8011-01p
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100506; File No. SR-NYSEARCA-2024-58]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change to Amend the NYSE Arca Equities Fees and
Charges
July 11, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),1 and Rule
19b-4 thereunder,2 notice is hereby given that on July 1, 2024, NYSE Arca, Inc. (“NYSE Arca”
or the “Exchange”) filed with the Securities and Exchange Commission (“SEC” or
“Commission”) the proposed rule change as described in Items I, II, and III below, which Items
have been prepared by the Exchange. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
I.

Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed
Rule Change
The Exchange proposes to amend the NYSE Arca Equities Fees and Charges (“Fee

Schedule”) to expand the application of providing an additional calculation for purposes of
determining whether an ETP Holder qualifies for fees and credits that pertain to providing
liquidity. The Exchange proposes to implement the fee change effective July 1, 2024. The
proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal
office of the Exchange, and at the Commission’s Public Reference Room.
II.

Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the self-regulatory organization included statements

concerning the purpose of, and basis for, the proposed rule change and discussed any comments
it received on the proposed rule change. The text of those statements may be examined at the

15 U.S.C. 78s(b)(1).

17 CFR 240.19b-4.

places specified in Item IV below. The Exchange has prepared summaries, set forth in sections
A, B, and C below, of the most significant parts of such statements.
A.

Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1.

Purpose

The Exchange proposes to amend the Fee Schedule to expand the application of
providing an additional calculation for purposes of determining whether an ETP Holder qualifies
for fees and credits that pertain to providing liquidity. More specifically, the proposed additional
calculation would apply to the following pricing tier in Section VII. of the Fee Schedule: Tape B
Tiers.3 The Exchange proposes to implement the fee change effective July 1, 2024.
Background
The Exchange operates in a highly competitive market. The Commission has repeatedly
expressed its preference for competition over regulatory intervention in determining prices,
products, and services in the securities markets. 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.”4
While Regulation NMS has enhanced competition, it has also fostered a “fragmented”
market structure where trading in a single stock can occur across multiple trading centers. When
multiple trading centers compete for order flow in the same stock, the Commission has
recognized that “such competition can lead to the fragmentation of order flow in that stock.”5

Tape B Tiers refers to Tiers 1 through 3 and the Step Up tiers under the Tape B Tiers
pricing tier table on the Fee Schedule.

See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499
(June 29, 2005) (File No. S7-10-04) (Final Rule) (“Regulation NMS”).

See Securities Exchange Act Release No. 61358, 75 FR 3594, 3597 (January 21, 2010)
(File No. S7-02-10) (Concept Release on Equity Market Structure).

Indeed, equity trading is currently dispersed across 16 exchanges,6 numerous alternative trading
systems,7 and broker-dealer internalizers and wholesalers, all competing for order flow. Based
on publicly available information, no single exchange currently has more than 20% market
share.8 Therefore, no exchange possesses significant pricing power in the execution of equity
order flow. More specifically, the Exchange currently has less than 12% market share of
executed volume of equities trading.9
The Exchange believes that the ever-shifting market share among the exchanges from
month to month demonstrates that market participants can move order flow, or discontinue or
reduce use of certain categories of products. While it is not possible to know a firm’s reason for
shifting order flow, the Exchange believes that one such reason is because of fee changes at any
of the registered exchanges or non-exchange venues to which the firm routes order flow.
Accordingly, competitive forces compel the Exchange to use exchange transaction fees and
credits because market participants can readily trade on competing venues if they deem pricing
levels at those other venues to be more favorable.
Proposed Rule Change
The Exchange currently provides ETP Holders with various tiered credits for executing
orders that add liquidity to the Exchange and charges them various fees for executing orders that
remove liquidity from the Exchange, as set forth in Section VII. of the Fee Schedule, titled “Tier
Rates - Round Lots and Odd Lots. The fees and credits enumerated in Section VII. apply to all
securities priced at $1 or more that are executed on the Exchange. ETP Holders may qualify for
See Cboe U.S Equities Market Volume Summary, available at
https://markets.cboe.com/us/equities/market_share.

See FINRA ATS Transparency Data, available at
https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of alternative
trading systems registered with the Commission is available
at https://www.sec.gov/foia/docs/atslist.htm.

See Cboe Global Markets U.S. Equities Market Volume Summary, available at
http://markets.cboe.com/us/equities/market_share/.

See id.

tiers of discounted fees and premium credits based, in part, upon the volume of their activities on
the Exchange as a percentage of total “Consolidated Average Daily Volume” or “CADV.”
Pursuant to Section I. of the Fee Schedule, the term “CADV” means, unless otherwise
stated, the United States consolidated average daily volume of transactions reported to a
securities information processor (“SIP”). Transactions that are not reported to a SIP are not
included in the CADV. If CADV is preceded by a reference to a Tape or to Sub-Dollar, then
CADV would refer to all consolidated average daily volume of transactions reported to a SIP for
all securities in that Tape or to all Sub-Dollar securities. Per the Fee Schedule, trade activity on
days when the market closes early and on the date of the annual reconstitution of the Russell
Investment Indexes does not count toward volume tiers.10 For purposes of determining trade
related fees and credits based on CADV, the Exchange may exclude any day that (1) the
Exchange is not open for the entire trading day and/or (2) a disruption affects an Exchange
system that lasts for more than 60 minutes during regular trading hours.11
Generally, the ratio of consolidated volumes in securities priced at or above $1 (“dollar
plus volume”) relative to consolidated volumes inclusive of securities priced below a dollar is
usually stable from month to month, such that “CADV” has been a reasonable baseline for
determining tiered incentives for ETP Holders that execute dollar plus volume on the Exchange.
However, there have been a few months where volumes in securities priced below a dollar (“subdollar volume”) have been elevated, thereby impacting the ratio mentioned above.
Anomalous rises in sub-dollar volume stand to have a material adverse impact on ETP
Holders’ qualifications for pricing tiers/incentives because such qualifications depend upon ETP
Holders achieving threshold percentages of volumes as a percentage of CADV, and an
extraordinary rise in sub-dollar volume stands to elevate CADV. As a result, ETP Holders may

See Fee Schedule, Footnote 1.

Id.

find it more difficult, if not practically impossible, to qualify for or to continue to qualify for
their existing incentives during months where there are such rises in sub-dollar volumes, even if
their dollar plus volumes have not diminished relative to prior months.
The Exchange believes that it would be unfair for ETP Holders that execute significant
dollar plus volumes on the Exchange to fail to achieve or to lose their existing incentives for
such volumes due to anomalous behavior that is extraneous to them. To address the anomalous
activity in sub-dollar volume, the Exchange recently adopted an additional calculation
methodology for purposes of determining whether an ETP Holder qualifies for fees and credits
that pertain to providing liquidity for the following pricing tiers in Section VII. of the Fee
Schedule: Adding Tiers, Limit Non-Display Step Up Tier and Tape C Tiers for Adding.12 For
those pricing tiers, the Exchange calculates an ETP Holder’s equity volume and total equity
CADV twice. First, the Exchange calculates an ETP Holder’s equity volume and total equity
CADV inclusive of volume that consists of executions in securities priced less than $1. Second,
the Exchange calculates an ETP Holder’s equity volume and total equity CADV exclusive of
volume that consists of executions in securities priced less than $1. The Exchange then assesses
which of these two calculations would qualify the ETP Holder for the most advantageous fees
and credits for the month and the Exchange then applies those to the ETP Holder.
The Exchange now proposes to expand the application of providing the additional
calculation described above for purposes of determining whether an ETP Holder qualifies for
fees and credits that pertain to providing liquidity under the Tape B Tiers pricing tier. With this
proposed rule change, the Exchange is expanding the remedy so that it can efficiently allocate its
limited resources for incentives while seeking to avoid extraordinary spikes in sub-dollar

See Securities Exchange Act Release No. 100350 (June 14, 2024), 89 FR 52153 (June 21,
2024) (SR-NYSEArca-2024-50).

volumes from adversely affecting an ETP Holder’s qualification of incentives for their dollar
plus stock executions.
The proposed expansion of providing an additional calculation of CADV is intended to
limit the cost impact on the Exchange, while still providing some relief to ETP Holders in
months with extraordinary spikes in sub-dollar volumes. It is appropriate for the Exchange to
devote to incentive programs in a meaningful way and to reallocate these incentives periodically
in a manner that best achieves the Exchange’s overall mix of objectives.
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 6(b) of
the Act,13 in general, and furthers the objectives of Sections 6(b)(4) and (5) of the Act,14 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.
As discussed above, the Exchange operates in a highly fragmented and competitive
market. 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.”15 As a threshold matter, the

15 U.S.C. 78f(b).

15 U.S.C. 78f(b)(4) and (5).

See Regulation NMS, supra note 5, 70 FR at 37499.

Exchange is subject to significant competitive forces in the market for equity securities
transaction services that constrain its pricing determinations in that market.
Numerous indicia demonstrate the competitive nature of this market. For example, clear
substitutes to the Exchange exist in the market for equity security transaction services. The
Exchange is only one of several equity venues to which market participants may direct their
order flow. Competing equity exchanges offer similar tiered pricing structures to that of the
Exchange, including credits and fees that apply based upon members achieving certain volume
thresholds. The Exchange believes that the ever-shifting market share among the exchanges
from month to month demonstrates that market participants can shift order flow, or discontinue
or reduce use of certain categories of products, in response to fee changes. Accordingly, the
Exchange’s fees are reasonably constrained by competitive alternatives and market participants
can readily trade on competing venues if they deem pricing levels at those other venues to be
more favorable.
The Exchange believes that the proposal to amend the Fee Schedule is reasonable and
equitable because, in its absence, ETP Holders may experience material adverse impacts on their
ability to qualify for certain incentives during a month with an anomalous rise in sub-dollar
volumes. The Exchange does not wish to penalize ETP Holders that execute significant volumes
on the Exchange due to anomalous and extraneous trading activities of a small number of firms
in sub-dollar securities. The proposed rule would seek to provide a means for ETP Holders that
provide liquidity to avoid such a penalty by determining whether calculating ETP Holder equity
volume and total equity CADV to include or exclude sub-dollar volume would result in ETP
Holders qualifying for the most advantageous fees and credits, and then applying the calculations
that would result in the incentives for providing liquidity that are most advantageous to each ETP
Holder. The Exchange believes it is reasonable to expand the application of the additional
calculation to incentives that pertain to providing liquidity to additional pricing tiers because the
pricing tiers that are the subject of this proposed rule change have also been impacted by

anomalous spikes in sub-dollar volumes, and applying the additional calculation to the specified
pricing tiers would alleviate burden on ETP Holders from being disadvantaged by trading over
which it has little or no control. The Exchange believes that the proposed rule change is an
equitable allocation and is not unfairly discriminatory because the Exchange does not intend for
the proposal to advantage any particular ETP Holders and the Exchange will apply the additional
calculation to all similarly situated ETP Holders.
On the backdrop of the competitive environment in which the Exchange currently
operates, the proposed rule change is a reasonable attempt by the Exchange to maintain, if not
improve its market share relative to its competitors.
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 Exchange’s statement regarding the burden on competition.
For the foregoing reasons, the Exchange believes that the proposal is consistent with the
Act.
B.

Self-Regulatory Organization’s Statement on Burden on Competition

In accordance with Section 6(b)(8) of the Act,16 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.
Intramarket Competition. The Exchange does not believe that its proposal would place
any category of Exchange participant at a competitive disadvantage. The Exchange intends for
its proposed changes to the fees and credits to reallocate its limited resources more efficiently
and to align them with the Exchange’s overall mix of objectives. The proposed rule change is
intended to help avoid pricing disadvantages due to anomalous spikes in sub-dollar volumes and

15 U.S.C. 78f(b)(8).

is not intended to provide a competitive advantage to any one particular ETP Holder. The
additional calculation would be available to all similarly-situated market participants, and, as
such, the proposed change would not impose a disparate burden on competition among market
participants on the Exchange.
Intermarket Competition. 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 Exchange’s market share of intraday trading (i.e., excluding auctions) is currently less
than 12%. In such an environment, the Exchange must continually review, and consider
adjusting its fees and credits to remain competitive with other exchanges and with off-exchange
venues. Because competitors are free to modify their own fees and credits in response, the
Exchange does not believe its proposed fee change can impose any burden on intermarket
competition.
The Exchange believes that the proposed change could promote competition between the
Exchange and other execution venues, including those that currently offer comparable
transaction pricing, by encouraging additional orders to be sent to the Exchange for execution.
C.

Self-Regulatory Organization’s 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 has become effective upon filing pursuant to Section

19(b)(3)(A)17 of the Act and paragraph (f) thereunder. At any time within 60 days of the filing
of the 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.

15 U.S.C. 78s(b)(3)(A).

IV.

Solicitation of Comments
Interested persons are invited to submit written data, views, and arguments concerning

the foregoing, including whether the proposed rule change is consistent with the Act. Comments
may be submitted by any of the following methods:
Electronic comments:
•

Use the Commission’s internet comment form (https://www.sec.gov/rules/sro.shtml); or

•

Send an email to rule-comments@sec.gov. Please include file number SR-NYSEARCA2024-58 on the subject line.

Paper comments:
•

Send paper comments in triplicate to Secretary, Securities and Exchange Commission,
100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSEARCA-2024-58. This file number

should be included on the subject line if email is used. To help the Commission process and
review your comments more efficiently, please use only one method. The Commission will post
all comments on the Commission’s internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written statements with respect to the
proposed rule change that are filed with the Commission, and all written communications
relating to the proposed rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission’s Public Reference Room, 100 F
Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m.
and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the
principal office of the Exchange. Do not include personal identifiable information in
submissions; you should submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted material that is obscene or
subject to copyright protection. All submissions should refer to file number SR-NYSEARCA-

2024-58, and should be submitted on or before [INSERT 21 DAYS AFTER DATE OF
PUBLICATION IN THE FEDERAL REGISTER].
For the Commission, by the Division of Trading and Markets, pursuant to delegated
authority.18

J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-15676 Filed: 7/16/2024 8:45 am; Publication Date: 7/17/2024]

17 CFR 200.30-3(a)(12).