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Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES

A. Self-Regulatory Organizations Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this filing is to provide additional time for member organizations to finalize their transition from older to newer and more efficient Pillar technology. The Exchange is not proposing to adjust the amount of the port fees or the fees charged to offset the Exchanges continuing costs of supporting legacy ports, which will remain at the current level for all market participants.
Effective July 3, 2019, the Exchange introduced transition pricing designed to provide member organizations an extended transition period to connect to the Exchange using Pillar technology with no fee increase. Specifically, the Exchange 1 adopted a cap on monthly fees for the use of certain ports connecting to the Exchange for the billing months July 2019 through March 2020 the Transition Period; 2
adopted a Decommission Extension Fee applicable for the billing months April 2020 through September 2020 the Decommission Period for legacy port connections; and 3 prorated the monthly fee for certain ports activated after July 1, 2019, effective April 1, 2020.5
Effective March 2, 2020, the Exchange 1 extended the end of the Transition Period from March 2020 to August 2020
for member organizations to transition to the utilization of ports that connect to the Exchange using Pillar technology;
2 shortened the Decommission Period from six months April 2020September 2020 to four months September December 2020; 3 extended the effective date that the Exchange would prorate the monthly fee for certain ports activated on or after July 1, 2019 from April 1, 2020 to September 1, 2020; and 4 revised the fees charged for legacy port connections during the Decommission Period.6
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 5 See Securities Exchange Act Release No. 86360
July 11, 2019, 84 FR 34210 July 17, 2019 SR
NYSE201939.
6 See Securities Exchange Act Release No. 88373
March 12, 2020, 85 FR 15533 March 18, 2020
SRNYSE202014.

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monthly fee for ports activated on or after July 1, 2019 from September 1, 2020 to November 1, 2020.7
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, 2021.8
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, 2021.9
The Exchange proposes to extend the end of the Decommission Period two months from June 2021 to August 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 August 2021.
The Exchange proposes to implement these changes to its Price List effective June 1, 2021.
Competitive Environment 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. 10
7 See Securities Exchange Act Release No. 89591
August 18, 2020, 85 FR 52159 August 24, 2020
SRNYSE202014.
8 See Securities Exchange Act Release No. 90180
October 14, 2020, 85 FR 66612 October 20, 2020
SRNYSE202082.
9 See Securities Exchange Act Release No. 90661
December 14, 2020, 85 FR 82532 December 18, 2020 SRNYSE202099.
10 See Securities Exchange Act Release No. 51808
June 9, 2005, 70 FR 37495, 37499 June 29, 2005
S71004 Final Rule Regulation NMS.

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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 16% 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 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 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/
divisionsmarketregmrexchangesshtml.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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