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Federal Register / Vol. 86, No. 103 / Tuesday, June 1, 2021 / Notices
significant amount of liquidity as well.
Any increase in liquidity adding activity that ensues from this credit will improve market quality, to the benefit of all participants. The Exchange notes that it includes the same criteria in several of its existing remove credit tiers.
The Exchange notes that those participants that are dissatisfied with the proposed credit are free to shift their order flow to competing venues that offer them higher credits or lower charges.

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The Proposal Is an Equitable Allocation of Credits and Charges The Exchange believes that it is an equitable allocation of its credits to establish a new remove credit tier that is tied to the growth in removal of liquidity in securities in Tape B. The addition of this new proposed credit tier will encourage members to increase the extent to which they remove Tape B
liquidity from the Exchange, and it will reward members that do so in significant volumes. The Exchange believes that any increase in the removal of liquidity from the Exchange that follows from the introduction of this new creditand in particular, liquidity in securities in Tape Bwill improve the quality of the Exchanges market, and it will cause the Exchange to become more attractive to existing and prospective participants.
The Exchange also believes it is an equitable allocation to tie the new proposed credit to the addition of at least an average daily volume of 50,000
shares of liquidity during the month.
Doing so will help to incent members, not only to remove a significant amount of liquidity from the Exchange, but also to add a significant amount of liquidity as well. Any increase in liquidity adding activity that ensues from this credit will improve market quality, to the benefit of all participants. The Exchange notes that it includes the same criteria in several of its existing remove credit tiers.
Any participant that is dissatisfied with the proposal is free to shift their order flow to competing venues that provide more generous pricing or less stringent qualifying criteria.
The Proposed New Credit Is Not Unfairly Discriminatory The Exchange believes that its new proposed remove credit with a growth component is not unfairly discriminatory because it is aimed at encouraging the growth in removal of liquidity from the Exchange, which if successful, stands to improve the quality of the Exchanges market, to the
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benefit of all market participants. The Exchange notes that its proposal to offer the new credit to members with orders in securities in Tape B is fair because the Exchange observes that its market has a greater need for, and its market quality would benefit most from, growth in removal of liquidity in securities in Tape B. The Exchange has limited resources with which to apply to incentives, and it must allocate those limited resources in a manner that prioritizes areas of greatest need and potential effect.
Any participant that is dissatisfied with the proposal is free to shift their order flow to competing venues that provide more generous pricing or less stringent qualifying criteria.
B. Self-Regulatory Organizations Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
Intramarket Competition The Exchange does not believe that its proposal will place any category of Exchange participant at a competitive disadvantage. As noted above, all members of the Exchange will benefit from any increase in market activity that the proposal effectuates. Members may grow or modify their businesses so that they can receive the new proposed credit. Moreover, members are free to trade on other venues to the extent they believe that the credit proposed is not attractive. As one can observe by looking at any market share chart, price competition between exchanges is fierce, with liquidity and market share moving freely between exchanges in reaction to fee and credit changes.
Intermarket Competition In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its credits and fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own credits and fees in response, and because market participants may readily adjust their order routing practices, the Exchange
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believes that the degree to which credit changes in this market may impose any burden on competition is extremely limited.
The proposed new credit is reflective of this competition because, as a threshold issue, the Exchange is a relatively small market so its ability to burden intermarket competition is limited. In this regard, even the largest U.S. equities exchange by volume has less than 17% market share, which in most markets could hardly be categorized as having enough market power to burden competition. Moreover, as noted above, price competition between exchanges is fierce, with liquidity and market share moving freely between exchanges in reaction to fee and credit changes. This is in addition to free flow of order flow to and among off-exchange venues which comprised more than 41% of industry volume for the month of March 2021.
In sum, if the change proposed herein is unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, the Exchange does not believe that the proposed change will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets.
C. Self-Regulatory Organizations Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19b3Aii of the Act.9
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: i Necessary or appropriate in the public interest; ii for the protection of investors; or iii otherwise in furtherance of the purposes of the Act.
If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule 9 15

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