Document ID: SEC-2008-1251-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2008-09-15T04:00Z

[Federal Register: September 15, 2008 (Volume 73, Number 179)]
[Notices]               
[Page 53312-53314]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15se08-127]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58473; File No. SR-NYSEArca-2008-97]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Rule Change by NYSE Arca, Inc. Amending Its Schedule 
of Fees and Charges for Exchange Services in Order To Establish a New 
Fee for Electronically Executed Complex Orders

September 8, 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 September 5, 2008, NYSE Arca, Inc. (``NYSE Arca'' or the 
``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 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 to amend its Schedule of Fees and Charges for 
Exchange Services (``Schedule'') in order to establish certain 
Transaction Fees.

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 purpose of this filing is to amend the existing Schedule in 
order to create a new fee structure covering electronically executed 
Complex Orders.\4\
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    \4\ NYSE Arca Rule 6.62(e) defines a ``Complex Order'' as any 
order involving the simultaneous purchase and/or sale of two or more 
different option series in the same underlying security, for the 
same account, in a ratio that is equal to or greater than one-to-
three (.333) and less than or equal to three-to-one (3.00) and for 
the purpose of executing a particular investment strategy.
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    Pursuant to a recent rule filing \5\ the Exchange will be 
introducing automated complex order trading for all market participants 
on NYSE Arca. In conjunction with this new functionality, the Exchange 
proposes to introduce two new transaction fees specific to Complex 
Order executions. Pursuant to this proposal, electronically entered and 
executed Complex Orders when executed against similar contra-side 
Complex Orders will be subject to a reduced transaction fee.
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    \5\ See Securities Exchange Act Release No. 58174 (July 16, 
2008), 73 FR 42640 (July 22, 2008) (order approving SR-NYSEArca-
2008-54, establishing rules pertaining to automated electronic 
trading of Complex Orders).
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    Complex Orders that are executed against other similar Complex 
Orders will be subject to a transaction fee of $0.10 per contract. For 
example, if a Complex Order, comprised of two legs, executes against a 
similar two-legged Complex Order, each market participant will be 
charged $0.20 ($0.10 per contract). To expand on this example, if the 
same strategy is executed a total of ten (10) times, each participant 
would be charged $2.00. If a Complex Order comprised of three legs 
executes against a similar three-legged Complex Order, then each 
participant would be charged $0.30 for the transaction. To expand on 
this example, if the same three-legged Complex Order is executed a 
total of ten (10) times, each participant would be changed $3.00. All 
electronically executed Complex Orders, regardless of whether they are 
entered by Market Makers, Brokers Dealers, or OTP Firms representing 
Public Customers, will be billed this same rate when their order is 
executed against another Complex Order.

[[Page 53313]]

    The Exchange proposes a separate fee for electronically executed 
Complex Orders when the same member firm represents both sides of the 
transaction. Complex Orders, entered by a firm that trade against a 
similar Complex Order represented by the same firm, will be subject to 
a transaction fee of $0.05 per contract. For example, if a Complex 
Order comprised of two legs is entered by Firm A and executes against a 
similar two-legged Complex Order also for Firm A, the firm will be 
charged a total of $0.20 (four contracts at $.05 per contract) for each 
time the complex order strategy is executed. To expand on this example, 
if the same two-legged Complex Order is executed a total of ten (10) 
times, the transaction would be subject to a $1.00 fee per Complex 
Order, and since the same firm is a party to both sides of the 
transaction, they would be charged a total of $2.00. If a Complex Order 
entered by Firm A, which is comprised of three legs, executes against a 
similar three-legged Complex Order entered by Firm A, then the firm 
would be charged a total of $0.30 for each time the three-legged 
Complex Order is executed. To expand on this example, if the same 
three-legged Complex Order is executed a total of ten (10) times, the 
transaction would be subject to a $1.50 fee per Complex Order, and 
since the firm represents both sides of the transaction, they would be 
charged a total of $3.00.
    There may be occasions where a Complex Order will not execute 
against a similar contra-side Complex Order, but instead will execute 
against the individual leg markets represented by quotes and/or orders 
in the Consolidated Book. This scenario will occur when the best price 
for the Complex Order strategy is actually represented by a combination 
of individual quotes and/or orders, resting in the Consolidated Book. 
In situations where Complex Orders are executed utilizing two or more 
individual quotes or orders from the Consolidated Book, standard 
transaction fees, as shown on the Schedule, will apply to all 
participants on the trade. For Complex Order transactions in Penny 
Pilot issues, when the Complex Order is executed against individual 
quotes and/or orders represented in the Consolidated Book, the Complex 
Order will be deemed to be taking liquidity from the Consolidated Book 
and therefore will be subject to the ``Take Liquidity'' rates, as shown 
on the Schedule.
    NYSE Arca plans to implement these fees in conjunction with the 
planned introduction of the initial phase of automated electronic 
Complex Order trading on September 15, 2008.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 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. in 
that it provides for the equitable allocation of reasonable dues, fees 
and other charges among its members and other market participants on 
NYSE Arca. [sic] The Exchange believes that the proposed rates are 
reasonable. The proposed rate structure is part of the Exchange's 
efforts to attract and enhance participation on the Exchange, with 
respect to the implementation of electronic complex order trading. The 
Exchange also believes that the proposed changes to the Fee Schedule 
are equitable in that they apply uniformly to all market participants 
on NYSE Arca.
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    \6\ 15 U.S.C. 78f.
    \7\ 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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge 
imposed by NYSE Arca.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(2).
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    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. 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-2008-97 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-2008-97. 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-
NYSEArca-2008-97 and should be submitted on or before October 6, 2008.

[[Page 53314]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-21330 Filed 9-12-08; 8:45 am]

BILLING CODE 8010-01-P