[Federal Register Volume 89, Number 210 (Wednesday, October 30, 2024)]
[Notices]
[Pages 86390-86393]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-25142]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101425; File No. SR-NYSE-2024-66]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Price List Regarding the Gross FOCUS Fee
October 24, 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 October 10, 2024, New York Stock Exchange LLC (``NYSE'' 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Price List regarding the gross
FOCUS fee charged to member organizations, effective October 10,
2024.\3\ 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.
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\3\ The Exchange previously filed to amend the Price List on
October 1, 2024 (SR-NYSE-2024-63) and withdrew such filing on
October 10, 2024.
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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
1. Purpose
The Exchange proposes to amend its Price List to (1) provide for a
temporary waiver of the Gross FOCUS fee from October 1, 2024 through
February 28, 2025 (the ``Waiver Period''), and (2) delete a reference
to a superseded fee.
The Exchange proposes to implement the fee changes effective
October 10, 2024.
Background
NYSE Rule 129 provides that the Exchange's Board may, from time to
time, impose such charge(s) on members and member organizations as it
deems appropriate to reimburse the Exchange, in whole or in part, for
regulatory oversight services provided to the membership by the
Exchange. Generally, the Exchange may only use regulatory fees ``to
fund the legal, regulatory and surveillance operations'' of the
Exchange.\4\
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\4\ See Fourteenth Amended and Restated Operating Agreement of
New York Stock Exchange LLC, Art. IV, Sec. 4.05, available at
https://www.nyse.com/publicdocs/nyse/regulation/nyse/Fourteenth_Amended_and_Restated_Operating_Agreement_of_New_York_Stock_Exchange.pdf.
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[[Page 86391]]
Consistent with the foregoing, the Exchange currently charges each
member organization a monthly regulatory fee of $0.11 per $1,000 of
gross revenue reported on its FOCUS Report (``Gross FOCUS Fee'').\5\
Member organizations are subject to certain minimum annual Gross FOCUS
Fees, which are $500 for carrying firms and designated market makers,
$250 for introducing firms, and $45 for member organizations who do not
conduct a public business.
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\5\ The current Gross FOCUS fee of $0.11 per $1,000 Gross FOCUS
Revenue was adopted in October 2020, effective January 1, 2021.
Given that the new rate was not proposed to be implemented until
January 1, 2021, both rates were reflected in the Price List. As
discussed below, the Exchange proposes to delete as obsolete the old
rate and the language following the current $0.11 rate.
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The revenue collected pursuant to the Gross FOCUS Fee funds the
performance of the Exchange's regulatory activities with respect to
member organizations. More specifically, the Gross FOCUS Fee funds a
material portion, but not all, of the Exchange's expenses related to
its regulatory program, including legal expenses associated with
regulation, the costs related to in-house staff, third-party service
providers, and technology that facilitates regulatory functions such as
surveillance, investigation, examinations, and enforcement. Gross FOCUS
Fee funds may also be used for indirect expenses such as human
resources and other administrative costs (collectively, ``Regulatory
Costs'').
The Exchange monitors the amount of revenue collected from the
Gross FOCUS Fee to ensure that these funds, in combination with its
other regulatory fees and fines, do not exceed Regulatory Costs. The
Exchange monitors Regulatory Costs and revenues on an annual basis, at
a minimum. If the Exchange determines that regulatory revenues exceed
or are projected to exceed Regulatory Costs, the Exchange will adjust
the Gross FOCUS Fee downward or seek a partial waiver of the fee by
submitting a filing to the Commission. As described below, the Exchange
has determined that continued collection of Gross FOCUS Fees at the
current rate for the proposed Waiver Period would exceed a material
portion of the Exchange's anticipated Regulatory Costs (as noted
above), justifying the proposed waiver of the Gross FOCUS Fee for
member organizations through the end of February 2025.
Proposed Rule Change
Based on the Exchange's recent review of current and anticipated
Regulatory Costs and Gross FOCUS Fee revenue, the Exchange proposes to
waive the Gross FOCUS Fee from October 1, 2024 through February 28,
2025 in order to help ensure that the amounts collected from the Gross
FOCUS Fee, in combination with other regulatory fees and fines, do not
exceed the Exchange's total projected Regulatory Costs. The Exchange
proposes to reduce the Gross FOCUS Fee because it believes that if the
fee is not adjusted, Gross FOCUS Fee revenue to the Exchange year-over-
year could exceed a material portion of the Exchange's Regulatory
Costs. The Exchange's position is based on its periodic analysis of
actual and anticipated costs to fund its regulatory program and revenue
to offset those costs, including the Gross FOCUS Fee, and takes into
consideration both that the last Gross FOCUS Fee adjustment was more
than three years ago, and the projected regulatory spending landscape
going forward. Moreover, the Exchange believes that a five-month waiver
rather than adjusting the fee would most efficiently accomplish the
goal of reasonably ensuring that Gross FOCUS Fee collection does not
exceed anticipated Regulatory Costs, and allow for further
consideration of the appropriate Gross FOCUS Fee rate going forward.
The Exchange would announce the proposed waiver of the Gross FOCUS
Fee by Trader Update.
Finally, as noted above, the Exchange adopted the current Gross
FOCUS Fee of $0.11 per $1,000 Gross FOCUS Revenue in October 2020,
effective January 1, 2021. Given that the new rate was not proposed to
be implemented until January 1, 2021, both rates were reflected in the
Price List. The Exchange proposes to delete as obsolete the old rate
and the language following the current $0.11 rate that reads ``as of
January 1, 2021.''
The proposed change is not otherwise intended to address 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,\6\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\7\ 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.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4) & (5).
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The Proposed Change Is Reasonable
The Exchange believes the proposed fee change is reasonable because
it would help ensure that revenue collected from the Gross FOCUS Fee
does not exceed a material portion of the Exchange's projected
Regulatory Costs. The Exchange has targeted the Gross FOCUS Fee to
generate revenues that would be less than or equal to the Exchange's
regulatory costs, which is consistent with both Rule 129 and the
Commission's view that regulatory fees be used for regulatory purposes.
As noted above, the principle that the Exchange may only use regulatory
fees ``to fund the legal, regulatory, and surveillance operations'' of
the Exchange is reflected in the Exchange's operating agreement.\8\ In
this regard, the Gross FOCUS Fee has been calculated to recover a
material portion, but not all, of the Exchange's Regulatory Costs. As
also noted above, based on the Exchange's recent review of current and
projected regulatory costs and Gross FOCUS Fee collections, a five-
month waiver of the Gross FOCUS Fee, which was last adjusted more than
three years ago, would be the most efficient way to lessen the
potential for generating excess funds that may otherwise occur using
the current rate and allow for further consideration of the appropriate
Gross FOCUS Fee rate going forward. The Exchange thus believes that the
proposed waiver would be a fair and reasonable method for ensuring that
the amounts collected from the Gross FOCUS Fee, in combination with
other regulatory fees and fines, do not potentially exceed Regulatory
Costs. The Exchange further believes that resuming the current rate as
of March 1, 2025 would be reasonable because it would permit the
Exchange to resume assessing the Gross FOCUS Fee in a way that is
designed to recover a material portion, but not all, of the Exchange's
projected Regulatory Costs. The Exchange would continue monitoring
Regulatory Costs in advance of the fee resumption next year and, if the
Exchange determines that the rate should be further modified to help
ensure that Gross FOCUS Fee collections would not exceed a material
portion of Regulatory Costs, would
[[Page 86392]]
make an appropriate rule filing with the Commission.
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\8\ See note 4, supra.
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The Exchange further believes that the proposed deletion of
references to a superseded Gross FOCUS Fee would increase the clarity
and transparency of the Exchange's rules and remove impediments to and
perfect the mechanism of a free and open market by ensuring that
persons subject to the Exchange's jurisdiction, regulators, and the
investing public could more easily navigate and understand the Exchange
rules. The Exchange further believes that the proposed change would not
be inconsistent with the public interest and the protection of
investors because investors will not be harmed and in fact would
benefit from increased clarity, thereby reducing potential confusion.
The Proposal Is an Equitable Allocation of Fees
The Exchange believes its proposal is an equitable allocation of
fees among its market participants. The Exchange further believes that
the proposed Gross FOCUS Fee waiver would benefit all member
organizations because all member organizations would be eligible for
the waiver, and would benefit from the waiver, on full and equal terms.
For the same reasons, the proposed waiver neither targets nor will it
have a disparate impact on any particular category of market
participant. All member organizations would qualify for the waiver of
the Gross FOCUS Fee on an equal and non-discriminatory basis. The
Exchange also believes that recommencing the Gross FOCUS Fee effective
March 1, 2025, at the current rate, unless the Exchange determines it
would be necessary to further adjust the fee, is equitable because the
Gross FOCUS Fee would resume applying to all member organizations on an
equal basis.
The Exchange further believes the proposed change supports an
equitable allocation of fees and credits among its market participants
because it would eliminate obsolete text from the Price List describing
pricing that is no longer applicable to any market participants.
Accordingly, the Exchange believes the proposal would impact all
similarly situated member organizations on an equal basis. The Exchange
also believes that the proposed change would promote investor
protection and the public interest because the deletion of superseded
fees from the Price List would enhance the clarity of the Price List
and reduce confusion regarding fees and credits currently applicable to
market participants who transact on the Exchange.
The Proposal Is Not Unfairly Discriminatory
The Exchange believes that the proposal is not unfairly
discriminatory. The proposed waiver of the Gross FOCUS Fee would
benefit all similarly-situated market participants on an equal and non-
discriminatory basis. Moreover, the proposal neither targets nor will
it have a disparate impact on any particular category of market
participant. The proposed fee change is designed to pause collection of
a fee that applies to member organizations on an equal and non-
discriminatory basis, waiver of which would apply to and benefit all
member organizations equally. The Exchange also believes that
recommencing the Gross FOCUS Fee on March 1, 2025 at the current rate,
unless the Exchange determines it would be necessary to further adjust
the rate to ensure that collections do not exceed a material portion of
its Regulatory Costs, is not unfairly discriminatory because the
resumed fee would apply equally to all member organizations.
In addition, the proposed elimination of obsolete pricing would
affect all market participants on an equal and non-discriminatory
basis, as the fee with which such pricing is associated is no longer
available to any market participants. The Exchange also believes that
the proposed change would protect investors and the public interest
because the deletion of superseded pricing programs would facilitate
market participants' understanding of the pricing currently applicable
on the Exchange.
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,\9\ 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.
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\9\ 15 U.S.C. 78f(b)(8).
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Intramarket Competition. The Exchange believes the proposed fee
change would not impose an undue burden on competition as the fee
waiver would apply to all member organizations on an equal and non-
discriminatory basis. The Exchange believes that the proposed waiver
would also not place certain market participants at an unfair
disadvantage because all member organizations would be eligible for the
same waiver. For the same reasons, the proposed fee waiver neither
targets nor will it have a disparate impact on any particular category
of market participant. All similarly-situated member organizations
would be eligible for the proposed waiver. The Exchange also believes
recommencing the Gross FOCUS Fee on March 1, 2025 at the same current
rate (unless the Exchange determines it necessary at that time to
adjust the fee to ensure that collections do not exceed a material
portion of its Regulatory Costs) would not impose an undue burden on
competition because the proposed rate would apply equally to all member
organizations subject to the Gross FOCUS Fee and would permit the
Exchange to resume assessing a fee that is designed to recover a
material portion, but not all, of the Exchange's projected Regulatory
Costs.
Intermarket Competition. The proposed fee change is not designed to
address any competitive issues. Rather, the proposed change is designed
to help the Exchange adequately fund its regulatory activities while
seeking to ensure that total collections from regulatory fees do not
exceed total Regulatory Costs.
Finally, that portion of the proposal that relates to elimination
of a reference to a superseded fee would not have any impact on intra-
or inter-market competition because the proposed change is solely
designed to enhance the clarity and transparency of the Price List and
alleviate possible customer confusion that may arise from inclusion of
a reference to a superseded fee.
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
Pursuant to Section 19(b)(3)(A)(ii) of the Act,\10\ and Rule 19b-
4(f)(2) thereunder \11\ the Exchange has designated this proposal as
establishing or changing a due, fee, or other charge imposed on any
person, whether or not the person is a member of the self-regulatory
organization, which renders the proposed rule change effective upon
filing. 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
[[Page 86393]]
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act.
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4.
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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 [email protected]. Please include
file number SR-NYSE-2024-66 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-NYSE-2024-66. 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
a.m. and 3 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-NYSE-2024-66, and should be
submitted on or before November 20, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-25142 Filed 10-29-24; 8:45 am]
BILLING CODE 8011-01-P