Document ID: SEC-2020-0108-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2020-01-27T05:00Z

[Federal Register Volume 85, Number 17 (Monday, January 27, 2020)]
[Notices]
[Pages 4752-4755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-01237]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88009; File No. SR-NYSEArca-2020-06]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the 
Schedule of Fees and Charges To Remove the Ineligibility for Certain 
Discounts

January 21, 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 January 10, 2020, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the

[[Page 4753]]

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 Schedule of Fees and Charges to 
remove the ineligibility for certain discounts when an issuer transfers 
an Exchange Traded Product or Structured Product off the Exchange 
(except to an Exchange affiliate) in a trailing 12-month period. The 
Exchange proposes to implement the fee changes effective January 10, 
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 Schedule of Fees and Charges to 
remove the ineligibility for certain discounts when an issuer transfers 
an Exchange Traded Product (``ETP'') or Structured Product off the 
Exchange (except for transfers to an Exchange affiliate) in a trailing 
12-month period.
    The proposed change responds to the current extremely competitive 
environment for ETP listings in which issuers can readily favor 
competing venues or transfer their listings if they deem fee levels at 
a particular venue to be excessive, or discount opportunities available 
at other venues to be more favorable. The Exchange's current annual 
fees for ETPs are based on the number of shares outstanding per issuer 
and provide incentives for issuers to list multiple series of certain 
securities on the Exchange. In response to the competitive environment 
for listings, the Exchange adopted a competitive pricing structure that 
combines higher minimum annual fees for certain securities with 
discounts for issuers that list multiple ETPs and Structured 
Products.\4\ The proposed change is designed to encourage more issuers 
to qualify for the discounts and enhance competition among issuers and 
listing venues by removing ineligibility for certain discounts when an 
issuer transfers a Product off the Exchange (except for transfers to an 
Exchange affiliate) in a trailing 12-month period.
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    \4\ ``Exchange Traded Products'' are defined in footnote 3 of 
the current Schedule of Fees and Charges. ``Structured Products'' 
are defined in footnote 4 of the current Schedule of Fees and 
Charges.
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    The Exchange proposes to implement the fee changes effective 
January 10, 2020.
Proposed Rule Change
    Currently, the Exchange offers non-mutually exclusive ``Fund 
Family'' and ``High Volume Products'' discounts for ETPs and Structured 
Products that are set forth in Section 9 of the Schedule of Fees and 
Charges. Eligibility for the discounts is subject to the limitation 
that an issuer that transfers a Product off the Exchange (except for 
transfers to an Exchange affiliate) in a trailing 12-month period 
beginning January 1, 2020 is ineligible for either or both discounts 
for the following calendar year. The Exchange proposes to remove this 
limitation from the Schedule of Fees and Charges.
    The purpose of the proposed change is to encourage more issuers to 
qualify for the discounts by removing the restriction on achieving or 
retaining them. Although the limitation is a reasonable attempt to 
incentivize issuers to maintain listings on the Exchange and discourage 
transfers to and from the Exchange solely for the purpose of securing 
one or more discounts, the Exchange believes that removing the 
limitation outweighs those considerations because it would result in 
more issuers qualifying for and retaining discounts while enhancing 
competition among issuers and listing venues, to the benefit of all 
market participants. The proposed change described above is 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,\5\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\6\ 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) & (5).
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The Proposed Change Is Reasonable
    As discussed above, the Exchange operates in a highly competitive 
market for the listing of ETPs. Specifically, ETP issuers can readily 
favor competing venues or transfer listings if they deem fee levels at 
a particular venue to be excessive, or discount opportunities available 
at other venues to be more favorable. The Exchange's current annual 
fees for ETPs are based on the number of shares outstanding per issuer 
and provide incentives for issuers to list multiple series of certain 
securities on the Exchange. The Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
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.'' \7\
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    \7\ See Regulation NMS, 70 FR at 37499.
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    The Exchange believes that the ongoing competition among the 
exchanges with respect to new listings and the transfer of existing 
listings among competitor exchanges demonstrates that issuers can 
choose different listing markets in response to fee changes. 
Accordingly, competitive forces constrain exchange listing fees. Stated 
otherwise, changes to exchange listing fees can have a direct effect on 
the ability of an exchange to compete for new listings and retain 
existing listings.
    Given this competitive environment, the Exchange believes that the 
proposed change is a reasonable attempt to encourage more issuers to 
qualify for discounts that the Exchange offers by removing restrictions 
on achieving or retaining them, thereby enhancing competition among 
issuers and listing venues.

[[Page 4754]]

The Proposal Is an Equitable Allocation of Fees
    The Exchange believes the proposal equitably allocates its fees 
among its market participants. In the prevailing competitive 
environment, issuers can readily favor competing venues or transfer 
listings if they deem fee levels at a particular venue to be excessive, 
or discount opportunities available at other venues to be more 
favorable. The proposed removal of the limitation on discounts for ETPs 
and Structured Products is equitable because it would apply uniformly 
to all issuers and to all ETPs and Structured Products listed on the 
Exchange either generically or pursuant to a rule filing with the 
Commission. For the same reasons, the proposal neither targets nor will 
it have a disparate impact on any particular category of market 
participant.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, issuers are 
free to list elsewhere if they believe that alternative venues offer 
them better value. The Exchange believes it is not unfairly 
discriminatory to remove an eligibility restriction on issuers 
transferring Products off the Exchange because removal of the 
restriction would apply to and potentially benefit all issuers equally.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\8\ 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 change would encourage competition by removing an 
incentive for issuers not to transfer Products off of the Exchange 
(except to an Exchange affiliate) in a trailing 12-month period, which 
the Exchange believes will enhance competition among issuers and 
listing venues, to the benefit of investors. As noted, the market for 
listing services is extremely competitive. Issuers have the option to 
list their securities on these alternative venues based on the fees 
charged and the value provided by each listing exchange. Because 
issuers have a choice to list their securities on a different national 
securities exchange, the Exchange does not believe that the proposed 
change impose a burden on competition.
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    \8\ 15 U.S.C. 78f(b)(8).
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    Intramarket Competition. The proposed change is designed to remove 
a restriction in order to encourage more issuers to qualify for and 
retain discounts that the Exchange offers. Removal of the restriction 
would be apply [sic] to and potentially benefit all issuers equally, 
and, as such, 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 listings market in which issuers can readily choose 
alternative listing venues. In such an environment, the Exchange must 
adjust its fees and discounts to remain competitive with other 
exchanges competing for the same listings. Because competitors are free 
to modify their own fees and discounts in response, and because issuers 
may readily adjust their listing decisions and practices, the Exchange 
does not believe its proposed change can 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) \9\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \10\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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) \11\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \11\ 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-NYSEArca-2020-06 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-2020-06. 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-2020-06 and

[[Page 4755]]

should be submitted on or before February 18, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
J. Matthew DeLesDernier,
Assistant Secretary.

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    \12\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2020-01237 Filed 1-24-20; 8:45 am]
 BILLING CODE 8011-01-P