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Federal Register / Vol. 86, No. 25 / Tuesday, February 9, 2021 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES

that occurred during those months.8 The Exchange will apply the three month look back regardless of whether the error was discovered by the Exchange or by a TPH or Non-TPH that submitted a fee dispute to the Exchange. The Exchange will continue to provide all disputes concerning fees and rebates assessed by the Exchange would have to be submitted to the Exchange in writing and accompanied by supporting documentation.
The Exchange notes that the proposed language continues to encourage TPHs and Non-TPHs to promptly review their Exchange invoices so that any disputed charges can be addressed in a timely manner. The Exchange notes that it provides TPHs with both daily and monthly fee reports and thus believes they should be aware of any potential billing errors within three months.
Requiring that TPHs and Non-TPHs submit disputes in writing and provide supporting documentation encourages them to promptly review their invoices so that any disputed charges can be addressed in a timely manner while the information and data underlying those charges e.g., applicable fees and order information is still easily and readily available. This practice will avoid issues that may arise when TPHs or Non-TPHs do not dispute an invoice in a timely manner and will conserve Exchange resources that would have to be expended to resolve untimely billing disputes. As such, the requirement continues to alleviate administrative burdens related to billing disputes, which could divert staff resources away from the Exchanges regulatory and business purposes. The proposed rule change to eliminate the requirement that the Exchange assess fees beyond three months if they were required to be assessed pursuant to the fees schedule at the time incurred i.e., all fees and rebates would be final after three months regardless of how far back a billing error occurred would provide both the Exchange and TPHs and NonTPHs finality and the ability to close their books after a known period of time.
The Exchange notes that a number of exchanges have explicitly stated that 8 For example, if the Exchange becomes aware of a transaction fee billing error on January 4, 2021, the Exchange will resolve the error by crediting or debiting Members based on the fees or rebates that should have been applied to any impacted transactions during October, November and December 2020. The Exchange notes that because it bills in arrears, the Exchange would be able to correct the error in advance of issuing the January 2021 invoice and therefore, transactions impacted through the date of discovery in this example, January 4, 2021 and thereafter, would be billed correctly.

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they consider all fees to be final after a similar period of time.9 Additionally, several other exchanges have adopted similar provisions in their rules that provide for a process for their members and non-members to submit fee disputes.10 Moreover, the proposed language is identical to the language recently adopted on the Exchanges affiliated exchanges.11 As such, the proposed change will also harmonize and conform the Exchanges billing practices with that of its affiliated exchanges. The proposed billing policy will apply to all charges and rebates reflected in the Exchanges fees schedules.
2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6b of the Act.12 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6b5 13 requirements that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is consistent with the Section 6b5 14 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers.
With respect to the proposed language regarding the billing procedure, the Exchange believes continuing to require the submission of all billing disputes in writing, and with supporting documentation is reasonable because 9 See e.g. Securities Exchange Act Release No.
87650 December 3, 2019, 84 FR 67304 December 9, 2019 SRNYSECHX2019024; Securities Exchange Act Release No. 84430 October 16, 2018, 83 FR 53347 October 22, 2018 SRNYSENAT
201823; and Securities Exchange Act Release No.
79060 October 6, 2016, 81 FR 70716 October 13, 2016 SRISEGemini201611 .
10 See e.g., MEMX LLC, Rule 15.3, IEX Rule 15.120, Nasdaq Rule Equity 7, Section 70, Nasdaq BX Rule Equity 7, Section 111, and Nasdaq PHLX
Rule Equity 7, Section 2.
11 See supra note 6.
12 15 U.S.C. 78fb.
13 15 U.S.C. 78fb5.
14 Id.

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the Exchange provides TPHs with ample tools to monitor and account for various charges incurred in a given month.
Additionally, the Exchange notes that most TPHs and Non-TPHs that pay exchange fees are sophisticated entities, so it is appropriate to expect them to promptly review their invoices for errors and to be capable of identifying such errors. The proposed provision also continues to promote the protection of investors and the public interest by providing a clear and concise mechanism for TPH and Non-TPHs to dispute fees and for the Exchange to review such disputes in a timely manner. Moreover, the proposed billing dispute language, which lowers the Exchanges administrative burden, is similar to billing dispute language of other exchanges, and the same as the Exchanges affiliates.15 In addition, the billing procedure is fair, equitable, and not unfairly discriminatory because it will apply equally to all TPHs and NonTPHs that pay Exchange fees.
The Exchange also believes that providing that all fees and rebates are final after three months i.e., always resolving billing errors only for the three full calendar months preceding the month in which the Exchange became aware of the error, is reasonable as both the Exchange and TPHs and Non-TPHs have an interest in knowing when its fee assessments are final and when reliance can be placed on those assessments.
Indeed, without some deadline on billing errors, the Exchange and TPHs and Non-TPHs would never be able to close their books with any confidence.
Furthermore, as noted above, a number of Exchanges similarly consider their fees final after a similar period of time.16
The proposed change is also equitable, and not unfairly discriminatory because it will apply equally to all TPHs and Non-TPHs that pay Exchange fees and apply in cases where either the TPH or Non-TPH discovers the error or the Exchange discovers the error. Lastly, the proposed changes to the fees schedule will align the Exchanges billing practices with those of its affiliated exchanges.
B. Self-Regulatory Organizations Statement on Burden on Competition The Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. With respect to the billing procedure and billing error policy, the proposed rule change would provide a clear process that would 15 See 16 See
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supra notes 6 and 10.
supra notes 6 and 9.

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