[Federal Register Volume 80, Number 74 (Friday, April 17, 2015)]
[Notices]
[Pages 21283-21286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-08792]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74715; File No. SR-NYSEArca-2015-24]


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 
Provide a Second Way To Qualify for the Cross-Asset Tier Credit of 
$0.0030 Per Share for Orders That Provide Liquidity to the Exchange

April 13, 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 March 31, 2015, NYSE Arca, Inc. (the

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``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 
provide a second way to qualify for the Cross-Asset Tier credit of 
$0.0030 per share for orders that provide liquidity to the Exchange. 
The Exchange proposes to implement the fee change effective April 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to provide a second 
way to qualify for the Cross-Asset Tier credit of $0.0030 per share for 
orders that provide liquidity to the Exchange. The Exchange proposes to 
implement the fee change effective April 1, 2015.
    Currently, ETP Holders, including Market Makers, qualify for the 
Cross-Asset Tier credit of $0.0030 per share for orders that provide 
liquidity to the Exchange if they (1) provide liquidity of 0.40% or 
more of United States consolidated average daily volume (``US CADV'') 
\4\ per month and (2) are affiliated with an NYSE Arca Options Trading 
Permit (``OTP'') Holder or OTP Firm that provides an average daily 
volume (``ADV'') of electronic posted Customer executions in Penny 
Pilot issues on NYSE Arca Options (excluding mini options) of at least 
0.95% of total Customer equity and Exchange-Traded Fund (``ETF'') 
option ADV, as reported by the Options Clearing Corporation (``OCC''). 
For all other fees and credits, Tiered or Basic Rates apply based on a 
firm's qualifying levels.
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    \4\ The Exchange proposes to use the same definition US CADV for 
purposes of the proposed alternative to qualifying for the Cross-
Asset Tier. Specifically, US CADV would mean the 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. See Fee Schedule, footnote 4.
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    The Exchange proposes to permit ETP Holders, including Market 
Makers, to alternatively qualify for the Cross-Asset Tier credit if 
they (1) provide liquidity of 0.30% or more of the US CADV per month, 
(2) are affiliated with an OTP Holder or OTP Firm that provides an ADV 
of electronic posted Customer executions in all issues on NYSE Arca 
Options (similarly excluding mini options) of at least 0.80% of total 
Customer equity and ETF option ADV as reported by OCC, and (3) executes 
an ADV of Retail Orders \5\ that provide liquidity during the month 
that is 0.10% or more of the US CADV. The Exchange believes that the 
proposal would create an added incentive for ETP Holders to bring 
additional retail order flow to a public market.
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    \5\ Retail Orders are defined in the Fee Schedule as orders 
designated as retail orders and that meet the requirements of Rule 
7.44(a)(3), but that are not executed in the Retail Liquidity 
Program. The Retail Liquidity Program is a pilot program designed to 
attract additional retail order flow to the Exchange for NYSE Arca-
listed securities and securities traded pursuant to unlisted trading 
privileges while also providing the potential for price improvement 
to such order flow. See Rule 7.44. See Securities Exchange Act 
Release No. 71176 (December 23, 2013), 78 FR 79524 (December 30, 
2013) (SR-NYSEArca-2013-107).
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    The proposed changes are not otherwise intended to address any 
other problem, and the Exchange is not aware of any significant problem 
that the affected market participants would have in complying with the 
proposed changes.
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 proposal to amend the Cross-Asset 
Tier is reasonable because it provides ETP Holders affiliated with an 
NYSE Arca Options OTP Holder or OTP Firm with an additional way to 
qualify for the $0.0030 rebate. The Exchange believes that the proposal 
to utilize a lower requirement of an ETP Holder or Market Maker 
providing liquidity of 0.30% or more of US CADV, rather than 0.40% or 
more of US CADV, is reasonable because to qualify for the alternative 
an ETP Holder or Market Maker would also be required to trade Retail 
Orders on the Exchange of 0.10% or more of the US CADV. In addition, 
the Exchange believes that the proposed alternative's requirement that 
an ETP Holder's and Market Maker's affiliated OTP Holder or OTP Firm 
provide an ADV of electronic posted Customer executions in all issues 
on NYSE Arca Options (excluding mini options) of at least 0.80% of 
total Customer equity and ETF option ADV as reported by OCC, rather 
than electronic posted Customer executions in Penny Pilot issues 
(excluding mini options) of at least 0.95% of total Customer equity and 
ETF option ADV, is reasonable because the proposed alternative to 
qualifying for the Cross-Asset Tier credit also requires a Retail Order 
requirement of 0.10%.
    The Exchange believes that the proposal is equitable and not 
unfairly discriminatory because all ETP Holders would be subject to the 
same fee structure and be offered the same alternative to qualifying 
for the Cross-Asset Tier credit. Moreover, the Cross-Asset Tier is 
available for all ETP Holders to satisfy, except for those ETP Holders 
that are not affiliated with an NYSE Arca Options OTP Holder or OTP 
Firm. ETP Holders that are not affiliated with an NYSE Arca Options OTP 
Holder or OTP Firm are eligible for a $0.0030 credit by other means 
than the Cross-Asset Tier credit. Specifically, ETP Holders can qualify 
for a $0.0030 credit under Tier 1 (Tape A and C) or under the Basic 
Rates for Retail Orders that provide liquidity to the Book (Tape A, B 
and C).
    Further, the Exchange believes that the proposal is reasonable and 
would create an added incentive for ETP Holders to execute Retail 
Orders on the

[[Page 21285]]

Exchange. The Exchange believes that the proposed change is equitable 
and not unfairly discriminatory because maintaining or increasing the 
proportion of Retail Orders in exchange-listed securities that are 
executed on a registered national securities exchange (rather than 
relying on certain available off-exchange execution methods) would 
contribute to investors' confidence in the fairness of their 
transactions and would benefit all investors by deepening the 
Exchange's liquidity pool, supporting the quality of price discovery, 
promoting market transparency and improving investor protection.
    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,\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. Instead, the Exchange believes that the proposal 
to add an additional way to qualify for the Cross-Asset Tier would 
encourage the submission of additional liquidity to a public exchange, 
thereby promoting price discovery and transparency and enhancing order 
execution opportunities for ETP Holders. The Exchange believes that 
this could promote competition between the Exchange and other execution 
venues, including those that currently offer similar order types and 
comparable transaction pricing, by encouraging additional orders to be 
sent to the Exchange for execution.
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    \8\ 15 U.S.C. 78f(b)(8).
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    Further, the proposal to add another way to qualify for the Cross-
Asset Tier credit of $0.0030 per share for orders that provide 
liquidity to the Exchange will not place an undue burden on competition 
because the Cross-Asset Tier would be available for all ETP Holders to 
satisfy, except for those ETP Holders that are not affiliated with an 
NYSE Arca Options OTP Holder or OTP Firm. ETP Holders that are not 
affiliated with an NYSE Arca Options OTP Holder or OTP Firm are 
eligible for a $0.0030 credit by others means than the Cross-Asset Tier 
credit. Specifically, ETP Holders can qualify for a $0.0030 credit 
under Tier 1 (Tape A and C) or under the Basic Rates for Retail Orders 
that provide liquidity to the Book (Tape A, B and C). ETP Holders would 
be subject to the same fee structure and be offered the same 
alternative to qualifying for the Cross-Asset Tier credit. Similarly, 
the proposal to utilize a lower requirement of at least 0.80% of total 
Customer equity and ETF option ADV as reported by OCC will not place an 
undue burden on competition because it is in line with the increased 
Retail Order requirement of 0.10%.
    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 ETP Holders 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

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#7b090e171e56181416161e150f083b081e18551c140d"><span class="__cf_email__" data-cfemail="0371766f662e606c6e6e666d7770437066602d646c75">[email protected]</span></a>. Please include 
File Number SR-NYSEArca-2015-24 on the subject line.

Paper Comments

    <bullet> 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-NYSEArca-2015-24. 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 principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal

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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-2015-24 and should be submitted 
on or before May 8, 2015.
     
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Brent J. Fields,
Secretary.
[FR Doc. 2015-08792 Filed 4-16-15; 8:45 am]
 BILLING CODE 8011-01-P


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