[Federal Register Volume 77, Number 32 (Thursday, February 16, 2012)]
[Notices]
[Pages 9293-9294]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-3608]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66376; File No. SR-NYSEAmex-2012-05]


Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending an 
Existing Rebate Relating to Qualified Contingent Cross Orders That Are 
Entered and Executed Through the Exchange Systems

February 10, 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 January 30, 2012, NYSE Amex LLC (the ``Exchange'' or ``NYSE Amex'') 
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 self-regulatory organization. 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 an existing rebate relating to 
Qualified Contingent Cross (``QCC'') orders that are entered and 
executed through the Exchange systems. 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.

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

1. Purpose
    The purpose of the proposal is to increase a rebate for Floor 
Brokers who enter QCC orders that subsequently execute.\3\ The Exchange 
intends to increase the existing rebate of $.03 per executed contract 
to $.07 per executed contract.\4\
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    \3\ See Securities Exchange Act Release No. 65472 (October 3, 
2011), 76 FR 62887 (October 11, 2011) (SR-NYSEAmex-2011-72). See 
also Securities Exchange Act Release No. 65047 (August 5, 2011), 76 
FR 49812 (August 11, 2011) (SR-NYSEAmex-2011-56). The QCC permits an 
NYSE Amex ATP Holder to effect a qualified contingent trade 
(``QCT'') in a Regulation NMS stock and cross the options leg of the 
trade on the Exchange immediately upon entry and without order 
exposure if the order is for at least 1,000 contracts, is part of a 
QCT, is executed at a price at least equal to the national best bid 
or offer, as long as there are no Customer orders in the Exchange's 
Consolidated Book at the same price.
    \4\ The exclusion of Customer-to-Customer QCC trades from the 
Floor Broker rebate will remain. See Securities Act Release No. 
65943 (December 13, 2011), 76 FR 78704 (December 19, 2011) (SR-
NYSEAmex-2011-95).
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    The rebate is credited to the executing Floor Broker. The Exchange 
notes that the terms of a QCC order are negotiated and agreed to prior 
to being brought to an exchange for possible execution. In bringing a 
QCC order to the Exchange for execution, permit holders have two 
primary means of doing so. They can configure their systems to deliver 
the QCC order to the Exchange matching engines for validation and 
execution. Alternatively they can utilize the services of another ATP 
Holder acting as a Floor Broker. In turn, the Floor Broker who is in 
receipt of such an order can enter the order through an Exchange-
provided system \5\ to be delivered to the Exchange matching engine for 
validation and potential execution. The Exchange does not offer a 
front-end for order entry, unlike some of the competing exchanges.\6\ 
The Exchange expects that the increased rebate offered to executing 
Floor Brokers will allow them to price their services at a level that 
will enable them to attract QCC order flow from participants who would 
otherwise utilize an existing front-end order entry mechanism offered 
by the Exchange's competitors or floor brokers on other exchanges, 
instead of incurring the cost in time and money to develop their own 
internal systems to be able to deliver QCC orders directly to the 
Exchange systems. To the extent that Floor Brokers are able to attract 
these QCC orders, they will gain important information that will allow 
them to solicit the parties to the QCC orders for participation in 
other trades, which will in turn benefit all other Exchange 
participants through the additional liquidity and price discovery that 
may occur as a result. The proposed change is also a competitive 
response to recent pricing changes at competing exchanges.\7\ The 
proposed change will be operative on February 1, 2012.
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    \5\ Floor Brokers are required by NYSE Amex Rule 955NY to have 
systematized orders prior to representing them in open outcry. Using 
the same Electronic Order Capture System, Floor Brokers will be able 
to enter QCC orders for validation by the Exchange matching engines 
and potential execution.
    \6\ The International Securities Exchange (``ISE'') offers 
PRECISE TRADE as a means for users to enter orders and Chicago Board 
Options Exchange has a similar front-end order entry system called 
PULSE. Such systems do not require users to develop their own 
internal front-end order entry systems and may provide savings to 
users in terms of development time and costs.
    \7\ See Securities Act Release No. 66169 (January 17, 2011) (SR-
ISE-2012-01) (notice of filing and immediate effectiveness of a 
proposed rule change, including an increase in ISE rebate of up to 
$.10 per contract for qualifying executed QCC orders), and NASDAQ 
OMX PHLX fee schedule dated January 18, 2012, page 5 (describing a 
rebate of up to $.10 per contract for qualifying executed QCC 
Orders), available at http://www.nasdaqtrader.com/content/marketregulation/membership/phlx/feesched.pdf.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) \8\ of the Securities Exchange Act 
of 1934 (the ``Act''), in general, and Section 6(b)(4) \9\ 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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposed increase from $.03 per contract 
to $.07 per contract rebate for Floor Brokers who enter QCC orders that 
execute is reasonable because it will allow Floor Brokers the 
opportunity to compete for QCC orders that would otherwise be

[[Page 9294]]

entered into front-end order entry systems of competing exchanges or 
sent to floor brokers on exchanges that offer higher rebates.\10\ The 
proposed rebate is comparable to or less than rebates offered on both 
the ISE and NASDAQ OMX PHLX in that it is being offered to Floor 
Brokers as an inducement that may allow them to competitively price 
their services offered to all participants.\11\ To the extent that the 
rebate is successful in attracting additional order flow to the 
Exchange, all participants should benefit. As such the Exchange 
believes that the rebate is appropriate and reasonable.
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    \10\ See supra note 6.
    \11\ See supra note 7.
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    The Exchange believes the proposal to increase the rebate from $.03 
per contract to a $.07 per contract is equitable and not unfairly 
discriminatory because it would uniformly apply to all QCC orders 
entered by a Floor Broker for validation by the system and potential 
execution, excepting Customer-to-Customer QCC trades. The exclusion of 
Customer-to-Customer QCC trades from the Floor Broker rebate will 
remain.\12\ Any participant will be able to engage a rebate-receiving 
Floor Broker in a discussion surrounding the appropriate level of fees 
that they may be charged for entrusting the entry of the QCC order to 
the Floor Broker into the Exchange systems for validation and 
execution. The additional order flow attracted by this increase in the 
rebate should benefit all participants. For this reason the Exchange 
feels the adoption of the proposed rebate increase is both equitable 
and not unfairly discriminatory.
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    \12\ See supra note 4.
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    For the reasons noted above, the Exchange believes that the 
proposed fees are fair, equitable and not unfairly discriminatory.

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) \13\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \14\ thereunder, because it establishes a due, fee, or other 
charge imposed by the NYSE Amex.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

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-NYSEAmex-2012-05 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-NYSEAmex-2012-05. 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 NW., 
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 available publicly. All 
submissions should refer to File Number SR-NYSEAmex-2012-05 and should 
be submitted on or before March 8, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-3608 Filed 2-15-12; 8:45 am]
BILLING CODE 8011-01-P