[Federal Register Volume 79, Number 95 (Friday, May 16, 2014)]
[Notices]
[Pages 28583-28585]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-11297]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72148; File No. SR-NYSEMKT-2014-43]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending Its Price List
To Account for Recent Changes to the Securities Eligible To Be Traded
on the Exchange Pursuant to a Grant of Unlisted Trading Privileges
May 12, 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 April 29, 2014, NYSE MKT LLC (the ``Exchange'' or ``NYSE
MKT'') 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 account for recent
changes to the securities eligible to be traded on the Exchange
pursuant to a grant of unlisted trading privileges (``UTP''). The
Exchange proposes to implement the fee change effective May 5, 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, on the
Commission's Web site at www.sec.gov, 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 account for recent
changes to the securities eligible to be traded on the Exchange
pursuant to UTP. The Exchange proposes to implement the fee change
effective May 5, 2014.
Securities traded on the Exchange pursuant to UTP are subject to a
pilot program (the ``UTP Pilot Program'') set forth in the 500 series
rules.\4\ The current UTP Pilot Program is limited to securities listed
on the Nasdaq Stock Market, LLC (``Nasdaq Securities'') and includes
only a single Exchange Traded Fund (``ETF''), the Invesco PowerShares
QQQTM (the ``QQQTM'').\5\
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\4\ See Securities Exchange Act Release No. 62479 (July 9,
2010), 75 FR 41264 (July 15, 2010) (SR-NYSEAmex-2010-31).
\5\ The UTP Pilot Program is currently scheduled to expire on
the earlier of Securities and Exchange Commission (``Commission'')
approval to make the pilot permanent or July 31, 2014. See
Securities Exchange Act Release No. 71363 (January 21, 2014), 79 FR
4373 (January 27, 2014) (SR-NYSEMKT-2014-01).
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The Exchange recently submitted a proposal for immediate
effectiveness to expand the UTP Pilot Program to permit additional
securities beyond Nasdaq Securities to be traded on the Exchange
pursuant to UTP.\6\ In addition to Nasdaq Securities, the new
definition of ``UTP Securities'' would include certain ``Exchange
Traded Products'' (``ETPs''), including ETFs; \7\ Exchange Traded
[[Page 28584]]
Notes (``ETNs''); \8\ Exchange Traded Vehicles (``ETVs''); \9\ or any
other security, other than a single equity option or a security futures
product, whose value is based, in whole or in part, upon the
performance of, or interest in, an underlying instrument.
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\6\ See Securities Exchange Act Release No. 71952 (April 16,
2014), 79 FR 22558 (April 22, 2014) (SR-NYSEMKT-2014-32).
\7\ An ETF is an open-end management investment company under
the Investment Company Act of 1940 that has received certain
exemptive relief from the Commission to allow secondary market
trading in the ETF shares. An ETF typically holds a portfolio of
securities that is intended to provide results that, before fees and
expenses, generally correspond to the price and yield performance of
an underlying benchmark index or an investment objective, or that,
rather than seek to track the performance of an underlying index,
are managed according to the investment objective of the ETF's
investment advisor.
\8\ An ETN is a senior unsecured debt obligation designed to
track the total return of an underlying index, benchmark or
strategy, minus investor fees. ETNs are registered under the
Securities Act of 1933 and are redeemable to the issuer.
\9\ An ETV tracks the underlying performance of an asset or
index, allowing the investors exposure to underlying assets such as
futures contracts, commodities, and currencies without trading
futures or taking physical delivery of the underlying asset. An ETV
is traded intraday like an ETF. An ETV is an open-end trust or
partnership unit that is registered under the Securities Act of
1933.
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The Exchange now proposes to amend its Price List to account for
these changes. The Exchange proposes to add a new section to the Price
List that would apply to transactions in ETPs traded on the Exchange
pursuant to UTP, including QQQ. The rates in the existing section in
the Price List for transactions in Nasdaq Securities would not change,
but the section headings would be updated to reflect that such rates
would only apply to non-ETPs traded on the Exchange pursuant to UTP.
The proposed rates for ETPs would be identical to the existing rates in
the Price List for Nasdaq Securities, except as follows:
The fee for Mid-Point Passive Liquidity (``MPL'') orders
that remove liquidity from the Exchange for securities priced $1 or
more would be $0.0029 instead of the existing $0.0030 fee for Nasdaq
Securities;
The fee for ``all other'' transactions that remove
liquidity from the Exchange for securities priced $1 or more would be
$0.0029 instead of the existing $0.0030 fee for Nasdaq Securities;
The existing credits for adding liquidity in orders that
originally display a minimum of 2,000 shares with a trading price of at
least $5.00 per share would not apply for ETPs;
The credit for Designated Market Maker (``DMM'')
transactions that add liquidity for securities priced $1 or more would
be $0.0030 instead of the existing $0.0040 credit for Nasdaq
Securities;
The fee for ``all other'' DMM transactions that remove
liquidity for securities priced $1 or more would be $0.0029 instead of
the existing $0.0030 fee for Nasdaq Securities; and
The credit for Supplemental Liquidity Provider (``SLP'')
transactions that add liquidity for securities priced $1 or more, if
the SLP meets its quoting requirement pursuant to Rule 107B--Equities,
would be $0.0028 instead of the existing $0.0030 credit for Nasdaq
Securities.
The Exchange also proposes certain non-substantive changes to the
Price List, such as updating subheadings and rule references.
The proposed change is not otherwise intended to address any other
issues, and the Exchange is not aware of any problems that members and
member organizations 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,\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.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the proposed change is reasonable
because it would identify pricing applicable to ETPs traded on the
Exchange pursuant to UTP, as a result of a recent, immediately
effective proposal by the Exchange to expand the UTP Pilot Program to
permit additional securities beyond Nasdaq Securities to be traded on
the Exchange pursuant to UTP.\12\ The Exchange believes that the
proposed rates are reasonable because many of them would be identical
to the existing rates in the Price List for Nasdaq Securities traded on
the Exchange pursuant to UTP. Certain of the proposed fees would be
slightly lower than the existing corresponding fees for Nasdaq
Securities, which is reasonable because it would incentivize increased
activity in ETPs that would be newly-traded on the Exchange pursuant to
UTP. Similarly, certain of the proposed credits for DMMs and SLPs would
be slightly lower than the existing corresponding credits for Nasdaq
Securities, which is reasonable because it would account for certain
lower fees that DMMs and SLPs would be charged and because the lower
credits would be more consistent with credits available to other market
participants' transactions in ETPs that would trade on the Exchange
pursuant to UTP.
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\12\ See supra note 6.
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An existing credit for transactions in Nasdaq Securities that
originally display a minimum of 2,000 shares with a trading price of at
least $5.00 per share would be eliminated for ETPs. The Exchange
believes that this is reasonable because of the lower fees that would
be available for transactions in ETPs traded on the Exchange pursuant
to UTP, as compared to certain of the existing rates for Nasdaq
Securities. The Exchange believes that these lower fees would act as an
incentive for market participants to trade on the Exchange, such that
this existing credit would not be needed to incentivize activity in the
newly-traded ETPs. The Exchange also believes that it is reasonable for
transactions in QQQ to be priced according the rates in the proposed
new section of the Price List because it would result in transactions
in QQQ being billed in the same manner as other ETPs traded on the
Exchange pursuant to UTP.
The Exchange believes that the proposed change is equitable and not
unfairly discriminatory because it would identify transaction fees and
credits applicable to an expanded number of securities available to be
traded on the Exchange pursuant to UTP, thereby encouraging the
additional utilization of, and interaction with, the Exchange. The
proposed pricing is also equitable and not unfairly discriminatory
because it would attract additional volume to the Exchange and thereby
contribute to a more competitive market on the Exchange in the trading
of securities pursuant to UTP.
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,\13\ the Exchange
believes that the proposed rule change would not 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 would increase competition by encouraging the additional
utilization of, and interaction with, the Exchange, thereby providing
market participants with additional price discovery, increased
liquidity through additional market making, more competitive quotes,
and potentially greater price improvement for UTP Securities.
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\13\ 15 U.S.C. 78f(b)(8).
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Finally, the Exchange notes that it operates in a highly
competitive market
[[Page 28585]]
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) \14\ of the Act and subparagraph (f)(2) of Rule
19b-4 \15\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 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) \16\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\16\ 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-NYSEMKT-2014-43 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEMKT-2014-43. 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-NYSEMKT-2014-43 and should
be submitted on or before June 6, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-11297 Filed 5-15-14; 8:45 am]
BILLING CODE 8011-01-P