[Federal Register Volume 82, Number 178 (Friday, September 15, 2017)]
[Notices]
[Pages 43430-43432]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-19586]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81573; File No. SR-NYSEARCA-2017-97]


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

September 11, 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 Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Equities Fees and 
Charges (the ``Fee Schedule'') to adopt a cap, for August and September 
2017, on monthly fees for the use of ports connecting to NYSE Arca that 
are added after August 18, 2017. The Exchange proposes to implement the 
changes on August 29, 2017.\4\ The proposed rule 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.
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    \4\ The Exchange originally filed to amend the Fee Schedule on 
August 18, 2017 (SR-NYSEArca-2017-91) and withdrew such filing on 
August 29, 2017.
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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
    In connection with the introduction of new gateways on August 21, 
2017, the Exchange proposes to amend its Fee Schedule to adopt a cap, 
for August and September 2017, on monthly fees for the use of ports 
connecting to NYSE Arca that are added after August 18, 2017.
    The Exchange currently makes ports available that provide 
connectivity to the Exchange's trading systems (i.e., ports for the 
entry of orders and/or quotes (``order/quote entry ports'')) and 
charges $550 per port per month.\5\ The Exchange also currently makes 
ports available for drop copies and charges $550 per port per month.\6\
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    \5\ Port fees are not applicable to ports used for the 
Exchange's Risk Management Gateway service. Further, no fee applies 
to ports in the backup datacenter that are not utilized during the 
relevant month. No fee applies to ports in the backup datacenter 
that are utilized when the primary datacenter is unavailable. 
However, if a port in the backup datacenter is utilized when the 
primary datacenter is available, then the fee shall apply.
    \6\ No fee applies to ports in the backup datacenter if 
configured such that it is duplicative of another drop copy port of 
the same user. Only one fee per drop copy port applies, even if the 
port receives drop copies from multiple order/quote entry ports and/
or drop copies for activity on both NYSE Arca Equities and NYSE Arca 
Options.
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    In order to facilitate an ETP Holder's transition to the Exchange's 
new gateways on August 21, 2017, the Exchange proposes to add to its 
Fee Schedule that, for the billing months of August and September 2017, 
the total charge per firm for order/quote entry ports and drop copy 
ports will be capped at the total number of such ports that the firm 
has activated at the start of trading on August 18, 2017, the last 
trading day prior to the introduction of the new gateways. This cap 
would have the effect of waiving the port fees, for August and 
September 2017, of any

[[Page 43431]]

new, additional ports that an ETP Holder may use.
    Additionally, the Exchange proposes that, effective October 1, 
2017, the monthly fees for ports activated after August 18, 2017, would 
be prorated to the number of trading days in a billing month, including 
any scheduled early closing days, that a port is connected to the 
Exchange.\7\
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    \7\ The NASDAQ Stock Market LLC (``NASDAQ'') prorates Order 
Entry Port fees for the first month for new requests for ports. See 
NASDAQ Price List at https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
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* * * * *
    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 Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\8\ in general, and furthers the 
objectives of Sections 6(b)(4) of the Act,\9\ in particular, because it 
provides for the equitable allocation of reasonable dues, fees, and 
other charges among its members, issuers and other persons using its 
facilities and does not unfairly discriminate between customers, 
issuers, brokers or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed cap for August and 
September 2017 is reasonable because the proposed cap would allow ETP 
Holders a transition period to adjust to the new gateways.\10\ Further, 
to the extent that an ETP Holder needs an increasing number of ports to 
maintain or expand its activity on the Exchange, the Exchange believes 
without the proposed cap ETP Holders may be inhibited from growing 
their activity on the Exchange. As a general principal, the Exchange 
believes that greater participation on the Exchange by ETP Holders 
improves market quality for all market participants. Thus, the proposed 
cap balances the Exchange's desire to improve market quality against 
the need to cover costs to support connectivity to the Exchange. 
Finally, the Exchange believes that the proposed cap constitutes an 
equitable allocation of fees because all similarly situated ETP Holders 
would be eligible for the cap.
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    \10\ The terms ``gateway'' and ``ports'' are used 
interchangeably. Activating a port, for instance, essentially means 
establishing a connection to a gateway.
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    The Exchange further believes the proposal to charge fees for ports 
activated after August 18, 2017 on a prorated basis based on the number 
of trading days in a billing month the port is connected to the 
Exchange is fair and reasonable because it would allow all Exchange 
participants to subscribe to the most effective connectivity according 
to their trading requirements and as a result will only be assessed 
fees for the connectivity they utilize during any trading month 
beginning October 1, 2017.\11\ The Exchange's proposal to pro-rate port 
fees is also equitable since it would apply equally to all ETP Holders 
that connect to the Exchange. As noted above, NASDAQ currently charges 
new order entry ports on a prorated basis for the first month of 
service. The Exchange notes, however, that fees for ports activated 
before August 21, 2017 would not be pro-rated. The Exchange believes it 
is fair, equitable and not unfairly discriminatory to charge flat fees 
for ports activated before August 21, 2017 as such ports are expected 
to be phased out within a short period of time after the introduction 
of the new gateways. The Exchange believes the proposed proration of 
fees for ports activated after August 18, 2017 would serve as an 
incentive to ETP Holders to fully transition to the new gateways even 
though the Exchange would continue to provide ETP Holders with the 
ability to connect to the Exchange through ports activated before 
August 21, 2017. The Exchange further notes that billing for ports 
activated before August 21, 2017 will continue to be based on the 
number of ports on the third business day prior to the end of the month 
consistent with the Exchange's billing policy, and so firms that cancel 
ports before the third business day prior to the end of the month will 
not be billed for those ports.
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    \11\ Billing for ports is based on the number of ports on the 
third business day prior to the end of the month. The level of 
activity with respect to a particular port does not affect the 
assessment of monthly fees, so even if a particular port that is 
available to a participant is not used, the participant is still 
billed for that port. See Securities Exchange Act Release No. 66110 
(January 5, 2012), 77 FR 1766 (January 11, 2012) (SR-NYSEArca-2012-
01).
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    The Exchange also believes the proposal furthers the objectives of 
Section 6(b)(5) of the Act \12\ in that the proposed rule change is 
designed to promote just and equitable principles of trade, 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 and is not designed to permit unfair discrimination 
between customers, issuers, brokers and dealers. In particular, the 
Exchange believes that the Exchange's pro-rating of port fees is 
consistent with Section 6(b)(5) of the Act since all ETP Holders would 
receive the benefit of being charged only for the connectivity utilized 
during any trading month beginning October 2017. As noted above, to the 
extent an ETP Holder continues to use ports activated before August 21, 
2017 to connect to the Exchange during October 2017 and any subsequent 
months, the Exchange believes it is fair, equitable and not unfairly 
discriminatory to continue to charge flat fees for such ports until 
such time that connection to the Exchange through the use of old ports 
is no longer available which the Exchange expects to occur within a 
short period of time after the introduction of the new gateways.
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    \12\ 15 U.S.C. 78f(b)(5).
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    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. For these reasons, the Exchange 
believes that the proposal is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\13\ the Exchange 
does not believe that the proposed rule change will impose any burden 
on intermarket or intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act in that it is 
simply designed to set forth the Exchange's adoption of a fee cap and 
pro-rata billing for ports without any change to the fees currently 
charged by the Exchange for the use of ports to connect to the 
Exchange's trading systems. ETP Holders may opt to disfavor the 
Exchange's pricing if they believe that alternatives offer them better 
value. Accordingly, the Exchange does not believe that the proposed 
change will impair the ability of ETP Holders to maintain their 
competitive standing in the financial markets. The Exchange believes 
that fees for connectivity are constrained by the robust competition 
for order flow among exchanges and non-exchange markets. Further, 
excessive fees for connectivity, including port fees, would serve to 
impair an exchange's ability to compete for order flow rather than 
burdening competition. The Exchange also does not believe the proposed 
rule change would impact intramarket competition as it would apply to 
all ETP Holders equally that connect to the Exchange through the use of 
new ports. To the extent an ETP Holder continues to use ports activated 
before August 21, 2017 to connect to the Exchange during October 2017 
and any subsequent

[[Page 43432]]

months, the Exchange believes the proposed rule change would not impact 
intramarket competition as given that the Exchange would provide all 
ETP Holders the ability to connect to the Exchange through ports that 
are activated before August 21, 2017 and through ports that are 
activated after August 18, 2017.
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    \13\ 15 U.S.C. 78f(b)(8).
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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) \14\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \15\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(2).
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    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) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

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

Electronic Comments

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#2c5e594049014f4341414942585f6c5f494f024b435a"><span class="__cf_email__" data-cfemail="8af8ffe6efa7e9e5e7e7efe4fef9caf9efe9a4ede5fc">[email protected]</span></a>. Please include 
File Number SR-NYSEARCA-2017-97 on the subject line.

Paper Comments

    <bullet> 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-NYSEARCA-2017-97. 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 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-NYSEARCA-2017-97 and should 
be submitted on or before October 6, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-19586 Filed 9-14-17; 8:45 am]
 BILLING CODE 8011-01-P


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