[Federal Register Volume 84, Number 181 (Wednesday, September 18, 2019)]
[Notices]
[Pages 49138-49141]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20156]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86943; File No. SR-NYSENAT-2019-20]


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

September 12, 2019.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on September 4, 2019, NYSE National, Inc. (``NYSE National'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described

[[Page 49139]]

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 its Schedule of Fees and Rebates 
(``Fee Schedule'') to specify that the Exchange may exclude from its 
average daily volume and quoting calculations the date of the annual 
reconstitution of the Russell Investments Indexes. 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 Fee Schedule to specify that the 
Exchange may exclude from its average daily volume and quoting 
calculations the date of the annual reconstitution of the Russell 
Investments Indexes (the ``Russell Rebalance'').
Proposed Rule Change
    The Exchange's Fee Schedule currently provides that, for purposes 
of determining transaction fees and credits based on quoting levels, 
average daily volume (``ADV''), and consolidated ADV (``CADV''), the 
Exchange may exclude shares traded any day that (1) the Exchange is not 
open for the entire trading day and/or (2) a disruption affects an 
Exchange system that lasts for more than 60 minutes during regular 
trading hours. The Exchange proposes to specify that the Exchange may 
also exclude from its quoting levels, ADV, and CADV calculations the 
date of the annual Russell Rebalance.
    The Russell Rebalance, which typically occurs in June, is 
characterized by high trading volumes, much of which derive from market 
participants who are not generally as active entering the market to 
rebalance their holdings in-line with the Russell Rebalance.\4\ The 
Exchange believes that the high trading volumes during the Russell 
Rebalance can significantly impact ADV, CADV and quoting calculations. 
The Exchange believes that excluding the date of the Russell Rebalance 
will mitigate the uncertainty faced by ETP Holders as to their quoting, 
ADV, and CADV levels and the corresponding rebate amounts during the 
month of the Russell Rebalance, thereby providing ETP Holders with an 
increased certainty as to that month's cost for trades executed on the 
Exchange. The Exchange further believes that removing this uncertainty 
will encourage ETP Holders to participate in trading on the Exchange 
during the remaining trading days in the month of the Russell Rebalance 
in a manner intended to be incented by the Exchange's Fee Schedule.
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    \4\ See, e.g., Securities Exchange Act Release No. 69793 (July 
18, 2013), 78 FR 37865, 37866 (July 24, 2013) (SR-BATS-2013-034) 
(excluding the Russell Reconstitution Day from the definition of 
ADV); Securities Exchange Act Release No. 72002 (April 23, 2014), 79 
FR 24028, 24029 (April 29, 2014) (SR-EDGX-2014-10) (same).
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    To effectuate this change, the Exchange proposes to add a new 
subsection (2) to the second bullet under Section I, heading B titled 
``General.'' As proposed, the new clause would provide that the 
Exchange may exclude shares traded any day that ``is the date of the 
annual reconstitution of the Russell Investments Indexes.'' The 
proposed change is similar to, and consistent with, the rules of the 
Exchange's affiliates and other self-regulatory organizations.\5\
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    \5\ See, e.g., NYSE Arca Equities Fees and Charges, available at 
https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf (``the date of the annual 
reconstitution of the Russell Investments Indexes does not count 
toward volume tiers''); Cboe BZX U.S. Equities Exchange Fee 
Schedule, available at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/(``The Exchange excludes from its 
calculation of ADAV and ADV shares added or removed on . . . the 
last Friday in June (the `Russell Reconstitution Day')'').
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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. The Exchange notes that 
it operates in a highly fragmented and competitive market in which 
competitive forces constrain the Exchange's transaction fees, and 
market participants can readily trade on competing venues if they deem 
pricing levels at those other venues to be more favorable.
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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 Proposed Change Is Reasonable
    The Exchange believes that it is reasonable to permit the Exchange 
to eliminate from the calculation of quoting levels, ADV, and CADV the 
date of the annual Russell Rebalance because it will provide ETP 
Holders with a greater level of certainty as to their level of rebates 
and fees for trading in the month of the Russell Rebalance. By 
eliminating a trading day that would almost certainly lower an ETP 
Holder's ADV as a percentage of CADV, the Exchange believes that the 
proposal will make the majority of ETP Holders more likely to meet the 
minimum thresholds of higher tiers, which will provide additional 
incentive for ETP Holders to increase their participation on the 
Exchange and earn more favorable rates. As noted above, other self-
regulatory organizations have adopted rules that are substantially 
similar to the change being proposed by the Exchange.\8\
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    \8\ See notes 4-5, supra.
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The Proposal Is an Equitable Allocation of Fees
    The Exchange believes its proposal equitably allocates its fees 
among its market participants. Specifically, the Exchange believes that 
the proposal constitutes an equitable allocation of fees because the 
exclusion would apply equally to all ETP Holders and market 
participants and to all volume tiers. Further, the Exchange believes 
that removing a single known day of atypical trading behavior would 
allow all ETP Holders to more predictably calculate the costs 
associated with their trading activity on the Exchange on the Russell 
Rebalance day, thereby enabling such participants to operate their 
business without concern of unpredictable and potentially significant 
changes in revenues and expenses.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory because the exclusion would apply

[[Page 49140]]

equally to all permit holders, to all market participants and to all 
volume tiers. Moreover, the proposal neither targets nor will it have a 
disparate impact on any particular category of market participant. 
Rather, as discussed above, the Exchange believes that removing a 
single known day of atypical trading behavior would allow all ETP 
Holders to more predictably calculate the credits and fees associated 
with their trading activity on the Russell Rebalance day, thereby 
enabling such participants to operate their business without concern of 
unpredictable and potentially significant changes in expenses.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\9\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Rather, as noted above, by eliminating a trading 
day that would almost certainly result in lowering an ETP Holder's ADV 
as a percentage of CADV, the Exchange believes that the proposal will 
benefit the majority of ETP Holders by making it more likely for them 
to meet the minimum thresholds of higher tiers, which will provide 
additional incentive for ETP Holders to increase their participation on 
the Exchange and earn more favorable rates. The Exchange believes that 
the proposal thus fosters competition by providing an additional 
incentive to ETP Holders to submit orders to the Exchange. The proposed 
exclusion 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.
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    \9\ 15 U.S.C. 78f(b)(8).
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    Intramarket Competition. The proposed change is designed to 
eliminate a trading day that would almost certainly result in lowering 
an ETP Holder's ADV as a percentage of CADV. The Exchange believes that 
the proposal would provide additional incentive for ETP Holders to 
increase their participation on 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. The proposed exclusion 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. In such an 
environment, the Exchange must continually adjust its fees and rebates 
to remain competitive with other exchanges and with off-exchange 
venues. By providing ETP Holders with a greater level of certainty as 
to their level of rebates and costs for trading in the month of the 
Russell Rebalance, the Exchange believes that the proposed change could 
promote competition between the Exchange and other execution venues by 
encouraging ETP Holders to their participation on the Exchange in order 
to earn more favorable rates.

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

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

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

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

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSENAT-2019-20 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSENAT-2019-20. 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 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-NYSENAT-2019-20, and should be submitted 
on or before October 9, 2019.


[[Page 49141]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-20156 Filed 9-17-19; 8:45 am]
 BILLING CODE 8011-01-P


