[Federal Register Volume 84, Number 206 (Thursday, October 24, 2019)]
[Notices]
[Pages 57106-57129]
[FR Doc No: 2019-23167]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87350; File No. SR-NYSEArca-2019-63]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by
Amendment No. 1, To Make Permanent the Retail Liquidity Program Pilot,
Rule 7.44-E, Which Is Set To Expire on October 31, 2019, Notice of
Filing of Amendment No. 1, and Order Granting Limited Exemption
Pursuant to Rule 612(c) of Regulation NMS

October 18, 2019.

I. Introduction

    On September 4, 2019, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to make permanent Exchange Rule
7.44-E governing the Exchange's Retail Liquidity Program Pilot
(``Program''). The proposed rule change was published for comment in
the Federal Register on September 10, 2019.\3\ The Commission received
one comment letter on the proposed rule change.\4\ On October 11, 2019,
the Exchange filed Amendment No. 1 to the proposed rule change, which
supersedes and replaces

the original filing in its entirety.\5\ In connection with the proposed
rule change, the Exchange requests exemptive relief from Rule 612 of
Regulation NMS,\6\ which, among other things, prohibits a national
securities exchange from accepting or ranking orders priced greater
than $1.00 per share in an increment smaller than $0.01.\7\ The
Commission is publishing this notice to solicit comments on Amendment
No. 1 from interested persons, issuing this order approving the
proposed rule change, as modified by Amendment No. 1, on an accelerated
basis, and issuing this order granting to the Exchange a limited
exemptive relief pursuant to Rule 612(c) of Regulation NMS.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 86870 (September 10,
2019), 84 FR 47575 (``Notice'').
    \4\ See Letter from Bahram Kasmai, dated September 4, 2019
(stating ``Thank you very much. I would incresing [sic] my
information about Exchange.'').
    \5\ See infra Section V.
    \6\ 17 CFR 242.612(c).
    \7\ See Letter from Martha Redding, Associate General Counsel
and Assistant Secretary, New York Stock Exchange, dated September
12, 2019.
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II. Description of the Proposed Rule Change

    In its filing with the Commission, the Exchange 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 V 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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to make permanent Rule 7.44-E, which sets
forth the Exchange's pilot Retail Liquidity Program (the ``Program'').
In support of the proposal to make the pilot Program permanent, the
Exchange believes it is appropriate to provide background on the
Program and an analysis of the economic benefits for retail investors
and the marketplace flowing from operation of the Program.
Background
    In December 2013, the Commission approved the Program on a pilot
basis.\8\ The purpose of the pilot was to analyze data and assess the
impact of the Program on the marketplace. The pilot period was
originally scheduled to end on April 14, 2015. The Exchange filed to
extend the operation of the pilot on several occasions in order to
prepare this rule filing. The pilot is currently set to expire on
October 31, 2019.\9\
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    \8\ See Securities Exchange Act Release No. 71176 (December 23,
2013), 78 FR 79524 (December 30, 2013) (SR-NYSEArca-2013-107) (``RLP
Approval Order''). In addition to approving the Program on a pilot
basis, the Commission granted the Exchange's request for exemptive
relief from Rule 612 of Regulation NMS, 17 CFR 242.612 (``Sub-Penny
Rule''), which among other things prohibits a national securities
exchange from accepting or ranking orders priced greater than $1.00
per share in an increment smaller than $0.01. See id.
    In 2013, the Program's rules were set forth in NYSE Arca
Equities Rule 7.44. In connection with the Exchange's implantation
of Pillar, an integrated trading technology platform designed to use
a single specification for connecting to the equities and options
markets operated by NYSE Arca and its affiliates, New York Stock
Exchange LLC and NYSE American LLC, NYSE Arca Equities Rule 7.44 was
replaced by NYSE Arca Equities Rule 7.44P. See Securities Exchange
Act Release No. 76267 (October 26, 2015), 80 FR 66951 (October 30,
2015) (SR-NYSEArca-2015-56) (order approving equity trading rules
relating to the implementation of Pillar, including, among others,
NYSE Arca Equities Rule 7.44P); Securities Exchange Act Release No.
79078 (October 11, 2016), 81 FR 71559 (October 17, 2016) (SR-
NYSEArca-2015-135) (deleting obsolete rules following migration to
Pillar, including NYSE Arca Equities 7.44, and removing ``P''
modifier in NYSE Arca Equities Rule 7.44P). At the time, NYSE Arca
Equities was a wholly owned subsidiary of the Exchange. In 2017,
NYSE Arca Equities was merged with and into the Exchange and the
NYSE Arca Equities rules were integrated into the NYSE Arca rules in
order to create a single rulebook. The Program's rules were
accordingly relocated to NYSE Arca Rule 7.44-E. See Securities
Exchange Act Release No. 81419 (August 17, 2017), 82 FR 40044
(August 23, 2017) (SR-NYSEArca-2017-40) (Approval Order).
    \9\ See Securities Exchange Act Release No. 87153 (September 30,
2019), 84 FR 53188 (October 4, 2019) (SR-NYSEArca-2019-67)
(extending pilot to October 31, 2019). See also Securities Exchange
Act Release No. 86198 (June 26, 2019), 84 FR 31648 (July 2, 2019)
(SR-NYSEArca-2019-45) (extending pilot to September 30, 2019);
Securities Exchange Act Release No. 84773 (December 10, 2018), 83 FR
64419 (December 14, 2018) (SR-NYSEArca-2018-89) (extending pilot to
June 30, 2019); Securities Exchange Act Release No. 83538 (June 28,
2018), 83 FR 31210 (July 3, 2018) (SR-NYSEArca-2018-46) (extending
pilot to December 31, 2018); Securities Exchange Act Release No.
82289 (December 11, 2017), 82 FR 59677 (December 15, 2017) (SR-
NYSEArca-2017-137) (extending pilot to June 30, 2018); Securities
Exchange Act Release No. 80851 (June 2, 2017), 82 FR 26722 (June 8,
2017) (SR-NYSEArca-2017-63) (extending pilot to December 31, 2017);
Securities Exchange Act Release No. 79495 (December 7, 2016), 81 FR
90033 (December 13, 2016) (SR-NYSEArca-2016-157) (extending pilot to
June 30, 2017); Securities Exchange Act Release No. 78601 (August
17, 2016), 81 FR 57632 (August 23, 2016) (SR-NYSEArca-2016-113)
(extending pilot to December 31, 2016) as corrected by Securities
Exchange Act Release No. 78601 (August 17, 2016), 81 FR 63243
(September 14, 2016) (SR-NYSEArca-2016-113); Securities Exchange Act
Release No. 77424 (March 23, 2016), 81 FR 17523 (March 29, 2016)
(SR-NYSEArca-2016-47) (extending pilot to August 31, 2016);
Securities Exchange Act Release No. 75994 (September 28, 2015), 80
FR 59834 (October 2, 2015) (SR-NYSEArca-2015-84) (extending pilot to
March 31, 2016); and Securities Exchange Act Release No. 74572
(March 24, 2015), 80 FR 16705 (March 30, 2015) (SR-NYSEArca-2015-22)
(extending pilot to September 30, 2015).
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    The Exchange established the Program to attract retail order flow
to the Exchange, and allow such order flow to receive potential price
improvement.\10\ The Program is currently limited to trades occurring
at prices equal to or greater than $1.00 a share. The Program includes
NYSE Arca-listed securities and securities traded pursuant to unlisted
trading privileges (``UTP''), but excluding NYSE-listed (Tape A)
securities.
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    \10\ RLP Approval Order, 78 FR at 79525.
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    As described in greater detail below, under Rule 7.44-E, a new
class of market participant called Retail Liquidity Providers
(``RLPs'') \11\ and non-RLP Equity Trading Permit (``ETP'') Holders
\12\ are able to provide potential price improvement to retail investor
orders in the form of a non-displayed order that is priced better than
the best protected bid or offer (``PBBO''), called a Retail Price
Improvement Order (``RPI''). When there is an RPI in a particular
security, the Exchange disseminates an indicator, known as the Retail
Liquidity Identifier (``RLI''), that such interest exists. Retail
Member Organizations (``RMOs'') can submit a Retail Order to the
Exchange, which interacts, to the extent possible, with available
contra-side RPI and then may interact with other liquidity on the
Exchange or elsewhere, depending on the Retail Order's instructions.
The segmentation in the Program allows retail order flow to receive
potential price improvement as a result of their order flow being
deemed more desirable by liquidity providers.\13\
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    \11\ The Program also allows for RLPs to register with the
Exchange. However, any firm can enter RPI orders into the system.
Currently, no ETP Holders are registered as an RLP.
    \12\ NYSE Arca refers to its members as ETP Holders. See RLP
Approval Order, 78 FR at 79525, n.9.
    \13\ RLP Approval Order, 78 FR at 79528.
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    In approving the pilot, the Commission concluded that the Program
was reasonably designed to benefit retail investors by providing price
improvement opportunities to retail order flow. Further, while the
Commission noted that the Program would treat retail order flow
differently from order flow submitted by other market participants,
such segmentation would not be inconsistent with Section 6(b)(5) of the
Act,\14\ which requires that the rules of an exchange are not designed
to permit unfair discrimination. As the Commission recognized, retail
order segmentation was designed to create additional competition for
retail order flow, leading to additional retail order flow to the
exchange environment and ensuring that retail investors benefit from
the

better price that liquidity providers are willing to give their
orders.\15\
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    \14\ 15 U.S.C. 78f(b)(5).
    \15\ RLP Approval Order, 78 FR at 79528.
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    As discussed below, the Exchange believes that the Program data
supports these conclusions and that it is therefore appropriate to make
the pilot Program permanent.\16\ The Exchange notes that the Commission
recently approved on a permanent basis the substantially similar retail
liquidity programs operated on a pilot basis by New York Stock Exchange
LLC (``NYSE'') and Nasdaq BX, Inc. (``Nasdaq BX'').\17\ The Commission
also recently approved a third exchange's retail liquidity program that
had not been previously approved on a pilot basis.\18\
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    \16\ See note 8, supra. Rule 7.44-E has been amended several
additional times. See Securities Exchange Act Release No. 71780
(March 24, 2014), 79 FR 17623 (March 28, 2014) (SR-NYSEArca-2014-21)
(amending rule to provide that odd-lot interest priced between the
PBBO will trade together with other undisplayed interest according
to price-time priority); Securities Exchange Act Release No. 73329
(October 9, 2014), 79 FR 62227 (October 16, 2014) (SR-NYSEArca-2014-
115) (amending rule to provide that RPI that are not priced better
than the PBB or PBBO will not be rejected upon entry); Securities
Exchange Act Release No. 73529 (November 5, 2014), 79 FR 67210
(November 12, 2014) (SR-NYSEArca-2014-128) (amending rule to delete
reference to proprietary data feed in Rule 7.44E(j)); Securities
Exchange Act Release No. 76549 (December 3, 2015), 80 FR 76595
(December 9, 2015) (SR-NYSEArca-2015-115) (``Release No. 76549'')
(amending rule to distinguish between orders routed on behalf of
other broker-dealers and orders routed on behalf of introduced
retail accounts that are carried on a fully disclosed basis);
Securities Exchange Act Release No. 77236 (February 25, 2016), 81 FR
10943 (March 2, 2016) (SR-NYSEArca-2016-30) (amending rule to
clarify that Retail Orders may not be designated with a minimum
trade size).
    \17\ See Securities Exchange Act Release No. 85160 (February 15,
2019), 84 FR 5754 (February 22, 2019) (SR-NYSE-2018-28) (``Release
No. 85160'') (approving the New York Stock Exchange's Retail
Liquidity Program on a permanent basis and granting a limited
exemption to the Sub-Penny Rule); Securities Exchange Act Release
No. 86194 (June 25, 2019), 84 FR 31385 (July 1, 2019) (SR-NYSEArca-
2019-11) (approving Nasdaq BX's Retail Price Improvement Program on
a permanent basis and granting a limited exemption to the Sub-Penny
Rule).
    \18\ See Securities Exchange Act Release No. 86619 (August 9,
2019), 84 FR 41769 (August 15, 2019) (SR-IEX-2019-05).
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Description of Pilot Rule 7.44-E That Would Become Permanent
Definitions
    Rule 7.44-E(a) contains the following definitions:
     First, the term ``Retail Liquidity Provider'' (``RLP'') is
defined as a ETP Holder that is approved by the Exchange under the Rule
to act as such and to submit Retail Price Improvement Orders in
accordance with the Rule.\19\
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    \19\ See Rule 7.44-E(a)(1).
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     Second, the term ``Retail Member Organization'' (``RMO'')
is defined as an ETP Holder that has been approved by the Exchange to
submit Retail Orders.\20\
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    \20\ Id. at (a)(2).
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     Third, the term ``Retail Order'' means an agency order or
a riskless principal order meeting the criteria of FINRA Rule 5320.03
that originates from a natural person and is submitted to the Exchange
by an RMO, provided that no change is made to the terms of the order
with respect to price or side of market and the order does not
originate from a trading algorithm or any other computerized
methodology. A Retail Order may be an odd lot, round lot, or mixed
lot.\21\
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    \21\ Id. at (a)(3).
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     Finally, the term ``Retail Price Improvement Order'' means
non-displayed interest in NYSE Arca-listed securities and UTP
Securities, excluding NYSE-listed (Tape A) securities, that would trade
at prices better than the best protected bid (``PBB'') or best
protected offer (``PBO'') by at least $0.001 and that is identified as
a Retail Price Improvement Order in a manner prescribed by the
Exchange.\22\ The price of an RPI would be determined by an ETP
Holder's entry of RPI buy or sell interest into Exchange systems. RPIs
would remain undisplayed. An RPI that was not priced within the PBBO
would be rejected upon entry. A previously entered RPI that became
priced at or inferior to the PBBO would not be eligible to interact
with incoming Retail Orders, and such an RPI would cancel if a Retail
Order executed against all displayed interest ranked ahead of the RPI
and then attempted to execute against the RPI. If not cancelled, an RPI
that was no longer priced at or inferior to the PBBO would again be
eligible to interact with incoming Retail Orders. An RPI must be
designated as either a PL or MPL Order, and an order so designated
would interact with only Retail Orders.
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    \22\ Id. at (a)(4). An RPI remains non-displayed in its
entirety, is ranked Priority 3--Non-Display Orders. See id. at
(a)(4)(A). Exchange systems will monitor whether RPI buy or sell
interest is eligible to trade with incoming Retail Orders. An RPI to
buy (sell) with a limit price at or below (above) the PBB (PBO) or
at or above (below) the PBO (PBB) will not be eligible to trade with
incoming Retail Orders to sell (buy), and such an RPI will cancel if
a Retail Order to sell (buy) trades with all displayed liquidity at
the PBB (PBO) and then attempts to trade with the RPI. If not
cancelled, an RPI to buy (sell) with a limit price that is no longer
at or below (above) the PBB (PBO) or at or above (below) the PBO
(PBB) will again be eligible to trade with incoming Retail Orders.
See id. at (a)(4)(B). For securities to which it is assigned, an RLP
may only enter an RPI in its RLP capacity. An RLP is permitted, but
not required, to submit RPIs for securities to which it is not
assigned, and will be treated as a non-RLP ETP Holder for those
particular securities. Additionally, ETP Holders other than RLPs are
permitted, but not required, to submit RPIs. See id. at (a)(4)(C).
Finally, an RPI may be an odd lot, round lot, or mixed lot. An RPI
must be designated as either a Limit Non-Displayed Order or MPL
Order, and an order so designated will interact with incoming Retail
Orders only and will not interact with either a Type 2-Retail Order
Day or Type 2-Retail Order Market that is resting on the NYSE Arca
Book. See id. at (a)(4)(D).
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    RLPs and other liquidity providers \23\ and RMOs could enter odd
lots, round lots or mixed lots as RPIs and as Retail Orders,
respectively. As discussed below, RPIs would be ranked and allocated
according to price and time of entry into Exchange systems and
therefore without regard to whether the size entered was an odd lot,
round lot or mixed lot. Similarly, Retail Orders would interact with
RPIs according to the priority and allocation rules of the Program and
without regard to whether they were odd lots, round lots or mixed lots.
Finally, Retail Orders could be designated as Type 1 or Type 2 without
regard to the size of the lot. RPIs would interact with Retail Orders
as follows; a more detailed priority and order allocation discussion is
below. An RPI would interact with Retail Orders at the level at which
the RPI was priced as long as the minimum required price improvement
was produced. Accordingly, if RPI sell interest was entered with a
$10.098 offer while the PBO was $10.11, the RPI could interact with the
Retail Order at $10.098, producing $0.012 of price improvement.
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    \23\ A Market Maker (``MM'') or Lead Market Maker (``LMM'')
would be permitted to enter RPIs for securities in which they were
not registered as an MM or LMM; however, the MM or LMM would not be
eligible for execution fees that are lower than non-RLP rates for
such securities.
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RMO Qualifications and Application Process
    Under Rule 7.44-E(b), any ETP Holder \24\ can qualify as an RMO if
it conducts a retail business or routes \25\ retail orders on behalf of
another broker-dealer. For purposes of Rule 7.44-E(b), conducting a
retail business includes carrying retail customer accounts on a fully
disclosed basis. To become an RMO, an ETP Holder must submit: (1) An
application form; (2) supporting documentation sufficient to
demonstrate the retail nature and characteristics of the applicant's
order flow; \26\ and (3) an

attestation, in a form prescribed by the Exchange, that any order
submitted by the member organization as a Retail Order would meet the
qualifications for such orders under Rule 7.44-E.\27\
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    \24\ An RLP may also act as an RMO for securities to which it is
not assigned, subject to the qualification and approval process
established by the proposed rule.
    \25\ See Release No. 76549, 80 FR at 76595.
    \26\ The supporting documentation may include sample marketing
literature, website screenshots, other publicly disclosed materials
describing the member organization's retail order flow, and any
other documentation and information requested by the Exchange in
order to confirm that the applicant's order flow would meet the
requirements of the Retail Order definition. See Rule 7.44-
E(b)(2)(B).
    \27\ See id. at (b)(2)(A)-(C).
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    An RMO must have written policies and procedures reasonably
designed to assure that it will only designate orders as Retail Orders
if all requirements of a Retail Order are met. Such written policies
and procedures must require the ETP Holder to (i) exercise due
diligence before entering a Retail Order to assure that entry as a
Retail Order is in compliance with the requirements of Rule 7.44-E, and
(ii) monitor whether orders entered as Retail Orders meet the
applicable requirements. If the RMO represents Retail Orders from
another broker-dealer customer, the RMO's supervisory procedures must
be reasonably designed to assure that the orders it receives from such
broker-dealer customer that it designates as Retail Orders meet the
definition of a Retail Order. The RMO must (i) obtain an annual written
representation, in a form acceptable to the Exchange, from each broker-
dealer customer that sends it orders to be designated as Retail Orders
that entry of such orders as Retail Orders will be in compliance with
the requirements of this rule, and (ii) monitor whether its broker-
dealer customer's Retail Order flow continues to meet the applicable
requirements.\28\
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    \28\ Id. at (b)(6).
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    Following submission of the required materials, the Exchange
provides written notice of its decision to the member organization.\29\
A disapproved applicant can appeal the disapproval by the Exchange as
provided in Rule 7.44-E(i), and/or reapply for RMO status 90 days after
the disapproval notice is issued by the Exchange. An RMO can also
voluntarily withdraw from such status at any time by giving written
notice to the Exchange.\30\
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    \29\ Id. at (b)(3).
    \30\ Id. at (b)(5).
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RLP Qualifications
    To qualify as an RLP under Rule 7.44-E(c), an ETP Holder must: (1)
Already be registered as a MM or LMM; (2) demonstrate an ability to
meet the requirements of an RLP; (3) have the ability to accommodate
Exchange-supplied designations that identify to the Exchange RLP
trading activity in assigned RLP securities; and (4) have adequate
trading infrastructure and technology to support electronic
trading.\31\
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    \31\ Id. at (c)(1)-(4). Because an RLP would only be permitted
to trade electronically, an ETP Holder's technology must be fully
automated to accommodate the Exchange's trading and reporting
systems that are relevant to operating as an RLP. If an ETP Holder
was unable to support the relevant electronic trading and reporting
systems of the Exchange for RLP trading activity, it would not
qualify as an RLP. An RLP may not use the Exchange supplied
designations for non-RLP trading activity at the Exchange.
Additionally, an ETP Holder will not receive credit for its RLP
trading activity for which it does not use its designation.
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RLP Application
    Under Rule 7.44-E(d), to become an RLP, an ETP Holder must submit
an RLP application form with all supporting documentation to the
Exchange. The Exchange would determine whether an applicant was
qualified to become an RLP as set forth above.\32\ After an applicant
submitted an RLP application to the Exchange with supporting
documentation, the Exchange would notify the applicant ETP Holder of
its decision. The Exchange could approve one or more ETP Holders to act
as an RLP for a particular security. The Exchange could also approve a
particular ETP Holder to act as an RLP for one or more securities.
Approved RLPs would be assigned securities according to requests made
to, and approved by, the Exchange.\33\
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    \32\ Id. at (d)(1).
    \33\ Id. at (d)(2).
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    If an applicant was approved by the Exchange to act as an RLP, the
applicant would be required to establish connectivity with relevant
Exchange systems before the applicant would be permitted to trade as an
RLP on the Exchange.\34\ If the Exchange disapproves the application,
the Exchange would provide a written notice to the ETP Holder. The
disapproved applicant could appeal the disapproval by the Exchange as
provided in Rule 7.44-E(i) and/or reapply for RLP status 90 days after
the disapproval notice was issued by the Exchange.\35\
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    \34\ Id. at (d)(3).
    \35\ Id. at (d)(4).
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Voluntary Withdrawal of RLP Status
    An RLP would be permitted to withdraw its status as an RLP by
giving notice to the Exchange under Rule 7.44-E(e). The withdrawal
would become effective when those securities assigned to the
withdrawing RLP were reassigned to another RLP. After the Exchange
received the notice of withdrawal from the withdrawing RLP, the
Exchange would reassign such securities as soon as practicable, but no
later than 30 days after the date the notice was received by the
Exchange. If the reassignment of securities took longer than the 30-day
period, the withdrawing RLP would have no further obligations and would
not be held responsible for any matters concerning its previously
assigned RLP securities.\36\
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    \36\ See id. at (e).
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RLP Requirements
    Under Rule 7.44-E(f), an RLP would only be permitted to enter RPIs
electronically and directly into Exchange systems and facilities
designated for this purpose and could only submit RPIs in their role as
an RLP for the securities to which it is assigned as RLP. An RLP
entering Retail Price Improvement Orders in securities to which it is
not assigned is not required to satisfy these requirements.\37\ In
order to be eligible for execution fees that are lower than non-RLP
rates, an RLP would be required to maintain (1) an RPI that was better
than the PBB at least five percent of the trading day for each assigned
security; and (2) an RPI that was better than the PBO at least five
percent of the trading day for each assigned security.\38\
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    \37\ Id. at (f)(1).
    \38\ An ETP Holder acting as an RLP for a security entering RPIs
into Exchange systems and facilities for securities to which it was
not assigned would not be eligible for execution fees that are lower
than non-RLP rates for securities to which it was not assigned.
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    An RLP's five-percent requirements would be calculated by
determining the average percentage of time the RLP maintained an RPI in
each of its RLP securities during the regular trading day, on a daily
and monthly basis.\39\ The Exchange would determine whether an RLP met
this requirement by calculating the following:
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    \39\ Id. at (f)(2).
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     The ``Daily Bid Percentage,'' calculated by determining
the percentage of time an RLP maintains a Retail Price Improvement
Order with respect to the PBB during each trading day for a calendar
month;
     The ``Daily Offer Percentage,'' calculated by determining
the percentage of time an RLP maintains a Retail Price Improvement
Order with respect to the PBO during each trading day for a calendar
month;
     The ``Monthly Average Bid Percentage,'' calculated for
each RLP security by summing the security's ``Daily Bid Percentages''
for each trading day in a calendar month then dividing the resulting
sum by the total number of trading days in such calendar month; and
     The ``Monthly Average Offer Percentage,'' calculated for
each RLP security by summing the security's ``Daily Offer Percentage''
for each trading day in a calendar month and

then dividing the resulting sum by the total number of trading days in
such calendar month.
    Finally, only RPIs would be used when calculating whether an RLP is
in compliance with its five-percent requirements.\40\
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    \40\ Id. at (f)(2)(A)-(E).
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    The five-percent requirement is not applicable in the first two
calendar months a member organization operates as an RLP and takes
effect on the first day of the third consecutive calendar month the
member organization operates as an RLP.\41\
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    \41\ Id. at (f)(3).
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Failure of RLP To Meet Requirements
    Rule 7.44-E(g) addresses the consequences of an RLP's failure to
meet its requirements. If, after the first two months an RLP acted as
an RLP, an RLP fails to meet any of the requirements set forth in Rule
7.44-E(f) for an assigned RLP security for three consecutive months,
the Exchange could, in its discretion, take one or more of the
following actions:
     Revoke the assignment of any or all of the affected
securities from the RLP;
     revoke the assignment of unaffected securities from the
RLP; or
     disqualify the member organization from its status as an
RLP.\42\
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    \42\ Id. at (g)(1)(A)-(C).
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    The Exchange will determine if and when an ETP Holder is
disqualified from its status as an RLP. One calendar month prior to any
such determination, the Exchange notifies an RLP of such impending
disqualification in writing. When disqualification determinations are
made, the Exchange provides a written disqualification notice to the
member organization.\43\ A disqualified RLP could appeal the
disqualification as provided in proposed Rule 7.44-E(i) and/or reapply
for RLP status 90 days after the disqualification notice is issued by
the Exchange.\44\
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    \43\ Id. at (2).
    \44\ Id. at (3).
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Failure of RMO To Abide by Retail Order Requirements
    Rule 7.44-E(h) addresses an RMO's failure to abide by Retail Order
requirements. If an RMO designates orders submitted to the Exchange as
Retail Orders and the Exchange determines, in its sole discretion, that
those orders fail to meet any of the requirements of Retail Orders, the
Exchange may disqualify a member organization from its status as an
RMO.\45\ When disqualification determinations are made, the Exchange
will provide a written disqualification notice to the ETP Holder.\46\ A
disqualified RMO could appeal the disqualification as provided in
proposed Rule 7.44-E(i) and/or reapply for RMO status 90 days after the
disqualification notice is issued by the Exchange.\47\
---------------------------------------------------------------------------

    \45\ Id. at (h)(1).
    \46\ Id. at (2).
    \47\ Id. at (3).
---------------------------------------------------------------------------

Appeal of Disapproval or Disqualification
    Rule 7.44-E(i) describes the appeal rights of ETP Holders. An ETP
Holder that disputes the Exchange's decision to disapprove it under
Rule 7.44-E(b) or (d) or disqualify it under Rule 7.44-E(g) or (h) may
request, within five business days after notice of the decision is
issued by the Exchange, that a Retail Liquidity Program Panel (``RLP
Panel'') review the decision to determine if it was correct.\48\ The
RLP Panel would consist of the Chief Regulatory Officer (``CRO''), or a
designee of the CRO, and qualified Exchange employees.\49\ The RLP
Panel will review the facts and render a decision within the time frame
prescribed by the Exchange.\50\ The RLP Panel may overturn or modify an
action taken by the Exchange under the Rule. A determination by the RLP
Panel would constitute final action by the Exchange on the matter at
issue.\51\
---------------------------------------------------------------------------

    \48\ Id. at (i)(1). In the event a member organization is
disqualified from its status as an RLP pursuant to proposed Rule
107C(g), the Exchange would not reassign the appellant's securities
to a different RLP until the RLP Panel has informed the appellant of
its ruling. Id. at (i)(1)(A).
    \49\ Id. at (i)(2).
    \50\ Id. at (3).
    \51\ Id. at (4).
---------------------------------------------------------------------------

Retail Liquidity Identifier
    Under Rule 7.44-E(j), the Exchange disseminates an identifier
through the Consolidated Quotation System or the UTP Quote Data Feed,
as applicable, when RPI interest priced at least $0.001 better than the
PBB or PBO for a particular security is available in Exchange systems
(``Retail Liquidity Identifier''). The Retail Liquidity Identifier
shall reflect the symbol for the particular security and the side (buy
or sell) of the RPI interest, but shall not include the price or size
of the RPI interest.\52\
---------------------------------------------------------------------------

    \52\ Id. at (j).
---------------------------------------------------------------------------

Retail Order Designations
    Under Rule 7.44-E(k), a Retail Order may not be designated with a
``No Midpoint Execution'' Modifier or with a minimum trade size. Under
subsection (k), an RMO can designate how a Retail Order would interact
with available contra-side interest as follows:
     A Type 1-Retail Order to buy (sell) is a Limit IOC Order
that will trade only with available Retail Price Improvement Orders to
sell (buy) and all other orders to sell (buy) with a working price
below (above) the PBO (PBB) on the NYSE Arca Book and will not route.
The quantity of a Type 1-Retail Order to buy (sell) that does not trade
with eligible orders to sell (buy) will be immediately and
automatically cancelled. A Type-1 designated Retail Order will be
rejected on arrival if the PBBO is locked or crossed.\53\
---------------------------------------------------------------------------

    \53\ Id. at (k)(1).
---------------------------------------------------------------------------

     A Type 2-Retail Order may be a Limit Order designated IOC
or Day or a Market Order, and will function as follows:
    [cir] A Type 2-Retail Order IOC to buy (sell) is a Limit IOC Order
that will trade first with available Retail Price Improvement Orders to
sell (buy) and all other orders to sell (buy) with a working price
below (above) the PBO (PBB) on the NYSE Arca Book. Any remaining
quantity of the Retail Order will trade with orders to sell (buy) on
the NYSE Arca Book at prices equal to or above (below) the PBO (PBB)
and will be traded as a Limit IOC Order and will not route.\54\
---------------------------------------------------------------------------

    \54\ Id. at (k)(2)(A).
---------------------------------------------------------------------------

    [cir] A Type 2-Retail Order Day to buy (sell) is a Limit Order that
will trade first with available Retail Price Improvement Orders to sell
(buy) and all other orders to sell (buy) with a working price below
(above) the PBO (PBB) on the NYSE Arca Book. Any remaining quantity of
the Retail Order, if marketable, will trade with orders to sell (buy)
on the NYSE Arca Book or route, and if non-marketable, will be ranked
in the NYSE Arca Book as a Limit Order.\55\
---------------------------------------------------------------------------

    \55\ Id. at (k)(2)(B).
---------------------------------------------------------------------------

    [cir] A Type 2-Retail Order Market to buy (sell) is a Market Order
that will trade first with available Retail Price Improvement Orders to
sell (buy) and all other orders to sell (buy) with a working price
below (above) the NBO (NBB). Any remaining quantity of the Retail Order
will function as a Market Order.\56\
---------------------------------------------------------------------------

    \56\ Id. at (k)(2)(C).
---------------------------------------------------------------------------

Priority and Order Allocation
    Under Rule 7.44-E(l), RPI in the same security will be ranked
together with all other interest ranked as Priority 3--Non-Display
Orders. Odd-lot orders ranked as Priority 2--Display Orders will have
priority over orders ranked Priority 3--Non-Display Orders at each
price. Any remaining unexecuted RPI interest will remain available to
trade with other

incoming Retail Orders. Any remaining unfilled quantity of the Retail
Order will cancel, execute, or post to the NYSE Arca Book in accordance
with Rule 7.44-E(k).
    Examples of priority and order allocation are as follows:

    PBBO for security ABC is $10.00-$10.05.
    RLP 1 enters a Retail Price Improvement Order to buy ABC at
$10.01 for 500.
    RLP 2 then enters a Retail Price Improvement Order to buy ABC at
$10.02 for 50.
    RLP 3 then enters a Retail Price Improvement Order to buy ABC at
$10.03 for 500.

    An incoming Type 1-Retail Order to sell ABC for 1,000 would trade
first with RLP 3's bid for 500 at $10.03, because it is the best-priced
bid, then with RLP 2's bid for 500 at $10.02, because it is the next
best-priced bid. RLP 1 would not be filled because the entire size of
the Retail Order to sell 1,000 would be depleted. The Retail Order
trades with RPI Orders in price/time priority.
    However, assume the same facts above, except that RLP 2's Retail
Price Improvement Order to buy ABC at $10.02 was for 100. The incoming
Retail Order to sell 1,000 would trade first with RLP 3's bid for 500
at $10.03, because it is the best-priced bid, then with RLP 2's bid for
100 at $10.02, because it is the next best-priced bid. RLP 1 would then
receive an execution for 400 of its bid for 500 at $10.01, at which
point the entire size of the Retail Order to sell 1,000 would be
depleted.
    Assume the same facts as above, except that RLP 3's order was not
an RPI Order to buy ABC at $10.03, but rather, a non-displayed order to
buy ABC at $10.03. The result will be similar to the result immediately
above, in that the incoming Retail Order to sell 1,000 trades first
with RLP 3's non-displayed bid for 500 at $10.03, because it is the
best-priced bid, then with RLP 2's bid for 100 at $10.02, because it is
the next best-priced bid. RLP 1 then receives an execution for 400 of
its bid for 500 at $10.01, at which point the entire size of the Retail
Order to sell 1,000 is depleted.
    As a final example, assume the original facts, except that LMT 1
enters a displayed odd lot limit order to buy ABC at $10.02 for 60. The
incoming Retail Order to sell for 1,000 trades first with RLP 3's bid
for 500 at $10.03, because it is the best-priced bid, then with LMT 1's
bid for 60 at $10.02 because it is the next best-priced bid and is
ranked Priority 2--Display Orders and has priority over same-priced
RPIs. The incoming Retail Order would then trade 440 shares with RLP
2's bid for 500 at $10.02 because it is the next priority category at
that price, at which point the entire size of the Retail Order to sell
1,000 is depleted. The balance of RLP 2's bid would remain on the NYSE
Arca Book and be eligible to trade with the next incoming Retail Order
to sell.
    To demonstrate how the different types of Retail Orders would trade
with available Exchange interest, assume the following facts:

    PBBO for security DEF is $19.99-$20.01 (100 x 100).
    LMT 1 enters a Limit Order to buy DEF at $20.00 for 100.
    RLP 1 then enters a Retail Price Improvement Order to buy DEF at
$20.003 for 100,
    MPL 1 then enters a Midpoint Passive Liquidity Order to buy DEF
at $21.00 for 100.

    An incoming Type 2-Retail Order IOC to sell DEF for 300 at $20.00
would trade first with MPL 1's bid for 100 at $20.005, because it is
the best-priced bid, then with RLP 1's bid for 100 at $20.003, because
it is the next best-priced bid, and then with LMT 1's bid for 100 at
$20.00 because it is the next best-priced bid, at which point the
entire size of the Retail Order to sell 300 is depleted.
    Assume the same facts as above except the incoming order is a Type
2-Retail Order Day to sell DEF for 500 at $20.00. The Retail Order
would trade first with MPL 1's bid for 100 at $20.005, because it is
the best-priced bid, then with RLP 1's bid for 100 at $20.003, because
it is the next best-priced bid, and then with LMT 1's bid for 100 at
$20.00 because it is the next best-priced bid. The remaining balance of
the Retail Order is displayed on the NYSE Arca Book at $20.00 as a
Limit Order, resulting in a PBBO of $19.99-$20.00 (100 x 200).
    Assume the same facts as above except the incoming order is a Type
1-Retail Order to sell DEF for 300. The Retail Order would trade first
with MPL 1's bid for 100 at $20.005, because it is the best-priced bid,
and then with RLP 1's bid for 100 at $20.003. The remaining balance of
the Retail Order would be cancelled and not trade with LMT 1 because
Type 1-designated Retail Orders do not trade with interest on the NYSE
Arca Book other than non-displayed orders and odd-lot orders priced
better than the PBBO on the opposite side of the Retail Order.
    Finally, to demonstrate the priority of displayed interest over
Retail Price Improvement Orders, assume the following facts:

    PBBO for security GHI is $30.00--$30.05.
    RLP 1 enters a Retail Price Improvement Order to buy GHI at
$30.02 for 100.
    LMT 1 then enters a Limit Order to buy GHI at $30.02 for 100.
    New PBBO of $30.02-$30.05.
    RLP 2 then enters a Retail Price Improvement Order at $30.03 for
100.

    An incoming Type 2-Retail Order IOC to sell GHI for 300 at $30.01
would trade first with RLP 2's bid for 100 at $30.03, because it is the
best-priced bid, then with LMT 1 for 100 at $30.02 because it is the
next best-priced bid. The Retail Order would then attempt to trade with
RLP 1, but because RLP 1 was priced at the PBBO and no longer price
improving, RLP 1 will cancel. At that point, the remaining balance of
the Retail Order will cancel because there are no remaining orders
within its limit price.
    Assume the same facts as above except the incoming Retail Order is
for 200. The Retail Order would trade with RLP 2's bid for 100 at
$30.03, because it is the best-priced bid, then with LMT 1 for 100 at
$30.02 because it is the next best-priced bid. RLP 1 does not cancel
because the incoming Retail Order was depleted before attempting to
trade with RLP 1. RLP 1 would be eligible to trade with another
incoming Retail Order because it would be priced better than the
PBBO.\57\
---------------------------------------------------------------------------

    \57\ Id. at (l).
---------------------------------------------------------------------------

Rationale for Making Pilot Permanent
    In approving the Program on a pilot basis, the Commission required
the Exchange to ``monitor the scope and operation of the Program and
study the data produced during that time with respect to such issues,
and will propose any modifications to the Program that may be necessary
or appropriate.'' \58\ As part of its assessment of the Program's
potential impact, the Exchange posted core weekly and daily summary
data on the Exchanges' website for public investors to review,\59\ and
provided additional data to the Commission regarding potential investor
benefits, including the level of price improvement provided by the
Program. This data included statistics about participation, frequency
and level of price improvement.
---------------------------------------------------------------------------

    \58\ RLP Approval Order, 78 FR at 79529.
    \59\ See https://www.nyse.com/markets/liquidity-programs#nyse-nyse-mkt-rlp.
---------------------------------------------------------------------------

    In the RLP Approval Order, the Commission observed that the Program
could promote competition for retail order flow among execution venues,
and that this could benefit retail investors by creating additional
price improvement opportunities for marketable retail order flow, most
of which is currently executed in the Over-the-Counter (``OTC'')
markets without ever reaching

a public exchange.\60\ The Exchange sought, and believes it has
achieved, the Program's goal of attracting retail order flow to the
Exchange, and allowing such order flow to receive potential price
improvement. As the Exchange's analysis of the Program data below
demonstrates, the Program provided tangible price improvement to retail
investors through a competitive pricing process. The data also
demonstrates that the Program had an overall negligible impact on
broader market structure.\61\
---------------------------------------------------------------------------

    \60\ RLP Approval Order, 78 FR at 79528.
    \61\ See id. at 79529.
---------------------------------------------------------------------------

    NYSE Arca launched the Program during April 2014. Between June and
November 2014, the Program received orders totaling 4.3 billion shares,
providing retail investors with price improvement of $1.6 million. As
Table 1 below shows, during 2017, an average of 3.5 million shares were
executed in the Program each day. During 2018, this number rose to 8.9
million shares per day but has since dropped to 3.6 million shares per
day for the period May-July 2019. Total price improvement provided to
retail investors for the 2017-2018 period was $6.2 million. Price
improvement has been highly dependent on the mix of securities and
volume sent into the Program. During the 2017-2018 period, price
improvement was as low as $0.0015 and as high as $0.0055 per share.
There are several high-priced securities with spreads greater than
$0.01, which often received price improvement of a penny or more.
Overall, fill rates have largely been in the low-to-mid 20% range,
although there have been periods of fill rates north of 30% from
September-November 2017, when there was a smaller share of very large
orders.
BILLING CODE 8011-01-P
[GRAPHIC] [TIFF OMITTED] TN24OC19.000

    Table 2 shows the frequency of order sizes entered by RMOs. The
largest plurality of order types were round lot or smaller, ranging
between 35% in early 2017 to more than 50% of all RMO orders entered
during the summer of 2018. Very large orders (greater than 15,000
shares) accounted for less than 1% of all orders since September 2017.
However, as shown in Table 3, these typically accounted for 20-25% of
shares placed into the Program, and ranged above 50% of all orders in
early 2017. The composition of shares executed (Table 4) was more
evenly distributed and fill rates (Table 5) were much lower for the
largest order sizes.

[GRAPHIC] [TIFF OMITTED] TN24OC19.001

[GRAPHIC] [TIFF OMITTED] TN24OC19.002

[GRAPHIC] [TIFF OMITTED] TN24OC19.003

    Table 5 highlights that while the Exchange indicates when there is
price improving liquidity available on CQS, UTP and proprietary feeds,
not all customers necessarily read that flag. Beginning in December
2017, the Exchange believes that one customer began sending orders
without checking the flag, resulting in poor fill rates, even for
orders less than or equal to 100 shares. This is clearly evidenced by
the sharp drop in fill rates for orders of one round lot or less.

[GRAPHIC] [TIFF OMITTED] TN24OC19.004

    Table 6 details the development of order sizes received in the
Program over time. Program orders taking liquidity sent to the Exchange
averaged around 1,000 shares for the Program's recent history, with
median order size mostly around 400 shares. Liquidity providing orders
tend to be smaller, and mostly average well below 1,000 shares, with
the median below 200 shares most months. Since any firm can enter a
liquidity providing order, there may be multiple providers offering
liquidity inside the quote, allowing for high fill rates.

[GRAPHIC] [TIFF OMITTED] TN24OC19.005

[GRAPHIC] [TIFF OMITTED] TN24OC19.006

BILLING CODE 8011-01-C
    Table 7 shows that during the two most recent years, no security
maintained more than 5% of total volume in the program, and nearly two-
thirds of all securities that had executions in the program averaged
less than 0.25% share of consolidated trading. The Exchange notes that
these

statistics largely overstate the total size of the Program, since many
securities rarely or never receive an order in the Program.
    Although the Program provides the opportunity to achieve
significant price improvement, the Program has not generated
significant activity, relative to the overall market. The Program
competes with wholesalers and similar programs offered by, among
others, Cboe BYX Exchange, Inc. (``Cboe BYX''), and Nasdaq BX, the
latter of which has been approved on a permanent basis.\62\
---------------------------------------------------------------------------

    \62\ See note 17, supra. See also Securities Exchange Act
Release No. 86742 (August 23, 2019), 84 FR 45575 (August 29, 2019)
(SR-CboeBYX-2019-014) (filing to make permanent Cboe BYX Rule 11.24,
which sets forth that exchange's pilot Retail Price Improvement
Program).
---------------------------------------------------------------------------

Difference in Differences Analysis
    The Exchange also analyzed market quality and market share impact
by using the difference in differences statistical technique.
Difference in differences (``DID'') requires studying the differential
effect of data measured between a treatment group and a control group.
The two groups are measured during two or more different time periods,
usually a period before ``treatment'' and at least one time period
after ``treatment'', that is, a time period after which the treatment
group is impacted but the control group is not. The assumption is that
the control group and the treatment group are otherwise impacted
equally by extraneous factors, i.e., that the other impacts are
parallel. For example, when measuring average quoted spreads, if
spreads increase by ten basis points in the control group, and 12 basis
points in the test group, the assumption would be that the two basis
point differential was caused by the treatment.
    Because all Tape B and Tape C securities (all securities not listed
on the NYSE) are eligible to participate in the Program, a natural
control group does not exist for the securities participating in the
Program. Hence, there is a possibility that the lack of activity in the
Program could have been the result of factors that DID cannot measure.
Nonetheless, to produce a control group, the Exchange identified the 50
most active ticker securities in the Program as measured by share of
consolidated volume following launch of the Program. The Exchange then
determined a matched sample, without replacement, using consolidated
volume, volume weighted average price, and consolidated quoted spread
in basis points. The matched sample compared the 50 most active ticker
securities in the Program with all securities that had very low Program
volume. The matching criteria minimized the sum of the squares of the
percent difference between the top 50 active ticker securities and
potential matches. The best 25 matches were then selected.
    The Exchange executed two DID analyses:
    1. Six months prior to launch of the Program (November 2013-April
2014) compared to six months following launch, excluding the first
month of the Program (June 2014-November 2014) for securities with a
consolidated average daily volume (``CADV'') of at least 500,000 during
the pre-treatment and treatment periods. Note that the program launched
during April 2014, but there were only six retail taking orders entered
during that month.
    2. Six months prior to launch of the Program (November 2013-April
2014) compared to all of 2017 and 2018 for securities with a CADV of at
least 500,000 during the pre-treatment and treatment periods.
    Because there was no natural control group, the Exchange employed
flexible matching criteria. In addition to the CADV restrictions, the
Exchange utilized a control versus treatment CADV ratio of 3:1, a
volume weighted average price (``VWAP'') of 2:1, and a spread of 2:1.
The Exchange also required potential control group stocks to have a
share of Program trading less than 1/10th of the lowest of the top 50
securities for the first trading period. The Exchange excluded
securities that were in the test groups of the Tick Size Pilot Program
\63\ from consideration in matching securities for the DID analysis of
the 2017-2018 period. Preferred stocks, warrants and rights were
excluded from the DID analysis for both periods. Finally, because the
Program is only valid for stocks trading at or above $1.00, any
security with a low price during the pre-treatment or the treatment
period below $1.00 was also excluded. Securities could not be listed on
the NYSE during the pre-treatment period or during the treatment
period.
---------------------------------------------------------------------------

    \63\ The Tick Size Pilot Program is a National Market System
(``NMS'') plan designed to allow the Commission, market participants
and the public to assess the impact of wider minimum quoting and
trading increments--or tick sizes--on the liquidity and trading of
the common stocks of certain small capitalization companies.
---------------------------------------------------------------------------

    The Exchange selected the top 25 securities by minimum differences
as described above.
DID Results for Period Around Program Launch
    As noted above, the Program launched in April 2014. Only six orders
RMO orders were entered during the month. The Exchange selected
November 2013-April 2014 to represent the pre-launch period. To allow
for Program adoption, the Exchange excluded May 2014 and chose June
2014-November 2014 to represent the post-launch period. Tables 8A and
8B show key attributes for the securities selected for the first
matched sample.
BILLING CODE 8011-01-P

[GRAPHIC] [TIFF OMITTED] TN24OC19.007

[GRAPHIC] [TIFF OMITTED] TN24OC19.008

    For the period 2017-2018 matched sample, we excluded securities
that were part of the Tick Size Pilot Program. Inclusion of those
securities could have resulted in exogenous influences skewing the
analyses.

[GRAPHIC] [TIFF OMITTED] TN24OC19.009

[GRAPHIC] [TIFF OMITTED] TN24OC19.010

BILLING CODE 8011-01-C
    The Exchange's DID analysis utilized the 25 treated and 25 control
securities noted above for the following statistics:
     Time-weighted NYSE Arca quoted spreads in basis points.
     Time-weighted NYSE Arca quoted spreads in dollars and
cents.
     Time-weighted consolidated quoted spreads in basis points.
     Time-weighted consolidated quoted spreads in dollars and
cents.
     Trade Reporting Facility (``TRF'') share of volume during
regular trading hours, excluding auctions.
     TRF share of volume, full day, including auctions.
     NYSE Arca share of volume during regular trading hours,
excluding auctions.
     NYSE Arca share of volume, full day, including auctions.
     Trade-to-trade price change in basis points.
    The Exchange calculated the DID regression for each of these
statistics using the following formula:

Yit = B0 + B1T + B2I +
B3IT

where T equals zero during the pre-period and equals one during the
treatment period, and where I is the Intervention.

    As Table 10 shows, only one statistic showed any significance, and
that at the weak 90% level. NYSE Arca market share during regular hours
trading, excluding auctions, increased during the early comparison
period.

[GRAPHIC] [TIFF OMITTED] TN24OC19.011

[GRAPHIC] [TIFF OMITTED] TN24OC19.012

[GRAPHIC] [TIFF OMITTED] TN24OC19.013

    Table 11 details results for the DID analysis comparing the pre-
Program period during 2013-2014 with trading in 2017 and 2018. The DID
regression shows, in all spread cases, that spreads, adjusted for
control group versus treatment group, resulted in favorable spread
changes. With a 90% confidence level, NYSE Arca basis point spreads
fell relative to the treatment group and NYSE Arca dollar-spreads fell
with 95% confidence levels. Consolidated spreads in basis points also
fell according to the regression, but were not statistically
significant. Dollar consolidated spreads did drop, but with a 90%
confidence level. NYSE Arca regular hours share showed an increase in
share at the 99.9% confidence level. This is not surprising since, as
noted earlier, the Program achieved about 8% share of NYSE Arca trading
during 2017. As discussed below, the more significant drops in dollar-
based spreads were expected as the nature of our matching effort,
resulting in the selection of stocks that saw price decreases, impacted
the spread calculations, and also may have impacted the NYSE Arca
regular hours share.
    As Table 12 shows, lower priced stocks tend to more likely trade on
the TRF as well as in the Program. Even with the large share increase
in NYSE Arca, TRF share also rose, highlighting the impact of the out-
of-sample matching criteria. As noted in the analysis of the NYSE
Retail Program, the matching criteria used tends to focus on stocks
with price drops, so the Exchange expected to see a fall in currency-
based spreads.\64\ Unlike the NYSE's experience, however, the price
differences were more muted from this

matching exercise, which allowed for a small regression-calculated drop
in in basis points spreads as well. Average spreads in basis points did
increase slightly, both for treatment and control securities, but the
DID analysis resulted in a favorable regression for Treatment stocks
compared to Control stocks. The impact of the matching criteria is
still present. Dollar spreads for treatment stocks fell from $0.018 to
$0.017 as VWAP dropped to $34.48 from $40.05. Control stock VWAPS rose
to $4.25 from $38.32, resulting in dollar spreads rising to $0.030 from
$0.019. Basis points spreads increased for control stocks (5.59 to
5.69) and for treatment stocks (5.70 versus 5.38), but the basis point
increase was due to stocks being tick constrained as prices fell during
the post-period. In any event, the regression implicated better
performance for Treatment stocks than control group securities.
---------------------------------------------------------------------------

    \64\ See Release No. 85160, 84 FR at 5768.
---------------------------------------------------------------------------

    All Tape B and Tape C Exchange-traded securities were eligible to
participate in the program when it launched in 2014. Because of this
factor, there was not a true control group for the Exchange to employ
in its DID analysis. Instead, for purposes of making the Program
permanent, the Exchange created an artificial control group and
treatment group by identifying a matched sample based on the securities
with the highest share of consolidated volume in the Program and
matching these securities based on volume weighted average price, time-
weighted quoted spread and CADV during the pre-treatment period
(subject to the criteria noted above). By necessity, however, the
percentage of activity in the Program itself had to be based on the
post-treatment period.
    This methodology provided several insights and permitted the
Exchange to offer a more thorough analysis of the Program's impact.
However, the Exchange believes that selection of securities with the
highest share of consolidated volume in the Program for the treatment
group created a biased treatment group. Securities with lower prices
tend to trade more actively in the TRF as well as in the Program (Table
12). The percentage value of on low-price stocks provides greater
savings to investors. For example, $0.0010 price improvement per share
for a $5.00 stock saves an investor $2.00 per $10,000 invested. The
same per share price improvement on a $50 stock is worth just $0.20.
Table 12 shows this relationship for the 2017-2018 treatment period
used in the analysis for securities eligible for the Program.
BILLING CODE 8011-01-P

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[GRAPHIC] [TIFF OMITTED] TN24OC19.015

[GRAPHIC] [TIFF OMITTED] TN24OC19.016

[GRAPHIC] [TIFF OMITTED] TN24OC19.017

BILLING CODE 8011-01-C
    Tables 13 and 14 provide details of the changes in VWAPs, dollar-
based and basis points-based spreads for both the early comparison
period and the late comparison period. As shown by the last two columns
in Table 13, there was virtually no difference in spreads or VWAPs both
pre- and post-treatment during the early comparison period. However, in
the case of the treated 2017-2018 study, when compared to November
2013-April 2014 pre-treatment period, there was an average price
increase in control securities of 42%, compared to a drop of 14% for
the treated stocks. This resulted in a small drop in dollar spreads and
an increase in spreads in basis points for the treated stocks, while
control stocks saw a small increase in percentage spreads and a larger
rise in dollar spreads. Additionally, several of the treatment
securities had average spreads during the pre-period near $0.01, the
minimum, meaning a price drop was reflected solely in the spreads
calculated in basis points and these stocks were tick-constrained.
    In conclusion, the Exchange believes that the Program was a
positive experiment in attracting retail order flow to a public
exchange. The order flow the Program attracted to the Exchange provided
tangible price improvement to retail investors through a competitive
pricing process unavailable in non-exchange venues. As such, despite
the low volumes, the Exchange believes that the Program satisfied the
twin goals of attracting retail order flow to the Exchange and allowing
such order flow to receive potential price improvement. Moreover, the
Exchange believes that the data collected during the Program supports
the conclusion that the Program's overall impact on market quality and
structure was not negative. Although the results of the Program
highlight the substantial advantages that broker-dealers retain when
managing the benefits of retail order flow, the Exchange believes that
the level of price improvement guaranteed by the Program justifies
making the Program permanent. The Exchange accordingly believes that
the pilot Program's rules, as amended, should be made permanent.
    The Exchange notes that the proposed change is not otherwise
intended to address any other issues and the Exchange is not aware of
any problems that member organizations would have in complying with the
proposed rule change.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the requirements of Section 6(b) of the

Act,\65\ in general, and Section 6(b)(5) of the Act,\66\ in particular,
in that it is designed to remove impediments to and perfect the
mechanism of a free and open market and a national market system, to
promote just and equitable principles of trade, and, in general, to
protect investors and the public interest and not to permit unfair
discrimination between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \65\ 15 U.S.C. 78f(b).
    \66\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposal is consistent with these
principles because it seeks to make permanent a pilot and associated
rule changes that were previously approved by the Commission as a pilot
for which the Exchange has subsequently provided data and analysis to
the Commission, and that this data and analysis, as well as the further
analysis in this filing, shows that the Program has operated as
intended and is consistent with the Act. The Exchange also believes
that the proposed rule change is consistent with these principles
because it would increase competition among execution venues, encourage
additional liquidity, and offer the potential for price improvement to
retail investors. Furthermore, as noted, similar programs instituted by
NYSE and Nasdaq BX have recently been approved by the Commission to
operate on a permanent basis.\67\ The Exchange believes that its
analysis, as well as the analysis conducted by NYSE and Nasdaq BX in
their proposals for permanent approval, show that retail price
improvement programs do not negatively impact market structure, and can
therefore provide benefits to retail investors without negatively
impacting the broader market.
---------------------------------------------------------------------------

    \67\ See note 17, supra. As also noted above, the Commission
also recently approved a third exchange's retail liquidity program
that had not been previously approved on a pilot basis. See note 18,
supra.
---------------------------------------------------------------------------

    The Exchange also believes the proposed rule change is designed to
facilitate transactions in securities and to remove impediments to, and
perfect the mechanisms of, a free and open market and a national market
system because making the Program permanent would attract retail order
flow to a public exchange and allow such order flow to receive
potential price improvement. The data provided by the Exchange to the
Commission staff demonstrates that the Program provided tangible price
improvement to retail investors through a competitive pricing process
unavailable in non-exchange venues and otherwise had an insignificant
impact on the marketplace. The Exchange believes that making the
Program permanent would encourage the additional utilization of, and
interaction with, the NYSE and provide retail customers with an
additional venue for price discovery, liquidity, competitive quotes,
and price improvement. For the same reasons, the Exchange believes that
making the Program permanent would promote just and equitable
principles of trade and remove impediments to and perfect the mechanism
of a free and open market.
    Additionally, the Exchange believes the proposed rule change is
designed to facilitate transactions in securities and to remove
impediments to, and perfect the mechanisms of, a free and open market
and a national market system because the competition promoted by the
Program facilitates the price discovery process and potentially
generates additional investor interest in trading securities. Making
the Program permanent will allow the Exchange to continue to provide
the Program's benefits to retail investors on a permanent basis and
maintain the improvements to public price discovery and the broader
market structure. The data provided to the Commission demonstrates that
the Program provided tangible price improvement and transparency to
retail investors through a competitive pricing process.
    For the reasons stated above, the Exchange believes that making the
Program permanent would promote just and equitable principles of trade
and remove impediments to and perfect the mechanism of a free and open
market.
    Finally, as described further below in the Exchange's statement
regarding the burden on competition, the Exchange also believes that it
is subject to significant competitive forces and it would increase
competition among execution venues, encourage additional liquidity, and
offer the potential for price improvement to retail investors.
    For all of these reasons, the Exchange believes that the proposal
is consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
believes that making the Program permanent would continue to promote
competition for retail order flow among execution venues. The Exchange
also believes that making the Program permanent will promote
competition between execution venues operating their own retail
liquidity programs, including competition between the Program and
similar programs currently operated by NYSE and Nasdaq BX on a
permanent basis pursuant to a recently approved rule changes. Such
competition will lead to innovation within the marketplace, thereby
increasing the quality of the national market system and allowing
national securities exchanges to compete both with each other and with
off-exchange venues for order flow. Such competition ultimately
benefits investors, and in this case specifically retail investors by
providing multiple potential trading venues for the execution of their
order flow, consistent with the principles of Regulation NMS, which was
premised on promoting fair competition among markets. Finally, the
Exchange notes that it operates in a highly competitive market in which
market participants can easily direct their orders to competing venues,
including off-exchange venues. In such an environment, the Exchange
must continually review, and consider adjusting the services it offers
and the requirements it imposes to remain competitive with other U.S.
equity exchanges.
    For the reasons described above, the Exchange believes that the
proposed rule change reflects this competitive environment.

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. Discussion and Commission Findings

    After careful review, the Commission finds that the Exchange's
proposal, as modified by Amendment No.1, to make permanent the Retail
Liquidity Program Pilot, Rule 7.44-E, is consistent with the
requirements of the Exchange Act and the rules and regulations
thereunder applicable to a national securities exchange.\68\ In
particular, the Commission finds that the proposed rule change, as
modified by Amendment No. 1, is consistent with Sections 6(b)(5) \69\
and 6(b)(8) \70\ of the Exchange Act. Section 6(b)(5) of the Exchange
Act requires that the rules of a national securities exchange be
designed, among other things, to promote just and

equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system and,
in general, to protect investors and the public interest, and not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. Section 6(b)(8) of the Exchange Act requires that
the rules of a national securities exchange not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Exchange Act.
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    \68\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \69\ 15 U.S.C. 78f(b)(5).
    \70\ 15 U.S.C. 78f(b)(8).
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    As noted above, the Commission approved the Program on a pilot
basis to allow the Exchange and market participants to gain valuable
practical experience with the Program during the pilot period, and to
allow the Commission to determine whether modifications to the Program
were necessary or appropriate prior to any Commission decision to
approve the Program on a permanent basis.\71\ As set forth in the RLP
Approval Order, the Exchange agreed to provide the Commission with a
significant amount of data to assist the Commission's evaluation of the
Program prior to any permanent approval of the Program.\72\
Specifically, the Exchange represented that it would ``produce data
throughout the pilot, which will include statistics about
participation, the frequency and level of price improvement provided by
the Program, and any effects on the broader market structure.'' \73\
The Commission expected the Exchange to monitor the scope and operation
of the Program and study the data produced during that time with
respect to such issues.\74\
---------------------------------------------------------------------------

    \71\ See RLP Approval Order supra note 8, at 79529.
    \72\ See id.
    \73\ See id.
    \74\ See id.
---------------------------------------------------------------------------

    Although the pilot period was originally scheduled to end on April
14, 2015, the Exchange filed to extend the operation of the pilot on
several occasions.\75\ The pilot is now set to expire on October 31,
2019, and the Exchange proposes to make the Program, Rule 7.44-E,
permanent. In its proposal, as modified by Amendment No. 1, the
Exchange provides data and analysis which it believes justifies
permanent approval of the Program. More specifically, in both the
Notice and Amendment No. 1, the Exchange provides data indicating that
the Program has had low volume levels, but has provided tangible price
improvement to retail investors while the Program's overall impact on
market quality has not been negative.
---------------------------------------------------------------------------

    \75\ See Securities Exchange Act Release Nos. 87153 (September
30, 2019), 84 FR 53188 (October 4, 2019) (SR-NYSEArca-2019-67)
(extending pilot to October 31, 2019); 86198 (June 26, 2019), 84 FR
31648 (July 2, 2019) (SR-NYSEArca-2019-45) (extending pilot to
September 30, 2019); Securities Exchange Act Release No. 84773
(December 10, 2018), 83 FR 64419 (December 14, 2018) (SR-NYSEArca-
2018-89) (extending pilot to June 30, 2019); Securities Exchange Act
Release No. 83538 (June 28, 2018), 83 FR 31210 (July 3, 2018) (SR-
NYSEArca-2018-46) (extending pilot to December 31, 2018); Securities
Exchange Act Release No. 82289 (December 11, 2017), 82 FR 59677
(December 15, 2017) (SR-NYSEArca-2017-137) (extending pilot to June
30, 2018); Securities Exchange Act Release No. 80851 (June 2, 2017),
82 FR 26722 (June 8, 2017) (SR-NYSEArca-2017-63) (extending pilot to
December 31, 2017); Securities Exchange Act Release No. 79495
(December 7, 2016), 81 FR 90033 (December 13, 2016) (SR-NYSEArca-
2016-157) (extending pilot to June 30, 2017); Securities Exchange
Act Release No. 78601 (August 17, 2016), 81 FR 57632 (August 23,
2016) (SR-NYSEArca-2016-113) (extending pilot to December 31, 2016)
as corrected by Securities Exchange Act Release No. 78601 (August
17, 2016), 81 FR 63243 (September 14, 2016) (SR-NYSEArca-2016-113);
Securities Exchange Act Release No. 77424 (March 23, 2016), 81 FR
17523 (March 29, 2016) (SR-NYSEArca-2016-47) (extending pilot to
August 31, 2016); Securities Exchange Act Release No. 75994
(September 28, 2015), 80 FR 59834 (October 2, 2015) (SR-NYSEArca-
2015-84) (extending pilot to March 31, 2016); and Securities
Exchange Act Release No. 74572 (March 24, 2015), 80 FR 16705 (March
30, 2015) (SR-NYSEArca-2015-22) (extending pilot to September 30,
2015).
---------------------------------------------------------------------------

    To assess the Program's impact on market quality, the the Exchange
undertook a DID stastical analysis. Using the methodology explained
above, the Exchange produced DID analyses that the Commission believes
are useful to assess the Program's impact on market quality, as
measured by a variety of market quality statistics including: (1) Time-
weighted NYSE Arca quoted spread in basis points; (2) time-weighted
NYSE Arca quoted spread in dollars and cents; (3) time-weighted
consolidated quoted spread in basis points; (4) time-weighted
consolidated quoted spread in dollars and cents; (5) Trade Reporting
Facilities (``TRF'') share of volume during regular trading hours,
excluding auctions; (6) TRF share of volume, full day, including
auctions; (7) NYSE Arca share of volume during regular trading hours,
excluding auctions; (8) NYSE Arca share of volume, full day, including
auctions; and (9) Trade-to-trade price changes in basis points. In its
DID analyses, the Exchange studies stocks that had a CADV of at least
500,000 shares during both a pre-treatment period and a treatment
period. For these stocks, the Exchange compares changes in market
quality statistics between the pre-treatment period and treatment
period for the treatment group and the control group stocks. The
Exchange conducts this study using two different treatment periods:
Examining market quality statistics for (i) the period November 2013-
April 2013 compared to the period from June 2014-November 2014; and
(ii) the period November 2013-April 2013, compared to the period 2017-
2018.
    During the first treatment period studied (June 2014-November
2014), the Exchange states that total price improvement provided to
retail investors under the Program was $1.6 million. As shown in Table
10 above, for this period, the Exchange also finds that there were no
statistically significant differences between treatment and control
group stocks for changes in time-weighted NYSE Arca or time-weighted
consolidated spreads.\76\
---------------------------------------------------------------------------

    \76\ The Exchange found that only one statistic--NYSE Arca
Regular Hours Share, no auction--had a statistical significance; it
showed that NYSE Arca market share increased during the treatment
period.
---------------------------------------------------------------------------

    During the second treatment period studied (2017-2018), the
Exchange states that total price improvement provided to retail
investors under the Program was $6.2 million, with per share price
improvement ranging from $0.0015 to $0.0055. With respect to the 2017-
2018 treatment period, when comparing changes between the pre-treatment
period and the 2017-2018 treatment period, the Exchange observes a
slight increase in average spreads in basis points, both for the
treatment and control securities, which could suggest a negative effect
of the Program. The Exchange explains, however, that further analysis
reveals that the treatment stocks for the 2017-2018 treatment period
saw an average price increase in control securities of 42%, compared to
an average drop of 14% for the treated stocks; the Exchange states that
this resulted in small drop in dollar spreads and an increase in
spreads in basis points for the treated stocks while the control stocks
saw a small increase in percentage spreads and a larger rise in dollar
spreads.
    In Amendment No.1 the Exchange provides futher analysis regarding
the above-mentioned increases in basis points spreads. The Exchange
explains that while average spreads in basis points did increase
slightly, the DID analysis resulted in a favorable regression for the
treatment stocks compared to the control stocks. Referencing Table 14,
the Exchange notes that dollar spreads for the treatment stocks fell
from $0.018 to $0.017 as VWAP dropped to $34.48 from $40.05; control
stock VWAPs rose to $4.25 from $38.32, which the Exchange believes
caused dollar spreads to rise to $0.030 from $0.019. The Exchange
further concludes that the

increases in basis points spreads for the control stocks (5.59 to 5.69)
and for the treatment stocks (5.70 versus 5.38) were due to stocks
being tick constrained as prices fell during the treatment period. As
such, the Exchange explains in Amendment No. 1 that the DID analysis
shows better performance for treatment stocks than control group
securities, in support of its conclusion that the Program has not had a
negative impact on market quality.
    After careful consideration, the Commission believes that the data
and analyisis provided by the Exchange, including the results of the
Exchange's DID analysis and additional analysis provided in Amendment
No. 1, support the Exchange's conclusion that the Program provides
tangible price improvement to retail investors on a regulated exchange
venue and has not demonstrably caused harm to the broader market.
Accordingly, the Commission finds that the proposed rule change, as
modified by Amendment No. 1, is consistent with the requirements of the
Exchange Act.

IV. Solicitation of Comments on Amendment No. 1

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether Amendment No. 1
to the proposed rule change is consistent with the Exchange Act.
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NYSEArca-2019-63 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-2019-63. 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 (http://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 this filing will also be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEArca-2019-63 and should be submitted
on or before November 14, 2019.

V. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 1

    The Commission finds good cause to approve the proposed rule
change, as modified by Amendment No. 1, prior to the 30th day after the
date of publication of notice of Amendment No. 1 in the Federal
Register. Amendment No. 1 supplements the proposal by providing
additional data regarding retail price improvement provided by the
Program and further analysis of the Program's impact on the broader
market by expanding the Exchange's explanation of its DID analysis.
Specifically, in Amendment No. 1, the Exchange represents that for the
years 2017-2018, the Program provided retail investors with $6.2
million in price improvement. Additionally, as explained further in
Section III above, the Exchange explains why despite slight increases
in basis point spreads for the treatment group, the regression
demonstrated in its DID analyses implicated better performance for
treatment stocks than control group securities. Additionally, Amendment
No. 1 provides two additional tables showing the time-weighted
consolidated spreads and VWAP comparisons for the respective treatment
and control securities from the years 2013-2014 and 2017-2018 samples.
The additional information and analysis set forth in Amendment No. 1
assisted the Commission in evaluating the price improvement provided to
retail investors by the Program and the Program's impact on the broader
market. This in turn, enabled the Commission to determine that that
permanent approval of the Program, Rule 7.44-E, is reasonably designed
to perfect the mechanism of a free and open market and the national
market system, protect investors and the public interest, and not be
unfairly discriminatory, or impose an unnecessary or inappropriate
burden on competition. Accordingly, pursuant to Section 19(b)(2) of the
Exchange Act,\77\ the Commission finds good cause to approve the
proposed rule change, as modified by Amendment No. 1, on an accelerated
basis.
---------------------------------------------------------------------------

    \77\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

VI. Limited Exemption from the Sub-Penny Rule

    Pursuant to its authority under Rule 612(c) of Regulation NMS,\78\
the Commission hereby grants the Exchange a limited exemption from the
Sub-Penny Rule to operate the Program. For the reasons discussed below,
the Commission determines that such action is necessary or appropriate
in the public interest, and is consistent with the protection of
investors.
---------------------------------------------------------------------------

    \78\ 17 CFR 242.612(c).
---------------------------------------------------------------------------

    When the Commission adopted the Sub-Penny Rule in 2005, the
Commission identified a variety of problems caused by sub-pennies that
the Sub-Penny Rule was designed to address:
     If investors' limit orders lose execution priority for a
nominal amount, investors may over time decline to use them, thus
depriving the markets of liquidity.
     When market participants can gain execution priority for a
nominal amount, important customer protection rules such as exchange
priority rules and the Manning Rule \79\ could be undermined.
---------------------------------------------------------------------------

    \79\ See Financial Industry Regulatory Authority Rule 5320
(Prohibition Against Trading Ahead of Customer Orders).
---------------------------------------------------------------------------

     Flickering quotations that can result from widespread sub-
penny pricing could make it more difficult for broker-dealers to
satisfy their best execution obligations and other regulatory
responsibilities.
     Widespread sub-penny quoting could decrease market depth
and lead to higher transaction costs.
     Decreasing depth at the inside could cause institutions to
rely more on execution alternatives away from the exchanges,
potentially increasing fragmentation in the securities markets.\80\
---------------------------------------------------------------------------

    \80\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
---------------------------------------------------------------------------

    The Commission believes that the limited exemption granted today
should continue to promote competition between exchanges and OTC market

makers in a manner that is reasonably designed to minimize the problems
that the Commission identified when adopting the Sub-Penny Rule. Under
the Program, sub-penny prices will not be disseminated through the
consolidated quotation data stream, which should avoid quote flickering
and its reduced depth at the inside quotation.
    Furthermore, the Commission does not believe that granting this
limited exemption and approving the proposal would reduce incentives
for market participants to display limit orders. As noted in the RLP
Approval Order, the vast majority of marketable retail orders were
internalized by OTC market makers that offered sub-penny
executions,\81\ and, as noted in Notice, the Program has attracted a
small volume of overall retail market share. As a result, enabling the
Exchange to continue to compete for retail order flow through the
Program should not materially detract from the current incentives to
display limit orders, while potentially resulting in greater order
interaction and price improvement for marketable retail orders on a
public national securities exchange. To the extent that the Program may
raise Manning and best execution issues for broker-dealers, these
issues are already presented by the existing practices of OTC market
makers.
---------------------------------------------------------------------------

    \81\ See RLP Approval Order, supra note 8, at 79529.
---------------------------------------------------------------------------

    This permanent and limited exemption from the Sub-Penny Rule is
limited solely to the operation of the Program by the Exchange. This
exemption does not extend beyond the scope of Exchange Rule 7.44-E. In
addition, this exemption is conditioned on the Exchange continuing to
conduct the Program, in accordance with Exchange Rule 7.44-E and
substantially as described in the Exchange's request for exemptive
relief and the proposed rule change.\82\ Any changes in Exchange Rule
7.44-E may cause the Commission to reconsider this exemption.
---------------------------------------------------------------------------

    \82\ See supra note 7.
---------------------------------------------------------------------------

VII. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\83\ that the proposed rule change (SR-NYSEArca-2019-63),
as modified by Amendment No. 1, be, and it hereby is, approved on an
accelerated basis.
---------------------------------------------------------------------------

    \83\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

    It is further ordered that, pursuant to Rule 612(c) under
Regulation NMS, that the Exchange shall be exempt from Rule 612(a) of
Regulation NMS with respect to the operation of the Program as set
forth in Exchange Rule 7.44-E as described herein.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\84\
---------------------------------------------------------------------------

    \84\ 17 CFR 200.30-3(a)(12) and 17 CFR 200.30-3(a)(83).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-23167 Filed 10-23-19; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 87, Number 124 (Wednesday, June 29, 2022)]
[Notices]
[Pages 38735-38736]
[FR Doc No: 2022-13822]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 3511-000]

Lower Saranac Hydro, LLC; Notice of Authorization for Continued
Project Operation

    The license for the Groveville Hydroelectric Project No. 3511 was
issued for a period ending May 31, 2022.
    Section 15(a)(1) of the FPA, 16 U.S.C. 808(a)(1), requires the
Commission, at the expiration of a license term, to issue from year-to-
year an annual license to the then licensee(s) under the terms and
conditions of the prior license until a new license is issued, or the
project is otherwise disposed of as provided in section 15 or any other
applicable section of the FPA. If the project's prior license waived
the applicability of section 15 of the FPA, then, based on section 9(b)
of the Administrative Procedure Act, 5 U.S.C. 558(c), and as set forth
at 18 CFR 16.21(a), if the licensee of such project has filed an
application for a subsequent license, the licensee may continue to
operate the project in accordance with the terms and conditions of the
license after the minor or minor part license expires, until the
Commission acts on its application. If the licensee of such a project
has not filed an application for a subsequent license, then it may be
required, pursuant to 18 CFR 16.21(b), to continue project operations
until the Commission issues someone else a license for the project or
otherwise orders disposition of the project.
    If the project is subject to section 15 of the FPA, notice is
hereby given that an annual license for Project No. 3511 is issued to
Lower Saranac Hydro, LLC

for a period effective June 1, 2022 through May 31, 2023, or until the
issuance of a new license for the project or other disposition under
the FPA, whichever comes first. If issuance of a new license (or other
disposition) does not take place on or before May 31, 2023, notice is
hereby given that, pursuant to 18 CFR 16.18(c), an annual license under
section 15(a)(1) of the FPA is renewed automatically without further
order or notice by the Commission, unless the Commission orders
otherwise.
    If the project is not subject to section 15 of the FPA, notice is
hereby given that Lower Saranac Hydro, LLC is authorized to continue
operation of the Groveville Hydroelectric Project under the terms and
conditions of the prior license until the issuance of a new license for
the project or other disposition under the FPA, whichever comes first.

    Dated: June 22, 2022.
Kimberly D. Bose,
Secretary.
[FR Doc. 2022-13822 Filed 6-28-22; 8:45 am]
BILLING CODE 6717-01-P