[Federal Register Volume 83, Number 120 (Thursday, June 21, 2018)]
[Notices]
[Pages 28874-28884]
[FR Doc No: 2018-13303]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83454; File No. SR-NYSE-2018-28]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change To Make Permanent the Retail
Liquidity Program Pilot, Rule 107C, Which Is Currently Set To Expire on
June 30, 2018

June 15, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\

notice is hereby given that on June 4, 2018, New York Stock Exchange
LLC (``NYSE'' or the ``Exchange'') filed with the Securities and
Exchange Commission (``SEC'' or ``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the Exchange. The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to make permanent Rule 107C, which sets forth
the Exchange's pilot Retail Liquidity Program. The proposed rule change
is available on the Exchange's website at www.nyse.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to make permanent Rule 107C, 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 July 2012, the Commission approved the Program on a pilot
basis.\3\ 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 July 31, 2013. 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 June
30, 2018.\4\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 67347 (July 3,
2012), 77 FR 40673 (July 10, 2012) (SR-NYSE-2011-55) (``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.
    \4\ See Securities Exchange Act Release No. 82230 (December 7,
2017), 82 FR 58667 (December 13, 2017) (SR-NYSE-2017-64) (extending
pilot to June 30, 2018). See also Securities Exchange Act Release
No. 80844 (June 1, 2017), 82 FR 26562 (June 7, 2017) (SR-NYSE-2017-
26) (extending pilot to December 31, 2017); Securities Exchange Act
Release No. 79493 (December 7, 2016), 81 FR 90019 (December 13,
2016) (SR-NYSE-2016-82) (extending pilot to June 30, 2017);
Securities Exchange Act Release No. 78600 (August 17, 2016), 81 FR
57642 (August 23, 2016) (SR-NYSE-2016-54) (extending pilot to
December 31, 2016); Securities Exchange Act Release No. 77426 (March
23, 2016), 81 FR 17533 (March 29, 2016) (SR-NYSE-2016-25) (extending
pilot to August 31, 2016); Securities Exchange Act Release No. 75993
(September 28, 2015), 80 FR 59844 (October 2, 2015) (SR-NYSE-2015-
41) (extending pilot to March 31, 2016); Securities Exchange Act
Release No. 74454 (March 6, 2015), 80 FR 13054 (March 12, 2015) (SR-
NYSE-2015-10) (extending pilot until September 30, 2015); Securities
Exchange Act Release No. 72629 (July 16, 2014), 79 FR 42564 (July
22, 2014) (NYSE-2014-35) (extending pilot until March 31, 2015); and
Securities Exchange Act Release No. 70096 (Aug. 2, 2013), 78 FR
48520 (Aug. 8, 2013) (SR-NYSE-2013-48) (extending pilot to July 31,
2014).
---------------------------------------------------------------------------

    The Exchange established the Program to attract retail order flow
to the Exchange, and allow such order flow to receive potential price
improvement.\5\ The Program is currently limited to trades occurring at
prices equal to or greater than $1.00 a share.
---------------------------------------------------------------------------

    \5\ RLP Approval Order, 77 FR at 40674.
---------------------------------------------------------------------------

    As described in greater detail below, under Rule 107C, a new class
of market participant called Retail Liquidity Providers (``RLPs'') \6\
and non-RLP member organizations 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 RPIs and Mid-Point Passive
Liquidity (``MPL'') Orders.\7\ 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.\8\
---------------------------------------------------------------------------

    \6\ The Program also allows for RLPs to register with the
Exchange. However, any firm can enter RPI orders into the system.
Currently, four firms are registered as RLPs but are not registered
in any symbols.
    \7\ The Exchange adopted MPL Orders in 2014 and amended Rule
107C to specify that MPL Orders could interact with incoming,
contra-side Retail Orders submitted by a RMO in the Program. See
Securities Exchange Act Release No. 71330 (January 16, 2014), 79 FR
3895 (January 23, 2014) (SR-NYSE-2013-71) (``Release No. 71330'').
    \8\ RLP Approval Order, 77 FR at 40679.
---------------------------------------------------------------------------

    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,\9\ 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.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b)(5).
    \10\ RLP Approval Order, 77 FR at 40679.
---------------------------------------------------------------------------

    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.\11\
---------------------------------------------------------------------------

    \11\ Rule 107C has been amended several times. See Securities
Exchange Act Release No. 68709 (January 23, 2013), 78 FR 6160
(January 29, 2013) (SR-NYSE-2013-04) (amending Rule 107C to clarify
that Retail Liquidity Providers may enter Retail Price Improvement
Orders in a non-RLP capacity for securities to which the RLP is not
assigned); 69103 (March 11, 2013), 78 FR 16547 (March 15, 2013) (SR-
NYSE-2013-20) (amending Rule 107C to clarify that a Retail Member
Organization may submit Retail Orders to the Program in a riskless
principal capacity as well as in an agency capacity, provided that
(i) the entry of such riskless principal orders meets the
requirements of FINRA Rule 5320.03, including that the RMO maintains
supervisory systems to reconstruct, in a time-sequenced manner, all
Retail Orders that are entered on a riskless principal basis; and
(ii) the RMO does not include non-retail orders together with the
Retail Orders as part of the riskless principal transaction); 69513
(May 3, 2013), 78 FR 27261 (May 9, 2013) (SR-NYSE-2013-08) (amending
Rule 107C to allow Retail Member Organizations to attest that
``substantially all,'' rather than all, orders submitted to the
Program qualifies as ``Retail Orders'' under the Rule); Release No.
71330, 79 FR at 3895 (amending Rule 107C to incorporate MPL Orders);
and 76553 (December 3, 2015), 80 FR 76607 (December 9, 2015) (SR-
NYSE-2015-59) (``Release No. 76553'') (amending Rule 107C to
distinguish between retail orders routed on behalf of other broker-
dealers and retail orders that are routed on behalf of introduced
retail accounts that are carried on a fully disclosed basis).

---------------------------------------------------------------------------

Description of Pilot Rule 107C That Would Become Permanent
Definitions
    Rule 107C(a) contains the following definitions:
     First, the term ``Retail Liquidity Provider'' is defined
as a member organization 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.\12\
---------------------------------------------------------------------------

    \12\ See Rule 107C(a)(1).
---------------------------------------------------------------------------

     Second, the term ``Retail Member Organization'' (``RMO'')
is defined as a member organization (or a division thereof) that has
been approved by the Exchange to submit Retail Orders.\13\
---------------------------------------------------------------------------

    \13\ Id. at (2).
---------------------------------------------------------------------------

     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 a 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 is an Immediate or Cancel Order and may be
an odd lot, round lot, or partial round lot (``PRL'').\14\
---------------------------------------------------------------------------

    \14\ Id. at (3).
---------------------------------------------------------------------------

     Finally, the term ``Retail Price Improvement Order'' means
nondisplayed interest in NYSE-listed securities that is 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.\15\
---------------------------------------------------------------------------

    \15\ Id. at (4). Exchange systems prevent Retail Orders from
interacting with Retail Price Improvement Orders if the RPI is not
priced at least $0.001 better than the PBBO. An RPI remains non-
displayed in its entirety (the buy or sell interest, the offset, and
the ceiling or floor). An RLP would only be permitted to enter a
Retail Price Improvement Order for the particular security or
securities to which it is assigned as RLP. 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 member organization for
those particular securities. Additionally, member organizations
other than RLPs are permitted, but not required, to submit RPIs. An
RPI may be an odd lot, round lot, or PRL. See id.
---------------------------------------------------------------------------

RMO Qualifications and Application Process
    Under Rule 107C(b), any member organization \16\ can qualify as an
RMO if it conducts a retail business or routes \17\ retail orders on
behalf of another broker-dealer. For purposes of Rule 107C(b),
conducting a retail business includes carrying retail customer accounts
on a fully disclosed basis. To become an RMO, a member organization
must submit: (1) An application form; (2) supporting documentation
sufficient to demonstrate the retail nature and characteristics of the
applicant's order flow; \18\ 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 107C.\19\
---------------------------------------------------------------------------

    \16\ 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.
    \17\ See Release No. 76553, 80 FR at 76607 (clarifying that one
way to qualify as an RMO is to route retail orders on behalf of
other broker-dealers).
    \18\ 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 107C
(b)(2)(B).
    \19\ See id. at (b)(2)(A)-(C).
---------------------------------------------------------------------------

    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 member organization 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 107C, 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.\20\
---------------------------------------------------------------------------

    \20\ Id. at (b)(6).
---------------------------------------------------------------------------

    Following submission of the required materials, the Exchange
provides written notice of its decision to the member organization.\21\
A disapproved applicant can appeal the disapproval by the Exchange as
provided in Rule 107C(4), 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.\22\
---------------------------------------------------------------------------

    \21\ Id. at (b)(3).
    \22\ Id. at (b)(5).
---------------------------------------------------------------------------

RLP Qualifications
    To qualify as an RLP under Rule 107C(c), a member organization
must: (1) Already be approved as a Designated Market Maker (``DMM'') or
Supplemental Liquidity Provider (``SLP''); (2) demonstrate an ability
to meet the requirements of an RLP; (3) have mnemonics or the ability
to accommodate other 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.\23\
---------------------------------------------------------------------------

    \23\ Id. at (c)(1)-(4).
---------------------------------------------------------------------------

RLP Application
    Under Rule 107C(d), to become an RLP, a member organization must
submit an RLP application form with all supporting documentation to the
Exchange, which would determine whether an applicant was qualified to
become an RLP as set forth above.\24\ After an applicant submits an RLP
application to the Exchange with supporting documentation, the Exchange
would notify the applicant member organization of its decision. The
Exchange could approve one or more member organizations to act as an
RLP for a particular security. The Exchange could also approve a
particular member organization to act as RLP for one or more
securities. Approved RLPs would be assigned securities according to
requests made to, and approved by, the Exchange.\25\
---------------------------------------------------------------------------

    \24\ Id. at (d)(1).
    \25\ Id. at (d)(2).
---------------------------------------------------------------------------

    If an applicant were 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.\26\ If the Exchange disapproves the application,
the Exchange would provide a written notice to the member organization.
The disapproved applicant could appeal the disapproval by the Exchange
as provided in proposed Rule 107C(i) and/or reapply for RLP status 90
days

after the disapproval notice is issued by the Exchange.\27\
---------------------------------------------------------------------------

    \26\ Id. at (d)(3).
    \27\ Id. at (d)(4).
---------------------------------------------------------------------------

Voluntary Withdrawal of RLP Status
    An RLP would be permitted to withdraw its status as an RLP by
giving notice to the Exchange under proposed NYSE Rule107C(e). The
withdrawal would become effective when those securities assigned to the
withdrawing RLP are reassigned to another RLP. After the Exchange
receives 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 is received by the
Exchange. If the reassignment of securities takes 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.\28\
---------------------------------------------------------------------------

    \28\ See id. at (e).
---------------------------------------------------------------------------

RLP Requirements
    Under Rule 107C(f), an RLP may only enter Retail Price Improvement
Orders electronically and directly into Exchange systems and facilities
designated for this purpose and only 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.\29\
---------------------------------------------------------------------------

    \29\ Id. at (f)(1).
---------------------------------------------------------------------------

    In order to be eligible for execution fees that are lower than non-
RLP rates, an RLP must maintain (1) a Retail Price Improvement Order
that is better than the PBB at least five percent of the trading day
for each assigned security; and (2) a Retail Price Improvement Order
that is better than the PBO at least five percent of the trading day
for each assigned security.\30\ An RLP's five-percent requirements is
calculated by determining the average percentage of time the RLP
maintains a Retail Price Improvement Order in each of its RLP
securities during the regular trading day, on a daily and monthly
basis.\31\ The Exchange determines whether an RLP has met this
requirement by calculating the following:
---------------------------------------------------------------------------

    \30\ Id. at (f)(1)(A)-(B).
    \31\ Id. at (f)(2).
---------------------------------------------------------------------------

     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 Retail Price Improvement Orders would be used when
calculating whether an RLP is in compliance with its five-percent
requirements.\32\
---------------------------------------------------------------------------

    \32\ Id. at (f)(2)(A)-(E).
---------------------------------------------------------------------------

    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.\33\
---------------------------------------------------------------------------

    \33\ Id. at (f)(3).
---------------------------------------------------------------------------

Failure of RLP To Meet Requirements
    Rule 107C(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 Rule 107C(f) requirements 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.\34\
---------------------------------------------------------------------------

    \34\ Id. at (g)(1)(A)-(C).
---------------------------------------------------------------------------

    The Exchange determines if and when a member organization 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.\35\ A disqualified RLP could appeal the
disqualification as provided in proposed Rule 107C(i) and/or reapply
for RLP status 90 days after the disqualification notice is issued by
the Exchange.\36\
---------------------------------------------------------------------------

    \35\ Id. at (2).
    \36\ Id. at (3).
---------------------------------------------------------------------------

Failure of RMO To Abide by Retail Order Requirements
    Rule 107C(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.\37\ When disqualification determinations are made, the Exchange
shall provide a written disqualification notice to the member
organization.\38\ A disqualified RMO could appeal the disqualification
as provided in proposed Rule 107C(i) and/or reapply for RMO status 90
days after the disqualification notice is issued by the Exchange.\39\
---------------------------------------------------------------------------

    \37\ Id. at (h)(1).
    \38\ Id. at (2).
    \39\ Id. at (3).
---------------------------------------------------------------------------

Appeal of Disapproval or Disqualification
    Rule 107C(i) describes the appeal rights of member organizations. A
member organization that disputes the Exchange's decision to disapprove
it under Rule 107C(b) or (d) or disqualify it under Rule 107C(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.\40\ The
RLP Panel would consist of the NYSE's Chief Regulatory Officer
(``CRO''), or a designee of the CRO, and two officers of the Exchange
designated by the CoHead of U.S. Listings and Cash Execution.\41\ The
RLP Panel would review the facts and render a decision within the time
frame prescribed by the Exchange.\42\ The RLP Panel can overturn or
modify an action taken by the Exchange and all determinations by the
RLP Panel would constitute final action by the Exchange on the matter
at issue.\43\
---------------------------------------------------------------------------

    \40\ 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).
    \41\ Id. at (i)(2).
    \42\ Id. at (3).
    \43\ Id. at (4).
---------------------------------------------------------------------------

Retail Liquidity Identifier
    Under Rule 107C(j), the Exchange disseminates an identifier through
proprietary Exchange data feeds or the Securities Information Processor
(``SIP'') 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.\44\
---------------------------------------------------------------------------

    \44\ Id. at (j).
---------------------------------------------------------------------------

Retail Order Designations
    Under Rule 107C(k), an RMO can designate how a Retail Order would
interact with available contra-side interest as follows:
     A Type 1-designated Retail Order interacts only with
available contra-side Retail Price Improvement Orders and MPL Orders
but would not interact with other available contra-side interest in
Exchange systems or route to other markets. The portion of a Type 1-
designated Retail Order that does not execute against contra-side
Retail Price Improvement Orders would be immediately and automatically
cancelled.\45\
---------------------------------------------------------------------------

    \45\ Id. at (k)(1). See note 7, supra.
---------------------------------------------------------------------------

     A Type 2-designated Retail Order interacts first with
available contra-side Retail Price Improvement Orders and MPL Orders
and any remaining portion of the Retail Order would be executed as a
Regulation NMS-compliant Immediate or Cancel Order pursuant to Rule
13.\46\
---------------------------------------------------------------------------

    \46\ Id. at (2).
---------------------------------------------------------------------------

     A Type 3-designated Retail Order interacts first with
available contra-side Retail Price Improvement Orders and MPL Orders
and any remaining portion of the Retail Order would be executed as an
NYSE Immediate or Cancel Order pursuant to Rule 13.\47\
---------------------------------------------------------------------------

    \47\ Id. at (k)(3).
---------------------------------------------------------------------------

Priority and Order Allocation
    Under Rule 107C(l), Retail Price Improvement Orders in the same
security are ranked and allocated according to price then time of entry
into Exchange systems. When determining the price to execute a Retail
Order, Exchange systems consider all eligible RPIs and MPL Orders. If
the only interest is RPIs, then the executions shall occur at the price
level that completes the incoming order's execution. If the only
interest is MPL Orders, the Retail Order shall execute at the midpoint
of the PBBO. If both RPIs and MPL Orders are present, Exchange systems
will evaluate at what price level the incoming Retail Order may be
executed in full (``clean-up price''). If the clean-up price is equal
to the midpoint of the PBBO, RPIs will receive priority over MPL
Orders, and the Retail Order will execute against both RPIs and MPL
Orders at the midpoint. If the clean-up price is worse than the
midpoint of the PBBO, the Retail Order will execute first with the MPL
Orders at the midpoint of the PBBO and any remaining quantity of the
Retail Order will execute with the RPIs at the clean-up price. If the
clean-up price is better than the midpoint of the PBBO, then the Retail
Order will execute against the RPIs at the clean-up price and will
ignore the MPL Orders. Any remaining unexecuted RPI interest and MPL
Orders will remain available to interact with other incoming Retail
Orders. Any remaining unexecuted portion of the Retail Order will
cancel or execute in accordance with Rule 107C(k).
    Examples of priority and order allocation are as follows:
    Example 1:
    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 500.
    RLP 3 then enters a Retail Price Improvement Order to buy ABC at
$10.03 for 500.
    An incoming Retail Order to sell ABC for 1,000 executes first
against RLP 3's bid for 500, because it is the best priced bid, then
against RLP 2's bid for 500, because it is the next best priced bid.
RLP 1 is not filled because the entire size of the Retail Order to sell
1,000 is depleted. The Retail Order executes at the price that
completes the order's execution. In this example, the entire 1,000
Retail Order to sell executes at $10.02 because it results in a
complete fill.
    However, assume the same facts above, except that RLP 2's Retail
Price Improvement Order to buy ABC at $10.02 is for 100. The incoming
Retail Order to sell 1,000 executes first against RLP 3's bid for 500,
because it is the best priced bid, then against RLP 2's bid for 100,
because it is the next best priced bid. RLP 1 then receives an
execution for 400 of its bid for 500, at which point the entire size of
the Retail Order to sell 1,000 is depleted. The Retail Order executes
at the price that completes the order's execution, which is $10.01.
    Example 2:
    PBBO for security DEF is $10.00-10.01.
    RLP 1 enters a Retail Price Improvement Order to buy DEF at $10.006
for 500.
    RLP 2 enters a Retail Price Improvement Order to buy DEF at $10.005
for 500.
    MPL 1 enters an MPL Order to buy DEF at $10.01 for 1,000.
    RLP 3 enters a Retail Price Improvement Order to buy DEF at $10.002
for 1,000.
    An incoming Retail Order to sell DEF for 2,500 arrives. The clean-
up price is $10.002. Because the midpoint of the PBBO is priced better
than the clean-up price, the Retail Order executes with MPL 1 for 1,000
shares at $10.005. The Retail Order then executes at $10.002 against
RLP 1's bid for 500, because it is the best-priced bid, then against
RLP 2's bid for 500 because it is the next best-priced bid and then RLP
3 receives an execution for 500 of its bid for 1,000, at which point
the entire size of the Retail Order to sell 2,500 is depleted.
    Assume the same facts above. An incoming Retail Order to sell DEF
for 1,000 arrives. The clean-up price is $10.005. Because the clean-up
price is equal to the midpoint of the PBBO, RPIs will receive priority
over MPL Orders. As a result, the Retail Order executes first against
RLP 1's bid for 500, because it is the best-priced bid, then against
RLP 2's bid for 500 because it is the next best-priced bid, at which
point the entire size of the Retail Order to sell 1,000 is
depleted.\48\
---------------------------------------------------------------------------

    \48\ 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.'' \49\ 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,\50\ 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 and effective and realized spreads.
---------------------------------------------------------------------------

    \49\ RLP Approval Order, 77 FR at 40681.
    \50\ 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.\51\ 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.\52\
---------------------------------------------------------------------------

    \51\ RLP Approval Order, 77 FR at 40679.
    \52\ See id. at 40682.
---------------------------------------------------------------------------

    Between August 1, 2012, when the Program began, and January 2,
2018, orders totaling in excess of 6.8 billion shares were executed
through the Program, providing retail investors with $12.3 million in
price improvement. As Table 1 shows, during 2016, an average of 2-3
million shares per day was executed in the Program. In 2017, an average
of 3-4 million shares per day were executed in the Program. During the
period 2016-17, average effective spreads in RLP executions ranged
between $0.012 and $0.019. Fill rates reached as high as 25.7% in May
2018. Overall price improvement averaged $0.0014 per share,
approximately 40% above the minimum of $0.001.\53\
---------------------------------------------------------------------------

    \53\ In 2016, the average price improvement reached as high as
$0.0017-$0.0018.

                                                Table 1--Summary Execution and Market Quality Statistics
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             RPI Avg.       Avg. daily                      Effective/         Price         Realized
                  Date                        volume          orders        Eff. spread    quoted ratio     improvement       spread       Fill rate (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Jan-16..................................       3,257,495          11,495         $0.0167           0.736         $0.0017         $0.0051            14.7
Feb-16..................................       3,119,642          10,400          0.0163           0.713          0.0018          0.0041            15.3
Mar-16..................................       2,760,731           9,179          0.0142           0.706          0.0018          0.0029            16.5
Apr-16..................................       2,277,189           8,432          0.0143           0.703          0.0018          0.0042            17.6
May-16..................................       1,727,219           6,931          0.0151           0.693          0.0019          0.0054            16.4
Jun-16..................................       2,003,149           9,122          0.0134           0.667          0.0019          0.0060            14.4
Jul-16..................................       2,265,579           7,880          0.0126           0.668          0.0019          0.0034            18.1
Aug-16..................................       2,009,630           5,626          0.0122           0.699          0.0017         -0.0019            16.4
Sep-16..................................       1,620,236           4,801          0.0136           0.696          0.0017          0.0035            15.6
Oct-16..................................       2,355,292           8,055          0.0143           0.693          0.0017          0.0041            19.7
Nov-16..................................       2,702,894           9,915          0.0161           0.700          0.0018          0.0040            17.3
Dec-16..................................       4,380,164          15,036          0.0142           0.710          0.0017          0.0034            20.5
Jan-17..................................       2,921,604          11,184          0.0148           0.730          0.0016          0.0011            21.4
Feb-17..................................       2,508,810           9,801          0.0165           0.754          0.0015          0.0023            20.3
Mar-17..................................       2,585,694           9,517          0.0175           0.770          0.0015          0.0060            20.9
Apr-17..................................       2,875,573          10,174          0.0156           0.764          0.0014          0.0056            23.5
May-17..................................       3,741,955          15,179          0.0150           0.763          0.0014          0.0026            25.7
Jun-17..................................       5,040,922          17,245          0.0155           0.688          0.0018          0.0046            19.2
Jul-17..................................       3,906,133          14,582          0.0154           0.712          0.0017          0.0020            19.8
Aug-17..................................       3,803,586          14,841          0.0174           0.700          0.0018          0.0055            19.5
Sep-17..................................       3,398,110          12,782          0.0152           0.773          0.0014          0.0017            23.2
Oct-17..................................       3,839,683          13,467          0.0156           0.773          0.0014          0.0022            25.2
Nov-17..................................       4,193,873          14,499          0.0161           0.775          0.0014          0.0028            24.2
Dec-17..................................       3,673,405          19,036          0.0180           0.782          0.0014          0.0027            19.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As Table 2 shows, approximately 45% of all orders in the Program in
2016-17 were for a round lot or fewer shares. More than 60% of retail
orders removing liquidity from the Exchange were for 300 shares or
less. Further, the number of very large orders was relatively steady,
with orders larger than 7,500 shares typically accounting for 4-5% of
orders received. Despite relatively low fill rates, large orders
account for a sizable portion of the shares executed in the Program.

                                           Table 2--Composition of Retail Taking Orders by Order Size Category
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          501-1,000    1001-2,000   2001-4,000   4001-7,500    7500-15,000     >15,000
                                   <100  (%)     101-300      301-500        (%)          (%)          (%)          (%)            (%)           (%)
---------------------------------------------------(%)----------(%)-------------------------------------------------------------------------------------
Jan-16..........................        36.31        19.06         9.74        11.64         7.60         6.48         4.38            2.70         2.09
Feb-16..........................        35.88        18.81         9.96        11.82         7.72         6.42         4.31            2.82         2.26
Mar-16..........................        35.67        18.69         9.90        11.83         7.82         6.70         4.52            2.92         1.94
Apr-16..........................        38.22        19.39         9.87        11.48         7.16         5.73         3.89            2.54         1.73
May-16..........................        37.64        19.81        10.12        11.57         7.51         5.60         3.74            2.35         1.65
Jun-16..........................        39.46        18.98         9.66        11.22         7.13         5.32         3.95            2.60         1.68
Jul-16..........................        40.22        18.59         9.45        11.10         6.75         5.40         4.05            2.65         1.78
Aug-16..........................        33.59        17.45         9.24        11.66         8.30         7.17         5.71            4.33         2.54
Sep-16..........................        33.40        17.83         9.13        11.55         8.33         7.32         5.69            4.17         2.59
Oct-16..........................        39.50        19.03         9.42        11.16         7.33         5.66         3.77            2.53         1.59
Nov-16..........................        38.72        19.67         9.80        11.40         7.19         5.27         3.63            2.64         1.70
Dec-16..........................        39.41        19.52         9.41        11.26         7.33         5.40         3.55            2.66         1.47
Jan-17..........................        42.16        19.82         9.22        10.62         6.92         4.84         3.05            2.08         1.30
Feb-17..........................        41.90        19.51         9.34        10.79         7.03         4.82         3.09            2.08         1.44
Mar-17..........................        41.55        18.98         9.12        11.04         7.30         5.18         3.40            2.07         1.36
Apr-17..........................        44.32        18.50         8.55        10.21         6.65         5.07         3.31            2.17         1.21
May-17..........................        52.39        17.82         7.14         8.08         5.32         4.03         2.64            1.72         0.87
Jun-17..........................        44.76        15.48         7.53         9.59         6.87         6.06         4.67            3.50         1.53

Jul-17..........................        45.33        15.98         8.05        10.21         7.08         5.61         3.70            2.62         1.43
Aug-17..........................        43.83        16.68         8.39        10.58         7.48         5.67         3.46            2.51         1.41
Sep-17..........................        46.15        17.81         8.26         9.93         6.78         4.85         2.93            2.09         1.20
Oct-17..........................        45.53        18.30         8.47        10.06         6.88         4.82         2.79            2.00         1.15
Nov-17..........................        45.14        17.37         8.63        10.37         7.13         5.02         2.90            2.15         1.29
Dec-17..........................        45.96        17.62         8.89        10.60         6.62         4.55         2.72            1.99         1.05
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Tables 3 and 4 show the distribution of orders received by size and
shares executed in 2016-17. During that period, the Program saw much
lower execution sizes due to smaller retail providing orders (typically
around 300 shares) breaking up fills and as a result of liquidity at
multiple price improvement points.

                                              Table 3--Composition of Shares Placed by Order Size Category
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          501-1,000    1001-2,000   2001-4,000   4001-7,500    7500-15,000     >15,000
                                   <100  (%)     101-300      301-500        (%)          (%)          (%)          (%)            (%)           (%)
---------------------------------------------------(%)----------(%)-------------------------------------------------------------------------------------
Jan-16..........................         1.11         2.17         2.28         5.01         6.21        10.14        12.73           14.71        45.64
Feb-16..........................         1.09         2.09         2.25         4.92         6.09         9.67        12.01           14.90        46.97
Mar-16..........................         1.15         2.23         2.40         5.28         6.61        10.79        13.50           16.37        41.68
Apr-16..........................         1.45         2.75         2.84         6.09         7.21        10.93        13.90           16.82        38.02
May-16..........................         1.47         2.81         2.93         6.16         7.59        10.70        13.39           15.81        39.14
Jun-16..........................         1.43         2.67         2.80         6.06         7.29        10.28        14.15           17.28        38.04
Jul-16..........................         1.38         2.50         2.61         5.67         6.57        10.05        13.95           16.71        40.57
Aug-16..........................         0.88         1.71         1.86         4.30         5.88         9.78        14.44           19.69        41.45
Sep-16..........................         0.92         1.78         1.84         4.24         5.89        10.04        14.44           19.38        41.48
Oct-16..........................         1.60         2.76         2.77         6.00         7.52        11.19        13.79           17.15        37.21
Nov-16..........................         1.49         2.70         2.72         5.84         6.99         9.77        12.62           16.97        40.90
Dec-16..........................         1.69         2.98         2.88         6.29         7.82        11.13        13.57           18.68        34.96
Jan-17..........................         2.08         3.51         3.29         6.89         8.59        11.57        13.51           17.30        33.26
Feb-17..........................         1.96         3.33         3.21         6.70         8.39        11.12        13.29           16.59        35.40
Mar-17..........................         1.90         3.16         3.05         6.72         8.50        11.64        14.12           15.93        34.97
Apr-17..........................         2.29         3.34         3.10         6.72         8.38        12.32        15.07           18.00        30.78
May-17..........................         4.06         4.02         3.23         6.65         8.42        12.26        14.97           17.66        28.74
Jun-17..........................         1.36         2.15         2.15         5.07         6.99        11.88        16.71           22.63        31.06
Jul-17..........................         1.45         2.49         2.58         6.02         8.03        12.20        14.85           19.55        32.83
Aug-17..........................         1.52         2.67         2.76         6.42         8.79        12.70        14.21           19.41        31.50
Sep-17..........................         2.01         3.29         3.08         6.74         8.98        12.38        13.73           18.52        31.27
Oct-17..........................         1.99         3.45         3.21         6.94         9.26        12.39        13.30           18.03        31.42
Nov-17..........................         1.85         3.10         3.11         6.80         9.07        12.20        13.06           18.30        32.51
Dec-17..........................         2.06         3.54         3.60         7.78         9.43        12.58        13.73           19.12        28.16
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                             Table 4--Composition of Shares Executed by Order Size Category
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          501-1,000    1001-2,000   2001-4,000   4001-7,500    7500-15,000     >15,000
                                   <100  (%)     101-300      301-500        (%)          (%)          (%)          (%)            (%)           (%)
---------------------------------------------------(%)----------(%)-------------------------------------------------------------------------------------
Jan-16..........................         6.25        10.48         9.45        17.31        14.62        10.14        10.60            8.43         8.90
Feb-16..........................         5.94         9.72         9.20        16.39        13.89         9.67        10.88            9.53        11.14
Mar-16..........................         5.79         9.59         9.07        16.56        14.13        10.79        11.31            9.99         9.13
Apr-16..........................         6.84        11.14        10.10        17.62        13.89        10.93        10.47            9.28         7.38
May-16..........................         7.38        11.61        10.14        17.20        13.47        10.70         9.84            8.47         8.99
Jun-16..........................         7.10        10.66         9.04        15.22        13.52        10.28        11.45           10.13        10.13
Jul-16..........................         6.18         9.52         8.28        14.74        12.55        10.05        13.28           11.29        10.57
Aug-16..........................         4.48         7.45         6.93        12.87        12.48         9.78        15.50           15.54        10.23
Sep-16..........................         4.73         7.83         6.94        12.86        12.43        10.04        16.13           14.42        10.16
Oct-16..........................         6.76        10.32         8.76        15.87        14.13        11.19        11.68           10.00         8.23
Nov-16..........................         7.02        11.19         9.76        17.17        14.19         9.77        10.31            8.99         8.58
Dec-16..........................         6.99        10.91         9.22        17.06        15.32        11.13        10.68            9.16         6.67
Jan-17..........................         8.21        12.23         9.82        17.25        15.76        11.57         9.59            7.24         6.40
Feb-17..........................         8.20        12.39        10.36        18.42        15.80        11.12         9.45            6.93         5.64
Mar-17..........................         7.67        11.72        10.02        19.32        16.40        11.64         9.76            6.64         4.93
Apr-17..........................         8.48        11.45         9.57        18.22        15.60        12.32        10.32            7.81         4.50
May-17..........................        14.15        12.70         9.29        16.65        14.45        12.26         9.45            7.18         3.52
Jun-17..........................         5.58         8.07         7.39        15.41        14.63        11.88        13.89           13.50         6.20
Jul-17..........................         5.67         9.03         8.53        17.83        16.45        12.20        11.56            9.71         6.11
Aug-17..........................         5.78         9.30         8.88        18.25        17.51        12.70        10.54            8.75         5.72
Sep-17..........................         7.32        10.97         9.79        18.78        17.26        12.38         9.53            7.60         4.98
Oct-17..........................         6.53        10.74         9.74        18.74        17.63        12.39         9.21            8.01         5.35
Nov-17..........................         6.28        10.18         9.41        18.28        17.38        12.20         9.80            8.44         6.08
Dec-17..........................         6.50        10.99        10.31        20.09        16.89        12.58         9.35            7.30         4.60
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As Table 5 shows, during 2016-17, fill rates trended near 80% for
orders up to 300 shares, while the average shares available at the
inside was 300 shares. Data published to the SIP indicates when
liquidity is available for retail

liquidity seekers inside the spread, and on which side.

                                                      Table 5--Fill Rates by Retail Take Order Size
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          501-1,000   1,001-2,000  2,001-4,000  4,001-7,500   7,500-15,000     >15,000
                                   <100  (%)     101-300      301-500        (%)           (%)          (%)          (%)           (%)           (%)
---------------------------------------------------(%)----------(%)-------------------------------------------------------------------------------------
Jan-16..........................        85.30        72.92        62.76        52.36        35.67        20.84        12.61            8.68         2.95
Feb-16..........................        83.81        71.47        62.76        51.21        35.07        21.18        13.92            9.84         3.65
Mar-16..........................        82.78        70.92        62.38        51.69        35.25        22.06        13.80           10.06         3.61
Apr-16..........................        83.19        71.37        62.58        50.99        33.95        21.41        13.27            9.72         3.42
May-16..........................        82.49        67.65        56.62        45.70        29.09        19.75        12.04            8.77         3.76
Jun-16..........................        71.79        57.72        46.59        36.28        26.76        17.91        11.69            8.46         3.84
Jul-16..........................        80.95        68.80        57.26        46.92        34.50        24.39        17.19           12.20         4.71
Aug-16..........................        83.54        71.79        61.39        49.17        34.92        24.40        17.64           12.97         4.06
Sep-16..........................        80.06        69.04        59.19        47.50        33.04        22.58        17.49           11.65         3.83
Oct-16..........................        83.10        73.58        62.22        52.05        36.97        25.09        16.67           11.48         4.35
Nov-16..........................        81.40        71.75        62.28        50.90        35.15        22.68        14.15            9.18         3.63
Dec-16..........................        84.73        75.04        65.56        55.67        40.18        25.76        16.14           10.06         3.91
Jan-17..........................        84.49        74.69        64.07        53.69        39.35        24.97        15.22            8.98         4.13
Feb-17..........................        84.49        75.25        65.39        55.64        38.16        23.34        14.40            8.46         3.23
Mar-17..........................        84.31        77.43        68.69        60.00        40.26        24.26        14.42            8.70         2.95
Apr-17..........................        86.84        80.63        72.49        63.69        43.71        26.79        16.10           10.19         3.44
May-17..........................        89.57        81.19        73.95        64.31        44.07        26.41        16.22           10.45         3.15
Jun-17..........................        78.80        72.17        66.04        58.35        40.20        24.80        15.96           11.46         3.83
Jul-17..........................        77.45        71.84        65.58        58.68        40.59        24.56        15.42            9.85         3.69
Aug-17..........................        74.17        67.92        62.76        55.48        38.88        23.48        14.48            8.80         3.54
Sep-17..........................        84.30        77.24        73.73        64.64        44.56        25.81        16.11            9.51         3.69
Oct-17..........................        82.84        78.51        76.55        68.14        48.06        28.59        17.47           11.21         4.30
Nov-17..........................        82.32        79.42        73.12        65.08        46.34        28.08        18.16           11.17         4.52
Dec-17..........................        81.62        80.19        74.12        66.68        46.28        28.70        17.60            9.86         4.22
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Table 6 shows the development of orders sizes received in the
Program over time. Orders adding liquidity to the Exchange averaged in
the mid-300 share range for most of the Program's recent history,
although the median size has increased since August 2016. (The Exchange
notes that the median order size is the average of the daily median
order sizes across all orders received on a trade date for NYSE
symbols.) After averaging near 2,000 shares at times, the size of
retail orders removing liquidity from the Exchange has dropped over
time, with median sizes periodically exceeding 300 shares. The slightly
smaller take order sizes helps explain the better overall fill rates
and improved effective spreads in the Program's recent history.
However, as shown by the occasional oversized orders, there remains
ample liquidity and opportunity in the Program to satisfy liquidity
takers with meaningful price improvement.

                                           Table 6--Order Size Details
----------------------------------------------------------------------------------------------------------------
                                                          Provide orders                    Take orders
                                                 ---------------------------------------------------------------
                                                      Average         Median          Average         Median
----------------------------------------------------------------------------------------------------------------
Jan-16..........................................             297             157           1,941             259
Feb-16..........................................             314             191           1,958             272
Mar-16..........................................             312             182           1,787             267
Apr-16..........................................             306             176           1,523             215
May-16..........................................             294             100           1,542             217
Jun-16..........................................             314             100           1,508             207
Jul-16..........................................             323             105           1,585             202
Aug-16..........................................             340             194           2,230             338
Sep-16..........................................             338             200           2,212             336
Oct-16..........................................             357             200           1,494             204
Nov-16..........................................             382             200           1,623             212
Dec-16..........................................             367             200           1,398             206
Jan-17..........................................             361             200           1,217             199
Feb-17..........................................             350             200           1,264             200
Mar-17..........................................             360             200           1,304             200
Apr-17..........................................             353             200           1,223             189
May-17..........................................             416             200             961             105
Jun-17..........................................             370             200           1,517             190
Jul-17..........................................             355             200           1,364             180
Aug-17..........................................             360             200           1,310             196
Sep-17..........................................             391             200           1,141             164
Oct-17..........................................             444             200           1,127             172
Nov-17..........................................             422             200           1,193             184
Dec-17..........................................             395             200           1,026             195
----------------------------------------------------------------------------------------------------------------

    Although the Program provides the opportunity to achieve
significant price improvement, the Program has not generated
significant activity. As Table 7 shows, the average daily volume for
the Program has hovered in the three to four million share range, and
has accounted for less than 0.1% of consolidated NYSE-listed volume in
2016-17. The Program's share of NYSE volume during that period was
below 0.4%. Moreover, no symbol during the past two years achieved as
much as 1.6% of their consolidated average daily volume (``CADV'') in
the Program, and all of the highest share symbols are low volume
securities. As Table 2 shows, during the 2016-2017 period, only 1.0% of
all day/symbol pairs exceeded 5% share of CADV, with another 8.2% of
day/symbol pairs achieving a share of CADV between 1% and 5%. Fully 75%
of all day/symbol pairs exhibited RLP share of 0.25% or less during
that time. For ticker symbols that traded at least 100 days during the
two-year period, more than half of all symbols over that period had
less than 0.10% of their consolidated volume executed in the program,
and 96% less than 0.50%. The Program's share of the total market in
NYSE-listed securities is tiny considering that non-ATS activity in the
U.S. equity markets, based on FINRA transparency data and NYSE Trade
and Quote (``TAQ'') volume statistics, is estimated to be approximately
20-25% of all U.S. equity volume. In short, the Program represents a
minor participant in the overall market to price improve marketable
retail order flow. While participation was low, as noted above, retail
investors that participated in the Program received price improvement
on their orders, which was one of the stated goals of the Program. The
NYSE therefore believes that the pilot data supports making the Program
permanent.

                                                     Table 7
----------------------------------------------------------------------------------------------------------------
                                                           Daily results                Two year aggregate
                Distribution (%)                 ---------------------------------------------------------------
                                                       Count        Percentage         Count        Percentage
----------------------------------------------------------------------------------------------------------------
>50.............................................              63          0.0088               0          0.0000
25.00-50.00.....................................             179          0.0251               0          0.0000
10.00-25.00.....................................           1,599          0.2238               0          0.0000
5.00-10.00......................................           5,569          0.7795               0          0.0000
1.00-5.00.......................................          58,368          8.1696               6          0.1733
0.75-1.00.......................................          18,527          2.5932              18          0.5198
0.50-0.75.......................................          29,869          4.1807             111          3.2053
0.25-0.50.......................................          64,440          9.0194             764         22.0618
0.10-0.25.......................................         116,211         16.2657             736         21.2532
0.05-0.10.......................................         101,813         14.2504             538         15.5357
0.01-0.05.......................................         181,194         25.3611           1,161         33.5258
<0.01...........................................         136,624         19.1228             129          3.7251
----------------------------------------------------------------------------------------------------------------

    Moreover, beyond providing a meaningful price improvement to retail
investors through a competitive and transparent pricing process
unavailable in non-exchange venues, the data collected during the
Program supports the conclusion that the Program has not had any
significant negative market impact. As set forth in Table 8, the
Exchange measured the correlation between several critical market
quality statistics and either RLP share of CADV, shares posted dark by
providers seeking to interact with retail orders or the amount of time
during the trading day that RLP liquidity was available. The
correlations the Exchange measured were levels, not changes. As a
result, fairly high correlation coefficients should suggest that the
Program had a meaningful impact on the statistics. In no case did the
Exchange observe a single correlation greater than an absolute value of
0.15, and even at the 90th percentile of all symbols, there was no
correlation of even 0.30. In short, there was no measure the Exchange
studied supporting the conclusion that the Program had any noticeable
impact on market quality.

                                                     Table 8
----------------------------------------------------------------------------------------------------------------
                                                                                90th
                  Statistic 1                              Statistic 2                Average       percentile
                                                                                correlation     correlation
----------------------------------------------------------------------------------------------------------------
% Time With RLP Liquidity.....................  Consolidated Spread.............          0.0001          0.0003
% Time With RLP Liquidity.....................  Eff. Sprd. Ex RPI...............          0.0943          0.2925
RLP Size at PBBO..............................  Consolidated Spread.............          0.0003          0.0005
RLP Size at PBBO..............................  Eff. Sprd. Ex RPI...............          0.0617          0.2348
RLP Share of CADV.............................  Eff. Sprd. Ex RPI...............          0.0010          0.1091
RLP Share of CADV.............................  Share wtd. NBBO Spread..........          0.0152          0.1357
RLP Share of CADV.............................  Time wtd. NBBO Spread...........          0.0002          0.0002
RLP Share of CADV.............................  Time wtd. NYSE BBO Spread.......          0.0002          0.0002
----------------------------------------------------------------------------------------------------------------

    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 and the
scant evidence that the Program negatively impacted the marketplace
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,\54\ in general, and
Section 6(b)(5) of the Act,\55\ 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.
---------------------------------------------------------------------------

    \54\ 15 U.S.C. 78f(b).
    \55\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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.
    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.
    Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition. For 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
believes that the data supplied to the Commission and experience gained
over nearly six years have demonstrated that the Program creates price
improvement opportunities for retail orders that are equal to what
would be provided under OTC internalization arrangements, thereby
benefiting retail investors and increasing competition between
execution venues. The Exchange also believes that making the Program
permanent will promote competition between execution venues operating
their own retail liquidity programs. Such competition will lead to
innovation within the market, thereby increasing the quality of the
national market system. 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. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 45 days of the date of publication of this notice in the
Federal Register or up to 90 days (i) as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or (ii) as to which the self-regulatory
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-NYSE-2018-28 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2018-28. 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 the filing also will be available for inspection
and copying at the principal offices 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-NYSE-2018-28, and should be submitted on
or before July 12, 2018.
---------------------------------------------------------------------------

    \56\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\56\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-13303 Filed 6-20-18; 8:45 am]
 BILLING CODE 8011-01-P


Anonymous Comment on Docket No. EPA-R01-UST-2022-0204-0001; Vermont Final Approval of State Underground Storage Tank Program Revisions and Incorporated by Reference Proposed Rule published Thursday, July 14, 2022:

I recommend we do not permit underground storage, we have already lived through this disaster of leaking storage containers and the costly process of digging them up. no more

Response to Comment: The Federal Register (FR) notice, published on July 14, 2022, was a direct final rule approving revisions to Vermont's Underground Storage Tank program. Issues raised in this comment do not relate to and are beyond the scope of this rulemaking.  Therefore, EPA does not view this comment as a significant negative comment that would affect EPA's approval of the state program.  The direct final rule will take effect on September 12, 2022.