[Federal Register Volume 89, Number 195 (Tuesday, October 8, 2024)]
[Notices]
[Pages 81587-81592]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-23062]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101226; File No. SR-LTSE-2024-06]


Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Adopt Initial Fees and Rebates Applicable to Members of the Exchange 
Pursuant to Exchange Rule 15.110 and Adopt a Policy Relating to Billing 
Errors

October 1, 2024.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on September 19, 2024, Long-Term Stock Exchange, Inc. (``LTSE'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the 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\ 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 is filing with the Securities and Exchange Commission 
(``Commission'') a proposed rule change to adopt the initial fees and 
rebates applicable to Members of the Exchange pursuant to Exchange Rule 
15.110 (Authority to Prescribe Dues, Fees, Assessments and Other 
Charges) and adopt a policy relating to billing errors. The Exchange 
proposes to implement the rule change effective immediately upon 
commencement of its transition to a new trading platform.
    The text of the proposed rule change is available at the Exchange's 
website at https://longtermstockexchange.com/, at the principal office 
of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement on 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 self-regulatory organization has prepared summaries, 
set forth in Sections A, B, and C below, of the most significant 
aspects of such statements.

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

1. Purpose
    The Exchange proposes to adopt a fee schedule (the ``Fee 
Schedule'') applicable to the use of the Exchange. Additionally, the 
Exchange proposes to amend Rule 15.120 (Collection of Exchange Fees and 
Other Claims and Billing Policy), as well as moving the entirety of the 
text in Rule 15.200 (Schedule of Fees) to the new Fee Schedule. These 
changes are part of a larger initiative where the Exchange intends to 
transition to a new trading platform. The go-live date for this 
transition is September 23, 2024 and thus, proposed fees and changes 
will be effective as of the date of such transition.\3\
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    \3\ Id.
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    The Exchange first notes that it operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. More specifically, the 
Exchange will be only one of numerous equities venues to which market 
participants may direct their order flow. Based on publicly available 
information, no single registered equities exchange currently has more 
than approximately 16% of

[[Page 81588]]

total market share.\4\ Thus, in such a low-concentrated and highly 
competitive market, no single equities exchange possesses significant 
pricing power in the execution of order flow and the Exchange currently 
represents a small percentage of the overall market.
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    \4\ Market share percentage calculated as of September 4, 2024. 
The Exchange receives and processes data made available through 
consolidated data feeds (i.e., CTS and UTDF).
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Transaction Fees
    Below is a description of the fees and rebates that the Exchange 
intends to impose under the initial proposed Fee Schedule, which will 
be applicable to transactions executed in all trading sessions. Under 
the proposed Fee Schedule, the Exchange will operate a ``Maker-Taker'' 
model whereby it provides rebates to Members that provide liquidity and 
charges fees to those that remove liquidity, as further described 
below. The Exchange does not initially propose to assess volume-based 
fees or rebates. Accordingly, all fees and rebates described below are 
applicable to all Members, regardless of the overall volume of a 
Member's trading activities on the Exchange.
    The Exchange proposes to adopt a pricing strategy that incentivizes 
adding displayed liquidity on the Exchange in order to encourage and 
facilitate price discovery and price formation, which the Exchange 
believes benefits all Members and investors. Details of this pricing 
strategy are laid out below:
(A) Standard Fee for Removing Liquidity
    The Exchange proposes a fee of $0.0030 per share for executions of 
orders that remove liquidity from the LTSE Order Book \5\ (``Remove 
Liquidity'') in securities priced at or above $1.00 per share or 0.30% 
of the total dollar value (``TDV'') for securities priced under 
$1.00.\6\
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    \5\ ``LTSE Order Book'' means the System's electronic file of 
orders. See Exchange Rule 1.160(t). The ``System'' shall mean the 
electronic communications and trading facility designated by the 
Board through which securities orders of Members are consolidated 
for ranking and execution. See Exchange Rule 1.160(rr).
    \6\ This pricing is referred to as ``Remove liquidity'' on the 
proposed Fee Schedule.
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(B) Standard Rebate for Adding Displayed Liquidity
    The Exchange proposes to provide a rebate of $0.0028 per share for 
executions of orders that: (i) are displayed on the LTSE Order Book and 
(ii) add liquidity to the Exchange (``Added Displayed Liquidity''), in 
all securities traded on the Exchange priced at or above $1.00 per 
share or 0.28% of the TDV for securities priced under $1.00.\7\ The 
proposed rebate for Added Displayed Liquidity would apply to the 
Reserve Quantity \8\ of an order such that any replenishment amount of 
the Reserve Quantity of an order that is executed against would be 
treated as Added Displayed Liquidity even though such portion of the 
order was not displayed on the LTSE Order Book prior to the order being 
replenished in accordance with the Member's instructions and the 
Exchange's rules. The entire portion of the Reserve Quantity of an 
order would be eligible for this rebate, however, a Member would only 
receive such rebate for any portion(s) of the Reserve Quantity that is 
(are) executed against it. The proposed Fee Schedule will detail the 
treatment of the Reserve Quantity.
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    \7\ The pricing is referred to by the Exchange as ``Add 
displayed liquidity'' on the proposed Fee Schedule.
    \8\ ``Reserve Quantity'' refers to the portion of an order that 
includes a Non-Displayed instruction in which a portion of that 
order is also displayed on the LTSE Order Book. Both the portion of 
the order with a Displayed instruction and the Reserve Quantity are 
available for execution against incoming orders. See Exchange Rule 
11.180(k).
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(C) Rebates for Adding Displayed Liquidity That Matches the National 
Best Bid or Offer (``NBBO'') \9\
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    \9\ ``NBBO'' is defined in LTSE Rule 11.410(b).
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    The Exchange proposes to provide a rebate of $0.0029 per share for 
executions of Added Displayed Liquidity that establishes a new best bid 
or offer on the Exchange that matches the NBBO first established on an 
away market (``NBBO Joiner'') in all securities traded on the Exchange 
priced at or above $1.00 per share or 0.29% of the TDV for securities 
priced under $1.00.\10\ The proposed Fee Schedule will include this 
definition of NBBO Joiner.
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    \10\ The pricing is referred to by the Exchange as ``Add 
displayed liquidity--NBBO Joiner'' on the proposed Fee Schedule.
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(D) Rebates for Adding Displayed Liquidity That Establishes the NBBO
    The Exchange proposes to provide a rebate of $0.00295 per share for 
executions of Added Displayed Liquidity that establishes the NBBO 
(``NBBO Setter'') on LTSE in all securities traded on the Exchange 
priced at or above $1.00 per share or 0.295% of the TDV for securities 
priced under $1.00.\11\ The proposed Fee Schedule will include this 
definition of NBBO Setter.
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    \11\ The pricing is referred to by the Exchange as ``Add 
displayed liquidity--NBBO Setter'' on the proposed Fee Schedule.
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(E) Standard Rebate for Adding Non-Displayed Liquidity
    The Exchange proposes to provide a standard rebate of $0.0014 per 
share for executions of orders that: (i) are not displayed on the LTSE 
Order Book and (ii) add liquidity to the Exchange, in all securities 
traded on the Exchange priced at or above $1.00 per share or 0.14% of 
the TDV for securities priced under $1.00.\12\
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    \12\ This pricing is referred to by the Exchange ``Add non-
displayed liquidity'' on the proposed Fee Schedule to represent the 
execution of an order that adds non-displayed liquidity.
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Other Proposed Changes
Annual Membership Fee
    The Exchange currently sets forth its Annual Membership Fee of 
$10,000 a year in Rule 15.200. The Exchange is proposing to remove this 
section of the rulebook and move the Annual Membership Fee to the newly 
created Section (A) of the Fee Schedule so that Members can have all 
specific fees assessed by the Exchange in one place. The Exchange is 
not proposing any changes to the Annual Membership Fee except to remove 
subsection (4) which details how the Exchange assessed the Annual 
Membership Fee the year it launched operations. Since this subsection 
is no longer applicable the Exchange believes it is appropriate to 
remove it altogether instead of inserting it into the proposed Fee 
Schedule.
Billing Errors
    Additionally, the Exchange is proposing to adopt a policy relating 
to billing errors. Specifically, the Exchange proposes to adopt a new 
paragraph (c) in Rule 15.120 which would provide that all fees and 
rebates assessed prior to the three full calendar months before the 
month in which the Exchange becomes aware of a billing error shall be 
considered final.\13\ To clarify the new Billing Errors section, the 
Exchange is also proposing to add the title ``Pricing Disputes'' to 
Rule 15.120(b). The Exchange would apply the three month look back 
regardless of whether the error was discovered by the Exchange or by a 
Member or Non-Member that submitted a pricing dispute.\14\
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    \13\ The Exchange notes that the current policy in Rule 
15.120(b), which states that all pricing disputes must be submitted 
no later than sixty (60) days after receipt of a billing invoice, 
will remain in place.
    \14\ For example, if the Exchange becomes aware of a transaction 
fee billing error on September 4, 2024, the Exchange will resolve 
the error by crediting or debiting Members or Non-Members based on 
the fees or rebates that should have been applied to any impacted 
transactions during June, July and August 2024. The Exchange notes 
that because it bills in arrears, the Exchange would be able to 
correct the error in advance of issuing the June [sic] 2024 invoice 
and therefore, transactions impacted after the end of the last full 
calendar month through the date of discovery (in this example, 
between August 31, 2024 and September 4, 2024) and thereafter, would 
be billed correctly.

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[[Page 81589]]

    The purpose of the proposed change is to provide both the Exchange 
and its Members and Non-Members finality with respect to fees and 
rebates previously assessed by the Exchange and the ability to close 
their books after a specified period of time. The Exchange notes that 
Rule 15.120(b) already requires that pricing disputes must be submitted 
to the Exchange in writing and accompanied by supporting documentation 
no later than 60 days after receipt of a billing invoice, which is 
designed to encourage prompt review of Exchange invoices so that any 
pricing disputes can be addressed in a timely manner. The Exchange 
believes the proposed change would further the goal of addressing 
billing discrepancies in a timely manner while the information and data 
underlying those charges (e.g., applicable fees and order information) 
is still easily and readily available, without further limiting the 
timeframe in which a pricing dispute may be submitted. This practice 
would avoid issues that may arise when billing errors are discovered 
long after they occurred and the parties have already prepared, and in 
some cases published, their books, and would conserve Exchange 
resources that would have to be expended to resolve untimely billing 
disputes. As such, the proposed rule change would alleviate 
administrative burdens related to prior billing errors, which could 
divert Exchange staff resources away from the Exchange's regulatory and 
business purposes.
    The Exchange notes that the language of proposed Rule 15.120(c) is 
the same as language in MEMX Rule 15.3(c) \15\ and is also included in 
the fee schedules of the four Cboe U.S. equities exchanges--Cboe BZX 
Exchange, Inc. (``Cboe BZX''),\16\ Cboe BYX Exchange, Inc. (``Cboe 
BYX''),\17\ Cboe EDGA Exchange, Inc. (``Cboe EDGA''),\18\ and Cboe EDGX 
Exchange, Inc. (``Cboe EDGX'').\19\ The Exchange also notes that a 
number of other exchanges have explicitly stated that they consider all 
fees to be final after a similar period of time.\20\ The proposed 
billing errors policy would apply to all fees and rebates assessed by 
the Exchange.
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    \15\ See Securities Exchange Act Release No. 34-93381 (October 
19, 2021), 86 FR 58972 (October 25, 2021) (SR-MEMX-2021-12).
    \16\ See Cboe BZX equities trading fee schedule on its public 
website (available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/). See also Securities Exchange Act Release No. 
90897 (January 11, 2021), 86 FR 4161 (January 15, 2021) (SR-CboeBZX-
2020-094).
    \17\ See Cboe BYX equities trading fee schedule on its public 
website (available at https://www.cboe.com/us/equities/membership/fee_schedule/byx/). See also Securities Exchange Act Release No. 
90899 (January 11, 2021), 86 FR 4156 (January 15, 2021) (SR-CboeBYX-
2020-034).
    \18\ See Cboe EDGA equities trading fee schedule on its public 
website (available at https://www.cboe.com/us/equities/membership/fee_schedule/edga/). See also Securities Exchange Act Release No. 
90897 (January 11, 2021), 86 FR 4161 (January 15, 2021) (SR-CboeBZX-
2020-094).
    \19\ See Cboe EDGX equities trading fee schedule on its public 
website (available at https://www.cboe.com/us/equities/membership/fee_schedule/edgx/). See also Securities Exchange Act Release No. 
90901 (January 11, 2021), 86 FR 4137 (January 15, 2021) (SR-
CboeEDGX-2020-064).
    \20\ See, e.g., Securities Exchange Act Release No. 34-91836 
(May 11, 2021), 86 FR 26765 (May 17, 2021) (SR-BOX-2021-08); 
Securities Exchange Act Release No. 87650 (December 3, 2019), 84 FR 
67304 (December 9, 2019) (SR-NYSECHX-2019-024); Securities Exchange 
Act Release No. 84430 (October 16, 2018), 83 FR 53347 (October 22, 
2018) (SR-NYSENAT-2018-23); and Securities Exchange Act Release No. 
79060 (October 6, 2016), 81 FR 70716 (October 13, 2016) (SR-
ISEGemini-2016-11).
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Other Changes
    The Exchange proposes to add a section to the proposed Fee Schedule 
entitled ``Additional Fees'' and state that Chapter 15 of the LTSE Rule 
contains other dues, fees, and assessments as well as the collection of 
Exchange fees for completeness. Further, the Exchange proposes to add a 
corresponding reference in Supplementary Material .02 of Chapter 15 to 
state that the LTSE Fee Schedule details fees and rebates assessed by 
the Exchange.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) \21\ of the Act in general, and 
furthers the objectives of Sections 6(b)(4) \22\ of the Act, in 
particular, in that it is designed to 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 that the proposed fees and rebates are consistent with the 
objectives of Section 6(b)(5) \23\ of the Act in that they are designed 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to a 
free and open market and national market system, and, in general, to 
protect investors and the public interest, and, particularly, are not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \21\ 15 U.S.C. 78f.
    \22\ 15 U.S.C. 78f(b)(4).
    \23\ 15 U.S.C. 78f(b)(5).
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    The Exchange operates in a highly competitive market in which 
market participants can readily direct order flow to competing venues 
if they deem fee levels at a particular venue to be excessive or 
incentives to be insufficient. The Exchange believes that the proposed 
Fee Schedule reflects a simple and competitive pricing structure 
designed to incentivize market participants to add aggressively priced 
displayed liquidity and direct their order flow to the Exchange, which 
the Exchange believes would promote price discovery and price formation 
and deepen liquidity that is subject to the Exchange's transparency, 
regulation, and oversight as an exchange, thereby enhancing market 
quality to the benefit of all Members and investors.
    The Commission and the courts have repeatedly expressed their 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. In Regulation 
NMS, while adopting a series of steps to improve the current market 
model, 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.'' \24\
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    \24\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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Transactions Fees
    The Exchange believes that charging a fee to the liquidity remover, 
and providing a rebate to the liquidity adder, is reasonable, equitable 
and not unfairly discriminatory because it incentivizes liquidity 
provision on the Exchange. The Exchange also notes that several other 
exchanges charge fees for removing liquidity and provide rebates for 
adding liquidity, and that this aspect of the Exchange's proposed Fee 
Schedule does not raise any new or novel issues that have not 
previously been considered by the Commission in connection with the 
fees and rebates of other exchanges.\25\ The Exchange notes that unlike 
other exchanges, LTSE is not proposing any volume based tiers or 
rebates and rather is proposing a simple flat fee for each of the 
categories listed below.
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    \25\ See e.g., MEMX Equities Fee Schedule, Transaction Fees; 
MIAX Pearl Equities Exchange Fee Schedule and Cboe EDGX Fee 
Schedule.
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    The Exchange also believes that it is reasonable, equitable and not 
unfairly

[[Page 81590]]

discriminatory to provide a higher rebate for executions resulting from 
adding displayed liquidity than for executions of adding non-displayed 
liquidity as this rebate structure is designed to incentivize Members 
to send the Exchange displayable orders, thereby contributing to price 
discovery and price formation, consistent with the overall goal of 
enhancing market quality. Moreover, the Exchange notes that there are 
precedents for exchanges to provide rebates that distinguish between 
displayed and non-displayed volume to incentivize displayed orders and 
facilitate price discovery.
Standard Fee for Removing Liquidity
    The Exchange believes that it is appropriate, reasonable, and 
consistent with the Act to charge a standard fee of $0.0030 per share 
for executions of orders that remove liquidity from the LTSE Order Book 
in securities priced at or above $1.00 per share or 0.30% of the TDV 
for securities priced under $1.00 because it is comparable to the 
transaction fee charged by other exchanges to remove liquidity.\26\ The 
Exchange further believes that this fee is equitably allocated and not 
unfairly discriminatory because it applies equally to all Members and, 
when coupled with higher rebates for adding displayed liquidity, as 
described below, is designed to facilitate increased activity on the 
Exchange to the benefit of all Members by providing more trading 
opportunities and promoting price discovery.
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    \26\ For example, the MEMX Fee Schedule assess fees to remove 
liquidity for securities at or above $1.00 that range from $0.0029-
$0.0030 per share (fees for securities below $1.00 the fees range 
from 0.28%-0.30% of total dollar value); see https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/. The Cboe BZX Fee Schedule has standard fees for 
``removing'' liquidity of $0.0030 for shares executed at or above 
$1.00 or 0.30% of total dollar volume for shares executed below 
$1.00; see https://www.cboe.com/us/equities/membership/fee_schedule/bzx/.
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Standard Rebate for Adding Displayed Liquidity
    The Exchange believes that it is appropriate, reasonable, and 
consistent with the Act to provide a standard rebate of $0.0028 per 
share for executions of orders that: (i) are displayed on the LTSE 
Order Book and (ii) add liquidity to the Exchange, in all securities 
traded on the Exchange priced at or above $1.00 per share or 0.28% of 
the TDV for securities priced under $1.00 because this rebate is 
consistent with transaction rebates provided by other exchanges.\27\ 
The Exchange further believes that this rebate structure is equitably 
allocated and not unfairly discriminatory because it applies equally to 
all Members.
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    \27\ For example, the Cboe BZX Fee Schedule reflects a standard 
rebate for adding displayed liquidity of $0.0016 for executions in 
securities priced at or above $1.00, with no rebate for executions 
in securities priced below $1.00. Further, various tiers provide the 
ability of a firm to receive a rebate of $0.0032 per share; see 
https://www.cboe.com/us/equities/membership/fee_schedule/bzx/. The 
MEMX Fee Schedule reflects rebates for ``adding'' displayed 
liquidity that range from $0.0015 to $0.0037 for shares executed at 
or above $1.00, with 0.075% to 0.15% of total dollar value for 
shares executed below $1.00, see https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/.
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Rebates for Adding Displayed Liquidity That Matches the NBBO
    The Exchange believes that it is appropriate, reasonable, and 
consistent with the Act to provide a standard rebate of $0.0029 per 
share for executions of Added Displayed Liquidity that matches the NBBO 
in all securities traded on the Exchange priced at or above $1.00 per 
share or 0.29% of the TDV for securities priced under $1.00 because 
this rebate is consistent with transaction rebates provided by other 
exchanges.\28\ The Exchange further believes that this rebate structure 
is equitably allocated and not unfairly discriminatory because it 
applies equally to all Members. Lastly, the Exchange believes that 
providing a higher rebate for adding displayed liquidity that matches 
the NBBO is reasonable, equitable and not unfairly discriminatory as it 
designed to encourage the submission of well priced orders, thereby 
contributing to a deeper and more robust and well-balanced market 
ecosystem on the Exchange to the benefit of all Members and market 
participants.
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    \28\ Id.
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Rebates for Adding Displayed Liquidity That Establishes the NBBO
    The Exchange believes that it is appropriate, reasonable, and 
consistent with the Act to provide a standard rebate of $0.00295 per 
share for executions of Added Displayed Liquidity that establishes the 
NBBO on LTSE in all securities traded on the Exchange priced at or 
above $1.00 per share or 0.295% of the TDV for securities priced under 
$1.00 because this rebate is consistent with transaction rebates 
provided by other exchanges.\29\ The Exchange further believes that 
this rebate structure is equitably allocated and not unfairly 
discriminatory because it applies equally to all Members. Lastly, the 
Exchange believes that providing a higher rebate for adding displayed 
liquidity that establishes the NBBO is reasonable, equitable and not 
unfairly discriminatory as it designed to encourage the submission of 
well priced orders, thereby contributing to a deeper and more robust 
and well-balanced market ecosystem on the Exchange to the benefit of 
all Members and market participants.
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    \29\ Id. The Exchange notes that MEMX does not have a standalone 
per share rebate for setting the NBBO, however MEMX offers an 
additive per share rebate of up to $0.0002 ``NBBO Setter Tier'' for 
securities at or above $1.00 based on the Member's average daily 
adding volume.
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Standard Rebate for Adding Non-Displayed Liquidity
    The Exchange believes that it is appropriate, reasonable, and 
consistent with the Act to provide a standard rebate of $0.0014 per 
share for executions of orders that: (i) are not displayed on the LTSE 
Order Book and (ii) add liquidity to the Exchange, in all securities 
traded on the Exchange priced at or above $1.00 per share or 0.14% of 
the TDV for securities priced under $1.00 because this rebate is 
consistent with transaction rebates provided by other exchanges.\30\ 
The Exchange further believes that this rebate structure is equitably 
allocated and not unfairly discriminatory because it applies equally to 
all Members.
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    \30\ For example, the Cboe BZX Fee Schedule reflects a standard 
rebate for adding liquidity of $0.0.00080 for executions in 
securities priced at or above $1.00, with no rebate for executions 
in securities priced below $1.00. Further, various tiers provide the 
ability of a firm to receive a rebate of $0.0032 per share; see 
https://www.cboe.com/us/equities/membership/fee_schedule/bzx/. The 
MEMX Fee Schedule reflects rebates for adding non-displayed 
liquidity that range from $0.0008 to $0.028 for shares executed at 
or above $1.00, with 0.075% for shares executed below a $1.00, see 
https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/.
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Other Proposed Changes
Annual Membership Fee
    The Exchange believes moving the Annual Membership Fee language to 
the proposed Fee Schedule is reasonable, equitable and not unfairly 
discriminatory. In particular, the Exchange believes that the proposed 
rule change will provide greater clarity to Members by having the 
Membership Fee in the Fee Schedule. Lastly, removing subsection (4) is 
appropriate as it is an obsolete reference which only applied during 
the Exchange's first year of operations. This proposed change does not 
propose any substantive changes to the Membership Fees the Exchange 
charges. Therefore, the Exchange does not believe that the proposed 
change raises any new or novel issues not already considered by the 
Commission.

[[Page 81591]]

Billing Errors
    With respect to the proposed policy relating to billing errors, the 
Exchange believes that providing that all fees and rebates are final 
after three months (i.e., resolving billing errors only for the three 
full calendar months preceding the month in which the Exchange became 
aware of the error) is reasonable and consistent with the Act as both 
the Exchange and its Members and Non-Members have an interest in 
knowing when its fee assessments are final and when reliance can be 
placed on those assessments. Indeed, without some deadline on billing 
errors, the Exchange and its Members and Non-Members would never be 
able to close their books with any confidence. As noted above, the 
Exchange believes this proposed change would conserve Exchange 
resources that would have to be expended to resolve untimely billing 
disputes, which could divert Exchange staff resources away from the 
Exchange's regulatory and business purposes. For these reasons, the 
Exchange believes this proposed change promotes just and equitable 
principles of trade, fosters cooperation and coordination with persons 
engaged in regulating, clearing, settling, processing information with 
respect to, and facilitating transactions in securities, removes 
impediments to and perfects the mechanism of a free and open market and 
a national market system, and, in general, protects investors and the 
public interest.
    Furthermore, as noted above, the language of proposed Rule 
15.120(c) is the same as language included in MEMX Rule 15.3(c) and the 
fee schedules of the four Cboe U.S. equities exchanges,\31\ and a 
number of other exchanges similarly consider their fees final after a 
similar period of time.\32\ As such, this proposed change does not 
raise any new or novel issues that have not been previously considered 
by the Commission. This proposed change is also equitable and not 
unfairly discriminatory because it would apply equally to all Members 
(and Non-Members that pay Exchange fees) and would apply in cases where 
either the Member (or Non-Member) discovers the error or the Exchange 
discovers the error.
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    \31\ See supra notes 17-21 [sic].
    \32\ See supra note 22 [sic].
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Additional Changes
    Lastly, the Exchange believes the additional changes are 
reasonable, equitable and not unfairly discriminatory. In particular, 
the Exchange believes that the proposed changes will provide greater 
clarity to market participants when looking at either the Fee Schedule 
or Chapter 15 of the LTSE Rulebook.This proposed change does not 
propose any substantive changes fees [sic] charged by the Exchange.. 
Therefore, the Exchange does not believe that the proposed change 
raises any new or novel issues not already considered by the 
Commission.
    In conclusion, the Exchange also submits that its proposed fee 
structure satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of 
the Act for the reasons discussed above in that it provides for the 
equitable allocation of reasonable dues, fees and other charges among 
its Members and other persons using its facilities, provides certainty 
in billing and a process for resolving billing disputes, does not 
permit unfair discrimination between customers, issuers, brokers, or 
dealers, and is designed to promote just and equitable principles of 
trade, to remove impediments to and perfect the mechanism of a free and 
open market and a national market system and in general to protect 
investors and the public interest, particularly as the proposal neither 
targets nor will it have a disparate impact on any particular category 
of market participant. As described more fully below in the Exchange's 
statement regarding the burden on competition, the Exchange believes 
that it is subject to significant competitive forces, and that its 
proposed fee and rebate structure is an appropriate effort to address 
such forces.

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. Rather, as 
discussed above, the Exchange believes that the proposed change would 
encourage the submission of additional order flow to a public exchange, 
thereby promoting market depth, execution incentives and enhanced 
execution opportunities, as well as price discovery and transparency 
for all Members. As a result, the Exchange believes that the proposed 
change furthers the Commission's goal in adopting Regulation NMS of 
fostering competition among orders, which promotes ``more efficient 
pricing of individual stocks for all types of orders, large and 
small.'' \33\ The Exchange does not believe that the proposed rule 
change will impose any burden on intermarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act. To 
the contrary, the Exchange believes that the proposed pricing structure 
will increase competition and is intended to draw volume to the 
Exchange. The Exchange believes that the ever-shifting market share 
among the exchanges from month to month demonstrates that market 
participants can shift order flow or discontinue to reduce use of 
certain categories of products, in response to new or different pricing 
structures being introduced into the market. Accordingly, competitive 
forces constrain the Exchange's transaction fees and rebates, and 
market participants can readily trade on competing venues if they deem 
pricing levels at those other venues to be more favorable. Although 
this pricing is intended to attract liquidity to the Exchange, most 
other exchanges in operation today already offer multiple incentives to 
their participants, including tiered pricing that provides higher 
rebates or discounted executions, and other exchanges will be able to 
modify such incentives in order to compete with the Exchange. 
Accordingly, with respect to a participant deciding to either submit an 
order to add liquidity or seeking to remove liquidity, there are 
multiple exchanges that will continue to be competitively priced for 
such orders when compared to the Exchange's pricing. Further, while 
pricing incentives can cause shifts of liquidity between trading 
centers, market participants make determinations on where to provide 
liquidity or route orders to take liquidity based on factors other than 
pricing, including execution quality, technology, functionality, and 
other considerations. Consequently, the Exchange believes that the 
degree to which its fees and rebates could impose any burden on 
competition is extremely limited, and does not believe that such fees 
would burden competition of Members or competing venues in a manner 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. The Exchange does not believe that the proposed rule change 
will impose any burden on intramarket competition that is not necessary 
or appropriate in furtherance of the purposes of the Act because the 
proposed fees and rebates apply equally to all Members. The proposed 
pricing structure is intended to encourage market participants to add 
displayed and non-displayed liquidity to the Exchange by providing 
rebates that are

[[Page 81592]]

comparable to those offered by other exchanges as well as to provide a 
competitive rate charged for removing liquidity, which the Exchange 
believes will help to encourage Members to send orders to the Exchange 
to the benefit of all Exchange participants. As the proposed rates are 
equally applicable to all market participants, the Exchange does not 
believe there is any burden on intramarket competition.
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    \33\ See supra note 26 [sic].
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    With respect to the proposed billing errors policy, the proposal 
would establish a clearly defined timeframe for fees and rebates to be 
considered final that would apply equally to all Members and Non-
Members. Additionally, as noted above, this proposed change is similar 
to rules of other exchanges and therefore does not raise any new or 
novel issues that have not been previously considered by the 
Commission.\34\
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    \34\ See supra notes 14-19 [sic].
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    For these reasons, the Exchange does not believe such proposed 
changes would impair the ability of Members or competing order 
execution venues to maintain their competitive standing in the 
financial markets, and therefore, the Exchange does not believe the 
proposal will impose any burden on intermarket competition. Moreover, 
because the proposed changes would apply equally to all Members and 
Non-Members, as applicable, the Exchange does not believe the proposal 
would impose any burden on intramarket competition.

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

    The Exchange neither solicited nor received comments on the 
proposed rule change.

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

    This proposed rule change establishes dues, fees or other charges 
among its members and, as such, may take effect upon filing with the 
Commission pursuant to Section 19(b)(3)(A)(ii) of the Act \35\ and 
paragraph (f)(2) of Rule 19b-4 thereunder.\36\ Accordingly, the 
proposed rule change would take effect upon filing with the Commission.
---------------------------------------------------------------------------

    \35\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \36\ 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 the rule 
change if it appears to the Commission that the action is necessary or 
appropriate in the public interest, for the protection of investors, or 
would otherwise further the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

    <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#c7b5b2aba2eaa4a8aaaaa2a9b3b487b4a2a4e9a0a8b1"><span class="__cf_email__" data-cfemail="e694938a83cb85898b8b83889295a6958385c8818990">[email protected]</span></a>. Please include 
file number SR-LTSE-2024-06 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-LTSE-2024-06. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-LTSE-2024-06 and should be 
submitted on or before October 29, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\37\
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    \37\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-23062 Filed 10-7-24; 8:45 am]
BILLING CODE 8011-01-P


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