[Federal Register Volume 79, Number 70 (Friday, April 11, 2014)]
[Notices]
[Pages 20283-20285]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-08125]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71890; File No. SR-NYSE-2014-18]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Its Price List for Certain Executions at the Opening

April 7, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on March 26, 2014, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') 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 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 for certain 
executions at the opening. The Exchange proposes to implement the fee 
change effective April 1, 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.

[[Page 20284]]

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

1. Purpose
    The Exchange proposes to amend its Price List for certain 
executions at the opening.\4\ The Exchange proposes to implement the 
fee change effective April 1, 2014.
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    \4\ The proposed pricing would only apply to securities priced 
$1.00 or greater. The existing pricing for executions at the opening 
in securities priced below $1.00 would remain unchanged (i.e., 0.3% 
of the total dollar value of the transaction). Designated Market 
Maker (``DMM'') executions at the opening would continue to not be 
charged.
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    The Exchange currently charges a fee of $0.0005 per share for 
executions at the opening or at the opening only orders, subject to a 
monthly fee cap of $15,000 per member organization for such executions. 
The Exchange proposes to raise the fee to $0.0010 per share and the 
monthly fee cap to $20,000 per member organization.
    The proposed change is not otherwise intended to address any other 
issues, and the Exchange is not aware of any problems that members and 
member organizations 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 Act,\5\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\6\ 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that it is reasonable to increase the fee and 
corresponding fee cap for executions at the opening because members and 
member organizations benefit from the substantial amounts of liquidity 
that are present on the Exchange during such time. The proposed new 
rate of $0.0010 for the fee is reasonable because it will strike a more 
appropriate balance between encouraging liquidity at the opening and 
generating adequate revenues for the Exchange. The Exchange notes that 
it has not increased the fee in nearly five years or the fee cap in 
more than two years.\7\ The increase to the fee cap is also reasonable 
in light of the proposed increase in the fee because member 
organizations would otherwise reach the fee cap twice as quickly. The 
Exchange believes that it is reasonable to increase the fee cap for 
executions at the opening because a member organization that reaches 
the cap would continue to be charged a marginal [sic] rate for its 
transactions at the opening that is lower than the $0.0010 rate that 
would be applicable without the cap (i.e., once a member organization 
reaches the cap, its per-transaction rate thereafter will be zero and 
its marginal rate [sic] will decrease for each additional transaction 
at the open thereafter). The proposed new rate for the fee and the 
corresponding new level for the fee cap are also reasonable because 
they are comparable to those for executions at the opening on other 
markets.\8\
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    \7\ See Securities Exchange Act Release Nos. 60436 (August 5, 
2009), 74 FR 40252 (August 11, 2009) (SR-NYSE-2009-77); and 66600 
(March 14, 2012), 77 FR 16298 (March 20, 2012) (SR-NYSE-2012-07).
    \8\ For example, the Nasdaq Stock Market, LLC (``NASDAQ'') 
similarly charges $0.0010 per share for certain orders executed in 
the NASDAQ Opening Cross and applies a $20,000 fee cap per month per 
firm for such executions. See NASDAQ Rule 7018(e).
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    The proposed new rate of $0.0010 for the fee and the increased fee 
cap of $20,000 are equitable and not unfairly discriminatory because, 
even at such increased levels, this pricing would continue to encourage 
robust levels of liquidity at the opening, which benefits all market 
participants. This pricing is also equitable and not unfairly 
discriminatory because it would apply equally to all similarly situated 
member organizations.\9\
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    \9\ As noted in note 1 [sic] above, DMM executions at the 
opening would continue to not be charged. The Exchange believes that 
this is reasonable because of the liquidity-providing function that 
DMMs serve. This is also equitable and not unfairly discriminatory 
because DMMs are subject to certain obligations to which other 
members and member organizations are not.
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    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 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, the Exchange believes that the proposed 
change would contribute to the Exchange's market quality and ultimately 
competition. The proposed change would also lead to increased 
competition among execution venues, including by permitting the 
Exchange to compete with other markets that apply comparable pricing 
for executions at the opening.\11\ The proposed change also would not 
impose any burden on competition among market participants. Instead, 
the pricing for executions at the opening would remain at relatively 
low levels and would continue to reflect the benefit that market 
participants receive through the ability to have their orders interact 
with other liquidity at the opening.
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    \10\ 15 U.S.C. 78f(b)(8).
    \11\ See supra note 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 levels at a particular venue to be 
excessive or rebate opportunities available at other venues to be more 
favorable. In such an environment, the Exchange must continually adjust 
its fees and rebates to remain competitive with other exchanges and 
with alternative trading systems that have been exempted from 
compliance with the statutory standards applicable to exchanges. 
Because competitors are free to modify their own fees and credits in 
response, and because market participants may readily adjust their 
order routing practices, the Exchange believes that the degree to which 
fee changes in this market may impose any burden on competition is 
extremely limited. As a result of all of these considerations, the 
Exchange does not believe that the proposed changes will impair the 
ability of member organizations or competing order execution venues to 
maintain their competitive standing in the financial markets.

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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[[Page 20285]]

    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:

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-2014-18 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2014-18. 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-NYSE-2014-18 and should be 
submitted on or before May 2, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Kevin M. O'Neill,
Deputy Secretary.
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    \15\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2014-08125 Filed 4-10-14; 8:45 am]
BILLING CODE 8011-01-P