31754 Federal Register / Vol. 86, No. 113 / Tuesday, June 15, 2021 / Notices 

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

21 17 CFR 240.19b–4(f)(2). 

22 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4The Exchange originally filed to amend the Fee 

Schedule on June 1, 2021 (SR–NYSEArca–2021–48) 

and withdrew such filing on June 4, 2021. 

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 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act,20 and Rule 

19b–4(f)(2) 21 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 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– 

MIAX–2021–23 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–MIAX–2021–23. 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–MIAX–2021–23 and should 

be submitted on or before July 6, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–12476 Filed 6–14–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92132; No. SR–NYSEArca– 

2021–51] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Modifying the NYSE Arca 

Options Fee Schedule 

June 9, 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, on June 4, 

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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to modify the 

NYSE Arca Options Fee Schedule (‘‘Fee 

Schedule’’) regarding the Customer 

Posting Credit Tiers and the Customer 

Incentive Program. The Exchange 

proposes to implement the fee change 

effective June 4, 2021.4 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this filing is to amend 

the Fee Schedule to make modifications 

to the Customer Penny Posting Credit 

Tiers, Customer Incentive Program, and 

Customer Posting Credit Tiers in NonPenny Issues. 

Currently, the Fee Schedule provides 

that OTP Holders and Firms (‘‘OTP 

Holders’’) can qualify for per contract 

credits applied to options transactions 

based on meeting certain minimum 

volume thresholds from Customer 

posting interest in Penny issues and 

Non-Penny issues and also qualify for 

an additional credit by meeting 

specified incentive volume levels. The 

Exchange proposes to make 

modifications to certain of its incentive 

programs as set forth below. 

The Exchange proposes to implement 

the fee change effective June 4, 2021. 

Customer Penny Posting Credit Tiers 

(the ‘‘Penny Tiers’’) 

The Exchange proposes to make the 

following modifications to the Penny 

Tiers, which provide per contract 


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5Regarding this alternative minimum threshold, 

the Exchange also proposes to make a nonsubstantive correction of a typographical error to 

eliminate an extraneous ‘‘ADV,’’ which would add 

clarity and transparency to the Fee Schedule. 

6See, e.g., BZX Options Fee Schedule, available 

at, https://markets.cboe.com/us/options/ 

membership/fee_schedule/bzx/ (providing a $0.52 

per contract credit to members that achieve Tier 4 

of the Customer Penny Add Volume Tiers). 

credits on executions of Customer 

posted interest in Penny Issues. First, 

the Exchange proposes to modify one of 

the alternative minimum volume 

thresholds to achieve Penny Tier 4, 

eliminate Penny Tier 5, and modify both 

alternative minimum volume thresholds 

to achieve Penny Tier 7 (which will also 

be renumbered to Tier 6). One of the 

two alternative means of achieving 

current Penny Tier 4 is for OTP Holders 

to execute at least 0.85% of TCADV 

from posted interest in Penny Issues, all 

account types. The Exchange is 

proposing to modify this alternative 

threshold to require at least 0.30% of 

TCADV from Customer posted interest 

in all issues, not including Professional 

Customer interest, plus executed ADV 

of 0.60% of U.S. Equity Market Share 

Posted and Executed on NYSE Arca 

Equity Market. The Exchange is not 

proposing to modify the Penny Tier 4 

per contract credit of ($0.47). 

The Exchange’s proposed changes to 

Penny Tier 4 would modify the 

qualification threshold for options order 

flow such that the qualifying volume 

would be restricted to posted Customer 

interest (not including Professional 

Customer interest) but would apply to 

posted Customer volume in all issues 

(not just Penny Issues). The proposed 

change excludes Professional Customer 

interest and is designed to attract 

Customer order flow, which provides 

benefits distinct from Professional 

Customer volume. Customer liquidity 

benefits all market participants by 

providing more trading opportunities, 

which attracts Market Makers. An 

increase in the activity of these market 

participants in turn facilitates tighter 

spreads, which may cause an additional 

corresponding increase in order flow 

from other market participants. The 

Exchange believes this proposed change 

would still encourage OTP Holders to 

achieve Tier 4 albeit with increased 

Customer posted interest. The 

Exchange’s proposed change to Penny 

Tier 4 to add a cross-asset component is 

designed to incentivize OTP Holders to 

execute volume on the Exchange’s 

equities platform which would make the 

Exchange a more attractive execution 

venue. 

Notwithstanding the proposed change 

to Penny Tier 4, the Exchange notes that 

OTP Holders are still eligible to qualify 

for the Penny Tier 4 per contract credit 

of per contract credit [sic] of ($0.47) 

under the alternative (and unchanged) 

threshold, which requires that an OTP 

Holder execute at least 0.75% of TCADV 

from Customer posted interest in all 

issues. By continuing to provide such 

alternative methods to qualify for a 

Penny Tier, the Exchange believes the 

opportunities to qualify for credits is 

increased, which benefits all 

participants through increased volume 

to the Exchange. 

In connection with the proposed 

change to Penny Tier 4, the Exchange 

proposes to eliminate current Penny 

Tier 5, which provides a ($0.48) per 

contract credit to OTP Holders that 

execute at least 0.22% of TCADV from 

Customer posted interest in all Issues, 

plus Executed ADV of 0.90% of U.S. 

Equity Market Share Posted and 

Executed on NYSE Arca Equity Market, 

or at least 0.75% of TCADV from 

Customer posted interest in all issues, 

plus at least 0.45% of TCADV from 

Market Maker Total Electronic Volume. 

The Exchange is eliminating Tier 5 

because OTP Holders failed to 

consistently achieve this Tier and thus 

the incentive did not operate as 

intended. The Exchange notes that the 

proposed changes to Penny Tier 4 

incorporates a cross-asset pricing 

component similar to the one being 

eliminated with existing Tier 5. 

The Exchange proposes to modify 

current Penny Tier 7 by increasing both 

of the minimum alternative volume 

thresholds to achieve the same ($0.50) 

per contract credit. First, the Exchange 

is proposing to require that OTP Holders 

execute at least 1.30% (up from 1.00%) 

of TCADV from Customer posted 

interest in all issues, or execute at least 

1.00% (up from 0.80%) of TCADV from 

Customer posted interest in all issues, 

plus executed ADV of 0.30% of U.S. 

Equity Market Share Posted and 

Executed on NYSE Arca Equity Market.5

The Exchange believes the proposed 

change to Penny Tier 7, which increases 

the minimum volume required, would 

not discourage OTP Holders from 

directing volume to the Exchange 

because the Penny Tier 7 per contract 

credit of ($0.50) is competitive with 

other options exchanges.6

The Exchange proposes to renumber 

current Penny Tiers 6 and 7 as new 

Penny Tiers 5 and 6, respectively. 

Customer Incentive Program (the 

‘‘Incentive Credits’’) 

The Exchange also proposes 

modifications to the Incentive Credits, 

which enables OTP Holders to achieve 

one additional credit (to the Customer 

Posting Credits Tiers in Penny and NonPenny Issues) if certain volume criteria 

and thresholds are met. The Exchange 

proposes to eliminate three of the 

existing Incentive Credits because such 

incentives failed to consistently incent 

OTP Holders to direct order flow to the 

Exchange. The Incentives Credits to be 

eliminated are: 

• The additional ($0.01) per contract 

credit for OTP Holders that executed at 

least 0.50% of TCADV from Customer 

posted interest in all issues, plus, an 

ADV from Market Maker posted interest 

in Penny Issues equal to at least 0.30% 

of TCADV; and 

• The additional ($0.03) per contract 

credit for OTP Holders that executed 

ADV of 0.90% of U.S. Equity Market 

Share Posted and Executed on NYSE 

Arca Equity Market; and 

• The additional ($0.03) per contract 

credit for OTP Holders that executed at 

least 1.50% of TCADV from Customer 

posted interest in both Penny and nonPenny Issues, plus Executed ADV of 

0.10% of U.S. Equity Market Share 

Posted and Executed on NYSE Arca 

Equity Market. 

The Exchange also proposes to add a 

new Incentive Credit which would 

provide an additional ($0.03) per 

contract credit for OTP Holders that 

executed at least 0.30% of TCADV from 

Customer posted interest in all issues, 

not including Professional Customer 

interest, plus executed ADV of 0.60% of 

U.S. Equity Market Share Posted and 

Executed on NYSE Arca Equity Market. 

The proposed new Incentive Credit 

excludes Professional Customer interest 

and is designed to attract Customer 

order flow, which provides benefits 

distinct from Professional Customer 

volume. Customer liquidity benefits all 

market participants by providing more 

trading opportunities, which attracts 

Market Makers. An increase in the 

activity of these market participants in 

turn facilitates tighter spreads, which 

may cause an additional corresponding 

increase in order flow from other market 

participants. The Exchange believes this 

proposed Incentive Credit would 

encourage OTP Holders to achieve this 

additional credit albeit with increased 

Customer posted interest. The 

Exchange’s proposed inclusion of a 

cross-asset component is designed to 

incentivize OTP Holders to execute 

volume on the Exchange’s equities 

platform (in addition to the options 

platform) which would make the 

Exchange a more attractive execution 

venue. 

Customer Posting Credit Tiers in NonPenny Issues (the ‘‘Non-Penny Tiers’’) 

The Exchange proposes to modify the 

Non-Penny Tiers, which provide per 


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7Regarding proposed Tier F, the Exchange also 

proposes to make a non-substantive correction of a 

typographical error to eliminate an extraneous 

‘‘ADV, which would add clarity and transparency 

to the Fee Schedule. The Exchange also proposes 

a non-substantive change to Non-Penny Tier D to 

remove an extraneous comma, which would add 

clarity and transparency to the Fee Schedule. 

8See, e.g., BZX Options Fee Schedule, supra note 

6 (providing a $1.00 per contract credit to members 

that achieve Tier 2 of the Customer Non-Penny Add 

Volume Tiers). 

9 15 U.S.C. 78f(b). 

10 15 U.S.C. 78f(b)(4) and (5). 

11See Securities Exchange Act Release No. 51808 

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

(S7–10–04) (‘‘Reg NMS Adopting Release’’). 

12The OCC publishes options and futures volume 

in a variety of formats, including daily and monthly 

volume by exchange, available here: https://

www.theocc.com/Market-Data/Market-DataReports/Volume-and-Open-Interest/MonthlyWeekly-Volume-Statistics. 

13Based on OCC data for monthly volume of 

equity-based options and monthly volume of ETFbased options, see id., the Exchange’s market share 

in equity-based options increased from 7.46% for 

the month of April 2020 to 9.28% for the month 

of April 2021. 

contract credits on executions of 

Customer posted interest in Non-Penny 

Issues, in several ways. First, the 

Exchange proposes to eliminate Tier B 

of the Non-Penny Tiers and the 

associated ($0.94) per contract credit, 

which Tier includes the same minimum 

volume requirement as the to-beeliminated Penny Tier 5 (i.e., that an 

OTP Holder achieve at least 0.75% of 

TCADV from Customer posted interest 

in all issues, plus an ADV from Market 

Maker Total Electronic Volume equal to 

0.45% of TCADV. [sic] Like the 

elimination of Penny Tier 5, the 

Exchange believes this change would 

remove an incentive that failed to 

consistently incent OTP Holders to 

direct order flow to the Exchange. In 

connection with this change, the 

Exchange proposes to rename the 

current Tier C as new Tier B and to offer 

a new Tier C. 

Proposed Tier C of the Non-Penny 

Tiers would offer a ($0.97) per contract 

credit to OTP Holders that execute at 

least 0.30% of TCADV from Customer 

posted interest in all issues, not 

including Professional Customer 

interest, plus executed ADV of 0.60% of 

U.S. Equity Market Share Posted and 

Executed on NYSE Arca Equity Market. 

Proposed Tier C, which excludes 

Professional Customer interest, is 

designed to attract Customer order flow, 

which provides benefits distinct from 

Professional Customer volume. 

Customer liquidity benefits all market 

participants by providing more trading 

opportunities, which attracts Market 

Makers. An increase in the activity of 

these market participants in turn 

facilitates tighter spreads, which may 

cause an additional corresponding 

increase in order flow from other market 

participants. The Exchange’s proposed 

inclusion of a cross-asset component is 

designed to incentivize OTP Holders to 

execute volume on the Exchange’s 

equities platform. The Exchange 

believes this proposed Tier C would 

encourage OTP Holders to achieve this 

Tier albeit with increased Customer 

posted interest and would also 

encourage increased equities trading, 

which would make the Exchange a more 

attractive execution venue. 

The Exchange also proposes to modify 

the minimum volume threshold 

required to achieve Tier F of the NonPenny Tiers by offering a ($1.02) per 

contract credit to OTP Holders that 

execute at least 1.00%(up from 0.80%) 

of TCADV from Customer posted 

interest in all issues, plus executed ADV 

of 0.30% ADV of U.S. Equity Market 

Share Posted and Executed on NYSE 

Arca Equity Market.7 The Exchange 

believes the proposed change to NonPenny Tier F, which increases the 

minimum volume required, would not 

discourage OTP Holders from directing 

volume to the Exchange because the 

Non-Penny Tier F per contract credit of 

($1.02) is competitive with other 

options exchanges.8

The Exchange notes that an OTP 

Holder that qualifies for the new 

alternative volume threshold under 

Penny Tier 4 would also qualify for new 

Non-Penny Tier C as well as the new 

Incentive Credit as all three programs 

have the same minimum volume 

threshold. The Exchange notes that new 

Incentive Credit, which is a credit that 

is achieved in addition to credits 

associated with the Penny and NonPenny Tiers, is designed to encourage 

OTP Holders that may already qualify 

based on the minimum options volume 

thresholds to also post and execute a 

certain amount of volume on the 

Exchange’s equities trading platform, 

which would make the Exchange a more 

attractive execution venue for both 

options and equities. 

The Exchange cannot predict with 

certainty whether any OTP Holders will 

avail themselves of the proposed 

changes to the Penny Tiers, Incentive 

Credits or Non-Penny Tiers. At present, 

whether or when an OTP Holder would 

qualify for the enhanced credit varies 

month-to-month. Thus, the Exchange 

cannot predict with any certainty the 

number of OTP Holders that may 

qualify for the proposed new 

qualifications, but believes that OTP 

Holders would be encouraged to 

increase volume to take advantage of the 

credit tiers, and also to increase 

participation through posted interest on 

the NYSE Arca Equity Market. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,9 in general, and 

furthers the objectives of Sections 

6(b)(4) and (5) of the Act,10 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. 

The Proposed Rule Change Is 

Reasonable 

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.’’ 11

There are currently 16 registered 

options exchanges competing for order 

flow. Based on publicly-available 

information, and excluding index-based 

options, no single exchange has more 

than 16% of the market share of 

executed volume of multiply-listed 

equity and ETF options trades.12

Therefore, currently no exchange 

possesses significant pricing power in 

the execution of multiply-listed equity & 

ETF options order flow. More 

specifically, in April 2021, the Exchange 

had less than 10% market share of 

executed volume of multiply-listed 

equity & ETF options trades.13

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 or 

reduce use of certain categories of 

products, in response to fee changes. 

Accordingly, competitive forces 

constrain options exchange transaction 

fees. In response to this competitive 

environment, the Exchange has 

established incentives, such as the 

Penny Tiers, the Incentive Credits, and 

the Non-Penny Tiers. 

The Exchange believes that the 

proposed modification to the Penny 

Tiers, including eliminating Penny Tier 


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5 and modifying the minimum volume 

thresholds and qualifying criteria for 

Penny Tier 4 and current Penny Tier 7 

(new Tier 6) are reasonably designed to 

continue to incent OTP Holders to 

increase the amount of Customer 

interest sent to the Exchange, especially 

posted interest. The proposed changes 

to the Penny Tiers exclude Professional 

Customer interest and are reasonably 

designed to attract Customer order flow, 

which is unique and provides benefits 

distinct from Professional Customer 

volume. An increase in Customer 

volume would create more trading 

opportunities, which, in turn attracts 

Market Makers. A resulting increase in 

Market-Maker activity may facilitate 

tighter spreads, which may lead to an 

additional increase of order flow from 

other market participants, further 

contributing to a deeper, more liquid 

market to the benefit of all market 

participants by creating a more robust 

and well-balanced market ecosystem. 

As noted above, OTP Holders are still 

eligible to qualify for Penny Credit Tier 

4 under the existing alternative 

(unchanged) qualification basis. By 

continuing to provide such alternative 

methods to qualify for a Penny Tier, the 

Exchange believes the opportunities to 

qualify for credits is increased, which 

benefits all participants through 

increased volume to the Exchange. 

The proposed addition of the crossasset component to Penny Tier 4 is 

designed to incent OTP Holders (and 

their affiliates) to transact more options 

and equities volume on the Exchange, 

which may result in an increase of 

volume and liquidity on both its options 

and equites platforms, which would 

benefit all market participants by 

providing more trading opportunities 

and tighter spreads, and may lead to a 

corresponding increase in order flow 

from other market participants. 

The proposed changes to eliminate 

certain Incentive Credits and NonPenny Tier B are reasonably designed to 

eliminate from the Fee Schedule 

incentives that did not consistently 

encourage OTP Holders to direct order 

flow to the Exchange. The proposed 

new Incentive Credit and new NonPenny Tier C, which each include a 

cross-asset component, are reasonably 

designed to encourage OTP Holders 

(and their affiliates) to transact more 

options and equities volume on the 

Exchange, which would benefit all 

market participants by providing more 

trading opportunities and tighter 

spreads, and may lead to a 

corresponding increase in order flow 

from other market participants. 

The Exchange believes that the 

proposed modification to the NonPenny Tier F is reasonably designed to 

continue to incent OTP Holders to 

increase the amount and type of 

Customer interest sent to the Exchange, 

especially posted interest. As noted 

above, an increase in posted Customer 

interest benefits all market participants. 

The proposed new Incentive Credit 

has a minimum volume threshold 

identical to proposed Penny Tier 4 and 

Non-Penny Tier C and similarly 

excludes Professional Customer interest. 

This proposed Incentive Credit is 

reasonably designed to attract Customer 

order flow, which provides benefits 

distinct from Professional Customer 

volume. Customer liquidity benefits all 

market participants by providing more 

trading opportunities, which attracts 

Market Makers. An increase in the 

activity of these market participants in 

turn facilitates tighter spreads, which 

may cause an additional corresponding 

increase in order flow from other market 

participants. The Exchange believes that 

this proposed Incentive Credit would 

encourage OTP Holders to achieve this 

additional credit albeit with increased 

Customer posted interest. The 

Exchange’s proposed inclusion of a 

cross-asset component in the new 

Incentive Credit is designed to 

incentivize OTP Holders to execute 

volume on the Exchange’s equities 

platform (in addition to the options 

platform) which would make the 

Exchange a more attractive execution 

venue. 

To the extent the proposed rule 

change continues to attract greater 

volume and liquidity by encouraging 

OTP Holders (and their affiliates) to 

increase their options and equities 

volume on the Exchange in an effort to 

achieve higher credits through the 

Penny and Non-Penny Tiers (as well as 

one of the additional Incentive Credits), 

the Exchange believes the proposed 

change would improve the Exchange’s 

overall competitiveness and strengthen 

its market quality for all market 

participants. In the backdrop of the 

competitive environment in which the 

Exchange operates, the proposed rule 

change is a reasonable attempt by the 

Exchange to increase the depth of its 

market and improve its market share 

relative to its competitors. 

The proposed non-substantive 

changes (see supra notes 5 and 7) are 

reasonably designed to add clarity and 

transparency to the Fee Schedule 

making it easier to navigate and 

comprehend. 

The Proposed Rule Change is an 

Equitable Allocation of Credits and Fees 

The Exchange believes the proposed 

rule change is an equitable allocation of 

its fees and credits. The proposal is 

based on the amount and type of 

business transacted on the Exchange 

and OTP Holders can opt to avail 

themselves of the credits or not. 

Moreover, the proposal is designed to 

incent OTP Holders to aggregate all 

Customer posting interest at the 

Exchange as a primary execution venue 

and to attract more posting interest on 

the NYSE Arca Equity Market. To the 

extent that the proposed change attracts 

more Customer posting interest to the 

Exchange and more posting interest on 

the NYSE Arca Equity Market, this 

increased order flow would continue to 

make the Exchange a more competitive 

venue for, among other things, order 

execution on both options and cash 

equities. Thus, the Exchange believes 

the proposed rule change would 

improve market quality for all market 

participants on the Exchange and, as a 

consequence, attract more order flow to 

the Exchange thereby improving marketwide quality and price discovery. 

The Proposed Rule Change Is Not 

Unfairly Discriminatory 

The Exchange believes it is not 

unfairly discriminatory to modify the 

Penny Tiers, the Incentive Credits, and 

the Non-Penny Tiers because the 

proposed modifications would be 

available to all similarly-situated market 

participants on an equal and nondiscriminatory basis. 

The proposal is based on the amount 

and type of business transacted on the 

Exchange and OTP Holders are not 

obligated to try to achieve the enhanced 

qualifications, nor are they obligated to 

execute posted interest. Rather, the 

proposal is designed to encourage OTP 

Holders to utilize the Exchange as a 

primary trading venue for Customer 

posted interest (if they have not done so 

previously) and more posting interest on 

the NYSE Arca Equity Market. To the 

extent that the proposed change attracts 

more Customer interest, including 

posted interest, to the Exchange, this 

increased order flow would continue to 

make the Exchange a more competitive 

venue for, among other things, order 

execution. Thus, the Exchange believes 

the proposed rule change would 

improve market quality for all market 

participants on the Exchange and, as a 

consequence, attract more order flow to 

the Exchange thereby improving marketwide quality and price discovery. The 

resulting increased volume and 

liquidity would provide more trading 

opportunities and tighter spreads to all 

market participants and thus would 

promote just and equitable principles of 

trade, remove impediments to and 

perfect the mechanism of a free and 


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14See Reg NMS Adopting Release, supra note 11, 

at 37499. 

15See supra note 12. 

16Based on OCC data for monthly volume of 

equity-based options and monthly volume of ETFbased options, see id., the Exchange’s market share 

in equity-based options increased from 7.46% for 

the month of April 2020 to 9.28% for the month 

of April 2021. 

17See supra notes 6 and 8. 

18 15 U.S.C. 78s(b)(3)(A). 

19 17 CFR 240.19b–4(f)(2). 

20 15 U.S.C. 78s(b)(2)(B). 

open market and a national market 

system and, in general, to protect 

investors and the public interest. 

Finally, the Exchange believes that it 

is subject to significant competitive 

forces, as described below in the 

Exchange’s statement regarding the 

burden on competition. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with Section 6(b)(8) of 

the Act, the Exchange does not believe 

that the proposed rule change would 

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 all market 

participants. 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.’’ 14

Intramarket Competition. The 

proposed change is designed to attract 

additional order flow (particularly 

Customer posted interest and posted 

equity interest) to the Exchange. The 

Exchange believes that the proposed 

modification to the Penny Tiers, the 

Incentive Credits, and the Non-Penny 

Tiers would incent OTP Holders to 

direct their Customer order flow and 

their posted equity order flow to the 

Exchange. Greater liquidity benefits all 

market participants on the Exchange 

and increased Customer order flow and 

posted equity order flow would increase 

opportunities for execution of other 

trading interest. The proposed 

modifications to the Penny Tiers, the 

Incentive Credits, and the Non-Penny 

Tiers would be available to all similarlysituated market participants that 

execute Customer posted interest 

(excluding Professional Customer 

interest), and, as such, the proposed 

change would not impose a disparate 

burden on competition among market 

participants on the Exchange. 

Intermarket Competition. The 

Exchange operates in a highly 

competitive market in which market 

participants can readily favor one of the 

16 competing option exchanges if they 

deem fee levels at a particular venue to 

be excessive. In such an environment, 

the Exchange must continually adjust its 

fees to remain competitive with other 

exchanges and to attract order flow to 

the Exchange. Based on publiclyavailable information, and excluding 

index-based options, no single exchange 

has more than 16% of the market share 

of executed volume of multiply-listed 

equity and ETF options trades.15

Therefore, currently no exchange 

possesses significant pricing power in 

the execution of multiply-listed equity & 

ETF options order flow. More 

specifically, in April 2021, the Exchange 

had less than 10% market share of 

executed volume of multiply-listed 

equity & ETF options trades.16

The Exchange believes that the 

proposed rule change reflects this 

competitive environment because it 

modifies the Exchange’s fees and credits 

in a manner that is competitive and 

designed to incent OTP Holders to 

direct trading interest (particularly 

Customer posted interest and posted 

equity interest) to the Exchange, to 

provide liquidity and to attract order 

flow.17 To the extent that this purpose 

is achieved, all the Exchange’s market 

participants should benefit from the 

improved market quality and increased 

opportunities for price improvement. 

The Exchange believes that the 

proposed change could promote 

competition between the Exchange and 

other execution venues, including those 

that currently offer similar Customer 

posting credits, by encouraging 

additional orders to be sent to the 

Exchange for execution. The Exchange 

also believes that the proposed change 

is designed to provide the public and 

investors with a Fee Schedule that is 

clear and consistent, thereby reducing 

burdens on the marketplace and 

facilitating investor protection. 

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) 18 of the Act and 

subparagraph (f)(2) of Rule 19b–4 19

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

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) 20 of the Act 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– 

NYSEArca–2021–51 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2021–51. 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 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 86, No. 113 / Tuesday, June 15, 2021 / Notices 31759 

21 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Equity 7, Section 114(f)(2) defines a ‘‘Designated 

Liquidity Provider’’ or ‘‘DLP’’ as a registered 

Nasdaq market maker for a Qualified Security 

(defined below) that has committed to maintain 

minimum performance standards. A DLP will be 

selected by Nasdaq based on factors including, but 

not limited to, experience with making markets in 

exchange-traded products, adequacy of capital, 

willingness to promote Nasdaq as a marketplace, 

issuer preference, operational capacity, support 

personnel, and history of adherence to Nasdaq rules 

and securities laws. Nasdaq may limit the number 

of DLPs in a security, or modify a previously 

established limit, upon prior written notice to 

members. 

4The Exchange is also making a technical change 

in the second sentence of Equity 7, Section 

114(f)(5)(B) to change ‘‘Rebate’’ to ‘‘rebate’’. 

5Equity 7, Section 114(f)(1) says a security may 

be designated as a ‘‘Qualified Security’’ if: (a) It is 

an exchange-traded product listed on Nasdaq 

pursuant to Nasdaq Rules 5705, 5710, 5720, 5735, 

or 5745; and (b) it has at least one DLP. 

6The inclusion of Nasdaq Rule 5704 to the list 

of securities that may be designated as a Qualified 

Security is not a substantive change, but being 

added as a clarification because the securities listed 

under Nasdaq Rule 5704 are already covered by 

Nasdaq Rules 5705 and 5735. 

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–2021–51, and 

should be submitted on or before July 6, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–12473 Filed 6–14–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92134; File No. SR– 

NASDAQ–2021–046] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Exchange’s Pricing Schedule at Equity 

7, Section 114(f) 

June 9, 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 May 27, 

2021, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Exchange’s Pricing Schedule at Equity 

7, Section 114(f) (‘‘Pricing Schedule’’). 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend the Exchange’s 

Pricing Schedule at Equity 7, Section 

114(f) applicable to the Designated 

Liquidity Provider (‘‘DLP’’) 3 Program. 

The Exchange proposes to amend the 

rebates applicable for DLPs in Nasdaqlisted securities with monthly 

incentives that are directly tied to 

meeting market quality metrics 

(‘‘MQMs’’). Specifically, the Exchange 

proposes to (1) add Exchange Traded 

Fund Shares listed on Nasdaq pursuant 

to Nasdaq Rule 5704, Proxy Portfolio 

Shares listed on Nasdaq pursuant to 

Nasdaq Rule 5750, and Managed 

Portfolio Shares listed on Nasdaq 

pursuant to Nasdaq Rule 5760 to the list 

of securities that may be designated as 

a Qualified Security, as long as it has at 

least one DLP; (2) amend Equity 7, 

Section 114(f)(4) to revise the monthly 

performance criteria related to the 

specific rebates provided under Equity 

7, Section 114(f)(5), as well as to address 

secondary DLPs (‘‘Secondary DLPs’’); (3) 

change the current schedule under 

Equity 7, Section 114(f)(5) from three 

tiers to five tiers, establish both standard 

rebates (‘‘Standard Rebate’’) and 

enhanced rebates (‘‘Enhanced Rebate’’), 

as well as address Secondary DLPs; and 

(4) change the existing Additional Tape 

C ETP Incentives in Equity 7, Section 

114(f)(5)(B), as well as add a new tier to 

the schedule. 

Description of the Changes 

The proposal amends the rebates 

applicable for DLPs in Nasdaq-listed 

securities with monthly incentives that 

are directly tied to meeting MQMs.4 The 

Exchange believes that these changes 

will encourage DLPs to maintain better 

market quality in Nasdaq-listed 

securities, and, in particular, in lower 

volume securities where transactionbased compensation (i.e., rebates) may 

not be sufficient. The Exchange 

currently offers a DLP Program, which 

applies to transactions in a Qualified 

Security 5 by one of its DLPs associated 

with its DLP Program market participant 

identifier (‘‘MPID’’). 

Add Exchange Traded Fund Shares, 

Proxy Portfolio Shares and Managed 

Portfolio Shares To List That May Be 

Designated as a Qualified Security 

The Exchange proposes to amend 

Equity 7, Section 114(f)(1)(A) to add 

Exchange Traded Fund Shares listed on 

Nasdaq pursuant to Nasdaq Rule 5704,6

Proxy Portfolio Shares listed on Nasdaq 

pursuant to Nasdaq Rule 5750 and 

Managed Portfolio Shares listed on 

Nasdaq pursuant to Nasdaq Rule 5760 to 

the list of securities that may be 

designated as a Qualified Security, as 

long as it has at least one DLP. Nasdaq 

Rule 5704 (Exchange Traded Fund 

Shares), Nasdaq Rule 5750 (Proxy 

Portfolio Shares) and Nasdaq Rule 5760 

(Managed Portfolio Shares) were all 

fairly recently adopted and should be 

added to the existing list that already 

includes: Nasdaq Rule 5705—Exchange 

Traded Funds: Portfolio Depository 

Receipts and Index Fund Shares; 

Nasdaq Rule 5710—Securities Linked to 

the Performance of Indexes and 

Commodities (Including Currencies); 

Nasdaq Rule 5720—Trust Issued 

Receipts; Nasdaq Rule 5735—Managed 

Fund Shares; and Nasdaq Rule 5745— 


khammond on DSKJM1Z7X2PROD with NOTICES