Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Notices 51207 

6 15 U.S.C. 78s(b)(2)(C). 

7 15 U.S.C. 78q–1(b)(3)(F). 

8 17 CFR 240.17Ad–22(e)(17)(i). 

9 15 U.S.C. 78q–1(b)(3)(F). 

10 15 U.S.C. 78q–1(b)(3)(F). 

11 17 CFR 240.17Ad–22(e)(17)(i). 

12 Id. 

13 15 U.S.C. 78q–1(b)(3)(F). 

14 17 CFR 240.17Ad–22(e)(17)(i). 

15 15 U.S.C. 78s(b)(2). 

16 In approving the proposed rule change, the 

Commission considered the proposal’s impact on 

efficiency, competition, and capital formation. 15 

U.S.C. 78c(f). 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4 . 

on the expiration date of each single 

name constituent contract with respect 

to which an Existing Restructuring has 

occurred. In practice, this could result 

in an exercise not occurring during a 

systems failure if the EOD reference 

prices are not in the money even if they 

would have been in the money based on 

intra-day pricing. Under the proposed 

rule change, whether an Index Swaption 

is ‘‘in the money’’ would be based on 

the relevant market-observed prices for 

the underlying CDS contract determined 

by ICC using the intraday market data 

available to it at the time of the 

Expiration Period, or the EOD price of 

the underlying CDS contract on the 

expiration date established at any 

Intercontinental Exchange, Inc. (‘‘ICE’’) 

clearinghouse, and where relevant, also 

based on the last available ICE EOD 

price of each single name constituent 

contract with respect to which an 

Existing Restructuring has occurred. 

This approach provides ICC more 

flexibility to ensure exercise is based on 

various reference prices. 

III. Discussion and Commission 

Findings 

Section 19(b)(2)(C) of the Act directs 

the Commission to approve a proposed 

rule change of a self-regulatory 

organization if it finds that such 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to such organization.6 For the 

reasons given below, the Commission 

finds that the proposed rule change is 

consistent with Section 17A(b)(3)(F) of 

the Act 7 and Rule 17Ad–22(e)(17)(i).8

A. Consistency With Section 

17A(b)(3)(F) of the Act 

Section 17A(b)(3)(F) of the Act 

requires, among other things, that the 

rules of ICC be designed to promote the 

prompt and accurate clearance and 

settlement of securities transactions 

and, to the extent applicable, derivative 

agreements, contracts, and transactions, 

as well as to assure the safeguarding of 

securities and funds which are in the 

custody or control of ICC or for which 

it is responsible.9

As noted above, ICC is proposing to 

make changes to certain exercise 

procedures related to systems failures. 

The Commission believes that by 

removing the option to cancel and 

reschedule the Exercise Period under 

Paragraph 2.6, the proposed rule change 

would help to streamline and simplify 

the Exercise Procedures in the case of an 

Exercise System Failure and thereby 

clarify that cancellations and 

rescheduling will not occur and that 

exercises will take place during systems 

failures. The Commission believes that 

this in turn will enhance ICC’s ability to 

promptly and accurately clear and settle 

transactions during systems failures. 

Additionally, automatic exercise 

applies to an Index Swaption that is 

determined by ICC to be in the money. 

As noted above, under the proposed 

rule change, whether an Index Swaption 

is ‘‘in the money’’ will be based on the 

relevant market-observed prices for the 

underlying CDS contract determined by 

ICC using the intraday market data 

available to it at the time or the EOD 

price of the underlying CDS contract on 

the expiration date established at any 

ICE clearinghouse, and where relevant, 

also based on the last available ICE EOD 

price of each single name constituent 

contract with respect to which an 

Existing Restructuring has occurred. 

This will allow ICC additional 

flexibility for determining whether an 

Index Swaption is in the money and 

facilitate exercise based on various 

reference prices, which the Commission 

believes provides the ability to reflect 

accurate prices thereby enhancing ICC’s 

ability to promptly and accurately settle 

and clear transactions during systems 

failures. 

For the reasons stated above, the 

Commission finds that the proposed 

rule changes are consistent with Section 

17A(b)(3)(F) of the Act.10

B. Consistency With Rule 17Ad– 

22(e)(17)(i) 

Rule 17Ad–22(e)(17) requires, in 

relevant part, each covered clearing 

agency to establish, implement, 

maintain, and enforce written policies 

and procedures reasonably designed to, 

as applicable, manage its operational 

risks by identifying the plausible 

sources of operational risk, both internal 

and external, and mitigating their 

impact through the use of appropriate 

systems, policies, procedures, and 

controls.11

The Commission believes that by 

revising its Index Swaption Exercise 

Procedures, as noted above, to remove 

the ability to cancel or reschedule 

exercises and to add flexibility to use 

various reference prices for determining 

if an Index Swaption is in the money 

during systems failures, the proposal 

allows ICC to manage the risks posed by 

a systems failure by (i) increasing 

certainty around the timing of the 

Exercise Period and (ii) increasing the 

likelihood that an Index Swaption 

would be categorized as being in-themoney, and therefore automatically 

exercised, as expected. The Commission 

believes that this in turn supports ICC’s 

ability to mitigate the consequences of 

a systems failure and promote systems 

that have a high degree of resiliency and 

operational reliability. 

For these reasons, the Commission 

believes the proposed rule change is 

consistent with Rule 17Ad– 

22(e)(17)(i).12

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act, and in 

particular, with the requirements of 

Section 17A(b)(3)(F) of the Act 13 and 

Rules 17Ad–22(e)(17)(i).14

It is therefore ordered pursuant to 

Section 19(b)(2) of the Act 15 that the 

proposed rule change (SR–ICC–2021– 

016), be, and hereby is, approved.16

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–19727 Filed 9–13–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92897; File No. SR–FINRA– 

2021–022] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Extend the 

Implementation Date of Certain 

Amendments to FINRA Rule 4210 

Approved Pursuant to SR–FINRA– 

2015–036 

September 8, 2021. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on August 

26, 2021, the Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) 


tkelley on DSK125TN23PROD with NOTICES
51208 Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Notices 

3 17 CFR 240.19b–4(f)(6). 

4See Securities Exchange Act Release No. 78081 

(June 15, 2016), 81 FR 40364 (June 21, 2016) (Notice 

of Filing of Amendment No. 3 and Order Granting 

Accelerated Approval to a Proposed Rule Change to 

Amend FINRA Rule 4210 (Margin Requirements) to 

Establish Margin Requirements for the TBA Market, 

as Modified by Amendment Nos. 1, 2, and 3; File 

No. SR–FINRA–2015–036). 

5See Partial Amendment No. 3 to SR–FINRA– 

2015–036 and Regulatory Notice 16–31 (August 

2016), both available at: www.finra.org. 

6Available at: www.finra.org/rules-guidance/ 

guidance/faqs. Further, staff of the SEC’s Division 

of Trading and Markets made available a set of 

Frequently Asked Questions regarding Exchange 

Act Rule 15c3–1 and Rule 15c3–3 in connection 

with Covered Agency Transactions under FINRA 

Rule 4210, also available at: www.finra.org/rulesguidance/guidance/faqs. 

7See Securities Exchange Act Release No. 81722 

(September 26, 2017), 82 FR 45915 (October 2, 

2017) (Notice of Filing and Immediate Effectiveness 

of a Proposed Rule Change to Delay the 

Implementation Date of Certain Amendments to 

FINRA Rule 4210 Approved Pursuant to SR– 

FINRA–2015–036; File No. SR–FINRA–2017–029); 

see also Regulatory Notice 17–28 (September 2017). 

8See Securities Exchange Act Release No. 90852 

(January 5, 2021), 86 FR 2021 (January 11, 2021) 

(Notice of Filing and Immediate Effectiveness of a 

Proposed Rule Change to Extend the 

Implementation Date of Certain Amendments to 

FINRA Rule 4210 Approved Pursuant to SR– 

FINRA–2015–036; File No. SR–FINRA–2020–046). 

9See Partial Amendment No. 3 to SR–FINRA– 

2015–036, available at: www.finra.org. 

10See Securities Exchange Act Release No. 91937 

(May 19, 2021), 86 FR 28161 (May 25, 2021) (Notice 

of Filing of a Proposed Rule Change to Amend the 

Requirements for Covered Agency Transactions 

under FINRA Rule 4210 (Margin Requirements) as 

Approved Pursuant to SR–FINRA–2015–036; File 

No. SR–FINRA–2021–010). See also Partial 

Amendment No. 1 to SR–FINRA–2021–010, 

available at www.finra.org. 

11See Securities Exchange Act Release No. 92713 

(August 20, 2021) (Notice of Filing of Amendment 

No. 1 and Order Instituting Proceedings to 

Determine Whether to Approve or Disapprove a 

Proposed Rule Change, as Modified by Amendment 

No. 1, to Amend the Requirements for Covered 

Agency Transactions under FINRA Rule 4210 

(Margin Requirements) as Approved Pursuant to 

SR–FINRA–2015–036; File No. SR–FINRA–2021– 

010). 

filed with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

the proposed rule change as described 

in Items I and II below, which Items 

have been prepared by FINRA. FINRA 

has designated the proposed rule change 

as constituting a ‘‘non-controversial’’ 

rule change under paragraph (f)(6) of 

Rule 19b–4 under the Act,3 which 

renders the proposal effective upon 

receipt of this filing by the Commission. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

FINRA is proposing to extend, to 

January 26, 2022, the implementation 

date of the amendments to FINRA Rule 

4210 (Margin Requirements) pursuant to 

SR–FINRA–2015–036, other than the 

amendments pursuant to SR–FINRA– 

2015–036 that were implemented on 

December 15, 2016. The proposed rule 

change would not make any changes to 

the text of FINRA rules. 

The text of the proposed rule change 

is available on FINRA’s website at 

http://www.finra.org, at the principal 

office of FINRA 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, 

FINRA 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. FINRA 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 

On October 6, 2015, FINRA filed with 

the Commission proposed rule change 

SR–FINRA–2015–036, which proposed 

to amend FINRA Rule 4210 to establish 

margin requirements for (1) To Be 

Announced (‘‘TBA’’) transactions, 

inclusive of adjustable rate mortgage 

(‘‘ARM’’) transactions; (2) Specified 

Pool Transactions; and (3) transactions 

in Collateralized Mortgage Obligations 

(‘‘CMOs’’), issued in conformity with a 

program of an agency or GovernmentSponsored Enterprise (‘‘GSE’’), with 

forward settlement dates, as defined 

more fully in the filing (collectively, 

‘‘Covered Agency Transactions’’). The 

Commission approved SR–FINRA– 

2015–036 on June 15, 2016 (the 

‘‘Approval Date’’).4

Pursuant to Partial Amendment No. 3 

to SR–FINRA–2015–036, FINRA 

announced in Regulatory Notice 16–31 

that the rule change would become 

effective on December 15, 2017, 18 

months from the Approval Date, except 

that the risk limit determination 

requirements as set forth in paragraphs 

(e)(2)(F), (e)(2)(G) and (e)(2)(H) of Rule 

4210 and in new Supplementary 

Material .05, each as respectively 

amended or established by SR–FINRA– 

2015–036 (collectively, the ‘‘risk limit 

determination requirements’’), would 

become effective on December 15, 2016, 

six months from the Approval Date.5

Industry participants sought 

clarification regarding the 

implementation of the requirements 

pursuant to SR–FINRA–2015–036. 

Industry participants also requested 

additional time to make system changes 

necessary to comply with the 

requirements, including time to test the 

system changes, and requested 

additional time to update or amend 

margining agreements and related 

documentation. In response, FINRA 

made available a set of Frequently 

Asked Questions & Guidance 6 and, 

pursuant to SR–FINRA–2017–029,7

extended the implementation date of the 

requirements of SR–FINRA–2015–036 to 

June 25, 2018, except for the risk limit 

determination requirements, which, as 

announced in Regulatory Notice 16–31, 

became effective on December 15, 2016. 

Industry participants requested that 

FINRA reconsider the potential impact 

of certain requirements pursuant to SR– 

FINRA–2015–036 on smaller and midsized firms. Industry participants also 

requested that FINRA extend the 

implementation date pending such 

reconsideration to reduce potential 

uncertainty in the Covered Agency 

Transaction market. In response to these 

concerns, FINRA further extended the 

implementation date of the 

requirements of SR–FINRA–2015–036, 

other than the risk limit determination 

requirements, to October 26, 2021 (the 

‘‘October 26, 2021 implementation 

date’’).8 FINRA noted that, as FINRA 

stated in Partial Amendment No. 3 to 

SR–FINRA–2015–036, FINRA would 

monitor the impact of the requirements 

pursuant to that rulemaking and, if the 

requirements prove overly onerous or 

otherwise are shown to negatively 

impact the market, FINRA would 

consider revisiting such requirements as 

may be necessary to mitigate the rule’s 

impact.9

Informed by extensive dialogue, both 

with industry participants and other 

regulators, including the staff of the SEC 

and the Federal Reserve System, FINRA 

has proposed amendments to the 

requirements of SR–FINRA–2015–036 

(the ‘‘Proposed Amendments’’).10 This 

rulemaking is ongoing. If the 

Commission approves the Proposed 

Amendments, FINRA believes it is 

appropriate, in the interest of regulatory 

clarity, to adjust the implementation of 

the requirements pursuant to SR– 

FINRA–2015–036 so as to permit time 

for the Commission to take action on the 

Proposed Amendments.11 As such, 

FINRA is proposing to extend the 

October 26, 2021 implementation date 


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Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Notices 51209 

12 15 U.S.C. 78o–3(b)(6). 

13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 240.19b–4 (f)(6). 

15 17 CFR 240.19b–4(f)(6). 

16 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 

19b–4(f)(6)(iii) requires a self-regulatory 

organization to give the Commission written notice 

of its intent to file the proposed rule change, along 

with a brief description and text of the proposed 

rule change, at least five business days prior to the 

date of filing of the proposed rule change, or such 

shorter time as designated by the Commission. 

FINRA has satisfied this requirement. 

17For purposes of waiving the 30-day operative 

delay, the Commission has also considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

to January 26, 2022, which date FINRA 

may propose to further adjust as 

appropriate in a separate rule filing 

pending any Commission action on the 

Proposed Amendments. FINRA notes 

that the risk limit determination 

requirements pursuant to SR–FINRA– 

2015–036 became effective on December 

15, 2016 and, as such, the 

implementation of such requirements is 

not affected by the proposed rule 

change. 

FINRA has filed the proposed rule 

change for immediate effectiveness and 

has requested that the Commission 

waive the requirement that the proposed 

rule change not become operative for 30 

days after the date of the filing. The 

operative date will be the date of filing 

of the proposed rule change. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,12 which 

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. FINRA believes that the 

proposed rule change will help to 

reduce potential uncertainty in the 

Covered Agency Transaction market 

because, pending any Commission 

action on the Proposed Amendments, 

the proposed rule change will permit 

adjustment and alignment, as 

appropriate, of the implementation of 

the requirements pursuant to SR– 

FINRA–2015–036 with the effective date 

of the Proposed Amendments. FINRA 

believes that this will thereby protect 

investors and the public interest by 

helping to promote stability in the 

Covered Agency Transaction market. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. FINRA 

believes that extending the October 26, 

2021 implementation date to January 26, 

2022, pending any Commission action 

on the Proposed Amendments, so as to 

permit adjustment and alignment of the 

implementation of the requirements 

pursuant to SR–FINRA–2015–036, as 

appropriate, with the effective date of 

the Proposed Amendments, will help to 

provide clarity to industry participants 

and to reduce any potential uncertainty 

in the Covered Agency Transaction 

market, thereby benefiting all parties. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 13 and Rule 19b– 

4(f)(6) thereunder.14

A proposed rule change filed under 

Rule 19b–4(f)(6) 15 normally does not 

become operative for 30 days after the 

date of filing. However, pursuant to 

Rule 19b–(f)(6)(iii),16 the Commission 

may designate a shorter time if such 

action is consistent with the protection 

of investors and the public interest. 

FINRA has requested that the 

Commission waive the 30-day operative 

delay so that the proposal may become 

operative upon filing. FINRA has stated 

that the purpose of the proposed rule 

change is to help to avoid unnecessary 

disruption in the Covered Agency 

Transaction market pending any 

Commission action on the amendments 

that FINRA has proposed to the Covered 

Agency Transaction margin 

requirements. The Commission believes 

that waiving the 30-day operative delay 

is consistent with the protection of 

investors and the public interest 

because the proposal to extend the 

implementation date of the 

requirements of Rule 4210 does not 

raise any new or novel issues and will 

reduce any potential uncertainty in the 

Covered Agency Transaction market. 

Therefore, the Commission hereby 

waives the 30-day operative delay 

requirement and designates the 

proposed rule change as operative upon 

filing.17

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 

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– 

FINRA–2021–022 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–FINRA–2021–022. 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 


tkelley on DSK125TN23PROD with NOTICES
51210 Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Notices 

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Exchange Rule 1.5(p). 

4Market share percentage calculated as of August 

30, 2021. The Exchange receives and processes data 

made available through consolidated data feeds 

(i.e., CTS and UTDF). 

5 Id. 

6As 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. 

7As set forth on the Fee Schedule, ‘‘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. 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at the principal office of 

FINRA. 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–FINRA– 

2021–022 and should be submitted on 

or before October 5, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–19729 Filed 9–13–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92896; File No. SR–MEMX– 

2021–11] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend the Exchange’s Fee 

Schedule 

September 8, 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 

31, 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. 

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 

September 1, 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) Include an additional Liquidity 

Provision Tier applicable to the rebates 

for executions of orders in securities 

priced at or above $1.00 per share that 

add displayed liquidity to the Exchange 

(such orders, ‘‘Added Displayed 

Volume’’) and modify the required 

criteria under the existing Liquidity 

Provision Tier; (ii) introduce a tiered 

pricing structure for the Displayed 

Liquidity Incentive (‘‘DLI’’) by including 

an additional DLI Tier and reducing the 

rebate provided under the existing DLI; 

(iii) increase the fee under the Liquidity 

Removal Tier for executions of orders in 

securities priced at or above $1.00 per 

share that remove liquidity from the 

Exchange (such orders, ‘‘Removed 

Volume’’); and (iv) reduce the standard 

rebate for executions of Added 

Displayed Volume. 

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.4 Thus, in 

such a low-concentrated and highly 

competitive market, no single equities 

exchange possesses significant pricing 

power in the execution of order flow, 

and the Exchange currently represents 

approximately 3% of the overall market 

share.5 The Exchange in particular 

operates a ‘‘Maker-Taker’’ model 

whereby it provides rebates to Members 

that add liquidity to the Exchange and 

charges fees to Members that remove 

liquidity from the Exchange. The Fee 

Schedule sets forth the standard rebates 

and fees applied per share for orders 

that add and remove liquidity, 

respectively. Additionally, in response 

to the competitive environment, the 

Exchange also offers tiered pricing, 

which provides Members with 

opportunities to qualify for higher 

rebates or lower fees where certain 

volume criteria and thresholds are met. 

Tiered pricing provides an incremental 

incentive for Members to strive for 

higher tier levels, which provides 

increasingly higher benefits or discounts 

for satisfying increasingly more 

stringent criteria. 

Liquidity Provision Tiers 

Currently, the Exchange provides a 

standard rebate of $0.0031 per share for 

executions of Added Displayed Volume, 

which the Exchange is proposing to 

reduce to $0.0028 per share, as further 

described below. The Exchange also 

currently offers, in addition to other 

incentives, a Liquidity Provision Tier in 

which a Member may receive an 

enhanced rebate of $0.00335 per share 

for executions of Added Displayed 

Volume by achieving an ADAV 6 of at 

least 15,000,000 shares. Now, the 

Exchange proposes to rename the 

existing Liquidity Provision Tier to 

Liquidity Provision Tier 1, modify the 

required criteria under Liquidity 

Provision Tier 1, and add a new 

Liquidity Provision Tier 2. Specifically, 

the Exchange proposes to modify the 

required criteria under Liquidity 

Provision Tier 1 such that a Member 

would now qualify for Liquidity 

Provision Tier 1 by achieving an ADAV 

of at least 0.20% of the TCV.7 Members 

that qualify for Liquidity Provision Tier 

1 would continue to receive an 

enhanced rebate of $0.00335 per share 


tkelley on DSK125TN23PROD with NOTICES