Document ID: SEC-2020-1778-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2020-11-06T05:00Z

[Federal Register Volume 85, Number 216 (Friday, November 6, 2020)]
[Notices]
[Pages 71125-71127]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24630]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90307; File No. SR-NYSE-2020-88]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend its Price List

November 2, 2020.
    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 October 20, 2020, 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 to reduce the gross 
FOCUS fee charged to member organizations, effective January 1, 2021. 
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 reduce the gross 
FOCUS fee from $0.12 per $1,000 Gross FOCUS Revenue to $0.11 per $1,000 
Gross FOCUS Revenue, effective January 1, 2021.\4\
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    \4\ The Exchange proposes to immediately reflect the proposed 
change in its Price List but not implement the proposed rate change 
until January 1, 2021.
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Background
    Rule 129 provides that the Exchange's Board may, from time to time, 
impose such charge or charges on members and member organizations as it 
deems appropriate to reimburse the Exchange, in whole or in part, for 
regulatory oversight services provided to the membership by the 
Exchange. Generally, the Exchange may only use regulatory fees ``to 
fund the legal, regulatory and surveillance operations'' of the 
Exchange.\5\
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    \5\ See Thirteenth Amended and Restated Operating Agreement of 
New York Stock Exchange LLC, Art. IV, Sec. 4.05, available at 
https://www.nyse.com/publicdocs/nyse/regulation/nyse/Thirteenth_Amended_and_Restated_Operating_Agreement_of_New_York_Stock_Exchange_LLC.pdf. The Exchange considers surveillance operations of 
its member organizations part of regulatory operations.
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    Consistent with the foregoing, the Exchange currently charges each 
member organization a monthly regulatory fee of $0.12 per $1,000 of 
gross revenue reported on its FOCUS Report (``Gross FOCUS Fee'').\6\ 
Member

[[Page 71126]]

organizations are subject to certain minimum annual Gross FOCUS Fees, 
which are $500 for carrying firms and designated market makers 
(``DMMs''), $250 for introducing firms, and $45 for member 
organizations who do not conduct a public business. The revenue 
collected pursuant to the Gross FOCUS Fee funds the performance of the 
Exchange's regulatory activities with respect to member organizations, 
including surveillance operations expenses. More specifically, the 
revenue generated by the Gross FOCUS Fee funds a material portion, but 
not all, of the Exchange's expenses related to third-party service 
providers and technology and other expenses related to market 
surveillance.
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    \6\ FOCUS is an acronym for Financial and Operational Combined 
Uniform Single Report. FOCUS Reports are filed periodically with the 
Securities and Exchange Commission (the ``Commission'' or ``SEC'') 
as SEC Form X-17A-5 pursuant to Rule 17a-5 under the Act.
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    The Exchange has sought to perform its regulatory functions in an 
effective and efficient manner. For example, beginning January 2021, 
the Exchange anticipates that it will have fully transitioned from its 
existing third-party surveillance system to a lower-cost, cloud-based 
surveillance solution. Consistent with these anticipated cost savings, 
the Exchange will be decreasing the Gross FOCUS Fee by approximately 
8%.
Proposed Rule Change
    Consistent with the anticipated reduced regulatory costs, the 
Exchange proposes to reduce the rate of the Gross FOCUS Fee by 
approximately 8% from $0.12 per $1,000 of gross revenue to $0.11 per 
$1,000 of gross revenue, effective January 1, 2021. The Exchange 
proposes this reduction to reflect cost savings associated with its 
move to more cost-effective surveillance and regulatory solutions. The 
Exchange notes that the Gross FOCUS Fee has remained unchanged since 
April 2013.\7\
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    \7\ See Securities Exchange Act Release No. 69101 (March 11, 
2013), 78 FR 16551 (March 15, 2013) (SR-NYSE-2013-19).
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    The Exchange will continue to monitor the amount of revenue 
collected from the Gross FOCUS Fee to ensure that it, in combination 
with its other regulatory fees and fines, does not exceed regulatory 
costs. The Exchange expects to monitor regulatory costs and revenues on 
an annual basis, at a minimum. If the Exchange determines that 
regulatory revenues exceed regulatory costs, the Exchange would adjust 
the Gross FOCUS Fee downward by submitting a fee change filing to the 
Commission.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) \8\ of the Act, in general, and 
Section 6(b)(4) and (5) \9\ of the Act, in particular, in that it is 
designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges among its members 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) and (5).
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The Proposal is Reasonable
    The Exchange believes the proposed fee change is reasonable because 
it would help ensure that revenue collected from the Gross FOCUS Fee 
does not exceed a material portion of the Exchange's regulatory costs. 
The Exchange has targeted the Gross FOCUS Fee to generate revenues that 
would be less than or equal to the Exchange's regulatory costs, which 
is consistent with both Rule 129 and the Commission's view that 
regulatory fees be used for regulatory purposes. As noted above, the 
principle that the Exchange may only use regulatory fees ``to fund the 
legal, regulatory, and surveillance operations'' of the Exchange is 
reflected in the Exchange's operating agreement.\10\ In this regard, 
the Gross FOCUS Fee has been calculated to recover a material portion, 
but not all, of the Exchange's expenses related to third-party service 
providers and technology and other expenses related to market 
surveillance. The Exchange accordingly believes reducing the Gross 
FOCUS Fee is fair and reasonable.
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    \10\ See note 5, supra.
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The Proposal is an Equitable Allocation of Fees
    The Exchange believes its proposal is an equitable allocation of 
fees among its market participants. The Exchange believes that the 
proposed Gross FOCUS Fee reduction would benefit all member 
organizations because all member organizations would pay the same rate 
per $1,000 of gross revenue. For the same reasons, the proposed fee 
reduction neither targets nor will it have a disparate impact on any 
particular category of market participant. All similarly-situated 
member organizations would be eligible to qualify for the lower Gross 
FOCUS Fee. Thus, the Exchange believes the decreased Gross FOCUS Fee 
would be equitably allocated in that it is charged to all member 
organizations equally.
The Proposed Fee is not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. The proposed reduction of the Gross FOCUS Fee would 
benefit all similarly-situated market participants on an equal and non-
discriminatory basis. Moreover, the proposal neither targets nor will 
it have a disparate impact on any particular category of market 
participant. The proposed fee change is designed to pass along 
regulatory cost savings, which would apply to and benefit all member 
organizations equally.
    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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange does not 
believe that the proposed rule change will impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act.
    Intramarket Competition. The Exchange believes the proposed fee 
change would not impose an undue burden on competition as it is charged 
to all member organizations to support the Exchange's regulatory 
program, including its surveillance program. The Exchange believes that 
the proposed Gross FOCUS Fee would not place certain market 
participants at an unfair disadvantage because all member organizations 
would pay the same rate per $1,000 of gross revenue. For the same 
reasons, the proposed fee reduction neither targets nor will it have a 
disparate impact on any particular category of market participant. All 
similarly-situated member organizations would be eligible to qualify 
for the lower Gross FOCUS Fee.
    Intermarket Competition. The proposed fee change is not designed to 
address any competitive issues. Rather, the proposed change is designed 
to help the Exchange adequately fund its regulatory surveillance while 
seeking to ensure that total regulatory revenues do not exceed total 
regulatory costs.

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.

[[Page 71127]]

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) \11\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \12\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \13\ 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 rule-comments@sec.gov. Please include 
File Number SR-NYSE-2020-88 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-NYSE-2020-88. 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-NYSE-2020-88 and should be submitted on 
or before November 27, 2020.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-24630 Filed 11-5-20; 8:45 am]
BILLING CODE 8011-01-P