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Federal Register / Vol. 86, No. 180 / Tuesday, September 21, 2021 / Notices Effective August 1, 2020, the Exchange 1 extended the end of the Transition Period from August 2020 to October 2020; 2 extended the beginning of the Decommission Period from September 2020 to November 2020
and the end of the Decommission Period from December 2020 to February 2021;
and 3 extended the effective date that the Exchange would prorate the monthly fee for ports activated on or after July 1, 2019 from September 1, 2020 to November 1, 2020.6
Effective October 1, 2020, the Exchange 1 extended the end of the Transition Period from October 2020 to December 2020; 2 extended the beginning of the Decommission Period from November 2020 to January 2021
and the end of the Decommission Period from February 2021 to April 2021; and 3 extended the effective date that the Exchange would prorate the monthly fee for ports activated on or after July 1, 2019 from November 1, 2020 to January 1, 2021.7
Effective December 1, 2020, the Exchange 1 extended the end of the Transition Period from December 2020
to February 2021; 2 extended the beginning of the Decommission Period from January 2021 to March 2021 and the end of the Decommission Period from April 2021 to June 2021; and 3
extended the effective date that the Exchange would prorate the monthly fee for ports activated on or after July 1, 2019 from January 1, 2021 to March 1, 2021.8
Effective June 10, 2021, the Exchange extended the end of the Decommission Period two months from June 2021 to August 2021.9
The Exchange proposes to extend the end of the Decommission Period one month from August 2021 to September 2021 in order to allow member organizations that did not complete the transition during the Transition Period the ability to choose to continue using Phase I ports until September 2021.
The Exchange proposes to implement these changes to its Price List effective September 1, 2021.

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Competitive Environment The Exchange operates in a highly competitive market. The Commission 6 See Securities Exchange Act Release No. 89591
August 18, 2020, 85 FR 52159 August 24, 2020
SRNYSE202014.
7 See Securities Exchange Act Release No. 90180
October 14, 2020, 85 FR 66612 October 20, 2020
SRNYSE202082.
8 See Securities Exchange Act Release No. 90661
December 14, 2020, 85 FR 82532 December 18, 2020 SRNYSE202099.
9 See Securities Exchange Act Release No. 92234
June 22, 2021, 86 FR 34080 June 28, 2021 SR
NYSE202136.

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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. 10
While Regulation NMS has enhanced competition, it has also fostered a fragmented market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that such competition can lead to the fragmentation of order flow in that stock. 11 Indeed, equity trading is currently dispersed across 16
exchanges,12 31 alternative trading systems,13 and numerous broker-dealer internalizers and wholesalers, all competing for order flow. Based on publicly available information, no single exchange has more than 17% market share.14 The Exchange believes that the ever-shifting market share among the exchanges from month to month demonstrates that market participants can shift order flow, or discontinue or reduce use of certain categories of products, including ports, in response to fee changes. Accordingly, the Exchanges fees, including port fees, are reasonably constrained by competitive alternatives and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable.
The Exchange is proposing these changes in the context of a competitive environment in which market participants can and do shift order flow, or discontinue or reduce use of certain 10 See Securities Exchange Act Release No. 51808
June 9, 2005, 70 FR 37495, 37499 June 29, 2005
S71004 Final Rule Regulation NMS.
11 See Securities Exchange Act Release No. 61358, 75 FR 3594, 3597 January 21, 2010 File No. S7
0210 Concept Release on Equity Market Structure.
12 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/divisions marketregmrexchangesshtml.html.
13 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.
14 See Cboe Global Markets U.S. Equities Market Volume Summary, available at http markets.cboe.
com/us/equities/market_share/.

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categories of products, in response to fee changes. Because ports are used by member organizations to trade electronically on the Exchange, fees associated with ports are subject to these same competitive forces. The Exchange believes that the proposal represents a reasonable attempt to provide member organizations with additional time to finalize an orderly transition to upgraded technology.
Proposed Rule Change Member organizations enter orders and order instructions, and receive information from the Exchange, by establishing a connection to a gateway that uses communication protocols that map to the order types and modifiers described in Exchange rules. These gateway connections, also known as logical port connections, are referred to as ports on the Exchanges Price List.
Legacy ports connect with the Exchange via a Common Customer Gateway known as CCG that accesses its equity trading systems Phase I ports.
Beginning July 1, 2019, the Exchange began making available ports using Pillar gateways to its member organizations Phase II ports.
Currently, member organizations that have not transitioned to Phase II ports and are still utilizing Phase I ports during the billing months of March 2021
through August 2021 i.e., the Decommission Period, would, in addition to the current port fees, be charged a Decommission Extension Fee of $1,000 per port per month, increasing by $1,000 per port for each month for any ports that communicate using Pillar phase I protocols. As per the Price List, ports using Pillar phase I protocols would no longer be available beginning September 1, 2021.
The Exchange proposes that the Decommission Period would end one month later, in September 2021. As proposed, the Price List would also be amended to provide that ports using Pillar phase I protocols would no longer be available beginning October 1, 2021.
As noted above, the Exchange believes that, to the extent that member organizations do not complete the transition during the Transition Period, the proposed rule change will offer member organizations the ability to choose to continue using Phase I ports until September 2021.
The proposed changes are not otherwise intended to address any other issues, and the Exchange is not aware of any problems that member organizations would have in complying with the proposed change.

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