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Federal Register / Vol. 86, No. 31 / Thursday, February 18, 2021 / Notices Removing Tier 1 would remain unchanged.
The Exchange believes that providing an alternative way for ETP Holders to qualify for Removing Tier 1 of at least 21.5 million shares ADV will allow greater numbers of ETP Holders to qualify for the tier, and will incentivize more ETP Holders to route liquidityremoving order flow to the Exchange in order to qualify for the tier. This is turn would support the quality of price discovery on the Exchange and provide additional price improvement opportunities for incoming orders. As described above, ETP Holders with liquidity-removing order flow have a choice of where to send that order flow.
The Exchange believes that as a result of the proposed change to Removing Tier 1, more ETP Holders will choose to route their liquidity-removing order flow to the Exchange in order to qualify for the credit for removing liquidity associated with Removing Tier 1 given that the requirements to qualify have been reduced.
As noted, the Exchange operates in a competitive environment. The Exchange does not know how much order flow ETP Holders choose to route to other exchanges or to off-exchange venues.
Based on the profile of liquidity-adding firms generally, the Exchange believes that additional ETP Holders could qualify for the tiered rate under the new qualification criteria if they choose to direct order flow to, and increase quoting on, the Exchange. Without having a view of ETP Holders activity on other exchanges and off-exchange venues, the Exchange has no way of knowing whether this proposed rule change would result in any additional ETP Holders directing orders to the Exchange in order to qualify for the Removing Tier 1 rate.
The proposed changes are not otherwise intended to address any other issues, and the Exchange is not aware of any problems that ETP Holders would have in complying with the proposed changes.

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2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6b of the Act,10 in general, and furthers the objectives of Sections 6b4 and 6b5 of the Act,11 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 10 15
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discriminate between customers, issuers, brokers or dealers.

The Proposal Is an Equitable Allocation of Fees
The Proposed Change Is Reasonable
The Exchange believes the proposed rule change equitably allocates its fees among its market participants. The proposed change would continue to encourage ETP Holders to both submit additional liquidity to the Exchange and execute orders on the Exchange, thereby contributing to robust levels of liquidity, to the benefit of all market participants.
The Exchange believes that modifying Adding Tiers 1 and 2 and Removing Tier 1 would encourage the submission and removal of additional liquidity from the Exchange, thus enhancing order execution opportunities for ETP Holders from the substantial amounts of liquidity present on the Exchange. All ETP Holders would benefit from the greater amounts of liquidity that would be present on the Exchange, which would provide greater execution opportunities.
The Exchange believes the proposed rule change would also improve market quality for all market participants seeking to remove liquidity on the Exchange and, as a consequence, attract more liquidity to the Exchange, thereby improving market-wide quality. The proposal neither targets nor will it have a disparate impact on any particular category of market participant.
Specifically, the Exchange believes that the proposal constitutes an equitable allocation of fees because all similarly situated ETP Holders and other market participants would be eligible for the same general and tiered rates and would be eligible for the same fees and credits. Moreover, the proposed change is equitable because the revised fees would apply equally to all similarly situated ETP Holders.

As discussed above, 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. 12
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. 13
Given the current competitive environment, the Exchange believes that the proposal represents a reasonable attempt to attract additional order flow to the Exchange. Specifically, the Exchange believes that the proposed revisions to Adding Tiers 1 and 2 and Removing Tier 1 are reasonable because they would promote execution opportunities for ETP Holders routing order flow to the Exchange.
The Exchange believes that the proposal as a whole represents a reasonable effort to promote price improvement and enhanced order execution opportunities for ETP
Holders. All ETP Holders would benefit from the greater amounts of liquidity on the Exchange, which would represent a wider range of execution opportunities.
The Exchange further believes that removing a redundant phrase from the Adding Tier 1, Adding Tier 2, Adding Tier 4, Adding Tier 4 and NonDisplayed Adding Tier 1 would also add clarity and transparency to the Schedule of Fees and Rebates.
12 See Securities Exchange Act Release No. 51808
June 9, 2005, 70 FR 37495, 37499 June 29, 2005
S71004 Final Rule Regulation NMS.
13 See Securities Exchange Act Release No. 61358, 75 FR 3594, 3597 January 21, 2010 File No. S7
0210 Concept Release on Equity Market Structure.

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The Proposal Is Not Unfairly Discriminatory The Exchange believes that the proposal is not unfairly discriminatory.
In the prevailing competitive environment, ETP Holders are free to disfavor the Exchanges pricing if they believe that alternatives offer them better value.
Moreover, the proposal neither targets nor will it have a disparate impact on any particular category of market participant. The Exchange believes that the proposal does not permit unfair discrimination because the proposal would be applied to all similarly situated ETP Holders and all ETP
Holders would be subject to the same modified Adding Tiers 1 and 2 and Removing Tier 1. Accordingly, no ETP
Holder already operating on the Exchange would be disadvantaged by
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