[Federal Register Volume 80, Number 7 (Monday, January 12, 2015)]
[Notices]
[Pages 1534-1537]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-00215]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73996; File No. SR-NYSE-2014-74]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending Its Price List Related to Fees for Trading Licenses To Extend
the Current Fee Schedule to February 27, 2015 and To Implement New
Trading License Fees Effective March 1, 2015
January 6, 2015.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on December 23, 2014, New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, and
II 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 related to fees for
trading licenses to extend the current fee schedule to February 27,
2015 and to implement new trading license fees effective March 1, 2015.
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 its Price List to extend the current
fee schedule to February 27, 2015 and to implement new trading license
fees effective March 1, 2015.
NYSE Rule 300(b) provides that, in each annual offering, up to
1,366 trading licenses for the following calendar year will be sold
annually at a price per trading license to be established each year by
the Exchange pursuant to a rule filing submitted to the Securities and
Exchange Commission (``Commission'') and that the price per trading
license will be published each year in the Exchange's Price List.
Currently, the Exchange charges an annual fee of $40,000 per license
for the first two trading licenses held by a member organization and
$25,000 for each additional trading license. For trading licenses
issued after July 1, 2013, fees are prorated for the portion of the
calendar year that the trading license is outstanding.\4\ However, if a
member organization is issued additional trading licenses between July
1, 2013 and December 31, 2014, and the total number of trading licenses
held by the member organization between July 1, 2013 and December 31,
2014 is greater than the total number of trading licenses held by the
member organization on July 1, 2013, the member organization would not
be charged a prorated fee for the period from July 3, 2013 to December
31, 2014 for those additional trading licenses above the number the
[[Page 1535]]
member organization held on July 1, 2013.\5\
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\4\ For a trading license that is in place for 15 calendar days
or less in a calendar month, proration for that month would be at a
flat rate of $100 per day with no tier pricing involved. For a
trading license that is in place for 16 calendar days or more in a
calendar month, proration for that month would be computed based on
the number of days as applied to the applicable annual fee for the
trading license. See Price List at current n. 16.
\5\ See Securities Exchange Act Release No. 71215 (December 31,
2013), 79 FR 885 (January 7, 2014) (SR-NYSE-2013-82). See also Price
List at current n. 15. If a firm becomes a member organization after
July 1, 2013, the firm is assigned a baseline of one trading license
and charged a prorated fee for that license. Any trading licenses in
addition to the first trading license are not charged a prorated fee
for the period from July 3, 2013 to December 31, 2014. If a member
organization merges with another member organization on or after
July 1, 2013, the total combined number of trading licenses held by
each member organization on July 1, 2013 is considered the baseline
number of trading licenses for the successor member organization as
of the date of the merger. See generally id.
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For 2015, the Exchange proposes to extend the current fee schedule
relating to trading license fees through February 27, 2015 and amend
the trading license fees effective March 1, 2015.
For the period between January 2, 2015 and February 27, 2015, the
Exchange proposes to retain the current fee schedule relating to
trading licenses, including the fee relief for additional licenses. As
a result, an annual fee would not apply to the number of trading
licenses issued to a member organization between July 3, 2013 and
February 27, 2015 that exceeds the total number of trading licenses
held by the member organization on July 1, 2013. The Exchange proposes
to maintain July 1, 2013 as the baseline date so that a consistent
point in time would be used to determine how many trading licenses for
which a member organization would be charged. The fee calculation for
new or merged member organizations would also be extended. Thus, for
any firm that becomes a member organization after July 1, 2013, the
firm would be considered to have one trading license as of July 1, 2013
and charged a fee for that one license through February 27, 2015. The
Exchange proposes to extend the current fee schedule for the first two
months of 2015 in order to maintain the existing fee schedule relating
to trading licenses and provide member organizations with advance
notice of the trading license fee changes that the Exchange proposes to
introduce on March 1, 2015.
Effective March 1, 2015, the Exchange proposes to charge an annual
fee of $50,000 for the first license held by a member organization and
$15,000 for each additional license. The Exchange proposes to eliminate
the existing fee relief for additional licenses and delete the relevant
text from current footnote 15.
The Exchange also proposes to introduce a $25,000 annual
administrative fee for member organizations that do not own a trading
license and agree to be regulated by the Exchange pursuant to Rule
2(b)(ii) (``Regulated Only Members'') to offset the costs of this
membership category.\6\
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\6\ Rule 2(b)(ii) recognizes as ``member organizations'' any
registered broker or dealer that is a member of the Financial
Industry Regulatory Authority (``FINRA'') or a registered securities
exchange consistent with the requirements of Rule 2(b)(i) and
``which does not own a trading license and agrees to be regulated by
the Exchange as a member organization and which the Exchange has
agreed to regulate.'' Regulated Only Members cannot enters orders
on, or clear through, the Exchange but are subject to regulation by
the Exchange, including periodic examination by FINRA on the
Exchange's behalf.
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The Exchange proposes to continue prorating license fees for any
portion of the year that a license may be outstanding, including the
administrative fee for Regulated Only members.\7\
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\7\ See note 4, supra. Firms becoming member organizations
between January 2, 2015 and February 27, 2015 would pay a prorated
fee for one license at the current rate of $40,000 until February
27, 2015 and then pay a prorated amount of the new proposed fee of
$50,000 for the remainder of 2015. Firms becoming Regulated Only
Members between January 2, 2015 and February 27, 2015 would pay no
fee and would pay a prorated fee beginning March 1, 2015 for the
remainder of the year.
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The Exchange also proposes to correct a typographical error in the
heading of the Price List where the word ``Licenses'' is misspelled.
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,\8\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\9\ 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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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the proposed change is reasonable
because maintaining the current fee structure through February 27,
2014[sic], including fee relief for the number of trading licenses that
exceeds the total number of trading licenses held by the member
organization on July 1, 2013, would maintain the existing fee schedule
relating to trading licenses while at the same time providing member
organizations with a reasonable period to assess the impact of the new
permanent fees the Exchange proposes for March 1, 2015 and effectuate
an orderly transition to the new fee schedule. The Exchange believes
that maintaining the current fee structure for the first two months of
2015 would also continue to encourage member organizations to hold
additional trading licenses during that time, which would increase the
number of market participants trading on the floor of the Exchange,
thereby promoting liquidity, price discovery and the opportunity for
price improvement for the benefit of all market participants. The
Exchange also believes that it is reasonable to maintain July 1, 2013
as the applicable baseline date so that a consistent point in time
would be used to determine how many trading licenses for which a member
organization would be charged, which would continue to provide member
organizations with greater flexibility in managing their personnel.
The Exchange further believes that the proposal to maintain the
current fee schedule through February 27, 2015 is equitable and not
unfairly discriminatory because all similarly situated member
organizations would continue to be subject to the same trading license
fee structure and because access to the Exchange's market would
continue to be offered on fair and nondiscriminatory terms. The
Exchange also believes that the proposal to maintain the current fee
schedule is equitable and not unfairly discriminatory because all
member organizations would continue to have the opportunity to enjoy
the benefits of the fee relief with respect to additional trading
licenses. The Exchange believes that it is equitable and not unfairly
discriminatory to continue to assign new member organizations a
baseline of one trading license because this will continue to encourage
firms to become member organizations, thereby encouraging trading
activity on the Exchange, which benefits all market participants.
The Exchange believes that the proposal to institute a new fee
structure on March 1, 2015, which would eliminate fee relief for
additional licenses and introduce a simpler model, is reasonable
because member organizations would be able to purchase the initial
license for slightly more than the current rate and add unlimited
additional licenses at a significantly lower rate. The Exchange
believes that the proposed trading license change would encourage
additional firms to become member organizations on the Exchange, which
would contribute to the quality of the Exchange's market and increase
the number of market participants trading on the floor of the
[[Page 1536]]
Exchange, thereby also promoting liquidity, price discovery and the
opportunity for price improvement for the benefit of all market
participants. The Exchange believes that the proposal would increase
the number of market participants trading on the floor of the Exchange
and continue to provide member organizations with greater flexibility
in managing their personnel.
The Exchange further believes that the proposed new fee schedule is
equitable and not unfairly discriminatory because all similarly
situated member organizations would continue to be subject to the same
trading license fee structure and because access to the Exchange's
market would continue to be offered on fair and nondiscriminatory
terms. The Exchange further believes that the proposal to introduce a
$25,000 annual administrative fee for Regulated Only Members is
reasonable, equitable and not unfairly discriminatory because all
member organizations that seek this status under Rule 2(b)(ii) would be
subject to the same fee. The Exchange also believes that it is
equitable and not unfairly discriminatory to subject Regulated Only
Members to an administrative fee because such member organizations are
subject to the same membership costs as non-Regulated Only Members.
The Exchange also believes that correcting a typographical error on
the Price List is consistent with the Act because it would add greater
clarity for member organizations.
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,\10\ 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 proposal
to maintain the current fee schedule through February 27, 2015 would
help to remove a potential burden on competition by making it easier
for member organizations to appropriately staff the floor of the
Exchange, which is a key feature of the Exchange's structure for
offering a fair and orderly market and competing with other exchanges.
Further, the Exchange believes that the proposed new fee schedule would
also contribute to making membership on the Exchange as a member
organization more economical and could therefore lead to increased
competition on the Exchange between member organizations.
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\10\ 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 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) \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-NYSE-2014-74 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-NYSE-2014-74. 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 Section, 100 F Street
NE., Washington, DC 20549-1090. Copies of the filing will also be
available for Web site viewing and printing at the NYSE's principal
office and on its Internet Web site at www.nyse.com. 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-2014-74 and should be
submitted on or before February 2, 2015.
[[Page 1537]]
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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Brent J. Fields,
Secretary.
[FR Doc. 2015-00215 Filed 1-9-15; 8:45 am]
BILLING CODE 8011-01-P