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

Cited as:85 FR 66370
Court:Securities And Exchange Commission
Publication Date:19 Oct 2020
Record Number:2020-23013
Federal Register, Volume 85 Issue 202 (Monday, October 19, 2020)
[Federal Register Volume 85, Number 202 (Monday, October 19, 2020)]
                [Notices]
                [Pages 66370-66373]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2020-23013]
                =======================================================================
                -----------------------------------------------------------------------
                SECURITIES AND EXCHANGE COMMISSION
                [Release No. 34-90161; File No. SR-NYSE-2020-81]
                Self-Regulatory Organizations; New York Stock Exchange LLC;
                Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
                Amend Its Price List
                October 13, 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 September 30, 2020, 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.
                ---------------------------------------------------------------------------
                 \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 extend through
                October 2020 the waiver of equipment and related service charges and
                trading license fees for NYSE Trading Floor-based member organizations
                implemented for April through September 2020. The Exchange proposes to
                implement the fee changes effective October 1, 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 Price List to extend through
                October 2020 the waiver of equipment and related service charges and
                trading license fees for NYSE Trading Floor-based member organizations
                implemented for April through September 2020.
                 The proposed changes respond to the current volatile market
                environment that has resulted in unprecedented average daily volumes
                and the temporary closure of the Trading Floor, which are both related
                to the ongoing spread of the novel coronavirus (``COVID-19'').
                 The Exchange proposes to implement the fee changes effective
                October 1, 2020.
                Background
                 Beginning on March 16, 2020, in order to slow the spread of COVID-
                19 through social distancing measures, significant limitations were
                placed on large gatherings throughout the country. As a result, on
                March 18, 2020, the Exchange determined that beginning March 23, 2020,
                the physical Trading Floor facilities located at 11 Wall Street in New
                York City would close and that the Exchange would move, on a temporary
                basis, to fully electronic trading.\4\ Following the temporary closure
                of the Trading Floor, the Exchange waived certain equipment fees for
                the booth telephone system on the Trading Floor and associated service
                charges for the months of April and May.\5\
                ---------------------------------------------------------------------------
                 \4\ See Press Release, dated March 18, 2020, available here:
                https://ir.theice.com/press/press-releases/allcategories/2020/03-18-2020-204202110.
                 \5\ See Securities Exchange Act Release No. 88602 (April 8,
                2020), 85 FR 20730 (April 14, 2020) (SR-NYSE-2020-27); Securities
                Exchange Act Release No. 88874 (May 14, 2020), 85 FR 30743 (May 20,
                2020) (SR-NYSE-2020-29). See footnote 11 of the Price List.
                ---------------------------------------------------------------------------
                 On May 14, 2020, the Exchange announced that on May 26, 2020
                trading operations on the Trading Floor would resume on a limited basis
                to a subset of Floor brokers, subject to health and safety measures
                designed to prevent the spread of COVID-19.\6\ On June 15, 2020, the
                Exchange announced that on June 17, 2020, the Trading Floor would
                reintroduce a subset of DMMs, also subject to health and safety
                measures designed to prevent the spread of COVID-19.\7\ Following this
                partial reopening of the Trading Floor, the Exchange extended the
                equipment fee waiver for the months of June, July, August and
                September.\8\ The Trading Floor continues to operate with reduced
                headcount and additional health and safety precautions.\9\
                ---------------------------------------------------------------------------
                 \6\ See Trader Update, dated May 14, 2020, available here:
                https://www.nyse.com/traderupdate/history#110000251588.
                 \7\ See Trader Update, dated June 15, 2020, available here:
                https://www.nyse.com/trader-update/history#110000272018.
                 \8\ See Securities Exchange Act Release No. 89050 (June 11,
                2020), 85 FR 36637 (June 17, 2020) (SR-NYSE-2020-49); Securities
                Exchange Act Release No. 89324 (July 15, 2020), 85 FR 44129 (July
                21, 2020) (SR-NYSE-2020-59); Securities Exchange Act Release No.
                89754 (September 2, 2020), 85 FR 55550 (September 8, 2020) (SR-NYSE-
                2020-71); and Securities Exchange Act Release No. 89798 (September
                9, 2020), 85 FR 57263 (September 15, 2020) (SR-NYSE-2020-72).
                 \9\ See Trader Update, dated June 15, 2020, available here:
                https://www.nyse.com/trader-update/history#110000272018. DMMs
                continue to support a subset of NYSE-listed securities remotely.
                ---------------------------------------------------------------------------
                Proposed Rule Change
                 The proposed rule change responds to the unprecedented events
                surrounding the spread of COVID-19 by extending the waiver of equipment
                and related service charges and trading license fees for NYSE Trading
                Floor-based member organizations for October 2020.
                 As noted, for the months of April, May, June, July, August and
                September, the Exchange waived the Annual Telephone Line Charge of $400
                per phone number and the $129 fee for a single line phone, jack, and
                data jack. The Exchange also waived related service charges, as
                follows: $161.25 to install single jack (voice or data); $107.50 to
                relocate a jack; $53.75 to remove a jack; $107.50 to install voice or
                data line; $53.75 to disconnect data line; $53.75 to change a phone
                line subscriber; and miscellaneous telephone charges billed at $106 per
                hour in 15 minute increments.\10\ These fees were waived for (1) member
                organizations with at least one trading license, a physical Trading
                Floor presence, and Floor broker executions accounting for 40% or more
                of the member organization's combined adding, taking, and auction
                volumes during March 1 to March 20, 2020, or, beginning in August
                [[Page 66371]]
                2020, if not a member organization during March 1 to March 20, 2020,
                based on the member organization's combined adding, taking, and auction
                volumes during its first month as a member organization on or after May
                26, 2020, i.e., the date the Trading Floor re-opened on a limited
                basis,\11\ and (2) member organizations with at least one trading
                license that are Designated Market Makers with 30 or fewer assigned
                securities for the billing month of March 2020.
                ---------------------------------------------------------------------------
                 \10\ The Service Charges also include an internet Equipment
                Monthly Hosting Fee that the Exchange did not waive for April, May,
                June, July, August and September 2020 and that the Exchange does not
                propose to waive for October 2020.
                 \11\ Beginning August 2020, member organizations with a physical
                trading Floor presence that became member organizations on or after
                April 1, 2020 are eligible for a one-time credit for the member
                organization's Booth Telephone System charges and all Service
                Charges except the internet Equipment Monthly Hosting Fee for the
                months of April through July 2020 if the member organization meets
                the other requirements for the waiver described in footnote 11 of
                the Price List.
                ---------------------------------------------------------------------------
                 Because the Trading Floor continues to operate with reduced
                capacity, the Exchange proposes to extend the waiver of these Trading
                Floor-based fees through October 2020. To effectuate this change, the
                Exchange proposes to delete ``, May, June, July, August, and
                September'' and add ``through October'' after ``April'' in footnote 11
                to the Price List.
                 In order to further reduce costs for member organizations with a
                Trading Floor presence, the Exchange also waived the April, May, June,
                July, August and September 2020 monthly portion of all applicable
                annual fees for (1) member organizations with at least one trading
                license, a physical Trading Floor presence and Floor broker executions
                accounting for 40% or more of the member organization's combined
                adding, taking, and auction volumes during March 1 to March 20, 2020,
                or, beginning in August 2020, if not a member organization during March
                1 to March 20, 2020, based on the member organization's combined
                adding, taking, and auction volumes during its first month as a member
                organization on or after May 26, 2020, and (2) member organizations
                with at least one trading license that are DMMs with 30 or fewer
                assigned securities for the billing month of March 2020.\12\
                ---------------------------------------------------------------------------
                 \12\ See notes 5-8, supra. See footnote 15 of the Price List.
                Beginning in August 2020, member organizations with a physical
                trading Floor presence that became member organizations on or after
                April 1, 2020 are eligible for a one-time credit for the member
                organization's indicated annual trading license fee for the months
                of April through July 2020 if the member organization meets the
                other requirements for the waiver described in footnote 15 of the
                Price List.
                ---------------------------------------------------------------------------
                 The Exchange proposes to also waive the October 2020 monthly
                portion of all applicable annual fees for member organizations with at
                least one trading license, a physical Trading Floor presence and Floor
                broker executions accounting for 40% or more of the member
                organization's combined adding, taking, and auction volumes during
                March 1 to March 20, 2020 or, if not a member organization during March
                1 to March 20, 2020, based on the member organization's combined
                adding, taking, and auction volumes during its first month as a member
                organization on or after May 26, 2020. The indicated annual trading
                license fees would also be waived for October 2020 for member
                organizations with at least one trading license that are DMMs with 30
                or fewer assigned securities for the billing month of March 2020. To
                effectuate this change, the Exchange proposes to delete ``,May, June,
                July, August, and September'' and add ``through October'' in footnote
                15 of the Price List.
                 The proposed extension of the fee waivers would reduce monthly
                costs for member organizations with a Trading Floor presence whose
                operations were disrupted by the Floor closure, which lasted
                approximately two months, and remains partially closed. The Exchange
                believes that extension of the fee waiver would ease the financial
                burden associated with the ongoing partial Trading Floor closure. The
                Exchange believes that all member organization that conduct a
                significant portion of trading on the Trading Floor would benefit from
                this proposed fee change.
                 The proposed changes are 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,\13\ in general, and furthers the
                objectives of Sections 6(b)(4) and (5) of the Act,\14\ in particular,
                because it provides for the equitable allocation of reasonable dues,
                fees, and other charges among its members, issuers and other persons
                using its facilities and does not unfairly discriminate between
                customers, issuers, brokers or dealers.
                ---------------------------------------------------------------------------
                 \13\ 15 U.S.C. 78f(b).
                 \14\ 15 U.S.C. 78f(b)(4) & (5).
                ---------------------------------------------------------------------------
                 The Exchange operates in a highly competitive market. The
                Commission has repeatedly expressed its preference for competition over
                regulatory intervention in determining prices, products, and services
                in the securities markets. In Regulation NMS, the Commission
                highlighted the importance of market forces in determining prices and
                SRO revenues and, also, recognized that current regulation of the
                market system ``has been remarkably successful in promoting market
                competition in its broader forms that are most important to investors
                and listed companies.'' \15\
                ---------------------------------------------------------------------------
                 \15\ 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.''
                \16\ Indeed, equity trading is currently dispersed across 15
                exchanges,\17\ 31 alternative trading systems,\18\ 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).\19\ Therefore, no exchange possesses significant pricing power
                in the execution of equity order flow. More specifically, the
                Exchange's market share of trading in Tape A, B and C securities
                combined is less than 14%.
                ---------------------------------------------------------------------------
                 \16\ 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'').
                 \17\ 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.
                 \18\ 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.
                 \19\ See Cboe Global Markets U.S. Equities Market Volume
                Summary, available at http://markets.cboe.com/us/equities/market_share/.
                ---------------------------------------------------------------------------
                The Proposed Change is Reasonable
                 The proposed extension of the waiver of equipment and related
                service fees and the applicable monthly trading license fee for Trading
                Floor-based member organizations is reasonable in light of the partial
                continued closure of the NYSE Trading Floor. Beginning March 2020,
                markets worldwide experienced unprecedented declines and volatility
                because of the ongoing spread of COVID-19 also resulted in the
                temporary closure of the NYSE Trading Floor. As noted, the Trading
                Floor was recently partially reopened on a limited basis to a subset of
                Floor brokers and DMMs, subject to health and safety measures designed
                to prevent the spread of COVID-19. The proposed change is designed to
                reduce costs for Floor participants for the month of October 2020 and
                therefore ease the financial burden faced by member organizations
                [[Page 66372]]
                that conduct business on the Trading Floor while it continues to
                operate with reduced capacity.
                The Proposal Is an Equitable Allocation of Fees
                 The Exchange believes the proposed extension of the waiver of
                equipment and related service fees and the applicable monthly trading
                license fee for Trading Floor-based member organizations to October
                2020 are an equitable allocation of fees. The proposed waivers apply to
                all Trading Floor-based firms meeting specific requirements during the
                period that the Trading Floor remains partially open. The proposed
                change is equitable as it merely continues the fee waiver granted in
                April, May, June, July, August and September 2020, and is designed to
                reduce monthly costs for Trading Floor-based member organizations that
                are unable to fully conduct Floor operations while the Trading Floor
                remains partially open during the ongoing COVID-19 pandemic.
                The Proposal Is Not Unfairly Discriminatory
                 The Exchange believes that the proposed continuation of the waiver
                of equipment and related service fees and the applicable monthly
                trading license fee for Trading Floor-based member organizations during
                October 2020 is not unfairly discriminatory because the proposed
                waivers would benefit all similarly-situated market participants on an
                equal and non-discriminatory basis. The Exchange is not proposing to
                waive the Floor-related fees indefinitely, but rather during the period
                that the Trading Floor is not fully open. The proposed fee change is
                designed to ease the financial burden on Trading Floor-based member
                organizations that cannot fully conduct Floor operations.
                 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,\20\ the Exchange
                believes that the proposed rule change would not impose any burden on
                competition that is not necessary or appropriate in furtherance of the
                purposes of the Act. Instead, as discussed above, the Exchange believes
                that the proposed changes would encourage the continued participation
                of member organizations on the Exchange by providing certainty and fee
                relief during the unprecedented volatility and market declines caused
                by the continued spread of COVID-19. 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.'' \21\
                ---------------------------------------------------------------------------
                 \20\ 15 U.S.C. 78f(b)(8).
                 \21\ Regulation NMS, 70 FR at 37498-99.
                ---------------------------------------------------------------------------
                 Intramarket Competition. The proposed continued waiver of equipment
                and related service fees and the applicable monthly trading license fee
                for Trading Floor-based member organizations during October 2020 is
                designed to reduce monthly costs for those Floor participants whose
                operations continue to be impacted by the spread of COVID-19 despite
                the fact that the Trading Floor has partially reopened. In reducing
                this monthly financial burden, the proposed change would provide a
                degree of certainty and ease the financial burden on Trading Floor-
                based member organizations impacted by the temporary closing and
                partial reopening of the Trading Floor. As noted, the proposal would
                apply to all similarly situated member organizations on the same and
                equal terms, who would benefit from the changes on the same basis.
                Accordingly, 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. The
                Exchange believes that the proposed rule change reflects this
                competitive environment because it permits impacted member
                organizations to continue to conduct market-making operations on the
                Exchange and avoid unintended costs of doing business on the Exchange
                while the Trading Floor is not fully open, which could make the
                Exchange a less competitive venue on which to trade as compared to
                other equities markets.
                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) \22\ of the Act and subparagraph (f)(2) of Rule
                19b-4 \23\ thereunder, because it establishes a due, fee, or other
                charge imposed by the Exchange.
                ---------------------------------------------------------------------------
                 \22\ 15 U.S.C. 78s(b)(3)(A).
                 \23\ 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) \24\ of the Act to determine whether the proposed
                rule change should be approved or disapproved.
                ---------------------------------------------------------------------------
                 \24\ 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-2020-81 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-2020-81. 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
                [[Page 66373]]
                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-2020-81 and should be submitted on or before November 9, 2020.
                 For the Commission, by the Division of Trading and Markets,
                pursuant to delegated authority.\25\
                ---------------------------------------------------------------------------
                 \25\ 17 CFR 200.30-3(a)(12).
                ---------------------------------------------------------------------------
                J. Matthew DeLesDernier,
                Assistant Secretary.
                [FR Doc. 2020-23013 Filed 10-16-20; 8:45 am]
                BILLING CODE 8011-01-P