[Federal Register Volume 83, Number 65 (Wednesday, April 4, 2018)]
[Notices]
[Pages 14528-14530]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06775]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82965; File No. SR-NYSE-2018-10]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Its Price List

March 29, 2018.
    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 March 16, 2018, New York Stock Exchange LLC (``NYSE'' 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 Price List for equity 
transactions in stocks with a per share stock price of $1.00 or more to 
introduce (1) a new fee for Floor broker executions at the open, and 
(2) different charges for Discretionary e-Quotes (``d-Quotes'') above 
the first 750,000 average daily volume (``ADV'') of aggregate 
executions at the close based on the time of d-Quote entry. The 
Exchange proposes to implement these changes to its Price List 
effective April 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 Price List to introduce (1) a 
new fee for Floor broker executions at the open, and (2) different 
charges for d-Quotes above the first 750,000 ADV of aggregate 
executions at the close based on time of d-Quote entry or modification.
    The proposed changes would only apply to fees and credits in 
transactions in securities priced $1.00 or more.
    The Exchange proposes to implement these changes to its Price List 
effective April 1, 2018.
Executions at the Open
    For securities priced $1.00 or more, the Exchange currently charges 
a fee of $0.0010 per share for executions at the open, subject to a 
monthly fee cap of $30,000 per member organization provided the member 
organization executes an ADV that adds liquidity to the Exchange during 
the billing month (``Adding ADV''), excluding liquidity added by a 
Designated Market Maker, of at least five million shares.
    For securities priced $1.00 or more, the Exchange proposes to 
introduce a fee of $0.0003 per share for executions at the open by 
Floor brokers which, as proposed, would also be subject to the $30,000 
per member organization monthly fee cap for executions at the open.\4\ 
The $0.0010 per share fee for executions at the opening would not be 
changed. DMMs currently are not charged for executions at the opening 
and would continue to not be charged.
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    \4\ The existing pricing for executions at the opening in 
securities priced below $1.00 would remain unchanged (i.e., 0.3% of 
the total dollar value of the transaction).
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Executions at the Close
    For d-Quotes above the first 750,000 ADV of the aggregate of 
executions at the close by a member organization, the Exchange proposes 
new charges differentiated by the last time such d-Quotes are last 
modified.
    Currently, the Exchange does not charge member organizations for 
the first 750,000 ADV of the aggregate of executions at the close for 
d-Quote, Floor broker executions swept into the close, excluding verbal 
interest, and executions at the close, excluding MOC Orders, LOC Orders 
and CO Orders. For d-Quote, Floor broker executions swept into the 
close, excluding verbal interest, and executions at the close, 
excluding MOC Orders, LOC Orders and CO Orders after the first 750,000 
ADV of the aggregate of executions at the close by a member 
organization, the Exchange charges $0.0007 per share.
    The Exchange proposes to continue not to charge member 
organizations for the first 750,000 ADV of the aggregate of executions 
at the close for d-Quote, Floor broker executions swept into the close, 
excluding verbal interest, and executions at the close, excluding MOC 
Orders, LOC Orders and CO Orders.
    The Exchange proposes the following fees differentiated by time of 
entry (or last modification) for d-Quotes at the close after the first 
750,000 ADV of the aggregate of executions at the close by a member 
organization:
     $0.0003 per share for executed d-Quotes last modified \5\ 
by the member organization earlier than 25 minutes before the scheduled 
close of trading.
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    \5\ As set forth in proposed footnote 10 to the Price List, as 
used in the Price List, the phrase ``last modified'' would mean the 
later of the order's entry time or the final modification or 
cancellation time for any d-Quote order with the same broker badge, 
entering firm mnemonic, symbol, and side.
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     $0.0007 per share for executed d-Quotes last modified from 
25 minutes up to but not including 3 minutes before the scheduled close 
of trading.
     $0.0008 per share for executed d-Quotes last modified in 
the last 3 minutes before the scheduled close of trading for firms in 
MOC/LOC Tiers 1 and 2; all other firms, $0.0010 per share.
    All other orders from continuous trading swept into the close would 
continue to be charged the existing rate of $0.0007.
    The Exchange proposes to add a new footnote 9 to the Price List 
that would provide that, for member organizations that execute an ADV 
on the NYSE during a billing month in excess of 750,000 shares, the 
Exchange would determine the average fee applicable to that member 
organization based on all executions at the close for that month and 
would not charge that average fee for executions below the 750,000 ADV.
    The following example demonstrates the operation of the new fee 
structure for executions at the close.
     Assume that Member Organization A has a combined ADV of d-
Quote, Floor broker and other orders executed at the close of 5 million 
shares in a 20 day month, or 100 million shares for the month. Further 
assume that Member Organization A is not at MOC/LOC Tier 1 or 2. Assume 
a regular 4:00 p.m. close of trading and that the firm therefore does 
not qualify for a MOC/LOC Tier.
     Assume further that a total of 75 million shares were d-
Quotes last

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modified before 3:35 p.m., and therefore subject to a fee of $0.0003; 5 
million shares were d-Quotes last modified from 3:35 p.m. and prior to 
3:57 p.m., and therefore subject to a fee of $0.0007; 15 million shares 
were d-Quotes last modified from 3:57 p.m. up to the close., and 
therefore subject to a fee of $0.0010; and 5 million shares were other 
executions at the close, and therefore subject to a fee of $0.0007.
     Member Organization A's combined initial fee for that 
month would be $44,500.00 an average fee of $0.000445 per share 
($44,500.00 divided by 100 million shares).
     Since under the proposed Price List, the first 750,000 
shares ADV would not be charged, the Exchange would reduce the initial 
$44,500.00 fee by $6,675.00, which is the product of 750,000 shares 
multiplied by 20 days multiplied by the average fee of $0.000445.
     Member Organization A's net fee for the month would thus 
be $37,825.00 ($44,500.00 minus $6,675.00 for the 750,000 ADV that is 
not charged).
     If Member Organization A was at MOC/LOC Tier 1 or MOC/LOC 
Tier 2, Member Organization A's monthly fee would be $35,275.00, 
representing an initial $41,500.00 fee reduced by $6,225.00 based on 
750,000 ADV without charge for 20 days on the average initial fee of 
$0.0004150 per share.
* * * * *
    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,\6\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\7\ 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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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) & (5).
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    The Exchange believes that the proposed fee changes for certain 
executions at the close are reasonable. The Exchange's closing auction 
is a recognized industry benchmark,\8\ 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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    \8\ For example, the pricing and valuation of certain indices, 
funds, and derivative products require primary market prints.
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Executions at the Open
    The Exchange believes that the proposed fee for executions at the 
open sent to a Floor broker for representation on the Exchange is 
reasonable because it would encourage additional liquidity on the 
Exchange's opening auction and because members and member organizations 
benefit from the substantial amounts of liquidity that are present on 
the Exchange during such time.
    The Exchange believes the proposed change is equitable and not 
unfairly discriminatory because it would continue to encourage member 
organizations to send orders to the trading Floor for execution, 
thereby contributing to robust levels of liquidity on the trading 
Floor, which benefits all market participants. The proposed fee 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 during the opening. Moreover, the requirement is equitable and 
not unfairly discriminatory because it would apply equally to all 
similarly situated member organizations. Finally, the Exchange notes 
that the proposed fee and the current cap together are comparable to 
those for executions at the opening on other markets.\9\
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    \9\ For example, NASDAQ charges $0.0015 per share for certain 
orders executed in the NASDAQ Opening Cross and applies at $35,000 
fee cap per month per firm for such executions. See Nasdaq Rule 
7018(e).
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Executions at the Close
    The Exchange believes that charging different rates for d-Quotes 
that execute in the close based on time of entry or last modification 
is reasonable and not unfairly discriminatory because it encourages all 
member organizations to enter or modify d-Quotes as early possible, 
beginning with as early as 25 minutes before the close of trading, in 
order to build up liquidity going into the closing auction. Further, it 
is reasonable to charge member organizations a higher rate for entering 
or modifying their interest in the final minute of regular trading 
hours because such interest most benefits from the flexibility afforded 
the order type.
    Similarly, the Exchange believes that calculating how a member 
organization that executes an ADV on the Exchange during a billing 
month in excess of 750,000 shares is not charged for those first 
750,000 shares is reasonable because the Exchange would reduce a member 
organization's total charges for d-Quote and other executions at the 
close by the average fee applicable to the member organization for that 
month for executions at the close times 750,000 shares per day. The 
Exchange believes it is reasonable to reduce the fee by the average fee 
applicable to that member organization because the Exchange would now 
charge four rates for d-Quotes and other executions at the close 
($0.0003, $0.0007, $0.0008 or $0.0010). The average rate would 
therefore be the member organization's weighted average of those three 
rates and the Exchange would not charge that average price for the 
first 750,000 shares per day.
    The Exchange believes that offering a lower fee for members at MOC/
LOC Tier 1 and 2 of $0.0008 for d-Quotes executed from 3:57 p.m. up to 
the close is reasonable and not unfairly discriminatory because the 
proposed change would encourage greater marketable and other liquidity 
at the closing auction, and higher volumes of MOC and LOC orders 
contribute to the quality of the Exchange's closing auction and provide 
market participants whose orders are swept into the close with a 
greater opportunity for execution. The Exchange believes that the 
proposed fee for MOC/LOC Tier 1 and 2 is equitable and not unfairly 
discriminatory because all similarly situated member organizations will 
be subject to the same fee structure, which will automatically adjust 
based on prevailing market conditions.
    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,\10\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, the Exchange believes that the proposed 
changes would encourage the submission of additional liquidity to a 
public exchange, thereby promoting

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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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    \10\ 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) \11\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \12\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \13\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSE-2018-10 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-NYSE-2018-10. 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-NYSE-2018-10 and should be submitted on 
or before April 25, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2018-06775 Filed 4-3-18; 8:45 am]
 BILLING CODE 8011-01-P


