[Federal Register Volume 79, Number 93 (Wednesday, May 14, 2014)]
[Notices]
[Pages 27657-27658]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-11027]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72123; File No. SR-NYSE-2014-25]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Its Price List, Effective May 2, 2014, To Set Forth a Fee for 
a Bond Trading License Under Rule 87 and a Rebate for Bond Liquidity 
Providers That Bring Liquidity to the Exchange's Bond Market in 
Accordance With Rule 88 and To Delete an Obsolete Fee

May 8, 2014.
    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 May 2, 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\ 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, effective May 2, 
2014, to (1) set forth a fee for a bond trading license under Rule 87 
and a rebate for BLPs that bring liquidity to the Exchange's bond 
market in accordance with Rule 88 and (2) delete an obsolete fee. 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 proposes to amend its Price List, effective May 2, 
2014, to (1) set forth a fee for a bond trading license under Rule 87 
and a rebate for BLPs that bring liquidity to the Exchange's bond 
market in accordance with Rule 88 and (2) delete an obsolete fee.
    On February 27, 2014, the Exchange filed a proposed rule change to 
make permanent its pilot program that provided for a bond trading 
license for member organizations that desire to trade only debt 
securities on the Exchange and that established a new class of market 
participants called BLPs.\3\ The proposal was published for comment on 
March 14, 2014 and approved by the Securities and Exchange Commission 
(``Commission'') on April 25, 2014.\4\
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    \3\ See Securities Exchange Act Release No. 71671 (March 10, 
2014), 79 FR 14558 (March 14, 2014) (SR-NYSE-2014-08). The 
Commission previously approved the proposed bond trading license and 
BLP program on a pilot basis. See Securities Exchange Act Release 
No. 63736 (January 19, 2011), 76 FR 4959 (January 27, 2011) (SR-
NYSE-2010-74). The pilot program was originally scheduled to expire 
on January 19, 2012, but the Commission approved two one-year 
extensions. See Securities Exchange Act Release No. 65995 (December 
16, 2011), 76 FR 79726 (December 22, 2011) (SR-NYSE-2011-63); 
Securities Exchange Act Release No. 68533 (December 21, 2012), 77 FR 
77166 (December 31, 2012) (SR-NYSE-2012-74). The pilot program 
terminated on January 19, 2014.
    \4\ See Securities Exchange Act Release No. 72026 (April 25, 
2014) (SR-NYSE-2014-08).
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    The Exchange proposes to amend its Price List to set forth the 
price of the bond trading license and a liquidity provider rebate and 
cap. First, the Exchange will offer a bond trading license under Rule 
87 for $1,000. By way of comparison, a trading license under Rule 300, 
which covers all debt and equity securities listed on the Exchange, is 
$40,000. Second, if a BLP meets the quoting requirements for a bond 
pursuant to Rule 88, the BLP will receive a liquidity provider rebate 
of $0.05 per bond, with a $50.00 rebate cap per transaction. The rebate 
first will be applied against any bond liquidity taking or other fees 
that the BLP owes to the Exchange. If the rebate exceeds such fees in 
any given month, the Exchange will pay the excess amount to the BLP. 
The Exchange does not propose any changes to its Price List for 
liquidity taking transactions on its bond platform, which were adopted 
on a permanent basis in 2010.\5\
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    \5\ See Securities Exchange Act Release No. 63593 (December 21, 
2010), 75 FR 81701 (December 28, 2010) (SR-NYSE-2010-83).
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    The Exchange also proposes to delete the reference to a $5,000 fee 
for the NYSE-Sponsored Graphic User Interface, which is no longer 
offered and not necessary for market participants to submit orders to 
NYSE Bonds.
    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,\6\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(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. The Exchange believes 
that it is reasonable to charge a lower fee for a bond trading license 
because holders will only be able to trade the narrower class of 
securities, rather than all securities on the Exchange. The price also 
reflects the Exchange's lower cost of administering and surveilling a 
narrower class of securities. The bond trading license fee is equitable 
because it will be offered to all market participants that wish to 
trade the narrower class of debt securities only.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4), (5).
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    The Exchange believes that the proposed rebate and rebate cap are 
reasonable because they will reward liquidity providers on the bond 
platform. The Exchange believes that it is reasonable to cap the 
rebates because excess rebates will be paid to the BLP after the 
rebates are applied against any bond liquidity taking or other fees 
that

[[Page 27658]]

the BLP owes to the Exchange. The cap will help to ensure that the 
rebates do not have an inappropriate negative impact on fees collected 
for other transactions or programs. The liquidity provider rebate and 
cap are equitable because they will apply to all BLPs that meet their 
quoting obligations under Rule 88.
    The deletion of the reference to a $5,000 fee for the NYSE-
Sponsored Graphic User Interface, which is no longer offered and not 
necessary for market participants to submit orders to NYSE Bonds, is 
reasonable and equitable because it will add clarity to the Price List 
and provide better notice to market participants.

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

    In accordance with Section 6(b)(8) of the Act,\8\ 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. Debt securities typically trade in a decentralized 
over-the-counter (``OTC'') dealer market that is less liquid and 
transparent than the equities markets. The Exchange believes that the 
proposed change would increase competition with these OTC venues by 
reducing the cost of obtaining an Exchange trading license and 
rewarding market participants for actively quoting and providing 
liquidity in the only transparent bond market, which the Exchange 
believes will enhance market quality.
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    \8\ 15 U.S.C. 78f(b)(8).
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    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues that 
are not transparent. In such an environment, the Exchange must 
continually review, and consider adjusting its fees and rebates to 
remain competitive with other exchanges as well as with alternative 
trading systems and other venues that are not required to comply 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 change 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) \9\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \10\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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) \11\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \11\ 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-2014-25 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-2014-25. 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-2014-25 and should be 
submitted on or before June 4, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-11027 Filed 5-13-14; 8:45 am]
BILLING CODE 8011-01-P