Document ID: SEC-2021-1003-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2021-07-20T04:00Z

[Federal Register Volume 86, Number 136 (Tuesday, July 20, 2021)]
[Notices]
[Pages 38375-38377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15335]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92400; File No. SR-NYSEARCA-2021-60]

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

July 14, 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 July 1, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 (``Fee Schedule'') to (1) eliminate an alternative credit 
applicable under Tier 2 pricing tier, and (2) eliminate the Tracking 
Order Tier 1 and Tracking Order Tier 2 pricing tiers. The Exchange 
proposes to implement the fee changes effective July 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 the Fee Schedule to (1) eliminate an 
alternative credit applicable under Tier 2 pricing tier, and (2) 
eliminate the Tracking Order Tier 1 and Tracking Order Tier 2 pricing 
tiers. The Exchange proposes to implement the fee changes effective 
July 1, 2021.
    Currently, a Tier 2 credit of $0.0029 per share for orders in Tape 
A and Tape C Securities that provide liquidity to the Book, and a 
credit of $0.0022 per share for orders in Tape B Securities \4\ that

[[Page 38376]]

provide liquidity to the Book, applies to ETP Holders \5\ that either 
(1) provide liquidity an average daily share volume per month of 0.30% 
or more, but less than 0.70% of the US CADV or (2) provide liquidity of 
0.10% of more of the US CADV per month, and are affiliated with an OTP 
Holder or OTP Firm that provides an ADV of electronic posted Customer 
and Professional Customer executions in all issues on NYSE Arca Options 
(excluding mini options) of at least 1.50% of total Customer equity and 
ETF option ADV as reported by The Options Clearing Corporation 
(``OCC''). In May 2019, the Exchange adopted a higher credit of $0.0031 
per share for orders that provide liquidity in Tape A and Tape C 
Securities, and $0.0024 per share for orders that provide liquidity in 
Tape B Securities. The higher credit is applicable for orders that 
provide displayed liquidity to the Book for ETP Holders and Market 
Makers that meet the requirements of Tier 2 \6\ and, for the billing 
month, (1) execute providing volume equal to at least 0.30% of US CADV, 
(2) execute removing volume equal to at least 0.285% of US CADV, and 
(3) execute Market-On-Close and Limit-On-Close Orders executed in a 
Closing Auction of at least 0.075% of US CADV.\7\
---------------------------------------------------------------------------

    \4\ An additional credit applies to ETP Holders and Market 
Makers affiliated with LMMs that provide displayed liquidity to the 
Book based on the number of Less Active ETP Securities in which the 
LMM is registered as the LMM. See LMM Transaction Fees and Credits 
on the Fee Schedule for the applicable tiered credits.
    \5\ All references to ETP Holders in connection with this 
proposed fee change include Market Makers.
    \6\ To qualify for Tier 2, ETP Holders and Market Makers must 
provide liquidity an average daily share volume per month of 0.30% 
or more, but less than 0.70% of the US CADV or (a) provide liquidity 
an average daily share volume per month of 0.25% or more, but less 
than 0.70% of the US CADV, (b) execute removing volume in Tape B 
Securities equal to at least 0.40% of US Tape B CADV, and (c) are 
affiliated with an OTP Holder or OTP Firm that provides an ADV of 
electronic posted Customer and Professional Customer executions in 
all issues on NYSE Arca Options (excluding mini options) of at least 
0.25% of total Customer equity and ETF option ADV as reported by 
OCC. See Tier 2, Fee Schedule.
    \7\ See Securities Exchange Act Release No. 85888 (May 17, 
2019), 84 FR 23821 (May 23, 2019) (SR-NYSEArca-2019-37).
---------------------------------------------------------------------------

    The Exchange proposes to eliminate the higher credit of $0.0031 per 
share for orders that provide liquidity in Tape A and Tape C 
Securities, and $0.0024 per share for orders that provide liquidity in 
Tape B Securities and remove it from the Fee Schedule. The Exchange has 
observed that not a single ETP Holder has qualified for the higher 
credit over the last six months. Given that the higher credit adopted 
by the Exchange has not served to meaningfully increase activity on the 
Exchange, the Exchange has determined to eliminate it from the Fee 
Schedule. The Exchange is not proposing any other change to the Tier 2 
pricing tier.
    Additionally, the Exchange proposes to eliminate the Tracking Order 
Tier 1 and Tracking Order Tier 2 pricing tiers.
    The Exchange adopted volume-based tiers applicable to Tracking 
Orders \8\ in 2009 in order to incentivize the use of this order type 
and attract liquidity to the Exchange.\9\ Currently, Tracking Order 
Tier 1 currently offers ETP Holders a credit of $0.0015 per share for 
Tracking Orders that result in executions on the Exchange with an 
average daily share volume per month greater than or equal to 10 
million shares. Additionally, Tracking Order Tier 2 currently offers 
ETP Holders a credit of $0.0012 per share for Tracking Orders that 
result in executions on the Exchange with an average daily share volume 
per month between 5 million shares and 9,999,999 shares. Finally, 
Tracking Order Tier 3 currently offers ETP Holders a credit of $0.001 
per share for Tracking Orders that result in executions on the Exchange 
with an average daily share volume per month between 1 million shares 
and 4,999,999 shares.\10\
---------------------------------------------------------------------------

    \8\ See NYSE Arca Rule 7.31-E(d)(4). A Tracking Order is an 
order to buy (sell) with a limit price that is not displayed, does 
not route, must be entered in round lots and designated Day, and 
trades only with an order to sell (buy) that is eligible to route.
    \9\ See Securities Exchange Act Release No. 60944 (November 5, 
2009), 74 FR 58668 (November 13, 2009) (SR-NYSEArca-2009-99). See 
also Securities Exchange Act Release No. 66379 (February 10, 2012), 
77 FR 9277 (February 16, 2012) (SR-NYSEArca-2012-11).
    \10\ See Securities Exchange Act Release No. 66568 (March 9, 
2012), 77 FR 15819 (March 16, 2012) (SR-NYSEArca-2012-17).
---------------------------------------------------------------------------

    No ETP Holder has qualified for the Tracking Order Tier 1 and 
Tracking Order Tier 2 pricing tiers in the last six months. Given that 
the pricing incentives offered under these tiers have not served to 
meaningfully increase activity on the Exchange or attract order flow in 
any meaningful way, the Exchange proposes to eliminate the Tracking 
Order Tier 1 and Tracking Order Tier 2 pricing tiers and remove them 
from the Fee Schedule. Given that the Tracking Order functionality 
continues to be available on the Exchange, the Exchange proposes to 
retain Tracking Order Tier 3, which provides the minimum level of 
credit for the use of Tracking Orders on the Exchange. The Exchange 
also proposes to amend the volume requirement applicable to current 
Tracking Order Tier 3 so that the $0.001 per share credit would be 
applicable for Tracking Orders that result in executions on the 
Exchange with an average daily volume per month of at least 1 million 
shares. Finally, with the proposed elimination of Tracking Order Tier 1 
and Tracking Order Tier 2 pricing tiers, the Exchange proposes to 
rename current Tracking Order Tier 3 as Tracking Order Tier 1.
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any significant problems 
that market participants would have in complying with the proposed 
changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\11\ in general, and furthers the 
objectives of Sections 6(b)(4) and(5) of the Act,\12\ 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change to eliminate 
the Tier 2 credit of $0.0031 per share for orders that provide 
liquidity in Tape A and Tape C Securities, and $0.0024 per share for 
orders that provide liquidity in Tape B Securities, and eliminate the 
Tracking Order Tier 1 and Tracking Order Tier 2 pricing tiers is 
reasonable because each of the pricing tiers that are the subject of 
this proposed rule change have been underutilized and have generally 
not incentivized ETP Holders to bring liquidity and increase trading on 
the Exchange. In the last six months, no ETP Holder has availed itself 
of the higher Tier 2 credit. Similarly, no ETP Holder has qualified for 
Tracking Order Tier 1 and Tracking Order Tier 2 pricing tiers in the 
last six months. The Exchange does not anticipate any ETP Holder in the 
near future to qualify for any of the tiers that are the subject of 
this proposed rule change. The Exchange believes it is reasonable to 
eliminate requirements and credits, and even entire pricing tiers, when 
such incentives become underutilized. The Exchange believes eliminating 
underutilized incentive programs would also simplify the Fee Schedule. 
The Exchange further believes that removing reference to the pricing 
tiers that the Exchange proposes to eliminate from the Fee Schedule 
would also add clarity to the Fee Schedule. The Exchange believes that 
eliminating requirements and credits, and even entire pricing tiers, 
from the Fee Schedule when such incentives become ineffective is 
equitable and not unfairly

[[Page 38377]]

discriminatory because the requirements, and credits, and even entire 
pricing tiers, would be eliminated in their entirety and would no 
longer be available to any ETP Holder.
    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,\13\ 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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    Intramarket Competition. The Exchange's proposal to eliminate 
certain requirements and credits, and pricing tiers in their entirety, 
will not place any undue burden on intramarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act 
given that not a single ETP Holder has qualified for any of the credits 
under the pricing tiers that are the subject of this proposed rule 
change in the past six months. To the extent the proposed rule change 
places a burden on competition, any such burden would be outweighed by 
the fact that none of the pricing tiers proposed for deletion have 
served their intended purpose of incentivizing ETP Holders to more 
broadly participate on the Exchange. Moreover, ETP Holders can choose 
to trade on other venues to the extent they believe that the credits 
provided are too low or the qualification criteria are not attractive.
    Intermarket Competition. The Exchange believes the proposed rule 
change does not impose any burden on intermarket competition that is 
not necessary or appropriate in furtherance of the purposes of the Act. 
The Exchange operates in a highly competitive market in which market 
participants can readily choose to send their orders to other exchanges 
and off-exchange venues if they deem fee levels at those other venues 
to be more favorable. Market share statistics provide ample evidence 
that price competition between exchanges is fierce, with liquidity and 
market share moving freely from one execution venue to another in 
reaction to pricing changes. In such an environment, the Exchange must 
continually adjust its fees and rebates to remain competitive with 
other exchanges and with off-exchange venues. 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 does not believe this proposed fee change would impose any 
burden on intermarket competition.

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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-2021-60 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-2021-60. 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-NYSEARCA-2021-60 and should be submitted 
on or before August 10, 2021.
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-15335 Filed 7-19-21; 8:45 am]
BILLING CODE 8011-01-P