Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Its Price List To Specify Pricing Applicable To Executions of Mid-Point Passive Liquidity Orders Against Retail Orders Within the Retail Liquidity Program, 16085-16088 [2014-06301]

Download as PDF Federal Register / Vol. 79, No. 56 / Monday, March 24, 2014 / Notices being treated differently than other participants, the Exchange believes that market makers would themselves not regard this proposal negatively, because they do not necessarily find that a COLA is necessary or helpful. In addition, it is not unfairly discriminatory, because market makers, unlike other participants, generally only respond to auctions and prefer immediate execution, such that treating them differently than other participants is rooted in the way they trade and the way they function, to their benefit, rather than in an effort to exclude them or be unfair to them. Other options exchanges have the ability under their rules not to trigger an auction by participant type, such that the Commission has approved the ability to treat different participants differently respecting complex order auctions. WREIER-AVILES on DSK5TPTVN1PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. Specifically, the proposal does not impose an intra-market burden on competition, because, even though it would result in market maker orders not triggering a COLA, the ability of market makers to compete amongst each other and with other market participants would not be diminished. Whether or not market makers orders trigger a COLA has no bearing on how they compete with each other in the marketplace; market makers compete based on price and trading strategy as applied to particular market conditions, regardless of auctions. With respect to competition with other market participants, even if their orders do not trigger a COLA, market makers can continue to compete by responding to auctions triggered by other participant types. Nor will the proposal impose a burden on competition among the options exchanges, because, in addition to the vigorous competition for order flow among the options exchanges, the proposal could result in the same outcome on three other exchanges that have the flexibility to determine which complex orders trigger an auction. To the extent that market makers disagree with the particular approach taken by the Exchange herein, market makers can easily and readily direct complex order flow to competing venues. VerDate Mar<15>2010 14:29 Mar 21, 2014 Jkt 232001 C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act 13 and subparagraph (f)(6) of Rule 19b–4 thereunder.14 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule 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– Phlx–2014–16 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–Phlx–2014–16. This file 13 15 U.S.C. 78s(b)(3)(a)(ii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 14 17 PO 00000 Frm 00153 Fmt 4703 Sfmt 4703 16085 number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–Phlx– 2014–16 and should be submitted on or before April 14, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–06302 Filed 3–21–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71730; File No. SR– NYSEMKT–2014–19] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Its Price List To Specify Pricing Applicable To Executions of Mid-Point Passive Liquidity Orders Against Retail Orders Within the Retail Liquidity Program March 18, 2014. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the 15 17 1 15 E:\FR\FM\24MRN1.SGM CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 24MRN1 16086 Federal Register / Vol. 79, No. 56 / Monday, March 24, 2014 / Notices ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on March 4, 2014, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) 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 Substance of the Proposed Rule Change The Exchange proposes to amend its Price List to specify pricing applicable to executions of Mid-Point Passive Liquidity (‘‘MPL’’) Orders against Retail Orders within the Retail Liquidity Program. The Exchange proposes to implement the fee change effective March 4, 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 the Statutory Basis for, the Proposed Rule Change WREIER-AVILES on DSK5TPTVN1PROD with NOTICES 1. Purpose The Exchange proposes to amend its Price List to specify pricing applicable to executions of MPL Orders against Retail Orders within the Retail Liquidity Program. The Exchange proposes to implement the fee change effective March 4, 2014. The Exchange recently introduced a new order type called an MPL Order, which is an undisplayed limit order that automatically executes at the mid-point of the protected best bid or offer 2 15 3 17 U.S.C. 78a. CFR 240.19b–4. VerDate Mar<15>2010 14:29 Mar 21, 2014 Jkt 232001 (‘‘PBBO’’).4 The Exchange also amended NYSE MKT Rule 107C—Equities to specify that MPL Orders could interact with incoming, contra-side Retail Orders submitted by a Retail Member Organization (‘‘RMO’’) in the Retail Liquidity Program.5 The Exchange proposes that the pricing for a Retail Order that executes against an MPL Order would be the same as the current pricing for a Retail Order that executes against a Retail Price Improvement Order (‘‘RPI’’) submitted by a Retail Liquidity Provider (‘‘RLP’’) or non-RLP.6 Specifically, the Retail Order would receive a credit of $0.0005 per share. The Exchange also proposes that the contra-side MPL Order would be billed according to the standard pricing that would otherwise apply to the MPL Order (e.g., a credit of $0.0016 per share for Exchange-listed securities or $0.0025 per share for UTP securities, not the pricing under the Retail Liquidity Program section of the Price List). 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. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,7 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,8 in 4 See Securities Exchange Act Release No. 71329 (January 16, 2014), 79 FR 3904 (January 23, 2014) (SR–NYSEMKT–2013–84). See also NYSE MKT Rule 13—Equities. 5 See NYSE MKT Rule 107C—Equities. Retail Order is defined in NYSE MKT Rule 107C(a)(3)— Equities as an agency order or a riskless principal order that meets the criteria of Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) Rule 5320.03 that originates from a natural person and is submitted to the Exchange by an RMO, provided that no change is made to the terms of the order with respect to price or side of market and the order does not originate from a trading algorithm or any other computerized methodology. RMO is defined in NYSE MKT Rule 107C(a)(2)—Equities as a member organization (or a division thereof) that has been approved by the Exchange to submit Retail Orders. 6 RPI is defined in NYSE MKT Rule 107C(a)(4)— Equities and consists of non-displayed interest in Exchange-traded securities (including, but not limited to, Exchange-listed securities and securities listed on the Nasdaq Stock Market traded pursuant to unlisted trading privileges (‘‘UTP’’)) that is priced better than the best protected bid (‘‘PBB’’) or best protected offer (‘‘PBO’’), as such terms are defined in Regulation NMS Rule 600(b)(57), by at least $0.001 and that is identified as such. RLP is defined in NYSE MKT Rule 107C(a)(1)—Equities as a member organization that is approved by the Exchange to act as such and that is required to submit RPIs in accordance with NYSE MKT Rule 107C—Equities. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(4) and (5). PO 00000 Frm 00154 Fmt 4703 Sfmt 4703 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 a $0.0005 per share credit for a Retail Order that executes against an MPL Order is reasonable because it is the same rate that currently applies to a Retail Order that executes against an RPI. In this regard, both MPL Orders and RPIs offer the potential for price improvement for a Retail Order. This is further reasonable because it would create an added financial incentive for RMOs to bring additional retail order flow to a public market, which could result in additional price improvement for retail investors. The Exchange also believes that it is reasonable for an MPL Order that executes against a Retail Order to be billed according to standard pricing that would otherwise apply to the MPL Order (e.g., a credit of $0.0016 per share for Exchange-listed securities or $0.0025 per share for UTP securities, not the pricing under the Retail Liquidity Program section of the Price List). Specifically, an MPL Order would be eligible to execute against Retail Orders, but without being so designated by the submitting member or member organization. Accordingly, the standard MPL Order rate (e.g., a credit of $0.0016 per share for Exchange-listed securities or $0.0025 per share for UTP securities) would otherwise apply to the MPL Order absent its interaction with the Retail Order. The pricing proposed herein is equitable and, like the Retail Liquidity Program itself, is not designed to permit unfair discrimination, but instead to promote a competitive process around retail executions such that retail investors would receive better prices than they currently do through bilateral internalization arrangements. The proposed pricing could result in an RPI receiving a rate (i.e., no charge or a fee of $0.0003 per share) that is inferior to the rate received by an MPL Order (e.g., a credit of $0.0016 per share for Exchange-listed securities or $0.0025 per share for UTP securities), even when both execute against a Retail Order. The Exchange believes that this is equitable and not unfairly discriminatory because RPIs would only execute against Retail Orders, whereas MPL Orders could execute against Retail Orders or other marketable interest on the Exchange, including non-retail liquidity.9 In this 9 This is also similar to the manner in which the NASDAQ Stock Market, LLC (‘‘NASDAQ’’) applies E:\FR\FM\24MRN1.SGM 24MRN1 Federal Register / Vol. 79, No. 56 / Monday, March 24, 2014 / Notices regard, and as previously recognized by the Securities and Exchange Commission (‘‘Commission’’), ‘‘markets generally distinguish between individual retail investors, whose orders are considered desirable by liquidity providers because such retail investors are presumed on average to be less informed about short-term price movements, and professional traders, whose orders are presumed on average to be more informed.’’ 10 The Exchange has sought to balance this view in setting the pricing of RPIs compared to MPL Orders, recognizing that the ability to limit interaction only to Retail Orders could be a potential benefit applicable only to RPIs. This is also equitable and not unfairly discriminatory because the use of RPIs by RLPs and non-RLPs is voluntary. Members and member organizations that perceive that the potential advantages of interacting with Retail Orders outweigh the potential costs (i.e., providing price improvement and potential inferior pricing as compared to MPL Orders) may choose to utilize RPIs, but those that do not are free to forgo their use. 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. WREIER-AVILES on DSK5TPTVN1PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,11 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 would increase competition among execution venues, encourage additional liquidity, and offer the pricing for its ‘‘Retail Price Improvement Program.’’ See NASDAQ Rule 7018(g). 10 See Securities Exchange Act Release No. 67347 (July 3, 2012), 77 FR 40673, 40679–80 (July 10, 2012) (SR–NYSE–2011–55; SR–NYSEAmex–2011– 84). See also Concept Release on Equity Market Structure, Securities Exchange Act Release No. 61358 (January 14, 2010), 75 FR 3594 (January 21, 2010) (‘‘Concept Release’’) (noting that dark pools and internalizing broker-dealers executed approximately 25.4% of share volume in September 2009). See also Mary L. Schapiro, Strengthening Our Equity Market Structure (Speech at the Economic Club of New York, Sept. 7, 2010) (available on the Commission’s Web site). In her speech, Chairman Schapiro noted that nearly 30 percent of volume in U.S.-listed equities was executed in venues that do not display their liquidity or make it generally available to the public and the percentage was increasing nearly every month. 11 15 U.S.C. 78f(b)(8). VerDate Mar<15>2010 14:29 Mar 21, 2014 Jkt 232001 potential for price improvement to retail investors. In this regard, the Exchange believes that the transparency and competitiveness of operating a program such as the Retail Liquidity Program on an exchange market, and the pricing related thereto, would encourage competition and result in better prices for retail investors. 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) 12 of the Act and subparagraph (f)(2) of Rule 19b–4 13 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 12 15 13 17 PO 00000 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). Frm 00155 Fmt 4703 Sfmt 4703 16087 the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 14 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– NYSEMKT–2014–19 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEMKT–2014–19. 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 Section, 100 F Street NE., Washington, DC 20549–1090, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing will also be available for inspection and copying at the NYSE’s principal office and on its Internet Web site at www.nyse.com. 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 14 15 E:\FR\FM\24MRN1.SGM U.S.C. 78s(b)(2)(B). 24MRN1 16088 Federal Register / Vol. 79, No. 56 / Monday, March 24, 2014 / Notices should refer to File Number SR– NYSEMKT–2014–19 and should be submitted on or before April 14, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–06301 Filed 3–21–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [File No. 500–1] IVI Communications, Inc., Omnicity Corp., Precision Petroleum Corporation, PSB Group, Inc., Sustainable Power Corp., and Whitehall Jewelers Holdings, Inc. (n/k/ a WJ Holdings Liquidating Company); Order of Suspension of Trading WREIER-AVILES on DSK5TPTVN1PROD with NOTICES March 20, 2014. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of IVI Communications, Inc. because it has not filed any periodic reports since the period ended December 31, 2008. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Omnicity Corp. because it has not filed any periodic reports since the period ended January 31, 2011. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Precision Petroleum Corporation because it has not filed any periodic reports since the period ended June 30, 2011. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of PSB Group, Inc. because it has not filed any periodic reports since the period ended September 30, 2010. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Sustainable Power Corp. because it has not filed any periodic reports since it registered its common stock under Exchange Act Section 12(g) pursuant to a Form 10– 12G filed on February 12, 2009. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Whitehall 15 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 14:29 Mar 21, 2014 Jkt 232001 Jewelers Holdings, Inc. (n/k/a WJ Holdings Liquidating Company) because it has not filed any periodic reports since the period ended February 2, 2008. The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed companies. Therefore, it is ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading in the securities of the abovelisted companies is suspended for the period from 9:30 a.m. EDT on March 20, 2014, through 11:59 p.m. EDT on April 2, 2014. By the Commission. Jill M. Peterson, Assistant Secretary. [FR Doc. 2014–06489 Filed 3–20–14; 4:15 pm] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [File No. 500–1] Order of Suspension of Trading; In the Matter of Network Dealer Services Holding Corp., NextFit, Inc., Rocky Mountain Minerals, Inc., Titan Technologies, Inc., Trudy Corporation, UAGH, Inc., and Uranium 308 Corp. Corporation because it has not filed any periodic reports since the period ended December 31, 2010. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of UAGH, Inc. because it has not filed any periodic reports since the period ended March 31, 2011. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Uranium 308 Corp. because it has not filed any periodic reports since the period ended September 30, 2010. The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed companies. Therefore, it is ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading in the securities of the abovelisted companies is suspended for the period from 9:30 a.m. EDT on March 20, 2014, through 11:59 p.m. EDT on April 2, 2014. By the Commission. Jill M. Peterson, Assistant Secretary. [FR Doc. 2014–06490 Filed 3–20–14; 4:15 pm] BILLING CODE 8011–01–P March 20, 2014. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Network Dealer Services Holding Corp. because it has not filed any periodic reports since the period ended September 30, 2011. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of NextFit, Inc. because it has not filed any periodic reports since the period ended September 30, 2009. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Rocky Mountain Minerals, Inc. because it has not filed any periodic reports since the period ended July 31, 2009. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Titan Technologies, Inc. because it has not filed any periodic reports since the period ended April 30, 2010. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Trudy PO 00000 Frm 00156 Fmt 4703 Sfmt 4703 DEPARTMENT OF STATE [Public Notice 8668] 60-Day Notice of Proposed Information Collection: Technology Security/ Clearance Plans, Screening Records, and Non-Disclosure Agreements Notice of request for public comments. ACTION: The Department of State is seeking Office of Management and Budget (OMB) approval for the information collection described below. In accordance with the Paperwork Reduction Act of 1995, we are requesting comments on this collection from all interested individuals and organizations. The purpose of this notice is to allow 60 days for public comment preceding submission of the collection to OMB. DATES: The Department will accept comments from the public up to 60 days from March 24, 2014. ADDRESSES: Comments and questions should be directed to Mr. Robert Hart, Office of Defense Trade Controls Policy, U.S. Department of State, who may be reached via the following methods: SUMMARY: E:\FR\FM\24MRN1.SGM 24MRN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 79, Number 56 (Monday, March 24, 2014)]
[Notices]
[Pages 16085-16088]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-06301]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71730; File No. SR-NYSEMKT-2014-19]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending Its Price List
To Specify Pricing Applicable To Executions of Mid-Point Passive
Liquidity Orders Against Retail Orders Within the Retail Liquidity
Program

March 18, 2014.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the

[[Page 16086]]

``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that,
on March 4, 2014, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') 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 Substance
of the Proposed Rule Change

The Exchange proposes to amend its Price List to specify pricing
applicable to executions of Mid-Point Passive Liquidity (``MPL'')
Orders against Retail Orders within the Retail Liquidity Program. The
Exchange proposes to implement the fee change effective March 4, 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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange proposes to amend its Price List to specify pricing
applicable to executions of MPL Orders against Retail Orders within the
Retail Liquidity Program. The Exchange proposes to implement the fee
change effective March 4, 2014.
The Exchange recently introduced a new order type called an MPL
Order, which is an undisplayed limit order that automatically executes
at the mid-point of the protected best bid or offer (``PBBO'').\4\ The
Exchange also amended NYSE MKT Rule 107C--Equities to specify that MPL
Orders could interact with incoming, contra-side Retail Orders
submitted by a Retail Member Organization (``RMO'') in the Retail
Liquidity Program.\5\
---------------------------------------------------------------------------

\4\ See Securities Exchange Act Release No. 71329 (January 16,
2014), 79 FR 3904 (January 23, 2014) (SR-NYSEMKT-2013-84). See also
NYSE MKT Rule 13--Equities.
\5\ See NYSE MKT Rule 107C--Equities. Retail Order is defined in
NYSE MKT Rule 107C(a)(3)--Equities as an agency order or a riskless
principal order that meets the criteria of Financial Industry
Regulatory Authority, Inc. (``FINRA'') Rule 5320.03 that originates
from a natural person and is submitted to the Exchange by an RMO,
provided that no change is made to the terms of the order with
respect to price or side of market and the order does not originate
from a trading algorithm or any other computerized methodology. RMO
is defined in NYSE MKT Rule 107C(a)(2)--Equities as a member
organization (or a division thereof) that has been approved by the
Exchange to submit Retail Orders.
---------------------------------------------------------------------------

The Exchange proposes that the pricing for a Retail Order that
executes against an MPL Order would be the same as the current pricing
for a Retail Order that executes against a Retail Price Improvement
Order (``RPI'') submitted by a Retail Liquidity Provider (``RLP'') or
non-RLP.\6\ Specifically, the Retail Order would receive a credit of
$0.0005 per share. The Exchange also proposes that the contra-side MPL
Order would be billed according to the standard pricing that would
otherwise apply to the MPL Order (e.g., a credit of $0.0016 per share
for Exchange-listed securities or $0.0025 per share for UTP securities,
not the pricing under the Retail Liquidity Program section of the Price
List).
---------------------------------------------------------------------------

\6\ RPI is defined in NYSE MKT Rule 107C(a)(4)--Equities and
consists of non-displayed interest in Exchange-traded securities
(including, but not limited to, Exchange-listed securities and
securities listed on the Nasdaq Stock Market traded pursuant to
unlisted trading privileges (``UTP'')) that is priced better than
the best protected bid (``PBB'') or best protected offer (``PBO''),
as such terms are defined in Regulation NMS Rule 600(b)(57), by at
least $0.001 and that is identified as such. RLP is defined in NYSE
MKT Rule 107C(a)(1)--Equities as a member organization that is
approved by the Exchange to act as such and that is required to
submit RPIs in accordance with NYSE MKT Rule 107C--Equities.
---------------------------------------------------------------------------

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.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\8\ 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.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that a $0.0005 per share credit for a Retail
Order that executes against an MPL Order is reasonable because it is
the same rate that currently applies to a Retail Order that executes
against an RPI. In this regard, both MPL Orders and RPIs offer the
potential for price improvement for a Retail Order. This is further
reasonable because it would create an added financial incentive for
RMOs to bring additional retail order flow to a public market, which
could result in additional price improvement for retail investors.
The Exchange also believes that it is reasonable for an MPL Order
that executes against a Retail Order to be billed according to standard
pricing that would otherwise apply to the MPL Order (e.g., a credit of
$0.0016 per share for Exchange-listed securities or $0.0025 per share
for UTP securities, not the pricing under the Retail Liquidity Program
section of the Price List). Specifically, an MPL Order would be
eligible to execute against Retail Orders, but without being so
designated by the submitting member or member organization.
Accordingly, the standard MPL Order rate (e.g., a credit of $0.0016 per
share for Exchange-listed securities or $0.0025 per share for UTP
securities) would otherwise apply to the MPL Order absent its
interaction with the Retail Order.
The pricing proposed herein is equitable and, like the Retail
Liquidity Program itself, is not designed to permit unfair
discrimination, but instead to promote a competitive process around
retail executions such that retail investors would receive better
prices than they currently do through bilateral internalization
arrangements.
The proposed pricing could result in an RPI receiving a rate (i.e.,
no charge or a fee of $0.0003 per share) that is inferior to the rate
received by an MPL Order (e.g., a credit of $0.0016 per share for
Exchange-listed securities or $0.0025 per share for UTP securities),
even when both execute against a Retail Order. The Exchange believes
that this is equitable and not unfairly discriminatory because RPIs
would only execute against Retail Orders, whereas MPL Orders could
execute against Retail Orders or other marketable interest on the
Exchange, including non-retail liquidity.\9\ In this

[[Page 16087]]

regard, and as previously recognized by the Securities and Exchange
Commission (``Commission''), ``markets generally distinguish between
individual retail investors, whose orders are considered desirable by
liquidity providers because such retail investors are presumed on
average to be less informed about short-term price movements, and
professional traders, whose orders are presumed on average to be more
informed.'' \10\ The Exchange has sought to balance this view in
setting the pricing of RPIs compared to MPL Orders, recognizing that
the ability to limit interaction only to Retail Orders could be a
potential benefit applicable only to RPIs. This is also equitable and
not unfairly discriminatory because the use of RPIs by RLPs and non-
RLPs is voluntary. Members and member organizations that perceive that
the potential advantages of interacting with Retail Orders outweigh the
potential costs (i.e., providing price improvement and potential
inferior pricing as compared to MPL Orders) may choose to utilize RPIs,
but those that do not are free to forgo their use.
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\9\ This is also similar to the manner in which the NASDAQ Stock
Market, LLC (``NASDAQ'') applies pricing for its ``Retail Price
Improvement Program.'' See NASDAQ Rule 7018(g).
\10\ See Securities Exchange Act Release No. 67347 (July 3,
2012), 77 FR 40673, 40679-80 (July 10, 2012) (SR-NYSE-2011-55; SR-
NYSEAmex-2011-84). See also Concept Release on Equity Market
Structure, Securities Exchange Act Release No. 61358 (January 14,
2010), 75 FR 3594 (January 21, 2010) (``Concept Release'') (noting
that dark pools and internalizing broker-dealers executed
approximately 25.4% of share volume in September 2009). See also
Mary L. Schapiro, Strengthening Our Equity Market Structure (Speech
at the Economic Club of New York, Sept. 7, 2010) (available on the
Commission's Web site). In her speech, Chairman Schapiro noted that
nearly 30 percent of volume in U.S.-listed equities was executed in
venues that do not display their liquidity or make it generally
available to the public and the percentage was increasing nearly
every month.
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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,\11\ 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 would increase competition among execution venues, encourage
additional liquidity, and offer the potential for price improvement to
retail investors. In this regard, the Exchange believes that the
transparency and competitiveness of operating a program such as the
Retail Liquidity Program on an exchange market, and the pricing related
thereto, would encourage competition and result in better prices for
retail investors.
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\11\ 15 U.S.C. 78f(b)(8).
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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) \12\ of the Act and subparagraph (f)(2) of Rule
19b-4 \13\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \14\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\14\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEMKT-2014-19 on the subject line.

Paper Comments

Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2014-19. 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 Section, 100 F Street
NE., Washington, DC 20549-1090, on official business days between the
hours of 10:00 a.m. and 3:00 p.m. Copies of the filing will also be
available for inspection and copying at the NYSE's principal office and
on its Internet Web site at www.nyse.com. 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

[[Page 16088]]

should refer to File Number SR-NYSEMKT-2014-19 and should be submitted
on or before April 14, 2014.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-06301 Filed 3-21-14; 8:45 am]
BILLING CODE 8011-01-P

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