[Federal Register Volume 78, Number 131 (Tuesday, July 9, 2013)]
[Notices]
[Pages 41166-41168]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-16480]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69927; File No. SR-NYSE-2013-46]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending Its Price List To Add Greater Specificity Related to the
Applicable ``Tier 3'' Supplemental Liquidity Provider Rate and the
Member Organization Tier 1 and Tier 2 Adding Credit Rates
July 3, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b4 thereunder,\2\ notice is hereby given that,
on June 20, 2013, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 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 its Price List to add greater
specificity related to (i) the applicable ``tier 3'' Supplemental
Liquidity Provider (``SLP'') rate and (ii) the member organization Tier
1 and Tier 2 Adding Credit rates. The Exchange proposes to implement
the fee change effective July 1, 2013. 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 add greater
specificity related to (i) the applicable ``tier 3'' SLP rate and (ii)
the member organization Tier 1 and Tier 2 Adding Credit rates. The
Exchange proposes to implement the fee change effective July 1, 2013.
SLP Credits \3\
---------------------------------------------------------------------------
\3\ The SLP program provides incentives for quoting and adds
competition to the existing group of liquidity providers. An SLP can
either be a proprietary trading unit of a member organization (an
``SLP-Prop'') or a registered market maker at the Exchange (an
``SLMM''). See Rule 107B.
---------------------------------------------------------------------------
SLPs are eligible for certain credits when adding liquidity to the
Exchange. The amount of the credit is determined by the ``tier'' that
the SLP qualifies for, which is generally based on the SLP's level of
quoting and the average daily volume (``ADV'') of liquidity added by
the SLP in assigned securities, excluding early closing days. Since
October 1, 2012, a $0.0025 credit has been available under ``tier 3''
for an SLP that adds liquidity to the NYSE in securities with a per
share price of $1.00 or more if the SLP (i) meets the 10% average or
more quoting requirement in an assigned security pursuant to Rule 107B
(quotes of an SLP-Prop and an SLMM of the same member organization are
not aggregated), (ii) adds liquidity for all assigned SLP securities in
the aggregate (including shares of both an SLP-Prop and an SLMM of the
same member organization) of an ADV of more than 0.22% of NYSE
consolidated ADV (``CADV''), (iii) adds liquidity for all assigned SLP
securities in the aggregate (including shares of both an SLP-Prop and
an SLMM of the same member organization) of an ADV during the billing
month that is at least an 0.18% increase over the SLP's
[[Page 41167]]
September 2012 Adding ADV \4\ (``SLP Baseline ADV''), and (iv) has a
minimum provide ADV for all assigned SLP securities of 12 million
shares.\5\
---------------------------------------------------------------------------
\4\ Adding ADV is ADV that adds liquidity to the NYSE during the
billing month. Adding ADV excludes any liquidity added by a
Designated Market Maker.
\5\ See Securities Exchange Act Release No. 68021 (October 9,
2012), 77 FR 63406 (October 16, 2012) (SR-NYSE-2012-50).
---------------------------------------------------------------------------
Unlike the other SLP tiers, the Price List does not currently
specify the applicable tier 3 rate for a Non-Displayed Reserve Order
that adds liquidity to the Exchange.\6\ The Exchange hereby proposes to
specify that the rate for a Non-Displayed Reserve Order that adds
liquidity to the Exchange for an SLP that qualifies for tier 3 is a
credit of $0.0020. The Exchange notes that, as is currently the case
for the other SLP tiers, the proposed rate of $0.0020 for Non-Displayed
Reserve Orders would be $0.0005 less than the otherwise applicable rate
of $0.0025.
---------------------------------------------------------------------------
\6\ A Non-Displayed Reserve Order is a limit order that is not
displayed, but remains available for potential execution against all
incoming automatically executing orders until executed in full or
cancelled. See NYSE Rule 13 (Definitions of Orders).
---------------------------------------------------------------------------
Member Organization Tier 1 and 2 Adding Credits
Member organizations are currently eligible for the Non-Tier Adding
Credit when adding liquidity to the Exchange, including both displayed
and non-displayed. The applicable rate for the Non-Tier Adding Credit
is $0.0015 per share, or $0.0010 if a Non-Displayed Reserve Order.
Executions of displayed liquidity of certain member organizations may
instead be eligible for the Tier 1 \7\ or Tier 2 \8\ Adding Credit
based on the member organization's level of activity during a month.\9\
The Price List currently specifies that the rate for the Tier 1 Adding
Credit is $0.0018 and that the rate for the Tier 2 Adding Credit is
$0.0017. The Exchange proposes a technical change to add the $0.0010
per share rate for Non-Displayed Reserve Orders to the Tier 1 and Tier
2 Adding Credits. In this regard, a member organization that qualifies
for the Tier 1 or Tier 2 Adding Credit currently receives a credit of
$0.0010 per share for Non-Displayed Reserve Orders pursuant to the Non-
Tier Adding Credit. The Exchange also proposes a conforming change to
remove the existing reference to ``displayed'' from the Tier 1 and Tier
2 Adding Credit descriptions.
---------------------------------------------------------------------------
\7\ A member organization currently qualifies for the Tier 1
Adding Credit by adding displayed liquidity to the Exchange if (i)
the member organization has ADV Adding ADV (which excludes any
liquidity added by a Designated Market Maker) that is at least 1.5%
of NYSE CADV, and executes market at-the-close (``MOC'') and limit
at-the-close (``LOC'') orders of at least 0.375% of NYSE CADV, (ii)
the member organization has Adding ADV that is at least 0.8% of NYSE
CADV, executes MOC and LOC orders of at least 0.12% of NYSE CADV,
and adds liquidity to the NYSE as an SLP for all assigned SLP
securities in the aggregate (including shares of both an SLP-Prop
and an SLMM of the same member organization) of more than 0.15% of
NYSE CADV, or (iii) the member organization has ADV that adds
liquidity in customer electronic orders to the NYSE (``Customer
Electronic Adding ADV,'' which excludes any liquidity added by a
Floor broker, Designated Market Maker, or SLP) during the billing
month that is at least 0.5% of NYSE CADV, executes MOC and LOC
orders of at least 0.12% of NYSE CADV, and has Customer Electronic
Adding ADV during the billing month that, taken as a percentage of
NYSE CADV, is at least equal to the member organization's Customer
Electronic Adding ADV during September 2012 as a percentage of CADV
in NYSE-listed securities during September 2012 plus 15%.
\8\ A member organization currently qualifies for the Tier 2
Adding Credit by adding displayed liquidity to the NYSE if the
member organization has Adding ADV that is at least 0.20% of NYSE
CADV and executes MOC and LOC orders of at least 0.10% of NYSE CADV.
\9\ The Tier 1 and Tier 2 Adding Credits became effective
October 1, 2012 pursuant to the same proposed rule change that
implemented SLP tier 3. See supra note 6. The criteria applicable to
the Tier 1 Adding credit was subsequently changed effective November
1, 2012. See Securities Exchange Act Release No. 68150 (November 5,
2012), 77 FR 67431 (November 9, 2012) (SR-NYSE-2012-56).
---------------------------------------------------------------------------
The Exchange believes that the proposed changes would result in
greater specificity in the Price List. The Exchange notes that the
proposed change is not otherwise intended to address any other issues,
and the Exchange is not aware of any problems that member
organizations, including SLPs, would have in complying with the
proposed change.
The Exchange believes that it is subject to significant competitive
forces, as described below in the Exchange's statement regarding the
burden on competition.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\10\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) 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) and (5).
---------------------------------------------------------------------------
The Exchange believes that the proposed change is reasonable
because, unlike the other SLP tiers, the Price List does not specify
the applicable tier 3 rate for Non-Displayed Reserve Orders that add
liquidity to the Exchange. The proposed change is also reasonable
because, as is currently the case for the other SLP tiers, the proposed
rate for Non-Displayed Reserve Orders would be $0.0005 less than the
otherwise applicable rate of $0.0025.
The Exchange believes that this proposed change is also equitable
and not unfairly discriminatory because it would apply to any SLP that
qualifies for tier 3. The proposed change is also equitable and not
unfairly discriminatory because it would add specificity to the Price
List regarding the applicable rate for Non-Displayed Reserve Orders.
The Exchange also believes that the proposed change is reasonable
because the technical change to add the $0.0010 per share rate for Non-
Displayed Reserve Orders to the Tier 1 and Tier 2 Adding Credits would
result in greater specificity regarding the applicable rate for
qualifying member organizations. The Exchange believes that this
proposed change is also equitable and not unfairly discriminatory
because such greater specificity would benefit all readers of the Price
List, including member organizations that qualify for the Tier 1 or
Tier 2 Adding Credit.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
For these reasons, the Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\12\ 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. Instead, the Exchange believes that the
proposed change will add greater specificity within the Price List.
Specifically, the proposed change related to SLP tier 3 would add
specificity to the Price List regarding the applicable rate for Non-
Displayed Reserve Orders. In this regard, the Exchange notes that, as
is currently the case for the other SLP tiers, the proposed rate of
$0.0020 for Non-Displayed Reserve Orders would be $0.0005 less than the
otherwise applicable rate of $0.0025. Additionally, the proposed change
related to the Tier 1 and Tier 2 Adding Credits would be a technical
change, and such greater specificity would benefit all readers of
[[Page 41168]]
the Price List, including member organizations that qualify for the
Tier 1 or Tier 2 Adding Credit.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive. 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.
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 Exchange.
---------------------------------------------------------------------------
\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. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \15\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
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-2013-46 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-2013-46. 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-2013-46 and should be
submitted on or before July 30, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------
\16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-16480 Filed 7-8-13; 8:45 am]
BILLING CODE 8011-01-P