[Federal Register Volume 86, Number 225 (Friday, November 26, 2021)]
[Notices]
[Pages 67531-67538]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25749]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93621; File No. SR-NYSEArca-2021-99]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Arca Equities Fees and Charges

November 19, 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 15, 2021, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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 the NYSE Arca Equities Fees and 
Charges (``Fee Schedule'') to (1) amend the standard rates for adding 
and removing liquidity in Round Lots and Odd Lots in Tapes A, B and C 
securities with a per share price below $1.00; (2) consolidate the fee 
charged for PO Orders in Tape B and Tape C securities routed to 
auctions at away markets; (3) amend the application of the credits for 
Retail Orders that add liquidity; (4) amend the requirement applicable 
to the additional credit payable for Tape B securities; and (5) amend 
the requirement applicable to tiered credits payable for adding 
liquidity in Round Lots and Odd Lots in Tapes A, B and C securities 
with a per share price below $1.00. The Exchange proposes to implement 
the fee changes effective November 15, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to (1) amend the 
standard rates for adding and removing liquidity in Round Lots and Odd 
Lots in Tapes A, B and C securities with a per share price below $1.00; 
(2) consolidate the fee charged for PO Orders in Tape B and Tape C 
securities routed to auctions at

[[Page 67532]]

away markets; (3) amend the application of the credits for Retail 
Orders that add liquidity; (4) amend the requirement applicable to the 
additional credit payable for Tape B securities; and (5) amend the 
requirement applicable to tiered credits payable for adding liquidity 
in Round Lots and Odd Lots in Tapes A, B and C securities with a per 
share price below $1.00.
    The Exchange proposes to implement the fee changes effective 
November 15, 2021.\4\
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    \4\ The Exchange originally filed to amend the Fee Schedule on 
November 1, 2021 (SR-NYSEArca-2021-95). SR-NYSEArca-2021-95 was 
subsequently withdrawn and replaced by this filing.
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Background
    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 37496, 37499 (June 29, 2005) (File No. 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\ numerous alternative trading systems,\8\ and broker-
dealer internalizers and wholesalers, all competing for order flow. 
Based on publicly available information, no single exchange currently 
has more than 18% market share.\9\ Therefore, no exchange possesses 
significant pricing power in the execution of equity order flow. More 
specifically, the Exchange currently has less than 12% market share of 
executed volume of equities trading.\10\
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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 U.S Equities Market Volume Summary, available at 
https://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/.
    \10\ 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 categories of 
products. While it is not possible to know a firm's reason for shifting 
order flow, the Exchange believes that one such reason is because of 
fee changes at any of the registered exchanges or non-exchange venues 
to which a firm routes order flow. With respect to non-marketable order 
flow that would provide liquidity on an Exchange against which market 
makers can quote, ETP Holders can choose from any one of the 16 
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.
Proposed Rule Change
Standard Rate for Adding and Removing Liquidity in Round Lots and Odd 
Lots in Tapes A, B and C Securities With a per Share Price Below $1.00 
(``Sub-Dollar Securities'')
    The Exchange currently provides a base credit of $0.00004 per share 
for adding liquidity in Sub-Dollar Securities. The base credit of 
$0.00004 per share also applies to Retail Orders and MPL Orders that 
add liquidity in Sub-Dollar Securities. For orders in Sub-Dollar 
Securities that remove liquidity, the Exchange currently charges a fee 
of 0.295% of dollar value.
    With this proposed rule change, the Exchange proposes to eliminate 
the credit for Sub-Dollar Securities that add liquidity, including for 
MPL Orders in Sub-Dollar Securities that add liquidity. For Retail 
Orders in Sub-Dollar Securities, the Exchange proposes to modify the 
credit, from $0.00004 per share to 0.05% of dollar value.\11\ For 
orders in Sub-Dollar Securities that remove liquidity, the Exchange 
proposes to increase the fee, from 0.295% of dollar value to 0.30% of 
dollar value.
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    \11\ The Exchange notes that other exchanges provide credits for 
liquidity-adding transactions in securities priced below $1.00 that 
are denominated in a percentage of the total dollar amount of the 
transaction. See e.g., the Members Exchange fee schedule on its 
public website (available at https://info.memxtrading.com/fee-schedule/), which reflects a rebate of 0.05% of total dollar value 
for Retail Orders that add displayed liquidity in securities priced 
below $1.00 per share.
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    The purpose of reducing the standard rebate for orders, including 
MPL Orders, in Sub-Dollar Securities is for business and competitive 
reasons, as the Exchange believes the reduction of rebates would 
decrease the Exchange's expenditures with respect to transaction 
pricing and would also offset some of the costs associated with rebates 
paid to ETP Holders that qualify for the Sub-Dollar Step Up Tier and 
the rebates paid by the Exchange for Retail Orders in Sub-Dollar 
Securities, and the Exchange's operations generally, in a manner that 
is still consistent with the Exchange's overall pricing philosophy of 
encouraging added liquidity. The Exchange notes that the proposed 
standard rebate for orders, including MPL Orders, in Sub-Dollar 
Securities that add liquidity, and the proposed standard fee for orders 
in Sub-Dollar Securities that remove liquidity is comparable to, and 
competitive with, the standard rebate and fee provided by at least one 
other exchange for executions of orders in securities priced below 
$1.00 per share.\12\ Additionally, the proposed standard rebate for 
Retail Orders in Sub-Dollar Securities that add liquidity is also 
comparable to, and competitive with, the standard rebate provided by at 
least one other exchange for execution of orders in securities priced 
below $1.00 per share.\13\
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    \12\ See the Nasdaq Stock Market equities trading fee schedule 
on its public website (available at https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2), which reflects a standard rebate 
of $0.00 per share to add liquidity in securities priced below $1.00 
per share and a standard fee of 0.30% of total dollar volume in 
securities priced below $1.00 per share.
    \13\ See note 11, supra.
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PO Orders
    Currently, under Section V. Standard Rates--Routing, the Exchange 
charges a fee of $0.0030 per share for PO Orders \14\ in Tape B 
securities routed for execution in the open or closing auction on Cboe 
BZX. The Exchange also currently charges a similar fee of $0.0030 per 
share for PO Orders in Tape C securities routed for execution in the 
open or closing auction on Nasdaq.
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    \14\ A PO Order is a Market or Limit Order that on arrival is 
routed directly to the primary listing market without being assigned 
a working time or interacting with interest on the NYSE Arca Book. 
See NYSE Arca Rule 7.31-E(f)(1).
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    The Exchange proposes to streamline the Fee Schedule by deleting 
the column for the fee for PO Orders in Tape C securities routed to 
Nasdaq auction and merge it with the column

[[Page 67533]]

for the fee for PO Orders in Tape B securities routed to Cboe BZX 
auction. The purpose of the proposed change is to simplify the Fee 
Schedule. The Exchange is not making any substantive change other than 
to streamline the Standard Rates--Routing table under Section V. by 
merging the per share fees for PO Orders routed to Cboe BZX and Nasdaq 
into a single column.
Retail Orders
    The Exchange currently provides tiered credits for Retail Orders 
that provide liquidity on the Exchange. Specifically, Section VI. Tier 
Rates--Round Lots and Odd Lots (Per Share Price $1.00 or Above), 
provides a base Retail Order Tier credit of $0.0033 per share for 
Adding. Additionally, the Exchange has established Retail Order Step-Up 
Tier 1, Retail Order Step-Up Tier 2 and Retail Order Step-Up Tier 3 
that provide a credit of $0.0038 per share, $0.0035 per share, and 
$0.0036 per share, respectively, for Adding.\15\
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    \15\ See Retail Tiers table under Section VI. Tier Rates--Round 
Lots and Odd Lots (Per Share Price $1.00 or Above). Footnote (f) 
provides that the credit payable under Retail Order Step-Up Tier 1, 
Retail Order Step-Up Tier 2 and Retail Order Step-Up Tier 3 applies 
for Adding displayed liquidity.
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    The Exchange proposes to eliminate the distinction with respect to 
the type of liquidity for which the Exchange provides credits under 
Retail Order Step-Up Tier 1, Retail Order Step-Up Tier 2 and Retail 
Order Step-Up Tier 3 by removing current footnote (f) from the Retail 
Tiers table. With the proposed elimination of footnote (f), all Retail 
Orders sent to the Exchange by ETP Holders that add liquidity would 
receive the credits payable under the Retail Order Tier, Retail Order 
Step-Up Tier 1, Retail Order Step-Up Tier 2 and Retail Order Step-Up 
Tier 3. The Exchange is not proposing any substantive change to the 
requirement or the amount of the credit under each of the Retail Order 
tiers. The Exchange also proposes to renumber footnotes (g) and (h) as 
footnotes (f) and (g), respectively, in conjunction to the changes 
discussed herein.
    The purpose of the proposed rule change is to adopt consistency 
within the Fee Schedule as to the type of activity for which the 
Exchange provides credits. The Exchange believes the proposed rule 
change will continue to encourage participation from ETP Holders to 
provide liquidity in Retail Orders on the Exchange to increase that 
order flow which would benefit all ETP Holders by providing greater 
execution opportunities on the Exchange. The Exchange also believes 
that the proposed change would protect investors and the public 
interest because maintaining such consistency within the Fee Schedule 
would make the Fee Schedule more transparent and facilitate market 
participants' understanding of the credits provided by the Exchange.
Tape B Credits
    Currently, ETP Holders that meet the requirement under Tape B Step 
Up Tier can earn the following incremental credits:
     An incremental credit of $0.0002 per share when an ETP 
Holder has Adding ADV of Tape B CADV of at least 0.50% and has an 
Adding Increase in Tape B of Tape B CADV of at least 20% in Q3 2019;
     An incremental credit of $0.0003 per share when an ETP 
Holder has Adding ADV of Tape B CADV of at least 0.50% and has an 
Adding Increase in Tape B of Tape B CADV of at least 30% in Q3 2019; 
and
     An incremental credit of $0.0004 per share when an ETP 
Holder has Adding ADV of Tape B CADV of at least 0.50% and has an 
Adding Increase in Tape B of Tape B CADV of at least 40% in Q3 2019.
    The incremental credits are payable in addition to the ETP Holder's 
Tiered or Standard credit(s); provided, however, that such combined 
credit(s) in Tape B securities currently cannot exceed $0.0032 per 
share.
    The Exchange also provides an increased cap applicable under the 
Tape B Step Up Tier pricing tier. Specifically, if an ETP Holder's 
providing ADV increases at least 150% over the ETP Holder's Adding ADV 
in Q3 2019, then the ETP Holder can receive a combined credit of up to:
     $0.0033 per share if the ETP Holder is registered as a 
Lead Market Maker or Market Maker in at least 150 Less Active ETPs in 
which it meets at least two Performance Metrics, and has Tape B Adding 
ADV equal to at least 0.65% of Tape B CADV, or
     $0.0034 per share if the ETP Holder or Market Maker is 
registered as a Lead Market Maker or Market Maker in at least 200 Less 
Active ETPs in which it meets at least two Performance Metrics, and has 
Tape B Adding ADV equal to at least 0.70% of Tape B CADV.
    The Exchange proposes to amend the requirement to qualify for the 
increased cap applicable under the Tape B Step Up Tier pricing tier. 
The Exchange is not proposing any change to the level of the credits.
    As proposed, if an ETP Holder is registered as a Lead Market Maker 
or Market Maker in at least 100 Less Active ETPs in which it meets at 
least two Performance Metrics, where the ETP Holder, together with any 
affiliates, has Adding Tape B ADV that is an increase of at least 60% 
over the ETP Holder's Adding ADV in Q3 2019, as a percentage of Tape B 
CADV, then such ETP Holder can receive a combined credit of up to:
     $0.0033 per share if the ETP Holder, together with any 
affiliates, has Tape B Adding ADV equal to at least 0.65% of Tape B 
CADV, or
     $0.0034 per share if the ETP Holder, together with any 
affiliates, has Tape B Adding ADV equal to at least 0.70% of Tape B 
CADV.
    The Exchange believes lowering the Adding Tape B ADV requirement 
from 150% over the ETP Holder's Adding ADV in Q3 2019 to 60% and 
lowering the number of Less Active ETPs in which an ETP Holder is 
required to register as a Lead Market Maker or Market Maker from 150 
and 200 Less Active ETPs to 100 Less Active ETPs, would allow ETP 
Holders to more easily qualify for the additional credits. The Exchange 
believes the amended requirements would continue to provide an 
incentive to ETP Holders to register as Lead Market Makers or Market 
Makers and incentivize such liquidity providers to increase the number 
of orders sent to the Exchange.
Sub-Dollar Adding Step Up Tier
    The Exchange currently provides tiered credits to ETP Holders that 
add liquidity in Sub-Dollar Securities. Specifically, an ETP Holder 
that has an Adding ADV of 1 million shares with a per share price below 
$1.00 (``Sub-Dollar Adding Orders''), and Adding Increase of CADV in 
Sub-Dollar Adding Orders over July 2020, as a percentage of CADV with a 
per share price below $1.00, receives a credit for Sub-Dollar Adding 
Orders, as follows:
     A credit equal to 0.050% of the total dollar value for 
Adding Increase of CADV in Sub-Dollar Adding Orders of at least 0.20% 
over July 2020;
     A credit equal to 0.100% of the total dollar value for 
Adding Increase of CADV in Sub-Dollar Adding Orders of at least 0.50% 
over July 2020;
     A credit equal to 0.125% of the total dollar value for 
Adding Increase of CADV in Sub-Dollar Adding Orders of at least 0.75% 
over July 2020; and
     A credit equal to 0.150% of the total dollar value for 
Adding Increase of CADV in Sub-Dollar Adding Orders of at least 1.00% 
over July 2020.
    The Exchange proposes to eliminate the tier in the third bullet 
above because no ETP Holder has reached that tier in the last 6 months. 
Additionally, the Exchange proposes to modify the

[[Page 67534]]

requirement for tiers in the first and second bullets above. The 
Exchange is not proposing any change to the level of the credits 
provided for adding liquidity in Sub-Dollar Securities.
    Specifically, the Exchange proposes to modify the volume threshold 
that ETP Holders would have to meet to qualify for the credits in the 
tiers in the first and second bullets above. With the proposed 
modifications, the tiered credits payable to ETP Holders that liquidity 
in Sub-Dollar Securities would be as follows:
     A credit equal to 0.050% of the total dollar value for 
Adding Increase of CADV in Sub-Dollar Adding Orders of at least 0.30% 
over July 2020;
     A credit equal to 0.100% of the total dollar value for 
Adding Increase of CADV in Sub-Dollar Adding Orders of at least 0.60% 
over July 2020; and
     A credit equal to 0.150% of the total dollar value for 
Adding Increase of CADV in Sub-Dollar Adding Orders of at least 1.00% 
over July 2020.
    The purpose of this proposed change is to continue to incentivize 
ETP Holders to increase the liquidity-providing orders in Sub-Dollar 
Securities they send to the Exchange, which would support the quality 
of price discovery on the Exchange and provide additional liquidity for 
incoming orders. 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. While the Exchange 
proposes to increase the volume threshold for two of the current tiers, 
the Exchange believes ETP Holders will continue to be able to meet the 
increased requirement given the increased trading in Sub-Dollar 
Securities in recent months. ETP Holders that trade in Sub-Dollar 
Securities would benefit by receiving enhanced credits if they choose 
to send such orders to the Exchange. The Exchange also believes that 
maintaining July 2020 as the baseline month would continue to allow ETP 
Holders to meet the increased volume requirement. Based on their 
current trading profile on the Exchange, a number of ETP Holders would 
already meet the increased volume threshold and would therefore 
continue to receive credits that they previously earned. However, 
without having a view of ETP Holders' activity on other markets and 
off-exchange venues, the Exchange has no way of knowing whether this 
proposed rule change would result in other ETP Holders directing orders 
to the Exchange in order to qualify for the tiers. The Exchange cannot 
predict with certainty how many ETP Holders would avail themselves of 
this opportunity, but additional liquidity-providing orders would 
benefit all market participants because it would provide greater 
execution opportunities on the Exchange.
    The Exchange believes that eliminating a tier that has become 
underutilized will streamline the Fee Schedule. The Exchange further 
believes that the remaining tiers will continue to incentivize ETP 
Holders to submit liquidity providing orders in Sub-Dollar Securities 
to qualify for the credits. As noted above, the Exchange is not 
proposing any change to the level of credits payable under the 
remaining tiers for adding liquidity in Sub-Dollar Securities.
    The proposed changes are not otherwise intended to address any 
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,\16\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\17\ 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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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(4) and (5).
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    As discussed above, the Exchange operates in a highly fragmented 
and 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.'' \18\
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    \18\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
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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 
shift order flow, or discontinue or reduce use of certain categories of 
products, in response to fee changes. With respect to non-marketable 
orders which provide liquidity on an Exchange, ETP Holders can choose 
from any one of the 16 currently operating registered exchanges to 
route such order flow. Accordingly, competitive forces reasonably 
constrain exchange transaction fees that relate to orders that would 
provide displayed liquidity on an exchange. Stated otherwise, changes 
to exchange transaction fees can have a direct effect on the ability of 
an exchange to compete for order flow.
    Given this competitive environment, the proposal represents a 
reasonable attempt to attract additional order flow to the Exchange. 
The Exchange believes that the proposal is also equitable and 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. The proposal is also not 
unfairly discriminatory because it neither targets nor will it have a 
disparate impact on any particular category of market participant.
Standard Rate for Adding and Removing Liquidity in Sub-Dollar 
Securities
    The Exchange believes that the proposed changes to increase the 
standard fee for orders in Sub-Dollar Securities that remove liquidity 
and reduce the standard rebate for orders, including MPL Orders, in 
Sub-Dollar Securities that add liquidity are reasonable, equitable, and 
consistent with the Act because such changes are designed to generate 
additional revenue and decrease the Exchange's expenditures with 
respect to transaction pricing and also to offset some of the costs 
associated with the rebates paid to ETP Holders that qualify for the 
Sub-Dollar Step Up Tier and the higher rebates paid by the Exchange for 
Retail Orders in Sub-Dollar Securities, and the Exchange's operations 
generally, in a manner that is still consistent with the Exchange's 
overall pricing philosophy of encouraging added liquidity.
    The Exchange also believes the proposed increased standard fee for 
orders in Sub-Dollar Securities is reasonable and appropriate because 
it represents a modest increase from the current standard fee and, as 
noted above, remains comparable to the fee to remove liquidity in 
securities below $1.00 charged by at least one other exchange.\19\ 
Similarly, the Exchange believes the proposed reduced standard rebate 
for orders, including MPL Orders, in Sub-Dollar Securities that add 
liquidity, and modification, from a per share basis to total dollar 
value, of the standard rebate for Retail Orders in Sub-

[[Page 67535]]

Dollar Securities that add liquidity is reasonable and appropriate 
because the reduction represents a modest decrease from the current 
standard rebate and, as noted above, remains comparable to, and 
competitive with, the standard rebates provided by other exchanges for 
orders, including Retail Orders, that add liquidity in securities 
priced below $1.00 per share.\20\ The Exchange further believes that 
the proposed changes to the standard fees and rebates for adding and 
removing liquidity in Sub-Dollar Securities are equitably allocated and 
not unfairly discriminatory because they would apply equally to all ETP 
Holders.
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    \19\ See note 12, supra.
    \20\ See notes 11 and 12, supra.
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PO Orders
    The Exchange believes that the proposed rule change to merge the 
fee columns for PO Orders routed to Cboe BZX and Nasdaq is reasonable 
because the resulting change will simplify the Fee Schedule. The 
Exchange believes the proposed change is also reasonable because the 
Exchange is not making any substantive change other than to streamline 
the Standard Rates--Routing table in Section V. by merging the per 
share fees for PO Orders routed to Cboe BZX and Nasdaq into a single 
column.
    The Exchange believes that simplifying and streamlining the Fee 
Schedule is equitable and not unfairly discriminatory because all ETP 
Holders would continue to be subject to the same fee structure, and 
access to the Exchange's market would continue to be offered on fair 
and non-discriminatory terms. The Exchange also believes that the 
proposed change would protect investors and the public interest because 
a streamlined Fee Schedule would make it more accessible and 
transparent and facilitate market participants' understanding of the 
fees charged for services currently offered by the Exchange.
Retail Orders
    The Exchange believes that the proposed rule change to eliminate 
the distinction between orders that provide liquidity and those that 
provide displayed liquidity under Retail Order Step-Up Tier 1, Retail 
Order Step-Up Tier 2 and Retail Order Step-Up Tier 3 is reasonable 
because it will result in consistency on the Exchange with respect to 
the credits provided for liquidity-adding Retail Orders under the 
Retail Order tiers. With this proposed rule change, the Exchange would 
provide a credit to all liquidity-adding Retail Orders that qualify 
under the Retail Order Step-Up Tier 1, Retail Order Step-Up Tier 2 and 
Retail Order Step-Up Tier 3, similar to liquidity-adding Retail Orders 
that qualify under the Retail Order Tier, which does not currently 
require that such orders provide displayed liquidity. The Exchange 
believes it is reasonable to provide credits for Retail Orders that 
provide liquidity without any distinction. At least one other exchange 
does not make a distinction when providing a credit for liquidity-
adding Retail Orders.\21\
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    \21\ See Cboe BZX U.S. Equities Exchange (``BZX'') Fee Schedule, 
Fee Code ZA, which provides a credit for Retail Orders that add 
liquidity, available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/.
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    The Exchange believes the proposed change is also reasonable 
because the Exchange is not making any change other than to remove 
footnote (f) and therefore, adopt consistency in how credits would be 
payable for liquidity-adding Retail Orders; the Exchange is not 
proposing any change to the requirements or the level of credits under 
the Retail Order Tier, Retail Order Step-Up Tier 1, Retail Order Step-
Up Tier 2 and Retail Order Step-Up Tier 3. As noted above, the purpose 
of the proposed rule change is to adopt consistency within the Fee 
Schedule as to the type of activity for which the Exchange provides 
credits. The Exchange believes the proposed rule change will continue 
to encourage participation from ETP Holders to provide liquidity in 
Retail Orders on the Exchange to increase that order flow which would 
benefit all ETP Holders by providing greater execution opportunities on 
the Exchange.
    The Exchange believes that adopting consistent application in how 
credits are paid is equitable and not unfairly discriminatory because 
all ETP Holders would continue to be subject to the same fee structure, 
and access to the Exchange's market would continue to be offered on 
fair and non-discriminatory terms. The Exchange also believes that the 
proposed change would protect investors and the public interest because 
a simplified Fee Schedule would make it more transparent and facilitate 
market participants' understanding of the credits provided by the 
Exchange.
Tape B Credits
    The Exchange believes the proposed rule change to modify the 
requirements to qualify for the additional Tape B credits is a 
reasonable means of attracting additional liquidity to the Exchange. 
The Exchange believes the modified requirements would continue to 
encourage ETP Holders to submit additional liquidity to a national 
securities exchange and receive the current level of credits, which are 
among the highest paid by the Exchange. The Exchange believes it is 
reasonable to require ETP Holders to meet the applicable volume 
threshold to qualify for the increased credits, given the higher 
combined credit of $0.0033 per share and $0.0034 per share that the 
Exchange would pay if the tier criteria is met. The Exchange believes 
that submission of additional liquidity to the Exchange would promote 
price discovery and transparency and enhance order execution 
opportunities for ETP Holders from the substantial amounts of liquidity 
present on the Exchange. The Exchange also believes it is reasonable to 
require ETP Holders to register as a Lead Market Maker or Market Maker 
in a minimum number of Less Active ETPs and to meet at least two 
Performance Metrics in such securities as the Exchange believes this 
requirement would enhance market quality in Less Active ETPs and 
support the quality of price discovery in such securities. The Exchange 
also believes it is reasonable to lower the number of Less Active ETPs 
in which an ETP Holder is required to register as a Lead Market Maker 
or Market Maker because it would lead to greater participation by ETP 
Holders in Less Active ETPs.
    The Exchange believes the proposed rule change to modify the 
requirements to qualify for the additional Tape B credits equitably 
allocates its fees and credits among market participants because it is 
reasonably related to the value of the Exchange's market quality 
associated with higher equities volume. As proposed, the Exchange would 
continue to provide qualifying ETP Holders with some of the highest 
credits payable by the Exchange provided they continue to participate 
as Lead Market Makers or Market Makers and continue to provide 
increased Tape B adding ADV. The more an ETP Holder participates, the 
greater the credit that ETP Holder would receive. The Exchange believes 
the modified requirements would encourage ETP Holders to continue to 
send orders that add liquidity to the Exchange, thereby contributing to 
robust levels of liquidity, which would benefit all market 
participants.
    The Exchange believes it is not unfairly discriminatory to modify 
the requirements to qualify for the increased Tape B credits because 
the resulting requirements would be applied on an equal basis to all 
ETP Holders, who would all be subject to them on an equal basis. 
Additionally, the proposal neither targets nor will it have a disparate 
impact on any particular category of

[[Page 67536]]

market participant. The proposal does not permit unfair discrimination 
because the modified requirements would be applied to all ETP Holders, 
who would all be subject to the requirements on an equal basis.
Sub-Dollar Adding Step Up Tier
    The Exchange believes the proposal to modify the volume requirement 
for ETP Holders to qualify for the Sub-Dollar Adding Step Up Tier is 
reasonable because, despite the increased volume requirement, ETP 
Holders would continue to be incentivized to send orders in Sub-Dollar 
Securities to qualify for the credits provided by the Exchange, which 
the Exchange is not changing. Additionally, despite the increased 
volume requirement, the Exchange believes that ETP Holders would 
continue to send orders in Sub-Dollar Securities to the Exchange 
because no competing market currently provides tier-based credits in 
Sub-Dollar Securities similar to those provided by the Exchange. To the 
extent that ETP Holders would be required to send increased orders in 
Sub-Dollar Securities to the Exchange to qualify for the credits, such 
increased participation would result in increased liquidity which in 
turn would support the quality of price discovery and would promote 
market transparency as such orders would be sent to a national 
securities exchange rather than to off-exchange venues. Moreover, the 
addition of liquidity would benefit market participants whose increased 
order flow would provide meaningful added levels of liquidity thereby 
contributing to the depth and market quality on the Exchange.
    The Exchange notes that volume-based incentives and discounts have 
been widely adopted by exchanges,\22\ including the Exchange,\23\ and 
are reasonable, equitable and non-discriminatory because they are open 
to all ETP Holders on an equal basis and provide additional credits 
that are reasonably related to the value to an exchange's market 
quality and associated higher levels of market activity.
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    \22\ See, e.g., BZX Fee Schedule, Footnote 1, Add Volume Tiers 
which provide enhanced rebates between $0.0025 and $0.0031 per share 
for displayed orders where BZX members meet certain volume 
thresholds.
    \23\ See, e.g., Fee Schedule, Step Up Tiers, which provide 
enhanced rebates between $0.0028 and $0.0033 per share in Tape A 
Securities, between $0.0022 and $0.0034 per share in Tape B 
Securities, and between $0.0028 and $0.0033 per share in Tape C 
Securities for orders that provide displayed liquidity where ETP 
Holders meet certain volume thresholds.
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    The Exchange believes that the proposed rule change to eliminate 
one of the tiers is reasonable because the tier proposed for deletion 
has been underutilized and has not incentivized ETP Holders to bring 
liquidity and increase trading on the Exchange. In the last 6 months, 
no ETP Holder has availed itself of the tier's requirement. The 
Exchange believes it is reasonable to eliminate pricing tiers when they 
become underutilized. The Exchange believes eliminating underutilized 
tiers would also simplify the Fee Schedule. The Exchange further 
believes that removing reference to underutilized tiers that the 
Exchange proposes to eliminate from the Fee Schedule would also add 
clarity to the Fee Schedule.
    The Exchange believes the proposal to modify the volume requirement 
for ETP Holders to qualify for the Sub-Dollar Adding Step Up Tier is 
equitable because, despite the increased volume requirement, ETP 
Holders would continue to be incentivized to send orders in Sub-Dollar 
Securities to qualify for the credits provided by the Exchange, which 
the Exchange is not changing. Moreover, any increased order flow would 
be to the benefit of all market participants because such increased 
order flow in Sub-Dollar Securities would provide meaningful added 
levels of liquidity thereby contributing to the depth and market 
quality on the Exchange.
    As noted above, based on their current trading profile on the 
Exchange, a number of ETP Holders would already meet the increased 
volume threshold and would therefore continue to receive credits that 
they previously earned. However, without having a view of ETP Holders' 
activity on other markets and off-exchange venues, the Exchange has no 
way of knowing whether this proposed rule change would result in other 
ETP Holders directing orders to the Exchange in order to qualify for 
the tiers. The Exchange cannot predict with certainty how many ETP 
Holders would avail themselves of this opportunity, but additional 
liquidity-providing orders would benefit all market participants 
because it would provide greater execution opportunities on the 
Exchange.
    The Exchange believes that offering credits for providing liquidity 
in Sub-Dollar Securities, which are some of the highest among the 
Exchange's competitors, if the step-up requirements are met, will 
continue to attract increased 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 qualify for the adding liquidity credits by 
increasing order flow and liquidity, the proposal will not adversely 
impact their existing pricing or their ability to qualify for other 
credits provided by the Exchange.
    The Exchange believes that the proposed rule change to eliminate 
one of the tiers is an equitable allocation of its fees and credits. 
The Exchange believes that eliminating a tier from the Fee Schedule 
when such tier becomes underutilized is equitable because the tier 
would be eliminated in its entirety and would no longer be available to 
any ETP Holder.
    The Exchange believes it is not unfairly discriminatory to modify 
the volume requirement for ETP Holders to qualify for the Sub-Dollar 
Adding Step Up Tier, as the modified requirement would be applicable on 
an equal basis to all ETP Holders that add liquidity under the pricing 
tier. The Exchange believes that, despite the increased volume 
requirement, the credits payable under the pricing tier, which the 
Exchange is not proposing to change, would continue to serve as an 
incentive to ETP Holders to increase the level of orders sent to the 
Exchange in order to qualify for such credits.
    The Exchange believes that the proposed rule change is not unfairly 
discriminatory because maintaining or increasing the proportion of Sub-
Dollar Securities that are executed on a registered national securities 
exchange (rather than relying on certain available off-exchange 
execution methods) would contribute to investors' confidence in the 
fairness of their transactions and would benefit all investors by 
deepening the Exchange's liquidity pool, supporting the quality of 
price discovery, promoting market transparency and improving investor 
protection. Finally, the submission of orders in Sub-Dollar Securities 
to the Exchange is optional for ETP Holders in that they could choose 
whether to submit such orders to the Exchange and, if they do, the 
extent of its activity in this regard.
    The Exchange believes that the proposed rule change to eliminate 
one of the tiers is not unfairly discriminatory. The Exchange believes 
that eliminating a tier from the Fee Schedule when such tier becomes 
underutilized is not unfairly discriminatory because the tier would be 
eliminated in its entirety and would no longer be available to any ETP 
Holder.
    On the backdrop of the competitive environment in which the 
Exchange currently operates, the proposed rule change is a reasonable 
attempt to

[[Page 67537]]

increase liquidity on the Exchange and improve the Exchange's market 
share relative to its competitors.
    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,\24\ 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 ETP Holders. 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.'' \25\
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b)(8).
    \25\ See Regulation NMS, 70 FR 37498-99.
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    Intramarket Competition. The Exchange believes the proposed 
amendments to its Fee Schedule would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The Exchange does not believe that the proposed 
changes represent a significant departure from previous pricing offered 
by the Exchange or its competitors. The proposed changes are designed 
to attract additional order flow to the Exchange, and would continue to 
incentivize market participants to direct order flow to the Exchange, 
bringing with it additional execution opportunities for market 
participants. In particular, the proposed changes to the standard fees 
and rebates for Sub-Dollar Securities would be available to all 
similarly situated market participants, and as such, would not impose a 
disparate burden on competition among market participants on the 
Exchange. The Exchange's proposal to remove the distinction between 
Retail Orders that provide liquidity from those that provide displayed 
liquidity would also continue to incentivize ETP Holders to direct more 
of their Retail Orders to the Exchange as each Retail Order would be 
treated in a similar fashion for purposes of the credits offered by the 
Exchange. Additionally, the proposed volume requirement to qualify for 
the Tape B credits and to qualify for the Sub-Dollar Adding Step Up 
tier would continue to incentivize ETP Holders to direct order flow to 
the Exchange, and would apply to all ETP Holders equally in that all 
ETP Holders are eligible for these tiers, have a reasonable opportunity 
to meet the tiers' criteria and will receive credits on their 
qualifying orders if such criteria are met. Greater overall order flow, 
trading opportunities, and pricing transparency benefits all market 
participants on the Exchange by enhancing market quality and continuing 
to encourage ETP Holders to send orders, thereby contributing towards a 
robust and well-balanced market ecosystem. Moreover, the proposal to 
modify the Fee Schedule to consolidate the pricing applicable to PO 
Orders routed to away markets would add clarity and transparency to the 
Fee Schedule. The Exchange also does not believe the proposed rule 
change to eliminate underutilized tiers will impose any burden on 
intramarket competition because the proposed change would impact all 
ETP Holders uniformly (i.e., the tier will not be available to any ETP 
Holder). The proposed changes would equally impact all similarly-
situated market participants, and, as such, 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. As noted 
above, the Exchange's market share of intraday trading (i.e., excluding 
auctions) is currently less than 12%. 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 changes 
imposes any burden on intermarket competition.
    The Exchange believes that the proposed fee changes may 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) \26\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \27\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(3)(A).
    \27\ 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) \28\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \28\ 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 [email protected]. Please include 
File Number SR-NYSEArca-2021-99 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-NYSEArca-2021-99. 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/

[[Page 67538]]

rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for website 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street NE, Washington, DC 20549 on official business days between the 
hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be 
available for inspection and copying at the principal offices of the 
Exchange. All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEArca-2021-99, and should 
be submitted on or before December 17, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
---------------------------------------------------------------------------

    \29\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25749 Filed 11-24-21; 8:45 am]
BILLING CODE 8011-01-P


