[Federal Register Volume 78, Number 124 (Thursday, June 27, 2013)]
[Notices]
[Pages 38748-38750]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-15347]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69820; File No. SR-NYSEMKT-2013-52]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Extending the Operation 
of Its Supplemental Liquidity Providers Pilot Until the Earlier of the 
Securities and Exchange Commission's Approval To Make Such Pilot 
Permanent or January 31, 2014

June 21, 2013.
    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 June 17, 2013, NYSE MKT LLC (``NYSE MKT'' or 
``Exchange'') 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 Exchange. The 
Commission is

[[Page 38749]]

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 '') proposes to extend the operation of 
its Supplemental Liquidity Providers Pilot (``SLP Pilot'' or ``Pilot'') 
(See Rule 107B-Equities), currently scheduled to expire on July 31, 
2013, until the earlier of the Securities and Exchange Commission's 
(``Commission'') approval to make such Pilot permanent or January 31, 
2014. 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 proposes to extend the operation of its SLP Pilot,\4\ 
currently scheduled to expire on July 31, 2013, until the earlier of 
Commission approval to make such Pilot permanent or January 31, 2014.
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    \4\ See Securities Exchange Act Release No. 61308 (January 7, 
2010), 75 FR 2573 (January 15, 2010) (SR-NYSEAmex-2009-98) 
(establishing the NYSE Amex Equities SLP Pilot). See also Securities 
Exchange Act Release Nos. 61841 (April 5, 2010), 75 FR 18560 (April 
12, 2010) (SR-NYSEAmex-2010-33) (extending the operation of the SLP 
Pilot to September 30, 2010); 62814 (September 1, 2010), 75 FR 54671 
(September 8, 2010) (SR-NYSEAmex-2010-88) (extending the operation 
of the SLP Pilot to January 31, 2011); 63615 (December 29, 2010), 76 
FR 611 (January 5, 2011) (SR-NYSEAmex-2010-123) (extending the 
operation of the SLP Pilot to August 1, 2011); 64772 (June 29, 
2011), 76 FR 39455 (July 6, 2011) (SR-NYSEAmex-2011-44) (extending 
the operation of the SLP Pilot to January 31, 2012); 66041 (December 
23, 2011), 76 FR 82328 (December 30, 2011) (SR-NYSEAmex-2011-103) 
(extending the operation of the SLP Pilot to July 31, 2012); 67496 
(July 25, 2012), 77 FR 45390 (July 31, 2012) (SR-NYSEMKT-2012-22) 
(extending the operation of the SLP Pilot to January 31, 2013); and 
68557 (January 2, 2013), 78 FR 1284 (January 8, 2013) (SR-NYSEMKT-
2012-85) (extending the operation of the SLP Pilot to July 31, 
2013).
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Background \5\
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    \5\ The information contained herein is a summary of the NMM 
Pilot and the SLP Pilot. See supra note 4 and Infra note 6 for a 
fuller description of those pilots.
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    In October 2008, the New York Stock Exchange LLC (``NYSE'') 
implemented significant changes to its market rules, execution 
technology and the rights and obligations of its market participants 
all of which were designed to improve execution quality on the NYSE. 
These changes were all elements of the NYSE's and the Exchange's 
enhanced market model referred to as the ``New Market Model'' (``NMM 
Pilot'').\6\ The NYSE SLP Pilot was launched in coordination with the 
NMM Pilot (see NYSE Rule 107B).
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    \6\ See Securities Exchange Act Release No. 58845 (October 24, 
2008), 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46).
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    As part of the NMM Pilot, NYSE eliminated the function of 
specialists on the Exchange creating a new category of market 
participant, the Designated Market Maker or ``DMM.'' \7\ Separately, 
the NYSE established the SLP Pilot, which established SLPs as a new 
class of market participants to supplement the liquidity provided by 
DMMs.\8\
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    \7\ See NYSE Rule 103.
    \8\ See NYSE Rule 107B and NYSE MKT Rule 107B--Equities. NYSE 
amended the monthly volume requirements to an ADV that is a 
specified percentage of NYSE CADV. See Securities Exchange Act 
Release No. 67759 (August 30, 2012), 77 FR 54939 (September 6, 2012) 
(SR-NYSE-2012-38).
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    The NYSE adopted NYSE Rule 107B governing SLPs as a six-month pilot 
program commencing in November 2008. This NYSE pilot has been extended 
several times, most recently to July 31, 2013.\9\ The NYSE is in the 
process of requesting an extension of their SLP Pilot until January 31, 
2014 or until the Commission approves the pilot as permanent.\10\ The 
extension of the NYSE SLP Pilot until January 31, 2014 runs parallel 
with the extension of the NMM pilot until January 31, 2014, or until 
the Commission approves the NMM Pilot as permanent.
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    \9\ See Securities Exchange Act Release Nos. 58877 (October 29, 
2008), 73 FR 65904 (November 5, 2008) (SR-NYSE-2008-108) (adopting 
SLP Pilot program); 59869 (May 6, 2009), 74 FR 22796 (May 14, 2009) 
(SR-NYSE-2009-46) (extending SLP Pilot program until October 1, 
2009); 60756 (October 1, 2009), 74 FR 51628 (October 7, 2009) (SR-
NYSE-2009-100) (extending SLP Pilot program until November 30, 
2009); 61075 (November 30, 2009), 74 FR 64112 (December 7, 2009) 
(SR-NYSE-2009-119) (extending SLP Pilot program until March 30, 
2010); 61840 (April 5, 2010), 75 FR 18563 (April 12, 2010) (SR-NYSE-
2010-28) (extending the SLP Pilot until September 30, 2010); 62813 
(September 1, 2010), 75 FR 54686 (September 8, 2010) (SR-NYSE-2010-
62) (extending the SLP Pilot until January 31, 2011); 63616 
(December 29, 2010), 76 FR 612 (January 5, 2011) (SR-NYSE-2010-86) 
(extending the operation of the SLP Pilot to August 1, 2011); 64762 
(June 28, 2011), 76 FR 39145 (July 5, 2011) (SR-NYSE-2011-30) 
(extending the operation of the SLP Pilot to January 31, 2012); 
66045 (December 23, 2011), 76 FR 82342 (December 30, 2011) (SR-NYSE-
2011-66) (extending the operation of the SLP Pilot to July 31, 
2012); 67493 (July 25, 2012), 77 FR 45388 (July 31, 2012) (SR-NYSE-
2012-27) (extending the operation of the SLP Pilot to January 31, 
2013); and 68560 (January 2, 2013), 78 FR 1280 (January 8, 2013) 
(SR-NYSE-2012-76) (extending the operation of the SLP Pilot to July 
31, 2013).
    \10\ See SR-NYSE-2013-44.
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Proposal To Extend the Operation of the NYSE MKT SLP Pilot

    The Exchange established the SLP Pilot to provide incentives for 
quoting, to enhance competition among the existing group of liquidity 
providers, including the DMMs, and add new competitive market 
participants. NYSE MKT Rule 107B--Equities is based on NYSE Rule 107B. 
NYSE MKT Rule 107B--Equities was filed with the Commission on December 
30, 2009, as a ``me too'' filing for immediate effectiveness as a pilot 
program.\11\ The Exchange's SLP Pilot is scheduled to end operation on 
July 31, 2013 or such earlier time as the Commission may determine to 
make the rules permanent.
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    \11\ See Securities Exchange Act Release No. 61308 (January 7, 
2010), 75 FR 2573 (January 15, 2010) (SR-NYSEAmex-2009-98).
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    The Exchange believes that the SLP Pilot, in coordination with the 
NMM Pilot and the NYSE SLP Pilot, allows the Exchange to provide its 
market participants with a trading venue that utilizes an enhanced 
market structure to encourage the addition of liquidity, facilitate the 
trading of larger orders more efficiently and operates to reward 
aggressive liquidity providers. As such, the Exchange believes that the 
rules governing the SLP Pilot (NYSE MKT Rule 107B--Equities) should be 
made permanent.
    Through this filing the Exchange seeks to extend the current 
operation of the SLP Pilot until January 31, 2014, in order to allow 
the Exchange to formally submit a filing to the Commission to convert 
the SLP Pilot rule to a permanent rule. The Exchange is currently 
preparing a rule filing seeking permission to make the Exchange's SLP 
Pilot permanent, but does not expect that filing to be completed and 
approved by the Commission before July 31, 2013.\12\
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    \12\ The NMM Pilot was scheduled to expire on July 31, 2013 as 
well. On June 14, 2013, the Exchange filed to extend the NMM Pilot 
until January 31, 2014 (See SR-NYSEMKT-2013-51).
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2. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'') 
for this proposed rule change is the requirement under Section 6(b)(5) 
that

[[Page 38750]]

an exchange have rules that are designed to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
of a free and open market and a national market system and, in general, 
to protect investors and the public interest. The Exchange believes 
that the instant filing is consistent with these principles because the 
SLP Pilot provides its market participants with a trading venue that 
utilizes an enhanced market structure to encourage the addition of 
liquidity and operates to reward aggressive liquidity providers. 
Moreover, the instant filing requesting an extension of the SLP Pilot 
will permit adequate time for: (i) The Exchange to prepare and submit a 
filing to make the rules governing the SLP Pilot permanent; (ii) public 
notice and comment; and (iii) completion of the 19b-4 approval process.

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 
extending the operation of the SLP Pilot will enhance competition among 
liquidity providers and thereby improve execution quality on the 
Exchange.

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 \13\ and Rule 19b-4(f)(6) thereunder.\14\ 
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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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
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.
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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-2013-52 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-2013-52. 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 publicly available. All 
submissions should refer to File Number SR-NYSEMKT-2013-52 and should 
be submitted on or before July 18, 2013.

    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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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2013-15347 Filed 6-26-13; 8:45 am]
BILLING CODE 8011-01-P