[Federal Register Volume 77, Number 11 (Wednesday, January 18, 2012)]
[Notices]
[Pages 2585-2587]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-778]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66138; File No. SR-NYSE-2011-70]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending the NYSE Price List To Revise Its Schedule of Rebates Paid to
Designated Market Makers for Providing Liquidity on the Exchange and To
Delete References to Round and Odd Lot Transactions
January 11, 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
``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 Designated Market Makers (``DMMs'') for
providing liquidity on the Exchange and to delete references to round
and odd lot transactions. The text of the proposed rule change is
available at the Exchange, the Commission's Public Reference Room, and
www.nyse.com.
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.
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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 DMMs for providing liquidity on the
Exchange and to delete references to round and odd lot transactions.
Currently, DMMs earn a rebate of $0.0030 per share when adding
liquidity in More Active Securities \3\ if the More Active Security has
a stock price of $1 or more and the DMM meets (i) the More Active
Securities Quoting Requirement \4\ and (ii) the More Active Securities
Quoted Size Ratio Requirement.\5\ The Exchange proposes to modify this
rebate as follows:
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\3\ ``More Active Securities'' are securities with an average
daily consolidated volume (``ADV'') in the previous month equal to
or greater than 1,000,000 shares per month.
\4\ The ``More Active Securities Quoting Requirement'' is met if
the More Active Security has a stock price of $1.00 or more and the
DMM quotes at the National Best Bid or Offer (``NBBO'') in the
applicable security at least 10% of the time in the applicable
month.
\5\ A DMM meets the ``More Active Securities Quoted Size Ratio
Requirement'' when the DMM Quoted Size for an applicable month is
15% of the NYSE Quoted Size. The ``NYSE Quoted Size'' is calculated
by multiplying the average number of shares quoted on the NYSE at
the NBBO by the percentage of time the NYSE had a quote posted at
the NBBO. The ``DMM Quoted Size'' is calculated by multiplying the
average number of shares of the applicable security quoted at the
NBBO by the DMM by the percentage of time during which the DMM
quoted at the NBBO.
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DMMs will continue to earn a rebate of $0.0030 per share
for adding liquidity that is 20% or less than NYSE's total intraday
adding liquidity in shares of each More Active Security for that month
if the More Active Security has a stock price of $1 or more and the DMM
meets (i) the More Active Securities Quoting Requirement and (ii) the
More Active Securities Quoted Size Ratio Requirement.
DMMs adding liquidity in those same securities will earn a
rebate of $0.0026 per share for any incremental adding liquidity in
each such security for that month that exceeds 20% of NYSE's total
intraday adding liquidity.
For the purposes of paying the DMM rebate, the NYSE total
intraday adding liquidity will be totaled monthly \6\ and will include
all NYSE adding liquidity, excluding NYSE open and NYSE close volume,
by all NYSE participants, including Supplemental Liquidity Providers
(``SLP''), customers, Floor brokers, and DMMs.
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\6\ The Exchange currently sends each DMM a daily file with that
DMM's daily and month to date volumes and quoting performance for
each individual DMM stock. The Exchange includes in that daily file
the DMM's intraday providing volume and NYSE intraday providing
volume by DMM stock, which will allow each DMM to track their month
to date status for the monthly rebates, which will be totaled on a
monthly basis.
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Rebates will be applied when (i) posting displayed and non-
displayed orders on Display Book, including s-quote and s-quote reserve
orders; (ii) when providing liquidity on non-displayed interest using
the Capital Commitment Schedule; and (iii) when executing trades in the
crowd and at Liquidity Replenishment Points.\7\
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\7\ See n. 6 of the Price List.
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For example, in a More Active Security (with a stock price of $1 or
more) in a given month where the DMM meets the More Active Securities
Quoting Requirement and the More Active Securities Quoted Size Ratio
Requirement, if a DMM's intraday adding liquidity for that month is
30,000,000 shares, and total NYSE intraday adding liquidity is
100,000,000 shares, the DMM will earn a rebate of $0.0030 per share for
the first 20,000,000 shares of adding liquidity because those shares
are at or below the 20% intraday adding share threshold. The DMM will
earn a rebate of $0.0026 per share for the remaining 10,000,000 shares
because those shares exceed the 20% intraday adding share threshold.
For other More Active Securities, with a stock price of $1 or more,
where the DMM meets the More Active Securities Quoting Requirement and
the More Active Securities Quoted Size Ratio Requirement, and the DMM's
share of intraday adding liquidity is at or below the 20% intraday
adding share threshold, the DMM will earn a rebate of $0.0030 per share
for all adding liquidity for the More Active Securities.
Finally, the Exchange proposes to delete references to round and
odd lot transactions in the Price List, which are outdated in light of
the decommissioning of the odd lot system.\8\ Since the decommissioning
of the odd lot system, all per share transaction fees and credits have
been applied at the round lot rate.
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\8\ See Securities Exchange Act Release No. 62578 (July 27,
2010), 75 FR 45185 (August 2, 2010) (SR-NYSE-2010-43).
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The proposed rule filing will be effective January 1, 2012[.] [sic]
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''),\9\ in general, and Section 6(b)(4) \10\ 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
that the proposed rebates are equitably allocated and not unfairly
discriminatory because they will apply equally to all DMMs. NYSE
believes that the rebate of $0.0026 for intraday adding liquidity that
exceeds 20% share of NYSE total adding liquidity as described above is
reasonable because DMMs have greater obligations than SLPs,\11\ so it
is reasonable to pay DMMs a $0.0026 rebate, which is still slightly
higher than the SLPs' rebate of up to $0.0022. Additionally, the
$0.0026 rebate is reasonable because it is still higher than the
$0.0025 rebate that DMMs receive when they only meet the More Active
Securities Quoting Requirement, but not the More Active Securities
Quoted Size Ratio Requirement. At the same time, the Exchange believes
the proposed rule change will encourage multiple sources of market
liquidity (e.g. SLPs, Floor Brokers, and other market participants),
which will help to promote a more robust, fair, and orderly market. The
Exchange believes that removing outdated references to round and odd
lots in the Price List will add clarity to the Price List.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
\11\ Compare NYSE Rule 104 (obligations for DMMs) versus NYSE
Rule 107B (obligations for SLPs).
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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) \12\ of the Act and subparagraph (f)(2) of Rule
19b-4 \13\ thereunder, because it establishes a due, fee, or other
charge imposed by the NYSE.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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
[[Page 2587]]
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 email to [email protected]. Please include
File Number SR-NYSE-2011-70 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-2011-70. 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 such 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 publicly available. All
submissions should refer to File Number SR-NYSE-2011-70 and should be
submitted on or before February 8, 2012.
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\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-778 Filed 1-17-12; 8:45 am]
BILLING CODE 8011-01-P