[Federal Register Volume 78, Number 239 (Thursday, December 12, 2013)]
[Notices]
[Pages 75655-75657]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-29615]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71016; File No. SR-NYSEArca-2013-136]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE 
Arca Options Fee Schedule To Raise the Take Liquidity Fee for Lead 
Market Maker and Market Maker Electronic Executions in Penny Pilot 
Issues

December 6, 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 November 26, 2013, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Options Fee Schedule 
(``Fee Schedule'') to raise the Take Liquidity fee for Lead Market 
Maker (``LMM'') and Market Maker electronic executions in Penny Pilot 
Issues. The Exchange proposes to implement the fee change effective 
December 1, 2013. 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.

[[Page 75656]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to raise the Take 
Liquidity fee for LMM and Market Maker electronic executions in Penny 
Pilot Issues.\4\ The Exchange proposes to implement the fee change 
effective December 1, 2013.\5\ Currently, the Exchange charges a Take 
Liquidity fee of $0.47 per contract for LMM and Market Maker electronic 
executions in Penny Pilot Issues. The Exchange proposes to raise the 
Take Liquidity fee to $0.48 per contract for LMM and Market Maker 
electronic executions in Penny Pilot Issues in order to keep the fee in 
the same range as other exchanges \6\ and generate revenue that will 
help support credits offered to market participants that post 
liquidity. The Exchange does not propose to make any other changes to 
the fees for electronic executions in Penny Pilot Issues. Take 
Liquidity fees will remain at $0.48 for Firms and Broker Dealers and 
$0.45 for Customers.
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    \4\ As provided under NYSE Arca Options Rule 6.72, options on 
certain issues have been approved to trade with a minimum price 
variation of $0.01 as part of a pilot program that is currently 
scheduled to expire on December 31, 2013. See Securities Exchange 
Act Release No. 69790, (June 18, 2013) 78 FR 37853 (June 24, 2013) 
(SR-NYSEArca-2013-59).
    \5\ The Exchange notes that it has previously filed with the 
Securities and Exchange Commission a proposed rule change to amend 
the Fee Schedule relating to co-location fees (File No. SR-NYSEArca-
2013-131). Exhibit 5 to SR-NYSEArca-2013-131 specified an effective 
date for the revised Fee Schedule of December 3, 2013 (changed from 
November 8, 2013). Exhibit 5 to the instant proposed rule change 
specifies an effective date of December 1, 2013 (changed from 
November 8, 2013). On December 1, 2013, the Exchange will update the 
Fee Schedule to reflect the fee change reflected in the instant 
proposed rule change, with an effective date of December 1, 2013. On 
December 3, 2013, the Exchange, subject to effectiveness of SR-
NYSEArca-2013-131, will further update the Fee Schedule to reflect 
the changes set forth in SR-NYSEArca-2013-131, with an effective 
date of December 3, 2013.
    \6\ For example, NASDAQ Options Market (``NOM'') charges Firms, 
Professionals, and Non-NOM Market Makers, NOM Market Makers, and 
Broker-Dealers $0.48 per contract for removing liquidity in Penny 
Pilot Options while Customers are charged $0.45 per contract. See 
NASDAQ Options Rules Chapter XV, Section 2, and Securities Exchange 
Act Release No. 70820, (November 6, 2013) 78 FR 68122 (November 13, 
2013) (SR-NASDAQ-2013-136).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\8\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that raising the Take Liquidity fee from 
$0.47 per contract to $0.48 per contract for LMM and Market Maker 
electronic executions in Penny Pilot Issues will result in the 
Exchange's fees for taking liquidity in Penny Pilot issues remaining 
comparable to fees charged by at least one other exchange.\9\ In 
addition, the proposed fee change is reasonable because it will 
generate revenue that will help to support the credits offered for 
posting liquidity, which are available to all market participants.
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    \9\ See supra note 6.
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    The Exchange believes that the proposed fee increase is equitable 
and not unfairly discriminatory because the Exchange would uniformly 
assess all market participants, except Customers, the same Take 
Liquidity fee of $0.48 per contract. Customer order flow benefits the 
market by increasing liquidity, which benefits all market participants; 
thus Customers are assessed lower fees. Also, LMMs and Market Makers 
have the ability to earn a higher Post Liquidity credit of $0.28 per 
contract for electronic executions in Penny Pilot Issues compared to 
the $0.10 per contract Post Liquidity Credit that is available to Firms 
and Broker Dealers. This is equitable and not unfairly discriminatory 
because LMMs and Market Makers have obligations to quote and commit 
capital, both of which contribute to market quality and price discovery 
on the Exchange. Firms and Broker Dealers do not have such obligations.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition. For these reasons, the Exchange 
believes that the proposal is consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\10\ 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 proposed fee will allow the Exchange to 
remain competitive with other exchanges by keeping its fees in a 
similar range.\11\ The Exchange believes that the proposed fee change 
reduces the burden on competition because it takes into account the 
value that various market participants add to the marketplace, as 
discussed above. 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 promotes a competitive 
environment.
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    \10\ 15 U.S.C. 78f(b)(8).
    \11\ See supra note 6.
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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) \12\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \13\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \14\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \14\ 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:

[[Page 75657]]

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-2013-136 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-2013-136. 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-NYSEArca-2013-136, and 
should be submitted on or before January 2, 2014.

    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. 2013-29615 Filed 12-11-13; 8:45 am]
BILLING CODE 8011-01-P