Document ID: SEC-2014-0639-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2014-04-15T04:00Z

[Federal Register Volume 79, Number 72 (Tuesday, April 15, 2014)]
[Notices]
[Pages 21308-21310]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-08415]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71912; File No. SR-NYSEArca-2014-33]

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 
Raise the Fee and Fee Cap for Market and Auction-Only Orders Executed 
in an Opening, Market Order or Trading Halt Auction; Modify the Fees 
Charges for Routing Orders To The New York Stock Exchange LLC; and 
Modify Certain Credits in the Basic Rate Pricing

April 9, 2014.
    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 26, 2014, 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'') to (i) raise 
the fee and fee cap for Market and Auction-Only Orders executed in an 
Opening, Market Order or Trading Halt Auction; (ii) modify the fees 
that it charges for routing orders to the New York Stock Exchange LLC 
(``NYSE''); and (iii) modify certain credits in the Basic Rate pricing. 
The Exchange proposes to implement the changes on April 1, 2014. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to (i) raise the 
fee and fee cap for Market and Auction-Only Orders executed in an 
Opening, Market Order or Trading Halt Auction; (ii) modify the fees 
that it charges for routing orders to the NYSE; and (iii) modify 
certain credits in the Basic Rate pricing. The Exchange proposes to 
implement the changes on April 1, 2014.
    The Exchange currently charges $0.0005 per share for Market and 
Auction-Only Orders executed in an Opening, Market Order or Trading 
Halt Auction. The Exchange proposes to raise this fee from $0.0005 to 
$0.0010 per share. The Exchange also proposes to raise the monthly fee 
cap for Market and Auction-Only Orders executed in an Opening, Market 
Order or Trading Halt Auction. Currently, the fees are capped at 
$15,000. The Exchange proposes to raise the fee cap to $20,000. These 
changes are consistent with changes proposed by the NYSE to become 
effective on April 1, 2014.\4\
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    \4\ See SR-NYSE-2014-18.
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    The NYSE introduced modifications to its transaction fee 
structures, including changes to the rates for taking liquidity, which 
became effective on March 1, 2014.\5\ In addition, the NYSE is 
proposing modifications to its at the opening or at the opening only 
orders to become effective on April 1, 2014.\6\ The Exchange's current 
fees for routing orders in securities with a per share price of $1.00 
or more to the NYSE are closely related to the NYSE's fees for taking 
liquidity in such securities, and the Exchange is proposing an 
adjustment to its routing fees to maintain the existing relationship to 
the new fees in place at the NYSE.
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    \5\ See Securities Exchange Act Release No. 71684 (March 11, 
2014), 78 FR 14758 (March 17, 2014) (SR-NYSE-2014-09) (the ``NYSE 
Fee Filing'').
    \6\ See supra note 4.
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    Currently, the NYSE charges a transaction fee for certain 
transactions in securities with a per share price of $1.00 or more 
based on the characteristics of the transaction. Among other changes, 
the NYSE Fee Filing proposed to increase the charge for transactions 
that do not have a specified per share charge based on their 
characteristics (``all other'' transactions). The NYSE Fee Filing 
increased the per share charge for all other non-floor broker 
transactions (i.e., when taking liquidity from the Exchange) from 
$0.0025 to $0.0026 per transaction.
    Currently, for the Exchange's Tier 1, Tier 2, Tier 3, Step Up Tier 
1, and Step Up Tier 2 customers, the fee for routing orders in Tape A 
securities to the NYSE outside the book is equal to the previous NYSE 
fee of $0.0025 per share for all other non-floor broker transactions in 
securities with a per share price of $1.00 or more, and the fee for 
routing such orders to the NYSE for non-tier (i.e., Basic Rate) 
customers is $0.0027 per share.\7\ Consequently, the Exchange is 
proposing to increase each of those fees by $0.0001 to $0.0026 per 
share and $0.0028 per share, respectively, consistent with the $0.0001 
increase in the NYSE fee for all other non-floor broker transactions.
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    \7\ The other tiers in the Fee Schedule do not specify a fee for 
routing orders in Tape A securities to the NYSE outside the book. 
However, such tiers provide that if a fee (or credit) is not 
included in the tier, the relevant tiered or Basic Rate applies 
based on a firm's qualifying levels. Accordingly, for orders in Tape 
A securities routed to the NYSE outside the book, ETP Holders and 
Market Makers that qualify for another tier would default to the 
Tier 1, Tier 2, Tier 3, Step Up Tier 1, Step Up Tier 2 or Basic Rate 
that applied to them based on their qualifying levels.
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    In addition, the Exchange currently charges $0.0023 per share for 
Primary Sweep Orders \8\ in Tape A securities that

[[Page 21309]]

are routed outside the book to the NYSE that remove liquidity from the 
NYSE.\9\ In order to maintain the existing relationship to the other 
Exchange routing fees that are being adjusted upward, the Exchange is 
also proposing to increase this fee by $0.0001, to $0.0024 per share.
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    \8\ A Primary Sweep Order is a Primary Only (``PO'') Order 
(i.e., a market or limit order that is to be routed to the primary 
market) that first sweeps the NYSE Arca book. See NYSE Arca Equities 
Rules 7.31(x) and (kk).
    \9\ This charge is included in the provisions for Tier 1, Tier 
2, and the Basic Rate. The other tiers in the Fee Schedule do not 
specify a fee for Primary Sweep Orders in Tape A securities that are 
routed outside the book to the NYSE that remove liquidity from the 
NYSE. Accordingly, for such orders ETP Holders and Market Makers 
that qualify for another tier would default to the Tier 1, Tier 2 or 
Basic Rate that applied to them based on their qualifying levels. 
See supra note 7.
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    For Primary Only Plus (``PO+'') orders,\10\ the current Exchange 
fee for orders routed to the NYSE that remove liquidity from the NYSE 
is $0.0025 per share, which is equal to the current NYSE fee for all 
other non-floor broker transactions in securities with a per share 
price of $1.00 or more.\11\ Consequently, the Exchange is proposing to 
increase its fees for routing PO+ orders to the NYSE that remove 
liquidity by the same amount ($0.0001) as the increase in the 
corresponding NYSE fees. The proposed new fee for PO+ orders routed to 
the NYSE that remove liquidity is $0.0026 per share. This change would 
maintain the current relationship with the NYSE rates.
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    \10\ A PO+ Order is a PO Order that is entered for participation 
in the primary market, other than for participation in the primary 
market opening or primary market re-opening. See NYSE Arca Equities 
Rule 7.31(x)(3).
    \11\ This charge is included in the provisions for Tier 1, Tier 
2, and the Basic Rate. The other tiers in the Fee Schedule do not 
specify a fee for PO+ orders routed outside the book to the NYSE 
that remove liquidity. Accordingly, for such orders ETP Holders and 
Market Makers that qualify for another tier would default to the 
Tier 1, Tier 2 or Basic Rate that applied to them based on their 
qualifying levels. See supra note 7.
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    Consistent with the fee change proposed by the NYSE,\12\ the 
Exchange proposes to amend the Fee Schedule to increase the Tier 1, 
Tier 2, Tier 3, and Basic Rate fee for PO and PO+ Orders in Tape A 
securities that are routed to the NYSE that execute in the opening or 
closing auction, from $0.00095 to $0.0010 per share.
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    \12\ See supra note 4.
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    Under the current Basic Rate pricing, the credit for adding 
liquidity in Tape A and Tape C securities is set at $0.0021 per share, 
and the credit for adding liquidity in Tape B securities is set at 
$0.0022 per share. The Exchange proposes to lower the credit for adding 
liquidity in Tape A, Tape B, and Tape C securities to $0.0020 per 
share.
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any problems that ETP 
Holders 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,\13\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\14\ 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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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed fee and fee cap increases 
for Market and Auction-Only Orders executed in an Opening, Market Order 
or Trading Halt Auction are reasonable because they are the same as the 
fees and fee caps imposed by at least one other exchange and proposed 
by the Exchange's affiliate, the NYSE.\15\ In addition, the proposed 
fee changes are equitable and not unfairly discriminatory because they 
apply uniformly to all similarly situated ETP Holders.
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    \15\ See NASDAQ Rule 7018 and supra note 4.
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    The Exchange believes that the proposed changes to routing fees are 
reasonable because the Exchange's fees for routing orders to the NYSE 
are closely related to the NYSE's fees for its members for taking 
liquidity, and the fee increases are consistent with the changes in 
effect and proposed by the NYSE to increase its fees for taking 
liquidity. The proposed changes will result in maintaining the existing 
relationship between the two sets of fees. In addition, the Exchange 
believes that the proposed rule change is reasonable, equitable, and 
not unfairly discriminatory because it would result in an increase in 
the per share fee for orders, Primary Sweep Orders, and PO+ Orders 
routed to the NYSE, thereby aligning the rate that the Exchange charges 
to ETP Holders with the rate that the Exchange is charged by the NYSE. 
Accordingly, the Exchange is proposing this increase so that the rate 
it charges to ETP Holders reflects the rate that the Exchange is 
charged by the NYSE. In addition, the proposed changes are equitable 
and not unfairly discriminatory because the fee increases apply 
uniformly across pricing tiers and all similarly situated ETP Holders 
would be subject to the same fee structure.
    The Exchange believes that the proposed changes to the Basic Rate 
pricing credits for providing liquidity in Tape A, Tape B, and Tape C 
securities are reasonable because the credits are consistent with the 
credits offered by at least two other exchanges.\16\ In addition, the 
proposed credits are equitable and not unfairly discriminatory because 
they apply uniformly to all similarly situated ETP Holders.
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    \16\ See NASDAQ Rule 7018 and EDGX Exchange, Inc. Fee Schedule 
available at www.directedge.com/Portals/0/01Trading/EDGX%20Fee%20Schedule/2014/EDGX%20Fee%20Schedule%20-%2003.05.14.pdf.
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    Finally, 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 these 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,\17\ 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. In particular, the proposed routing fee 
changes would not place a burden on competition because the Exchange is 
seeking to align its fees with the fees charged by the NYSE.\18\ In 
addition, the proposed changes to the Exchange's fee and fee cap for 
Market and Auction-Only Orders executed in an Opening, Market Order or 
Trading Halt Auction and Basic Rate pricing credits are consistent with 
the fees and credits imposed by other exchanges.\19\
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    \17\ 15 U.S.C. 78f(b)(8).
    \18\ See supra notes 4-5.
    \19\ See supra notes 15-16.
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    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues. In 
such an environment, the Exchange must continually review, and consider 
adjusting, its fees and credits to remain competitive with other 
exchanges. For the reasons described above, the Exchange believes that 
the proposed rule change promotes a competitive environment.

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.

[[Page 21310]]

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) \20\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \21\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 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) \22\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \22\ 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

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2014-33 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-2014-33. 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 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 offices of NYSE. 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-2014-33, and should be submitted on or before May 6, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Secretary.
[FR Doc. 2014-08415 Filed 4-14-14; 8:45 am]
BILLING CODE 8011-01-P