased opportunity to trade 
on the Exchange, both intraday and during the closing auction.
Credits for Non-Displayed Limit Orders
    As described 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. 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.'' \27\
---------------------------------------------------------------------------

    \27\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7-10-04) (Final 
Rule) (``Regulation NMS'').
---------------------------------------------------------------------------

    The Exchange believes that the ever-shifting 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 liquidity on the Exchange, member 
organizations can choose from any one of currently operating registered 
exchanges to route such order flow. Accordingly, competitive forces 
constrain exchange fees that relate to providing incentives for such 
order flow. Given this competitive environment, the proposal to offer 
tiered credits for member organizations providing non-displayed 
liquidity in Tape A, B, and C securities with a per share stock price 
below $1.00 equal to a percentage of the total dollar value of the 
transaction for those securities is a reasonable means to improve 
opportunities for price improvement, attract additional order flow to a 
public market, and enhance execution opportunities for member 
organizations on the Exchange, to the benefit of all market 
participants.
D Orders at the Close
    The Exchange believes that charging different rates for D Orders 
that execute in the close based on time of entry or last modification 
encourages all member organizations to enter or modify d-Quotes as 
early possible, beginning with as early as 25 minutes before the close 
of trading, in order to build up liquidity going into the closing 
auction. Further, it is reasonable to charge member organizations a 
higher rate for entering or modifying their interest in the final 
minutes of regular trading hours because such interest most benefits 
from the flexibility afforded the order type.
    The Exchange believes that offering an alternative way to qualify 
for the $0.0008 per share fee for executed D Orders last modified in 
the last 3 minutes before the scheduled close of trading and a new fee 
of $0.0009 for member organizations in MOC/LOC Tiers 1, 2 and 3 and 
that have Adding ADV of at least 0.65% of Tape A CADV is reasonable 
because the proposed change would encourage greater marketable and 
other liquidity at the closing auction, and encourage better liquidity 
and price discovery during the trading day.
Small DMM Incentive
    The Exchange believes that offering DMMs with 150 or fewer assigned 
securities an additional monthly rebate for assigned securities payable 
per symbol in securities where qualified DMMs quote at the NBBO 25% of 
the time, as well as making them eligible for the Non Display Tier 1 
and 2 is a reasonable means to improve market quality, attract 
additional order flow to a public market, and enhance execution 
opportunities for member organizations on the Exchange, to the benefit 
of all market participants. The Exchange notes that the proposal would 
also foster liquidity provision and stability in the marketplace and 
further reduce smaller DMM's reliance on transaction fees. The proposal 
would also reward DMM units, who have greater risks and heightened 
quoting and other obligations than other market participants. The 
proposed change is also a reasonable attempt to potentially attract 
additional DMM units to the Exchange by providing additional financial 
incentives for smaller firms to become DMM units.
Deletion of Underutilized Fees for Orders With a Retail Modifier
    The Exchange believes that the proposed elimination of the 
underutilized fees for orders designated with a Retail Modifier is 
reasonable because member organizations have underutilized these fees. 
As noted, the fees have been underutilized by member organizations 
insofar as they have not encouraged member organizations to increase 
their retail liquidity in response to these lower fees as the Exchange 
had anticipated it would since they were adopted. The Exchange does not 
anticipate that any additional member organization in the near future 
would increase their retail liquidity in response to either fee that is 
the subject of this proposed rule change. The Exchange believes it is 
reasonable to eliminate fees when such incentives become underutilized. 
The Exchange also believes eliminating underutilized incentives would 
add clarity and transparency to the Price List.
Routing Fees to NYSE American for Tape B and C Securities Below $1.00
    The Exchange believes that its proposed routing fee of 0.08% of 
total dollar value of the transaction for orders that route to NYSE 
American is reasonable because the fee would be comparable to the 
current fee of $0.0005 per share for orders that route to the 
Exchange's affiliate NYSE American. Moreover, the proposed fee would be 
consistent with or lower than fees charged on other exchanges.\28\ The 
Exchange notes that operates in a highly competitive market in which 
market participants can readily select between various providers of 
routing services with different product offerings and different 
pricing.
---------------------------------------------------------------------------

    \28\ See note 17, supra.
---------------------------------------------------------------------------

The Proposal Is an Equitable Allocation of Fees
    The Exchange believes the proposal equitably allocates fees and 
credits among market participants because all member organizations that 
participate on the Exchange 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.
Credits for Non-Displayed Limit Orders
    The Exchange believes the proposal equitably allocates its fees 
among its market participants by fostering liquidity provision and 
stability in the marketplace. The Exchange believes that the proposed 
tiered credits for member organizations adding non-displayed liquidity 
in Tape A, B, and C securities with a per share stock price below $1.00 
is equitable because the proposed credits would create incentives for 
adding greater liquidity and providing price improvement. The Exchange 
believes the proposed rule change would attract more liquidity to the 
Exchange, thereby improving market-wide liquidity.

[[Page 5293]]

D Orders at the Close
    The Exchange believes that offering an alternative way to qualify 
for the $0.0008 per share fee for executed D Orders last modified in 
the last 3 minutes before the scheduled close of trading and a new fee 
of $0.0009 for member organizations in MOC/LOC Tiers 1, 2 and 3 and 
that have Adding ADV of at least 0.65% of Tape A CADV is not unfairly 
discriminatory because the proposed change would encourage greater 
marketable and other liquidity at the closing auction. Moreover, the 
proposed fees are equitable because all similarly situated member 
organizations will be subject to the same fee structure, which will 
automatically adjust based on prevailing market conditions.
Small DMM Incentive
    The Exchange believes the proposal equitably allocates its fees 
among its market participants by fostering liquidity provision and 
stability in the marketplace and reducing smaller DMM's reliance on 
transaction fees. Moreover, the proposal is an equitable allocation of 
fees because it would reward DMM units for their increased risks and 
heightened quoting and other obligations. As such, it is equitable to 
offer smaller DMM units an additional flat, per security credit for 
orders that add liquidity. The proposed rebate is also equitable 
because it would apply equally to any DMM unit of a certain size. In 
addition, the proposed alternative way for member organizations that 
operate a DMM unit to qualify for the Non Display Tier rebates is 
equitable because a member organization that would not qualify for the 
rebates operation of a DMM unit with a certain number of registrations 
that meet the incentive quoting requirements would have the ability to 
qualify for the rebates based on adding volume in Non-Displayed Limit 
Orders in Tapes A, B and C as set forth under the modified 
qualification criteria.
    The Exchange notes that at this time there is currently only one 
DMM unit that could qualify for the proposed rebate based on its number 
of assigned securities. The Exchange believes that the proposal would 
provide an equal incentive to any member organization to maintain a DMM 
unit, and that the proposal constitutes an equitable allocation of fees 
because all similarly situated member organizations would be eligible 
for the same rebate.
Deletion of Underutilized Fees for Orders With a Retail Modifier
    The Exchange believes the proposal equitably allocates fees among 
its market participants because the underutilized fees the Exchange 
proposes to eliminate would be eliminated in their entirety, and would 
no longer be available to any member organization in any form. 
Similarly, the Exchange believes the proposal equitably allocates fees 
among its market participants because elimination of the underutilized 
fees would apply to all similarly-situated member organizations that 
send orders, including MOC and LOC orders, to the Exchange with a 
Retail Modifier on an equal basis. All such member organizations would 
continue to be subject to the same fee structure, and access to the 
Exchange's market would continue to be offered on fair and 
nondiscriminatory terms.
Routing Fees to NYSE American for Tape B and C Securities Below $1.00
    The Exchange believes its proposal equitably allocates its fees 
among market participants. The Exchange believes that the proposal 
represents an equitable allocation of fees because it would apply 
uniformly to all member organizations that route orders in securities 
below $1.00 to NYSE American, and each such member organization would 
be charged the proposed fee when utilizing the functionality. Without 
having a view of member organizations' activity on other exchanges and 
off-exchange venues, the Exchange has no way of knowing whether the 
proposed fee would result in any member organization from reducing or 
discontinuing its use of the routing functionality. Moreover, the 
proposed fee would be equitable because it is consistent with or lower 
than fees charged on other exchanges.\29\
---------------------------------------------------------------------------

    \29\ See note 17, supra.
---------------------------------------------------------------------------

The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, member 
organizations are free to disfavor the Exchange's pricing if they 
believe that alternatives offer them better value.
Credits for Non-Displayed Limit Orders
    The Exchange believes that offering the proposed credits to member 
organizations based on the amount of liquidity provided to the Exchange 
in non-displayed liquidity in Tape A, B, and C securities with a per 
share stock price below $1.00 would provide a further incentive for all 
member organizations to provide additional liquidity to the Exchange.
D Orders at the Close
    The Exchange believes that offering an alternative way to qualify 
for the lower $0.0008 per share fee for executed D Orders last modified 
in the last 3 minutes before the scheduled close of trading and a new 
fee of $0.0009 for member organizations in MOC/LOC Tiers 1, 2 and 3 and 
that have Adding ADV of at least 0.65% of Tape A CADV is not unfairly 
discriminatory because the proposed change would encourage greater 
marketable and other liquidity at the closing auction. The Exchange 
believes that the proposal is not unfairly discriminatory because all 
similarly situated member organizations that submit D Orders last 
modified in the last 3 minutes before the scheduled close of trading 
above the first 750,000 ADV of the aggregate of executions at the close 
by a member organization will be subject to the same fee structure, 
which will automatically adjust based on prevailing market conditions.
Small DMM Incentive
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, member 
organizations are free to disfavor the Exchange's pricing if they 
believe that alternatives offer them better value. For example, member 
organizations could display quotes on competing exchanges rather than 
quoting sufficiently on the Exchange to meet the proposed 25% NBBO 
quoting requirement. The Exchange believes that offering an additional 
rebate for DMM units with 150 or fewer assigned securities in the 
previous month would provide a further incentive for smaller DMM units 
to quote and trade their assigned securities on the Exchange, and will 
generally allow the Exchange and DMM units to better compete for order 
flow, thus enhancing competition. The Exchange also believes that the 
requirement of 150 or fewer assigned securities to qualify for the 
credit is not unfairly discriminatory because it would apply equally to 
all existing and prospective member organizations with 150 or fewer 
assigned securities that choose to maintain a DMM unit on the Exchange. 
The Exchange does not believe that it is unfairly discriminatory to 
offer incentives based on a maximum threshold. The Exchange notes that 
it currently offers incentives that apply equally to all member 
organizations that cannot or choose not to exceed a certain volume 
threshold.\30\ The Exchange

[[Page 5294]]

believes that the proposal would provide an equal incentive to any 
member organization to operate and maintain a DMM unit, and that the 
proposal would not be unfairly discriminatory because the threshold-
based incentive would be offered on equal terms to all similarly 
situated member organizations. Similarly, the proposal does not permit 
unfair discrimination because the proposed alternative way for member 
organizations that operate a DMM unit to qualify for the Non Display 
Tier rebates would be applied to all similarly situated member 
organizations, who would all be eligible for the same credits on an 
equal basis. Member organizations could qualify the Non Display Tier 
rebates either by operating a DMM unit that meets the existing and 
proposed incentive quoting requirements at the NBBO or meeting the 
requirements of the Non Display Tiers as modified by this proposal. In 
both cases, the proposal does not permit unfair discrimination because 
the proposed criteria apply equally to all similarly situated member 
organizations, and all member organizations eligible for the rebates 
under either criteria would be eligible for the same credits on an 
equal and non-discriminatory basis. Moreover, the Exchange does not 
believe that offering a lower remove fee to member organizations that 
operate a DMM unit and meet Adding ADV requirements would be unfairly 
discriminatory given that member organizations operating a DMM unit 
have greater risks and heightened quoting and other obligations than 
other market participants. As such, it is equitable and not unfairly 
discriminatory to offer member organizations operating a DMM unit that 
also meet incentive quoting requirements the ability to receive the Non 
Display Tier rebates as other member organizations that do not operate 
a DMM unit and thus do not have the same quoting and trading 
obligations as DMM units. Accordingly, no member organization already 
operating on the Exchange would be disadvantaged by the proposed 
allocation of fees.
---------------------------------------------------------------------------

    \30\ For instance, as noted above, the first 750,000 ADV of the 
aggregate of executions at the close by a member organization are 
not charged. See NYSE Price List, available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf.
---------------------------------------------------------------------------

Deletion of Underutilized Fees for Orders With a Retail Modifier
    The Exchange believes that the proposal is not unfairly 
discriminatory because it neither targets nor will it have a disparate 
impact on any particular category of market participant. The Exchange 
believes that the proposal is not unfairly discriminatory because the 
proposed elimination of the underutilized fees would affect all 
similarly-situated market participants on an equal and non-
discriminatory basis. The Exchange believes that eliminating fees that 
are underutilized and ineffective would no longer be available to any 
member organization on an equal basis. The Exchange also believes that 
the proposed change would protect investors and the public interest 
because the deletion of an underutilized fee would make the Price List 
more accessible and transparent.
Routing Fees to NYSE American for Tape B and C Securities Below $1.00
    The Exchange believes its proposed routing fee is not unfairly 
discriminatory because the fee would be applicable to all member 
organizations on an equal and non-discriminatory basis.
    The Exchange believes that the proposal is not unfairly 
discriminatory. The Exchange believes it is not unfairly discriminatory 
as the proposal to charge a fee would be assessed on an equal basis to 
all member organizations that route orders in securities below $1.00 to 
NYSE American. 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 member organizations. 
Accordingly, no member organization already operating on the Exchange 
would be disadvantaged by the proposed allocation of fees. The Exchange 
further believes that the proposed rule change would not permit unfair 
discrimination among member organizations because the ability to route 
to NYSE American would remain available to all member organizations on 
an equal basis and each such participant would be charged the same fee 
for using the functionality.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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) \31\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \32\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78s(b)(3)(A).
    \32\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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) \33\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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#9eecebf2fbb3fdf1f3f3fbf0eaeddeedfbfdb0f9f1e8"><span class="__cf_email__" data-cfemail="097b7c656c246a6664646c677d7a497a6c6a276e667f">[email protected]</span></a>. Please include 
file number SR-NYSE-2024-04 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-NYSE-2024-04. 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

[[Page 5295]]

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-NYSE-2024-04 and should be submitted on or before February 16, 2024.
    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\34\
---------------------------------------------------------------------------

    \34\ 17 CFR 200.30-3(a)(12).

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-01508 Filed 1-25-24; 8:45 am]
BILLING CODE 8011-01-P


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