[Federal Register Volume 85, Number 17 (Monday, January 27, 2020)]
[Notices]
[Pages 4752-4755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-01237]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88009; File No. SR-NYSEArca-2020-06]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending the
Schedule of Fees and Charges To Remove the Ineligibility for Certain
Discounts
January 21, 2020.
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 January 10, 2020, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the
[[Page 4753]]
Securities and Exchange Commission (the ``Commission'') the proposed
rule change as described in Items I, II, and III below, which Items
have been prepared by the self-regulatory organization. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Schedule of Fees and Charges to
remove the ineligibility for certain discounts when an issuer transfers
an Exchange Traded Product or Structured Product off the Exchange
(except to an Exchange affiliate) in a trailing 12-month period. The
Exchange proposes to implement the fee changes effective January 10,
2020. The proposed rule change is available on the Exchange's website
at www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Schedule of Fees and Charges to
remove the ineligibility for certain discounts when an issuer transfers
an Exchange Traded Product (``ETP'') or Structured Product off the
Exchange (except for transfers to an Exchange affiliate) in a trailing
12-month period.
The proposed change responds to the current extremely competitive
environment for ETP listings in which issuers can readily favor
competing venues or transfer their listings if they deem fee levels at
a particular venue to be excessive, or discount opportunities available
at other venues to be more favorable. The Exchange's current annual
fees for ETPs are based on the number of shares outstanding per issuer
and provide incentives for issuers to list multiple series of certain
securities on the Exchange. In response to the competitive environment
for listings, the Exchange adopted a competitive pricing structure that
combines higher minimum annual fees for certain securities with
discounts for issuers that list multiple ETPs and Structured
Products.\4\ The proposed change is designed to encourage more issuers
to qualify for the discounts and enhance competition among issuers and
listing venues by removing ineligibility for certain discounts when an
issuer transfers a Product off the Exchange (except for transfers to an
Exchange affiliate) in a trailing 12-month period.
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\4\ ``Exchange Traded Products'' are defined in footnote 3 of
the current Schedule of Fees and Charges. ``Structured Products''
are defined in footnote 4 of the current Schedule of Fees and
Charges.
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The Exchange proposes to implement the fee changes effective
January 10, 2020.
Proposed Rule Change
Currently, the Exchange offers non-mutually exclusive ``Fund
Family'' and ``High Volume Products'' discounts for ETPs and Structured
Products that are set forth in Section 9 of the Schedule of Fees and
Charges. Eligibility for the discounts is subject to the limitation
that an issuer that transfers a Product off the Exchange (except for
transfers to an Exchange affiliate) in a trailing 12-month period
beginning January 1, 2020 is ineligible for either or both discounts
for the following calendar year. The Exchange proposes to remove this
limitation from the Schedule of Fees and Charges.
The purpose of the proposed change is to encourage more issuers to
qualify for the discounts by removing the restriction on achieving or
retaining them. Although the limitation is a reasonable attempt to
incentivize issuers to maintain listings on the Exchange and discourage
transfers to and from the Exchange solely for the purpose of securing
one or more discounts, the Exchange believes that removing the
limitation outweighs those considerations because it would result in
more issuers qualifying for and retaining discounts while enhancing
competition among issuers and listing venues, to the benefit of all
market participants. The proposed change described above is not
otherwise intended to address other issues, and the Exchange is not
aware of any significant problems that market participants would have
in complying with the proposed changes.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\5\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\6\ 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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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4) & (5).
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The Proposed Change Is Reasonable
As discussed above, the Exchange operates in a highly competitive
market for the listing of ETPs. Specifically, ETP issuers can readily
favor competing venues or transfer listings if they deem fee levels at
a particular venue to be excessive, or discount opportunities available
at other venues to be more favorable. The Exchange's current annual
fees for ETPs are based on the number of shares outstanding per issuer
and provide incentives for issuers to list multiple series of certain
securities on the Exchange. 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.'' \7\
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\7\ See Regulation NMS, 70 FR at 37499.
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The Exchange believes that the ongoing competition among the
exchanges with respect to new listings and the transfer of existing
listings among competitor exchanges demonstrates that issuers can
choose different listing markets in response to fee changes.
Accordingly, competitive forces constrain exchange listing fees. Stated
otherwise, changes to exchange listing fees can have a direct effect on
the ability of an exchange to compete for new listings and retain
existing listings.
Given this competitive environment, the Exchange believes that the
proposed change is a reasonable attempt to encourage more issuers to
qualify for discounts that the Exchange offers by removing restrictions
on achieving or retaining them, thereby enhancing competition among
issuers and listing venues.
[[Page 4754]]
The Proposal Is an Equitable Allocation of Fees
The Exchange believes the proposal equitably allocates its fees
among its market participants. In the prevailing competitive
environment, issuers can readily favor competing venues or transfer
listings if they deem fee levels at a particular venue to be excessive,
or discount opportunities available at other venues to be more
favorable. The proposed removal of the limitation on discounts for ETPs
and Structured Products is equitable because it would apply uniformly
to all issuers and to all ETPs and Structured Products listed on the
Exchange either generically or pursuant to a rule filing with the
Commission. For the same reasons, the proposal neither targets nor will
it have a disparate impact on any particular category of market
participant.
The Proposal Is Not Unfairly Discriminatory
The Exchange believes that the proposal is not unfairly
discriminatory. In the prevailing competitive environment, issuers are
free to list elsewhere if they believe that alternative venues offer
them better value. The Exchange believes it is not unfairly
discriminatory to remove an eligibility restriction on issuers
transferring Products off the Exchange because removal of the
restriction would apply to and potentially benefit all issuers equally.
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,\8\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, as discussed above, the Exchange believes
that the proposed change would encourage competition by removing an
incentive for issuers not to transfer Products off of the Exchange
(except to an Exchange affiliate) in a trailing 12-month period, which
the Exchange believes will enhance competition among issuers and
listing venues, to the benefit of investors. As noted, the market for
listing services is extremely competitive. Issuers have the option to
list their securities on these alternative venues based on the fees
charged and the value provided by each listing exchange. Because
issuers have a choice to list their securities on a different national
securities exchange, the Exchange does not believe that the proposed
change impose a burden on competition.
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\8\ 15 U.S.C. 78f(b)(8).
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Intramarket Competition. The proposed change is designed to remove
a restriction in order to encourage more issuers to qualify for and
retain discounts that the Exchange offers. Removal of the restriction
would be apply [sic] to and potentially benefit all issuers equally,
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 listings market in which issuers can readily choose
alternative listing venues. In such an environment, the Exchange must
adjust its fees and discounts to remain competitive with other
exchanges competing for the same listings. Because competitors are free
to modify their own fees and discounts in response, and because issuers
may readily adjust their listing decisions and practices, the Exchange
does not believe its proposed 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) \9\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \10\ thereunder, because it establishes a due, fee, or other charge
imposed by the Exchange.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \11\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\11\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEArca-2020-06 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2020-06. 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-NYSEArca-2020-06 and
[[Page 4755]]
should be submitted on or before February 18, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
J. Matthew DeLesDernier,
Assistant Secretary.
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\12\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2020-01237 Filed 1-24-20; 8:45 am]
BILLING CODE 8011-01-P