[Federal Register Volume 79, Number 132 (Thursday, July 10, 2014)]
[Notices]
[Pages 39419-39421]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16100]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72542; File No. SR-NYSEArca-2014-73]
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
Exclude the Date of the Annual Reconstitution of the Russell
Investments Indexes for Billing Purposes When Calculating ETP Holder
Average Daily Volume of Trade Activity and Consolidated ADV
July 3, 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 June 24, 2014, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule
[[Page 39420]]
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 the
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 exclude
the date of the annual reconstitution of the Russell Investments
Indexes (the ``Russell Reconstitution Date'') for billing purposes when
calculating ETP Holder average daily volume (``ADV'') of trade activity
and consolidated ADV (``CADV''). The Exchange proposes to implement the
fee change effective immediately. 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 the Fee Schedule to exclude the
Russell Reconstitution Date for billing purposes when calculating ETP
Holder ADV of trade activity and CADV.\4\ The Exchange proposes to
implement the fee change effective immediately.
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\4\ Questions and answers related to the Russell Reconstitution
Date are available at http://www.russell.com/indexes/americas/tools-resources/reconstitution/frequently-asked-questions.page.
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Various fees and credits in the Fee Schedule are based on an ETP
Holder's ADV of trade activity during the billing month, taken as a
percentage of CADV. CADV means U.S. CADV for transactions reported to
the Consolidated Tape. Trade activity across all markets on the Russell
Reconstitution Date typically exceeds levels on other days during the
month, thereby resulting in an unusually higher CADV for the billing
month. The Exchange therefore proposes to exclude the Russell
Reconstitution Date when calculating ETP Holder ADV of trade activity
and CADV. The Exchange would amend Footnotes 1 and 3 in the Fee
Schedule to specify that trade activity and CADV, respectively, do not
include the Russell Reconstitution Date. ETP Holder transactions on the
Russell Reconstitution Date would continue to be subject to the fees
and credits in the Fee Schedule. The 2014 Russell Reconstitution Date
is June 27, 2014.
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,\5\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\6\ 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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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the proposed change is reasonable
because trade activity across all markets on the Russell Reconstitution
Date typically exceeds levels on other days during the month, thereby
resulting in an artificially higher CADV for the billing month. Trade
activity of a particular ETP Holder, taken as a percentage of CADV,
could therefore be lower on the Russell Reconstitution Date than during
the rest of the billing month. This could prevent an ETP Holder from
qualifying for the pricing tiers in the Fee Schedule, despite such ETP
Holder's trade activity during the rest of the billing month being
sufficient to qualify. The proposed change would therefore eliminate
the potential for the increased trade activity that typically occurs on
the Russell Reconstitution Date to cause an ETP Holder to fail to
qualify for the pricing tiers in the Fee Schedule during that month.
The proposed change is equitable and not unfairly discriminatory
because the Russell Reconstitution Date would be excluded when
determining trade activity for all ETP Holders and when determining
CADV for billing purposes for all ETP Holders. The proposed change
would eliminate a particular day of trade activity that is likely to be
an outlier compared to the rest of the trading month, both with respect
to a particular ETP Holder's trade activity as well as CADV for the
month. While the proposed change is primarily designed so that an ETP
Holder that would otherwise qualify for a pricing tier is not
negatively impacted by the higher trade activity on the Russell
Reconstitution Date, the proposed change would also eliminate the
potential for an ETP Holder whose trade activity is artificially higher
on the Russell Reconstitution Date to qualify for the pricing tiers
when such ETP Holder's activity during the rest of the month is not
representative of the levels required by the pricing tiers.
The proposed change is also reasonable because it is similar to the
manner in which Footnotes 1 and 3 in the Fee Schedule currently specify
that trade activity and CADV exclude trade activity on days when the
market closes early. Without this existing exclusion, and in contrast
to the artificially higher CADV for the month caused by the Russell
Reconstitution Date, CADV for a billing month during which the market
closes early on a particular day or days would be artificially low. The
current exclusion eliminates the potential for the decreased trade
activity that typically occurs on an early close day to make it more
likely for an ETP Holder to qualify for the pricing tiers in the Fee
Schedule. As with the existing exclusion for early close days, the
proposed exclusion of the Russell Reconstitution Date is consistent
with the Act because it would address a somewhat predictable variance
in typical trade activity resulting from a known, future event (i.e.,
an early close day or, as discussed herein, the Russell Reconstitution
Date).
The Exchange also believes that it is reasonable to exclude the
Russell Reconstitution Date as proposed herein because the Nasdaq Stock
Market LLC (``Nasdaq'') treats the Russell Reconstitution Date in the
same manner.\7\
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\7\ See, e.g., Nasdaq Rule 7018(a). See also Securities Exchange
Act Release No. 69758 (June 13, 2013), 78 FR 36801 (June 19, 2013)
(SR-NASDAQ-2013-081).
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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.
[[Page 39421]]
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,\8\ 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. The proposed change would eliminate a particular
trading day from consideration when calculating trade activity of ETP
Holders and CADV for billing purposes, given that trade activity across
all markets on the Russell Reconstitution Date typically exceeds levels
on other days during the month, thereby resulting in an artificially
higher CADV for the billing month. This proposed change would therefore
provide all ETP Holders with a clearer picture of the level of trade
activity required of them in order to qualify for the pricing tiers in
the Fee Schedule. The Russell Reconstitution Date occurs toward the end
of the billing month--June 27, 2014 for the next reconstitution. Only
one trading day would remain in the month. Without this proposed
exclusion, it would be difficult for an ETP Holder to modify its trade
activity on the Exchange during the remainder of the month in order to
make up for any shortfall with respect to the pricing tiers caused by
the increased trade activity on the Russell Reconstitution Date.
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\8\ 15 U.S.C. 78f(b)(8).
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Also, the Exchange does not believe that the proposed change will
impair the ability of ETP Holders or competing order execution venues
to maintain their competitive standing in the financial markets. In
this regard, the Exchange notes that pricing on other exchanges treats
the Russell Reconstitution Date in the same manner.\9\
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\9\ See supra note 7.
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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 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) \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 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-2014-73 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-NYSEArca-2014-73.
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 such 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-2014-73, and should be submitted on or before July 31, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014-16100 Filed 7-9-14; 8:45 am]
BILLING CODE 8011-01-P