[Federal Register Volume 77, Number 197 (Thursday, October 11, 2012)]
[Notices]
[Pages 61803-61804]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-24969]
[[Page 61803]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67986; File No. SR-NYSEArca-2012-104]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Proposing To Amend
the NYSE Arca Equities Schedule of Fees and Charges for Exchange
Services
October 4, 2012.
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 September 24, 2012, 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, II
and III 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Equities Schedule of
Fees and Charges for Exchange Services (``Fee Schedule'') to (i)
increase the credit for executions of Mid-Point Passive Liquidity
(``MPL'') Orders that provide liquidity on the Exchange in certain
active Tape C Securities, and (ii) eliminate the credit that is
currently applicable to Passive Liquidity (``PL'') Orders in Tape B
Securities that provide liquidity on the Exchange. The text of the
proposed rule change is available on the Exchange's Web site at
www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to (i) increase the credit for executions of
MPL Orders that provide liquidity on the Exchange in certain active
Tape C Securities, and (ii) eliminate the credit that is currently
applicable to PL Orders in Tape B Securities that provide liquidity on
the Exchange. The Exchange proposes to implement the fee changes on
October 1, 2012.
A PL Order is an order to buy or sell a stated amount of a security
at a specified, undisplayed price.\4\ An MPL Order is a PL Order
executable only at the midpoint of the Protected Best Bid and Offer.\5\
In this regard, PL Orders, including MPL Orders, allow for additional
opportunities for passive interaction with trading interest on the
Exchange and are designed to offer potential price improvement to
incoming marketable orders submitted to the Exchange.\6\
---------------------------------------------------------------------------
\4\ See Rule 7.31(h)(4).
\5\ See Rule 7.31(h)(5).
\6\ See, e.g., Securities Exchange Act Release No. 54511
(September 26, 2006), 71 FR 58460, 58461 (October 3, 2006) (SR-PCX-
2005-53).
---------------------------------------------------------------------------
Currently, MPL Orders that provide liquidity on the Exchange
receive a $0.0015 per share credit, regardless of whether the order is
for a Tape A, B, or C Security. The Exchange proposes to increase this
credit to $0.0025 per share for MPL Orders that provide liquidity on
the Exchange in the following Tape C Securities, which were selected
based on year-to-date consolidated average daily volume (``CADV''):
------------------------------------------------------------------------
Company name Symbol
------------------------------------------------------------------------
Cisco Systems, Inc........................... CSCO
Dell Inc..................................... DELL
Facebook, Inc................................ FB
Intel Corporation............................ INTC
Microsoft Corporation........................ MSFT
Micron Technology Inc........................ MU
Oracle Corporation........................... ORCL
Research In Motion Limited................... RIMM
SIRIUS XM Radio Inc.......................... SIRI
Zynga, Inc................................... ZNGA
------------------------------------------------------------------------
These securities would be deemed ``Active Tape C Securities'' for
purposes of the Fee Schedule.\7\ The Exchange believes that this
proposed change would incentivize ETP Holders to submit additional MPL
Orders in the Active Tape C Securities. This would increase the
liquidity available on the Exchange in the Active Tape C Securities
and, therefore, could increase the potential price improvement to
incoming marketable orders submitted to the Exchange.
---------------------------------------------------------------------------
\7\ Any change to the list of Active Tape C Securities would be
made by submitting a proposed rule change to the Commission.
---------------------------------------------------------------------------
Separately, PL Orders in Tape B Securities that provide liquidity
on the Exchange currently receive a per share credit.\8\ The Exchange
proposes to eliminate this Tape B PL Order credit, such that PL Orders
in Tape B Securities that provide liquidity on the Exchange would
neither receive a credit nor be charged a fee. The credit for PL Orders
in Tape B securities that provide liquidity to the Exchange was
originally designed to incentivize ETP Holders to submit orders that
provide liquidity on the Exchange in such securities.\9\ The Exchange
has determined to eliminate the Tape B PL Order credit because it has
generally not incentivized ETP Holders to submit additional liquidity
in Tape B Securities in the form of PL Orders. The Exchange notes that
PL Orders in Tape A and C Securities that provide liquidity on the
Exchange are currently neither provided with a credit nor charged a
fee, as is proposed for Tape B Securities. Accordingly, this proposed
change would align the treatment of PL Orders in Tape B securities that
provide liquidity on the Exchange with that of Tape A and C Securities
in the Exchange's Fee Schedule.
---------------------------------------------------------------------------
\8\ The credit is currently $0.0015 per share for Tier 1 and
Step Up Tier 1 and $0.0010 per share for Tier 2, Tier 3, Step Up
Tier 2 and Basic Rates. For Investor Tiers 1-4, the applicable
credit is based on a firm's qualifying levels.
\9\ See Securities Exchange Act Release No. 67180 (June 11,
2012), 77 FR 36027 (June 15, 2012) (SR-NYSEArca-2012-56).
---------------------------------------------------------------------------
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''),\10\ in general, and furthers the objectives of Section
6(b)(4) of the Act,\11\ in particular, because it provides for the
equitable allocation of reasonable dues, fees, and other charges among
its members, issuers and other persons using its facilities and does
not unfairly discriminate between customers, issuers, brokers or
dealers.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes that the proposed change is reasonable
because the increased credit of $0.0025 per share would incentivize ETP
Holders to submit additional MPL Orders in Active Tape C Securities.
This would increase
[[Page 61804]]
the liquidity available on the Exchange in Active Tape C Securities
and, therefore, could increase the potential price improvement to
incoming marketable orders submitted to the Exchange. In this regard,
the selection by the Exchange of the particular Active Tape C
Securities is reasonable because the Exchange's market for such
securities would improve as a result of the increase in liquidity that
the Exchange anticipates resulting from the proposed credit increase.
The Exchange believes that the proposed change is equitable and not
unfairly discriminatory because it would apply equally to MPL Orders
from all ETP Holders in Active Tape C Securities. Additionally, the
proposed change is equitable and not unfairly discriminatory because,
by applying to Active Tape C Securities, all market participants will
have an opportunity to interact in such names, as opposed to thinly
traded securities that might be less liquid.
The Exchange also believes that the proposed change is reasonable
because eliminating the Tape B PL Order credit would remove a pricing
feature from the Fee Schedule that has generally not incentivized ETP
Holders to submit additional PL Orders in Tape B Securities, as was
originally intended. In this regard, the PL Order credit was originally
designed to incentivize ETP Holders to provide additional liquidity on
the Exchange in Tape B Securities and, therefore, to potentially
increase the quality of the Exchange's market in these securities.\12\
Removal of the Tape B PL Order credit is also equitable and not
unfairly discriminatory because it would be eliminated for all ETP
Holders. The Exchange also notes that PL Orders in Tape A and C
Securities that provide liquidity on the Exchange are currently neither
provided with a credit nor charged a fee, as is proposed for Tape B
Securities. Accordingly, this proposed change would align the treatment
of PL Orders in Tape B securities that provide liquidity on the
Exchange with that of Tape A and C Securities for purposes of the
Exchange's Fee Schedule.
---------------------------------------------------------------------------
\12\ See supra note 9.
---------------------------------------------------------------------------
Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues. In such an environment, the Exchange must continually
review, and consider adjusting, its fees and credits to remain
competitive with other exchanges. For the reasons described above, the
Exchange believes that the proposed rule change reflects this
competitive environment.
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) \13\ of the Act and subparagraph (f)(2) of Rule
19b-4 \14\ thereunder, because it establishes a due, fee, or other
charge imposed by the NYSE Arca.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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 email to [email protected]. Please
include File Number SR-NYSEArca-2012-104 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-2012-104. 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-2012-104 and should
be submitted on or before November 1, 2012.
---------------------------------------------------------------------------
\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-24969 Filed 10-10-12; 8:45 am]
BILLING CODE 8011-01-P