Federal Register / Vol. 89, No. 35 / Wednesday, February 21, 2024 / Notices 13117 

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

2 17 CFR 240.19b–4. 

Loans 6 S.A` R.L., Barings SLA 6 LLC, 

Barings SS4 (LUX) LLC, Barings 

Umbrella Fund (LUX)—Barings Global 

Special Situations Credit Fund 4 (LUX) 

Fund, Barings Global Special Situations 

Credit 4 (LUX) S.A` R.L., Barings Global 

Credit Fund (LUX)—Barings Global 

Special Situations Credit Fund 3, 

Barings Global Special Situations Credit 

3 S.A` R.L., Barings Global Umbrella 

Fund—Barings Developed and Emerging 

Markets High Yield Bond Fund, 

Barings—MM Revolver Fund LP, 

Barings North American Private Loan 

Fund (Cayman)-A, L.P., Barings North 

American Private Loan Fund, L.P., 

Barings North American Private Loan 

Fund (Cayman), LP, Barings Small 

Business Fund, L.P., Barings Middle 

Market CLO Ltd. 2017–I, Barings CLO 

Ltd. 2018–I, Barings CLO Ltd. 2018–II, 

Barings CLO Ltd. 2018–III, Barings CLO 

Ltd. 2018–IV, Barings Middle Market 

CLO Ltd. 2018–I, Barings CLO Ltd. 

2019–I, Barings CLO Ltd. 2019–II, 

Barings CLO Ltd. 2019–III, Barings 

Middle Market CLO Ltd. 2019–I, Barings 

CLO Ltd. 2020–1, Barings CLO Ltd. 

2020–IV, Barings CLO Ltd. 2021–I, 

Barings CLO Ltd. 2021–II, Barings CLO 

Ltd. 2021–III, Barings Middle Market 

CLO Ltd. 2021–I, Barings CLO Ltd. 

2016–II, Babson CLO Ltd. 2014–I, 

Barings CLO Ltd. 2015–I, Barings CLO 

Ltd. 2016–I, Barings CLO Ltd. 2017–I, 

Barings U.S. High Yield Collective 

Investment Fund, MassMutual High 

Yield Fund, MassMutual Ascend Life 

Insurance Company, MassMutual Trad 

Private Equity LLC, Barings Global 

Investment Funds plc—Global MultiCredit Strategy Fund 1, Barings Global 

Multi-Credit Strategy 1 Limited, Barings 

Global Investment Funds 2 plc—Global 

Multi-Credit Strategy Fund 3, Barings 

Global Multi-Credit Strategy 3 Limited, 

Barings Global Investment Funds plc— 

Global Multi-Credit Strategy Fund 4, 

Barings Global Multi-Credit Strategy 4 

Limited, BME SCSp, BME Investment 

S.A` R.L., Barings North American 

Private Loan Fund II (Cayman)-A, LP, 

NAPLF (Cayman)-A Senior Funding I 

LLC, Barings North American Private 

Loan Fund II (Cayman), L.P., NAPLF 

(Cayman) Senior Funding I LLC, Barings 

North American Private Loan Fund II 

(Unlevered), L.P., NAPLF Senior 

Funding I LLC, NAPLF (Cayman)-A 

Senior Funding II LLC, NAPLF 

(Cayman) Senior Funding II LLC, 

OTPP—BNAPLF II LP, OTPP—BNAPLF 

II Funding LP, Barings Global Special 

Situations Credit Fund 4 (Delaware) 

L.P., Tryon Street Funding III Ltd., 

Barings Global Investment Funds plc— 

European Loan Strategy Fund 1, Barings 

European Loan Strategy 1 Limited, BPC 

Funding LLC, and BPCC Holdings, Inc. 

Filing Dates: The application was 

filed on July 20, 2023, and amended on 

October 25, 2023 and December 4, 2023. 

Hearing or Notification of Hearing: An 

order granting the requested relief will 

be issued unless the Commission orders 

a hearing. Interested persons may 

request a hearing on any application by 

emailing the SEC’s Secretary at 

Secretarys-Office@sec.gov and serving 

the Applicants with a copy of the 

request by email, if an email address is 

listed for the relevant Applicant below, 

or personally or by mail, if a physical 

address is listed for the relevant 

Applicant below. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on March 11, 2024, and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Pursuant to rule 0–5 under the 

Act, hearing requests should state the 

nature of the writer’s interest, any facts 

bearing upon the desirability of a 

hearing on the matter, the reason for the 

request, and the issues contested. 

Persons who wish to be notified of a 

hearing may request notification by 

emailing the Commission’s Secretary at 

Secretarys-Office@sec.gov. 

ADDRESSES: The Commission: 

Secretarys-Office@sec.gov. Applicants: 

Jill Dinerman, Chief Legal Officer, 

Barings LLC at jill.dinerman@

barings.com. 

FOR FURTHER INFORMATION CONTACT: 

Matthew Cook, Senior Counsel, or Terri 

Jordan, Branch Chief, at (202) 551–6825 

(Division of Investment Management, 

Chief Counsel’s Office). 

SUPPLEMENTARY INFORMATION: For 

Applicants’ representations, legal 

analysis, and conditions, please refer to 

Applicants’ second amended and 

restated application, dated December 4, 

2023, which may be obtained via the 

Commission’s website by searching for 

the file number at the top of this 

document, or for an Applicant using the 

Company name search field, on the 

SEC’s EDGAR system. The SEC’s 

EDGAR system may be searched at 

http://www.sec.gov/edgar/searchedgar/ 

legacy/companysearch.html. You may 

also call the SEC’s Public Reference 

Room at (202) 551–8090. 

For the Commission, by the Division 

of Investment Management, under 

delegated authority. 

Dated: February 14, 2024. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–03422 Filed 2–20–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99538; File No. SR– 

NYSEARCA–2024–13] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the NYSE Arca 

Equities Fees and Charges 

February 14, 2024. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on February 

1, 2024, NYSE Arca, Inc. (‘‘NYSE Arca’’ 

or the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I, II, 

and III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

NYSE Arca Equities Fees and Charges 

(‘‘Fee Schedule’’) to introduce 

additional base credit adjustments for 

Lead Market Makers for Adding 

Displayed Liquidity in certain assigned 

Exchange Traded Products listed on the 

Exchange. The Exchange proposes to 

implement the proposed changes 

effective February 1, 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. 


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13118 Federal Register / Vol. 89, No. 35 / Wednesday, February 21, 2024 / Notices 

3The term ‘‘Lead Market Maker’’ is defined in 

Rule 1.1(w) to mean a registered Market Maker that 

is the exclusive Designated Market Maker in listings 

for which the Exchange is the primary market. 4See 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’’). 

5See Securities Exchange Act Release No. 61358, 

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

02–10) (Concept Release on Equity Market 

Structure). 6See Cboe U.S Equities Market Volume 

Summary, available at https://markets.cboe.com/us/ 

equities/market_share. See generally https://

www.sec.gov/fastanswers/divisionsmarketregmr

exchangesshtml.html. 

7See FINRA ATS Transparency Data, available at 

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

AtsIssueData. A list of alternative trading systems 

registered with the Commission is available at 

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

8See Cboe Global Markets U.S. Equities Market 

Volume Summary, available at https://markets.

cboe.com/us/equities/market_share/. 

9See id. 

10The Performance Metrics are enumerated on 

the Fee Schedule in Section III under LMM 

Transaction Fees and Credits. 

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 to introduce additional 

base credit adjustments for Lead Market 

Makers (‘‘LMMs’’) 3 for Adding 

Displayed Liquidity in certain assigned 

Exchange Traded Products (‘‘ETPs’’) 

listed on the Exchange. The Exchange 

proposes to implement the proposed 

changes effective February 1, 2024. 

Current Market and Competitive 

Environment 

The Exchange operates in a highly 

competitive market. The Commission 

has repeatedly expressed its preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. In Regulation NMS, the 

Commission highlighted the importance 

of market forces in determining prices 

and SRO revenues and, also, recognized 

that current regulation of the market 

system ‘‘has been remarkably successful 

in promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 4

While Regulation NMS has enhanced 

competition, it has also fostered a 

‘‘fragmented’’ market structure where 

trading in a single stock can occur 

across multiple trading centers. When 

multiple trading centers compete for 

order flow in the same stock, the 

Commission has recognized that ‘‘such 

competition can lead to the 

fragmentation of order flow in that 

stock.’’ 5 Indeed, cash equity trading is 

currently dispersed across 16 

exchanges,6 numerous alternative 

trading systems,7 and broker-dealer 

internalizers and wholesalers, all 

competing for order flow. Based on 

publicly-available information, no 

single exchange currently has more than 

20% market share.8 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%.9

The Exchange believes that the evershifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can move order flow, or discontinue or 

reduce use of certain categories of 

products. 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 nonexchange 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. 

Proposed Rule Change 

The Exchange currently provides 

financial incentives to LMMs that are 

based on whether the LMM meets 

certain prescribed metrics. Specifically, 

the Exchange provides incremental 

credits to LMMs based on how many 

performance metrics an LMM meets in 

each NYSE Arca-listed security. The 

financial incentives are intended to 

encourage LMMs to maintain better 

market quality in securities in which 

they are registered as the LMM, 

including in lower volume and newlylisted securities. 

The Exchange notes that its listing 

business operates in a highly 

competitive market in which market 

participants, including issuers of 

securities, LMMs, and other liquidity 

providers, can readily transfer their 

listings, or direct order flow to 

competing venues if they deem fee 

levels, liquidity provision incentive 

programs, or other factors at a particular 

venue to be insufficient or excessive. 

The proposed rule change reflects the 

current competitive pricing 

environment and is designed to 

incentivize market participants to 

participate as LMMs, and thereby, 

further enhance the market quality on 

all securities listed on the Exchange and 

encourage issuers to list new products 

on the Exchange. 

Currently, under the Lead Market 

Maker Transaction Fees and Credits 

section of the Fee Schedule, pursuant to 

Section II titled ‘‘LMM Base Fees and 

Credits per Share,’’ the Exchange 

currently charges LMMs a base fee of 

$0.0029 per share for orders that remove 

liquidity and provides the following 

base credits: 

• $0.0033 per share for orders that 

provide liquidity in securities for which 

the LMM is registered as the LMM and 

which have a CADV in the previous 

month greater than 3,000,000 shares; 

• $0.0040 per share for orders that 

provide liquidity in securities for which 

the LMM is registered as the LMM and 

which have a CADV in the previous 

month of between 1,000,000 and 

3,000,000 shares; and 

• $0.0045 per share for orders that 

provide liquidity in securities for which 

the LMM is registered as the LMM and 

which have a CADV in the previous 

month of less than 1,000,000 shares. 

Additionally, LMMs are provided a 

credit of $0.0030 per share for orders 

that provide undisplayed liquidity in 

Non-Routable Limit Orders in securities 

for which the LMM is registered as the 

LMM, and a credit of $0.0015 per share 

for Non-Displayed Limit Orders that 

provide liquidity in securities for which 

the LMM is registered as the LMM. The 

Exchange also does not charge LMMs a 

fee for orders executed in the Closing 

Auction. 

Further, pursuant to Section III titled 

‘‘LMM Performance Metrics-based 

Incremental Base Credit Adjustments,’’ 

the base credit earned by an LMM for 

Adding Displayed Liquidity (as 

provided in Section II) in an assigned 

ETP is adjusted based on the number of 

Performance Metrics 10 met by the LMM 

in the billing month for each assigned 

ETP, as follows: 

Number of performance metrics met Incremental base credit 

adjustment per ETP 

Incremental base credit 

adjustment per 

leveraged ETP 

4 ................................................................................................................................... ($0.0001) ($0.0001) 


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11A ‘‘Less Active ETP’’ is currently defined on 

the Fee Schedule in Section I under LMM 

Transaction Fees and Credits to mean ‘‘ETPs that 

have a CADV in the prior calendar quarter that is 

the greater of either less than 100,000 shares or less 

than 0.013% of Consolidated Tape B ADV.’’ 

12A ‘‘Leveraged ETP’’ is currently defined on the 

Fee Schedule in Section I under LMM Transaction 

Fees and Credits to mean ‘‘an ETP that tracks an 

underlying index by a ratio other than on a one-toone basis.’’ 

13The Exchange proposes to adopt a definition of 

New ETP on the Fee Schedule in Section I under 

LMM Transaction Fees and Credits. As proposed, 

a ‘‘New ETP would mean an ETP for the first 12 

months of listing on NYSE Arca.’’ Under the 

proposal, the Exchange would treat an ETP listed 

for the first 12 months as a New ETP even if it 

qualifies as a Less Active ETP. 

Number of performance metrics met Incremental base credit 

adjustment per ETP 

Incremental base credit 

adjustment per 

leveraged ETP 

3 ................................................................................................................................... (0.00005) (0.00005) 

2 ................................................................................................................................... 0.0000 0.0000 

1 ................................................................................................................................... 0.0001 0.0000 

0 ................................................................................................................................... 0.0002 0.0000 

The Exchange proposes to introduce 

four new categories of ETPs in which a 

LMM is registered as the LMM and 

provide an incremental credit to such 

LMMs based on the number of 

Performance Metrics met by the LMM in 

the billing month for each assigned ETP. 

The proposed new categories of ETPs 

are Less Active ETP,11 Less Active 

Leveraged ETP,12 New ETP 13 and New 

Leveraged ETP. 

As proposed, LMMs that are 

registered as the LMM in a Less Active 

ETP would be able to earn an 

incremental credit of $0.0001 per share 

if the LMM meets 3 Performance 

Metrics or earn an incremental credit of 

$0.0002 per share if the LMM meets all 

4 Performance Metrics. There would be 

no adjustment to the base credit payable 

to the LMM if the LMM meets 2 

Performance Metrics. LMMs that meet 

just 1 Performance Metric would have 

their base credit reduced by $0.0002 per 

share and LMMs that do not meet any 

Performance Metric would have their 

base credit reduced by $0.0004 per 

share. 

Further, as proposed, LMMs that are 

registered as the LMM in a Less Active 

Leveraged ETP would be able to earn an 

incremental credit of $0.0001 per share 

if the LMM meets 3 Performance 

Metrics or earn an incremental credit of 

$0.0002 per share if the LMM meets all 

4 Performance Metrics. There would be 

no adjustment to the base credit payable 

to the LMM if the LMM meets 1 or 2 

Performance Metrics or if the LMM does 

not meet any Performance Metric. 

Additionally, as proposed, LMMs that 

are registered as the LMM in a New ETP 

would be able to earn an incremental 

credit of $0.0002 per share if the LMM 

meets 3 Performance Metrics or earn an 

incremental credit of $0.0004 per share 

if the LMM meets all 4 Performance 

Metrics. LMMs that meet 2 Performance 

Metrics would have their base credit 

reduced by $0.0002 per share while 

LMMs that meet just 1 Performance 

Metric would have their base credit 

reduced by of $0.0004 per share. LMMs 

that do not meet any Performance 

Metric would have their base credit 

reduced by $0.0005 per share. 

Lastly, as proposed, LMMs that are 

registered as the LMM in a New 

Leveraged ETP would be able to earn an 

incremental credit of $0.0002 per share 

if the LMM meets 3 Performance 

Metrics or earn an incremental credit of 

$0.0004 per share if the LMM meets all 

4 Performance Metrics. There would be 

no adjustment to the base credit payable 

to the LMM if the LMM meets 1 or 2 

Performance Metrics or if the LMM does 

not meet any Performance Metric. 

The table below illustrates the 

proposed new incremental base credit 

adjustments discussed above. 

Number of 

performance 

metrics met 

Incremental 

base credit 

adjustment 

per less active 

ETP 

Incremental 

base credit 

adjustment 

per less active 

leveraged ETP 

Incremental 

base credit 

adjustment 

per new ETP 

Incremental 

base credit 

adjustment 

per new 

leveraged 

ETP 

4 ................................................................................................................. ($0.0002) ($0.0002) ($0.0004) ($0.0004) 

3 ................................................................................................................. (0.0001) (0.0001) (0.0002) (0.0002) 

2 ................................................................................................................. 0.0000 0.0000 0.0002 0.0000 

1 ................................................................................................................. 0.0002 0.0000 0.0004 0.0000 

0 ................................................................................................................. 0.0004 0.0000 0.0005 0.0000 

The Exchange believes the proposed 

rule change would further enhance 

market quality on New ETPs and Less 

Active ETPs by incentivizing LMMs to 

meet the Performance Metrics across all 

ETPs, including Less Active ETPs (and 

Less Active Leveraged ETPs) and New 

ETPs (and New Leveraged ETPs), which 

would support the quality of price 

discovery in such securities on the 

Exchange and provide additional 

liquidity for incoming orders for the 

benefit of all market participants. 

The Exchange believes the proposed 

rule change would also provide superior 

market quality and price discovery for 

Exchange-listed securities, specifically 

securities that are new or less active, 

through new financial incentives for 

achieving various performance metrics 

illustrated in Section III under the Lead 

Market Maker Transaction Fees and 

Credits section of the Fee Schedule, i.e., 

LMM spread, LMM shares within 1% of 

NBBO and LMM quoting size 

requirements in Core Open Auction and 

Closing Auction, thus promoting 

liquidity in in such securities. The 

proposed rule change is intended to 

provide a more meaningful incentive to 

LMMs to provide liquidity in new and 

less active securities by providing 

financial incentives to the Exchange’s 

members as long as they meet certain 

prescribed quoting criteria. The 

Exchange believes that a performancedriven incentive would encourage such 

members to provide meaningful quotes 

and size in new and less active 

securities listed and traded on the 

Exchange. 


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14 15 U.S.C. 78f(b). 

15 15 U.S.C. 78f(b)(4). 

16 15 U.S.C. 78f(b)(5). 

17See Equity 7 Pricing Schedule, Section 114. 

Market Quality Incentive Programs, at https://listing

center.nasdaq.com/rulebook/nasdaq/rules/ 

Nasdaq%20Equity%207#section_114_market_

quality_incentive_programs. 

Additionally, for newly-listed and 

less active ETPs, the cost to a firm for 

making a market, such as holding 

inventory in the security, is often not 

fully offset by the revenue through 

rebates provided by the Exchange. In 

some cases, firms may even operate at 

a loss in new and less active ETPs. The 

Exchange believes the proposed 

incentives, which would compensate 

members as long as they meet the 

prescribed performance metrics, is a 

more deterministic program from a 

member’s perspective. The member 

would decide how many, if any, new 

and less active ETPs it wants to provide 

tight and deep markets in. The more 

securities the member provides 

heightened quoting in, the more the 

member could collect in the form of a 

rebate. 

The proposed changes are not 

otherwise intended to address any 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 the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.14 Specifically, 

the Exchange believes the proposed rule 

change is consistent with Section 6(b)(4) 

of the Act,15 which provides that 

Exchange rules may provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

members and other persons using its 

facilities. Additionally, the Exchange 

believes the proposed rule change is 

consistent with the Section 6(b)(5) 16

requirement that the rules of an 

exchange not be designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange notes that its ETP listing 

business operates in a highlycompetitive market in which market 

participants, which includes LMMs, as 

well as ETP issuers, can opt not to 

participate on the Exchange or readily 

transfer their listings from the Exchange, 

respectively, if they deem fee levels, 

liquidity provision incentive programs, 

or any other factor at a particular venue 

to be insufficient or excessive. The 

proposed rule change reflects a 

competitive pricing structure designed 

to incentivize issuers to list new 

products and transfer existing products 

to the Exchange and market participants 

to enroll and participate as LMMs on 

the Exchange, which the Exchange 

believes will enhance market quality in 

all ETPs listed on the Exchange. 

The Proposed Change Is Reasonable 

The Exchange believes that the 

proposal to adopt market quality-based 

incentives is a reasonable means to 

incentivize liquidity provision in ETPs 

listed on the Exchange. The marketplace 

for listings is extremely competitive and 

the Exchange is not the only venue for 

listing ETPs. Competition in ETPs is 

further exacerbated by the fact that 

listings can and do transfer from one 

listing market to another. The proposed 

rule change is intended to help the 

Exchange compete as a listing venue for 

ETPs, specifically New and Less Active 

ETPs. Further, the Exchange notes that 

the proposed incentives are not 

transaction fees, nor are they fees paid 

by participants to access the Exchange. 

Rather, the proposed rebates are based 

on achieving certain objective market 

quality metrics. The Exchange believes 

providing rebates that are based on the 

quality of the market in individual ETPs 

that generally have low volume, or are 

newly-listed, will allow ETP Holders to 

anticipate their revenue and will 

incentivize them to provide tight and 

deep markets in those securities. 

The Exchange cannot be certain that 

LMMs will choose to actively compete 

for the proposed incentives. For LMMs 

that do choose to actively participate by 

providing deep and tight markets in 

Less Active ETPs and New ETPs, the 

Exchange expects those members to 

receive payments comparable to what 

they currently receive, with the 

potential for additional upside when 

they meet the Performance Metrics in a 

greater number of securities. The 

Exchange believes the proposed 

incentives, which would compensate 

LMMs as long as they meet the 

prescribed Performance Metrics, is also 

reasonable because it is a more 

deterministic program from an ETP 

Holder’s perspective. 

The Exchange believes the proposed 

rule change is intended to encourage 

LMMs to promote price discovery and 

market quality in Less Active ETPs and 

New ETPs for the benefit of all market 

participants. The Exchange believes the 

proposed rule change is reasonable and 

appropriate in that the incentives are 

based on the amount of business 

transacted on the Exchange. The 

Exchange notes that the proposed 

incremental credits offered by the 

Exchange is similar to market quality 

incentive programs already in place on 

other markets, such as the Designated 

Liquidity Provider incentives on the 

Nasdaq Stock Market LLC (‘‘Nasdaq’’), 

which requires a member on that 

exchange to provide meaningful and 

consistent support to market quality and 

price discovery in low volume 

exchange-traded products by quoting at 

the National Best Bid and Offer and 

adding liquidity in a minimum number 

of such securities. In return, Nasdaq 

provides the member with an 

incremental rebate.17

The Proposal Is an Equitable Allocation 

of Fees 

The Exchange believes the proposed 

rule change is equitable because the 

proposal would provide discounts that 

are reasonably related to the value to the 

Exchange’s market quality associated 

with higher volumes and improved 

quoting in Less Active ETPs and New 

ETPs. The Exchange further believes 

that the proposed incentives are 

equitable because they are consistent 

with the market quality and competitive 

benefits associated with the fee program 

and because the magnitude of the 

proposed incentives are not 

unreasonably high in comparison to the 

rebate paid with respect to other 

displayed liquidity-providing orders. 

The Exchange believes that it is 

equitable to offer increased rebates to 

LMMs as they are currently subject to 

obligations specified in Rule 7.23–E, 

which are not applicable to non-Market 

Maker ETP Holders, and LMMs would 

be subject to additional requirements 

and obligations (such as meeting 

Performance Metrics) that other market 

participants are not. 

The Exchange believes that the 

proposal to offer incentives tied to 

market quality metrics represents an 

equitable allocation of payments 

because LMMs would be required to not 

only meet their Rule 7.23–E obligations, 

but also meet prescribed quoting 

requirements to qualify for the credits, 

as described above. Where an LMM 

does not meet at least 3 Performance 

Metrics, that member will not receive 

any additional financial benefit. 

Further, all LMMs on the Exchange are 

eligible to participate and could do so 

by simply registering in a Less Active 

ETP and/or a New ETP and meeting the 

prescribed market quality metrics. The 

Exchange has designed the proposed 

pricing incentives to be sustainable over 

the long-term and generally expects that 

credits paid to LMMs will be 

comparable to credits the Exchange 


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Federal Register / Vol. 89, No. 35 / Wednesday, February 21, 2024 / Notices 13121 

18 15 U.S.C. 78f(b)(8). 

19See Securities Exchange Act Release No. 51808, 

70 FR 37495, 37498–99 (June 29, 2005) (S7–10–04) 

(Final Rule). 20 15 U.S.C. 78s(b)(3)(A). 

currently provides to its members and 

comparable to pricing incentives offered 

by the Exchange’s competitors. As such, 

the Exchange believes that the proposal 

represents an equitable allocation of 

dues, fees and credits. 

The Proposal Is Not Unfairly 

Discriminatory 

The Exchange believes that the 

proposal is not unfairly discriminatory. 

In the prevailing competitive 

environment, LMMs are free to disfavor 

the Exchange’s pricing if they believe 

that alternatives offer them better value. 

The Exchange believes it is not 

unfairly discriminatory to adopt 

incremental credits applicable to LMMs 

because LMMs are already subject to 

additional obligations, as specified in 

Rule 7.23–E, and the proposed 

additional credits would be provided on 

an equal basis to all similarly-situated 

participants provided each such 

participant meets the prescribed market 

quality metrics. If an LMM does not 

meet the required number of 

Performance Metrics, the LMM would 

not receive any incremental credit. 

Further, the Exchange believes the 

incremental credit would incentivize 

each of these participants to register in 

Less Active ETPs and New ETPs and 

send more orders to the Exchange to 

qualify for higher credits. The Exchange 

also believes that the proposed rule 

change is not unfairly discriminatory 

because it is reasonably related to the 

value to the Exchange’s market quality 

associated with higher volume. 

The proposal to offer an additional 

credit tied to meeting certain market 

quality requirements neither targets nor 

will it have a disparate impact on any 

particular category of market 

participant. The proposal does not 

permit unfair discrimination because 

LMMs already have increased 

obligations vis-a ́-vis non-Market Maker 

ETP Holders, as specified in Rule 7.23– 

E, and the proposed requirements 

would be applied to all similarlysituated LMMs equally. 

The Exchange believes that the 

proposed rule change is not unfairly 

discriminatory because all LMMs that 

choose to qualify for the incremental 

credits would be required to meet a 

minimum number of Performance 

Metrics in order to receive the credits. 

Where a participant does not achieve a 

certain number of Performance Metrics, 

it will not receive any incremental 

credits. Further, all LMMs on the 

Exchange are eligible to participate in 

the program and could do so by being 

registered as the LMM in Less Active 

ETPs and/or New ETPs and meeting a 

minimum number of Performance 

Metrics. The Exchange has designed the 

pricing incentives proposed herein to be 

sustainable over the long-term and 

generally expects that credits provided 

to LMMs would be comparable to 

credits the Exchange currently provides 

to its LMMs and comparable to pricing 

incentives offered by the Exchange’s 

competitors. As such, the Exchange 

believes that the proposal is not unfairly 

discriminatory. 

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,18 the Exchange believes that the 

proposed rule change would not impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Instead, as 

discussed above, the Exchange believes 

that the proposed changes would 

encourage the submission of additional 

liquidity to a public exchange, thereby 

promoting market depth, price 

discovery and transparency and 

enhancing order execution 

opportunities for LMMs. As a result, the 

Exchange believes that the proposed 

change furthers the Commission’s goal 

in adopting Regulation NMS of fostering 

integrated competition among orders, 

which promotes ‘‘more efficient pricing 

of individual stocks for all types of 

orders, large and small.’’ 19

Intramarket Competition. The 

proposed change is designed to attract 

additional order flow to the Exchange. 

The Exchange believes that the 

proposed Performance Metrics-based 

incremental credit applicable to LMMs 

in Less Active ETPs (including Less 

Active Leveraged ETPs) and New ETPs 

(including New Leveraged ETPs) in 

which they are registered as the LMM 

would continue to incentivize market 

participants to direct their displayed 

order flow to the Exchange. Greater 

liquidity benefits all market participants 

on the Exchange by providing more 

trading opportunities and encourages 

LMMs to send additional orders to the 

Exchange, thereby contributing to robust 

levels of liquidity. The proposed pricing 

incentive would be applicable to all 

similarly-situated market participants 

that have obligations under Rule 7.23– 

E to meet specified obligations, and, as 

such, the proposed changes would not 

impose a disparate burden on 

competition among market participants 

on the Exchange. Accordingly, the 

Exchange does not believe that the 

proposed change will impair the ability 

of LMMs to maintain their competitive 

standing. The Exchange does not believe 

that the proposed change represents a 

significant departure from previous 

pricing offered by the Exchange or its 

competitors. 

Intermarket Competition. The 

Exchange operates in a highly 

competitive market in which market 

participants can readily choose to send 

their orders to other exchange and offexchange venues if they deem fee levels 

at those other venues to be more 

favorable. As noted above, the 

Exchange’s market share of intraday 

trading (i.e., excluding auctions) is 

currently less than 12%. In such an 

environment, the Exchange must 

continually adjust its fees and rebates to 

remain competitive with other 

exchanges and with off-exchange 

venues. Because competitors are free to 

modify their own fees and credits in 

response, and because market 

participants may readily adjust their 

order routing practices, the Exchange 

does not believe its proposed fee change 

can impose any burden on intermarket 

competition. The Exchange believes that 

the proposed rule change could promote 

competition between the Exchange and 

other execution venues, including those 

that currently offer comparable 

transaction pricing, by encouraging 

additional orders to be sent to the 

Exchange for execution. 

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 has become 

effective upon filing pursuant to Section 

19(b)(3)(A) 20 of the Act and paragraph 

(f) thereunder. 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. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 


khammond on DSKJM1Z7X2PROD with NOTICES
13122 Federal Register / Vol. 89, No. 35 / Wednesday, February 21, 2024 / Notices 

21 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

NYSEARCA–2024–13 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–NYSEARCA–2024–13. 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 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. 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– 

13, and should be submitted on or 

before March 13, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–03453 Filed 2–20–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99537; File No. SR–Phlx– 

2024–04] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Equity 7, 

Section 3(a) 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on February 

1, 2024, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

pricing schedule at Equity 7, Section 

3(a), as described further below. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/rules, 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 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to provide an additional 

calculation for purposes of determining 

whether a member qualifies for credits 

set forth in Equity 7, Section 3(a) that 

pertain to providing liquidity. 

Presently, the Exchange provides its 

members with various credits for 

executing orders that add liquidity to 

the Exchange and charges them various 

fees for executing orders, that remove 

liquidity from the Exchange, as set forth 

in Equity 7, Section 3(a) of the 

Exchange’s Rules. The charges and 

credits in Equity 7, Section 3(a) apply to 

the use of the order execution and 

routing services of the Nasdaq PSX 

System by members for all securities 

priced at $1 or more that it trades. 

Members may qualify for tiers of 

discounted fees and premium credits 

based, in part, upon their volume on the 

Exchange as a percentage of total 

‘‘Consolidated Volume.’’ 

Pursuant to Equity 7, Section 3(a), the 

term ‘‘Consolidated Volume’’ means the 

total consolidated volume reported to 

all consolidated transaction reporting 

plans by all exchanges and trade 

reporting facilities during a month in 

equity securities, excluding executed 

orders with a size of less than one round 

lot. For purposes of calculating 

Consolidated Volume and the extent of 

a member’s trading activity, the 

following are excluded from both total 

Consolidated Volume and the member’s 

trading activity: (1) the date of the 

annual reconstitution of the Russell 

Investments Indexes; (2) the dates on 

which stock options, stock index 

options, and stock index futures expire 

(i.e., the third Friday of March, June, 

September, and December); (3) the dates 

of the rebalance of the MSCI Equities 

Indexes (i.e., on a quarterly basis); (4) 

the dates of the rebalance of the S&P 

400, S&P 500, and S&P 600 Indexes (i.e., 

on a quarterly basis); and (5) the date of 

the annual reconstitution of the Nasdaq100 and Nasdaq Biotechnology Indexes. 

Generally, the ratio of consolidated 

volumes in securities priced at or above 

$1 (‘‘dollar plus volume’’) relative to 

consolidated volumes inclusive of 

securities priced below a dollar is 

usually stable from month to month, 

such that ‘‘Consolidated Volume’’ has 

been a reasonable baseline for 

determining tiered incentives for 

members that execute dollar plus 

volume on the Exchange. However, 

there have been a few months where 


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