Document ID: SEC-2016-2276-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2016-12-23T05:00Z

[Federal Register Volume 81, Number 247 (Friday, December 23, 2016)]
[Notices]
[Pages 94460-94462]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30943]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79597; File No. SR-NYSEArca-2016-165]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE 
Arca Equities Schedule of Fees and Charges for Exchange Services

December 19, 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 December 13, 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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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Equities Schedule of 
Fees and Charges for Exchange Services (``Fee Schedule''). The Exchange 
proposes to implement the fee change effective December 13, 2016.\4\ 
The proposed 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.
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    \4\ The Exchange originally filed to amend the Fee Schedule on 
December 2, 2016 (SR-NYSEArca-2016-162) and withdrew such filing on 
December 13, 2016.
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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 the Fee Schedule to amend the volume 
criteria for the Exchange's tiered-rebate structure applicable to Lead 
Market Makers (``LMMs'') \5\ and to ETP Holders and Market Makers 
affiliated with the LMM that provide liquidity in Tape B securities to 
the NYSE Arca Book. The Exchange proposes to implement the fee change 
effective December 13, 2016.
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    \5\ The term ``Lead Market Maker'' is defined in Rule 1.1(ccc) 
to mean a registered Market Maker that is the exclusive Designated 
Market Maker in listings for which the Exchange is the primary 
market.
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    The Exchange currently provides tier-based incremental credits for 
orders that provide displayed liquidity to the NYSE Arca Book in Tape B 
Securities.\6\ Specifically, LMMs that are registered as the LMM in 
Tape B securities that have a consolidated average daily volume 
(``CADV'') in the previous month of less than 100,000 shares (``Less 
Active ETP Securities''), and the ETP Holders and Market Makers 
affiliated with such LMMs, currently receive an incremental credit for 
orders that provide displayed liquidity to the Book in any Tape B 
Securities that trade on the Exchange.\7\ The current incremental 
credits and volume thresholds are as follows:
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    \6\ See Securities Exchange Act Release No. 76084 (October 6, 
2015), 80 FR 61529 (October 13, 2015) (SR-NYSEArca-2015-87).
    \7\ The Exchange defines ``affiliate'' to ``mean any ETP Holder 
under 75% common ownership or control of that ETP Holder.'' See Fee 
Schedule, NYSE Arca Marketplace: General, Section II(c).
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     An additional credit of $0.0004 per share if an LMM is 
registered as the LMM in at least 300 Less Active ETP Securities
     An additional credit of $0.0003 per share if an LMM is 
registered as the LMM in at least 200 but less than 300 Less Active ETP 
Securities
     An additional credit of $0.0002 per share if an LMM is 
registered as the LMM in at least 100 but less than 200 Less Active ETP 
Securities
    The number of Less Active ETP Securities for the billing month is 
based on the number of Less Active ETP Securities in which an LMM is 
registered as the LMM on the last business day of the previous month.
    The Exchange proposes to amend the volume criteria for Less Active 
ETP Securities. As proposed, a Less Active ETP Security would be a Tape 
B Security that has a CADV in the previous month of less than 100,000 
shares, or 0.0070% of Consolidated Tape B ADV, whichever is greater. 
The Exchange is proposing to expand the manner by which LMMs that are 
registered as the LMM in Tape B Securities, and the ETP Holders and 
Market Makers affiliated with such LMMs, would qualify for the 
incremental credit.
    The Exchange is not proposing any change to the level of the 
incremental credits and volume thresholds noted above that are payable 
to LMMs and to ETP Holders and Market Makers affiliated with the LMM.
    The Exchange is proposing to amend the current criteria for 
securities to qualify as Less Active ETP Securities by expanding it to 
the greater of a numerical threshold or a percentage threshold based 
upon the average daily traded volume of the relevant security, for 
several reasons. The percentage threshold will adjust each calendar 
month based on the U.S. average daily consolidated share volume in Tape 
B Securities for that month, while the numerical threshold remains 
unchanged from month to month, thereby providing a consistent floor 
against which to measure volume in a Tape B Security. The Exchange 
believes that the proposed approach will provide a straightforward way 
to float volume tiers, while maintaining a minimum threshold. The 
Exchange notes that the combined approach will allow tiers to move in 
sync with consolidated volume during months with high volumes while 
maintaining a numerical threshold. The Exchange believes that this will 
continue to provide an incentive for LMMs to act as an LMM for less 
active issues during months with higher market volumes when the 100,000 
share

[[Page 94461]]

threshold would be harder to obtain. While the percentage threshold 
will result in lower maximum share volume requirement when consolidated 
volumes are lower, it will also result in higher maximum share volume 
requirement when consolidated volumes are higher. Such higher and lower 
consolidated volumes will have a similar impact on the maximum share 
requirements; however, the minimum share requirement will remain 
unchanged at 100,000 shares.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\8\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\9\ 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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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4) and (5).
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    The proposed fee change is intended to encourage LMMs and ETP 
Holders and Market Makers affiliated with such LMMs to promote price 
discovery and market quality in Less Active ETP Securities for the 
benefit of all market participants.
    The Exchange believes the proposed amendment to the volume criteria 
for Less Active ETP Securities is equitable and not unfairly 
discriminatory because it would continue to apply to all LMMs and ETP 
Holders and Market Makers affiliated with such LMM on an equal basis. 
The Exchange further believes that the proposed rule change is not 
unfairly discriminatory because it is consistent with the market 
quality and competitiveness benefits associated with the proposed fee 
program.
    The Exchange further believes that the proposed amendment to the 
criteria to qualify for the incremental credits is reasonable, 
equitable and not unfairly discriminatory as it will result in more 
LMMs and ETP Holders and Market Makers affiliated with such LMMs to 
qualify for the increased credits and therefore reduce their overall 
transaction costs on the Exchange.
    Further, the Exchange believes that the proposal is reasonable and 
would create an added incentive for these market participants to 
execute additional orders on the Exchange and thereby qualify for the 
incremental credits. The Exchange believes that the proposed change is 
equitable and not unfairly discriminatory because providing incentives 
for orders in exchange-listed securities that are executed on a 
registered national securities exchange (rather than relying on certain 
available off-exchange execution methods) would contribute to 
investors' confidence in the fairness of their transactions and would 
benefit all investors by deepening the Exchange's liquidity pool, 
supporting the quality of price discovery, promoting market 
transparency and improving investor protection.
    Volume-based rebates such as the ones currently in place on the 
Exchange have been widely adopted in the cash equities markets and are 
equitable because they are open to all LMMs and ETP Holders and Market 
Makers affiliated with such LMMs on an equal basis and provides 
additional benefits that are reasonably related to the value to an 
exchange's market quality associated with higher levels of market 
activity.
    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 these 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,\10\ 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 encourage increased participation by LMMs in the trading 
of ETP securities generally and Less Active ETP Securities, in 
particular. The proposed change would also encourage the submission of 
additional liquidity to a public exchange, thereby promoting price 
discovery and transparency and enhancing order execution opportunities 
for ETP Holders and Market Makers affiliated with LMMs.
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    \10\ 15 U.S.C. 78f(b)(8).
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    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues. In 
such an environment, the Exchange must continually review, and consider 
adjusting, its fees and credits to remain competitive with other 
exchanges. For the reasons described above, the Exchange believes that 
this proposal promotes a competitive environment.

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) \11\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \12\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \13\ 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-2016-165 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-NYSEArca-2016-165. 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

[[Page 94462]]

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-NYSEArca-2016-165 and should 
be submitted on or before January 13, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-30943 Filed 12-22-16; 8:45 am]
 BILLING CODE 8011-01-P