[Federal Register Volume 85, Number 53 (Wednesday, March 18, 2020)]
[Notices]
[Pages 15533-15538]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-05559]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88373; File No. SR-NYSE-2020-14]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Transition Period for Member Organizations To Transition to 
the Utilization of Ports That Connect to the Exchange Using Pillar 
Technology

March 12, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on March 2, 2020, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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) extend the 
Transition Period for member organizations to transition to the 
utilization of ports that connect to the Exchange using Pillar 
technology; (2) shorten the Decommission Period from six to four 
months; (3) extend the effective date that the Exchange would prorate 
the monthly fee for ports activated on or after July 1, 2019; and (4) 
revise the fees charged for legacy port connections during the 
Decommission Period. The Exchange proposes to implement these changes 
to its Price List effective March 2, 2020. The proposed rule change is 
available on the Exchange's website at www.nyse.com, at the principal 
office of

[[Page 15534]]

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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Effective July 3, 2019, the Exchange introduced transition pricing 
designed to provide member organizations an extended transition period 
to connect to the Exchange using Pillar technology with no fee 
increase. Specifically, the Exchange (1) adopted a cap on monthly fees 
for the use of certain ports connecting to the Exchange for the billing 
months July 2019 through March 2020 (the ``Transition Period''); (2) 
adopted a Decommission Extension Fee applicable for the billing months 
April 2020 through September 2020 (the ``Decommission Period'') for 
legacy port connections; and (3) prorated the monthly fee for certain 
ports activated after July 1, 2019, effective April 1, 2020.\4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 86360 (July 11, 
2019), 84 FR 34210 (SR-NYSE-2019-39).
---------------------------------------------------------------------------

    The Exchange proposes to
     extend the end of the Transition Period from March 2020 to 
August 2020 for member organizations to transition to the utilization 
of ports that connect to the Exchange using Pillar technology;
     shorten the Decommission Period that begins once the 
transition period ends from six months (April 2020-September 2020) to 
four months (September-December 2020);
     extend the effective date that the Exchange would prorate 
the monthly fee for certain ports activated on or after July 1, 2019 
from April 1, 2020 to September 1, 2020; and
     revise the fees charged for legacy port connections during 
the Decommission Period.
    The purpose of this filing is to provide additional time for member 
organizations to transition from older to newer and more efficient 
Pillar technology. The Exchange is not proposing to adjust the amount 
of the port fees, which will remain at the current level for all market 
participants. The Exchange would continue to provide a cap on how much 
member organizations would be charged for ports during the proposed 
extra five months of the Transition Period so that they would not incur 
additional charges during the transition to Pillar communication 
protocols. Moreover, the Exchange proposes to shorten the period during 
which the few firms that do not transition during the proposed longer 
Transition Period would be charged fees to offset the Exchange's 
continuing costs of supporting legacy ports, and proposes to increase 
those fees to account for the overall longer time period that the 
Exchange would need to support legacy ports.
    The Exchange proposes to implement these changes to its Price List 
effective March 2, 2020.
Competitive Environment
    The Exchange operates in a highly 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.'' \5\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (``Regulation 
NMS'').
---------------------------------------------------------------------------

    As the Commission itself recognized, the market for trading 
services in NMS stocks has become ``more fragmented and competitive.'' 
\6\ Indeed, equity trading is currently dispersed across 13 
exchanges,\7\ 31 alternative trading systems,\8\ and numerous broker-
dealer internalizers and wholesalers. Based on publicly-available 
information, no single exchange has more than 20% of the market share 
of executed volume of equity trades (whether excluding or including 
auction volume).\9\ 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 or reduce use of 
certain categories of products, including ports, in response to fee 
changes. Accordingly, the Exchange's fees, including port fees, are 
reasonably constrained by competitive alternatives and market 
participants can readily trade on competing venues if they deem pricing 
levels at those other venues to be more favorable.
---------------------------------------------------------------------------

    \6\ 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'').
    \7\ 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.
    \8\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \9\ See Cboe Global Markets U.S. Equities Market Volume Summary, 
available at http://markets.cboe.com/us/equities/market_share/.
---------------------------------------------------------------------------

    The Exchange is proposing these changes in the context of a 
competitive environment in which market participants can and do shift 
order flow, or discontinue or reduce use of certain categories of 
products, in response to fee changes. Because ports are used by member 
organizations to trade electronically on the Exchange, fees associated 
with ports are subject to these same competitive forces. The Exchange 
believes that the proposal represents a reasonable attempt to provide 
member organizations with additional time to effect an orderly 
transition to upgraded technology without incurring additional costs. 
If a member organization is unable to complete this transition within 
the proposed longer period, the proposed pricing is designed to offset 
the Exchange's continuing costs of supporting legacy ports for a longer 
period of time.
Proposed Rule Change
    Member organizations enter orders and order instructions, and 
receive information from the Exchange, by establishing a connection to 
a gateway that uses communication protocols that map to the order types 
and modifiers described in Exchange rules. These gateway connections, 
also known as logical port connections, are referred to as ``ports'' on 
the Exchange's Price List. Legacy ports connect with the Exchange via a 
Common Customer Gateway (known as ``CCG'') that accesses its equity 
trading systems (``Phase I ports''). Beginning July 1, 2019, the 
Exchange began to make available ports using Pillar gateways to its 
member organizations (``Phase II ports'').
Extension of the Date To Prorate Ports
    The Exchange currently makes available ports that provide 
connectivity

[[Page 15535]]

to the Exchange's trading systems (i.e., ports for entry of orders and/
or quotes (``order/quote entry ports'')) and charges $550 per port per 
month. Designated Market Makers (``DMMs'') are not charged for the 
first 12 ports per month that connect to the Exchange.\10\ The Exchange 
also currently makes ports available for drop copies and charges $550 
per port per month,\11\ except that DMMs are not charged for drop copy 
ports that connect to the Exchange.
---------------------------------------------------------------------------

    \10\ DMMs completed the transition to Phase II ports last year.
    \11\ Only one fee per drop copy port applies, even if receiving 
drop copies from multiple order/quote entry ports.
---------------------------------------------------------------------------

    During the ongoing first phase of the Exchange's transition 
pricing, the fees charged for both order/quote entry and drop copy 
ports are, with certain exceptions, capped at--and thus not charged for 
more than--the total number of both order/quote entry and drop copy 
ports that the member organization has activated as of its June 2019 
invoice.
    Effective April 1, 2020, the Exchange will prorate fees for order/
quote entry and drop copy ports activated after July 1, 2019, to the 
number of trading days that a port is eligible for production trading 
with the Exchange, including any scheduled early closing days.
    The Exchange proposes to extend the effective date for the 
prorating of order/quote entry and drop copy ports to September 1, 2020 
to coincide with the end of the proposed extended Transition Period in 
August 2020, discussed below.
Extension of the Transition Period
    Currently, during the billing months of July 2019 through March 
2020 (the ``Transition Period''), the total number of ports charged per 
member organization is capped at the total number of ports that the 
member organization activated as of the June 2019 invoice, which was 
the last full month prior to the introduction of the new gateways (the 
``Transition Cap''). Transition Cap pricing is available until the 
earlier of (1) the end of the Transition Period, i.e., March 2020, or 
(2) the billing month during which a member organization fully 
transitions to using only ports that communicate using Pillar phase II 
protocols. If during the Transition Period, a member organization 
increases the number of Phase I ports above the Transition Cap, those 
ports would be charged at the current rates for order/quote entry ports 
and drop copy ports. Finally, if during the Transition Period a member 
organization has a total number of ports below the Transition Cap, the 
Exchange would charge a member organization for their actual number of 
ports.
    The Exchange proposes to extend the Transition Period by five 
months to August 2020. As proposed, the charge per port (order/quote 
entry and drop copy) would remain at $550 per port per month. DMMs 
would continue not to be charged for drop copy ports and for their 
first 12 order/quote entry ports per month that connect to the Exchange 
and then charged $550 per order/quote entry port that connects to the 
Exchange per month thereafter.
    The purpose of Transition Period pricing is to cap port fees to 
allow member organizations additional time to implement technology 
changes necessary to connect to the Exchange using the Phase II ports 
without incurring additional Exchange fees. As of January 2020, only 
42% of Phase I ports have been cancelled. Based on the Exchange's 
experience to date, the Exchange believes that an additional five 
months will be necessary to provide sufficient time for all member 
organizations, regardless of size, to be able to complete the necessary 
changes and transition fully to the Phase II ports.
Extension of the Decommission Period and New Decommission Extension Fee
    Currently, member organizations that have not transitioned to Phase 
II ports and are still utilizing Phase I ports during the billing 
months of April 2020 through September 2020 (i.e., the Decommission 
Period), would, in addition to the current port fees, be charged a 
Decommission Extension Fee of $500 per port per month, increasing by 
$500 per port for each month for any ports that communicate using 
Pillar phase I protocols. As per the Price List, ports using Pillar 
phase I protocols would no longer be available beginning October 1, 
2020.
    The Exchange proposes that the Decommission Period would begin in 
September 2020, after the end of the proposed longer Transition Period, 
and shortened to four months. As proposed, the Decommission Period 
would commence in September 2020 and end in December 2020. As a result, 
the Price List would also be amended to provide that ports using Pillar 
phase I protocols would no longer be available beginning January 1, 
2021. The Exchange further proposes to increase the Decommission 
Extension Fee to $1,000 per port per month and increasing by $1,000 per 
port for each month for any ports that communicate using Pillar phase I 
protocols.
    For example, in January 2020, Firm A has 10 Phase I ports and a 
Transition Cap of 10 ports. By September 2020, the first month of the 
proposed Decommission Period, Firm A still has two Phase I ports. In 
this scenario, Firm A would be charged the standard port rate for two 
Phase I ports plus $1,000 per port for the Decommission Extension Fee.
    If Firm A has the same two Phase I ports in October 2020, Firm A 
would be charged the standard port rate for the two Phase I ports plus 
$2,000 per port for the Decommission Extension Fee.
    If Firm A retains the two Phase I ports until December 2020, the 
final month of the proposed enlarged Decommission Period, Firm A would 
be charged the standard port rate for the two Phase I ports plus $4,000 
per port for the Decommission Extension Fee.
    As noted above, the Exchange believes that a longer Transition 
Period would provide sufficient time for member organizations to fully 
transition to Phase II ports and eliminate their use of Phase I ports. 
To the extent that member organizations do not complete the transition 
during the Transition Period, the Exchange will offer member 
organizations the ability to choose to continue using Phase I ports 
until December 2020. To cover the costs associated with maintaining and 
supporting both Phase I ports and Phase II ports beyond the longer 
Transition Period, and to provide an added incentive for member 
organizations to migrate to Phase II ports before the end of the 
Transition Period, the Exchange proposes to increase the costs for the 
expected very small number of member organizations that would need 
longer to transition than the 14-month Transition Period. Specifically, 
to support the continued availability of the Phase I ports, the 
Exchange would have to maintain additional hardware and devote 
technology resources to maintain and operate those ports, which is a 
cost to the Exchange. While these costs cannot be specifically 
quantified and it is unknown how many (if any) member organizations 
would need to continue to access the Exchange using Phase I ports after 
the Transition Period, the Exchange believes that the proposed 
increased Decommission Extension Fee would, in part, cover the costs 
associated with continuing to support the Phase I port infrastructure 
for use by a dwindling number of member organizations. The Exchange 
believes that the proposed additional five months will provide more 
than sufficient time for the transition and that fewer member 
organizations will choose to pay the proposed Decommission Fee because 
they do not transition within the extended Transition Period.

[[Page 15536]]

    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any problems that member 
organizations would have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\13\ 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) & (5).
---------------------------------------------------------------------------

The Proposed Changes Are Reasonable
    The Exchange operates in a highly 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.'' \14\
---------------------------------------------------------------------------

    \14\ See Regulation NMS, 70 FR at 37499.
---------------------------------------------------------------------------

    As the Commission itself recognized, the market for trading 
services in NMS stocks has become ``more fragmented and competitive.'' 
\15\ Indeed, equity trading is currently dispersed across 13 
exchanges,\16\ 31 alternative trading systems,\17\ and numerous broker-
dealer internalizers and wholesalers. Based on publicly-available 
information, no single exchange has more than 20% of the market share 
of executed volume of equity trades (whether excluding or including 
auction volume).\18\ 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 or reduce use 
of certain categories of products, including ports, in response to fee 
changes. Accordingly, the Exchange's fees, including port fees, are 
reasonably constrained by competitive alternatives and market 
participants can readily trade on competing venues if they deem pricing 
levels at those other venues to be more favorable.
---------------------------------------------------------------------------

    \15\ See Transaction Fee Pilot, 84 FR at 5253.
    \16\ See Cboe Global Markets, U.S. Equities Market Volume, 
available at http://markets.cboe.com/us/equities/market_share/. See 
generally https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \17\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \18\ See Cboe Global Markets U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/.
---------------------------------------------------------------------------

    If a particular exchange charges excessive fees for connectivity, 
impacted members and non-members may opt to terminate their 
connectivity arrangements with that exchange, and adopt a possible 
range of alternative strategies, including routing to the applicable 
exchange through another participant or market center or taking that 
exchange's data indirectly. Accordingly, if the Exchange charges 
excessive fees, it would stand to lose not only connectivity revenues 
but also revenues associated with the execution of orders routed to it, 
and, to the extent applicable, market data revenues. The Exchange 
believes that this competitive dynamic imposes powerful restraints on 
the ability of any exchange to charge unreasonable fees for 
connectivity.
    Given this competitive environment, the proposal represents a fair 
and reasonable attempt to provide member organizations with additional 
time to make an orderly transition to upgraded technology without 
increasing their costs. As noted, more than half of legacy ports have 
not been cancelled. If a member organization is unable to complete this 
transition within the additional five months of the extended Transition 
Period, the pricing is designed so that only those few member 
organizations that may not transition within that time period would pay 
for the Exchange to continue to support their Phase I ports. 
Additionally, the Exchange believes that the revised Decommission 
Extension Fee for member organizations that choose to continue to 
connect to the Exchange through the use of Phase I ports following the 
end of the Transition Period is reasonable because the Exchange would 
continue to incur ongoing costs in maintaining Phase I ports for a 
longer period of time.
The Proposal Is an Equitable Allocation of Fees
    The Exchange believes its proposal equitably allocates its fees 
among its market participants. The Exchange is not proposing to adjust 
the amount of the port fees, which will remain at the current level for 
all market participants. Rather, the proposal would revise the 
Decommission Extension Fee for those few member organizations that 
choose not to transition to Phase II ports during the extended 
Transition Period.
    The Exchange believes that the proposal constitutes an equitable 
allocation of fees because all similarly situated member organizations 
and other market participants eligible for the Decommission Extension 
Fee would be charged the same rates. Specifically, the proposed revised 
Decommission Extension Fee would apply equally to all member 
organizations that choose to connect to the Exchange through the use of 
Phase I ports during the Decommission Period. Moreover, as noted above, 
the Exchange proposes a longer transition period which the Exchange 
expects should be more than sufficient for all member organizations, 
regardless of size, to transition to Phase II ports before the proposed 
revised Decommission Fee goes into effect.
    The proposal to pro-rate port fees beginning September 1, 2020, is 
also an equitable allocation of fees since it would apply equally to 
all member organizations that connect to the Exchange, who would 
equally receive the benefit of being charged only for the connectivity 
utilized during any trading month beginning in September 1, 2020. As 
noted above, to the extent a member organization continues to use ports 
activated before July 1, 2019 to connect to the Exchange during the new 
September 1, 2020 date and any subsequent months, the Exchange believes 
it is fair and equitable to continue to charge flat fees for such ports 
until such time that connection to the Exchange through the use of 
Phase I ports is no longer available beginning January 1, 2021.
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, and are free to 
discontinue to connect to the Exchange through its ports. As noted, the 
Exchange is offering upgraded connections in an effort to keep pace 
with changes in the industry and evolving customer needs as new 
technologies emerge and products continue to develop and change.
    The proposal neither targets nor will it have a disparate impact on 
any particular category of market participant. The Exchange believes 
that the proposal does not permit unfair discrimination because the 
proposal would be applied to all similarly

[[Page 15537]]

situated member organizations and other market participants would be 
charged the same rates.
    The Exchange believes that the proposal does not permit unfair 
discrimination because the Exchange will be making available both the 
Phase I and Phase II ports available to all member organizations during 
the extended Transition Period on an equal basis. Accordingly, no 
member organization already operating on the Exchange would be 
disadvantaged by this allocation of fees. For the same reasons, the 
Exchange believes that the proposal would not permit unfair 
discrimination between member organizations.
    Similarly, the proposal does not permit unfair discrimination 
between member organizations because the proposed revised Decommission 
Extension Fee would apply equally to all member organizations that 
choose to connect to the Exchange through the use of such ports during 
the proposed Decommission Period. If a member organizations becomes 
subject to the Decommission Fee, it would only be because such firm 
chose not to complete its transition to the Phase II ports by the end 
of the longer Transition Period. While the Exchange cannot predict with 
certainty whether any firms would be subject to the Decommission Fee, 
and if so, which ones, the Exchange anticipates that it would be a 
limited set of member organizations that would incur such fees. 
Moreover, the Exchange believes that increasing the Decommission 
Extension Fee for each month for ports that communicate using Pillar 
phase I protocols once the new Decommission Period begins would also 
apply equally to all member organizations that continue to choose to 
connect to the Exchange utilizing legacy ports.
    The Exchange believes that the proposal to pro-rate port fees does 
not permit unfair discrimination because it would apply equally to all 
member organizations that connect to the Exchange, who would equally 
receive the benefit of being charged only for the connectivity utilized 
during any trading month beginning September 1, 2020. As noted, to the 
extent a member organization continues to use ports activated before 
July 1, 2019 to connect to the Exchange during September 1, 2020 and 
any subsequent months, the Exchange believes it is fair, equitable and 
not unfairly discriminatory to continue to charge flat fees for such 
ports until such time that connection to the Exchange through the use 
of old ports is no longer available beginning January 1, 2021.
    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 provide additional time for member 
organizations to transition from older to newer and more efficient 
Pillar technology with no fee increase and offset the Exchange's 
continuing costs of supporting the Phase I ports for the few firms that 
do not transition to the new ports during the longer transition period 
without any change to the fees currently charged by the Exchange for 
the use of ports to connect to the Exchange's trading systems.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    Intramarket Competition. The Exchange does not believe the proposed 
rule change would impose any burden on intramarket competition that is 
not necessary or appropriate because it would apply to all member 
organizations equally that connect to the Exchange. All member 
organizations, regardless of size, will be eligible for the transition 
pricing through the extended Transition Period ending August 2020 and 
will be eligible to connect via either Phase I or Phase II ports during 
this period. In addition, all member organizations will be subject to 
the proposed Decommission Fee on an equal basis if they do complete the 
transition to Phase II ports by the end of the new August 2020 date. As 
noted, the Exchange anticipates that a low percentage of member 
organizations would be subject to the proposed Decommission Fee, and 
the firms likely to be subject to such fee would be larger firms that 
could more easily absorb the cost of that fee. The Exchange further 
believes that by extending the Transition Period and providing six 
months' notice of the revised Decommission Fee, all member 
organizations have an equal opportunity to timely transition to Phase 
II ports before the new Decommission Fee would take effect.
    Intermarket Competition. The Exchange does not believe the proposed 
rule change would impose any burden on intermarket competition that is 
not necessary or appropriate because 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. The 
Exchange believes that fees for connectivity are constrained by the 
robust competition for order flow among exchanges and non-exchange 
markets.
    As noted, the no single exchange has more than 20% of the market 
share of executed volume of equity trades (whether excluding or 
including auction volume).\20\ 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 or reduce use of certain categories of products, including 
ports, in response to fee changes. Accordingly, the Exchange's fees, 
including port fees, are reasonably constrained by competitive 
alternatives and market participants can readily trade on competing 
venues if they deem pricing levels at those other venues to be more 
favorable.
---------------------------------------------------------------------------

    \20\ See Cboe Global Markets U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/.
---------------------------------------------------------------------------

    The Exchange is proposing these changes in the context of a 
competitive environment in which market participants can and do shift 
order flow, or discontinue or reduce use of certain categories of 
products, in response to fee changes. Because ports are used by member 
organizations to trade electronically on the Exchange, fees associated 
with ports are subject to these same competitive forces. The Exchange 
therefore believes that the proposal would not impose an undue burden 
on intermarket competition because the purpose of this filing is not to 
change the rates charged for ports but rather to provide member 
organizations with more time to effect an orderly transition to 
upgraded technology without needing to incur any additional costs. If a 
member organization is unable to complete this transition within the 
proposed longer period, the pricing is designed to offset the 
Exchange's continuing costs of supporting legacy ports for a shorter 
period of time.

[[Page 15538]]

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.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-2020-14 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-2020-14. 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-2020-14 and should be submitted on 
or before April 8, 2020.
---------------------------------------------------------------------------

    \24\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-05559 Filed 3-17-20; 8:45 am]
 BILLING CODE 8011-01-P


