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lotter on DSK11XQN23PROD with NOTICES1

Federal Register / Vol. 86, No. 174 / Monday, September 13, 2021 / Notices including the Exchange,13 and are reasonable, equitable and nondiscriminatory because they are open to all members on an equal basis and provide additional benefits or discounts that are reasonably related to i the value to an exchanges market quality and ii associated higher levels of market activity, such as higher levels of liquidity provision and/or growth patterns. Competing equity exchanges offer similar tiered pricing structures, including schedules of rebates and fees that apply based upon members achieving certain volume and/or growth thresholds, as well as assess similar fees or rebates for similar types of orders, to that of the Exchange.
In particular, the Exchange believes the proposed changes to Growth Tier 1
is reasonable because the Tier will continue to be available to all Members and provide all Members with an additional opportunity to receive an enhanced rebate, albeit using slightly modified criteria and providing an alternative criteria Members may satisfy.
The Exchange further believes the Growth Tier 1, even as amended, continues to provide a reasonable means to encourage overall growth in Members order flow to the Exchange and to incentivize Members to continue to provide liquidity adding volume to the Exchange by offering them an additional opportunity to receive an enhanced rebate on qualifying orders.
An overall increase in activity would deepen the Exchanges liquidity pool, offers additional cost savings, support the quality of price discovery, promote market transparency and improve market quality, for all investors.
Further, the Exchange believes that the proposed changes are reasonable as it does not represent a significant departure from the criteria currently offered in the Fee Schedule. For example, the Exchange notes similar criteria is offered under the first prong of Growth Tier 2 which provides an enhanced rebate where a Member adds a Step-Up ADAV from June 2021 of greater than or equal to 0.10% of the TCV or adds a Step-Up ADAV from June 2021 greater than or equal to 8,000,000.14 Additionally, the Exchange believes that the proposed enhanced rebate under Growth Tier 1, which is not being changed, continues to be commensurate with the new criteria.
13 See EDGX Equities Fee Schedule, Footnote 1, Add/Remove Volume Tiers.
14 A Member must also meet the second prong under Growth Tier 2 which requires the Member to have a total remove ADV of greater than or equal to 0.70% of TCV. See EDGX Equities Fees Schedule, Footnote 1.

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The Exchange also believes that the proposal represents an equitable allocation of fees and rebates and is not unfairly discriminatory because all Members continue to be eligible for Growth Tier 1 and have the opportunity to meet the Tiers criteria and receive the corresponding enhanced rebate if such criteria is met. Without having a view of activity on other markets and off-exchange venues, the Exchange has no way of knowing whether this proposed rule change would definitely result in any Members qualifying for Growth Tier 1, as amended. While the Exchange has no way of predicting with certainty how the proposed changes will impact Member activity, the Exchange anticipates that at least one Member will be able to satisfy the criteria proposed under the Tier currently, two Members satisfy Growth Tier 1. The Exchange also notes that proposed changes will not adversely impact any Members ability to qualify for reduced fees or enhanced rebates offered under other tiers. Should a Member not meet the proposed new criteria, the Member will merely not receive that corresponding enhanced rebate.
B. Self-Regulatory Organizations Statement on Burden on Competition The Exchange does not believe that the proposed rule changes will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. Rather, as discussed above, the Exchange believes that the proposed change would encourage the submission of additional order flow to a public exchange, thereby promoting market depth, execution incentives and enhanced execution opportunities, as well as price discovery and transparency for all Members. As a result, the Exchange believes that the proposed change furthers the Commissions goal in adopting Regulation NMS of fostering competition among orders, which promotes more efficient pricing of individual stocks for all types of orders, large and small.
The Exchange believes the proposed rule change does not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. Particularly, the proposed changes to Growth Tier 1
applies to all Members equally in that all Members are eligible for the Tier, have a reasonable opportunity to meet the Tiers criteria and will receive the enhanced rebate on their qualifying orders if such criteria is met. The Exchange does not believe the proposed changes burdens competition, but rather, enhances competition as it is
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intended to increase the competitiveness of EDGX by amending an existing pricing incentive in order to attract order flow and incentivize participants to increase their participation on the Exchange, providing for additional execution opportunities for market participants and improved price transparency.
Greater overall order flow, trading opportunities, and pricing transparency benefits all market participants on the Exchange by enhancing market quality and continuing to encourage Members to send orders, thereby contributing towards a robust and well-balanced market ecosystem.
Next, the Exchange believes the proposed rule change does not impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act.
As previously discussed, the Exchange operates in a highly competitive market.
Members have numerous alternative venues that they may participate on and direct their order flow, including other equities exchanges, off-exchange venues, and alternative trading systems.
Additionally, the Exchange represents a small percentage of the overall market.
Based on publicly available information, no single equities exchange has more than 16% of the market share.15
Therefore, no exchange possesses significant pricing power in the execution of order flow. Indeed, participants can readily choose to send their orders to other exchange and offexchange venues if they deem fee levels at those other venues to be more favorable. Moreover, 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. 16 The fact that this market is competitive has also long been recognized by the courts.
In NetCoalition v. Securities and Exchange Commission, the D.C. Circuit stated as follows: no one disputes that competition for order flow is fierce. . . . As the SEC explained, in the U.S. national market system, buyers and sellers of securities, and the broker15 Supra
note 4.
Securities Exchange Act Release No. 51808
June 9, 2005, 70 FR 37496, 37499 June 29, 2005.
16 See
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