[Federal Register Volume 76, Number 241 (Thursday, December 15, 2011)]
[Notices]
[Pages 78066-78068]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32138]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65922; File No. SR-NYSEArca-2011-91]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE
Arca Options Fee Schedule Relating to Manual Orders
December 9, 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 December 1, 2011, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE
Arca'') 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 to amend the NYSE Arca Options Fee Schedule
(``Fee Schedule'') with respect to manual orders. The Exchange proposes
to make the rule change operative on December 1, 2011. The text of the
proposed rule change is available at the Exchange, the Commission's
Public Reference Room, and http://www.nyse.com.
[[Page 78067]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Fee Schedule with respect to
manual orders.
Electronic orders and quotes resting on the Consolidated Book
currently have priority over equal-priced bids or offers in the Trading
Crowd.\3\ In this regard, a Floor Broker, after negotiating a price
with the Trading Crowd, may be required to trade against resting
interest on the Consolidated Book (``clear the Book'') before trading
against interest in the Trading Crowd. Currently, if a Floor Broker
clears the Book before trading against interest in the Trading Crowd,
the Exchange charges the portion of the order executed against the
Consolidated Book an electronic transaction fee and charges any
remaining order size that trades against interest in the Trading Crowd
a manual transaction fee.\4\
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\3\ See NYSE Arca Options Rule 6.75(a) and (b).
\4\ For example, a Broker-Dealer manual order is currently
charged a standard execution fee of $0.25 per contract. However, if
a portion of the Broker-Dealer manual order executes against resting
interest on the Consolidated Book, then that portion of the manual
order is instead charged the $0.50 per-contract rate for a Broker-
Dealer electronic order. Similarly, if the Broker-Dealer manual
order is in a Penny Pilot class and executes against resting
interest on the Consolidated Book, then that portion of the manual
order is considered to ``Take Liquidity'' and is instead charged the
$0.45 per-contract rate for a Broker-Dealer electronic order. The
Exchange notes that, at the time of the adoption of Post-Take
pricing for electronic executions in Penny Pilot classes, the
Exchange determined that any execution in Penny Pilot issues against
resting orders in the Consolidated Book would be charged a ``take
liquidity'' fee. See Securities Exchange Act Release No. 55223
(February 1, 2007), 72 FR 6306 (February 9, 2007) (SR-NYSEArca-2007-
07).
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The Exchange proposes to amend endnote 5 of the Fee Schedule to
reflect that a manual order that executes in part against an electronic
order or quote resting on the Consolidated Book prior to executing
against interest in the Trading Crowd would be assessed the applicable
manual transaction fee for the entire order. As is the case today, the
contra-side electronic order or quote would be assessed the applicable
electronic transaction fee or credit. However, if a manual order
executes completely against an electronic order or quote, and therefore
does not execute against interest in the Trading Crowd, then both sides
of the transaction would continue to be charged only the applicable
electronic transaction fee. In order to be eligible for the manual
transaction fee, all manual orders must be entered into the Exchange's
Electronic Order Capture System.
The Exchange proposes to make the rule change operative on December
1, 2011.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Securities Exchange Act of 1934 (the
``Act''),\5\ in general, and Section 6(b)(4) of the Act,\6\ in
particular, because 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. In addition, the
proposed rule change is not designed to permit unfair discrimination
between customers, issuers, brokers or dealers. Under the proposed
change a manual order that executes partially against an electronic
order or quote resting on the Consolidated Book prior to executing
against interest in the Trading Crowd would be assessed the applicable
manual transaction fee for the entire order. The Exchange believes that
this is reasonable, equitable, and not unfairly discriminatory because
a customer who sends an order to the Floor for execution has no control
over whether a portion of the manual order will execute against the
Consolidated Book and therefore has significant uncertainty about the
transaction fees applicable to such order, whereas a customer that
submits an electronic order has certainty that only electronic
transaction fees will apply. The Exchange also believes it is
reasonable, equitable, and not unfairly discriminatory to charge the
electronic transaction fee for manual orders that are executed entirely
against one or more electronic orders or quotes resting on the
Consolidated Book. Manual transaction fees are lower than electronic
transaction fees and the proposed rule change will reduce the incentive
for customers to submit manual orders to obtain the lower fee even
though there is sufficient liquidity in the Consolidated Book to fill
the order. When both sides of the order execute fully on the
Consolidated Book, the Exchange believes it is equitable and not
unfairly discriminatory to charge both sides of the trade the same
category of transaction fee. The Exchange expects that by providing
more certainty about the applicable transaction fees, customers will be
encouraged to submit manual orders to the Exchange and that the
additional order flow will benefit all market participants.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4).
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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
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A)(ii) of the Act \7\ and subparagraph (f)(2) of Rule
19b-4 \8\ thereunder, because it establishes a due, fee, or other
charge imposed by NYSE Arca. 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.
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\7\ 15 U.S.C. 78s(b)(3)(A)(ii).
\8\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEArca-2011-91 on the subject line.
[[Page 78068]]
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-2011-91. 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 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-2011-91 and should
be submitted on or before January 5, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-32138 Filed 12-14-11; 8:45 am]
BILLING CODE 8011-01-P