Document ID: SEC-2008-0375-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2008-03-11T04:00Z

[Federal Register: March 11, 2008 (Volume 73, Number 48)]
[Notices]               
[Page 13064-13065]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11mr08-117]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57433; File No. SR-NYSE-2008-15]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Provide a Credit to Members for Execution of Orders Sent Directly to a 
Floor Broker that Adds Liquidity to the Exchange

March 5, 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 February 28, 2008, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') 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 substantially 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 it effective upon filing with the Commission. 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\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
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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 its equity transaction fees, for 
implementation on March 1, 2008. Member Organizations will receive a 
$.0004 per share credit for execution of orders sent directly to the 
floor broker for representation on the NYSE when adding liquidity to 
the NYSE Display Book[supreg] system (including Percentage Orders). The 
text of the proposed rule change is available at http://www.nyse.com, 
the Exchange, and 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, NYSE 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. NYSE 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 Exchange proposes to amend its equity transaction fees, for 
implementation on March 1, 2008. Member organizations will receive a 
$.0004 per share credit for execution of orders sent directly to the 
floor broker for representation on the NYSE when adding liquidity to 
the NYSE Display Book system \5\ (including Percentage Orders).\6\ 
Technological limitations \7\ make it impossible for floor brokers to 
post orders on other markets while at the point of sale on the 
Exchange. Therefore, unlike other Exchange users, they are unable to 
benefit from the incentives certain other markets provide to customers 
who provide liquidity. The time that would elapse if a floor broker 
sent the order to his booth or upstairs trading desk for execution on 
another market means that, if the floor broker utilized this 
alternative, the trade would likely not get executed at the desired 
price. The Exchange believes this disparity places floor brokers at a 
competitive disadvantage to other Exchange customers and believes that 
the proposed credit will mitigate the effects of that disadvantage 
while also attracting additional liquidity to the Exchange.
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    \5\ The Display Book system is an order management and execution 
facility. The Display Book system receives and displays orders to 
the specialists, contains the Book, and provides a mechanism to 
execute and report transactions and publish the results to the 
Consolidated Tape. The Display Book system is connected to a number 
of other Exchange systems for the purposes of comparison, 
surveillance, and reporting information to customers and other 
market data and national market systems.
    \6\ An order adds liquidity to the market if it is posted on the 
book for execution against incoming orders on the contra side. 
Generally, Exchange customers are able to send their orders to other 
markets to avail themselves of incentives those markets provide to 
customers who provide liquidity. Floor brokers add liquidity to the 
market by posting orders either as e-Quotes or as DOT or Percentage 
Orders. Non-electronic trades on the Exchange floor do not add 
liquidity to the book and are either charged a fee of $.0004 per 
share (if they are non-electronic agency transactions of less than 
10,000 shares between brokers in the crowd) or are free (if they are 
non-electronic trades of 10,000 shares or more).
    \7\ The Exchange's order management system on the floor, the 
Broker Booth Support System[supreg] (BBSS), is not configured to 
route orders away from the floor to another market.
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    The Exchange believes the credit is justified because of the 
importance of the floor brokers to the continuation of the floor as an 
integral part of the Exchange's market model. The Exchange's market 
model integrates the auction market with automated trading. Essential 
to this model is the interaction between the specialists, floor 
brokers, and orders in the Display Book system, which creates 
opportunities for price improvement, provides information about 
changing market conditions, and serves as a catalyst to trading. The 
Exchange believes that this incentive will allow floor brokers to 
remain competitive.
    The Exchange's 2008 Price List is also being modified to reflect 
the fact that it is no longer necessary to note that Percentage Orders 
adding liquidity to the NYSE are free of charge, as Percentage Orders 
can only be accepted by Exchange systems if sent through a floor 
broker's hand-held device, and thus all Percentage Orders that were 
formerly free will now receive the $.0004 per share credit.

[[Page 13065]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of section 6 of the Act \8\ in general, and 
furthers the objectives of section 6(b)(4) of the Act \9\ 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. The Exchange believes 
that the proposed credit represents an equitable allocation of 
reasonable dues, fees, and other charges because floor brokers are 
integral to the Exchange's market model and the proposed credit lessens 
the impact on floor brokers of the competitive disadvantage arising out 
of the difficulty they experience in availing themselves or their 
customers of liquidity credits on other markets.
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    \8\ 15 U.S.C. 78f
    \9\ 15 U.S.C. 78f(b)(4).
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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 purpose of the Exchange Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing proposed rule change is filed pursuant to section 
19(b)(3)(A)(ii) of the Act \10\ and subparagraph (f)(2) of Rule 19b-4 
thereunder \11\ because it establishes or changes a due, fee, or other 
charge applicable only to a member imposed by a self-regulatory 
organization. Accordingly, the proposal is effective upon Commission 
receipt of the filing. 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
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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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2008-15 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2008-15. 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 
theprovisions 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 the principal office 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-NYSE-2008-15 and should be 
submitted on or before April 1, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-4747 Filed 3-10-08; 8:45 am]

BILLING CODE 8011-01-P