[Federal Register Volume 80, Number 114 (Monday, June 15, 2015)]
[Notices]
[Pages 34182-34184]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14478]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75123; File No. SR-NYSEArca-2015-49]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE 
Arca Equities Schedule of Fees and Charges for Exchange Services To 
Modify the Credits for Mid-Point Passive Liquidity Orders

June 9, 2015.
    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 May 29, 2015, 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Equities Schedule of 
Fees and Charges for Exchange Services (the ``Fee Schedule'') to modify 
the credits for Mid-Point Passive Liquidity (``MPL'') Orders. The 
Exchange proposes to implement the fee changes on June 1, 2015. 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 the Fee Schedule to modify the 
credits applicable to MPL Orders.\4\ The Exchange proposes to implement 
the fee changes on June 1, 2015.
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    \4\ An MPL Order is a Passive Liquidity Order executable only at 
the midpoint of the Protected Best Bid and Offer. See Rule 
7.31(h)(5) [sic]. A Passive Liquidity Order is an order to buy or 
sell a stated amount of a security at a specified, undisplayed 
price. See Rule 7.31(h)(4) [sic].
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    Currently, MPL Orders that provide liquidity on the Exchange 
receive a credit of $0.0015 per share for Tape A, Tape B and Tape C 
Securities under Tier 1, Tier 2 and Basic Rates in the Fee Schedule.\5\
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    \5\ Tier 1 applies to ETP Holders and Market Makers (1) that 
provide liquidity an average daily share volume per month of 0.70% 
or more of the US CADV or (2) that (a) provide liquidity an average 
daily share volume per month of 0.15% or more of the US CADV and (b) 
are affiliated with an OTP Holder or OTP Firm that provides an ADV 
of electronic posted executions (including all account types) in 
Penny Pilot issues on NYSE Arca Options (excluding mini options) of 
at least 100,000 contracts, of which at least 25,000 contracts must 
be for the account of a market maker. Tier 2 applies to ETP Holders 
and Market Makers that provide liquidity an average daily share 
volume per month of 0.30% or more, but less than 0.70% of the US 
CADV. Basic Rates apply when tier rates do not apply. US CADV means 
United States Consolidated Average Daily Volume for transactions 
reported to the Consolidated Tape, excluding odd lots through 
January 31, 2014 (except for purposes of Lead Market Maker pricing), 
and excludes volume on days when the market closes early and on the 
date of the annual reconstitution of the Russell Investments 
Indexes. Transactions that are not reported to the Consolidated Tape 
are not included in US CADV.
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    The Exchange proposes to modify the credits under Tier 1, Tier 2 
and Basic Rates for MPL Orders that provide liquidity and establish 
different credits based on the Average Daily Volume (``ADV'') of 
provided liquidity in MPL Orders for Tape A, Tape B and Tape C 
Securities combined (``MPL Adding ADV''). The proposed changes would 
apply to ETP Holders and Market Makers that are eligible for Tier 1 or 
Tier 2 fees and credits, and to the Basic Rates. The proposed changes 
would apply to securities with a per share price of $1.00 or above.
    For ETP Holders and Market Makers that have MPL Adding ADV during 
the billing month of at least 3 million shares, the credit per share 
would be $0.0015 for Tape A Securities, $0.0020 for Tape B Securities 
and $0.0025 for Tape C Securities (``MPL Adding ADV Category 1'').
    For ETP Holders and Market Makers with MPL Adding ADV during the

[[Page 34183]]

billing month of at least 1.5 million shares but less than 3 million 
shares, the credit per share would be $0.0015 for Tape A, Tape B and 
Tape C Securities (``MPL Adding ADV Category 2'').
    For ETP Holders and Market Makers with MPL Adding ADV during the 
billing month of less than 1.5 million shares, the credit per share 
would be $0.0010 for Tape A, Tape B and Tape C Securities (``MPL Adding 
ADV Category 3'').
    The current $0.0030 fee for MPL Orders in Tape A, B and C 
securities that remove liquidity from the Exchange would not change as 
a result of this proposal. In addition, MPL Orders removing liquidity 
from the Exchange that are designated as Retail Orders are not 
currently subject to a fee, which the Exchange is not proposing to 
change.
    The Exchange also proposes to add the defined term, ``MPL'' in 
place of Mid-Point Passive Liquidity'' throughout the Fee Schedule.
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.
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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 change to the credits for 
MPL Orders is reasonable because it would align the level of the 
credits to the level of volume provided.
    The Exchange believes that the higher credits in MPL Adding ADV 
Category 1 for Tape B and Tape C securities, of $0.0020 and $0.0025, 
respectively, is reasonable because the higher credits would 
incentivize ETP Holders to submit the additional liquidity required for 
MPL Adding ADV Category 1 through MPL Orders in Tape B and Tape C 
Securities. The Exchange believes that for MPL Adding ADV Category 1, 
the credit for Tape A securities of $0.0015 is reasonable because it is 
unchanged from the current credit.
    Similarly, the credit of $0.0015 in MPL Adding ADV Category 2, 
which is the same as the current per share credit for MPL Orders, is 
reasonable because it would apply to ETP Holders and Market Makers that 
provide a lower MPL Adding ADV, of more than 1.5 million shares but 
less than 3 million shares, than MPL Adding ADV Category 1, but higher 
[sic] than the MPL Adding ADV required for the higher credits in MPL 
Adding ADV Category 1 [sic] for Tape B and Tape C Securities. The 
lowest credit, of $0.0010 per share, in MPL Adding ADV Category 3, is 
reasonable because it would apply equally to the ETP Holders and Market 
Makers that provide the lowest MPL Adding ADV of less than 1.5 million 
shares.
    MPL Orders allow for additional opportunities for passive 
interaction with trading interest on the Exchange and are designed to 
offer potential price improvement to incoming marketable orders 
submitted to the Exchange.\8\ The Exchange believes that by correlating 
the level of the credit to the level of MPL Adding Volume, this 
proposed fee structure would incentivize ETP Holders to submit more 
liquidity providing MPL Orders to the Exchange, thereby increasing the 
potential price improvement to incoming marketable orders submitted to 
the Exchange.
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    \8\ See, e.g., Securities Exchange Act Release No. 54511 
(September 26, 2006), 71 FR 58460, 58461 (October 3, 2006) (SR-PCX-
2005-53).
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    The Exchange believes that the proposed change is also equitable 
and not unfairly discriminatory because the proposed credits would be 
available to all ETP Holders and Market Makers to qualify for and would 
apply equally to MPL Orders from all ETP Holders and Market Makers.
    Finally, the Exchange notes that certain other exchanges also 
structure pricing based on midpoint pricing, including with respect to 
applicable volume thresholds that must be satisfied in order to qualify 
for such pricing, and that the pricing levels proposed by the Exchange 
are competitive with those exchanges.\9\
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    \9\ For example, the Nasdaq Stock Market LLC (``NASDAQ'') 
provides a non-tier credit for midpoint liquidity of $0.0014 for 
Tape A and B securities and $0.0010 per share for Tape C securities. 
See NASDAQ Rule 7018.
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    The Exchange believes that the changes to replace the term, ``Mid-
Point Passive Liquidity'' with the defined term, ``MPL'' throughout the 
fee schedule is reasonable because it will make the Fee Schedule 
clearer and easier to understand.
    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. 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 change 
reflects this competitive environment. 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. Instead, the Exchange believes that the 
proposed change will encourage competition, including by attracting 
additional liquidity to the Exchange, which will make the Exchange a 
more competitive venue for, among other things, order execution and 
price discovery. In general, ETP Holders impacted by the proposed 
change may readily adjust their trading behavior to maintain or 
increase their credits in a favorable manner, and will therefore not be 
disadvantaged in their ability to compete. Specifically, all ETP 
Holders have the ability to submit MPL Orders and ETP Holders could 
readily choose to submit additional MPL Orders on the Exchange in order 
to qualify for the proposed credits for MPL Orders.
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    \10\ 15 U.S.C. 78f(b)(8).
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    Also, the Exchange does not believe that the proposed change will 
impair the ability of ETP Holders or competing order execution venues 
to maintain their competitive standing in the financial markets. In 
this regard, the Exchange notes that certain aspects of the proposed 
change are similar to, and competitive with, pricing structures and 
applicable fees and credits applicable on another exchange.\11\
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    \11\ See supra note 9.
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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. The credits proposed herein 
are based on objective standards that are applicable to all ETP Holders 
and reflect the need for the Exchange to offer significant financial 
incentives to attract order flow. For these reasons, the Exchange 
believes that the proposed rule change reflects this competitive 
environment and is therefore consistent with the Act.

[[Page 34184]]

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:

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-2015-49 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-NYSEArca-2015-49. 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 will also be 
available for inspection and copying at the NYSE's principal office and 
on its Internet Web site at www.nyse.com. 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-2015-49, and should be 
submitted on or before July 6, 2015.

    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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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-14478 Filed 6-12-15; 8:45 am]
 BILLING CODE 8011-01-P