[Federal Register Volume 79, Number 25 (Thursday, February 6, 2014)]
[Notices]
[Pages 7267-7269]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-02498]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71452; File No. SR-NYSE-2014-05]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Its Price List To Introduce Fees and Credits for A New Order 
Type Called a Midpoint Passive Liquidity Order

January 31, 2014.
    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 January 22, 2014, 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 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Price List to introduce fees for 
a new order type called a Midpoint Passive Liquidity (``MPL'') Order. 
The proposed fees would be operative on January 27, 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 amend its Price List to introduce fees for 
a new order type called a MPL Order. The proposed fees would be 
operative on January 27, 2014.
    The Exchange recently introduced the MPL Order type,\4\ which is an 
undisplayed limit order that automatically executes at the mid-point of 
the protected best bid or offer (``PBBO''). An MPL Order is not 
eligible for manual executions, including openings, re-openings, or 
closing transactions. An MPL Order also is not eligible to trade if it 
would trade at a price below $1.00 or if the execution price would be 
out to five decimal places above $1.00. All market participants--
customers, Floor brokers, Designated Market Makers (``DMMs''), and 
Supplemental Liquidity Providers (``SLPs'')--may use the MPL order 
type.
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    \4\ See Rule 13 and Securities Exchange Act Release No. 71330 
(January 16, 2014) (SR-NYSE-2013-71).
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    The Exchange proposes to charge $0.0025 per share for all MPL 
Orders that remove liquidity from the Exchange if the security is 
priced $1.00 or more. The Exchange also proposes to offer a

[[Page 7268]]

credit of $0.0015 per share for all MPL Orders that provide liquidity 
to the Exchange if the security is priced $1.00 or more.\5\ The fee and 
credit will apply to all market participants. MPL Orders that add 
liquidity will contribute to adding liquidity requirements, including 
Tier 1 Adding Credit, Tier 2 Adding Credit, SLP credits for $0.0023 and 
$0.0025 credits, and DMM providing liquidity. However, the Exchange 
notes that MPL Orders will not be eligible for any tiered or additional 
credits or reduced fees even if the MPL Orders contribute to a member 
organization qualifying for an additional credit. For example, if a 
member organization qualified for the Tier 1 Adding Credit, the member 
organization will receive the proposed $0.0015 per share credit for MPL 
Orders, not $0.0018 per share for such order under the tier. Where the 
MPL Order fee or credit does not differ from the current fee or credit, 
the Exchange has not proposed a change to the Price List.
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    \5\ The Exchange's current rates for transactions in securities 
with a per share price less of than $1.00 would continue to apply.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\7\ 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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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed fee of $0.0025 per share 
for all MPL Orders that remove liquidity from the Exchange and the 
proposed credit of $0.0015 per share for all MPL Orders that provide 
liquidity to the Exchange if the security is priced $1.00 or more are 
reasonable because the fee and credit would be the same as the fee and 
credit that would otherwise apply for all other non-Floor broker 
transactions (i.e., $0.0025 per share fee for taking liquidity from the 
Exchange and $0.0015 per share credit under the non-Tier Adding 
Credit). The Exchange notes that the proposed credit and fee are within 
the same range as at least one other exchange for MPL Orders.\8\ The 
Exchange also believes that the proposed fee and credit are equitable 
and not unfairly discriminatory because they may provide opportunities 
for market participants to interact with orders priced at the midpoint 
of the PBBO, thus providing price improving liquidity to market 
participants and thereby increase the quality of order execution on the 
Exchange's market, which benefits all market participants. The Exchange 
also believes that providing the same fees and credits for MPL Orders 
that would otherwise apply is equitable and not unfairly 
discriminatory. Moreover, all market participants will be eligible for 
the proposed fee and credit. The Exchange believes that it is 
reasonable, equitable, and not unfairly discriminatory to limit 
additional or higher credits for MPL Orders for which market 
participants may otherwise qualify because it will ensure that all 
market participants pay the same fees and receive the same credits 
regardless of Floor broker, DMM, or SLP designation. The Exchange 
believes that it is reasonable to allow MPL Orders to count toward 
adding liquidity because it is consistent with the purpose of those 
credits. The Exchange also believes it is equitable and not unfairly 
discriminatory because all market participants that use the MPL Order 
type will pay the same fee and receive the same credit.
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    \8\ For Tape A Securities under its Tier 1, Tier 2, and Basic 
Rate Tier, the Exchange's affiliate, NYSE Arca Equities, Inc., 
currently charges $0.0030 per share for all MPL Orders that remove 
liquidity and provides a credit of $0.0015 per share for all MPL 
Orders that provide liquidity. See NYSE Arca Equities, Inc. Schedule 
of Fees and Charges, available at https://usequities.nyx.com/sites/usequities.nyx.com/files/nyse_arca_marketplace_fees__for_1-2-14.pdf.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\9\ 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 the proposed MPL Order fees 
and credits will enhance order execution opportunities for member 
organizations. Further, the Exchange believes that providing the same 
fees and credits for MPL Orders that would otherwise apply will enhance 
competition between the Exchange and other exchanges that currently 
offer similar order types by offering investors another option to 
access liquidity at the midpoint of the PBBO.
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    \9\ 15 U.S.C. 78f(b)(8).
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    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee or credit levels at a particular 
venue to be unattractive. In such an environment, the Exchange must 
continually review, and consider adjusting, its fees and credits to 
remain competitive with other exchanges. For these reasons, the 
Exchange believes that the proposed rule change reflects this 
competitive environment and is therefore consistent with 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) \10\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \11\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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) \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 proposal 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-2014-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary,

[[Page 7269]]

Securities and Exchange Commission, 100 F Street NE., Washington, DC 
20549-1090.

All submissions should refer to File Number SR-NYSE-2014-05. 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-NYSE-2014-05 and should be 
submitted on or before February 27, 2014.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-02498 Filed 2-5-14; 8:45 am]
BILLING CODE 8011-01-P