[Federal Register Volume 84, Number 171 (Wednesday, September 4, 2019)]
[Notices]
[Pages 46588-46593]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-18999]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86784; File No. SR-NYSE-2019-45]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Price List To Revise the Remove and Adding Liquidity Tiers 
for Tape B and C Securities

August 28, 2019.
    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 August 15, 2019, 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 to (1) revise the 
Remove Tier for Tape B and C securities to add a new Tier charge for 
removing liquidity, and (2) increase the credits available to 
Supplemental Liquidity Providers (``SLPs'') under SLP Provide Tier 1 
for adding displayed and non-displayed liquidity to the Exchange in 
Tapes B and C securities. The Exchange proposes to implement the fee 
changes effective August 15, 2019. The proposed rule change is 
available on the Exchange's website at www.nyse.com, at the principal 
office of the Exchange, and

[[Page 46589]]

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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Price List to revise pricing 
available for trading in Tape B and C securities as follows:
    (1) Revise the Remove Tier for Tape B and C securities to add a new 
Tier charge of $0.0026 per share for removing liquidity. A member 
organization would be able to qualify for this rate either by (i) 
meeting a specified percentage of average daily volume of orders in 
Tape B and C securities executed on the Exchange that remove liquidity 
(``Removing ADV'') as a percentage of consolidated average daily volume 
(``CADV'') in Tape B and C securities (``Tape B and C CADV''),\4\ or 
(ii) meeting a lower specified percentage of Removing ADV as a 
percentage of Tape B and C CADV and meeting specified closing auction 
volume thresholds in Tape A securities, and
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    \4\ The term ``CADV'' is defined in footnote * of the Price 
List.
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    (2) Increase the credits available to SLPs under SLP Provide Tier 1 
for adding displayed and non-displayed liquidity to the Exchange in 
Tapes B and C securities from $0.0031 per share to $0.0033 per share 
(for displayed orders) and from $0.0014 per share to $0.0015 per share 
(for non-displayed orders).
    The proposed changes respond to the current competitive environment 
where order flow providers have a choice of where to direct liquidity-
providing orders by offering further incentives for member 
organizations to send additional displayed liquidity to the Exchange.
    The Exchange proposes to implement the fee changes effective August 
15, 2019.\5\
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    \5\ The Exchange originally filed to amend the Fee Schedule on 
August 1, 2019 (SR-NYSE-2019-43). SR-NYSE-2019-43 was subsequently 
withdrawn and replaced by this filing.
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Competitive Environment
    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, 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 2.2% market share of executed volume of equity trades 
in Tape B and C securities (excluding auction volume), which was down 
from 2.8% 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 categories of 
products, in response to fee changes. With respect to non-marketable 
order flow that would provide displayed liquidity on an Exchange, 
member organizations 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.
Proposed Rule Change
    To respond to this competitive environment, the Exchange has 
established incentives for its member organizations who submit orders 
that provide and remove liquidity on the Exchange, including cross-tape 
incentives for member organizations and SLPs based on submission of 
orders that provide displayed and non-displayed liquidity in Tapes B 
and C securities.
    For Tape B and C securities, the Exchange currently offers a Remove 
Tier for securities at or above $1.00 for member organizations that 
have a minimum amount of Adding ADV in non-SLP and Floor broker order 
flow.\12\ Further, the Exchange offers several levels of credits for 
SLP orders that provide displayed and non-displayed liquidity to the 
Exchange in Tape B and C securities priced at or above $1.00 based on 
the volume of orders that member organizations send to the Exchange. 
The SLP Provide Tier credits (Non Tier, Tier 2, Tier 1 and Tape A Tier) 
range from $0.00005 to $0.0031.
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    \12\ See footnote 4 to the current Price List. The Exchange 
proposes a non-substantive amendment to replace the term ``Client'' 
as used in the Adding Tiers and Remove Tiers for Tape B and C 
securities by specifying that this refers to member organization 
order flow that is not from SLPs or Floor brokers, as the rates for 
such order flow are specified elsewhere on the Price List. See 
Securities Exchange Act Release No. 83113 (April 26, 2018), 83 FR 
19376 (May 2, 2018) (SR-NYSE-2018-15) (Notice) (adopting new pricing 
for trading Tape B and C securities on the Pillar trading platform).
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    The proposed fee change is designed to attract additional order 
flow to the Exchange by introducing a new Tier rate for removing 
liquidity from the Exchange and increasing the incentive for SLPs that 
provide displayed and non-displayed liquidity in Tape B and C 
securities, as described below.
Remove Tiers Fee For Securities At or Above $1.00
    Currently, for securities at or above $1.00 in Tape B and C 
securities, the Exchange charges a per tape fee of $0.00285 per share 
to remove liquidity from the Exchange for member

[[Page 46590]]

organizations with an Adding ADV of at least 50,000 shares per 
respective tape.
    The Exchange proposes to retain this charge and introduce a new, 
lower fee of $0.0026 per share for removing liquidity from the Exchange 
in both Tapes B and C for member organizations that either have:
     0.175% of Removing ADV \13\ in Tapes B and C combined as a 
percentage of Tape B and C CADV, or
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    \13\ The Exchange proposes to define the term ``Removing ADV'' 
in a new footnote on the Price List to mean the average daily volume 
of orders executed on the Exchange during the billing month that 
removed liquidity.
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     0.075% of Removing ADV in Tapes B and C combined as a 
percentage of Tape B and C CADV, and execute an ADV of Market-on-Close 
(MOC) and Limit-on-Close (LOC) Orders combined on the NYSE in Tape A 
securities of at least 0.35% of NYSE CADV.
    The proposed tier would be designated Tier 1 while the existing 
tier would be designated Tier 2 and aligned accordingly in the Price 
List.
    The term ``ADV'' in proposed Tier 1 would have a citation to 
footnote 4 in the current Price List, which provides ``For purposes of 
transaction fees and Supplemental Liquidity Provider liquidity credits, 
ADV calculations exclude early closing days.'' The text of current 
footnote 4 would remain unchanged.
    For example, if a member organization averaged a Removing ADV in 
Tape B and C securities of 6 million shares in a month where the Tape B 
and C CADV is 3 billion shares, that member organization would have a 
Removing ADV of 0.20% of Tape B and C CADV and would qualify for the 
reduced fee of $0.0026 per share for removing liquidity from the 
Exchange in both Tapes B and C.
    If that member instead averaged a Removing ADV in Tape B and C 
securities of 3 million shares in a month where the Tape B and C CADV 
is 3 billion shares, the member organization's removing ADV would be 
0.10% of Tape B and C CADV. That Removing ADV alone would not qualify 
for the new fee. But if that member organization also averaged an ADV 
of MOC and LOC Orders in Tape A securities of 14 million shares in a 
month where NYSE CADV was 3.5 billion shares, its MOC and LOC ADV would 
be 0.40% of NYSE CADV and that member organization would qualify for 
the reduced remove fee of $0.0026 per share. However, if that member 
organization averaged an MOC and LOC ADV of less than 12.25 million 
shares in that same month, or under 0.35% of NYSE CADV, the member 
organization would not qualify for the reduced $0.0026 fee per 
share.\14\
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    \14\ The Exchange proposes minor, non-substantive changes to the 
Price List. First, the Exchange would add an ``s'' to ``fee'' in the 
first entry under the third column titled ``Removing Liquidity'' and 
to ``Tier'' in the heading of the first column titled ``Remove Tier 
For Securities At or Above $1.00.'' Second, the Exchange would 
delete ``Per-Tape'' and ``Client Adding ADV \4\'' and add ``Rate'' 
under the Remove Tiers heading in the first column. Finally, under 
the new Tier 2 heading, the Exchange would add ``Per Tape of Non-SLP 
and Floor broker'' after ``50,000 shares'' and before ``Adding 
ADV.''
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Displayed Liquidity Under SLP Provide Tier 1
    Under current SLP Provide Tier 1, SLPs that add displayed liquidity 
to the Exchange in securities with a per share price at or above $1.00 
and that:
     Add liquidity for all assigned Tape B securities of a CADV 
of at least 0.10% for Tape B or for all assigned Tape C Securities of a 
CADV of at least 0.075% for Tape C,
     meet the 10% average or more quoting requirement in 400 or 
more assigned securities in Tapes B and C combined pursuant to Rule 
107B, and
     meet the 10% average or more quoting requirement in an 
assigned Tape B or C security pursuant to Rule 107B

are eligible for a $0.0031 per share credit per tape in an assigned 
Tape B or C security.
    The Exchange proposes to increase the credit to $0.0033. The 
qualification requirements would remain unchanged.
Non-Displayed Liquidity Under SLP Provide Tier 1
    Under current SLP Provide Tier 1, SLPs that add non-displayed 
liquidity to the Exchange on a per Tape basis in securities with a per 
share price at or above $1.00 and that:
     Add liquidity for all assigned Tape B securities of a CADV 
of at least 0.10% for Tape B or for all assigned Tape C Securities of a 
CADV of at least 0.075% for Tape C,
     meet the 10% average or more quoting requirement in 400 or 
more assigned securities in Tapes B and C combined pursuant to Rule 
107B, and
     meet the 10% average or more quoting requirement in an 
assigned Tape B or C security pursuant to Rule 107B

are eligible for a credit of $0.0014 per share per tape credit and a 
$0.0025 per share per tape credit for MPL orders in the Tape where they 
qualify for SLP Provider Tier 1.
    The Exchange proposes to increase the credit to $0.0015. The 
qualification requirements would remain unchanged and the rate for MPL 
Orders would remain unchanged.
Application and Impact of Transition Period Pricing
    The purpose of these proposed changes are to incentivize member 
organizations to trade on the Exchange in Tape B and C securities. The 
proposed Remove Tier fee would incentivize member organizations to 
remove additional liquidity from the Exchange, thereby increasing the 
number of orders adding liquidity that are executed on the Exchange and 
improving overall liquidity on a public exchange. The Exchange believes 
that including an alternate way to qualify for this requirement to 
include MOC and LOC ADV in Tape A securities would encourage the 
additional submission of both Tape B and C order flow and auction order 
flow in Tape A securities to the Exchange.
    For example, if an SLP adds liquidity for all assigned Tape B 
securities in the aggregate of a CADV of at least 0.10% for Tape B and 
met the 10% average or more quoting requirement in 400 or more assigned 
securities in Tape B and C securities, that SLP would receive a credit 
of $0.0033 per share for providing displayed liquidity and a credit of 
$0.0015 per share for providing non-displayed liquidity in Tape B 
securities.
    The proposed change to SLP Provide Tier 1 would incentivize member 
organizations that are SLPs to increase the liquidity-providing orders 
in Tape B and C securities they send to the Exchange, which would 
support the quality of price discovery on the Exchange and provide 
additional price improvement opportunities for incoming orders. The 
Exchange believes that by correlating the amount of the credit to the 
level of orders sent by a member organization that add displayed and 
non-displayed liquidity, the Exchange's fee structure would incentivize 
member organizations to submit more orders that add liquidity to the 
Exchange, thereby increasing the potential for price improvement and 
execution opportunities to incoming marketable orders submitted to the 
Exchange.
    As noted above, the Exchange operates in a competitive and 
fragmented market environment, particularly as it relates to attracting 
non-marketable orders, which add liquidity to the Exchange. The 
Exchange believes that the proposed higher credits would provide an 
incentive for member organizations to route additional displayed and 
non-displayed liquidity to the Exchange in order to qualify for them.

[[Page 46591]]

    Without having a view of a member organization's activity on other 
markets and off-exchange venues, the Exchange believes the proposed 
Remove Tier with a lower rate and alternative ways to qualify would 
provide an incentive for member organizations to remove additional 
liquidity from the Exchange in Tape B and C securities. Currently, six 
firms (out of a total 145 member firms) can qualify for the Remove Tier 
fee. Based on the profile of liquidity-removing firms generally, the 
Exchange believes that five additional member organizations could 
qualify for the new tiered rate under either proposed criteria if they 
choose to direct order flow to, and increase quoting on, the Exchange.
    Similarly, the proposed higher rates under SLP Provide Tier 1 would 
provide an incentive for member organizations to submit additional 
adding displayed and non-displayed liquidity to the Exchange in Tape B 
and C securities. Currently, there are 15 SLPs \15\ on the Exchange out 
of a total of 145 member organizations. Of these, four firms are 
qualifying for the SLP Provide Tier 1 credit in both Tape B and C for 
adding displayed liquidity, and adding non-displayed liquidity. Based 
on the profile of liquidity-providing SLPs generally, the Exchange 
believes that three additional SLPs could qualify for the displayed and 
non-displayed SLP Provide Tier 1 credits if they choose to direct order 
flow to, and increase quoting on, the Exchange.
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    \15\ Under Rule 107B, an SLP can be either a proprietary trading 
unit of a member organization (``SLP-Prop'') or a registered market 
maker at the Exchange (``SLMM''). Currently, there are three SLMMs 
on the NYSE.
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    The proposed changes are not otherwise intended to address other 
issues, and the Exchange is not aware of any significant problems that 
market participants would have in complying with the proposed changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\16\ in general, and furthers the 
objectives of Sections 6(b)(4) and (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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The Proposed Change is Reasonable
    As discussed above, the Exchange operates in a highly fragmented 
and competitive market. 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 categories of products, in response to fee changes. With 
respect to non-marketable orders that provide liquidity on an Exchange, 
member organizations 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 displayed liquidity on an exchange. Stated 
otherwise, changes to exchange transaction fees can have a direct 
effect on the ability of an exchange to compete for order flow.
    Given this competitive environment, the proposal represents a 
reasonable attempt to attract additional order flow to the Exchange. As 
noted, the Exchange's market share of intraday trading (i.e., excluding 
auctions) declined from March 2019 to June 2019.
    Specifically, the Exchange believes that a new, lower fee of 
$0.0026 per share for removing liquidity from the Exchange in both 
Tapes B and C securities is reasonable because it would incentivize 
member organizations to remove additional liquidity from the Exchange, 
thereby increasing the number of orders adding liquidity that are 
executed on the Exchange and improving overall liquidity on a public 
exchange and resulting in lower costs for member organizations that 
qualify for the rate. The Exchange also believes that the proposal is 
reasonable because it provides alternative ways for member 
organizations to qualify for the tier, thereby increasing potential 
participation at the tier. Moreover, the Exchange believes that by 
requiring as part of the second qualification criteria an ADV of MOC 
and LOC activity combined on the Exchange in Tape A securities, the 
proposal would encourage greater liquidity at the close.
    Without having a view of a member organization's activity on other 
markets and off-exchange venues, the Exchange believes the proposed 
Remove Tier with a lower rate and alternative ways to qualify would 
provide an incentive for member organizations to remove additional 
liquidity from the Exchange in Tape B and C securities. As previously 
noted, a number of firms can qualify for the Remove Tier fee and 
additional member organizations could qualify for the new tiered rate 
under either proposed criteria if they choose to direct order flow to, 
and increase quoting on, the Exchange.
    Further, the Exchange believes that increasing the proposed credits 
for member organizations that are SLPs that add displayed and non-
displayed liquidity in Tape B and C securities on the Exchange is 
reasonable because it would provide further incentives for such member 
organizations to provide additional liquidity to a public exchange in 
Tape B and C securities, thereby promoting price discovery and 
transparency and enhancing order execution opportunities for member 
organizations. All member organizations 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 proposal would provide an incentive for 
member organizations that are SLPs to route additional liquidity-
providing orders to the Exchange in Tape B and C securities. As noted 
above, the Exchange operates in a highly competitive environment, 
particularly for attracting non-marketable order flow that provides 
liquidity on an exchange. The Exchange believes it is reasonable to 
provide a higher credit for orders that provide additional liquidity.
    Without having a view of a member organization's activity on other 
markets and off-exchange venues, the Exchange believes the proposed 
higher rates would provide an incentive for member organizations to 
submit additional adding liquidity to the Exchange in Tape B and C 
securities. As previously noted, a number of SLPs are qualifying for 
the SLP Provide Tier 1 credit for adding displayed liquidity and adding 
non-displayed liquidity. Based on the profile of liquidity-providing 
SLPs generally, the Exchange believes additional SLPs could qualify for 
the displayed and non-displayed SLP Provide Tier 1 credits if they 
choose to direct order flow to, and increase quoting on, the Exchange.
    The Exchange notes that the proposed credits remains in line with 
the credits the Exchange currently credits SLPs for adding displayed 
and non-displayed liquidity in Tape A securities.\18\ The Exchange 
notes that SLPs qualifying for the Tier 1 Adding Credit in UTP 
securities in both Tapes B and C would also be eligible for a lower 
adding liquidity requirement of 0.75% for SLP Tier 1 in Tape A. The 
Exchange further notes that SLPs that currently meet Tier

[[Page 46592]]

1 in both Tape B and Tape C receive a credit of $0.00005 per share in 
addition to the Tape A SLP credit in Tape A assigned securities where 
the SLP meets the 10% quoting requirement pursuant to Rule 107B.
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    \18\ See page 5 of the current NYSE Price List, available at 
https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf.
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    Finally, the Exchange also believes the proposed non-substantive 
changes are reasonable and would not be inconsistent with the public 
interest and the protection of investors because investors will not be 
harmed and in fact would benefit from increased clarity and 
transparency on the Price List, thereby reducing potential confusion.
The Proposal is an Equitable Allocation of Fees
    The Exchange believes its proposal equitably allocates its fees 
among its market participants by fostering liquidity provision and 
stability in the marketplace. Moreover, the proposal is an equitable 
allocation of fees because it would reward SLPs for their increased 
risks and heightened quoting and other obligations.
    The Exchange believes that, for the reasons discussed above, the 
proposed Remove Tier fee would incentivize member organizations to 
remove additional liquidity from the Exchange, thereby increasing the 
number of orders adding liquidity that are executed on the Exchange and 
improving overall liquidity on a public exchange and that increasing 
the credits for SLPs for adding displayed and non-displayed liquidity 
to the Exchange in Tapes B and C securities will encourage the SLPs to 
add liquidity to the market in Tape B and C securities, thereby 
providing customers with a higher quality venue for price discovery, 
liquidity, competitive quotes and price improvement. 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 member 
organizations from the substantial amounts of liquidity present on the 
Exchange. All member organizations would benefit from the greater 
amounts of liquidity that will be present on the Exchange, which would 
provide greater execution opportunities.
    The Exchange also believes that a lower fee for removing liquidity 
with a lower rate and alternative ways to qualify would encourage 
member organizations to remove additional liquidity from the Exchange 
in Tape B and C securities. As previously noted, a number of member 
organizations are qualifying for the Remove Tier fee. Based on the 
profile of liquidity-removing firms generally, the Exchange believes 
additional member organizations could qualify for the new tiered rate 
under either proposed criteria if they choose to direct order flow to, 
and increase quoting on, the Exchange. The proposed lower rate is also 
equitable because it would apply equally to all existing member 
organizations that remove liquidity from the Exchange in Tape B and C 
securities.
    Further, the Exchange believes that higher credits for adding 
liquidity in Tape B and C securities will encourage participation from 
a greater number of current and new SLPs which would promote additional 
liquidity in Tape B and C securities. As the Exchange previously noted 
that, a number of the current SLP firms are qualifying for the SLP 
Provide Tier 1 credit based on adding displayed liquidity and adding 
non-displayed liquidity. Based on the profile of liquidity-providing 
SLPs generally, the Exchange believes that additional SLPs could 
qualify for the displayed and non-displayed SLP Provide Tier 1 credits 
if they choose to direct order flow to, and increase quoting on, the 
Exchange.
    The proposed rebate is also equitable because it would apply 
equally to all existing and potential SLPs. The Exchange believes the 
proposed higher rebates could provide an incentive for other market 
participants to become SLPs on the Exchange. The Exchange believes that 
the proposal would provide an equal incentive to all member 
organizations to become SLPs, and that the proposal constitutes an 
equitable allocation of fees because all similarly situated member 
organizations would be eligible for the same rebates.
The Proposal is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, member 
organizations are free to disfavor the Exchange's pricing if they 
believe that alternatives offer them better value.
    The proposal does not permit unfair discrimination because the 
lower rate for removing liquidity in Tape B and C securities and the 
higher credits for adding liquidity in Tape B and C securities would be 
applied to all similarly situated member organizations and other market 
participants, who would all be eligible for the same credit on an equal 
basis. Accordingly, no member organization already operating on the 
Exchange would be disadvantaged by this allocation of fees.
    The Exchange believes it is not unfairly discriminatory to provide 
a lower fee for removing liquidity and higher credits for adding 
displayed and non-displayed liquidity as the proposed fee and credits 
would be provided on an equal basis to all member organizations that 
remove liquidity by meeting the tiered requirements. Further, the 
Exchange believes the proposed fee would provide an incentive for 
member organizations to remove additional liquidity from the Exchange 
in Tape B and C securities and, for member organizations that seek to 
qualify for the proposed fee under the second criteria based on adding 
ADV in MOC and LOC activity, would encourage greater liquidity at the 
Exchange close, to the benefit of all market participants. Similarly, 
the Exchange believes that the proposed credits would incentivize 
member organizations that are SLPs and meet the current tiered 
requirements to send more orders to the Exchange to qualify for higher 
credits. The Exchange also believes that the proposed change is not 
unfairly discriminatory because it is reasonably related to the value 
to the Exchange's market quality associated with higher volume. 
Finally, the submission of orders to the Exchange is optional for 
member organizations in that they could choose whether to submit orders 
to the Exchange and, if they do, the extent of its activity in this 
regard.
    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,\19\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, as discussed above, the Exchange believes 
that the proposed changes would encourage the submission of additional 
liquidity to a public exchange, thereby promoting market depth, price 
discovery and transparency and enhancing order execution opportunities 
for member organizations. 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

[[Page 46593]]

promotes ``more efficient pricing of individual stocks for all types of 
orders, large and small.'' \20\
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    \19\ 15 U.S.C. 78f(b)(8).
    \20\ Regulation NMS, 70 FR at 37498-99.
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    Intramarket Competition. The proposed changes are designed to 
attract additional order flow to the Exchange. The Exchange believes 
that the proposed changes would continue to incentivize market 
participants to direct order flow to the Exchange. Greater liquidity 
benefits all market participants on the Exchange by providing more 
trading opportunities and encourages member organizations to send 
orders, thereby contributing to robust levels of liquidity, which 
benefits all market participants on the Exchange. The proposed credits 
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 in Tape B and C 
securities (excluding auction volume) declined from March 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. The Exchange also believes that the proposed 
change is designed to provide the public and investors with a Price 
List that is clear and consistent, thereby reducing burdens on the 
marketplace and facilitating investor protection.

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) \21\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \22\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 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) \23\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \23\ 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-NYSE-2019-45 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-NYSE-2019-45. 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-2019-45 and should be submitted on 
or before September 24,  2019.
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    \24\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-18999 Filed 9-3-19; 8:45 am]
 BILLING CODE 8011-01-P


