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Federal Register / Vol. 86, No. 103 / Tuesday, June 1, 2021 / Notices
jbell on DSKJLSW7X2PROD with NOTICES

reasonably constrain exchange transaction fees that relate to Retail Orders on an exchange. Stated otherwise, changes to exchange transaction fees can have a direct effect on the ability of an exchange to compete for order flow.
Given this competitive environment, the proposal represents a reasonable attempt to attract additional Retail Orders to the Exchange.
The Exchange believes that the proposed change to adopt lower fees for Retail Orders executed in the Exchanges opening and closing auctions is reasonable because the lower fees would encourage ETP Holders to send a greater number of their Retail Orders for execution on the Exchange.
As noted above, the Exchange operates in a highly competitive environment, particularly for attracting Retail Order flow. The Exchange believes it is reasonable to offer reduced fees for Retail Orders in the opening and closing auctions. The Exchange believes the proposed change is also reasonable because it is designed to attract higher volumes of Retail Orders transacted on the Exchange by ETP Holders which would benefit all market participants by offering greater price discovery and an increased opportunity to trade on the Exchange.
On the backdrop of the competitive environment in which the Exchange currently operates, the proposed rule change is a reasonable attempt to increase liquidity on the Exchange and improve the Exchanges market share relative to its competitors.
The Proposed Fee Change Is an Equitable Allocation of Fees and Credits The Exchange believes its proposal is an equitable allocation of its fees among its market participants because all ETP
Holders that participate on the Exchange may qualify for the proposed reduced fee if they elect to send their Retail Orders for execution in the Exchanges opening and closing auctions. Without having a view of 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 sending more of their Retail Orders to the Exchange. The Exchange cannot predict with certainty how many ETP Holders would avail themselves of this opportunity but additional Retail Orders would benefit all market participants because it would provide greater execution opportunities in the Exchanges opening and closing auctions. The Exchange anticipates that multiple ETP Holders that engage in retail trading activity would endeavor to
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send more of their Retail Orders for execution in the Exchanges opening and closing auctions and pay the proposed lower fee.
Further, given the competitive market for attracting Retail Order flow, the Exchange notes that with this proposed rule change, the Exchanges pricing for Retail Orders that are executed in the opening and closing auctions would be lower that fees charged by other exchanges that the Exchange competes with for order flow. For example, the Nasdaq Stock Market LLC Nasdaq charges its members a fee of $0.0015 per share per share for orders, including Retail Orders, that are executed in the Nasdaq Opening Cross, and a fee that ranges between $0.0008 per share and $0.0016 per share for orders, including Retail Orders, that are executed in the Nasdaq Closing Cross.16
The Exchange further believes that the proposed change is equitable because it is reasonably related to the value to the Exchanges market quality associated with higher volume in Retail Orders.
The Exchange believes that recalibrating the fees charged for execution of Retail Orders will continue to attract order flow and liquidity to the Exchange, thereby contributing to price discovery on the Exchange and benefiting investors generally.
The Exchange believes that the proposed rule change is equitable because maintaining or increasing the proportion of Retail Orders in exchangelisted securities that are executed on a registered national securities exchange rather than relying on certain available off-exchange execution methods would contribute to investors confidence in the fairness of their transactions and would benefit all investors by deepening the Exchanges liquidity pool, supporting the quality of price discovery, promoting market transparency and improving investor protection.
The Proposed Fee Change 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.
The Exchange believes that the proposed change is not unfairly discriminatory because it would apply to all ETP Holders on an equal and nondiscriminatory basis. The Exchange
believes that the proposed rule change is not unfairly discriminatory because maintaining or increasing the proportion of Retail Orders in exchangelisted securities that are executed on a registered national securities exchange rather than relying on certain available off-exchange execution methods would contribute to investors confidence in the fairness of their transactions and would benefit all investors by deepening the Exchanges liquidity pool, supporting the quality of price discovery, promoting market transparency and improving investor protection. This aspect of the proposed rule change also is consistent with the Act because all similarly situated ETP
Holders would pay the same fee for Retail Orders executed in the Exchanges opening and closing auctions. Lastly, the submission of Retail Orders is optional for ETP
Holders in that they could choose whether to submit Retail Orders 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,17 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 fee change 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. 18
Intramarket Competition. The Exchange believes the proposed amendments to its Fee Schedule would not impose any burden on competition that is not necessary or appropriate in 17 15

16 See
Nasdaq Price List, NASDAQ Crossing Network, at http nasdaqtrader.com/
Trader.aspx?id=PriceListTrading2.

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U.S.C. 78fb8.
Securities Exchange Act Release No. 51808, 70 FR 37495, 3749899 June 29, 2005 S71004
Final Rule.
18 See
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