[Federal Register Volume 79, Number 25 (Thursday, February 6, 2014)]
[Notices]
[Pages 7267-7269]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-02498]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71452; File No. SR-NYSE-2014-05]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending Its Price List To Introduce Fees and Credits for A New Order
Type Called a Midpoint Passive Liquidity Order
January 31, 2014.
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 January 22, 2014, 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,
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 its Price List to introduce fees for
a new order type called a Midpoint Passive Liquidity (``MPL'') Order.
The proposed fees would be operative on January 27, 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Price List to introduce fees for
a new order type called a MPL Order. The proposed fees would be
operative on January 27, 2014.
The Exchange recently introduced the MPL Order type,\4\ which is an
undisplayed limit order that automatically executes at the mid-point of
the protected best bid or offer (``PBBO''). An MPL Order is not
eligible for manual executions, including openings, re-openings, or
closing transactions. An MPL Order also is not eligible to trade if it
would trade at a price below $1.00 or if the execution price would be
out to five decimal places above $1.00. All market participants--
customers, Floor brokers, Designated Market Makers (``DMMs''), and
Supplemental Liquidity Providers (``SLPs'')--may use the MPL order
type.
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\4\ See Rule 13 and Securities Exchange Act Release No. 71330
(January 16, 2014) (SR-NYSE-2013-71).
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The Exchange proposes to charge $0.0025 per share for all MPL
Orders that remove liquidity from the Exchange if the security is
priced $1.00 or more. The Exchange also proposes to offer a
[[Page 7268]]
credit of $0.0015 per share for all MPL Orders that provide liquidity
to the Exchange if the security is priced $1.00 or more.\5\ The fee and
credit will apply to all market participants. MPL Orders that add
liquidity will contribute to adding liquidity requirements, including
Tier 1 Adding Credit, Tier 2 Adding Credit, SLP credits for $0.0023 and
$0.0025 credits, and DMM providing liquidity. However, the Exchange
notes that MPL Orders will not be eligible for any tiered or additional
credits or reduced fees even if the MPL Orders contribute to a member
organization qualifying for an additional credit. For example, if a
member organization qualified for the Tier 1 Adding Credit, the member
organization will receive the proposed $0.0015 per share credit for MPL
Orders, not $0.0018 per share for such order under the tier. Where the
MPL Order fee or credit does not differ from the current fee or credit,
the Exchange has not proposed a change to the Price List.
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\5\ The Exchange's current rates for transactions in securities
with a per share price less of than $1.00 would continue to apply.
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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 Sections 6(b)(4) and (5) of the Act,\7\ 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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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the proposed fee of $0.0025 per share
for all MPL Orders that remove liquidity from the Exchange and the
proposed credit of $0.0015 per share for all MPL Orders that provide
liquidity to the Exchange if the security is priced $1.00 or more are
reasonable because the fee and credit would be the same as the fee and
credit that would otherwise apply for all other non-Floor broker
transactions (i.e., $0.0025 per share fee for taking liquidity from the
Exchange and $0.0015 per share credit under the non-Tier Adding
Credit). The Exchange notes that the proposed credit and fee are within
the same range as at least one other exchange for MPL Orders.\8\ The
Exchange also believes that the proposed fee and credit are equitable
and not unfairly discriminatory because they may provide opportunities
for market participants to interact with orders priced at the midpoint
of the PBBO, thus providing price improving liquidity to market
participants and thereby increase the quality of order execution on the
Exchange's market, which benefits all market participants. The Exchange
also believes that providing the same fees and credits for MPL Orders
that would otherwise apply is equitable and not unfairly
discriminatory. Moreover, all market participants will be eligible for
the proposed fee and credit. The Exchange believes that it is
reasonable, equitable, and not unfairly discriminatory to limit
additional or higher credits for MPL Orders for which market
participants may otherwise qualify because it will ensure that all
market participants pay the same fees and receive the same credits
regardless of Floor broker, DMM, or SLP designation. The Exchange
believes that it is reasonable to allow MPL Orders to count toward
adding liquidity because it is consistent with the purpose of those
credits. The Exchange also believes it is equitable and not unfairly
discriminatory because all market participants that use the MPL Order
type will pay the same fee and receive the same credit.
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\8\ For Tape A Securities under its Tier 1, Tier 2, and Basic
Rate Tier, the Exchange's affiliate, NYSE Arca Equities, Inc.,
currently charges $0.0030 per share for all MPL Orders that remove
liquidity and provides a credit of $0.0015 per share for all MPL
Orders that provide liquidity. See NYSE Arca Equities, Inc. Schedule
of Fees and Charges, available at https://usequities.nyx.com/sites/usequities.nyx.com/files/nyse_arca_marketplace_fees__for_1-2-14.pdf.
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B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\9\ 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. The Exchange believes the proposed MPL Order fees
and credits will enhance order execution opportunities for member
organizations. Further, the Exchange believes that providing the same
fees and credits for MPL Orders that would otherwise apply will enhance
competition between the Exchange and other exchanges that currently
offer similar order types by offering investors another option to
access liquidity at the midpoint of the PBBO.
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\9\ 15 U.S.C. 78f(b)(8).
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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 or credit levels at a particular
venue to be unattractive. In such an environment, the Exchange must
continually review, and consider adjusting, its fees and credits to
remain competitive with other exchanges. For these reasons, the
Exchange believes that the proposed rule change reflects this
competitive environment and is therefore consistent with 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) \10\ of the Act and subparagraph (f)(2) of Rule
19b-4 \11\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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) \12\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\12\ 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 proposal 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-2014-05 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary,
[[Page 7269]]
Securities and Exchange Commission, 100 F Street NE., Washington, DC
20549-1090.
All submissions should refer to File Number SR-NYSE-2014-05. 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-2014-05 and should be
submitted on or before February 27, 2014.
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-02498 Filed 2-5-14; 8:45 am]
BILLING CODE 8011-01-P