[Federal Register Volume 73, Number 126 (Monday, June 30, 2008)]
[Notices]
[Pages 36943-36945]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-14766]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58006; File No. SR-NYSEArca-2008-64]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending its 
Schedule of Fees and Charges for Exchange Services

    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 19, 2008, NYSE Arca, Inc. (``NYSE Arca'' or the ``Exchange''), 
through its wholly owned subsidiary NYSE Arca Equities, Inc. (``NYSE 
Arca Equities''), 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 substantially prepared by the 
Exchange. The Exchange filed the proposed rule change pursuant to 
section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
which renders it effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, through its wholly-owned subsidiary NYSE Arca 
Equities, Inc. (``NYSE Arca Equities''), proposes to amend the section 
of its Schedule of Fees and Charges for Exchange Services (the 
``Schedule'') that applies to orders submitted by ETP Holders and 
Market Makers.\5\ The changes to the Schedule pursuant to this proposal 
are effective upon filing; however the changes will become operative on 
July 1, 2008. The text of the proposed rule change is available on the 
Exchange's Web site at http://www.nyse.com, at the Exchange's Office of 
the Secretary and at the Commission's Public Reference Room.
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    \5\ See NYSE Arca Equities Rule 1.1(n) and (u).
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NYSE Arca 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 
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
    The Exchange proposes to amend the Schedule and introduce unified 
volume tiers for NYSE Arca equities pricing in Tape A, B, and C 
securities. Currently, ETP Holders and Market Makers must meet volume 
tiers independently in each Tape to qualify for a volume discount. 
Pursuant to this proposal, an ETP Holder's and Market Maker's volume in 
each Tape will be aggregated for purposes of attaining the applicable 
fee or credit associated with the tier attained. The Exchange believes 
these integrated volume tiers offer highly attractive volume-based 
incentives with the best rate combinations in NYSE-listed and Nasdaq-
listed securities among major liquidity venues.
    The Exchange proposes to amend the Schedule as it applies to ETP 
Holders and Market Makers as follows:
    Tier 1:
    For customers who transact average daily share volume per month 
greater than 90 million shares in total Tape A, B, and C volume, 
including adding liquidity of more than 45 million shares, the rates 
are as follows:
     For Tape A and C securities, a $0.0028 per share credit 
for orders that add liquidity and a fee of $0.0027 per share for orders 
that remove liquidity.

[[Page 36944]]

     For Tape B securities, a $0.0023 per share credit for 
orders that add liquidity and a fee of $0.0028 for orders that remove 
liquidity.
     For Tape A, B, or C securities, a routing fee of $0.0029 
per share for orders routed to and executed by another market center or 
participant, except on the NYSE, where the routing fee is $0.0008 or 
$0.0006 for customers using the Primary Sweep Order.
    Tier 2:
    For customers who transact average daily share volume per month 
greater than 60 million shares in total Tape A, B, and C volume, 
including adding liquidity of more than 30 million shares, the rates 
are as follows:
     For Tape A and C securities, a $0.0027 per share credit 
for orders that add liquidity and a fee of $0.0029 per share for orders 
that remove liquidity.
     For Tape B securities, a $0.0022 per share credit for 
orders that add liquidity and a fee of $0.0028 per share for orders 
that remove liquidity.
     For Tape A, B, and C securities, a routing fee of $0.0029 
per share for orders routed to and executed by another market center or 
participant, except on the NYSE, where the routing fee is $0.0008 or 
$0.0006 for customers using the Primary Sweep Order.
    As described above, these two tiers replace the previously 
applicable, but non-unified tiers for Tape A and C securities as well 
as the only available tier for Tape B securities. In addition, these 
changes will further the Exchange's objective to narrow the margins 
between fees received and credits paid. In comparison to the present 
model, for example, the pricing for the new top tier offers ETP Holders 
and Market Makers (i) reduced take and routing fees for Tape A 
securities, (ii) an increased rebate for Tape B and C securities, and 
(iii) an increased take fee for Tape C securities. Also, in comparison 
to the present model, the pricing for the new lowest tier offers ETP 
Holders and Market Makers (i) reduced take and routing fees for Tape A 
securities, (ii) an increased rebate for Tape C securities, and (iii) 
an increased take fee for Tape C securities.
    Take Tier:
    For customers who transact average daily share volume per month 
greater than 85 million shares in removed and routed Tape A, B, and C 
volume, including routed volume of more than 2 million shares, the 
rates are as follows:
     For Tape A and C securities, a $0.0023 per share credit 
for orders that add liquidity and a fee of $0.0029 per share for orders 
that remove liquidity.
     For Tape B securities, a $0.0022 per share credit for 
orders that add liquidity and a fee of $0.0029 per share for orders 
that remove liquidity.
     For Tape A, B, and C securities, a routing fee of $0.00285 
per share for orders routed to and executed by any away market center 
or participant, except on the NYSE, where the routing fee is $0.0008 or 
$0.0006 for customers using the Primary Sweep Order.
    The Exchange introduces this Take Tier as a means of offering an 
attractive volume-based incentive to ETP Holders and Market Makers who 
participate on our market primarily as liquidity takers. Currently, the 
Exchange does not offer a Take Tier and believes that by doing so, ETP 
Holders and Market Makers will be motivated to participate on our 
market for purposes of accessing our liquidity.
    Basic Rates:
    For ETP Holders or Market Makers who do not attain any of the 
available tiers, the rates are as follows:
     For Tape A and C securities, a $0.0023 per share credit 
for orders that add liquidity and a fee of $0.0029 per share for orders 
that remove liquidity.
     For Tape B securities, a $0.0022 per share credit for 
orders that add liquidity and a fee of $0.0030 per share for orders 
that remove liquidity.
     For Tape A securities, a routing fee of $0.0030 per share 
for orders routed to and executed by any away market center or 
participant, except on the NYSE where the routing fee is $0.0010 or 
$0.0006 for customers using the Primary Sweep Order.
     For Tape B and C securities, a routing fee of $0.0035 per 
share for orders routed to and executed by any away market center or 
participant.
    These basic rates shall replace the previously applicable basic 
rates for Tape A, B, and C securities. In comparison to the present 
model, the amended basic rates offer ETP Holders and Market Makers (i) 
a reduced rebate and take fee for Tape A securities, (ii) an increased 
rebate for Tape B securities, and (iii) an increased rebate and take 
fee for Tape C securities.
    Market Data Revenue Sharing:
    Presently, the Exchange offers its ETP Holders various market data 
revenue sharing credits in Tape A, B, and C securities. According to 
this proposal, the Exchange is eliminating the Liquidity Provider 
Credit and Directed Order credit offered to ETP Holders for purposes of 
market data revenue sharing in Tape B securities.\6\ Instead, as 
described above, the Exchange is now offering ETP Holders increased 
rebates for transactions in Tape B securities, from the basic rate of 
$0.0020 to $0.0022 and the volume-based tier rate of $0.0020 to 
$0.0023.
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    \6\ The Exchange will continue to offer the Cross Order credit 
in Tapes A, B, and C securities.
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    Format Changes and Clarifying Text:
    In conjunction with this proposed rate change, the Exchange is also 
reformatting the schedule to make it clearer and more user-friendly. 
The newly integrated tiers represent a significant change in how the 
Exchange applies its fees and credits compared to the Tape specific 
thresholds presently in place. By reformatting the Schedule, the 
Exchange will be able to clearly present the new, unified volume tiers 
and the applicable ``add/remove'' rate combinations. The proposed 
reformatting also allows the Exchange to remove previously redundant 
entries that in the past only confused customers and required multiple 
changes to the Schedule per each amendment.
    For example, the Exchange proposes to eliminate a significant 
portion of the Schedule identifying fees and credits applicable to 
Market Makers. Under both the current Schedule and the amended 
Schedule, the fees and credits applicable to Market Makers conducting 
round lot transactions are the same as those that apply to ETP Holders 
generally. As such, there is no need to include a separate section 
detailing Market Maker round lot transactions. Accordingly, the section 
titled ``Round Lots'' under the heading ``Market Maker Transactions 
Fees and Credits'' is hereby deleted. Eliminating this duplicative 
section will eliminate any confusion as well as the need for multiple 
changes per amendment to the Schedule. To further clarify this point, 
the Exchange is adding the term Market Maker to the revised ETP Holder 
section of the Schedule. The new section will be titled: ``Exchange 
Transactions, ETP Holders and Market Makers.''
    The Exchange is also eliminating the section titled ``ETP Holder 
Transaction Credit'' under the heading ``Other Fees and Charges.'' This 
section is generally duplicative and unnecessary in that all ETP 
transaction credits are now described in the ``Trade Related Charges'' 
section of the revised Schedule under the revised heading ``Exchange 
Transactions, ETP Holders and Market Makers.'' Deleting this wholly 
duplicative section will eliminate any confusion as well as the need 
for repetitive changes for every single amendment to the Schedule.
    In addition, for purposes of odd lot fees and credits, the Exchange 
proposes to add clarifying language where necessary to make it clear 
that the designated odd lot fees and credits are applicable to 
transactions in shares priced above $1.00 as opposed to fees

[[Page 36945]]

and credits currently identified as applicable to transactions in 
shares priced below $1.00.
    Further, the Exchange will amend footnote 1 within the Schedule to 
explain that trade activity that occurs on days when the market closes 
early will not count towards volume tiers. In this manner, the Exchange 
will not unintentionally penalize an ETP Holder when it calculates its 
average daily volume by including a singularly low total stemming from 
a short trading day.
    The Exchange will also renumber the footnotes within the Schedule 
where necessary.\7\
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    \7\ As part of the reformatting, the Exchange is also proposing 
to add grid lines to the Schedule for ease of review.
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    While changes to the Schedule pursuant to this proposal will be 
effective upon filing, the changes will become operative on July 1, 
2008.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
section 6(b) of the Act,\8\ in general, and furthers the objectives of 
section 6(b)(4),\9\ in particular, in that it is intended to provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its members and other persons using its facilities. The 
Exchange believes that the proposed fees and credits are reasonable. 
The proposed rates are part of the Exchange's effort to attract and 
enhance participation on the Exchange, by offering volume-based 
incentives. The Exchange also believes that the proposed changes to the 
Schedule are equitable in that they apply uniformly to their customers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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B. Self Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing proposed rule change is subject to section 
19(b)(3)(A)(ii) of the Act \10\ and subparagraph (f)(2) of Rule 19b-4 
thereunder because it establishes or changes a due, fee, or other 
charge applicable only to a member imposed by a self-regulatory 
organization. Accordingly, the proposal is effective upon Commission 
receipt of the filing. At any time within 60 days of the filing of the 
proposed rule change, the Commission may summarily abrogate 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.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 15 U.S.C. 78s(b)(3)(C).
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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 (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NYSEArca-2008-64 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-NYSEArca-2008-64. This 
file number should be included on the subject line if e-mail 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 (http://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 inspection 
and copying in the Commission's Public Reference Room, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of NYSE Arca. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEArca-2008-64 and should 
be submitted on or before July 21, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-14766 Filed 6-27-08; 8:45 am]
BILLING CODE 8010-01-P