Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Permit ETP Holders to Designate Orders as Retail Orders By Using a Tag in the Order Entry Message, 72425-72426 [2012-29316]

Download as PDF Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Notices 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–NSX– 2012–22 and should be submitted on or before December 26, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Kevin M. O’Neill, Deputy Secretary. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68322; File No. SR– NYSEARCA–2012–129] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Permit ETP Holders to Designate Orders as Retail Orders By Using a Tag in the Order Entry Message mstockstill on DSK4VPTVN1PROD with 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 November 16, 2012, NYSE Arca, Inc. CFR 200.30–3(a)(12). U.S.C.78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes to permit ETP Holders to designate orders as Retail Orders for the purpose of qualifying for the Retail Order Tier by means of a tag in the order entry message. 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 [FR Doc. 2012–29281 Filed 12–4–12; 8:45 am] November 29, 2012. (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 selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1. Purpose The Exchange is proposing to permit ETP Holders to designate orders as Retail Orders for the purpose of qualifying for the Retail Order Tier by means of a tag in the order entry message. The Exchange proposes to implement the change effective December 1, 2012. On August 1, 2012, the Exchange introduced the ‘‘Retail Order Tier,’’ a new tier and corresponding credit in the Fee Schedule for ETP Holders, including Market Makers, that execute an average daily volume (‘‘ADV’’) of Retail Orders during the particular month that is 0.40% or more of the U.S. Consolidated ADV.4 For purposes of the Retail Order Tier and credit, a ‘‘Retail 72425 Order’’ is an agency order that originates from a natural person and is submitted to the Exchange by an ETP Holder, provided that no change is made to the terms of the order with respect to price or side of market and the order does not originate from a trading algorithm or any other computerized methodology. As part of qualifying for the Retail Order Tier, an ETP Holder is required to designate certain of its order entry ports at the Exchange as ‘‘Retail Order Ports’’ and attest, in a form and/or manner prescribed by the Exchange, that all orders submitted to the Exchange via such Retail Order Ports are Retail Orders. The Exchange proposes to provide an additional method for ETP Holders to designate orders as Retail Orders. Specifically, the Exchange proposes to allow ETP Holders to designate orders as Retail Orders by using a tag in the order entry message. ETP Holders would still be able to use Retail Order Ports to designate orders as Retail Orders. As currently required with the use of Retail Order Ports to designate orders as Retail Orders, an ETP Holder designating orders as Retail Orders by using a tag in the order entry message will be required to have written policies and procedures reasonably designed to assure that it will only designate orders as Retail Orders if all requirements of a Retail Order are met. The written policies and procedures must require the ETP Holder to (i) exercise due diligence before entering a Retail Order to assure that entry as a Retail Order is in compliance with the requirements specified by the Exchange, and (ii) monitor whether orders entered as Retail Orders meet the applicable requirements. If the ETP Holder represents Retail Orders from another broker-dealer customer, the ETP Holder’s supervisory procedures must be reasonably designed to assure that the orders it receives from such brokerdealer customer that it designates as Retail Orders meet the definition of a Retail Order. The ETP Holder must (i) obtain an annual written representation, in a form acceptable to the Exchange, from each broker-dealer customer that sends it orders to be designated as Retail Orders that entry of such orders as Retail Orders will be in compliance with the requirements specified by the Exchange, and (ii) monitor whether its broker-dealer customer’s Retail Order flow continues to meet the applicable requirements.5 19 17 1 15 VerDate Mar<15>2010 17:19 Dec 04, 2012 4 Exchange Act Release No. 34–67540 (July 30, 2012), 77 FR 46539 (August 3, 2012) (SR– NYSEArca–2012–77). Jkt 229001 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 5 The Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’), on behalf of the Exchange, will E:\FR\FM\05DEN1.SGM Continued 05DEN1 72426 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Notices The proposed change is not otherwise intended to address any other matter, and the Exchange is not aware of any significant problem that ETP Holders would have in complying with the proposed change. mstockstill on DSK4VPTVN1PROD with 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’’),6 in general, and furthers the objectives of Section 6(b)(4) of the Act,7 in particular, because it provides for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers, or dealers. The Exchange believes that the proposed rule change is reasonable since permitting ETP Holders to use alternative methods to designate orders as Retail Orders will encourage the development of the Exchange’s liquidity pool, and thus support the quality of price discovery, promote market transparency, and improve investor protection. The Exchange believes the proposed change is reasonable because it will provide ETP Holders alternative ways to designate orders as Retail Orders while ensuring that ETP Holders are required to have written policies and procedures designed to assure that they will only designate orders as Retail Orders if all requirements of a Retail Order are met. The Exchange believes that the proposed rule change is equitable and not unfairly discriminatory because it provides a second method for Retail Order designation and allows each ETP Holder to choose the designation method most convenient to it, recognizing that individual firms have different internal system configurations. By providing alternative avenues for ETP Holders to designate orders as Retail Orders, the Exchange believes that ETP Holders will choose the designation method that is most operationally efficient, potentially reducing transaction costs. Finally, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For review an ETP Holder’s compliance with these requirements through an exam-based review of the ETP Holder’s internal controls. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). VerDate Mar<15>2010 17:19 Dec 04, 2012 Jkt 229001 the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment. 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) 8 of the Act and subparagraph (f)(2) of Rule 19b–4 9 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–2012–129 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. All submissions should refer to File Number SR–NYSEARCA–2012–129. 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–2012–129 and should be submitted on or before December 26, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–29316 Filed 12–4–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68318; File No. SR–ISE– 2012–90] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding the Short Term Option Series Program November 29, 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 November 21, 2012, the International 10 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b–4(f)(2). PO 00000 Frm 00108 Fmt 4703 1 15 Sfmt 4703 E:\FR\FM\05DEN1.SGM 05DEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 77, Number 234 (Wednesday, December 5, 2012)]
[Notices]
[Pages 72425-72426]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29316]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68322; File No. SR-NYSEARCA-2012-129]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Permit ETP
Holders to Designate Orders as Retail Orders By Using a Tag in the
Order Entry Message

November 29, 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 November 16, 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.
---------------------------------------------------------------------------

\1\ 15 U.S.C.78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

The Exchange proposes to permit ETP Holders to designate orders as
Retail Orders for the purpose of qualifying for the Retail Order Tier
by means of a tag in the order entry message. 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 to permit ETP Holders to designate orders
as Retail Orders for the purpose of qualifying for the Retail Order
Tier by means of a tag in the order entry message. The Exchange
proposes to implement the change effective December 1, 2012.
On August 1, 2012, the Exchange introduced the ``Retail Order
Tier,'' a new tier and corresponding credit in the Fee Schedule for ETP
Holders, including Market Makers, that execute an average daily volume
(``ADV'') of Retail Orders during the particular month that is 0.40% or
more of the U.S. Consolidated ADV.\4\ For purposes of the Retail Order
Tier and credit, a ``Retail Order'' is an agency order that originates
from a natural person and is submitted to the Exchange by an ETP
Holder, provided that no change is made to the terms of the order with
respect to price or side of market and the order does not originate
from a trading algorithm or any other computerized methodology.
---------------------------------------------------------------------------

\4\ Exchange Act Release No. 34-67540 (July 30, 2012), 77 FR
46539 (August 3, 2012) (SR-NYSEArca-2012-77).
---------------------------------------------------------------------------

As part of qualifying for the Retail Order Tier, an ETP Holder is
required to designate certain of its order entry ports at the Exchange
as ``Retail Order Ports'' and attest, in a form and/or manner
prescribed by the Exchange, that all orders submitted to the Exchange
via such Retail Order Ports are Retail Orders.
The Exchange proposes to provide an additional method for ETP
Holders to designate orders as Retail Orders. Specifically, the
Exchange proposes to allow ETP Holders to designate orders as Retail
Orders by using a tag in the order entry message. ETP Holders would
still be able to use Retail Order Ports to designate orders as Retail
Orders.
As currently required with the use of Retail Order Ports to
designate orders as Retail Orders, an ETP Holder designating orders as
Retail Orders by using a tag in the order entry message will be
required to have written policies and procedures reasonably designed to
assure that it will only designate orders as Retail Orders if all
requirements of a Retail Order are met. The written policies and
procedures must require the ETP Holder to (i) exercise due diligence
before entering a Retail Order to assure that entry as a Retail Order
is in compliance with the requirements specified by the Exchange, and
(ii) monitor whether orders entered as Retail Orders meet the
applicable requirements. If the ETP Holder represents Retail Orders
from another broker-dealer customer, the ETP Holder's supervisory
procedures must be reasonably designed to assure that the orders it
receives from such broker-dealer customer that it designates as Retail
Orders meet the definition of a Retail Order. The ETP Holder must (i)
obtain an annual written representation, in a form acceptable to the
Exchange, from each broker-dealer customer that sends it orders to be
designated as Retail Orders that entry of such orders as Retail Orders
will be in compliance with the requirements specified by the Exchange,
and (ii) monitor whether its broker-dealer customer's Retail Order flow
continues to meet the applicable requirements.\5\
---------------------------------------------------------------------------

\5\ The Financial Industry Regulatory Authority, Inc.
(``FINRA''), on behalf of the Exchange, will review an ETP Holder's
compliance with these requirements through an exam-based review of
the ETP Holder's internal controls.

---------------------------------------------------------------------------

[[Page 72426]]

The proposed change is not otherwise intended to address any other
matter, and the Exchange is not aware of any significant problem that
ETP Holders would have in complying with the proposed change.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Securities Exchange Act of 1934 (the
``Act''),\6\ in general, and furthers the objectives of Section 6(b)(4)
of the Act,\7\ in particular, because it provides for the equitable
allocation of reasonable dues, fees, and other charges among its
members and issuers and other persons using its facilities and does not
unfairly discriminate between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

The Exchange believes that the proposed rule change is reasonable
since permitting ETP Holders to use alternative methods to designate
orders as Retail Orders will encourage the development of the
Exchange's liquidity pool, and thus support the quality of price
discovery, promote market transparency, and improve investor
protection. The Exchange believes the proposed change is reasonable
because it will provide ETP Holders alternative ways to designate
orders as Retail Orders while ensuring that ETP Holders are required to
have written policies and procedures designed to assure that they will
only designate orders as Retail Orders if all requirements of a Retail
Order are met.
The Exchange believes that the proposed rule change is equitable
and not unfairly discriminatory because it provides a second method for
Retail Order designation and allows each ETP Holder to choose the
designation method most convenient to it, recognizing that individual
firms have different internal system configurations. By providing
alternative avenues for ETP Holders to designate orders as Retail
Orders, the Exchange believes that ETP Holders will choose the
designation method that is most operationally efficient, potentially
reducing transaction costs.
Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues. In such an environment, the Exchange must continually
review, and consider adjusting, its fees and credits to remain
competitive with other exchanges. For the reasons described above, the
Exchange believes that the proposed rule change reflects this
competitive environment.

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) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge
imposed by the NYSE Arca.
---------------------------------------------------------------------------

\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 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-2012-129 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.

All submissions should refer to File Number SR-NYSEARCA-2012-129. 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-2012-129 and should
be submitted on or before December 26, 2012.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

\10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-29316 Filed 12-4-12; 8:45 am]
BILLING CODE 8011-01-P

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