[Federal Register Volume 79, Number 4 (Tuesday, January 7, 2014)]
[Notices]
[Pages 873-875]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-31605]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71214; File No. SR-NYSEArca-2013-146]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE
Arca Equities Schedule of Fees and Charges for Exchange Services To
Eliminate the Mid-Point Passive Liquidity Order Tier, Add a New
Routable Order Cross-Asset Tier, and Make Other Changes Relating to
Open Orders
December 31, 2013.
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 December 19, 2013, 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.
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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 the NYSE Arca Equities Schedule of
Fees and Charges for Exchange Services (``Fee Schedule'') to eliminate
the Mid-Point Passive Liquidity (``MPL'') Order Tier, add a new
Routable Order Cross-Asset Tier, and make other changes relating to
open orders. The Exchange proposes to implement the changes on January
2, 2014. 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 amend the Fee Schedule to eliminate the
MPL Order Tier, add a new Routable Order Cross-Asset Tier, and make
other changes relating to open orders. The Exchange proposes to
implement the changes on January 2, 2014.
Currently, the Exchange provides a $0.0020 per share credit for ETP
holders, including Market Makers, that execute an Average Daily Volume
(``ADV'') of providing MPL orders during the month that is 0.0775% or
more of the U.S. Consolidated ADV (``US CADV''). When the Exchange
proposed the MPL Order Tier credit, the Exchange expected it to
incentivize ETP Holders to submit additional MPL orders on the
Exchange; \4\ however, the credit has not had the intended effect.
Accordingly, the Exchange proposes to eliminate the MPL Order Tier. The
$0.0015 per share credit would remain in place for the Tier 1, Tier 2,
and Basic rates.
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\4\ See Securities Exchange Act Release No. 69926 (July 3,
2013), 78 FR 41154 (July 9, 2013) (SR-NYSEArca-2013-67).
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The Exchange also is proposing a new Routable Order Cross-Asset
Tier. Under the Routable Order Cross-Asset Tier, ETP Holders, including
Market Makers, that (1) provide liquidity of 0.40% or more of the US
CADV during the billing month across all Tapes, (2) maintain a ratio
during the billing month across all Tapes of executed provide liquidity
that is eligible to route away from the Exchange (``Routable Orders'')
to total executed provide liquidity of 65% or more, (3) execute an ADV
of provide liquidity during the billing month across all Tapes that is
equal to at least the ETP Holder's or Market Maker's May 2013 provide
liquidity across all Tapes
[[Page 874]]
plus 40%, and (4) are affiliated with an OTP Holder or OTP Firm that
provides an ADV of manual (i.e., non-electronic) executions (as defined
in footnote 5 of the NYSE Arca Options Fee Schedule) \5\ on NYSE Arca
Options (excluding mini options, qualified contingent cross orders, and
strategy trades) across all account type ranges of at least 1.5% of
total Customer equity and ETF option ADV as reported by the Options
Clearing Corporation would qualify for a $0.0032 per share credit for
Routable and non-Routable Orders that provide liquidity in Tape A and C
securities and a $0.0027 per share credit for Routable and non-Routable
Orders that provide liquidity in Tape B securities. The Exchange notes
that the proposed credits would provide an alternative way to qualify
for the current Routable Order Tier credit of $0.0032 for Tape A and
Tape C securities and an alternative way to qualify for the current
Tape B Step Up Tier credit of $0.0027 for Tape B securities that are
offered by the Exchange.\6\ The Exchange also proposes to make
conforming changes to the Tape B Adding Tier, Tape B Step Up Tier, Tape
C Step Up Tier, and Tape C Step Up Tier 2 to specify that ETP Holders
and Market Makers that qualify for the proposed Routable Order Cross-
Asset Tier would not additionally qualify for those tiers.
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\5\ As provided in footnote 5 in the NYSE Arca Options Fee
Schedule, manual executions exclude certain electronic transactions.
Specifically, a manual order that executes in part against one or
more electronic orders or quotes resting on the NYSE Arca Options
Consolidated Book prior to executing against interest in the NYSE
Arca Options Trading Crowd would be considered a manual transaction
order for the entire order. A manual order that executes entirely
against one or more electronic orders or quotes resting on the
Consolidated Book would be considered an electronic transaction for
the entire order. In either case, the contra-side electronic order
or quote would be considered an electronic transaction. In order to
be considered a manual transaction, all manual orders must be
entered into NYSE Arca Options' Electronic Order Capture System.
Manual orders that are entered into an order entry device approved
by NYSE Arca Options and contemporaneously recorded into the
Electronic Order Capture System are also considered manual
transactions.
\6\ The $0.0027 per share credit for executions of Tape B
securities under the Routable Order Cross-Asset Tier is the same
credit that ETP Holders would receive if they qualified for both the
Tier 1 ($0.0023) and Tape B Step Up Tier ($0.0004) credits.
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Lastly, the Exchange proposes to amend footnote 1 in the Fee
Schedule to eliminate the restriction that credits will not be applied
to open orders (e.g., ``Good Till Cancelled'' or ``GTC'' Orders)
executed after the trading date on which they were entered. The
Exchange is eliminating the restriction to encourage more orders to be
submitted and enhance liquidity on the Exchange.
The proposed change is not otherwise intended to address any other
issues, and the Exchange is not aware of any problems that ETP Holders
would have in complying with the proposed change.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\8\ 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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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that eliminating the MPL Order Tier is
reasonable because it has generally not incentivized ETP Holders to
submit additional liquidity in MPL orders as intended.\9\ The Exchange
believes that removal of the MPL Order Tier is equitable and not
unfairly discriminatory because it would be eliminated for all ETP
Holders. The Exchange also believes that eliminating the MPL Order Tier
is reasonable and equitable because ETP Holders can still receive a
$0.0015 credit for MPL orders that provide liquidity under the Tier 1,
Tier 2, and Basic rates.
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\9\ See supra note 4.
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The Exchange believes that the proposal to add the new Routable
Order Cross-Asset Tier is reasonable because it would provide firms
with an alternative way in which to qualify for the current Routable
Order Tier credit of $0.0032 for Tape A and Tape C securities and an
alternative way to qualify for the current Tape B Step Up Tier credit
of $0.0027 for Tape B securities through equity and options orders,
thereby encouraging increased trading activity on both the NYSE Arca
equity and option markets. The Exchange believes that the thresholds
that it has set for qualifying for the new tier are reasonable because
they are based in part on the qualifications for the existing Routable
Order Tier. The Exchange believes that lowering the ratio for Routable
Orders from 75% in the current Routable Order Tier to 65% in the
proposed Routable Order Cross-Asset Tier is reasonable because under
the proposed tier, ETP Holders would be required to meet an additional
threshold in options volume in order to qualify for the credit. The
Exchange further believes that the proposed Routable Order Cross-Asset
Tier is equitable and not unfairly discriminatory because ETP Holders
that are not affiliated with an NYSE Arca Options OTP Holder or OTP
Firm would continue to have the opportunity to qualify for the same
levels of credit pursuant to either the Routable Order Tier or the Tier
1 and Tape B Step Up Tier. The Exchange also believes that it is
reasonable, equitable, and not unfairly discriminatory for an ETP
Holder or Market Maker that qualifies for the proposed Routable Order
Cross-Asset Tier to not be eligible for the Tape B Adding Tier, Tape B
Step Up Tier, Tape C Step Up Tier, or Tape C Step Up Tier 2 because the
ETP Holders and Market Makers that qualify for these specified tiers
would already receive the benefit of a lower fee or an equal or
incrementally higher credit for such executions that add liquidity.
The Exchange believes that it is reasonable to include Tape B
securities within the proposed Routable Order Cross-Asset Tier because
it would encourage additional liquidity on the Exchange in such
securities. The Exchange further believes that it is equitable and not
unfairly discriminatory to apply the same qualifying thresholds to Tape
B securities as would apply to Tape A and Tape C securities, but to
apply a lower credit for Tape B securities (i.e., $0.0027 compared to
$0.0032), because existing pricing on the Exchange for Tape B
Securities is often different from Tape A and Tape C Securities, with
different credits and fees.
The Exchange believes that eliminating the restriction on open
orders in footnote 1 and making credits available to open orders that
execute after the day that they are entered is reasonable because it
may encourage more open orders to be submitted, which may enhance
liquidity on the Exchange. The Exchange believes that the proposed
change to footnote 1 is equitable and not unfairly discriminatory
because all ETP Holders would have the opportunity to earn credits for
open orders that do not execute on the day entered.
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.
[[Page 875]]
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\10\ 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. In particular, the removal of the MPL Order
Tier will not impose a burden on competition because the tier will be
removed in its entirety and generally has not encouraged liquidity on
the Exchange, as intended. The proposal to add the new Routable Order
Cross-Asset Tier will not place a burden on competition because ETP
Holders that are not affiliated with an OTP Holder or OTP Firm can
still qualify to receive the same proposed credits pursuant to the
other existing tiers discussed above. The Exchange believes that the
proposed change to footnote 1 will not impose a burden on competition
but rather will create an incentive to submit open orders to the
Exchange, thereby promoting competition. 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
promotes a competitive environment.
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\10\ 15 U.S.C. 78f(b)(8).
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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) \11\ of the Act and subparagraph (f)(2) of Rule
19b-4 \12\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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) \13\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\13\ 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-NYSEArca-2013-146 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-2013-146. 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-NYSEArca-2013-146 and should
be submitted on or before January 28, 2014.
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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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-31605 Filed 1-6-14; 8:45 am]
BILLING CODE 8011-01-P [FEDREG][VOL]*[/VOL][NO]*[/NO][DATE]*[/
DATE][NOTICES]