Document ID: SEC-2015-1633-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2015-10-13T04:00Z

[Federal Register Volume 80, Number 197 (Tuesday, October 13, 2015)]
[Notices]
[Pages 61529-61535]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-25863]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76084; File No. SR-NYSEARCA-2015-87]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE 
Arca Equities Schedule of Fees and Charges for Exchange Services

October 6, 2015.
    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 September 22, 2015, 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.
---------------------------------------------------------------------------

    \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 Schedule of 
Fees and Charges for Exchange Services (``Fee Schedule''). The text of 
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.

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,

[[Page 61530]]

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 (i) change 
certain rebate and volume thresholds applicable to Lead Market Makers 
(``LMMs'') \4\ for providing liquidity in primary listed securities in 
which they are registered as the LMM, (ii) adopt an incremental tiered-
rebate structure applicable to LMMs and to ETP Holders and Market 
Makers affiliated with the LMM that provide liquidity in Tape B 
securities to the NYSE Arca Book, (iii) increase the fee charged to 
LMMs for removing liquidity from the NYSE Arca Book, (iv) revise the 
requirements, fees and credits for Tier 1, (v) revise the requirements 
for the current Cross Asset Tier, and rename it Cross Asset Tier 1, 
(vi) adopt a new pricing tier, Cross Asset Tier 2, (vii) add two new 
Step Up Tiers for Tape B Securities, (viii) eliminate obsolete pricing 
tiers, and (ix) amend Port Fees. The Exchange proposes to implement the 
fee changes effective October 1, 2015.
---------------------------------------------------------------------------

    \4\ The term ``Lead Market Maker'' is defined in Rule 1.1(ccc) 
to mean a registered Market Maker that is the exclusive Designated 
Market Maker in listings for which the Exchange is the primary 
market.
---------------------------------------------------------------------------

LMM Transaction Credits
    The Exchange proposes to amend the Fee Schedule to modify the 
structure of the transaction credits it provides to LMMs for providing 
displayed liquidity in the NYSE Arca Marketplace \5\ primary listed 
securities in which they are registered as the LMM. The Exchange has a 
tiered rebate structure that is based on the consolidated average daily 
volume (``CADV'') of the security in the previous month. Specifically, 
the current rebates are as follows:
---------------------------------------------------------------------------

    \5\ The term ``NYSE Arca Marketplace'' is defined in Rule 1.1(e) 
to mean the electronic securities communications and trading 
facility designated by the Board of Directors through which orders 
of Users are consolidated for execution and/or display.
---------------------------------------------------------------------------

     $0.0035 per share (credit) for orders that provide 
displayed liquidity to the Book in securities for which they are 
registered as the LMM and which have a CADV in the previous month 
greater than 5,000,000 shares
     $0.004 per share (credit) for orders that provide 
displayed liquidity to the Book in securities for which they are 
registered as the LMM and which have a CADV in the previous month of 
between 1,000,000 and 5,000,000 shares
     $0.0045 per share (credit) for orders that provide 
displayed liquidity to the Book in securities for which they are 
registered as the LMM and which have a CADV in the previous month of 
less than 1,000,000 shares
    The Exchange proposes to lower the credit for the tier requiring a 
CADV in the previous month greater than 5,000,000 shares from $0.0035 
per share to $0.0033 per share. The Exchange is not proposing any 
change to the credits provided for the other two tiers. The Exchange 
also proposes to lower the volume threshold for the tier requiring a 
CADV in the previous month greater than 5,000,000 million shares from 
5,000,000 shares to 3,000,000 shares, and lower the volume threshold 
for the tier requiring a CADV in the previous month of between 
1,000,000 shares and 5,000,000 to 1,000,000 shares and 3,000,000 
shares. The Exchange is not proposing any change to the volume 
threshold for the remaining tier.
    As proposed, the transaction credits and volume thresholds would be 
as follows:
     $0.0033 per share (credit) for orders that provide 
displayed liquidity to the Book in securities for which they are 
registered as the LMM and which have a CADV in the previous month 
greater than 3,000,000 shares
     $0.004 per share (credit) for orders that provide 
displayed liquidity to the Book in securities for which they are 
registered as the LMM and which have a CADV in the previous month of 
between 1,000,000 and 3,000,000 shares
     $0.0045 per share (credit) for orders that provide 
displayed liquidity to the Book in securities for which they are 
registered as the LMM and which have a CADV in the previous month of 
less than 1,000,000 shares
LMMs and Affiliated ETP Holders and Market Makers Incremental 
Transaction Credits
    The Exchange proposes to adopt tier-based incremental credits for 
orders that provide displayed liquidity to the NYSE Arca Book in Tape B 
Securities. Specifically, LMMs that are registered as the LMM in Tape B 
securities that have a CADV in the previous month of less than 100,000 
shares (``Less Active ETP Securities''), and the ETP Holders and Market 
Makers affiliated with such LMMs, would receive an additional credit 
for orders that provide displayed liquidity to the Book in any Tape B 
Securities that trade on the Exchange.\6\ As proposed, the incremental 
credits and volume thresholds would be as follows:
---------------------------------------------------------------------------

    \6\ The Exchange defines ``affiliate'' to ``mean any ETP Holder 
under 75% common ownership or control of that ETP Holder.'' See Fee 
Schedule, NYSE Arca Marketplace: General.
---------------------------------------------------------------------------

     An additional credit of $0.0004 per share if an LMM is 
registered as the LMM in at least 300 Less Active ETP Securities
     An additional credit of $0.0003 per share if an LMM is 
registered as the LMM in at least 200 but less than 300 Less Active ETP 
Securities
     An additional credit of $0.0002 per share if an LMM is 
registered as the LMM in at least 100 but less than 200 Less Active ETP 
Securities
    The number of Less Active ETP Securities for the billing month 
would be based on the number of Less Active ETP Securities in which an 
LMM is registered as the LMM on the last business day of the previous 
month. As noted above, the proposed incremental credits would also 
apply to ETP Holders and Market Makers affiliated with the LMM whose 
orders in Tape B Securities provide displayed liquidity to the NYSE 
Arca Book.
    For example, a LMM that provides liquidity to the NYSE Arca Book in 
a security for which the LMM is registered as the LMM which has a CADV 
in the previous month of at least 1,000,000 shares would receive a 
credit of $0.0045 per share. If that LMM is a Tier 1 firm that is also 
registered as an LMM in 250 Less Active ETP Securities, the LMM would 
receive an incremental credit of $0.0003 per share under the proposed 
new rebate structure, for a total credit of $0.0048 per share. 
Additionally, affiliated ETP Holders and Market Makers of such LMM that 
provide displayed liquidity in Tape B Securities would receive a total 
credit of $0.0026 per share, i.e., $0.0023 per share Tier 1 credit for 
orders that provide liquidity to the NYSE Arca Book plus $0.0003 per 
share for being registered as a LMM in 250 Less Active ETP Securities.
    With this pricing incentive, the Exchange hopes to provide 
incentives for increased trading in Less Active ETP Securities for 
market participants.
LMM Transaction Fees
    The Exchange currently charges a fee of $0.0025 per share to LMMs 
for orders in primary listed securities that remove liquidity from the 
NYSE Arca Book. The Exchange proposes to increase this fee to $0.0028 
per share.
Tier 1
    Currently, ETP Holders and Market Makers qualify for Tier 1 fees 
and

[[Page 61531]]

credits by meeting one of two requirements. These participants can 
either provide liquidity an average daily share volume per month of 
0.70% or more of the US CADV, or (a) provide liquidity an average daily 
share volume per month of 0.15% or more of the US CADV and (b) are 
affiliated with an OTP Holder or OTP Firm that provides an ADV of 
electronic posted executions (including all account types) in Penny 
Pilot issues on NYSE Arca Options (excluding mini options) of at least 
100,000 contracts, of which at least 25,000 contracts must be for the 
account of a market maker. In Tape A and Tape C Securities, ETP Holders 
and Market Makers currently receive a credit of $0.0030 per share for 
orders that provide liquidity to the Book and pay a fee of $0.0030 per 
share for orders that take liquidity from the Book. In Tape B 
Securities, ETP Holders and Market Makers receive a credit of $0.0023 
per share for orders that provide liquidity to the Book.
    The Exchange proposes to simplify this pricing tier by removing the 
second requirement. As proposed, ETP Holders and Market Makers will 
qualify for Tier 1 fees and credits if they provide liquidity an 
average daily share volume per month of 0.70% or more of the US CADV. 
Additionally, the Exchange proposes distinct fees and credits 
applicable to Tape A and Tape C Securities. As proposed, ETP Holders 
and Market Makers would receive an increased credit of $0.0031 per 
share for orders that provide liquidity to the Book in Tape A 
Securities and will continue to pay a fee of $0.0030 per share for 
orders that take liquidity from the Book in Tape A Securities. ETP 
Holders and Market Makers would receive an increased credit of $0.0033 
per share for orders that provide liquidity to the Book in Tape C 
Securities and would pay a lower fee of $0.0029 per share for orders 
that take liquidity from the Book in Tape C Securities. The Exchange is 
not proposing any change to the per share credit provided to ETP 
Holders and Market Makers in Tape B Securities.
Cross-Asset Tier
    Currently, ETP Holders and Market Makers receive a credit of 
$0.0030 per share in Tape A, Tape B and Tape C Securities when such 
participants (1) provide liquidity of 0.40% or more of the US CADV per 
month, and (2) are affiliated with an OTP Holder or OTP Firm that 
provides an ADV of electronic posted Customer executions in Penny Pilot 
issues on NYSE Arca Options (excluding mini options) of at least 0.95% 
of total Customer equity and ETF option ADV as reported by OCC, or when 
such participants (1) provide liquidity of 0.30% or more of the US CADV 
per month, (2) are affiliated with an OTP Holder or OTP Firm that 
provides an ADV of electronic posted Customer executions in all issues 
on NYSE Arca Options (excluding mini options) of at least 0.80% of 
total Customer equity and ETF option ADV as reported by OCC, and (3) 
execute an ADV of Retail Orders that provide liquidity during the month 
that is 0.10% or more of the US CADV. Under the current tier, 
participants receive a credit of $0.0030 per share for providing 
liquidity to the order book in Tape A, Tape B and Tape C Securities.
    The Exchange proposes to simplify this pricing tier by removing the 
first requirement. As proposed, ETP Holders and Market Makers would 
receive a per share credit when such participants (a) provide liquidity 
of 0.30% or more of the US CADV per month, (b) are affiliated with an 
OTP Holder or OTP Firm that provides an ADV of electronic posted 
Customer executions in all issues on NYSE Arca Options (excluding mini 
options) of at least 0.80% of total Customer equity and ETF option ADV 
as reported by OCC, and (c) execute an ADV of Retail Orders that 
provide liquidity during the month that is 0.10% or more of the US 
CADV. The Exchange is not proposing any change to the amount of the 
credit in Tape A, Tape B and Tape C Securities, which will remain at 
$0.0030 per share. The Exchange also proposes to rename the current 
tier to Cross Asset Tier 1 to distinguish this pricing tier from Cross 
Asset Tier 2, which the Exchange is proposing to adopt with this 
proposed rule change.
Cross Asset Tier 2
    The Exchange proposes a new pricing tier--Cross Asset Tier 2--for 
securities with a per share price above $1.00.
    As proposed, the Cross Asset Tier 2 would apply to ETP Holders and 
Market Makers that (a) provide liquidity an average daily volume share 
per month of 0.30% or more of the US CADV and (b) are affiliated with 
an OTP Holder or OTP Firm that provides an ADV of electronic posted 
executions for the account of a market maker in Penny Pilot issues on 
NYSE Arca Options (excluding mini options) of at least 90,000 
contracts. Such ETP Holders and Market Makers would receive a credit of 
$0.0031 per share for orders that provide liquidity to the order book 
in Tape A Securities; a credit of $0.0030 per share for providing 
liquidity to the order book and a fee of $0.0028 per share for taking 
liquidity from the order book in Tape B Securities; and a credit of 
$0.0033 per share for providing liquidity to the order book and a fee 
of $0.0029 per share for taking liquidity from the order book in Tape C 
Securities.
Tape B Tiers
    The Exchange proposes to introduce two new pricing tier levels--
Tape B Tier 1 and Tape B Tier 2--for securities with a per share price 
above $1.00.
    As proposed, a new Tape B Tier 1 credit of $0.0030 per share \7\ 
would be applicable to ETP Holders, including Market Makers, that, on a 
daily basis, measured monthly, directly execute providing volume in 
Tape B Securities during the billing month (``Tape B Adding ADV'') that 
is equal to at least 0.40% of US Tape B CADV over the ETP Holder's 
second quarter 2015 Tape B Adding ADV taken as a percentage of Tape B 
CADV (``Tape B Baseline % CADV''). For example, if an ETP Holder's Tape 
B Baseline % CADV during second quarter 2015 was 0.10%, the ETP Holder 
would need a Tape B Adding ADV of at least 0.50% in order to qualify 
for the proposed Tape B Tier 1 credit of $0.0030 per share (i.e., 0.10% 
Tape B Baseline % CADV plus 0.40% of the US Tape B CADV for the billing 
month).\8\ LMMs cannot qualify for the Tape B Tier 1.
---------------------------------------------------------------------------

    \7\ Under the Basic Rate, ETP Holders receive a credit of 
$0.0020 per share for Tape B orders that provide liquidity to the 
Book.
    \8\ The Exchange recognizes that a firm that becomes an ETP 
Holder or Market Maker after the Baseline Month would have a Tape B 
Baseline ADV of zero. In this regard, a new ETP Holder or Market 
Maker would need to have a Tape B Adding ADV during the billing 
month of no less than 0.40% of US Tape B CADV for the $0.0030 per 
share credit to apply.
---------------------------------------------------------------------------

    Additionally, a new Tape B Tier 2 credit of $0.0028 per share \9\ 
would be applicable to ETP Holders and Market Makers, that, on a daily 
basis, measured monthly, directly execute Tape B Adding ADV that is 
equal to at least 0.20% of the US Tape B CADV over the ETP Holder's or 
Market Maker's Tape B Baseline % CADV. For example, if an ETP Holder's 
Tape B Baseline % CADV during second quarter 2015 was 0.10%, the ETP 
Holder would need to have a Tape B Adding ADV of at least 0.30% in 
order to qualify for the proposed Tape B Tier 2 credit of $0.0028 per 
share (i.e., 0.10% Tape B Baseline % CADV plus 0.20% of the US Tape B 
CADV for the billing month).\10\ LMMs cannot qualify for the Tape B 
Tier 2.
---------------------------------------------------------------------------

    \9\ Under the Basic Rate, ETP Holders receive a credit of 
$0.0020 per share for Tape B orders that provide liquidity to the 
Book.
    \10\ The Exchange recognizes that a firm that becomes an ETP 
Holder or Market Maker after the Baseline Month would have a Tape B 
Baseline ADV of zero. In this regard, a new ETP Holder or Market 
Maker would need to have a Tape B Adding ADV during the billing 
month of no less than 0.200% of US Tape B CADV for the $0.0028 per 
share credit to apply.

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

[[Page 61532]]

Elimination of Obsolete Pricing
    The Fee Schedule currently includes several pricing tiers that have 
not encouraged ETP Holders and Market Makers to increase their activity 
to qualify for the tiers as significantly as the Exchange anticipated 
they would. These tiers are as follows: (i) Step Up Tier 1, (ii) Step 
Up Tier 2, (iii) Step Up Tier 3, (iv) Tape B Step Up Tier, (v) Tape C 
Step Up Tier, (vi) Tape C Step Up Tier 2, and (vii) Routable Order 
Tier. The Exchange proposes to remove these pricing tiers from the Fee 
Schedule as well as any related cross references.
Port Fees
    The Exchange currently makes ports available that provide 
connectivity to the Exchange's trading systems (i.e., ports for entry 
of orders and/or quotes (``order/quote entry ports'')) and charges $200 
per port per month for users of 1-5 ports, and $500 per port per month 
for users of 6 or more ports.\11\ The Fee Schedule currently provides 
that no fees apply to ports in the backup datacenter that are not 
utilized during the relevant month. The Fee Schedule further provides 
that no fees apply to ports in the backup datacenter that are utilized 
when the primary datacenter is unavailable but that the fees would 
apply if a port in the backup datacenter is utilized when the primary 
datacenter is available. The Exchange also currently makes ports 
available for drop copies and charges $500 per port per month.\12\ The 
Fee Schedule provides that no fees apply to ports in the backup 
datacenter if configured such that it is duplicative of another drop 
copy port of the same user.
---------------------------------------------------------------------------

    \11\ The Fee Schedule provides that users of the Exchange's Risk 
Management Gateway service are not charged for order/quote entry 
ports if such ports are designated as being used for RMG purposes. 
See Securities Exchange Act Release No. 68227 (November 14, 2012), 
77 FR 69679 (November 20, 2012) (SR-NYSEArca-2012-123).
    \12\ Only one fee per drop copy port applies, even if receiving 
drop copies from multiple order/quote entry ports and/or from NYSE 
Arca Options.
---------------------------------------------------------------------------

    The Exchange proposes to standardize the port fee and charge $550 
per port per month, regardless of the number of users and whether the 
port is used for order/quote entry or for drop copies. The Exchange 
believes standardizing the port fees will permit the Exchange to 
offset, in part, its infrastructure costs associated with making such 
ports available. The proposed change would also encourage users to 
become more efficient with their usage of the ports thereby resulting 
in a corresponding increase in the efficiency that the Exchange would 
be able to realize with respect to managing its own infrastructure. In 
this regard, as users decrease the number of ports that they utilize, 
the Exchange would similarly be able to decrease the amount of its 
hardware that it is required to support to interface with such ports.
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any problems that ETP 
Holders 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,\13\ in general, and furthers the 
objectives of sections 6(b)(4) and (5) of the Act,\14\ 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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

LMM Transaction Credits
    The Exchange believes the proposed new incremental tiered-rebates 
will provide a further incentive for LMMs to quote and trade a greater 
number of securities on the Exchange and will generally allow the 
Exchange and LMMs to better compete for order flow and thus enhance 
competition. Specifically, the Exchange believes that its proposal, 
which among other things, adjusts the CADV and credits for LMMs based 
on the CADV of the security in primary listed securities in which they 
are registered as the LMM, is reasonable as it is still the highest 
credit in securities with a CADV greater than 3,000,000 shares. The 
Exchange also believes that the rebate for providing displayed 
liquidity is equitable because it would uniformly apply to all LMMs.
LMMs and Affiliated ETP Holders and Market Makers Incremental 
Transaction Credits
    The proposed fee change is intended to encourage ETP Holders to 
promote price discovery and market quality in Less Active ETP 
Securities for the benefit of all market participants. The Exchange 
believes the proposed credits are reasonable and appropriate in that 
they are based on the amount of business transacted on the Exchange. 
The Exchange notes that the proposed fee change is similar to market 
quality incentive programs already in place on other markets, such as 
the Qualified Market Maker incentive on the NASDAQ Stock Market LLC 
(``NASDAQ''), which requires a member on that exchange to provide 
meaningful and consistent support to market quality and price discovery 
by quoting at the National Best Bid and Offer in a large number of 
securities. In return, NASDAQ provides such member with an incremental 
rebate.\15\ NASDAQ OMX PHLX LLC (``PHLX'') also provides enhanced 
credits to Market Makers on certain volumes based on an affiliate's 
activity. Specifically, PHLX offers a tiered Customer Rebate Program 
that qualifies either a Specialist or Market Maker or its affiliate 
under Common Ownership \16\ to an additional rebate provided the 
Specialist or Market Maker has reached the Monthly Market Maker 
Cap.\17\ The Exchange believes that providing increased credits to ETP 
Holders and Market Makers that are affiliated with a LMM that add 
liquidity in Tape B securities to the Exchange is reasonable because 
the Exchange believes that by providing increased rebates to affiliated 
ETP Holders and Market Makers of a LMM, more LMMs will register to 
quote and trade in Less Active ETP Securities. The Exchange believes 
the proposed incremental credit for adding liquidity is also reasonable 
because it will encourage liquidity and competition in Tape B 
securities quoted and traded on the Exchange. Moreover, the Exchange 
believes that the proposed fee change will incentivize LMMs to register 
as an LMM in Less Active ETP Securities and thus, add more liquidity in 
these and other Tape B Securities to the benefit of all market 
participants.
---------------------------------------------------------------------------

    \15\ See NASDAQ Rule 7014.
    \16\ The term ``Common Ownership'' is defined as meaning 
``members or member organizations under 75% common ownership or 
control.'' See PHLX fee schedule, at http://www.nasdaqtrader.com/Micro.aspx?id=phlxpricing.
    \17\ Id. (Section II, Monthly Market Maker Cap). See also 
Securities Exchange Act Release No. 70969 (December 3, 2013), 78 FR 
73906 (December 9, 2013) (SR-Phlx-2013-114).
---------------------------------------------------------------------------

    The Exchange believes the proposed incremental credits are 
equitable and not unfairly discriminatory because they are open to all 
ETP Holders and Market Makers affiliated with a LMM on an equal basis 
and provide discounts that are reasonably related to the value to the 
Exchange's market quality associated with higher volumes. The Exchange 
further believes that the proposed incremental rebate is not unfairly 
discriminatory because it is consistent with the market quality and

[[Page 61533]]

competitiveness benefits associated with the proposed fee program and 
because the magnitude of the additional rebate is not unreasonably high 
in comparison to the rebate paid with respect to other displayed 
liquidity-providing orders. The Exchange does not believe that it is 
unfairly discriminatory to offer increased rebates to LMMs as LMMs are 
subject to additional requirements and obligations (such as quoting 
requirements) that other market participants are not. When PHLX adopted 
its proposal to provide enhanced credits, it noted its belief that the 
additional rebate it provides was equitable, and not unfairly 
discriminatory because, among other things, Specialists and Market 
Makers ``have burdensome quoting obligations,'' to the market that 
other market participants do not; are subject to higher transaction 
costs and incur higher costs related to market making activities; and 
``also serve an important role on the Exchange with regard to order 
interaction and they provide liquidity in the marketplace.'' \18\ PHLX 
further noted that the ``proposed differentiation as between 
Specialists and Market Makers as compared to other market participants 
recognizes the differing contributions made to the trading environment 
on the Exchange by these market participants.'' The Exchange also 
believes that allowing ETP Holders to receive enhanced credits based on 
activities of their affiliates is reasonable, equitable and not 
unfairly discriminatory because the Exchange believes that ETP Holders 
affiliated with LMMs may qualify to earn enhanced credits in 
recognition of their shared economic interest, which includes the 
heightened obligations and costs imposed on LMMs. ETP Holders 
unaffiliated with LMMs do not share the same type of economic 
interests. Further, ETP Holders not affiliated with a LMM have an 
opportunity to establish such affiliation by several means, including 
but not limited to, a business combination or the establishment of 
their own market making operation, which each unaffiliated firm has the 
potential to establish.
---------------------------------------------------------------------------

    \18\ See Securities Exchange Act Release No. 70969 (December 3, 
2013), 78 FR 73906 (December 9, 2013) (SR-Phlx-2013-114).
---------------------------------------------------------------------------

LMM Transaction Fees
    The Exchange believes that it is reasonable to increase the fee 
charged to LMMs for orders in primary listed securities that remove 
liquidity from the NYSE Arca Book as this fee is same as the fee 
charged by the Exchange to Tier 1, Tier 2 and Tier 3 ETP Holders and 
Market Makers that take liquidity in Tape B securities.\19\ In 
addition, the proposed fee change is equitable and not unfairly 
discriminatory because it would apply uniformly to all similarly 
situated LMMs.
---------------------------------------------------------------------------

    \19\ See NYSE Arca Marketplace: Trade Related Fees and Credits, 
Tier 1, Tier 2 and Tier 3, Tape B Securities at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf.
---------------------------------------------------------------------------

Tier 1
    The Exchange believes that the amendments to Tier 1 is reasonable, 
equitable and not unfairly discriminatory because the proposed 
amendment would apply uniformly to all similarly situated ETP Holders 
and Market Makers that send orders to the Exchange. The Exchange 
believes providing increased credits and charging lower fees for orders 
in Tape A and Tape C Securities will incentivize ETP Holders to 
increase the orders sent to the Exchange and therefore provide 
liquidity that supports the quality of price discovery and promotes 
market transparency. The Exchange believes that by recalibrating the 
fees for taking liquidity and credits for providing liquidity will 
attract additional order flow and liquidity to the Exchange, thereby 
contributing to price discovery on the Exchange and benefiting 
investors generally. The Exchange also believes it is reasonable to 
remove one of the two current requirements for ETP Holders and Market 
Makers to qualify for Tier 1 fees and credits. The proposed change will 
simplify the tier by removing a multi-prong requirement. The Exchange 
believes that the proposed change is equitable and not unfairly 
discriminatory because the requirement would be eliminated entirely--no 
ETP Holders would remain able to qualify for the eliminated prong.
Cross Asset Tiers
    The Exchange believes that the amendments to the Cross Asset Tier 
is reasonable, equitable and not unfairly discriminatory because the 
proposed amendment would continue to directly relate to the activity of 
an ETP Holder and the activity of an affiliated OTP Holder or OTP Firm 
on NYSE Arca Options, thereby encouraging increased trading activity on 
both the NYSE Arca equity and option markets. In this regard, the 
proposal is designed to bring additional posted order flow to NYSE Arca 
Options, so as to provide additional opportunities for all OTP Holders 
and OTP Firms to trade on NYSE Arca Options. Furthermore, similar to 
the revised Cross Asset Tier, the NYSE Arca Options Fee Schedule 
includes a credit for OTP Holders and OTP Firms that is based on both 
equity and options volume. Additionally, ETP Holders that are not 
affiliated with an NYSE Arca Options OTP Holder or OTP Firm are still 
eligible for fees and credits by means other than the Cross Asset Tier. 
NASDAQ similarly charges certain fees based on both equity and options 
volume.\20\ Further, the Exchange believes it is reasonable to remove 
one of the two current requirements for ETP Holders and Market Makers 
to qualify for Cross Asset Tier fees and credits as its removal would 
simplify the pricing tier. The Exchange believes that the proposed 
change is equitable and not unfairly discriminatory because the 
requirement would be eliminated entirely--no ETP Holders would remain 
able to qualify for the eliminated prong.
---------------------------------------------------------------------------

    \20\ See NASDAQ Rule 7018.
---------------------------------------------------------------------------

    The Exchange believes the proposed Cross Asset Tier 2 is reasonable 
and equitably allocated because it would apply to ETP Holders and 
Market Makers that provide liquidity to the Exchange and is designed to 
incentivize these market participants to increase the orders sent 
directly to the Exchange and therefore provide liquidity that supports 
the quality of price discovery and promotes market transparency. The 
Exchange believes the new Cross Asset Tier 2 is equitable because it 
would be available to all similarly situated ETP Holders and Market 
Makers on an equal basis and would provide credits that are reasonably 
related to the value of an exchange's market quality associated with 
higher volumes. The Exchange further believes that the proposed Cross 
Asset Tier 2 is reasonable, equitable and not unfairly discriminatory 
because the Exchange has previously implemented cross asset tiers, 
including the current Cross Asset Tier.
Tape B Tiers
    The Exchange believes the proposed Tape B Tiers are reasonable and 
equitably allocated because they apply to ETP Holders and Market Makers 
that provide liquidity to the Exchange and are designed to incentivize 
these market participants to increase the orders sent directly to the 
Exchange and therefore provide liquidity that supports the quality of 
price discovery and promotes market transparency. The Exchange believes 
the new Tape B Tiers are equitable because they are open to all 
similarly situated ETP Holders and Market Makers on an equal basis and 
provide credits that are reasonably related to the value of an 
exchange's market quality associated with higher volumes. The Exchange 
further believes

[[Page 61534]]

that the proposed Tape B Tier 1 and Tape B Tier 2 are reasonable, 
equitable and not unfairly discriminatory because the Exchange has 
previously implemented multiple step up tiers, including Step Up Tier 
1, Step Up Tier 2 and Step Up Tier 3.
Elimination of Obsolete Pricing
    The Exchange believes that it is reasonable to eliminate the 
obsolete pricing tiers from the Fee Schedule because ETP Holders have 
not increased their activity to qualify for these tiers as 
significantly as the Exchange anticipated they would. The Exchange 
believes that it is equitable and not unfairly discriminatory to 
eliminate these tiers because they would be eliminated entirely--no ETP 
Holders would remain able to qualify for the eliminated tiers. This 
aspect of the proposed change would therefore result in a more 
streamlined Fee Schedule, including with respect to removal of related 
cross references.
Port Fees
    The Exchange believes that the proposal to amend the port fees 
constitutes an equitable allocation of fees because all similarly 
situated ETP Holders and other market participants would be charged the 
same amount. The Exchange believes that the proposed change to the 
monthly rates is reasonable because the proposed port fees are expected 
to permit the Exchange to offset, in part, its infrastructure costs 
associated with making such ports available, including costs based on 
gateway software and hardware enhancements and resources dedicated to 
gateway development, quality assurance, and support. In this regard, 
the Exchange believes that the proposed fees are competitive with those 
charged by other exchanges.\21\ The proposed change is also reasonable 
because the proposed per port rates would encourage users to become 
more efficient with, and reduce the number of ports used, thereby 
resulting in a corresponding increase in the efficiency that the 
Exchange would be able to realize with respect to managing its own 
infrastructure.
    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.
---------------------------------------------------------------------------

    \21\ For example, the charge on the NASDAQ for a FIX Trading 
Port is $550 per port per month. See NASDAQ Rule 7015. A separate 
charge for Pre-Trade Risk Management ports also is applicable, which 
ranges from $400 to $600 and is capped at $25,000 per firm per 
month. See NASDAQ Rule 7016.
---------------------------------------------------------------------------

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

    In accordance with section 6(b)(8) of the Act,\22\ 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 increased participation by LMMs in the trading 
of ETP securities generally and Less Active ETP Securities, in 
particular. The proposed change would also encourage the submission of 
additional liquidity to a public exchange, thereby promoting price 
discovery and transparency and enhancing order execution opportunities 
for ETP Holders and Market Makers affiliated with LMMs.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    Further, the proposal to amend the requirements to qualify for Tier 
1 and the Cross Asset Tier will not place an undue burden on 
competition because both pricing tiers would remain available for all 
ETP Holders to satisfy, except, with respect to the Cross Asset Tier 
which would not be available for those ETP Holders that are not 
affiliated with an NYSE Arca Options OTP Holder or OTP Firm. ETP 
Holders that are not affiliated with an NYSE Arca Options OTP Holder or 
OTP Firm are eligible for fees and credits by others means than the 
Cross Asset Tier. The Exchange believes that the proposed change to 
adopt the Tape B Tiers will encourage competition by attracting 
additional liquidity to the Exchange, which will make the Exchange a 
more competitive venue for, among other things, order execution and 
price discovery. An ETP Holder could qualify for the proposed new Tape 
B Tiers by providing sufficient adding liquidity to satisfy the 
applicable proposed volume requirements. The Exchange also notes that 
the proposed Tape B Tiers would be similar to existing pricing tiers 
and applicable credits on the Exchange. Also, the Exchange does not 
believe that the proposed change will impair the ability of ETP Holders 
or competing order execution venues to maintain their competitive 
standing in the financial markets. In this regard, the Exchange notes 
that existing pricing tiers of other exchanges similarly provide for 
credits for market participants that provide certain levels of 
liquidity on those exchanges.\23\ In general, ETP Holders impacted by 
the proposed change may readily adjust their trading behavior to 
maintain or increase their credits or decrease their fees in a 
favorable manner, and will therefore not be disadvantaged in their 
ability to compete.
---------------------------------------------------------------------------

    \23\ See, e.g., the ``Investor Support Program'' under NASDAQ 
Rule 7014.
---------------------------------------------------------------------------

    The removal of obsolete pricing tiers is not competitive in nature, 
but would result in a more streamlined Fee Schedule.
    The Exchange believes the proposed change to the port fees sets the 
fees that are competitive with those charges by other exchanges,\24\ 
and would encourage users to become more efficient with, and reduce the 
number of ports used, thereby resulting in a corresponding increase in 
the efficiency of the ports utilized by users.
---------------------------------------------------------------------------

    \24\ See supra note 21.
---------------------------------------------------------------------------

    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues. In 
such an environment, the Exchange must continually review, and consider 
adjusting, its fees and credits to remain competitive with other 
exchanges. For the reasons described above, the Exchange believes that 
this proposal promotes a competitive environment.

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) \25\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \26\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78s(b)(3)(A).
    \26\ 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) \27\ of the Act to determine whether the proposed 
rule

[[Page 61535]]

change should be approved or disapproved.
---------------------------------------------------------------------------

    \27\ 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-2015-87 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-NYSEARCA-2015-87. 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 will also be available 
for inspection and copying at the NYSE's principal office and on its 
Internet Web site at www.nyse.com. 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-2015-87 and should be submitted on or before 
November 3, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
---------------------------------------------------------------------------

    \28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-25863 Filed 10-9-15; 8:45 am]
 BILLING CODE 8011-01-P