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 To Change the Monthly Fees for the Use of Certain Ports, 40786-40788 [2013-16233]

Download as PDF 40786 Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Notices A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION [Release No. 34–69904; File No. SR– NYSEArca–2013–64] 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 To Change the Monthly Fees for the Use of Certain Ports July 1, 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 June 28, 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 solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services (the ‘‘Fee Schedule’’) to change the monthly fees for the use of certain ports. The Exchange proposes to implement the fee changes on July 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. emcdonald on DSK67QTVN1PROD with NOTICES 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. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 VerDate Mar<15>2010 16:27 Jul 05, 2013 Jkt 229001 1. Purpose The Exchange proposes to amend the NYSE Arca Equities Fee Schedule to change the monthly fees for the use of certain ports. The Exchange proposes to implement the fee changes on July 1, 2013.4 The Exchange currently makes ports available that provide connectivity to the Exchange’s trading systems (i.e., ports for entry of orders and/or quotes (‘‘order/quote entry ports’’)) and charges $200 per port per month.5 The Fee Schedule currently provides that no fees apply to ports in the backup datacenter that are not utilized during the relevant month. The Exchange proposes that the $200 fee per port per month would apply to users with five or fewer order/quote entry ports and that the fee for users with more than five order/quote entry ports would be $500 per port per month, including for the first five ports.6 The Exchange is proposing this change in order to permit the Exchange to offset, in part, its infrastructure costs associated with making such ports available. The proposed change would also encourage users to become more efficient with, and reduce the number of, their order/quote ports, thereby resulting in a corresponding increase in the efficiency that the Exchange would be able to realize with respect to managing its own infrastructure. In this regard, as users decrease the number of order/quote ports that they utilize, the Exchange would similarly be able to decrease the amount of its hardware that it is required to support to interface with such ports. The Exchange also proposes to add text to the Fee Schedule to add further 4 The Exchange notes that billing for ports is based on the number of ports on the third business day prior to the end of the month. In addition, the level of activity with respect to a particular port does not affect the assessment of monthly fees, such that, except for ports that are not charged and ports considered established for backup purposes, even if a particular port is not used, a port fee still applies. Additionally, separate port fees are charged for an order/quote entry port that is authorized for both equity and option order/quote entry. 5 The Fee Schedule provides that users of the Exchange’s Risk Management Gateway service (‘‘RMG’’) are not charged for order/quote entry ports if such ports are designated as being used for RMG purposes. See Securities Exchange Act Release No. 68227 (November 14, 2012), 77 FR 69679 (November 20, 2012) (SR–NYSEArca–2012–123). 6 For example, a user with five ports would be charged $200 per port per month for a total of $1,000 per month for all five ports. A user with six ports would be charged $500 per port per month, including for the first five ports, for a total of $3,000 per month for all six ports. PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 detail about charges for ports in the backup datacenter. Specifically, the Exchange proposes to add text stating that no fee will apply to ports in the backup datacenter that are utilized when the primary datacenter is unavailable but that a fee will apply if such ports are utilized when the primary datacenter is available.7 The Exchange notes that the proposed change is not otherwise intended to address any other issues, and the Exchange is not aware of any problems that member organizations would have in complying with the proposed change. The Exchange believes that it is subject to significant competitive forces, as described below in the Exchange’s statement regarding the burden on competition. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,8 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,9 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 change to the monthly rates is reasonable because the fees charged for order/quote entry ports are expected to permit the Exchange to offset, in part, its infrastructure costs associated with making such ports available, including costs based on gateway software and hardware enhancements and resources dedicated to gateway development, quality assurance, and support. In this regard, the Exchange believes that the proposed fees are competitive with those charged by other exchanges.10 The proposed change is also reasonable because the proposed per port rates would encourage users to become more efficient with, and reduce the number of, ports used for order/quote entry, thereby resulting in a corresponding 7 The Exchange notes that it monitors usage of backup ports for billing purposes. Since the primary datacenter in Mahwah, New Jersey, was established, it has always been available, and the backup datacenter has not yet been utilized for disaster recovery. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(4) and (5). 10 For example, the charge on the NASDAQ Stock Market LLC (‘‘NASDAQ’’) for a FIX Trading Port is $500 per port per month. See Nasdaq Rule 7015. A separate charge for Pre-Trade Risk Management ports also is applicable, which ranges from $400 to $600 and is capped at $25,000 per firm per month. See Nasdaq Rule 7016. EDGA Exchange, Inc. (‘‘EDGA’’) and EDGX Exchange, Inc. (‘‘EDGX’’) also each charge $500 per port per month. E:\FR\FM\08JYN1.SGM 08JYN1 emcdonald on DSK67QTVN1PROD with NOTICES Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Notices increase in the efficiency that the Exchange would be able to realize with respect to managing its own infrastructure. The Exchange also believes that these changes to the fees are equitable and not unfairly discriminatory because they would apply to all users of order/quote entry ports on the Exchange, subject to the exceptions noted above.11 The Exchange also believes that it is equitable and not unfairly discriminatory to charge a higher fee to users with more than five order/quote entry ports, as compared to users with five or fewer order/quote entry ports, because the Exchange believes that users with more than five order/quote entry ports would be incentivized to become more efficient with their utilization of ports.12 The Exchange has considered multiple factors in proposing the tiered approach to order/quote entry port pricing, including that the fee increase would occur once a user has more than five order/quote entry ports. The Exchange believes that this approach to pricing is equitable and not unfairly discriminatory, including for the following reasons. Specifically, the Exchange believes that there is a correlation between the number of order/quote entry ports utilized by users and the level of trading volume sent to the Exchange by such users, such that a user with significant trading activity sent to the Exchange likely utilizes a greater number of order/quote entry ports than a user with minimal trading activity sent to the Exchange. However, despite this correlation, and regardless of the amount of activity a user sends to the Exchange via its order/quote entry ports, or the size of the firm, every user that connects its systems to the Exchange’s trading systems requires at least one port for order/quote entry. Many users also maintain a certain number of additional order/quote entry ports for redundancy and/or hardware configuration purposes. These users have a limited opportunity to become more efficient with their use of ports. Accordingly, the Exchange believes that five is a reasonable number of ports that would permit a user that sends a lesser amount of trading activity to the Exchange to manage its ports in such a way that it could sufficiently address these redundancy and configuration concerns without crossing the threshold for which higher fees apply. 11 See supra note 5. Exchange also notes that at least one of its competitors charges different rates depending on the number of ports utilized. Specifically, EDGA and EDGX each provide the first five ports for free. 12 The VerDate Mar<15>2010 16:27 Jul 05, 2013 Jkt 229001 In this regard, the Exchange anticipates that, as a result of the proposed increase of the order/quote entry port fee under the tiered structure, users would become more efficient with their utilization of order/quote entry ports and would decrease the number of order/quote entry ports so as to qualify for the $200 rate per port. Such a decrease in order/quote entry port use would result in a corresponding decrease in the infrastructure that the Exchange is required to support for connectivity to its trading systems and a decrease in the costs related thereto. The Exchange also believes that the proposed change to the Fee Schedule concerning backup datacenter ports is reasonable because it will result in ETP Holders not being charged when the ports are solely used for backup purposes, which the Exchange believes will encourage appropriate business continuity planning. However, if a port in the backup datacenter were used for quote or order entry when the primary datacenter was available (i.e., not for backup purposes), then it would be charged like any other port. The Exchange believes that this is also equitable and not unfairly discriminatory because it would apply equally to all users that request ports in the backup datacenter and, furthermore, because it would contribute to the fair, efficient, and appropriate use of the backup datacenter. For the reasons above, the Exchange believes that the proposal is consistent with the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,13 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. Instead, the Exchange believes that the proposed change will permit the Exchange to set fees for ports that are competitive with those charged by other exchanges.14 Moreover, the Exchange believes that charging different rates for users with five or fewer order/quote entry ports as compared to users with more than five ports would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act because the Exchange believes that a reduction in the number of order/quote entry ports would result in a decrease in the infrastructure that the Exchange is required to support for connectivity to PO 00000 its trading systems. This would also provide incentive for users to become more efficient with their use of ports and could therefore result in such users becoming more competitive due to decreased costs. In this regard, the Exchange notes that at least one of the Exchange’s competitors charges different rates depending on the number of ports utilized.15 Additionally, adding detail to the Fee Schedule to provide that no fee will apply to ports in the backup datacenter that are utilized when the primary data center is unavailable, but that a fee will apply when a port in the backup datacenter is utilized when the primary datacenter is available, will provide better notice to ETP Holders and encourage them to only use the backup datacenter for its intended purpose, which is to help preserve business continuity and competition if the Exchange’s primary datacenter were unavailable. Finally, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive. 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. 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 the Exchange. 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 15 See supra note 12. U.S.C. 78s(b)(3)(A). 17 17 CFR 240.19b–4(f)(2). 13 15 U.S.C. 78f(b)(8). 14 See supra note 10. Frm 00100 Fmt 4703 16 15 Sfmt 4703 40787 E:\FR\FM\08JYN1.SGM 08JYN1 40788 Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Notices the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 18 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: emcdonald on DSK67QTVN1PROD with NOTICES 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–2013–64 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–2013–64. 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 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. 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 18 15 Number SR–NYSEArca–2013–64, and should be submitted on or before July 29, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Elizabeth M. Murphy, Secretary. [FR Doc. 2013–16233 Filed 7–5–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–69903; File No. SR–CHX– 2013–12] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Single-Sided Order Fees and Credits and the Order Cancellation Fee July 1, 2012. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on June 26, 2013, the Chicago Stock Exchange, Inc. (‘‘CHX’’ or ‘‘Exchange’’) 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. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change CHX proposes to amend its Schedule of Participant Fees and Assessments (the ‘‘Fee Schedule’’) to amend the Single-Sided Order Fees and Credits and the Order Cancellation Fee. The Exchange proposes to implement the fee changes on July 1, 2013. The text of this proposed rule change is available on the Exchange’s Web site at https:// www.chx.com/rules/ proposed_rules.htm, 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, U.S.C. 78s(b)(2)(B). VerDate Mar<15>2010 16:27 Jul 05, 2013 Jkt 229001 PO 00000 19 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. Frm 00101 Fmt 4703 Sfmt 4703 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 Section E of the Fee Schedule, effective July 1, 2013. Specifically, the Exchange proposes to eliminate references in Sections E.1 and E.8 to ‘‘Derivative Securities Products’’ (‘‘DSPs’’) and ‘‘Non-Derivative Securities Products’’ (‘‘Non-DSPs’’) and to eliminate references in Section E.1 to ‘‘Regular’’ Trading Session and ‘‘Early and Late’’ Trading Sessions. Moreover, the Exchange proposes to amend Section E.1 to set the liquidity providing fee for all Tape A, B, and C securities priced greater than or equal to $1.00/share at $0.00250/share and the Liquidity Removing Fee for all Tape A, B, and C securities priced greater than or equal to $1.00/share at $0.0030/share. Current Section E.1 On November 2, 2012, the Exchange adopted current Section E.1 of the Fee Schedule,4 amended in February 2013,5 which permits twenty-four (24) distinct sets of credits and fees. Specifically, the Section E.1 fee table distinguishes between ‘‘Regular’’ Trading Session and ‘‘Early and Late’’ Trading Sessions and divides each trading session into Tape A, B, and C securities. Moreover, each Tape is divided into DSPs and NonDSPs and each set of DSPs and NonDSPs are further divided into securities priced greater than or equal to $1.00/ share or those that are priced less than $1.00/share. With respect to the current values of the credits and fees of Section E.1, for transactions in Tape A and Tape B NonDSPs priced greater than or equal to $1.00/share that are executed in the Regular Trading Session, the current Fee Schedule gives no credit for providing liquidity, and charges a $0.0030/share Liquidity Removing Fee. For transactions in Tape A and Tape B DSPs 4 See Securities Exchange Act Release No. 68182 (November 8, 2012), 77 FR 68167 (November 15, 2012) (SR–CHX–2012–16). 5 See Securities Exchange Act Release No. 68894 (February 15, 2013), 78 FR 11258 (February 15, 2013) (SR–CHX–2013–06). E:\FR\FM\08JYN1.SGM 08JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 78, Number 130 (Monday, July 8, 2013)]
[Notices]
[Pages 40786-40788]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-16233]

[[Page 40786]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69904; File No. SR-NYSEArca-2013-64]

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 To
Change the Monthly Fees for the Use of Certain Ports

July 1, 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 June 28, 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 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 amend the NYSE Arca Equities Schedule of
Fees and Charges for Exchange Services (the ``Fee Schedule'') to change
the monthly fees for the use of certain ports. The Exchange proposes to
implement the fee changes on July 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 the NYSE Arca Equities Fee Schedule
to change the monthly fees for the use of certain ports. The Exchange
proposes to implement the fee changes on July 1, 2013.\4\
---------------------------------------------------------------------------

\4\ The Exchange notes that billing for ports is based on the
number of ports on the third business day prior to the end of the
month. In addition, the level of activity with respect to a
particular port does not affect the assessment of monthly fees, such
that, except for ports that are not charged and ports considered
established for backup purposes, even if a particular port is not
used, a port fee still applies. Additionally, separate port fees are
charged for an order/quote entry port that is authorized for both
equity and option order/quote entry.
---------------------------------------------------------------------------

The Exchange currently makes ports available that provide
connectivity to the Exchange's trading systems (i.e., ports for entry
of orders and/or quotes (``order/quote entry ports'')) and charges $200
per port per month.\5\ The Fee Schedule currently provides that no fees
apply to ports in the backup datacenter that are not utilized during
the relevant month.
---------------------------------------------------------------------------

\5\ The Fee Schedule provides that users of the Exchange's Risk
Management Gateway service (``RMG'') are not charged for order/quote
entry ports if such ports are designated as being used for RMG
purposes. See Securities Exchange Act Release No. 68227 (November
14, 2012), 77 FR 69679 (November 20, 2012) (SR-NYSEArca-2012-123).
---------------------------------------------------------------------------

The Exchange proposes that the $200 fee per port per month would
apply to users with five or fewer order/quote entry ports and that the
fee for users with more than five order/quote entry ports would be $500
per port per month, including for the first five ports.\6\ The Exchange
is proposing this change in order to permit the Exchange to offset, in
part, its infrastructure costs associated with making such ports
available. The proposed change would also encourage users to become
more efficient with, and reduce the number of, their order/quote ports,
thereby resulting in a corresponding increase in the efficiency that
the Exchange would be able to realize with respect to managing its own
infrastructure. In this regard, as users decrease the number of order/
quote ports that they utilize, the Exchange would similarly be able to
decrease the amount of its hardware that it is required to support to
interface with such ports.
---------------------------------------------------------------------------

\6\ For example, a user with five ports would be charged $200
per port per month for a total of $1,000 per month for all five
ports. A user with six ports would be charged $500 per port per
month, including for the first five ports, for a total of $3,000 per
month for all six ports.
---------------------------------------------------------------------------

The Exchange also proposes to add text to the Fee Schedule to add
further detail about charges for ports in the backup datacenter.
Specifically, the Exchange proposes to add text stating that no fee
will apply to ports in the backup datacenter that are utilized when the
primary datacenter is unavailable but that a fee will apply if such
ports are utilized when the primary datacenter is available.\7\
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\7\ The Exchange notes that it monitors usage of backup ports
for billing purposes. Since the primary datacenter in Mahwah, New
Jersey, was established, it has always been available, and the
backup datacenter has not yet been utilized for disaster recovery.
---------------------------------------------------------------------------

The Exchange notes that the proposed change is not otherwise
intended to address any other issues, and the Exchange is not aware of
any problems that member organizations would have in complying with the
proposed change.
The Exchange believes that it is subject to significant competitive
forces, as described below in the Exchange's statement regarding the
burden on competition.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\8\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\9\ 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.
---------------------------------------------------------------------------

\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

The Exchange believes that the proposed change to the monthly rates
is reasonable because the fees charged for order/quote entry ports are
expected to permit the Exchange to offset, in part, its infrastructure
costs associated with making such ports available, including costs
based on gateway software and hardware enhancements and resources
dedicated to gateway development, quality assurance, and support. In
this regard, the Exchange believes that the proposed fees are
competitive with those charged by other exchanges.\10\ The proposed
change is also reasonable because the proposed per port rates would
encourage users to become more efficient with, and reduce the number
of, ports used for order/quote entry, thereby resulting in a
corresponding

[[Page 40787]]

increase in the efficiency that the Exchange would be able to realize
with respect to managing its own infrastructure.
---------------------------------------------------------------------------

\10\ For example, the charge on the NASDAQ Stock Market LLC
(``NASDAQ'') for a FIX Trading Port is $500 per port per month. See
Nasdaq Rule 7015. A separate charge for Pre-Trade Risk Management
ports also is applicable, which ranges from $400 to $600 and is
capped at $25,000 per firm per month. See Nasdaq Rule 7016. EDGA
Exchange, Inc. (``EDGA'') and EDGX Exchange, Inc. (``EDGX'') also
each charge $500 per port per month.
---------------------------------------------------------------------------

The Exchange also believes that these changes to the fees are
equitable and not unfairly discriminatory because they would apply to
all users of order/quote entry ports on the Exchange, subject to the
exceptions noted above.\11\ The Exchange also believes that it is
equitable and not unfairly discriminatory to charge a higher fee to
users with more than five order/quote entry ports, as compared to users
with five or fewer order/quote entry ports, because the Exchange
believes that users with more than five order/quote entry ports would
be incentivized to become more efficient with their utilization of
ports.\12\
---------------------------------------------------------------------------

\11\ See supra note 5.
\12\ The Exchange also notes that at least one of its
competitors charges different rates depending on the number of ports
utilized. Specifically, EDGA and EDGX each provide the first five
ports for free.
---------------------------------------------------------------------------

The Exchange has considered multiple factors in proposing the
tiered approach to order/quote entry port pricing, including that the
fee increase would occur once a user has more than five order/quote
entry ports. The Exchange believes that this approach to pricing is
equitable and not unfairly discriminatory, including for the following
reasons. Specifically, the Exchange believes that there is a
correlation between the number of order/quote entry ports utilized by
users and the level of trading volume sent to the Exchange by such
users, such that a user with significant trading activity sent to the
Exchange likely utilizes a greater number of order/quote entry ports
than a user with minimal trading activity sent to the Exchange.
However, despite this correlation, and regardless of the amount of
activity a user sends to the Exchange via its order/quote entry ports,
or the size of the firm, every user that connects its systems to the
Exchange's trading systems requires at least one port for order/quote
entry. Many users also maintain a certain number of additional order/
quote entry ports for redundancy and/or hardware configuration
purposes. These users have a limited opportunity to become more
efficient with their use of ports. Accordingly, the Exchange believes
that five is a reasonable number of ports that would permit a user that
sends a lesser amount of trading activity to the Exchange to manage its
ports in such a way that it could sufficiently address these redundancy
and configuration concerns without crossing the threshold for which
higher fees apply.
In this regard, the Exchange anticipates that, as a result of the
proposed increase of the order/quote entry port fee under the tiered
structure, users would become more efficient with their utilization of
order/quote entry ports and would decrease the number of order/quote
entry ports so as to qualify for the $200 rate per port. Such a
decrease in order/quote entry port use would result in a corresponding
decrease in the infrastructure that the Exchange is required to support
for connectivity to its trading systems and a decrease in the costs
related thereto.
The Exchange also believes that the proposed change to the Fee
Schedule concerning backup datacenter ports is reasonable because it
will result in ETP Holders not being charged when the ports are solely
used for backup purposes, which the Exchange believes will encourage
appropriate business continuity planning. However, if a port in the
backup datacenter were used for quote or order entry when the primary
datacenter was available (i.e., not for backup purposes), then it would
be charged like any other port. The Exchange believes that this is also
equitable and not unfairly discriminatory because it would apply
equally to all users that request ports in the backup datacenter and,
furthermore, because it would contribute to the fair, efficient, and
appropriate use of the backup datacenter.
For the reasons above, the Exchange believes that the proposal is
consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

In accordance with Section 6(b)(8) of the Act,\13\ 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. Instead, the Exchange believes that the
proposed change will permit the Exchange to set fees for ports that are
competitive with those charged by other exchanges.\14\ Moreover, the
Exchange believes that charging different rates for users with five or
fewer order/quote entry ports as compared to users with more than five
ports would not impose any burden on competition that is not necessary
or appropriate in furtherance of the purposes of the Act because the
Exchange believes that a reduction in the number of order/quote entry
ports would result in a decrease in the infrastructure that the
Exchange is required to support for connectivity to its trading
systems. This would also provide incentive for users to become more
efficient with their use of ports and could therefore result in such
users becoming more competitive due to decreased costs. In this regard,
the Exchange notes that at least one of the Exchange's competitors
charges different rates depending on the number of ports utilized.\15\
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\13\ 15 U.S.C. 78f(b)(8).
\14\ See supra note 10.
\15\ See supra note 12.
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Additionally, adding detail to the Fee Schedule to provide that no
fee will apply to ports in the backup datacenter that are utilized when
the primary data center is unavailable, but that a fee will apply when
a port in the backup datacenter is utilized when the primary datacenter
is available, will provide better notice to ETP Holders and encourage
them to only use the backup datacenter for its intended purpose, which
is to help preserve business continuity and competition if the
Exchange's primary datacenter were unavailable.
Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive. 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.

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 the Exchange.
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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

[[Page 40788]]

the purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings under Section 19(b)(2)(B) \18\
of the Act to determine whether the proposed rule change should be
approved or disapproved.
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\18\ 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-2013-64 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-2013-64. 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 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. 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-2013-64, and should be submitted on or before
July 29, 2013.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-16233 Filed 7-5-13; 8:45 am]
BILLING CODE 8011-01-P

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