[Federal Register Volume 78, Number 19 (Tuesday, January 29, 2013)]
[Notices]
[Pages 6152-6154]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-01840]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68710; File No. SR-NYSEMKT-2013-02]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Rule 107C--
Equities To Allow Retail Liquidity Providers To Enter Retail Price 
Improvement Orders in a Non-RLP Capacity for Securities to Which the 
RLP Is Not Assigned

January 23, 2013.
    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 11, 2013, 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 and II 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)(2).
    \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 Rule 107C--Equities to clarify that

[[Page 6153]]

Retail Liquidity Providers (``RLPs'') may enter Retail Price 
Improvement Orders (``RPIs'') in a non-RLP capacity for securities to 
which the RLP is not assigned. 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 is proposing an amendment to Rule 107C--Equities to 
clarify that RLPs may enter RPIs in a non-RLP capacity for securities 
to which the RLP is not assigned.
    Under current Rule 107C--Equities, a member organization that is 
registered as an RLP must submit RPIs for securities that are assigned 
to the RLP, with an RPI being required to be priced better than the 
PBBO by at least $0.001 per share. For each assigned securities, an RLP 
must maintain RPIs that are better than the PBBO at least 5% of the 
trading day. If an RLP fails to meet this 5% quoting requirement in any 
assigned security for three consecutive months, the Exchange may: (1) 
Revoke the assignment of any or all of the affected securities; (2) 
revoke the assignment of unaffected securities; or (3) disqualify the 
member organization to serve as a Retail Liquidity Provider. Under the 
Retail Liquidity Program, member organizations that are not RLPs are 
permitted to interact with Retail Orders within the Program by also 
submitting RPIs. Member organizations are not eligible for the lower 
execution fees available to RLPs who satisfy their quoting 
requirements.
    The Exchange is proposing to amend Rule 107C--Equities to clarify 
that RLPs may act in a non-RLP capacity for those securities to which 
it is not assigned, and as a result, may submit RPIs for those 
securities. For securities to which it is not assigned, the RLP would 
not be required to satisfy the quoting requirements found in Rule 
107C(f)--Equities, but would also not be eligible for the lower 
execution fees available to RLPs submitting RPIs for assigned 
securities.\3\ For assigned securities, the RLP would still be subject 
to the quoting requirements found in Rule 107C(f)--Equities, and 
failure to meet those requirements, could still result in the actions 
found in Rule 107C(g)--Equities.
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    \3\ Currently, RLPs who satisfy the applicable percentage 
requirement of Rule 107C--Equities are not charged a fee per share 
per execution of RPIs against a Retail Order. Non-RLP member 
organizations, unless they execute an average daily volume during 
the month of at least 500,000 shares of RPIs, would be charged a fee 
per share per execution of RPIs against Retail Orders of $0.0003.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\4\ in general, and 
furthers the objectives of Section 6(b)(5),\5\ in particular, in that 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. The Exchange believes the change 
proposed herein meets these requirements because it permits member 
organizations who have taken on the extra requirements of being an RLP 
in its assigned securities to still participate in the Program with 
other member organizations for those securities to which it is not 
assigned, which promotes just and equitable principles of trade. 
Without such permission, an RLP would be effectively penalized for 
taking on the responsibilities of becoming an RLP in assigned 
securities by not being permitted to participate in the program in 
securities to which it is not assigned. The proposed rule change would 
rectify this disparate treatment between RLPs and non-RLP member 
organizations in non-assigned securities. Additionally, the proposed 
rule change will remove impediments to and perfect the mechanism of a 
free and open market and a national market system because it will allow 
RLPs to submit RPIs in both its assigned and non-assigned securities, 
thus creating a larger pool of liquidity for Retail Orders to interact 
with and stimulating further price competition for retail orders.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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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. The Exchange believes that 
the amendment, by increasing the level of participation in the program, 
will increase the level of competition around executions such that 
retail investors would receive better prices than they currently do on 
the Exchange and potentially through bilateral internalization 
arrangements. The Exchange believes that the transparency and 
competitiveness of operating a program such as the Retail Liquidity 
Program on an exchange market would result in better prices for retail 
investors, and benefits retail investors by expanding the capabilities 
of Exchanges to encompass practices currently allowed on non-Exchange 
venues.

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 Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \6\ and Rule 19b-4(f)(6) thereunder.\7\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \7\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \8\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\9\ the Commission 
may designate a shorter time if such action is consistent with the 
protection

[[Page 6154]]

of investors and the public interest.\10\ The Exchange has asked the 
Commission to waive the 30-day operative delay so that the proposal may 
become operative immediately upon filing. The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest. The proposal would explicitly state 
that RLPs could submit RPIs in non-assigned securities, which should 
allow retail orders additional opportunities to receive price 
improvement. Therefore, the Commission designates the proposed rule 
change as operative upon filing.\11\
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    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ 17 CFR 240.19b-4(f)(6)(iii).
    \10\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to 
give the Commission written notice of the Exchange's intent to file 
the proposed rule change, along with a brief description and text of 
the proposed rule change, at least five business days prior to the 
date of filing of the proposed rule change, or such shorter time as 
designated by the Commission. The Exchange has satisfied this 
requirement.
    \11\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \12\ 15 U.S.C. 78s(b)(2)(B).
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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-2013-02 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-2013-02. 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 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-NYSEMKT-2013-02 and should 
be submitted on or before February 19, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-01840 Filed 1-28-13; 8:45 am]
BILLING CODE 8011-01-P