[Federal Register Volume 77, Number 11 (Wednesday, January 18, 2012)]
[Notices]
[Pages 2585-2587]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-778]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66138; File No. SR-NYSE-2011-70]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending the NYSE Price List To Revise Its Schedule of Rebates Paid to 
Designated Market Makers for Providing Liquidity on the Exchange and To 
Delete References to Round and Odd Lot Transactions

January 11, 2012.
    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 30, 2011, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') 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 its Price List to revise its 
schedule of rebates paid to Designated Market Makers (``DMMs'') for 
providing liquidity on the Exchange and to delete references to round 
and odd lot transactions. The text of the proposed rule change is 
available at the Exchange, the Commission's Public Reference Room, and 
www.nyse.com.

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.

[[Page 2586]]

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 its Price List to revise its 
schedule of rebates paid to DMMs for providing liquidity on the 
Exchange and to delete references to round and odd lot transactions.
    Currently, DMMs earn a rebate of $0.0030 per share when adding 
liquidity in More Active Securities \3\ if the More Active Security has 
a stock price of $1 or more and the DMM meets (i) the More Active 
Securities Quoting Requirement \4\ and (ii) the More Active Securities 
Quoted Size Ratio Requirement.\5\ The Exchange proposes to modify this 
rebate as follows:
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    \3\ ``More Active Securities'' are securities with an average 
daily consolidated volume (``ADV'') in the previous month equal to 
or greater than 1,000,000 shares per month.
    \4\ The ``More Active Securities Quoting Requirement'' is met if 
the More Active Security has a stock price of $1.00 or more and the 
DMM quotes at the National Best Bid or Offer (``NBBO'') in the 
applicable security at least 10% of the time in the applicable 
month.
    \5\ A DMM meets the ``More Active Securities Quoted Size Ratio 
Requirement'' when the DMM Quoted Size for an applicable month is 
15% of the NYSE Quoted Size. The ``NYSE Quoted Size'' is calculated 
by multiplying the average number of shares quoted on the NYSE at 
the NBBO by the percentage of time the NYSE had a quote posted at 
the NBBO. The ``DMM Quoted Size'' is calculated by multiplying the 
average number of shares of the applicable security quoted at the 
NBBO by the DMM by the percentage of time during which the DMM 
quoted at the NBBO.
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     DMMs will continue to earn a rebate of $0.0030 per share 
for adding liquidity that is 20% or less than NYSE's total intraday 
adding liquidity in shares of each More Active Security for that month 
if the More Active Security has a stock price of $1 or more and the DMM 
meets (i) the More Active Securities Quoting Requirement and (ii) the 
More Active Securities Quoted Size Ratio Requirement.
     DMMs adding liquidity in those same securities will earn a 
rebate of $0.0026 per share for any incremental adding liquidity in 
each such security for that month that exceeds 20% of NYSE's total 
intraday adding liquidity.
     For the purposes of paying the DMM rebate, the NYSE total 
intraday adding liquidity will be totaled monthly \6\ and will include 
all NYSE adding liquidity, excluding NYSE open and NYSE close volume, 
by all NYSE participants, including Supplemental Liquidity Providers 
(``SLP''), customers, Floor brokers, and DMMs.
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    \6\ The Exchange currently sends each DMM a daily file with that 
DMM's daily and month to date volumes and quoting performance for 
each individual DMM stock. The Exchange includes in that daily file 
the DMM's intraday providing volume and NYSE intraday providing 
volume by DMM stock, which will allow each DMM to track their month 
to date status for the monthly rebates, which will be totaled on a 
monthly basis.
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    Rebates will be applied when (i) posting displayed and non-
displayed orders on Display Book, including s-quote and s-quote reserve 
orders; (ii) when providing liquidity on non-displayed interest using 
the Capital Commitment Schedule; and (iii) when executing trades in the 
crowd and at Liquidity Replenishment Points.\7\
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    \7\ See n. 6 of the Price List.
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    For example, in a More Active Security (with a stock price of $1 or 
more) in a given month where the DMM meets the More Active Securities 
Quoting Requirement and the More Active Securities Quoted Size Ratio 
Requirement, if a DMM's intraday adding liquidity for that month is 
30,000,000 shares, and total NYSE intraday adding liquidity is 
100,000,000 shares, the DMM will earn a rebate of $0.0030 per share for 
the first 20,000,000 shares of adding liquidity because those shares 
are at or below the 20% intraday adding share threshold. The DMM will 
earn a rebate of $0.0026 per share for the remaining 10,000,000 shares 
because those shares exceed the 20% intraday adding share threshold. 
For other More Active Securities, with a stock price of $1 or more, 
where the DMM meets the More Active Securities Quoting Requirement and 
the More Active Securities Quoted Size Ratio Requirement, and the DMM's 
share of intraday adding liquidity is at or below the 20% intraday 
adding share threshold, the DMM will earn a rebate of $0.0030 per share 
for all adding liquidity for the More Active Securities.
    Finally, the Exchange proposes to delete references to round and 
odd lot transactions in the Price List, which are outdated in light of 
the decommissioning of the odd lot system.\8\ Since the decommissioning 
of the odd lot system, all per share transaction fees and credits have 
been applied at the round lot rate.
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    \8\ See Securities Exchange Act Release No. 62578 (July 27, 
2010), 75 FR 45185 (August 2, 2010) (SR-NYSE-2010-43).
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    The proposed rule filing will be effective January 1, 2012[.] [sic]
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Securities Exchange Act of 1934 
(the ``Act''),\9\ in general, and Section 6(b)(4) \10\ of the Act, in 
particular, in that 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. The Exchange believes 
that the proposed rebates are equitably allocated and not unfairly 
discriminatory because they will apply equally to all DMMs. NYSE 
believes that the rebate of $0.0026 for intraday adding liquidity that 
exceeds 20% share of NYSE total adding liquidity as described above is 
reasonable because DMMs have greater obligations than SLPs,\11\ so it 
is reasonable to pay DMMs a $0.0026 rebate, which is still slightly 
higher than the SLPs' rebate of up to $0.0022. Additionally, the 
$0.0026 rebate is reasonable because it is still higher than the 
$0.0025 rebate that DMMs receive when they only meet the More Active 
Securities Quoting Requirement, but not the More Active Securities 
Quoted Size Ratio Requirement. At the same time, the Exchange believes 
the proposed rule change will encourage multiple sources of market 
liquidity (e.g. SLPs, Floor Brokers, and other market participants), 
which will help to promote a more robust, fair, and orderly market. The 
Exchange believes that removing outdated references to round and odd 
lots in the Price List will add clarity to the Price List.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ Compare NYSE Rule 104 (obligations for DMMs) versus NYSE 
Rule 107B (obligations for SLPs).
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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) \12\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \13\ thereunder, because it establishes a due, fee, or other 
charge imposed by the NYSE.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the

[[Page 2587]]

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.

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-NYSE-2011-70 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2011-70. 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 such 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 publicly available. All 
submissions should refer to File Number SR-NYSE-2011-70 and should be 
submitted on or before February 8, 2012.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-778 Filed 1-17-12; 8:45 am]
BILLING CODE 8011-01-P