Document ID: SEC-2018-1647-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2018-10-23T04:00Z

[Federal Register Volume 83, Number 205 (Tuesday, October 23, 2018)]
[Notices]
[Pages 53524-53527]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-23039]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84444; File No. SR-NYSE-2018-49]

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

October 17, 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 October 4, 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) adopt an 
alternate way to qualify for the Tier 3 Adding Credit; (2) add a new 
charge for transactions that remove liquidity from the Exchange; and 
(3) make certain non-substantive, clarifying changes. The

[[Page 53525]]

Exchange proposes to implement these changes to its Price List 
effective October 4, 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 
September 28, 2018 (SR-NYSE-2018-45). SR-NYSE-2018-45 was 
subsequently withdrawn and replaced by this filing.
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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) adopt an 
alternate way to qualify for the Tier 3 Adding Credit; (2) add a new 
charge for transactions that remove liquidity from the Exchange; and 
(3) make certain non-substantive, clarifying changes.
    The Exchange proposes to implement these changes to its Price List 
effective October 4, 2018.
Tier 3 Adding Credit
    The Exchange currently provides an equity per share credit of 
$0.0018 per transaction for all orders, other than MPL and Non-Display 
Reserve orders, for transactions in stocks with a share price of $1.00 
or more when adding liquidity to the Exchange if the member 
organization (1) has an average daily trading volume (``ADV'') that 
adds liquidity to the Exchange during the billing month (``Adding 
ADV'') \5\ that is at least 0.40% of NYSE consolidated average daily 
volume (``CADV''), and (2) executes market at-the-close (``MOC'') and 
limit at-the-close (``LOC'') of at least 0.05% of NYSE CADV.
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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 provide an alternate way for member 
organizations to qualify for the Tier 3 Adding Credit. As proposed, the 
Exchange would provide an equity per share credit of $0.0018 per 
transaction for all orders, other than MPL and Non-Display Reserve 
orders, for transactions in stocks with a share price of $1.00 or more 
when adding liquidity to the Exchange if the member organization (1) 
has an Adding ADV that is at least 0.35% of NYSE CADV, (2) executes MOC 
and LOC orders of at least 0.05% of NYSE CADV, and (3) has an Adding 
ADV in MPL orders of at least 400,000 shares.
Charges for Removing Liquidity
    The Exchange currently charges a fee of $0.00275 for non-Floor 
broker transactions that remove liquidity from the Exchange, including 
those of DMMs. The Exchange also currently charges $0.0030 for non-
Floor broker transactions removing liquidity from the Exchange by 
member organizations with an Adding ADV, excluding any liquidity added 
by a DMM, of less than 250,000 ADV on the Exchange during the billing 
month.
    The Exchange proposes to add a slightly higher intermediate fee of 
$0.00280 for non-Floor broker transactions that remove liquidity from 
the Exchange by member organizations with an Adding ADV, excluding any 
liquidity added by a DMM, that is at least 250,000 ADV on the NYSE in 
Tape A Securities and less than 500,000 ADV on the NYSE in Tape B and 
Tape C securities combined during the billing month.
    For example, in a given month, a member organization with an Adding 
ADV, excluding any liquidity added by a DMM, of 250,000 or more on the 
Exchange in Tape A securities would qualify for a fee of $0.00275 per 
share in Tape A securities.
     If that same member organization had an Adding ADV of 
300,000 in Tape B securities and an Adding ADV of 250,000 in Tape C 
securities, or 550,000 ADV combined, that member would continue to 
receive a fee of $0.00275 per share in Tape A securities under the 
proposed change.
     If that same member organization had an Adding ADV in Tape 
B and Tape C securities combined of less than 500,000, but still had an 
Adding ADV of 250,000 or more in Tape A securities, that member 
organization would receive a fee of $0.0028 per share in Tape A 
securities under the proposed change.
     If that member organization had an Adding ADV in Tape B 
and Tape C securities combined of less than 500,000, and also had an 
Adding ADV of less than 250,000 in Tape A securities, that member 
organization would receive a fee of $0.0030 per share in Tape A 
securities under the proposed change.
Clarifying, Non-Substantive Changes
    First, the Exchange proposes to add a sentence to footnote * to 
clarify that, unless otherwise specified, references to volumes, 
quoting, ADV and CADV in the Price List refer to Tape A securities.
    Second, the Exchange proposes to make a non-substantive, clarifying 
change to the annual trading license fee. Currently, for all member 
organizations, including Floor brokers with more than ten trading 
licenses but excluding Regulated Only Members, the trading license fee 
is $50,000 for the first license held by the member organization unless 
one of the other rates is deemed applicable.\6\ The current Price List 
provides that the annual fee applies to ``All member organizations with 
10 or more trading licenses.'' The Exchange proposes a non-substantive 
change to clarify this language by adding the phrase ``, including 
Floor brokers'' after ``All member organizations'' and the 
parenthetical ``excluding Regulated Only Members'' at the end of the 
entry.
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    \6\ See Securities Exchange Act Release No. 82563 (January 22, 
2018), 83 FR 3799, 3801 (January 26, 2018) (SR-NYSE-2018-03).
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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,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\8\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) & (5).
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Tier 3 Adding Credit
    The Exchange believes that providing an additional way to qualify 
for the Tier 3 Adding Credit is reasonable, equitable and not an 
unfairly discriminatory allocation of fees because it would encourage 
additional liquidity on the Exchange and because members and

[[Page 53526]]

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. The proposed 
changes will also encourage the submission of additional MPL orders 
that add liquidity, thus providing price improving liquidity to market 
participants and increasing the quality of order execution on the 
Exchange's market, which benefits all market participants. 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 
and add liquidity to the Exchange and do not currently meet the 
requirements for higher credits for Adding Tiers 1, 2, and 3.
Charges for Removing Liquidity
    The Exchange believes that introducing a slightly higher charge 
than the current lowest charge of $0.00275 for non-Floor broker 
transactions that remove liquidity from the Exchange for member 
organizations with an Adding ADV, excluding DMM liquidity, of at least 
250,000 ADV on NYSE Tape A and less than 500,000 ADV on the NYSE in 
Tape B and Tape C securities combined during the billing month is 
reasonable. The Exchange believes that the proposed rate change will 
incentivize submission of additional liquidity in Tape B and Tape C 
securities to a public exchange, thereby promoting price discovery and 
transparency and enhancing order execution opportunities for member 
organizations. The Exchange also believes that the proposed fee is 
equitable because it would apply to all similarly situated member 
organizations that add liquidity in Tape B or Tape C securities.
    The proposed fee also is equitable and not unfairly discriminatory 
because it would be consistent with the applicable rate on other 
marketplaces. For example, Nasdaq PSX provides a lower fee per share 
for removing liquidity, $0.0028 in Tape A and B securities and $0.0029 
in Tape C securities, if a firm removes 0.065% or more of Consolidated 
Volume; otherwise, Nasdaq PSX imposes a charge of $0.0030 per share for 
removing liquidity.\9\ Given the Exchange's and Nasdaq PSX's relative 
size and market share, the Exchange believes that Nasdaq PSX remove 
requirement of 0.065%, which would be 4.55 million shares ADV in a 
month where CADV is 7 billion shares, is comparable to the Exchange's 
250,000 ADV and 500,000 ADV adding requirements. The Exchange notes 
that since the requirement is for Tape B and Tape C securities 
combined, member organizations can meet the requirement by adding 
liquidity in either Tape B or Tape C securities, or both. The Exchange 
further notes that other marketplaces have tiers with adding 
requirements in specific tapes to qualify for a rate in securities on 
another tape. For example, to be eligible for a $0.0020 adding credit 
in Tape C securities on Nasdaq, firms are required to average a minimum 
of 250,000 shares added per day in Tape A or Tape B securities 
(combined); otherwise, the Tape C credit for adding liquidity is 
$0.0015.\10\
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    \9\ See https://www.nasdaqtrader.com/Trader.aspx?id=PSX_Pricing.
    \10\ See https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
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Non-Substantive, Clarifying Changes
    The Exchange believes that the proposed non-substantive, clarifying 
changes would remove impediments to, and perfect the mechanisms of, a 
free and open market and a national market system and, in general, 
protect investors and the public interest because they are designed to 
provide greater specificity and clarity to the Price List, thereby 
removing impediments to and perfecting the mechanism of a free and open 
market and a national market system, and, in general, protecting 
investors and the public interest. The proposed change would not alter 
the application of any fees or rebates on the Price List. As such, the 
proposed changes would foster cooperation and coordination with persons 
engaged in facilitating transactions in securities and would remove 
impediments to and perfect the mechanism of a free and open market and 
a national exchange system. In particular, the Exchange believes that 
the proposed change would provide greater clarity to members and member 
organizations and the public regarding the Exchange's Rules. It is in 
the public interest for rules to be accurate and concise so as to 
eliminate the potential for confusion.
    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 make non-substantive technical 
corrections and update the Exchange's Price List in order 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

[[Page 53527]]

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-2018-49 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-2018-49. 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-2018-49 and should be submitted on 
or before November 13, 2018.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-23039 Filed 10-22-18; 8:45 am]
BILLING CODE 8011-01-P