9288 Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Notices 

12See NYSE Amex Equities Rule 104(a)(1)(A). 

13 15 U.S.C. 78s(b)(2). 

14 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Under NYSE Arca Options Rule 6.72, options on 

certain issues have been approved to trade in a 

minimum price variation of $0.01 as part of a pilot 

program that is scheduled to expire on June 30, 

2012. 

interest, for securities traded pursuant 

to UTP. 

The Exchange proposes to reduce 

DMM units’ quoting obligations 

applicable to ‘‘more active’’ securities 

traded in the UTP Pilot Program to 

quoting at the NBBO for 5% of the 

trading day. The Commission notes that 

this percentage would reflect the 

quoting requirement currently 

applicable to DMM units quoting nonUTP Pilot Program securities, i.e., those 

listed on the Exchange.12 There would 

be one significant difference between 

the proposed quoting obligation for the 

UTP Pilot Program and the current 

quoting obligation for non-UTP Pilot 

Program securities—UTP Pilot Program 

quoting obligations are and would 

continue to be calculated on a securityby-security basis, rather than averaged 

across a portfolio of all of a DMM unit’s 

assigned securities. The Commission 

believes that this security-by-security 

basis calculation is reasonably designed 

to maintain robust quotes for all UTP 

Pilot Program securities. In addition, the 

Exchange’s proposal would reduce 

quoting obligations only for ‘‘more 

active’’ securities, which by definition 

are more liquid and may, therefore, be 

less reliant on quoting obligations for 

continued liquidity. Finally, based on 

the Exchange’s experience during the 

UTP Pilot Program, the proposed 

quoting obligation is designed to ensure 

the continued active participation by 

DMM units in such securities. 

The Commission also finds that the 

proposed deletion in NYSE Amex 

Equities Rule 504(b)(1)(A) to the 

reference to NYSE Amex Equities Rule 

103B(II) is consistent with the Act. The 

Exchange represented that this reference 

is not necessary within Rule 

504(b)(1)(A), and that, despite the 

proposed deletion, DMM units would 

remain subject to NYSE Amex Equities 

Rule 103B(II) with respect to security 

allocation eligibility. 

For the foregoing reasons, the 

Commission finds that the proposal to 

amend the UTP Pilot Program is 

consistent with the requirements of the 

Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,13 that the 

proposed rule change (SR–NYSEAmex– 

2011–101) be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–3611 Filed 2–15–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66377; File No. SR– 

NYSEArca–2012–12] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Implementing Changes to 

the NYSE Arca Options Fee Schedule 

Relating to Post Liquidity Credits 

February 10, 2012. 

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 January 

31, 2012, NYSE Arca, Inc. (the 

‘‘Exchange’’ or ‘‘NYSE Arca’’) 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 Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

NYSE Arca Options Fee Schedule (‘‘Fee 

Schedule’’) to increase the Post 

Liquidity credits on Customer posted 

electronic executions and to delete 

references to Royalty Fees for foreign 

currency options, which the Exchange 

no longer trades. The text of the 

proposed rule change is available at the 

Exchange, the Commission’s Public 

Reference Room, and www.nyse.com. 

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 increase the Post 

Liquidity credits on Customer posted 

electronic executions and to delete 

references to Royalty Fees for foreign 

currency options, which the Exchange 

no longer trades. The Exchange 

proposes to make the rule change 

operative on February 1, 2012. 

Post Liquidity Credits 

Electronic transactions in Penny Pilot 

issues 3 are assessed Take Liquidity fees 

and credited with Post Liquidity credits. 

Under the current Fee Schedule, the 

Post Liquidity credit is $0.25 per 

contract for Customers, $0.32 per 

contract for Lead Market Makers and 

Market Makers, and $0.10 per contract 

for Firms and Broker Dealers. OTP 

Holders that provide aggregated 

Customer posting volume in Penny Pilot 

issues that exceeds certain thresholds 

receive higher Post Liquidity credits on 

all Customer posted electronic 

executions. Specifically, an OTP Holder 

sending Customer orders that in the 

aggregate exceed 500,000 contracts 

executed in a month from posting 

liquidity receives a Post Liquidity credit 

of $0.32 per contract on all executions 

resulting from posted liquidity. If such 

aggregated Customer orders exceed 

800,000 contracts executed in a month 

from posting liquidity, the OTP Holder 

receives a Post Liquidity credit of $0.34 

per contract on all executions resulting 

from posted liquidity. If such aggregated 

Customer orders exceed 1,200,000 

contracts executed in a month from 

posting liquidity, the OTP Holder 

receives a Post Liquidity credit of $0.38 

per contract on all executions resulting 

from posted liquidity. The volume 

thresholds are intended to incentivize 

firms to route additional Customer 

orders to the Exchange. 

The Exchange proposes to amend the 

volume thresholds for the Post Liquidity 

credits by lowering the initial volume 

threshold to qualify for the first level of 

higher Post Liquidity credits, generally 

raising the amount of the Post Liquidity 


srobinson on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Notices 9289 

4 15 U.S.C. 78f(b). 

5 15 U.S.C. 78f(b)(4). 

6See, e.g., Nasdaq Options Market pricing, 

available at http://nasdaqtrader.com/ 

Micro.aspx?id=OptionsPricing, and BATS BZX 

Exchange Fee Schedule, Effective January 3, 2012, 

available at http://batstrading.com/FeeSchedule/. 

7 15 U.S.C. 78s(b)(3)(A). 

8 17 CFR 240.19b–4(f)(2). 

credits for the next two volume 

thresholds, and creating a new higher 

volume threshold that will pay a higher 

Post Liquidity credit than is currently 

offered. The Exchange notes, however, 

that under the proposed volume 

thresholds, an OTP Holder that sends 

Customer orders that in the aggregate 

exceed 500,000 but not 800,000 

contracts executed in a month will 

receive a lower Post Liquidity credit of 

$0.28 per contract, which is lower than 

the $0.32 Post Liquidity credit under the 

current Fee Schedule. The Exchange 

believes that the overall redistribution 

of the credits will in turn increase order 

flow to add liquidity on the Exchange 

and encourage greater participation by 

the largest market participants. The 

proposed volume thresholds and Post 

Liquidity credits are as follows: 

Monthly total customer contracts executed from posted 

liquidity 

Per contract rate 

on all posted 

liquidity 

Threshold 1 ................................................................... More than 350,000 ............................................................................. ¥$0.28 

Threshold 2 ................................................................... More than 800,000 ............................................................................. ¥0.36 

Threshold 3 ................................................................... More than 1,200,000 .......................................................................... ¥0.42 

Threshold 4 ................................................................... More than 3,500,000 .......................................................................... ¥0.43 

Royalty Fees for Foreign Currency 

Options 

The current Fee Schedule sets forth 

Royalty Fees for certain foreign currency 

options. Because the Exchange no 

longer trades foreign currency options, 

it proposes to delete references to such 

Royalty Fees. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Securities Exchange 

Act of 1934 (the ‘‘Act’’) 4 in general and 

Section 6(b)(4) of the Act 5 in particular 

because it is designed to provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

members and other persons using its 

facilities and does not unfairly 

discriminate between customers, 

issuers, brokers or dealers. The 

proposed change is equitably allocated 

and not unfairly discriminatory because 

it will apply uniformly to all similarly 

situated OTP Holders that direct 

Customer orders to the Exchange. The 

proposed fees also are equitably 

allocated and reasonable because they 

create an incrementally higher incentive 

for OTP Holders to bring additional 

liquidity to the Exchange, thereby 

contributing to price discovery and 

benefiting investors generally. 

Moreover, the difference between (1) the 

Post Liquidity credits received by OTP 

Holders that aggregate Customer orders, 

and (2) the Post Liquidity credit 

received by Firms and Broker Dealers is 

not inequitable or unfairly 

discriminatory because the Exchange 

believes that it has structured its Fee 

Schedule in a manner to attract order 

flow from all such entities. In this 

regard, the Exchange has found that the 

higher Post Liquidity credit for Firms 

and Broker Dealers has not caused them 

to send additional order flow to the 

Exchange. Based on its observations, the 

Exchange believes that such entities 

focus on the ability to trade with 

Customer order flow to capture the 

spread rather than on rebates and fees. 

Accordingly, the Exchange is proposing 

to further generally increase the Post 

Liquidity credits for Customer order 

flow to attract such order flow to the 

Exchange. Although certain OTP 

Holders that send Customer orders that 

in the aggregate exceed 500,000 but not 

800,000 contracts executed in a month 

will receive a slightly lower Post 

Liquidity credit than they currently do, 

other OTP Holders that previously did 

not qualify for the credit will qualify 

going forward. The Exchange believes 

that overall redistribution of the credits 

will in turn increase order flow to add 

liquidity on the Exchange and 

encourage greater participation by the 

largest market participants. With the 

anticipated increase in such order flow 

to the Exchange, the Exchange expects 

to attract additional order flow from 

Firms and Broker Dealers to trade with 

such order flow. The Exchange further 

believes that the proposed change is 

reasonable because other exchanges 

offer comparable tiers of credits for 

adding Customer liquidity in Penny 

Pilot issues.6

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

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. 

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) 7 of the Act and 

subparagraph (f)(2) of Rule 19b–4 8

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

NYSE Arca. 

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. 

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 rulecomments@sec.gov. Please include File 

Number SR–NYSEArca–2012–12 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 


srobinson on DSK4SPTVN1PROD with NOTICES
9290 Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Notices 

9 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The purpose of the fidelity bond is to protect a 

member against certain types of losses, including, 

but not limited to, those caused by the malfeasance 

of its officers and employees, and the effect of such 

losses on the member’s capital. 

4See Securities Exchange Act Release No. 63961 

(February 24, 2011), 76 FR 11542 (March 2, 2011) 

(SR–FINRA–2010–059) (a rule change to adopt a 

rule of the National Association of Securities 

Dealers, Inc. (‘‘NASD’’) as part of the consolidation 

of the FINRA rulebook). This new rule took into 

account Incorporated NYSE Rule 319 (Fidelity 

Bonds) and its Interpretation. 

Securities and Exchange Commission, 

100 F Street NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca-2012–12. 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– 

NYSEArca–2012–12 and should be 

submitted on or before March 8, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–3613 Filed 2–15–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66372; File No. SR– 

NASDAQ–2012–021] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NASDAQ 

Stock Market LLC Relating to Fidelity 

Bonds 

February 10, 2012. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–42 thereunder, 

notice is hereby given that on January 

31, 2012, The NASDAQ Stock Market 

LLC (‘‘NASDAQ’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

the proposed rule change as described 

in Items I and II below, which Items 

have been prepared by NASDAQ. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The NASDAQ Stock Market LLC 

proposes to amend NASDAQ Rule 3020 

to reflect recent changes to a 

corresponding rule of the Financial 

Industry Regulatory Authority 

(‘‘FINRA’’). 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http:// 

www.nasdaq.cchwallstreet.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 

Exchange included statements 

concerning the purpose of, and basis for, 

the proposed rule change. The text of 

these 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 aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Many of NASDAQ’s rules are based 

on rules of FINRA (formerly the 

National Association of Securities 

Dealers (‘‘NASD’’)). Beginning in 2008, 

FINRA embarked on an extended 

process of moving rules formerly 

designated as ‘‘NASD Rules’’ into a 

consolidated FINRA rulebook. In most 

cases, FINRA has renumbered these 

rules, and in some cases has 

substantively amended them. 

Accordingly, NASDAQ also has 

initiated a process of modifying its 

rulebook to ensure that NASDAQ rules 

corresponding to FINRA/NASD rules 

continue to mirror them as closely as 

practicable. 

This proposed rule change concerns 

NASDAQ Rule 3020 entitled ‘‘Fidelity 

Bonds,’’ which follows and incorporates 

by reference former NASD Rule 3020.3

FINRA recently amended its rules to 

adopt former NASD Rule 3020, relating 

to Fidelity Bonds, with certain changes, 

into the consolidated FINRA rulebook 

as FINRA Rule 4360.4 NASDAQ Rule 

3020 provides that ‘‘[a] member 

designated to Nasdaq for oversight 

pursuant to SEC Rule 17d–1 shall 

comply with NASD Rule 3020 as if such 

Rule were part of Nasdaq’s Rules.’’ The 

Exchange proposes to amend this text to 

reference new FINRA Rule 4360, which 

replaced NASD Rule 3020. 

NASD Rule 3020(a) generally 

provides that each member required to 

join the Securities Investor Protection 

Corporation (‘‘SIPC’’) that has 

employees and that is not a member in 

good standing of one of the enumerated 

national securities exchanges must 

maintain fidelity bond coverage. FINRA 

Rule 4360 requires each member that is 

required to join SIPC to maintain 

blanket fidelity bond coverage with 

specified amounts of coverage based on 

the member’s net capital requirement, 

with certain exceptions. NASD Rule 

3020(a)(1) requires members to maintain 

a blanket fidelity bond in a form 

substantially similar to the standard 

form of Brokers Blanket Bond 

promulgated by the Surety Association 

of America. New FINRA Rule 4360 

requires members to maintain fidelity 

bond coverage that provides for per loss 

coverage without an aggregate limit of 

liability. Also, pursuant to FINRA Rule 

4360, a member’s fidelity bond must 

provide against loss and have Insuring 

Agreements covering at least the 

following: Fidelity, on premises, in 

transit, forgery and alteration, securities 

and counterfeit currency. The rule 

change modified the descriptive 

headings for these Insuring Agreements, 

in part, from NASD Rule 3020(a)(1) and 

NYSE Rule 319(d) to align them with 

the headings in the current bond forms 

available to broker-dealers. FINRA Rule 

4360 also eliminates the specific 

coverage provisions in NASD Rule 


srobinson on DSK4SPTVN1PROD with NOTICES