[Federal Register Volume 86, Number 221 (Friday, November 19, 2021)]
[Notices]
[Pages 64971-64974]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25228]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93576; File No. SR-NYSENAT-2021-21]


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

November 15, 2021.
    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 November 1, 2021, NYSE National, Inc. (``NYSE National'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Schedule of Fees and Rebates 
(``Fee Schedule'') to (1) modify the fee for non-tiered orders adding 
liquidity in securities priced at or above $1.00; (2) modify the 
requirements to qualify for Removing Tier 4; and (3) add new Removing 
Tier 5. The Exchange proposes to implement the rule change on November 
1, 2021. The proposed rule change is available on the Exchange's 
website at www.nyse.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedule to (1) modify the 
fee for non-tiered orders adding liquidity in securities priced at or 
above $1.00; (2) modify the requirements to qualify for Removing Tier 
4; and (3) add new Removing Tier 5.
    The proposed changes respond to the current competitive environment 
where order flow providers have a choice of where to direct liquidity-
providing and liquidity-removing orders by offering further incentives 
for ETP Holders to send additional adding and removing liquidity to the 
Exchange.
    The Exchange proposes to implement the rule change on November 1, 
2021.
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. 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.'' \4\
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    \4\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04) (Final Rule) 
(``Regulation NMS'').
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    As the Commission itself has recognized, the market for trading 
services in NMS stocks has become ``more fragmented and competitive.'' 
\5\ Indeed, equity trading is currently dispersed across 16 
exchanges,\6\ 31 alternative trading systems,\7\ and numerous broker-
dealer internalizers and wholesalers. Based on publicly-available 
information, no single exchange has more than 18% of the market.\8\ 
Therefore, no exchange possesses significant pricing power in the 
execution of equity order flow. More specifically, the Exchange's share 
of executed volume of equity trades in Tapes A, B and C securities is 
less than 2%.\9\
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    \5\ See Securities Exchange Act Release No. 51808, 84FR 5202, 
5253 (February 20, 2019) (File No. S7-05-18) (Transaction Fee Pilot 
for NMS Stocks Final Rule) (``Transaction Fee Pilot'').
    \6\ 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.
    \7\ 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.
    \8\ See Cboe Global Markets U.S. Equities Market Volume Summary, 
available at http://markets.cboe.com/us/equities/market_share/.
    \9\ See id.
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
move order flow, or discontinue or reduce use of certain products, in 
response to fee changes. While it is not possible to know a firm's 
reason for moving order flow, the Exchange believes that one such 
reason is because of fee changes at any of the registered exchanges or 
non-exchange trading venues to which a firm routes order flow. These 
fees can vary from month to month, and not all are publicly available. 
With respect to non-marketable order flow that would provide liquidity 
on an exchange, ETP Holders can choose from any one of the

[[Page 64972]]

16 currently operating registered exchanges to route such order flow. 
Accordingly, 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.
    The Exchange utilizes a ``taker-maker'' or inverted fee model to 
attract orders that provide liquidity at the most competitive prices. 
Under the taker-maker model, offering rebates for taking (or removing) 
liquidity increases the likelihood that market participants will send 
orders to the Exchange to trade with liquidity providers' orders. This 
increased taker order flow provides an incentive for market 
participants to send orders that provide liquidity. The Exchange 
generally charges fees for order flow that provides liquidity. These 
fees are reasonable due to the additional marketable interest (in part 
attracted by the Exchange's rebate to remove liquidity) with which 
those order flow providers can trade.
Proposed Rule Change
    To respond to this competitive environment, the Exchange proposes 
the following changes to its Fee Schedule designed to provide order 
flow providers with additional incentives to route order flow to the 
Exchange. As described above, ETP Holders have a choice of where to 
send their order flow.
Change of Fee for Non-Tiered Orders Adding Liquidity
    The Exchange proposes to increase the fee for non-tiered orders 
adding liquidity in securities priced at or above $1.00, currently set 
at $0.0028 per share, to $0.0029 per share. The proposed fee is 
competitive and would still be less than the fees charged by other 
markets for non-tiered orders adding liquidity.\10\
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    \10\ See, e.g., Nasdaq BX Pricing Schedule, available at https://www.nasdaqtrader.com/Trader.aspx?id=bx_pricing (providing $0.0030 
standard rate for adding displayed liquidity); Cboe EDGA Exchange 
Fee Schedule, available at https://www.cboe.com/us/equities/membership/fee_schedule/edga/ (providing $0.0030 standard rate for 
adding displayed liquidity).
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Proposed Change To Removing Tier 4 and Addition of New Removing Tier 5
    Under current Removing Tier 4, the Exchange provides a rebate of 
$0.0015 per share to ETP Holders that remove liquidity from the 
Exchange in securities with a per share price of $1.00 or more and that 
have at least 50,000 Adding ADV.
    The Exchange proposes to revise Removing Tier 4 by adding an 
additional requirement. As proposed, ETP Holders would qualify for the 
current rebate by if they have at least 50,000 Adding ADV and Adding 
ADV and Removing ADV combined of at least 0.04% of US CADV. The 
Exchange does not propose any changes to the removing rate for orders 
that remove liquidity that qualify for Removing Tier 4.
    In addition, the Exchange proposes to add new Removing Tier 5, 
which would provide a rebate of $0.0007 per share to ETP Holders that 
remove liquidity from the Exchange in securities with a per share price 
of $1.00 or more and that have at least 50,000 Adding ADV.
    The Exchange believes that together, these proposed changes will 
incentivize more ETP Holders to route liquidity-removing and liquidity-
adding order flow to the Exchange to meet the tier requirements for 
Removing Tier 4 by adding the proposed requirement to Removing Tier 4 
of a combination of Adding and Removing ADV.\11\ For ETP Holders who 
cannot meet the proposed additional requirement to qualify for proposed 
Removing Tier 4, the Exchange believes that the addition of proposed 
new Removing Tier 5 would encourage additional removing order flow to 
the Exchange by providing a $0.0007 per share rebate for ETP Holders 
that meet the 50,000 Adding ADV requirement, which would still be less 
than the fees charged by other markets for non-tiered orders adding 
liquidity.\12\
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    \11\ The Exchange currently uses a similarly-structured 
requirement for Removing Tier 1. See Securities Exchange Act Release 
No. 89640 (August 12, 2020), 85 FR 53041 (August 27, 2020) (SR-
NYSENAT-2020-27).
    \12\ See Nasdaq BX Pricing Schedule, available at https://www.nasdaqtrader.com/Trader.aspx?id=bx_pricing (providing rebates of 
$0.0005 for Tapes A and B and $0.0004 for Tape C for firms adding at 
least 50,000 ADV).
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    The Exchange believes that the increased order flow that may result 
from these proposed changes would in turn support the quality of price 
discovery on the Exchange and provide additional price improvement 
opportunities for incoming orders.
    As noted, the Exchange operates in a competitive environment. The 
Exchange does not know how much order flow ETP Holders choose to route 
to other exchanges or to off-exchange venues. Based on the profile of 
firms generally, the Exchange believes that additional ETP Holders 
could qualify for Removing Tier 4 with the additional qualification 
criteria if they choose to direct order flow to the Exchange. Without 
having a view of ETP Holders' activity on other exchanges and off-
exchange venues, the Exchange has no way of knowing whether this 
proposed rule change would result in any additional ETP Holders 
directing orders to the Exchange in order to qualify for the Removing 
Tier 4 or Removing Tier 5 rate.
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any problems that ETP 
Holders 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,\13\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\14\ 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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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4) & (5).
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The Proposed Change Is Reasonable
    As discussed above, the Exchange operates in a highly 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.'' \15\ 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.'' \16\
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    \15\ See Regulation NMS, supra note 4, at 37499.
    \16\ 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 the current competitive environment, the Exchange believes 
that the proposal represents a reasonable attempt to attract additional 
order flow to the Exchange while aligning the Exchange's fees with 
those charged by other markets. Specifically, the

[[Page 64973]]

proposed fee increase for non-tiered orders adding liquidity in 
securities priced at or above $1.00 is reasonable because it is 
competitive and the proposed fee would remain advantageous when 
compared to the fees charged by other markets for non-tiered orders 
adding liquidity.\17\ In addition, the Exchange believes that the 
proposed changes to the Removing Tiers are reasonable because they 
would encourage greater liquidity for ETP Holders routing order flow to 
the Exchange.
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    \17\ See supra note 10.
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    The Exchange believes that the proposal as a whole represents a 
reasonable effort to promote price discovery and enhanced order 
execution opportunities for ETP Holders. All ETP Holders would benefit 
from the greater amounts of liquidity on the Exchange, which would 
represent a wider range of execution opportunities.
The Proposal Is an Equitable Allocation of Fees and Rebates
    The Exchange believes the proposed rule change equitably allocates 
its fees among its market participants. The proposed change would 
continue to encourage ETP Holders to both submit additional liquidity 
to the Exchange and execute orders on the Exchange, thereby 
contributing to robust levels of liquidity, to the benefit of all 
market participants.
    The Exchange believes that increasing the fee currently charged for 
non-tiered orders adding liquidity in securities priced at or above 
$1.00 is an equitable allocation of fees. Even though the proposed 
change would increase the fee for non-tiered orders, the Exchange does 
not believe that it will discourage executions on the Exchange because 
the proposed fee would remain advantageous when compared with 
comparable fees charged by other markets.\18\ To the extent that the 
proposed change continues to attract order flow to the Exchange, this 
order flow would make the Exchange a more competitive venue for, among 
other things, order execution. Thus, the Exchange believes the proposed 
rule change would continue to improve market quality for all market 
participants on the Exchange and, as a consequence, continue to attract 
more order flow to the Exchange, thereby improving market-wide quality 
and price discovery.
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    \18\ See id.
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    Similarly, the Exchange believes that the proposed changes to the 
Removing Tiers would encourage the submission of additional liquidity 
to the Exchange, thus enhancing order execution opportunities for ETP 
Holders from the additional amounts of liquidity present on the 
Exchange. All ETP Holders would benefit from the greater amounts of 
liquidity that would be present on the Exchange, which would provide 
greater execution opportunities and improve market quality.
    The Exchange further believes that the proposal constitutes an 
equitable allocation of fees and credits because all similarly situated 
ETP Holders and other market participants would be eligible for the 
same general and tiered rates and would be eligible for the same fees 
and credits. Moreover, the proposed change is equitable because the 
revised fees would apply equally to all similarly situated ETP Holders. 
The proposal neither targets nor will it have a disparate impact on any 
particular category of market participant.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, ETP Holders 
are free to disfavor the Exchange's pricing if they believe that 
alternatives offer them better value.
    Moreover, 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 situated ETP 
Holders and all ETP Holders would be subject to the same modified fee 
for non-tiered orders adding liquidity in securities priced at or above 
$1.00, and to the same qualification requirements for modified Removing 
Tier 4 and new Removing Tier 5. Accordingly, no ETP Holder already 
operating on the Exchange would be disadvantaged by the proposed 
allocation of fees and credits.
    The Exchange further believes that the proposed changes would not 
permit unfair discrimination among ETP Holders because the non-tiered 
and tiered rates are available equally to all ETP Holders. As described 
above, in today's competitive marketplace, order flow providers have a 
choice of where to direct order flow, and the Exchange believes there 
are additional ETP Holders that could qualify if they chose to direct 
their order flow to the Exchange.
    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 change would encourage the submission of additional 
liquidity and order flow to a public exchange, thereby enhancing order 
execution opportunities for ETP Holders. As a result, the Exchange 
believes that the proposed change furthers the Commission's goal in 
adopting Regulation NMS of fostering competition among orders, which 
promotes ``more efficient pricing of individual stocks for all types of 
orders, large and small.'' \20\
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    \19\ 15 U.S.C. 78f(b)(8).
    \20\ Regulation NMS, 70 FR at 37498-99.
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    Intramarket Competition. The proposed change is designed to attract 
additional order flow to the Exchange. As described above, the Exchange 
believes that the proposed change would provide additional incentives 
for market participants to route liquidity-providing and liquidity-
removing orders to the Exchange. Greater liquidity benefits all market 
participants on the Exchange by providing more trading opportunities 
and encourages ETP Holders to send orders, thereby contributing to 
robust levels of liquidity. The proposed revised requirements for the 
tiered rebates and fees would be available to all similarly-situated 
market participants, and thus, 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 exchanges 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 off-exchange venues. 
Because competitors are free to modify their own fees and rebates 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.

[[Page 64974]]

    The Exchange believes that the proposed change could promote 
competition between the Exchange and other execution venues, including 
those that currently offer similar order types and comparable 
transaction pricing, by encouraging additional orders to be sent to the 
Exchange for execution.

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

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

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \21\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \22\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \23\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \23\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSENAT-2021-21 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSENAT-2021-21. 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-NYSENAT-2021-21 and should be submitted 
on or before December 10, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25228 Filed 11-18-21; 8:45 am]
BILLING CODE 8011-01-P


