[Federal Register Volume 77, Number 217 (Thursday, November 8, 2012)]
[Notices]
[Pages 67034-67036]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-27291]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68146; File No. SR-NYSE-2012-59]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Transaction Fees on the New York Block Exchange

November 2, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on November 1, 2012, the New York Stock Exchange LLC (``NYSE'' 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 Exchange. NYSE 
has designated the proposed rule change as ``establishing or changing a 
due, fee or other charge'' under Section 19(b)(3)(A)(ii) of the Act \3\ 
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal 
effective upon receipt of this filing by 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)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes certain changes to the transaction fees 
within its Price List for its facility, the New York Block Exchange\SM\ 
(``NYBX''). 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to reduce certain transaction fees within 
its Price List for NYBX transactions and that such reductions become 
operative on November 1, 2012.
    NYBX is the electronic facility of the Exchange that provides for 
the continuous matching and execution of all non-displayed NYBX orders 
with the aggregate of liquidity in the NYBX facility, the Exchange's 
Display Book[supreg] (``DBK'') as provided in NYSE Rule 1600, and 
considers the protected quotations of all automated trading centers for 
securities listed on the Exchange.\5\
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    \5\ See NYSE Rule 1600. NYBX is a joint venture between the 
Exchange and BIDS Holdings L.P. (``BIDS''). Under the governance 
structure approved by the Commission, the Exchange and BIDS each own 
a 50% economic interest in New York Block Exchange LLC, the entity 
that owns and operates NYBX. In addition, the Exchange, through its 
wholly-owned subsidiary NYSE Market, Inc., owns less than 10% of the 
aggregate limited partnership interest in BIDS. See Securities 
Exchange Act Release No. 59281 (January 22, 2009), 74 FR 5014 
(January 28, 2009) (SR-NYSE-2008-120); see also Securities Exchange 
Act Release No. 61257 (December 30, 2009), 75 FR 500 (January 5, 
2010) (SR-NYSE-2009-116).
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    The Exchange currently offers a per share charge of $0.0030 for the 
execution of all orders entered into NYBX regardless of whether the 
order executes in NYBX, DBK, or in another market center, such as NYSE 
Arca,\6\ NASDAQ, and BATS BZX. The Exchange proposes to reduce the 
transaction fee for orders entered into NYBX as follows:
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    \6\ Other NYSE affiliated market centers operate independently 
of NYBX and offer distinct pricing.
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    1. The Exchange proposes to reduce the per share charge from 
$0.0030 to $0.0005 for all orders executing in NYBX.
    2. The Exchange proposes to reduce the per share charge from 
$0.0030 to $0.0005 for all executions of Midpoint Pegging Orders \7\ 
entered into NYBX, whether such orders execute occur in NYBX, in DBK, 
or on another market center.
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    \7\ An NYBX ``Midpoint Pegging Order'' is a limit order with an 
instruction to execute it at the midpoint of the National Best Bid 
and Best Offer (``NBBO''). The Midpoint Pegging Order will not 
permit an instruction to peg to the midpoint of the NBBO plus or 
minus the Exchange's minimum price variation. See NYSE Rule 
1600(c)(2)(A)(i).
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    3. The Exchange proposes to reduce the per share charge from 
$0.0030 to $0.0025 for all orders executing in DBK other than Midpoint 
Pegging Orders entered into NYBX.
    All other executions of orders entered into NYBX will maintain a 
per share charge of $0.0030.
    The Exchange believes that the proposed reduction of charges for 
NYBX orders executing in NYBX and DBK and executions of Midpoint 
Pegging Orders entered into NYBX, as specified, will reduce transaction 
costs for and potentially offer additional block trading liquidity to 
NYBX participants. In addition, the scope of the reduction generally 
aligns with costs associated with NYBX's routing orders to other market 
centers to access more favorable prices. When an NYBX order executes 
outside of NYBX, the market center on which the order executes charges 
NYBX, with the per share charge being as high as $0.0030.\8\ As a 
result, to cover NYBX's cost, NYBX orders executed outside of NYBX are 
currently charged, and will continue to be charged, a per share charge 
of $0.0030. When two orders are matched in NYBX, NYBX does not incur a 
fee from another market, and therefore, the Exchange believes it is 
appropriate to reduce the per share charge from $0.0030 to $0.0005.
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    \8\ As examples, NASDAQ currently charges $0.0030 per share, and 
BATS BZX charges $.0029 per share. See NASDAQ Price List--Trading & 
Connectivity, available at http://www.nasdaqtrader.com/trader.aspx?id=pricelisttrading2; and BATS BZX Exchange Fee 
Schedule, available at http://cdn.batstrading.com/resources/regulation/rule_book/BATS-Exchanges_Fee_Schedules.pdf.
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    The Exchange believes that the lower per share charge of $0.0005 
should also be applied to an NYBX execution of a Midpoint Pegging 
Order, regardless of whether the order is executed in NYBX, in DBK, or 
in another market center. While Midpoint Pegging Orders could 
potentially execute outside of NYBX, such an execution outside of NYBX 
is uncommon. Reducing the transaction fee for all NYBX executions of 
Midpoint Pegging Orders affords pricing certainty for such orders. 
Midpoint Pegging Orders provide price improvement for both sides of the 
transaction between the quoted spread, and therefore, the lower charges 
will facilitate price improvement.
    Finally, the Exchange proposes to reduce the charges for all 
executions in

[[Page 67035]]

DBK of orders entered into NYBX, excepting Midpoint Pegging Orders. The 
proposed reduction in the per share charge, from $0.0030 to $0.0025, 
will result in the fee for such executions being equal to the fee 
charged if a non-Floor broker member enters an order removing liquidity 
into DBK directly, with the exception of orders in stocks with a per 
share stock price lower than $1.00.\9\
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    \9\ The equity per share charge for Designated Market Makers 
when taking liquidity from the Exchange is $0.0025 per transaction, 
which is also the charge for all other non-Floor broker transactions 
when taking liquidity from the Exchange, with the exception of 
transactions in stocks with a per share stock price below $1.00, 
which charge is 0.3% of the total dollar value of the transaction. 
The equity per share fee for Floor broker transactions when taking 
liquidity from the NYSE is $0.0024. NYBX is charged $0.0015 by the 
Exchange for the execution of an NYBX order in DBK.
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    The proposed change is not otherwise intended to address any other 
matter, and the Exchange is not aware of any significant problem that 
the affected market participants would have in complying with the 
proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of Section 6(b) of the Act,\10\ in general, and 
Section 6(b)(4) of the Act,\11\ in particular, because it provides for 
the equitable allocation of reasonable dues, fees, and other charges 
among its members and issuers and other persons using its facilities 
and does not unfairly discriminate between customers, issuers, brokers, 
or dealers.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    Specifically, the Exchange believes that reducing transaction 
charges for NYBX executions is reasonable because it will lower 
participants' trading costs and the Exchange expects that it will 
enhance trading liquidity available to NYBX participants. The Exchange 
believes that the limitation of the reduction to those orders occurring 
inside NYBX is equitable and not unfairly discriminatory because it is 
aligned with the costs experienced by NYBX, in that when two orders are 
matched in NYBX, NYBX does not incur a fee from another market, while 
when an order is routed to other market centers the other market center 
on which the order executes charges NYBX.
    The Exchange believes that reducing the per share charge for all 
executions of Midpoint Pegging Orders entered into NYBX is reasonable 
because it will incentivize Midpoint Pegging Orders by lowering 
participants' trading costs and providing pricing certainty for such 
orders. The Exchange believes that limiting the proposed change to 
Midpoint Pegging Orders is equitable and not unfairly discriminatory 
because, unlike other types of orders, Midpoint Pegging Orders execute 
at the midpoint of the NBBO, and therefore encouraging Midpoint Pegging 
Orders will further the Exchange's goal to facilitate price improvement 
on both sides of a trade.
    The Exchange believes that reducing the charges for all executions 
in DBK of orders entered into NYBX, excepting Midpoint Pegging Orders, 
is reasonable because as a result of the change members will be charged 
the same fee for an NYBX order executed in DBK as the fee charged to 
non-Floor broker members entering orders into DBK directly, with the 
exception of orders in stocks with a per share stock price lower than 
$1.00,\12\ which the Exchange believes will ensure that the rate 
structure does not disincentivize the use of NYBX. The Exchange 
believes that the proposed change is equitable and not unfairly 
discriminatory because as a result of the change all similarly situated 
members would be subject to the same fee.
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    \12\ See note 8, supra.
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    Additionally, the proposed changes to the fee schedule allows NYBX 
to compete with other market centers for block liquidity and to deliver 
the benefits of competition in the form of reduced transaction costs to 
investors utilizing block trading venues.
    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 continually 
reviews, and considers adjusting its fees to remain competitive with 
other market centers. For the reasons described above, the Exchange 
believes that the proposed rule change both meets the needs of NYBX and 
benefits the users of NYBX.

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.
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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-NYSE-2012-59 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-2012-59. 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

[[Page 67036]]

printing in the Commission's Public Reference Room on official business 
days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal offices of NYSE. 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-NYSE-2012-59, and should be submitted on or before November 29, 
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. 2012-27291 Filed 11-7-12; 8:45 am]
BILLING CODE 8011-01-P