[Federal Register Volume 86, Number 100 (Wednesday, May 26, 2021)]
[Notices]
[Pages 28399-28405]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-11082]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91948; File No. SR-NYSE-2021-33]


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

May 20, 2021.
    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 May 17, 2021, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``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) introduce a 
new fee for orders designated with a Retail Modifier at the open and 
the close; (2) revise certain requirements for executions at the open 
and the close; (3) introduce an additional credit under the Step Up 
Tier 2 Adding Credit; and (4) revise certain requirements for Retail 
Price Improvement (``RPI'') orders in the Retail Liquidity Program. The 
Exchange proposes to implement the fee changes effective May 17, 
2021.\4\ 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.
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    \4\ The Exchange originally filed to amend the Price List on May 
3, 2021 (SR-NYSE-2021-30). SR-NYSE-2021-30 was subsequently 
withdrawn and replaced by this filing.
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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 (1) introduce a 
new fee for orders designated with a Retail Modifier at the open and 
the close; (2) revise certain requirements for executions at the open 
and the close; (3) introduce an additional credit under the Step Up 
Tier 2 Adding Credit; and (4) revise certain requirements for RPI 
orders in the Retail Liquidity Program.
    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 liquidity to the Exchange, including 
retail order flow.
    The Exchange proposes to implement the fee changes effective May 
17, 2021.
Background
Current Market and 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. 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\
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    \5\ 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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    While Regulation NMS has enhanced competition, it has also fostered 
a ``fragmented'' market structure where trading in a single stock can 
occur across multiple trading centers. When multiple trading centers 
compete for order flow in the same stock, the Commission has recognized 
that ``such competition can lead to the fragmentation of order flow in 
that stock.'' \6\ Indeed, equity trading is currently dispersed across 
16 exchanges,\7\ 31 alternative trading systems,\8\ and numerous 
broker-dealer internalizers and wholesalers, all competing for order 
flow. Based on publicly available information, no single exchange has 
more than 20% market share.\9\ Therefore, no exchange possesses 
significant pricing power in the execution of equity order flow. More 
specifically, the Exchange's market share of trading in Tape A, B and C 
securities combined is less than 12%.
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    \6\ See Securities Exchange Act Release No. 61358, 75 FR 3594, 
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on 
Equity Market Structure).
    \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/.
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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 numerous 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.
    In response to this competitive environment, the Exchange has 
established incentives for its member organizations who submit orders 
that provide liquidity on the Exchange. The proposed fee change is 
designed to

[[Page 28400]]

attract additional order flow to the Exchange by incentivizing member 
organizations to submit additional displayed liquidity to the Exchange, 
including retail order flow.
Proposed Rule Change
Executions at the Open
    For securities priced $1.00 or more, the Exchange currently charges 
a fee of $0.0010 per share for executions at the open and a fee of 
$0.0003 per share for executions at the open by Floor brokers, subject 
to a monthly fee cap of $30,000 per member organization provided the 
member organization executes an average daily volume (``ADV'') that 
adds liquidity to the Exchange during the billing month (``Adding 
ADV''),\10\ excluding liquidity added by a Designated Market Maker 
(``DMM''), of at least five million shares.
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    \10\ The terms ``ADV'' and ``CADV'' are defined in footnote * of 
the Price List.
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    The Exchange proposes to introduce a fee of $0.0005 for executions 
at the open designated with a Retail Modifier as defined in Rule 
13.\11\ In addition, the Exchange proposes to increase the per member 
organization monthly fee cap for all member organization executions at 
the open to $35,000. As proposed, the fee for executions at the open 
with a Retail Modifier as well as the current fees for executions at 
the open would be subject to a $35,000 per member organization monthly 
fee cap.\12\ DMMs currently are not charged for executions at the 
opening and would continue to not be charged.
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    \11\ The Exchange proposes the non-substantive, conforming 
change of replacing ``designated with a Retail Modifier as defined 
in Rule 13'' and ``designated as `retail' (i.e., orders that satisfy 
the Retail Modifier requirements of Rule 13'' with the defined term 
``Retail Modifier'' where the phrases appear in the Price List. In 
one place, ``are not designated with a Retail Modifier as defined in 
Rule 13'' would be replaced with ``no Retail Modifier.'' As Rule 13 
makes clear, orders with a ``retail'' modifier are separate and 
distinct from a ``Retail Order'' under Rule 107C (now Rule 7.44, see 
note 17, infra).
    \12\ The Exchange has not previously amended the $30,000 cap. In 
2020, the Exchange eliminated an alternative cap and corresponding 
requirements. See Securities Exchange Act Release Nos. 87957 
(January 14, 2020), 85 FR 3440 (January 21, 2020) (SR-NYSE-2020-02).
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    The Exchange believes that the proposed fee for executions at the 
open designated with a Retail Modifier would encourage additional 
retail liquidity on the Exchange's opening auction by reducing the fee 
to execute at the open for those orders. The Exchange also believes a 
higher cap will encourage member organizations to increase their 
activity in order to qualify for the existing fees and the proposed fee 
for executions at the open.
Executions at the Close
    Currently, for all market at-the-close (``MOC'') and limit at-the-
close (``LOC'') orders from any member organization in the prior three 
billing months that do not meet the MOC/LOC Tier 1, Tier 2, or Tier 3 
requirements, the Exchange currently charges member organizations 
$0.0010 per share for MOC orders, $0.0005 for MOC orders executed by a 
Floor broker unless a lower tiered fee applies, and $0.0011 for LOC 
Orders. The Exchange proposes to charge $0.0008 per share for MOC and 
LOC Orders with a Retail Modifier, unless a lower tiered fee applies.
    Similarly, the Exchange does not currently charge member 
organizations for the first 750,000 ADV of the aggregate of executions 
at the close for D Orders,\13\ Floor broker executions swept into the 
close, excluding verbal interest, and executions at the close, 
excluding market at-the-close (``MOC'') Orders, limit at-the-close 
(``LOC'') Orders and Closing Offset (``CO'') Orders. After the first 
750,000 ADV of the aggregate of executions at the close by a member 
organization, D Orders are charged fees differentiated by time of entry 
(or last modification). With respect to D Orders last modified in the 
last 3 minutes before the scheduled close of trading, the Exchange 
charges member organizations in MOC/LOC Tiers 1 and 2 a fee of $0.0008 
per share. The Exchange proposes to charge this fee to member 
organizations in MOC/LOC Tiers 1 and 2, both with an Adding ADV of at 
least 0.50% of Tape A CADV. The purpose of this change is to encourage 
additional adding liquidity on the Exchange by providing an incentive 
for member organizations to submit greater adding liquidity to achieve 
a lower fee for D Orders at the close.
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    \13\ ``d-Quotes'' are now called ``D Orders.'' See Rule 
7.31(Orders and Modifiers). The Exchange proposes the non-
substantive change of replacing references to ``d-Quote'' and ``d-
Quotes'' with ``D Order'' and ``D Orders,'' respectively, in the 
Price List.
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Step Up Tier 2 Adding Credit
    Under the current Step Up Tier 2 Adding Credit, a member 
organization that sends orders, except Mid-Point Liquidity Orders 
(``MPL'') and Non-Displayed Limit Orders, that add liquidity in Tape A 
securities receives the credit specified below if:
     The member organization quotes at least 15% of the 
National Best Bid or Offer (``NBBO'') \14\ in 300 or more Tape A 
securities on a monthly basis, and
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    \14\ See Rule 1.1(q) (defining ``NBBO'' to mean the national 
best bid or offer).
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     The member organization's Adding ADV in Tapes A, B and C 
securities as a percentage of Tapes A, B and C CADV, excluding any 
orders by a DMM, that
    [cir] is at least two times more than the Member Organization's 
Adding ADV in Tapes A, B and C securities in July 2019 as a percentage 
of Tapes A, B and C CADV, and
    [cir] adds liquidity as an Supplemental Liquidity Provider 
(``SLP'') in Tape A securities of at least 0.10% of NYSE CADV, and
    [cir] exceeds the Member Organization's Adding ADV, excluding any 
liquidity added by a DMM, in Tapes A, B and C securities in July 2019 
as a percentage of Tapes A, B and C CADV by at least 0.20% of Tapes A, 
B and C CADV.
    Currently, member organizations whose Adding ADV as a percentage of 
US CADV represents an increase of at least 0.20% and less than 0.35% 
over their July 2019 Adding ADV as a percentage of US CADV receive a 
$0.0029 credit. Member organizations whose Adding ADV as a percentage 
of US CADV represents an increase of at least 0.35% and less than 0.45% 
over their July 2019 Adding ADV as a percentage of US CADV receive a 
$0.0030 credit. Finally, member organizations whose Adding ADV as a 
percentage of US CADV represents an increase of at least 0.45% or more 
over their July 2019 Adding ADV as a percentage of US CADV receive a 
$0.0031 credit.
    In addition, a member organization that meets these requirements 
and adds liquidity, excluding liquidity added as a SLP, in Tapes B and 
C Securities of at least 0.20% of Tape B and Tape C CADV combined 
receives an additional $0.00005 per share for adding liquidity in Tape 
A securities.
    The Exchange proposes to modify the current requirements to qualify 
for the Step Up Tier 2 Adding Credit, as follows.
    First, a member organization's Adding ADV in Tapes A, B and C 
securities as a percentage of Tapes A, B and C CADV, excluding any 
orders by a DMM, would need to be at least 1.75 times more than the 
Member Organization's Adding ADV in Tapes A, B and C securities in July 
2019 as a percentage of Tapes A, B and C CADV.
    Second, a member organization would need to add liquidity as an SLP 
in Tape A securities of at least 0.05% of NYSE CADV.
    Third, a member organization's Adding ADV in Tapes A, B and C 
securities as a percentage of Tapes A, B and C CADV, excluding any 
orders by a DMM, would need to exceed the member organization's Adding 
ADV,

[[Page 28401]]

excluding any liquidity added by a DMM, in Tapes A, B and C securities 
in July 2019 as a percentage of Tapes A, B and C CADV by at least 0.10% 
of Tapes A, B and C CADV.
    In addition, the Exchange proposes a $0.0025 credit for member 
organizations that meet the requirements for the Step Up Tier 2 Adding 
Credit as modified whose Adding ADV as a percentage of US CADV 
represents an increase of at least 0.10% and less than 0.20% over their 
July 2019 Adding ADV as a percentage of US CADV.
    The requirements for the current increase in Adding ADV as a 
percentage of US CADV over the member organization's July 2019 Adding 
ADV as a percentage of US CADV, of at least 0.20% and less than 0.35% 
for the $0.0029 credit, of at least 0.35% and less than 0.45% for the 
$0.0030 credit, and of at least 0.45% for the $0.0031 credit, would all 
remain unchanged.
    The purpose of the proposed change is to incentivize member 
organizations to increase the liquidity-providing orders 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. By offering a lower credit with a lower increase in 
Adding ADV requirement, the Exchange believes the proposed change would 
encourage more member organizations to try to achieve the offered step 
up credits by directing more order flow that adds liquidity to the 
Exchange. The Exchange believes that by correlating the amount of the 
credit to the level of orders sent by a member organization that add 
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 to incoming 
marketable orders submitted to the Exchange. As noted above, the 
Exchange operates in a competitive environment, particularly as it 
relates to attracting non-marketable orders, which add liquidity to the 
Exchange. Because, as proposed, the tier requires a member organization 
to increase the volume of its trades against orders that add liquidity, 
the Exchange believes that the proposed higher credits based on a 
commensurate increase in Adding ADV would provide an incentive for 
member organizations to route additional liquidity to the Exchange in 
order to qualify for the higher credits.
    The Exchange does not know how much order flow member organizations 
choose to route to other exchanges or to off-exchange venues. As 
described above, member organizations with liquidity-providing orders 
have a choice of where to send those orders. The Exchange believes that 
offering an alternate credit and modifying the requirements for member 
organizations to qualify for a tiered credit, more member organizations 
will be able to choose to route their liquidity-providing orders to the 
Exchange to qualify for the credit. However, without having a view of 
member organization's activity on other exchanges and off-exchange 
venues, the Exchange has no way of knowing whether this proposed rule 
change would result in any member organization directing orders to the 
Exchange in order to qualify for the new credit.
RPI Orders
    The Retail Liquidity Program is designed to attract additional 
retail order flow to the Exchange for NYSE-listed securities while also 
providing the potential for price improvement to such order flow.\15\ 
Retail order flow is submitted through the Retail Liquidity Program as 
a distinct order type called a ``Retail Order,'' which is an agency 
order or a riskless principal order that meets the criteria of 
Financial Industry Regulatory Authority, Inc. Rule 5320.03 that 
originates from a natural person and is submitted to the Exchange by a 
Retail Member Organization (``RMO''), provided that no change is made 
to the terms of the order with respect to price or side of market and 
the order does not originate from a trading algorithm or any other 
computerized methodology.\16\ In addition to RMOs, an additional class 
of market participants known as Retail Liquidity Providers (``RLPs'') 
are required to provide potential price improvement for Retail Orders 
in the form of ``RPIs,'' which are non-displayed interest that is 
better than the best protected bid (``PBB'') or best protected offer 
(``PBO''), as such terms are defined in Regulation NMS Rule 600(b)(57) 
(together, ``PBBO'').\17\
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    \15\ See Rule 7.44.
    \16\ See id. at (a)(3). An RMO is as a member organization (or a 
division thereof) that has been approved by the Exchange under Rule 
7.44 to submit Retail Orders. As noted above, under the Exchange's 
rules, a ``Retail Order'' is separate and distinct from an order 
with Retail Modifier.
    \17\ See 17 CFR 242.600(b)(57). RLP is defined in Rule 
7.44(a)(1) as a member organization that is approved by the Exchange 
to act as such and that is required to submit RPIs in accordance 
with Rule 7.44. RPI is defined in Rule 7.44(a)(4) and consists of 
non-displayed interest in NYSE-listed securities that would trade at 
prices better than the PBB or PBO by at least $0.001 and that is 
identified as such. Member organizations other than RLPs are also 
permitted, but not required, to submit RPIs.
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    A fee of $0.0003 per share currently applies to non-RLP member 
organization executions of RPIs against Retail Orders, unless the non-
RLP member organization executes an ADV during the month of at least 
500,000 shares of RPIs, in which case a credit of $0.0003 per share 
applies. The Exchange proposes to eliminate the exception for non-RLP 
member organizations that executes an ADV during the month of at least 
500,000 shares of RPIs. As proposed, non-RLP member organizations will 
receive a credit of $0.0003 per share for all RPI orders.\18\
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    \18\ The Exchange also proposes two non-substantive changes in 
this section of the Price List. First, the Exchange proposes the 
conforming change of deleting ``a non-RLP member organization 
(except DMMs), unless the rate immediately below applies; and'' 
which would be obsolete once the exception is deleted. Second, the 
Exchange would update the relevant rule reference from Rule 107C to 
Rule 7.44. The Exchange relocated the substance of Rule 107C to Rule 
7.44 as part of the transition of NYSE-listed securities to the 
Exchange's Pillar trading platform. See Securities Exchange Act 
Release No. 85930 (May 23, 2019), 84 FR 25100 (May 30, 2010) (SR-
NYSE-2020-26).
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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,\19\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\20\ 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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    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(4) & (5).
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    As discussed above, 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. 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.'' \21\ While Regulation 
NMS has enhanced competition, it has also fostered a ``fragmented'' 
market structure where

[[Page 28402]]

trading in a single stock can occur across multiple trading centers. 
When multiple trading centers compete for order flow in the same stock, 
the Commission has recognized that ``such competition can lead to the 
fragmentation of order flow in that stock.'' \22\
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    \21\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule) 
(``Regulation NMS'').
    \22\ See Securities Exchange Act Release No. 61358, 75 FR 3594, 
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on 
Equity Market Structure).
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    Given this competitive environment, the proposal represents a 
reasonable attempt to attract additional order flow to the Exchange.
The Proposed Change Is Reasonable
Executions at the Open
    The Exchange believes that the proposed fee for executions at the 
open designated with a Retail Modifier as defined in Rule 13 and the 
higher per member organization monthly fee cap for all member 
organization executions at the open are reasonable. The Exchange 
believes that the proposed fee for executions at the open with a Retail 
Modifier will encourage the submission of additional liquidity to a 
national securities exchange, thereby promoting price discovery and 
transparency and enhancing order execution opportunities for member 
organizations from the substantial amounts of liquidity that are 
present on the Exchange during the opening. The Exchange also believes 
a higher cap will encourage member organizations to increase their 
activity in order to qualify for the higher cap, which will result in 
no fees for executions above the new cap for those member 
organizations, which will benefit all participants through greater 
liquidity at the open.
Executions at the Close
    The Exchange believes that the proposed fee for MOC and LOC Orders 
with a Retail Modifier, unless a lower tiered fee applies, and the 
revised requirements for the fee for D Orders last modified in the last 
3 minutes before the scheduled close of trading, are reasonable. The 
purpose of these changes is to encourage additional liquidity on the 
Exchange because market participants benefit from the greater amounts 
of displayed liquidity present on a public exchange. The Exchange's 
Closing Auction is a recognized industry reference point,\23\ and 
member organizations receive a substantial benefit from the Exchange in 
obtaining high levels of executions at the Exchange's closing price on 
a daily basis. Finally, the Exchange believes it's reasonable to 
require an Adding ADV of 0.50% for the $0.0008 per share fee for D 
Orders last modified in the last 3 minutes before the scheduled close 
of trading for member organizations in MOC/LOC Tiers 1 and 2 as it 
would encourage greater adding liquidity on the Exchange, which 
benefits all market participants.
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    \23\ For example, the pricing and valuation of certain indices, 
funds, and derivative products require primary market prints.
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Step Up Tier 2 Adding Credit
    The Exchange believes that revising the current requirements to 
qualify for the Step Up Tier 2 Adding Credit and introducing a $0.0025 
credit for member organizations that meet the requirements for the Step 
Up Tier 2 Adding Credit as modified whose Adding ADV as a percentage of 
US CADV represents an increase of at least 0.10% and less than 0.20% 
over their July 2019 Adding ADV as a percentage of US CADV is 
reasonable.
    Specifically, the Exchange believes that offering credits for 
increased Adding ADV of a minimum and maximum percentage over a 
baseline would provide an incentive for member organizations to route 
additional liquidity providing orders to the Exchange. 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 
incrementally higher credits for orders that provide additional 
liquidity because it would encourage additional displayed liquidity on 
the Exchange and because market participants benefit from the greater 
amounts of displayed liquidity present on the Exchange. Because the 
tier requires a member organization to increase the volume of its 
trades against orders that add liquidity, the Exchange believes that 
the proposed lower credit based on a commensurate increase in Adding 
ADV would provide an incentive for member organizations to route 
additional liquidity to the Exchange in order to qualify for the higher 
credits. The Exchange does not know how much order flow member 
organizations choose to route to other exchanges or to off-exchange 
venues. As described above, member organizations with liquidity-
providing orders have a choice of where to send those orders. The 
Exchange believes that offering an alternate credit and modifying the 
requirements for member organizations to qualify for a tiered credit, 
more member organizations will be able to choose to route their 
liquidity-providing orders to the Exchange to qualify for the credit. 
However, without having a view of member organization's activity on 
other exchanges and off-exchange venues, the Exchange has no way of 
knowing whether this proposed rule change would result in any member 
organization directing orders to the Exchange in order to qualify for 
the new credit.
RPI Orders
    The Exchange believes that eliminating the exception for non-RLP 
member organizations that execute an ADV during the month of at least 
500,000 shares of RPIs so that non-RLP member organizations would 
receive a credit of $0.0003 per share for all RPI orders is reasonable 
because it would further incentivize submission of RPIs for interaction 
with Retail Orders and therefore could result in greater price 
improvement for Retail Orders. The proposed change is also reasonable 
because, with the revision of the requirements, non-RLP member 
organizations, and indirectly their customers, would continue to 
receive significant benefits in the form of price improvement by 
interacting with RPIs.
Non-Substantive Changes
    Finally, the Exchange believes the proposed non-substantive 
clarifying and conforming 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
Executions at the Open
    The Exchange believes the proposed fee for executions at the open 
with a Retail Modifier and to increase to the monthly fee cap are 
equitable because the proposal would contribute to robust levels of 
liquidity at the open, which benefits all market participants by 
attracting more liquidity to the Exchange, thereby improving market 
wide quality and price discovery at the open. The Exchange believes the 
proposed fee and increase to the monthly fee cap is reasonable as it 
would encourage the submission of additional retail liquidity to a 
national securities exchange, thereby promoting price discovery and 
transparency and enhancing order execution opportunities for member 
organizations from the substantial amounts of liquidity that are 
present on the Exchange during the opening.
    The proposal neither targets nor will it have a disparate impact on 
any

[[Page 28403]]

particular category of market participant. All member organizations 
that provide retail liquidity at the Exchange open could be eligible to 
qualify for the proposed fee. The Exchange believes that offering 
credits for providing liquidity will continue to attract order flow and 
liquidity to the Exchange, thereby providing additional price 
improvement opportunities on the Exchange and benefiting investors 
generally. As to those market participants that do not presently 
qualify for fee for executions at the open, the proposal will not 
adversely impact their existing pricing or their ability to qualify for 
other fees provided by the Exchange. Moreover, the proposed change 
represents an equitable allocation of the Exchange's fees because it 
would apply equally to all similarly situated member organizations. 
Finally, the Exchange notes that other markets have a similar cap for 
executions at the opening.\24\
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    \24\ For instance, on Nasdaq, each firm's Opening Cross charges 
for Market-On-Open (MOO) and Limit-On-Open (LOO) orders are capped 
at $35,000 per month, provided that the firm adds one million shares 
of liquidity, on average, during the month. See Nasdaq Price List, 
at http://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
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Executions at the Close
    The Exchange believes that it is equitable to modify the fees and 
requirements for executions at the close because the proposed changes 
would incentivize member organizations to send in more closing auction 
volume to the primary market, thereby deepening the Exchange's 
liquidity pool and supporting the quality of price discovery. The 
Exchange believes that it is equitable to charge fees to encourage 
member organizations to send orders to the Exchange for the closing 
auction because member organizations would continue to derive a 
substantial benefit from the higher volume of closing executions. The 
Exchange believes that its proposal would equitably balance these 
interests and continue to encourage order flow from multiple sources, 
which helps to maintain the quality of the Exchange's closing auctions 
for the benefit of all market participants.
Step Up Tier 2 Adding Credit
    The Exchange believes that the proposal to provide an additional 
incremental credit and lower the requirement for member organizations 
to qualify for the Step Up Tier 2 Adding Credit is equitable because it 
would encourage additional displayed liquidity on the Exchange and 
because market participants benefit from the greater amounts of 
displayed liquidity present on the Exchange. The Exchange believes that 
the magnitude of the additional credit is not unreasonably high 
compared to the current credits for Step Up Tier 2 and also relative to 
the other adding tier credits, which range from $0.0015 to $0.0031, in 
comparison to the credits paid by other exchanges for orders that 
provide additional step up liquidity.\25\
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    \25\ See Cboe BZX Fee Schedule, which has adding credits ranging 
from $0.0025 to $0.0032, at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/.
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    The Exchange believes the proposed rule change would improve market 
quality for all market participants on the Exchange and, as a 
consequence, attract more liquidity to the Exchange, thereby improving 
market-wide quality and price discovery. Since the proposed credit 
would be new, no member organization currently qualifies for it. The 
Exchange does not know how much order flow member organizations choose 
to route to other exchanges or to off-exchange venues. As described 
above, member organizations with liquidity-providing orders have a 
choice of where to send those orders. The Exchange believes that 
offering an alternate credit and modifying the requirements for member 
organizations to qualify for a tiered credit, more member organizations 
will be able to choose to route their liquidity-providing orders to the 
Exchange to qualify for the credit. However, without having a view of 
member organization's activity on other exchanges and off-exchange 
venues, the Exchange has no way of knowing whether this proposed rule 
change would result in any member organization directing orders to the 
Exchange in order to qualify for the new credit.
    The Exchange believes the proposed credit is reasonable as it would 
provide an additional incentive for member organizations to direct 
their order flow to the Exchange and provide meaningful added levels of 
liquidity in order to qualify for the higher credit, thereby 
contributing to depth and market quality on the Exchange. The proposal 
neither targets nor will it have a disparate impact on any particular 
category of market participant. All member organizations would be 
eligible to qualify for the proposed credit if they increase their 
Adding ADV over their own baseline of order flow accordingly. The 
Exchange believes that offering step up credits for providing liquidity 
if the step up requirements for Tape A securities are met, will 
continue to attract order flow and liquidity to the Exchange, thereby 
providing additional price improvement opportunities on the Exchange 
and benefiting investors generally. As to those market participants 
that do not presently qualify for the adding liquidity credits, the 
proposal would provide a lower entry point and revised requirements 
that could allow those member organizations to qualify for a credit. 
The proposal will also not adversely impact their ability to qualify 
for other credits provided by the Exchange.
RPI Orders
    The proposal to enable non-RLP member organizations to receive a 
credit of $0.0003 per share for all RPI orders would contribute to 
robust amounts of RPI liquidity submitted by non-RLPs being available 
for interaction with the Retail Orders. The Exchange believes that, 
because Retail Orders are likely to reflect long-term investment 
intentions, they promote price discovery and dampen volatility. The 
Exchange believes that an increase in the amount of RPI liquidity 
interacting with Retail Orders would contribute to the quality of the 
Exchange's market and to the Exchange's status as a premier destination 
for liquidity and order execution. Accordingly, the Exchange believes 
that an increase in the amount of RPI liquidity on the Exchange has the 
potential to benefit all market participants. For these reasons, the 
Exchange believes that the proposed pricing is equitable and would 
continue to encourage greater retail participation on the Exchange.
The Proposal Is Not Unfairly Discriminatory
Executions at the Open
    The Exchange believes it is not unfairly discriminatory to 
introduce a fee for executions at the open designated with a Retail 
Modifier and to increase the monthly fee cap because the proposed fee 
would be provided on an equal basis to all member organizations that 
add additional retail liquidity on the Exchange's opening auction and 
the monthly cap would apply to all member organizations equally. As 
noted, the Exchange believes that the proposed fee and higher monthly 
cap would provide an incentive for member organizations to increase 
their activity and provide additional liquidity at the open. The 
proposal will encourage the submission of additional retail liquidity 
to a national securities exchange, thereby promoting price discovery 
and transparency and enhancing order execution opportunities for member

[[Page 28404]]

organizations from the substantial amounts of liquidity that are 
present on the Exchange during the opening. Accordingly, the Exchange 
believes the proposed change is not unfairly discriminatory because it 
would continue to encourage member organizations to send orders to the 
Exchange for execution at the open, thereby contributing to robust 
levels of liquidity on the Exchange, which benefits all market 
participants. 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.
Executions at the Close
    The Exchange believes that it is not unfairly discriminatory to 
modify the fees and requirements for executions at the close because 
the proposed changes would be provided on an equal basis to all member 
organizations that add liquidity to the Exchange's closing auction and 
would equally encourage all member organizations to provide additional 
liquidity on the Exchange. 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. The proposal does not permit unfair discrimination because the 
qualification criteria would be applied to all similarly situated 
member organizations, who would all be eligible for the same fees on an 
equal basis. As noted, the Exchange believes that the proposed credits 
would provide an incentive for member organizations to send additional 
retail liquidity to the Exchange, to the benefit of all market 
participants. 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.
Step Up Tier 2 Adding Credit
    The Exchange believes it is not unfairly discriminatory to provide 
an additional incremental credit and lower the requirement for member 
organizations to qualify for the Step Up Tier 2 Adding Credit as the 
proposed credit would be provided on an equal basis to all member 
organizations that add liquidity by meeting the new proposed Step Up 
Tier 2 requirements. For the same reason, the Exchange believes it is 
not unfairly discriminatory to provide additional incremental credits 
to member organizations that satisfy the Step Up Tier 2 requirements 
and add liquidity in Tape A, B and C securities. Further, the Exchange 
believes the proposed Step Up Tier 2 credit would incentivize member 
organizations that meet the new lower tiered requirements to send more 
orders to the Exchange. Since the proposed $0.0025 credit would be new, 
no member organization currently qualifies for it. As noted, without a 
view of member organization activity on other exchanges and off-
exchange venues, the Exchange has no way of knowing whether this 
proposed rule change would result in any member organization qualifying 
for the tier. The Exchange believes the proposed credit is reasonable 
as it would provide an incentive for member organizations to direct 
their order flow to the Exchange and provide meaningful added levels of 
liquidity in order to qualify for the credits, thereby contributing to 
depth and market quality on the Exchange. The proposal neither targets 
nor will it have a disparate impact on any particular category of 
market participant. All member organizations that provide liquidity 
could be eligible to qualify for the proposed credit if meet the 
proposed adding liquidity requirements. The Exchange believes that 
offering credits for providing liquidity will continue to attract order 
flow and liquidity to the Exchange, thereby providing additional price 
improvement opportunities on the Exchange and benefiting investors 
generally. As to those market participants that do not presently 
qualify for the adding liquidity credits, the proposal will not 
adversely impact their existing pricing or their ability to qualify for 
other credits provided by the Exchange.
RPI Orders
    The proposal to enable non-RLP member organizations to receive a 
credit for all RPI executions, like the Retail Liquidity Program 
itself, is not designed to permit unfair discrimination, but instead to 
promote a competitive process around retail executions such that retail 
investors would receive better prices than they currently do through 
bilateral internalization arrangements. The Exchange believes that the 
transparency and competitiveness of operating a program such as the 
Retail Liquidity Program on an exchange market, and the pricing related 
thereto, would result in better prices for retail investors. The 
proposed change is also equitable and not unfairly discriminatory 
because it would contribute to investors' confidence in the fairness of 
their transactions and because it would benefit all investors by 
deepening the Exchange's liquidity pool, supporting the quality of 
price discovery, promoting market transparency and improving investor 
protection. The proposal neither targets nor will it have a disparate 
impact on any particular category of market participant. All member 
organizations that are not RLPs and provide liquidity could be eligible 
to qualify for the proposed credit.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\26\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, as discussed above, the Exchange believes 
that the proposed 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 promotes 
``more efficient pricing of individual stocks for all types of orders, 
large and small.'' \27\
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78f(b)(8).
    \27\ Regulation NMS, 70 FR at 37498-99.
---------------------------------------------------------------------------

    Intramarket Competition. The proposed changes are designed to 
attract additional retail order flow to the Exchange. The Exchange 
believes that the proposed changes would continue to incentivize market 
participants to direct displayed and non-displayed 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 
current fees and 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. As noted, the proposal would apply to all similarly situated 
member organizations on the same and equal terms, who would benefit 
from the changes on the same basis. Accordingly, the proposed change 
would not impose a disparate burden on

[[Page 28405]]

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. 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.

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) \28\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \29\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ 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) \30\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \30\ 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-2021-33 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-2021-33. 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-2021-33 and should be submitted on 
or before June 16, 2021.
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    \31\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-11082 Filed 5-25-21; 8:45 am]
BILLING CODE 8011-01-P


