Document ID: SEC-2020-1832-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2020-11-17T05:00Z

[Federal Register Volume 85, Number 222 (Tuesday, November 17, 2020)]
[Notices]
[Pages 73326-73329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25263]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90391; File No. SR-NYSE-2020-92]

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

November 10, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on November 2, 2020, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``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 extend through 
December 2020 the waiver of equipment and related service charges and 
trading license fees for NYSE Trading Floor-based member organizations 
implemented for April through October 2020. The Exchange proposes to 
implement the fee changes effective November 2, 2020. 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 extend through 
December 2020 the waiver of equipment and related service charges and 
trading license fees for NYSE Trading Floor-based member organizations 
implemented for April through October 2020.
    The proposed changes respond to the current volatile market 
environment that has resulted in unprecedented average daily volumes 
and the temporary closure of the Trading Floor, which are both related 
to the ongoing spread of the novel coronavirus (``COVID-19'').
    The Exchange proposes to implement the fee changes effective 
November 2, 2020.
Background
    Beginning on March 16, 2020, in order to slow the spread of COVID-
19 through social distancing measures, significant limitations were 
placed on large gatherings throughout the country. As a result, on 
March 18, 2020, the Exchange determined that beginning March 23, 2020, 
the physical Trading Floor facilities located at 11 Wall Street in New 
York City would close and that the Exchange would move, on a temporary 
basis, to fully electronic trading.\4\ Following the temporary closure 
of the Trading Floor, the Exchange waived certain equipment fees for 
the booth telephone system on the Trading Floor and associated service 
charges for the months of April and May.\5\
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    \4\ See Press Release, dated March 18, 2020, available here: 
https://ir.theice.com/press/press-releases/allcategories/2020/03-18-2020-204202110.
    \5\ See Securities Exchange Act Release No. 88602 (April 8, 
2020), 85 FR 20730 (April 14, 2020) (SR-NYSE-2020-27); Securities 
Exchange Act Release No. 88874 (May 14, 2020), 85 FR 30743 (May 20, 
2020) (SR-NYSE-2020-29). See footnote 11 of the Price List.
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    On May 14, 2020, the Exchange announced that on May 26, 2020 
trading operations on the Trading Floor would resume on a limited basis 
to a subset of Floor brokers, subject to health and safety measures 
designed to prevent the spread of COVID-19.\6\ On June 15, 2020, the 
Exchange announced that on June 17, 2020, the Trading Floor would 
reintroduce a subset of DMMs, also subject to health and safety 
measures designed to prevent the spread of COVID-19.\7\ Following this 
partial reopening of the Trading Floor, the Exchange extended the 
equipment fee waiver for the months of June, July, August, September 
and October.\8\ The Trading Floor continues to operate with reduced 
headcount and additional health and safety precautions.\9\
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    \6\ See Trader Update, dated May 14, 2020, available here: 
https://www.nyse.com/traderupdate/history#110000251588.
    \7\ See Trader Update, dated June 15, 2020, available here: 
https://www.nyse.com/trader-update/history#110000272018.
    \8\ See Securities Exchange Act Release No. 89050 (June 11, 
2020), 85 FR 36637 (June 17, 2020) (SR-NYSE-2020-49); Securities 
Exchange Act Release No. 89324 (July 15, 2020), 85 FR 44129 (July 
21, 2020) (SR-NYSE-2020-59); Securities Exchange Act Release No. 
89754 (September 2, 2020), 85 FR 55550 (September 8, 2020) (SR-NYSE-
2020-71); Securities Exchange Act Release No. 89798 (September 9, 
2020), 85 FR 57263 (September 15, 2020) (SR-NYSE-2020-72); and 
Securities Exchange Act Release No. 90161 (October 13, 2020), 85 FR 
66370 (October 19, 2020) (SR-NYSE-2020-81).
    \9\ See Trader Update, dated June 15, 2020, available here: 
https://www.nyse.com/trader-update/history#110000272018. DMMs 
continue to support a subset of NYSE-listed securities remotely.
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Proposed Rule Change
    The proposed rule change responds to the unprecedented events 
surrounding the spread of COVID-19 by extending the waiver of equipment 
and related service charges and trading license fees for NYSE Trading 
Floor-based member organizations for the remainder of 2020.
    As noted, for the months of April, May, June, July, August, 
September and October, the Exchange waived the Annual Telephone Line 
Charge of $400 per phone number and the $129 fee for

[[Page 73327]]

a single line phone, jack, and data jack. The Exchange also waived 
related service charges, as follows: $161.25 to install single jack 
(voice or data); $107.50 to relocate a jack; $53.75 to remove a jack; 
$107.50 to install voice or data line; $53.75 to disconnect data line; 
$53.75 to change a phone line subscriber; and miscellaneous telephone 
charges billed at $106 per hour in 15 minute increments.\10\ These fees 
were waived for (1) member organizations with at least one trading 
license, a physical Trading Floor presence, and Floor broker executions 
accounting for 40% or more of the member organization's combined 
adding, taking, and auction volumes during March 1 to March 20, 2020, 
or, beginning in August 2020, if not a member organization during March 
1 to March 20, 2020, based on the member organization's combined 
adding, taking, and auction volumes during its first month as a member 
organization on or after May 26, 2020, i.e., the date the Trading Floor 
re-opened on a limited basis, and (2) member organizations with at 
least one trading license that are Designated Market Makers with 30 or 
fewer assigned securities for the billing month of March 2020.
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    \10\ The Service Charges also include an internet Equipment 
Monthly Hosting Fee that the Exchange did not waive for April, May, 
June, July, August and September 2020 and that the Exchange does not 
propose to waive for November and December 2020.
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    Because the Trading Floor continues to operate with reduced 
capacity, the Exchange proposes to extend the waiver of these Trading 
Floor-based fees through December 2020. To effectuate this change, the 
Exchange proposes to replace ``October'' with ``December'' after 
``through'' and before ``2020'' in footnote 11 to the Price List.
    In order to further reduce costs for member organizations with a 
Trading Floor presence, the Exchange also waived the April, May, June, 
July, August, September and October 2020 monthly portion of all 
applicable annual fees for (1) member organizations with at least one 
trading license, a physical Trading Floor presence and Floor broker 
executions accounting for 40% or more of the member organization's 
combined adding, taking, and auction volumes during March 1 to March 
20, 2020, or, beginning in August 2020, if not a member organization 
during March 1 to March 20, 2020, based on the member organization's 
combined adding, taking, and auction volumes during its first month as 
a member organization on or after May 26, 2020, and (2) member 
organizations with at least one trading license that are DMMs with 30 
or fewer assigned securities for the billing month of March 2020.\11\
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    \11\ See notes 5-8, supra. See footnote 15 of the Price List. 
Beginning in August 2020, member organizations with a physical 
trading Floor presence that became member organizations on or after 
April 1, 2020 are eligible for a one-time credit for the member 
organization's indicated annual trading license fee for the months 
of April through July 2020 if the member organization meets the 
other requirements for the waiver described in footnote 15 of the 
Price List.
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    The Exchange proposes to also waive the November and December 
monthly portion of all applicable annual fees for member organizations 
with at least one trading license, a physical Trading Floor presence 
and Floor broker executions accounting for 40% or more of the member 
organization's combined adding, taking, and auction volumes during 
March 1 to March 20, 2020 or, if not a member organization during March 
1 to March 20, 2020, based on the member organization's combined 
adding, taking, and auction volumes during its first month as a member 
organization on or after May 26, 2020. The indicated annual trading 
license fees would also be waived for November and December 2020 for 
member organizations with at least one trading license that are DMMs 
with 30 or fewer assigned securities for the billing month of March 
2020. To effectuate this change, the Exchange proposes to replace 
``October'' with ``December'' after ``through'' and before ``2020'' in 
footnote 15 of the Price List.
    The proposed extension of the fee waivers would reduce monthly 
costs for member organizations with a Trading Floor presence whose 
operations were disrupted by the Floor closure, which lasted 
approximately two months, and remains partially closed. The Exchange 
believes that extension of the fee waiver would ease the financial 
burden associated with the ongoing partial Trading Floor closure. The 
Exchange believes that all member organization that conduct a 
significant portion of trading on the Trading Floor would benefit from 
this proposed fee change.
    The proposed changes are not otherwise intended to address 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,\12\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\13\ 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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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) & (5).
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    The Exchange operates in a highly competitive market. The 
Commission has repeatedly expressed its preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. In Regulation NMS, the Commission 
highlighted the importance of market forces in determining prices and 
SRO revenues and, also, recognized that current regulation of the 
market system ``has been remarkably successful in promoting market 
competition in its broader forms that are most important to investors 
and listed companies.'' \14\
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    \14\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule) 
(``Regulation NMS'').
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    While Regulation NMS has enhanced competition, it has also fostered 
a ``fragmented'' market structure where trading in a single stock can 
occur across multiple trading centers. When multiple trading centers 
compete for order flow in the same stock, the Commission has recognized 
that ``such competition can lead to the fragmentation of order flow in 
that stock.'' \15\ Indeed, equity trading is currently dispersed across 
15 exchanges,\16\ 31 alternative trading systems,\17\ and numerous 
broker-dealer internalizers and wholesalers, all competing for order 
flow. Based on publicly-available information, no single exchange has 
more than 20% market share.\18\ Therefore, no exchange possesses 
significant pricing power in the execution of equity order flow. More 
specifically, the Exchange's market share of trading in Tape A, B and C 
securities combined is less than 14%.
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    \15\ See Securities Exchange Act Release No. 61358, 75 FR 3594, 
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on 
Equity Market Structure).
    \16\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/. See generally https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \17\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \18\ See Cboe Global Markets U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/.
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The Proposed Change is Reasonable
    The proposed extension of the waiver of equipment and related 
service fees and the applicable monthly trading

[[Page 73328]]

license fee for Trading Floor-based member organizations is reasonable 
in light of the partial continued closure of the NYSE Trading Floor. 
Beginning March 2020, markets worldwide experienced unprecedented 
declines and volatility because of the ongoing spread of COVID-19 also 
resulted in the temporary closure of the NYSE Trading Floor. As noted, 
the Trading Floor was recently partially reopened on a limited basis to 
a subset of Floor brokers and DMMs, subject to health and safety 
measures designed to prevent the spread of COVID-19. The proposed 
change is designed to reduce costs for Floor participants for the end 
of 2020 and therefore ease the financial burden faced by member 
organizations that conduct business on the Trading Floor while it 
continues to operate with reduced capacity.
The Proposal Is an Equitable Allocation of Fees
    The Exchange believes the proposed extension of the waiver of 
equipment and related service fees and the applicable monthly trading 
license fee for Trading Floor-based member organizations to December 
2020 are an equitable allocation of fees. The proposed waivers apply to 
all Trading Floor-based firms meeting specific requirements during the 
period that the Trading Floor remains partially open. The proposed 
change is equitable as it merely continues the fee waiver granted in 
April, May, June, July, August, September and October 2020, and is 
designed to reduce monthly costs for Trading Floor-based member 
organizations that are unable to fully conduct Floor operations while 
the Trading Floor remains partially open during the ongoing COVID-19 
pandemic.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposed continuation of the waiver 
of equipment and related service fees and the applicable monthly 
trading license fee for Trading Floor-based member organizations during 
November and December 2020 is not unfairly discriminatory because the 
proposed waivers would benefit all similarly-situated market 
participants on an equal and non-discriminatory basis. The Exchange is 
not proposing to waive the Floor-related fees indefinitely, but rather 
during the period that the Trading Floor is not fully open. The 
proposed fee change is designed to ease the financial burden on Trading 
Floor-based member organizations that cannot fully conduct Floor 
operations.
    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,\19\ 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, as discussed above, the Exchange believes 
that the proposed changes would encourage the continued participation 
of member organizations on the Exchange by providing certainty and fee 
relief during the unprecedented volatility and market declines caused 
by the continued spread of COVID-19. As a result, the Exchange believes 
that the proposed change furthers the Commission's goal in adopting 
Regulation NMS of fostering integrated competition among orders, which 
promotes ``more efficient pricing of individual stocks for all types of 
orders, large and small.'' \20\
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    \19\ 15 U.S.C. 78f(b)(8).
    \20\ Regulation NMS, 70 FR at 37498-99.
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    Intramarket Competition. The proposed continued waiver of equipment 
and related service fees and the applicable monthly trading license fee 
for Trading Floor-based member organizations during November and 
December 2020 is designed to reduce monthly costs for those Floor 
participants whose operations continue to be impacted by the spread of 
COVID-19 despite the fact that the Trading Floor has partially 
reopened. In reducing this monthly financial burden, the proposed 
change would provide a degree of certainty and ease the financial 
burden on Trading Floor-based member organizations impacted by the 
temporary closing and partial reopening of the Trading Floor. As noted, 
the proposal would apply to all similarly situated member organizations 
on the same and equal terms, who would benefit from the changes on the 
same basis. Accordingly, the proposed change would not impose a 
disparate burden on competition among market participants on the 
Exchange.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily choose to 
send their orders to other exchange and off-exchange venues if they 
deem fee levels at those other venues to be more favorable. The 
Exchange believes that the proposed rule change reflects this 
competitive environment because it permits impacted member 
organizations to continue to conduct market-making operations on the 
Exchange and avoid unintended costs of doing business on the Exchange 
while the Trading Floor is not fully open, which could make the 
Exchange a less competitive venue on which to trade as compared to 
other equities 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) \21\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \22\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 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) \23\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \23\ 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-2020-92 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.

[[Page 73329]]

All submissions should refer to File Number SR-NYSE-2020-92. 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-2020-92 and should be submitted on 
or before December 8, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-25263 Filed 11-16-20; 8:45 am]
BILLING CODE 8011-01-P