Document ID: SEC-2018-1357-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2018-08-29T04:00Z

[Federal Register Volume 83, Number 168 (Wednesday, August 29, 2018)]
[Notices]
[Pages 44115-44119]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-18678]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83929; File No. SR-NYSE-2018-37]

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

August 23, 2018.
    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 August 10, 2018, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Price List to (1) amend the cap 
applicable to certain transactions at the

[[Page 44116]]

open; (2) add new incentives for member organizations and Supplemental 
Liquidity Providers (``SLP'') in Tape A securities when adding 
liquidity in securities traded pursuant to Unlisted Trading Privileges 
(``UTP'') (Tapes B and C); (3) add a new Step Up tier for SLPs in Tape 
A securities; and (4) amend the alternative NYSE Crossing Session II 
(``NYSE CSII'') fee cap. The Exchange proposes to implement these 
changes to its Price List effective August 10, 2018.\4\ 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.
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    \4\ The Exchange originally filed to amend the Price List on 
August 1, 2018 (SR-NYSE-2018-36) and withdrew such filing on August 
10, 2018. This filing replaces SR-NYSE-2018-36 in its entirety.
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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 (1) amend the cap 
applicable to certain transactions at the open; (2) add new incentives 
for member organizations and SLPs in Tape A securities when adding 
liquidity in UTP Securities (Tapes B and C); (3) add a new Step Up tier 
for SLPs in Tape A securities; and (4) amend the alternative NYSE CSII 
fee cap. In general, the proposed amendments are intended to encourage 
greater participation by Exchange member organizations and encourage 
submission of additional liquidity to a national securities exchange, 
to the benefit of all market participants.
    The Exchange proposes to implement these changes to its Price List 
effective August 10, 2018.
Executions at the Open
    For securities priced $1.00 or more, the Exchange currently charges 
fees of $0.0010 per share for executions at open, and $0.0003 per share 
for Floor broker executions at the open, subject to $30,000 cap per 
month per member organization, provided the member organization 
executes an average daily trading volume (``ADV'') that adds liquidity 
to the Exchange during the billing month (``Adding ADV''),\5\ excluding 
liquidity added by a DMM, of at least five million shares, unless the 
lower $20,000 monthly fee cap applies. The lower fee cap applies to 
member organizations that execute an ADV that takes liquidity from the 
NYSE during the billing month (``Taking ADV''), excluding liquidity 
taken by a DMM, of at least 1.30% of NYSE consolidated average daily 
volume (``CADV'') and an ADV of orders for execution at the open 
(``Open ADV'') of at least 8 million shares.
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    \5\ Footnote 2 to the Price List defines ADV as ``average daily 
volume'' and ``Adding ADV'' as ADV that adds liquidity to the 
Exchange during the billing month. The Exchange is not proposing to 
change these definitions.
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    The Exchange proposes to lower the alternative fee cap from $20,000 
to $10,000. The Exchange would also require member organizations to 
execute a Taking ADV, excluding liquidity taken by a DMM, of at least 
1.20% of NYSE CADV in order to qualify for the lower cap. The 
additional requirement of an Open ADV of at least 8 million shares 
would remain unchanged.
New Cross Tape Incentive
    The Exchange proposes an additional incentive to member 
organizations and SLPs in Tape A securities that add liquidity to the 
Exchange in UTP Securities, as follows.
    As proposed, member organizations that meet the current 
requirements for the Tier 1 Adding Credit or Tier 2 Adding Credit on 
Tape A would be eligible to receive an additional $0.00005 per share in 
Tape A securities if the member organization adds liquidity, excluding 
liquidity added as an SLP, in UTP Securities of at least 0.20% of Tape 
B and Tape C CADV combined.
    Similarly, SLPs that (1) meet the current requirements for the SLP 
Tier 1 or Tier 4 credits or the proposed requirements for the SLP Step 
Up Tier credits described below, and (2) add liquidity in UTP 
Securities of at least 0.30% of Tape B and Tape C CADV combined, would 
be eligible for an additional $0.00005 per share in Tape A securities 
for SLPs that meet the requirements for SLP Tier 1 and Tier 4 credits 
or an additional $0.0001 in Tape A securities for SLPs that meet the 
requirements for SLP Step Up Tier in securities with a per share price 
of $1.00 or more that meet the 10% average or more quoting requirement 
in an assigned security pursuant to Rule 107B (quotes of an SLP-Prop 
and an SLMM of the same member organization would not be 
aggregated).\6\
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    \6\ Under Rule 107B, an SLP can be either a proprietary trading 
unit of a member organization (``SLP-Prop'') or a registered market 
maker at the Exchange (``SLMM''). For purposes of the 10% average or 
more quoting requirement in assigned securities pursuant to Rule 
107B, quotes of an SLP-Prop and an SLMM of the same member 
organization are not aggregated. However, for purposes of adding 
liquidity for assigned SLP securities in the aggregate, shares of 
both an SLP-Prop and an SLMM of the same member organization are 
included.
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    SLPs that meet the current requirements for SLP Tier 1 and add 
liquidity in UTP Securities of at least 0.30% of Tape B and Tape C CADV 
combined would receive an additional credit of $0.00005 per share in 
Tape A securities for adding liquidity in securities, other than MPL 
and Non-Display Reserve orders, where they are not assigned as an SLP 
or in securities where they do not meet the 10% average or more quoting 
requirement in an assigned security pursuant to Rule 107B. For example, 
assume an SLP meets the requirements of SLP Tier 1 and adds liquidity 
in UTP Securities of at least 0.30% of Tape B and Tape C CADV combined. 
Further assume that the SLP averages an Adding ADV of 28 million shares 
a day in Tape A securities, with 20 million shares ADV in securities 
that meet the 10% quoting requirement and 8 million shares ADV in 
securities below the 10% requirement. Also assume that the SLP adds an 
additional 10 million shares ADV in Tape A securities as a non-SLP. 
Under these facts, the SLP would receive an $0.00005 credit for all 28 
million Adding ADV shares as an SLP as well as the 10 million Adding 
ADV shares as a non-SLP.
New SLP Step Up Tier
    The Exchange proposes a new, sixth SLP Tier designated the ``SLP 
Step Up Tier'' that would provide that an SLP, when adding liquidity to 
the NYSE with orders, other than MPL orders, in securities with a per 
share price of $1.00 or more, would receive a credit of $0.0018, or 
$0.0001 if a Non-Displayed Reserve Order, if the SLP (1) meets the 10% 
average or more quoting requirement in an assigned security pursuant to 
Rule 107B (quotes of an SLP-Prop and an SLMM of the same

[[Page 44117]]

member organization would not be aggregated), and (2) adds liquidity 
for all assigned SLP securities in the aggregate (including shares of 
both an SLP-Prop and an SLMM of the same or an affiliated member 
organization) of an ADV of more than 0.085% of NYSE CADV over that 
SLPs' April 2018 adding liquidity for all assigned SLP securities in 
the aggregate (including shares of both an SLP-Prop and an SLMM of the 
same or an affiliated member organization) taken as a percentage of 
NYSE CADV. SLPs that are also DMMs and subject to Rule 107B(i)(2)(A) 
would need to add liquidity for all assigned SLP securities in the 
aggregate (including shares of both an SLP-Prop and an SLMM of the same 
or an affiliated member organization) of an ADV of more than 0.085% of 
NYSE CADV over that SLPs' April 2018 adding liquidity for all assigned 
SLP securities in the aggregate (including shares of both an SLP-Prop 
and an SLMM of the same or an affiliated member organization) taken as 
a percentage of NYSE CADV after a discount of the percentage for the 
prior quarter of NYSE CADV in DMM assigned securities as of the last 
business day of the prior month. The Exchange believes the new tier 
would provide greater incentives for more SLPs to add more liquidity to 
the Exchange.
NYSE CSII Fee Cap
    Currently, the Exchange charges a fee of $0.0004 per share (both 
sides) for executions in NYSE CSII.\7\ Fees for executions in CSII are 
capped at $200,000 per month per member organization unless the 
alternative, lower cap of $25,000 per month per member organization 
applies for member organizations that execute a Taking ADV, excluding 
liquidity taken by a DMM, of at least 1.30% of NYSE CADV and Open ADV 
of at least 8 million shares.
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    \7\ CSII runs on the Exchange from 4:00 p.m. to 6:30 p.m. 
Eastern Time and handles member organization crosses of baskets of 
securities of aggregate-priced buy and sell orders. See NYSE Rules 
900-907.
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    The Exchange proposes to lower the alternative cap to $15,000 per 
month for member organizations that execute a Taking ADV, excluding 
liquidity taken by a DMM, of at least 1.20% of NYSE CADV. The 
requirement for executing an Open ADV of at least 8 million shares 
would remain unchanged.\8\
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    \8\ The Exchange also proposes non-substantive changes to delete 
and add a space on either side of footnote 8 at the end of the 
description of SLP Tier 1A.
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* * * * *
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any problems that member 
organizations would have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\10\ 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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) & (5).
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Executions at the Open
    The Exchange believes that lowering the alternative fee cap to 
$10,000 and lowering the requirement for member organizations to 
execute a Taking ADV, excluding liquidity taken by a DMM, to at least 
1.20% of NYSE CADV in order to qualify for the lower cap for executions 
at the open is reasonable, equitable and not unfairly discriminatory 
because it would encourage additional liquidity on the Exchange and 
because members and member organizations benefit from the substantial 
amounts of liquidity that are present on the Exchange. The Exchange 
believes the proposed changes are equitable and not unfairly 
discriminatory because it would continue to encourage member 
organizations to send orders, thereby contributing to robust levels of 
liquidity, which benefits all market participants. The proposed changes 
will encourage the submission of additional liquidity to a national 
securities exchange, thereby promoting price discovery and transparency 
and enhancing order execution opportunities for member organizations 
from the substantial amounts of liquidity that are present on the 
Exchange. Moreover, the proposed changes are equitable and not unfairly 
discriminatory because they would apply equally to all qualifying 
member organizations, including Floor brokers, that submit orders to 
the NYSE opening and that remove liquidity from the Exchange.
New Cross Tape Incentive
    The Exchange believes that providing an additional incentive in 
Tape A securities for member organizations that add liquidity in UTP 
Securities is reasonable because it would further contribute to 
incenting member organizations to provide additional liquidity to a 
public exchange in UTP Securities, thereby promoting price discovery 
and transparency and enhancing order execution opportunities for member 
organizations. The Exchange believes that that the proposal is 
reasonable and not unfairly discriminatory because it would apply to 
all member organizations eligible for the relevant Tape A tier credits 
equally. The Exchange further believes that extending the additional 
credit to Tier 1 Adding Credit and Tier 2 Adding Credit is reasonable 
because it would increase the number of member organizations at the 
higher tiers that could qualify for the proposed credit. The Exchange 
further believes that the proposed credit is reasonable and not 
unfairly discriminatory because, although the proposed additional 
credit is less than that offered for Non-Tier, Adding Tier 3 and Adding 
Tier 4, members organizations qualifying for Tier 1 Adding Credit and 
Tier 2 Adding Credit tiers already receive a higher credit for such 
executions. Similarly, the Exchange believes that extending the 
additional credit to SLP Tier 1 and SLP Tier 4 and the proposed SLP 
Step Up Tier is reasonable and not unfairly discriminatory because SLPs 
qualifying for SLP Tier 3, SLP Tier 2 and SLP Tier 1A would already 
receive a higher additional credit for such executions. The Exchange 
further believes that the proposed credit is reasonable and not 
unfairly discriminatory because, although the proposed additional 
credit for SLP Tier 1 and SLP Tier 4 is less than that offered for SLP 
Tier 3, SLP Tier 2, SLP Tier 1A and the proposed SLP Step Up Tier, SLPs 
qualifying for SLP Tier 1 and SLP Tier 4 already receive a higher 
credit for such executions. In addition, the Exchange believes that the 
additional credit of $0.00005 per share for SLPs that meet the current 
requirements for SLP Tier 1 and add liquidity in UTP Securities of at 
least 0.30% of Tape B and Tape C CADV combined for adding liquidity in 
securities where they are not assigned as an SLP or in securities where 
they do not meet the 10% average or more quoting requirement in an 
assigned security pursuant to Rule 107B is reasonable and not unfairly 
discriminatory because SLP Tier 1 has the highest Adding ADV 
requirement. Finally, the proposed cross tape incentives are equitable 
and not unfairly discriminatory because they would apply equally to all 
qualifying member organizations, including SLPs, that add

[[Page 44118]]

liquidity to the Exchange in Tape A, Tape B and Tape C securities and 
that qualify for SLP Tier 1, SLP Tier 4, Adding Tier 1, and Adding Tier 
2.
New SLP Step Up Tier
    The Exchange believes that the proposal to introduce a new SLP Step 
Up Tier is reasonable because it provides SLPs as well as SLPs that are 
also DMMs with an additional way to qualify for a rebate, thereby 
providing SLPs with greater flexibility and creating an added incentive 
for SLPs to bring additional order flow to a public market. In 
particular, as noted above, the Exchange believes that the new tier 
will provide greater incentives for more active SLPs to add liquidity 
to the Exchange, to the benefit of the investing public and all market 
participants. Moreover, offering a higher credit for SLPs that add 
liquidity for all assigned SLP securities in the aggregate (including 
shares of both an SLP-Prop and an SLMM of the same or an affiliated 
member organization) of an ADV of more than 0.085% of NYSE CADV over 
that SLPs' April 2018 adding liquidity and that meet the SLP quoting 
requirements would provide an incentive for less active SLPs to add 
liquidity in order to meet the SLP quoting requirements, thereby 
contributing to additional levels of liquidity to a public exchange, 
which benefits all market participants. Finally, the Exchange believes 
that the proposed tier is equitable and not unfairly discriminatory 
because it would apply equally to all SLPs that don't qualify for 
better SLP tiered credits and that would submit additional adding 
liquidity to the Exchange in order to qualify for the new credit.
NYSE CSII Fee Cap
    The Exchange believes that lowering the alternative cap to $15,000 
per month and the Taking ADV requirement to at least 1.20% of NYSE CADV 
is reasonable and an equitable allocation of fees because it would 
encourage the execution of additional liquidity on a public exchange, 
thereby promoting price discovery and transparency. Further, the 
Exchange believes that the proposed requirements are reasonable, 
equitable and not unfairly discriminatory because all member 
organizations that submit orders to the NYSE open, remove liquidity 
from the Exchange, and participate in CSII will be subject to the same 
fee structure and access to the Exchange's market would continue to be 
offered on fair and non-discriminatory terms. The Exchange further 
believes that the proposed lowering of the Taking ADV requirement would 
encourage additional member organizations to participate in CSII.
    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,\11\ 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 foster liquidity provision and stability in the 
marketplace, thereby promoting price discovery and transparency and 
enhancing order execution opportunities for member organizations. In 
this regard, the Exchange believes that the transparency and 
competitiveness of attracting additional executions on an exchange 
market would encourage competition. The Exchange also believes that the 
proposed rule change is designed to provide the public and investors 
with a Price List that is clear and consistent, thereby reducing 
burdens on the marketplace and facilitating investor protection.
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    \11\ 15 U.S.C. 78f(b)(8).
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    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive or rebate opportunities available at other venues to be more 
favorable. In such an environment, the Exchange must continually adjust 
its fees and rebates to remain competitive with other exchanges and 
with alternative trading systems that have been exempted from 
compliance with the statutory standards applicable to exchanges. 
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 believes that the degree to which 
fee changes in this market may impose any burden on competition is 
extremely limited. As a result of all of these considerations, the 
Exchange does not believe that the proposed changes will impair the 
ability of member organizations or competing order execution venues to 
maintain their competitive standing in the financial 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) \12\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \13\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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) \14\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \14\ 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 [email protected]. Please include 
File Number SR-NYSE-2018-37 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-NYSE-2018-37. 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

[[Page 44119]]

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-2018-37 and should be submitted on 
or before September 19, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-18678 Filed 8-28-18; 8:45 am]
 BILLING CODE 8011-01-P