[Federal Register Volume 76, Number 102 (Thursday, May 26, 2011)]
[Notices]
[Pages 30745-30746]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-13023]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64525; File No. SR-NYSEArca-2011-30]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending Its Rules
To Remove the Concept of an ``Odd Lot Dealer''
May 19, 2011.
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 May 12, 2011, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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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 its rules to remove the concept of
an ``Odd Lot Dealer.'' The text of the proposed rule change is
available at the Exchange, the Commission's Public Reference Room,
http://www.nyse.com, and the Commission's Web site at http://www.sec.gov.
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
NYSE Arca Equities proposes to amend its rules to remove the
concept of an Odd Lot Dealer.
An Odd Lot Dealer is any Market Maker who has agreed to buy and
sell securities in odd lots (i.e., orders less than 100 shares) at the
Best Protected Bid and the Best Protected Offer throughout the duration
of Core Trading Hours and who is registered as an Odd Lot Dealer in
accordance with NYSE Arca Equities Rule 7.25.
Before August 13, 2009, the Exchange charged $0.03 per share for
odd lot orders executed against orders residing in the book in Tape A
and Tape B securities, and $0.0035 per share for Tape C securities and
paid a $0.02 per share credit to Market Makers that executed against an
odd lot order.\4\ The Exchange also had odd lot pricing associated with
odd lots routed to different market centers.\5\ As of August 13, 2009,
the Exchange eliminated this differential odd lot pricing structure and
thereafter charged and credited ETP Holders executing odd lots in the
same way that it charged and credited them for round-lot executions,
thereby simplifying the Exchange's fee structure.\6\ Thereafter, in
November 2009, the Exchange eliminated the requirement that for each
security in which a Market Maker was registered as a Lead Market Maker
(``LMM''), the LMM also was required to register as an Odd Lot Dealer
in that security.\7\ Thereafter, LMMs could choose to register as an
Odd Lot Dealer, but were not be required to do so.
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\4\ See Exchange Act Release No. 60495 (Aug. 13, 2009), 74 FR
41957 (August 19, 2009) (SR-NYSEArca-2009-72).
\5\ Id. at 41958.
\6\ Id.
\7\ See Exchange Act Release No. 61025 (November 18, 2009), 74
FR 61726 (November 25, 2009) (SR-NYSEArca-2009-102).
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Since March 2010, no Market Maker has maintained a registration as
an Odd Lot Dealer. Because (1) Exchange systems can process odd lot
orders and they are treated the same as round lot and mixed lot orders
for purposes of ranking and execution, (2) there is no financial
incentives or requirements to act as an Odd Lot Dealer, and (3) there
currently is no ETP Holder acting as an Odd Lot Dealer, the Exchange
believes that it is appropriate to eliminate the concept of Odd Lot
Dealer from its rules. As such, the proposed rule change eliminates the
description of an Odd Lot Dealer (or references to rules relating to
Odd Lot Dealers) and make conforming changes in NYSE Arca Equities
Rules 1.1, 7.25, 7.31, 7.38, 10.12 and 10.13.\8\
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\8\ To add clarity, Rule 7.37 also would be amended to provide
that round lot, mixed lot and odd lot orders shall be treated in the
same manner in the NYSE Arca Marketplace.
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In addition, the Exchange proposes to delete Rule 7.38(c) which
prohibits ETP Holders from: (i) Combining odd lot orders given by
different customers into a round lot order or orders unless
specifically requested to do so by the customers giving the orders;
(ii) unbundling round lots for the purpose of entering odd lot limit
orders in comparable amounts; (iii) failing to aggregate odd lot orders
into round lots when such orders are for the same account or for
various accounts in which there is a common monetary interest; and (iv)
entering both buy and sell odd lot limit orders in the same stock
before one of the orders is executed for the purpose of capturing the
spread in the stock. The Exchange proposes to delete these requirements
because the issues associated with such odd lot orders are moot now
that the Exchange's systems can process odd lot orders in the same
manner as round lot
[[Page 30746]]
and mixed lot orders for purposes of ranking and execution.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\9\ in
general, and furthers the objectives of Section 6(b)(5) of the Act,\10\
in particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest. The Exchange
does not believe that the removal of rules surrounding Odd Lot Dealers
will affect the protection of investors or public interest because
Exchange systems can process odd lot orders and they are treated the
same as round lot and mixed lot orders for purposes of ranking and
execution, there is no financial incentive or requirements to act as an
Odd Lot Dealer, and there currently is no ETP Holder acting as an Odd
Lot Dealer.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
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
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
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6)
thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with written notice of its intent to file the proposed rule change,
along with a brief description and text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Exchange has fulfilled this requirement.
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At any time within 60 days of the filing of the 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.
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 e-mail to [email protected]. Please include
File Number SR-NYSEArca-2011-30 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2011-30. 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 Web site
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 a.m. and 3 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; 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-
NYSEArca-2011-30 and should be submitted on or before June 16, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-13023 Filed 5-25-11; 8:45 am]
BILLING CODE 8011-01-P