Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Implementing Changes to the NYSE Arca Options Fee Schedule Relating to Post Liquidity Credits, 9288-9290 [2012-3613]
Download as PDF
<![CDATA[
9288
Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Notices
interest, for securities traded pursuant
to UTP.
The Exchange proposes to reduce
DMM units’ quoting obligations
applicable to ‘‘more active’’ securities
traded in the UTP Pilot Program to
quoting at the NBBO for 5% of the
trading day. The Commission notes that
this percentage would reflect the
quoting requirement currently
applicable to DMM units quoting nonUTP Pilot Program securities, i.e., those
listed on the Exchange.12 There would
be one significant difference between
the proposed quoting obligation for the
UTP Pilot Program and the current
quoting obligation for non-UTP Pilot
Program securities—UTP Pilot Program
quoting obligations are and would
continue to be calculated on a securityby-security basis, rather than averaged
across a portfolio of all of a DMM unit’s
assigned securities. The Commission
believes that this security-by-security
basis calculation is reasonably designed
to maintain robust quotes for all UTP
Pilot Program securities. In addition, the
Exchange’s proposal would reduce
quoting obligations only for ‘‘more
active’’ securities, which by definition
are more liquid and may, therefore, be
less reliant on quoting obligations for
continued liquidity. Finally, based on
the Exchange’s experience during the
UTP Pilot Program, the proposed
quoting obligation is designed to ensure
the continued active participation by
DMM units in such securities.
The Commission also finds that the
proposed deletion in NYSE Amex
Equities Rule 504(b)(1)(A) to the
reference to NYSE Amex Equities Rule
103B(II) is consistent with the Act. The
Exchange represented that this reference
is not necessary within Rule
504(b)(1)(A), and that, despite the
proposed deletion, DMM units would
remain subject to NYSE Amex Equities
Rule 103B(II) with respect to security
allocation eligibility.
For the foregoing reasons, the
Commission finds that the proposal to
amend the UTP Pilot Program is
consistent with the requirements of the
Act.
srobinson on DSK4SPTVN1PROD with NOTICES
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,13 that the
proposed rule change (SR–NYSEAmex–
2011–101) be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–3611 Filed 2–15–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66377; File No. SR–
NYSEArca–2012–12]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Implementing Changes to
the NYSE Arca Options Fee Schedule
Relating to Post Liquidity Credits
February 10, 2012.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that, on January
31, 2012, NYSE Arca, Inc. (the
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
NYSE Arca Options Fee Schedule (‘‘Fee
Schedule’’) to increase the Post
Liquidity credits on Customer posted
electronic executions and to delete
references to Royalty Fees for foreign
currency options, which the Exchange
no longer trades. The text of the
proposed rule change is available at the
Exchange, the Commission’s Public
Reference Room, and www.nyse.com.
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.
14 17
12 See
NYSE Amex Equities Rule 104(a)(1)(A).
13 15 U.S.C. 78s(b)(2).
VerDate Mar<15>2010
16:31 Feb 15, 2012
Jkt 226001
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00091
Fmt 4703
Sfmt 4703
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 increase the Post
Liquidity credits on Customer posted
electronic executions and to delete
references to Royalty Fees for foreign
currency options, which the Exchange
no longer trades. The Exchange
proposes to make the rule change
operative on February 1, 2012.
Post Liquidity Credits
Electronic transactions in Penny Pilot
issues 3 are assessed Take Liquidity fees
and credited with Post Liquidity credits.
Under the current Fee Schedule, the
Post Liquidity credit is $0.25 per
contract for Customers, $0.32 per
contract for Lead Market Makers and
Market Makers, and $0.10 per contract
for Firms and Broker Dealers. OTP
Holders that provide aggregated
Customer posting volume in Penny Pilot
issues that exceeds certain thresholds
receive higher Post Liquidity credits on
all Customer posted electronic
executions. Specifically, an OTP Holder
sending Customer orders that in the
aggregate exceed 500,000 contracts
executed in a month from posting
liquidity receives a Post Liquidity credit
of $0.32 per contract on all executions
resulting from posted liquidity. If such
aggregated Customer orders exceed
800,000 contracts executed in a month
from posting liquidity, the OTP Holder
receives a Post Liquidity credit of $0.34
per contract on all executions resulting
from posted liquidity. If such aggregated
Customer orders exceed 1,200,000
contracts executed in a month from
posting liquidity, the OTP Holder
receives a Post Liquidity credit of $0.38
per contract on all executions resulting
from posted liquidity. The volume
thresholds are intended to incentivize
firms to route additional Customer
orders to the Exchange.
The Exchange proposes to amend the
volume thresholds for the Post Liquidity
credits by lowering the initial volume
threshold to qualify for the first level of
higher Post Liquidity credits, generally
raising the amount of the Post Liquidity
3 Under NYSE Arca Options Rule 6.72, options on
certain issues have been approved to trade in a
minimum price variation of $0.01 as part of a pilot
program that is scheduled to expire on June 30,
2012.
E:\FR\FM\16FEN1.SGM
16FEN1
Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Notices
credits for the next two volume
thresholds, and creating a new higher
volume threshold that will pay a higher
Post Liquidity credit than is currently
offered. The Exchange notes, however,
that under the proposed volume
thresholds, an OTP Holder that sends
Customer orders that in the aggregate
exceed 500,000 but not 800,000
contracts executed in a month will
receive a lower Post Liquidity credit of
$0.28 per contract, which is lower than
the $0.32 Post Liquidity credit under the
current Fee Schedule. The Exchange
believes that the overall redistribution
of the credits will in turn increase order
flow to add liquidity on the Exchange
and encourage greater participation by
the largest market participants. The
proposed volume thresholds and Post
Liquidity credits are as follows:
Monthly total customer contracts executed from posted
liquidity
Threshold
Threshold
Threshold
Threshold
1
2
3
4
...................................................................
...................................................................
...................................................................
...................................................................
srobinson on DSK4SPTVN1PROD with NOTICES
Royalty Fees for Foreign Currency
Options
The current Fee Schedule sets forth
Royalty Fees for certain foreign currency
options. Because the Exchange no
longer trades foreign currency options,
it proposes to delete references to such
Royalty Fees.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Securities Exchange
Act of 1934 (the ‘‘Act’’) 4 in general and
Section 6(b)(4) of the Act 5 in particular
because it is designed to provide for the
equitable allocation of reasonable dues,
fees, and other charges among its
members and other persons using its
facilities and does not unfairly
discriminate between customers,
issuers, brokers or dealers. The
proposed change is equitably allocated
and not unfairly discriminatory because
it will apply uniformly to all similarly
situated OTP Holders that direct
Customer orders to the Exchange. The
proposed fees also are equitably
allocated and reasonable because they
create an incrementally higher incentive
for OTP Holders to bring additional
liquidity to the Exchange, thereby
contributing to price discovery and
benefiting investors generally.
Moreover, the difference between (1) the
Post Liquidity credits received by OTP
Holders that aggregate Customer orders,
and (2) the Post Liquidity credit
received by Firms and Broker Dealers is
not inequitable or unfairly
discriminatory because the Exchange
believes that it has structured its Fee
Schedule in a manner to attract order
flow from all such entities. In this
regard, the Exchange has found that the
higher Post Liquidity credit for Firms
and Broker Dealers has not caused them
to send additional order flow to the
4 15
5 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
VerDate Mar<15>2010
16:31 Feb 15, 2012
Jkt 226001
More
More
More
More
than
than
than
than
350,000 .............................................................................
800,000 .............................................................................
1,200,000 ..........................................................................
3,500,000 ..........................................................................
Exchange. Based on its observations, the
Exchange believes that such entities
focus on the ability to trade with
Customer order flow to capture the
spread rather than on rebates and fees.
Accordingly, the Exchange is proposing
to further generally increase the Post
Liquidity credits for Customer order
flow to attract such order flow to the
Exchange. Although certain OTP
Holders that send Customer orders that
in the aggregate exceed 500,000 but not
800,000 contracts executed in a month
will receive a slightly lower Post
Liquidity credit than they currently do,
other OTP Holders that previously did
not qualify for the credit will qualify
going forward. The Exchange believes
that overall redistribution of the credits
will in turn increase order flow to add
liquidity on the Exchange and
encourage greater participation by the
largest market participants. With the
anticipated increase in such order flow
to the Exchange, the Exchange expects
to attract additional order flow from
Firms and Broker Dealers to trade with
such order flow. The Exchange further
believes that the proposed change is
reasonable because other exchanges
offer comparable tiers of credits for
adding Customer liquidity in Penny
Pilot issues.6
B. Self-Regulatory Organization’s
Statement on Burden on Competition
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.
6 See, e.g., Nasdaq Options Market pricing,
available at https://nasdaqtrader.com/
Micro.aspx?id=OptionsPricing, and BATS BZX
Exchange Fee Schedule, Effective January 3, 2012,
available at https://batstrading.com/FeeSchedule/.
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
9289
Per contract rate
on all posted
liquidity
¥$0.28
¥0.36
¥0.42
¥0.43
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) 7 of the Act and
subparagraph (f)(2) of Rule 19b–4 8
thereunder, because it establishes a due,
fee, or other charge imposed by the
NYSE Arca.
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.
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–NYSEArca–2012–12 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
7 15
8 17
E:\FR\FM\16FEN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
16FEN1
9290
Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Notices
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NYSEArca-2012–12. 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 (https://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–2012–12 and should be
submitted on or before March 8, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Kevin M. O’Neill,
Deputy Secretary.
(‘‘Act’’),1 and Rule 19b–42 thereunder,
notice is hereby given that on January
31, 2012, The NASDAQ Stock Market
LLC (‘‘NASDAQ’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I and II below, which Items
have been prepared by NASDAQ. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The NASDAQ Stock Market LLC
proposes to amend NASDAQ Rule 3020
to reflect recent changes to a
corresponding rule of the Financial
Industry Regulatory Authority
(‘‘FINRA’’).
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
www.nasdaq.cchwallstreet.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
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change. The text of
these 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 aspects of such
statements.
[FR Doc. 2012–3613 Filed 2–15–12; 8:45 am]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
srobinson on DSK4SPTVN1PROD with NOTICES
[Release No. 34–66372; File No. SR–
NASDAQ–2012–021]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NASDAQ
Stock Market LLC Relating to Fidelity
Bonds
February 10, 2012.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
Many of NASDAQ’s rules are based
on rules of FINRA (formerly the
National Association of Securities
Dealers (‘‘NASD’’)). Beginning in 2008,
FINRA embarked on an extended
process of moving rules formerly
designated as ‘‘NASD Rules’’ into a
consolidated FINRA rulebook. In most
cases, FINRA has renumbered these
rules, and in some cases has
substantively amended them.
Accordingly, NASDAQ also has
initiated a process of modifying its
rulebook to ensure that NASDAQ rules
corresponding to FINRA/NASD rules
1 15
9 17
CFR 200.30–3(a)(12).
VerDate Mar<15>2010
16:31 Feb 15, 2012
2 17
Jkt 226001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00093
Fmt 4703
Sfmt 4703
continue to mirror them as closely as
practicable.
This proposed rule change concerns
NASDAQ Rule 3020 entitled ‘‘Fidelity
Bonds,’’ which follows and incorporates
by reference former NASD Rule 3020.3
FINRA recently amended its rules to
adopt former NASD Rule 3020, relating
to Fidelity Bonds, with certain changes,
into the consolidated FINRA rulebook
as FINRA Rule 4360.4 NASDAQ Rule
3020 provides that ‘‘[a] member
designated to Nasdaq for oversight
pursuant to SEC Rule 17d–1 shall
comply with NASD Rule 3020 as if such
Rule were part of Nasdaq’s Rules.’’ The
Exchange proposes to amend this text to
reference new FINRA Rule 4360, which
replaced NASD Rule 3020.
NASD Rule 3020(a) generally
provides that each member required to
join the Securities Investor Protection
Corporation (‘‘SIPC’’) that has
employees and that is not a member in
good standing of one of the enumerated
national securities exchanges must
maintain fidelity bond coverage. FINRA
Rule 4360 requires each member that is
required to join SIPC to maintain
blanket fidelity bond coverage with
specified amounts of coverage based on
the member’s net capital requirement,
with certain exceptions. NASD Rule
3020(a)(1) requires members to maintain
a blanket fidelity bond in a form
substantially similar to the standard
form of Brokers Blanket Bond
promulgated by the Surety Association
of America. New FINRA Rule 4360
requires members to maintain fidelity
bond coverage that provides for per loss
coverage without an aggregate limit of
liability. Also, pursuant to FINRA Rule
4360, a member’s fidelity bond must
provide against loss and have Insuring
Agreements covering at least the
following: Fidelity, on premises, in
transit, forgery and alteration, securities
and counterfeit currency. The rule
change modified the descriptive
headings for these Insuring Agreements,
in part, from NASD Rule 3020(a)(1) and
NYSE Rule 319(d) to align them with
the headings in the current bond forms
available to broker-dealers. FINRA Rule
4360 also eliminates the specific
coverage provisions in NASD Rule
3 The purpose of the fidelity bond is to protect a
member against certain types of losses, including,
but not limited to, those caused by the malfeasance
of its officers and employees, and the effect of such
losses on the member’s capital.
4 See Securities Exchange Act Release No. 63961
(February 24, 2011), 76 FR 11542 (March 2, 2011)
(SR–FINRA–2010–059) (a rule change to adopt a
rule of the National Association of Securities
Dealers, Inc. (‘‘NASD’’) as part of the consolidation
of the FINRA rulebook). This new rule took into
account Incorporated NYSE Rule 319 (Fidelity
Bonds) and its Interpretation.
E:\FR\FM\16FEN1.SGM
16FEN1
]]>Agencies
[Federal Register Volume 77, Number 32 (Thursday, February 16, 2012)]
[Notices]
[Pages 9288-9290]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-3613]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66377; File No. SR-NYSEArca-2012-12]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Implementing
Changes to the NYSE Arca Options Fee Schedule Relating to Post
Liquidity Credits
February 10, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on January 31, 2012, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Options Fee Schedule
(``Fee Schedule'') to increase the Post Liquidity credits on Customer
posted electronic executions and to delete references to Royalty Fees
for foreign currency options, which the Exchange no longer trades. The
text of the proposed rule change is available at the Exchange, the
Commission's Public Reference Room, and www.nyse.com.
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 increase the
Post Liquidity credits on Customer posted electronic executions and to
delete references to Royalty Fees for foreign currency options, which
the Exchange no longer trades. The Exchange proposes to make the rule
change operative on February 1, 2012.
Post Liquidity Credits
Electronic transactions in Penny Pilot issues \3\ are assessed Take
Liquidity fees and credited with Post Liquidity credits. Under the
current Fee Schedule, the Post Liquidity credit is $0.25 per contract
for Customers, $0.32 per contract for Lead Market Makers and Market
Makers, and $0.10 per contract for Firms and Broker Dealers. OTP
Holders that provide aggregated Customer posting volume in Penny Pilot
issues that exceeds certain thresholds receive higher Post Liquidity
credits on all Customer posted electronic executions. Specifically, an
OTP Holder sending Customer orders that in the aggregate exceed 500,000
contracts executed in a month from posting liquidity receives a Post
Liquidity credit of $0.32 per contract on all executions resulting from
posted liquidity. If such aggregated Customer orders exceed 800,000
contracts executed in a month from posting liquidity, the OTP Holder
receives a Post Liquidity credit of $0.34 per contract on all
executions resulting from posted liquidity. If such aggregated Customer
orders exceed 1,200,000 contracts executed in a month from posting
liquidity, the OTP Holder receives a Post Liquidity credit of $0.38 per
contract on all executions resulting from posted liquidity. The volume
thresholds are intended to incentivize firms to route additional
Customer orders to the Exchange.
---------------------------------------------------------------------------
\3\ Under NYSE Arca Options Rule 6.72, options on certain issues
have been approved to trade in a minimum price variation of $0.01 as
part of a pilot program that is scheduled to expire on June 30,
2012.
---------------------------------------------------------------------------
The Exchange proposes to amend the volume thresholds for the Post
Liquidity credits by lowering the initial volume threshold to qualify
for the first level of higher Post Liquidity credits, generally raising
the amount of the Post Liquidity
[[Page 9289]]
credits for the next two volume thresholds, and creating a new higher
volume threshold that will pay a higher Post Liquidity credit than is
currently offered. The Exchange notes, however, that under the proposed
volume thresholds, an OTP Holder that sends Customer orders that in the
aggregate exceed 500,000 but not 800,000 contracts executed in a month
will receive a lower Post Liquidity credit of $0.28 per contract, which
is lower than the $0.32 Post Liquidity credit under the current Fee
Schedule. The Exchange believes that the overall redistribution of the
credits will in turn increase order flow to add liquidity on the
Exchange and encourage greater participation by the largest market
participants. The proposed volume thresholds and Post Liquidity credits
are as follows:
------------------------------------------------------------------------
Monthly total
customer contracts Per contract rate
executed from posted on all posted
liquidity liquidity
------------------------------------------------------------------------
Threshold 1................... More than 350,000.... -$0.28
Threshold 2................... More than 800,000.... -0.36
Threshold 3................... More than 1,200,000.. -0.42
Threshold 4................... More than 3,500,000.. -0.43
------------------------------------------------------------------------
Royalty Fees for Foreign Currency Options
The current Fee Schedule sets forth Royalty Fees for certain
foreign currency options. Because the Exchange no longer trades foreign
currency options, it proposes to delete references to such Royalty
Fees.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Securities Exchange Act of 1934 (the ``Act'')
\4\ in general and Section 6(b)(4) of the Act \5\ in particular because
it is designed to provide for the equitable allocation of reasonable
dues, fees, and other charges among its members and other persons using
its facilities and does not unfairly discriminate between customers,
issuers, brokers or dealers. The proposed change is equitably allocated
and not unfairly discriminatory because it will apply uniformly to all
similarly situated OTP Holders that direct Customer orders to the
Exchange. The proposed fees also are equitably allocated and reasonable
because they create an incrementally higher incentive for OTP Holders
to bring additional liquidity to the Exchange, thereby contributing to
price discovery and benefiting investors generally. Moreover, the
difference between (1) the Post Liquidity credits received by OTP
Holders that aggregate Customer orders, and (2) the Post Liquidity
credit received by Firms and Broker Dealers is not inequitable or
unfairly discriminatory because the Exchange believes that it has
structured its Fee Schedule in a manner to attract order flow from all
such entities. In this regard, the Exchange has found that the higher
Post Liquidity credit for Firms and Broker Dealers has not caused them
to send additional order flow to the Exchange. Based on its
observations, the Exchange believes that such entities focus on the
ability to trade with Customer order flow to capture the spread rather
than on rebates and fees. Accordingly, the Exchange is proposing to
further generally increase the Post Liquidity credits for Customer
order flow to attract such order flow to the Exchange. Although certain
OTP Holders that send Customer orders that in the aggregate exceed
500,000 but not 800,000 contracts executed in a month will receive a
slightly lower Post Liquidity credit than they currently do, other OTP
Holders that previously did not qualify for the credit will qualify
going forward. The Exchange believes that overall redistribution of the
credits will in turn increase order flow to add liquidity on the
Exchange and encourage greater participation by the largest market
participants. With the anticipated increase in such order flow to the
Exchange, the Exchange expects to attract additional order flow from
Firms and Broker Dealers to trade with such order flow. The Exchange
further believes that the proposed change is reasonable because other
exchanges offer comparable tiers of credits for adding Customer
liquidity in Penny Pilot issues.\6\
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(4).
\6\ See, e.g., Nasdaq Options Market pricing, available at
https://nasdaqtrader.com/Micro.aspx?id=OptionsPricing, and BATS BZX
Exchange Fee Schedule, Effective January 3, 2012, available at
https://batstrading.com/FeeSchedule/.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
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.
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) \7\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \8\ thereunder, because it establishes a due, fee, or other charge
imposed by the NYSE Arca.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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.
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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2012-12 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary,
[[Page 9290]]
Securities and Exchange Commission, 100 F Street NE., Washington, DC
20549-1090.
All submissions should refer to File Number SR-NYSEArca-2012-12. 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 (https://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-2012-12 and should
be submitted on or before March 8, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
---------------------------------------------------------------------------
\9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-3613 Filed 2-15-12; 8:45 am]
BILLING CODE 8011-01-P
