Justia Agencies And Commissions Securities And Exchange Commission Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Amex Options Fee Schedule for Professional Customers and Broker-Dealers To Increase the Transaction Fee for Electronic Executions and Introduce Volume-Based Tiers for Certain Electronic Executions That Would Be Charged a Lower per Contract Rate, 42345-42347 [2012-17419]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Amex Options Fee Schedule for Professional Customers and Broker-Dealers To Increase the Transaction Fee for Electronic Executions and Introduce Volume-Based Tiers for Certain Electronic Executions That Would Be Charged a Lower per Contract Rate, 42345-42347 [2012-17419]

Download as PDF Federal Register / Vol. 77, No. 138 / Wednesday, July 18, 2012 / Notices 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–2012–71 on the subject line. Paper Comments tkelley on DSK3SPTVN1PROD with NOTICES • 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–NYSEArca–2012–71. 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 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–2012–71 and should be submitted on or before August 8, 2012. VerDate Mar<15>2010 17:27 Jul 17, 2012 Jkt 226001 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–17418 Filed 7–17–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–67420; File No. SR– NYSEMKT–2012–17] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Amex Options Fee Schedule for Professional Customers and BrokerDealers To Increase the Transaction Fee for Electronic Executions and Introduce Volume-Based Tiers for Certain Electronic Executions That Would Be Charged a Lower per Contract Rate July 12, 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, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) 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 self-regulatory organization. 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 Amex Options Fee Schedule (‘‘Fee Schedule’’) for Professional Customers and Broker-Dealers to increase the transaction fee for electronic executions and introduce volume-based tiers for certain electronic executions that would be charged a lower per contract rate. The proposed rule change will be 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. PO 00000 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 Frm 00091 Fmt 4703 Sfmt 4703 42345 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 for Professional Customers and Broker-Dealers to increase the transaction fee for electronic executions and introduce volume-based tiers for certain electronic executions that would be charged a lower per contract rate. Specifically, the Exchange proposes to increase the per contract transaction fee for electronically executed orders for Professional Customers and BrokerDealers from $.23 and $.20, respectively, to $.28 per contract for both categories of market participant.3 The Exchange notes that the proposed fee is within the range of Professional Customer fees presently assessed in the industry, which range from $.20 per contract for non-Select Symbols on the International Securities Exchange (‘‘ISE’’) 4 to $.50 per contract to take liquidity on The NASDAQ Options Market (‘‘NOM’’) for non-Penny Pilot securities.5 Similarly, the proposed fee for electronic BrokerDealer transactions is within the range of fees assessed in the industry, which range from $.20 to add liquidity in Complex Orders on NASDAQ OMX 3 In March 2012, the Exchange increased the per contract execution costs for certain participants. See Securities Exchange Act Release No. 66561 (Mar. 9, 2012), 77 FR 15429 (Mar. 15, 2012) (SR– NYSEAmex–2012–16). However, the Exchange inadvertently did not increase Broker-Dealer fees to the same level as Professional Customer fees, as required by the definition of Professional Customer in Rule 902.NY(18A), which provides that Professional Customer and Broker-Dealer fees must be the same. The proposed change would make the fees for Professional Customers and Broker-Dealers the same level, as they were prior to March 2012. 4 See ISE fee schedule dated June 1, 2012, available at https://www.ise.com/assets/documents/ OptionsExchange/legal/fee/fee_schedule.pdf. 5 See NOM Fee Schedule, available at https:// www.nasdaqtrader.com/ Micro.aspx?id=OptionsPricing. E:\FR\FM\18JYN1.SGM 18JYN1 42346 Federal Register / Vol. 77, No. 138 / Wednesday, July 18, 2012 / Notices allocation of reasonable dues, fees, and other charges among its members and other persons using its facilities and is not unfairly discriminatory. Specifically, the Exchange believes that the proposed fee increase for certain electronically executed orders on behalf of Professional Customers and Broker-Dealers is equitable and reasonable because it will help offset the Exchange’s costs in processing the relatively higher volume of orders, many of which do not execute, that are being submitted to the Exchange by Professional Customers and BrokerDealers.11 Rather than passing the costs of higher order volumes along to all Average daily volume tiers for Rate per participants, the Exchange believes it is professional customers and more equitable to assess those costs to contract broker-dealers taking liquidity the participants that are responsible for 12 0 to 50,000 ................................... $.28 them. The Exchange notes that other 50,001 to 100,000 ........................ .26 Over 100,000 ................................ .23 participants pay substantially more for the ability to trade on the Exchange and, Thus, for Professional Customers that as such, the proposed amount of the have average daily volume of over increase is reasonable. For example, 100,000 contracts, the fee per contract Market Makers have much higher fixed will remain the same as it currently is monthly costs as compared to at $.23. Professional Customers and BrokerIn addition, the Exchange proposes to Dealers. A Market Maker seeking to amend the Fee Schedule to clarify that stream quotes in the entire universe of the ‘‘Broker Dealer Manual’’ fee and names traded on the Exchange would ‘‘Professional Customer Manual’’ fee are have to pay $20,000 per month in Amex the same. Trading Permit (‘‘ATP’’) fees. In The proposed change will be addition, a Market Maker acting as a operative on July 1, 2012. Specialist, e-Specialist, or Directed Order Market Maker will incur monthly 2. Statutory Basis Rights Fees that range from $75 per The Exchange believes that the option to $1,500 per option. proposed rule change is consistent with Professional Customers and Brokerthe provisions of Section 6(b) 9 of the Dealers, who access the Exchange via an Securities Exchange Act of 1934 (the order routing firm, pay only $500 per ‘‘Act’’), in general, and Section 6(b)(4) 10 month in ATP fees (assuming the cost of the Act, in particular, in that it is is passed back to them), and for that low designed to provide for the equitable monthly cost are able to send orders in all issues traded on the Exchange.13 For 6 See NASDAQ OMX PHLX Fee Schedule, Broker-Dealers who are ATP Holders available at https:// and do access the Exchange directly, nasdaqomxphlx.cchwallstreet.com/ they will incur the monthly ATP fee of NASDAQOMXPHLXTools/Platform Viewer.asp?selectednode=chp%5F1%5F4%5F1& $500 and in turn have the ability to send manual=%2Fnasdaqomxphlx% orders in all issues traded on the 2Fphlx%2Fphlx%2Drulesbrd%2F. Exchange. Other participants have a 7 Whenever a participant sends a marketable much higher per contract cost to trade order to immediately trade against a resting bid or tkelley on DSK3SPTVN1PROD with NOTICES PHLX to $.60 to transact in non-Penny Pilot securities on NASDAQ OMX PHLX.6 At the same time, the Exchange proposes to establish volume-based tiers for Professional Customers and BrokerDealers that take liquidity on the Exchange.7 Upon achieving these volume tiers, they will automatically become eligible for a lower per contract rate on all of their electronic executions in that month irrespective of whether those executions resulted from taking or making liquidity. The proposed volumebased tiers and associated rates per contract are shown below.8 offer in the Exchange’s Consolidated Order Book, it will be viewed as taking liquidity. Conversely, whenever a participant posts a bid or offer that does not immediately execute they will be viewed as making liquidity on the Exchange. 8 The average daily volume will be calculated by taking the sum total of a Professional Customer’s or Broker-Dealer’s taking liquidity volume and dividing it by the number of days the Exchange was open for business during the month. Any electronic volumes that arise from the execution of either Complex Orders or Qualified Contingent Cross (‘‘QCC’’) orders will not be included in the calculation of average daily volume. QCC orders will remain subject to the current $.20 per contract pricing in the Fee Schedule applicable to nonCustomers. 9 15 U.S.C. 78f(b). 10 15 U.S.C. 78f(b)(4). VerDate Mar<15>2010 17:27 Jul 17, 2012 Jkt 226001 11 The Exchange does not believe that the costs associated with this increased volume are fully addressed through the Exchange’s existing fee structure. Cancellation fees only apply to public customer orders, the messages-to-contracts ratio fee only applies after 1 billion messages, and the orderto-trades ratio fee only applies after the ratio reaches 10,000 orders to 1 execution. 12 At this time, the Exchange is leaving in place current rate of $.20 per contract for Firms because unlike Professional Customers and Broker-Dealers, the majority of Firm volumes are transacted in open outcry or manually, and de facto market making activity by Firm participants is very limited. 13 The Exchange notes that it has proposed to increase the ATP fees for an order routing firm from $500 per month to $1,000 per month effective July 1, 2012. See SR–NYSEMKT–2012–16. PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 on the Exchange, such as Non-NYSE Amex Options Market Makers, who pay $.43 per contract to transact on the Exchange electronically. Given these facts, coupled with the aforementioned range in Professional Customer and Broker-Dealer fees on other exchanges, the Exchange believes that the proposed increase is both reasonable and equitable. The Exchange further notes that Broker-Dealers and Professional Customers may directly compete with Market Makers; unlike Customers, they are not prohibited from de facto market making.14 Both Broker-Dealers and Professional Customers have a measurable economic advantage relative to a NYSE Amex Options Market Maker’s cost when trading with Customer order flow. For example, an NYSE Amex Options Market Maker trading against a Customer order in a non-Penny Pilot name will pay as much as $.85 in transaction charges, whereas under the proposal, both Broker-Dealers and Professional Customers will pay a maximum of $.28 per contract.15 The proposed fee increase will diminish the maximum per contract differential between Market Makers with quoting obligations who trade against Customers versus Broker-Dealers and Professional Customers who do not have such obligations and who may trade electronically against Customers in a manner that the Exchange believes is more equitable in light of the differing roles such participants play on the Exchange and the attendant costs, benefits, and obligations. The Exchange believes the proposed change to increase fees as high as $.28 per contract for lower volume Professional Customer and BrokerDealer participants is not unfairly discriminatory as the change will apply to all Professional Customers and Broker-Dealers equally. Further, Professional Customers and BrokerDealers are free to change the manner in which they access the Exchange. A Professional Customer may, by sending fewer than 390 orders per day across the industry, begin participating as a 14 See Rule 995NY(b). Amex Options Market Makers must pay marketing charges of $.65 per contract when they trade contra to a Customer order electronically. This is in addition to the Exchange transaction fee of $.20 per contract applicable to a NYSE Amex Options Market Maker. The Exchange notes that the marketing charges are used by NYSE Amex Options Market Makers to attract Customer order flow to the Exchange. Such order flow is beneficial to all participants on the Exchange, including BrokerDealers and Professional Customers who are permitted to act as a de facto market maker by placing electronic orders on both sides of the market simultaneously. 15 NYSE E:\FR\FM\18JYN1.SGM 18JYN1 Federal Register / Vol. 77, No. 138 / Wednesday, July 18, 2012 / Notices tkelley on DSK3SPTVN1PROD with NOTICES Customer and avoid incurring any transaction fees. Additionally Professional Customers may elect to register as a Broker-Dealer and, once registered as a Broker-Dealer, may apply to become Market Makers to transact on a proprietary basis as Market Makers or become ATP Holders to transact on the Exchange as a Firm. In light of the ability to access the Exchange in a variety of ways, each of which is priced differently, Professional Customers, Broker-Dealers and other participants may access the Exchange in a manner that makes the most economic sense for them. The Exchange believes that the proposed change to establish volumebased tiers for Professional Customers and Broker-Dealers that transact electronically is reasonable, equitable, and not unfairly discriminatory. As noted previously, they have lower aggregate fees when compared to, for example, the ATP fees incurred by a NYSE Amex Market Maker to quote the entire universe of names traded on the Exchange. Further, the establishment of the tiers will enable Professional Customers and Broker-Dealers that transact in sufficient volumes to obtain a lower per contract rate on all of their electronic volumes in a given month. This is reasonable and equitable given that a higher volume of marketable orders, which these volume tiers will encourage, is beneficial to other Exchange participants due to the increased opportunity to trade. The Exchange believes the proposed change to adopt volume-based tiers for Professional Customers and BrokerDealers that transact electronically is not unfairly discriminatory because the change will apply to all participants in those categories equally. The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they determine that such venues offer more favorable trading conditions and rates. Finally, the Exchange believes that the amendment of the ‘‘Broker Dealer Manual’’ and ‘‘Professional Customer Manual’’ fees in the Fee Schedule is equitable and reasonable because it would result in increased clarity in the Fee Schedule regarding such fees. 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. VerDate Mar<15>2010 17:27 Jul 17, 2012 Jkt 226001 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) 16 of the Act and subparagraph (f)(2) of Rule 19b–4 17 thereunder, because it establishes a due, fee, or other charge imposed by NYSE MKT. 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–NYSEMKT–2012–17 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–NYSEMKT–2012–17. 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 PO 00000 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– NYSEMKT–2012–17 and should be submitted on or before August 8, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–17419 Filed 7–17–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–67424; File No. SR– NYSEArca–2012–70] 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 July 12, 2012. 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 29, 2012, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) 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. 18 17 CFR 200.30–3(a)(12). U.S.C.78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 16 15 17 17 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). Frm 00093 Fmt 4703 Sfmt 4703 42347 E:\FR\FM\18JYN1.SGM 18JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 77, Number 138 (Wednesday, July 18, 2012)]
[Notices]
[Pages 42345-42347]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17419]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67420; File No. SR-NYSEMKT-2012-17]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending the NYSE Amex
Options Fee Schedule for Professional Customers and Broker-Dealers To
Increase the Transaction Fee for Electronic Executions and Introduce
Volume-Based Tiers for Certain Electronic Executions That Would Be
Charged a Lower per Contract Rate

July 12, 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, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') 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 self-regulatory organization. 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 Amex Options Fee Schedule
(``Fee Schedule'') for Professional Customers and Broker-Dealers to
increase the transaction fee for electronic executions and introduce
volume-based tiers for certain electronic executions that would be
charged a lower per contract rate. The proposed rule change will be
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 proposes to amend the Fee Schedule for Professional
Customers and Broker-Dealers to increase the transaction fee for
electronic executions and introduce volume-based tiers for certain
electronic executions that would be charged a lower per contract rate.
Specifically, the Exchange proposes to increase the per contract
transaction fee for electronically executed orders for Professional
Customers and Broker-Dealers from $.23 and $.20, respectively, to $.28
per contract for both categories of market participant.\3\ The Exchange
notes that the proposed fee is within the range of Professional
Customer fees presently assessed in the industry, which range from $.20
per contract for non-Select Symbols on the International Securities
Exchange (``ISE'') \4\ to $.50 per contract to take liquidity on The
NASDAQ Options Market (``NOM'') for non-Penny Pilot securities.\5\
Similarly, the proposed fee for electronic Broker-Dealer transactions
is within the range of fees assessed in the industry, which range from
$.20 to add liquidity in Complex Orders on NASDAQ OMX

[[Page 42346]]

PHLX to $.60 to transact in non-Penny Pilot securities on NASDAQ OMX
PHLX.\6\
---------------------------------------------------------------------------

\3\ In March 2012, the Exchange increased the per contract
execution costs for certain participants. See Securities Exchange
Act Release No. 66561 (Mar. 9, 2012), 77 FR 15429 (Mar. 15, 2012)
(SR-NYSEAmex-2012-16). However, the Exchange inadvertently did not
increase Broker-Dealer fees to the same level as Professional
Customer fees, as required by the definition of Professional
Customer in Rule 902.NY(18A), which provides that Professional
Customer and Broker-Dealer fees must be the same. The proposed
change would make the fees for Professional Customers and Broker-
Dealers the same level, as they were prior to March 2012.
\4\ See ISE fee schedule dated June 1, 2012, available at https://www.ise.com/assets/documents/OptionsExchange/legal/fee/fee_schedule.pdf.
\5\ See NOM Fee Schedule, available at https://www.nasdaqtrader.com/Micro.aspx?id=OptionsPricing.
\6\ See NASDAQ OMX PHLX Fee Schedule, available at https://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLXTools/PlatformViewer.asp?selectednode=chp%5F1%5F4%5F1&manual=%2Fnasdaqomxphlx%2Fphlx%2Fphlx%2Drulesbrd%2F.
---------------------------------------------------------------------------

At the same time, the Exchange proposes to establish volume-based
tiers for Professional Customers and Broker-Dealers that take liquidity
on the Exchange.\7\ Upon achieving these volume tiers, they will
automatically become eligible for a lower per contract rate on all of
their electronic executions in that month irrespective of whether those
executions resulted from taking or making liquidity. The proposed
volume-based tiers and associated rates per contract are shown
below.\8\
---------------------------------------------------------------------------

\7\ Whenever a participant sends a marketable order to
immediately trade against a resting bid or offer in the Exchange's
Consolidated Order Book, it will be viewed as taking liquidity.
Conversely, whenever a participant posts a bid or offer that does
not immediately execute they will be viewed as making liquidity on
the Exchange.
\8\ The average daily volume will be calculated by taking the
sum total of a Professional Customer's or Broker-Dealer's taking
liquidity volume and dividing it by the number of days the Exchange
was open for business during the month. Any electronic volumes that
arise from the execution of either Complex Orders or Qualified
Contingent Cross (``QCC'') orders will not be included in the
calculation of average daily volume. QCC orders will remain subject
to the current $.20 per contract pricing in the Fee Schedule
applicable to non-Customers.

------------------------------------------------------------------------
Average daily volume tiers for professional customers and Rate per
broker-dealers taking liquidity contract
------------------------------------------------------------------------
0 to 50,000.................................................. $.28
50,001 to 100,000............................................ .26
Over 100,000................................................. .23
------------------------------------------------------------------------

Thus, for Professional Customers that have average daily volume of
over 100,000 contracts, the fee per contract will remain the same as it
currently is at $.23.
In addition, the Exchange proposes to amend the Fee Schedule to
clarify that the ``Broker Dealer Manual'' fee and ``Professional
Customer Manual'' fee are the same.
The proposed change will be operative on July 1, 2012.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) \9\ of the Securities Exchange Act
of 1934 (the ``Act''), in general, and Section 6(b)(4) \10\ of the Act,
in particular, in that 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 is not unfairly
discriminatory.
---------------------------------------------------------------------------

\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

Specifically, the Exchange believes that the proposed fee increase
for certain electronically executed orders on behalf of Professional
Customers and Broker-Dealers is equitable and reasonable because it
will help offset the Exchange's costs in processing the relatively
higher volume of orders, many of which do not execute, that are being
submitted to the Exchange by Professional Customers and Broker-
Dealers.\11\ Rather than passing the costs of higher order volumes
along to all participants, the Exchange believes it is more equitable
to assess those costs to the participants that are responsible for
them.\12\
---------------------------------------------------------------------------

\11\ The Exchange does not believe that the costs associated
with this increased volume are fully addressed through the
Exchange's existing fee structure. Cancellation fees only apply to
public customer orders, the messages-to-contracts ratio fee only
applies after 1 billion messages, and the order-to-trades ratio fee
only applies after the ratio reaches 10,000 orders to 1 execution.
\12\ At this time, the Exchange is leaving in place current rate
of $.20 per contract for Firms because unlike Professional Customers
and Broker-Dealers, the majority of Firm volumes are transacted in
open outcry or manually, and de facto market making activity by Firm
participants is very limited.
---------------------------------------------------------------------------

The Exchange notes that other participants pay substantially more
for the ability to trade on the Exchange and, as such, the proposed
amount of the increase is reasonable. For example, Market Makers have
much higher fixed monthly costs as compared to Professional Customers
and Broker-Dealers. A Market Maker seeking to stream quotes in the
entire universe of names traded on the Exchange would have to pay
$20,000 per month in Amex Trading Permit (``ATP'') fees. In addition, a
Market Maker acting as a Specialist, e-Specialist, or Directed Order
Market Maker will incur monthly Rights Fees that range from $75 per
option to $1,500 per option. Professional Customers and Broker-Dealers,
who access the Exchange via an order routing firm, pay only $500 per
month in ATP fees (assuming the cost is passed back to them), and for
that low monthly cost are able to send orders in all issues traded on
the Exchange.\13\ For Broker-Dealers who are ATP Holders and do access
the Exchange directly, they will incur the monthly ATP fee of $500 and
in turn have the ability to send orders in all issues traded on the
Exchange. Other participants have a much higher per contract cost to
trade on the Exchange, such as Non-NYSE Amex Options Market Makers, who
pay $.43 per contract to transact on the Exchange electronically. Given
these facts, coupled with the aforementioned range in Professional
Customer and Broker-Dealer fees on other exchanges, the Exchange
believes that the proposed increase is both reasonable and equitable.
---------------------------------------------------------------------------

\13\ The Exchange notes that it has proposed to increase the ATP
fees for an order routing firm from $500 per month to $1,000 per
month effective July 1, 2012. See SR-NYSEMKT-2012-16.
---------------------------------------------------------------------------

The Exchange further notes that Broker-Dealers and Professional
Customers may directly compete with Market Makers; unlike Customers,
they are not prohibited from de facto market making.\14\ Both Broker-
Dealers and Professional Customers have a measurable economic advantage
relative to a NYSE Amex Options Market Maker's cost when trading with
Customer order flow. For example, an NYSE Amex Options Market Maker
trading against a Customer order in a non-Penny Pilot name will pay as
much as $.85 in transaction charges, whereas under the proposal, both
Broker-Dealers and Professional Customers will pay a maximum of $.28
per contract.\15\ The proposed fee increase will diminish the maximum
per contract differential between Market Makers with quoting
obligations who trade against Customers versus Broker-Dealers and
Professional Customers who do not have such obligations and who may
trade electronically against Customers in a manner that the Exchange
believes is more equitable in light of the differing roles such
participants play on the Exchange and the attendant costs, benefits,
and obligations.
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\14\ See Rule 995NY(b).
\15\ NYSE Amex Options Market Makers must pay marketing charges
of $.65 per contract when they trade contra to a Customer order
electronically. This is in addition to the Exchange transaction fee
of $.20 per contract applicable to a NYSE Amex Options Market Maker.
The Exchange notes that the marketing charges are used by NYSE Amex
Options Market Makers to attract Customer order flow to the
Exchange. Such order flow is beneficial to all participants on the
Exchange, including Broker-Dealers and Professional Customers who
are permitted to act as a de facto market maker by placing
electronic orders on both sides of the market simultaneously.
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The Exchange believes the proposed change to increase fees as high
as $.28 per contract for lower volume Professional Customer and Broker-
Dealer participants is not unfairly discriminatory as the change will
apply to all Professional Customers and Broker-Dealers equally.
Further, Professional Customers and Broker-Dealers are free to change
the manner in which they access the Exchange. A Professional Customer
may, by sending fewer than 390 orders per day across the industry,
begin participating as a

[[Page 42347]]

Customer and avoid incurring any transaction fees. Additionally
Professional Customers may elect to register as a Broker-Dealer and,
once registered as a Broker-Dealer, may apply to become Market Makers
to transact on a proprietary basis as Market Makers or become ATP
Holders to transact on the Exchange as a Firm. In light of the ability
to access the Exchange in a variety of ways, each of which is priced
differently, Professional Customers, Broker-Dealers and other
participants may access the Exchange in a manner that makes the most
economic sense for them.
The Exchange believes that the proposed change to establish volume-
based tiers for Professional Customers and Broker-Dealers that transact
electronically is reasonable, equitable, and not unfairly
discriminatory. As noted previously, they have lower aggregate fees
when compared to, for example, the ATP fees incurred by a NYSE Amex
Market Maker to quote the entire universe of names traded on the
Exchange. Further, the establishment of the tiers will enable
Professional Customers and Broker-Dealers that transact in sufficient
volumes to obtain a lower per contract rate on all of their electronic
volumes in a given month. This is reasonable and equitable given that a
higher volume of marketable orders, which these volume tiers will
encourage, is beneficial to other Exchange participants due to the
increased opportunity to trade. The Exchange believes the proposed
change to adopt volume-based tiers for Professional Customers and
Broker-Dealers that transact electronically is not unfairly
discriminatory because the change will apply to all participants in
those categories equally.
The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues if they
determine that such venues offer more favorable trading conditions and
rates.
Finally, the Exchange believes that the amendment of the ``Broker
Dealer Manual'' and ``Professional Customer Manual'' fees in the Fee
Schedule is equitable and reasonable because it would result in
increased clarity in the Fee Schedule regarding such fees.

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) \16\ of the Act and subparagraph (f)(2) of Rule
19b-4 \17\ thereunder, because it establishes a due, fee, or other
charge imposed by NYSE MKT.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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-NYSEMKT-2012-17 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-NYSEMKT-2012-17. 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 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-NYSEMKT-2012-17 and should
be submitted on or before August 8, 2012.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17419 Filed 7-17-12; 8:45 am]
BILLING CODE 8011-01-P

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