Document ID: SEC-2007-0971-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca, Inc.
Posted Date: 2007-07-18T04:00Z

[Federal Register: July 18, 2007 (Volume 72, Number 137)]
[Notices]               
[Page 39474-39475]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18jy07-122]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56054; File No. SR-NYSEArca-2007-52]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Order Granting Accelerated Approval of Proposed Rule Change as 
Modified by Amendment No. 2 Thereto Relating to Exchange Fees and 
Charges

July 12, 2007.
    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 June 1, 2007, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange''), 
through its wholly owned subsidiary NYSE Arca Equities, Inc. (``NYSE 
Arca Equities''), filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by the Exchange. 
On June 12, 2007, NYSE Arca filed Amendment No. 1 to the proposed rule 
change. On June 29, 2007, the Exchange withdrew Amendment No. 1 and 
submitted Amendment No. 2 to the proposed rule change.\3\ This order 
provides notice of the proposed rule change, as modified by Amendment 
No. 2, and approves the proposed rule change, as amended, on an 
accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 2 replaced the original filing in its 
entirety.
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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 Schedule of Fees and Charges for 
Exchange Services (``Schedule'') by charging Royalty Fees to all 
Intermarket Options Linkage orders (``Linkage Orders'') except 
Satisfaction Orders. The text of the proposed rule change is available 
on the Exchange's Web site at http://www.nyse.com, at the Exchange's 

principal office, 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 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 III 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 proposed rule change is to allow the Exchange 
to assess Royalty Fees (aka Surcharge Fees or Licensing Fees) on 
Principal orders (``P Orders'') and Principal Acting as Agent orders 
(``P/A Orders'') \4\ sent to the Exchange via the Intermarket Linkage 
System (``Linkage''). The Exchange proposes to add language to the 
footnote associated with Royalty Fees and also include a reference to 
said footnote, in the Linkage Fees section of the Schedule. These 
changes will explain that Royalty Fees will now be applicable to orders 
executed via Linkage, except for Satisfaction Orders.\5\
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    \4\ See Section 2(16)(a) and (b) of the Plan for the Purpose of 
Creating and Operating an Intermarket Option Linkage (``Linkage 
Plan'') for definitions of ``P Orders'' and ``P/A Orders.''
    \5\ See Section 2(16)(c) of the Linkage Plan for definition of 
``Satisfaction Order.''
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    Certain classes of options listed on NYSE Arca have as their 
underlying security licensed products that require the Exchange to pay 
a Royalty Fee to the licensing entity for every contract traded in that 
particular class of options.

[[Page 39475]]

Royalty Fees are assessed to the Exchange by a licensing entity through 
an agreement which allows the Exchange to trade options on certain 
proprietary products. Royalty Fees are not Exchange transaction fees. A 
list of all Royalty Fees in place at NYSE Arca is published in the 
Schedule and available on the company Web site at http://www.nyse.com. 

Presently, Royalty Fees that are charged to the Exchange are passed on 
to trade participants on all Firm, Broker-Dealer and Market Maker 
transactions in issues that carry a Royalty Fee.
    Linkage Orders (except for Satisfaction Orders) executed on NYSE 
Arca are subject to the same fees as other Broker-Dealer orders.\6\ 
Accordingly, the Exchange now proposes to pass on any Royalty Fees to 
options exchanges sending P Orders and P/A Orders through Linkage. 
Assessing Royalty Fees on Linkage Orders is consistent with billing 
practices presently in place at the Chicago Board Options Exchange, the 
American Stock Exchange and the International Securities Exchange.
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    \6\ Fees imposed on Linkage Orders are subject to an Exchange 
Pilot Program and will expire July 31, 2007. On July 10, 2007, the 
Exchange filed a proposed rule change with the Commission to extend 
the pilot until July 31, 2008. See SR-NYSEArca-2007-66.
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act, in general,\7\ and Section 6(b)(4) in particular,\8\ 
in that it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members and other persons using its 
facilities.
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    \7\ 15 U.S.C. 78f(b)(4).
    \8\ Id.
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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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. 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-NYSEArca-2007-52 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-NYSEArca-2007-52. 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 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-2007-52 and should 
be submitted on or before August 8, 2007.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\9\ In particular, the Commission finds that the proposed rule 
change is consistent with Section 6(b)(4) of the Act,\10\ which 
requires that the rules of an exchange provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and issuers and other persons using its facilities.
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    \9\ In approving this rule change, the Commission notes that it 
has considered the proposal's impact on efficiency, competition, and 
capital formation. See 15 U.S.C. 78c(f).
    \10\ 15 U.S.C. 78f(b)(4).
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    The Commission also finds good cause for approving the proposed 
rule change prior to the 30th day after the date of publication of the 
notice of filing thereof in the Federal Register. The Commission notes 
that NYSE Arca's proposal to apply fees to P Orders and P/A Orders is 
consistent with the practices of other options exchanges.\11\ The 
Commission also believes that NYSE Arca's proposal does not raise any 
novel regulatory issues. Therefore, the Commission finds good cause, 
consistent with Section 19(b)(2) of the Act,\12\ to approve the 
proposed rule change on an accelerated basis.
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    \11\ See, e.g., Securities Exchange Act Release Nos. 51351 
(March 9, 2005), 70 FR 12917 (March 16, 2005) (SR-CBOE-2005-14) 
(applying license fees to P Orders and P/A Orders on MNX and NDX 
Indexes) and 51858 (June 16, 2005), 70 FR 36218 (June 22, 2005) 
(applying license fees to P Orders and P/A Orders on RUI, RUT and 
RMN indexes) (SR-ISE-2005-26).
    \12\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\13\ that the proposed rule change (SR-NYSEArca-2007-52), as 
modified by Amendment No. 2, be and hereby is, approved on an 
accelerated basis.
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    \13\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E7-13878 Filed 7-17-07; 8:45 am]

BILLING CODE 8010-01-P