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 Add a New Pricing Tier Applicable to Orders That Add Liquidity on the Exchange, 8524-8527 [2014-03008]

Download as PDF 8524 Federal Register / Vol. 79, No. 29 / Wednesday, February 12, 2014 / Notices plan through the end of Regular Trading Hours. Accordingly, the Commission finds that good cause exists, consistent with Section 6(b)(5) of the Act, to approve the filing, as modified by Amendment No. 1, on an accelerated basis. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment No. 1 is consistent with the Act. Comments may be submitted by any of the following methods: mstockstill on DSK4VPTVN1PROD with NOTICES 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– BATS–2013–066 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–BATS–2013–066. 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 the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–BATS– 2013–066, and should be submitted on or before March 5, 2014. VerDate Mar<15>2010 17:11 Feb 11, 2014 Jkt 232001 V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,47 that the proposed rule change, SR–BATS–2013– 066, as modified by amendment No. 1, be, and hereby is, approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.48 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–03005 Filed 2–11–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71503; File No. SR– NYSEArca–2014–13] 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 Add a New Pricing Tier Applicable to Orders That Add Liquidity on the Exchange February 6, 2014. 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 January 28, 2014, 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 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 (‘‘Fee Schedule’’) to add a new pricing tier applicable to orders that add liquidity on the Exchange. The Exchange proposes to implement the fee change on February 1, 2014. The text of the proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of 47 15 U.S.C. 78s(b)(2). 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. 48 17 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the Fee Schedule to add a new pricing tier applicable to orders that add liquidity on the Exchange. The Exchange proposes to implement the fee change effective February 1, 2014. The Exchange proposes to add a new ‘‘Step Up Tier 3’’ applicable to an ETP Holder, including a Market Maker, that on a daily basis, measured monthly, directly executes providing volume (‘‘Adding ADV’’) during the billing month that is both (i) at least 0.20% of U.S. consolidated average daily volume (‘‘U.S. CADV’’) for the billing month and (ii) at least 0.125% taken as a percentage of U.S. CADV for the billing month over the ETP Holder’s December 2013 Adding ADV taken as a percentage of U.S. CADV in December 2013 (‘‘Baseline % CADV’’).4 For example, if U.S. CADV during the billing month is 7 billion shares, an ETP Holder’s Adding ADV during the billing month would first need to be at least 14 million shares (i.e., at least 0.20% of U.S. CADV for the billing month). If U.S. CADV in December 2013 was 6 billion shares and an ETP Holder’s December 2013 Adding ADV was 6 million shares, the ETP Holder’s Baseline % CADV would be 0.10% (i.e., the ETP Holder’s December 2013 Adding ADV taken as a percentage 4 U.S. CADV means United States Consolidated Average Daily Volume for transactions reported to the Consolidated Tape, excluding odd lots through January 31, 2014 (except for purposes of Lead Market Maker pricing), and excludes volume on days when the market closes early. Transactions that are not reported to the Consolidated Tape are not included in U.S. CADV. An ETP Holder with zero Adding ADV in December 2013 (e.g., a firm that became an ETP Holder after December 2013) would be treated as having Baseline % CADV of zero for purposes of the proposed Step Up Tier 3. E:\FR\FM\12FEN1.SGM 12FEN1 Federal Register / Vol. 79, No. 29 / Wednesday, February 12, 2014 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES of U.S. CADV in December 2013). The ETP Holder’s Adding ADV during the billing month would therefore need to be at least 0.225% of U.S. CADV for the billing month (i.e., Baseline % CADV of 0.10% plus at least 0.125%), which would equate to at least 15.75 million shares of Adding ADV and would therefore be a ‘‘step up’’ of 9.75 million shares. A qualifying ETP Holder would receive a credit of $0.0004 per share for (i) Adding ADV in Tape A securities during the billing month taken as a percentage of U.S. CADV in Tape A securities in the billing month in excess of the Baseline % CADV in Tape A securities and (ii) Adding ADV in Tape C securities during the billing month taken as a percentage of U.S. CADV in Tape C securities in the billing month in excess of the Baseline % CADV in Tape C securities.5 Continuing with the example above, if the ETP Holder’s Adding ADV during the billing month was the minimum of 15.75 million shares identified above, and if 8 million shares consisted of Tape A securities, and further if 3.2 billion of the 7 billion shares of overall U.S. CADV during the billing month were in Tape A securities, then the ETP Holder’s Adding ADV in Tape A securities taken as a percentage of U.S. CADV in Tape A securities during the billing month would be 0.25% (i.e., 8 million divided by 3.2 billion). Also, assume that in December 2013 4.5 million shares of the ETP Holder’s Baseline % CADV consisted of Tape A securities and that 3 billion of the 6 billion shares of overall U.S. CADV in December 2013 were in Tape A securities. The ETP Holder’s Baseline % CADV in Tape A securities would be 0.15% (i.e., 4.5 million divided by 3 billion). The excess in the billing month over December 2013 would be 0.10% (i.e., 0.25% minus 0.15%). 0.10% of U.S. CADV in Tape A securities for the billing month would be 3.2 million shares (i.e., 0.01 multiplied by 3.2 billion shares U.S. CADV in Tape A securities). Therefore, an average daily credit of $1,280 would apply under proposed Step Up Tier 3 for the ETP Holder’s Tape A securities during the billing month (i.e., $0.0004 multiplied by 3.2 million), which would be a monthly credit of $26,880 (with 21 trading days in the month). The same 5 Orders that provide liquidity in Tape B securities would count toward the ETP Holder’s qualification for the proposed Step Up Tier 3, but such orders would not be eligible for a credit under the proposed Step Up Tier 3. The Exchange’s Fee Schedule currently already includes a ‘‘Tape B Step Up Tier’’ that provides for a similar credit of $0.0004 per share only for orders in Tape B securities that provide liquidity. VerDate Mar<15>2010 17:11 Feb 11, 2014 Jkt 232001 analysis would be performed with respect to the ETP Holder’s Tape C securities. The credits provided under the proposed Step Up Tier 3 would be in addition to the ETP Holder’s Tiered or Basic Rate credit(s); provided, however, that such combined credit would not be permitted to exceed $0.0034 per share. For example, an ETP Holder that qualifies for Investor Tier 3 receives a credit of $0.0032 under Investor Tier 3.6 If this same ETP Holder also qualifies for the proposed Step Up Tier 3, its orders (i) in Tape A securities that are eligible for the Step Up Tier 3 credit would receive an additional credit of $0.0002 (i.e., $0.0032 under Investor Tier 3 plus a remaining $0.0002 under proposed Step Up Tier 3), and (ii) in Tape C securities that are eligible for the Step Up Tier 3 credit would receive an additional credit of $0.0002 (i.e., $0.0032 under Investor Tier 3 plus a remaining $0.0002 under proposed Step Up Tier 3). Lead Market Makers (‘‘LMMs’’) on the Exchange could not qualify for the proposed new Step Up Tier 3, nor would LMM provide volume apply to the applicable volume requirements proposed for the new Step Up Tier 3.7 Retail Order Tier and Retail Order Cross-Asset Tier ETP Holders and Market Makers also could not qualify for the proposed new Step Up Tier 3, nor would Retail Order provide volume apply to the applicable volume requirements.8 Finally, for ETP Holders that qualify for the proposed new Step Up Tier 3, Tiered or Basic Rates would apply to all other fees and credits, based on a firm’s qualifying levels, and if an ETP Holder qualifies for more than one tier in the Fee Schedule, the Exchange would apply the most favorable rate available under such tiers. The proposed change is not otherwise intended to address any other issues, and the Exchange is not aware of any problems that ETP Holders would have in complying with the proposed change. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with 6 Investor Tier 3 requires that an ETP Holder (1) provide liquidity of 0.60% or more of the U.S. CADV per month, (2) maintain a ratio of cancelled orders to total orders less than 30%, excluding Immediate-or-Cancel orders, and (3) maintain a ratio of executed liquidity adding volume-to-total volume of greater than 50%. 7 The Exchange’s Fee Schedule currently already includes separate pricing applicable only to LMMs. 8 The Retail Order Tier and Retail Order Cross Asset Tier currently already provide for credits applicable only to Retail Orders. PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 8525 Section 6(b) of the Act,9 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,10 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 is reasonable because the proposed Step Up Tier 3 credit would encourage ETP Holders to send additional orders to the Exchange across all Tapes for execution in order to qualify for an incrementally higher credit for such executions in Tape A and Tape C securities that add liquidity on the Exchange. In this regard, the Exchange believes that this may incentivize ETP Holders to increase the orders sent directly to the Exchange and therefore provide liquidity that supports the quality of price discovery and promotes market transparency. The Exchange believes that the rate proposed for the Step Up Tier 3 credit is reasonable because it is directly related to an ETP Holder’s level of executions in Tape A and Tape C Securities during the month. This rate is also within the range of other credits available to ETP Holders that execute providing volume during a billing month that is greater than during a particular ‘‘baseline’’ month.11 The Exchange believes that the proposed Step Up Tier 3 credit is also equitable and not unfairly discriminatory because it would incentivize ETP Holders to submit orders in securities across all Tapes to the Exchange and would result in a credit that is reasonably related to an exchange’s market quality that is associated with higher volumes. Moreover, like existing pricing on the Exchange that is tied to ETP Holder volume levels, the Exchange believes that the proposed Step Up Tier 3 credit is equitable and not unfairly discriminatory because it would be available for all ETP Holders, including Market Makers, on an equal and nondiscriminatory basis. The Exchange also believes that it is equitable and not unfairly discriminatory that orders that provide liquidity in Tape B securities would not be eligible for a credit under the proposed Step Up Tier 3 because the Exchange’s Fee Schedule currently already includes a ‘‘Tape B Step Up Tier’’ that provides for a similar credit 9 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 11 See, e.g., the ‘‘Tape B Step Up Tier,’’ for which a corresponding credit of $0.0004 applies. 10 15 E:\FR\FM\12FEN1.SGM 12FEN1 8526 Federal Register / Vol. 79, No. 29 / Wednesday, February 12, 2014 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES of $0.0004 per share only for orders in Tape B securities that provide liquidity. The Exchange also believes that it is equitable and not unfairly discriminatory that the proposed $0.0004 credit under the Step Up Tier 3 would not be permitted to exceed $0.0034 per share when combined with other credits available to ETP Holders under other tiers specified in the Fee Schedule because the ETP Holders that qualify for these specified tiers would already receive a higher credit for such executions. Similarly, the Exchange believes that it is equitable and not unfairly discriminatory to prohibit LMMs on the Exchange from qualifying for the proposed new Step Up Tier 3 and to exclude LMM provide volume from applying to the applicable volume requirements proposed for the new Step Up Tier 3. This is because, like ETP Holders that qualify for other tiers in the Fee Schedule that provide for incrementally higher credits, LMMs are already eligible for increased credits that range from $0.0035 per share to $0.0045 per share for executions of transactions that add liquidity to the Exchange. The Exchange also believes that it is equitable and not unfairly discriminatory to prohibit Retail Order Tier and Retail Order Cross-Asset Tier ETP Holders from qualifying for the proposed new Step Up Tier 3 and to exclude Retail Orders from applying to the applicable volume requirements proposed for the new Step Up Tier 3. This is because Retail Orders, and the ETP Holders that submit them, are already eligible for increased credits that range from $0.0033 to $0.0034 per share for executions of transactions that add liquidity to the Exchange. Finally, the Exchange believes that it is subject to significant competitive forces, as described below in the Exchange’s statement regarding the burden on competition. For these reasons, 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,12 the Exchange believes that the proposed rule change would not 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 encourage competition, including by attracting additional liquidity to the Exchange, which will 12 15 U.S.C. 78f(b)(8). VerDate Mar<15>2010 17:11 Feb 11, 2014 Jkt 232001 make the Exchange a more competitive venue for, among other things, order execution and price discovery. In general, ETP Holders impacted by the proposed change may readily adjust their trading behavior to maintain or increase their credits or decrease their fees in a favorable manner, and will therefore not be disadvantaged in their ability to compete. More specifically, an ETP Holder could qualify for the proposed new Step Up Tier 3 by providing sufficient adding liquidity to satisfy the applicable proposed volume requirements. The Exchange also notes that the proposed Step Up Tier 3 would be similar to existing pricing tiers and applicable credits on the Exchange.13 Also, the Exchange does not believe that the proposed change will impair the ability of ETP Holders or competing order execution venues to maintain their competitive standing in the financial markets. In this regard, the Exchange notes that existing pricing tiers of other exchanges similarly provide for credits for market participants that provide certain levels of liquidity on those exchanges.14 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 or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees and rebates to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees and credits in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. As a result of all of these considerations, the Exchange does not believe that the proposed changes will impair the ability of member organizations or competing order execution venues to maintain their competitive standing in the financial markets. supra note 11. e.g., the ‘‘Investor Support Program’’ under NASDAQ Stock Market, LLC (‘‘NASDAQ’’) Rule 7014. 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) 15 of the Act and subparagraph (f)(2) of Rule 19b–4 16 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 the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)17 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 rule-comments@ sec.gov. Please include File Number SR– NYSEArca–2014–13 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-2014–13. 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 13 See 14 See, PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 15 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 17 15 U.S.C. 78s(b)(2)(B). 16 17 E:\FR\FM\12FEN1.SGM 12FEN1 Federal Register / Vol. 79, No. 29 / Wednesday, February 12, 2014 / Notices 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–2014–13, and should be submitted on or before March 5, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Kevin M. O’Neill, Deputy Secretary. Commission is publishing this notice to solicit comments on the proposed rule change from interested persons and, by this Order, approve the proposed rule change on an accelerated basis. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change consists of modifications to the DTC Settlement Service guide (the ‘‘Service Guide’’) to: (i) Lower the amount of the maximum Net Debit Cap for an affiliated family of Participants, and (ii) make other changes to the Service Guide, as more fully described below.3 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, DTC 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 III below. DTC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of such statements. BILLING CODE 8011–01–P (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION 1. Purpose [FR Doc. 2014–03008 Filed 2–11–14; 8:45 am] [Release No. 34–71499; File No. SR–DTC– 2014–01] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Order of Accelerated Approval of Proposed Rule Change To Amend the Depository Trust Company Settlement Service Guide To Lower the Amount of the Maximum Net Debit Cap for an Affiliated Family of Participants and Make Other Related Changes mstockstill on DSK4VPTVN1PROD with NOTICES February 6, 2014. 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 January 24, 2014, the Depository Trust Company (‘‘DTC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change described in Items I and II below, which Items have been prepared primarily by DTC. The 18 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 17:11 Feb 11, 2014 Jkt 232001 Introduction By this filing, DTC seeks to amend the Service Guide to: (i) Lower the amount of the maximum Net Debit Cap 4 for an affiliated family of Participants (‘‘Affiliated Family’’),5 and (ii) make 3 Terms not defined herein have the meaning set forth in DTC’s Rules & Procedures (the ‘‘Rules’’). Please note that DTC’s Procedures include its service guides, including but not limited to the Settlement Service guide. 4 Pursuant to Rule 1 the term: (a) ‘‘Net Debit Cap’’ of a Participant means an amount determined by the Corporation in the manner specified in the Procedures; provided, however, that the maximum Net Debit Cap of the Participant shall be the least of: (i) A maximum amount applicable to all Participants based on the liquidity resources of the Corporation, (ii) the Settling Bank Net Debit Cap applicable to such Participant or (iii) any other amount determined by the Corporation, in its sole discretion. 5 Pursuant to Rule 1 the term ‘‘Affiliated Family’’ means each Participant that controls or is controlled by another Participant and each Participant that is under the common control of any Person. For purposes of this definition, ‘‘control’’ means the direct or indirect ownership of more than 50% of the voting securities or other voting interests of any Person. PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 8527 other changes to the Service Guide as more fully described below. Background The Net Debit Cap is a risk management control under the Rules to limit the net debit balance of any Participant and of any Affiliated Family to no more than the amount of liquidity resources available to DTC to complete system-wide settlement in the event of a failure to settle by the largest Participant or Affiliated Family. Liquidity resources for DTC include cash deposits to the Participants Fund and a committed line of credit with a syndicate of commercial lenders. Pursuant to the Rules each Participant must: (i) Make a Required Participants Fund Deposit in cash and (ii) purchase an amount of DTC Series A Preferred Stock (‘‘DTC Preferred Stock’’) (the ‘‘Required Preferred Stock Investment’’).6 The aggregate of these amounts across all Participants is currently (i) $1.15 billion and (ii) $150 million, respectively, equal to an aggregate funded amount of $1.3 billion.7 This amount, plus a committed line of credit of $1.9 billion,8 provides DTC with $3.2 billion in liquidity resources. In accordance with the Rules, the maximum Net Debit Cap of any Participant and its Affiliated Family may not exceed this total amount of liquidity. The Net Debit Cap of each Participant is set at or below the maximum based on historic activity of the Participant; the aggregate amount of the Net Debit Caps of Participants in an Affiliated Family (the ‘‘Aggregate Affiliated Family Net Debit Cap’’) 9 is likewise limited by the amount of these liquidity resources. The maximum Net Debit Cap currently allowed by DTC for an individual Participant is $1.8 billion and the maximum Aggregate Affiliated Family Net Debit Cap is $3.0 billion.10 6 See DTC Rule 4, Section 2 et seq. Exchange Act Release Nos. 41529 (Jun. 15, 1999), 64 FR 33333 (Jun. 22, 1999) (SR– DTC–1999–08); 43197 (Aug. 23, 2000), 65 FR 52459 (Aug. 29, 2000) (SR–DTC–2000–02); 54775 (Nov. 17, 2006), 71 FR 68662 (Nov. 27, 2006) (SR–DTC– 2006–14); 59612 (Mar. 20, 2009), 74 FR 13488 (Mar. 27, 2009) (SR–DTC–2009–06); and 62567 (Dec. 16, 2010), 75 FR 80878 (Dec. 23, 2010) (SR–DTC–2010– 14). 8 Securities Exchange Act Release No. 69556 (May 10, 2013), 78 FR 28933 (May 16, 2013) (SR–DTC– 2013–802). 9 Pursuant to Rule 1, the term ‘‘Aggregate Affiliated Family Net Debit Cap’’ means the sum of the Net Debit Caps for the Participants that are part of an Affiliated Family in the manner specified in the Procedures; provided, however, that the maximum Aggregate Affiliated Family Net Debit Cap shall not exceed the total available liquidity resources of the Corporation. 10 DTC maintains the maximum Aggregate Affiliated Family Net Debit Cap below its available 7 Securities E:\FR\FM\12FEN1.SGM Continued 12FEN1

Agencies

[Federal Register Volume 79, Number 29 (Wednesday, February 12, 2014)]
[Notices]
[Pages 8524-8527]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-03008]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71503; File No. SR-NYSEArca-2014-13]


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 Add 
a New Pricing Tier Applicable to Orders That Add Liquidity on the 
Exchange

February 6, 2014.
    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 January 28, 2014, 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 (``Fee Schedule'') to add a new 
pricing tier applicable to orders that add liquidity on the Exchange. 
The Exchange proposes to implement the fee change on February 1, 2014. 
The text of the proposed rule change is available on the Exchange's Web 
site at www.nyse.com, at the principal office of the Exchange, and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to add a new 
pricing tier applicable to orders that add liquidity on the Exchange. 
The Exchange proposes to implement the fee change effective February 1, 
2014.
    The Exchange proposes to add a new ``Step Up Tier 3'' applicable to 
an ETP Holder, including a Market Maker, that on a daily basis, 
measured monthly, directly executes providing volume (``Adding ADV'') 
during the billing month that is both (i) at least 0.20% of U.S. 
consolidated average daily volume (``U.S. CADV'') for the billing month 
and (ii) at least 0.125% taken as a percentage of U.S. CADV for the 
billing month over the ETP Holder's December 2013 Adding ADV taken as a 
percentage of U.S. CADV in December 2013 (``Baseline % CADV'').\4\ For 
example, if U.S. CADV during the billing month is 7 billion shares, an 
ETP Holder's Adding ADV during the billing month would first need to be 
at least 14 million shares (i.e., at least 0.20% of U.S. CADV for the 
billing month). If U.S. CADV in December 2013 was 6 billion shares and 
an ETP Holder's December 2013 Adding ADV was 6 million shares, the ETP 
Holder's Baseline % CADV would be 0.10% (i.e., the ETP Holder's 
December 2013 Adding ADV taken as a percentage

[[Page 8525]]

of U.S. CADV in December 2013). The ETP Holder's Adding ADV during the 
billing month would therefore need to be at least 0.225% of U.S. CADV 
for the billing month (i.e., Baseline % CADV of 0.10% plus at least 
0.125%), which would equate to at least 15.75 million shares of Adding 
ADV and would therefore be a ``step up'' of 9.75 million shares.
---------------------------------------------------------------------------

    \4\ U.S. CADV means United States Consolidated Average Daily 
Volume for transactions reported to the Consolidated Tape, excluding 
odd lots through January 31, 2014 (except for purposes of Lead 
Market Maker pricing), and excludes volume on days when the market 
closes early. Transactions that are not reported to the Consolidated 
Tape are not included in U.S. CADV. An ETP Holder with zero Adding 
ADV in December 2013 (e.g., a firm that became an ETP Holder after 
December 2013) would be treated as having Baseline % CADV of zero 
for purposes of the proposed Step Up Tier 3.
---------------------------------------------------------------------------

    A qualifying ETP Holder would receive a credit of $0.0004 per share 
for (i) Adding ADV in Tape A securities during the billing month taken 
as a percentage of U.S. CADV in Tape A securities in the billing month 
in excess of the Baseline % CADV in Tape A securities and (ii) Adding 
ADV in Tape C securities during the billing month taken as a percentage 
of U.S. CADV in Tape C securities in the billing month in excess of the 
Baseline % CADV in Tape C securities.\5\ Continuing with the example 
above, if the ETP Holder's Adding ADV during the billing month was the 
minimum of 15.75 million shares identified above, and if 8 million 
shares consisted of Tape A securities, and further if 3.2 billion of 
the 7 billion shares of overall U.S. CADV during the billing month were 
in Tape A securities, then the ETP Holder's Adding ADV in Tape A 
securities taken as a percentage of U.S. CADV in Tape A securities 
during the billing month would be 0.25% (i.e., 8 million divided by 3.2 
billion). Also, assume that in December 2013 4.5 million shares of the 
ETP Holder's Baseline % CADV consisted of Tape A securities and that 3 
billion of the 6 billion shares of overall U.S. CADV in December 2013 
were in Tape A securities. The ETP Holder's Baseline % CADV in Tape A 
securities would be 0.15% (i.e., 4.5 million divided by 3 billion). The 
excess in the billing month over December 2013 would be 0.10% (i.e., 
0.25% minus 0.15%). 0.10% of U.S. CADV in Tape A securities for the 
billing month would be 3.2 million shares (i.e., 0.01 multiplied by 3.2 
billion shares U.S. CADV in Tape A securities). Therefore, an average 
daily credit of $1,280 would apply under proposed Step Up Tier 3 for 
the ETP Holder's Tape A securities during the billing month (i.e., 
$0.0004 multiplied by 3.2 million), which would be a monthly credit of 
$26,880 (with 21 trading days in the month). The same analysis would be 
performed with respect to the ETP Holder's Tape C securities.
---------------------------------------------------------------------------

    \5\ Orders that provide liquidity in Tape B securities would 
count toward the ETP Holder's qualification for the proposed Step Up 
Tier 3, but such orders would not be eligible for a credit under the 
proposed Step Up Tier 3. The Exchange's Fee Schedule currently 
already includes a ``Tape B Step Up Tier'' that provides for a 
similar credit of $0.0004 per share only for orders in Tape B 
securities that provide liquidity.
---------------------------------------------------------------------------

    The credits provided under the proposed Step Up Tier 3 would be in 
addition to the ETP Holder's Tiered or Basic Rate credit(s); provided, 
however, that such combined credit would not be permitted to exceed 
$0.0034 per share. For example, an ETP Holder that qualifies for 
Investor Tier 3 receives a credit of $0.0032 under Investor Tier 3.\6\ 
If this same ETP Holder also qualifies for the proposed Step Up Tier 3, 
its orders (i) in Tape A securities that are eligible for the Step Up 
Tier 3 credit would receive an additional credit of $0.0002 (i.e., 
$0.0032 under Investor Tier 3 plus a remaining $0.0002 under proposed 
Step Up Tier 3), and (ii) in Tape C securities that are eligible for 
the Step Up Tier 3 credit would receive an additional credit of $0.0002 
(i.e., $0.0032 under Investor Tier 3 plus a remaining $0.0002 under 
proposed Step Up Tier 3).
---------------------------------------------------------------------------

    \6\ Investor Tier 3 requires that an ETP Holder (1) provide 
liquidity of 0.60% or more of the U.S. CADV per month, (2) maintain 
a ratio of cancelled orders to total orders less than 30%, excluding 
Immediate-or-Cancel orders, and (3) maintain a ratio of executed 
liquidity adding volume-to-total volume of greater than 50%.
---------------------------------------------------------------------------

    Lead Market Makers (``LMMs'') on the Exchange could not qualify for 
the proposed new Step Up Tier 3, nor would LMM provide volume apply to 
the applicable volume requirements proposed for the new Step Up Tier 
3.\7\ Retail Order Tier and Retail Order Cross-Asset Tier ETP Holders 
and Market Makers also could not qualify for the proposed new Step Up 
Tier 3, nor would Retail Order provide volume apply to the applicable 
volume requirements.\8\
---------------------------------------------------------------------------

    \7\ The Exchange's Fee Schedule currently already includes 
separate pricing applicable only to LMMs.
    \8\ The Retail Order Tier and Retail Order Cross Asset Tier 
currently already provide for credits applicable only to Retail 
Orders.
---------------------------------------------------------------------------

    Finally, for ETP Holders that qualify for the proposed new Step Up 
Tier 3, Tiered or Basic Rates would apply to all other fees and 
credits, based on a firm's qualifying levels, and if an ETP Holder 
qualifies for more than one tier in the Fee Schedule, the Exchange 
would apply the most favorable rate available under such tiers.
    The proposed change is not otherwise intended to address any other 
issues, and the Exchange is not aware of any problems that ETP Holders 
would have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\10\ 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed change is reasonable 
because the proposed Step Up Tier 3 credit would encourage ETP Holders 
to send additional orders to the Exchange across all Tapes for 
execution in order to qualify for an incrementally higher credit for 
such executions in Tape A and Tape C securities that add liquidity on 
the Exchange. In this regard, the Exchange believes that this may 
incentivize ETP Holders to increase the orders sent directly to the 
Exchange and therefore provide liquidity that supports the quality of 
price discovery and promotes market transparency. The Exchange believes 
that the rate proposed for the Step Up Tier 3 credit is reasonable 
because it is directly related to an ETP Holder's level of executions 
in Tape A and Tape C Securities during the month. This rate is also 
within the range of other credits available to ETP Holders that execute 
providing volume during a billing month that is greater than during a 
particular ``baseline'' month.\11\
---------------------------------------------------------------------------

    \11\ See, e.g., the ``Tape B Step Up Tier,'' for which a 
corresponding credit of $0.0004 applies.
---------------------------------------------------------------------------

    The Exchange believes that the proposed Step Up Tier 3 credit is 
also equitable and not unfairly discriminatory because it would 
incentivize ETP Holders to submit orders in securities across all Tapes 
to the Exchange and would result in a credit that is reasonably related 
to an exchange's market quality that is associated with higher volumes. 
Moreover, like existing pricing on the Exchange that is tied to ETP 
Holder volume levels, the Exchange believes that the proposed Step Up 
Tier 3 credit is equitable and not unfairly discriminatory because it 
would be available for all ETP Holders, including Market Makers, on an 
equal and non-discriminatory basis. The Exchange also believes that it 
is equitable and not unfairly discriminatory that orders that provide 
liquidity in Tape B securities would not be eligible for a credit under 
the proposed Step Up Tier 3 because the Exchange's Fee Schedule 
currently already includes a ``Tape B Step Up Tier'' that provides for 
a similar credit

[[Page 8526]]

of $0.0004 per share only for orders in Tape B securities that provide 
liquidity.
    The Exchange also believes that it is equitable and not unfairly 
discriminatory that the proposed $0.0004 credit under the Step Up Tier 
3 would not be permitted to exceed $0.0034 per share when combined with 
other credits available to ETP Holders under other tiers specified in 
the Fee Schedule because the ETP Holders that qualify for these 
specified tiers would already receive a higher credit for such 
executions.
    Similarly, the Exchange believes that it is equitable and not 
unfairly discriminatory to prohibit LMMs on the Exchange from 
qualifying for the proposed new Step Up Tier 3 and to exclude LMM 
provide volume from applying to the applicable volume requirements 
proposed for the new Step Up Tier 3. This is because, like ETP Holders 
that qualify for other tiers in the Fee Schedule that provide for 
incrementally higher credits, LMMs are already eligible for increased 
credits that range from $0.0035 per share to $0.0045 per share for 
executions of transactions that add liquidity to the Exchange.
    The Exchange also believes that it is equitable and not unfairly 
discriminatory to prohibit Retail Order Tier and Retail Order Cross-
Asset Tier ETP Holders from qualifying for the proposed new Step Up 
Tier 3 and to exclude Retail Orders from applying to the applicable 
volume requirements proposed for the new Step Up Tier 3. This is 
because Retail Orders, and the ETP Holders that submit them, are 
already eligible for increased credits that range from $0.0033 to 
$0.0034 per share for executions of transactions that add liquidity to 
the Exchange.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    For these reasons, 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,\12\ the Exchange 
believes that the proposed rule change would not 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 encourage competition, including by attracting additional 
liquidity to the Exchange, which will make the Exchange a more 
competitive venue for, among other things, order execution and price 
discovery. In general, ETP Holders impacted by the proposed change may 
readily adjust their trading behavior to maintain or increase their 
credits or decrease their fees in a favorable manner, and will 
therefore not be disadvantaged in their ability to compete. More 
specifically, an ETP Holder could qualify for the proposed new Step Up 
Tier 3 by providing sufficient adding liquidity to satisfy the 
applicable proposed volume requirements. The Exchange also notes that 
the proposed Step Up Tier 3 would be similar to existing pricing tiers 
and applicable credits on the Exchange.\13\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b)(8).
    \13\ See supra note 11.
---------------------------------------------------------------------------

    Also, the Exchange does not believe that the proposed change will 
impair the ability of ETP Holders or competing order execution venues 
to maintain their competitive standing in the financial markets. In 
this regard, the Exchange notes that existing pricing tiers of other 
exchanges similarly provide for credits for market participants that 
provide certain levels of liquidity on those exchanges.\14\
---------------------------------------------------------------------------

    \14\ See, e.g., the ``Investor Support Program'' under NASDAQ 
Stock Market, LLC (``NASDAQ'') Rule 7014.
---------------------------------------------------------------------------

    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 or rebate opportunities available at other venues to be more 
favorable. In such an environment, the Exchange must continually adjust 
its fees and rebates to remain competitive with other exchanges and 
with alternative trading systems that have been exempted from 
compliance with the statutory standards applicable to exchanges. 
Because competitors are free to modify their own fees and credits in 
response, and because market participants may readily adjust their 
order routing practices, the Exchange believes that the degree to which 
fee changes in this market may impose any burden on competition is 
extremely limited. As a result of all of these considerations, the 
Exchange does not believe that the proposed changes will impair the 
ability of member organizations or competing order execution venues to 
maintain their competitive standing in the financial markets.

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) \15\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \16\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B)\17\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \17\ 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-2014-13 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-2014-13. 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

[[Page 8527]]

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-2014-13, and should be submitted on or before March 5, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-03008 Filed 2-11-14; 8:45 am]
BILLING CODE 8011-01-P
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