[Federal Register Volume 77, Number 229 (Wednesday, November 28, 2012)]
[Notices]
[Pages 71026-71028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-28799]
[[Page 71026]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68283; File No. SR-NYSE-2012-45]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending Its Price List To Specify Pricing That Is Currently Applicable
to Certain Executions on the Exchange, but That Is Not Currently
Included in the Price List
November 21, 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 November 9, 2012, New York Stock Exchange LLC (the
``Exchange'' or ``NYSE'') 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 specify pricing
that is currently applicable to certain executions on the Exchange, but
that is not currently included in the Price List. 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to amend its Price List to specify
pricing that is currently applicable to certain executions on the
Exchange, but that is not currently included in the Price List. The
Exchange proposes to make the changes immediately effective and
operative.
Specifically, the Exchange proposes to include the following
changes to the Price List to reflect pricing that is currently being
assessed for the following intraday transactions: (1) A $0.0005 fee for
a Floor broker discretionary e-Quote (``d-Quote'') that takes liquidity
in a security priced $1 or above; (2) no charge (i.e., free) for a non-
electronic agency transaction of a Floor broker that executes against
the Book, both in a security priced $1 or above and in a security
priced below $1; (3) no charge for a non-electronic agency transaction
between Floor brokers in the crowd in a security priced below $1; and
(4) no charge for an agency cross trade (i.e., a trade where a member
organization has customer orders to buy and sell an equivalent amount
of the same security) in a security priced below $1.
d-Quotes
The Exchange proposes to specify in the Price List that a d-Quote
that removes liquidity from the Book is charged $0.0005 per share if
the security is priced $1 or above.\3\ A d-Quote that adds liquidity to
the Book in a security priced $1 or above will continue to receive a
credit of $0.0019 per share.\4\ Similarly, a d-Quote that adds
liquidity to the Book in a security priced below $1 will continue to
receive a credit of $0.0004 per share.\5\ Also, a d-Quote that removes
liquidity from the Book in a security priced below $1 will continue to
be charged a fee equal to 0.3% of the total dollar volume of the
transaction.\6\
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\3\ The Exchange has charged for d-Quotes that removed liquidity
since October 2007.
\4\ This is in accordance with the current Price List and
therefore the Exchange is not proposing a new or separate line item
therein for this type of transaction.
\5\ Id.
\6\ Id.
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Non-Electronic Agency Transactions
The Exchange proposes to specify in the Price List that a non-
electronic agency transaction of a Floor broker that executes against
the Book is not charged (i.e., it is free),\7\ both for a security
priced $1 or above and for a security priced below $1.\8\ This is the
same rate (i.e., free) that is currently specified in the Price List
for non-electronic agency transactions between Floor brokers in the
crowd in securities priced $1 or above. In this regard, the Exchange
also proposes to specify in the Price List that there is no charge for
a non-electronic agency transaction between Floor brokers in the crowd
in a security priced below $1.\9\
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\7\ Because of the nature of non-electronic trading interest
(i.e., verbal/manual interest), the concept of adding and removing
liquidity is not applicable.
\8\ The Exchange began charging for a non-electronic agency
transaction of a Floor broker that executed against the Book in
October 2007. Beginning in March 2009, the Exchange no longer
charged for this type of transaction.
\9\ The Exchange has not charged for a non-electronic agency
transaction between Floor brokers in the crowd in a security priced
below $1 since October 2007, if the transaction was for 10,000
shares or more, and since March 2009, if the transaction was for
fewer than 10,000 shares.
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Agency Cross Trades
The Price List currently specifies that an agency cross trade is
not charged for a security priced $1 or above.\10\ Similarly, the
Exchange proposes to specify in the Price List that there is no charge
for an agency cross trade in a security priced below $1.\11\
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\10\ Because of the nature of an agency cross trade (i.e., the
member organization already has customer orders to buy and sell an
equivalent amount of the same security), the concept of adding and
removing liquidity is not applicable.
\11\ The Exchange has not charged for an agency cross trade in a
security priced below $1 since October 2007, if the transaction was
for 10,000 shares or more, and since March 2009, if the transaction
was for fewer than 10,000 shares.
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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''),\12\ in general, and furthers the objectives of Section
6(b)(4) of the Act,\13\ 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.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed d-Quote rate of $0.0005 per
share for securities priced $1 or above is reasonable because, when
compared to the rate that would otherwise apply (i.e., $0.0024 per
share for all other Floor broker transactions that take liquidity from
the Exchange) it may encourage additional liquidity during
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the trading day and may incentivize Floor brokers to provide additional
intra-quote price improved trading, which would contribute to the
quality of the Exchange's market. The Exchange also believes that the
proposed rate of $0.0005 per share is equitable and not unfairly
discriminatory because it may provide opportunities for Floor brokers
to attract additional liquidity to the Floor and thereby increase the
quality of order execution on the Exchange's market, which benefits all
market participants.
Additionally, the Exchange believes that not charging for a non-
electronic agency transaction of a Floor Broker that executes against
the Book, in both securities priced $1 or above as well as securities
priced below $1, is reasonable because it would be set at a level that
would align the rate with certain other non-electronic agency Floor
broker interest that is similarly not charged. In this regard, and as
noted above, the Exchange does not charge for executions of non-
electronic agency transactions between Floor brokers in the crowd.\14\
Additionally, the Exchange believes that this is equitable and not
unfairly discriminatory because a non-electronic agency transaction of
a Floor broker would be used, for example, at a time of the trading day
when a Floor broker is physically present at the point of sale and
requires flexibility to represent customer interest, which is unique to
a Floor broker, but which may also result in added opportunity cost and
uncertainty for the Floor broker when compared to an electronic
execution.
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\14\ The Commission notes that the Exchange does not charge for
executions of non-electronic agency transactions between Floor
brokers in the crowd for transactions in stocks with a per share
stock price of $1.00 or more.
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The Exchange also believes that it is reasonable to specify that a
non-electronic agency transaction between Floor brokers in the crowd is
not charged for securities priced below $1 because doing so will add
greater specificity to the Price List by reflecting that it is the same
as the rate charged for such transactions in securities priced $1 or
above. This is also equitable and not unfairly discriminatory because
it would provide greater certainty regarding the applicable rates for
transactions in securities priced below $1. The Exchange believes that
not charging for these transactions is further reasonable because it
may incentivize additional liquidity in these low-priced securities,
which typically are more thinly-traded and less liquid than securities
priced $1 or above. Accordingly, it is also equitable and not unfairly
discriminatory to not charge for these transactions because the
increased liquidity that may result in these securities would increase
the quality of order execution on the Exchange's market, which benefits
all market participants. Finally, and as described above for a non-
electronic agency transaction of a Floor broker that executes against
the Book, the Exchange believes that this is equitable and not unfairly
discriminatory because non-electronic agency transactions between Floor
brokers in the crowd occur, for example, at a time of the trading day
when a Floor broker is physically present at the point of sale and
requires flexibility to represent customer interest, which is unique to
a Floor broker, but which may also result in added opportunity cost and
uncertainty for the Floor broker when compared to an electronic
execution.
The Exchange also believes that it is reasonable to specify that an
agency cross trade is not charged for securities priced below $1
because doing so will add greater specificity to the Price List by
reflecting that it is the same as the rate charged for such
transactions in securities priced $1 or above. This is also equitable
and not unfairly discriminatory because it would provide greater
certainty regarding the applicable rates for transactions in securities
priced below $1. The Exchange believes that not charging for these
transactions is further reasonable because of the nature of an agency
cross trade, in that it is a trade where a member organization has
customer orders to buy and sell an equivalent amount of the same
security.\15\
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\15\ See supra note 10.
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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) \16\ of the Act and subparagraph (f)(2) of Rule
19b-4 \17\ thereunder, because it establishes a due, fee, or other
charge imposed by the NYSE.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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 email to [email protected]. Please include
File Number SR-NYSE-2012-45 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-2012-45. 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
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal
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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-2012-45 and should be submitted on or before December 19, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-28799 Filed 11-27-12; 8:45 am]
BILLING CODE 8011-01-P