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Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Notices Charges for products that track an index, as follows:
Number of shares outstanding each issue Less than 25 million
25 million up to 49,999,999 ..
50 million up to 99,999,999 ..
100 million up to 249,999,999
250 million up to 499,999,999
500 million and over

Annual fee $7,500
10,000
15,000

6b4 and 5 of the Act,7 in particular, because it provides for the equitable allocation of reasonable dues, fees, and other charges among its members, issuers and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers or dealers.

The Proposed Change Is Reasonable As discussed above, the Exchange 20,000
operates in a highly competitive market 25,000 for the listing of ETPs. Specifically, ETP
30,000 issuers can readily favor competing venues or transfer listings if they deem fee levels at a particular venue to be An ETP designed to provide a excessive, or discount opportunities particular set of returns over a specific available at other venues to be more outcome period utilizing a buffer favorable. The Exchanges current strategy as described above is designed annual fees for ETPs are based on the to provide investment returns that number of shares outstanding per issuer match the gains of a particular indexs and provide incentives for issuers to list up to a maximum cap level while multiple series of certain securities on guarding against declines in the same the Exchange. The Commission has underlying indexs below a certain buffer level over a specified time period, repeatedly expressed its preference for competition over regulatory which is very similar to how a fund intervention in determining prices, based on an index operates. Moreover, an ETP with a maturity date designed to products, and services in the securities end on a specific date would not require markets. Specifically, in Regulation NMS, the Commission highlighted the the same open-ended commitment of importance of market forces in Exchange resources as the more determining prices and SRO revenues traditional types of actively managed and, also, recognized that current products eligible for fees under section 6.b. of the Schedule of Fees and Charges regulation of the market system has been remarkably successful in that do not have a specified end date.
Accordingly, the Exchange believes that promoting market competition in its the proposed lower fees are appropriate broader forms that are most important to investors and listed companies. 8
because ETPS that have a maturity date The Exchange believes that the and that provide an expected return ongoing competition among the over a specific outcome period, like exchanges with respect to new listings products that track an index, generally require the expenditure of less Exchange and the transfer of existing listings among competitor exchanges resources to support listing and demonstrates that issuers can choose administration. Charging lower fees for different listing markets in response to such products would thus more closely correlate the listing fee applicable to the fee changes. Accordingly, competitive forces constrain exchange listing fees.
issuer of ETPs to the costs associated Stated otherwise, changes to exchange with listing and trading such products, listing fees can have a direct effect on including costs related to issuer services, listing administration, product the ability of an exchange to compete for new listings and retain existing listings.
development and regulatory oversight.
Annual fees for ETPs are based on the Structured products would continue to number of shares outstanding per issuer, be charged annual fees under section 7
and then are further differentiated based of the Schedule of Fees and Charges.
on whether the ETP is index based or The proposed change described above not, with lower annual fees for ETPs is not otherwise intended to address that are based on an index. As discussed other issues, and the Exchange is not above, the Exchange believes that it is aware of any significant problems that reasonable to charge annual fees for market participants would have in ETPs that have a maturity date and ETPs complying with the proposed changes.
that provide an expected return over a specific outcome period based on that 2. Statutory Basis same differentiation. The Exchange The Exchange believes that the believes that, given the characteristics of proposed rule change is consistent with such ETPs, charging the same, lower Section 6b of the Act,6 in general, and fees as the Exchange currently charges furthers the objectives of Sections 7 15
6 15

U.S.C. 78fb.

VerDate Sep<11>2014

16:57 Jan 29, 2021

U.S.C. 78fb4 & 5.
Regulation NMS, 70 FR at 37499.

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ETPs that track an index would be reasonable because those relatively lower annual fees better correlate with the generally lesser Exchange costs associated with listing and trading ETPs that track an index, including costs related to issuer services, listing administration and product development. Given the current competitive environment, the Exchange believes that the proposed change is a reasonable attempt to establish listing fees for products that, like products that track an index, require a decreased expenditure of Exchange resources to support listing and administration, thereby enhancing competition among issuers and listing venues. The Exchange also believes that lower annual fees may reduce the barriers to entry and incentivize enhanced competition among issuers of ETPs that have a maturity date and ETPs that provide an expected return over a specific outcome period. The proposed rule change reflects 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 Proposal Is An Equitable Allocation of Fees The Exchange believes the proposal equitably allocates its fees among its market participants. In the prevailing competitive environment, issuers can readily favor competing venues or transfer listings if they deem fee levels at a particular venue to be excessive, or discount opportunities available at other venues to be more favorable. The proposed fees for ETPs that have a maturity date and ETPs that provide an expected return over a specific outcome period are equitable because the proposed annual fees would apply uniformly to all issuers. Moreover, the proposed fees would be equitably allocated among issuers because issuers would continue to qualify for the annual listing fee based on issuing ETPs that have a maturity date and that provide an expected return over a specific outcome period and for the annual fee based on the number of shares outstanding and under criteria applied uniformly to all such issuers. For the same reasons, the proposal neither targets nor will it have a disparate impact on any particular category of market participant.
The Proposal Is Not Unfairly Discriminatory The Exchange believes that the proposal is not unfairly discriminatory.

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