Document ID: SEC-2013-0854-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2013-05-07T04:00Z

[Federal Register Volume 78, Number 88 (Tuesday, May 7, 2013)]
[Notices]
[Pages 26677-26679]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-10742]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69489; File No. SR-NYSEMKT-2013-39]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Amex 
Options Fee Schedule To Modify the Existing Floor Broker Rebate for 
Executed Qualified Contingent Cross Orders

May 1, 2013.
    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 April 19, 2013, NYSE MKT LLC (the ``Exchange'' or ``NYSE 
MKT'') 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 the NYSE Amex Options Fee Schedule 
(``Fee Schedule'') to modify the existing Floor Broker rebate for 
executed qualified contingent cross (``QCC'') orders. 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

[[Page 26678]]

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 Exchange proposes to amend the Fee Schedule to modify the 
existing Floor Broker rebate for executed QCC orders.\4\ The proposed 
change will be operative on May 1, 2013.
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    \4\ The QCC permits an NYSE Amex ATP Holder to effect a 
qualified contingent trade (``QCT'') in a Regulation NMS stock and 
cross the options leg of the trade on the Exchange immediately upon 
entry and without order exposure if the order is for at least 1,000 
contracts, is part of a QCT, is executed at a price at least equal 
to the national best bid or offer, as long as there are no Customer 
orders in the Exchange's Consolidated Book at the same price.
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    Specifically, the Exchange proposes to adopt a tiered rebate based 
on Floor Broker executed QCC volume in a given month. The existing 
rebate is $.07 per contract,\5\ and this rebate will continue to be 
paid to Floor Brokers that execute monthly QCC volumes up to and 
including 300,000 contracts. The Exchange is proposing to adopt a 
higher per contract rebate of $.10 per contract to be paid to Floor 
Brokers for any QCC volume in excess of 300,000 contracts in a given 
month. The rebate paid per contract will include all eligible volume 
within each tier at the applicable rate. The rebate is per contract and 
not retroactive to the first contract. Thus, if a Floor Broker has 
400,000 contracts in QCC volume, he or she will earn a rebate of $.07 
for the first 300,000 contracts and $.10 for the remaining 100,000 
contracts. As with the existing rebate, Customer to Customer QCC trades 
will not qualify for any rebate as such a transaction nets the Exchange 
no revenue.\6\
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    \5\ See Securities Act Release No. 66376 (February 10, 2012), 77 
FR 9293 (February 16, 2012) (SR-NYSEAmex-2012-05).
    \6\ See Securities Act Release No. 65943 (December 13, 2011), 76 
FR 78704 (December 19, 2011) (SR-NYSEAmex-2011-95).
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    The Exchange notes that the proposed rebate falls within the range 
of rebates paid for QCC volumes across the industry. Specifically, the 
Exchange notes that the International Securities Exchange (``ISE'') 
pays a volume-based rebate for QCC and Solicitation volumes that ranges 
from $.00 to $.11 per contract.\7\ NASDAQ OMX PHLX (``PHLX'') also pays 
a volume-based rebate for QCC volume that ranges from $.00 to $.11 per 
contract.\8\
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    \7\ See ISE fee schedule, available at http://www.ise.com/assets/documents/OptionsExchange/legal/fee/fee_schedule.pdf.
    \8\ See PHLX fee schedule, available at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLXTools/PlatformViewer.asp?selectednode=chp_1_4&manual=%2Fnasdaqomxphlx%2Fphlx%2Fphlx-rulesbrd%2F.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) \9\ of the Act, in general, and 
Section 6(b)(4) and (5) \10\ of the Act, 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 and does not unfairly discriminate between customers, 
issuers, brokers, or dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed tiered rebates are 
reasonable because they are within the range of tiered volume rebates 
on other exchanges.\11\ To the extent that the rebate is successful in 
attracting additional order flow to the Exchange, all market 
participants should benefit. Any participant will be able to engage a 
rebate-receiving Floor Broker in a discussion surrounding the 
appropriate level of fees that they may be charged for entrusting the 
QCC order to the Floor Broker. Moreover, the Exchange believes that the 
proposed rebates are equitable and not unfairly discriminatory because 
they will apply to all Floor Brokers that execute QCC orders on 
Exchange on an equal and non-discriminatory basis.
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    \11\ See supra notes 7-8.
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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. The Exchange believes that 
the proposed change will allow Floor Brokers to better compete for QCC 
volumes as the rebates are more in line with those paid to participants 
on other exchanges. The Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive and/or rebates to be insufficient. 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 
reflects this 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.

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) \12\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \13\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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) \14\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \14\ 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-NYSEMKT-2013-39 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEMKT-2013-39. This 
file number should be included on the subject line if email is used. To 
help the

[[Page 26679]]

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, 100 F Street NE., Washington, 
DC 20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the 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-NYSEMKT-2013-39 and should 
be submitted on or before May 28, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-10742 Filed 5-6-13; 8:45 am]
BILLING CODE 8011-01-P