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, 21443-21447 [2013-08385]

Download as PDF Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Notices as reflected in the LULD Release. Moreover, the related Information Memorandum to members and member organizations would provide advance notice to NYSE MKT members and member organizations that the Exchange would cease offering the LRP functionality in furtherance of the Commission’s expectations. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose a burden on competition because the Exchange is discontinuing the LRP functionality to fulfill the Commission’s expectations. In this respect, the Exchange notes that because Commission expects all exchanges to discontinue their respective volatility mechanisms, there should be no burden on competition because all exchanges as well as their members and issuers would be similarly situated. 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 Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 13 and Rule 19b–4(f)(6) thereunder.14 Because the proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6)(iii) thereunder. A proposed rule change filed under Rule 19b–4(f)(6) 15 normally does not become operative prior to 30 days after the date of the filing. However, pursuant TKELLEY on DSK3SPTVN1PROD with NOTICES 13 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires the Exchange to give the Commission written notice of the Exchange’s intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 15 17 CFR 240.19b–4(f)(6). 14 17 VerDate Mar<15>2010 17:59 Apr 09, 2013 Jkt 229001 21443 to Rule 19b–4(f)(6)(iii),16 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to designate an operative date of April 8, 2013. The Commission believes that waiving the operative delay and designating April 8, 2013 as the operative date of the proposed rule change is consistent with the protection of investors and the public interest because such waiver would allow the proposed rule change to be operative on the initial date of Plan operations. Accordingly, the Commission hereby grants the Exchange’s request and designates an operative date of April 8, 2013.17 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. 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 publicly available. All submissions should refer to File Number SR– NYSEMKT–2013–33 and should be submitted on or before May 1, 2013. 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Kevin M. O’Neill, Deputy Secretary. 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–2013–33 on the subject line. SECURITIES AND EXCHANGE COMMISSION 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–2013–33. 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 16 17 CFR 240.19b–4(f)(6)(iii). purposes only of waiving the operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 17 For PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 [FR Doc. 2013–08320 Filed 4–9–13; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–69305; File No. SR– NYSEArca–2013–32] 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 April 4, 2013. 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 March 25, 2013, 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 selfregulatory organization. The Commission is publishing this notice to 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 E:\FR\FM\10APN1.SGM 10APN1 21444 Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Notices 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 its Schedule of Fees and Charges for Exchange Services (‘‘Fee Schedule’’) to (i) amend Step Up Tier 1 and Step Up Tier 2 (the ‘‘Step Up Tiers’’) to increase the volume threshold requirements needed to be eligible for each respective tier; (ii) amend the Cross-Asset Tier to replace the numeric benchmark needed to be eligible for the tier with a benchmark based on a percentage of options contract volume; (iii) add a new Retail Order Cross-Asset Tier; (iv) raise the fee charged for transactions in securities with a per share price below $1.00; and (v) amend the options-related volume requirements in certain tiers in the Fee Schedule to exclude volume in mini options from contributing to the volume requirements of the affected tiers. The Exchange proposes to implement the changes on April 1, 2013. 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 TKELLEY on DSK3SPTVN1PROD with NOTICES 1. Purpose The Exchange proposes to amend its Fee Schedule to (i) amend the Step Up Tiers to increase the volume threshold requirements needed to be eligible for each respective tier; (ii) amend the Cross-Asset Tier to replace the numeric benchmark needed to be eligible for the tier with a benchmark based on a percentage of options contract volume; (iii) add a new Retail Order Cross-Asset Tier; (iv) raise the fee charged for VerDate Mar<15>2010 17:59 Apr 09, 2013 Jkt 229001 transactions in securities with a per share price below $1.00; and (v) amend the options-related volume requirements in certain tiers in the Fee Schedule to exclude volume in mini options from contributing to the volume requirements of the affected tiers. The Exchange proposes to implement the changes on April 1, 2013. Step Up Tiers Currently, in order to qualify for Step Up Tier 1, an ETP Holder on a daily basis, measured monthly, must directly execute providing volume on NYSE Arca in an amount that is an increase of no less than 0.15% of U.S. consolidated average daily volume (‘‘US CADV’’) in Tape A, Tape B, and Tape C securities for that month over the ETP Holder’s average daily providing volume in June 2011 (the ‘‘Baseline Month’’), subject to a minimum increase of 15 million average daily providing shares.4 The Exchange proposes to increase the eligibility requirement for Step Up Tier 1 to no less than 0.20% of US CADV for the month over the ETP Holder’s average daily providing volume in the Baseline Month, subject to a minimum increase of 20 million average daily providing shares. Similarly, in order to qualify for Step Up Tier 2, an ETP Holder on a daily basis, measured monthly, must directly execute providing volume on NYSE Arca in an amount that is an increase of no less than 0.10% of US CADV for that month over the ETP Holder’s average daily providing volume in the Baseline Month, subject to a minimum increase of 10 million average daily providing shares. The Exchange proposes to increase the eligibility requirement for Step Up Tier 2 to no less than 0.12% of US CADV for the month over the ETP Holder’s average daily providing volume in the Baseline Month, subject to a minimum increase of 12 million average daily providing shares. By way of example, if an ETP Holder executed an average daily providing volume of 5 million shares in the Baseline Month, then to qualify for Step Up Tier 2 in a month where US CADV is 11 billion shares, that ETP Holder would need to increase its average daily providing volume by at least 13.2 million shares, or 0.12% of that month’s US CADV, for a total average daily 4 US CADV means United States Consolidated Average Daily Volume for transactions reported to the Consolidated Tape and excludes volume on days when the market closes early. Transactions that are not reported to the Consolidated Tape are not included in US CADV. The Exchange currently makes this data publicly available on a T + 1 basis from a link at https://www.nyxdata.com/US-andEuropean-Volumes. PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 providing volume of at least 18.2 million shares. If that same ETP Holder in that same month increased its average daily providing volume by at least 22 million shares, or 0.20% of that month’s US CADV, for a total average daily providing volume average of at least 27 million shares, then that ETP Holder would qualify for Step Up Tier 1.5 As previously explained,6 the goal of the Step Up Tiers is to incent ETP Holders to increase the orders sent directly to NYSE Arca and therefore provide liquidity that supports the quality of price discovery and promotes market transparency. In the Step Up Tiers Release, the Exchange explained that the Step Up Tiers were expected to benefit ETP Holders whose increased order flow provided added levels of liquidity (thereby contributing to the depth and market quality of the Book) but who are still not eligible for Tier 1, 2 or 3, or Investor Tier 1 or 2.7 For similar reasons, the Exchange believes that raising the volume requirements needed to be eligible for each respective Step Up Tier will continue to incent ETP Holders to increase the orders sent directly to NYSE Arca and therefore provide liquidity that supports the quality of price discovery and promotes market transparency. The Exchange believes that this especially is the case given that the credits for Tape A and Tape C securities under Step Up Tier 1 ($0.00295) and Step Up Tier 2 ($0.0029) are substantially higher that the credits for Tape A and Tape C securities under the Basic Rates ($0.0021) and Tier 3 ($0.0025). Cross-Asset Tier Currently, under the Cross-Asset Tier, ETP Holders and Market Makers that (1) provide liquidity of 0.45% or more of the US CADV per month in Tape A, Tape B, and Tape C securities combined, and (2) are affiliated with an NYSE Arca Options Trading Permit (‘‘OTP’’) Holder or OTP Firm that provides an average daily volume (‘‘ADV’’) of electronic posted Customer executions in Penny Pilot issues on NYSE Arca Options of at least 90,000 contracts receive a per share credit of $0.0030 for orders in Tape A, Tape B 5 In addition, for both Step Up Tiers, those ETP Holders that did not directly provide volume to NYSE Arca in the Baseline Month will be treated as having an average daily providing volume of zero for the Baseline Month. With respect to the increased percentage of US CADV, the volume requirements to reach the Step Up Tiers’ pricing levels will adjust each calendar month based on the US CADV for that given month. 6 See Securities Exchange Act Release No. 64820 (July 6, 2011), 76 FR 40974 (July 12, 2011) (SR– NYSEArca–2011–41) (‘‘Step Up Tiers Release’’). 7 Id. at 76 FR 40975. E:\FR\FM\10APN1.SGM 10APN1 Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Notices TKELLEY on DSK3SPTVN1PROD with NOTICES and Tape C securities that provide liquidity to the Book. The Exchange proposes to replace the current fixed 90,000-contract requirement with a variable requirement of at least 0.95% of total Customer equity and exchangetraded fund (‘‘ETF’’) option (as discussed below, excluding mini options) ADV, as reported by the Options Clearing Corporation (‘‘OCC’’).8 The Exchange is proposing these changes to the Cross-Asset Tier in order to make the eligibility requirement consistent with the Exchange’s other variable eligibility requirements that are based on percentage of volume. The Exchange believes that using an eligibility requirement based on percentage of volume will better reflect fluctuations in trading volumes. In this respect, the Exchange notes that Equity and ETF Customer volume is a widely followed benchmark of industry volume and is indicative of industry market share. The Exchange also notes that based on current volume, the 0.95% volume requirement is consistent with the original 110,000 contract requirement which was lowered July 1, 2012 due to concerns over temporarily lower volume on NYSE Arca Options.9 The proposed changes to the CrossAsset Tier would thus eliminate the need to modify a fixed number requirement because a threshold based 8 The OCC provides volume information in two product categories: equity and ETF volume and index volume, and the information can be filtered to show only Customer, firm, or market maker account type. Equity and ETF Customer volume numbers are available directly from the OCC each morning, or may be transmitted, upon request, free of charge from the Exchange. Total Industry Customer equity and ETF option ADV is comprised of those equity and ETF option contracts that clear in the customer account type at OCC, including Exchange-Traded Fund Shares, Trust Issued Receipts, Partnership Units, and Index-Linked Securities such as Exchange-Traded Notes (see NYSE Arca Options Rule 5.3(g)–(j)), and does not include contracts that clear in either the firm or market maker account type at OCC or contracts overlying a security other than an equity or ETF security. The Exchange notes that there is one Penny Pilot issue, Mini NDX 100 Stock Index, that does not overlie an equity or ETF security that is eligible for the Customer posting credit. This Penny Pilot issue is not included in equity and ETF option ADV; however, the Exchange expects that the effect on the calculations for the qualification thresholds for tiered Customer posting credits to be negligible. Under the proposed rule change, Total Industry Customer equity and ETF option ADV will be that which is reported for the month by OCC in the month in which the credits may apply. The Exchange currently makes this data publicly available on a T+1 basis from a link at https:// www.nyxdata.com/factbook. 9 See Securities Exchange Act Release Nos. 67180 (June 11, 2012), 77 FR 36027 (June 15, 2012) (SR– NYSEArca–2012–56) and 67424 (July 12, 2012), 77 FR 42347 (July 18, 2012) (SR–NYSE–Arca–2012– 70). VerDate Mar<15>2010 17:59 Apr 09, 2013 Jkt 229001 on volume would automatically make the necessary adjustments. Retail Order Cross-Asset Tier The Exchange also is proposing a new Retail Cross-Asset Tier. Under the Retail Cross-Asset Tier, firms that execute at least 0.30% of US CADV in retail orders and are affiliated with an NYSE Arca OTP Holder or OTP Firm that provides an ADV of electronic posted Customer executions in customer penny pilot options of at least 0.50% of total Customer equity and ETF option (as discussed below, excluding mini options) ADV would qualify for a $.0034 rebate for retail orders that provide liquidity. The Retail Cross-Asset Tier would provide firms with a second way to qualify for the $0.0034 rebate (in addition to Investor Tier 1) using equity retail and options customer post. The Exchange notes that the $0.0034 rebate is $.0001 higher than the current Retail Order Tier in light of the tier including an additional options requirement and a higher equity retail requirement. Sub-$1.00 Securities Currently, a fee of 0.2% of the total dollar value of the transaction is charged for transactions with a per share price below $1.00 that take liquidity from the Book. The Exchange proposes raising the fee from 0.2% of the total dollar value of the transaction to 0.3% of the total dollar value of the transaction. The Exchange is proposing these changes as they are consistent with similar fee amounts charged by other exchanges.10 Mini Options The Exchange proposes to amend the Fee Schedule to specifically exclude volume in mini options from contributing to the volume requirements for tiers with an options volume-related component. Specifically, the proposed amendment would exclude volume in mini options from contributing to the volume requirements in Tier 1 and the Cross-Asset Tier. Mini option volume similarly would be excluded from the proposed Retail Order Cross-Asset Tier discussed above. The proposed changes are not otherwise intended to address any other problem, and the Exchange is not aware of any significant problem that the affected market participants would have in complying with the proposed changes. 10 See, e.g., DirectEdge Fee Schedule, available at https://www.directedge.com/Membership/ FeeSchedule/EDGXFeeSchedule.aspx; and Nasdaq Fee Schedule, available at https:// www.nasdaqtrader.com/ Trader.aspx?id=PriceListTrading2#execution. PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 21445 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,11 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,12 in particular, because it provides for the equitable allocation of reasonable dues, fees, and other charges among its members, issuers and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers or dealers. The Exchange believes that the proposed amendments to the Step Up Tiers that raise the volume requirements needed to be eligible for each respective tier are reasonable because the proposed changes are designed to further incent ETP Holders to increase the orders sent directly to NYSE Arca and therefore provide liquidity that supports the quality of price discovery and promotes market transparency. The Exchange believes that this is especially the case given that the credits for Tape A and Tape C securities under Step Up Tier 1 ($0.00295) and Step Up Tier 2 ($0.0029) are substantially higher than the credits for Tape A and Tape C securities under Basic Rates ($0.0021) and Tier 3 ($0.0025). The Exchange further believes that the proposed amendments to the Step Up Tiers are equitable and not unfairly discriminatory because they will benefit ETP Holders whose increased order flow provides added levels of liquidity (thereby contributing to the depth and market quality of the Book), but who may still not be eligible for Tier 1, 2 or 3, or other tiers. Moreover, the Step Up Tiers are available for all ETP Holders to satisfy. The Exchange believes that the proposal to amend the Cross-Asset Tier to replace the current fixed benchmark needed to be eligible for the tier with a variable benchmark based on a percentage of volume is reasonable because it will make the eligibility requirement consistent with the Exchange’s other variable eligibility requirements that also are based on percentage of volume. In addition, the Exchange believes that expanding the basis for the Cross-Asset Tier to include all Customer equity and ETF options ADV will better reflect the correlation between options trading and the underlying securities, which trade at the Exchange, including ETFs. In this respect, the Exchange notes that Equity and ETF Customer volume is a widely followed benchmark of industry volume and is indicative of industry market 11 15 12 15 E:\FR\FM\10APN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 10APN1 TKELLEY on DSK3SPTVN1PROD with NOTICES 21446 Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Notices share.13 In addition, the Exchange believes that the proposed amendments to the Cross-Asset Tier are equitable and not unfairly discriminatory because they will apply to all ETP Holders and Market Makers. Moreover, the Cross-Asset Tier is available for all ETP Holders to satisfy, except for those ETP Holders that are not affiliated with an NYSE Arca Options OTP Holder or OTP Firm. However, the Exchange notes that ETP Holders that are not affiliated with an NYSE Arca Options OTP Holder or OTP Firm are still eligible for the $0.0030 Cross-Asset Tier rate when they qualify for one of the other Tiers described in the Fee Schedule (e.g., Tier 1). The Exchange believes that the proposal to add the new Retail Order Cross-Asset Tier is reasonable because it would provide firms with a way in which to qualify for $0.0034 rebate through equity retail and options customer orders. The Exchange further believes that the proposed Retail Order Cross-Asset Tier is equitable and not unfairly discriminatory because a firm that does not submit options orders can still be eligible for the $0.0034 rebate available from Investor Tier 1. The Exchange believes that the proposal to raise the fee charged for transactions with a per share price below $1.00 that take liquidity from the Book from 0.2% to 0.3% of the total dollar value of the transaction is reasonable because the proposed new rate is consistent with similar fee amounts charged by other exchanges.14 The Exchange further believes that the proposed fee increase is equitable and not unfairly discriminatory because it will apply to all transactions that take liquidity from the Exchange in securities with a per share price below $1.00. Finally, the Exchange believes that the proposal to exclude volume in mini options from contributing to the option volume requirements for Tier 1, the Cross-Asset Tier and the proposed Retail Order Cross-Asset Tier is reasonable because the options volume requirement currently in place in the fee schedule were established prior to the existence of mini options, a new product on NYSE Arca Options. Because mini options are such a new product, the Exchange believes it is reasonable to exclude mini option volume in this way. The Exchange further believes that the proposal to exclude volume in mini options from the tiers mentioned above is equitable and not unfairly discriminatory because 13 See 14 See supra note 8. supra note 10. VerDate Mar<15>2010 17:59 Apr 09, 2013 Jkt 229001 all market participants that are eligible for the affected tiers will be similarly situated. 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. In particular, the proposed amendments to the Step Up Tiers that raise the volume requirement needed to be eligible for each respective tier are designed to incent ETP Holders and Market Makers to increase the volume of orders sent directly to NYSE Arca and therefore provide liquidity that supports the quality of price discovery and promotes market transparency. The proposal to amend the CrossAsset Tier to replace the numeric benchmark needed to be eligible for the tier with a benchmark based on a percentage of volume will not place an undue burden on competition because it will apply uniformly to all ETP Holders and Market Makers. The proposal to add the new Retail Order Cross-Asset Tier will not place an undue burden on competition because all firms can be eligible for the $0.0034 credit, as those firms that do not submit options orders can still qualify to receive the $0.0034 rebate by meeting the requirements of Investor Tier 1. The proposal to raise the fee charged for transactions with a per share price below $1.00 from 0.2% to 0.3% of the total value of orders that take liquidity from the Book is consistent with similar fees charged by other exchanges. Finally, the proposal to exclude volume in mini options from contributing to the option volume requirements for Tier 1, the Cross-Asset Tier and the proposed Retail Order Cross-Asset Tier will not place an undue burden on competition because all market participants will be similarly situated in their inability to the use volume in mini options to satisfy the options volume requirements of the affected tiers. 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 change reflects this competitive environment. PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 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)(ii) of the Act 15 because it establishes a due, fee, or other charge imposed by NYSE Arca. At any time within 60 days of the filing of such proposed rule change, the Securities and Exchange Commission (‘‘Commission’’) summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 16 of the Act to determine whether the proposed rule change should be approved or disapproved. 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–2013–32 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–NYSEArca-2013–32. 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 15 15 16 15 E:\FR\FM\10APN1.SGM U.S.C. 78s(b)(3)(A)(ii). U.S.C. 78s(b)(2)(B). 10APN1 Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Notices (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 offices of NYSE Arca. 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–2013–32, and should be submitted on or before May 1, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–08385 Filed 4–9–13; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–69310; File No. SR–BATS– 2013–022] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify Market Maker Peg Order Functionality TKELLEY on DSK3SPTVN1PROD with NOTICES April 4, 2013. 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 March 22, 2013, BATS Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BATS’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 17:59 Apr 09, 2013 Jkt 229001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing with the Commission a proposal to amend the functionality of the Market Maker Peg Order to more closely resemble analogous order types offered by NASDAQ Stock Market LLC (‘‘Nasdaq’’) and EDGX Exchange, Inc. (‘‘EDGX’’) 3 and to make certain clarifying changes to the rule. The text of the proposed rule change is available at the Exchange’s Web site at https://www.batstrading.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 and discussed any comments it received on 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 parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION 17 17 comments on the proposed rule change from interested persons. 1. Purpose The purpose of this proposed rule change is to amend BATS Rule 11.9(c)(16). Specifically, the Exchange proposes to: (1) Remove the option to allow Market Maker Peg Orders to be priced and executed during the PreOpening Session 4 and the After Hours Trading Session 5 and to cancel all Market Maker Peg Orders that are on the BATS Book 6 at the end of Regular Trading Hours; (2) remove the option for a Market Maker Peg Order to be automatically cancelled where there is no NBBO and the order is priced based 3 The Exchange notes that EDGA Exchange, Inc. also has an order type identical to that of EDGX, however, for the purposes of this filing, the Exchange is referring only to the order type functionality available at EDGX. 4 Pre-Opening Session means the time between 8:00 a.m. and 9:30 a.m. Eastern Time. 5 After Hours Trading Session means the time between 4:00 p.m. and 5:00 p.m. Eastern Time. 6 BATS Book means the System’s electronic file of orders. PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 21447 on the last reported sale from the single plan processor; (3) remove the functionality that would allow a Market Maker to designate a more aggressive offset from the NBBO; (4) make clear that a Market Maker Peg Order will not peg to itself; and (5) make clear that only registered Market Makers are eligible to enter Market Maker Peg Orders. The Exchange is also proposing to reaffirm that it will continue to offer the present automated functionality provided to market makers under Rule 11.8(e) for a period of three months after the implementation of the Market Maker Peg Order. Market Maker Peg Orders Entered Outside of Regular Trading Hours The Exchange is proposing to amend BATS Rule 11.9(c)(16) to eliminate the option for Market Maker Peg Orders to be priced and executed outside of Regular Trading Hours and to cancel all Market Maker Peg Orders that are on the BATS Book at the end of Regular Trading Hours. As currently written, a Market Maker may enter a Market Maker Peg Order at any time during the PreOpening Session 7 or Regular Trading Hours, with an order entered during the Pre-Opening Session, by default, to remain unpriced and unexecutable until Regular Trading Hours, however, a Market Maker could designate that the order be priced and executable immediately upon entry during the PreOpening Session. Specifically, the Exchange is proposing rule changes to eliminate the ability for a Market Maker to designate that an order be priced and executable immediately upon entry during the PreOpening Session, to state that all Market Maker Peg Orders that are on the BATS Book expire at the end of Regular Trading Hours, and to reject all Market Maker Peg Orders entered during the After Hours Trading Session. The Exchange is proposing these changes in order to make its Market Maker Peg Order functionality more closely resemble that of Market Maker Peg Orders at Nasdaq and EDGX. Because the Market Maker Peg Order is designed to help Market Makers meet their quoting obligation on the Exchange and the Exchange’s quoting obligations do not include any obligations outside of Regular Trading Hours, the Exchange does not believe that allowing Market Maker Peg Orders to be priced and executed outside of Regular Trading Hours provides Market Makers with any benefit that would warrant the additional complexity that the 7 The Pre-Opening Session means the time between 8:00 a.m. and 9:30 a.m. Eastern Time. E:\FR\FM\10APN1.SGM 10APN1

Agencies

[Federal Register Volume 78, Number 69 (Wednesday, April 10, 2013)]
[Notices]
[Pages 21443-21447]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08385]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69305; File No. SR-NYSEArca-2013-32]


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

April 4, 2013.
    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 March 25, 2013, 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

[[Page 21444]]

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 Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Schedule of Fees and Charges for 
Exchange Services (``Fee Schedule'') to (i) amend Step Up Tier 1 and 
Step Up Tier 2 (the ``Step Up Tiers'') to increase the volume threshold 
requirements needed to be eligible for each respective tier; (ii) amend 
the Cross-Asset Tier to replace the numeric benchmark needed to be 
eligible for the tier with a benchmark based on a percentage of options 
contract volume; (iii) add a new Retail Order Cross-Asset Tier; (iv) 
raise the fee charged for transactions in securities with a per share 
price below $1.00; and (v) amend the options-related volume 
requirements in certain tiers in the Fee Schedule to exclude volume in 
mini options from contributing to the volume requirements of the 
affected tiers. The Exchange proposes to implement the changes on April 
1, 2013. 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 its Fee Schedule to (i) amend the 
Step Up Tiers to increase the volume threshold requirements needed to 
be eligible for each respective tier; (ii) amend the Cross-Asset Tier 
to replace the numeric benchmark needed to be eligible for the tier 
with a benchmark based on a percentage of options contract volume; 
(iii) add a new Retail Order Cross-Asset Tier; (iv) raise the fee 
charged for transactions in securities with a per share price below 
$1.00; and (v) amend the options-related volume requirements in certain 
tiers in the Fee Schedule to exclude volume in mini options from 
contributing to the volume requirements of the affected tiers. The 
Exchange proposes to implement the changes on April 1, 2013.
Step Up Tiers
    Currently, in order to qualify for Step Up Tier 1, an ETP Holder on 
a daily basis, measured monthly, must directly execute providing volume 
on NYSE Arca in an amount that is an increase of no less than 0.15% of 
U.S. consolidated average daily volume (``US CADV'') in Tape A, Tape B, 
and Tape C securities for that month over the ETP Holder's average 
daily providing volume in June 2011 (the ``Baseline Month''), subject 
to a minimum increase of 15 million average daily providing shares.\4\ 
The Exchange proposes to increase the eligibility requirement for Step 
Up Tier 1 to no less than 0.20% of US CADV for the month over the ETP 
Holder's average daily providing volume in the Baseline Month, subject 
to a minimum increase of 20 million average daily providing shares.
---------------------------------------------------------------------------

    \4\ US CADV means United States Consolidated Average Daily 
Volume for transactions reported to the Consolidated Tape and 
excludes volume on days when the market closes early. Transactions 
that are not reported to the Consolidated Tape are not included in 
US CADV. The Exchange currently makes this data publicly available 
on a T + 1 basis from a link at https://www.nyxdata.com/US-and-European-Volumes.
---------------------------------------------------------------------------

    Similarly, in order to qualify for Step Up Tier 2, an ETP Holder on 
a daily basis, measured monthly, must directly execute providing volume 
on NYSE Arca in an amount that is an increase of no less than 0.10% of 
US CADV for that month over the ETP Holder's average daily providing 
volume in the Baseline Month, subject to a minimum increase of 10 
million average daily providing shares. The Exchange proposes to 
increase the eligibility requirement for Step Up Tier 2 to no less than 
0.12% of US CADV for the month over the ETP Holder's average daily 
providing volume in the Baseline Month, subject to a minimum increase 
of 12 million average daily providing shares.
    By way of example, if an ETP Holder executed an average daily 
providing volume of 5 million shares in the Baseline Month, then to 
qualify for Step Up Tier 2 in a month where US CADV is 11 billion 
shares, that ETP Holder would need to increase its average daily 
providing volume by at least 13.2 million shares, or 0.12% of that 
month's US CADV, for a total average daily providing volume of at least 
18.2 million shares. If that same ETP Holder in that same month 
increased its average daily providing volume by at least 22 million 
shares, or 0.20% of that month's US CADV, for a total average daily 
providing volume average of at least 27 million shares, then that ETP 
Holder would qualify for Step Up Tier 1.\5\
---------------------------------------------------------------------------

    \5\ In addition, for both Step Up Tiers, those ETP Holders that 
did not directly provide volume to NYSE Arca in the Baseline Month 
will be treated as having an average daily providing volume of zero 
for the Baseline Month. With respect to the increased percentage of 
US CADV, the volume requirements to reach the Step Up Tiers' pricing 
levels will adjust each calendar month based on the US CADV for that 
given month.
---------------------------------------------------------------------------

    As previously explained,\6\ the goal of the Step Up Tiers is to 
incent ETP Holders to increase the orders sent directly to NYSE Arca 
and therefore provide liquidity that supports the quality of price 
discovery and promotes market transparency. In the Step Up Tiers 
Release, the Exchange explained that the Step Up Tiers were expected to 
benefit ETP Holders whose increased order flow provided added levels of 
liquidity (thereby contributing to the depth and market quality of the 
Book) but who are still not eligible for Tier 1, 2 or 3, or Investor 
Tier 1 or 2.\7\ For similar reasons, the Exchange believes that raising 
the volume requirements needed to be eligible for each respective Step 
Up Tier will continue to incent ETP Holders to increase the orders sent 
directly to NYSE Arca and therefore provide liquidity that supports the 
quality of price discovery and promotes market transparency. The 
Exchange believes that this especially is the case given that the 
credits for Tape A and Tape C securities under Step Up Tier 1 
($0.00295) and Step Up Tier 2 ($0.0029) are substantially higher that 
the credits for Tape A and Tape C securities under the Basic Rates 
($0.0021) and Tier 3 ($0.0025).
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 64820 (July 6, 
2011), 76 FR 40974 (July 12, 2011) (SR-NYSEArca-2011-41) (``Step Up 
Tiers Release'').
    \7\ Id. at 76 FR 40975.
---------------------------------------------------------------------------

Cross-Asset Tier
    Currently, under the Cross-Asset Tier, ETP Holders and Market 
Makers that (1) provide liquidity of 0.45% or more of the US CADV per 
month in Tape A, Tape B, and Tape C securities combined, and (2) are 
affiliated with an NYSE Arca Options Trading Permit (``OTP'') Holder or 
OTP Firm that provides an average daily volume (``ADV'') of electronic 
posted Customer executions in Penny Pilot issues on NYSE Arca Options 
of at least 90,000 contracts receive a per share credit of $0.0030 for 
orders in Tape A, Tape B

[[Page 21445]]

and Tape C securities that provide liquidity to the Book. The Exchange 
proposes to replace the current fixed 90,000-contract requirement with 
a variable requirement of at least 0.95% of total Customer equity and 
exchange-traded fund (``ETF'') option (as discussed below, excluding 
mini options) ADV, as reported by the Options Clearing Corporation 
(``OCC'').\8\ The Exchange is proposing these changes to the Cross-
Asset Tier in order to make the eligibility requirement consistent with 
the Exchange's other variable eligibility requirements that are based 
on percentage of volume. The Exchange believes that using an 
eligibility requirement based on percentage of volume will better 
reflect fluctuations in trading volumes. In this respect, the Exchange 
notes that Equity and ETF Customer volume is a widely followed 
benchmark of industry volume and is indicative of industry market 
share. The Exchange also notes that based on current volume, the 0.95% 
volume requirement is consistent with the original 110,000 contract 
requirement which was lowered July 1, 2012 due to concerns over 
temporarily lower volume on NYSE Arca Options.\9\ The proposed changes 
to the Cross-Asset Tier would thus eliminate the need to modify a fixed 
number requirement because a threshold based on volume would 
automatically make the necessary adjustments.
---------------------------------------------------------------------------

    \8\ The OCC provides volume information in two product 
categories: equity and ETF volume and index volume, and the 
information can be filtered to show only Customer, firm, or market 
maker account type. Equity and ETF Customer volume numbers are 
available directly from the OCC each morning, or may be transmitted, 
upon request, free of charge from the Exchange. Total Industry 
Customer equity and ETF option ADV is comprised of those equity and 
ETF option contracts that clear in the customer account type at OCC, 
including Exchange-Traded Fund Shares, Trust Issued Receipts, 
Partnership Units, and Index-Linked Securities such as Exchange-
Traded Notes (see NYSE Arca Options Rule 5.3(g)-(j)), and does not 
include contracts that clear in either the firm or market maker 
account type at OCC or contracts overlying a security other than an 
equity or ETF security. The Exchange notes that there is one Penny 
Pilot issue, Mini NDX 100 Stock Index, that does not overlie an 
equity or ETF security that is eligible for the Customer posting 
credit. This Penny Pilot issue is not included in equity and ETF 
option ADV; however, the Exchange expects that the effect on the 
calculations for the qualification thresholds for tiered Customer 
posting credits to be negligible. Under the proposed rule change, 
Total Industry Customer equity and ETF option ADV will be that which 
is reported for the month by OCC in the month in which the credits 
may apply. The Exchange currently makes this data publicly available 
on a T+1 basis from a link at https://www.nyxdata.com/factbook.
    \9\ See Securities Exchange Act Release Nos. 67180 (June 11, 
2012), 77 FR 36027 (June 15, 2012) (SR-NYSEArca-2012-56) and 67424 
(July 12, 2012), 77 FR 42347 (July 18, 2012) (SR-NYSE-Arca-2012-70).
---------------------------------------------------------------------------

Retail Order Cross-Asset Tier
    The Exchange also is proposing a new Retail Cross-Asset Tier. Under 
the Retail Cross-Asset Tier, firms that execute at least 0.30% of US 
CADV in retail orders and are affiliated with an NYSE Arca OTP Holder 
or OTP Firm that provides an ADV of electronic posted Customer 
executions in customer penny pilot options of at least 0.50% of total 
Customer equity and ETF option (as discussed below, excluding mini 
options) ADV would qualify for a $.0034 rebate for retail orders that 
provide liquidity. The Retail Cross-Asset Tier would provide firms with 
a second way to qualify for the $0.0034 rebate (in addition to Investor 
Tier 1) using equity retail and options customer post. The Exchange 
notes that the $0.0034 rebate is $.0001 higher than the current Retail 
Order Tier in light of the tier including an additional options 
requirement and a higher equity retail requirement.
Sub-$1.00 Securities
    Currently, a fee of 0.2% of the total dollar value of the 
transaction is charged for transactions with a per share price below 
$1.00 that take liquidity from the Book. The Exchange proposes raising 
the fee from 0.2% of the total dollar value of the transaction to 0.3% 
of the total dollar value of the transaction. The Exchange is proposing 
these changes as they are consistent with similar fee amounts charged 
by other exchanges.\10\
---------------------------------------------------------------------------

    \10\ See, e.g., DirectEdge Fee Schedule, available at https://www.directedge.com/Membership/FeeSchedule/EDGXFeeSchedule.aspx; and 
Nasdaq Fee Schedule, available at https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2#execution.
---------------------------------------------------------------------------

Mini Options
    The Exchange proposes to amend the Fee Schedule to specifically 
exclude volume in mini options from contributing to the volume 
requirements for tiers with an options volume-related component. 
Specifically, the proposed amendment would exclude volume in mini 
options from contributing to the volume requirements in Tier 1 and the 
Cross-Asset Tier. Mini option volume similarly would be excluded from 
the proposed Retail Order Cross-Asset Tier discussed above.
    The proposed changes are not otherwise intended to address any 
other problem, and the Exchange is not aware of any significant problem 
that the affected market participants would have in complying with the 
proposed changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\11\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\12\ in 
particular, because it provides for the equitable allocation of 
reasonable dues, fees, and other charges among its members, issuers and 
other persons using its facilities and does not unfairly discriminate 
between customers, issuers, brokers or dealers.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed amendments to the Step Up 
Tiers that raise the volume requirements needed to be eligible for each 
respective tier are reasonable because the proposed changes are 
designed to further incent ETP Holders to increase the orders sent 
directly to NYSE Arca and therefore provide liquidity that supports the 
quality of price discovery and promotes market transparency. The 
Exchange believes that this is especially the case given that the 
credits for Tape A and Tape C securities under Step Up Tier 1 
($0.00295) and Step Up Tier 2 ($0.0029) are substantially higher than 
the credits for Tape A and Tape C securities under Basic Rates 
($0.0021) and Tier 3 ($0.0025). The Exchange further believes that the 
proposed amendments to the Step Up Tiers are equitable and not unfairly 
discriminatory because they will benefit ETP Holders whose increased 
order flow provides added levels of liquidity (thereby contributing to 
the depth and market quality of the Book), but who may still not be 
eligible for Tier 1, 2 or 3, or other tiers. Moreover, the Step Up 
Tiers are available for all ETP Holders to satisfy.
    The Exchange believes that the proposal to amend the Cross-Asset 
Tier to replace the current fixed benchmark needed to be eligible for 
the tier with a variable benchmark based on a percentage of volume is 
reasonable because it will make the eligibility requirement consistent 
with the Exchange's other variable eligibility requirements that also 
are based on percentage of volume. In addition, the Exchange believes 
that expanding the basis for the Cross-Asset Tier to include all 
Customer equity and ETF options ADV will better reflect the correlation 
between options trading and the underlying securities, which trade at 
the Exchange, including ETFs. In this respect, the Exchange notes that 
Equity and ETF Customer volume is a widely followed benchmark of 
industry volume and is indicative of industry market

[[Page 21446]]

share.\13\ In addition, the Exchange believes that the proposed 
amendments to the Cross-Asset Tier are equitable and not unfairly 
discriminatory because they will apply to all ETP Holders and Market 
Makers.
---------------------------------------------------------------------------

    \13\ See supra note 8.
---------------------------------------------------------------------------

    Moreover, the Cross-Asset Tier is available for all ETP Holders to 
satisfy, except for those ETP Holders that are not affiliated with an 
NYSE Arca Options OTP Holder or OTP Firm. However, the Exchange notes 
that ETP Holders that are not affiliated with an NYSE Arca Options OTP 
Holder or OTP Firm are still eligible for the $0.0030 Cross-Asset Tier 
rate when they qualify for one of the other Tiers described in the Fee 
Schedule (e.g., Tier 1).
    The Exchange believes that the proposal to add the new Retail Order 
Cross-Asset Tier is reasonable because it would provide firms with a 
way in which to qualify for $0.0034 rebate through equity retail and 
options customer orders. The Exchange further believes that the 
proposed Retail Order Cross-Asset Tier is equitable and not unfairly 
discriminatory because a firm that does not submit options orders can 
still be eligible for the $0.0034 rebate available from Investor Tier 
1.
    The Exchange believes that the proposal to raise the fee charged 
for transactions with a per share price below $1.00 that take liquidity 
from the Book from 0.2% to 0.3% of the total dollar value of the 
transaction is reasonable because the proposed new rate is consistent 
with similar fee amounts charged by other exchanges.\14\ The Exchange 
further believes that the proposed fee increase is equitable and not 
unfairly discriminatory because it will apply to all transactions that 
take liquidity from the Exchange in securities with a per share price 
below $1.00.
---------------------------------------------------------------------------

    \14\ See supra note 10.
---------------------------------------------------------------------------

    Finally, the Exchange believes that the proposal to exclude volume 
in mini options from contributing to the option volume requirements for 
Tier 1, the Cross-Asset Tier and the proposed Retail Order Cross-Asset 
Tier is reasonable because the options volume requirement currently in 
place in the fee schedule were established prior to the existence of 
mini options, a new product on NYSE Arca Options. Because mini options 
are such a new product, the Exchange believes it is reasonable to 
exclude mini option volume in this way. The Exchange further believes 
that the proposal to exclude volume in mini options from the tiers 
mentioned above is equitable and not unfairly discriminatory because 
all market participants that are eligible for the affected tiers will 
be similarly situated.

 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. In particular, the proposed 
amendments to the Step Up Tiers that raise the volume requirement 
needed to be eligible for each respective tier are designed to incent 
ETP Holders and Market Makers to increase the volume of orders sent 
directly to NYSE Arca and therefore provide liquidity that supports the 
quality of price discovery and promotes market transparency.
    The proposal to amend the Cross-Asset Tier to replace the numeric 
benchmark needed to be eligible for the tier with a benchmark based on 
a percentage of volume will not place an undue burden on competition 
because it will apply uniformly to all ETP Holders and Market Makers. 
The proposal to add the new Retail Order Cross-Asset Tier will not 
place an undue burden on competition because all firms can be eligible 
for the $0.0034 credit, as those firms that do not submit options 
orders can still qualify to receive the $0.0034 rebate by meeting the 
requirements of Investor Tier 1.
    The proposal to raise the fee charged for transactions with a per 
share price below $1.00 from 0.2% to 0.3% of the total value of orders 
that take liquidity from the Book is consistent with similar fees 
charged by other exchanges. Finally, the proposal to exclude volume in 
mini options from contributing to the option volume requirements for 
Tier 1, the Cross-Asset Tier and the proposed Retail Order Cross-Asset 
Tier will not place an undue burden on competition because all market 
participants will be similarly situated in their inability to the use 
volume in mini options to satisfy the options volume requirements of 
the affected tiers.
    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 change reflects this competitive environment.

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)(ii) of the Act \15\ because it establishes a due, 
fee, or other charge imposed by NYSE Arca. At any time within 60 days 
of the filing of such proposed rule change, the Securities and Exchange 
Commission (``Commission'') summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-2013-32 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-NYSEArca-2013-32. 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

[[Page 21447]]

(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 offices of NYSE Arca. 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-2013-32, and should be submitted on or before 
May 1, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

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

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-08385 Filed 4-9-13; 8:45 am]
BILLING CODE 8011-01-P
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