Federal Register - February 23, 2021
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Source: Federal Register
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Federal Register / Vol. 86, No. 34 / Tuesday, February 23, 2021 / Notices
on NYSE Arca Options. A number of ETP Holders have a reasonable opportunity to satisfy the tiers criteria.18 The Exchange does not know how much order flow ETP Holders choose to route to other exchanges or to off-exchange venues. Without having a view of an ETP Holders activity on other markets and off-exchange venues, the Exchange has no way of knowing whether this proposed rule change would result in any ETP Holder affiliated with an OTP Holder or OTP
Firm that has a market maker account on NYSE Arca Options to increase participation in the Exchanges equities and options markets to qualify for the proposed Tape B Tier 3 credit. The Exchange believes the proposed pricing tier could provide an incentive for other ETP Holders that are affiliated with an OTP Holder or OTP Firm that has a market maker account on NYSE Arca Options to submit additional liquidity on the Exchange and on NYSE Arca Options to qualify for the Tape B Tier 3 credit. To the extent that such participants direct significant order flow to the Exchanges equities and options markets, the Exchange believes such participants should receive the credit proposed by the new pricing tier. To the extent an ETP Holder participates on the Exchange but not on NYSE Arca Options, the Exchange believes that the proposal is still reasonable, equitable and not unfairly discriminatory with respect to such ETP Holder based on the overall benefit to the Exchange resulting from the success of NYSE Arca Options.
In particular, such success would allow the Exchange to continue to provide and potentially expand its existing incentive programs to the benefit of all participants on the Exchange, whether they participate on NYSE Arca Options or not.
While the proposal is intended to incentivize ETP Holders that are affiliated with an OTP Holder or OTP
Firm that has a market maker account on NYSE Arca Options, ETP Holders that do not meet the criteria for the proposed tier can still qualify for credits available under the other Tape B pricing tiers which do not require it to have any affiliation with an OTP Holder or OTP
Firm and conduct options trading on NYSE Arca Options.
would continue to apply to ETP Holders as it does currently because the Exchange is not adopting any new fees or credits or removing any current fees or credits from the Fee Schedule. All ETP Holders would continue to be subject to the same fees and credits that currently apply to them.
Non-Substantive Change The Exchange believes that the proposed rule change to delete the phrases to the Book, from the Book, and outside the Book from the Fee Schedule is equitable because the resulting streamlined Fee Schedule
Non-Substantive Change
18 See
supra note 13.
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The Proposed Fee Change Is Not Unfairly Discriminatory Tape B Tier 3
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.
The Exchange believes it is not unfairly discriminatory to adopt the Tape B Tier 3 pricing tier as it would be available on an equal basis to ETP
Holders that are affiliated with an OTP
Holder or OTP Firm that has a market maker account on NYSE Arca Options that meet the requirement of the proposed Tape B Tier 3 pricing tier.
Further, the Exchange believes the proposed pricing tier would incentivize such ETP Holders to send their options orders to the Exchange to qualify for the proposed new credit. The Exchange believes that, to the extent that ETP
Holders affiliated with an OTP Holder or OTP Firm that has a market maker account on NYSE Arca Options, direct significant order flow to the Exchanges equities and options markets, such participants should receive the credit proposed by the new pricing tier. The Exchange also believes that the proposed change is not unfairly discriminatory because it is reasonably related to the value to the Exchanges market quality associated with higher volume.
The proposed rule change is intended to incentivize ETP Holders that are affiliated with an OTP Holder or OTP
Firm that has a market maker account on NYSE Arca Options. As such, it does not permit unfair discrimination because the requirement to qualify for the new pricing tier would be applied to all similarly situated ETP Holders, who would all be eligible for the same credit on an equal basis.
The Exchange believes that the proposed rule change to delete the phrases to the Book, from the Book, and outside the Book from the Fee Schedule is not unfairly discriminatory because the resulting streamlined Fee Schedule would continue to apply to ETP Holders as it does currently
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because the Exchange is not adopting any new fees or credits or removing any current fees or credits from the Fee Schedule. All ETP Holders would continue to be subject to the same fees and credits that currently apply to them.
Finally, the submission of orders to the Exchange is optional for ETP
Holders in that they could choose whether to submit orders to the Exchange and, if they do, the extent of its activity in this regard. The Exchange believes that it is subject to significant competitive forces, as described below in the Exchanges statement regarding the burden on competition.
For the foregoing reasons, the Exchange believes that the proposal is consistent with the Act.
B. Self-Regulatory Organizations Statement on Burden on Competition In accordance with Section 6b8 of the Act,19 the Exchange believes that the proposed rule change would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Instead, as discussed above, the Exchange believes that the proposed changes would encourage the submission of additional liquidity to a public exchange, thereby promoting market depth, price discovery and transparency and enhancing order execution opportunities for ETP Holders. As a result, the Exchange believes that the proposed change furthers the Commissions goal in adopting Regulation NMS of fostering integrated competition among orders, which promotes more efficient pricing of individual stocks for all types of orders, large and small. 20
Intramarket Competition. The proposed change is designed to attract additional equities and options order flow to the Exchange. The Exchange believes that the proposed introduction of the Tape B Tier 3 pricing tier would incentivize market participants to direct providing order flow to the Exchange and greater participation on NYSE Arca Options. Greater liquidity benefits all market participants on the Exchange by providing more trading opportunities and encourages ETP Holders affiliated with an OTP Holder or OTP Firm that has a market maker account on NYSE
Arca Options to send orders to the Exchange, thereby contributing to robust levels of liquidity, which benefits all market participants. The proposed volume requirement would be applicable to all similarly-situated market participants, and, as such, the 19 15
U.S.C. 78fb8.
Regulation NMS, 70 FR at 3749899.
20 See
E:FRFM23FEN1.SGM
23FEN1
