[Federal Register Volume 84, Number 158 (Thursday, August 15, 2019)]
[Notices]
[Pages 41788-41793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-17491]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86620; File No. SR-NYSEArca-2019-56]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Arca Equities Fees and Charges To Adopt An Incremental Credit Under a 
Current Pricing Tier, Cross-Asset Tier 3

August 9, 2019.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act''),\2\ and Rule 19b-4

[[Page 41789]]

thereunder,\3\notice is hereby given that on August 1, 2019, NYSE Arca, 
Inc. (``NYSE Arca'' or the ``Exchange'') filed with the Securities and 
Exchange Commission (``SEC'' or ``Commission'') the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared by the Exchange. The Commission is publishing this notice 
to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Equities Fees and 
Charges (``Fee Schedule'') to adopt an incremental credit under a 
current pricing tier, Cross-Asset Tier 3. The Exchange proposes to 
implement the fee change effective August 1, 2019. 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 the Fee Schedule to adopt an 
incremental credit under a current pricing tier, Cross-Asset Tier 3, 
that would provide an additional incentive for all ETP Holders 
(including Market Makers) \4\ to provide liquidity in Tapes A and B 
Securities. The Exchange proposes to implement the fee change effective 
August 1, 2019.
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    \4\ All references to ETP Holders in connection with Cross-Asset 
Tier 3 include Market Makers.
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    The purpose of this proposed rule change is to introduce a new 
incremental credit of $0.0002 per share under Cross-Asset Tier 3 if an 
ETP Holder meets both the existing Cross-Asset Tier 3 requirements \5\ 
and executes a designated percentage of volume of its US CADV, as 
described below.
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    \5\ To qualify for credits under Cross-Asset Tier 3, ETP Holders 
are required to (a) provide liquidity of 0.30% or more of the US 
CADV per month, and (b) have an affiliation with an OTP Holder or 
OTP Firm that provides an ADV of electronic posted Customer and 
Professional Customer executions in all issues on NYSE Arca Options 
(excluding mini options) of at least 0.80% of total Customer equity 
and ETF option ADV as reported by OCC, of which at least 0.20% of 
total Customer equity and ETF option ADV as reported by OCC is from 
Customer and Professional Customer executions in non-Penny Pilot 
issues on NYSE Arca Options. See Fee Schedule, Cross-Asset Tier 3. 
US CADV means United States Consolidated Average Daily Volume for 
transactions reported to the Consolidated Tape, excluding odd lots 
through January 31, 2014 (except for purposes of Lead Market Maker 
pricing), and excludes volume on days when the market closes early 
and on the date of the annual reconstitution of the Russell 
Investments Indexes. Transactions that are not reported to the 
Consolidated Tape are not included in US CADV.
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Background
    The Commission has repeatedly expressed its preference for 
competition over regulatory intervention in determining prices, 
products, and services in the securities markets. 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.'' \6\
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    \6\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule) 
(``Regulation NMS'').
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    As the Commission itself recognized, the market for trading 
services in NMS stocks has become ``more fragmented and competitive.'' 
\7\ Indeed, equity trading is currently dispersed across 13 
exchanges,\8\ 31 alternative trading systems,\9\ and numerous broker-
dealer internalizers and wholesalers, all competing for order flow. 
Based on publicly-available information for June 2019, no single 
exchange has more than 18% market share (whether including or excluding 
auction volume).\10\ Therefore, no exchange possesses significant 
pricing power in the execution of equity order flow. More specifically, 
in June 2019, the Exchange had 8.5% market share of executed volume of 
equity trades (excluding auction volume), down from 9.0% in March 
2019.\11\
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    \7\ See Securities Exchange Act Release No. 51808, 84 FR 5202, 
5253 (February 20, 2019) (File No. S7-05-18) (Transaction Fee Pilot 
for NMS Stocks Final Rule) (``Transaction Fee Pilot'').
    \8\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/. See generally https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \9\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. Although 54 
alternative trading systems were registered with the Commission as 
of July 29, 2019, only 31 are currently trading. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \10\ See Cboe Global Markets U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/.
    \11\ See id.
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
move order flow, or discontinue or reduce use of certain products. 
While it is not possible to know a firm's reason for shifting order 
flow, the Exchange believes that one such reason is because of fee 
changes at any of the registered exchanges or non-exchange venues to 
which a firm routes order flow. These fees vary month to month, and not 
all are publicly available. With respect to non-marketable order flow 
that would provide displayed liquidity on an Exchange against which 
market makers can quote, ETP Holders can choose from any one of the 13 
currently operating registered exchanges to route such order flow. 
Accordingly, competitive forces constrain exchange transaction fees 
that relate to orders that would provide liquidity on an exchange.
    The Exchange operates a ``Maker-Taker'' model whereby it pays 
credits to members that provide liquidity and assesses fees to those 
that remove liquidity. The Exchange's Fee Schedule sets forth the 
rebates and fees applied on a per share basis for orders that provide 
and remove liquidity, respectively. In response to this competitive 
environment, the Exchange offers tiered pricing that provides ETP 
Holders opportunities to qualify for higher rebates or reduced fees 
where certain volume criteria and thresholds are met. Tiered pricing 
provides an incremental incentive for ETP Holders to strive for higher 
tier levels, which provides increasingly higher discounts for 
satisfying more stringent criteria.
    More specifically, the Exchange currently has multiple levels of 
credits designed to incentivize ETP Holders to achieve certain levels 
of participation on both the Exchange's equities and options platform 
(``NYSE Arca Options''). Under Cross-Asset Tier 1 and Cross-Asset Tier 
3, ETP Holders can currently receive a credit of $0.0030 per share for 
orders that provide liquidity, i.e., resting limit orders available for 
execution on the Exchange, in Tapes A,

[[Page 41790]]

B and C Securities.\12\ Additionally, under Cross-Asset Tier 2, ETP 
Holders can currently receive the following credits for orders that 
provide liquidity: $0.0031 per share in Tape A Securities; $0.0030 per 
share in Tape B Securities; and $0.0032 per share in Tape C 
Securities.\13\
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    \12\ See Fee Schedule, Cross-Asset Tier 1 and Cross-Asset Tier 
3. Additionally, under Cross-Asset Tier 3, ETP Holders can also 
receive an incremental credit of $0.0004 per share in Tape C 
Securities if they meet the current requirements of Cross-Asset Tier 
3 and execute a designated percentage of volume of its Tape C CADV.
    \13\ See Fee Schedule, Cross-Asset Tier 2.
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Proposed Fee Change for Cross-Asset Tier 3
    The Exchange proposes to provide an increased incentive for ETP 
Holders that otherwise qualify for the current Cross-Asset Tier 3 to 
send liquidity-providing orders to the Exchange in Tapes A, B and C 
Securities. As proposed, if an ETP Holder (including Market Makers) 
meets the requirements of Cross-Asset Tier 3 and, for the billing 
month, executes orders that provide liquidity in Tapes A, B and C 
Securities that is at least 0.65% of US CADV, that ETP Holder would be 
eligible for an incremental credit of $0.0002 per share for orders that 
provide liquidity to the Book in Tapes A and B Securities.
    For example, assume an ETP Holder meets the options requirement of 
Cross- Asset Tier 3 by having an affiliation with an OTP Holder or OTP 
Firm that provides an ADV of electronic posted Customer and 
Professional Customer executions in all issues on NYSE Arca Options 
(excluding mini options) of at least 0.80% of total Customer equity and 
ETF option ADV as reported by OCC, of which at least 0.20% of total 
Customer equity and ETF option ADV as reported by OCC is from Customer 
and Professional Customer executions in non-Penny Pilot issues on NYSE 
Arca Options. Further assume that ETP Holder provides liquidity of 24.5 
million shares in a month where US CADV is 7.0 billion shares, or 0.35% 
of US CADV, thereby meeting the current requirements and qualifying for 
the Cross-Asset Tier 3 credit of $0.0030 per share. If that ETP Holder 
instead provides liquidity of at least 45.5 million shares, or 0.65% of 
US CADV, that ETP Holder would be eligible for the proposed incremental 
credit of $0.0002 per share for orders that provide liquidity to the 
Book in Tapes A and B Securities, for a combined credit of $0.0032 per 
share.
Applicability of Proposed Rule Change
    The proposed rule change is designed to be available to all ETP 
Holders on the Exchange and is intended to provide ETP Holders an 
additional opportunity to receive an enhanced rebate by executing more 
of their orders on the Exchange.
    The Exchange proposes to increase the credits available under the 
Cross-Asset Tier 3 pricing tier to provide an incentive for ETP Holders 
to send increased order flow to qualify for these tiers. If an ETP 
Holder qualifies for Cross-Asset Tier 3 and meets the additional 
proposed volume requirement, that ETP Holder would be eligible for an 
incremental credit as compared to the current credit for qualifying for 
Cross-Asset Tier 3, which is $0.0030 per share credit for orders that 
provide liquidity in Tapes A, B and C Securities.
    The Exchange does not know how much order flow ETP Holders choose 
to route to other exchanges or to off-exchange venues. There are 
currently no firms that qualify for the credits under the current 
Cross-Asset Tier 1 pricing tier. There is currently one firm that 
qualifies for the credits under the current Cross-Asset Tier 2 pricing 
tier and one firm that qualifies for the credits under the current 
Cross-Asset Tier 3 pricing tier.\14\ However, without having a view of 
ETP Holders' activity on other markets and off-exchange venues, the 
Exchange has no way of knowing whether this proposed rule change would 
result in any ETP Holders qualifying for the incremental credit. The 
Exchange believes the proposed increased credit for Cross-Asset Tier 3 
would provide an incentive for ETP Holders to submit additional 
liquidity-providing orders to the Exchange to qualify for the 
incremental credit.
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    \14\ As of July 24, 2019, there are 165 ETP Holders on the 
Exchange, of which 57 are affiliated with an OTP Holder or OTP Firm 
and could therefore, qualify for the Exchange's Cross-Asset pricing 
tiers.
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    As noted above, the Exchange operates in a competitive environment, 
particularly as it relates to attracting non-marketable, providing 
liquidity that would be displayed on the Exchange. The proposed rule 
change is designed to incentivize ETP Holders to increase the orders 
sent to the Exchange that would provide liquidity, which would support 
the quality of price discovery and transparency on the Exchange. The 
Exchange believes that by correlating the level of the credit to the 
level of executed providing volume on the Exchange, the Exchange's fee 
structure would incentivize ETP Holders to submit more displayed, 
liquidity-providing orders to the Exchange that are likely to be 
executed (i.e., are not orders that are intended to be displayed, but 
are priced such that they are not likely to be executed), thereby 
increasing the potential for incoming marketable orders submitted to 
the Exchange to receive an execution.
    With respect to the proposed new incremental credit under Cross-
Asset Tier 3 for orders that provide liquidity, while there is 
currently one ETP Holder that qualifies for Cross-Asset Tier 3, the 
Exchange believes that at least three other ETP Holders could qualify 
for the proposed new incremental credit if these firms were to direct 
more of their eligible order flow to the Exchange such that these firms 
would then meet both the existing Cross-Asset Tier 3 requirements and 
the proposed new volume requirement.
    The proposed changes are not otherwise intended to address any 
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,\15\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\16\ 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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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposed Fee Change is Reasonable
    As discussed above, the Exchange operates in a highly fragmented 
and competitive market. 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.'' \17\
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    \17\ See Regulation NMS, 70 FR at 37499.
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    As the Commission itself recognized, the market for trading 
services in NMS stocks has become ``more fragmented

[[Page 41791]]

and competitive.'' \18\ Indeed, equity trading is currently dispersed 
across 13 exchanges,\19\ 31 alternative trading systems,\20\ and 
numerous broker-dealer internalizers and wholesalers, all competing for 
order flow. Based on publicly-available information, no single exchange 
has more than 18% market share (whether including or excluding auction 
volume).\21\ Therefore, no exchange possesses significant pricing power 
in the execution of equity order flow. More specifically, as noted 
earlier, the Exchange averaged less than 9% market share of executed 
volume of equity trades (excluding auction volume) for June 2019. The 
Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow, or discontinue to reduce use of certain categories of 
products, in response to fee changes. Accordingly, competitive forces 
reasonably constrain exchange transaction fees. Stated otherwise, 
changes to exchange transaction fees can have a direct effect on the 
ability of an exchange to compete for order flow.
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    \18\ See Transaction Fee Pilot, 84 FR at 5253.
    \19\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/.
    \20\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. Although 54 
alternative trading systems were registered with the Commission as 
of July 29, 2019, only 31 are currently trading. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \21\ See Cboe Global Markets U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/.
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    The Exchange believes the proposed increased credit is reasonable 
as it would provide an additional incentive for ETP Holders to qualify 
for the new incremental credit and direct their order flow to the 
Exchange and provide meaningful added levels of liquidity, thereby 
contributing to the depth and market quality on the Exchange. As noted 
above, the Exchange operates in a highly competitive environment, 
particularly for attracting order flow that provides liquidity on an 
exchange. The Exchange believes it is reasonable to continue to provide 
a higher credit for orders that provide liquidity if an ETP Holder 
meets the heightened volume requirements to qualify for the new 
incremental credit.
    Because the proposed amendment to the Cross-Asset Tier 3 pricing 
tier would be new with a requirement to increase liquidity providing 
orders, no ETP Holder currently qualifies for the proposed new 
incremental credit.
    The Exchange notes that volume-based incentives and discounts have 
been widely adopted by exchanges,\22\ including the Exchange,\23\ and 
are reasonable, equitable and non-discriminatory because they are open 
to all ETP Holders on an equal basis and provide additional credits 
that are reasonably related to the value to an exchange's market 
quality and associated higher levels of market activity.
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    \22\ See e.g., Cboe BZX U.S. Equities Exchange (``BZX'') Fee 
Schedule, Footnote 1, Add Volume Tiers which provide enhanced 
rebates between $0.0025 and $0.0032 per share for displayed orders 
where BZX members meet certain volume thresholds.
    \23\ See e.g., Fee Schedule, Step Up Tier, Step Up Tier 2, Step 
Up Tier 3 and Step Up Tier 4, which provide enhanced rebates between 
$0.0025 and $0.0033 per share in Tape A Securities, between $0.0022 
and $0.0034 per share in Tape B Securities, and between $0.0025 and 
$0.0033 per share in Tape C Securities for orders that provide 
displayed liquidity where ETP Holders meet certain volume 
thresholds.
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    As noted previously, there are a small number of firms that 
currently qualify or could qualify for the credits under the current 
Cross-Asset Tier 1, Cross-Asset Tier 2, and Cross-Asset Tier 3 pricing 
tiers and if these firms were to submit more of their liquidity-
providing orders to the Exchange, each could qualify for the proposed 
new incremental credit. However, without having a view of ETP Holders' 
activity on other markets and off-exchange venues, the Exchange has no 
way of knowing whether this proposed rule change would result in any 
ETP Holders qualifying for the new incremental credit. The Exchange 
believes the proposed incremental credit would provide an incentive for 
ETP Holders to submit additional adding liquidity to qualify for the 
additional credit.
    The Exchange believes that the proposed new credit for liquidity 
providing orders in Tapes A, B and C Securities under the current 
Cross-Asset Tier 3 pricing tier is reasonable because it provides an 
incentive for ETP Holders to route additional liquidity-providing order 
flow to the Exchange, which would promote price discovery and increase 
execution opportunities for all ETP Holders. The proposed pricing is 
structured similarly to the incremental credit the Exchange currently 
provides under current Cross-Asset Tier 3, which likewise provides ETP 
Holders an incremental credit of $0.0004 per share (above the tiered 
rate of $0.0030 per share) if the ETP Holder meets the qualifying 
requirements.\24\ The Exchange believes that the proposed change to the 
Cross-Asset Tier 3 pricing tier is reasonable because an ETP Holder 
that otherwise qualifies for the tier would still be eligible for the 
current per share credit of $0.0030 per share for orders that provide 
liquidity. The proposed additional credit is designed to provide an 
incentive for such ETP Holder to route additional providing liquidity 
to the Exchange, which would be eligible for the higher credit.
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    \24\ See Fee Schedule, Cross-Asset Tier 3. See also Securities 
and Exchange Act Release No. 80920 (June 14, 2017), 82 FR 28106 
(June 20, 2017) (SR-NYSEArca-2017-64).
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    On the backdrop of the competitive environment in which the 
Exchange currently operates, the proposed rule change is a reasonable 
attempt to increase liquidity on the Exchange and improve the 
Exchange's market share relative to its competitors.
The Proposed Fee Change is an Equitable Allocation of Fees and Credits
    The Exchange believes the proposed rule change is an equitable 
allocation of its fees and credits. The Exchange believes that the 
proposed increased credit under the Cross-Asset Tier 3 pricing tier is 
equitable because the magnitude of the additional credit is not 
unreasonably high in comparison to the credit paid with respect to 
other pricing tiers on the Exchange, and in comparison to the credits 
paid by other exchanges for orders that provide liquidity. For example, 
ETP Holders currently receive credits in Tape A, Tape B and Tape C 
Securities that range between $0.0022 per share and $0.0034 per share 
under Step Up Tier, Step Up Tier 2, Step Up Tier 3 and Step Up Tier 4.
    With respect to credits paid by the Exchange's competitors, BZX 
provides a credit that ranges between $0.0028 and $0.0030 per share in 
Tape A, Tape B and Tape C Securities under that market's Cross-Asset 
pricing tiers.\25\
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    \25\ See Cross-Asset Add Volume Tier 1-4, at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/.
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    The Exchange believes that the proposed new incremental credit for 
liquidity providing orders in Tapes A, B and C Securities under current 
Cross-Asset Tier 3 is also equitable because the proposal would 
continue to encourage ETP Holders to route liquidity-providing orders 
to the Exchange in Tapes A, B and C Securities, thereby contributing to 
robust levels of liquidity, which benefits all market participants.
    As noted above, there are a small number of firms that currently 
qualify or could qualify for the credits under the current Cross-Asset 
Tier 1, Cross-Asset Tier 2, and Cross-Asset Tier 3 pricing tiers and if 
these firms were to submit

[[Page 41792]]

more of their liquidity-providing orders to the Exchange, each could 
qualify for the proposed new incremental credit. However, without 
having a view of an ETP Holder's activity on other markets and off-
exchange venues, the Exchange believes the proposed new incremental 
credit would provide an incentive for market participants to increase 
liquidity in order to qualify for the proposed new incremental credit, 
thereby encouraging submission of additional liquidity to the Exchange. 
The proposed change will thereby encourage the submission of additional 
liquidity to a national securities exchange, thus promoting price 
discovery and transparency and enhancing order execution opportunities 
for ETP Holders from the substantial amounts of liquidity present on 
the Exchange. All ETP Holders would benefit from the greater amounts of 
liquidity that will be present on the Exchange, which would provide 
greater execution opportunities.
    The Exchange believes the proposed rule change would improve market 
quality for all market participants on the Exchange and, as a 
consequence, attract more liquidity to the Exchange thereby improving 
market-wide quality. The proposal neither targets nor will it have a 
disparate impact on any particular category of market participant. ETP 
Holders that currently qualify for credits associated with Cross-Asset 
pricing tiers on the Exchange will continue to receive credits when 
they provide liquidity to the Exchange. The Exchange believes that 
recalibrating the credits for providing liquidity will continue to 
attract order flow and liquidity to the Exchange for the benefit of 
investors generally. As to those market participants that do not 
presently qualify for the credits associated with Cross-Asset Tier 3, 
the proposal will not adversely impact their existing pricing or their 
ability to qualify for other credits provided by the Exchange.
The Proposed Fee Change is not Unfairly Discriminatory
    The Exchange believes it is not unfairly discriminatory to provide 
an incremental per share credit as the proposed increased credit would 
be provided on an equal basis to all ETP Holders that add liquidity by 
meeting the increased volume requirements under the Cross-Asset Tier 3 
pricing tier. Further, the Exchange believes the proposed incremental 
per share credit would incentivize ETP Holders that meet the current 
Cross-Asset Tier 3 pricing tier requirements to execute more of their 
liquidity-providers orders on the Exchange to qualify for the proposed 
incremental credit. The Exchange also believes that the proposed change 
is not unfairly discriminatory because it is reasonably related to the 
value of the Exchange's market quality associated with higher volume. 
The proposed incremental per share credit would apply equally to all 
ETP Holders as each would be required to execute providing volume in 
Tapes A, B and C Securities during the billing month equal to at least 
0.65% of US CADV regardless of whether an ETP Holder currently meets 
the requirement of another pricing tier.
    Similarly, the Exchange believes it is not unfairly discriminatory 
to provide an incremental credit for liquidity providing orders in 
Tapes A and B Securities under the current Cross-Asset Tier 3 pricing 
tier because the proposed credit would be provided on an equal basis to 
all ETP Holders that add liquidity by meeting the proposed new volume 
requirements. Further, the Exchange believes the proposed incremental 
credit would incentivize ETP Holders to send more orders to the 
Exchange to qualify for the higher credit.
    Finally, the submission of orders to the Exchange is optional for 
ETP Holders in that they could choose whether to submit orders to the 
Exchange and, if they do, the extent of its activity in this regard. 
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,\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, as discussed above, the Exchange believes 
that the proposed rule change would encourage the submission of 
additional liquidity to a public exchange, thereby promoting market 
depth, price discovery and transparency and enhancing order execution 
opportunities for ETP Holders. As a result, the Exchange believes that 
the proposed change furthers the Commission's goal in adopting 
Regulation NMS of fostering integrated competition among orders, which 
promotes ``more efficient pricing of individual stocks for all types of 
orders, large and small.'' \27\
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    \26\ 15 U.S.C. 78f(b)(8).
    \27\ Regulation NMS, 70 FR at 37498-99.
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    Intramarket Competition. The proposed change is designed to attract 
additional order flow to the Exchange. The Exchange believes that the 
proposed incremental credit would continue to incentivize market 
participants to direct and execute more orders to the Exchange. Greater 
liquidity benefits all market participants on the Exchange by providing 
more trading opportunities and encourages ETP Holders to send orders, 
thereby contributing to robust levels of liquidity, which benefits all 
market participants on the Exchange. The proposed incremental credit 
would be available to all similarly-situated market participants, and, 
as such, the proposed change would not impose a disparate burden on 
competition among market participants on the Exchange.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily choose to 
send their orders to other exchange and off-exchange venues if they 
deem fee levels at those other venues to be more favorable. As noted, 
the Exchange's market share of intraday trading (i.e., excluding 
auctions) declined from March 2019 to June 2019. In such an 
environment, the Exchange must continually adjust its fees and rebates 
to remain competitive with other exchanges and with off-exchange 
venues. 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 does not believe its 
proposed fee change can impose any burden on intermarket competition.
    The Exchange believes that the proposed change 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.

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.

[[Page 41793]]

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) \28\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \29\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ 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) \30\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \30\ 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-NYSEArca-2019-56 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-2019-56. 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 a.m. and 3 p.m. 
Copies of the filing also will be available for inspection and copying 
at the principal offices 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-2019-56, and should be submitted on or before September 5, 
2019.
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    \31\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-17491 Filed 8-14-19; 8:45 am]
 BILLING CODE 8011-01-P


