Document ID: SEC-2020-0058-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2020-01-15T05:00Z

[Federal Register Volume 85, Number 10 (Wednesday, January 15, 2020)]
[Notices]
[Pages 2474-2480]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00480]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87917; File No. SR-NYSEArca-2019-93]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Its 
Schedule of Fees and Charges To Modify the Annual Fees Applicable To 
Exchange Traded Products and Managed Fund Shares and Managed Trust 
Securities

January 9, 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 December 31, 2019, NYSE Arca, Inc. (``NYSE Arca'' 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 Schedule of Fees and Charges to 
(1) modify the annual fees applicable to Exchange Traded Products 
(``ETPs'') and Managed Fund Shares and Managed Trust Securities, (2) 
introduce annual fee discounts for ETPs and Structured Products, and 
(3) offer an alternate way for issuers of multiple series of securities 
listed under Rule 5.2-E(j)(6) to qualify for the current discount. The 
Exchange proposes to implement the fee changes effective January 1, 
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 
(1) modify the annual fee applicable to ETPs and Managed Fund Shares 
and Managed Trust Securities, (2) introduce annual fee discounts for 
ETPs and Structured Products, and (3) offer an alternate way for 
issuers of multiple series of securities listed under Rule 5.2-E(j)(6) 
to qualify for the current discount.
    The proposed changes respond 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

[[Page 2475]]

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 
proposes a competitive pricing structure that combines higher minimum 
annual fees for ETPs and Managed Fund Shares and Managed Trust 
Securities with new discounts for issuers that list multiple ETPs and 
Structured Products.\4\ The proposed changes are designed to 
incentivize issuers to list new products, transfer existing products to 
the Exchange, and maintain listings on the Exchange, which the Exchange 
believes will enhance competition both among issuers and listing 
venues, to the benefit of investors.
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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 1, 2020.
Proposed Rule Change
    The Exchange proposes increased annual fees for ETPs and Managed 
Fund Shares and Managed Trust Securities. Annual fees are assessed each 
January in the first full calendar year following the year of listing. 
The aggregate total shares outstanding is calculated based on the total 
shares outstanding as reported by the Fund issuer or Fund ``family'' in 
its most recent periodic filing with the Commission or other publicly 
available information. Annual fees apply regardless of whether any of 
these Funds are listed elsewhere.
Annual ETP Fees
    Currently, the Exchange charges the following annual fees for 
listed ETPs (with the exception of Managed Fund Shares and Managed 
Trust Securities) based on the number of shares outstanding for each 
issue listed by the same issuer, as follows:

 
        Number of shares outstanding (each issue)           Annual fee
 
Less than 25 million....................................          $5,000
25 million up to 49,999,999.............................           7,500
50 million up to 99,999,999.............................          10,000
100 million up to 249,999,999...........................          15,000
250 million up to 499,999,999...........................          20,000
500 million and over....................................          25,000
 

    The Exchange proposes to increase annual fees for such listed ETPs 
by $2,500 at the levels below 49,999,999 shares outstanding and by 
$5,000 for each level at 50 million shares outstanding and above. The 
Exchange proposes the following revised annual fees:

For issuers with less than 25 million shares outstanding for each 
issue, the proposed annual fee would be $7,500.
     For issuers with shares outstanding for each issue from 25 
million up to 49,999,999, the proposed annual fee would be $10,000.
     For issuers with shares outstanding for each issue from 50 
million up to 99,999,999, the proposed annual fee would be $15,000.
     For issuers with shares outstanding for each issue from 
100 million up to 249,999,999, the proposed annual fee would be 
$20,000.
     For issuers with shares outstanding for each issue from 
250 million up to 499,999,999, the proposed annual fee would be 
$25,000.
     For issuers with shares outstanding for each issue from 
500 million and over, the proposed annual fee would be $30,000.
Annual Fees for Managed Fund Shares and Managed Trust Securities
    Currently, the Exchange charges the following annual fees for 
listed Managed Fund Shares and Managed Trust Securities based on the 
number of shares outstanding for each issue:

 
                                                                 Annual
          Number of shares outstanding (each issue)               fee
 
Less than 25 million.........................................     $7,500
25 million up to 49,999,999..................................     10,000
50 million up to 99,999,999..................................     12,500
100 million up to 249,999,999................................     20,000
250 million up to 499,999,999................................     30,000
500 million and over.........................................     40,000
 

    The Exchange proposes to increase annual fees for listed Managed 
Fund Shares and Managed Trust Securities by $2,500 at the levels below 
49,999,999 shares outstanding. For issuers with outstanding shares 
between 50 million up to 99,999,999, the proposed fee would increase by 
$7,500. For issuers with outstanding shares of 100 million up to 
249,999,999 shares, the annual fee would increase by $5,000. Issuers 
with shares outstanding of 250 million shares and over would be charged 
$30,000, and the current rate of $40,000 for issuers with shares 
outstanding of 500 million and over would be eliminated. The Exchange 
proposes the following revised annual fees for listed Managed Fund 
Shares and Managed Trust Securities:
     For issuers with less than 25 million shares outstanding 
for each issue, the proposed fee would be $10,000.
     For issuers with shares outstanding for each issue from 25 
million up to 49,999,999, the proposed fee would be $12,500.
     For issuers with shares outstanding for each issue from 50 
million up to 99,999,999, the proposed fee would be $20,000.
     For issuers with shares outstanding for each issue from 
100 million up to 249,999,999, the proposed fee would be $25,000.
     For issuers with shares outstanding for each issue from 
250 million and over, the proposed fee would be $30,000.
    The proposed annual fee increases are intended to support the 
ongoing costs of listing and trading ETPs and Managed Fund Shares and 
Managed Trust Securities on the Exchange, including costs related to 
issuer services, listing administration and product development. The 
Exchange's comprehensive listing and trading program, including 
utilization of Lead Market Makers (``LMM'') to foster liquidity 
provision and stability in the marketplace, seeks to provide superior 
market quality for securities listed on the Exchange. The Exchange 
notes that annual fees for ETPs and Managed Fund Shares and Managed 
Trust Securities have not increased since 2009.\5\ The Exchange 
believes that the proposed fee increases are appropriate in that the 
Exchange generally expends significant resources supporting the listing 
and administration of ETPs and Managed Fund Shares and Managed Trust 
Securities. The Exchange expects to increase spending to support the 
listing and administration of these securities going forward.
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    \5\ See Securities Exchange Act Release No. 61104 (December 3, 
2009), 74 FR 65568 (December 10, 2009) (SR-NYSEArca-2009-106).
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    The Exchange believes that the proposed fee increase of $2,500 for 
ETPs with less than 50 million shares outstanding and proposed increase 
of $5,000 for ETPs with 50 million shares or more outstanding could be 
mitigated at least in part for those issuers that would qualify for the 
proposed additional annual fee discounts the Exchange is proposing for 
ETP issuers, described in more detail below. The largest proposed 
annual fee increase of $7,500 would be for Managed Fund Shares and 
Managed Trust Securities with between 50 million and 99,999,999 shares 
outstanding. However, the current $40,000 fee for securities with 500 
million shares outstanding or more would be eliminated, effectively 
lowering the rate for issuers with securities in that category by 
$10,000. Annual fees for Managed Fund Shares and Managed Trust 
Securities would not exceed $30,000 for such securities at 250 million 
shares outstanding and above.

[[Page 2476]]

    Finally, the proposed fees are comparable to the annual fees 
charged by competing exchanges on a per product basis. For example, a 
new ETP listed on the Exchange with 1 million shares outstanding would 
pay a $7,500 annual fee under the proposal. On The Nasdaq Stock Market 
LLC (``Nasdaq''), the issuer of a series of ETPs with up to 1 million 
shares outstanding currently pays an annual fee of $6,500.\6\ On Cboe 
BZX Exchange, Inc. (``Cboe BZX''), when an ETP first lists or has been 
listed for fewer than three calendar months on the ETP's first trading 
day of the year, the ETP currently pays an annual listing fee of 
$4,500. Other newly listed ETPs on Cboe BZX are subject to a volume-
based fee schedule, where annual fees range from $7,000 for 
consolidated average daily volume (``CADV'') of 0-10,000 shares to 
$5,000 for ETPs with a CADV greater than 1,000,000 shares.\7\ Moreover, 
unlike these competing exchanges, the Exchange does not cap or waive 
annual fees for ETPs and Structured Products once certain levels are 
achieved. Nasdaq, for instance, caps the annual fee of an issuer of a 
series of ETPs at $14,500 once the total shares outstanding exceed 16 
million shares.\8\ On Cboe BZX, where the average daily auction volume 
combined between the opening and closing auctions on the Exchange 
across all of an issuer's ETPs listed on the Exchange exceeds 500,000 
shares, there is no annual listing fee for any of the issuer's ETPs 
listed on the Exchange.\9\
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    \6\ See Nasdaq Rule 5940(b)(1). Nasdaq Rule 5940(b) applies to a 
series of Portfolio Depository Receipts, Index Fund Shares, Managed 
Fund Shares or other securities listed under the Nasdaq Rule 5700 
Series where no other fee schedule is specifically applicable. 
Nasdaq's annual listing fees are also based on the total number of 
outstanding shares.
    \7\ See Cboe BZX Rule 14.13(b)(2)(C)(ii) & (v). On Cboe BZX, 
ETPs include all securities set forth in Cboe BZX Rule 14.11. See, 
e.g., Cboe BZX Rule 14.13(b)(1)(C).
    \8\ See Nasdaq Rule 5940(b)(1).
    \9\ See Cboe BZX Rule 14.13(b)(2)(C)(iii).
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Additional Annual Fee Discounts
    In addition to the proposed increases to the annual fees described 
above, the Exchange proposes two new, non-mutually exclusive discounts 
for ETPs and Structured Products that would be set forth in new Section 
9 of the Schedule of Fees and Charges titled ``Additional Annual Fee 
Discounts for ETPs and Structured Products (``Products'').'' 
Eligibility for the proposed discounts would be subject to certain 
limitations, described more fully below.
    First, the Exchange proposes to move the current discount for 
multiple series listed under Rule 5.2-E(j)(6) to a new romanette (i) 
under the proposed heading. The current text would be transposed 
without change except for the addition of an alternate way for issuers 
of multiple series of securities listed under Rule 5.2-E(j)(6) to 
qualify for the current discount. Specifically, the Exchange would add 
a clause providing that multiple series of securities listed under Rule 
5.2-E(j)(6) that are issued by the same issuer that issues five or more 
ETNs based on an identical reference asset would also be eligible to 
receive the current 30% discount off the aggregate calculated annual 
fee for such multiple series. The Exchange believes the proposed change 
would 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.
    Second, the proposed new discounts for ``families'' of Products 
would appear under new romanette (ii) titled ``Product Family 
Discounts.''
    As proposed, an issuer that lists multiple Products would be 
eligible for the following discounts for those Products, which would be 
a discount on the aggregate calculated annual fee for each Product from 
such issuer.
     A family consisting of between 5 and 9 listed Products 
would be eligible for a 5% discount for each Product.
     A family consisting of between 10 and 19 listed Products 
would be eligible for a 7.5% discount for each Product.
     A family consisting of between 20 and 39 listed Products 
would be eligible for a 10% discount for each product.
     A family consisting of between 40 and 89 listed Products 
would be eligible for a 12.5% discount for each product.
     A family consisting of between 90 and 249 listed Products 
would be eligible for a 15% discount for each product.
     A family consisting of 250 or more listed Products would 
be eligible for a 17.5% discount for each product.
    Third, the Exchange proposes new ``High Volume Products Discounts'' 
in romanette (iii). As proposed, an eligible Product would be 
considered a ``High Volume Product'' if it has (1) 1,000,000 shares 
CADV averaged over 12 months or, if the Product is listed less than 12 
months, 1,000,000 shares CADV averaged since the date of listing, or 
(2) 50,000 CADV executed in opening and closing auctions averaged over 
12 months or, if the Product is listed less than 12 months, 1,000,000 
shares CADV averaged since the date of listing. A Product transferred 
to the Exchange after January 1, 2020, would automatically be 
considered a High Volume Product eligible for the next highest High 
Volume Products discount for the calendar year in which the transfer 
occurred plus the following calendar year.
    As proposed, an issuer that lists multiple High Volume Products as 
defined above would be eligible for the following discounts, which will 
be a discount on the aggregate calculated annual fee for each Product 
from such issuer:
     An issuer listing between 1 and 2 High Volume Products 
would be eligible for a 7.5% discount for each Product.
     An issuer listing between 3 and 9 High Volume Products 
would be eligible for a 10% discount for each Product.
     An issuer listing between 10 and 14 High Volume Products 
would be eligible for a 12.5% discount for each Product.
     An issuer listing between 15 and 34 High Volume Products 
would be eligible for a 15% discount for each Product.
     An issuer listing 35 or more High Volume Products would be 
eligible for a 17.5% discount for each Product.
    Finally, romanette (iv) would set forth the following proposed 
limitations on discounts offered by the Exchange:
     First, the Exchange proposes that the eligible discounts 
for Product Family and High Volume Products can be combined. For 
instance, an issuer with five listed Products, three of which qualify 
as High Volume Products, would be eligible for a 5% Product Family 
discount plus a 10% High Volume Products discount for a 15% total 
discount for all five listed products.
     Second, the Exchange proposes 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 would become ineligible for either or both the Fund Family and the 
High Volume Products discount for the following calendar year.
     Finally, the Exchange proposes that issuers eligible for 
the 30% discount for issuing more than five securities based on an 
identical reference asset that also qualify for the Fund Family and/or 
the High Volume Products discounts for those products would receive 
either the Fund Family and/or the High Volume Products discount or the 
30% discount, whichever is greater.
    The purpose of the proposed changes is to provide an incentive for 
issuers to develop and list additional Products on the Exchange. The 
proposed discounts would encourage issuers to list additional Products 
on the Exchange and maintain their listings on the

[[Page 2477]]

Exchange. By proposing to combine eligible discounts for Product Family 
and High Volume Products, the proposal is designed to provide an 
incentive to issuers to list additional series of securities on the 
Exchange. Moreover, the proposal to automatically consider a High 
Volume Product eligible for the next highest High Volume Products 
discount for the calendar year in which the transfer occurred as well 
as the following calendar year would provide an incentive to issuers to 
transfer additional Products to the Exchange. In addition, proposing 
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, would become ineligible for either or both 
the Fund Family and the High Volume Products discount for the following 
calendar year, would provide an incentive to issuers to maintain those 
and other listings on the Exchange. Finally, proposing that issuers 
eligible for the 30% discount for issuing more than five securities 
based on an identical reference asset that also qualify for the Fund 
Family and/or the High Volume Products discounts for those products 
would receive the greater of the Fund Family and/or the High Volume 
Products discount or the 30% discount would ensure that qualifying 
issuers receive the maximum discount for which they are eligible.
    Each of the proposed changes described above are 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,\10\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\11\ 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 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.'' \12\
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    \12\ 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 proposal represents a 
reasonable attempt to attract new issuers and retain listings on the 
Exchange. Specifically, the Exchange believes that the proposed annual 
fee increases for ETPs and Managed Fund Shares and Managed Trust 
Securities--the first proposed annual fee increase since 2009--are 
reasonable and necessary to support the ongoing Exchange costs 
associated with listing and trading ETPs and Managed Fund Shares and 
Managed Trust Securities on the Exchange, including costs related to 
issuer services, listing administration and product development. The 
Exchange's comprehensive listing and trading program, including 
utilization of LMMs to foster liquidity provision and stability in the 
marketplace, seeks to provide superior market quality for securities 
listed on the Exchange. Moreover, as previously noted, the Exchange 
believes that the proposed fee increases are reasonable because the 
Exchange generally expends significant resources to provide services in 
connection with the listing and administration of ETPs and Managed Fund 
Shares and Managed Trust Securities. The Exchange expects to increase 
spending to support the listing and administration of those securities 
going forward.
    The Exchange also believes that the proposed fee increases, which 
range between $2,500 and $7,500, are modest and, that the proposed fee 
increase of $2,500 for ETPs with less than 50 million shares 
outstanding and proposed increase of $5,000 for ETPs with 50 million 
shares or more outstanding could be mitigated at least in part for 
those issuers that would qualify for the proposed additional annual fee 
discounts the Exchange is proposing for ETP issuers.
    The Exchange further believes the proposed fee increases are 
reasonable because the current $40,000 fee for Managed Fund Shares and 
Managed Trust Securities with outstanding shares of 500 million or more 
would be eliminated, effectively lowering the rate for issuers in that 
group by $10,000 and fixing the annual fee for Managed Fund Shares and 
Managed Trust Securities with 250 million outstanding shares or above 
at $30,000.
    The Exchange also believes that the proposed fees are reasonable 
because they are comparable to the annual fees charged by other 
competing exchanges on a per product basis. For instance, as noted 
above, a new ETP listed on the Exchange with 1 million shares 
outstanding would pay a $7,500 annual fee under the proposal. On 
Nasdaq, a new ETP with up to 1 million shares outstanding currently 
pays an annual fee of $6,500.\13\ On Cboe BZX, an initially listed ETP 
(or one listed for fewer than three calendar months on the ETP's first 
trading day of the year) currently pays an annual listing fee of 
$4,500; other newly issued ETPs on Cboe BZX are subject to a volume-
based fee schedule, where annual fees range from $7,000 to $5,000 from 
lowest to highest CADV range.\14\ As noted above, the Exchange operates 
in a highly competitive listings market in which issuers can readily 
choose alternative listing venues. For instance, unlike competing 
exchanges, the Exchange does not cap or waive annual fees for ETPs and 
Structured Products once certain levels are achieved. Nasdaq, for 
instance, caps the annual fee of an issuer of a series at $14,500 once 
the total shares outstanding exceed 16 million shares.\15\ On Cboe BZX, 
where the average daily auction volume combined between the opening and 
closing auctions on the Exchange across

[[Page 2478]]

all of an issuer's ETPs listed on the Exchange exceeds 500,000 shares, 
there is no annual listing fee for any of the issuer's ETPs listed on 
the Exchange.\16\ Moreover, a competing market has the ability to defer 
or waive all or any part of its annual fees for listings and that the 
Exchange lacks similar discretionary authority.\17\ Given this 
competitive environment, the Exchange believes that the proposal 
represents a reasonable attempt to attract new issuers and retain 
listings on the Exchange.
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    \13\ See Nasdaq Rule 5940(b)(1). Nasdaq's annual listing fees 
are, like the Exchange's, also based on the number of outstanding 
shares.
    \14\ See Cboe BZX Rule 14.13(b)(2)(C)(ii) & (v).
    \15\ See Nasdaq Rule 5940(b)(1).
    \16\ See Cboe BZX Rule 14.13(b)(2)(C)(iii).
    \17\ See Cboe BZX Rule 14.13(b)(2)(D).
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    The proposed discounts for Products are also reasonable because 
they are designed to encourage issuers to add additional Products to 
the Exchange. The proposed automatic application of the discounts to 
High Volume Products transferred to the Exchange for the year in which 
the transfer occurred as well as the following calendar year and the 
penalties for transferring products off the Exchange in a trailing 12-
month period after January 1, 2020, are reasonable attempts to provide 
incentives to issuers to transfer additional Products to, and maintain 
listings on, the Exchange. The proposed penalty also constitutes a 
reasonable attempt to discourage transfers to and from the Exchange 
solely for the purpose of securing one or more of the proposed 
discounts.
    Finally, the Exchange believes that the proposal to also permit 
issuers that issue five or more ETNs based on an identical reference 
asset to qualify for the current 30% annual fee discount for multiple 
series of securities listed under Rule 5.2-E(j)(6) is reasonable 
because it would reduce the annual fee for related ETNs and would 
facilitate the issuance of additional ETNs series, which may provide 
enhanced competition among ETN issuers. The Exchange further believes 
that the proposal is reasonable because the Exchange would incur cost 
savings in connection with the listing and administration of such 
additional related ETNs that are commensurate with the reduction in 
annual fees.\18\
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    \18\ For instance, the Exchange would benefit from efficiencies 
relating to, among other things, listing review and ongoing 
regulatory compliance in connection with the issuance of multiple 
ETNs.
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The Proposal Is an Equitable Allocation of Fees
    The Exchange believes its 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 fee increases for ETPs and Managed Fund Shares and 
Managed Trust Securities are equitable because the proposed increased 
annual fees would apply uniformly to all issuers. Moreover, as 
proposed, the fee structure would retain the same categories of number 
of shares outstanding for ETPs and would retain all but the last of the 
current categories for Managed Fund Shares and Managed Trust 
Securities. The proposed fees would continue to be equitably allocated 
among issuers because issuers would continue to qualify for an annual 
fee based on the number of shares outstanding and under criteria 
applied uniformly to all such issuers. The proposed discounts for ETPs 
and Structured Products are also equitable because the propose 
discounts would apply uniformly to all issuers and to all ETPs and 
Structured Products that are listed on the Exchange either generically 
or pursuant to a rule filing with the Commission.
    The proposal neither targets nor will it have a disparate impact on 
any particular category of market participant. The proposed annual fee 
increases would be applicable to all existing and potential issuers of 
ETPs and Managed Fund Shares and Managed Trust Securities uniformly. 
Moreover, all issuers would be eligible for the proposed discounts for 
ETPs and Structured Products, and all issuers would be subject to the 
proposed benefits and penalties of the proposed discounts in equal 
measure.
    Finally, the Exchange believes that the proposed alternate way to 
qualify for the current 30% annual fee discount for multiple series of 
securities listed under Rule 5.2-E(j)(6) is an equitable allocation of 
fees because the current discount would apply equally to all issuers 
issuing five or more ETNs based on an identical reference asset. As 
noted, the Exchange believes that the proposal would reduce the annual 
fee for related ETNs and would facilitate the issuance of additional 
ETNs series, which may provide enhanced competition among ETN issuers. 
The Exchange further believes that the proposal is reasonable because 
the Exchange would incur cost savings in connection with the listing 
and administration of such additional related ETNs that are 
commensurate with the reduction in annual fees.
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 provide 
higher annual fees for ETPs and Managed Fund Shares and Managed Trust 
Securities because the proposed fees would be provided on an equal 
basis to all issuers listing those products on the Exchange during a 
calendar year. Moreover, the proposed fee structure would retain the 
same six categories of number of shares outstanding for ETPs and would 
retain all but the last of the current six categories for Managed Fund 
Shares and Managed Trust Securities. As a result, the proposal would 
apply to issuers in the same manner as the current annual fees for ETPs 
and Managed Fund Shares and Managed Trust Securities.
    For the same reason, the Exchange believes it is not unfairly 
discriminatory to offer combinable discounts for ETPs and Structured 
Products because the discounts are available equally to all issuers 
listing multiple products in those categories on the Exchange during a 
calendar year. As noted, the Exchange believes that the proposed 
discounts are designed to incentivize issuers to list new Products, 
transfer existing Products to the Exchange, and maintain their listings 
on the Exchange, which the Exchange believes will enhance competition 
both among issuers and listing venues, to the benefit of investors.
    The proposal does not unfairly discriminate between issuers by 
offering a discount to issuers that transfer a High Volume Product 
after January 1, 2020. Competing markets similarly offer incentives to 
issuers to either maintain a listing or transfer additional listings. 
For instance, Cboe BZX provides a more favorable annual fee to both 
legacy listings and transfers by capping the annual fee it charges ETPs 
listed prior to January 1, 2019 or that transferred from another 
national securities exchange at $4,000.\19\ Moreover, the Exchange 
notes that a competing market has the ability to defer or waive all or 
any part of its annual fees for listings and that the Exchange lacks 
similar discretionary authority.\20\
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    \19\ See Cboe BZX Rule 14.13(b)(2)(C)(i).
    \20\ See Cboe BZX Rule 14.13(b)(2)(D).
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    The proposed Product Family Discounts are not unfairly 
discriminatory. The Exchange proposes a discount proportionate to the 
number of Products listed that increases by a uniform 2.5% in order to 
attract new listings of ETPs and Structured Products to the Exchange. 
Although the proposed

[[Page 2479]]

Product Family Discounts would not apply to issuers with less than 5 
listed Products, it would provide an equal incentive for issuers to 
list at least 5 Products on the Exchange in order to qualify for a 
proposed discount.
    Similarly, the proposed High Volume Products discounts are not 
unfairly discriminatory. The High Volume Products discounts would offer 
a discount proportionate to the number of Products listed that 
increases by a uniform 2.5% in order to attract new listings of ETPs 
and Structured Products to the Exchange. The proposed discounts 
incentivize all issuers to list or transfer additional Products to the 
Exchange in order to qualify for the proposed discounts. Any issuer can 
qualify for the minimum 7.5% discount by listing a Product that meets 
the proposed definition of a High Volume Product (which would apply to 
all eligible Products despite length of time listed) or transferring a 
Product to the Exchange after January 1, 2020.
    The Exchange also believes that combining discounts for Product 
Family Discounts and High Volume Products is not unfairly 
discriminatory. As noted, both proposed discounts apply to all issuers 
equally, and the proposal to combine them would not be unfairly 
discriminatory since issuers of all sizes could qualify for, and 
combine, discounts in both proposed categories.
    The Exchange further believes that the proposed alternate way to 
qualify for the current 30% annual fee discount for multiple series of 
securities listed under Rule 5.2-E(j)(6) is not unfairly 
discriminatory. As noted, the current discount would apply equally to 
all similarly situated issuers. Any ETN issuer could qualify for the 
current discount by issuing 5 or more ETNs. Although the current 
discount would not apply to ETN issuers that issue less than 5 ETNs 
based on the same reference asset, the proposal would provide an equal 
incentive for ETN issuers to list at least 5 ETNs on the Exchange in 
order to qualify for the current discount.
    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,\21\ 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 changes would encourage competition because it will 
increase fees for ETPs and Managed Fund Shares and Managed Trust 
Securities and provide additional, cumulative discounts for ETPs and 
Structured Products, designed to encourage issuers to develop and list 
additional products on the Exchange, which the Exchange believes will 
enhance competition both among issuers and listing venues, to the 
benefit of investors. The proposal also ensures that the fees charged 
by the Exchange accurately reflect the services provided and benefits 
realized by listed issuers. 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 fee changes impose a burden 
on competition.
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    \21\ 15 U.S.C. 78f(b)(8).
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    Intramarket Competition. The proposed changes are designed to 
attract additional listings to the Exchange. The Exchange believes that 
the proposed changes would continue to incentivize issuers to develop 
and new products, transfer existing products to the Exchange, and 
maintain listings on the Exchange. The proposed fees and discounts 
would be available to all issuers, and, as such, the proposed change 
would not impose a disparate burden on competition among market 
participants on the Exchange. Although issuers that can list more 
Products would qualify for relatively higher Product Family discounts, 
such issuers would also pay substantially higher aggregate annual fees. 
Moreover, the proposed discounts are relatively modest, ranging from 5% 
to 17.5%. The relative benefit of higher Product Family discounts 
potentially accruing to larger issuers are thus not sufficiently 
disparate as to impose a burden on competition among Exchange issuers. 
Similarly, the current discount for multiple series listed under Rule 
5.2-E(j)(6) would apply equally to all similarly situated issuers, and, 
as such, the proposed change would also 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 fee change can impose any burden on 
intermarket competition. Moreover, the Exchange notes that a competing 
market has the ability to defer or waive all or any part of its annual 
fees for listings and that the Exchange lacks similar discretionary 
authority.\22\ As such, the proposal is a competitive proposal designed 
to enhance pricing competition among listing venues and implement 
pricing for listings that better reflects the revenue and expenses 
associated with listing on the Exchange.
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    \22\ See Cboe BZX Rule 14.13(b)(2)(D).
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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) \23\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \24\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \23\ 15 U.S.C. 78s(b)(3)(A).
    \24\ 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) \25\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \25\ 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

[[Page 2480]]

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-2019-93 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-2019-93. 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-2019-93 and should be submitted 
on or before February 5, 2020.
    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-00480 Filed 1-14-20; 8:45 am]
 BILLING CODE 8011-01-P