FR 2021-03215

General Summary

The document is a notice from the NYSE National, Inc. outlining a proposed update to its fee and rebate schedule. This update seeks to enhance the attraction of orders that both provide and remove liquidity from the exchange. By offering different criteria for qualification, the exchange aims to incentivize ETP Holders—essentially participants in the trade of exchange-traded products—by offering improved execution opportunities. The document frames these changes within the context of a highly competitive equity trading market where firms can choose from multiple exchanges to conduct their trading activities.

Significant Issues and Concerns

One of the primary challenges in the document lies in its use of complex and technical language, which might be inaccessible to ETP Holders and other stakeholders who are not deeply familiar with securities and exchange terminologies. This complexity could obscure the understanding of the fee structure changes and the implications for participants.

Moreover, the document uses extensive financial jargon and regulatory references that could confuse average readers. There is a significant emphasis on the competitive dynamics of the market without providing concrete examples, which may leave the analysis feeling vague and untailored. The intricate criteria involving multiple percentage thresholds and share counts could also lead to potential misunderstandings.

Additionally, the document would benefit from more clear explanations regarding data limitations, instead of ambiguous phrases like "without having a view of ETP Holders' activity on other exchanges."

Impact on the Public

For the general public, the changes proposed by the NYSE National, Inc. are unlikely to have a direct impact unless they are involved in trading or investing through exchange-traded funds. However, it does highlight how regulatory decisions and fee structures can impact the larger financial ecosystem. A more vibrant and competitive trading environment could potentially lead to better pricing for investors, reflecting market efficiencies.

Impact on Specific Stakeholders

For ETP Holders, these proposed changes could present both opportunities and challenges. The new fee structure aims to encourage more liquidity provision and engagement with the NYSE National exchange, which could be beneficial for those who are able to meet the new criteria. These participants might see enhanced execution opportunities and possibly more favorable trading conditions.

On the downside, stakeholders may face difficulties adapting to the new fee structure due to its complexity and the need to adjust trading strategies accordingly. Firms must carefully assess whether they can meet the new thresholds to benefit from the tiered rates, which could entail additional operational adjustments.

In summary, while the proposal is crafted to increase competitiveness and favorable conditions on the NYSE National exchange, its complexity and technical nature present a barrier to immediate understanding and implementation by stakeholders. It reiterates the regulatory need to balance comprehensibility with intricate financial mechanisms aimed at enhancing market participation.

The document outlines proposed rule changes by NYSE National, Inc. regarding amendments to its Schedule of Fees and Rebates. This discussion is primarily about financial implications for ETP Holders—entities trading on the exchange—who either add or remove liquidity.

Financial References and Summary

The key financial components described include specific fees and rebates associated with the Adding and Removing Tiers. These fees have direct financial implications for ETP Holders.

• Adding Tier 1 currently charges a fee of $0.0020 per share for ETP Holders adding displayed orders in securities priced at $1.00 or more. For non-displayed orders, the fee is $0.0024 per share.

• Adding Tier 2 involves a fee of $0.0022 per share for adding displayed orders, also applicable to securities at $1.00 or more in value.

• Removing Tier 1 offers a rebate of $0.0030 per share for ETP Holders that meet certain criteria for removing liquidity from the exchange.

Relation to Identified Issues

The document presents complexities primarily in the form of detailed financial criteria and mechanisms such as percentage thresholds and share counts necessary to qualify for specific tiers. These complexities can lead to confusion among stakeholders who are not well-versed in financial jargon or the operational specifics of securities exchanges.

1. Complex Language and Stakeholder Confusion: The details involved in determining which tier-specific financial charges or rebates apply can be difficult to navigate. For example, the use of percentages like 0.25% or 0.18% of the US CADV as qualification measures may confuse ETP Holders unfamiliar with these terms or unable to easily calculate their ADV.

2. Detailed Financial Data: The document discusses market conditions and competitive analysis, which can overwhelm stakeholders simply looking for financial details relevant to their orders. The precise per-share fees and rebates should be clearly understood by ETP Holders to effectively respond to fee structure changes.

3. Understanding Financial Incentives: By proposing alternative means to qualify for reduced fees, NYSE National aims to encourage ETP Holders to engage more with the exchange. Understanding these incentives—and the additional criteria such as share counts—can be challenging without clear and simple communication.

Overall, the financial references within the document reveal efforts by NYSE National to make its platform more appealing through fee adjustments, though the complexity of these changes could obscure understanding for less experienced stakeholders. Simplifying the language and effectively illustrating how fees and rebates relate back to their trading activities could enhance transparency for all parties involved.