Document ID: SEC-2012-1690-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2012-10-16T04:00Z

[Federal Register Volume 77, Number 200 (Tuesday, October 16, 2012)]
[Notices]
[Pages 63406-63409]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-25322]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68021; File No. SR-NYSE-2012-50]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Implementing Changes to Certain Fees and Credits Within the New York 
Stock Exchange LLC Price List

October 9, 2012.
    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 September 26, 2012, New York Stock Exchange LLC (the 
``Exchange'' or ``NYSE'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by the 
Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to make changes to certain fees and credits 
within its Price List, which the Exchange proposes to become operative 
on October 1, 2012. 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 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
    The Exchange proposes to make changes to certain fees and credits 
within its Price List, which the Exchange proposes to become operative 
on October 1, 2012.
Transaction Fees
    The Exchange currently provides a per share credit per transaction 
when adding liquidity to the Exchange in a security with a per share 
price of $1.00 or more (displayed and non-displayed orders) of $0.0015, 
or $0.0010 if it is a non-displayed reserve order. The Exchange 
proposes to add two additional per share credits that would apply in 
lieu of the current adding liquidity credit, if certain thresholds are 
met:
     First, the Exchange proposes to provide a $0.0018 per 
share credit per transaction when adding displayed liquidity to the 
Exchange if either (i) the

[[Page 63407]]

member organization has average daily volume (``ADV'') that adds 
liquidity to the Exchange during the billing month (``Adding ADV,'' 
which shall exclude any liquidity added by a Designated Market Maker 
(``DMM'')) that is at least 1.5% of consolidated average daily volume 
in NYSE-listed securities during the billing month (``NYSE CADV''), and 
executes market at-the-close (``MOC'') and limit at-the-close (``LOC'') 
orders of at least 0.375% of NYSE CADV, or (ii) the member organization 
has Adding ADV that is at least 0.8% of NYSE CADV, executes MOC and LOC 
orders of at least 0.12% of NYSE CADV, and adds liquidity to the 
Exchange as a Supplemental Liquidity Provider (``SLP'') for all 
assigned SLP securities in the aggregate (including shares of both a 
SLP proprietary trading unit (``SLP-Prop'') and a SLP market maker 
(``SLMM'') of the same member organization) of more than 0.25% of NYSE 
CADV.
     Second, the Exchange proposes to provide a $0.0017 per 
share credit per transaction when adding displayed liquidity to the 
Exchange if the member organization has Adding ADV that is at least 
0.20% of NYSE CADV and executes MOC and LOC orders of at least 0.10% of 
NYSE CADV.
    Currently, the transaction fee for certain transactions in stocks 
with a per share price of $1.00 or more depends on the characteristics 
of the transaction, including order type.\3\ Those transactions that do 
not have a specified per share charge based on their characteristics 
(``all other'' transactions) are currently subject to an equity per 
share charge of $0.0023 per transaction for non-floor broker 
transactions or $0.0022 per transaction for Floor broker transactions. 
The Exchange proposes to increase this charge, such that for all other 
non-floor broker transactions (i.e., when taking liquidity from the 
Exchange), the Exchange proposes to increase the per share charge from 
$0.0023 to $0.0025 per transaction. The Exchange proposes to raise the 
per share charge for all other floor broker transactions from $0.0022 
to $0.0024 per transaction.
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    \3\ For example, the Exchange charges $0.0005 per share (subject 
to a monthly cap) for at the opening or at the opening only orders, 
$0.0055 per share per transaction for all MOC and LOC orders from 
any member organization executing an ADV of MOC/LOC activity on the 
Exchange in that month of at least 14 million shares, and $0.0095 
per share per transaction for all other MOC and LOC orders.
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    In addition, the Exchange proposes to raise the credit per share 
for executions of orders sent to a floor broker for representation on 
the Exchange when adding liquidity to the NYSE Display Book system from 
$0.0017 to $0.0019 per transaction.
    Lastly, the Exchange proposes to include an additional credit per 
share of $0.0002 for member organizations and floor brokers that 
provide displayed liquidity to the Exchange in the following ten active 
securities (``Active Securities''), which were selected based on year-
to-date CADV:

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                Company name                            Symbol
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Bank of America Corp.......................  BAC.
Citigroup Inc..............................  C.
Ford Motor Company.........................  F.
General Electric...........................  GE.
JPMorgan Chase & Co........................  JPM.
Nokia Corporation..........................  NOK.
PFIZER Inc.................................  PFE.
Sprint Nextel Corporation..................  S.
AT&T Inc...................................  T.
Wells Fargo & Co...........................  WFC.
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    The credit will apply to transactions in the Active Securities and 
is in addition to any other credit for floor and non-floor 
transactions.\4\
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    \4\ The credit will not apply to transactions in the Active 
Securities in the Retail Liquidity Program.
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DMMs
    The Exchange proposes to increase the per share charge for DMMs 
that take liquidity from the Exchange from $0.0023 to $0.0025.
    DMMs are currently eligible for a per share credit when adding 
liquidity in More Active Securities \5\ if the More Active Security has 
a stock price of $1.00 or more, the DMM meets both the More Active 
Securities Quoting Requirement \6\ and the More Active Securities 
Quoted Size Ratio Requirement,\7\ and the DMM's providing liquidity 
meets certain thresholds, as follows:
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    \5\ ``More Active Securities'' are those with an ADV in the 
previous month equal to or greater than one million shares.
    \6\ A DMM meets the ``More Active Securities Quoting 
Requirement'' when a More Active Security has a stock price of $1.00 
or more and the DMM quotes at the National Best Bid or Offer 
(``NBBO'') in the applicable security at least 10% of the time in 
the applicable month.
    \7\ A DMM meets the ``More Active Securities Quoted Size Ratio 
Requirement'' when the DMM Quoted Size for an applicable month is at 
least 15% of the NYSE Quoted Size. The ``NYSE Quoted Size'' is 
calculated by multiplying the average number of shares quoted on the 
NYSE at the NBBO by the percentage of time the NYSE had a quote 
posted at the NBBO. The ``DMM Quoted Size'' is calculated by 
multiplying the average number of shares of the applicable security 
quoted at the NBBO by the DMM by the percentage of time during which 
the DMM quoted at the NBBO.
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     $0.0026 per share if the DMM's providing liquidity is 10% 
or less of the NYSE's total intraday adding liquidity in each such 
security for that month; \8\
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    \8\ The NYSE total intraday adding liquidity is totaled monthly 
and includes all NYSE adding liquidity, excluding NYSE open and NYSE 
close volume, by all NYSE participants, including SLPs, customers, 
Floor brokers and DMMs.
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     $0.0030 per share if the DMM's providing liquidity is more 
than 10% but less than or equal to 20% of the NYSE's total intraday 
adding liquidity in each such security for that month; and
     $0.0029 per share if the DMM's providing liquidity is more 
than 20% of the NYSE's total intraday adding liquidity in each such 
security for that month.\9\
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    \9\ The Exchange notes that the $0.0029 per-share credit is 
applicable to all of the member organization's adding liquidity in 
each such security for that month, not just the incremental 
liquidity that is more than 30% of the NYSE's total intraday adding 
liquidity.
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    The Exchange proposes to change the level of providing liquidity 
for DMMs to be eligible for the credits. Specifically, DMMs would be 
eligible for a per share credit when adding liquidity in More Active 
Securities if the More Active Security has a stock price of $1.00 or 
more, the DMM meets both the More Active Securities Quoting Requirement 
and the More Active Securities Quoted Size Ratio Requirement, and the 
DMM's providing liquidity meets certain thresholds, as follows:
     $0.0026 per share if the DMM's providing liquidity is 15% 
or less of the NYSE's total intraday adding liquidity in each such 
security for that month;
     $0.0030 per share if the DMM's providing liquidity is more 
than 15% but less than or equal to 30% of the NYSE's total intraday 
adding liquidity in each such security for that month; and
     $0.0029 per share if the DMM's providing liquidity is more 
than 30% of the NYSE's total intraday adding liquidity in each such 
security for that month.
    Lastly, the Exchange proposes to include an additional credit per 
share of $0.0002 for DMMs that provide displayed liquidity to the 
Exchange in the Active Securities. The credit will apply to 
transactions in the Active Securities and is in addition to any other 
credit for DMMs.
SLPs
    The Exchange proposes to increase the credit per share for SLPs 
that add liquidity to the Exchange in securities with a per share price 
of $1.00 or more, if the SLP (i) meets the 10% average or more quoting 
requirement in an assigned security pursuant to Rule 107B (quotes of an 
SLP-Prop and an SLMM of the same member organization shall not be 
aggregated) and (ii) adds liquidity for all assigned SLP securities in 
the

[[Page 63408]]

aggregate (including shares of both an SLP-Prop and an SLMM of the same 
member organization) of an ADV of more than 0.22% of NYSE CADV from 
$0.0021 to $0.0023 per transaction, and from $0.0016 to $0.0018 per 
transaction for non-displayed reserve orders.
    The Exchange proposes to include an additional credit per share of 
$0.0025 per transaction for SLPs that add liquidity to the Exchange in 
securities with a per share price of $1.00 or more, if the SLP (i) 
meets the 10% average or more quoting requirement in an assigned 
security pursuant to Rule 107B (quotes of an SLP-Prop and an SLMM of 
the same member organization shall not be aggregated), (ii) adds 
liquidity for all assigned SLP securities in the aggregate (including 
shares of both an SLP-Prop and an SLMM of the same member organization) 
of an ADV of more than 0.22% of NYSE CADV, (iii) adds liquidity for all 
assigned SLP securities in the aggregate (including shares of both an 
SLP-Prop and an SLMM of the same member organization) of an ADV during 
the billing month that is at least a 0.18% increase over the SLP's 
September 2012 Adding ADV (``SLP Baseline ADV''), and (iv) has a 
minimum provide ADV for all assigned SLP securities of 12 million 
shares.
    Lastly, the Exchange proposes to include an additional credit per 
share of $0.0002 for SLPs that provide displayed liquidity to the 
Exchange in the Active Securities. The credit will apply to 
transactions in the Active Securities and is in addition to any other 
credit for SLPs.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Securities Exchange Act of 1934 (the 
``Act''),\10\ in general, and furthers the objectives of Section 
6(b)(4) of the Act,\11\ in particular, because it provides for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members and issuers and other persons using its facilities and does 
not unfairly discriminate between customers, issuers, brokers, or 
dealers.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the two new transaction fee credits and the 
increased credit for executions of orders in securities with a per 
share price of $1.00 or more sent to the floor broker for 
representation on the Exchange when adding liquidity to the NYSE 
Display Book system are reasonable because they encourage additional 
displayed liquidity on the Exchange. The Exchange believes the new 
credits are equitable and not unfairly discriminatory because they are 
open to all member organizations on an equal basis, provide discounts 
that are reasonably related to the value to the Exchange's market 
quality associated with higher volumes, and, in the case of the $0.0018 
per share credit, the Exchange has provided alternative methods for 
achieving the credit.
    The Exchange believes that increasing the per share charge for 
floor broker and non-floor broker transactions in securities with a per 
share price of $1.00 or more is reasonable in light of the increased 
credits the Exchange is proposing in order to increase liquidity on the 
Exchange. The Exchange believes that the additional credit for 
transactions in Active Securities is reasonable because it will 
encourage liquidity and competition in actively traded securities on 
the Exchange. The Exchange believes the new charges and credits for 
member organizations and floor brokers are equitably allocated and not 
unfairly discriminatory because similarly situated member organizations 
and floor brokers will be subject to the same fee structure, and it 
allocates a higher rebate to member organizations and floor brokers 
that make significant contributions to market quality and that 
contribute to price discovery by providing higher volumes of liquidity.
    The Exchange believes that increasing the per share charge for DMMs 
that take liquidity from the Exchange is reasonable in light of the 
changes to the DMM credits the Exchange is proposing, which are 
designed to attract liquidity to the Exchange. The Exchange believes 
that the additional credit for DMM transactions in Active Securities is 
reasonable because it will encourage greater liquidity and competition 
in actively traded securities on the Exchange. The Exchange recognizes 
that the credit for a DMM whose providing liquidity is currently 
between 10-15% of the NYSE's total intraday adding liquidity will 
decrease from $0.0030 to $0.0026. The Exchange believes that this 
change is reasonable, equitable, and not unfairly discriminatory 
because it would result in credits being applied that are more 
representative of the amount of liquidity added by such a DMM. In this 
regard, the Exchange believes that a DMM that meets both the More 
Active Securities Quoting Requirement and the More Active Securities 
Quoted Size Ratio Requirement is likely to also be providing liquidity 
that is reasonably close to, but not greater than, 15% of the NYSE's 
total intraday adding liquidity in each such security for that month. 
In contrast, the Exchange believes that a DMM whose providing liquidity 
is greater than 15% of the NYSE's total intraday adding liquidity would 
be adding liquidity above the amount associated with meeting both the 
More Active Securities Quoting Requirement and the More Active 
Securities Quoted Size Ratio Requirement. Accordingly, the Exchange 
considers it reasonable, equitable and not unfairly discriminatory to 
provide a higher credit for a DMM whose providing liquidity is greater 
than 15% of the NYSE's total intraday adding liquidity in each such 
security for that month. Additionally, the Exchange believes that 
reducing the credit for DMMs that provide relatively less liquidity 
(10-15%) is reasonable, equitable, and not unfairly discriminatory, 
because it would offset the cost of providing a higher credit to DMMs 
that provide more liquidity (20-30%). The Exchange also believes that 
increasing the credit for a DMM whose providing liquidity is between 
20-30% of the NYSE's total intraday adding liquidity is reasonable, 
equitable, and not unfairly discriminatory, because it will increase 
the incentive for DMMs to provide liquidity but still promote multiple 
sources of liquidity by decreasing the credit slightly when the DMM 
provides liquidity that is more than 30% of the NYSE's total intraday 
adding liquidity. The Exchange believes that the proposed changes are 
equitable and not unfairly discriminatory because all similarly 
situated DMMs will be subject to the same fee structure.
    The Exchange believes that increasing the credit per share for SLPs 
that add liquidity to the Exchange with a per share price of $1.00 or 
more if the SLP meets certain requirements is reasonable because the 
incentives are reasonably related to an SLP's liquidity obligations. 
The Exchange believes the new SLP credit for adding liquidity is 
reasonable because it provides an added incentive for SLPs to provide 
liquidity in their assigned securities. The Exchange believes that the 
additional credit for SLP transactions in Active Securities is 
reasonable because it will encourage liquidity and competition in 
actively traded securities on the Exchange. The Exchange believes the 
credits are equitable and not unfairly discriminatory because they are 
open to all SLPs on an equal basis and provide discounts that are 
reasonably related to the value to the Exchange's market quality 
associated with higher volumes.
    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such

[[Page 63409]]

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.

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) \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 NYSE.
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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.

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-NYSE-2012-50 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-NYSE-2012-50. This file 
number should be included on the subject line if email 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 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-NYSE-2012-50 and should be 
submitted on or before November 6, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25322 Filed 10-15-12; 8:45 am]
BILLING CODE 8011-01-P