Document ID: SEC-2018-0306-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2018-02-20T05:00Z

[Federal Register Volume 83, Number 34 (Tuesday, February 20, 2018)]
[Notices]
[Pages 7282-7284]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-03314]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82706; File No. SR-NYSE-2018-08]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Price List for Equity Transactions in Stocks With a Per Share 
Stock Price of $1.00 or More To Introduce a New Market at-the-Close and 
Limit at-the-Close Tier 3

February 13, 2018.
    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 February 1, 2018, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Price List for equity 
transactions in stocks with a per share stock price of $1.00 or more to 
introduce a new market at-the-close (``MOC'') and limit at-the-close 
(``LOC'') Tier 3. 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 Exchange proposes to amend its Price List to introduce a new 
MOC/LOC Tier 3.
    The proposed change would only apply to fees and credits in 
transactions in securities priced $1.00 or more.
    The Exchange proposes to implement this change to its Price List 
effective February 1, 2018.
    Currently, for MOC/LOC Tier 1, the Exchange currently charges 
$0.0004 per share for MOC orders and $0.0007 per share for LOC orders 
from any member organization in the prior three billing months 
executing (1) an ADV of MOC activity on the NYSE of at least 0.45% of 
NYSE CADV, (2) an ADV of total close activity (MOC/LOC and executions 
at the close) on the NYSE of at least 0.7% of NYSE CADV, and (3) whose 
MOC activity comprised at least 35% of the member organization's total 
close activity (MOC/LOC and other executions at the close). For MOC/LOC 
Tier 2, the Exchange currently charges $0.0005 per share for MOC orders 
and $0.0008 per share for LOC orders from any member organization in 
the prior three billing months executing (1) an ADV of MOC activity on 
the NYSE of at least 0.35% of NYSE CADV, (2) an ADV of total close 
activity (MOC/LOC and other executions at the close) on the NYSE of at 
least 0.525% of NYSE CADV, and (3) whose MOC activity comprised at 
least 35% of the member organization's total close activity (MOC/LOC 
and other executions at the close).
    The Exchange proposes a third tier for MOC and LOC orders that 
would charge $0.0008 per share for MOC orders and $0.0009 per share for 
LOC orders from any member organization executing in the current 
billing month (1) an ADV of MOC activity on the NYSE of at least 0.25% 
of NYSE (Tape A) CADV, (2) an ADV of the member organization's total 
close activity (MOC/LOC and other executions at the close) on the NYSE 
of at least 0.35% of NYSE (Tape A) CADV, and (3) whose MOC activity 
comprised at least 35% of the member organization's total close 
activity (MOC/LOC and other executions at the close). The rates and 
requirements for MOC/LOC Tiers 1 and 2 would remain the same.
* * * * *
    The proposed change is 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,\4\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\5\ 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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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4) & (5).
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    The Exchange believes that the proposed fee change for certain 
executions at the close are reasonable. The Exchange's closing auction 
is a recognized industry benchmark,\6\ and member organizations receive 
a substantial benefit from the Exchange in obtaining high levels of 
executions at the Exchange's closing price on a daily basis.
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    \6\ For example, the pricing and valuation of certain indices, 
funds, and derivative products require primary market prints.
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    The Exchange believes that offering a new fee tier for member 
organizations that execute in a current month an ADV of MOC activity on 
the NYSE of at least 0.25% of NYSE (Tape A) CADV, an ADV of the member 
organization's total close activity (MOC/LOC and other executions at 
the close) on the NYSE of at least 0.35% of NYSE (Tape A) CADV, and 
whose MOC activity comprised at least 35% of the member organization's 
total close activity (MOC/LOC and other executions at the close) is 
reasonable and not unfairly discriminatory because the proposed change 
would encourage greater marketable and other liquidity at

[[Page 7283]]

the closing auction, and higher volumes of MOC and LOC orders 
contribute to the quality of the Exchange's closing auction and provide 
market participants whose orders are swept into the close with a 
greater opportunity for execution. The Exchange believes that the 
proposed tier is equitable and not unfairly discriminatory because all 
member organizations will be subject to the same fee structure, which 
will automatically adjust based on prevailing market conditions.
    The Exchange believes that charging a lower rate for MOC executions 
than LOC executions is reasonable and not unfairly discriminatory 
because MOC orders are always marketable and therefore have a higher 
likelihood of execution at the close. Charging a lower fee will 
encourage higher volumes of MOC orders at the close, which should 
result in a higher level of orders matched and greater liquidity for 
all Exchange auction participants. The Exchange notes that the current 
MOC/LOC Tier 1 and MOC/LOC Tier 2 charge a lower rate for MOC 
executions than LOC executions.
    The Exchange believes that the requirement that at least 35% of the 
member organization's total close activity be comprised of MOC activity 
in order to qualify for MOC/LOC Tier 3 rates is reasonable and not 
unfairly discriminatory because MOC orders contribute meaningfully to 
the price and size discovery, which is the hallmark of the closing 
auction process. Charging a lower fee to member organizations utilizing 
MOC orders as a significant component of their closing auction 
participation will encourage higher volumes of MOC orders at the close, 
which should result in robust price discovery, a higher level of orders 
matched and greater liquidity for all Exchange auction participants.
    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 the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\7\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, the Exchange believes that the proposed 
change would encourage the submission of additional liquidity to a 
public exchange, thereby promoting price discovery and transparency and 
enhancing order execution opportunities for member organizations. The 
Exchange believes that this could promote competition between the 
Exchange and other execution venues, including those that currently 
offer similar order types and comparable transaction pricing, by 
encouraging additional orders to be sent to the Exchange for execution.
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    \7\ 15 U.S.C. 78f(b)(8).
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    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 change 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) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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)\10\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \10\ 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

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSE-2018-08 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-NYSE-2018-08. 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

[[Page 7284]]

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-NYSE-2018-08 and should be 
submitted on or before March 13, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-03314 Filed 2-16-18; 8:45 am]
 BILLING CODE 8011-01-P