44110 Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 

25 Id. 

26 15 U.S.C. 78q–1(b)(3)(I). 

27 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Executive Chairman. Finally, OCC 

believes the proposed changes to its 

Board Committee Charters would 

provide OCC’s Board with appropriate 

flexibility to more quickly adjust the 

administrative reporting lines for, and 

oversight of the performance of, OCC’s 

Internal Audit and Compliance 

functions and key OCC personnel, such 

as the CAE, CCO, and CRO, taking into 

account the specific qualifications, 

experience, competence, character, 

skills, incentives, integrity or other 

relevant attributes of Board members 

and senior officers at any given time. 

OCC believes the proposed change 

would provide an appropriate level of 

clarity and transparency regarding the 

limited set of officers to which the CAE, 

CCO, and CRO may report to for 

administrative purposes and the Board’s 

responsibility for designating such 

reporting lines. The proposed changes 

to the Board Committee Charters would 

not alter the responsibilities of the 

Board generally or of any of its 

individual committees or committee 

members. These responsibilities would 

continue to be specified in each of the 

Board Committee Charters. As a result, 

OCC believes the proposed rule change 

is reasonably designed to provide for 

governance arrangements that remain 

clear and transparent and specify clear 

and direct lines of responsibility in 

accordance with Rule 17Ad–22(e)(2)(i) 

and (v).25

(B) Clearing Agency’s Statement on 

Burden on Competition 

Section 17A(b)(3)(I) of the Exchange 

Act 26 requires that the rules of a 

clearing agency not impose any burden 

on competition not necessary or 

appropriate in furtherance of the Act. 

OCC does not believe that the proposed 

rule change would have any impact or 

impose any burden on competition. The 

proposed rule change would provide 

OCC’s Board with the discretion to elect 

either an Executive Chairman or a NonExecutive Chairman to preside over the 

Board and would clarify the roles and 

responsibilities of an Executive versus a 

Non-Executive Chairman. The proposed 

rule change would also make changes to 

OCC’s Board and Board Committee 

Charters regarding the Board’s oversight 

of the Chairman and other senior 

officers of OCC. The proposed rule 

change would not inhibit access to 

OCC’s services or disadvantage of favor 

any user in relationship to another. As 

a result, OCC believes the proposed rule 

change would not impact or impose a 

burden on competition. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants or Others 

Written comments on the proposed 

rule change were not and are not 

intended to be solicited with respect to 

the proposed rule change and none have 

been received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

OCC–2021–007 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–OCC–2021–007. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of OCC and on OCC’s website at 

https://www.theocc.com/CompanyInformation/Documents-and-Archives/ 

By-Laws-and-Rules. 

All comments received will be posted 

without change. Persons submitting 

comments are cautioned that we do not 

redact or edit personal identifying 

information from comment submissions. 

You should submit only information 

that you wish to make available 

publicly. 

All submissions should refer to File 

Number SR–OCC–2021–007 and should 

be submitted on or before September 1, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–17088 Filed 8–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92579; File No. SR–MEMX– 

2021–09] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend Its Fee Schedule 

August 5, 2021. 

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 August 2, 

2021, MEMX LLC (‘‘MEMX’’ 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 Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 


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3See Exchange Rule 1.5(p). 

4The Exchange initially filed the proposed Fee 

Schedule changes on July 30, 2021 (SR–MEMX– 

2021–08). On August 2, 2021, the Exchange 

withdrew that filing and submitted this proposal. 

5Market share percentage calculated as of July 30, 

2021. The Exchange receives and processes data 

made available through consolidated data feeds 

(i.e., CTS and UTDF). 

6 Id. 

7The Exchange currently provides an enhanced 

rebate for executions of Added Displayed Volume 

to Members that meet a specified volume threshold 

under the Exchange’s Liquidity Provision Tier. See 

Securities Exchange Act Release No. 92150 (June 

10, 2021), 86 FR 32090 (June 16, 2021) (SR–MEMX– 

2021–07). 

8As proposed, the term ‘‘Step-Up ADAV’’ means 

ADAV in the relevant baseline month subtracted 

from current ADAV. As set forth on the Fee 

Schedule, ‘‘ADAV’’ means the average daily added 

volume calculated as the number of shares added 

per day, which is calculated on a monthly basis. 

9As proposed, the term ‘‘TCV’’ means total 

consolidated volume calculated as the volume 

reported by all exchanges and trade reporting 

facilities to a consolidated transaction reporting 

plan for the month for which the fees apply. 

10As proposed, the term ‘‘ADV’’ means average 

daily volume calculated as the number of shares 

added or removed, combined, per day. 

11This proposed pricing is referred to by the 

Exchange on the Fee Schedule under the new 

description ‘‘Removed volume, Liquidity Removal 

Tier’’ with a Fee Code of ‘‘R1’’ to be provided by 

the Exchange on the monthly invoices provided to 

Members. The Exchange notes that because the 

determination of whether a Member qualifies for 

the Liquidity Removal Tier for a particular month 

will not be made until after the month-end, the 

Exchange will provide the Fee Code otherwise 

applicable to such transactions (i.e., ‘‘R’’) on the 

execution reports provided to Members during the 

month and will only designate the Fee Code of 

‘‘R1’’ on the monthly invoices, which are provided 

after such determination has been made. 

12The Exchange also proposes to relocate the 

definition of ‘‘ADAV’’ from the ‘‘Notes’’ section to 

the proposed new ‘‘Definitions’’ section of the Fee 

Schedule for organization purposes. 

13See, e.g., the Cboe EDGX Exchange, Inc. (‘‘Cboe 

EDGX’’) equities trading fee schedule on its public 

website (available at https://www.cboe.com/us/ 

equities/membership/fee_schedule/edgx/); the Cboe 

BZX Exchange, Inc. (‘‘Cboe BZX’’) equities trading 

fee schedule on its public website (available at 

Continued 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing with the 

Commission a proposed rule change to 

amend the Exchange’s fee schedule 

applicable to Members 3 (the ‘‘Fee 

Schedule’’) pursuant to Exchange Rules 

15.1(a) and (c). The Exchange proposes 

to implement the changes to the Fee 

Schedule pursuant to this proposal on 

August 2, 2021. The text of the proposed 

rule change is provided in Exhibit 5. 

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 amend the Fee Schedule to: 

(i) Adopt a new Liquidity Removal Tier 

applicable to the fees charged for 

executions of orders in securities priced 

at or above $1.00 per share that remove 

liquidity from the Exchange (such 

orders, ‘‘Removed Volume’’); (ii) 

increase the standard fee for executions 

of Removed Volume; and (iii) allow 

affiliated Members to aggregate their 

volume for purposes of the Exchange’s 

pricing tiers with prior notice to the 

Exchange.4

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 is only one of 

16 registered equities exchanges, as well 

as a number of alternative trading 

systems and other off-exchange 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 

the total market share of executed 

volume of equities trading.5 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 

approximately 3% of the overall market 

share.6

Adoption of Liquidity Removal Tier 

The Exchange is proposing to 

introduce a tiered pricing structure 

applicable to the fees charged for 

executions of Removed Volume, which 

is similar to the Exchange’s existing 

tiered pricing structure applicable to the 

rebates provided for executions of 

displayed orders in securities priced at 

or above $1.00 per share that add 

liquidity to the Exchange (‘‘Added 

Displayed Volume’’).7 Specifically, the 

Exchange proposes to adopt a new 

volume-based tier, referred to by the 

Exchange as the Liquidity Removal Tier, 

in which the Exchange will charge a fee 

that is lower than the standard fee for 

executions of Removed Volume for 

Members that meet at least one of two 

specified volume thresholds on the 

Exchange, as described below. 

Currently, the Exchange charges a 

standard fee of $0.00265 per share for 

all executions of Removed Volume, 

which the Exchange is proposing to 

increase to $0.0028, as further described 

below. The Exchange now proposes to 

adopt the Liquidity Removal Tier in 

which it will charge a lower fee of 

$0.00265 per share for executions of 

Removed Volume for Members that 

qualify for the Liquidity Removal Tier 

by achieving: (1) A Step-Up ADAV 8

from July 2021 that is equal to or greater 

than 0.05% of the TCV; 9 or (2) an 

ADV 10 that is equal to or greater than 

0.30% of the TCV.11 As proposed, ADV 

and Step-Up ADAV will be calculated 

on a monthly basis, and Members that 

qualify for the Liquidity Removal Tier 

by achieving at least one of the Step-Up 

ADAV or ADV thresholds specified 

above in a particular month will be 

charged the proposed lower fee of 

$0.00265 per share, instead of the 

proposed standard fee of $0.0028 per 

share, for all executions of Removed 

Volume in that month. 

The Exchange proposes to charge 

Members that qualify for the Liquidity 

Removal Tier a fee of 0.05% of the total 

dollar value of the transaction for 

executions of orders that remove 

liquidity from the Exchange in 

securities priced below $1.00 per share, 

which is the same fee that would be 

applicable to such executions for 

Members that do not qualify for the 

Liquidity Removal Tier. Thus, as under 

the Exchange’s current pricing, the same 

fee would be charged to all Members for 

executions of orders that remove 

liquidity from the Exchange in 

securities priced below $1.00 per share. 

The Exchange proposes to add 

definitions of the terms ADV, Step-Up 

ADAV, and TCV, which are consistent 

with the definitions of those terms 

above, under a new ‘‘Definitions’’ 

section of the Fee Schedule in 

connection with the proposed Liquidity 

Removal Tier.12 The Exchange notes 

that the proposed definitions of ADV, 

Step-Up ADAV, and TCV are 

substantially similar to the definitions 

of those terms used by other exchanges 

on their fee schedules in connection 

with similar volume-based pricing 

tiers.13 Additionally, like the Exchange 


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https://markets.cboe.com/us/equities/membership/ 

fee_schedule/bzx/). 

14The Exchange notes that excluding such days 

from the calculations of ADV and TCV is also 

consistent with the practice of other exchanges 

when calculating ADV and TCV. See id. 

15The Exchange currently excludes routed shares 

in the calculation of ADAV so this proposed change 

is clarifying this practice and also adopting it for 

the calculation of ADV. The Exchange notes that 

excluding routed shares from the calculations of 

ADAV and ADV is also consistent with the practice 

of other exchanges when calculating ADAV and 

ADV. See, e.g., the Cboe BZX equities trading fee 

schedule on its public website (available at https:// 

markets.cboe.com/us/equities/membership/fee_

schedule/bzx/). 

16See the Cboe EDGX equities trading fee 

schedule on its public website (available at https:// 

www.cboe.com/us/equities/membership/ 

feeschedule/edgx/), which reflects fees charged 

under ‘‘Remove Volume Tiers’’—tiers based on a 

member achieving certain step-up ADAV and ADV 

volume thresholds—ranging from $0.0027 to 

$0.00275 per share for removing volume from the 

Cboe EDGX exchange. 

17This proposed pricing is referred to by the 

Exchange on the Fee Schedule under the existing 

description ‘‘Removed volume from MEMX Book’’ 

and such orders will continue to receive a Fee Code 

of ‘‘R’’ assigned by the Exchange. 

18See, e.g., the Cboe BZX equities trading fee 

schedule on its public website (available at https:// 

markets.cboe.com/us/equities/membership/fee_

schedule/bzx/), which reflects a standard fee of 

$0.0030 per share to remove liquidity in securities 

priced at or above $1.00 per share; the Cboe EDGX 

equities trading fee schedule on its public website 

(available at https://markets.cboe.com/us/equities/ 

membership/fee_schedule/edgx/), which reflects a 

standard fee of $0.00285 per share to remove 

liquidity in securities priced at or above $1.00 per 

share; the Nasdaq Price List—Trading Connectivity 

(available at http://nasdaqtrader.com/ 

Trader.aspx?id=PriceListTrading2), which reflects a 

standard fee of $0.0030 per share to remove 

liquidity in securities priced at or above $1.00 per 

share. 

19See supra note 13. 

20 15 U.S.C. 78f. 

21 15 U.S.C. 78f(b)(4) and (5). 

currently does with respect to its 

calculation of ADAV and for purposes 

of determining qualification for the 

Exchange’s Displayed Liquidity 

Incentive, the Exchange proposes to 

exclude from its calculations of ADV 

and TCV: (1) Any trading day that the 

Exchange’s system experiences a 

disruption that lasts for more than 60 

minutes during regular trading hours 

(‘‘Exchange System Disruption Days’’); 

and (2) the day that Russell Investments 

reconstitutes its family of indexes (the 

‘‘Russell Reconstitution Day’’).14 The 

Exchange also proposes to specify on 

the Fee Schedule that routed shares are 

not included in the calculation of ADAV 

or ADV.15

The Exchange believes that the 

proposed Liquidity Removal Tier 

provides an incremental incentive for 

Members to strive for higher ADAV on 

the Exchange and/or maintain or strive 

for higher ADV on the Exchange in 

order to qualify for the proposed lower 

fee for executions of Removed Volume. 

As such, the proposed Liquidity 

Removal Tier is designed to encourage 

Members to maintain or increase their 

order flow directed to the Exchange, 

thereby contributing to a deeper and 

more liquid market to the benefit of all 

market participants and enhancing the 

attractiveness of the Exchange as a 

trading venue. The Exchange notes that 

the proposed lower fee for executions of 

Removed Volume applicable to 

Members that qualify for the Liquidity 

Removal Tier (i.e., $0.00265 per share) 

is comparable to, and competitive with, 

the fees charged for executions of 

liquidity-removing orders charged by at 

least one other exchange under similar 

volume-based tiers.16

Increased Standard Fee for Removed 

Volume 

In connection with the proposed 

adoption of the Liquidity Removal Tier, 

the Exchange also proposes to increase 

the standard fee charged for executions 

Removed Volume. Currently, the 

Exchange charges a standard fee of 

$0.00265 per share for executions of 

Removed Volume. The Exchange now 

proposes to increase the standard fee 

charged for executions of Removed 

Volume to $0.0028 per share.17 The 

Exchange notes that Members would 

still be able to pay a fee of $0.00265 per 

share for executions of Removed 

Volume by qualifying for the proposed 

Liquidity Removal Tier, as described 

above. 

The purpose of increasing the 

standard fee for executions of Removed 

Volume is for business and competitive 

reasons, as the Exchange believes that 

increasing such fee as proposed would 

generate additional revenue to offset 

some of the costs associated with the 

Exchange’s current pricing structure, 

which provides various rebates for 

liquidity-adding orders, and the 

Exchange’s operations generally, in a 

manner that is consistent with the 

Exchange’s overall pricing philosophy 

of encouraging added liquidity. The 

Exchange notes that despite the modest 

increase proposed herein, the 

Exchange’s standard fee for executions 

of Removed Volume remains lower 

than, and competitive with, the 

standard fee to remove liquidity in 

securities priced at or above $1.00 per 

share charged by several other 

exchanges.18

Allow Members To Aggregate Volume 

for Pricing Tiers 

Lastly, the Exchange proposes to add 

a note to the Fee Schedule to allow 

affiliated Members to aggregate their 

volume for purposes of the Exchange’s 

determination of ADAV and ADV with 

respect to pricing tiers if such Members 

provide prior notice to the Exchange. 

Specifically, to the extent that two or 

more affiliated companies maintain 

separate memberships with the 

Exchange and can demonstrate their 

affiliation by showing they control, are 

controlled by, or are under common 

control with each other, the Exchange 

would permit such Members to count 

aggregate volume of such affiliates in 

calculating ADAV and ADV. As 

proposed, the Exchange will verify such 

affiliation using a Member’s Form BD, 

which lists control affiliates. The 

purpose of this proposed change is to 

avoid disparate treatment of firms that 

have divided their various business 

activities between separate corporate 

entities as compared to firms that 

operate those business activities within 

a single corporate entity, as allowing 

affiliated Member firms to count their 

aggregate volume in calculating ADAV 

and ADV would produce the same 

result for purposes of the Exchange’s 

volume-based tier pricing as if such 

affiliated Member firms were instead 

organized as a single corporate entity. 

The Exchange notes that this proposed 

change is consistent with the practice of 

other exchanges with respect to the 

aggregation of affiliated member firms’ 

volume for purposes of ADAV and ADV 

calculations with respect to pricing 

tiers.19

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,20

in general, and with Sections 6(b)(4) and 

6(b)(5) of the Act,21 in particular, in that 

it provides for the equitable allocation 

of reasonable dues, fees and other 

charges among its Members and other 

persons using its facilities and is not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

As discussed above, the Exchange 

operates in a highly fragmented and 

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, and the Exchange 

represents only a small percentage of 

the overall market. 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, 


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22Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 

23See supra note 7. 

24See the Cboe EDGX equities trading fee 

schedule on its public website (available at https:// 

www.cboe.com/us/equities/membership/fee_

schedule/edgx/). 25 Id. 26See supra note 13. 

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.’’ 22

The Exchange believes that the evershifting 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. The Exchange believes the 

proposal reflects a reasonable and 

competitive pricing structure designed 

to incentivize market participants to 

direct their order flow to the Exchange, 

which the Exchange believes would 

enhance liquidity and market quality to 

the benefit of all Members and market 

participants. 

Adoption of Liquidity Removal Tier 

The Exchange believes that the 

proposed Liquidity Removal Tier is 

reasonable because it would provide 

Members with an additional incentive 

to achieve certain volume thresholds on 

the Exchange. Volume-based incentives 

and discounts have been widely 

adopted by exchanges, including the 

Exchange,23 and are equitable and not 

unfairly discriminatory because they are 

open to all Members on an equal basis 

and provide additional benefits or 

discounts that are reasonably related to 

the value to an exchange’s market 

quality associated with higher levels of 

market activity, such as higher levels of 

liquidity provision and/or growth 

patterns and the introduction of higher 

volumes of orders into the price and 

volume discovery processes. The 

Exchange believes the proposed 

Liquidity Removal Tier is equitable and 

not unfairly discriminatory for these 

same reasons, as it is open to all 

Members and is designed to encourage 

Members to maintain or increase their 

order flow directed to the Exchange, 

thereby contributing to a deeper and 

more liquid market to the benefit of all 

market participants and enhancing the 

attractiveness of the Exchange as a 

trading venue. Moreover, the Exchange 

believes the proposed Liquidity 

Removal Tier is a reasonable means to 

incentivize such increased activity, as it 

provides two different types of volume 

thresholds that Members may choose to 

achieve in order to receive the proposed 

lower fee for executions of Removed 

Volume—a Step-Up ADAV threshold, 

which can be met by a Member 

increasing their liquidity-adding volume 

on the Exchange (i.e., ADAV) by at least 

the specified threshold above their July 

2021 ADAV, and an ADV threshold, 

which can be met by a Member 

maintaining or increasing their overall 

(i.e., liquidity-adding and liquidityremoving) volume executed on the 

Exchange to an amount equal to or 

greater than the specified TCV 

threshold. Thus, Members that do not 

increase their ADAV above their July 

2021 ADAV by at least 0.05% of the 

TCV could still qualify for the Liquidity 

Removal Tier by maintaining or 

increasing their ADV at or above 0.30% 

of the TCV, and vice versa. 

Additionally, the Exchange believes 

the proposed lower fee for executions of 

Removed Volume for qualifying 

Members (i.e., $0.00265 per share) is 

reasonable, in that it represents only a 

modest decrease from the proposed 

standard fee for such executions (i.e., 

$0.0028 per share) and is the same as 

the current standard fee for such 

executions. The Exchange believes that 

it is reasonable, consistent with an 

equitable allocation of fees, and not 

unfairly discriminatory to charge such 

lower fee for executions of Removed 

Volume to Members that qualify for the 

Liquidity Removal Tier in comparison 

with the standard fee in recognition of 

the benefits that such Members provide 

to the Exchange and market 

participants, as described above, 

particularly as the magnitude of the 

lower fee is not unreasonably high and 

is, instead, reasonably related to the 

enhanced market quality it is designed 

to achieve. Further, as noted above, 

competing exchanges offer tiered 

pricing structures similar to the 

proposed Liquidity Removal Tier, 

including schedules of rebates and fees 

that apply based upon Members 

achieving certain volume and/or growth 

thresholds, and the Exchange believes 

the proposed Liquidity Removal Tier’s 

criteria are reasonable when compared 

to such tiers provided for by other 

exchanges. For example, Cboe EDGX 

charges lower fees for removing volume 

from the Cboe EDGX exchange under its 

‘‘Remove Volume Tiers’’ ranging from 

$0.0027 to $0.00275 per share, as 

compared to its standard fee of $0.00285 

per share, but requires different, but 

similar, criteria than the Exchange’s 

proposed Liquidity Removal Tier, 

which are also based upon a member’s 

volume and/or growth patterns.24

The Exchange further believes that it 

is reasonable, consistent with an 

equitable allocation of fees, and not 

unfairly discriminatory to charge 

Members that qualify for the Liquidity 

Removal Tier a fee of 0.05% of the total 

dollar value of the transaction for 

executions of orders that remove 

liquidity from the Exchange in 

securities priced below $1.00 per share, 

as this is the same fee that would be 

applicable to such executions for all 

Members (i.e., including those that do 

not qualify for the Liquidity Removal 

Tier), which is also the case under the 

Exchange’s current pricing. 

The Exchange also believes the 

proposed Liquidity Removal Tier is fair, 

equitable, and not unfairly 

discriminatory because it is available to 

all Members. Further, the proposed 

Liquidity Removal Tier would provide a 

way for Members to continue to pay the 

same fee they currently do for 

executions of Removed Volume (i.e., 

$0.00265 per share) even though the 

Exchange is proposing to increase the 

standard fee to $0.0028 per share. 

Additionally, as noted above, such fee is 

comparable to the fees charged for 

executions of liquidity-removing orders 

charged by Cboe EDGX under similar 

volume-based tiers.25

The Exchange believes that adding the 

proposed definitions for the terms ADV, 

Step-Up ADAV, and TCV, as well as 

relocating the definition of ADAV, 

under a new ‘‘Definitions’’ section of the 

Fee Schedule is reasonable, equitable, 

and non-discriminatory because such 

definitions are substantially similar to 

the definitions of such terms used by 

other exchanges in connection with 

similar volume-based pricing tiers, as 

described above,26 and their placement 

on the Fee Schedule is designed to 

ensure that the Fee Schedule is as clear 

and understandable as possible with 

respect to applicable pricing. Similarly, 

the Exchange believes that adding notes 

on the Fee Schedule specifying that 

routed shares are not included in the 

calculation of ADAV or ADV and that 

Exchange System Disruption Days and 

the Russell Reconstitution Day are 

excluded from the calculations of ADV 

and TCV is reasonable, equitable, and 


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27See supra notes 14–15. 

28See supra note 18. 29See supra note 13. 30See supra note 22. 

non-discriminatory as such notes are 

intended to clarify the Exchange’s 

calculation practices with respect to its 

volume-based pricing tiers, and such 

practices are consistent with the 

practices of other exchanges in this 

regard.27

Increased Standard Fee for Removed 

Volume 

The Exchange believes that the 

proposed change to increase the 

standard fee for executions of Removed 

Volume is reasonable, equitable, and 

consistent with the Act because such 

change is designed to generate 

additional revenue and decrease the 

Exchange’s expenditures with respect to 

transaction pricing in order to offset 

some of the costs associated with the 

various rebates provided by the 

Exchange for liquidity-adding orders 

and the Exchange’s operations 

generally, in a manner that is consistent 

with the Exchange’s overall pricing 

philosophy of encouraging added 

liquidity, as described above. The 

Exchange also believes the proposed 

increased standard fee for executions of 

Removed Volume is reasonable and 

appropriate because it represents a 

modest increase from the current 

standard fee and, as noted above, 

remains lower than, and competitive 

with, the standard fee charged by 

several other exchanges to remove 

liquidity in securities priced at or above 

$1.00 per share.28 The Exchange further 

believes that the proposed increased 

standard fee for executions of Removed 

Volume is equitably allocated and not 

unfairly discriminatory because it will 

apply equally to all Members. 

Allow Members To Aggregate Volume 

for Pricing Tiers 

As noted above, the proposed 

language permitting aggregation of 

volume amongst affiliated Members for 

purposes of the ADAV and ADV 

calculations is intended to avoid 

disparate treatment of firms that have 

divided their various business activities 

between separate corporate entities as 

compared to firms that operate those 

business activities within a single 

corporate entity, as allowing affiliated 

Member firms to count their aggregate 

volume in calculating ADAV and ADV 

would produce the same result for 

purposes of the Exchange’s volumebased tier pricing as if such affiliated 

Member firms were instead organized as 

a single corporate entity. By way of 

example, subject to appropriate 

information barriers, many firms that 

are Members of the Exchange operate 

both a market making desk and a public 

customer business within the same 

corporate entity. In contrast, other firms 

may be part of a corporate structure that 

separates those business lines into 

different corporate affiliates, either for 

business, compliance or historical 

reasons. Those corporate affiliates, in 

turn, are required to maintain separate 

memberships with the Exchange. 

Absent the proposed policy, such 

corporate affiliates would not receive 

the same treatment as firms operating 

similar business lines within a single 

entity that is a Member of the Exchange. 

Accordingly, the Exchange believes that 

its proposed policy is fair and equitable, 

and not unreasonably discriminatory. In 

addition to ensuring fair and equal 

treatment of its Members, the Exchange 

does not want to create incentives for its 

Members to restructure their business 

operations or compliance functions 

simply due to the Exchange’s pricing 

structure. Moreover, as noted above, this 

proposed policy is consistent with the 

practice of other exchanges with respect 

to the aggregation of affiliated Members’ 

volume for purposes of determining 

ADAV and ADV with respect to pricing 

tiers.29

For the reasons discussed above, the 

Exchange submits that the proposal 

satisfies the requirements of Sections 

6(b)(4) and 6(b)(5) of the Act in that it 

provides for the equitable allocation of 

reasonable dues, fees and other charges 

among its Members and other persons 

using its facilities and is not designed to 

unfairly discriminate between 

customers, issuers, brokers, or dealers. 

As described more fully below in the 

Exchange’s statement regarding the 

burden on competition, the Exchange 

believes that its transaction pricing is 

subject to significant competitive forces, 

and that the proposed fees and rebates 

described herein are appropriate to 

address such forces. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposal will result in any burden 

on competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. Instead, as 

discussed above, the proposal is 

intended to encourage Members to 

maintain or increase their order flow on 

the Exchange, thereby contributing to a 

deeper and more liquid market to the 

benefit of all market participants and 

enhancing the attractiveness of the 

Exchange as a trading venue. As a 

result, the Exchange believes the 

proposal would enhance its 

competitiveness as a market that attracts 

actionable orders, thereby making it a 

more desirable destination venue for its 

customers. For these reasons, the 

Exchange believes that the proposal 

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.’’ 30

Intramarket Competition 

The Exchange believes that the 

proposal would incentivize Members to 

maintain or increase their order flow on 

the Exchange, thereby contributing to a 

deeper and more liquid market to the 

benefit of all market participants and 

enhancing the attractiveness of the 

Exchange as a trading venue, which the 

Exchange believes, in turn, would 

continue to encourage market 

participants to direct additional order 

flow to the Exchange. Greater liquidity 

benefits all Members by providing more 

trading opportunities and encourages 

Members to send additional orders to 

the Exchange, thereby contributing to 

robust levels of liquidity, which benefits 

all market participants. The opportunity 

to qualify for the Liquidity Removal 

Tier, and thus receive the proposed 

lower fee for executions of Removed 

Volume, would be available to all 

Members that meet the associated 

volume requirement in any month. The 

Exchange believes that meeting the 

volume requirement of the Liquidity 

Removal Tier is attainable for several 

market participants, as Members must 

meet only one of two different types of 

volume thresholds, as described above, 

and the Exchange believes such 

thresholds are relatively low and 

reasonably related to the enhanced 

liquidity and market quality that the 

Liquidity Removal Tier is designed to 

promote. Similarly, the proposed 

increased standard fee for executions of 

Removed Volume and the ability for 

Members to aggregate volume amongst 

affiliated Member firms for purposes of 

the Exchange’s determination of ADAV 

and ADV with respect to pricing tiers 

would apply equally to all Members. As 

such, the Exchange believes the 

proposed changes would not impose 

any burden on intramarket competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

Intermarket Competition 

As noted above, the Exchange 

operates in a highly competitive market 

in which market participants can 


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Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 44115 

31See supra notes 18 and 24. 

32See supra note 13. 

33See supra note 22. 

34NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 

Cir. 2010) (quoting Securities Exchange Act Release 

No. 59039 (December 2, 2008), 73 FR 74770, 74782– 

83 (December 9, 2008) (SR–NYSE–2006–21)). 

35 15 U.S.C. 78s(b)(3)(A)(ii). 

36 17 CFR 240.19b–4(f)(2). 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. Members 

have numerous alternative venues that 

they may participate on and direct their 

order flow to, including 15 other 

equities exchanges and numerous 

alternative trading systems and other 

off-exchange venues. As noted above, no 

single registered equities exchange 

currently has more than approximately 

16% of the total market share of 

executed volume of equities trading. 

Thus, in such a low-concentrated and 

highly competitive market, no single 

equities exchange possesses significant 

pricing power in the execution of order 

flow. Moreover, 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, including with respect 

to executions of Removed Volume, and 

market participants can readily choose 

to send their orders to other exchange 

and off-exchange venues if they deem 

fee levels at those other venues to be 

more favorable. 

As described above, the proposed 

Liquidity Removal Tier and the 

proposed increased standard fee for 

executions of Removed Volume are 

competitive proposals through which 

the Exchange is seeking to encourage 

additional order flow to be sent to the 

Exchange and generate additional 

revenue to offset some of the costs 

associated with the Exchange’s current 

pricing structure and its operations 

generally, and such proposed rates 

applicable to executions of Removed 

Volume are comparable to, and 

competitive with, rates charged by other 

exchanges.31 As noted above, the 

proposed rate applicable to executions 

of orders in securities priced at or above 

$1.00 per share for Members that qualify 

for the Liquidity Removal Tier would be 

the same rate applicable to such 

executions for all Members, as is the 

case under the Exchange’s current 

pricing. Additionally, the proposed 

change to allow affiliated Members to 

aggregate their volume for purposes of 

the Exchange’s determination of ADAV 

and ADV with respect to pricing tiers is 

designed to avoid disparate treatment of 

firms that have divided their various 

business activities between separate 

corporate entities as compared to firms 

that operate those business activities 

within a single corporate entity, which 

is consistent with the practice of other 

exchanges, as discussed above.32

Accordingly, the Exchange believes the 

proposal would not burden, but rather 

promote, intermarket competition by 

enabling it to better compete with other 

exchanges that offer similar volumebased incentives and pricing with 

respect to executions of Removed 

Volume and volume aggregation 

amongst affiliates with respect to 

pricing tiers. 

Additionally, 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.’’ 33 The 

fact that this market is competitive has 

also long been recognized by the courts. 

In NetCoalition v. SEC, the D.C. Circuit 

stated as follows: ‘‘[n]o one disputes 

that competition for order flow is 

‘fierce.’ . . . As the SEC explained, ‘[i]n 

the U.S. national market system, buyers 

and sellers of securities, and the brokerdealers that act as their order-routing 

agents, have a wide range of choices of 

where to route orders for execution’; 

[and] ‘no exchange can afford to take its 

market share percentages for granted’ 

because ‘no exchange possesses a 

monopoly, regulatory or otherwise, in 

the execution of order flow from broker 

dealers’ . . . .’’.34 Accordingly, the 

Exchange does not believe its proposed 

pricing changes impose any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

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 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act 35 and Rule 

19b–4(f)(2) 36 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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

MEMX–2021–09 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–MEMX–2021–09. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 


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37 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 92291 

(June 29, 2021), 86 FR 35551 (July 6, 2021) 

(‘‘Notice’’). 

4 15 U.S.C. 78s(b)(3)(A). A proposed rule change 

may take effect upon filing with the Commission if 

it is designated by the exchange as ‘‘establishing or 

changing a due, fee, or other charge imposed by the 

self-regulatory organization on any person, whether 

or not the person is a member of the self-regulatory 

organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii). 

5See Notice, supra note 3. 

6 15 U.S.C. 78s(b)(3)(C). 

7The Exchange defines internalized executions as 

an execution where two orders presented to the 

Exchange from the same ETP Holder (i.e., MPID) are 

presented separately and not in a paired manner, 

but nonetheless inadvertently match with one 

another. See Notice, supra note 3, at 35552 note 13. 

8See id. 

9 15 U.S.C. 78s(b)(3)(C). 

10 15 U.S.C. 78s(b)(1). 

11See 17 CFR 240.19b–4 (Item 3 entitled ‘‘SelfRegulatory Organization’s Statement of the Purpose 

of, and Statutory Basis for, the Proposed Rule 

Change’’). 

12See id. 

13 15 U.S.C. 78f(b)(4). 

14 15 U.S.C. 78f(b)(5). 

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

16See Notice, supra note 3, at 35552. 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–MEMX–2021–09 and 

should be submitted on or before 

September 1, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.37

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–17085 Filed 8–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92583; File No. SR– 

NYSEArca–2021–52] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Suspension of and Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove a 

Proposed Rule Change To Amend the 

NYSE Arca Equities Fees and Charges 

August 5, 2021. 

I. Introduction 

On June 14, 2021, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’), 

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

Securities Exchange Act of 1934 

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

proposed rule change (File No. SR– 

NYSEArca–2021–52) to amend the 

NYSE Arca Equities Fees and Charges 

(‘‘Fee Schedule’’).3 The proposed rule 

change was immediately effective upon 

filing with the Commission pursuant to 

Section 19(b)(3)(A) of the Act.4 The 

proposed rule change was published for 

comment in the Federal Register on July 

6, 2021.5 The Commission received no 

comment letters regarding the proposed 

rule change. Pursuant to Section 

19(b)(3)(C) of the Act,6 the Commission 

is hereby: (1) Temporarily suspending 

File No. SR–NYSEArca–2021–52; and 

(2) instituting proceedings to determine 

whether to approve or disapprove File 

No. SR–NYSEArca–2021–52. 

II. Description of the Proposed Rule 

Change 

The Exchange proposes to establish a 

new category of Retail Order executions 

for purposes of the Fee Schedule. 

Specifically, the Exchange proposes that 

no fees or credits would apply for Retail 

Order executions that are denoted 

‘‘internalized’’ executions under certain 

circumstances.7 The Exchange proposes 

that no fees will be charged nor credits 

paid for Retail Orders where (i) each 

side of the executed order shares the 

same MPID, (ii) each side of the 

executed order is a Retail Order with a 

time-in-force of Day, and (iii) the above 

executed orders have an Average Daily 

Volume (‘‘ADV’’) of at least 150,000 

shares. 

Prior to the proposed rule change, 

Retail Orders that were internalized 8 on 

the Exchange were not identified in the 

Fee Schedule and were treated the like 

other Retail Orders, regardless of 

whether they were internalized 

executions, and regardless of ADV. 

Specifically, the Exchange provides a 

credit ranging from $0.0035 to $0.0038, 

depending on the step-up tier, to Retail 

Orders that provide liquidity, and 

charges no fee for Retail Orders that 

remove liquidity. Therefore, the 

proposal carves out a particular group of 

Retail Orders—internalized orders when 

such orders have an ADV of at least 

150,000 shares—and eliminates the 

credits for those Retail Orders that 

provide liquidity. ETP Holders with an 

ADV under 150,000 of internalized 

Retail Orders would continue to receive 

the relevant credit for Retail Orders that 

provide liquidity. 

III. Suspension of the Proposed Rule 

Change 

Pursuant to Section 19(b)(3)(C) of the 

Act,9 at any time within 60 days of the 

date of filing of an immediately effective 

proposed rule change pursuant to 

Section 19(b)(1) of the Act,10 the 

Commission summarily may 

temporarily suspend the change in the 

rules of a self-regulatory organization 

(‘‘SRO’’) 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. As discussed below, the 

Commission believes a temporary 

suspension of the proposed rule change 

is necessary and appropriate to allow for 

additional analysis of the proposed rule 

change’s consistency with the Act and 

the rules thereunder. 

When exchanges file their proposed 

rule changes with the Commission, 

including fee filings like the Exchange’s 

present proposal, they are required to 

provide a statement supporting the 

proposal’s basis under the Act and the 

rules and regulations thereunder 

applicable to the exchange.11 The 

instructions to Form 19b–4, on which 

exchanges file their proposed rule 

changes, specify that such statement 

‘‘should be sufficiently detailed and 

specific to support a finding that the 

proposed rule change is consistent with 

[those] requirements.’’ 12

Section 6 of the Act, including 

Sections 6(b)(4), (5), and (8), require the 

rules of an exchange to: (1) Provide for 

the equitable allocation of reasonable 

fees among members, issuers, and other 

persons using the exchange’s 

facilities; 13 (2) perfect the mechanism of 

a free and open market and a national 

market system, protect investors and the 

public interest, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or 

dealers; 14 and (3) not impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Act.15

In justifying its proposal, the 

Exchange stated in its filing that its 

proposal is reasonable because it ‘‘is a 

reasonable attempt to increase liquidity 

on the Exchange and improve the 

Exchange’s market share relative to its 

competitors.’’ 16 The Exchange also 

states that the proposal is an equitable 

allocation of fees and credits because 

‘‘all ETP Holder that participate on the 


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