Document ID: SEC-2016-2198-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2016-12-14T05:00Z

[Federal Register Volume 81, Number 240 (Wednesday, December 14, 2016)]
[Notices]
[Pages 90391-90394]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29938]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79506; File No. SR-NYSEArca-2016-158]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the 
Exchange's Schedule of Fees and Charges Relating to the Listing and 
Annual Fees Applicable to Certain Structured Products

December 8, 2016
    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 November 29, 2016, 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.
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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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[[Page 90392]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Schedule of Fees and 
Charges (``Fee Schedule'') relating to the Listing and Annual Fees 
applicable to certain Structured Products. This amendment to the Fee 
Schedule is effective November 29, 2016. 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, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Exchange's Schedule of Fees and 
Charges (``Fee Schedule'') relating to the Listing Fee and the Annual 
Fee applicable to certain ``Structured Products'', as described 
below.\4\ This amendment to the Fee Schedule is effective November 29, 
2016.
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    \4\ ``Structured Products'' are defined in Note 4 to the Fee 
Schedule as securities listed under Rule 5.2(j)(1) (Other 
Securities), 5.2(j)(2) (Equity Linked Notes); Rule 5.2(j)(4) (Index-
Linked Exchangeable Notes); Rule 5.2(j)(6) (Equity Index-Linked 
Securities, Commodity-Linked Securities, Currency-Linked Securities, 
Fixed Income Index-Linked Securities, Futures-Linked Securities and 
Multifactor Indexed-Linked Securities (collectively, ``Index-Linked 
Securities'')); Rule 5.2(j)(7) (Trust Certificates); Rule 8.3 
(Currency and Index Warrants); and Rule 8.400 (Paired Trust Shares).
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    Currently, the Exchange's Fee Schedule provides for a ``Listing 
Fee'' for issues of ``Structured Products'' which ranges from $5,000 to 
$45,000 based on the number of shares outstanding.
    The Exchange proposes to amend the Fee Schedule to eliminate the 
Listing Fee in connection with Exchange listing of certain Structured 
Products effective November 29, 2016, as described below. Exchange 
rules applicable to listing of Structured Products under NYSE Arca 
Equities Rules 5.2(j)(2), 5.2(j)(4) and 5.2(j)(6) provide for listing 
such products pursuant to Rule 19b-4(e) under the Act if they satisfy 
all criteria--referred to as ``generic'' listing criteria--in such 
rule. If an issue of such Structured Products does not satisfy all 
applicable generic criteria, the Commission must approve or issue a 
notice of effectiveness with respect to a proposed rule change filed by 
the Exchange pursuant to Section 19(b) of the Act prior to Exchange 
listing of such issue.
    The Exchange proposes to eliminate the Listing Fee for the 
following Structured Products listed on the Exchange pursuant to Rule 
19b-4(e) under the Act, and for which a proposed rule change pursuant 
to Section 19(b) of the Act is not required to be filed with the 
Commission: (i) Equity Linked Notes (listed under Rule 5.2(j)(2)); (ii) 
Index-Linked Exchangeable Notes (listed under Rule 5.2(j)(4)); and 
(iii) Index-Linked Securities (listed under Rule 5.2(j)(6)) 
(collectively, ``Generically-Listed Structured Products''). The 
Exchange believes that eliminating the Listing Fee for Generically-
Listed Structured Products would help correlate the Listing Fee 
applicable to an issue of Generically-Listed Structured Products to the 
resources required to list such securities on the Exchange. The 
Exchange believes it is appropriate to eliminate the Listing Fee for 
Generically-Listed Structured Products because such products do not 
require a commitment of time and resources by Exchange staff to prepare 
and review Rule 19b-4 filings for Structured Products other than 
Generically-Listed Structured Products, and to communicate with issuers 
and the Commission staff regarding such filings. Application of a 
Listing Fee for Structured Products other than Generically-Listed 
Structured Products is appropriate because the Exchange generally 
incurs increased costs in connection with the listing administration 
process, issuer services, and consultative legal services when a 
proposed rule change pursuant to Section 19(b) of the Act is required 
to be filed with the Commission.\5\
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    \5\ The Exchange has eliminated the Exchange Listing Fee 
applicable to certain Exchange Traded Products for which a proposed 
rule change pursuant to Section 19(b) of the Act is not required to 
be filed with the Commission. See Securities Exchange Act Release 
No. 78633 (August 22, 2016), 81 FR 59025 (August 26, 2016) (SR-
NYSEArca-2016-114) (notice of filing and immediate effectiveness of 
proposed rule change amending the Exchange's Schedule of Fees and 
Charges to eliminate the Listing Fee in connection with Exchange 
listing of certain Exchange Traded Products).
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    The Exchange also proposes to amend the Exchange's Fee Schedule 
relating to the Annual Fee payable in connection with Exchange listing 
of Index-Linked Securities.\6\ The issuer of a series of Index-Linked 
Securities, which are referred to as exchange-traded notes (or 
``ETNs''), may issue a subsequent series of ETNs based on the identical 
reference asset (for example, stock index) as the initially-listed 
securities. The Exchange proposes to amend the Fee Schedule to provide 
that multiple series of securities listed under Rule 5.2(j)(6) that are 
issued by the same issuer and are based on an identical reference asset 
and leverage factor (i.e., 1X, -1X, 2X, -2X, 3X or -3X) will receive a 
30% discount off the aggregate calculated Annual Fee for such multiple 
series. Thus, for such series, the Exchange would aggregate the Annual 
Fee that would apply to the initial and subsequently issued series, and 
apply a 30% discount to the aggregated Annual Fee amount.
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    \6\ The Fee Schedule provides that Annual Fees for Structured 
Products range from $10,000 to $55,000, based on the total number of 
securities outstanding per listed issue.
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    Example: An issuer issues ETN Series A based on the S&P 500 Index 
with a leverage factor of 2X and subsequently issues Series B based on 
the S&P 500 Index with a leverage factor of 2X. Series A has 20 million 
shares outstanding and Series B has 7 million shares outstanding. The 
Annual Fee, calculated separately, for Series A is $25,000 and, for 
Series B, $12,000. The aggregate Annual Fee for both series is $37,000. 
The aggregate Annual Fee would be reduced by 30%, and the Annual Fee 
for both series combined would be $25,900.
    The Exchange believes it is appropriate to provide a reduction in 
the Annual Fee for related ETNs, as described above, because such 
reduction will facilitate the issuance of additional ETNs series, which 
may provide enhanced competition among ETN issuers, while providing a 
reduction in fees to certain issuers listing additional ETN series. The 
proposed reduction would apply equally to all issuers issuing 
additional ETN series based on the same reference asset and leverage 
factor. The Exchange believes that a discount, as described above, is 
appropriate in such cases because the Exchange would incur cost savings 
relating to listing review, ongoing regulatory compliance, issuer 
services and legal services in connection with listing of such 
additional related ETNs that are commensurate with the proposed 
reduction in Annual Fees.

[[Page 90393]]

    Notwithstanding the proposed amendments to the Listing Fee and 
Annual Fee, as described above, the Exchange will continue to be able 
to fund its regulatory obligations.
2. Statutory Basis
    NYSE Arca believes that the proposal is consistent with Section 
6(b) \7\ of the Act, in general, and Section 6(b)(4) \8\ of the Act in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its issuers and other 
persons using its facilities. In addition, the Exchange believes the 
proposal is consistent with the requirement under Section 6(b)(5) \9\ 
that an exchange have rules that are designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments to, and perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest; and are not designed to permit unfair discrimination 
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).
    \9\ 15 U.S.C. 78f(b)(5).
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    The proposed elimination of the Listing Fee for certain 
Generically-Listed Structured Products, as described above, is 
equitable and does not unfairly discriminate between issuers because it 
would apply uniformly to issues of Structured Products that are listed 
generically under Exchange rules. The Exchange believes eliminating the 
Listing Fee for such Structured Products, as described above, listed on 
the Exchange pursuant to Rule 19b-4(e) under the Act, and for which a 
proposed rule change pursuant to Section 19(b) of the Act is not 
required to be filed with the Commission, would help correlate the 
Listing Fee applicable to an issue of Structured Products to the 
resources required to list such securities on the Exchange. The 
Exchange believes it is appropriate to continue to charge a Listing Fee 
for Structured Products other than Generically-Listed Structured 
Products for which a proposed rule change pursuant to Section 19(b) of 
the Act is required to be filed because of the significant additional 
extensive time and legal and business resources required by Exchange 
staff to prepare and review such filings and to communicate with 
issuers and the Commission regarding such filings.
    The Exchange believes it is appropriate to provide a reduction in 
the Annual Fee for ETNs, as described above, because such reduction 
will facilitate the issuance of additional ETN series, which may 
provide enhanced competition among ETN issuers, while providing a 
reduction in fees to certain issuers listing additional ETN series. The 
proposed reduction would apply equally to all issuers issuing 
additional ETNs series based on the same reference asset and leverage 
factor. The Exchange believes that a discount, as described above, is 
appropriate in such cases because the Exchange would incur cost savings 
relating to listing review, ongoing regulatory compliance, issuer 
services and legal services in connection with listing of such 
additional related ETNs that are commensurate with the proposed 
reduction in Annual Fees.
B. Self-Regulatory Organization's Statement on Burden on Competition
    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange believes the 
proposed rule change would promote competition because it will 
eliminate the Listing Fee for certain Structured Products and reduce 
the Annual Fee for certain ETNs and will therefore encourage issuers to 
develop and list additional Structured Products on the Exchange.

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) \10\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \11\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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)\12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \12\ 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-2016-158 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-2016-158. 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 also will be available 
for inspection and copying at the principal office of the Exchange. 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-

[[Page 90394]]

NYSEArca-2016-158 and should be submitted on or before January 4, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-29938 Filed 12-13-16; 8:45 am]
 BILLING CODE 8011-01-P