[Federal Register Volume 85, Number 133 (Friday, July 10, 2020)]
[Notices]
[Pages 41633-41635]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14869]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89220; File No. SR-NYSE-2020-54]


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

July 6, 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 June 23, 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 
and II 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 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 Price List 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 Price List 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 member organizations as to their 
quoting, ADV, and CADV levels and the corresponding rebate amounts 
during the month of the Russell Rebalance, thereby providing member 
organizations 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 member organizations 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 Price List.
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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 clause to 
current footnote * following ``Transaction Fees.'' 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''); NYSE National, Inc. Schedule of Fees and 
Rebates, available at https://www.nyse.com/publicdocs/nyse/regulation/nyse/NYSE_National_Schedule_of_Fees.pdf (``the Exchange 
may exclude shares traded any day that . . . is the date of the 
annual reconstitution of the Russell Investments Indexes'' for 
purposes of determining transaction fees and credits based on 
quoting levels, ADV, and CADV); 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 member 
organizations 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 a member 
organization's ADV as a percentage of CADV, the Exchange believes that 
the proposal will make the majority of member organizations more likely 
to meet the minimum thresholds of higher

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tiers, which will provide additional incentive for member organizations 
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 member organizations 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 member organizations 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 equally to all member 
organizations, 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 member organizations 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 a member 
organization's ADV as a percentage of CADV, the Exchange believes that 
the proposal will benefit the majority of member organizations by 
making it more likely for them to meet the minimum thresholds of higher 
tiers, which will provide additional incentive for member organizations 
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 member organizations 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 
a member organization's ADV as a percentage of CADV. The Exchange 
believes that the proposal would provide additional incentive for 
member organizations to increase their participation on 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. 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 member organizations 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 member organizations 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-NYSE-2020-54 on the subject line.

Paper Comments

     Send paper comments in triplicate to: Secretary, 
Securities and Exchange

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Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2020-54. 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-2020-54 and should be submitted on 
or before July 31, 2020.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-14869 Filed 7-9-20; 8:45 am]
BILLING CODE 8011-01-P


