FR 2025-06414

Summary of the Document

The document in question is a formal notice regarding a proposed change by NYSE Arca, Inc., a major stock exchange, to its "Equities Fees and Charges." This proposed change, filed with the Securities and Exchange Commission (SEC), introduces a new fee structure for a specific trading strategy termed "Midpoint Ping." Essentially, this strategy allows traders to route orders through different exchanges within the NYSE Group, helping them achieve better pricing if they find matching orders at certain price points, known as the midpoint of a bid-ask spread. The intent is to make these opportunities more accessible, albeit with an added fee.

Under the proposed change, using this strategy will result in a fee of $0.0030 per share for stocks priced at $1.00 or more. For those priced under $1.00, the fee is set at 0.30% of the dollar value of the trade. This fee structure was put into effect immediately, and the SEC is soliciting public comments on it until May 7, 2025.

Significant Issues or Concerns

One primary issue is the use of technical jargon that may not be accessible to a general audience, such as terms like "MPL-IOC Orders" and references to specific regulatory rules. This complexity might deter stakeholders from fully understanding how changes could affect them. Additionally, the document presents references to external documents and websites through footnotes without providing direct context, making it harder for those unfamiliar with these resources to follow the discussion.

The document also assumes that its readers have a comprehensive understanding of market regulations, like Regulation NMS, which governs trading and can influence competitive dynamics. This detailed regulation underpins the changes mentioned but remains unexplained.

Furthermore, there is a lack of illustrative examples in the document that might help potential stakeholders, such as Exchange Traded Product (ETP) Holders, understand the financial implications of these fees on their activities.

Impact on the Public

For the general public, the document likely signifies a continuation of trends in financial markets where technology and complex strategies increasingly dictate trading operations. While this might lead to more efficient markets, the average person may struggle to find relevance or clarity in these technicalities without assistance or further explanation.

Impact on Specific Stakeholders

For stakeholders directly involved in trading on NYSE Arca, such as investors, brokers, and ETP Holders, the changes could have more immediate implications. Positively, this Midpoint Ping strategy provides enhanced options for achieving optimal trade execution by reaching midpoint liquidity on different exchanges. This could lead to potential cost efficiencies or more favorable trade outcomes.

Conversely, the newly introduced fees could impose additional costs on these stakeholders, especially smaller firms or individual traders for whom every fractional cost adds to operational expenses. The ability to opt in voluntarily is beneficial, but the economic pressure to remain competitive may drive more traders to adopt the strategy regardless of the additional expense.

Overall, while the proposed changes offer potentially advantageous trading opportunities within NYSE Group exchanges, they also include economic considerations that stakeholders must weigh against their trading strategies and financial goals. The broader implications for market fairness and competition remain dependent on the responses and adjustments from ETP Holders and competing exchanges.

The document discusses a proposal from NYSE Arca, Inc., a securities exchange, regarding changes to fees associated with a specific trading strategy known as the Midpoint Ping routing strategy. This proposal was filed with the Securities and Exchange Commission (SEC) and is aimed at updating the NYSE Arca Equities Fees and Charges.

Financial References in the Document

1. Routing Fees for Midpoint Ping Strategy The document specifies a new fee structure for orders routed via the Midpoint Ping routing strategy. For securities priced at or above $1.00, the fee is $0.0030 per share. For securities priced below $1.00, the fee is set at 0.30% of the Dollar Value of the security. These fees will apply to orders utilizing the Midpoint Ping routing strategy, which allows ETP Holders to route MPL-IOC Orders to other exchanges for potential execution.

2. Changes to Existing Fee Descriptions The proposal includes removing a parenthetical reference from Section VI of the current fee schedule. This section originally stipulated that fees applied solely to securities priced at $1.00 or above. This change suggests a broader application of the fee policy that now explicitly includes securities priced below $1.00, as reflected in the new fee structure.

3. Specification for Directed Orders The document also mentions an adjustment for Directed Orders routed to OneChronos LLC, clarifying that these fees specifically apply to orders where the security is priced at or above $1.00. Thus, this change adds precision to the applicability of fees based on security price thresholds.

Relation to Identified Issues

The technical language and references in the document, such as the specific trading strategy and associated rules, may pose challenges for individuals without specialized knowledge of securities exchanges. This challenge is compounded when trying to grasp the implications of financial changes without illustrative examples.

• Complex Terminology: Terms such as "Midpoint Ping routing strategy" and "MPL-IOC Orders" could make it difficult for a general audience to understand the fee structure's impact on their trading activities or financial obligations.

• Regulatory Framework: References to sections and rules like Rule 7.37-E(b)(9)(A) without context can hinder comprehension. These rules encapsulate the trading mechanisms that are directly tied to the fee impositions described.

• Financial Impacts Without Clear Examples: While the fees are stated, how they affect stakeholders like ETP Holders financially isn't illustrated with scenarios that demonstrate potential costs or savings based on typical trading volumes. This absence leaves stakeholders to conjecture on their own, making strategic planning more complex.

Overall, while the proposal delineates a clear change in financial allocations and obligations for those utilizing the routing strategy, its communication could benefit from simplified explanations and contextualized examples, enabling a broader audience to understand the practical financial implications.