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Federal Register / Vol. 86, No. 16 / Wednesday, January 27, 2021 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES

more granular Outcome Periods in order to ensure that they are able to achieve the full Cap Level upside and Buffer Level downside protection. Issuers of Outcome Strategy ETPs generally issue the products in at least quarterly versions of each strategy. The issuer may also elect to list ETPs employing the Buffer Strategy in order to provide monthly Outcome Periods, meaning that there would be twelve separate ETPs listed on the Exchange that each employ the same Buffer Strategy, but have different Outcome Periods. Again, this provides investors with more precision when deciding which Outcome Strategy ETP to purchase among the series of Outcome Strategy ETPs the Outcome Strategy Series.
With this in mind, the Exchange adopted the Rule which capped the maximum listing fee per year for an Outcome Strategy Series at $16,000.
Specifically, the Rule provides that where an issuer lists multiple ETPs that are each designed to provide i a predefined set of returns; ii over a specified outcome period; iii based on the performance of the same underlying instrument; and iv each employ the same outcome strategy for achieving the predefined set of returns, the maximum annual listing fee applicable to such Outcome Strategy Series will be $16,000
per year.
Now, the Exchange proposes to expand criteria iii of the Rule to include ETPs that are based on the performance of two or more underlying instruments. Such an amendment would expand the annual listing fee cap to include an Outcome Strategy Series that may, for example, include Outcome Strategy ETPs with returns based on the performance of two or more Reference Indexes. The Exchange intends to implement the proposed amendments to its fee schedule on January 4, 2021.
2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6b of the Act.5 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6b5 6 in that it provides for the equitable allocation of reasonable dues, fees and other charges among issuers and it does not unfairly discriminate between customers, issuers, brokers or dealers.
The Exchange believes that the proposed amendment to the Rule is 5 15
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reasonable, fair and equitable, and not an unfairly discriminatory allocation of fees and other charges because it would apply equally for all issuers and all Outcome Strategy Series. The Rule was designed to implement a cap on the listing fees for multiple series of Outcome Strategy ETPs with, among other things, returns based on the same underlying instrument. However, the Rule does not contemplate such a cap for a series of Outcome Strategy ETPs with returns based on the performance of multiple instruments. As such, the proposed amendment would allow a greater number of Outcome Strategy Series to benefit from the fee cap of $16,000.
The Exchange notes that the proposal would only expand the cap on fees for ETPs meeting the amended definition of Outcome Strategy ETPs and would only act to leave static or reduce fees for ETPs listed on the Exchange. Further, as proposed, the Rule would decrease the fees associated with Outcome Strategy ETPs that are based on the performance of the same underlying instruments, which may reduce the barriers to entry into the space and incentivize enhanced competition among issuers of Outcome Strategy ETPs, to the benefit of investors. The Exchange notes that an issuer would only receive the benefit of the annual fee cap if they accrue greater than $16,000 in listing fees for a particular Outcome Strategy Series.
The Exchange believes that the proposed cap on fees for Outcome Strategy Series and the associated changes is a reasonable means to incentivize issuers to list or transfer Outcome Strategy ETPs on the Exchange. The marketplace for listings is extremely competitive and there are several other national securities exchanges that offer ETP listings.
Transfers between listing venues occur frequently for numerous reasons, including listing fees. The proposed rule changes reflect a competitive pricing structure designed to incentivize issuers to list new products and transfer existing products to the Exchange, which the Exchange believes will enhance competition both among ETP
issuers and listing venues, to the benefit of investors.
Based on the foregoing, the Exchange believes that the proposed rule changes are consistent with the Act.
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. The
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Exchange does not believe that the proposed change burdens competition, but instead, enhances competition, as it is intended to apply the $16,000 fee cap to Outcome Strategy ETPs that are based on the performance of two or more instruments, which may lead to reduced fees for issuers of such products. The marketplace for listings is extremely competitive and there are several other national securities exchanges that offer ETP listings. Transfers between listing venues occur frequently for numerous reasons, including listing fees. This proposal is intended to help the Exchange compete as an ETP listing venue. Accordingly, the Exchange does not believe that the proposed change will impair the ability of issuers or competing ETP listing venues to maintain their competitive standing.
The Exchange also notes that the proposed change represents a competitive pricing structure designed to incentivize issuers to list new products and transfer existing products to the Exchange, which the Exchange believes will enhance competition both among ETP issuers and listing venues, to the benefit of investors. The Exchange believes that such proposed changes will directly enhance competition among ETP listing venues by reducing the costs associated with listing on the Exchange for ETPs meeting the proposed definition of Outcome Strategy ETPs. As such, the proposal is a competitive proposal designed to enhance pricing competition among listing venues and implement pricing for listings that better reflects the revenue and expenses associated with listing ETPs on the Exchange. The Exchange does not believe the proposed amendments would burden intramarket competition as they would be available to all issuers uniformly.
C. Self-Regulatory Organizations Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19b3A
of the Act 7 and paragraph f of Rule 19b4 8 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if 7 15
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