[Federal Register Volume 86, Number 157 (Wednesday, August 18, 2021)]
[Notices]
[Pages 46297-46304]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-17667]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92648; File No. SR-NYSEARCA-2021-70]


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

August 12, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that August 2, 2021, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, 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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Equities Fees and 
Charges (``Fee Schedule'') to (1) modify the application of the per 
share fee for Tape B securities; (2) adopt increased credits and a cap 
applicable to the Step Up Tier 4 credit in Tape B securities; (3) 
eliminate a requirement to qualify for the Tape B Tier 2 credit; (4) 
adopt increased credits and a cap applicable to the Tape B Step Up 
Tier; and (5) adopt a new pricing tier, MPID Adding Tier, applicable to 
Tape A and Tape C securities. The Exchange proposes to implement the 
fee changes effective August 2, 2021. The proposed rule change is 
available on the Exchange's website at www.nyse.com, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the Fee Schedule to (1) modify the 
application of the per share fee for Tape B securities; (2) adopt 
increased credits and a cap applicable to the Step Up Tier 4 credit in 
Tape B securities; (3) eliminate a requirement to qualify for the Tape 
B Tier 2 credit; (4) adopt increased credits and a cap applicable to 
the Tape B Step Up Tier; and (5) adopt a new pricing tier, MPID Adding 
Tier, applicable to Tape A and Tape C securities.

[[Page 46298]]

    The proposed changes respond to the current competitive environment 
where order flow providers have a choice of where to direct liquidity-
providing orders by offering further incentives for ETP Holders \4\ to 
send additional liquidity to the Exchange.
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    \4\ All references to ETP Holders in connection with this 
proposed fee change include Market Makers.
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    The Exchange proposes to implement the fee changes effective August 
2, 2021.
Background
    The Exchange operates in a highly competitive market. The 
Commission has repeatedly expressed its preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. In Regulation NMS, the Commission 
highlighted the importance of market forces in determining prices and 
SRO revenues and, also, recognized that current regulation of the 
market system ``has been remarkably successful in promoting market 
competition in its broader forms that are most important to investors 
and listed companies.'' \5\
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    \5\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7-10-04) (Final 
Rule) (``Regulation NMS'').
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    While Regulation NMS has enhanced competition, it has also fostered 
a ``fragmented'' market structure where trading in a single stock can 
occur across multiple trading centers. When multiple trading centers 
compete for order flow in the same stock, the Commission has recognized 
that ``such competition can lead to the fragmentation of order flow in 
that stock.'' \6\ Indeed, equity trading is currently dispersed across 
16 exchanges,\7\ numerous alternative trading systems,\8\ and broker-
dealer internalizers and wholesalers, all competing for order flow. 
Based on publicly available information, no single exchange currently 
has more than 17% market share.\9\ Therefore, no exchange possesses 
significant pricing power in the execution of equity order flow. More 
specifically, the Exchange currently has less than 10% market share of 
executed volume of equities trading.\10\
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    \6\ See Securities Exchange Act Release No. 61358, 75 FR 3594, 
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on 
Equity Market Structure).
    \7\ See Cboe U.S Equities Market Volume Summary, available at 
https://markets.cboe.com/us/equities/market_share. See generally 
https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \8\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \9\ See Cboe Global Markets U.S. Equities Market Volume Summary, 
available at http://markets.cboe.com/us/equities/market_share/.
    \10\ See id.
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
move order flow, or discontinue or reduce use of certain categories of 
products. While it is not possible to know a firm's reason for shifting 
order flow, the Exchange believes that one such reason is because of 
fee changes at any of the registered exchanges or non-exchange venues 
to which a firm routes order flow. With respect to non-marketable order 
flow that would provide liquidity on an Exchange against which market 
makers can quote, ETP Holders can choose from any one of the 16 
currently operating registered exchanges to route such order flow. 
Accordingly, competitive forces constrain exchange transaction fees 
that relate to orders that would provide liquidity on an exchange.
Proposed Rule Change
Tape B
    Currently, for Exchange Transactions, under Section III (Standard 
Rates--Transactions), the Exchange charges a fee of $0.0012 per share 
for Closing Orders \11\ in securities priced at or above $1.00.\12\ 
Pursuant to footnote (f), this fee currently applies to orders in Tape 
A Securities, Tape C Securities and NYSE Arca primary listed securities 
(includes all ETFs/ETNs). The Exchange currently does not charge this 
fee for orders in securities whose primary market is NYSE American LLC 
(``NYSE American'') or Cboe BZX Exchange, Inc. (``Cboe BZX''). The 
Exchange proposes to modify the application of this fee by amending the 
text of footnote (f) so that the fee would apply to all securities, 
i.e., Tape A, Tape B and Tape C securities. The purpose of the proposed 
fee change is to simplify the Fee Schedule and maintain consistency 
with respect to the fee charged by the Exchange when it executes 
Closing Orders in all securities.
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    \11\ Under Section I (Definitions) of the Fee Schedule, the term 
Closing Orders means Market, Market-On-Close, Limit-On-Close, and 
Auction-Only Orders executed in a Closing Auction.
    \12\ For Retail Orders in securities priced at or above $1.00, 
this fee is $0.0008 per share, and for securities priced below 
$1.00, this fee is 0.1% of Dollar Value.
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    Similarly, for Exchange Transaction[sic], under Section VI (Tier 
Rates--Round Lots and Odd Lots (Per Share Price $1.00 or Above)), the 
Exchange currently charges a fee of $0.0010 per share for Market, 
Market-On-Close, Limit-On-Close, and Auction-Only Orders executed in a 
Closing Auction in NYSE Arca Primary listed securities (includes all 
ETFs/ETNs). This fee is applicable under Tier 1 and Tier 2 pricing 
tiers.
    The Exchange currently does not charge this fee for orders in 
securities whose primary market is NYSE American or Cboe BZX. The 
Exchange proposes to modify the application of this fee by deleting the 
words ``in NYSE Arca primary listed securities (includes all ETFs/
ETNs)'' in Tier 1 and Tier 2 so that the fee would apply to all Tape B 
securities. The purpose of the proposed fee change is to simplify the 
Fee Schedule and maintain consistency with respect to the fee charged 
by the Exchange when it executes Closing Orders in all Tape B 
securities.
Step Up Tier 4
    The proposed rule change is designed to be available to all ETP 
Holders on the Exchange and is intended to provide ETP Holders an 
opportunity to receive enhanced rebates by executing more of their 
orders in Tape B securities on the Exchange.
    The Exchange currently has multiple levels of step-up pricing 
tiers, Step Up Tiers 1--5, which are designed to encourage ETP Holders 
that provide displayed liquidity on the Exchange to increase that order 
flow, which would benefit all ETP Holders by providing greater 
execution opportunities on the Exchange. In order to provide an 
incentive for ETP Holders to direct providing displayed order flow to 
the Exchange, the credits increase in the various tiers based on 
increased levels of volume directed to the Exchange.
    Currently, the following credits are available to ETP Holders that 
provide increased levels of displayed liquidity on the Exchange:

------------------------------------------------------------------------
                                         Credit for providing displayed
                 Tier                               liquidity
------------------------------------------------------------------------
Step Up Tier..........................  $0.0030 (Tape A).
                                        $0.0023 (Tape B).
                                        $0.0031 (Tape C).
Step Up Tier 2........................  $0.0028 (Tape A and C).
                                        $0.0022 (Tape B).
Step Up Tier 3........................  $0.0025 (Tape A and C).
                                        $0.0022 (Tape B).
Step Up Tier 4........................  $0.0033 (Tape A and C).
                                        $0.0034 (Tape B).
Step Up Tier 5........................  $0.0032 (Tape A, B and C).
------------------------------------------------------------------------

    Under the Step Up Tier 4, if an ETP Holder increases its providing 
liquidity on the Exchange by a specified percentage over the level that 
such ETP Holder provided liquidity in September 2019, it is eligible to 
earn higher credits. Specifically, to qualify for the credits under 
Step Up Tier 4, an ETP Holder

[[Page 46299]]

must directly execute providing average daily volume (ADV) per month 
that is an increase of no less than 0.40% of US CADV for that month 
over the ETP Holder's providing ADV in September 2019, taken as a 
percentage of US CADV.
    If an ETP Holder meets the Step Up Tier 4 requirement, such ETP 
Holder is currently eligible to earn a credit of:
    <bullet> $0.0033 per share for orders that provide displayed 
liquidity in Tape A and Tape C Securities, and
    <bullet> $0.0034 per share for orders that provide displayed 
liquidity in Tape B Securities.\13\
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    \13\ See Securities Exchange Act Release Nos. 86122 (June 17, 
2019), 84 FR 29258 (June 21, 2019) (SR-NYSEArca-2019-43); 87292 
(October 11, 2019), 84 FR 55603 (October 17, 2019) (SR-NYSEArca-
2019-70); and 88833 (May 7, 2020), 85 FR 28676 (May 13, 2020) (SR-
NYSEArca-2020-39).
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    ETP Holders that qualify for Step Up Tier 4 do not receive any 
additional incremental Tape B Tier credits for providing displayed 
liquidity, including any incremental credits associated with Less 
Active ETP Securities and are currently capped at $0.0034 per 
share.\14\ With this proposed rule change, the Exchange proposes to 
modify the cap applicable to the Step Up Tier 4 credit in Tape B 
securities. As proposed, an ETP Holder that is registered as a Lead 
Market Maker can receive up to a combined credit of $0.0036 per share 
on all its adding volume in Tape B Securities if that ETP Holder, 
together with its affiliates,\15\ executes providing ADV in Tape B 
Securities that is at least 40% over the ETP Holder's providing ADV in 
Q3 2019, as a percentage of US Tape B CADV.
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    \14\ See Securities Exchange Act Release Nos. 88436 (March 20, 
2020), 85 FR 17112 (March 26, 2020) (SR-NYSEArca-2020-21); and 88833 
(May 7, 2020), 85 FR 28676 (May 13, 2020) (SR-NYSEArca-2020-39).
    \15\ The term ``affiliate'' means any ETP Holder under 75% 
common ownership or control of that ETP Holder. See Fee Schedule, 
NYSE Arca Marketplace: General, Section II. Aggregate Billing of 
Affiliated ETP Holders.
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    The purpose of the proposed rule change is to incentivize ETP 
Holders to register as Lead Market Makers and generally to incentivize 
order flow providers to send liquidity-providing orders to the Exchange 
while capping the level of credit that such participants would receive. 
The Exchange believes that, although it is proposing to continue to 
limit the financial incentive for orders that provide displayed 
liquidity in Tape B securities, the current rebate, i.e., $0.0034 per 
share, is among one of the highest credits paid by the Exchange and 
should continue to serve as an incentive for ETP Holders to direct 
displayed liquidity providing orders to the Exchange.
Tape B Tier 2
    Currently, under the Tape B Tier 2 pricing tier, an ETP Holder 
could qualify for a credit of $0.0028 per share \16\ if such ETP 
Holder, on a daily basis, measured monthly, directly executes providing 
volume in Tape B Securities during the billing month (``Tape B Adding 
ADV'') that is either (1) equal to at least 1.0% of the US Tape B CADV 
or (2) equal to at least 0.20% of the US Tape B CADV for the billing 
month over the ETP Holder's or Market Maker's Q2 2015 Tape B Adding ADV 
taken as a percentage of Tape B CADV or (3) equal to at least 0.25% of 
the US Tape B CADV for the billing month over the ETP Holder's or 
Market Maker's April 2020 Tape B Adding ADV taken as a percentage of 
Tape B CADV.
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    \16\ Under the Standard Rates, ETP Holders receive a credit of 
$0.0020 per share for Tape B orders that provide liquidity.
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    The Exchange proposes to eliminate the second requirement above 
which requires an ETP Holder to execute providing volume in Tape B 
Securities equal to at least 0.20% of the US Tape B CADV for the 
billing month over the ETP Holder's or Market Maker's Q2 2015 Tape B 
Adding ADV taken as a percentage of Tape B CADV. The Exchange has 
observed that, over the last 6 months, not a single ETP Holder has 
qualified for the Tape B Tier 2 credit by utilizing the requirement 
that the Exchange is proposing to eliminate. Given that this 
requirement has not served to meaningfully increase activity on the 
Exchange, the Exchange has determined to eliminate it from the Fee 
Schedule. The Exchange is not proposing any other change to the Tape B 
Tier 2 pricing tier.
    With this proposed rule change, ETP Holders would continue to be 
able to qualify for the Tape B Tier 2 credit of $0.0028 per share for 
providing liquidity in Tape B Securities if such ETP Holder, on a daily 
basis, measured monthly, directly executes Tape B Adding ADV that is 
either (1) equal to at least 1.0% of the US Tape B CADV or (2) equal to 
at least 0.25% of the US Tape B CADV for the billing month over the ETP 
Holder's or Market Maker's April 2020 Tape B Adding ADV taken as a 
percentage of Tape B CADV.
    The Exchange believes that eliminating a requirement that has 
become underutilized will also streamline the Fee Schedule. The 
Exchange further believes that the remaining requirements will continue 
to incentivize ETP Holders to submit liquidity providing orders in Tape 
B Securities to qualify for the Tape B Tier 2 credit. The Exchange is 
not proposing any change to the level of Tape B Tier 2 credit.
Tape B Step Up Tier
    Currently, ETP Holders that meet the requirement under Tape B Step 
Up Tier can earn the following incremental credits:
    <bullet> An incremental credit of $0.0002 per share when an ETP 
Holder's providing ADV in Tape B Securities during the billing month is 
at least 0.50% of the US Tape B CADV and the ETP Holder's providing ADV 
in Tape B Securities during the billing month as a percentage of US 
Tape B CADV is at least 20% more but less than 30% of the ETP Holder's 
providing ADV as a percentage of US Tape B CADV in 3Q 2019;
    <bullet> An incremental credit of $0.0003 per share when an ETP 
Holder's providing ADV in Tape B Securities during the billing month is 
at least 0.50% of the US Tape B CADV and the ETP Holder's providing ADV 
in Tape B Securities during the billing month as a percentage of US 
Tape B CADV is at least 30% more but less than 40% of the ETP Holder's 
providing ADV as a percentage of US Tape B CADV in 3Q 2019; and
    <bullet> An incremental credit of $0.0004 per share when an ETP 
Holder's providing ADV in Tape B Securities during the billing month is 
at least 0.50% of the US Tape B CADV and the ETP Holder's providing ADV 
in Tape B Securities during the billing month as a percentage of US 
Tape B CADV is at least 40% more than the ETP Holder's providing ADV as 
a percentage of US Tape B CADV in 3Q 2019.\17\
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    \17\ See Securities Exchange Act Release No. 87292 (October 11, 
2019), 84 FR 55603 (October 17, 2019) (SR-NYSEArca-2019-70).
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    The incremental credits are payable in addition to the ETP Holder's 
Tiered or Standard credit(s); provided, however, that such combined 
credit(s) in Tape B Securities currently cannot exceed $0.0032 per 
share.
    The Exchange proposes to adopt an increased cap applicable under 
the Tape B Step Up Tier pricing tier. As proposed, if an ETP Holder's 
providing ADV increases at least 150% over the ETP Holder's providing 
ADV in Q3 2019, then the ETP Holder can receive a combined credit of up 
to:
    <bullet> $0.0033 per share if the ETP Holder is registered as a 
Lead Market Maker or Market Maker in at least 150 Less Active ETPs in 
which it meets at least two Performance Metrics, and has Tape B Adding 
ADV equal to at least 0.65% of US Tape B CADV, or
    <bullet> $0.0034 per share if the ETP Holder or Market Maker is 
registered as a Lead

[[Page 46300]]

Market Maker or Market Maker in at least 200 Less Active ETPs in which 
it meets at least two Performance Metrics, and has Tape B Adding ADV 
equal to at least 0.70% of US Tape B CADV.
    For example, assume an ETP Holder has providing ADV of 1.20% of 
Tape B CADV in Tape B securities in the baseline period of third 
quarter of 2019. Further assume that the same ETP Holder has providing 
ADV of Tape B CADV of 1.80% in Tape B securities in the billing month. 
The ETP Holder in this example would qualify for an incremental credit 
of $0.0004 per share because the ETP Holder has providing ADV in Tape B 
Securities during the billing month of 1.80%, which is at least 0.50% 
of the US Tape B CADV, and because the ETP Holder has providing ADV of 
Tape B CADV of 1.80%, which is at least 40% more than the ETP Holder's 
baseline ADV of 1.20% of Tape B CADV. Also assume further that the ETP 
Holder is registered as a Lead Market Maker or Market Maker in 150 Less 
Active ETPs in which it meets at least two Performance Metrics.
    In the above example, the ETP Holder would also qualify for the 
existing Tape B Tier 1 credit of $0.0030 per share by meeting the 1.5% 
of the US Tape B CADV requirement, for a total credit of $0.0034 per 
share ($0.0030 per share plus $0.0004 per share). Given the cap 
currently in place, the ETP Holder's combined credit would be reduced 
to $0.0032 per share. However, since the ETP Holder is registered as a 
Lead Market Maker or Market Maker in at least 150 Less Active ETPs in 
which it meets at least two Performance Metrics, under the proposed 
rule change, the ETP Holder would receive a combined credit of $0.0033 
per share. If the ETP Holder was registered as a Lead Market Maker or 
Market Maker in 200 Less Active ETPs in which it met at least two 
Performance Metrics, under the proposed rule change, ETP Holder would 
receive a combined credit of $0.0034 per share. Under both scenarios, 
the ETP Holder meets the Tape B Adding ADV requirement of 0.70% of US 
Tape B CADV for the $0.0034 per share cap.
    As noted above, the Exchange operates in a competitive environment, 
particularly as it relates to attracting non-marketable, providing 
liquidity that would be displayed on the Exchange. The purpose of this 
proposed rule change is to provide an incentive to ETP Holders to 
register as Lead Market Makers or Market Makers in Less Active ETPs and 
to incentivize such liquidity providers to increase the orders sent to 
the Exchange.
MPID Adding Tier
    The Exchange proposes to adopt a new pricing tier, MPID Adding 
Tier, that would offer a per share credit for orders that provide 
liquidity in Tape A and Tape C securities. As proposed, to qualify for 
the proposed pricing tier, an MPID would be required to execute 
providing ADV in all securities that is at least 2 times more than its 
providing ADV in 2Q 2021, as a percentage of US CADV. A qualifying MPID 
would receive a credit for providing liquidity in Tape A and Tape C 
securities of $0.0028 per share if the MPID has least 4 million shares 
of providing ADV during the billing month, or $0.0029 per share if the 
MPID has at least 9 million shares of providing ADV during the billing 
month.
    For example, assume an MPID has providing ADV of 2 million shares 
of Tape A, Tape B and Tape C securities in the baseline period of 2Q 
2021. Further assume that the same MPID has providing ADV of 4 million 
shares in the billing month, which is 2 times more than the baseline 
ADV of 2 million shares. Under the proposed rule change, the MPID would 
receive a credit of $0.0028 per share for adding liquidity in Tape A 
and Tape C securities. If instead the MPID has providing ADV of 9 
million shares in the billing month, which is 4.5 times more than the 
baseline period, then the MPID would receive a credit of $0.0029 per 
share for adding liquidity in Tape A and Tape C securities.
    The proposed rule change is designed to incentivize ETP Holders to 
increase liquidity-providing orders in Tape A and Tape C securities 
they send to the Exchange, which would support the quality of price 
discovery on the Exchange and provide additional liquidity for incoming 
orders. As noted above, the Exchange operates in a competitive 
environment, particularly as it relates to attracting non-marketable, 
which add liquidity to the Exchange. Because the proposed tier requires 
an ETP Holder's MPID to increase the volume of its trades in orders 
that add liquidity over the MPID's 2Q 2021 baseline, the Exchange 
believes that the proposed credits would provide an incentive for all 
ETP Holders to send additional liquidity to the Exchange in order to 
qualify for them.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\18\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\19\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
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    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposed Fee Change Is Reasonable
    As discussed above, the Exchange operates in a highly fragmented 
and competitive market. The Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \20\
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    \20\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow, or discontinue to reduce use of certain categories of 
products, in response to fee changes. With respect to non-marketable 
order which provide liquidity on an Exchange, ETP Holders can choose 
from any one of the 16 currently operating registered exchanges to 
route such order flow. Accordingly, competitive forces reasonably 
constrain exchange transaction fees that relate to orders that would 
provide displayed liquidity on an exchange. Stated otherwise, changes 
to exchange transaction fees can have a direct effect on the ability of 
an exchange to compete for order flow.
Tape B
    The Exchange believes the proposed amendment to the Tape B fees is 
reasonable because it seeks to standardize the fee for Tape B 
securities. The Exchange periodically reviews its fees and rebates and 
determined that it does not currently charge a fee for Closing Orders 
in Tape B securities whose primary market is NYSE American or Cboe BZX, 
nor does the Exchange currently charge for Market, Market-On-Close, 
Limit-On-Close, and Auction-Only Orders executed in a Closing Auction 
for securities whose primary market is NYSE American or Cboe BZX. The 
Exchange believes it is

[[Page 46301]]

reasonable to charge the same fee for all Tape B securities.
Step Up Tier 4
    The Exchange believes the proposed rule change to adopt an 
increased cap on the credit applicable to the Step Up Tier 4 credit in 
Tape B securities is reasonable because the increased credit, which 
would be among the highest paid by the Exchange, outside of Lead Market 
Maker credits for adding liquidity, would serve to incentivize ETP 
Holders to increase their participation on the Exchange as Lead Market 
Makers and execute a greater number of orders in Tape B securities on 
the Exchange. The Exchange believes the increased credits would 
continue to encourage ETP Holders to submit additional liquidity to a 
national securities exchange and to participate as a Lead Market Maker 
or Market Maker. The Exchange believes it is reasonable to require ETP 
Holders to meet the applicable volume threshold to qualify for the 
increased credits. Submission of additional liquidity to the Exchange 
would promote price discovery and transparency and enhance order 
execution opportunities for ETP Holders from the substantial amounts of 
liquidity present on the Exchange. The Exchange notes that the 
requirement to execute providing ADV that is at least 40% over the ETP 
Holder's or Market Maker's providing ADV in Q3 2019 is the same as the 
requirement to achieve the top incremental credit for Tape B Step Up 
Tier. The Exchange believes that adopting an identical requirement 
would provide ETP Holders a further incentive to provide additional 
liquidity in Tape B Securities. Additionally, the Exchange believes 
that utilizing the same baseline as Tape B Step Up Tier would make it 
easier for firms to monitor their providing ADV for both tiers, as 
opposed introducing a new baseline. All ETP Holders would benefit from 
the greater amounts of liquidity that will be present on the Exchange, 
which would provide greater execution opportunities.
Tape B Tier 2
    The Exchange believes that the proposed rule change to eliminate 
one of the requirements to qualify for the Tape B Tier 2 credit is 
reasonable because the requirement proposed for deletion has been 
underutilized and has generally not incentivized ETP Holders to bring 
liquidity and increase trading on the Exchange.
    In the last 6 months, no ETP Holder has availed itself of the Tape 
B Tier 2 by meeting the requirement proposed for deletion. The Exchange 
does not anticipate any ETP Holder in the near future to qualify for 
the Tape B Tier 2 credit by meeting the requirement proposed for 
deletion. The Exchange believes it is reasonable to eliminate 
requirements within pricing tiers when they become underutilized. The 
Exchange believes eliminating underutilized tier requirements would 
also simplify the Fee Schedule. The Exchange further believes that 
removing reference to underutilized tier requirements that the Exchange 
proposes to eliminate from the Fee Schedule would also add clarity to 
the Fee Schedule.
Tape B Step Up Tier
    The Exchange believes the proposed rule change to modify the credit 
and the cap applicable under the Tape B Step Up Tier for Tape B 
securities is a reasonable means of attracting additional liquidity to 
the Exchange. The Exchange believes the modified credits, which are 
among the highest paid by the Exchange, would continue to encourage ETP 
Holders to submit additional liquidity to a national securities 
exchange. The Exchange believes it is reasonable to require ETP Holders 
to meet the applicable volume threshold to qualify for the increased 
credits, given the higher combined credit of $0.0033 per share and 
$0.0034 per share the Exchange would pay if the tier criteria is met. 
Submission of additional liquidity to the Exchange would promote price 
discovery and transparency and enhance order execution opportunities 
for ETP Holders from the substantial amounts of liquidity present on 
the Exchange. The Exchange also believes it is reasonable to require 
ETP Holders be registered as a Lead Market Maker or Market Maker in a 
minimum number [sic] Less Active ETPs and to meet at least two 
Performance Metrics in such securities as the Exchange believes this 
requirement would enhance market quality in Less Active ETPs and 
support the quality of price discovery in such securities. All ETP 
Holders would benefit from the greater amounts of liquidity that will 
be present on the Exchange, which would provide greater execution 
opportunities.
MPID Adding Tier
    The Exchange believes the proposed MPID Adding Tier is a reasonable 
means to encourage ETP Holders to increase their liquidity providing 
orders in Tape A and Tape C securities each month over a predetermined 
baseline by offering liquidity providers an opportunity to receive an 
enhanced rebate. Further, the Exchange believes it's reasonable to 
provide the proposed credit to the qualifying MPID if it meets the 
tier's criteria because this would encourage individual MPIDs to send 
orders that provide liquidity to the Exchange, thereby contributing to 
robust levels of liquidity, which benefits all market participants, and 
promoting price discovery and transparency. Since the proposed tier 
would be new, no ETP Holder's MPID currently qualifies for the proposed 
pricing tier. As previously noted, without a view of ETP Holder 
activity on other exchanges and off-exchange venues, the Exchange has 
no way of knowing whether the proposed rule change would result in any 
ETP Holder's MPID qualifying for the tier. The Exchange believes the 
proposed credit is reasonable as it would provide an additional 
incentive for an ETP Holder's MPID to direct its order flow to the 
Exchange and provide meaningful added levels of liquidity in order to 
qualify for the proposed credit, thereby contributing to depth and 
market quality on the Exchange.
    As noted above, the Exchange operates in a highly competitive 
environment, particularly for attracting order flow that provides 
displayed liquidity on an exchange. More specifically, the Exchange 
notes that greater add volume order flow may provide for deeper, more 
liquid markets and execution opportunities at improved prices, which 
the Exchange believes incentivizes liquidity providers to submit 
additional liquidity and enhance execution opportunities. This overall 
increase in activity would deepen the Exchange's liquidity pool, offer 
additional cost savings, support the quality of price discovery, 
promote market transparency and improve market quality, for all 
investors. The Exchange believes it is reasonable to provide higher 
credits in Tape A and Tape C securities to incentivize liquidity adding 
orders in those securities, and not in Tape B securities, because Tape 
A and Tape C securities are non-NYSE Arca-listed securities and do not 
have Lead Market Makers or Market Makers to provide additional 
liquidity. The Exchange notes that other markets with which the 
Exchange competes currently offer its members an opportunity to earn 
rebates based on the activity of the member's MPID.\21\ The Exchange 
believes the proposed new pricing tier continues to be a reasonable

[[Page 46302]]

means to encourage ETP Holders to increase their liquidity on the 
Exchange.
---------------------------------------------------------------------------

    \21\ See BZX Fee Schedule, Footnote 2, Step Up Tiers, and 
Footnote 4, Single Investor MPID Tiers, at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/.
---------------------------------------------------------------------------

The Proposed Fee Change is an Equitable Allocation of Fees and Credits
    The Exchange believes its proposal equitably allocates its fees 
among its market participants.
Tape B
    The Exchange believes that the proposed rule change constitutes an 
equitable allocation of reasonable fees because the proposed fee is 
comparable to the fee charged by the Exchange for the same activity in 
NYSE Arca-listed securities and would apply equally to all ETP Holders 
that choose to execute their orders in Tape B securities on the 
Exchange. The proposed change may impact the submission of orders to a 
national securities exchange, and to the extent that ETP Holders 
continue to submit such orders to the Exchange, the proposed rule 
change would not have a negative impact to ETP Holders trading on the 
Exchange because the proposed fee would be in line with the fee 
currently charged by the Exchange for trading in NYSE Arca-listed 
securities. However, without having a view of ETP Holder's activity on 
other markets and off-exchange venues, the Exchange has no way of 
knowing whether this proposed rule change would result in a change in 
trading behavior by ETP Holders.
Step Up Tier 4
    The Exchange believes the proposed amendment to the credit and the 
cap under Step Up Tier 4 equitably allocates its fees and credits among 
market participants because it is reasonably related to the value of 
the Exchange's market quality associated with higher equities volume. 
The Exchange believes the proposed increased credits, which would be 
among the highest paid by the Exchange, would provide an incentive for 
ETP Holders to increase their participation as Lead Market Makers on 
the Exchange and execute a greater amount of their orders in Tape B 
securities on the Exchange. The Exchange believes the proposed 
increased credits would continue to encourage ETP Holders to send 
orders that add liquidity to the Exchange, thereby contributing to 
robust levels of liquidity for the benefit all market participants. The 
Exchange believes the proposed rule change would improve market quality 
for all market participants on the Exchange and attract more liquidity 
to the Exchange. ETP Holders that currently qualify for credits 
associated with Step Up pricing tiers on the Exchange will continue to 
receive credits when they provide liquidity to the Exchange. The 
Exchange believes that recalibrating the requirements for providing 
liquidity will continue to attract order flow and liquidity to the 
Exchange for the benefit of investors generally.
Tape B Tier 2
    The Exchange believes that the proposed rule change to eliminate 
one of the requirements to qualify for the Tape B Tier 2 credit is an 
equitable allocation of its fees and credits. The Exchange believes 
that eliminating a tier requirement from the Fee Schedule when such 
requirement becomes underutilized is equitable because the requirement 
would be eliminated in its entirety and would no longer be available to 
any ETP Holder.
Tape B Step Up Tier
    The Exchange believes the proposed amendment to the credit and the 
cap under the Tape B Step Up Tier equitably allocates its fees and 
credits among market participants because it is reasonably related to 
the value of the Exchange's market quality associated with higher 
equities volume. As proposed, the Exchange would provide qualifying ETP 
Holders with some of the highest credits payable by the Exchange 
provided they participate as Lead Market Makers and provide increased 
Tape B adding ADV. The more an ETP Holder participates, the greater the 
credit they would receive. The Exchange believes the proposed credits 
would encourage ETP Holders to send orders that add liquidity to the 
Exchange, thereby contributing to robust levels of liquidity, which 
would benefit all market participants.
MPID Adding Tier
    The Exchange believes that the proposed adoption of the MPID Adding 
Tier represents an equitable allocation of fees because all ETP Holders 
will be eligible for the proposed pricing tier and have the opportunity 
to meet the tier's criteria and receive the applicable rebate if such 
criteria is met. That is, the proposed pricing tier is designed as an 
incentive to any and all liquidity providers interested in meeting the 
tier criteria to submit additional order flow to the Exchange and each 
will receive the proposed rebate if the tier criteria is met. While the 
Exchange has no way of knowing whether this proposed rule change would 
definitively result in any particular ETP Holder qualifying for the 
proposed pricing tier, the Exchange anticipates a number of ETP Holders 
would be able to meet, or will reasonably be able to meet, the proposed 
criteria. However, without having a view of activity on other markets 
and off-exchange venues, the Exchange has no way of knowing whether 
this proposed rule change would result in any ETP Holder qualifying for 
the proposed tier. The Exchange also notes that the proposed change 
will not adversely impact any ETP Holder's pricing or their ability to 
qualify for other rebate tiers. Rather, should an ETP Holder not meet 
the proposed criteria, the ETP Holder will merely not receive the 
corresponding rebate.
The Proposed Fee Change Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, ETP Holders 
are free to disfavor the Exchange's pricing if they believe that 
alternatives offer them better value.
Tape B
    The proposal to amend the Tape B fees is not unfairly 
discriminatory because the fee would be applied on an equal basis to 
all ETP Holders that choose to send their orders in Tape B securities 
to the Exchange. Additionally, the proposed rule change neither targets 
nor will it have a disparate impact on any particular category of 
market participant. The proposal does not permit unfair discrimination 
because the proposed fees would be applied to all ETP Holders, who 
would all be charged the same fee on an equal basis. Accordingly, no 
ETP Holder already operating on the Exchange would be disadvantaged by 
this allocation of fees.
Step Up Tier 4
    The Exchange believes it is not unfairly discriminatory to cap the 
increased credit payable under Step Up Tier 4 for providing displayed 
liquidity in Tape B securities because the proposed credit and cap 
would be applied on an equal basis to all ETP Holders, who would all be 
subject to the proposed change on an equal basis. Additionally, the 
proposal neither targets nor will it have a disparate impact on any 
particular category of market participant. The proposal does not permit 
unfair discrimination because the proposed change would be applied to 
all ETP Holders, who would all be subject to the proposed change on an 
equal basis. Accordingly, no ETP Holder already operating on the 
Exchange would be disadvantaged by this allocation of fees.

[[Page 46303]]

Tape B Tier 2
    The Exchange believes that the proposed rule change to eliminate 
one of the requirements to qualify for the Tape B Tier 2 credit is not 
unfairly discriminatory. The Exchange believes that eliminating a tier 
requirement from the Fee Schedule when such requirement becomes 
underutilized is equitable and not unfairly discriminatory because the 
requirement would be eliminated in its entirety and would no longer be 
available to any ETP Holder. Additionally, the proposed rule change 
neither targets nor will it have a disparate impact on any particular 
category of market participant.
Tape B Step Up Tier
    The Exchange believes it is not unfairly discriminatory to modify 
and cap the credit payable under Tape B Step Up Tier 4 for providing 
displayed liquidity in Tape B securities because the proposed increased 
cap would be applied on an equal basis to all ETP Holders, who would 
all be subject to the proposed cap on an equal basis. Additionally, the 
proposal neither targets nor will it have a disparate impact on any 
particular category of market participant. The proposal does not permit 
unfair discrimination because the proposed cap would be applied to all 
ETP Holders, who would all be subject to the cap on an equal basis.
MPID Adding Tier
    The Exchange believes it is not unfairly discriminatory to provide 
the proposed credit as the credit would be provided on an equal basis 
to all ETP Holders that add liquidity by meeting the new proposed MPID 
Adding Tier's requirements. The Exchange also believes that the 
proposed change is not unfairly discriminatory because it is reasonably 
related to the value to the Exchange's market quality associated with 
higher volume. The proposed new tier is designed as an incentive to any 
and all ETP Holders interested in meeting the tier criteria to submit 
additional order flow to the Exchange and each will receive the 
proposed rebate if the tier criteria is met. The Exchange also notes 
that the proposed change will not adversely impact any ETP Holder's 
pricing or their ability to qualify for other tiers. Rather, should an 
ETP Holder not meet the criteria of the proposed new pricing tier, the 
ETP Holder will merely not receive the corresponding rebate.
* * * * *
    In the prevailing competitive environment, ETP Holders are free to 
disfavor the Exchange's pricing if they believe that alternatives offer 
them better value. Moreover, this proposed rule change neither targets 
nor will it have a disparate impact on any particular category of 
market participant. The Exchange believes that this proposal does not 
permit unfair discrimination because the changes described in this 
proposal would be applied to all similarly situated ETP Holders and all 
ETP Holders would be subject to the same requirements. Accordingly, no 
ETP Holder already operating on the Exchange would be disadvantaged by 
the proposed allocation of fees. The Exchange further believes that the 
proposed changes would not permit unfair discrimination among ETP 
Holders because the standard and tiered rates are available equally to 
all ETP Holders.
    Finally, the submission of orders to the Exchange is optional for 
ETP Holders in that they could choose whether to submit orders to the 
Exchange and, if they do, the extent of its activity in this regard. 
The Exchange believes that it is subject to significant competitive 
forces, as described below in the Exchange's statement regarding the 
burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\22\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, as discussed above, the Exchange believes 
that the proposed changes would encourage the submission of additional 
liquidity to a public exchange, thereby promoting market depth, price 
discovery and transparency and enhancing order execution opportunities 
for ETP Holders. As a result, the Exchange believes that the proposed 
change furthers the Commission's goal in adopting Regulation NMS of 
fostering integrated competition among orders, which promotes ``more 
efficient pricing of individual stocks for all types of orders, large 
and small.'' \23\
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78f(b)(8).
    \23\ See Securities Exchange Act Release No. 51808, 70 FR 37495, 
37498-99 (June 29, 2005) (S7-10-04) (Final Rule).
---------------------------------------------------------------------------

    Intramarket Competition. The Exchange believes the proposed 
amendments to its Fee Schedule would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The Exchange does not believe that the proposed 
change represents a significant departure from previous pricing offered 
by the Exchange or its competitors. The proposed changes are designed 
to attract additional order flow to the Exchange. The Exchange believes 
that the proposed adoption of a new pricing tier and amending credits 
associated with established tiers would incentivize market participants 
to direct liquidity adding order flow to the Exchange, bringing with it 
additional execution opportunities for market participants and improved 
price transparency. Greater overall order flow, trading opportunities, 
and pricing transparency benefits all market participants on the 
Exchange by enhancing market quality and continuing to encourage ETP 
Holders to send orders, thereby contributing towards a robust and well-
balanced market ecosystem. The Exchange also does not believe the 
proposed rule change to eliminate underutilized requirements to qualify 
for a pricing tier will impose any burden on intramarket competition 
because the proposed change would impact all ETP Holders uniformly 
(i.e., the requirement will not be available to any ETP Holder).
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily choose to 
send their orders to other exchange and off-exchange venues if they 
deem fee levels at those other venues to be more favorable. As noted 
above, the Exchange's market share of intraday trading (i.e., excluding 
auctions) is currently less than 10%. In such an environment, the 
Exchange must continually adjust its fees and rebates to remain 
competitive with other exchanges and with off-exchange venues. Because 
competitors are free to modify their own fees and credits in response, 
and because market participants may readily adjust their order routing 
practices, the Exchange does not believe its proposed fee change can 
impose any burden on intermarket competition.
    The Exchange believes that the proposed change could promote 
competition between the Exchange and other execution venues, including 
those that currently offer similar order types and comparable 
transaction pricing, by encouraging additional orders to be sent to the 
Exchange for execution.

[[Page 46304]]

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

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

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \24\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \25\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78s(b)(3)(A).
    \25\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \26\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

    <bullet> Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#88fafde4eda5ebe7e5e5ede6fcfbc8fbedeba6efe7fe"><span class="__cf_email__" data-cfemail="453730292068262a2828202b3136053620266b222a33">[email protected]</span></a>. Please include 
File Number SR-NYSEARCA-2021-70 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEARCA-2021-70. 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 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-NYSEARCA-2021-70, and should be 
submitted on or before September 8, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
---------------------------------------------------------------------------

    \27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-17667 Filed 8-17-21; 8:45 am]
BILLING CODE 8011-01-P


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