[Federal Register Volume 85, Number 36 (Monday, February 24, 2020)]
[Notices]
[Pages 10482-10487]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03546]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88233; File No. SR-NYSEAMER-2020-07]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Change To Amend Its
Price List
February 18, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\
[[Page 10483]]
notice is hereby given that, on February 3, 2020, NYSE American LLC
(``NYSE American'' 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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) offer new
credits for displayed orders, and revise the credits for non-displayed
orders, that add liquidity to the Exchange; (2) revise the fees for
non-displayed orders that remove liquidity from the Exchange; and (3)
offer a one-time credit for quoting in UTP Securities. The proposed
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 its Price List to (1) offer new
credits for displayed orders, and revise the credits for non-displayed
orders, that add liquidity to the Exchange; (2) revise the fees for
non-displayed orders that remove liquidity from the Exchange; and (3)
offer a one-time credit for quoting in UTP Securities.\4\
---------------------------------------------------------------------------
\4\ See Rule 1.1E(ii) (definition of UTP Security).
---------------------------------------------------------------------------
The proposed change responds to the current competitive environment
where order flow providers have a choice of where to direct orders by
offering further incentives for Equity Trading Permit (``ETP'') Holders
\5\ to send additional displayed liquidity to the Exchange.
---------------------------------------------------------------------------
\5\ See id. at (m) (definition of ETP) & (n) (definition of ETP
Holder).
---------------------------------------------------------------------------
The Exchange proposes to implement the rule change on February 3,
2020.
Competitive Environment
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.'' \6\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule)
(``Regulation NMS'').
---------------------------------------------------------------------------
As the Commission itself recognized, the market for trading
services in NMS stocks has become ``more fragmented and competitive.''
\7\ Indeed, equity trading is currently dispersed across 13
exchanges,\8\ 31 alternative trading systems,\9\ and numerous broker-
dealer internalizers and wholesalers, all competing for order flow.
Based on publicly-available information, no single exchange has more
than 20% market share (whether including or excluding auction
volume).\10\ Therefore, no exchange possesses significant pricing power
in the execution of equity order flow. More specifically, the
Exchange's market share of trading in Tapes A, B and C securities
combined is less than 1%.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 51808, 84 FR 5202,
5253 (February 20, 2019) (File No. S7-05-18) (Transaction Fee Pilot
for NMS Stocks Final Rule) (``Transaction Fee Pilot'').
\8\ 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.
\9\ 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.
\10\ See Cboe Global Markets U.S. Equities Market Volume
Summary, available at http://markets.cboe.com/us/equities/market_share/.
---------------------------------------------------------------------------
The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
move order flow, or discontinue or reduce use of certain categories of
products, in response to fee changes. With respect to non-marketable
order flow that would provide liquidity on an Exchange, ETP Holders can
choose from any one of the 13 currently operating registered exchanges
to route such order flow. Accordingly, competitive forces constrain
exchange transaction fees that relate to orders that would provide
liquidity on an exchange.
In response to this competitive environment, the Exchange proposes
to introduce incentives for its ETP Holders who submit orders that
provide liquidity on the Exchange in displayed and non-displayed
securities and for ETP Holders that remove liquidity from the Exchange.
In addition, the Exchange proposes a credit for each ETP Holder's
Market Participant Identifier (``MPID'') that meets certain quoting
requirements in UTP Securities, up to a maximum amount, designed to
encourage ETP Holders to quote on the Exchange in UTP Securities. In
short, the proposed fee change is designed to attract additional order
flow to the Exchange and to encourage quoting and trading on the
Exchange.
Proposed Rule Change
Liquidity Adding Displayed Order Fees
For transactions in securities priced at or above $1.00, other than
transactions by Electronic Designated Market Makers (``eDMM'') in
assigned securities, the Exchange currently does not charge a fee for
executions on the Exchange of displayed orders that add liquidity to
the Exchange.
The Exchange proposes to offer the following credits for displayed
orders that add liquidity to the Exchange:
For displayed orders and Mid-Point Liquidity Orders (``MPL
Order'') \11\ with an average daily volume (``ADV'') of at least
750,000 shares that add liquidity to the Exchange (``Adding ADV''),\12\
the Exchange proposes a $0.0025 credit per displayed and MPL share.
---------------------------------------------------------------------------
\11\ See Rule 7.31E(d)(3) (description of MPL Order).
\12\ The Exchange proposes to add a fourth bullet under the
first heading in the Price List titled ``Pillar Trading Platform''
that would provide that capitalized terms have the same meaning as
in Rules 1.1E and 7E and that ``Adding ADV'' means an ETP Holder's
average daily volume of shares executed on the Exchange that
provided liquidity.
---------------------------------------------------------------------------
For displayed orders and MPL Orders that add liquidity to
the Exchange that do not have an Adding ADV of at least 750,000 shares,
the Exchange proposes a $0.0024 credit per displayed and MPL share.
For orders that add displayed liquidity to the Exchange
and that set a new best bid or offer (``BBO'') on NYSE American, \13\
the Exchange proposes a $0.0026 per share credit.
---------------------------------------------------------------------------
\13\ See Rule 1.1E(h) (definition of BBO).
---------------------------------------------------------------------------
The purpose of this proposed change is to incentivize ETP Holders
to increase
[[Page 10484]]
the liquidity-providing orders 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.
The Exchange believes that the proposed credits for orders the meeting
the Adding ADV requirement, for orders that don't meet the Adding ADV
requirements and for orders that set a new Exchange BBO would provide
incentives for ETP Holders to send additional liquidity and improve
quoting on the Exchange in order to qualify for a credit.
The Exchange does not know how much order flow ETP Holders choose
to route to other exchanges or to off-exchange venues. The Exchange did
not previously offer credits for displayed orders that add liquidity to
the Exchange, but 5 ETP Holders currently qualify for the tiered
credits, and all ETP Holders could qualify for the proposed $0.0026
credit for setting a new BBO if they so choose. However, without having
a view of ETP Holder'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 ETP Holder directing orders to the Exchange
in order to qualify for the new credits.
Liquidity Adding Non-Displayed Order Fees
For securities priced at or above $1.00, other than transactions by
eDMMs in assigned securities, the Exchange currently charges $0.0002
per share for executions on the Exchange of non-displayed orders that
add liquidity to the Exchange. The Exchange proposes a credit for
executions on the Exchange of non-displayed orders that add liquidity
to the Exchange of $0.0020 per share.
For securities priced at or above $1.00 on transactions by eDMMs in
assigned securities, the Exchange currently does not offer a credit for
executions of non-displayed orders that add liquidity to the Exchange.
The Exchange proposes to offer a $0.0020 per share credit to eDMMs for
executions of non-displayed orders that add liquidity to the
Exchange.\14\
---------------------------------------------------------------------------
\14\ The Exchange proposes to delete the stray comma following
``(displayed)'' in the first entry under ``Adding Liquidity'' in
Section II, A of the Price List.
---------------------------------------------------------------------------
The purpose of this proposed change is to incentivize ETP Holders
to increase the liquidity-providing orders they send to the Exchange,
which would support the quality of price discovery on the Exchange and
provide additional 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. The Exchange believes that the proposed credits would provide
incentives for ETP Holders to send additional liquidity to the
Exchange.
The Exchange does not know how much order flow ETP Holders choose
to route to other exchanges or to off-exchange venues. The Exchange
believes all ETP Holders and eDMMs could qualify for the credits if
they so choose. However, without having a view of ETP Holder's and
eDMM'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 ETP Holder or eDMM directing orders to the Exchange in
order to qualify for the new credits.
Liquidity Removing Order Fees
For securities priced at or above $1.00, other than transactions by
eDMMs in assigned securities, the Exchange currently charges $0.0002
per share for all executions that remove liquidity from the Exchange.
The Exchange proposes to revise the current fee for removing
liquidity to $0.0026 per share where an ETP Holder has an Adding ADV of
at least 10,000 shares. Where an ETP Holder does not have an Adding ADV
of at least 10,000 shares, the Exchange proposes to charge $0.0030 per
share for all executions that remove liquidity from the Exchange.
For priced at or above $1.00 in transactions applicable to eDMMs in
assigned securities that remove liquidity from the Exchange, the
Exchange currently charges $0.0002 per share for all executions that
remove liquidity from the Exchange. The Exchange proposes to revise
this fee for removing liquidity in transactions applicable to eDMMs in
assigned securities to $0.0026 per share.
The Exchange does not know how much order flow ETP Holders choose
to route to other exchanges or to off-exchange venues. There are
currently 25 ETP Holders that qualify for the current fees for removing
liquidity based on their current trading profile on the Exchange.
However, without having a view of ETP Holder'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 ETP Holder
directing orders to the Exchange in order to qualify for the lower
fees.
Monthly Quoting Credit
The Exchange proposes to offer a credit in addition to the
transaction fees and credits specified in Section I.B of the Price List
to encourage quoting on the Exchange in UTP Securities. Specifically,
the Exchange proposes that each ETP Holder's MPID quoting at the
national best bid or offer (``NBBO'') \15\ an average of at least 10%
of the time in 750 securities or more UTP Securities in the billing
month would be eligible for a credit of $10,000 per qualifying MPID in
the first month that an MPID qualifies for the credit for the first
time, up to a maximum of $50,000 per ETP Holder for all of the ETP
Holder's MPIDs.
---------------------------------------------------------------------------
\15\ See Rule 1.1E(dd) (definition of NBBO, Best Protected Bid,
Best Protected Offer, Protected Best Bid and Offer (PBBO)).
---------------------------------------------------------------------------
For example, assume that ETP Holder A has 6 MPIDs and that ETP
Holder A's first MPID quotes at least 10% at the NBBO in 800 UTP
Securities in the first month while the remaining 5 MPIDs quote at
least 10% in less than 750 UTP Securities each. The first MPID would
qualify for the $10,000 credit in the first month. Assume that in the
second month all of ETP Holder A's MPIDs quote at least 10% in at least
750 UTP Securities each. In the second month, ETP Holder A's first MPID
would not qualify for the credit since it already received the $10,000
credit in the first month. ETP Holder A would accordingly receive a
credit for $40,000 in the second month because the five of the
remaining MPIDs met the quoting requirements but the combined credit is
capped at $50,000 per ETP Holder. Because ETP Holder A would have
received a combined credit of $50,000 over the first two months, ETP
Holder A would not be eligible for any additional monthly quoting
credits.
As noted, the purpose of this proposed change is to provide ETP
Holders with an incentive to increase quoting on the Exchange in UTP
Securities, which would support the quality of price discovery on the
Exchange and provide additional liquidity for incoming orders. As
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 believes that incentivizing ETP Holders
to quote at the NBBO in UTP Securities more frequently could attract
additional orders to the Exchange and contribute to price discovery,
especially in less liquid securities that may quote but not trade. In
addition,
[[Page 10485]]
additional liquidity-providing quotes benefit all market participants
because they provide greater execution opportunities on the Exchange
and improve the public quotation.
The proposed changes are not otherwise intended to address any
other issues, and the Exchange is not aware of any problems that ETP
Holders would have in complying with the proposed change.
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.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(4) & (5).
---------------------------------------------------------------------------
The Proposal is Reasonable
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\
---------------------------------------------------------------------------
\18\ See Regulation NMS, 70 FR at 37499.
---------------------------------------------------------------------------
The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
move order flow, or discontinue or reduce use of certain categories of
products, in response to fee changes. With respect to non-marketable
order flow that would provide liquidity on an Exchange, ETP Holders can
choose from any one of the 13 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. 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, and to increase
quoting on, the Exchange. As noted, the Exchange's market share of
trading in Tapes A, B and C securities combined is under 1%.
Specifically, the Exchange believes that offering new credits for
displayed orders, and revising the credits for non-displayed orders,
that add liquidity to the Exchange would provide incentives for ETP
Holders to send additional liquidity providing orders to the Exchange.
As noted above, the Exchange operates in a highly competitive
environment, particularly for attracting non-marketable order flow that
provides liquidity on an exchange.
Since the credits for displayed orders that add liquidity to the
Exchange would be new, no ETP Holder currently qualifies for the
proposed credits. As previously noted, there are a number of ETP
Holders that could qualify for the proposed credits for displayed and
non-displayed orders that add liquidity to the Exchange but without a
view of ETP Holder activity on other exchanges and off-exchange venues,
the Exchange has no way of knowing whether the proposed rule change
would result in any ETP Holder qualifying for the proposed credits. The
Exchange believes the proposed credits are reasonable as they would
provide an incentive for ETP Holders to direct order flow to the
Exchange and provide meaningful added levels of liquidity in order to
qualify for the credits, thereby contributing to depth and market
quality on the Exchange. The Exchange notes that the proposed credits
remain in line with credits currently offered on other markets to
attract displayed and non-displayed liquidity. For example, Cboe BZX
and Nasdaq offer non-tier credits for adding liquidity of $0.0020.\19\
---------------------------------------------------------------------------
\19\ See Cboe BZX U.S. Equities Exchange Fee Schedule, Fee Codes
and Associated Fees, available at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/; Nasdaq Price List, Rebate to
Add Displayed Designated Retail Liquidity, available at http://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
---------------------------------------------------------------------------
The Exchange further believes that the proposed revised fees for
orders that remove liquidity from the Exchange are reasonable because
they would incentivize ETP Holders to remove additional liquidity from
the Exchange, thereby increasing the number of orders adding liquidity
executed on the Exchange and improving overall liquidity on a public
exchange, resulting in lower costs for ETP Holders that qualify for the
rates. The Exchange notes that the proposed fees, although higher than
current levels, are significantly less than comparable fees offered on
other markets. For example, Cboe BZX and Nasdaq both offer a non-tier
fee for removing liquidity of $0.0030.\20\
---------------------------------------------------------------------------
\20\ See Cboe BZX Fee Schedule, Fee Codes and Associated Fees,
available at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/; Nasdaq Price List, Fees to Remove Liquidity,
available at http://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
---------------------------------------------------------------------------
Without having a view of an ETP Holder's activity on other markets
and off-exchange venues, the Exchange believes that the proposed higher
fees to remove liquidity would provide an incentive for ETP Holders to
remove additional liquidity from the Exchange. As previously noted, a
number of ETP Holders qualify for the proposed fees and additional ETP
Holders could qualify for the fees if they choose to direct order flow
to, and increase quoting on, the Exchange.
The Exchange believes that the proposed credit for quoting on the
Exchange in UTP Securities is reasonable. The proposed credit would
provide ETP Holders with an additional incentive to increase quoting on
the Exchange in UTP Securities, and particularly in less active
securities, which would support the quality of price discovery on the
Exchange and provide additional liquidity for incoming orders. The
Exchange believes that incentivizing ETP Holders on the Exchange to
quote at the NBBO more frequently could attract additional orders to
the Exchange and contribute to price discovery. In addition, additional
liquidity-providing quotes benefit all market participants because they
provide greater execution opportunities on the Exchange and improve the
public quotation.
Finally, the Exchange also believes the proposed non-substantive
changes are reasonable and would not be inconsistent with the public
interest and the protection of investors because investors will not be
harmed and in fact would benefit from increased clarity and
transparency on the Price List, thereby reducing potential confusion.
Given the competitive environment in which the Exchange currently
operates, the proposed rule change accordingly constitutes a reasonable
attempt to increase liquidity on the Exchange and improve the
Exchange's market share relative to its competitors.
The Proposal Is an Equitable Allocation of Fees
The Exchange believes the proposal equitably allocates its fees
among its market participants by fostering liquidity provision and
stability in the marketplace. Moreover, the proposal is
[[Page 10486]]
an equitable allocation of fees because it would reward ETP Holders for
increasing their quoting on the Exchange in UTP Securities. As such, it
is equitable to offer ETP Holders an additional credit for quoting in
UTP Securities up to a maximum amount.
The Exchange believes that the new credits for displayed orders,
and revising the credits for non-displayed orders, that add liquidity
to the Exchange are equitable because the proposed credits are not
unreasonably high in comparison to the credits paid by other exchanges
for displayed and non-displayed orders that provide liquidity.\21\ The
Exchange believes the proposed rule change would improve market quality
for all market participants on the Exchange and, as a consequence,
attract more liquidity to the Exchange, thereby improving market wide
quality and price discovery.
---------------------------------------------------------------------------
\21\ See note 19, supra.
---------------------------------------------------------------------------
Currently, 5 ETP Holders qualify for the proposed credits for
displayed orders that add liquidity to the Exchange. As previously
noted, there are a number of other ETP Holders that could qualify for
the proposed credits for displayed and non-displayed orders that add
liquidity to the Exchange but without a view of ETP Holder activity on
other exchanges and off-exchange venues, the Exchange has no way of
knowing whether the proposed rule change would result in any ETP Holder
qualifying for the proposed credits. The Exchange believes the proposed
credits are reasonable as they would provide an incentive for ETP
Holders to direct order flow to the Exchange and provide meaningful
added levels of liquidity in order to qualify for the credits, thereby
contributing to depth and market quality on the Exchange.
The proposal neither targets nor will it have a disparate impact on
any particular category of market participant. All ETP Holders would be
eligible to qualify for the proposed credits by directing displayed and
non-displayed order flow to the Exchange. Similarly, all ETP Holders
would be eligible to qualify for the one-time credit for quoting on the
Exchange in UTP Securities. ETP Holders must have an assigned MPID to
quote and trade on the Exchange, and are thus all ETP Holders would be
equally eligible to receive the same proposed credit. 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 believes that offering credits for liquidity-
providing displayed and non-displayed orders would provide incentives
for ETP Holders to send additional liquidity to the Exchange, thereby
providing additional price improvement opportunities on the Exchange
and benefiting investors generally. Similarly, the Exchange believes
that offering a one-time credit for quoting on the Exchange in UTP
Securities would provide an added incentive to increase quoting on the
Exchange in UTP Securities, and particularly in less active securities,
which would support the quality of price discovery on the Exchange and
provide additional liquidity for incoming orders.
The Exchange believes that, for the reasons discussed above, the
proposed changes to the liquidity-removing order fees would incentivize
ETP Holders to add additional liquidity from the Exchange to qualify
for the lower removing fee of $0.0026, thereby increasing the number of
orders adding liquidity that are executed on the Exchange and improving
overall liquidity on a public exchange. As previously noted, a number
of ETPs are qualifying for the current fees for removing liquidity
based on their current trading profile on the Exchange. Based on the
profile of liquidity-removing firms generally, the Exchange believes
additional ETP Holders could qualify for the new rates if they choose
to direct order flow to, and increase quoting on, the Exchange, given
the low level of 10,000 shares ADV.
The Proposal Is Not Unfairly Discriminatory
The Exchange believes that the proposal is not unfairly
discriminatory. In the prevailing competitive environment, ETP Holders
are free to disfavor the Exchange's pricing if they believe that
alternatives offer them better value.
The Exchange believes it is not unfairly discriminatory to provide
higher credits for displayed orders and non-displayed orders as well as
a one-time credit based on enhanced quoting at the NBBO in UTP
Securities insofar as the proposed credits would be provided on an
equal basis to all similarly situated ETP Holders that add liquidity to
the Exchange, who would all be eligible for the same credits if they
meet the quoting and other requirements on an equal basis. Moreover,
the proposed cap per ETP Holder of $50,000 for the one-time credit for
enhanced quoting at the NBBO in UTP Securities would also be provided
on equal basis to all ETP Holders. ETP Holders must have an assigned
MPID to quote and trade on the Exchange, and are thus all ETP Holders
would be equally eligible to receive the same proposed credit.
The revised fees for orders that remove liquidity from the Exchange
are also not unfairly discriminatory because the ADV requirement to
qualify for the fee would be applied to all similarly situated ETP
Holders who would all be eligible for the same fee on an equal basis.
Accordingly, no ETP Holder already operating on the Exchange would be
disadvantaged by this allocation of fees. Further, the Exchange
believes the proposal would provide an incentive for ETP Holders to
remove additional liquidity from the Exchange, to the benefit of all
market participants.
The proposal does not permit unfair discrimination to provide a
lower fee for removing liquidity and higher credits for adding
displayed and non-displayed liquidity as the proposed fee and credits
would be provided on an equal basis to all similarly situated ETP
Holders who would all be eligible for the same credit on an equal
basis. Accordingly, no ETP Holder already operating on the Exchange
would be disadvantaged by this allocation of fees.
The Exchange also believes that the proposed change is not unfairly
discriminatory because it is reasonably related to the value to the
Exchange's market quality associated with higher volume. The Exchange
believes the proposed credits would incentivize ETP Holders to send
more orders to the Exchange and to increase quoting on the Exchange in
order to qualify for the proposed credits, which would support the
quality of price discovery on the Exchange and provide additional
liquidity for incoming orders. Further, 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.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
For the foregoing reasons, the Exchange believes that the proposal
is consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\22\ 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
[[Page 10487]]
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.'' \23\
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78f(b)(8).
\23\ Regulation NMS, 70 FR at 37498-99.
---------------------------------------------------------------------------
Intramarket Competition. The proposed changes are designed to
attract additional order flow to the Exchange. The Exchange believes
that the proposed changes would continue to incentivize market
participants to direct order flow to the Exchange. Greater liquidity
benefits all market participants on the Exchange by providing more
trading opportunities and encourages member organizations to send
orders, thereby contributing to robust levels of liquidity, which
benefits all market participants on the Exchange. The 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 exchange and off-exchange venues if they
deem fee levels at those other venues to be more favorable. As noted,
the Exchange's market share of trading in Tapes A, B and C securities
combined is less than 1%. In such an environment, the Exchange must
continually adjust its fees and rebates to remain competitive with
other exchanges and with off-exchange venues. Because competitors are
free to modify their own fees and credits in response, and because
market participants may readily adjust their order routing practices,
the Exchange does not believe its proposed fee change can impose any
burden on intermarket competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \24\ of the Act and subparagraph (f)(2) of Rule
19b-4 \25\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
---------------------------------------------------------------------------
\24\ 15 U.S.C. 78s(b)(3)(A).
\25\ 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) \26\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\26\ 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-NYSEAMER-2020-07 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-NYSEAMER-2020-07. 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-NYSEAMER-2020-07 and should be submitted
on or before March 16, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
---------------------------------------------------------------------------
\27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020-03546 Filed 2-21-20; 8:45 am]
BILLING CODE 8011-01-P