[Federal Register Volume 81, Number 33 (Friday, February 19, 2016)]
[Notices]
[Pages 8548-8550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-03387]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77124; File No. SR-NYSEArca-2016-18]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Arca Equities Schedule of Fees and Charges for Exchange Services

February 12, 2016.
    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 February 1, 2016, 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Equities Schedule of 
Fees and Charges for Exchange Services (``Fee Schedule''). The Exchange 
proposes to implement the fee changes effective February 1, 2016. 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
    On February 1, 2016,\4\ the Exchange is scheduled to commence the 
implementation of Pillar, the Exchange's proposed new technology 
trading platform.\5\ Pillar is the integrated trading technology 
platform designed to use a single specification for connection to the 
equities and options markets operated by NYSE Arca and its affiliates, 
New York Stock Exchange LLC and NYSE MKT LLC. NYSE Arca Equities will 
be the first trading system to migrate to Pillar. Securities traded on 
the Exchange will be migrated from the current trading platform to 
Pillar in phases. The Exchange is proposing that the current Fee 
Schedule, which applies to all securities traded on the Exchange, will 
also apply to securities that migrate to Pillar. To that end, the 
Exchange proposes to explicitly state in the current Fee Schedule that 
it will also apply to securities traded on Pillar.
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    \4\ The Commission notes that, according to the Exchange, the 
implementation of Pillar is now scheduled to begin on February 22, 
2016. See NYSE Arca Trader Update, NYSE Pillar: Phase I Test and 
Launch Date (January 27, 2016), available at https://www.nyse.com/publicdocs/nyse/markets/nyse/Pillar_Phase_I_Launch_Date_Move.pdf.
    \5\ See Securities Exchange Act Release Nos. 74951 (May 13, 
2015), 80 FR 28721 (May 19, 2015) (Notice) and 75494 (July 20, 
2015), 80 FR 44170 (July 24, 2015) (Order) (SR-NYSEArca-2015-38) 
(``Pillar I Filing''); 75497 (July 21, 2015), 80 FR 45022 (July 28, 
2015) (Notice) and 76267 (Oct. 26, 2015), 80 FR 66951 (Oct. 30, 
2015) (Order) (SR-NYSEArca-2015-56)(``Pillar II Filing''); 75467 
(July 16, 2015), 80 FR 43515 (July 22, 2015) (Notice) and 76198 
(Oct. 20, 2015), 80 FR 65274 (Oct. 26, 2015) (Order) (SR-NYSEArca-
2015-58) (``Pillar III Filing''); and 76085 (Oct. 6, 2015), 80 FR 
61513 (Oct. 13, 2015) (Notice) and 76869 (Jan. 11, 2016) (Order) 
(SR-NYSEArca-2015-86) (``Pillar Auction Filing'').
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Mid-Point Passive Liquidity Order--Securities $1.00 and Greater
    The Exchange currently provides per share credits under Tier 1, 
Tier 2 and Basic Rates \6\ for Mid-Point Passive Liquidity (``MPL'') 
Orders that provide liquidity 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''). Specifically, for ETP 
Holders and Market Makers that have MPL Adding ADV during a billing 
month of at least 3 million shares, the Exchange provides a credit of 
$0.0015 for Tape A Securities, $0.0020 for Tape B Securities and 
$0.0025 per share for Tape C Securities. For ETP Holders and Market 
Makers with MPL Adding ADV during a billing month of at least 1.5 
million shares but less than 3 million shares, the Exchange provides a 
credit of $0.0015 for Tape A, Tape B and Tape C Securities. For ETP 
Holders and Market Makers with MPL Adding ADV during a billing month of 
less than 1.5 million shares, the Exchange provides a credit of $0.0010 
for Tape A, Tape B and Tape C Securities. The Exchange also currently 
charges a fee of $0.0030 per share for MPL Orders in Tape A, Tape B and 
Tape C Securities that remove liquidity from the Exchange that are not 
designated as ``Retail Orders.'' \7\ In addition, MPL Orders removing 
liquidity from the Exchange that are designated as Retail Orders are 
not currently subject to a fee. On Pillar,

[[Page 8549]]

Mid-Point Passive Liquidity Order is named Mid-Point Liquidity Order 
and the Exchange proposes to note this name change in each of the Tier 
1, Tier 2 and Basic Rates sections of the Fee Schedule in which fees 
and credits for Mid-Point Passive Liquidity Orders are described. The 
Exchange is not proposing any change to the fees charged or credits 
provides [sic] for Mid-Point Passive Liquidity Orders (and for Mid-
Point Liquidity Orders on Pillar) in securities priced $1.00 and 
greater.
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    \6\ 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. 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.
    \7\ 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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    Orders designated as retail orders for securities traded on Pillar 
would need to meet the requirements of Rule 7.44P(a)(3) and the 
Exchange proposes to amend the Fee Schedule to note the application of 
Rule 7.44P to such securities.
Opening Auction--Securities $1.00 and Greater
    The Fee Schedule currently provides that a fee of $0.0015 per share 
is charged for certain orders executed in the Opening Auction. The 
order types that may trade in these auctions include Market Orders and 
Auction-Only Orders.\8\ This fee is capped at $20,000 per month per 
Equity Trading Permit ID. On Pillar, the Opening Auction is named the 
Early Open Auction and the Exchange proposes to note this name change 
in each of the Tier 1, Tier 2 and Basic Rates sections of the Fee 
Schedule in which fees for trades in the Early Open Auction are 
described. The Exchange is not proposing any change to the fees charged 
for orders executed in the Opening Auction (and in the Early Open 
Auction on Pillar) in securities priced $1.00 and greater.
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    \8\ See NYSE Arca Equities Rule 7.31(c). An Auction-Only order 
is executable during the next auction following entry of the order. 
If the Auction-Only Order is not executed in the auction, the 
balance is cancelled. Auction-Only orders are only available for 
auctions that take place on the Exchange and are not routed to other 
exchanges.
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Market Order Auction--Securities $1.00 and Greater
    The Fee Schedule currently provides that a fee of $0.0015 per share 
is charged for certain orders executed in the Market Order Auction. The 
order types that may trade in these auctions include Market Orders and 
Auction-Only Orders. This fee is capped at $20,000 per month per Equity 
Trading Permit ID. On Pillar, the Market Order Auction is named the 
Core Open Auction and the Exchange proposes to note this name change in 
each of the Tier 1, Tier 2 and Basic Rates sections of the Fee Schedule 
in which fees for trades in the Core Open Auction are described. The 
Exchange is not proposing any change to the fees charged for orders 
executed in the Market Order Auction (and in the Core Open Auction on 
Pillar) in securities priced $1.00 and greater.
Market Order Auction--Securities Less Than $1.00
    The Fee Schedule currently provides that a fee of 0.1% of the total 
dollar value will be charged for round lot and odd lot executions of 
securities priced below $1.00 that take place during a Market Order 
Auction. On Pillar, the Market Order Auction is named the Core Open 
Auction and the Exchange proposes to note this name change. The 
Exchange is not proposing any change to the fee charged for orders 
executed in the Market Order Auction (and in the Core Open Auction on 
Pillar) in securities priced below $1.00.
Passive Liquidity Order--Securities $1.00 and Greater
    The Fee Schedule currently provides that no fee or credit is 
charged for Passive Liquidity Orders that provide liquidity to the 
order book in Tape A, Tape B or Tape C securities. The Fee Schedule 
further provides that a fee of $0.0030 per share is charged for Passive 
Liquidity Orders that take liquidity from the order book in Tape A 
[sic] securities, and a fee of $0.0028 per share is charged for such 
orders that take liquidity from the order book in Tape B and Tape C 
[sic] securities. On Pillar, Passive Liquidity Order is named Limit 
Non-Displayed Order and the Exchange proposes to note this name change 
in each of the Tier 1, Tier 2, Tier 3 and Basic Rates sections of the 
Fee Schedule in which fees for Passive Liquidity Orders are described. 
The Exchange is not proposing any change to the fee charged or rebate 
provided for Passive Liquidity Orders (and for Limit Non-Displayed 
Orders on Pillar) in securities priced $1.00 and greater.
Passive Liquidity Order--Lead Market Makers
    For Lead Market Makers (``LMMs''),\9\ the Exchange currently 
provides a $0.0015 per share credit for Passive Liquidity Orders that 
provide liquidity in securities for which they are registered as the 
LMM. On Pillar, Passive Liquidity Order is named Non-Displayed Limit 
Order and the Exchange proposes to note this name change in the section 
of the Fee Schedule related to Market Maker Fees and Credits. The 
Exchange is not proposing any change to the credit provided to LMMs for 
Passive Liquidity Orders (and for Non-Displayed Limit Orders on 
Pillar).
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    \9\ The term ``Lead Market Maker'' means a registered Market 
Maker that is the exclusive Designated Market Maker in listings for 
which the Exchange is the primary market. See NYSE Arca Equities 
Rule 1.1(ccc).
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Post No Preference Blind Order--Lead Market Makers
    For LMMs, the Exchange currently provides a $0.0030 per share 
credit for orders that provide undisplayed liquidity in Post No 
Preference Blind (PNP B) Orders to the order book in securities for 
which they are registered as LMMs. On Pillar, PNP B Order is named Arca 
Only Order and the Exchange proposes to note the name change with an 
amendment to the Fee Schedule that notes this name change. The Exchange 
is not proposing any change to the credit provided to LMMs that provide 
undisplayed liquidity in securities in which they are registered as 
LMMs using PNP B Orders (and for Arca Only Orders on Pillar).
Non-Substantive Change to the Fee Schedule
    The Fee Schedule currently provides that a fee of $0.0025 per share 
is charged for Primary Sweep Orders in Tape A securities routed outside 
the book to the NYSE that remove liquidity from the NYSE and that 
Primary Sweep Orders in Tape A securities routed outside the book to 
the NYSE that provide liquidity to the NYSE are not charged a fee or 
given a credit. This fee appears in each of Tier 1, Tier 2 and Basic 
Rates sections of the Fee Schedule. The Exchange has eliminated the 
Primary Sweep Order type and therefore, proposes to remove this fee 
from the Fee Schedule as it is no longer applicable.\10\
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    \10\ See Securities Exchange Act Release No. 74415 (March 3, 
2015), 80 FR 12537 (March 9, 2015) (SR-NYSEArca-2015-08).
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    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any significant problems 
that 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,\11\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\12\ 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

[[Page 8550]]

discriminate between customers, issuers, brokers or dealers.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed changes to the Fee 
Schedule, which include the addition of rule text to note that the Fee 
Schedule would be applicable to securities traded on Pillar and the 
addition of rule text to [sic] regarding order types that would be 
renamed on Pillar, is reasonable, equitable and not unfairly 
discriminatory because the changes are designed to make the Fee 
Schedule more logical and comprehensive therefore, easier for market 
participants to navigate and digest, which is in the public interest. 
The Exchange further believes that the proposed changes are designed to 
enable market participants to better understand how Exchange fees would 
be applicable to market participants, which should make the overall Fee 
Schedule more transparent and comprehensive to the benefit of the 
investing public.
    The Exchange believes removing references to Primary Sweep Orders 
from the Fee Schedule will remove investor confusion as this order type 
no longer exists in the Exchange's rules. The Exchange strives for 
clarity in its rules and Fee Schedule so that market participants may 
best understand how rules and fees apply. The Exchange believes that 
the proposed removal of outdated language and fees from the Fee 
Schedule will add clarity to the Fee Schedule and alleviate potential 
confusion which will remove impediments to and perfect the mechanism of 
a free and open market and a national market system, and in general, 
protect investors and the public interest.
    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

    The Exchange does not believe that the proposed rule change will 
any [sic] burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed change is not 
designed to address any competitive issue but rather provide the public 
and investors with a Fee Schedule that is transparent once securities 
traded on the Exchange begin to migrate to Pillar.

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) \13\ of the Act and subparagraph (f)(2) of Rule 
19b-4[hairsp]\14\ thereunder, because it establishes a due, fee, or 
other charge imposed by the Exchange.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \15\ 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#3e4c4b525b135d5153535b504a4d7e4d5b5d10595148"><span class="__cf_email__" data-cfemail="81f3f4ede4ace2eeecece4eff5f2c1f2e4e2afe6eef7">[email protected]</span></a>. Please include 
File Number SR-NYSEArca-2016-18 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-2016-18. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEArca-2016-18, and should 
be submitted on or before March 11, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-03387 Filed 2-18-16; 8:45 am]
 BILLING CODE 8011-01-P


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