[Federal Register Volume 76, Number 241 (Thursday, December 15, 2011)]
[Notices]
[Pages 78066-78068]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32138]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65922; File No. SR-NYSEArca-2011-91]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Arca Options Fee Schedule Relating to Manual Orders

December 9, 2011.
    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 December 1, 2011, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Options Fee Schedule 
(``Fee Schedule'') with respect to manual orders. The Exchange proposes 
to make the rule change operative on December 1, 2011. The text of the 
proposed rule change is available at the Exchange, the Commission's 
Public Reference Room, and http://www.nyse.com.

[[Page 78067]]

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

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

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

1. Purpose
    The Exchange proposes to amend the Fee Schedule with respect to 
manual orders.
    Electronic orders and quotes resting on the Consolidated Book 
currently have priority over equal-priced bids or offers in the Trading 
Crowd.\3\ In this regard, a Floor Broker, after negotiating a price 
with the Trading Crowd, may be required to trade against resting 
interest on the Consolidated Book (``clear the Book'') before trading 
against interest in the Trading Crowd. Currently, if a Floor Broker 
clears the Book before trading against interest in the Trading Crowd, 
the Exchange charges the portion of the order executed against the 
Consolidated Book an electronic transaction fee and charges any 
remaining order size that trades against interest in the Trading Crowd 
a manual transaction fee.\4\
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    \3\ See NYSE Arca Options Rule 6.75(a) and (b).
    \4\ For example, a Broker-Dealer manual order is currently 
charged a standard execution fee of $0.25 per contract. However, if 
a portion of the Broker-Dealer manual order executes against resting 
interest on the Consolidated Book, then that portion of the manual 
order is instead charged the $0.50 per-contract rate for a Broker-
Dealer electronic order. Similarly, if the Broker-Dealer manual 
order is in a Penny Pilot class and executes against resting 
interest on the Consolidated Book, then that portion of the manual 
order is considered to ``Take Liquidity'' and is instead charged the 
$0.45 per-contract rate for a Broker-Dealer electronic order. The 
Exchange notes that, at the time of the adoption of Post-Take 
pricing for electronic executions in Penny Pilot classes, the 
Exchange determined that any execution in Penny Pilot issues against 
resting orders in the Consolidated Book would be charged a ``take 
liquidity'' fee. See Securities Exchange Act Release No. 55223 
(February 1, 2007), 72 FR 6306 (February 9, 2007) (SR-NYSEArca-2007-
07).
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    The Exchange proposes to amend endnote 5 of the Fee Schedule to 
reflect that a manual order that executes in part against an electronic 
order or quote resting on the Consolidated Book prior to executing 
against interest in the Trading Crowd would be assessed the applicable 
manual transaction fee for the entire order. As is the case today, the 
contra-side electronic order or quote would be assessed the applicable 
electronic transaction fee or credit. However, if a manual order 
executes completely against an electronic order or quote, and therefore 
does not execute against interest in the Trading Crowd, then both sides 
of the transaction would continue to be charged only the applicable 
electronic transaction fee. In order to be eligible for the manual 
transaction fee, all manual orders must be entered into the Exchange's 
Electronic Order Capture System.
    The Exchange proposes to make the rule change operative on December 
1, 2011.
 2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Securities Exchange Act of 1934 (the 
``Act''),\5\ in general, and Section 6(b)(4) of the Act,\6\ in 
particular, because it is designed to provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and other persons using its facilities. In addition, the 
proposed rule change is not designed to permit unfair discrimination 
between customers, issuers, brokers or dealers. Under the proposed 
change a manual order that executes partially against an electronic 
order or quote resting on the Consolidated Book prior to executing 
against interest in the Trading Crowd would be assessed the applicable 
manual transaction fee for the entire order. The Exchange believes that 
this is reasonable, equitable, and not unfairly discriminatory because 
a customer who sends an order to the Floor for execution has no control 
over whether a portion of the manual order will execute against the 
Consolidated Book and therefore has significant uncertainty about the 
transaction fees applicable to such order, whereas a customer that 
submits an electronic order has certainty that only electronic 
transaction fees will apply. The Exchange also believes it is 
reasonable, equitable, and not unfairly discriminatory to charge the 
electronic transaction fee for manual orders that are executed entirely 
against one or more electronic orders or quotes resting on the 
Consolidated Book. Manual transaction fees are lower than electronic 
transaction fees and the proposed rule change will reduce the incentive 
for customers to submit manual orders to obtain the lower fee even 
though there is sufficient liquidity in the Consolidated Book to fill 
the order. When both sides of the order execute fully on the 
Consolidated Book, the Exchange believes it is equitable and not 
unfairly discriminatory to charge both sides of the trade the same 
category of transaction fee. The Exchange expects that by providing 
more certainty about the applicable transaction fees, customers will be 
encouraged to submit manual orders to the Exchange and that the 
additional order flow will benefit all market participants.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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

    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)(ii) of the Act \7\ and subparagraph (f)(2) of Rule 
19b-4 \8\ thereunder, because it establishes a due, fee, or other 
charge imposed by NYSE Arca. 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
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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 email to [email protected]. Please include 
File Number SR-NYSEArca-2011-91 on the subject line.

[[Page 78068]]

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2011-91. 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 (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 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 
a.m. and 3 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-NYSEArca-2011-91 and should 
be submitted on or before January 5, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-32138 Filed 12-14-11; 8:45 am]
BILLING CODE 8011-01-P