[Federal Register Volume 78, Number 2 (Thursday, January 3, 2013)]
[Notices]
[Pages 335-337]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-31572]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68538; File No. SR-NYSE-2012-71]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending the Price List To Waive Certain Fees for Floor Brokers for
November and December 2012
December 27, 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 December 17, 2012, New York Stock Exchange LLC (``NYSE'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
and II 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 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 provide relief for
Floor brokers from the Annual Telephone Line Charge and the Annual Fee
for November and December 2012, which the Exchange proposes to become
operative as of November 1, 2012. 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 proposes to amend its Price List to provide relief for
Floor brokers from the Annual Telephone Line Charge and the Annual Fee
for November and December 2012, which the Exchange proposes to become
operative as of November 1, 2012.
Currently, member organizations are charged an Annual Telephone
Line Charge of $400 per phone number. The Exchange proposes to waive
the fee for Floor brokers for November and December 2012 on a prorated
basis because Hurricane Sandy affected the ability of Floor brokers to
communicate with customers from the Floor.
The Exchange has been advised by its third-party carrier that the
damage to the telephone connections is very extensive, and as a result,
the telephone line connections for Floor brokers still are not fully
operational and may not be so for at least another month, and possibly
longer, given the type of work that needs to be completed to restore
the telephone services. In particular, the Exchange notes that the
telephone lines that support both the wired and wireless connections
for Floor brokers are based in an area of lower Manhattan that suffered
extensive damage as a result of Hurricane Sandy. The type of damage
that was sustained will require the third-party carrier to rebuild the
infrastructure that supports the telephone services, rather than engage
in repairs of the existing lines.\4\ In addition to the damage to
telephone lines, internet bandwidth has been reduced considerably. The
Exchange notes that it is waiving the fee for Floor brokers only
because off-Floor member firms were not impacted by these services. In
addition, DMMs are on the Floor but do not engage in an agency business
with customers from the Floor and, therefore, were not impacted by the
telecommunications issues. The proposed waiver would be $33.33 for each
month.
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\4\ The Exchange filed a rule change to temporarily suspend
those aspects of Rules 36.20, 36.21, and 36.30 that would not permit
Floor brokers and Designated Market Makers (``DMMs'') to use
personal portable phone devices on the Floor following the aftermath
of Hurricane Sandy and during the period that phone service was not
fully functional. See Securities Exchange Act Release No. 68137
(November 1, 2012), 77 FR 66893 (November 7, 2012) (SR-NYSE-2012-
58). The temporary suspension was subsequently extended for Floor
brokers and DMMs, and again extended for Floor brokers after the
Exchange was able to restore service for DMMs. See Securities
Exchange Act Release No. 68161 (November 5, 2012), 77 FR 67704
(November 13, 2012) (SR-NYSE-2012-61) and File No. SR-NYSE-2012-64.
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Currently, member organizations are charged an Annual Fee of
$40,000 per license (the equivalent of $3,333.33 per month) for the
first two licenses held by a member organization and $25,000 per
license (the equivalent of $2,083.33 per month) for additional licenses
held by a member organization. The Exchange proposes to provide a
monthly credit of $2,000 for the first and second Floor broker licenses
held by a member organization and a monthly credit of $500 for each
additional Floor broker license held by a member organization for
November and December 2012 because of the impact of Hurricane Sandy on
Floor brokers. For example, a member organization with only one Floor
broker license would receive a $2,000 credit in November and December
2012, and a member organization with three Floor broker licenses would
receive a total of $4,500 in credits for November and December 2012.
As stated above, Hurricane Sandy had a disproportionate impact on
Floor brokers compared with off-Floor member firms and DMMs, including
limited telephone service, no direct customer telephone lines, limited
Internet service, intermittent cellular telephone service at the
Exchange, and
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persistent busy signals.\5\ As a result, Floor brokers face greater
operating challenges and have experienced reduced activity from certain
accounts and customers compared with pre-Hurricane Sandy levels.
Therefore, Floor brokers are not getting the full benefit of their
licenses.
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\5\ As part of the proposed rule change, the Exchange proposes
to renumber the footnotes in the Price List accordingly.
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The proposed waivers would apply retroactively and would be
reflected in the December 2012 and January 2013 billing statements.
The proposed changes are not otherwise intended to address any
other problem, and the Exchange is not aware of any significant problem
that the affected member organizations would have in complying with the
proposed changes.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\6\ in general, and furthers the
objectives of Section 6(b)(4) of the Act,\7\ in particular, because it
provides for the equitable allocation of reasonable dues, fees, and
other charges among its members and issuers and other persons using its
facilities and does not unfairly discriminate between customers,
issuers, brokers, or dealers. The Exchange also believes that the
proposed rule change is consistent with Section 6(b)(5) of the Act,\8\
in particular, because it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to, and perfect the mechanisms of, a
free and open market and a national market system and, in general, to
protect investors and the public interest and because it is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4).
\8\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that waiving the Annual Telephone Line Charge
and providing a monthly credit for the Annual Fee for Floor brokers for
November and December 2012 is reasonable because Hurricane Sandy
affected the ability of Floor brokers to communicate with customers and
the ease with which they could represent public orders on the Floor.
Therefore, the Exchange believes it is reasonable to provide relief for
Floor brokers in this regard.
The Exchange believes the proposed change to the Annual Telephone
Line Charge and Annual Fee for Floor brokers is equitable and not
unfairly discriminatory because Floor brokers are the only class of
member organization that was affected by the telecommunications issues,
which has impacted their ability to conduct their regular business and
has resulted in reduced activity from certain accounts and customers.
Therefore, it is equitable and not unfairly discriminatory to offer the
fee waiver and credit only to Floor brokers, which is the only class of
Floor members not getting the full benefit of their licenses. In
addition, the Exchange believes that because communications with
customers is a vital part of a Floor broker's role as agent, during the
period when phone service continues to be intermittent, Floor brokers
should receive relief from the Annual Telephone Line Charge.
The Exchange believes that the proposed monthly credit of $2,000
for the first and second licenses held by a Floor broker for November
and December 2012 is reasonable because all Floor brokers hold at least
one license, and as such, all member organizations that have a Floor
broker license will receive at least a $2,000 per month credit for
November and December 2012. The Exchange believes that the proposed
monthly credit of $500 for each additional Floor broker license held by
a member organization for November and December 2012 is reasonable
because it will provide additional compensation to a member
organization that holds and pays for more than two Floor broker
licenses. In addition, the Exchange believes that the proposed credits
are equitable and not unfairly discriminatory because member
organizations that hold only one or two Floor broker licenses are
generally smaller and are less able to absorb the operating impact
resulting from the infrastructure damage caused by Hurricane Sandy. In
addition, member organizations that hold more than two Floor broker
licenses pay a reduced Annual Fee for additional licenses, and
therefore, it is equitable and not unfairly discriminatory to provide a
lower monthly credit for each additional Floor broker license.
The Exchange believes that the proposed relief for Floor brokers
removes impediments to and perfects the mechanism of a free and open
market and national market system because it would provide relief for
Floor brokers that are experiencing ongoing issues with telephone
service while they are conducting their regular business on the Floor.
The Exchange further believes that the proposed waiver and credit do
not permit unfair discrimination because they would provide relief for
Floor brokers that have been disproportionally impacted in their
ability to operate as agents for customers during this time of
unprecedented weather disruptions.
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
Because the proposed rule change does not: (i) Significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6)(iii) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Commission believes
that waiving the 30-day operative delay is
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consistent with the protection of investors and the public interest.
The Commission notes that doing so will allow the Exchange to provide
the proposed relief during the billing period in which the Floor
brokers were affected. Therefore, the Commission hereby waives the 30-
day operative delay and designates the proposal operative upon
filing.\13\
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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-2012-71 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-2012-71. 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 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-2012-71 and should be
submitted on or before January 24, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Lynn M. Powalski,
Deputy Secretary.
[FR Doc. 2012-31572 Filed 1-2-13; 8:45 am]
BILLING CODE 8011-01-P