Document ID: SEC-2018-1587-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE National, Inc.
Posted Date: 2018-10-12T04:00Z

[Federal Register Volume 83, Number 198 (Friday, October 12, 2018)]
[Notices]
[Pages 51750-51752]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-22209]

[[Page 51750]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84380; File No. SR-NYSENAT-2018-22]

Self-Regulatory Organizations; NYSE National, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its 
Schedule of Fees

October 5, 2018.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on September 28, 2018, NYSE National, Inc. (``Exchange'' or 
``NYSE National'') filed with the Securities and Exchange Commission 
(``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 Rebates to 
(1) revise the requirements to qualify for the Adding Tier 2 credits; 
(2) adopt a new Adding Tier 3 that would set forth fees for displayed 
and non-displayed orders that add liquidity to the Exchange; and (3) 
eliminate waiver of the volume requirements for the current Taking 
Tier. The Exchange proposes to implement the rule change on October 1, 
2018. 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 Rebates to 
(1) revise the requirements to qualify for the Adding Tier 2 credits; 
(2) adopt a new Adding Tier 3 that would set forth fees for displayed 
and non-displayed orders that add liquidity to the Exchange; and (3) 
eliminate waiver of the volume requirements for the current Taking 
Tier.
    The Exchange proposes to implement the rule change on October 1, 
2018.
Adding Tier 2 Requirements
    Currently, under Adding Tier 2, the Exchange offers the following 
fees for transactions in stocks with a per share price of $1.00 or more 
when adding liquidity to the Exchange if the ETP Holder quotes at least 
5% of the NBBO \4\ in 1,000 or more symbols on an average daily basis, 
calculated monthly:
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    \4\ To satisfy the 5% requirement, ETP Holders must maintain a 
bid or an offer at the NBB or the NBO for at least 5% of the trading 
day in round lots in a security for that security to count toward 
the tier requirement. The terms ``NBB,'' ``NBO,'' ``NBBO,'' and 
``BBO'' are defined in NYSE National Rule 1.1.
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     $0.0005 per share for adding displayed orders;
     $0.0005 per share for orders that set a new Exchange BBO; 
\5\
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    \5\ The term ``BBO'' is defined in Rule 1.1 to mean the best bid 
or offer that is a Protected Quotation on the Exchange. The term 
``BB'' means the best bid that is a Protected Quotation on the 
Exchange and the term ``BO'' means the best offer that is a 
Protected Quotation on the Exchange.
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     $0.0007 per share for adding non-displayed orders; and
     $0.0005 per share for adding MPL orders.
    The Exchange proposes to revise the requirements for the Adding 
Tier 2 fees and provide alternative requirements to qualify for the 
fees.
    First, in addition to requiring ETP Holders to quote at least 5% of 
the NBBO in 1,000 or more symbols on an average daily basis, calculated 
monthly, the Exchange proposes that ETP Holders also execute 0.25% or 
more Adding average daily volume (``ADV'') as a percentage of U.S. 
consolidated ADV (``CADV'').
    Second, the Exchange proposes that ETP Holders can alternatively 
qualify for the above Adding Tier 2 fees when adding liquidity to the 
Exchange if the ETP Holder quotes at least 5% of the NBBO in 2,500 or 
more symbols on an average daily basis, calculated monthly and execute 
0.10% or more Adding ADV as a percentage of U.S. CADV. The proposed 5% 
requirement would be the same as the current 5% requirement described 
in footnote **.
    For example, in a given month of 20 trading days, if an ETP Holder 
quotes at least 5% of the NBBO in 3,000 securities each day for the 
first 10 days and quotes at least 5% of the NBBO in 2,400 securities 
each day for the last 10 days, the ETP Holder would have 2,700 
securities on an average daily basis that meet the 5% NBBO requirement 
for the billing month. If that same ETP holder executes 10.5 million 
shares Adding ADV in that same month where U.S. CADV is 7 billion 
shares, or 0.15% as a percentage of U.S. CADV, the qualifications for 
Adding Tier 2 would be met.
Proposed Adding Tier 3
    The Exchange proposes a new Adding Tier 3 for displayed and non-
displayed orders in securities priced at or above $1.00. Current Adding 
Tier 3 would be re-named ``Adding Tier 4.''
    Under proposed Adding Tier 3, the Exchange would offer the 
following fees for transactions in stocks with a per share price of 
$1.00 or more when adding liquidity to the Exchange if the ETP Holder 
quotes at least 5% of the NBBO \6\ in 2000 or more symbols on an 
average daily basis, calculated monthly, and executes 0.10% or more 
Adding ADV as a percentage of U.S. CADV:
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    \6\ See note 5, supra.
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     $0.0009 per share for adding displayed orders;
     $0.0009 per share for orders that set a new Exchange BBO;
     $0.0011 per share for adding non-displayed orders; and
     $0.0005 per share for MPL orders.
    For example, in a given month of 20 trading days, if an ETP Holder 
quotes at least 5% of the NBBO in 2,400 securities each day for the 
first 10 days and quotes at least 5% of the NBBO in 2,000 securities 
each day for the last 10 days, the ETP Holder would have 2,200 
securities on an average daily basis that meet the 5% NBBO requirement 
for the billing month. If that same ETP holder executes 10.5 million 
shares Adding ADV in that same month where U.S. CADV was 7 billion 
shares, or 0.15% as a percentage of U.S. CADV, that ETP holder would 
meet the qualifications for Adding Tier 3.
Elimination of Volume Requirement Waiver
    As reflected in footnote * of the Schedule of Fees and Rebates, the 
volume requirements for the current Taking Tier is waived. The Exchange

[[Page 51751]]

proposes to eliminate the waiver for the Taking Tier. To effect this 
change, the Exchange would delete ``Taking Tier'' from footnote *.
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any problems that ETP 
Holders would have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\8\ in 
particular, because it provides for the equitable allocation of 
reasonable dues, fees, and other charges among its members, issuers and 
other persons using its facilities and does not unfairly discriminate 
between customers, issuers, brokers or dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) & (5).
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Adding Tier 2 Requirements
    The Exchange believes that requiring ETP Holders to execute 0.25% 
or more Adding average daily volume as a percentage of U.S. CADV in 
addition to quoting at least 5% of the NBBO in 1,000 or more symbols on 
an average daily basis, calculated monthly, in order to qualify for the 
Adding Tier 2 fees is reasonable, equitable and not unfairly 
discriminatory because it would encourage additional liquidity on the 
Exchange and because members and member organizations benefit from the 
greater amounts of liquidity that will be present on the Exchange. The 
Exchange believes the proposed changes are equitable and not unfairly 
discriminatory because it would continue to encourage member 
organizations to send orders, thereby contributing to robust levels of 
liquidity, which benefits all market participants. The proposed changes 
will encourage the submission of additional liquidity to a national 
securities exchange, thereby promoting price discovery and transparency 
and enhancing order execution opportunities for member organizations 
from the substantial amounts of liquidity that are present on the 
Exchange. Moreover, the proposed changes are equitable and not unfairly 
discriminatory because they would apply equally to all qualifying 
member organizations that add liquidity to the Exchange and quote at 
the NBBO. The Exchange notes that ETP Holders will now have two ways to 
meet the requirements to qualify for Adding Tier 2, one of which is 
described below.
    Similarly, the Exchange believes that providing an alternative way 
for ETP Holders to qualify for the Adding Tier 2 rates when adding 
liquidity to the Exchange if the ETP Holder quotes at least 5% of the 
NBBO in 2,500 or more symbols on an average daily basis, calculated 
monthly and 0.10% or more Adding ADV as a percentage of U.S. CADV is 
reasonable, equitable and not unfairly discriminatory because the 
proposed change would also encourage the submission of additional 
liquidity to a national securities exchange, thereby contributing to 
robust levels of liquidity, which benefits all market participants. The 
requirement for a higher number of symbols quoting at least 5% of the 
NBBO will encourage ETP Holders to quote at the NBBO, which contributes 
to price discovery and benefits all market participants. Once again, 
the proposed change is equitable and not unfairly discriminatory 
because the alternate qualification method would apply equally to all 
similarly situated ETP Holders that add liquidity to the Exchange and 
quote at the NBBO.
Proposed Adding Tier 3
    The Exchange believes that the proposed Adding Tier 3 fees for ETP 
Holder with at least 5% of the NBBO in 2000 or more symbols on an 
average daily basis, calculated monthly, and 0.10% or more Adding ADV 
as a percentage of U.S. CADV are reasonable because the proposed tiers 
would further contribute to incentivizing ETP Holders to provide 
increased displayed liquidity on the Exchange, benefiting all ETP 
Holders. In addition, the Exchange believes that the proposed Adding 
Tier 3 fees are equitable and not unfairly discriminatory as all 
similarly situated market participants who add liquidity to the 
Exchange and quote at the NBBO will be subject to the same fees on an 
equal and non-discriminatory basis.
Elimination of Volume Requirement Waiver
    The Exchange believes it is reasonable to eliminate waiver of the 
Taking Tier volume requirements because the waiver [sic] will encourage 
additional liquidity on the Exchange and because members and member 
organizations benefit from the greater amounts of liquidity that will 
be present on the Exchange. The proposed elimination of the waiver is 
not unfairly discriminatory because it will apply equally to all 
similarly situated ETP Holders that add liquidity to the Exchange. The 
Exchange notes that the requirement, 50,000 Adding ADV, is much smaller 
when compared with the Adding ADV requirements for Adding Tier 2, 
Adding Tier 3, and Adding Tier 4.
    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,\9\ 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 ETP Holders. 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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    \9\ 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 ETP Holders or competing order execution venues to maintain 
their competitive standing in the financial markets.

[[Page 51752]]

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

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

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \10\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \11\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \12\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSENAT-2018-22 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-NYSENAT-2018-22. 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; the Commission does not edit 
personal identifying information from submissions. 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-NYSENAT-2018-22 and should 
be submitted on or before November 2, 2018.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-22209 Filed 10-11-18; 8:45 am]
 BILLING CODE 8011-01-P