NYSE Arca, Inc., a major U.S. securities exchange, filed a proposed rule change with the Securities and Exchange Commission on February 6, 2026, to amend its Equities Fees and Charges schedule. This filing, designated as SR-NYSEARCA-2026-16, seeks to align the exchange's pricing structure with recent amendments to Rule 610 of Regulation NMS. Published in the Federal Register on February 18, 2026, the notice invites public comments and takes immediate effect under the Securities Exchange Act of 1934. The changes address a key regulatory shift requiring that exchange fees and rebates be determinable at the time of order execution, a move designed to promote market transparency and efficiency. This development reflects ongoing efforts by the SEC to modernize trading rules in response to evolving technology and market dynamics, potentially affecting how market participants calculate costs and incentives.
Background on Regulation NMS Amendments
Regulation NMS, established in 2005, governs the national market system for securities trading in the United States. It includes Rule 610, which regulates access fees and rebates charged by exchanges. In 2022, the SEC proposed updates to several NMS rules, citing advancements in data processing and communications that enable more efficient market operations. These proposals aimed to ensure economically efficient executions, fair competition among brokers and exchanges, and the best execution of investor orders, as outlined in Section 11A of the Securities Exchange Act of 1934.
The specific amendment to Rule 610, approved by the SEC on September 18, 2024, in Release No. 101070, prohibits exchanges from imposing fees or providing rebates that cannot be determined at the time of execution. Instead, any volume-based thresholds or tiers must rely on activity from a prior period. Originally set to take effect on November 3, 2025, the compliance date was extended to February 2026 via temporary exemptive relief granted on October 31, 2025, in Release No. 104172, due to a lapse in government appropriations. This extension allowed exchanges like NYSE Arca time to adjust their fee structures without disrupting operations.
Key players include the SEC, which oversees NMS rules, and self-regulatory organizations such as NYSE Arca, part of the Intercontinental Exchange group. The amendments draw from broader policy goals to protect investors and maintain fair markets, echoing precedents like the 2005 adoption of Regulation NMS, which addressed issues such as access fees capping at $0.003 per share.
Details of NYSE Arca's Proposed Changes
The filing proposes targeted amendments to the NYSE Arca Equities Fees and Charges schedule to ensure compliance. Under the general sections for trade-related fees and credits, as well as tier rates for round and odd lots, the exchange introduces language stating that, unless otherwise noted, all tier calculations for fees and credits in a billing month will be based on the ETP Holder's trading activity in the prior billing month. This shift moves away from real-time or current-month assessments, directly addressing the determinability requirement.
For Lead Market Makers (LMMs), the proposal revises definitions critical to fee calculations. The term 'CADV' (consolidated average daily volume) changes from the prior month to the second prior month. Similarly, 'ETP Price' (average official closing price) shifts to the second prior month. In Section III, which covers LMM performance metrics-based credits, the base credit for adding liquidity will now depend on metrics met in the prior month, rather than the billing month.
Section IV, addressing additional Tape B credits for LMMs and Market Makers, adds clarifying text after the tiered table: all tier calculations for fees and credits in a billing month are based on the prior billing month's activity, unless noted otherwise. These adjustments apply uniformly to all ETP Holders and do not alter the actual fee or rebate amounts, only their calculation timing.
The exchange notes that these changes stem from its earlier filing (SR-NYSEARCA-2026-08), withdrawn and replaced by this one, and are set to take effect on February 6, 2026.
Statutory Basis and Justification
NYSE Arca justifies the proposal under Section 6(b) of the Securities Exchange Act, emphasizing equitable allocation of fees and non-discrimination. The exchange argues that the changes promote transparency by allowing market participants to know applicable fees or rebates at execution, consistent with Rule 610's intent. It cites the public interest in removing impediments to a free and open market, as investors benefit from clearer fee structures.
The filing asserts no burden on competition, as the amendments are solely for regulatory compliance and apply equally to all participants. This aligns with SEC goals in the Rule 610 amendment, which sought to eliminate uncertainty in tiered pricing models that previously relied on end-of-month volumes.
Perspectives and Implications
Stakeholders offer varied views on these changes. Exchanges and market makers may appreciate the clarity, reducing administrative burdens in fee forecasting. However, some brokers and investors could face short-term adjustments in trading strategies, as rebates become less immediately responsive to current activity. Critics of the original NMS proposal, including certain industry groups, argued that such determinism might stifle innovation in pricing models, potentially leading to higher costs in less liquid securities.
Short-term implications include smoother compliance for NYSE Arca, avoiding potential SEC enforcement actions. Long-term, this could standardize fee practices across exchanges, fostering fairer competition and better investor protection. It may also influence ongoing debates about market structure, such as the role of rebates in order routing decisions, without resolving broader controversies like payment for order flow.
In summary, NYSE Arca's filing represents a procedural step toward regulatory alignment, highlighting the interplay between technological advancements and market rules. Potential next steps include the SEC reviewing public comments submitted by March 11, 2026, which could lead to modifications or full approval. Ongoing challenges involve monitoring how these changes affect trading volumes and liquidity, while debates persist on balancing innovation with investor safeguards in evolving market environments.
