Document ID: SEC-2008-1721-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2008-12-29T05:00Z

[Federal Register: December 29, 2008 (Volume 73, Number 249)]
[Notices]               
[Page 79533-79535]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29de08-105]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59112; File No. SR-NYSE-2008-125]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC 
That the $8,000,000 Annual Trading Floor Regulatory Fee Allocated Among 
the Designated Market Maker Firms, Formerly Referred to as the 
``Specialist Trading Floor Regulatory Fee,'' Be Reduced by 50% for 
2008, and Eliminated Thereafter

December 17, 2008.
    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 December 15, 2008, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
and II 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 that the $8,000,000 annual trading floor 
regulatory fee allocated among the Designated Market Maker firms 
(``DMMs'' or ``firms''),\4\ formerly referred to as the ``specialist 
trading floor regulatory fee,'' be reduced by 50% for 2008, and 
eliminated thereafter.
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    \4\ See Securities Exchange Act Release No. 58845 (October 24, 
2008) 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46). In this rule 
filing, which created a new market model for the Exchange, the role 
of the specialist was altered in certain respects and the term 
``specialist'' was replaced with the term ``Designated Market Maker 
(`DMM').'' Therefore, the annual trading floor regulatory fee 
previously paid by ``specialist'' firms will be referred to as the 
``Designated Market Maker'' annual trading floor regulatory fee.
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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
    Effective retroactively to July 1, 2008, the Exchange proposes that 
the $8,000,000 annual trading floor regulatory fee allocated among the 
DMMs be reduced by 50% for 2008 (i.e., $4,000,000), and eliminated 
thereafter. The purpose of the trading floor regulatory fee has been to 
defray the costs incurred by the Exchange in connection with the 
monitoring of trading floor activity by the Exchange's Market 
Surveillance Division. Effective January 1, 2008, the Exchange reduced 
this fee from $16,000,000 to $8,000,000.

[[Page 79534]]

At that time the Exchange noted that the dramatically increased 
percentage of NYSE trades automatically executed and the shifts in the 
specialists' trading role under the Hybrid Market initiative made it 
appropriate to reduce the direct annual contribution to the regulatory 
program. After further study this year, and in light of the launching 
of the New Market Model,\5\ which was filed with the Commission for 
immediate effectiveness [sic] on October 24, 2008, the Exchange has 
determined that it is appropriate to eliminate this fee entirely. As a 
result, it is proposed that from July 1, 2008 to the end of 2008, this 
annual fee be reduced from $8,000,000 to $4,000,000 (the amount already 
billed at the time this approach was discussed with the members) and 
that the fee be eliminated hereafter for all members.
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    \5\ See Securities Exchange Act Release No. 58845 (October 24, 
2008) 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46).
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Background
    In the past, what was formerly referred to as the ``specialists' 
annual trading floor regulatory fee'' and now referred to as the 
``Designated Market Maker annual trading floor regulatory fee,'' was 
billed to each firm in four quarterly installments. For the reasons 
stated above, in June 2008 the Exchange decided to reduce the fee from 
$8,000,000 to $4,000,000 (i.e., the amount that had already been billed 
to each firm by July 1, 2008), and to completely eliminate the fee in 
anticipation of the launching of the New Market Model in the fall of 
2008.
    In or about June and July 2008, the Exchange informed each firm 
that they should not pay the third or fourth quarter installments of 
the annual trading floor regulatory fee as such reduced fee of 
$4,000,000 had been satisfied by the installments in the first two 
quarters of the year ($2,000,000 x 2 = $4,000,000). By July 1, 2008, 
each firm had paid the full amount of the reduced regulatory fee. The 
Exchange instructed the firms to disregard any future bills for this 
fee, and in the event the firms had already paid the third quarter 
installment of the fee, the Exchange would give the firms a credit for 
any payment over $4,000,000. The Exchange applied this reduced annual 
trading floor regulatory fee of $4,000,000 to all DMM firms (formerly 
specialist firms). The fee will be eliminated henceforth, and will not 
appear on the 2009 NYSE Price List.
    The elimination of the annual trading floor regulatory fee will not 
have any impact on the Exchange's ability to maintain its current level 
of trading floor surveillance or to develop and adopt new surveillance 
technologies and procedures in the future.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 \6\ of the Securities Exchange Act of 
1934 (the ``Act'') \7\ in general and Section 6(b)(4) of the Act \8\ 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.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78a.
    \8\ 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 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

    Because the foregoing rule does not (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, provided that the self-regulatory organization 
has given the Commission written notice of its intent to file the 
proposed rule change at least five business days prior to the date of 
filing of the proposed rule change or such shorter time as designated 
by the Commission, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) 
thereunder.\10\ At any time within 60 days of the filing of such 
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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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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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-2008-125 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-NYSE-2008-125. 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 the filing will also be available for 
inspection and copying at the principal office of the self-regulatory 
organization. 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-2008-125 and should be submitted on or before January 20, 2009.

[[Page 79535]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-30787 Filed 12-24-08; 8:45 am]

BILLING CODE 8011-01-P