Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Its Price List To Introduce a New Credit for Certain Retail Providing Liquidity on the Exchange, 19936-19940 [2014-08057]
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Federal Register / Vol. 79, No. 69 / Thursday, April 10, 2014 / Notices
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Advisers Act 3—they do not manage $25
million or more in assets and do not
advise registered investment companies,
or they manage between $25 million
and $100 million in assets, do not
advise registered investment companies
or business development companies,
and are required to be registered as
investment advisers with the states in
which they maintain their principal
offices and places of business and are
subject to examination as an adviser by
such states.4 Eligibility under rule
203A–2(e) is conditioned on an adviser
maintaining in an easily accessible
place, for a period of not less than five
years from the filing of Form ADV,5 a
record demonstrating that the adviser’s
advisory business has been conducted
through an interactive Web site in
accordance with the rule.6
This record maintenance requirement
is a ‘‘collection of information’’ for PRA
purposes. The Commission believes that
approximately 74 advisers are registered
with the Commission under rule 203A–
2(e), which involves a recordkeeping
requirement of approximately four
burden hours per year per adviser and
results in an estimated 296 of total
burden hours (4 × 74) for all advisers.
This collection of information is
mandatory, as it is used by Commission
staff in its examination and oversight
program in order to determine
continued Commission registration
eligibility of advisers registered under
this rule. Responses generally are kept
confidential pursuant to section 210(b)
of the Advisers Act.7 An agency may not
conduct or sponsor, and a person is not
required to respond to a collection of
information unless it displays a
currently valid OMB control number.
The public may view the background
documentation for this information
collection at the following Web site,
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to: Shagufta_
Ahmed@omb.eop.gov; and (ii) Thomas
Bayer, Chief Information Officer,
Securities and Exchange Commission,
c/o Remi Pavlik-Simon, 100 F Street
NE., Washington, DC 20549 or send an
email to: PRA_Mailbox@sec.gov.
3 15
U.S.C. 80b–3a(a).
4 Id.
5 The
five-year record retention period is a similar
recordkeeping retention period as imposed on all
advisers under rule 204–2 of the Advisers Act. See
rule 204–2 (17 CFR 275.204–2).
6 17 CFR 275.203A–2(e)(1)(ii).
7 15 U.S.C. 80b–10(b).
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Comments must be submitted to OMB
within 30 days of this notice.
Dated: April 4, 2014.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–07999 Filed 4–9–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
Extension:
Rule 15b6–1 and Form BDW, SEC File No.
270–17, OMB Control No. 3235–0018.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 15b6–1 (17 CFR
240.15b6–1), under the Securities
Exchange Act of 1934 (15 U.S.C 78a et
seq.). The Commission plans to submit
this existing collection of information to
the Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Registered broker-dealers use Form
BDW (17 CFR 249.501a) to withdraw
from registration with the Commission,
the self-regulatory organizations, and
the states. On average, the Commission
estimates that it would take a brokerdealer approximately one hour to
complete and file a Form BDW to
withdraw from Commission registration
as required by Rule 15b6–1. The
Commission estimates that
approximately 488 broker-dealers
withdraw from Commission registration
annually 1 and, therefore, file a Form
BDW via the internet with the Central
Registration Depository, a computer
system operated by the Financial
Industry Regulatory Authority, Inc. that
maintains information regarding
registered broker-dealers and their
registered personnel. The 488 brokerdealers that withdraw from registration
by filing Form BDW would incur an
1 This estimate is based on Form BDW data
collected over the past three years for fully
registered broker- dealers. In fiscal year (from
10/1 through 9/30) 2011, 524 broker-dealers
withdrew from registration. In fiscal year 2012, 428
broker-dealers withdrew from registration. In fiscal
year 2013, 513 broker-dealers withdrew from
registration. (524 + 428 + 513)/3 = 488.
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aggregate annual reporting burden of
approximately 488 hours.2
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information to be collected; and
(d) ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: Thomas Bayer, Chief Information
Officer, Securities and Exchange
Commission, c/o Remi Pavlik-Simon,
100 F Street NE., Washington, DC
20549, or send an email to: PRA_
Mailbox@sec.gov.
Dated: April 2, 2014.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–07997 Filed 4–9–14; 8:45 a.m.]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71878; File No. SR–
NYSEMKT–2014–25]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending Its Price List
To Introduce a New Credit for Certain
Retail Providing Liquidity on the
Exchange
April 4, 2014.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on March
24, 2014, NYSE MKT LLC (‘‘NYSE
MKT’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
× 1 hour) = 488 hours.
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
2 (488
1 15
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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 introduce a new credit for
certain retail providing liquidity on the
Exchange. The Exchange proposes to
implement the fee change effective
April 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 the
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.
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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 introduce a new credit for
certain retail providing liquidity on the
Exchange.4 The Exchange proposes to
implement the fee change effective
April 1, 2014.
The Exchange currently operates the
Retail Liquidity Program as a pilot
program that is designed to attract
additional retail order flow to the
Exchange for Exchange-traded securities
(including but not limited to Exchangelisted securities and securities listed on
the Nasdaq Stock Market, LLC
(‘‘NASDAQ’’) traded pursuant to
unlisted trading privileges) while also
providing the potential for price
improvement to such order flow.5 Retail
order flow is submitted through the
4 The proposed pricing would only apply to
securities priced $1.00 or greater.
5 See Rule 107C—Equities. See also Securities
Exchange Act Release No. 67347 (July 3, 2012), 77
FR 40673 (July 10, 2012) (SR–NYSEAmex–2011–
84).
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Retail Liquidity Program as a distinct
order type called a ‘‘Retail Order,’’
which is defined in 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 a
Retail Member Organization (‘‘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.6
An execution of a Retail Order is always
considered to remove liquidity, whether
against contra-side interest in the Retail
Liquidity Program or against the Book.7
As described in the Price List,
executions of Retail Orders receive a
credit of $0.0005 per share if executed
against Retail Price Improvement Orders
(‘‘RPIs’’) or Mid-Point Passive Liquidity
(‘‘MPL’’) Orders and are otherwise
charged according to standard fees
applicable to non-Retail Orders if
executed against the Book.8
The Exchange proposes to introduce a
new credit of $0.0030 per share for
executions of orders designated as
‘‘retail’’ that provide liquidity on the
Book.9 An order properly designated as
‘‘retail’’ would be required to satisfy the
requirements of Rule 107C(a)(3)—
Equities, but would not be submitted as
a Retail Order within the Retail
Liquidity Program and therefore would
not need to be submitted by an RMO.10
Designation of an order as ‘‘retail’’ for
purposes of the proposed new credit
would be separate and distinct from
submission of a Retail Order for
purposes of the Retail Liquidity
6 RMO is defined in Rule 107C(a)(2)—Equities as
a member organization (or a division thereof) that
has been approved by the Exchange under Rule
107C—Equities to submit Retail Orders.
7 A Retail Order is an Immediate or Cancel Order.
See Rule 107C(a)(3)—Equities. See also Rule
107C(k)—Equities for a description of the manner
in which a member or member organization may
designate how a Retail Order will interact with
available contra-side interest.
8 RPI is defined in Rule 107C(a)(4)—Equities and
consists of non-displayed interest in Exchangetraded securities 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. MPL Order is defined in Rule
13—Equities as an undisplayed limit order that
automatically executes at the mid-point of the
protected best bid or offer (‘‘PBBO’’).
9 The existing rates in the Price List would apply
to executions of MPL Orders (e.g., $0.0016 per
share). A Supplemental Liquidity Provider (‘‘SLP’’)
market maker (‘‘SLMM’’) could designate orders as
‘‘retail’’ and be eligible for the proposed new credit.
10 The RMO aspect of Rule 107C(a)(3)—Equities
would not be considered when determining
whether an order designated as ‘‘retail’’ satisfies the
requirements thereunder.
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19937
Program, despite the characteristics
being identical (i.e., they must each
satisfy the requirements in Rule
107C(a)(3)—Equities).
The Exchange proposes to permit
members and member organizations to
designate orders as ‘‘retail’’ for the
purposes of the proposed $0.0030 credit
either (1) by means of a specific tag in
the order entry message or (2) by
designating a particular member or
member organization mnemonic used at
the Exchange as a ‘‘retail mnemonic.’’ A
member or member organization would
be required to attest, in a form and/or
manner prescribed by the Exchange,
that substantially all orders submitted to
the Exchange satisfy the requirements of
Rule 107C(a)(3)—Equities.11
A member or member organization
would be required to have written
policies and procedures reasonably
designed to assure that it will only
designate orders as ‘‘retail’’ if all the
requirements of Rule 107C(a)(3)—
Equities are met. Such written policies
and procedures must require the
member or member organization to (1)
exercise due diligence before entering
orders designated as ‘‘retail’’ to assure
that such entry is in compliance with
the requirements specified by the
Exchange, and (2) monitor whether
orders designated as ‘‘retail’’ meet the
applicable requirements. If the member
or member organization represents
orders designated as ‘‘retail’’ from
another broker-dealer customer of the
member or member organization, the
member’s or member organization’s
supervisory procedures must be
reasonably designed to assure that the
orders it receives from such brokerdealer customer that it designates as
‘‘retail’’ meet the requirements of Rule
107C(a)(3)—Equities. The member or
member organization must (1) obtain an
annual written representation, in a form
acceptable to the Exchange, from each
broker-dealer customer that sends it
orders to be designated as ‘‘retail’’ that
entry of such orders designated as
‘‘retail’’ will be in compliance with the
requirements specified by the Exchange,
and (2) monitor whether its brokerdealer customer’s orders designated as
11 This would be similar to the process under the
Retail Liquidity Program, whereby an RMO must
attest, in a form prescribed by the Exchange, that
substantially all orders submitted as Retail Orders
will qualify as such under Rule 107C—Equities. See
Rule 107C(b)(C)—Equities. This would also be
similar to the manner in which an Exchange
Trading Permit (‘‘ETP’’) Holder on NYSE Arca
Equities, Inc. (‘‘NYSE Arca Equities’’) may
designate orders as ‘‘retail’’ outside of the NYSE
Arca Equities Retail Liquidity Program. See, e.g.,
Securities Exchange Act Release No. 68322
(November 29, 2012), 77 FR 72425 (December 5,
2012) (SR–NYSEArca–2012–129).
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‘‘retail’’ meet the applicable
requirements.12
Designating orders as ‘‘retail’’ would
be optional. Accordingly, a member or
member organization that chooses not to
designate orders as ‘‘retail’’ would
therefore either (1) not use the
applicable tag in the order entry
message or (2) not designate any of its
mnemonics as ‘‘retail mnemonics.’’ The
Exchange further proposes that it may
disqualify a member or member
organization from eligibility for the
proposed new $0.0030 credit if the
Exchange determines, in its sole
discretion, that a member or member
organization has failed to abide by any
of the requirements proposed herein,
including, for example, if a member or
member organization (1) designates
greater than a de minimis quantity of
orders to the Exchange as ‘‘retail’’ that
fail to meet any of the applicable
requirements, (2) fails to make the
required attestation to the Exchange, or
(3) fails to maintain the required
policies and procedures.
The proposed change is not otherwise
intended to address any other issues,
and the Exchange is not aware of any
problems that members and member
organizations would have in complying
with the proposed change.
2. Statutory Basis
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The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,13 in general, and
furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,14 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 notes that a significant
percentage of the orders of individual
investors are executed over-thecounter.15 While the Exchange believes
12 FINRA, on behalf of the Exchange, would
review member and member organization
compliance with these requirements through an
exam-based review of the member’s or member
organization’s internal controls.
13 15 U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(4) and (5).
15 See 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 Jo White, Focusing on
Fundamentals: The Path to Address Equity Market
Structure (Speech at the Security Traders
Association 80th Annual Market Structure
Conference, Oct. 2, 2013) (available on the
Commission’s Web site) (‘‘White Speech’’); Mary L.
Schapiro, Strengthening Our Equity Market
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that markets and price discovery
optimally function through the
interactions of diverse flow types, it also
believes that growth in internalization
has required differentiation of retail
order flow from other order flow types.
In this regard, the Exchange believes
that the proposed change is reasonable
because it would contribute to
maintaining or increasing the
proportion of retail flow in exchangelisted securities that are executed on a
registered national securities exchange
(rather than relying on certain available
off-exchange execution methods). The
proposed change is also equitable and
not unfairly discriminatory because it
would contribute to investors’
confidence in the fairness of their
transactions and because it would
benefit all investors by deepening the
Exchange’s liquidity pool, supporting
the quality of price discovery,
promoting market transparency and
improving investor protection.
The Exchange also believes that
providing a credit for executions of
orders that provide liquidity on the
Book and that are designated as ‘‘retail’’
is reasonable because it would create an
added financial incentive for members
and member organizations to bring
additional retail flow to a public market.
The proposed new credit is also
reasonable because it would reduce the
costs of members and member
organizations that represent retail flow
and potentially also reduce costs to their
customers. The proposed change is also
reasonable because it would be similar
to the manner in which NASDAQ
provides a $0.0033 credit for
‘‘Designated Retail Orders’’ that provide
liquidity.16
Absent this proposal, for example, a
credit of $0.0016 would apply to the
retail providing liquidity that this
proposal targets.17 The Exchange
believes that providing a credit of
$0.0030 per share for executions of
orders that provide liquidity on the
Book and that are designated as ‘‘retail’’
is reasonable because it is set at a level
that would reasonably incentivize
members and member organizations to
Structure (Speech at the Economic Club of New
York, Sept. 7, 2010) (available on the Commission’s
Web site) (‘‘Schapiro Speech’’). In her speech, Chair
White noted a steadily increasing percentage of
trading that occurs in ‘‘dark’’ venues, which appear
to execute more than half of the orders of long-term
investors. Similarly, in her speech, only three years
earlier, Chair 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.
16 See NASDAQ Rule 7018.
17 The Price List also provides for credits for
SLPs.
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qualify for eligibility to designate orders
as ‘‘retail’’ (e.g., attestations and
procedures) as well as to actually direct
such retail flow to the Exchange. Such
orders designated as ‘‘retail’’ would
increase the pool of robust liquidity
available on the Exchange, thereby
contributing to the quality of the
Exchange’s market and to the
Exchange’s status as a premier
destination for liquidity and order
execution. The Exchange believes that,
because retail flow is likely to reflect
long-term investment intentions, it
promotes price discovery and dampens
volatility. Accordingly, the presence of
retail flow on the Exchange has the
potential to benefit all market
participants. For this reason, the
Exchange believes that it is equitable
and not unfairly discriminatory to
provide a financial incentive to
encourage greater retail participation on
the Exchange.
The Exchange believes that the
process for designating orders as
‘‘retail’’ and the requirements
surrounding such designations, such as
attestations and procedures, are
reasonable because they would
reasonably ensure that substantially all
of those orders would satisfy the
applicable requirements of Rule
107C(a)(3)—Equities and therefore be
eligible for the corresponding credit of
$0.0030 per share. These processes and
requirements are also reasonable
because they are substantially similar to
those in effect on the Exchange for the
Retail Liquidity Program and on NYSE
Arca Equities related to pricing for
certain retail flow.18 More specifically,
the Exchange understands that some
members and member organizations
represent both retail flow as well as
other agency and riskless principal flow
that may not meet the strict
requirements of Rule 107C(a)(3)—
Equities. The Exchange further
understands that limitations in order
management systems and routing
networks used by such members and
member organizations may make it
infeasible for them to isolate 100% of
retail flow from other agency or riskless
principal, non-retail flow that they
would direct to the Exchange. Unable to
make the categorical attestation required
by the Exchange, some members and
member organizations may not attempt
to qualify for the proposed new $0.0030
credit, notwithstanding that they have
substantial retail flow. The Exchange
believes that it is reasonable to permit
a de minimis amount of orders to be
designated as ‘‘retail,’’ despite not
satisfying the requirements of Rule
18 See
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supra note 11.
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107C(a)(3)—Equities, because it would
allow for enough flexibility to
accommodate member and member
organization system limitations while
still reasonably ensuring that no more
than a de minimis amount of orders
submitted to the Exchange would not
satisfy the requirements of Rule
107C(a)(3)—Equities. This is also
equitable and not unfairly
discriminatory because it will
reasonably ensure that similarly situated
members and member organizations that
have only slight differences in the
capability of their systems would be
able to equally benefit from the
proposed pricing for orders designated
as ‘‘retail.’’
The pricing proposed herein is
equitable and is not designed to permit
unfair discrimination, but instead to
promote a competitive process around
retail executions such that retail
investors’ orders would be subject to
greater transparency. 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.’’ 19 The Exchange
has sought to balance this view in
setting the pricing of the credit available
for executions of orders designated as
‘‘retail’’ that provide liquidity compared
to other liquidity providing executions,
recognizing that the ability of a
member’s or member organization’s
contra-side liquidity to interact with
such orders designated as ‘‘retail’’ could
be a potential benefit applicable to the
members or member organizations
submitting such contra-side liquidity.
The proposal is also equitable and not
unfairly discriminatory because the
ability to designate an order as ‘‘retail’’
is available to all members and member
organizations that submit qualifying
orders and satisfy the other related
requirements.
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.
19 See SR–NYSEAmex–2011–84, supra note 5.
See also Concept Release, White Speech, Schapiro
Speech, supra note 15.
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,20 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 and encourage
additional liquidity. In this regard, the
Exchange believes that the transparency
and competitiveness of attracting
additional executions on an exchange
market, and the pricing related thereto,
would encourage competition. The
proposed change would also permit the
Exchange to compete with other
markets, including NASDAQ, which
similarly provides a credit for
‘‘Designated Retail Orders’’ that provide
liquidity.21
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) 22 of the Act and
subparagraph (f)(2) of Rule 19b–4 23
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) 24 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–2014–25 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–2014–25. 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
22 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
24 15 U.S.C. 78s(b)(2)(B).
20 15
U.S.C. 78f(b)(8).
21 See supra note 16.
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19940
Federal Register / Vol. 79, No. 69 / Thursday, April 10, 2014 / Notices
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 inspection and copying 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 Web site viewing
and printing 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
should refer to File Number SR–
NYSEMKT–2014–25 and should be
submitted on or before May 1, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–08057 Filed 4–9–14; 8:45 am]
BILLING CODE 8011–01–P
Index Option Spread Orders. The text of
the proposed rule change is available on
the Exchange’s Web site (https://
www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71872; File No. SR–CBOE–
2014–026]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing of a
Proposed Rule Change To Amend Its
Rule 24.19
April 4, 2014.
sroberts on DSK5SPTVN1PROD with NOTICES
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 21,
2014, Chicago Board Options Exchange,
Incorporated (the ‘‘Exchange’’ or
‘‘CBOE’’) 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 Exchange. 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 its
rule related to Multi-Class Broad-Based
25 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
18:14 Apr 09, 2014
Jkt 232001
The Exchange proposes to make
changes regarding Multi-Class BroadBased Index Option Spread Orders
(‘‘Multi-Class Spread Orders’’) and its
Rule 24.19. Exchange Rule 24.19
provides a definition of the term
‘‘Broad-Based Index Option’’ for the
purposes of Rule 24.19. However, some
of the products that qualify as ‘‘BroadBased Index Options’’ under Rule 24.19
are not, in and of themselves, index
options. As such, the Exchange
proposes to rename this term ‘‘Broad
Based Option’’ and replace the term
‘‘Broad-Based Index Option’’ with
‘‘Broad-Based Option’’ throughout Rule
24.19.
Similarly, Rule 24.19 provides a
definition of the term ‘‘Multi-Class
Broad-Based Index Option Spread
Order.’’ Because of the change proposed
above, the Exchange proposes to remove
the word ‘‘Index’’ from this term. The
Exchange also proposes to replace the
word ‘‘Spread’’ with ‘‘Complex’’ in
order to achieve continuity within
Exchange rules (spread orders are
complex orders). As such, the term
would now be ‘‘Multi-Class BroadBased Option Complex Order’’ and the
Exchange proposes to replace ‘‘MultiClass Broad-Based Index Option Spread
Order’’ with ‘‘Multi-Class Broad-Based
Option Complex Order’’ throughout
Rule 24.19 (and to replace the shortened
term, ‘‘Multi-Class Spread Order’’ with
PO 00000
Frm 00076
Fmt 4703
Sfmt 4703
‘‘Multi-Class Complex Order’’
throughout Rule 24.19).
The Exchange also proposes to update
the definition of Multi-Class Complex
Order to more clearly and accurately
reflect what such an order is. Currently,
the term Multi-Class Complex Order is
defined as ‘‘an order or quote to buy a
stated number of contracts of a BroadBased Option and to sell an equal
number, or an equivalent number, of
contracts of a different Broad-Based
Option.’’ 3 The common conception of a
Multi-Class Complex Order really
involves the transaction (either a buy or
a sell) of a stated number of contracts of
a Broad-Based Option and the
transaction (either a buy or a sell) of an
equal number, or equivalent number, of
contracts of a different Broad-Based
Option to achieve a position in which
one leg of the order generally offsets the
market exposure of the other leg. Given
the inherent nature of options contracts,
a buy-sell structure is not necessary to
achieve offsetting market exposure.
For example, because OEX is
approximately half the value of SPX, a
Multi-Class Complex Order including
the two products would achieve a
position in which one leg of the order
offsets the market exposure of the other
leg by trading two times as many OEX
contracts as SPX contracts. But it would
not necessarily require buying and
selling contracts. To continue with the
example, a market participant could buy
100 SPX calls and buy 200 OEX puts,
thereby offsetting the market exposure
of the first leg with the second leg (since
the first leg creates a long position and
the second leg creates a short position
(and also since this would involve
trading two times as many OEX
contracts as SPX contracts)). Therefore,
the Exchange proposes to amend this
statement to replace the terms ‘‘buy’’
and ‘‘sell’’ with ‘‘transact’’, and to add
the language regarding one leg of the
order offsetting the market exposure of
the other leg. Also, the description of a
Multi-Class Complex Order being ‘‘an
order or quote’’ is somewhat misleading,
as a quote cannot be submitted for a
Multi-Class Complex Order and may
only be made in open outcry in
response to a Multi-Class Complex
Order. As such, the Exchange proposes
to clarify that it is an ‘‘order (or quote
in response to an order) . . .’’ Therefore,
either an order or a quote that is in
response to an order can qualify for the
provisions of paragraphs (b)(iii) and
(b)(iv) of Rule 24.19. In sum, the
Exchange proposes to amend the
beginning of Rule 24.19(a)(2) to read:
‘‘The term ‘‘Multi-Class Broad-Based
3 See
E:\FR\FM\10APN1.SGM
CBOE Rule 24.19(a)(2).
10APN1
]]>Agencies
[Federal Register Volume 79, Number 69 (Thursday, April 10, 2014)]
[Notices]
[Pages 19936-19940]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-08057]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71878; File No. SR-NYSEMKT-2014-25]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending Its Price List
To Introduce a New Credit for Certain Retail Providing Liquidity on the
Exchange
April 4, 2014.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on March 24, 2014, NYSE MKT LLC (``NYSE MKT'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and
[[Page 19937]]
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 introduce a new
credit for certain retail providing liquidity on the Exchange. The
Exchange proposes to implement the fee change effective April 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 the
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 introduce a new
credit for certain retail providing liquidity on the Exchange.\4\ The
Exchange proposes to implement the fee change effective April 1, 2014.
---------------------------------------------------------------------------
\4\ The proposed pricing would only apply to securities priced
$1.00 or greater.
---------------------------------------------------------------------------
The Exchange currently operates the Retail Liquidity Program as a
pilot program that is designed to attract additional retail order flow
to the Exchange for Exchange-traded securities (including but not
limited to Exchange-listed securities and securities listed on the
Nasdaq Stock Market, LLC (``NASDAQ'') traded pursuant to unlisted
trading privileges) while also providing the potential for price
improvement to such order flow.\5\ Retail order flow is submitted
through the Retail Liquidity Program as a distinct order type called a
``Retail Order,'' which is defined in 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 a Retail Member Organization (``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.\6\ An execution of a Retail Order is always
considered to remove liquidity, whether against contra-side interest in
the Retail Liquidity Program or against the Book.\7\ As described in
the Price List, executions of Retail Orders receive a credit of $0.0005
per share if executed against Retail Price Improvement Orders
(``RPIs'') or Mid-Point Passive Liquidity (``MPL'') Orders and are
otherwise charged according to standard fees applicable to non-Retail
Orders if executed against the Book.\8\
---------------------------------------------------------------------------
\5\ See Rule 107C--Equities. See also Securities Exchange Act
Release No. 67347 (July 3, 2012), 77 FR 40673 (July 10, 2012) (SR-
NYSEAmex-2011-84).
\6\ RMO is defined in Rule 107C(a)(2)--Equities as a member
organization (or a division thereof) that has been approved by the
Exchange under Rule 107C--Equities to submit Retail Orders.
\7\ A Retail Order is an Immediate or Cancel Order. See Rule
107C(a)(3)--Equities. See also Rule 107C(k)--Equities for a
description of the manner in which a member or member organization
may designate how a Retail Order will interact with available
contra-side interest.
\8\ RPI is defined in Rule 107C(a)(4)--Equities and consists of
non-displayed interest in Exchange-traded securities 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. MPL
Order is defined in Rule 13--Equities as an undisplayed limit order
that automatically executes at the mid-point of the protected best
bid or offer (``PBBO'').
---------------------------------------------------------------------------
The Exchange proposes to introduce a new credit of $0.0030 per
share for executions of orders designated as ``retail'' that provide
liquidity on the Book.\9\ An order properly designated as ``retail''
would be required to satisfy the requirements of Rule 107C(a)(3)--
Equities, but would not be submitted as a Retail Order within the
Retail Liquidity Program and therefore would not need to be submitted
by an RMO.\10\ Designation of an order as ``retail'' for purposes of
the proposed new credit would be separate and distinct from submission
of a Retail Order for purposes of the Retail Liquidity Program, despite
the characteristics being identical (i.e., they must each satisfy the
requirements in Rule 107C(a)(3)--Equities).
---------------------------------------------------------------------------
\9\ The existing rates in the Price List would apply to
executions of MPL Orders (e.g., $0.0016 per share). A Supplemental
Liquidity Provider (``SLP'') market maker (``SLMM'') could designate
orders as ``retail'' and be eligible for the proposed new credit.
\10\ The RMO aspect of Rule 107C(a)(3)--Equities would not be
considered when determining whether an order designated as
``retail'' satisfies the requirements thereunder.
---------------------------------------------------------------------------
The Exchange proposes to permit members and member organizations to
designate orders as ``retail'' for the purposes of the proposed $0.0030
credit either (1) by means of a specific tag in the order entry message
or (2) by designating a particular member or member organization
mnemonic used at the Exchange as a ``retail mnemonic.'' A member or
member organization would be required to attest, in a form and/or
manner prescribed by the Exchange, that substantially all orders
submitted to the Exchange satisfy the requirements of Rule 107C(a)(3)--
Equities.\11\
---------------------------------------------------------------------------
\11\ This would be similar to the process under the Retail
Liquidity Program, whereby an RMO must attest, in a form prescribed
by the Exchange, that substantially all orders submitted as Retail
Orders will qualify as such under Rule 107C--Equities. See Rule
107C(b)(C)--Equities. This would also be similar to the manner in
which an Exchange Trading Permit (``ETP'') Holder on NYSE Arca
Equities, Inc. (``NYSE Arca Equities'') may designate orders as
``retail'' outside of the NYSE Arca Equities Retail Liquidity
Program. See, e.g., Securities Exchange Act Release No. 68322
(November 29, 2012), 77 FR 72425 (December 5, 2012) (SR-NYSEArca-
2012-129).
---------------------------------------------------------------------------
A member or member organization would be required to have written
policies and procedures reasonably designed to assure that it will only
designate orders as ``retail'' if all the requirements of Rule
107C(a)(3)--Equities are met. Such written policies and procedures must
require the member or member organization to (1) exercise due diligence
before entering orders designated as ``retail'' to assure that such
entry is in compliance with the requirements specified by the Exchange,
and (2) monitor whether orders designated as ``retail'' meet the
applicable requirements. If the member or member organization
represents orders designated as ``retail'' from another broker-dealer
customer of the member or member organization, the member's or member
organization's supervisory procedures must be reasonably designed to
assure that the orders it receives from such broker-dealer customer
that it designates as ``retail'' meet the requirements of Rule
107C(a)(3)--Equities. The member or member organization must (1) obtain
an annual written representation, in a form acceptable to the Exchange,
from each broker-dealer customer that sends it orders to be designated
as ``retail'' that entry of such orders designated as ``retail'' will
be in compliance with the requirements specified by the Exchange, and
(2) monitor whether its broker-dealer customer's orders designated as
[[Page 19938]]
``retail'' meet the applicable requirements.\12\
---------------------------------------------------------------------------
\12\ FINRA, on behalf of the Exchange, would review member and
member organization compliance with these requirements through an
exam-based review of the member's or member organization's internal
controls.
---------------------------------------------------------------------------
Designating orders as ``retail'' would be optional. Accordingly, a
member or member organization that chooses not to designate orders as
``retail'' would therefore either (1) not use the applicable tag in the
order entry message or (2) not designate any of its mnemonics as
``retail mnemonics.'' The Exchange further proposes that it may
disqualify a member or member organization from eligibility for the
proposed new $0.0030 credit if the Exchange determines, in its sole
discretion, that a member or member organization has failed to abide by
any of the requirements proposed herein, including, for example, if a
member or member organization (1) designates greater than a de minimis
quantity of orders to the Exchange as ``retail'' that fail to meet any
of the applicable requirements, (2) fails to make the required
attestation to the Exchange, or (3) fails to maintain the required
policies and procedures.
The proposed change is not otherwise intended to address any other
issues, and the Exchange is not aware of any problems that members and
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,\13\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\14\ 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.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange notes that a significant percentage of the orders of
individual investors are executed over-the-counter.\15\ While the
Exchange believes that markets and price discovery optimally function
through the interactions of diverse flow types, it also believes that
growth in internalization has required differentiation of retail order
flow from other order flow types. In this regard, the Exchange believes
that the proposed change is reasonable because it would contribute to
maintaining or increasing the proportion of retail flow in exchange-
listed securities that are executed on a registered national securities
exchange (rather than relying on certain available off-exchange
execution methods). The proposed change is also equitable and not
unfairly discriminatory because it would contribute to investors'
confidence in the fairness of their transactions and because it would
benefit all investors by deepening the Exchange's liquidity pool,
supporting the quality of price discovery, promoting market
transparency and improving investor protection.
---------------------------------------------------------------------------
\15\ See 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 Jo White, Focusing on
Fundamentals: The Path to Address Equity Market Structure (Speech at
the Security Traders Association 80th Annual Market Structure
Conference, Oct. 2, 2013) (available on the Commission's Web site)
(``White Speech''); 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) (``Schapiro
Speech''). In her speech, Chair White noted a steadily increasing
percentage of trading that occurs in ``dark'' venues, which appear
to execute more than half of the orders of long-term investors.
Similarly, in her speech, only three years earlier, Chair 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.
---------------------------------------------------------------------------
The Exchange also believes that providing a credit for executions
of orders that provide liquidity on the Book and that are designated as
``retail'' is reasonable because it would create an added financial
incentive for members and member organizations to bring additional
retail flow to a public market. The proposed new credit is also
reasonable because it would reduce the costs of members and member
organizations that represent retail flow and potentially also reduce
costs to their customers. The proposed change is also reasonable
because it would be similar to the manner in which NASDAQ provides a
$0.0033 credit for ``Designated Retail Orders'' that provide
liquidity.\16\
---------------------------------------------------------------------------
\16\ See NASDAQ Rule 7018.
---------------------------------------------------------------------------
Absent this proposal, for example, a credit of $0.0016 would apply
to the retail providing liquidity that this proposal targets.\17\ The
Exchange believes that providing a credit of $0.0030 per share for
executions of orders that provide liquidity on the Book and that are
designated as ``retail'' is reasonable because it is set at a level
that would reasonably incentivize members and member organizations to
qualify for eligibility to designate orders as ``retail'' (e.g.,
attestations and procedures) as well as to actually direct such retail
flow to the Exchange. Such orders designated as ``retail'' would
increase the pool of robust liquidity available on the Exchange,
thereby contributing to the quality of the Exchange's market and to the
Exchange's status as a premier destination for liquidity and order
execution. The Exchange believes that, because retail flow is likely to
reflect long-term investment intentions, it promotes price discovery
and dampens volatility. Accordingly, the presence of retail flow on the
Exchange has the potential to benefit all market participants. For this
reason, the Exchange believes that it is equitable and not unfairly
discriminatory to provide a financial incentive to encourage greater
retail participation on the Exchange.
---------------------------------------------------------------------------
\17\ The Price List also provides for credits for SLPs.
---------------------------------------------------------------------------
The Exchange believes that the process for designating orders as
``retail'' and the requirements surrounding such designations, such as
attestations and procedures, are reasonable because they would
reasonably ensure that substantially all of those orders would satisfy
the applicable requirements of Rule 107C(a)(3)--Equities and therefore
be eligible for the corresponding credit of $0.0030 per share. These
processes and requirements are also reasonable because they are
substantially similar to those in effect on the Exchange for the Retail
Liquidity Program and on NYSE Arca Equities related to pricing for
certain retail flow.\18\ More specifically, the Exchange understands
that some members and member organizations represent both retail flow
as well as other agency and riskless principal flow that may not meet
the strict requirements of Rule 107C(a)(3)--Equities. The Exchange
further understands that limitations in order management systems and
routing networks used by such members and member organizations may make
it infeasible for them to isolate 100% of retail flow from other agency
or riskless principal, non-retail flow that they would direct to the
Exchange. Unable to make the categorical attestation required by the
Exchange, some members and member organizations may not attempt to
qualify for the proposed new $0.0030 credit, notwithstanding that they
have substantial retail flow. The Exchange believes that it is
reasonable to permit a de minimis amount of orders to be designated as
``retail,'' despite not satisfying the requirements of Rule
[[Page 19939]]
107C(a)(3)--Equities, because it would allow for enough flexibility to
accommodate member and member organization system limitations while
still reasonably ensuring that no more than a de minimis amount of
orders submitted to the Exchange would not satisfy the requirements of
Rule 107C(a)(3)--Equities. This is also equitable and not unfairly
discriminatory because it will reasonably ensure that similarly
situated members and member organizations that have only slight
differences in the capability of their systems would be able to equally
benefit from the proposed pricing for orders designated as ``retail.''
---------------------------------------------------------------------------
\18\ See supra note 11.
---------------------------------------------------------------------------
The pricing proposed herein is equitable and is not designed to
permit unfair discrimination, but instead to promote a competitive
process around retail executions such that retail investors' orders
would be subject to greater transparency. 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.'' \19\ The Exchange has sought to balance
this view in setting the pricing of the credit available for executions
of orders designated as ``retail'' that provide liquidity compared to
other liquidity providing executions, recognizing that the ability of a
member's or member organization's contra-side liquidity to interact
with such orders designated as ``retail'' could be a potential benefit
applicable to the members or member organizations submitting such
contra-side liquidity.
---------------------------------------------------------------------------
\19\ See SR-NYSEAmex-2011-84, supra note 5. See also Concept
Release, White Speech, Schapiro Speech, supra note 15.
---------------------------------------------------------------------------
The proposal is also equitable and not unfairly discriminatory
because the ability to designate an order as ``retail'' is available to
all members and member organizations that submit qualifying orders and
satisfy the other related requirements.
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,\20\ 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 and encourage
additional liquidity. In this regard, the Exchange believes that the
transparency and competitiveness of attracting additional executions on
an exchange market, and the pricing related thereto, would encourage
competition. The proposed change would also permit the Exchange to
compete with other markets, including NASDAQ, which similarly provides
a credit for ``Designated Retail Orders'' that provide liquidity.\21\
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78f(b)(8).
\21\ See supra note 16.
---------------------------------------------------------------------------
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) \22\ of the Act and subparagraph (f)(2) of Rule
19b-4 \23\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78s(b)(3)(A).
\23\ 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) \24\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\24\ 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-NYSEMKT-2014-25 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-2014-25. 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
[[Page 19940]]
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 inspection and copying 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 Web site viewing and
printing 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 should refer to File Number SR-
NYSEMKT-2014-25 and should be submitted on or before May 1, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-08057 Filed 4-9-14; 8:45 am]
BILLING CODE 8011-01-P
