[Federal Register Volume 83, Number 191 (Tuesday, October 2, 2018)]
[Notices]
[Pages 49555-49556]
[FR Doc No: 2018-21414]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 11834-068]

Notice of Application for Amendment of License, Soliciting
Comments, Motions To Intervene, and Protests; Brookfield White Pine
Hydro, LLC

    Take notice that the following hydroelectric application has been
filed with the Commission and is available for public inspection:
    a. Type of Proceeding: Application for amendment of license.
    b. Project No.: 11834-068.
    c. Date Filed: August 28, 2018.
    d. Licensee: Brookfield White Pine Hydro, LLC.
    e. Name of Project: Upper and Middle Dams Storage Project.
    f. Location: The project is located on the Rapid River in Oxford
and Franklin counties, Maine.
    g. Filed Pursuant to: Federal Power Act, 16 U.S.C. 791a--825r.
    h. Licensee Contact: Ms. Kelly Maloney, Brookfield Renewable, 150
Main Street, Lewiston, ME,<PHONE_NUMBER>,
[email protected].
    i. FERC Contact: Ms. Rebecca Martin,<PHONE_NUMBER>,
[email protected].
    j. Deadline for filing comments, interventions, and protests is 30
days from the issuance date of this notice by the Commission. The
Commission strongly encourages electronic filing. Please file motions
to intervene, protests and comments using the Commission's eFiling
system at http://www.ferc.gov/docs-filing/efiling.asp. Commenters can
submit brief comments up to 6,000 characters, without prior
registration, using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and contact information
at the end of your comments. For assistance, please contact FERC Online
Support at [email protected],<PHONE_NUMBER> (toll free), or
(202) 502-8659 (TTY). In lieu of electronic filing, please send a paper
copy to: Secretary, Federal Energy Regulatory Commission, 888 First
Street NE, Washington, DC 20426. The first page of any filing should
include docket number P-11834-068.
    k. Description of Project Facilities: The project includes two
developments: Upper Dam, which impounds Mooselookmeguntic Lake, and
Middle Dam, which impounds Richardson Lake. The two dams operate as a
single water storage project to regulate flows to the Androscoggin
River for downstream hydroelectric generation, reduction of flood
flows, and other beneficial uses. The proposed work would only occur at
Middle Dam. Project works at the Middle Dam Development consist of the
244-foot-long Middle Dam equipped with a gatehouse containing: (a)
Three 15-foot-wide by 12-foot-deep sluice gates: (b) five 6-foot-wide
by 14.7-foot-deep gates; (c) six 7-foot-wide 14.7-foot-deep shoal
gates; and (d) six 9-foot-wide by 12.3-foot deep spillway gates; a 560-
foot-long earthen dike extending north of the gatehouse; a 200-foot-
long earthen dike extending south of the gatehouse; the 7,470 acre
reservoir; the 180-foot-long earthen dike (Black Cat Dike) located
2,000 feet to the southeast of Middle Dam; and appurtenant facilities.
    l. Description of Request: The licensee has filed a copy of its
application with the Maine Land Use Planning Commission and the US Army
Corps of Engineers for its proposed replacement of the spillway at the
Middle Dam Development. Replacement of the Middle Dam Development
spillway is being required under Part 12 of the Commission's
regulations for safety of water power projects and project works. The
proposal involves a multi-year, phased approach beginning with the
installation of a bypass gate to pass all river flow during the removal
of the existing dam and installation of the new dam. Black Cat Dike
embankment would also be modified to meet Commission requirements. The
proposed measures would not alter the basic footprint of the existing
dam or involve substantial modification of the licensed operation of
the project. Work is proposed to begin in May 2019 and be completed by
December 15, 2023.
    m. This filing may be viewed on the Commission's website at http://www.ferc.gov/docs-filing/elibrary.asp. Enter the docket number
excluding the last three digits in the docket number field to access
the document. You may also register online at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and
issuances related to this or other pending projects. For assistance,
call 1-866-208-3676 or email [email protected], for TTY, call
(202) 502-8659. A copy is also available for inspection and
reproduction in the Commission's Public Reference Room located at 888
First Street NE, Room 2A, Washington, DC 20426, or by calling (202)
502-8371.
    n. Individuals desiring to be included on the Commission's mailing
list should so indicate by writing to the Secretary of the Commission.
    o. Comments, Protests, or Motions to Intervene: Anyone may submit
comments, a protest, or a motion to intervene in accordance with the
requirements of Rules of Practice and Procedure, 18 CFR 385.210, .211,
.212 and .214. In determining the appropriate action to take, the
Commission will consider all protests or other comments filed, but only
those who file a motion to intervene in accordance with the
Commission's Rules may become a party to the proceeding. Any comments,
protests, or motions to intervene must be received on or before the
specified comment date for the particular application.

    p. Filing and Service of Responsive Documents: Any filing must (1)
bear in all capital letters the title ``COMMENTS'', ``PROTEST'', or
``MOTION TO INTERVENE'' as applicable; (2) set forth in the heading the
name of the applicant and the project number of the application to
which the filing responds; (3) furnish the name, address, and telephone
number of the person protesting or intervening; and (4) otherwise
comply with the requirements of 18 CFR 385.2001 through 385.2005. All
comments, motions to intervene, or protests must set forth their
evidentiary basis and otherwise comply with the requirements of 18 CFR
4.34(b). All comments, motions to intervene, or protests should relate
to the surrender application that is the subject of this notice.
Agencies may obtain copies of the application directly from the
applicant. A copy of any protest or motion to intervene must be served
upon each representative of the applicant specified in the particular
application. If an intervener files comments or documents with the
Commission relating to the merits of an issue that may affect the
responsibilities of a particular resource agency, they must also serve
a copy of the document on that resource agency. A copy of all other
filings in reference to this application must be accompanied by proof
of service on all persons listed in the service list prepared by the
Commission in this proceeding, in accordance with 18 CFR 4.34(b) and
385.2010.
    q. Agency Comments--Federal, state, and local agencies are invited
to file comments on the described proceeding. If any agency does not
file comments within the time specified for filing comments, it will be
presumed to have no comments.

    Dated: September 26, 2018.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2018-21414 Filed 10-1-18; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register: January 7, 2008 (Volume 73, Number 4)]
[Notices]
[Page 1241-1246]
[DOCID:fr07ja08-61]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57066; File No. SR-ISE-2007-65]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing of Proposed Rule Change and Amendment No. 1
Thereto Relating to Generic Listing Standards for Exchange-Traded Funds
Based on Fixed Income Indexes and Order Granting Accelerated Approval
of the Proposed Rule Change, as Modified by Amendment No. 1

December 28, 2007.
    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 July 24, 2007, the International Securities Exchange, LLC (``ISE''
or ``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared substantially by the Exchange.
On December 28, 2007, the Exchange filed Amendment No. 1.\3\ This order
provides notice of the proposed rule change, as amended, and approves
the amended proposal on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(l).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 replaced and superseded the original filing
in its entirety.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend ISE Rules 2123 and 2131 to include
generic listing and/or trading standards for Investment Company Units
(``Units'') and Portfolio Depositary Receipts (``PDRs'') that are based
on indexes or portfolios consisting of fixed income securities (``Fixed
Income Indexes'') or composite indexes consisting of both equity and
fixed income securities (collectively, ``Combination Indexes''). The
text of the proposed rule change is available at the Exchange's
principal office, on the Exchange's Web site at http://www.ise.com, 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 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 these statements may be examined at the places specified in
Item III below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects 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 revise ISE Rules 2123 and 2131 to include
generic listing and trading standards for series of Units and PDRs
(Units and PDRs, collectively referred to as ``ETFs'') that are based
on Fixed Income Indexes or on Combination Indexes. This proposal would
enable the Exchange to list and trade ETFs pursuant to Rule 19b-4(e)
under the Act \4\ if each of the conditions set forth in ISE Rules 2123
and 2131, as applicable, is satisfied. Rule 19b-4(e) provides that the
listing and trading of a new derivative securities product by a self-
regulatory organization (``SRO'') shall not be deemed a proposed rule
change, pursuant to paragraph (c)(1) of Rule 19b-4,\5\ if the
Commission has approved, pursuant to Section 19(b) of the Act,\6\ the
SRO's trading rules, procedures, and listing standards for the product
class that would include the new derivatives securities product, and
the SRO has a surveillance program for the product class.\7\ Similar
proposals by the American Stock Exchange LLC (``Amex'') and NYSE Arca,
Inc. (``NYSE Arca'') have been approved by the Commission.\8\
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    \4\ 17 CFR 240.19b-4(e).
    \5\ 17 CFR 240.19b-4(c)(1).
    \6\ 15 U.S.C. 78s(b).
    \7\ When relying on Rule 19b-4(e), the SRO must submit Form 19b-
4(e) to the Commission within five business days after the exchange
begins trading the new derivative securities product. See 17 CFR
240.19b-4(e)(2)(ii).
    \8\ See Securities Exchange Act Release No. 55437 (March 9,
2007), 72 FR 12233 (March 15, 2007) (SR-Amex-2006-118); Securities
Exchange Act Release No. 55783 (May 17, 2007), 72 FR 29294 (May 24,
2007) (SR-NYSEArca-2007-36).
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a. ETFs
    ISE Rule 2123 provides standards for the initial and continued
listing of Units, which are securities issued by a unit investment
trust, an open-end management investment company (open-end mutual
fund), or a similar entity based on a portfolio of stocks or fixed
income securities that seeks to provide investment results that
correspond generally to the price and yield performance of a specified
foreign or domestic stock index or fixed income securities index. PDRs
represent securities based on a unit investment trust that holds the
securities that comprise an index or portfolio underlying a series of
PDRs. Pursuant to ISE Rules 2123 and 2131, Units and PDRs must be
issued in a specified aggregate minimum number in return for a deposit
of specified securities and/or a cash amount, with a value equal to the
next determined net asset value (``NAV''). When aggregated in the same
specified minimum number, Units and PDRs must be redeemable by the
issuer for securities and/or cash, with a value equal to the next
determined NAV. The NAV is calculated once a day after the close of the
regular trading day.
    To meet the investment objective of providing investment returns
that correspond to the price, dividend, and yield performance of the
underlying index, an ETF may use a ``replication'' strategy or a
``representative sampling'' strategy with respect to the ETF portfolio.
An ETF using a replication strategy would invest in each security found
in the underlying index in about the same proportion as that security
is represented in the index itself. An ETF using a representative
sampling strategy would generally invest in a significant number, but
perhaps not all, of the component securities of the underlying index,
and would hold the securities that, in the aggregate, are intended to
approximate the full index in terms of certain key characteristics. In
the context of a Fixed Income Index, such characteristics may include
liquidity, duration, maturity, and yield.
    In addition, an ETF portfolio may be adjusted in accordance with
changes in the composition of the underlying index or to maintain
compliance with requirements applicable to a regulated investment
company under the Internal Revenue Code (``IRC'').\9\
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    \9\ In order for an ETF to qualify for tax treatment as a
regulated investment company, it must meet several requirements
under the IRC, including requirements with respect to the nature and
the value of the ETF's assets.
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b. Generic Listing Standards for Exchange-Traded Funds
    The Commission has previously approved generic listing standards
for ETFs based on indexes that consist of stocks listed on U.S.
exchanges as well as on indexes consisting of U.S. Components, Non-U.S.
Components or both U.S. and Non-U.S. Components.\10\

In addition, the Commission has previously approved the listing and
trading of ETFs based on fixed income securities indexes.\11\
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    \10\ See ISE Rule 2123 and Securities Exchange Act Release No.
54528 (September 28, 2006), 71 FR 58650 (October 4, 2006) (SR-ISE-
2006-48) (approving generic listing standards for ICUs); Securities
Exchange Act Release No. 56633 (October 9, 2007), 72 FR 58696
(October 16, 2007) (SR-ISE-2007-60) (approving generic listing
standards for ETFs based on international or global indexes or
indexes described in rules previously approved by the Commission as
underlying benchmarks for derivative securities).
    \11\ See Securities Exchange Act Release No. 46299 (August 1,
2002), 67 FR 51907 (August 9, 2002) (SR-NYSE-2002-26); Securities
Exchange Act Release No. 55780 (May 17, 2007), 72 FR 29022 (May 23,
2007) (SR-NYSE-2007-37).
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    The Commission has also approved listing standards for other index-
based derivatives that permit the listing--pursuant to Rule 19b-4(e)--
of such securities where the Commission had previously approved the
trading of specified index-based derivatives on the same index, on the
condition that all of the standards set forth in the original order are
satisfied by the exchange employing generic listing standards.\12\
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    \12\ See NYSE Arca Equities Rule 5.2(j)(6); Securities Exchange
Act Release No. 52204 (August 3, 2005), 70 FR 46559 (August 10,
2005) (SR-PCX-2005-63) (order approving generic listing standards
for index-linked securities); Securities Exchange Act Release No.
56117 (July 23, 2007), 72 FR 41369 (July 27, 2007) (SR-ISE-2007-47)
(order approving generic listing standards for index-linked
securities).
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    The Exchange believes that adopting additional generic listing
standards for ETFs based on Fixed Income Indexes and Combination
Indexes and applying Rule 19b-4(e) thereto should fulfill the intended
objective of that rule by allowing those ETFs that satisfy the proposed
generic listing standards to commence trading, without the need for
individualized Commission approval. The proposed rules have the
potential to reduce the timeframe for bringing ETFs to market, thereby
reducing the burdens on issuers and other market participants. The
failure of a particular index or portfolio to comply with the proposed
generic listing standards under Rule 19b-4(e) would not, however,
preclude the Exchange from submitting a separate filing pursuant to
Section 19(b)(2) requesting Commission approval to list and trade a
particular ETF.
c. Fixed Income and Combination Index ETFs
    ETFs listed pursuant to the proposed generic standards would be
traded in all other respects under the Exchange's existing trading
rules and procedures that apply to all securities traded on ISE,
including ETFs, and would be covered under the Exchange's surveillance
procedures for equities.\13\
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    \13\ The Exchange notes that its current trading surveillance
focuses on detecting securities trading outside their normal
patterns. When such situations are detected, surveillance analysis
follows and investigations are opened, where appropriate, to review
the behavior of all relevant parties for all relevant trading
violations.
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    To list an ETF pursuant to the proposed generic listing standards
for ETFs based on Fixed Income Indexes or Combination Indexes, the
index underlying the ETF must satisfy all the conditions contained in
proposed ISE Rules 2123 (for Units) or ISE Rule 2131 (for PDRs), as
applicable. As with the existing generic listing standards for ETFs
based on domestic and international or global indexes, the proposed
generic listing standards are intended to ensure that fixed income
securities with substantial market distribution and liquidity account
for a substantial portion of the weight of an index or portfolio. While
the standards in this proposal are based on the standards contained in
Commission and Commodity Futures Trading Commission (``CFTC'') rules
regarding the application of the definition of narrow-based security
index to debt security indexes \14\ as well as existing fixed income
ETFs, they have been adapted as appropriate to apply generally to Fixed
Income Indexes for ETFs.
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    \14\ See Securities Exchange Act Release No. 54106 (July 6,
2006), 71 FR 39534 (July 13, 2006) (File No. S7-07-06) (``Joint
Rules'').
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d. Fixed Income Securities
    As proposed, ISE Rule 2123(b)(3) and .02 of the Supplementary
Material to ISE Rule 2131 define the term ``Fixed Income Securities''
to include, notes, bonds (including convertible bonds), debentures, or
evidences of indebtedness that include, but are not limited to, U.S.
Treasury securities (``Treasury Securities''), government sponsored
entity securities (``GSE Securities''), municipal securities, trust
preferred securities,\15\ supernational debt,\16\ and debt of a foreign
country or subdivision thereof. This new definition is designed to
create a category of ETFs based on Fixed Income Indexes that may be
listed and traded pursuant to Rule 19b-4(e) under the Act.
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    \15\ Trust preferred securities are undated cumulative
securities issued from a special purpose trust in which a bank or
bank holding company owns all of the common securities. The trust's
sole asset is a subordinated note issued by the bank or bank holding
company. Trust preferred securities are treated as debt for tax
purposes so that the distributions or dividends paid are a tax
deductible interest expense.
    \16\ Supranational debt represents the debt of international
organizations such as the World Bank, the International Monetary
Fund, regional multilateral development banks, and multilateral
financial institutions. Examples of regional multilateral
development banks include the African Development Bank, Asian
Development Bank, European Bank for Reconstruction and Development,
and the Inter-American Development Bank. Examples of multilateral
financial institutions include the European Investment Bank and the
International Fund for Agricultural Development.
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    For purposes of the proposed definition, a convertible bond is
deemed to be a Fixed Income Security up until the time that it is
converted into its underlying common or preferred stock.\17\ Once
converted, the equity security may no longer continue as a component of
a Fixed Income Index under the proposed rules and accordingly would be
removed from such index.
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    \17\ The Exchange notes that under Section 3(a)(11) of the Act,
15 U.S.C. 78c(a)(11), a convertible security is defined as an equity
security. However, for the purpose of the proposed generic listing
criteria, ISE believes that defining a convertible security (prior
to its conversion) as a Fixed Income Security is consistent with the
objectives and intention of the generic listing standards for fixed-
income-based ETFs as well as the Act.
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    The Exchange proposes that, to list a series of Units or PDRs based
on a Fixed Income Index pursuant to the generic standards, the index
must meet the following criteria:
     The index or portfolio must consist of Fixed Income
Securities;
     Components that in aggregate account for at least 75% of
the weight of the index or portfolio each must have a minimum original
principal amount outstanding of $100 million or more;
     No component Fixed Income Security (excluding Treasury
Securities or GSE Securities) represents more than 30% of the weight of
the index, and the five most heavily weighted component fixed income
securities in the index do not in the aggregate account for more than
65% of the weight of the index;
     An underlying index or portfolio (excluding one consisting
entirely of exempted securities) must include a minimum of 13 non-
affiliated issuers; and
     Component securities that in aggregate account for at
least 90% of the weight of the index or portfolio must be either:
     From issuers that are required to file reports pursuant to
Sections 13 and 15(d) of the Act; \18\
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    \18\ 15 U.S.C. 78m and 78o(d).
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    [cir] From issuers that have a worldwide market value of its
outstanding common equity held by non-affiliates of $700 million or
more;
    [cir] From issuers that have outstanding securities that are notes,
bonds, debentures, or evidences of indebtedness having a total
remaining principal amount of at least $1 billion;
    [cir] Exempted securities as defined in Section 3(a)(12) of the
Act; \19\ or

    [cir] From issuers that are governments of foreign countries or
political subdivisions of foreign countries.
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    \19\ 15 U.S.C. 78c(a)(12).
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    The Exchange believes that these proposed component criteria
standards are reasonable for Fixed Income Indexes and, when applied in
conjunction with the other listing requirements, would result in ETFs
that are sufficiently broad-based in scope.
    The Exchange notes that the proposed standards are similar to the
standards set forth by the Commission and the CFTC in the Joint Rules
as well as existing fixed-income-based ETFs. First, in the proposed
standards, component Fixed Income Securities that in the aggregate
account for at least 75% of the weight of the index or portfolio would
have to have a minimum original principal amount outstanding of at
least $100 million; this is consistent with ISE Rule 2123(d)(1)(ii) and
.02(a)(2) of the Supplementary Material to ISE Rule 2131. Second, the
proposed standards provide that the most heavily weighted component
security cannot exceed 30% of the weight of the index or portfolio,
consistent with the standard for U.S. equity ETFs set forth in ISE Rule
2123(c)(2)(i)(C). In addition, this standard is identical to the
standard set forth by the Commission and the CFTC in the Joint
Rules.\20\ Third, in the proposed standards, the five most heavily
weighted component securities shall not exceed 65% of the weight of the
index or portfolio, which is consistent with the Joint Rules and the
standard for U.S. equity ETFs set forth in ISE Rule 2123(c)(2)(i)(C)
and .01(a)(1)(iii) of the Supplementary Material to ISE Rule 2131.
Fourth, the minimum number of Fixed Income Securities (except for
portfolios consisting entirely of exempted securities, such as Treasury
Securities or GSE Securities) from unaffiliated \21\ issuers in the
proposed standards would be 13, consistent with the standard for U.S.
equity ETFs set forth in ISE Rule 2123(c)(2)(i)(D), .01(a)(1)(v) of the
Supplementary Material to ISE Rule 2131, and the Joint Rules. This
requirement, together with the diversification standards set forth
above, would provide assurance that the Fixed Income Securities
comprising an index on which an overlying ETF may be listed pursuant to
this proposal, would not be overly dependent on the price behavior of a
single component or small group of components.
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    \20\ See supra at note 10.
    \21\ Rule 405 under the Securities Act of 1933, 17 CFR 230.405,
defines an affiliate as a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or
is under common control with, such person. Control, for this
purpose, is the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by
contract, or otherwise.
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    Finally, the proposed standards would require that at least 90% of
the weight of the index or portfolio must be either: (i) From issuers
that are required to file reports pursuant to Sections 13 and 15(d) of
the Act; \22\ (ii) from issuers that each have a worldwide market value
of its outstanding common equity held by non-affiliates of $700 million
or more; (iii) from issuers that have outstanding securities that are
notes, bonds, debentures, or evidences of indebtedness having a total
remaining principal amount of at least $1 billion; (iv) exempted
securities as defined in Section 3(a)(12) of the Act; \23\ or (v) from
issuers that are governments of foreign countries or a political
subdivision of foreign countries. This proposed standard is consistent
with a similar standard in the Joint Rules and is designed to ensure
that the component Fixed Income Securities have sufficient publicly
available information.
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    \22\ 15 U.S.C. 78m and 15 U.S.C. 78o(d).
    \23\ 15 U.S.C. 78c(a)(12).
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    The proposed generic listing standards for fixed income ETFs would
not require that component securities in an underlying index have an
investment-grade rating.\24\ In addition, the proposed requirements
would not require a minimum trading volume, due to the lower trading
volume that generally occurs in the fixed income markets as compared to
the equity markets.
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    \24\ Cf. Joint Rules, 71 FR at 30538.
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    The proposed rules would also provide that the Exchange could not
approve for listing or trading a series of ETFs based on a Combination
Index under the proposed generic listing standards if such series seeks
to provide investment results that either exceed the performance of a
specified index by a specified multiple (``Multiple ETF'') or that
correspond to the inverse (opposite) of the performance of a specified
index by a specified multiple (``Inverse ETF'').
e. Requirements for Listing and Trading ETFs Based on Combination
Indexes
    The Exchange also seeks to list and trade ETFs based on Combination
Indexes. An ETF listed or traded pursuant to the generic listing
standards for Combination Indexes would be traded, in all other
respects, under the Exchange's existing trading rules and procedures
that apply to all Exchange-traded securities, including ETFs, and would
be covered under the Exchange's surveillance program for equities.
    To list an ETF pursuant to the proposed generic listing standards
for Combination Indexes, an index underlying a Unit or PDR must satisfy
all the conditions contained in proposed ISE Rule 2123(e) (for Units)
and .03 of Supplementary Material to ISE Rule 2131 (for PDRs). However,
for Units traded on the Exchange pursuant to UTP, only the provisions
ISE Rule 2110 and paragraphs (c)(3), (c)(5), (f), (h), (i), and (l) of
Rule 2123--regarding minimum price variation, disseminated information,
written surveillance procedures, trading halts, hours of trading, and
disclosures--would apply. For PDRs traded on the Exchange pursuant to
UTP, only the provisions set forth in ISE Rules 2131(c) and
2131(e)(2)(ii), as well as paragraphs (c), (e), (f), and (g) of
Commentary .02 and Commentary .03 of the Supplementary Material to ISE
Rule 2131--regarding disclosures, trading halts, disseminated
information, minimum price variation, hours of trading, and written
surveillance procedures would apply. Further, Commentary .02(b)(ii) and
Commentary .03(a)(ii), which pertain to dissemination of the current
index value, would also apply to PDRs traded pursuant to UTP on the
Exchange that are based on Fixed Income Indexes and Combination
Indexes, respectively. These generic listing standards are intended to
ensure that securities with substantial market distribution and
liquidity account for a substantial portion of the weight of both the
equity and fixed income portions of an index or portfolio.
    Proposed ISE Rule 2123(e) and proposed .03 of the Supplementary
Material to ISE Rule 2131 provide that the Exchange may approve a
series of Units and PDRs--based on a combination of indexes or a series
of component securities representing the U.S. or domestic equity
market, the international equity market, and the fixed income market--
for listing and trading pursuant to Rule 19b-4(e) under the Act. The
standards that an ETF would have to comply with are as follows: (i)
Such portfolio or combination of indexes has been described in an
exchange rule for the trading of options, Units, PDRs, Index-Linked
Exchangeable Notes, or Index-Linked Securities that has been approved
by the Commission under Section 19(b)(2) of the Act, and all of the
standards set forth in the Commission's approval order are satisfied;
or (ii) the equity portion and fixed income portion of the component
securities separately meet the criteria set forth in 2123(c)(2)
(equities) and proposed ISE Rule

2123(d) (fixed income) for Units and .01 (equities) and .02 (fixed
income) of the Supplementary Material to ISE Rule 2131 for PDRs. In all
cases, however, Multiple or Inverse ETFs may not be listed pursuant to
ISE Rules 2123 or 2131.
f. Index Methodology and Dissemination
    The Exchange proposes to adopt (d)(2) and (e)(1) of ISE Rule 2123
and .02(b) and .03(a) of Supplementary Material to ISE Rule 2131 to
establish requirements for index methodology and dissemination in
connection with Fixed Income and Combination Indexes.
    If a broker-dealer or fund advisor is responsible for maintaining
(or has a role in maintaining) the underlying index, such broker-dealer
or fund advisor would be required to erect and maintain a ``firewall,''
in a form satisfactory to the Exchange, to prevent the flow of non-
public information regarding the underlying index from the personnel
involved in the development and maintenance of such index to others
such as sales and trading personnel.
    With respect to dissemination of the index values, the Exchange
proposes to adopt ISE Rules 2123(d)(2)(ii), 2123(e)(1)(ii), as well as
.02(b)(ii) and .03a(ii) of Supplementary Material to ISE Rule 2131. For
an ETF based on a Fixed Income Index, the underlying index value must
be widely disseminated by one or more major market data vendors at
least once a day during the time when the ETF shares trade on the
Exchange; if the index value does not change during some or all of the
period when trading is occurring on the Exchange, the last official
calculated index value must remain available throughout Exchange
trading hours. This reflects the nature of the fixed income markets as
well as the frequency of intra-day trading information with respect to
Fixed Income Indexes. For an ETF based on a Combination Index, the
underlying index value would have to be widely disseminated by one or
more major market data vendors at least every 15 seconds during the
time the ETF shares trade on the Exchange to reflect updates for the
prices of the equity securities included in the Combination Index; the
Non-U.S. Component Stock portion of the Combination Index will be
updated at least every 60 seconds,\25\ and the fixed income portion of
the Combination Index will be updated at least daily.
---------------------------------------------------------------------------

    \25\ See proposed ISE Rule 2123(e)(1)(ii) and proposed section
.03(a)(ii) of the Supplementary Material to ISE Rule 2131.
---------------------------------------------------------------------------

g. Application of General Rules
    Proposed ISE Rule 2123(f) as well as .02(c)-(g) and .03(b) of the
proposed Supplementary Material to ISE Rule 2131 would be added to
identify those requirements of ETFs that would apply to all such series
of Units or PDRs based on Fixed Income or Combination Indexes. This
would include the dissemination of the Intraday Indicative Value, an
estimate of the value of a share of each ETF, updated at least every 15
seconds. In addition, ISE Rule 2123(c)(5), which requires the Exchange
to implement written surveillance procedures applicable to a series of
Units, would apply to series of Units based on Fixed Income and
Combination Indexes. Proposed .02(d)-(g) to the Supplementary Material
of ISE Rule 2131, sets forth the requirements for PDRs relating to
initial shares outstanding, minimum price variation, trading hours, and
surveillance procedures.
    Proposed Sections .02(g) and .03(b) of the Supplementary Material
to ISE Rule 2131 provide that the written surveillance procedures
applicable to a series of PDRs listed and traded under Section .01
would apply to Fixed Income and Combination Indexes. The Exchange
represents that its surveillance procedures are adequate to properly
monitor the trading of the ETFs traded and/or listed pursuant to the
proposed generic standards. The Exchange stated that it may obtain
information via the Intermarket Surveillance Group (``ISG'') from
exchanges that are members or affiliates of the ISG. In addition, the
Exchange also has a general policy prohibiting the distribution of
material, non-public information by its employees.
    The Exchange states that the Commission has approved generic
listing standards providing for the listing pursuant to Rule 19b-4(e)
of other derivative products based on indexes or portfolios described
in rules previously approved by the Commission under Section 19(b)(2)
of the Act. The Exchange proposes to include in the generic listing
standards for the listing of Fixed Income and Combination Indexes based
Units and PDRs, in ISE Rule 2123(e) and .03 of the Supplementary
Material to ISE Rule 2131, indexes or portfolios described in rules
that have been approved by the Commission in connection with the
listing of options, Investment Company Units, Portfolio Depository
Receipts, Index-Linked Exchangeable Notes, or Index-Linked Securities.
The Exchange believes that the application of that standard to ETFs is
appropriate because the underlying index would have been subject to
Commission review in the context of the approval of listing of other
derivatives.\26\
---------------------------------------------------------------------------

    \26\ See supra notes 10 and 11.
---------------------------------------------------------------------------

    The Exchange notes that existing ISE Rules 2123 and 2131 provide
continued listing standards for all Units and PDRs. For example, where
the value of the underlying index or portfolio of securities on which
the ETF is based is no longer calculated or available, the Exchange
would commence delisting proceedings. The Exchange notes that ISE Rules
2123(a)(6) and 2131(e)(1)(ii) provide that, prior to approving an ETF
for listing, the Exchange will obtain a representation from the ETF
issuer that the NAV per share will be calculated daily and made
available to all market participants at the same time.
    The trading halt requirements for existing ETFs will similarly
apply to fixed income and combination index ETFs. In particular, ISE
Rules 2123(e) and 2131(e)(2)(ii) provide that, if the Intraday
Indicative Value or the index value applicable to that series of ETFs
is not being disseminated as required when the Exchange is the listing
market, the Exchange may halt trading during the day in which the
interruption to the dissemination of the Intraday Indicative Value or
the index value occurs. If the interruption to the dissemination of the
Intraday Indicative Value or the index value persists past the trading
day in which it occurred, the Exchange would halt trading no later than
the beginning of the trading day following the interruption.\27\
---------------------------------------------------------------------------

    \27\ If an ETF is traded on the Exchange pursuant to unlisted
trading privileges (``UTP''), the Exchange would halt trading if the
primary listing market halts trading in such ETF because the
Intraday Indicative Value and/or the index value is not being
disseminated. See ISE Rules 2123(c)(3) and 2131(e)(2)(ii).
---------------------------------------------------------------------------

    Additionally, the Exchange proposes to amend ISE Rule 2101 to
include securities contemplated by ISE Rule 2131 in the list of Equity
Securities that the Exchange will trade via UTP, unless and until the
Exchange files with the Commission a rule change under Section 19(b)(2)
of the Act and receives Commission approval to amend its rules to
become a listing market. Further, the Exchange proposes to expand the
definition of ``Equity Securities,'' as set forth in ISE Rule
2100(c)(7), to include PDRs.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section

6(b)(5) of the Act,\28\ which requires that the rules of a national
securities exchange be designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
to foster cooperation and coordination with persons engaged in
facilitating transactions in securities, 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.
In particular, ISE believes that this filing will provide investors
with access to a wider range of derivative securities products.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange believes that the proposed rule change would not
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.

III. 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 e-mail to<EMAIL_ADDRESS>Please include

File Number SR-ISE-2007-65 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-ISE-2007-65. This file
number should be included on the subject line if e-mail 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 Web site (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 inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of ISE. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-ISE-2007-65 and should be
submitted on or before January 28, 2008.

IV. Discussion

    After careful review, the Commission finds that the proposed rule
change, as amended, is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\29\ In particular, the Commission finds that the
proposal is consistent with Section 6(b)(5) of the Act \30\ in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, 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.
---------------------------------------------------------------------------

    \29\ In approving this rule change, the Commission notes that it
has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
    \30\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Currently, the Exchange would have to file a proposed rule change
with the Commission pursuant to Section 19(b)(1) of the Act \31\ and
Rule 19b-4 thereunder \32\ to list or trade any ETF based on a Fixed
Income Index or on a Combination Index. The Exchange also would have to
file a proposed rule change to list or trade an ETF based on a Fixed
Income or Combination Index described in an exchange rule previously
approved by the Commission as an underlying benchmark for a derivative
security. Rule 19b-4(e), however, provides that the listing and trading
of a new derivative securities product by an SRO will not be deemed a
proposed rule change pursuant to Rule 19b-4(c)(1) if the Commission has
approved, pursuant to Section 19(b) of the Act, the SRO's trading
rules, procedures, and listing standards for the product class that
would include the new derivative securities product, and the SRO has a
surveillance program for the product class. The Exchange's proposed
rules for the listing and trading of ETFs pursuant to Rule 19b-4(e)
based on (1) certain indexes with components that include Fixed Income
Securities or (2) indexes or portfolios described in exchange rules
previously approved by the Commission as underlying benchmarks for
derivative securities fulfill these requirements. Use of Rule 19b-4(e)
by ISE to list and trade such ETFs should promote competition, reduce
burdens on issuers and other market participants, and make such ETFs
available to investors more quickly.\33\
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78s(b)(1).
    \32\ 17 CFR 240.19b-4.
    \33\ The Commission notes that failure of a particular ETF to
satisfy the Exchange's generic listing standards does not preclude
the Exchange from submitting a separate proposal under Rule 19b-4 to
list and trade such ETF.
---------------------------------------------------------------------------

    The Commission previously has approved generic listing standards of
other exchanges that are substantially similar to those proposed here
by ISE.\34\ This proposal does not appear to raise any novel regulatory
issues. Therefore, the Commission finds that ISE's proposal is
consistent with the Act on the same basis that it approved those
earlier proposals.
---------------------------------------------------------------------------

    \34\ See supra at note 8.
---------------------------------------------------------------------------

    The Commission believes that ISE's proposal is consistent with
Section 11A(a)(1)(C)(iii) of the Act,\35\ which sets forth Congress'
finding that it is in the public interest and appropriate for the
protection of investors and the maintenance of fair and orderly markets
to assure the availability to brokers, dealers, and investors of
information with respect to quotations for and transactions in
securities. The value of a Fixed Income Index underlying an ETF listed
pursuant to this proposal is required to be widely disseminated by one
or more major market data vendors at least once a day. Likewise, the
value of an underlying Combination Index is required to be widely
disseminated by one or more major market data vendors at least once
every 15 seconds during

the time when the corresponding ETF trades on the Exchange, provided
that, with respect to the fixed income components of the Combination
Index, the impact on the index is required to be updated only once each
day.
---------------------------------------------------------------------------

    \35\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------

    Furthermore, the Commission believes that the proposed rules are
reasonably designed to promote fair disclosure of information that may
be necessary to price an ETF appropriately. If a broker-dealer or fund
advisor is responsible for maintaining (or has a role in maintaining)
the underlying index, such broker-dealer or fund advisor would be
required to erect and maintain a ``firewall,'' in a form satisfactory
to the Exchange, to prevent the flow of non-public information
regarding the underlying index from the personnel involved in the
development and maintenance of such index to others such as sales and
trading personnel. The Commission also notes that current ISE Rules
2123(a)(6) and 2131(e)(1)(ii) provide that, in connection with
approving an ETF issuer for listing on the Exchange, the Exchange would
obtain a representation from the ETF issuer that the NAV per share will
be calculated each business day and made available to all market
participants at the same time.
    The Commission also believes that the Exchange's trading halt rules
are reasonably designed to prevent trading in an ETF when transparency
is impaired. Proposed ISE Rule 2123(h) and current ISE Rule
2131(e)(2)(ii) provide that, when the Exchange is the listing market,
if the IIV or index value applicable to an ETF is not disseminated as
required, the Exchange may halt trading during the day in which the
interruption occurs. If the interruption continues, then the Exchange
will halt trading no later than the beginning of the next trading day.
Also, the Exchange may commence delisting proceedings in the event that
the value of the underlying index is no longer calculated or available.
    The Commission further believes that the trading rules and
procedures to which ETFs will be subject pursuant to this proposal are
consistent with the Act. The definition of ``Equity Securities''
already includes Units and, by this proposed rule change, that
definition would be expanded to also include PDRs.\36\ As a result,
ETFs would be subject to ISE's previously approved rules governing the
trading of Equity Securities.
---------------------------------------------------------------------------

    \36\ See proposed ISE Rule 2100(c)(7).
---------------------------------------------------------------------------

    The Exchange will implement written surveillance procedures for
ETFs based on Fixed Income Indexes or Combination Indexes.\37\ In
approving this proposal, the Commission relied on ISE's representation
that its surveillance procedures are adequate to properly monitor the
trading of ICUs listed pursuant to this proposal.
---------------------------------------------------------------------------

    \37\ See proposed ISE Rule 2123(m) and proposed sections .02(g)
and .03(b) to the Supplementary Material to ISE Rule 2131.
---------------------------------------------------------------------------

Acceleration
    The Commission finds good cause for approving the proposed rule
change, as amended, prior to the 30th day after the date of publication
of the notice of filing thereof in the Federal Register. ISE's proposal
is substantially similar to other proposals that have been approved by
the Commission.\38\ The Commission does not believe that ISE's proposal
raises any novel regulatory issues, and accelerated approval of the
proposal will expedite the listing and trading of additional ETFs by
the Exchange, subject to consistent and reasonable standards.
Therefore, the Commission finds good cause, consistent with Section
19(b)(2) of the Act,\39\ to approve the proposed rule change, as
modified by Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------

    \38\ See supra at note 8.
    \39\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\40\ that the proposed rule change (SR-ISE-2007-65), as modified by
Amendment No. 1 thereto, be, and it hereby is, approved on an
accelerated basis.
---------------------------------------------------------------------------

    \40\ Id.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\41\
---------------------------------------------------------------------------

    \41\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
 [FR Doc. E7-25652 Filed 1-4-08; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 91 (Monday, May 11, 2020)]
[Notices]
[Pages 27787-27789]
[FR Doc No: 2020-09956]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88812; File No. SR-NYSEArca-2020-38]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Modify the NYSE
Arca Options Fee Schedule

May 5, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on April 29, 2020, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. 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\ 15 U.S.C. 78a.
    \3\ 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 modify the NYSE Arca Options Fee Schedule
(``Fee Schedule'') to waive certain Floor-based fixed fees for the
month of May 2020. The Exchange proposes to implement the fee change
effective April 29, 2020. 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 purpose of this filing is to modify the Fee Schedule to waive
certain Floor-based fixed fees for the month of May 2020. The Exchange
proposes to implement the fee change effective April 29, 2020.
    On March 18, 2020, the Exchange announced that it would temporarily
close the Trading Floor, effective Monday, March 23, 2020, as a
precautionary measure to prevent the potential spread of COVID-19.
Following the temporary closure of the Trading Floor, the Exchange
waived certain Floor-based fixed fees for April

2020 (the ``fee waiver'').\4\ Although the Trading Floor will be
partially reopened on May 4, 2020 and normal open outcry activity will
be supported, because the Trading Floors remained closed for a longer
period than expected--including seven business days in March, and will
continue to operate with reduced capacity, the Exchange proposes to
extend the fee waiver through May 2020.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 88596 (April 8,
2020), 85 FR 20796 (April 14, 2020) (SR-NYSEArca-2020-29). See Fee
Schedule, NYSE Arca OPTIONS: FLOOR and EQUIPMENT and CO-LOCATION
FEES.
---------------------------------------------------------------------------

    Specifically, the fee waiver covers the following fixed fees, which
relate directly to Floor operations, are charged only to Floor
participants and do not apply to participants that conduct business
off-Floor:
     Floor Booths;
     Market Maker Podia;
     Options Floor Access;
     Wire Services; and
     ISP Connection.\5\
---------------------------------------------------------------------------

    \5\ See proposed Fee Schedule, NYSE Arca OPTIONS: FLOOR and
EQUIPMENT and CO-LOCATION FEES.
---------------------------------------------------------------------------

    This proposed extension of the fee waiver would reduce monthly
costs for Floor participants whose operations have been disrupted by
the unanticipated Floor closure for more than a month. In reducing this
monthly financial burden, the proposed change would allow affected
participants to reallocate funds to assist with the cost of shifting
and maintaining their previously on-Floor operations to off-Floor and
recoup losses as a result of the unanticipated Floor closure. Absent
this change, such participants may experience an unexpected increase in
the cost of doing business on the Exchange.\6\
---------------------------------------------------------------------------

    \6\ The Exchange will refund participants of the Floor Broker
Prepayment Program for any prepaid May 2020 fees that are waived.
See proposed Fee Schedule, FLOOR BROKER FIXED COST PREPAYMENT
INCENTIVE PROGRAM (the ``FB Prepay Program'') (providing that ``the
Exchange will refund certain of the prepaid Eligible Fixed costs
that were waived for April 2020, per NYSE Arca OPTIONS: FLOOR and
EQUIPMENT and CO-LOCATION FEES'').
---------------------------------------------------------------------------

    The Exchange believes that all OTP Holders that conduct business on
the Trading Floor would benefit from this proposed fee change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\8\ in particular,
because it provides for the equitable allocation of reasonable dues,
fees, and other charges among its members, issuers and other persons
using its facilities and does not unfairly discriminate between
customers, issuers, brokers or dealers.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange operates in a highly competitive market. The
Commission has repeatedly expressed its preference for competition over
regulatory intervention in determining prices, products, and services
in the securities markets. In Regulation NMS, the Commission
highlighted the importance of market forces in determining prices and
SRO revenues and, also, recognized that current regulation of the
market system ``has been remarkably successful in promoting market
competition in its broader forms that are most important to investors
and listed companies.'' \9\
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04) (``Reg NMS
Adopting Release'').
---------------------------------------------------------------------------

    There are currently 16 registered options exchanges competing for
order flow. Based on publicly-available information, and excluding
index-based options, no single exchange has more than 16% of the market
share of executed volume of multiply-listed equity and ETF options
trades.\10\ Therefore, currently no exchange possesses significant
pricing power in the execution of multiply-listed equity & ETF options
order flow. More specifically, in January 2020, the Exchange had less
than 10% market share of executed volume of multiply-listed equity &
ETF options trades.\11\
---------------------------------------------------------------------------

    \10\ The OCC publishes options and futures volume in a variety
of formats, including daily and monthly volume by exchange,
available here: https://www.theocc.com/market-data/volume/default.jsp.
    \11\ Based on OCC data, see id., in 2019, the Exchange's market
share in equity-based options was 9.57% for the month of January
2019 and 9.59% for the month of January 2020.
---------------------------------------------------------------------------

    This proposed extension of the fee waiver is reasonable, equitable,
and not unfairly discriminatory because it would reduce monthly costs
for Floor participants whose operations have been disrupted by the
unanticipated Floor closure for more than a month. In reducing this
monthly financial burden, the proposed change would allow affected
participants to reallocate funds to assist with the cost of shifting
and maintaining their previously on-Floor operations to off-Floor and
recoup losses as a result of the unanticipated Floor closure. Absent
this change, such participants may experience an unexpected increase in
the cost of doing business on the Exchange.
    The Exchange believes that all OTP Holders that conduct business on
the Trading Floor would benefit from this proposed fee change.
    The Exchange believes the proposed rule change is an equitable
allocation of its fees and credits as it merely continues the fee
waiver, which impacts fees charged only to Floor participants and do
not apply to participants that conduct business off-Floor.
    The Exchange believes that the proposal is not unfairly
discriminatory because the proposed continuation of the fee waiver
would affect all similarly-situated market participants on an equal and
non-discriminatory basis.
    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.

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

    In accordance with Section 6(b)(8) of the Act, the Exchange does
not believe that the proposed rule change would impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. The Exchange believes that the proposed changes
would encourage the continued participation of affected OTP Holders,
thereby promoting market depth, price discovery and transparency and
enhancing order execution opportunities for all market participants. As
a result, the Exchange believes that the proposed change furthers the
Commission's goal in adopting Regulation NMS of fostering integrated
competition among orders, which promotes ``more efficient pricing of
individual stocks for all types of orders, large and small.'' \12\
---------------------------------------------------------------------------

    \12\ See Reg NMS Adopting Release, supra note 9, at 37499.
---------------------------------------------------------------------------

    Intramarket Competition. The proposed continuation of the fee
waiver is designed to reduce monthly costs for Floor participants whose
operations have been disrupted by the unanticipated Floor closure. In
reducing this monthly financial burden, the proposed change would allow
affected participants to reallocate funds to assist with the cost of
shifting and maintaining their previously on-Floor operations to off-
Floor. Absent this change, such participants may experience an
unintended increase in the cost of doing business on the Exchange. The
Exchange believes that the proposed waiver of fees would not impose a
disparate burden on competition among market participants on the
Exchange because off-Floor market participants are not subject to these
Floor-based fixed fees.
    Intermarket Competition. The Exchange operates in a highly

competitive market in which market participants can readily favor one
of the 16 competing option exchanges if they deem fee levels at a
particular venue to be excessive. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
exchanges and to attract order flow to the Exchange. Based on publicly-
available information, and excluding index-based options, no single
exchange currently has more than 16% of the market share of executed
volume of multiply-listed equity and ETF options trades.\13\ Therefore,
currently no exchange possesses significant pricing power in the
execution of multiply-listed equity & ETF options order flow. More
specifically, in January 2020, the Exchange had less than 10% market
share of executed volume of multiply-listed equity & ETF options
trades.\14\
---------------------------------------------------------------------------

    \13\ See supra note 10.
    \14\ Based on OCC data, supra note 11, the Exchange's market
share in equity-based options was 9.57% for the month of January
2019 and 9.59% for the month of January, 2020.
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change reflects this
competitive environment because it continues the fee waiver, which is
designed to reduce monthly costs for Floor participants whose
operations have been disrupted by the unanticipated Floor closure. In
reducing this monthly financial burden, the proposed change would allow
affected participants to reallocate funds to assist with the cost of
shifting and maintaining their previously on-Floor operations to off-
Floor. Absent this change, such participants may experience an
unintended increase in the cost of doing business on the Exchange,
which would make the Exchange a less competitive venue on which to
trade as compared to other options exchanges.

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

    The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \15\ of the Act and subparagraph (f)(2) of Rule
19b-4 \16\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \17\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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_ADDRESS>Please include
File Number SR-NYSEArca-2020-38 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-2020-38. 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 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-2020-38 and should be submitted
on or before June 1, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-09956 Filed 5-8-20; 8:45 am]
 BILLING CODE 8011-01-P