[Federal Register Volume 76, Number 110 (Wednesday, June 8, 2011)]
[Notices]
[Pages 33380-33382]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-14129]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64593; File No. SR-NYSEArca-2011-34]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE
Arca Equities Schedule of Fees and Charges for Exchange Services to
Introduce Two New Pricing Tiers, Investor Tier 1 and Investor Tier 2
June 3, 2011.
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 1, 2011, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') filed
with the Securities and Exchange Commission (``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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 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 amend the NYSE Arca Equities Schedule of Fees
and Charges for Exchange Services (the ``Schedule'') to introduce two
new pricing tiers, Investor Tier 1 and Investor Tier 2. The text of the
proposed rule change is available at the Exchange's principal office,
at http://www.nyse.com, at the Commission's Public Reference Room, and
at 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
Effective June 1, 2011, NYSE Arca proposes to introduce two new
pricing tier levels, Investor Tier 1 and Investor Tier 2. Investor Tier
1 will allow customers to earn a credit of $0.0032 per share for
executed orders that provide liquidity to the Book for Tape A, Tape B
and Tape C securities. Investor Tier 2 will allow customers to earn a
credit of $0.0030 per share for executed orders that provide liquidity
to the Book for Tape A, Tape B and Tape C securities. All other fees
and credits will be at the existing tiered and basic rates based on the
firms qualifying levels.
In order to qualify for the new Investor Tiers, customers must meet
all of the following criteria on a monthly basis:
Maintain a ratio of cancelled orders to total orders of
less than 30%. In calculating this ratio, the Exchange will exclude
Immediate-or-Cancel orders, which are liquidity removing in nature.
[[Page 33381]]
Maintain a ratio of executed liquidity adding volume to
total volume of greater than 80%.
For Investor Tier 1, firms must add at least 35 million
shares of liquidity per day on NYSE Arca to qualify. For Investor
Tier 2, firms must add at least 10 million shares of liquidity per
day but less than 35 million shares of liquidity per day on NYSE
Arca to qualify. Trade activity on days when the market closes early
is excluded from both Investor Tiers.
The goal of the Investor Tiers is to incentivize customers to
maintain low cancellation rates and provide liquidity that supports the
quality of price discovery and promotes market transparency. The tiers
reward providers whose orders stay on the Book and do not rapidly
cancel a large portion of their orders placed, which makes the price
discovery process more efficient and results in higher fill rates,
greater depth and lower volatility. It serves to encourage customers to
post orders that are more likely to be executed.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Securities Exchange Act of 1934
(the ``Act''),\3\ in general, and Section 6(b)(4) of the Act,\4\ in
particular, in that it is designed to provide for the equitable
allocation of reasonable dues, fees, and other charges among its
members and other persons using its facilities. The Exchange believes
that the proposal does not constitute an inequitable allocation of
fees, as all similarly situated member organizations and other market
participants will be charged the same amount and access to the
Exchange's market is offered on fair and non-discriminatory terms.
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\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(4).
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NYSE Arca believes that the Investor Tiers are equitable and non-
discriminatory because both are open to all customers on an equal basis
and provide credits that are reasonably related to the value to an
exchange's market quality associated with higher volumes. While the
Investor Tiers distinguish among orders, such distinctions ``are not
designed to permit unfair discrimination'' but rather intended to
promote submission of liquidity providing orders to NYSE Arca, which
would benefit all NYSE Arca members and all investors. Similarly,
NASDAQ established an Investor Support Program (``ISP'') targeting
retail and institutional investor orders where firms receive a higher
rebate if they meet all of the following criteria: (1) Add at least 10
million shares of liquidity per day via ISP-designated ports; (2)
Maintain a ratio of orders-to-orders executed of less than 10 to 1
(counting only liquidity-providing orders and excluding certain order
types) on ISP-designated ports; (3) Exceed the firm's August 2010
``baseline'' volume of liquidity added across all the firm's ports or,
if a firm does not have an August baseline, then the firm will be
deemed to have added an average of 35 million shares per day as the
baseline starting point to qualify for the higher rebate program.\5\ In
addition, by offering two Investor Tiers the Exchange believes more
customers may provide the targeted order flow and more customers will
be eligible to receive the credits for such orders.
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\5\ See Securities Exchange Act Release No. 63270 (November 8,
2010), 75 FR 69489 (November 12, 2012) [sic]; Securities Exchange
Act Release No. 63414 (December 2, 2010), 75 FR 76505 (December 28,
2010).
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Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues 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 with
alternative trading systems that have been exempted from compliance
with the statutory standards applicable to exchanges. The Exchange
believes that the proposed rule change reflects this competitive
environment because it will broaden the conditions under which
customers may qualify for higher liquidity provider credits.
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
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \6\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \7\ thereunder, because it establishes a due, fee, or other charge
imposed by the NYSE Arca.
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\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4(f)(2).
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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.
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-2011-34 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-2011-34. 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
[[Page 33382]]
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
NYSEArca-2011-34 and should be submitted on or before June 29, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-14129 Filed 6-7-11; 8:45 am]
BILLING CODE 8011-01-P