[Federal Register Volume 80, Number 131 (Thursday, July 9, 2015)]
[Notices]
[Pages 39468-39472]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16726]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75353; File No. SR-NYSE-2015-30]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change To Amend Its Price List To
Revise: (i) The Non-Tier Adding Credit; (ii) Certain Fees for
Executions at the Close; (iii) Credits Applicable to Designated Market
Makers; (iv) Credits Applicable to Supplemental Liquidity Providers;
and (v) Pricing Related to the Retail Liquidity Program Under Rule 107C
as it Relates to Designated Market Maker Transactions, and To Make Non-
Substantive Changes to the Price List
July 2, 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 June 26, 2015, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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 revise: (i) The
non-tier adding credit; (ii) certain fees for executions at the close;
(iii) credits applicable to designated market makers; (iv) credits
applicable to supplemental liquidity providers; and (v) pricing related
to the retail liquidity program under rule 107c as it relates to
designated market maker transactions, and to make non-substantive
changes to the price list. 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 to revise (i) the
Non-Tier Adding Credit; (ii) certain fees for executions at the close;
(iii) credits applicable to Designated Market Makers (``DMMs''); (iv)
credits applicable to Supplemental Liquidity Providers (``SLPs''); and
(v) pricing related to the Retail Liquidity Program under Rule 107C as
it relates to DMM transactions, and to make non-substantive changes to
the Price List. The Exchange proposes to implement the fee change
effective July 1, 2015.
Member Organization Non-Tier Adding Credit
Member organizations are currently eligible for the Non-Tier Adding
Credit for all orders in securities priced $1.00 or more, other than
Midpoint Passive Liquidity (``MPL'') \4\ and Non-Display Reserve
orders, that add liquidity to the NYSE unless a higher credit applies.
The applicable rate for the Non-Tier Adding Credit is $0.0015 per
share. The Exchange proposes to lower this credit to $0.0014 per share.
The credits applicable to MPL orders and Non-Display Reserve orders
would be unchanged.
---------------------------------------------------------------------------
\4\ An MPL Order is an undisplayed limit order that
automatically executes at the mid-point of the best protected bid
(``PBB'') or best protected offer (``PBO''), as such terms are
defined in Regulation NMS Rule 600(b)(57) (together, ``PBBO''). See
Rule 13. See also 17 CFR 242.600(b)(57).
---------------------------------------------------------------------------
Executions at the Close
The Exchange currently charges member organizations $0.00095 per
share for market-at-the-close (``MOC'') and limit-at-the-close
(``LOC'') orders, unless a member organization meets specified
thresholds set forth in the Price List for MOC and LOC activity. The
Exchange proposes to increase this fee by $0.00005 to $0.0010 per share
and to identify this pricing tier in the Price List as Non-Tier MOC/
LOC.
The Exchange currently charges $0.00065 per share for all MOC and
LOC orders from any member organization executing (i) an ADV of MOC and
LOC activity on the Exchange in the month of at least 0.375% of
consolidated ADV (``CADV'') in NYSE-listed securities during the
billing month (``NYSE CADV''); or (ii) an ADV of MOC and LOC activity
on the Exchange in that month of at least 0.30% of NYSE CADV plus an
ADV of total close activity (i.e., MOC and LOC and other executions at
the close) on the Exchange in that month of at least 0.475% of NYSE
CADV. The Exchange proposes to increase this fee to $0.00070 per share
and to identify this pricing tier in the Price List as MOC/LOC Tier 2.
The Exchange does not propose to change the fee of $0.0006 per
share applicable to MOC and LOC orders from any member organization
executing an ADV of MOC and LOC activity on the NYSE in that month of
at least 0.575% of NYSE CADV. The Exchange proposes to identify this
tier in the Price List as MOC/LOC Tier 1.
[[Page 39469]]
DMMs
DMMs are currently eligible for a per share credit of $0.0025 when
adding liquidity in shares of each More Active Security \5\ if the More
Active Security has a stock price of $1.00 or more and the DMM quotes
at the National Best Bid or Offer (``NBBO'') in the applicable security
at least 10% of the time in the applicable month (``More Active
Securities Quoting Requirement''). The Exchange proposes to raise this
credit to $0.0027 per share.
---------------------------------------------------------------------------
\5\ A ``More Active Security'' is a security with an average
daily consolidated volume in the previous month equal to or greater
than one million shares. See Price List.
---------------------------------------------------------------------------
DMMs are currently eligible for a per share credit when adding
liquidity in shares of each More Active Security if (a) the More Active
Security has a stock price of $1.00 or more, (b) the DMM meets the More
Active Securities Quoting Requirement, (c) the DMM Quoted Size for an
applicable month is at least 15% of the NYSE Quoted Size (defined in
the Price List as the ``More Active Securities Quoted Size Ratio
Requirement''), and (d) the DMM's providing liquidity meets certain
thresholds, as follows:
$0.0029 per share if the DMM's providing liquidity is 15%
or less of the NYSE's total intraday adding liquidity in each such
security for that month; \6\ or
---------------------------------------------------------------------------
\6\ The NYSE total intraday adding liquidity is totaled monthly
and includes all NYSE adding liquidity, excluding NYSE open and NYSE
close volume, by all NYSE participants, including SLPs, customers,
Floor brokers and DMMs. See Price List.
---------------------------------------------------------------------------
$0.0032 per share if the DMM's providing liquidity is more
than 15% of the NYSE's total intraday adding liquidity in each such
security for that month.
The ``NYSE Quoted Size'' is calculated by multiplying the average
number of shares quoted on the NYSE at the NBBO by the percentage of
time the NYSE had a quote posted at the NBBO. The ``DMM Quoted Size''
is calculated by multiplying the average number of shares of the
applicable security quoted at the NBBO by the DMM by the percentage of
time during which the DMM quoted at the NBBO.
The Exchange proposes to make the following changes to these
credits:
The Exchange proposes to raise the $0.0029 per share credit to
$0.0031 per share when the DMM has a DMM Quoted Size for an applicable
month that is at least 10% of the NYSE Quoted Size, reduced from the
current requirement of 15% of the NYSE Quoted Size. In addition, the
requirement that a DMM provide liquidity of 15% or less of the NYSE's
total intraday adding liquidity to receive this credit would no longer
apply.
The Exchange proposes to raise the $0.0032 per share credit when
adding liquidity to $0.0034 per share. The requirements for this credit
would remain unchanged, including the requirement to provide liquidity
of more than 15% of the NYSE's total intraday adding liquidity in each
such security for that month.
The Exchange proposes to delete the defined term, ``More Active
Securities Quoted Size Ratio Requirement,'' as currently set forth in
the Price List, as part of the changes to these credits.
In any month in which a DMM quotes at the NBBO at least 20% of the
time in a security with a Security CADV \7\ of less than 1,000,000
shares per month (``Less Active Securities''), such DMM receives all of
the market data quote revenue (the ``Quoting Share'') received by the
Exchange from the Consolidated Tape Association under the Revenue
Allocation Formula of Regulation NMS (regardless of whether the stock
price exceeds $1.00). If the DMM quotes at the NBBO in a Less Active
Security \8\ at least 15% of the time, but quotes less than 20% of the
time in an applicable month, the DMM receives 50% of the Quoting Share.
---------------------------------------------------------------------------
\7\ ``Security CADV'' is defined in the Price List as the
average daily consolidated volume of a security.
\8\ ``Less Active Securities'' are defined in the Price List as
securities that have a Security CADV of less than 1,000,000 shares
per month in the previous month.
---------------------------------------------------------------------------
The Exchange proposes to raise the threshold for the Security CADV
of securities with respect to which DMMs would receive the Quoting
Share from less than 1,000,000 shares to less than 1,500,000 shares in
the previous month. A DMM would receive 50% of the Quoting Share if it
quotes at the NBBO in a security that has a Security CADV of less than
1,500,000 shares in the previous month at least 15% of the time, but
less than 20% of the time in an applicable month.
SLPs
SLPs are eligible for certain credits when adding liquidity to the
Exchange. The amount of the credit is currently determined by the
``tier'' for which the SLP qualifies, which is based on the SLP's level
of quoting and the ADV of liquidity added by the SLP in assigned
securities.
Currently, SLP Tier 3 provides that when adding liquidity to the
NYSE in securities with a share price of $1.00 or more, an SLP is
eligible for a credit of $0.0023 per share traded if the SLP (1) meets
the 10% average or more quoting requirement in assigned securities
pursuant to Rule 107B and (2) adds liquidity for assigned SLP
securities in the aggregate \9\ of an ADV \10\ of more than 0.20% of
NYSE CADV,\11\ or with respect to an SLP that is also a DMM and subject
to Rule 107B(i)(2)(a),\12\ more than 0.15% of NYSE CADV. The SLP Tier 3
credit in the case of Non-Displayed Reserve Orders is $0.0008. For less
active SLP securities (i.e., securities with an ADV in the previous
month of 500,000 share or less per month (``Less Active SLP
Securities'')), under SLP Tier 3, the SLP is eligible for a per share
credit of $0.0028; $0.0013 if a Non-Displayed Reserve Order.
---------------------------------------------------------------------------
\9\ Under Rule 107B, an SLP can be either a proprietary trading
unit of a member organization (``SLP-Prop'') or a registered market
maker at the Exchange (``SLMM''). For purposes of the 10% average or
more quoting requirement in assigned securities pursuant to Rule
107B, quotes of an SLP-Prop and an SLMM of the same member
organization are not aggregated. However, for purposes of adding
liquidity for assigned SLP securities in the aggregate, shares of
both an SLP-Prop and an SLMM of the same member organization are
included.
\10\ The defined term, ``ADV,'' used here as defined in footnote
2 to the Price List.
\11\ NYSE CADV is defined in the Price List as the consolidated
average daily volume of NYSE-listed securities.
\12\ Rule 107B(i)(2)(A) prohibits a DMM from acting as a SLP in
the same securities in which it is a DMM.
---------------------------------------------------------------------------
Similarly, SLP Tier 2 provides that an SLP adding liquidity in
securities with a per share price of $1.00 or more is eligible for a
per share credit of $0.0026 if the SLP: (1) Meets the 10% average or
more quoting requirement in an assigned security pursuant to Rule 107B;
and (2) adds liquidity for all assigned SLP securities in the aggregate
of an ADV of more than 0.45% of NYSE CADV, or with respect to an SLP
that is also a DMM and subject to Rule 107B(i)(2)(a), more than 0.40%
of NYSE CADV.\13\ The SLP Tier 2 credit in the case of Non-Displayed
Reserve Orders is $0.0011. For Less Active SLP Securities, under SLP
Tier 2, the SLP is eligible for a per share credit of $0.0031;
[$]0.0016 if a Non-Displayed Reserve Order.
---------------------------------------------------------------------------
\13\ In determining whether an SLP meets the requirement to add
liquidity in the aggregate of an ADV of more than 0.35% or 0.30%
depending on whether the SLP is also a DMM, the SLP may include
shares of both an SLP-Prop and an SLMM of the same member
organization.
---------------------------------------------------------------------------
SLP Tier 1 provides that an SLP adding liquidity in securities with
a per share price of $1.00 or more is eligible for a per share credit
of $0.0029 if the SLP: (1) Meets the 10% average or more quoting
requirement in an assigned security pursuant to Rule 107B; and (2) adds
liquidity for all for assigned SLP securities in the aggregate of an
ADV of more than 0.90% of NYSE CADV, or with respect to an SLP that is
also a
[[Page 39470]]
DMM and subject to Rule 107B(i)(2)(a), more than 0.85% of NYSE CADV.
The SLP Tier 1 credit in the case of Non-Displayed Reserve Orders is
$0.0014. For Less Active SLP Securities, the SLP is eligible for a per
share credit of $0.0034; $0.0019 if a Non-Displayed Reserve Order.
Finally, the SLP Non-Tier provides that an SLP adding liquidity in
securities with a per share price of $1.00 or more that does not
qualify for the credits described above is eligible for the applicable
rate for the base SLP tier, which would be the rate that applies to the
non-SLP activity of the member organization, i.e., the non-Tier Adding
Credit, Tier 3 Adding Credit, Tier 2 Adding Credit or Tier 1 Adding
Credit (``SLP Non-Tier''). In the case of Non-Displayed Reserve Orders,
there is no credit under the SLP Non-Tier.
For SLP Tier 3, SLP Tier 2, and SLP Tier 1, the Exchange proposes
to eliminate the higher credits that currently apply to Less Active
Securities. Accordingly, regardless of the ADV of a security, SLPs
would receive a per share credit of $0.0023, $0.0026, and $0.0029 for
SLP Tier 3, SLP Tier 2, and SLP Tier 1, respectively and $.0008,
$0.0011, and $0.0014 for Non-Displayed Reserve Orders for SLP Tier 3,
SLP Tier 2, and SLP Tier 1, respectively.
In addition, for SLP Tier 1 and SLP Tier 2, the Exchange proposes
to lower the ADV percentage requirement for credits for SLPs that are
also DMMs and subject to Rule 107B(i)(2)(A). The ADV percentage
requirement for SLPs that are also DMMs and subject to Rule
107B(i)(2)(A) for SLP Tier 1 and SLP Tier 2 would decrease from 0.85%
to 0.65% and 0.40% to [0.30%], respectively. The Exchange does not
propose to change the ADV percentage requirement for SLP Tier 3, nor
does the Exchange propose any changes to the SLP Non-Tier.
Finally, the Exchange proposes to raise the per share credits for
Non-Displayed Reserve Orders for SLP Tier 3, from $0.0008 to $0.0009,
for SLP Tier 2, from $0.0011 to $0.0012, and for SLP Tier 1, from
$0.0014 to $0.0015.
Retail Liquidity Program
The Retail Liquidity Program is a pilot program that is designed to
attract additional retail order flow to the Exchange for NYSE-listed
securities while also providing the potential for price improvement to
such order flow.\14\ Retail order flow is submitted through the Retail
Liquidity Program as a distinct order type called a ``Retail Order,''
which is defined in Rule 107C(a)(3) as an agency order or a riskless
principal order that meets the criteria of Financial Industry
Regulatory Authority, Inc. Rule 5320.03 that originates from a natural
person and is submitted to the Exchange by a Retail Member Organization
(``RMO''), provided that no change is made to the terms of the order
with respect to price or side of market and the order does not
originate from a trading algorithm or any other computerized
methodology.\15\ In addition to RMOs, Retail Liquidity Providers
(``RLPs'') were created as an additional class of market participant
under the Retail Liquidity Program. RLPs are required to provide
potential price improvement for Retail Orders in the form of ``RPIs,''
which are non-displayed interest that is better than the PBBO.\16\
Member organizations other than RLPs are also permitted, but not
required, to submit RPIs.
---------------------------------------------------------------------------
\14\ See Rule 107C. See also Securities Exchange Act Release
Nos. 67347 (July 3, 2012), 77 FR 40673 (July 10, 2012) (SR-NYSE-
2011-55) (establishing the Retail Liquidity Program pilot) and 74454
(March 6, 2015), 80 FR 13054 (March 12, 2015) (SR-NYSE-2015-10)
(extending the pilot period to September 30, 2015).
\15\ RMO is defined in Rule 107C(a)(2) as a member organization
(or a division thereof) that has been approved by the Exchange under
Rule 107C to submit Retail Orders.
\16\ RLP is defined in Rule 107C(a)(1) as a member organization
that is approved by the Exchange to act as such and that is required
to submit RPIs in accordance with Rule 107C. RPI is defined in Rule
107C(a)(4) and consists of non-displayed interest in NYSE-listed
securities that is priced better than the PBBO by at least $0.001
and that is identified as such.
---------------------------------------------------------------------------
RLP executions of RPIs against Retail Orders are currently provided
with a credit of $0.0003 per share if the RLP satisfies the applicable
percentage requirement of Rule 107C. RPIs of an RLP that does not
satisfy the applicable percentage requirement of Rule 107C are subject
to a fee of $0.0003 per share.
A fee of $0.0003 per share also currently applies to non-RLP member
organization executions of RPIs against Retail Orders, unless the non-
RLP member organization executes an ADV during the month of at least
500,000 shares of RPIs, in which case a credit of $0.0003 per share
applies.
For executions of Retail Orders if executed against RPIs or MPL
Orders, RMOs are not currently charged or provided with a credit (i.e.,
they are free).\17\
---------------------------------------------------------------------------
\17\ Retail Orders are otherwise charged according to standard
fees applicable to non-Retail Orders if executed against the Book.
---------------------------------------------------------------------------
The Exchange proposes a credit of $0.0020 per share for executions
of an RPI by a DMM that is not an RLP against a Retail Order. The
Exchange also proposes to exclude DMMs from the other rates applicable
to non-RLP Member organizations in connection with the executions of
RPIs against Retail Orders.
Finally, the Exchange proposes to make non-substantive changes to
the Price List. Effective June 1, 2015, the Exchange eliminated the
credit of $0.0010 per share for executions of Non-Displayed Reserve
Orders for market participants, other than SLPs, that provide
liquidity.\18\ The Exchange proposes to add a line item to the Price
List for Non-Displayed Reserve Orders, and to add a comma to the
description of the Non-Tier Adding Credit, to make it clear in the
Price List that there is no charge with respect to executions of Non-
Displayed Reserve Orders for market participants, other than SLPs, that
provide liquidity.
---------------------------------------------------------------------------
\18\ See Securities Exchange Act Release No. 75139 (June 10,
2015), 80 FR 34475 (June 16, 2015) (SR-NYSE-2015-28).
---------------------------------------------------------------------------
The above proposed changes are 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,\19\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\20\ 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.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
Member Organization Non-Tier Adding Credit
The Exchange believes that the change to the Member Organization
Non-Tier Adding Credit for executions of orders in securities with a
per share price of $1.00 or more is reasonable, equitable and not
unfairly discriminatory because it is intended to incentivize member
organizations to submit additional amounts of liquidity to the Exchange
to be eligible to receive the higher credits available from the Tier 1
Adding Credit, the Tier 2 Adding Credit and the Tier 3 Adding Credit.
The Exchange believes that the proposed lower credit for the Member
Organization Non-Tier Adding Credit is equitable and not unfairly
discriminatory because it would apply equally to all member
organizations.
[[Page 39471]]
Executions at the Close
The Exchange believes that increasing the MOC/LOC Non-Tier fee to
$0.0010 is reasonable because this rate would be lower than the non-
tier rate, Tier F, for market-on-close and limit-on-close orders on the
NASDAQ Stock Market (``NASDAQ''), of $0.0015 per executed share.\21\
Similarly, the Exchange believes that increasing the MOC/LOC Tier 2 fee
to $0.0007 per share is reasonable because it would be lower than the
lowest fee for market-on-close and limit-on-close orders on NASDAQ, of
$0.0008 per executed share. The Exchange notes that it is not changing
the fee of $0.0006 for MOC/LOC Tier 1. The Exchange believes that
maintaining the lowest fee for the highest liquidity requirements would
incentivize member organizations to send in more closing auction volume
to the primary market, thereby deepening the Exchange's liquidity pool
and supporting the quality of price discovery. The Exchange believes
that it is equitable and not unfairly discriminatory to charge lower
fees to member organizations that make significant contributions to
market quality by providing higher volumes of liquidity, which benefits
all market participants. The Exchange believes the proposed fees are
equitable and not unfairly discriminatory because all similarly
situated member organizations would be subject to the same fee
structure.
---------------------------------------------------------------------------
\21\ See NASDAQ Rule 7018(d).
---------------------------------------------------------------------------
The Exchange believes that the proposal to add defined terms to the
Price List for the MOC/LOC fee tiers is reasonable because the change
would make the Price List clearer and easier to understand.
DMMs
The Exchange believes that the proposed higher credits would
increase the incentive to DMMs to provide additional liquidity on the
Exchange to meet the quoting and quoted size requirements for the
higher credits. Moreover, the requirement is equitable and not unfairly
discriminatory because it would apply equally to all DMM firms.
The Exchange believes that the $0.0031 rebate for DMMs when adding
liquidity with orders, other than MPL orders, in a More Active Security
if the More Active Security has a stock price of $1.00 or more and the
DMM meets the More Active Securities Quoting Requirement and has a DMM
Quoted Size for an applicable month that is at least 10% of the NYSE
Quoted Size is reasonable because the requirement for DMM Quoted Size
would be reduced from 15% to 10% of the NYSE Quote Size, the DMM would
still need to meet the More Active Securities Quoting Requirement of
10%, and the requirement for providing liquidity of 15% or less of the
NYSE's total intraday adding in liquidity in each such security would
no longer apply. The Exchange believes that maintaining the requirement
for DMM Quoted Size at 15% of the NYSE Quote Size for the $0.0034
credit is reasonable as the credit for meeting that requirement would
be higher than the $0.0031 credit for meeting the lower requirement of
at least 10% of NYSE Quoted Size. Moreover, the requirements are
equitable and not unfairly discriminatory because they would apply
equally to all DMMs.
The Exchange believes that expanding the number of securities that
can make a DMM eligible to receive the market data quote revenue is
reasonable as it would encourage greater quoting in an expanded
universe of less actives securities where there may be fewer liquidity
providers. Moreover, the requirement is equitable and not unfairly
discriminatory because it would apply equally to all DMMs.
SLPs
The Exchange believes that removing the higher credits for SLPs
that apply to providing liquidity in Less Active Securities is
reasonable and would not impose a burden on competition because the
credits would be removed in their entirety and generally have not
encouraged liquidity on the Exchange, as intended.
The Exchange believes that lowering the ADV percentage requirements
for the SLP Tier 1 and SLP Tier 2 credits for SLPs that are also DMMs
and subject to Rule 107B(i)(2)(A) is reasonable because lowering the
requirements would increase the incentives to add liquidity and more
closely compares to the requirements for SLP Tier 3. Moreover, the
requirement is equitable and not unfairly discriminatory because it
would apply equally to all SLPs.
The Exchange believes that increasing the credits for SLPs for Non-
Displayed Reserve Orders for SLP Tier 3, SLP Tier 2 and SLP Tier 1 is
reasonable because the added incentive created by the availability of
the higher credit is reasonably related to an SLP's liquidity
obligations on the Exchange and the value to the Exchange's market
quality associated with higher volumes. The proposed changes also are
equitable and not unfairly discriminatory because all similarly
situated SLPs would be eligible to qualify for the rates by satisfying
the related thresholds, where applicable.
Retail Liquidity Program
The Exchange believes that the proposed change to the rates under
the Retail Liquidity Program is reasonable. The Exchange originally
introduced the existing rates approximately three years ago.\22\ At
that time, the Exchange stated that, because the Retail Liquidity
Program was a pilot program, the Exchange anticipated that it would
periodically review applicable pricing to seek to ensure that it
contributes to the goal of the Retail Liquidity Program, which is
designed to attract additional retail order flow to the Exchange for
NYSE-listed securities while also providing the potential for price
improvement to such order flow. The proposed new rate is a result of
this review.
---------------------------------------------------------------------------
\22\ See Securities Exchange Act Release No. 67529 (July 27,
2012), 77 FR 46137 (August 2, 2012) (SR-NYSE-2012-30).
---------------------------------------------------------------------------
The proposed new rate would be set at a level that would reasonably
incentivize DMMs to contribute to RPI liquidity being available for
interaction with Retail Orders which would encourage more Retail Orders
being submitted to the Exchange. Together, this would increase the pool
of robust liquidity available on the Exchange, thereby contributing to
the quality of the Exchange's market and to the Exchange's status as a
premier destination for liquidity and order execution. The Exchange
believes that, because Retail Orders are likely to reflect long-term
investment intentions, they promote price discovery and dampen
volatility. Accordingly, the presence of Retail Orders on the Exchange
has the potential to benefit all market participants. In addition, the
Exchange believes that it is equitable and not unfairly discriminatory
to allocate higher or additional credits to DMMs compared to other
market participants because the higher credit is reasonably related to
a DMM's affirmative obligations on the Exchange.\23\ The Exchange also
believes the proposed credit is equitable and not unfairly
discriminatory because it will apply equally to all DMMs.
---------------------------------------------------------------------------
\23\ Under Rule 104(a), DMMs registered in one or more
securities traded on the Exchange have obligations with respect to
the quality of the markets in securities to which they are assigned,
such as engaging in a course of dealings for their own account to
provide a continuous two-sided quote with reasonable size,
maintaining fair and orderly markets and facilitating openings,
reopenings, and the close of trading in assigned securities.
---------------------------------------------------------------------------
The Exchange believes that the non-substantive clarifying changes
to the
[[Page 39472]]
Price List are reasonable because they are designed to provide greater
transparency with regard to how the Exchange assesses fees and provides
rebates. The Exchange notes that the proposed non-substantive
clarifying changes are not designed to amend any fee or rebate, nor to
change how the Exchange assesses fees or calculates credits. In
particular, the proposed changes are reasonable and equitable because
they do not modify the fees or credits applicable to Non-Displayed
Reserve Orders for market participants, other than SLPs, that provide
liquidity.
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 the foregoing 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,\24\ 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 by promoting
price discovery and ultimately increased competition. For the same
reasons, the proposed change also would not impose any burden on
competition among market participants. Pricing for executions at the
opening would remain at the same 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.
---------------------------------------------------------------------------
\24\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
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) \25\ of the Act and subparagraph (f)(2) of Rule
19b-4 \26\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
---------------------------------------------------------------------------
\25\ 15 U.S.C. 78s(b)(3)(A).
\26\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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) \27\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\27\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
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-2015-30 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2015-30. 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-NYSE-2015-30 and should be submitted on or before July
30, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
---------------------------------------------------------------------------
\28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-16726 Filed 7-8-15; 8:45 am]
BILLING CODE 8011-01-P