[Federal Register Volume 77, Number 250 (Monday, December 31, 2012)]
[Notices]
[Pages 77172-77174]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-31412]



[[Page 77172]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68527; File No. SR-NYSEMKT-2012-83]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending the NYSE MKT 
LLC Price List To Specify Pricing that is Currently Applicable to 
Certain Executions on the Exchange But That Is Not Currently Included 
in the Price List

December 21, 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 14, 2012, NYSE MKT LLC (the ``Exchange'' or ``NYSE 
MKT'') 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 specify pricing 
that is currently applicable to certain executions on the Exchange, but 
that is not currently included in the Price List. 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 amend its Price List to specify 
pricing that is currently applicable to certain executions on the 
Exchange, but that is not currently included in the Price List. The 
Exchange proposes to make the changes immediately effective and 
operative.
    Specifically, the Exchange proposes to amend the Price List, as 
necessary, to reflect pricing that is currently being assessed for the 
following intraday transactions:
     For a Floor broker discretionary e-Quote (``d-Quote'') 
that adds liquidity, a credit of $0.0016 per share for trades in a 
security priced $1 or above, as well as a credit of $0.0025 for NASDAQ 
Stock Market-listed securities (``Nasdaq securities'') trading on the 
Exchange pursuant to a grant of unlisted trading privileges (``UTP''); 
\3\
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    \3\ See, e.g., Securities Exchange Act Release No. 62479 (July 
9, 2010), 75 FR 41264 (July 15, 2010) (SR-NYSEAmex-2010-31).
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     For a d-Quote that adds liquidity, no charge (i.e., free) 
for a security priced below $1, as well as a credit of 0.10% of total 
dollar value of the transaction for a Nasdaq security trading pursuant 
to UTP;
     For a non-electronic agency transaction of a Floor broker 
that executes against the Book, no charge for a security priced $1 or 
above, a security priced below $1, or a Nasdaq security trading 
pursuant to UTP;
     No charge for a non-electronic agency transaction between 
Floor brokers in the crowd in a security priced below $1; \4\ and
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    \4\ As discussed below, this is already specified in the Price 
List for securities priced $1 or above and for Nasdaq securities 
trading pursuant to UTP.
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     No charge for an agency cross trade (i.e., a trade where a 
member organization has customer orders to buy and sell an equivalent 
amount of the same security) in a security priced below $1.\5\
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    \5\ As discussed below, this is already specified in the Price 
List for securities priced $1 or above and for Nasdaq securities 
trading pursuant to UTP.
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d-Quotes
    The Price List currently provides that d-Quotes are subject to a 
transaction fee.\6\ The current rate in the Price List is $0.0005 per 
share for a security priced $1 or above or, for a security priced below 
$1, the lesser of (i) $0.0005 per share and (ii) 0.25% of the total 
dollar value of the transaction. For Nasdaq securities trading pursuant 
to UTP, the current rate in the Price List is $0.0005 per share for a 
security priced $1 or above or, for a security priced below $1, 0.20% 
of the total dollar value of the transaction.
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    \6\ See Securities Exchange Act Release No. 59045 (December 3, 
2008), 73 FR 75151 (December 10, 2008) (SR-NYSEALTR-2008-09); 
Securities Exchange Act Release No. 59883 (May 7, 2009), 74 FR 22785 
(May 14, 2009) (SR-NYSEAmex-2009-16); and Securities Exchange Act 
Release No. 62488 (July 13, 2010), 75 FR 41912 (July 19, 2010) (SR-
NYSEAmex-2010-69).
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    Despite the descriptions in the Price List, the fee in the Price 
List is currently charged only for a d-Quote that removes liquidity 
from the Book. A d-Quote that provides liquidity to the Book for a 
security priced $1 or above currently receives a credit of $0.0016 per 
share, or, for Nasdaq securities trading pursuant to UTP, $0.0025 per 
share.\7\ For a security priced below $1, a d-Quote that provides 
liquidity to the Book is not charged, or, for Nasdaq securities trading 
pursuant to UTP, a credit of 0.10% of the total dollar value of the 
transaction is provided.\8\
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    \7\ The Exchange has provided a credit for d-Quotes for a 
security priced $1 or above that add liquidity since December 2008. 
For Nasdaq securities, the Exchange has provided a credit for d-
Quotes for a security priced $1 or above that add liquidity since 
July 2010.
    \8\ The Exchange has not charged for d-Quotes for a security 
priced below $1 that add liquidity since December 2008. For Nasdaq 
securities, the Exchange has provided a credit for d-Quotes for a 
security priced below $1 that add liquidity since July 2010.
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    The Exchange proposes to amend the descriptions in the Price List 
related to d-Quotes to specify that the corresponding rates apply only 
to a d-Quote that removes liquidity from the Book. Providing a credit 
of $0.0016 per share for a d-Quote for a security priced $1 or above 
that provides liquidity to the Book would be in accordance with the 
$0.0016 per share rate for providing liquidity that is currently in the 
Price List, and therefore the Exchange is not proposing a new or 
separate line item therein for this type of transaction. This is also 
true with respect to Nasdaq securities trading pursuant to UTP and the 
related credit of $0.0025 that is currently in the Price List. 
Similarly, not charging for a d-Quote for a security priced below $1 
that provides liquidity to the Book would be in accordance with the 
``no charge'' rate for providing liquidity that is currently in the 
Price List, and therefore the Exchange is not proposing a new or 
separate line item therein for this type of transaction. Again, this is 
also true with respect to Nasdaq securities trading pursuant to UTP and 
the related credit of 0.10% of

[[Page 77173]]

the total dollar value of the transaction that is currently in the 
Price List.
Non-Electronic Agency Transactions
    The Price List currently provides that verbal agency interest by 
Floor brokers is charged $0.0005 per share for a security priced $1 or 
above and is charged the lesser of (i) $0.0005 per share and (ii) 0.25% 
of the total dollar value of the transaction for a security priced less 
than $1.\9\ For Nasdaq securities priced $1 or above, the same $0.0005 
rate applies, and, for sub-$1 Nasdaq securities, the rate in the Price 
List is 0.20% of the total dollar value of the transaction. The 
Exchange proposes to specify in the Price List that verbal agency 
interest, which the Exchange proposes to hereafter refer to as a non-
electronic agency transaction, of a Floor broker that executes against 
the Book is not charged (i.e., it is free),\10\ both for a security 
priced $1 or above and for a security priced below $1 as well as for 
Nasdaq securities trading pursuant to UTP.\11\ This is the same rate 
(i.e., free) that is currently specified in the Price List for non-
electronic agency transactions between Floor brokers in the crowd in 
securities priced $1 or above and for Nasdaq securities trading 
pursuant to UTP.\12\ In this regard, the Exchange also proposes to 
specify in the Price List that there is no charge for a non-electronic 
agency transaction between Floor brokers in the crowd in a security 
priced below $1.\13\
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    \9\ See SR-NYSEAmex-2009-16, supra note 6.
    \10\ Because of the nature of non-electronic trading interest 
(i.e., verbal/manual interest), the concept of adding and removing 
liquidity is not applicable.
    \11\ The Exchange began charging for a non-electronic agency 
transaction of a Floor broker that executed against the Book in 
December 2008. Beginning in March 2009, the Exchange no longer 
charged for this type of transaction. For Nasdaq securities, the 
Exchange has not charged for these transactions since July 2010.
    \12\ This has been the case for Nasdaq securities trading 
pursuant to UTP since July 2010.
    \13\ The Exchange has not charged for a non-electronic agency 
transaction between Floor brokers in the crowd in a security priced 
below $1 since December 2008, if the transaction was for 10,000 
shares or more, and since March 2009, if the transaction was for 
fewer than 10,000 shares.
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Agency Cross Trades
    The Price List currently specifies that an agency cross trade \14\ 
is not charged for a security priced $1 or above or for Nasdaq 
securities trading pursuant to UTP.\15\ Similarly, the Exchange 
proposes to specify in the Price List that there is no charge for an 
agency cross trade in a security priced below $1.\16\
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    \14\ Because of the nature of an agency cross trade (i.e., the 
member organization already has customer orders to buy and sell an 
equivalent amount of the same security), the concept of adding and 
removing liquidity is not applicable.
    \15\ This has been the case for Nasdaq securities trading 
pursuant to UTP since July 2010.
    \16\ The Exchange has not charged for an agency cross trade in a 
security priced below $1 since December 2008, if the transaction was 
for 10,000 shares or more, and since March 2009, if the transaction 
was for fewer than 10,000 shares.
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    The Exchange notes that the proposed change is not otherwise 
intended to address any other issues surrounding Floor broker charges 
and that the Exchange is not aware of any problems that Floor brokers 
would have in complying with the proposed change.
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''),\17\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\18\ 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.
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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed rates for a d-Quote that 
adds liquidity are reasonable because they may encourage additional 
liquidity during the trading day and may incentivize Floor brokers to 
provide additional intra-quote price improved trading, which would 
contribute to the quality of the Exchange's market. The Exchange also 
believes that the proposed rates are equitable and not unfairly 
discriminatory because they may provide opportunities for Floor brokers 
to attract additional liquidity to the Floor and thereby increase the 
quality of order execution on the Exchange's market, which benefits all 
market participants.
    Additionally, the Exchange believes that not charging for a non-
electronic agency transaction of a Floor broker that executes against 
the Book, in both securities priced $1 or above as well as securities 
priced below $1, is reasonable because it would be set at a level that 
would align the rate with certain other non-electronic agency Floor 
broker interest that is similarly not charged. In this regard, and as 
noted above, the Exchange does not charge for executions of non-
electronic agency transactions between Floor brokers in the crowd. 
Additionally, the Exchange believes that this is equitable and not 
unfairly discriminatory because a non-electronic agency transaction of 
a Floor broker would be used, for example, at a time of the trading day 
when a Floor broker is physically present at the point of sale and 
requires flexibility to represent customer interest, but which may also 
result in added opportunity cost and uncertainty for the Floor broker 
when compared to an electronic execution, which is unique to a Floor 
broker.
    The Exchange also believes that it is reasonable to specify that a 
non-electronic agency transaction between Floor brokers in the crowd is 
not charged for securities priced below $1 because doing so will add 
greater specificity to the Price List by reflecting that it is the same 
as the rate charged for such transactions in securities priced $1 or 
above. This is also equitable and not unfairly discriminatory because 
it would provide greater certainty regarding the applicable rates for 
transactions in securities priced below $1. The Exchange believes that 
not charging for these transactions is further reasonable because it 
may incentivize additional liquidity in these low-priced securities, 
which typically are more thinly-traded and less liquid than securities 
priced $1 or above. Accordingly, it is also equitable and not unfairly 
discriminatory to not charge for these transactions because the 
increased liquidity that may result in these securities would increase 
the quality of order execution on the Exchange's market, which benefits 
all market participants. Finally, and as described above for a non-
electronic agency transaction of a Floor broker that executes against 
the Book, the Exchange believes that this is equitable and not unfairly 
discriminatory because non-electronic agency transactions between Floor 
brokers in the crowd occur, for example, at a time of the trading day 
when a Floor broker is physically present at the point of sale and 
requires flexibility to represent customer interest, which is unique to 
a Floor broker, but which may also result in added opportunity cost and 
uncertainty for the Floor broker when compared to an electronic 
execution.
    The Exchange also believes that it is reasonable to specify that an 
agency cross trade is not charged for securities priced below $1 
because doing so will add greater specificity to the Price List by 
reflecting that it is the same as the rate charged for such 
transactions in securities priced $1 or above. This is also equitable 
and not unfairly discriminatory because it would provide greater 
certainty regarding the applicable rates for transactions in securities 
priced below $1. The Exchange believes that not charging for these 
transactions is further reasonable because of the nature of an agency 
cross trade, in that it is a trade where a

[[Page 77174]]

member organization has customer orders to buy and sell an equivalent 
amount of the same security.\19\
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    \19\ See supra note 14.
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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) \20\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \21\ thereunder, because it establishes a due, fee, or other 
charge imposed by the NYSE MKT.
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 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-NYSEMKT-2012-83 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-NYSEMKT-2012-83. 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 submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEMKT-2012-83 and should 
be submitted on or before January 22, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-31412 Filed 12-28-12; 8:45 am]
BILLING CODE 8011-01-P