60 Day Notice

Federal Register / Vol. 84, No. 240 / Friday, December 13, 2019 / Notices
or computer-to-computer interfaces.60
The Exchange also represents that
orders for covered accounts from
Options Members will be transmitted
from a remote location directly to the
proposed C–SAM by electronic means.
Because no Exchange Options Member
may submit orders into the C–SAM from
on the floor of the Exchange, the
Commission believes that the C–SAM
satisfies the off-floor transmission
requirement.
Second, the Rule requires that the
member and any associated person not
participate in the execution of its order
after the order has been transmitted. The
Exchange represents that at no time
following the submission to the C–SAM
of an order or C–SAM response is an
Options Member able to acquire control
or influence over the result or timing of
the order’s or response’s execution.61
According to the Exchange, the
execution of an order (including the
Agency and the Solicited Order) or a C–
SAM response sent to the C–SAM is
determined by what other orders and
responses are present and the priority of
those orders and responses.62
Accordingly, the Commission believes
that an Options Member does not
participate in the execution of an order
or response submitted to the C–SAM.
Third, Rule 11a2–2(T) requires that
the order be executed by an exchange
member who is unaffiliated with the
member initiating the order. The
Commission has stated that this
requirement is satisfied when
automated exchange facilities, such as
the C–SAM, are used, as long as the
design of these systems ensures that
members do not possess any special or
unique trading advantages in handling
their orders after transmitting them to
the exchange.63 The Exchange
60 See

Notice, supra note 3, at 59876.
id. (also representing, among other things,
that no Options Member, including the Initiating
Member, will see a C–SAM response submitted into
C–SAM and therefore will not be able to influence
or guide the execution of their Agency Orders,
Solicited Orders, or C–SAM responses, as
applicable).
62 See id. The Exchange notes that an Initiating
Member may not cancel or modify an Agency Order
or Solicited Order after it has been submitted into
C–SAM, but that Options Members may modify or
cancel their responses after being submitted to a C–
SAM. See id. at 59876 n.77. As the Exchange notes,
the Commission has stated that the nonparticipation requirement does not preclude
members from cancelling or modifying orders, or
from modifying instructions for executing orders,
after they have been transmitted so long as such
modifications or cancellations are also transmitted
from off the floor. See Securities Exchange Act
Release No. 14563 (March 14, 1978), 43 FR 11542,
11547 (the ‘‘1978 Release’’).
63 In considering the operation of automated
execution systems operated by an exchange, the
Commission noted that, while there is not an

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61 See

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represents that the C–SAM is designed
so that no Options Member has any
special or unique trading advantage in
the handling of its orders or responses
after transmitting its orders to the
mechanism.64 Based on the Exchange’s
representation, the Commission believes
that the C–SAM satisfies this
requirement.
Fourth, in the case of a transaction
effected for an account with respect to
which the initiating member or an
associated person thereof exercises
investment discretion, neither the
initiating member nor any associated
person thereof may retain any
compensation in connection with
effecting the transaction, unless the
person authorized to transact business
for the account has expressly provided
otherwise by written contract referring
to Section 11(a) of the Act and Rule
11a2–2(T) thereunder.65 The Exchange
represents that Options Members
relying on Rule 11a2–2(T) for
transactions effected through the C–
SAM must comply with this condition
of the Rule and that the Exchange will
enforce this requirement pursuant to its
obligations under Section 6(b)(1) of the
Act to enforce compliance with federal
securities laws.66
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,67 that the
proposed rule change (SR–CboeEDGX–
2019–064) be, and hereby is, approved.
independent executing exchange member, the
execution of an order is automatic once it has been
transmitted into the system. Because the design of
these systems ensures that members do not possess
any special or unique trading advantages in
handling their orders after transmitting them to the
exchange, the Commission has stated that
executions obtained through these systems satisfy
the independent execution requirement of Rule
11a2–2(T). See 1979 Release, supra note 48.
64 See Notice, supra note 3, at 59876.
65 In addition, Rule 11a2–2(T)(d) requires a
member or associated person authorized by written
contract to retain compensation, in connection with
effecting transactions for covered accounts over
which such member or associated persons thereof
exercises investment discretion, to furnish at least
annually to the person authorized to transact
business for the account a statement setting forth
the total amount of compensation retained by the
member or any associated person thereof in
connection with effecting transactions for the
account during the period covered by the statement.
See 17 CFR 240.11a2–2(T)(d). See also 1978
Release, supra note 51, at 11548 (stating ‘‘[t]he
contractual and disclosure requirements are
designed to assure that accounts electing to permit
transaction-related compensation do so only after
deciding that such arrangements are suitable to
their interests’’).
66 See Notice, supra note 3, at 59876–77.
67 15 U.S.C. 78s(b)(2).

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68235

For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.68
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2019–26851 Filed 12–12–19; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
Extension:
Rule 147A(f)(1)(iii) Written Representation
as to Purchaser Residency, SEC File No.
270–806, OMB Control No. 3235–0757.

Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Rule 147A(f)(1)(iii) (17 CFR
230.147A(f)(1)(iii)) requires the issuer to
obtain from the purchaser a written
representation as to the pruchase’s
residency in order to qualify for safe
harbor under Securities Act Rule 147A
(17 CFR 230.147A). Rule 147A is an
exemption from registration under
Securities Act Section 28 (15 U.S.C.
77z–3). Under Rule 147A, the purchaser
in the offering must be a resident of the
same state or territory in which the
issuer is a resident. While the formal
representation of residency by itself is
not sufficient to establish a reasonable
belief that such purchasers are in-state
residents, the representation
requirement, together with the
reasonable belief standard, may result in
better compliance with the rule and
maintaining appropriate investor
protections. The representation of
residency is not provided to the
Commission. Approximately 700
respondents provide the information
required by Rule 147A(f)(1)(iii) at an
estimated 2.75 hours per response for a
total annual reporting burden of 1,925
hours (2.75 hours x 700 responses).
Written comments are invited on: (a)
Whether this proposed collection of
information is necessary for the
68 17

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CFR 200.30–3(a)(12).

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Federal Register / Vol. 84, No. 240 / Friday, December 13, 2019 / Notices

performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
Charles Riddle, Acting Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Cynthia
Roscoe, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
Dated: December 9. 2019.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2019–26869 Filed 12–12–19; 8:45 am]

SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87695; File No. SR–
NYSENAT–2019–30]

Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Its Schedule of
Fees and Rebates

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December 9, 2019.

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 November
27, 2019, NYSE National, Inc. (‘‘NYSE
National’’ 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.
2 17

U.S.C. 78s(b)(1).
CFR 240.19b–4.

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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 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

BILLING CODE 8011–01–P

1 15

I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Schedule of Fees and Rebates (‘‘Fee
Schedule’’) to eliminate the fees
currently charged for MPL orders that
add liquidity on the Exchange and
provide that liquidity-removing orders
that execute at prices better than the
contra-side NBBO will not be subject to
any fee. 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.

1. Purpose
The Exchange proposes to amend its
Fee Schedule to (1) eliminate the fee
currently charged for non-tiered MPL
orders adding liquidity in securities
priced at or above $1.00, (2) eliminate
the fee currently charged for liquidityadding MPL orders in Adding Tiers 1,
2, and 3, and (3) revise its rates for
removing liquidity to provide that
liquidity-removing orders that execute
at prices better than the contra-side
NBBO will not be subject to any fee.
The Exchange proposes to implement
the rule change on December 2, 2019.
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. 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

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promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 3
As the Commission itself recognized,
the market for trading services in NMS
stocks has become ‘‘more fragmented
and competitive.’’ 4 Indeed, equity
trading is currently dispersed across 13
exchanges,5 31 alternative trading
systems,6 and numerous broker-dealer
internalizers and wholesalers. Based on
publicly-available information, no
single exchange has more than 17% of
the market share of executed volume of
equity trades (whether excluding or
including auction volume).7 Therefore,
no exchange possesses significant
pricing power in the execution of equity
order flow. More specifically, in each of
the last three months, the Exchange had
approximately 2% market share of
executed volume of equity trades
(whether excluding or including auction
volume).8
The Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can shift order flow, or discontinue or
reduce use of certain 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 trading
venues to which a firm routes order
flow. These fees vary month to month,
and not all are publicly available. With
respect to non-marketable order flow
that would provide liquidity on an
exchange, ETP Holders can choose from
any one of the 13 currently operating
registered exchanges to route such order
flow. Accordingly, competitive forces
constrain the Exchange’s transaction
fees, and market participants can readily
trade on competing venues if they deem
3 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (S7–10–04)
(Final Rule) (‘‘Regulation NMS’’).
4 See Securities Exchange Act Release No. 51808,
84 FR 5202, 5253 (February 20, 2019) (File No. S7–
05–18) (Transaction Fee Pilot for NMS Stocks Final
Rule) (‘‘Transaction Fee Pilot’’).
5 See Cboe Global Markets, U.S. Equities Market
Volume Summary, available at http://
markets.cboe.com/us/equities/market_share/. See
generally https://www.sec.gov/fast-answers/
divisionsmarketregmrexchangesshtml.html.
6 See FINRA ATS Transparency Data, available at
https://otctransparency.finra.org/otctransparency/
AtsIssueData. Although 54 alternative trading
systems were registered with the Commission as of
July 29, 2019, only 31 are currently trading. A list
of alternative trading systems registered with the
Commission is available at https://www.sec.gov/
foia/docs/atslist.htm.
7 See Cboe Global Markets U.S. Equities Market
Volume Summary, available at http://
markets.cboe.com/us/equities/market_share/.
8 See id.

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