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khammond on DSKJM1Z7X2PROD with NOTICES

Federal Register / Vol. 86, No. 136 / Tuesday, July 20, 2021 / Notices reasonable means to encourage Members to increase their relative add liquidity on the Exchange each month over a predetermined baseline as well as over a set threshold by offering Members an additional opportunity to meet criteria to receive a reduced fee.
More specifically, the Exchange notes that greater add volume order flow may provide for deeper, more liquid markets and execution opportunities at improved prices, which the Exchange believes signals an increase in activity from other market participants. This overall increase in activity deepens the Exchanges liquidity pool, offers additional cost savings, supports the quality of price discovery, promotes market transparency and improves market quality, for all investors.
Further, the Exchange believes that the proposed Step-Up Tier is reasonable as it does not represent a significant departure from the criteria or corresponding rates currently offered under in the Fee Schedule, and that the proposed reduced fee is commensurate with the new criteria. For example, Remove Volume Tier 7 under footnote 1 of the Fee Schedule provides an enhanced rebate of $0.0016 per share for qualifying orders, where a Member increases certain order flow on the Exchange each month over a predetermined baseline as well as over a set threshold. The Exchange notes that this enhanced rebate $0.0016 over the standard rebate $0.00020 is essentially equivalent to the proposed $0.0014
reduced fee offer in the new Step-Up Tier.
The Exchange also believes that the proposed rule change represents an equitable allocation of fees and rebates and is not unfairly discriminatory because all Members are eligible for the new Step-Up Tier and have the opportunity to meet the tiers criteria and receive the proposed reduced fee if such criteria is met. Without having a view of activity on other markets and off-exchange venues, the Exchange has no way of knowing whether this proposed rule change would definitely result in any Members qualifying for the proposed tier. While the Exchange has no way of predicting with certainty how the proposed tier will impact Member activity, the Exchange anticipates that at least three Members will be able to satisfy the criteria proposed under the new tier. The Exchange also notes that the proposed tier will not adversely impact any Members ability to qualify for reduced fees or enhanced rebate offered under other tiers. Should a Member not meet the proposed new criteria, the Member will merely not
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receive the corresponding proposed reduced fee.
B. Self-Regulatory Organizations Statement on Burden on Competition The Exchange does not believe that the proposed rule changes will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. Rather, as discussed above, the Exchange believes that the proposed change would encourage the submission of additional order flow to a public exchange, thereby promoting market depth, execution incentives and enhanced execution opportunities, as well as price discovery and transparency for all Members. As a result, the Exchange believes that the proposed change furthers the Commissions goal in adopting Regulation NMS of fostering competition among orders, which promotes more efficient pricing of individual stocks for all types of orders, large and small.
The Exchange believes the proposed rule change does not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. Particularly, the proposed new Step-Up Tier applies to all Members equally in that all Members are eligible for these tiers, have a reasonable opportunity to meet the tiers criteria and will receive the reduced fee on their qualifying orders if such criteria is met. The Exchange does not believe the proposed change to adopt a new Step-Up Tier burdens competition, but rather, enhances competition as it is intended to increase the competitiveness of BYX by adopting an additional pricing incentive in order to attract order flow and incentivize participants to increase their participation on the Exchange, providing for additional execution opportunities for market participants and improved price transparency.
Greater overall order flow, trading opportunities, and pricing transparency benefits all market participants on the Exchange by enhancing market quality and continuing to encourage Members to send orders, thereby contributing towards a robust and well-balanced market ecosystem.
Next, the Exchange believes the proposed rule change does not impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act.
As previously discussed, the Exchange operates in a highly competitive market.
In such an environment, the Exchange must continually review, and consider adjusting, its fees and rebates to remain
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competitive with other exchanges.
Members have numerous alternative venues that they may participate on and direct their order flow, including other equities exchanges, off-exchange venues, and alternative trading systems.
Additionally, the Exchange represents a small percentage of the overall market.
Based on publicly available information, no single equities exchange has more than 15% of the market share.12
Therefore, no exchange possesses significant pricing power in the execution of order flow. Indeed, participants can readily choose to send their orders to other exchange and offexchange venues if they deem fee levels at those other venues to be more favorable. Moreover, the Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, 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. 13 The fact that this market is competitive has also long been recognized by the courts.
In NetCoalition v. Securities and Exchange Commission, the D.C. Circuit stated as follows: no one disputes that competition for order flow is fierce. . . . As the SEC explained, in the U.S. national market system, buyers and sellers of securities, and the brokerdealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution;
and no exchange can afford to take its market share percentages for granted because no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers. . . ..14 Accordingly, the Exchange does not believe its proposed fee changes imposes any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.

12 See
supra note 3.
Securities Exchange Act Release No. 51808
June 9, 2005, 70 FR 37496, 37499 June 29, 2005.
14 NetCoalition v. SEC, 615 F.3d 525, 539 D.C.
Cir. 2010 quoting Securities Exchange Act Release No. 59039 December 2, 2008, 73 FR 74770, 74782
83 December 9, 2008 SRNYSEArca200621.
13 See
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