Federal Register / Vol. 73, No. 155 / Monday, August 11, 2008 / Notices 46681 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5The Exchange may trade option contracts in one 

cent increments in certain approved issues as part 

of the Penny Pilot, through March 27, 2009. See 

Securities Exchange Act Release No. 56568 

(September 27, 2007), 72 FR 56422 (October 3, 

2007) (Order approving SR–NYSEArca–2007–88). 

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSEArca–2008–80 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2008–80. This 

file number should be included on the 

subject line if e-mail 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 inspection and copying in 

the Commission’s Public Reference 

Room 100 F Street, NE., Washington, DC 

20549 on official business days between 

the hours of 10 a.m. and 3 p.m. Copies 

of such filing also will be available for 

inspection and copying at NYSE Arca’s 

principal office and on its Internet Web 

site at http://www.nyse.com. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NYSEArca–2008–80, and 

should be submitted on or before 

September 2, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–18382 Filed 8–8–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58295; File No. SR–

NYSEArca–2008–75] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending Its Schedule of 

Fees and Charges for Exchange 

Services In Order To Revise Certain 

Transaction Fees 

August 4, 2008. 

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 July 14, 

2008, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

‘‘Exchange’’) 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 

Exchange filed the proposed rule change 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(2) thereunder,4

which renders the proposal effective 

upon filing with the Commission. 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 

NYSE Arca proposes to amend its 

Schedule of Fees and Charges for 

Exchange Services (‘‘Schedule’’) in 

order to revise certain Transaction Fees. 

The text of the proposed rule change is 

available at NYSE Arca, the 

Commission’s Public Reference Room, 

and http://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 

Exchange 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 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 

The purpose of this filing is to amend 

the existing Schedule in order to (i) 

make changes to Transaction Fees 

assessed on certain executions in issues 

that trade as part of the Penny Pilot,5

and (ii) eliminate the Market Maker Post 

Liquidity Incentive Credit. A 

description of the proposed change 

follows. 

Post/Take Pricing 

NYSE Arca offers market participants 

a Post/Take pricing model for 

electronically executed transactions in 

issues that are included in the Penny 

Pilot. Under the present rate schedule, 

all electronic orders that ‘‘take’’

liquidity from the Consolidated Book 

(incoming electronic quotes and orders 

that are executed upon receipt) are 

charged a fee of $0.45 per contract. 

NYSE Arca now proposes to revise the 

Post/Take pricing it applies to 

transactions in selected Penny Pilot 

issues that the Exchange has designated 

as ‘‘Tier 1’’ issues. Specifically the 

Exchange will: (a) Raise the Take 

Liquidity fee, in certain highly active 

issues, from $0.45 to $0.55 per contract 

for all market participants; (b) raise the 

Post Liquidity credit, in certain highly 

active issues, from $0.30 to $.40 for 

Lead Market Makers and NYSE Arca 

Market Makers; and (c) raise the Post 

Liquidity credit, in certain highly active 

issues, from $0.25 to $0.35 for both 

electronic broker-dealer and electronic 

customer transactions. 

The new fee will initially apply to 

transactions in the following ten (10) 

option issues that the Exchange has 

designated as Tier 1 Penny Pilot issues. 

AAPL Apple Inc 

CSCO Cisco Systems, Inc. 

DIA Diamonds Trust 

MSFT Microsoft Corporation 

IWM iShares Russell 2000 Index 

QQQQ PowerShares QQQ Trust 

RIMM Research in Motion 


rmajette on PRODPC74 with NOTICES
46682 Federal Register / Vol. 73, No. 155 / Monday, August 11, 2008 / Notices 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(4). 

8 15 U.S.C. 78s(b)(3)(A)(ii). 

9 17 CFR 240.19b–4(f)(2). 

10See, e.g., Newton v. Merrill, Lynch, Pierce, 

Fenner & Smith, Inc., 135 F.3d 266, 269–70, 274 (3d 

Cir.), cert. denied, 525 U.S. 811 (1998); Certain 

Market Making Activities on Nasdaq, Securities 

Exchange Act Release No. 40900 (Jan. 11, 1999) 

(settled case) (citing Sinclair v. SEC, 444 F.2d 399 

(2d Cir. 1971); Arleen Hughes, 27 SEC 629, 636 

(1948), aff’d sub nom. Hughes v. SEC, 174 F.2d 969 

(D.C. Cir. 1949)). See also Order Execution 

Obligations, Securities Exchange Act Release No. 

37619A (Sept. 6, 1996), 61 FR 48290 (Sept. 12, 

1996) (‘‘Order Handling Rules Release’’). 

11Linkage Plan Section 8(c) and NYSE Arca Rule 

6.94. 

12Linkage is governed by the Options Linkage 

Authority under the conditions set forth under the 

Linkage Plan. The registered U.S. options markets 

are linked together on a real-time basis through a 

network capable of transporting orders and 

messages to and from each market. 

13See infra note 14. 

14See SR–NYSEArca–2008–76 (submitted July 

14, 2008). 

15The Commission notes that Citadel has filed a 

Petition for Rulemaking to Address Excessive 

Access Fees in the Options Markets addressing this 

issue. See Letter from John C. Nagel, Managing 

XLF Financial Select Sector SPDR 

SPY S&P 500 Depository Receipts 

YHOO Yahoo! Inc. 

The Exchange may periodically 

review the list of securities included in 

the Penny Pilot and will make a 

determination as to the appropriateness 

of the Tier 1 designation for certain 

issues. NYSE Arca notes that the 

primary criteria for designating a Tier 1 

is overall cleared national options 

volume, however, the Exchange notes 

that this list is not necessarily limited 

to, or inclusive of, the most active 

issues. The Exchange may take into 

consideration other factors, including 

but not limited to, transactions and 

options volume at NYSE Arca for a 

given issue (both electronic and 

manual), the implied volatility of the 

underlying issue and the per-share price 

of the underlying issue. Any future 

changes to the list of Tier 1 issues 

would only be effective pursuant to a 

subsequent Rule 19b–4 filing with the 

Commission. 

Market Maker Post Liquidity Incentive 

Credit 

The Exchange offers Market Makers, 

who reach a certain level of trade 

activity in Penny Pilot issues, a reduced 

transaction rate by offering a fee credit 

on contracts executed over and above 

certain volume thresholds. The 

Exchange established the fee credit as a 

way to incentivize Market Making firms 

to transact a larger share of their overall 

options business on NYSE Arca. 

Since its inception, the fee credit has 

failed to meet the expected results that 

the Exchange was looking for. 

Therefore, NYSE Arca now proposes to 

eliminate the Market Maker Post 

Liquidity Incentive Credit. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6(b) of the 

Act,6 in general, and Section 6(b)(4) of 

the Act,7 in particular, in that 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. 

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 proposed rule change is 

effective upon filing pursuant to Section 

19(b)(3)(A)(ii) of the Act 8 and Rule 19b–

4(f)(2) thereunder,9 because it 

establishes or changes a due, fee, or 

other charge applicable only to a 

member imposed by the Exchange. At 

any time within 60 days of the filing of 

the proposed rule change, the 

Commission may summarily abrogate 

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. In 

addition, the Commission seeks 

comment on the following: 

1. The Commission requests comment 

generally on the impact, if any, of the 

increased Take Liquidity fee on the 

ability of members and other market 

participants to obtain fair and efficient 

access to NYSE Arca quotations in the 

Tier 1 classes. 

2. Broker-dealers have a duty of best 

execution when executing customer 

orders.10 In addition, the options 

exchanges are required under the Plan 

for the Purpose of Creating and 

Operating an Intermarket Option 

Linkage (‘‘Linkage Plan’’) to have in 

place rules that require their members to 

avoid trade-throughs.11 The 

Commission requests comment on the 

impact of exchange fees on the ability of 

members to satisfy these regulatory 

obligations. More specifically, the 

Commission requests comment on the 

impact of NYSE Arca’s increase to the 

Take Liquidity fee, if any, on the ability 

of broker-dealers and other market 

participants to fulfill these 

responsibilities. 

3. The Commission notes that, in 

addition to direct or indirect access to 

NYSE Arca systems by or through its 

members, market participants are able to 

access NYSE Arca quotations through 

the Intermarket Option Linkage 

(‘‘Linkage’’).12 The Commission requests 

comment on whether market 

participants currently are able to access 

NYSE Arca quotations in a reasonable 

and efficient manner through the 

Linkage. Would this analysis change if 

the fees charged for orders electronically 

executed through the Linkage (‘‘Linkage 

Fees’’) were increased? 13

4. As noted above, this proposal 

increases the Take Liquidity fee charged 

to members of NYSE Arca for the Tier 

1 classes. The Exchange also has filed a 

companion proposed rule change to 

increase the Linkage Fee in Tier 1 

classes to $0.55.14 That proposal will 

not be effective unless approved by the 

Commission. Thus, the Linkage Fee 

currently remains at $0.45. The 

Commission requests comment on 

whether the analysis as to the impact of 

the increased Take Liquidity fee for 

members on the ability of broker-dealers 

and other market participants to satisfy 

their regulatory obligations would 

change if the Linkage Fee for executing 

orders in the Tier 1 classes also 

increased. 

5. The Commission requests comment 

on the impact, if any, of the increased 

Take Liquidity fee on the usefulness and 

accuracy of displayed quotations in the 

Tier 1 classes. Do high fees for accessing 

quotations, as well as wide disparity in 

the level of fees for accessing 

quotations, detract from the usefulness 

and accuracy of the prices of the 

displayed quotations? 

6. The Commission requests comment 

on whether there should be a limit on 

the maximum fee that NYSE Arca, or 

any other options exchange, can charge 

for access to is quotations.15


rmajette on PRODPC74 with NOTICES
Federal Register / Vol. 73, No. 155 / Monday, August 11, 2008 / Notices 46683 

Director & Deputy General Counsel, Citadel, to 

Nancy M. Morris, Secretary, Commission, dated 

July 15, 2008 (‘‘Petition’’). 

16 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3After the closing of the Merger, the Amex will 

be renamed NYSE Alternext U.S. LLC. 

7. The Commission further requests 

comment on whether, if a commenter 

believes that a fee cap should be 

imposed, such fee cap should apply 

only to transactions effected by nonmembers through Linkage, or whether a 

fee cap should apply to member access 

as well. Would capping the maximum 

transaction fee that options exchanges 

charge non-members prevent or mitigate 

the negative consequences of 

unreasonably high access fees for 

members? 

8. If a commenter believes that a fee 

cap should be imposed, the Commission 

specifically requests comment as to 

what level would be appropriate. For 

example, the Petition proposes an 

access fee limit of 20%, or $0.20 per 

contract ($0.002 per underlying share). 

Are there other fee cap structures that 

would be more appropriate for the 

options markets then the percentage of 

the minimum quoting increment model? 

9. Further, the Commission requests 

comment as to whether such a fee cap 

should apply only to the best bid and 

offer of each exchange, or also to access 

to ‘‘depth of book’’ quotations. 

10. The Commission requests 

comment as to whether the use of 

‘‘maker-taker’’ pricing by options 

exchanges has led, or is likely to lead, 

to an increase in locked and crossed 

markets. 

11. The Commission requests 

comment as to the impact, if any, on the 

use of the ‘‘maker-taker’’ pricing model 

on the quoted spread widths and sizes 

of registered options market makers in 

the classes subject to such pricing 

model. If a commenter believes that the 

‘‘maker-taker’’ model has had an impact 

on the quality of quoted prices, the 

Commission requests comment as to 

whether there is sufficient liquidity in 

the classes subject to the model from 

market participants other than 

registered market makers. Would the 

analysis change if a similar pricing 

model were proposed for all options? 

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSEArca–2008–75 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2008–75. This 

file number should be included on the 

subject line if e-mail 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 inspection and copying in 

the Commission’s Public Reference 

Room, on official business days between 

the hours of 10 a.m. and 3 p.m. Copies 

of such 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 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File No. SR–NYSEArca–

2008–75 and should be submitted on or 

before September 2, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–18386 Filed 8–8–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58297; File No. SR–

NYSEArca–2008–78] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change To Waive Annual Fees for 

Securities Transferring to NYSE Arca 

From NYSE Alternext U.S. 

August 4, 2008. 

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 July 23, 

2008, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

‘‘Exchange’’) 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 proposal from 

interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

rules governing NYSE Arca, LLC (also 

referred to as the ‘‘NYSE Arca 

Marketplace’’), which is the equities 

trading facility of NYSE Arca Equities. 

The Exchange proposes that securities 

transferring to NYSE Arca from NYSE 

Alternext U.S. 3 after the closing of the 

purchase of the American Stock 

Exchange LLC by NYSE Euronext (the 

‘‘Merger’’) will not be charged any 

prorated Annual Fee for the remainder 

of the year in which the Merger takes 

place. The fee waiver in the preceding 

sentence will be of no further effect if 

the closing of the Merger does not take 

place by March 31, 2009. 

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 that securities 

transferring to NYSE Arca from NYSE 

Alternext U.S. after the closing of the 

Merger will not be charged any prorated 

Annual Fee for the remainder of the 

year in which the Merger takes place. 

The fee waiver in the preceding 

sentence will be of no further effect if 

the closing of the Merger does not take 

place by March 31, 2009. 

NYSE Euronext, the ultimate parent 

company of the Exchange, has agreed to 


rmajette on PRODPC74 with NOTICES