Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Changes to the Transaction Fees and Credits Within Its Price List, 42024-42026 [2012-17333]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 77, Number 137 (Tuesday, July 17, 2012)]
[Notices]
[Pages 42024-42026]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17333]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67408; File No. SR-NYSE-2012-22]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Changes 
to the Transaction Fees and Credits Within Its Price List

July 11, 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 June 29, 2012, New York Stock Exchange LLC (the ``Exchange'' 
or ``NYSE'') 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 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 certain changes to the transaction fees and 
credits within its Price List, which the Exchange proposes to become 
operative on July 1, 2012. 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 is proposing certain changes to the transaction fees 
and credits within its Price List, which the Exchange proposes to 
become operative on July 1, 2012.
    The Exchange recently amended Rule 107B, which currently operates 
on a pilot basis,\3\ to add a class of Supplemental Liquidity Providers 
(``SLPs'') that are registered as market makers at the Exchange 
(``SLMMs'').\4\ SLPs in the original class (``SLP-Props'') are eligible 
for credits when adding liquidity on the Exchange. The amount of the 
credit is determined by the ``tier'' for which the SLP-Prop qualifies, 
which is based on (i) whether the SLP-Prop meets the 10% average or 
more quoting requirement in all assigned securities pursuant to Rule 
107B; and (ii) whether the SLP-Prop (a) adds liquidity of an average 
daily volume (``ADV'') of more than 10 million shares for all assigned 
SLP securities in the aggregate; and (b) for each assigned SLP 
security, adds liquidity within a specified range of percentages of 
consolidated ADV (``CADV'') for that security.
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    \3\ See Securities Exchange Act Release No. 58877 (October 29, 
2008), 73 FR 65904 (November 5, 2008) (SR-NYSE-2008-108). The pilot 
is currently scheduled to end on July 31, 2012.
    \4\ See Securities Exchange Act Release No. 67154 (June 7, 
2012), 77 FR 35455 (June 13, 2012) (SR-NYSE-2012-10). The Exchange 
notes that pursuant to SR-NYSE-2012-10 the addition of the SLMM 
class would not be effective until the first day of the month 
following Commission approval, which is July 2, 2012.
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    The Exchange hereby proposes that transaction credits for SLMMs 
would be identical to those that are applicable to SLP-Props, both with 
respect to the rate of the credit and the qualification requirements 
for the tiers. The Exchange also proposes to specify that, for purposes 
of determining whether an SLP has added liquidity of an ADV of more 
than 10 million shares for all assigned SLP securities in the 
aggregate, shares of an SLP-Prop and an SLMM of the same member 
organization would be aggregated.\5\ The Exchange has proposed this 
aggregation because, as described in SR-NYSE-2012-10, if a member 
organization has more than one business unit, and the SLP-Prop business 
unit is walled off from the SLMM business unit, the member organization 
may engage in both an SLP-Prop and SLMM business from those different 
business units.\6\ Accordingly, because the 10 million share threshold 
applies to all of an SLP's shares in the aggregate, the Exchange 
believes that the activity of an SLP-Prop and an SLMM of the same 
member organization should be aggregated.\7\ However, for purposes of 
determining whether an SLP has satisfied the 10% average or more 
quoting requirement pursuant to Rule 107B as well as the per-security 
percentage of added liquidity, shares of an SLP-Prop and an SLMM of the 
same member organization would not be aggregated. As described in SR-
NYSE-2012-10, provided there is no coordinated trading between the SLP-
Prop and SLMM business units, they may be assigned the same 
securities.\8\ In

[[Page 42025]]

this regard, the Exchange believes that this proposed disaggregation is 
consistent with the prohibition of an SLP-Prop coordinating its trading 
with an SLMM of the same member organization, and vice versa.\9\
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    \5\ The Exchange proposes to add ``in the aggregate'' to the 
$0.0005 tier for securities with a per-share price of less than 
$1.00 to make this language consistent with the other tiers. This 
aspect of the proposed rule change would not be a substantive 
change.
    \6\ See supra note 4 at 35456.
    \7\ Additionally, this would be consistent with the manner in 
which the Exchange aggregates the activity of an SLP-Prop and an 
SLMM of the same member organization for purposes of determining 
whether the 10 million share requirement of Rule 107B(a) has been 
satisfied.
    \8\ See supra note 4 at 35456. See also Rule 107B(i)(2)(B), 
which provides that an SLP-Prop shall not also act as an SLMM in the 
same securities in which it is registered as an SLP-Prop and vice 
versa, provided, however, that if a member organization maintains 
information barriers between an SLP-Prop unit and an SLMM unit, the 
SLP-Prop and SLMM units may be assigned the same securities.
    \9\ This also would be consistent with the manner in which the 
Exchange disaggregates the activity of an SLP-Prop and an SLMM of 
the same member organization for purposes of determining whether the 
10% requirement of Rule 107B(a) has been satisfied.
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    Accordingly, the credits for SLP-Props and SLMMs would be as 
follows:

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Credit per Share--per              $0.0015; or $0.0010 if a Non-
 transaction--for Supplemental      Displayed Reserve Order.
 Liquidity Providers (``SLPs'')--
 when adding liquidity to the
 NYSE in securities with a per
 share price of $1.00 or more, if
 the SLP does not qualify for the
 higher credit set forth below.
Credit per Share--per              $0.0020; or $0.0015 if a Non-
 transaction--for SLPs--when        Displayed Reserve Order.
 adding liquidity to the NYSE in
 securities with a per share
 price of $1.00 or more, if the
 SLP (i) meets the 10% average or
 more quoting requirement in an
 assigned security pursuant to
 Rule 107B [sic] and (ii) adds
 liquidity of an ADV of more than
 10 million shares for all
 assigned SLP securities in the
 aggregate (including shares of
 both an SLP-Prop and an SLMM of
 the same member organization)
 and, for each assigned SLP
 security, adds liquidity of not
 more than 1.0% of the
 consolidated ADV for that
 assigned SLP security in the
 applicable month (shares of an
 SLP-Prop and an SLMM of the same
 member organization shall not be
 aggregated).
Credit per Share--per              $0.0021; or $0.0016 if a Non-
 transaction--for SLPs--when        Displayed Reserve Order.
 adding liquidity to the NYSE in
 securities with a per share
 price of $1.00 or more, if the
 SLP (i) meets the 10% average or
 more quoting requirement in an
 assigned security pursuant to
 Rule 107B [sic] and (ii) adds
 liquidity of an ADV of more than
 10 million shares for all
 assigned SLP securities in the
 aggregate (including shares of
 both an SLP-Prop and an SLMM of
 the same member organization)
 and, for each assigned SLP
 security, adds liquidity of more
 than 1.0% but not more than 2.5%
 of the consolidated ADV for that
 assigned SLP security in the
 applicable month (shares of an
 SLP-Prop and an SLMM of the same
 member organization shall not be
 aggregated).
Credit per Share--per              $0.0024; or $0.0019 if a Non-
 transaction--for SLPs--when        Displayed Reserve Order.
 adding liquidity to the NYSE in
 securities with a per share
 price of $1.00 or more, if the
 SLP (i) meets the 10% average or
 more quoting requirement in an
 assigned security pursuant to
 Rule 107B [sic] and (ii) adds
 liquidity of an ADV of more than
 10 million shares for all
 assigned SLP securities in the
 aggregate (including shares of
 both an SLP-Prop and an SLMM of
 the same member organization)
 and, for each assigned SLP
 security, adds liquidity of more
 than 2.5% of the consolidated
 ADV for that assigned SLP
 security in the applicable month
 (shares of an SLP-Prop and an
 SLMM of the same member
 organization shall not be
 aggregated).
Credit per Share for SLPs for      None.
 executions of securities with a
 per share price of $1.00 or more
 at the close.
Credit per Share--per              $0.0005.
 transaction--for SLPs--when
 adding liquidity to the NYSE in
 securities with a per share
 price of less than $1.00, if the
 SLP (i) meets the 10% average or
 more quoting requirement in an
 assigned security pursuant to
 Rule 107B [sic] and (ii) adds
 liquidity of an ADV of more than
 10 million shares for all
 assigned SLP securities in the
 aggregate (including shares of
 both an SLP-Prop and an SLMM of
 the same member organization) in
 the applicable month.
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    The following example illustrates how the proposed aggregation/
disaggregation would operate for a member organization that has 
separate business units that operate as an SLP-Prop and an SLMM, where 
the SLP-Prop and SLMM are each assigned securities ABC and XYZ and the 
following assumptions are made:
     The percentage of time at the NBBO for securities ABC and 
XYZ during the month is 13% and 11%, respectively for SLP-Prop and 11% 
and 9%, respectively, for SLMM;
     The ADV of adding liquidity for all assigned securities 
(i.e., securities ABC and XYZ) during the month is 5 million shares per 
day for SLP-Prop and 6 million shares per day for SLMM; and
     The adding liquidity in securities ABC and XYZ during the 
month is 1.5% and 2.6% of CADV, respectively, for SLP-Prop and 0.6% and 
1.5% of CADV, respectively, for SLMM.
    In this example, the member organization's combined ADV for adding 
liquidity in all assigned securities is greater than 10 million, which 
enables both the SLP-Prop and SLMM units of that member organization to 
qualify for the SLP credit of $0.0020 or more if it meets the 
individual per security requirements. The SLP-Prop would qualify for a 
$0.0021 credit per share in security ABC and a $0.0024 credit per share 
in security XYZ. The SLMM would qualify for a $0.0020 credit per share 
in security ABC, but only a $0.0015 credit per share in security XYZ 
because it does not meet the quoting requirements in security XYZ.
    Unrelated to the proposed SLMM credits, the Exchange proposes to 
remove obsolete text from the Price List that states that there is no 
charge during Crossing Session (``CS'') II, CSIII and CSIV.\10\ In this 
regard, CSIII and CSIV are no longer in effect on the Exchange.\11\ 
Additionally, the Exchange currently charges a fee for executions 
during CSII.\12\ For clarity, the Exchange proposes to move the fee 
schedule references to CSI and CSII under one heading.
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    \10\ The Exchange also proposes to designate related footnote 14 
in the Price List as ``reserved.''
    \11\ CSIII and CSIV operated pursuant to a pilot program that 
ceased operating after it was last extended to February 2009. See 
Securities Exchange Act Release No. 57213 (January 28, 2008), 73 FR 
6540 (February 4, 2008) (SR-NYSE-2008-07).
    \12\ See Securities Exchange Act Release No. 62082 (May 11, 
2010), 75 FR 27848 (May 18, 2010) (SR-NYSE-2010-34). See also 
Securities Exchange Act Release No. 66600 (March 14, 2012), 77 FR 
16298 (March 20, 2012) (SR-NYSE-2012-07).
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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''),\13\ in general, and furthers the objectives of Section 
6(b)(4) of the Act,\14\ 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. The 
proposed rule change is equitably allocated and not unfairly 
discriminatory because it applies uniformly to all similarly situated 
member organizations.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4).
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    Specifically, the Exchange believes that the proposed rule change 
is reasonable, equitable and not unfairly discriminatory because the 
same credits would be made available to SLMMs that are currently 
available for SLP-Props. In this regard, the proposed SLMM credits are 
reasonable, equitable and not unfairly discriminatory because they are 
available to all SLMMs on an equal basis and because the credits would

[[Page 42026]]

provide incentives to SLMMs that are reasonably related to an SLMM's 
additional quoting and liquidity obligations in each security.
    The Exchange also believes that it is reasonable, equitable and not 
unfairly discriminatory to aggregate shares of an SLP-Prop and an SLMM 
of the same member organization for purposes of determining whether an 
SLP has added liquidity of an ADV of more than 10 million shares for 
all assigned SLP securities. Specifically, and as described in SR-NYSE-
2012-10, if a member organization has more than one business unit, and 
the SLP-Prop business unit is walled off from the SLMM business unit, 
the member organization may engage in both an SLP-Prop and SLMM 
business from those different business units.\15\ Accordingly, because 
the 10 million share threshold applies to all of an SLP's shares in the 
aggregate, the Exchange believes that the activity of an SLP-Prop and 
an SLMM of the same member organization should be aggregated.\16\ 
Furthermore, provided there is no coordinated trading between the SLP-
Prop and SLMM business units, they may be assigned the same 
securities.\17\ In this regard, however, the Exchange believes that it 
is reasonable, equitable and not unfairly discriminatory to 
disaggregate shares of an SLP-Prop and an SLMM of the same member 
organization for purposes of determining whether an SLP has satisfied 
the 10% average or more quoting requirement pursuant to Rule 107B as 
well as the per-security percentage of added liquidity. The Exchange 
believes that this proposed disaggregation is consistent with the 
prohibition of an SLP-Prop coordinating its trading with an SLMM of the 
same member organization, and vice versa.\18\
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    \15\ See supra note 4 at 35456.
    \16\ Additionally, this would be consistent with the manner in 
which the Exchange aggregates the activity of an SLP-Prop and an 
SLMM of the same member organization for purposes of determining 
whether the 10 million share requirement of Rule 107B(a) has been 
satisfied.
    \17\ See supra note 4 at 35456. See also Rule 107B(i)(2)(B), 
which provides that an SLP-Prop shall not also act as an SLMM in the 
same securities in which it is registered as an SLP-Prop and vice 
versa, provided, however, if a member organization maintains 
information barriers between an SLP-Prop unit and an SLMM unit, the 
SLP-Prop and SLMM units may be assigned the same securities.
    \18\ Additionally, this would be consistent with the manner in 
which the Exchange disaggregates the activity of an SLP-Prop and an 
SLMM of the same member organization for purposes of determining 
whether the 10% requirement of Rule 107B(a) has been satisfied.
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    The Exchange also believes that the removal of the text describing 
that there is no charge during CSII, CSIII and CSIV and putting the 
text describing CSI and CSII under one heading is reasonable, equitable 
and not unfairly discriminatory because it would result in the removal 
of obsolete text from the Price List and add greater clarity regarding 
off-hours trading.

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) \19\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \20\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 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.

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-NYSE-2012-22 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2012-22. 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-NYSE-2012-22 and should be 
submitted on or before August 7, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17333 Filed 7-16-12; 8:45 am]
BILLING CODE 8011-01-P