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Federal Register / Vol. 86, No. 136 / Tuesday, July 20, 2021 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES

provide liquidity to the Book, applies to ETP Holders 5 that either 1 provide liquidity an average daily share volume per month of 0.30% or more, but less than 0.70% of the US CADV or 2
provide liquidity of 0.10% of more of the US CADV per month, and are affiliated with an OTP Holder or OTP
Firm that provides an ADV of electronic posted Customer and Professional Customer executions in all issues on NYSE Arca Options excluding mini options of at least 1.50% of total Customer equity and ETF option ADV
as reported by The Options Clearing Corporation OCC. In May 2019, the Exchange adopted a higher credit of $0.0031 per share for orders that provide liquidity in Tape A and Tape C
Securities, and $0.0024 per share for orders that provide liquidity in Tape B
Securities. The higher credit is applicable for orders that provide displayed liquidity to the Book for ETP
Holders and Market Makers that meet the requirements of Tier 2 6 and, for the billing month, 1 execute providing volume equal to at least 0.30% of US
CADV, 2 execute removing volume equal to at least 0.285% of US CADV, and 3 execute Market-On-Close and Limit-On-Close Orders executed in a Closing Auction of at least 0.075% of US CADV.7
The Exchange proposes to eliminate the higher credit of $0.0031 per share for orders that provide liquidity in Tape A and Tape C Securities, and $0.0024
per share for orders that provide liquidity in Tape B Securities and remove it from the Fee Schedule. The Exchange has observed that not a single ETP Holder has qualified for the higher credit over the last six months. Given that the higher credit adopted by the Exchange has not served to meaningfully increase activity on the Exchange, the Exchange has determined to eliminate it from the Fee Schedule.
Transaction Fees and Credits on the Fee Schedule for the applicable tiered credits.
5 All references to ETP Holders in connection with this proposed fee change include Market Makers.
6 To qualify for Tier 2, ETP Holders and Market Makers must provide liquidity an average daily share volume per month of 0.30% or more, but less than 0.70% of the US CADV or a provide liquidity an average daily share volume per month of 0.25%
or more, but less than 0.70% of the US CADV, b execute removing volume in Tape B Securities equal to at least 0.40% of US Tape B CADV, and c are affiliated with an OTP Holder or OTP Firm that provides an ADV of electronic posted Customer and Professional Customer executions in all issues on NYSE Arca Options excluding mini options of at least 0.25% of total Customer equity and ETF
option ADV as reported by OCC. See Tier 2, Fee Schedule.
7 See Securities Exchange Act Release No. 85888
May 17, 2019, 84 FR 23821 May 23, 2019 SR
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The Exchange is not proposing any other change to the Tier 2 pricing tier.
Additionally, the Exchange proposes to eliminate the Tracking Order Tier 1
and Tracking Order Tier 2 pricing tiers.
The Exchange adopted volume-based tiers applicable to Tracking Orders 8 in 2009 in order to incentivize the use of this order type and attract liquidity to the Exchange.9 Currently, Tracking Order Tier 1 currently offers ETP
Holders a credit of $0.0015 per share for Tracking Orders that result in executions on the Exchange with an average daily share volume per month greater than or equal to 10 million shares. Additionally, Tracking Order Tier 2 currently offers ETP Holders a credit of $0.0012 per share for Tracking Orders that result in executions on the Exchange with an average daily share volume per month between 5 million shares and 9,999,999 shares. Finally, Tracking Order Tier 3 currently offers ETP Holders a credit of $0.001 per share for Tracking Orders that result in executions on the Exchange with an average daily share volume per month between 1 million shares and 4,999,999
shares.10
No ETP Holder has qualified for the Tracking Order Tier 1 and Tracking Order Tier 2 pricing tiers in the last six months. Given that the pricing incentives offered under these tiers have not served to meaningfully increase activity on the Exchange or attract order flow in any meaningful way, the Exchange proposes to eliminate the Tracking Order Tier 1 and Tracking Order Tier 2 pricing tiers and remove them from the Fee Schedule. Given that the Tracking Order functionality continues to be available on the Exchange, the Exchange proposes to retain Tracking Order Tier 3, which provides the minimum level of credit for the use of Tracking Orders on the Exchange. The Exchange also proposes to amend the volume requirement applicable to current Tracking Order Tier 3 so that the $0.001 per share credit would be applicable for Tracking Orders that result in executions on the Exchange with an average daily volume per month of at least 1 million shares.
8 See NYSE Arca Rule 7.31Ed4. A Tracking Order is an order to buy sell with a limit price that is not displayed, does not route, must be entered in round lots and designated Day, and trades only with an order to sell buy that is eligible to route.
9 See Securities Exchange Act Release No. 60944
November 5, 2009, 74 FR 58668 November 13, 2009 SRNYSEArca200999. See also Securities Exchange Act Release No. 66379 February 10, 2012, 77 FR 9277 February 16, 2012 SR
NYSEArca201211.
10 See Securities Exchange Act Release No. 66568
March 9, 2012, 77 FR 15819 March 16, 2012 SR
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Finally, with the proposed elimination of Tracking Order Tier 1 and Tracking Order Tier 2 pricing tiers, the Exchange proposes to rename current Tracking Order Tier 3 as Tracking Order Tier 1.
The proposed changes are not otherwise intended to address any other issues, and the Exchange is not aware of any significant problems that market participants would have in complying with the proposed changes.
2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6b of the Act,11 in general, and furthers the objectives of Sections 6b4 and5 of the Act,12 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 Exchange believes that the proposed rule change to eliminate the Tier 2 credit of $0.0031 per share for orders that provide liquidity in Tape A
and Tape C Securities, and $0.0024 per share for orders that provide liquidity in Tape B Securities, and eliminate the Tracking Order Tier 1 and Tracking Order Tier 2 pricing tiers is reasonable because each of the pricing tiers that are the subject of this proposed rule change have been underutilized and have generally not incentivized ETP Holders to bring liquidity and increase trading on the Exchange. In the last six months, no ETP Holder has availed itself of the higher Tier 2 credit. Similarly, no ETP
Holder has qualified for Tracking Order Tier 1 and Tracking Order Tier 2 pricing tiers in the last six months. The Exchange does not anticipate any ETP
Holder in the near future to qualify for any of the tiers that are the subject of this proposed rule change. The Exchange believes it is reasonable to eliminate requirements and credits, and even entire pricing tiers, when such incentives become underutilized. The Exchange believes eliminating underutilized incentive programs would also simplify the Fee Schedule. The Exchange further believes that removing reference to the pricing tiers that the Exchange proposes to eliminate from the Fee Schedule would also add clarity to the Fee Schedule. The Exchange believes that eliminating requirements and credits, and even entire pricing tiers, from the Fee Schedule when such incentives become ineffective is equitable and not unfairly 11 15
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