[Federal Register Volume 87, Number 32 (Wednesday, February 16, 2022)]
[Notices]
[Pages 8891-8898]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-03282]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94223; File No. SR-NYSE-2022-07]


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

February 10, 2022.
    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 February 9, 2022, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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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) align the 
charges for market at-the-close (``MOC'') and limit at-the close 
(``LOC'') orders on MOC/LOC Tiers 1, 2 and 3, revise the requirements 
for MOC/LOC Tier 3, introduce incremental per share discounts on MOC 
orders under MOC/LOC Tier 1, 2 and 3, and revise the rate for all other 
orders swept into the close; (2) introduce new credits for removing 
liquidity from the Exchange in Tape C securities; and (3) introduce new 
Tier 1 Adding Credits in Tape C securities, revise the requirements for 
Adding Tier 2 in Tape B and C securities, and introduce a new Adding 
Tier in Tape C securities. The Exchange proposes to implement the rule 
change on February 9, 2022.\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 
January 27, 2022 (SR-NYSE-2022-06). SR-NYSE-2022-06 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withdrawn and replaced by this filing.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

[[Page 8892]]

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) align the 
charges for MOC and LOC orders on MOC/LOC Tier 1, 2 and 3, revise the 
requirements for MOC/LOC Tier 3, introduce incremental per share 
discounts on MOC orders under MOC/LOC Tier 1, 2 and 3, and revise the 
rate for all other orders swept into the close; (2) introduce new 
credits for removing liquidity from the Exchange in Tape C securities; 
and (3) introduce new Tier 1 Adding Credits in Tape C securities, 
revise the requirements for Adding Tier 2 in Tape B and C securities, 
and introduce a new Adding Tier in Tape C securities.
    The proposed changes responds to the current competitive 
environment where order flow providers have a choice of where to direct 
not only liquidity-providing and liquidity-removing orders but also MOC 
orders in NYSE-listed securities by aligning incentives for member 
organizations to send additional adding and removing liquidity to the 
Exchange.
    The Exchange proposes to implement the rule change on February 9, 
2022.
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.'' \5\
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    \5\ 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.'' 
\6\ Indeed, equity trading is currently dispersed across 16 
exchanges,\7\ 31 alternative trading systems,\8\ and numerous broker-
dealer internalizers and wholesalers. Based on publicly-available 
information, no single exchange has more than 20% of the market.\9\ 
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 12%.\10\
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    \6\ 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'').
    \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/.
    \10\ See id.
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    In addition, with the growth of broker-dealer internalization of 
MOC orders and the availability of the Cboe Market Close, there has 
been increased competition for MOC Orders in NYSE-listed securities. In 
the currently highly competitive national market system, numerous 
exchanges and other order execution venues compete for order flow 
intraday as well as at the close, and competition for closing orders is 
robust. For example, in 2021, 25.2% of volume at the NYSE closing price 
in NYSE-listed securities was executed off-exchange.
    The Exchange believes that the ever-shifting market share among 
trading venues 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. 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 the firm 
routes order flow. These fees vary month to month, and not all are 
publicly available. With respect to non-marketable order flow that 
would provide liquidity on an exchange, member organizations can choose 
from any one of the 16 currently operating registered exchanges to 
route such order flow. With respect to MOC Order flow, member 
organizations can choose among multiple options of where to execute 
such orders. 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.
    In response to this competitive environment, the Exchange has 
established incentives for member organizations who submit orders that 
provide liquidity on the Exchange. The Exchange has also established 
incentives for member organizations to remove liquidity from the 
Exchange. As detailed below, the proposed higher fees and credits are 
intended to align incentives for trading both on the close and 
intraday, which the Exchange believes will increase the quality of 
order execution on the Exchange's market, which benefits all market 
participants.
Proposed Rule Change
    The Exchange proposes changes to credits and fees for certain 
executions at the close as well as for adding and removing liquidity in 
Tape C securities in order to attract liquidity to the Exchange. The 
Exchange believes that the proposed changes, taken together, will 
incentivize submission of additional liquidity in Tape A, B and Tape C 
securities to a public exchange, thereby promoting price discovery and 
transparency and enhancing order execution opportunities for member 
organizations.
Align MOC and LOC Orders in MOC/LOC Tiers 1, 2 and 3
    The Exchange currently charges different fees for MOC and LOC 
orders in MOC/LOC Tiers 1, 2 and 3. The Exchange proposes to align the 
fees for MOC and LOC orders by raising the rates for MOC orders to 
parity with the rates for LOC orders, as follows.
    Currently, for MOC/LOC Tier 1, the Exchange charges $0.0004 per 
share for MOC orders and $0.0007 per share for LOC orders from any 
member organization in the prior three billing months executing (1) an 
average daily trading volume (``ADV'') of MOC activity on the NYSE of 
at least 0.45% of NYSE consolidated ADV (``CADV''),\11\ (2) an ADV of 
total close activity (MOC/LOC and executions at the close) on the NYSE 
of at least 0.7% of NYSE CADV, and (3) whose MOC activity comprised at 
least 35% of the member organization's total close activity (MOC/LOC 
and other executions at the close).

[[Page 8893]]

The Exchange proposed to charge $0.0007 per share for MOC orders 
meeting the requirements of MOC/LOC Tier 1. The requirements of MOC/LOC 
Tier 1 would remain the same.
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    \11\ ADV and CADV are defined in footnote * of the Price List.
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    For MOC/LOC Tier 2, the Exchange currently charges $0.0005 per 
share for MOC orders and $0.0008 per share for LOC orders from any 
member organization in the prior three billing months executing (1) an 
ADV of MOC activity on the NYSE of at least 0.35% of NYSE CADV, (2) an 
ADV of total close activity (MOC/LOC and other executions at the close) 
on the NYSE of at least 0.525% of NYSE CADV, and (3) whose MOC activity 
comprised at least 35% of the member organization's total close 
activity (MOC/LOC and other executions at the close). The Exchange 
proposes to charge $0.0008 per share for MOC orders meeting the 
requirements of MOC/LOC Tier 2. The tier requirements would remain 
unchanged.
    For MOC/LOC Tier 3, the Exchange currently charges $0.0008 per 
share for MOC orders and $0.0009 per share for LOC orders from any 
member organization executing in the current billing month (1) an ADV 
of MOC activity on the NYSE of at least 0.25% of NYSE (Tape A) CADV, 
(2) an ADV of the member organization's total close activity (MOC/LOC 
and other executions at the close) on the NYSE of at least 0.35% of 
NYSE (Tape A) CADV, and (3) whose MOC activity comprised at least 35% 
of the member organization's total close activity (MOC/LOC and other 
executions at the close). The Exchange proposes to charge $0.0009 per 
share for MOC orders meeting the revised requirements for MOC/LOC Tier 
3. Specifically, member organization executing in the current billing 
month would need (1) an ADV of MOC activity on the NYSE of at least 
0.20% of NYSE (Tape A) CADV and (2) an ADV of the member organization's 
total close activity (MOC/LOC and other executions at the close) on the 
NYSE of at least 0.30% of NYSE (Tape A) CADV. The third requirement for 
MOC/LOC Tier 3, that member organizations MOC activity comprise at 
least 35% of the member organization's total close activity (MOC/LOC 
and other executions at the close), would remain unchanged.
    MOC/LOC Tier 1 and 2 pricing on the Exchange has remained unchanged 
since 2018.\12\ The MOC/LOC Tier 3 rate has also remained unchanged 
since its adoption in 2018.\13\ The proposed change to the rate for 
Tier 1 and 2 MOC orders would revert to the rates to those in effect 
prior to the 2018 MOC/LOC Tier fee changes.\14\ However, as described 
below, the Exchange will provide member organizations an opportunity to 
qualify for incremental per share discounts that would allow a member 
organization to qualify for MOC/LOC Tier pricing that would be in line 
with the current tier pricing for MOC Orders. But even without the 
discounts described below, the proposed rates for MOC orders under Tier 
1 and Tier 2, would be lower than or equal to the best applicable rate 
on other primary listing exchanges.\15\
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    \12\ See Securities Exchange Act Release No. 82563 (January 22, 
2018), 83 FR 3799 (January 26, 2018) (SR-NYSE-2018-03).
    \13\ See Securities Exchange Act Release No. 82706 (February 13, 
2018), 83 FR 7282 (February 20, 2018) (SR-NYSE-2018-08).
    \14\ See Securities Exchange Act Release No. 78233 (July 6, 
2016), 81 FR 45190 (July 12, 2016) (SR-NYSE-2016-47) (setting the 
MOC/LOC Tier 1 fee to $0.0007 per share and the MOC/LOC Tier 2 fee 
to $0.0008).
    \15\ For example, the best applicable fee on the NASDAQ Stock 
Market, LLC (``NASDAQ'') is $0.0016 per executed share, with the 
lowest possible rate available on Nasdaq of $0.0008 per executed 
share, which is available only if a firm adds liquidity in all Tapes 
above 1.75.% of Consolidated Volume or MOC/LOC volume above 0.50% of 
Consolidated Volume. See NASDAQ Price List, available at https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2. The highest 
rate for LOC orders in Tier 3 would also be lower than the NASDAQ 
fee. The closing auction fee on Cboe BZX for listed securities is 
$0.00100. See Cboe BZX Fee Schedule, available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/. The Exchange 
notes that the NASDAQ requirements for MOC/LOC volume is a 
percentage of all Tapes CADV, whereas the NYSE requirement is all 
close (MOC/LOC and other orders at the close) as a percentage of 
just Tape A CADV.
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Incremental Per Share Discounts on MOC Orders
    As a way of offsetting the proposed higher fees for tiered MOC 
orders, the Exchange proposes incremental discounts per share on MOC 
orders for member organizations that meet the requirements of the MOC/
LOC Tiers 1-3 in the billing month. These proposed discounts are 
designed to align incentives among both trading on the close and 
intraday trading on the Exchange.
    As proposed, member organizations that have an Adding ADV \16\ in 
Tapes A, B and C Securities as a percentage of Tapes A, B and C CADV, 
excluding any liquidity added by a Designated Market Maker (``DMM''), 
that is at least 0.50%, would be eligible for an incremental discount 
per share of $0.0001. Alternatively, a member organization has an 
Adding ADV in Tapes A, B and C Securities as a percentage of Tapes A, B 
and C CADV, excluding any liquidity added by a DMM, that is at least 
1.00% would instead be eligible for a $0.0002 incremental discount per 
share. Finally, member organizations with an ADV of at least 250,000 
shares entered and executed by its affiliated Floor broker would also 
be eligible for an incremental per share discount of $0.0001. This last 
discount would be in addition to either of the first two discounts. For 
purposes of the proposed discount, an affiliated Floor broker eligible 
for the discount would be a Floor broker under 75% common ownership or 
control of the member organization.\17\
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    \16\ Footnote 2 to the Price List defines ADV as ``average daily 
volume'' and ``Adding ADV'' as ADV that adds liquidity to the 
Exchange during the billing month.
    \17\ The Price List defines ``affiliate'' as any member 
organization under 75% common ownership or control of that member 
organization. See Price List, General, Section I (Billing Disputes).
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    For example, assume Member Organization A in the billing month has 
an ADV of at least:
     0.45% of Adding as a percentage of Tape A, B and C CADV;
     0.20% of MOC as a percentage of Tape A CADV;
     0.30% of total close as a percentage of Tape A CADV; and
     35% of MOC as a percentage of that member organization's 
total close ADV.
    Based on the foregoing, under the proposed change, Member 
Organization A would qualify for per share fees for MOC and LOC orders 
of $0.0009 under MOC/LOC Tier 3. Without the proposed change, Member 
Organization A would not qualify under the current higher requirements 
of 0.25% of MOC and 0.35% of total close as a percentage of Tape A 
CADV, and would be charged the non-tier rate of $0.0010 per share. 
Accordingly, the proposed change could result in a fee reduction for 
member organizations that would currently only be eligible for the 
higher non-tier rate.
    Assume instead that Member Organization A had an Adding ADV of 
0.55% of Tape A, B, and C CADV. In that case, Member Organization A 
would qualify for a MOC per share discount of $0.0001 and a combined 
MOC order fee of $0.0008. If Member Organization A had a trading Floor 
ADV of at least 250,000 shares, including adding, removing, open and 
close ADV, executed by that member organization's affiliated Floor 
broker, Member Organization A would then qualify for an additional 
$0.0001 per share discount, for a combined MOC order fee of $0.0007.
    Assume Member Organization A had an Adding ADV of at least 1.00% 
rather than 0.55%. In that case, Member Organization A would qualify 
for a

[[Page 8894]]

$0.0002 per share discount, instead of $0.0001 as in the previous 
example, for combined discount of $0.0003 and a combined MOC order fee 
of $0.0006 (including the additional $0.0001 per share Floor broker 
discount), which would be lower than the current MOC/LOC Tier 3 rate of 
$0.0008 per share. Member Organization A's fee for LOC orders would 
remain at the MOC/LOC Tier 3 fee of $0.0009.
    As the example shows, the discounts provide for several ways for 
member organizations to lower their effective MOC fee to levels that 
are comparable and even below the current rates for MOC orders on MOC/
LOC Tier 3 and equal to the current MOC/LOC Tier 1 and 2 today. In 
addition, because the discounts are structured such that they are 
available based on higher adding volumes or sending orders to 
affiliated Floor brokers, the discounts also enhance liquidity 
provision on the Exchange and/or support the maintenance and potential 
expansion of a trading Floor presence by member organizations. The 
Exchange believes that expanding the trading Floor presence by member 
organizations would benefit investors by increasing the amount of order 
flow to and execution opportunities on a public exchange, thereby 
encouraging greater participation and liquidity. Moreover, it should be 
noted that member organizations have alternative ways to participate in 
lower MOC rates at the closing auction. MOC orders executed by a Floor 
broker are eligible for a $0.0005 standard rate unless a lower tiered 
fee applies. Member organizations also have the option of utilizing D 
Orders last modified (as defined in the Price List) earlier than 25 
minutes before the scheduled close of trading, which would give the 
member organization a $0.0003 rate, which is lower than the lowest 
proposed MOC/LOC Tier 1 rate. D Orders entered between 3:35 up to 3 
minutes before the close are also charged a $0.0007 fee, which is lower 
than the proposed MOC/LOC Tier 2 rate for MOC orders. The Exchange 
notes that these discounts also provide member organizations with 
flexibility to qualify for discounts, either through Adding ADV or 
through their affiliated Floor broker.
    Since the proposed incremental discounts are new, the Exchange does 
not know how many member organizations could qualify for the new 
discounts based on their current trading profile and if they choose to 
direct order flow to the Exchange. Based on the profile of liquidity-
adding firms generally, the Exchange believes that additional member 
organizations could qualify for the discounts if they choose to direct 
order flow to the Exchange. 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 discounts.
Orders at the Close
    Currently, the Exchange does not charge member organizations for 
the first 750,000 ADV of the aggregate of executions at the close for 
d-Quote, Floor broker executions swept into the close, excluding verbal 
interest, and executions at the close, excluding MOC orders, LOC orders 
and CO orders. As set forth in the Price List, the Exchange charges 
certain fees differentiated by time of entry (or last modification) for 
D Orders at the close after the first 750,000 ADV of the aggregate of 
executions at the close by a member organization. All other orders from 
continuous trading swept into the close are charged $0.0007. The 
Exchange proposes to charge all other orders from continuous trading 
swept into the close $0.0008, which is in line with the applicable fee 
on other marketplaces.\18\
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    \18\ For example, the NASDAQ's Continuous Book fee is $0.00085. 
See NASDAQ Price List, available at https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
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Credits for Removing Liquidity in Tape C Securities
    For Tape B and C securities, the Exchange currently offers a Remove 
Tier for securities at or above $1.00 for member organizations that 
have a minimum amount of Adding ADV. The Exchange also charges a lower 
remove fee of $0.00285 in Tapes B and C for member organization with an 
Adding ADV, excluding liquidity added by a DMM, that is at least 
250,000 ADV on the NYSE in Tape A.
    The Exchange proposes two new credits for member organizations 
removing liquidity in Tape C securities. First, the Exchange proposes a 
$0.0026 per share fee for removing in Tape C securities if the member 
organizations achieves a 0.25% Adding Tape C percentage of Tape C CADV. 
Second, the Exchange proposes a $0.0027 per share fee for removing in 
Tape C securities if the member organization achieves a 0.10% Adding 
Tape C percentage of Tape C CADV.
    Since the proposed credits are new, the Exchange does not know how 
many member organizations could qualify for the new credits based on 
their current trading profile and if they choose to direct order flow 
to the Exchange. Based on the profile of liquidity-adding firms 
generally, the Exchange believes that additional member organizations 
could qualify for the tier if they choose to direct order flow to the 
Exchange. 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 either of the new credits.
Tiered Adding Credits in Tape B and C Securities
    The current Tier 1 Adding Credit in Tape B and C Securities offers 
a credit of $0.0026 per share on a per tape basis for transactions in 
stocks with a per share price of $1.00 or more when adding liquidity to 
the Exchange if the member organization has at least 0.10% of Adding 
CADV in Tape B or C on a per tape basis. For purposes of qualifying for 
this tier, the 0.10% of Adding CADV could include shares of both an 
SLP-Prop and an SLMM of the same or an affiliated member 
organization.\19\ The Exchange proposes that member organizations 
meeting the adding liquidity requirements for Tier 1, which would 
remain unchanged, would be eligible for a $0.0029 per share credit 
instead for Tape C securities. Member organizations meeting the adding 
liquidity requirements for Tier 1 would continue to be eligible for the 
existing $0.0026 per share credit for Tape B securities.
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    \19\ Under Rule 107B, a SLP can be either a proprietary trading 
unit of a member organization (``SLP-Prop'') or a registered market 
maker at the Exchange (``SLMM''). For purposes of the 10% average or 
more quoting requirement in assigned securities pursuant to Rule 
107B, quotes of an SLP-Prop and an SLMM of the same member 
organization are not aggregated. However, for purposes of adding 
liquidity for assigned SLP securities in the aggregate, shares of 
both an SLP-Prop and an SLMM of the same member organization are 
included.
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    Similarly, the current Tier 2 Adding Credit offers a per tape 
credit of $0.0023 per share for transactions in stocks with a per share 
price of $1.00 or more when adding liquidity to the Exchange if the 
member organization has at least 0.03% of Adding CADV in Tape B or C on 
a per tape basis. For purposes of qualifying for this tier, the 0.03% 
of Adding CADV could include shares of both an SLP-Prop and an SLMM of 
the same or an affiliated member organization. The Exchange proposes to 
require at least 0.05% of Adding CADV in Tape B or C in order to 
qualify for

[[Page 8895]]

this credit. The current credit would remain unchanged.
    Finally, the Exchange proposes a new Tape C Adding Tier credit that 
would offer a per tape credit of $0.0031 per share for transactions in 
stocks with a per share price of $1.00 or more when adding liquidity to 
the Exchange if the member organization has at least 0.25% of Adding 
CADV in Tape C securities. The Exchange believes that the proposed Tape 
C Adding Tier would further contribute to incenting member 
organizations to provide additional amounts of liquidity on 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. The Exchange does not know 
how much order flow in Tape C securities that member organizations 
choose to route to other exchanges or to off-exchange venues. Because 
the proposed Tape C Adding Tier would be new, the Exchange does not 
know how many member organizations could qualify for the new credit 
based on their current trading profile and if they choose to direct 
order flow to the Exchange. Based on the profile of liquidity-adding 
firms generally, the Exchange believes that additional member 
organizations could qualify for the tier if they choose to direct order 
flow to the Exchange. 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.\20\
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    \20\ The Exchange proposes the non-substantive change of 
relocating the phrase ``(including shares of both an SLP-Prop and an 
SLMM of the same or an affiliated member organization)'' without 
change from Tier 1 and Tier 2 to the first column of the chart 
following ``Per-Tape Requirement (Non-SLP and Floor broker Adding % 
Tape CADV)'' in order to avoid duplication. Further, the Exchange 
proposes the non-substantive change of deleting ``per share on a per 
Tape basis'' in Tier 1 and ``per share'' in Tier 2 and adding ``per 
share'' following ``Display Adding Rate'' in the first column to 
similarly to similarly avoid duplication.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\21\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\22\ 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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    \21\ 15 U.S.C. 78f(b).
    \22\ 15 U.S.C. 78f(b)(4) & (5).
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The Proposed Change Is Reasonable
    In light of the competitive environment in which the Exchange 
currently operates, the proposed rule change is a reasonable attempt to 
increase liquidity on the Exchange and improve the Exchange's market 
share relative to its competitors. The Exchange believes the proposed 
change is also reasonable because it is designed to attract higher 
volumes of orders transacted on the Exchange by member organizations by 
aligning incentives for trading both on the close and intraday, which 
would benefit all market participants by offering greater price 
discovery and an increased opportunity to trade on the Exchange, both 
intraday and during the closing auction.
Orders at the Close
    The Exchange believes that the proposed fee change for certain 
executions at the close are reasonable. The Exchange's closing auction 
is a recognized industry benchmark,\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.
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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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    The Exchange believes that the proposed increased fees and 
incentives for fee discounts for MOC orders are a reasonable way to 
encourage greater liquidity and achieving the proposed discounts. MOC 
orders are always marketable and therefore have a higher likelihood of 
execution at the close which have value. MOC orders also contribute 
meaningfully to the price and size discovery, which is the hallmark of 
the closing auction process. Higher volumes of MOC orders contribute to 
the quality of the Exchange's closing auction and provide market 
participants whose orders are swept into the close with a greater 
opportunity for execution. Further, as noted above, in the currently 
highly competitive national market system, competition for closing 
orders among exchanges, ATSs and other market execution venues is 
robust.
    In addition, the Exchange believes that lowering the required ADV 
of MOC activity on the NYSE as a percentage of Tape A CADV and total 
close activity (MOC/LOC and other executions at the close) on the NYSE 
as a percentage of Tape A CADV in order to qualify for MOC/LOC Tier 3 
is reasonable because, coupled with the increased fee, the Exchange 
believes the change would encourage greater participation which leads 
to greater marketable and other liquidity at the closing auction. As 
noted, higher volumes of MOC orders contribute to the quality of the 
Exchange's closing auction and provide market participants whose orders 
are executed at the close with a greater opportunity for execution, 
which benefits all participants As noted above, the rate for MOC orders 
has remained unchanged since 2018, and the proposed change to the rate 
for Tier 1 and 2 MOC orders would revert to the rates to those in 
effect prior to the changes made in 2018 to lower the MOC/LOC Tier 1 
and 2 rates. Moreover, even without the proposed incremental discounts, 
the proposed rates for MOC orders, including the highest proposed rate, 
would be lower than or in line with the applicable rate on other 
marketplaces.\24\ The Exchanges offers other ways for member 
organizations to achieve lower fees in the close, including MOC orders 
through their Floor broker or D Orders last modified earlier than 25 
minutes before the scheduled close of trading.
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    \24\ See note 15, supra.
---------------------------------------------------------------------------

    Further, the Exchange believes that offering proposed incremental 
per share discounts on MOC orders is a reasonable way to lower a member 
organization's effective fee for MOC orders. The proposed discounts 
based on increased Adding ADV in Tapes A, B and C Securities as a 
percentage of Tapes A, B and C CADV and/or through entry by an 
affiliated Floor broker is also a reasonable way to encourage 
submission of additional liquidity to a public exchange and the 
submission of additional marketable liquidity to the Exchange's closing 
auction. Member organizations can also achieve discounts by using their 
affiliated Floor broker to achieve the ADV requirement, which combined 
with the above discount gives member organizations flexibility in 
achieve lower fees for MOC orders. As noted, members and member 
organizations benefit from the substantial amounts of liquidity that 
are present on the Exchange during such time. The Exchange notes that 
other marketplaces provide discounts based on intraday adding volume, 
and that aligning incentives for lower pricing at the close with 
additional intraday volume is not novel. For example, NASDAQ offers six 
MOC/LOC tiers with fees ranging from $0.0008 to $0.00145 and a non-tier 
rate of $0.0016 based on adding volume or MOC/LOC volume per MPID as a 
percentage of Tapes A, B

[[Page 8896]]

and C. The proposed requirements to achieve the proposed discounts are 
lower than NASDAQ's current requirements and, as noted, even without 
the discounts, the proposed rates are lower than or in line with 
NASDAQ's discounted rates.\25\ Finally, the Exchange believes that 
increasing the fee for all other orders from continuous trading swept 
into the close is also reasonable because it remains in line or better 
when compared with other exchanges.\26\
---------------------------------------------------------------------------

    \25\ See note 15, supra.
    \26\ For example, the NASDAQ's Continuous Book fee is $0.00085. 
See NASDAQ Price List, available at https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
---------------------------------------------------------------------------

Tape C Incentives
    The Exchange believes that the proposed incentives relating to 
adding and removing liquidity in Tape C securities are a reasonable way 
to incentivize member organizations to add and remove liquidity on a 
public exchange.
    Specifically, the proposal to introduce new credits for member 
organizations removing liquidity in Tape C securities of $0.0026 and 
$0.0027 would incentivize member organizations to remove additional 
liquidity from the Exchange, thereby increasing the number of orders 
adding liquidity that are executed on the Exchange to achieve the tier 
requirements which improves overall liquidity on a public exchange and 
resulting in lower costs for member organizations that qualify for the 
rate. Without having a view of a member organization's activity on 
other markets and off-exchange venues, the Exchange believes the 
proposed credits would provide an incentive for member organizations to 
remove additional liquidity from the Exchange in Tape C securities. The 
Exchange notes that the proposed fees are in line with or better than 
the applicable rate on other marketplaces.\27\
---------------------------------------------------------------------------

    \27\ See note 15, supra.
---------------------------------------------------------------------------

    The proposed changes to the Tier 1 and Tier 2 Adding Credits in 
Tape B and C Securities and the introduction of a Tier 3 Adding Credit 
in Tape C securities are also reasonable. The proposed $0.0029 per 
share credit for Tape C securities for member organizations meeting the 
adding liquidity requirements of Tier 1 and requiring a higher Adding 
CADV in Tape B or C in order to qualify for the Tape 2 Adding Credit 
are reasonable because the changes would further contribute to 
incenting member organizations to provide additional amounts of 
liquidity on the Exchange in Tape C securities, and all member 
organizations would benefit from such increased levels of liquidity.
    Finally, the proposed new Tape C Tier Adding credit of $0.0031 per 
share when adding liquidity to the Exchange if the member organization 
has at least 0.25% of Adding CADV in Tape C securities is reasonable 
because it would also further contribute to incenting member 
organizations to provide additional amounts of liquidity on 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. The Exchange does not know 
how much order flow member organizations choose to route to other 
exchanges or to off-exchange venues. The Exchange believes that the 
higher adding requirement to qualify for adding credits in Tape C 
securities would provide greater incentives for member organizations to 
add more liquidity to the Exchange. The Exchange does not know how much 
order flow member organizations choose to route to other exchanges or 
to off-exchange venues. Based on the profile of liquidity-adding firms 
generally, the Exchange believes that additional member organizations 
could qualify for the proposed tiered credit if they choose to direct 
order flow to the Exchange. However, without having a view of member 
organizations' 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 member organizations directing orders to the 
Exchange in order to qualify for the proposed Tape C Tier.
The Proposal Is an Equitable Allocation of Fees
    The Exchange believes the proposal equitably allocates fees and 
credits among market participants because all member organizations that 
participate on the Exchange may qualify for the proposed credits and 
fees on an equal basis. The Exchange believes its proposal equitably 
allocates its fees and credits among its market participants by 
fostering liquidity provision and stability in the marketplace.
Orders at the Close
    The Exchange believes that the proposed fees for MOC orders and 
associated discounts are an equitable allocation of fees because the 
proposed changes, taken together, will incentivize member organizations 
to send additional adding liquidity to achieve lower fees and encourage 
greater marketable and other liquidity at the closing auction. Higher 
volumes of MOC orders contribute to the quality of the Exchange's 
closing auction and provide market participants whose orders are swept 
into the close with a greater opportunity for execution of orders on 
the Exchange, thereby promoting price discovery and transparency and 
enhancing order execution opportunities and improving overall liquidity 
on a public exchange. The Exchange also believes that the proposed 
change is equitable because it would apply to all similarly situated 
member organizations that utilize MOC orders on the Exchange. The 
proposed change also is equitable because the proposed fees, including 
the highest proposed fee, would be lower than or in line with the 
applicable rate on other marketplaces.\28\
---------------------------------------------------------------------------

    \28\ See note 15, supra.
---------------------------------------------------------------------------

    The Exchange believes that the proposed incremental per share 
discounts on MOC orders are equitable because the discounts would be 
available on an equal basis to all similarly situated member 
organizations that utilize MOC orders on the Exchange. In this regard, 
the proposed discounts are equitable because any member organization 
can choose to increase their adding ADV volume in order to qualify for 
the proposed discounts and any member organization can choose to have 
an affiliated Floor broker in order to qualify for the additional 
proposed discount. Moreover, as noted above, alternative ways to 
achieve lower MOC fees are also available to all similarly situated 
member organizations that utilize MOC orders on the Exchange on an 
equal basis.
Tape C Incentives
    The Tape C incentives for removing and adding liquidity equitably 
allocate fees and credits among the Exchange's market participants 
because all member organizations that participate on the Exchange may 
receive the proposed credits for removing liquidity in Tape C 
securities and the proposed credits for adding liquidity in if they 
elect to send their orders to the Exchange and meet the corresponding 
requirements, including the enhanced requirement for the Tier 2 Adding 
Credit, in order to qualify for the credits. Without having a view of 
member organization's activity on other markets and off-exchange 
venues, the Exchange has no way of knowing whether this proposed rule 
change would result in any member organizations sending more of their 
orders to the Exchange. The Exchange cannot predict with certainty how 
many member organizations would avail

[[Page 8897]]

themselves of this opportunity, but additional orders would benefit all 
market participants because it would provide greater execution 
opportunities on the Exchange.
    The Exchange also believes that the proposed change is equitable 
because it would apply to all similarly situated member organizations 
that remove and add liquidity in Tape C securities. The proposal 
neither targets nor will it have a disparate impact on any particular 
category of market participant. Specifically, the Exchange believes 
that the proposal constitutes an equitable allocation of fees because 
all similarly situated member organizations would be eligible for the 
same credits if they meet the corresponding requirements for the fee or 
credit. As to those member organizations that do not presently qualify 
for the adding liquidity credit, the proposal will not adversely impact 
their existing pricing or their ability to qualify for other credits 
provided by the Exchange. The proposed change also is equitable because 
it would be consistent with the applicable rate on other marketplaces. 
For example, the Cboe BZX fee for removing is $0.0030 and the 
requirement to achieve a credit for removing of $0.0031 is an adding 
ADV of 1.00% of CADV or 100 million shares ADV.\29\
---------------------------------------------------------------------------

    \29\ See Cboe BZX Fee Schedule, available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/.
---------------------------------------------------------------------------

    As previously noted, the Exchange operates in a competitive 
environment, particularly as it relates to attracting non-marketable 
orders, which add liquidity to the Exchange. The Exchange does not know 
how much order flow member organizations choose to route to other 
exchanges or to off-exchange venues. Because the proposed Tape C 
incentive involves the introduction of new credits and/or new 
requirements, the Exchange does not know how many member organizations 
could qualify for the new remove and add fees based on their current 
trading profile and if they choose to direct order flow to the 
Exchange. 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.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, member 
organizations are free to disfavor the Exchange's pricing if they 
believe that alternatives offer them better value.
Orders at the Close
    The proposed increased fees for MOC orders and associated discounts 
are not unfairly discriminatory because the proposed fees would be 
applied to all similarly situated member organizations and other market 
participants, who would all be subject to the same fees, requirements 
and discounts on an equal basis. For the same reason, the proposal 
neither targets nor will it have a disparate impact on any particular 
category of market participant. Accordingly, no member organization 
already operating on the Exchange would be disadvantaged by this 
allocation of fees. Further, the Exchange believes the proposal would 
incentivize member organizations to send more orders to the Exchange to 
qualify for higher credits. 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.
    Further, the Exchange believes that the proposed incremental per 
share discounts on MOC orders is not unfairly discriminatory because 
the discounts would be available on an equal basis to all similarly 
situated member organizations. As noted above, additional ways to 
achieve lower MOC fees are also available to all similarly situated 
member organizations that utilize MOC orders on the Exchange on an 
equal basis.
Tape C Incentives
    The Exchange believes it is not unfairly discriminatory to provide 
additional credits and fees for adding liquidity to the Exchange in 
Tape C securities because the credits and fees would be provided on an 
equal basis to all member organizations that add liquidity by meeting 
the new proposed adding tier requirements. In the prevailing 
competitive environment, member organizations are free to disfavor the 
Exchange's pricing if they believe that alternatives offer them better 
value. The Exchange believes it is not unfairly discriminatory to 
provide additional credits and revised requirements to encourage 
liquidity in Tape C securities as the proposed credits and requirements 
would be provided on an equal basis to all member organizations. 
Further, the Exchange believes the proposed credits would incentivize 
member organizations that meet the new requirements to send more orders 
to the Exchange. Since the proposed credits would be new, no member 
organization currently qualifies for them. 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 credits provide a reasonable 
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.
    In addition, the Exchange believes that the proposal is not 
unfairly discriminatory because it 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 credits in Tape C securities if they meet the 
proposed 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 ability 
to qualify for other credits provided by the Exchange. Finally, as 
noted, the submission of orders is optional for member organizations in 
that they could choose whether to submit orders to the Exchange and, if 
they do, they can choose the extent of their activity in this regard. 
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,\30\ 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 proposal would 
encourage the submission of additional liquidity to a public exchange, 
thereby promoting market depth, price discovery and transparency and

[[Page 8898]]

enhancing order execution opportunities for member organization. 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.'' \31\
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78f(b)(8).
    \31\ Regulation NMS, 70 FR at 37498-99.
---------------------------------------------------------------------------

    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-removing and liquidity-
providing orders 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. Greater overall order flow, trading 
opportunities, and pricing transparency benefit all market participants 
on the Exchange by enhancing market quality and continuing to encourage 
member organizations to send orders, thereby contributing towards a 
robust and well-balanced market ecosystem. The current and proposed 
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.
    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. As noted 
above, the Exchange currently has less than 12% market share of 
executed volume of equities trading. 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 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.
    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) \32\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \33\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78s(b)(3)(A).
    \33\ 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) \34\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \34\ 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-NYSE-2022-07 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-2022-07. 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-2022-07 and should be submitted on 
or before March 9, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
---------------------------------------------------------------------------

    \35\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-03282 Filed 2-15-22; 8:45 am]
BILLING CODE 8011-01-P


