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Federal Register / Vol. 86, No. 174 / Monday, September 13, 2021 / Notices which provides rebates for Retail Orders when such orders provide liquidity and interact with other participants, should provide a sufficient incentive for ETP
Holders to direct their Retail Orders to the Exchange.
The Exchange believes that the proposed rule change is equitable because maintaining the proportion of Retail Orders in exchange-listed 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.

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The Proposed Fee Change Is Not Unfairly Discriminatory The Exchange believes that the proposal is not unfairly discriminatory.
The Exchange also believes that nothing about its proposed pricing model for Retail Orders that are internalized is inherently unfair; instead, it is a rational pricing model that was employed by one of the Exchanges competitors for many years.20 Despite the elimination of the credits, the Exchange believes its fee structure incentivizes retail trading on a transparent market, thus enhances price discovery and improves the overall quality of the equity markets. 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. All ETP Holders on the Exchange that qualify for the Retail Order Step Up Tiers 13 whose Retail Orders are internalized would no longer receive credits and would continue to not pay a fee. The Exchange also notes that the proposed rule change will not adversely impact any ETP
Holders ability to qualify for other reduced fee or enhanced rebate tiers.
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,21 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, despite the elimination of credits for Retail Orders that are internalized under the Retail Order Step Up Tiers 1
3, the resulting fee structure would continue to incentivize the submission of Retail Orders to a public exchange, thereby enhancing order execution opportunities for all market participants. 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. 22
Intramarket Competition. 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 change applies to all ETP
Holders equally in that all ETP Holders would be able to internalize Retail Orders on the Exchange at no cost, i.e., they would receive no credit or pay any fee. The Exchange believes that the resulting fee structure would continue to incentivize market participants to submit Retail Orders that are internalized for execution on a public and transparent market rather than on an off-exchange venue because ETP
Holders would be able to transact such orders at no cost. Greater liquidity benefits all market participants on the Exchange by providing more trading opportunities and encourages ETP
Holders to send orders, thereby contributing to robust levels of liquidity, which benefits all market participants.
The elimination of credits for Retail Orders that are internalized under the Retail Order Step Up Tiers 13 would impact all similarly-situated ETP
Holders on an equal basis, and, as such, the proposed change would not impose a disparate burden on competition
e.g., Securities Exchange Act Release No.
667662 April 6, 2012, 77 FR 22053 April 12, 2021 SREDGX201212. See also supra, note 19.

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U.S.C. 78fb8.
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among market participants on the Exchange.
Intermarket Competition. 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. The Exchange operates in a highly competitive market in which market participants can readily choose to send their orders to other exchanges and offexchange venues if they deem fee levels at those other venues to be more favorable. As noted above, the Exchanges market share of intraday trading i.e., excluding auctions is currently less than 10%. In such an environment, the Exchange must continually adjust its fees and rebates to remain competitive with other exchanges and with off-exchange venues. Because competitors are free to modify their own fees and credits in response, and because market participants may readily adjust their order routing practices, the Exchange does not believe this proposed fee change would impose any burden on intermarket competition.
C. Self-Regulatory Organizations Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19b3A 23 of the Act and subparagraph f2 of Rule 19b4 24
thereunder, because it establishes a due, fee, or other charge imposed by the Exchange.
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19b2B 25 of the Act to determine whether the proposed rule change should be approved or disapproved.

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