[Federal Register Volume 78, Number 161 (Tuesday, August 20, 2013)]
[Notices]
[Pages 51251-51254]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-20191]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70193; File No. SR-NYSE-2013-56]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Changes to the
Price List
August 14, 2013.
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 July 31, 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.
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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 (i) add a new
credit for agency cross trades, (ii) revise the fees for executions at
the close, (iii) revise the fees for market at-the-close (``MOC'') and
limit at-the-close (``LOC'') orders, (iv) revise the fees for Floor
broker Discretionary e-Quotes (``d-Quotes''), and (v) revise the fees
for certain other Floor broker transactions. The Exchange proposes to
implement the fee changes effective August 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 (i) add a new
credit for agency cross trades, (ii) revise the fees for executions at
the close, (iii) revise the fees for MOC and LOC orders, (iv) revise
the fees for d-Quotes, and (v) revise the fees for certain other Floor
broker transactions. The proposed transaction fee changes described
below apply to transactions in stocks with a per share stock price of
$1.00 or more. The Exchange proposes to implement the fee changes
effective August 1, 2013.
Agency Cross Trades
Currently, the Exchange does not charge member organizations a fee
for agency cross trades (i.e., a trade where a member organization has
customer orders to buy and sell an equivalent amount of the same
security). The Exchange proposes to offer a per share credit per
transaction of $0.0003, which will be credited to both sides of the
transaction.
Executions at the Close
Currently, the Exchange does not charge member organizations a fee
for (i) executions at the close (except MOC and LOC orders) or (ii)
Floor broker executions swept into the close. The Exchange proposes
that if a member organization executes an average daily trading volume
(``ADV'') on the Exchange during the billing month of at least
1,000,000 shares in (i) executions at the close (except MOC and LOC
orders), and/or (ii) Floor broker executions swept into the close, then
the Exchange will charge such member organization $0.0001 per share per
transaction (charged to both sides).\3\ Such executions will continue
to be free of charge if the member organization
[[Page 51252]]
executes an ADV on the Exchange during the billing month of fewer than
1,000,000 shares.
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\3\ For example, a fee would be charged if a member organization
executed an ADV on the Exchange during the billing month of (1)
1,000,000 shares in executions at the close (excluding MOC and LOC
orders), but had no Floor broker executions swept into the close;
(2) 1,000,000 shares in Floor broker executions swept into the
close, but had no other closing executions; or (3) 500,000 shares in
executions at the close (excluding MOC and LOC orders) and 500,000
shares in Floor broker executions swept into the close.
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MOC and LOC Orders
Currently, the Exchange charges $0.00095 per share per transaction
(charged to both sides) for all MOC and LOC orders unless a member
organization meets a specified consolidated ADV in NYSE-listed
securities during the billing month (``NYSE CADV''). Specifically, if a
member organization executes an ADV of MOC and LOC activity on the
Exchange in that month of at least 0.375% of NYSE CADV, then the
Exchange charges $0.00055 per share per transaction (charged to both
sides) for all MOC and LOC orders. The Exchange proposes to add an
additional fee tier for MOC and LOC orders. The Exchange proposes to
charge $0.00050 per share per transaction (charged to both sides) for
all MOC and LOC orders from any member organization executing an ADV of
MOC and LOC activity on the Exchange in the billing month of at least
0.575% of NYSE CADV.
Floor Broker d-Quotes
Currently, the Exchange charges $0.0005 per share per transaction
for Floor broker d-Quotes that remove liquidity. The Exchange proposes
to add an additional pricing tier for Floor broker d-Quotes.
Specifically, the Exchange proposes to charge $0.0010 per share per
transaction for all Floor broker d-Quotes that remove liquidity from
any member organization executing an ADV of at least 500,000 shares in
d-Quotes that remove liquidity from the Exchange in that month.
Other Floor Broker Transactions
Currently, Floor broker transactions (i.e. when taking liquidity
from the Exchange) that are not otherwise specified in the Price List
are charged $0.0024 per share per transaction. The Exchange proposes to
lower this fee to $0.0022 per share per transaction. For Floor brokers
that execute an ADV in such Floor broker transactions that is at least
10% more than their May 2013 ADV for such Floor broker transactions,
the Floor broker transaction charge will be $0.0020 per share per
transaction.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\4\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\5\ 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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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the proposed credit for agency cross
trades is reasonable because such trades are typically large block
orders, and providing a credit will encourage their submission to a
public exchange, thereby promoting price discovery and transparency.
The Exchange believes that the proposed credit is equitable and not
unfairly discriminatory because all member organizations that engage in
agency trading will be eligible to receive the credit, and all market
participants will benefit from the price discovery and transparency
provided for large block orders.
The Exchange believes that offering a new, lower fee tier for
member organizations that execute a higher NYSE CADV of MOC and LOC
orders is reasonable because it will incent member organizations to
provide higher volumes of MOC and LOC orders, and higher volumes of MOC
and LOC orders will contribute to the quality of the Exchange's closing
auction and provide market participants whose orders are swept into the
close with a greater opportunity for execution. The Exchange believes
that the proposed tier is equitable and not unfairly discriminatory
because all member organizations will be subject to the same fee
structure, which will automatically adjust based on prevailing market
conditions. The Exchange believes that it is equitable and not unfairly
discriminatory to charge a lower fee to member organizations that make
significant contributions to market quality by providing higher volumes
of liquidity, which benefit all market participants.
The Exchange believes that it is reasonable to charge a fee of
$0.0001 for executions at the close (other than MOC and LOC orders) and
Floor broker executions swept into the close if a member organization
executes an ADV of at least 1,000,000 such executions on a combined
basis. The Exchange's closing auction is a recognized industry
benchmark,\6\ and member organizations receive a substantial benefit
from the Exchange in obtaining an ADV of 1,000,000 or more such
executions at the Exchange's closing price on a daily basis. In that
respect, this fee increase is designed in part to offset the reduction
in the Exchange's revenues from the fee reduction described in the
preceding paragraph. The Exchange also believes that the proposed fee
is equitable and not unfairly discriminatory. While member
organizations that reach the threshold of an ADV of at least 1,000,000
combined executions are generally larger member organizations that are
deriving a substantial benefit from this high volume of executions, the
Exchange must nonetheless encourage liquidity from multiple sources.
Allowing member organizations with lower execution volumes to continue
to obtain executions at the close at no charge will encourage them to
continue to send orders to the Exchange for the closing auction. The
Exchange believes that the threshold it has selected will continue to
incent order flow from multiple sources and help maintain the quality
of the Exchange's closing auctions, which benefits all market
participants.
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\6\ For example, the pricing and valuation of certain indices,
funds, and derivative products require primary market prints.
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The Exchange believes that the proposed d-Quote rate of $0.0010 per
share for Floor brokers executing an ADV of at least 500,000 d-Quotes
that remove liquidity from the Exchange is reasonable because a
substantial benefit is derived from obtaining executions for such a
high volume of d-Quotes. The Exchange believes that the proposed tier
is equitable and not unfairly discriminatory. While Floor brokers that
reach the threshold of an ADV of at least 500,000 combined executions
are generally larger member organizations that are deriving a
substantial benefit from this high volume of executions, the Exchange
must nonetheless encourage liquidity from multiple sources. Allowing
Floor brokers with lower execution volumes to continue to use d-Quotes
to remove liquidity at the lower fee of $0.0005 will continue to incent
order flow from multiple sources and help maintain the quality of order
execution on the Exchange, which benefits all market participants. The
Exchange further believes it is reasonable to continue to maintain d-
Quote take rates that are lower than the take rate that applies to
Floor broker transactions not otherwise specified on the Price List
(i.e., the proposed $.0022 and $0.0020 per share rates) because d-
Quotes in particular encourage additional liquidity during the trading
day and incent Floor brokers to provide additional intra-quote price
improved trading, which contribute to the overall quality of the
Exchange's market.
The Exchange believes that it is reasonable to lower the fees for
Floor
[[Page 51253]]
broker transactions that take liquidity but are not otherwise specified
in the Price List in light of the two proposed increases in other Floor
broker fees. The Exchange also believes it is equitable and not
unfairly discriminatory to continue to charge Floor brokers that take
liquidity lower fees ($0.0022 or $0.0020 per share) than non-Floor
brokers that take liquidity (which pay $0.0025 per share) because Floor
brokers have slower access to the Exchange (via handheld technology)
than non-Floor brokers and are prohibited from routing directly to
other market centers from handheld devices, which prevents them from
accessing any associated pricing opportunities that might exist at
those away markets.
The Exchange believes that the lower Floor broker take liquidity
fee of $0.0020 for take liquidity over the proposed 10% threshold is
reasonable because it is designed to strike a balance in the fees and
incentives offered by the Exchange for taking and providing liquidity.
The Exchange believes that it is reasonable to use May 2013 as the
threshold date because that is the last month without exceptional
market activity, such as an index rebalancing. Moreover, customer
orders that take liquidity encourage liquidity providers to post in the
expectation of having their own orders filled. Accordingly, the
Exchange believes that it is equitable and not unfairly discriminatory
to use pricing incentives, such as a reduced fee for taking liquidity,
to encourage Floor brokers to increase their participation in the
market by submitting their customers' liquidity taking orders to the
Exchange.
Finally, the Exchange believes that it is subject to significant
competitive forces in setting its fees and credits, 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,\7\ 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.
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\7\ 15 U.S.C. 78f(b)(8).
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Specifically, the Exchange believes the proposed credit for agency
cross trades will provide an alternative to reporting them to FINRA's
trade reporting facility and allow the Exchange to more effectively
compete for market share. The proposed new fee for executions at the
close and Floor broker executions swept into the close will only apply
to member organizations that obtain high volumes of executions at the
close on a daily basis; to date, such executions have been free, and
the Exchange does not believe competition will be burdened by
instituting a small fee for members that are obtaining a substantial
benefit from these executions. Similarly, the Exchange does not believe
that Floor brokers that are removing higher volumes of liquidity via d-
Quotes from the Exchange would be burdened by paying a higher fee for
such executions. The increases in these Floor broker fees in turn will
be offset by the fee reductions for all other Floor broker transactions
that take liquidity that are not otherwise specified in the Price List.
The additional pricing tier for MOC and LOC orders reflect the need for
the Exchange to adjust financial incentives to attract order flow.
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 or rebate
opportunities available at other venues to be more favorable. In such
an environment, the Exchange must continually adjust its fees and
rebates to remain competitive with other exchanges and with alternative
trading systems that have been exempted from compliance with the
statutory standards applicable to exchanges. Because competitors are
free to modify their own fees and credits in response, and because
market participants may readily adjust their order routing practices,
the Exchange believes that the degree to which fee changes in this
market may impose any burden on competition is extremely limited. As a
result of all of these considerations, the Exchange does not believe
that the proposed changes will impair the ability of member
organizations or competing order execution venues to maintain their
competitive standing in the financial markets.
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) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge
imposed by the Exchange.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 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. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \10\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\10\ 15 U.S.C. 78s(b)(2)(B).
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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-2013-56 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-2013-56. 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
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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-2013-56 and should be submitted on or before
September 10, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-20191 Filed 8-19-13; 8:45 am]
BILLING CODE 8011-01-P