Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Notices 43059 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release Nos. [sic] 

81228 (July 27, 2017), 82 FR 36012 (August 2, 2017) 

(SR–NYSEMKT–2017–43). 

5See id., 82 FR at 36012–13. 

6The Exchange proposes to delete these fees and 

credits in their entirety, including (1) the section 

headings of all of credits and fees being deleted, (2) 

all associated footnotes, and (3) the recently added 

preamble. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81547; File No. SR– 

NYSEAMER–2017–11] 

Self-Regulatory Organizations; NYSE 

American LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Change To Amend Its Price List 

September 7, 2017. 

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 August 

29, 2017, NYSE American LLC (the 

‘‘Exchange’’ or ‘‘NYSE American’’) 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 selfregulatory 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 amend its 

Price List to (1) delete fees and credits 

that are not applicable to trading on the 

Pillar trading platform, and (2) prorate 

Port Fees to the number of trading days 

in a billing month that a port is utilized. 

The Exchange proposes to implement 

the rule change on September 1, 2017. 

The proposed change is available on the 

Exchange’s Web site 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 Exchange proposes to amend its 

Price List to (1) delete fees and credits 

that are not applicable to trading on the 

Pillar trading platform, and (2) prorate 

Port Fees to the number of trading days 

in a billing month that a port is utilized. 

The Exchange proposes to implement 

the rule change on September 1, 2017. 

Deletion of Non-Pillar Fees and Credits 

To effect its transition of cash equities 

trading to Pillar, the Exchange amended 

its Price List to adopt a new pricing 

model for trading on the Pillar 

platform.4 Because specified transaction 

fees and credits applicable to trading 

cash equities on a Floor-based trading 

platform are not applicable to trading on 

Pillar, the Exchange designated certain 

fees and credits with the following 

preamble: ‘‘The following Fees and 

Credits are not Applicable to Trading on 

the Pillar Trading Platform.’’ 5

On July 24, 2017, the Exchange 

transitioned all cash equities trading to 

the Pillar platform. Because transaction 

fees and credits that are not applicable 

to trading on the Pillar trading platform 

are now obsolete, the Exchange 

proposes to delete the following fees 

and credits in their entirety: 6

• Equity Transaction Fees and Credits 

for Listed Securities and the following 

subheadings: 

Æ Transactions in Securities with a 

Per Share Price of $1.00 or More; 

Æ Transactions in Securities with a 

Per Share Price Below $1.00; 

Æ Fees and Credits Applicable to 

Designated Market Makers on 

Transactions in Securities with a Per 

Share Price of $1.00 or more; 

Æ Fees and Credits Applicable to 

Designated Market Makers on 

Transactions in Securities with a Per 

Share Price below $1.00; 

Æ Credits Applicable to Supplemental 

Liquidity Providers; and 

Æ Fees and Credits Applicable to 

Executions in the Retail Liquidity 

Program. 

• Transaction Fees and Credits For 

Non-ETP Securities Traded Pursuant to 

Unlisted Trading Privileges and the 

following subheadings: 

Æ Fees and Credits applicable to 

Market Participants; 

Æ Fees and Credits applicable to 

Designated Market Makers (DMMs); 

Æ Fees and Credits applicable to 

Supplemental Liquidity Providers 

(SLPs); and 

Æ Fees and Credits Applicable to 

Executions in the Retail Liquidity 

Program. 

• Transaction Fees and Credits For 

ETPs Traded Pursuant to Unlisted 

Trading Privileges and the following 

subheadings: 

Æ Fees and Credits applicable to 

Market Participants; 

Æ Fees and Credits applicable to 

DMMs; 

Æ Fees and Credits applicable to 

SLPs; 

Æ Fees and Credits Applicable to 

Executions in the Retail Liquidity 

Program; and 

Æ Crossing Sessions 

• Port Fees. 

* * * * * 

The Exchange proposes to delete the 

following additional fees as being 

inapplicable to trading on Pillar: 

Æ Risk Management Gateway 

(‘‘RMG’’); 

Æ Equipment fees; 

Æ Radio Paging Service; 

Æ Financial Vendor Services; 

Æ Cellular Phones; 

Æ Booth Telephone System; 

Æ Service Charges; and 

Æ System Processing Fees, comprising 

fees for the Online Comparison System 

(OCS) and Merged Order Report. 

The RMG is no longer supported in 

Pillar and the various equipment fees 

relate to trading cash equities on a 

Floor-based trading platform, and are 

thus obsolete. Similarly, the Exchange 

no longer utilizes OCS or makes Merged 

Order Reports available. 

The Exchange also proposes to delete 

footnotes 17–19 designated as 

‘‘Reserved’’ in the ‘‘CRD Fees for 

Member Organizations that are not 

FINRA Members’’ section of the Price 

List. The Exchange believes it would 

reduce confusion and promote 

transparency to delete footnotes that do 

not have any substantive content. 

The Exchange also proposes a 

technical, non-substantive amendment 

to replace the heading ‘‘Pillar Trading 

Platform’’ with ‘‘NYSE American 

Trading Fees and Credits.’’ 

Proration of Port Fees 

Until October 1, 2017, the Exchange is 

not charging market participants for the 

use of order/quote entry ports or for the 


sradovich on DSK3GMQ082PROD with NOTICES
43060 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Notices 

7Order/quote entry ports provide connectivity to 

the Exchange’s trading systems for entry of orders 

and/or quotes. Drop copy ports allow for the receipt 

of ‘‘drop copies’’ of order or transaction 

information. 

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

9 15 U.S.C. 78f(b)(4). 

10 15 U.S.C. 78f(b)(5). 11 15 U.S.C. 78f(b)(8). 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f)(2). 

14 15 U.S.C. 78s(b)(2)(B). 

use of drop copy ports.7 Thereafter, a 

$250 per port per month fee will apply 

for order/quote entry and drop copy 

ports. 

The Exchange proposes to amend the 

Price List to add a footnote to the 

heading of Section V (Port Fees) 

providing that port fees for order/quote 

entry and drop copies will be prorated 

to the number of trading days in a 

billing month. 

* * * * * 

The proposed changes are not 

otherwise intended to address any other 

issues, and the Exchange is not aware of 

any problems that member 

organizations would have in complying 

with the proposed change. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),8 in general, and furthers the 

objectives of Section 6(b)(4) 9 of the Act, 

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 

Exchange also believes that the 

proposed rule change is consistent with 

Section 6(b)(5) of the Act,10 in particular 

in that it is designed to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, to remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

The Exchange believes that its 

proposed rule change to eliminate fees 

and credits that are not applicable to 

trading on Pillar would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because it 

would eliminate fees and credits that 

are now obsolete. Eliminating obsolete 

fees and credits would reduce potential 

confusion and add transparency and 

clarity to the Exchange’s rules, thereby 

ensuring that members, regulators, and 

the public can more easily navigate and 

understand the Exchange’s rulebook. 

The Exchange also believes that 

prorating the fees for order/quote entry 

and drop copy ports is reasonable 

because it would provide a nexus 

between the Exchange’s charge for use 

of its ports and the number of trading 

days in a billing month that the market 

participant utilizes the applicable port. 

The Exchange believes that the 

proposed prorating of monthly port fees 

rebate is equitable and not unfairly 

discriminatory because it directly ties 

the monthly port fees to the number of 

trading days in that billing month. The 

Exchange also believes that the 

proposed prorating is equitable and not 

unfairly discriminatory because all 

market participants utilizing ports to 

connect to the Exchange would be 

treated the same. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

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

the Act,11 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. The 

proposed rule change is not intended to 

address any competitive issues, but 

rather it is designed to eliminate 

obsolete fees and credits. 

Finally, the Exchange notes that it 

operates in a highly competitive market 

in which market participants can 

readily favor competing venues if they 

deem fee levels at a particular venue to 

be excessive or rebate opportunities 

available at other venues to be more 

favorable. In such an environment, the 

Exchange must continually adjust its 

fees and rebates to remain competitive 

with other exchanges and with 

alternative trading systems that have 

been exempted from compliance with 

the statutory standards applicable to 

exchanges. 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 

believes that the degree to which fee 

changes in this market may impose any 

burden on competition is extremely 

limited. As a result of all of these 

considerations, the Exchange does not 

believe that the proposed changes will 

impair the ability of member 

organizations or competing order 

execution venues to maintain their 

competitive standing in the financial 

markets. 

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) 12 of the Act and 

subparagraph (f)(2) of Rule 19b–4 13

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) 14 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– 

NYSEAMER–2017–11 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEAMER–2017–11. 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 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Notices 43061 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 81203 (July 

25, 2017), 82 FR 35563 (July 31, 2017) (SR–NSCC– 

2017–010) (‘‘Notice’’). NSCC also filed a related 

advance notice with the Commission pursuant to 

Section 806(e)(1) of the Payment, Clearing, and 

Settlement Supervision Act of 2010 and Rule 19b– 

4(n)(1) under the Act. 15 U.S.C. 5465(e)(1) and 17 

CFR 240.19b–4(n)(1). The advance notice was 

published in the Federal Register on August 2, 

2017. Securities Exchange Act Release No. 81286 

(August 2, 2017), 82 FR 37141 (August 8, 2017) 

(SR–NSCC–2017–804). The Commission did not 

receive any comments on that proposal. 

4Specific wrong-way risk is the risk that an 

exposure to a counterparty is highly likely to 

increase when the creditworthiness of that 

counterparty is deteriorating. See Principles for 

financial market infrastructures, issued by the 

Committee on Payment and Settlement Systems and 

the Technical Committee of the International 

Organization of Securities Commissions 47 n.65 

(April 2012), available at http://www.bis.org/publ/ 

cpss101a.pdf. 

5Notice, 82 at 35563–64. As part of this proposal, 

NSCC proposes to define in its rules that, for a 

given Member, a family-issued security is a security 

that was issued by such Member or an affiliate of 

such Member. Notice, 82 at 35563. 

6Notice, 82 at 35563. As part of its ongoing 

monitoring of its membership, NSCC utilizes an 

internal credit risk rating matrix to rate its risk 

exposures to its Members based on a scale from 1 

(the strongest) to 7 (the weakest). Members that fall 

within the weakest three rating categories (i.e., 5, 6, 

and 7) are placed on NSCC’s ‘‘Watch List’’ and, as 

provided under NSCC’s Rules and Procedures 

(‘‘Rules’’), may be subject to enhanced surveillance 

or additional margin charges. See Section 4 of Rule 

2B and Section I(B)(1) of Procedure XV of NSCC’s 

Rules, available at http://dtcc.com/∼/media/Files/ 

Downloads/legal/rules/nscc_rules.pdf. 

7Notice, 82 at 35564. 

8 Id. 

9 Id. 

10 Id. 

11 Id. More specifically, fixed-income securities 

that are family-issued securities are charged a rate 

of no less than 80 percent for firms that are rated 

6 or 7 on the credit risk rating matrix, and no less 

than 40 percent for firms that are rated 5 on the 

credit risk rating matrix. Equity securities that are 

family-issued securities are charged a rate of 100 

percent for firms that are rated 6 or 7 on the credit 

risk rating matrix, and no less than 50 percent for 

firms that are rated 5 on the credit risk rating 

matrix. See Section I(B)(1) of Procedure XV of 

NSCC’s Rules, available at http://dtcc.com/∼/ 

media/Files/Downloads/legal/rules/nscc_rules.pdf. 

12Notice, 82 at 35564. In a default scenario, NSCC 

would receive the family-issued securities from a 

Member’s guaranteed long transactions and would 

have to liquidate the holding to unwind NSCC’s 

position. Id. 

13 Id. 

14 Id. 

Internet Web site (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 Web site 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; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NYSEAMER–2017–11 and should be 

submitted on or before October 4, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–19376 Filed 9–12–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81550; File No. SR–NSCC– 

2017–010] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Order Approving 

Proposed Rule Change To Expand the 

Application of the Family-Issued 

Securities Charge 

September 7, 2017. 

On July 10, 2017, National Securities 

Clearing Corporation (‘‘NSCC’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) proposed 

rule change SR–NSCC–2017–010 

(‘‘Proposed Rule Change’’) pursuant to 

Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder.2 The Proposed Rule 

Change was published for comment in 

the Federal Register on July 31, 2017.3

The Commission did not receive any 

comments on the Proposed Rule 

Change. For the reasons discussed 

below, the Commission approves the 

Proposed Rule Change. 

I. Description of the Proposed Rule 

Change 

The Proposed Rule Change is a 

proposal by NSCC to further address 

specific wrong-way risk 4 that is present 

when NSCC acts as central counterparty 

to a transaction with an NSCC member 

(‘‘Member’’) where the underlying 

securities are securities issued by such 

Member or an affiliate of such Member 

(‘‘family-issued securities’’).5 Currently, 

NSCC applies a targeted margin charge 

to address the specific wrong-way risk 

of family-issued securities transactions 

(‘‘FIS Charge’’) where the Member is on 

NSCC’s Watch List.6 NSCC believes that 

Members on the Watch List present a 

higher credit risk (i.e., a greater risk of 

defaulting on their settlement 

obligations), compared to Members not 

on the Watch List.7 As such, the familyissued securities of Members on the 

Watch List currently receive a FIS 

Charge because of the increased credit 

risk presented by such Members.8 As 

described in detail below, NSCC 

proposes in the Proposed Rule Change 

to expand the application of the FIS 

Charge to all Members, regardless of a 

Member’s Watch List status, but still 

maintain a higher FIS Charge for 

Members that present a greater credit 

risk to NSCC, such as Members on the 

Watch List.9

Currently, in calculating a Watch List 

Member’s overall margin charge (i.e., a 

Watch List Member’s required deposit 

to NSCC’s clearing fund), NSCC 

excludes the Member’s net, unsettled 

long position in family-issued securities 

from the volatility component of the 

margin calculation (‘‘VaR Charge’’).10

Instead, for such unsettled long 

positions, NSCC calculates the required 

margin (i.e., the FIS Charge) by 

multiplying the position value by a set 

percentage, which is determined based 

on a Member’s rating on NSCC’s 

internal credit risk rating matrix.11

NSCC applies this separate margin 

calculation to deal with specific wrongway risk that arises from these positions 

because NSCC has to liquidate the 

unsettled family-issued security long 

positions in the Member’s portfolio to 

manage the default.12 Given that the 

Member’s default would likely 

adversely affect NSCC’s ability to 

liquidate such positions at full value 

(because the value of the family-issued 

securities will decline in response to the 

Member’s default), NSCC applies the 

FIS Charge to try to address the risk of 

a shortfall.13 According to NSCC, the 

FIS Charge constitutes a more 

conservative approach to collecting 

margin on family-issued security 

positions than what may be achieved by 

applying the VaR Charge, which does 

not recognize the relationship between 

the Member and the family-issued 

securities.14

Although the risk of default by 

Members that are not on the Watch List 

is lower than Members on the Watch 


sradovich on DSK3GMQ082PROD with NOTICES