Document ID: SEC-2017-1292-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2017-08-02T04:00Z

[Federal Register Volume 82, Number 147 (Wednesday, August 2, 2017)]
[Notices]
[Pages 36012-36017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-16208]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81228; File No. SR-NYSEMKT-2017-43]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Change To Adopt Transaction Fees in 
Connection With the Exchange's Transition to a Fully-Automated Cash 
Equities Market

July 27, 2017.
    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 July 19, 2017, NYSE MKT LLC (the ``Exchange'' or ``NYSE 
MKT'') 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 adopt transaction fees in connection with 
the Exchange's transition to a fully-automated cash equities market. 
The Exchange proposes to implement the rule change on July 24, 2017. 
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.

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
    On January 29, 2015, the Exchange announced the implementation of 
Pillar, which is an integrated trading technology platform designed to 
use a single specification for connecting to the equities and options 
markets operated by the Exchange and its affiliates, NYSE Arca, Inc. 
(``NYSE Arca'') and New York Stock Exchange LLC (``NYSE'').\4\ NYSE 
Arca Equities, Inc. (``NYSE Arca Equities),\5\ which operates the cash 
equities trading platform for NYSE Arca, was the first trading system 
to migrate to Pillar.\6\
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    \4\ See Trader Update dated January 29, 2015, available here: 
https://www.nyse.com/trader-update/history#13517.
    \5\ NYSE Arca Equities is a wholly-owned corporation of NYSE 
Arca and operates as a facility of NYSE Arca.
    \6\ NYSE Arca filed four rule proposals in connection with the 
NYSE Arca implementation of Pillar. See Securities Exchange Act 
Release Nos. 74951 (May 13, 2015), 80 FR 28721 (May 19, 2015) 
(Notice) and 75494 (July 20, 2015), 80 FR 44170 (July 24, 2015) (SR-
NYSEArca-2015-38) (Approval Order of NYSE Arca Pillar I Filing, 
adopting rules for Trading Sessions, Order Ranking and Display, and 
Order Execution); Securities Exchange Act Release Nos. 75497 (July 
21, 2015), 80 FR 45022 (July 28, 2015) (Notice) and 76267 (October 
26, 2015), 80 FR 66951 (October 30, 2015) (SR-NYSEArca-2015-56) 
(Approval Order of NYSE Arca Pillar II Filing, adopting rules for 
Orders and Modifiers and the Retail Liquidity Program); Securities 
Exchange Act Release Nos. 75467 (July 16, 2015), 80 FR 43515 (July 
22, 2015) (Notice) and 76198 (October 20, 2015), 80 FR 65274 
(October 26, 2015) (SR-NYSEArca-2015-58) (Approval Order of NYSE 
Arca Pillar III Filing, adopting rules for Trading Halts, Short 
Sales, Limit Up-Limit Down, and Odd Lots and Mixed Lots); and 
Securities Exchange Act Release Nos. 76085 (October 6, 2015), 80 FR 
61513 (October 13, 2015) (Notice) and 76869 (January 11, 2016), 81 
FR 2276 (January 15, 2016) (SR-NYSEArca-2015-86) (Approval Order of 
NYSE Arca Pillar IV Filing, adopting rules for Auctions).
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    To effect its transition to Pillar, the Exchange adopted the rule 
numbering framework of the NYSE Arca Equities, Inc. (``NYSE Arca 
Equities'') rules for Exchange cash equities trading on the Pillar 
trading platform.\7\ The Exchange's trading rules for cash equity 
trading on Pillar are based on the trading rules of NYSE Arca 
Equities.\8\ As described in the Trading Rules Filing, with Pillar, the 
Exchange will transition its cash equities trading platform from a 
Floor-based market with a parity allocation model to a fully automated 
price-time priority allocation model that trades all NMS Stocks.
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    \7\ See Securities Exchange Act Release No. 79242 (November 4, 
2016), 81 FR 79081 (November 10, 2016) (SR-NYSEMKT-2016-97) (Notice 
and Filing of Immediate Effectiveness of Proposed Rule Change) (the 
``Framework Filing''). The rules applicable to cash equities trading 
on Pillar are denoted with the letter ``E''. Additionally, the 
Exchange filed a proposed rule change to support Exchange trading of 
securities listed on other national securities exchanges on an 
unlisted trading privileges basis, including Exchange Traded 
Products (``ETP'') listed on other exchanges. See Securities 
Exchange Act Release No. 79400 (November 25, 2016), 81 FR 86750 
(December 1, 2016) (SR-NYSEMKT-2016-103) (Notice) (the ``ETP Listing 
Rules Filing'').
    \8\ See Securities Exchange Act Release Nos. 80590 (May 4, 
2017), 82 FR 21843 (May 10, 2017) (Approval Order) and 79993 
(February 9, 2017), 82 FR 10814 (February 15, 2017) (SR-NYSEMKT-
2017-01) (Notice) (``Trading Rules Filing''). The Exchange also has 
established market maker obligations when trading on the Pillar 
trading platform. See Securities Exchange Act Release No. 80577 (May 
2, 2017), 82 FR 21446 (May 8, 2017) (SR-NYSEMKT-2017-04) (Approval 
Order) (``DMM Obligations Filing''). In addition, the Exchange will 
introduce a delay mechanism on Pillar that will add the equivalent 
of 350 microseconds of latency to inbound and outbound order 
messages. See Securities Exchange Act Release Nos. 80700 (May 16, 
2017), 82 FR 23381 (May 22, 2017) (SR-NYSEMKT-2017-05) (Approval 
Order) and 79998 (February 9, 2017), 82 FR 10828 (February 15, 2017) 
(SR-NYSEMKT-2017-05) (Notice).
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    In connection with this transition, the Exchange proposes to amend 
its Price List to adopt a new pricing model for trading on the Pillar 
platform.
    The proposed changes would apply to transactions executed in all 
trading sessions in securities priced at or above and below $1.00.
    The Exchange proposes to implement these changes effective July 24, 
2017.
Proposed Rule Change
    The Exchange proposes the following transaction fees for trading on 
its Pillar trading platform.
    The Exchange also proposes to add the following legend immediately 
before those current fees and credits in the

[[Page 36013]]

current fee schedule that would no longer be applicable when trading on 
the Pillar platform begins: ``The following Fees and Credits are not 
Applicable to Trading on the Pillar Trading Platform.'' The Exchange 
believes that the proposed legend would clarify which fees and credits 
in the current fee schedule would not be applicable to trading on the 
Pillar platform, and thus promote transparency regarding which rules 
would govern trading on the Exchange once it transitions to Pillar.
General Information Applicable to the Price List
    The Exchange proposes to summarize general information applicable 
to fees for the Pillar trading platform in three bullets under the 
first heading in the Price List titled ``Pillar Trading Platform.''
    The first bullet would provide that rebates are indicated by 
parentheses.
    The second bullet would provide that, for purposes of determining 
transaction fees and credits based on requirements based on quoting 
levels, average daily volume (``ADV''), and consolidated ADV 
(``CADV''), the Exchange may exclude shares traded any day that (1) the 
Exchange is not open for the entire trading day and/or (2) a disruption 
affects an Exchange system that lasts for more than 60 minutes during 
regular trading hours. The second proposed bullet would reproduce the 
language in footnote 6 of the current Price List.
    Finally, the Exchange would state that Electronic Designated Market 
Maker (``eDMM'') \9\ liquidity credits based on quoting in Exchange-
listed securities in the current month will include scheduled early 
closing days but will not include days involving one or both of the 
events described in proposed bullet two described above. Once again, 
the language on the third proposed bullet would reproduce language in 
footnote 7 of the current Price List.
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    \9\ See note 10, infra.
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Transaction Fees
    The Exchange proposes the following transactions fees for all 
transactions other than transactions by an eDMM in securities assigned 
to an eDMM under heading I titled ``Transaction Fees (other than for 
Transactions by an eDMM in Securities Assigned to an eDMM)'':
Liquidity Adding Displayed Order Fees
    The Exchange does not propose to charge a fee for executions on the 
Exchange of displayed orders that add liquidity to the Exchange. The 
proposal would apply to securities priced at or above $1.00 as well as 
below $1.00.
Liquidity Adding Non-Displayed Order Fees
    For securities priced at or above $1.00, the Exchange proposes to 
charge $0.0002 per share for executions on the Exchange of non-
displayed orders that add liquidity to the Exchange.
    For securities priced below $1.00, the Exchange proposes to charge 
0.25% of the total dollar value of the transaction for executions on 
the Exchange of non-displayed orders that add liquidity to the 
Exchange.
Liquidity Removing Order Fees
    The Exchange proposes to charge $0.0002 per share for securities 
priced at or above $1.00 and 0.25% of the total dollar value of the 
transaction for securities priced below $1.00 for all executions on the 
Exchange that remove liquidity from the Exchange. As noted below, the 
same fees would apply to eDMM transactions that remove liquidity from 
the Exchange.
Executions at the Open and Close
    For securities priced at or above $1.00 as well as below $1.00, the 
Exchange proposes to charge a fee of $0.0005 per share for executions 
at the open and close.
eDMM Fees and Credits
    Following the transition to Pillar, Exchange DMMs will be 
electronic access only,\10\ and the Exchange proposes to refer to them 
as ``eDMMs'' in the Price List and in this Filing. The Exchange 
proposes new fees and credits applicable to eDMM on transactions in 
securities assigned to the eDMM under heading II in the Price List 
titled ``Fees and Credits Applicable to eDMMs on Transactions in 
Securities Assigned to an eDMM.''
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    \10\ See DMM Obligations Filing, 82 FR at 21446. In addition, 
because DMMs in Pillar will not be Floor-based individuals who 
operate within a DMM unit of a member organization, the Exchange 
will not assign securities at the natural person level and will not 
require DMMs to facilitate the opening, reopening, or closing of 
assigned Exchange-listed securities. Further, the DMM rules do not 
entitle e-DMMs to a parity allocation of executions, and also would 
not subject DMMs to heightened capital requirements. Finally, DMMs 
would continue to be subject to rules governing allocation of 
securities and combination of DMM units. See generally id. The 
registration and obligations of DMMs are set forth in Rule 7.24E.
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    Immediately below the new proposed heading, the Exchange proposes 
to summarize certain general information applicable to eDMM fees and 
credits in three introductory bullets.
    The first bullet would provide that, unless an eDMM qualifies for a 
higher rebate, eDMMs in NYSE American \11\-listed securities will 
receive the specified rebates based on the specified quoting 
requirement for securities at or above $1.00.
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    \11\ Effective on or before July 24, 2017, the Exchange's name 
will change to NYSE American LLC. The Exchange has filed to amend, 
among other documents, the Price List to reflect the name change. 
See Securities Exchange Act Release No. 80283 (March 21, 2017), 82 
FR 15244 (March 21, 2017). Because the proposed amendments to the 
Price List described in this proposed rule change will be effective 
after the Exchange changes its name, the Exchange proposes to 
reflect the new name in the proposed Price List.
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    The second bullet would define ``Core Trading Hours'' to mean the 
hours of 9:30 a.m. Eastern Time through 4:00 p.m. Eastern Time or such 
other hours as may be determined by the Exchange from time to time. The 
proposed bullet is consistent with Rule 1.1E(j), which defines ``Core 
Trading Hours.''
    Finally, the third bullet would provide that, for each eDMM to 
qualify for the specified credits, each eDMM must meet the heightened 
quoting obligations set forth in Rule 7.24E(c).\12\
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    \12\ Rule 7.24E(c) describes the obligations of DMMs on the 
Pillar Trading Platform and provides that, in addition to meeting 
the Market Maker obligations set forth in Rule 7.23E, DMMs are 
required to maintain a bid or an offer at the National Best Bid and 
National Best Offer (``NBBO'' or ``inside'') at least 25% of the day 
as measured across all Exchange-listed securities that have been 
assigned to the DMM. Rule 7.24E(c) further provides that time at the 
inside is calculated as the average of the percentage of time the 
DMM unit has a bid or offer at the inside and that orders entered by 
the DMM that are not displayed would not be included in the inside 
quote calculation.
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    The Exchange proposes three new subheadings A through C setting 
forth eDMM transaction fee and credits, eDMM monthly credits, and 
market data revenue.
Transaction Fees and Credits
    Beneath a new subheading A titled ``Transaction Fees and Credits,'' 
the Exchange would summarize eDMM fees and credits for transactions 
that (1) add liquidity to the Exchange, (2) remove liquidity from the 
Exchange, and (3) for executions at the open and close of trading, as 
follows:
    For transactions in securities with a price at or above $1.00, the 
Exchange proposes a rebate to eDMMs of $0.0045 per share for displayed 
transactions that add liquidity to the Exchange.
    The Exchange does not propose to charge for non-displayed 
transactions that add liquidity to the Exchange in securities with a 
price at or above $1.00.
    For transactions in securities with a price below $1.00, the 
Exchange proposes a rebate of .25% of total dollar value for displayed 
transactions that add liquidity to the Exchange.

[[Page 36014]]

    The Exchange does not propose to charge for non-displayed 
transactions that add liquidity to the Exchange in securities with a 
price below $1.00.
    The Exchange does not propose to charge for executions at the open 
and close for securities priced at or above $1.00 as well as below 
$1.00.
    The Exchange proposes to charge $0.0002 per share for securities 
priced at or above $1.00 and 0.25% of the total dollar value of the 
transaction for securities priced below $1.00 for all eDMM executions 
on the Exchange that remove liquidity from the Exchange.
Monthly Credits
    Beneath a new subheading B titled ``Monthly Credits,'' the Exchange 
proposes that, in addition to the current rate on transactions, the 
Exchange would provide additional per security credits for eDMMs if 
certain requirements are met.
    First, the Exchange proposes a $100 per security credit in a month 
that a security is assigned to the eDMM for securities whose CADV 
during the previous month would be less than 50,000 shares per day and 
for which the eDMM quotes at the NBBO at least 25% of the time during 
Core Trading Hours for that symbol in that month. The credit would be 
prorated to the number of trading days in a month that a security is 
assigned to the eDMM.
    Second, in addition to the current rate on transactions and the 
$100 monthly credit, the Exchange proposes to provide a $500 per 
security credit in a month that a security is assigned to an eDMM, for 
each security for which the eDMM quotes at the NBBO at least 25% of the 
time during Core Trading Hours for that symbol in that month up to a 
maximum of 20 symbols per month per eDMM.
Market Data Revenue
    Under new heading C titled ``Market Data Revenue,'' the Exchange 
proposes that, for securities with a trading price either at, above or 
below $1.00, each eDMM would receive all of the market data quote 
revenue (the ``Quoting Share'') in their assigned securities received 
by the Exchange from the Consolidated Tape Association under the 
Revenue Allocation Formula of Regulation NMS in any month in which the 
eDMM quotes at the NBBO at least 25% of time during Core Trading Hours.
Routing Fees for All ETP Holders
    Under new heading III titled ``Fees for Routing for all ETP 
Holders,'' the Exchange proposes the following fees for routing, which 
would be applicable to all orders that are routed, including orders 
from eDMMs in their assigned NYSE American-listed securities.
    For executions in securities with a price at or above $1.00 that 
route to and execute on Away Markets,\13\ the Exchange proposes to 
charge a fee of $0.0016 per share for executions in an Away Market 
auction, and a fee of $0.0030 for all other executions.
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    \13\ The term ``Away Market'' is defined in Rule 1.1E(ff) to 
mean any exchange, alternative trading system (``ATS'') or other 
broker-dealer (1) with which the Exchange maintains an electronic 
linkage, and (2) that provides instantaneous responses to orders 
routed from the Exchange.
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    For securities priced below $1.00 that route to and execute on Away 
Markets, the Exchange proposes to charge a fee of 0.30% of the total 
dollar value of the transaction for executions in an Away Market 
auction as well as all other executions.
Off-Hours Trading Facility
    Following the transition to Pillar, trading on the Exchange's Off-
Hours Trading Facility will be governed by Rule 7.39E for trading in 
aggregate-price coupled orders, which is also known as ``Crossing 
Session II.'' The Exchange currently charges a fee of $0.0004 per share 
for multiple stock aggregate priced buy and sell orders in Crossing 
Session II. Fees for such executions are currently capped at $100,000 
per month per member organization.
    The Exchange proposes to retain this fee structure without any 
substantive differences for aggregate-price coupled orders executed in 
the Off-Hours Trading Facility described in Rule 7.39E. Because such 
trading would be pursuant to a Pillar rule, the Exchange proposes to 
set forth the fee under a new heading IV titled ``Fees for Off-Hours 
Trading Facility'' in the proposed Price List and omit any reference to 
Crossing Session II.

Port Fees

    Under proposed new heading V titled ``Port Fees,'' the Exchange 
proposes fees for the use of ports that (1) that provide connectivity 
to the Exchange's trading systems (i.e., ports for entry of orders and/
or quotes (``order/quote entry ports'')), and (2) allow for the receipt 
of ``drop copies'' of order or transaction information (``drop copy 
ports'' and, together with order/quote entry ports, ``ports'').\14\
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    \14\ Firms receive confirmations of their orders and receive 
execution reports via the order/quote entry port that is used to 
enter the order or quote. A ``drop copy'' contains redundant 
information that a firm chooses to have ``dropped'' to another 
destination (e.g., to allow the firm's back office and/or compliance 
department, or another firm--typically the firm's clearing broker--
to have immediate access to the information). Drop copies can only 
be sent via a drop copy port. Drop copy ports cannot be used to 
enter orders and/or quotes.
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    For order/quote entry ports, the Exchange proposes to charge $250 
per port per month. The fee would apply to all market participants. The 
Exchange proposes not to charge for order/quote entry ports until 
October 1, 2017. Thereafter, the Exchange proposes to implement the 
$250 per port per month fee.
    Similarly, the Exchange proposes to charge $250 per drop copy port 
per month. The fee would apply to all market participants. 
Additionally, the Exchange proposes to specify that only one fee per 
drop copy port would apply, even if the port receives drop copies from 
multiple order/quote entry ports.
    The Exchange proposes not to charge for drop copy ports until 
October 1, 2017. Thereafter, the Exchange proposes to implement the 
$250 per port per month fee.

Equity Trading Permit (``ETP'') Fee

    The Exchange proposes a new heading VI titled ``ETP Fee.'' The 
Exchange does not propose to charge a fee to obtain an ETP.\15\
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    \15\ See Rule 1.1E(m) (definition of ETP).
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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,\16\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\17\ 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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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(4) & (5).
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Transaction Fees

Liquidity Adding Displayed Order Fees
    The Exchange believes that not charging a fee for liquidity adding 
displayed orders would encourage price discovery and enhance market 
quality by encouraging more competitive pricing of displayed orders. 
The Exchange believes that not charging a fee for liquidity adding 
displayed orders is equitable and not unfairly discriminatory because 
it is designed to facilitate execution of, and enhance

[[Page 36015]]

trading opportunities for, displayable orders, thereby further 
incentivizing entry of displayed orders on the Exchange.
Liquidity Adding Non-Displayed Order Fees
    The Exchange believes that charging $0.0002 per share for 
securities priced at or above $1.00 and 0.25% of the total dollar value 
of the transaction for securities priced below $1.00 for executions on 
the Exchange of non-displayed orders that add liquidity to the Exchange 
is reasonable and not unfairly discriminatory because the proposed rate 
would be lower than the fee charged by other exchanges.\18\ The 
Exchange further believes that the proposed fee increase is equitable 
and not unfairly discriminatory because it would apply to all non-
displayed orders that add liquidity to the Exchange.
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    \18\ IEX, for instance, charges a fee of $0.0009 per share for 
providing non-displayed liquidity for securities priced at or above 
$1.00 and 0.30% of TDVT (i.e., the total dollar value of the 
transaction calculated as the execution price) for securities below 
$1.00. See Investors Exchange Fee Schedule 2017, available at 
https://www.iextrading.com/trading/fees/.
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Liquidity Removing Order Fees
    The Exchange believes that charging $0.0002 per share for 
securities priced at or above $1.00 and 0.25% of the total dollar value 
of the transaction for securities priced below $1.00 for executions on 
the Exchange that remove liquidity, including eDMM transactions, is 
reasonable and consistent with the Act. The Exchange notes that the 
proposed fees are less than the comparable fees on other exchanges.\19\
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    \19\ For example, IEX charges a fee of $0.0009 per share for 
taking non-displayed liquidity for securities priced at or above 
$1.00 and 0.30% of TDVT (for securities below $1.00. See Investors 
Exchange Fee Schedule 2017, available at https://www.iextrading.com/trading/fees/.
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Executions at the Open and Close
    The Exchange believes that charging $0.0005 per share for 
executions at the open and close for all securities would encourage 
order flow to maintain the quality of the Exchange's closing auctions 
for the benefit of all market participants. The Exchange's closing 
auction is a recognized industry benchmark,\20\ and member 
organizations receive a substantial benefit from the Exchange in 
obtaining high levels of executions at the Exchange's closing price on 
a daily basis.
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    \20\ For example, the pricing and valuation of certain indices, 
funds, and derivative products require primary market prints.
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eDMM Fees and Credits

Transaction Fees and Credits
    The Exchange believes that the proposed rebate of $0.0045 per share 
for eDMM displayed transactions that add liquidity to the Exchange in 
securities with a price at or above $1.00 and the proposed rebate of 
.25% of total dollar value for eDMM displayed transactions that add 
liquidity to the in securities with a price below $1.00 are reasonable 
and not unfairly discriminatory. To qualify for the proposed adding 
liquidity, monthly and market data credits, each eDMM must satisfy the 
heightened quoting obligation in for eDMMs in Rule 7.24E(c), which 
requires the eDMM to maintain a bid or an offer at the NBBO at least 
25% of the day as measured across all Exchange-listed securities that 
have been assigned to the eDMM. The Exchange believes that the proposed 
rebates based on the heightened quoting obligations in Rule 7.24E(c) 
would encourage additional displayed liquidity on the Exchange in 
Exchange-listed securities. Further, the Exchange believes that the 
proposed rebates are equitably allocated and not unfairly 
discriminatory because they would apply equally to all eDMMs.
    Further, the Exchange believes that not charging eDMMs for non-
displayed transactions that add liquidity to the Exchange in all 
securities is reasonable and not unfairly discriminatory because it 
would encourage additional non-displayed liquidity on the Exchange in 
Exchange-listed securities. The Exchange believes that not charging 
eDMMs for adding non-displayed liquidity is not unfairly discriminatory 
because it would apply equally to all eDMMs. In addition, eDMMs have 
higher quoting obligations than other market participant, which 
contributes to price discovery and benefits all market participants. As 
such, it is equitable and not unfairly discriminatory to offer eDMMs 
fees that are relatively lower than other market participants that do 
not have such obligations.
    The Exchange believes that not charging eDMMs for executions at the 
open or close in all securities does not constitute an inequitable 
allocation of dues, fees and other charges as it provides the eDMMs 
appropriate incentives to act as liquidity providers and would support 
them in performing their market making function in the Exchange's new 
automated price-time priority allocation market model on Pillar.
Monthly Credits
    The Exchange believes that the proposed $100 per security credit 
and the proposed prorating is reasonable in light of lower trading 
volumes in the applicable securities relatively [sic] to those 
securities that have a consolidated ADV of less than 50,000 shares. The 
Exchange believes it is appropriate to prorate the rebate to the number 
of trading days because it would provide a nexus between, and directly 
tie, the rebate paid to a eDMM and the number of trading days for which 
an eDMM has regulatory responsibility for a stock pursuant to Rule 
7.24E(c). The Exchange also believes that the proposal is equitable and 
not unfairly discriminatory because all eDMMs would be treated the 
same. The Exchange believes that the proposed additional $500 per 
security credit is reasonable and not unfairly discriminatory for the 
same reasons.
Market Data Revenue
    The Exchange believes that the proposed DMM quoting requirement at 
the NBBO at least 25% of the time during Core Trading Hours in order to 
receive in each applicable security 100% of the Quoting Share is 
reasonable because the proposed requirement would improve quoting and 
increase adding liquidity across thinly traded securities where there 
may be fewer liquidity providers. Moreover, the requirement is 
equitable and not unfairly discriminatory because it would apply 
equally to all eDMMs. The Exchange notes that the Quoting Share is in 
addition to the eDMM rebate for providing liquidity and the monthly 
credit payable to eDMMs for securities with an ADV of less than 50,000 
shares during the billing month.
Routing Fees
    The Exchange believes that its proposed routing fees are a 
reasonable and not an unfairly discriminatory allocation of fees 
because the fee would be applicable to all ETP Holders in an equivalent 
manner. Moreover, the proposed fees for routing shares are also 
reasonable and not unfairly discriminatory because they are consistent 
with fees charged on other exchanges. In particular, the Exchange's 
proposal to charge a fee of $0.0016 per share for executions that route 
to and execute on Away Market auctions in securities priced at or above 
$1.00 is reasonable and not unfairly discriminatory because it is 
consistent with fees charged on other exchanges.\21\
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    \21\ For example, the NASDAQ Stock Market (``NASDAQ'') charges a 
rate of $0.0016 per executed share for Tier F. See NASDAQ Fee 
Schedule at http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.

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[[Page 36016]]

    The proposal to charge $0.0030 for all other executions in 
securities priced at or above $1.00 that route to and execute on Away 
Market auctions is reasonable and not unfairly discriminatory because 
it is consistent with fees charged on other exchanges.\22\
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    \22\ For example, NASDAQ charges a rate of $0.0030 to remove 
liquidity for shares executed at or above $1.00. See NASDAQ Fee 
Schedule at http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
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    Finally, the proposal to charge a fee of 0.30% of total dollar 
value for transactions in securities with a price under $1.00 are 
reasonable and not unfairly discriminatory because it is consistent 
with fees charged on other exchanges.\23\
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    \23\ NASDAQ, for example, charges a fee of 0.30% (i.e. 30 basis 
points) of total dollar volume to remove liquidity for shares 
executed below $1.00. See NASDAQ Fee Schedule at http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
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Off-Hours Trading Facility
    The Exchange believes that retaining the current fee structure for 
off-hours aggregate-price coupled orders in Pillar without substantive 
change and moving the fee to the new Pillar section of the Price List 
utilizing updated references is reasonable because the proposed changes 
are designed to provide greater specificity and clarity to the Price 
List, reduce potential confusion, and make the Exchange's rules easier 
to navigate, 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.
Port Fees
    The Exchange believes that the proposed rates for order/quote entry 
ports and drop copy ports are reasonable because the fees charged for 
both types of ports are expected to permit the Exchange to offset, in 
part, its connectivity costs associated with making such ports 
available, including costs based on software and hardware enhancements 
and resources dedicated to gateway development, quality assurance, and 
support. The proposed port fees are also reasonable because the 
proposed fees are comparable to the rates charged by other venues, and 
in some cases are less expensive than many of the Exchange's 
competitors.\24\
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    \24\ For example, NASDAQ charges $575 for order entry ports and 
$550 for DROP ports. See NASDAQ Fee Schedule at http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2#connectivity. 
Also, BZX charges $550 per month per pair for logical ports. 
Additionally, EDGA and EDGX each charge $550 per port per month.
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    The Exchange believes that the proposed fee for order/quote entry 
ports is equitable and not unfairly discriminatory because charges for 
order/entry ports being [sic] will be based on the number of ports 
utilized. This aspect of the proposed rule change is also equitable and 
not unfairly discriminatory because it will apply on an equal basis for 
all ports on the Exchange. The Exchange also believes that these 
changes to the fees are equitable and not unfairly discriminatory 
because they would apply to all users of order/quote entry ports on the 
Exchange.
    The Exchange believes that the proposed fee for drop copy ports is 
reasonable because it will result in a fee being charged for the use of 
technology and infrastructure provided by the Exchange. In this regard, 
the Exchange believes that the rate is reasonable because it is 
comparable to the rate charged by other exchanges for drop copy 
ports.\25\
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    \25\ See note 24, supra.
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    The Exchange also believes that it is reasonable that only one fee 
per drop copy port would apply, even if the port receives drop copies 
from multiple order/quote entry ports, because the purpose of drop 
copies is such that a trading unit's or a firm's entire order and 
execution activity is captured. The Exchange believes that the proposed 
new fee for drop copy ports is equitable and not unfairly 
discriminatory because it will apply on an equal basis to all users of 
drop copy ports and to all drop copy ports on the Exchange. In this 
regard, all firms will be able to request drop copy ports, as would be 
the case with order/quote entry ports.
ETP Fee
    The Exchange believes that not charging member organization [sic] a 
fee to obtain an ETP on the Exchange is reasonable because it may 
incentivize broker-dealers to become Exchange member organizations and 
to direct order flow to the Exchange, which benefits all market 
participants through increased liquidity and enhanced price discovery.
    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 [sic]

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\26\ 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 
changes would encourage the submission of additional liquidity to a 
public exchange, thereby promoting price discovery and transparency and 
enhancing order execution opportunities for member organizations. The 
Exchange believes that this could promote competition between the 
Exchange and other execution venues, including those that currently 
offer similar order types and comparable transaction pricing, by 
encouraging additional orders to be sent to the Exchange for execution.
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    \26\ 15 U.S.C. 78f(b)(8).
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    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive or rebate opportunities available at other venues to be more 
favorable. In such an environment, the Exchange must continually adjust 
its fees and rebates to remain competitive with other exchanges and 
with alternative trading systems that have been exempted from 
compliance with the statutory standards applicable to exchanges. 
Because competitors are free to modify their own fees and credits in 
response, and because market participants may readily adjust their 
order routing practices, the Exchange believes that the degree to which 
fee changes in this market may impose any burden on competition is 
extremely limited. As a result of all of these considerations, the 
Exchange does not believe that the proposed changes will impair the 
ability of member organizations or competing order execution venues to 
maintain their competitive standing in the financial markets.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \27\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \28\ thereunder, because it establishes a due,

[[Page 36017]]

fee, or other charge imposed by the Exchange.
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    \27\ 15 U.S.C. 78s(b)(3)(A).
    \28\ 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) \29\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \29\ 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-NYSEMKT-2017-43 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-NYSEMKT-2017-43. 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-NYSEMKT-2017-43 and should 
be submitted on or before August 23, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-16208 Filed 8-1-17; 8:45 am]
 BILLING CODE 8011-01-P