[Federal Register Volume 77, Number 155 (Friday, August 10, 2012)]
[Notices]
[Pages 47905-47907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-19608]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67595; File No. SR-NYSEArca-2012-80]


 Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Proposing To Amend 
the NYSE Arca Equities Schedule of Fees and Charges for Exchange 
Services

August 6, 2012.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on July 26, 2012, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') 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 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\ 15 U.S.C. 78a.
    \3\ 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 Equities Schedule of 
Fees and Charges for Exchange Services (``Fee Schedule''). 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 
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 the Fee Schedule, as described 
below, and implement the fee changes on August 1, 2012.
    The Exchange proposes to introduce a new Investor Tier 1 and 
corresponding credit in the Fee Schedule for ETP Holders, including 
Market Makers, that (1) provide liquidity of 0.60% or more of the U.S. 
consolidated average daily volume (``CADV'') per month,\4\ (2) maintain 
a ratio of cancelled orders to total orders of less than 30%, excluding 
Immediate-or-Cancel orders, and (3) maintain a ratio of executed 
liquidity adding volume-to-total volume of greater than 80%. ETP 
Holders and Market Makers that qualify for this proposed new Investor 
Tier 1 would receive a credit of $0.0034 per share for orders that 
provide liquidity to the Exchange.\5\
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    \4\ CADV means United States Consolidated Average Daily Volume 
for transactions reported to the Consolidated Tape and excludes 
volume on days when the market closes early.
    \5\ For all other fees and credits, Tiered or Basic Rates apply 
based on a firm's qualifying levels.
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    The Exchange also proposes to renumber the existing Investor Tiers 
(e.g., current Investor Tier 1 would become Investor Tier 2) as well as 
cross references in the Fee Schedule to the existing Investor Tiers. In 
this regard, the Exchange notes that the Tape A, B and C Step Up Tiers 
and the Tape C Step Up Tier 2 provide that current Investor Tier 1 and 
2 ETP Holders and Market Makers are not able to qualify for those Tape 
Step Up Tiers. The Exchange proposes that new Investor Tier 1 ETP 
Holders and Market Makers would similarly not be able to qualify for 
those Tape Step Up Tiers. However, current Investor Tier 3 ETP Holders 
and Market Makers, which would become Investor Tier 4 ETP Holders and 
Market Makers after the proposed renumbering, would remain able to 
qualify for those Tape Step Up Tiers. The Exchange also proposes to 
specify that current Investor Tier 1, which would become Investor Tier 
2, would apply to ETP Holders, including Market Makers, that provide 
liquidity of 0.45% or more, but less than 0.60% or more, of CADV per 
month.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Securities Exchange Act of 1934, in general, 
and furthers the objectives of Section 6(b)(4) of the Act,

[[Page 47906]]

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 believes that the proposed rule change is reasonable, 
equitable and not unfairly discriminatory because it would encourage 
ETP Holders to send additional orders to the Exchange for execution in 
order to qualify for an incrementally higher credit for such executions 
that add liquidity on the Exchange. In this regard, the Exchange 
believes that this may incentivize ETP Holders to increase the orders 
sent directly to the Exchange and therefore provide liquidity that 
supports the quality of price discovery and promotes market 
transparency.
    The Exchange believes that the rate proposed for the new Investor 
Tier 1 is reasonable because it is directly related to an ETP Holder's 
level of liquidity provided on the Exchange during the month, including 
the percentage of the ETP Holder's total activity that adds liquidity 
on the Exchange. Additionally, the Exchange believes that the rate 
proposed for the new Investor Tier 1 is reasonable because it would 
incentivize ETP Holders to provide liquidity on the Exchange and would 
result in a credit that is reasonably related to an exchange's market 
quality that is associated with higher volumes. Additionally, the 
Exchange believes that prohibiting proposed new Investor Tier 1 ETP 
Holders from qualifying for the Tape A, B and C Step Up Tiers and the 
Tape C Step Up Tier 2 is reasonable, equitable and not unfairly 
discriminatory because the ETP Holders that qualify for Investor Tier 1 
would already receive a higher credit for such executions.
    The Exchange believes that the proposed thresholds required for an 
ETP Holder to qualify for proposed new Investor Tier 1 are reasonable, 
equitable and not unfairly discriminatory because these percentages are 
within a range that the Exchange believes would incentivize ETP Holders 
to submit orders to the Exchange to qualify for the applicable credit 
of $0.0034 per share. The Exchange notes that these thresholds are 
consistent with the thresholds required for current Investor Tiers 1 
and 2, which similarly make credits available to ETP Holders that are 
also based on the ETP Holder's level of activity as a percentage of 
CADV, ratio of cancelled orders to total orders and ratio of executed 
liquidity adding volume-to-total volume.\6\ Moreover, like existing 
pricing on the Exchange that is tied to ETP Holder volume levels, the 
Exchange believes that the proposed new Investor Tier 1 credit is 
equitable and not unfairly discriminatory because it would be available 
for all ETP Holders, including Market Makers, on an equal and non-
discriminatory basis.
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    \6\ For example, current Investor Tier 1 requires, in part, that 
an ETP Holder maintain a ratio of executed liquidity adding volume 
to total volume of greater than 80%, which is the same ratio 
proposed for the new Investor Tier 1. Also, current Investor Tier 2 
requires, in part, that an ETP Holder provide liquidity of 0.60% or 
more of CADV per month, which is the same percentage proposed for 
the new Investor Tier 1.
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    The Exchange believes that the proposed renumbering of the existing 
Investor Tiers, as well as the added language for current Investor Tier 
1, which would become Investor Tier 2, related to the applicable 
percentage of CADV per month, is reasonable, equitable and not unfairly 
discriminatory because it would conform the Fee Schedule to the newly 
added Investor Tier 1.
    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such an environment, the Exchange must continually 
review, and consider adjusting, its fees and credits to remain 
competitive with other exchanges. For the reasons described above, the 
Exchange believes that the proposed rule change reflects this 
competitive environment.

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) \7\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \8\ thereunder, because it establishes a due, fee, or other charge 
imposed by NYSE Arca.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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-NYSEArca-2012-80 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-NYSEArca-2012-80. 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 
10:00 a.m. and 3:00 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

[[Page 47907]]

submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSEArca-2012-80 and should be submitted on or before August 31, 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. 2012-19608 Filed 8-9-12; 8:45 am]
BILLING CODE 8011-01-P