[Federal Register Volume 77, Number 7 (Wednesday, January 11, 2012)]
[Notices]
[Pages 1769-1771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-317]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66106; File No. SR-NYSE-2011-73]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change by New York Stock Exchange LLC
To Amend the Schedule of Rebates Paid to Supplemental Liquidity
Providers for Providing Liquidity
January 5, 2012.
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 30, 2011, New York Stock Exchange LLC (``NYSE'' or
the ``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 to amend its Price List to revise its
schedule of rebates paid to Supplemental Liquidity Providers (``SLPs'')
for providing liquidity on the Exchange. The text of the proposed rule
change is available at the Exchange's principal office, at
www.nyse.com, at the Commission's Public Reference Room, and at the
Commission's Web site at 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
The Exchange proposes to amend its Price List to revise its
schedule of rebates paid to SLPs for providing liquidity on the
Exchange.
Currently, under a tiered structure of credits, a SLP that meets
the 10% average or more quoting requirement pursuant to NYSE Rule 107B
in an assigned security with a per share stock price of $1.00 or more
receives a credit per share per transaction for adding liquidity in the
applicable month as follows: \3\
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\3\ See Securities Exchange Act Release No. 65062 (August 9,
2011), 76 FR 50529 (August 15, 2011) (SR-NYSE-2011-39).
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$0.0020 credit per share per transaction if the SLP adds
liquidity of an average daily volume of more than 10 million shares but
not more than the greater of 15 million shares or 0.50% of consolidated
average daily volume (``ADV'') \4\ in NYSE listed securities for all
assigned SLP securities; and
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\4\ Consolidated ADV is equal to the volume reported by all
exchanges and trade reporting facilities to the Consolidated Tape
Association (``CTA'') Plan for Tape A (i.e., NYSE listed)
securities.
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$0.0021 credit per share per transaction if the SLP adds
liquidity of the greater of (a) an ADV of more than 15 million shares
but not more than 35 million shares or (b) more than 0.50% but not more
that 1.25% of consolidated ADV in NYSE listed securities for all
assigned SLP securities; and
$0.0022 credit per share per transaction if the SLP adds
liquidity of the greater of (a) an ADV of more than 35 million shares
or (b) more than 1.25% of consolidated ADV in NYSE listed securities
for all assigned SLP securities.
For example, under current procedures, if a SLP is assigned three
securities and meets the 10% quoting requirement pursuant to NYSE Rule
107B for each assigned security, the SLP must add liquidity of at least
10 million shares ADV for all three assigned securities in the
aggregate to receive a rebate per share of $0.0020. To receive a rebate
of $0.0021 per share, the SLP must add liquidity of at least 15 million
shares ADV for all three assigned securities in the aggregate, or the
ADV for added liquidity of the three assigned securities must be at
least 0.50% of the consolidated Tape A ADV, whichever is greater. Thus,
if consolidated Tape A ADV is 4 billion shares, then the SLP's added
liquidity for the three assigned
[[Page 1770]]
stocks in the aggregate must be at least 20 million shares (or 0.5%. of
4 billion), since 0.5% of 4 billion is more than 15 million shares ADV
for all three assigned securities.
The Exchange proposes to amend these credits as described below. A
SLP that meets the 10% average or more quoting requirement in an
assigned security pursuant to NYSE Rule 107B will receive a credit per
share per transaction for adding liquidity as follows:
$0.0020 credit per share per transaction if the SLP adds
liquidity of an ADV of more than 10 million shares for all assigned SLP
securities in the aggregate and, for each assigned SLP security, adds
liquidity of not more than 1.0% of the consolidated ADV for that
assigned SLP security in the applicable month; and
$0.0021 credit per share per transaction if the SLP adds
liquidity of an ADV of more than 10 million shares for all assigned SLP
securities in the aggregate and, for each assigned SLP security, adds
liquidity of more than 1.0% but not more than 2.5% of the consolidated
ADV for that assigned SLP security in the applicable month; and
$0.0022 credit per share per transaction if the SLP adds
liquidity of an ADV of more than 10 million shares for all assigned SLP
securities in the aggregate and, for each assigned SLP security, adds
liquidity of more than 2.5% of the consolidated ADV for that assigned
SLP security in the applicable month.
For example, under the proposed procedures, if a SLP is assigned
three securities, S1, S2, and S3, and meets the 10% quoting requirement
pursuant to NYSE Rule 107B for each assigned security, the SLP must add
liquidity of at least 10 million shares ADV for all three assigned
securities in the aggregate to receive a rebate per share of $0.0020
(``Tier 3''). To receive a rebate of $0.0021 per share for S1, the SLP
must meet the Tier 3 requirements and must add liquidity of more than
1.0% but not more than 2.5% of the consolidated ADV for S1 (``Tier
2''). To receive a rebate of $0.0022 per share for S1, the SLP must
meet the Tier 3 requirements and must add liquidity of more than 2.5%
of the consolidated ADV for S1 (``Tier 1''). Assuming the SLP meets the
10% quoting requirement pursuant to NYSE Rule 107B, the following chart
illustrates the application of the proposed rebates when the SLP adds
liquidity to the extent specified below:
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Percentage of
SLP provide ADV Consolidated ADV consolidated ADV
Assigned security per security per security provided by SLP
(%)
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S1..................................................... 6,000,000 100,000,000 6.0
S2..................................................... 4,000,000 220,000,000 1.8
S3..................................................... 2,000,000 250,000,000 0.8
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Aggregate of all Assigned Securities............... 12,000,000
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The SLP would receive a Tier 3 rebate of $0.0020 per share for S3,
because it added liquidity of at least 10 million shares for all
assigned securities (12 million shares ADV total), but did not exceed
1.0% of the consolidated ADV for S3. The SLP would receive a Tier 2
rebate of $0.0021 per share for S2, because it added liquidity of at
least 10 million shares for all assigned securities, exceeded 1.0% of
the consolidated ADV for S2, but did not exceed 2.5% of consolidated
ADV for S2. Lastly, the SLP would receive a Tier 1 rebate of $0.0022
per share for S1, because it added liquidity of at least 10 million
shares for all assigned securities and exceeded 2.5% of the
consolidated ADV for S3.
The calculation of consolidated ADV and SLP adding liquidity for an
assigned SLP security will include only those days and volumes when the
SLP security was assigned to a SLP and will also not include those days
and volumes where the SLP security was not listed on the Exchange for
trading. For example, if a SLP security is added or deleted in the
middle of the month, then the volume and quoting requirements will be
based on the average of the days when the SLP was acting as such during
the calendar month.\5\
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\5\ In addition, ADV calculations also exclude early closing
days. See note 4 of the Price List.
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The proposed fee changes will be effective January 1, 2012.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act, in general, and Section
6(b)(4) \6\ of the Act, 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 the proposed pricing tiers are equitable and non-
discriminatory because they are open to all SLPs on an equal basis and
provide incentives that are reasonably related to a SLP's additional
quoting and liquidity obligations in each security. The linking of the
adding liquidity requirement to the percent of consolidated ADV for
each individual security will reward SLPs for adding more liquidity and
meeting the quoting requirement in an individual security, while also
requiring the SLP to meet the total ADV of added liquidity requirement
of 10 million shares. The Exchange notes that, while the proposed
change in requirements to receive the rebates of $0.0021 and $0.0022
are reduced in the aggregate, they are increased on an individual stock
basis. Lastly, the Exchange believes the requirement to meet a
percentage of consolidated ADV in an individual security should
increase incentive to add liquidity across more securities, including
less active securities where there may be fewer liquidity providers and
thus make it more likely to reach the individual percentage of
consolidated ADV requirement than in more active securities.
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\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.
[[Page 1771]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed 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 the Exchange. 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-NYSE-2011-73 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-NYSE-2011-73. 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-NYSE-2011-73 and should be
submitted on or before February 1, 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. 2012-317 Filed 1-10-12; 8:45 am]
BILLING CODE 8011-01-P