Document ID: SEC-2007-0645-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca, Inc.
Posted Date: 2007-05-08T04:00Z

[Federal Register: May 8, 2007 (Volume 72, Number 88)]
[Notices]               
[Page 26190-26191]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08my07-115]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55679; File No. SR-NYSEArca-2007-35]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to 
Exchange Fees and Charges

April 27, 2007.
    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 3, 2007, NYSE Arca, Inc. (the ``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 prepared by Exchange. The Exchange has 
filed this proposal pursuant to Section 19(b)(3)(A) of the Act \4\ and 
Rule 19b-4(f)(2) thereunder,\5\ which renders the proposed rule change 
effective upon filing with the Commission. 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
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NYSE Arca is proposing to amend its Schedule of Fees and Charges 
for Exchange Services (``Schedule''). The text of the proposed rule 
change is available at http://www.nysearca.com, at the Exchange's 

Office of the Secretary, 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 changes and 
discussed any comments it received regarding the proposal. The text of 
these 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 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 filing is to amend the existing NYSE Arca Rate 
Schedule by revising or eliminating certain fees and adding clarifying 
language to either footnotes or explanatory text, associated with 
certain fees. The Exchange also proposes making minor technical changes 
to the Schedule. A brief description of each proposed change is shown 
below.
OTP Trading Participant Rights
    NYSE Arca Market Makers pay a fee of $4,000 per month for each 
Options Trading Permit (OTP) used. The fee is presently capped at 
$16,000 per month, which represents four OTPs. Pursuant to NYSEArca 
Rule 6.35(d)(4), a Market Maker with four OTPs is permitted to trade 
all issues on the Exchange. Because of this provision, there would 
never be an occasion for a Market Maker to need more than four OTPs, 
thereby negating any need for a fee cap. As a result, the Exchange 
proposes to eliminate the $16,000 fee cap from the Schedule.
LMM Options Issue Relinquishment Fee
    This fee was initially implemented to help offset the costs 
incurred by the Exchange when a Lead Market Maker (``LMM'') 
relinquished an allocated option issue. Previously, the relinquishment 
process involved administrative and technological changes, both of 
which were mostly manual processes. Much of the process has now been 
automated and the associated cost has been significantly reduced. 
Accordingly, the Exchange proposes eliminating the Issue Relinquishment 
Fee in its entirety.
DEA Fee
    The Exchange charges a one time $75 registration fee, for new 
applicants, when the Exchange also acts as the Designated Examining 
Authority. This fee helps to offset administrative expenses involved in 
processing new applications. Much of the processing is now done over 
the NASD Central Registration Depository (``CRD''). Included in the 
fees that NASD collects on behalf of the Exchange, is a $55 assessment 
for new applicants. The Exchange believes that these fees are 
duplicitous and as such, will eliminate the $75 one time registration 
fee.
Weekly Bulletin Subscription Fee
    NYSE Arca distributes a Weekly Bulletin (``Bulletin'') to OTP 
Holders and OTP Firms in order to provide them with regulatory 
bulletins, rule adoption notices, and other official communications. 
The Bulletin has been available either electronically or via U.S. Mail. 
To offset the cost of postage and handling, the Exchange charges a $200 
per year subscription fee to anyone electing to receive the Bulletin 
via regular mail.
    NYSE Arca Rule 2.25 requires that Each OTP Holder and OTP Firm must 
maintain with NYSE Arca an electronic mail account for communication 
with the NYSE Arca. Presently, all OTP Holders and OTP Firms receive 
the Bulletin via e-mail subscriptions. As a result, the Exchange will 
no longer offer the option of receiving the Bulletin via regular mail. 
Therefore, the Exchange proposes eliminating the Subscription Fee.
Transaction Fees
    The Exchange proposes making minor changes to the Order Types 
included in the Transaction Fee section of the Schedule.
    Orders executed on behalf of registered Broker Dealers (``BD''), or 
Broker Dealer Firms, are presently assessed the ``BD rate.'' In order 
to avoid any misunderstanding and to clarify that the ``BD rate'' is 
applicable to the BD Firms as well as the BDs, the BD Electronic rate 
and BD Manual rate will now read ``Broker Dealer & Firm Electronic'' 
and ``Broker Dealer & Firm Manual.''
    Presently, the ``Firm rate'' applies to any transaction involving a 
proprietary trading account of an OTP Firm that has a customer of that 
OTP Firm on the contra side of the transaction. This explanation 
presently appears on the Schedule as a footnote to the Firm fee. This 
practice is generally referred to as ``facilitating'' an order. In 
order to better explain that the ``Firm rate'' is only applicable when 
a firm facilitates their customer's order, the Schedule will now read 
``Firm Facilitation.''
Marketing Charge--QQQQ
    The Exchange assesses Market Makers a Marketing Charge on certain 
transactions. The Standard and Poor's Depository Receipts (QQQQ) carry 
a $1.00 per contract charge. Marketing Charges are not assessed on 
issues that

[[Page 26191]]

trade as part of the Penny Pilot. QQQQ has now been included in the 
Penny Pilot and therefore the Exchange will no longer assess a 
Marketing Charge on any trades in this issue. The Exchange also 
proposes making minor technical changes to this section of the Schedule 
with this filing.
Royalty Fees
    In an effort to reduce costs associated with trading on NYSE Arca, 
the Exchange proposes to eliminate certain Royalty Fees. The Exchange 
proposes to eliminate the $0.10 per contract Royalty Fee for options 
traded on the following ETFs; the Financial Select Sector SPDR (XLF), 
the Technology Select Sector SPDR (XLK), and the Healthcare Select 
Sector SPRD (XLV). By eliminating these fees, the Exchange hopes to 
attract additional order flow and encourage more trading by market 
participants.
Vendor Equipment Room Usage Fee
    This fee covers the use of server cabinets in the vendor equipment 
room located adjacent to the trading floor. This fee will now be called 
the Vendor Equipment Room Cabinet Fee, and the footnote associate with 
the fee will now be moved into the body of the Schedule. These minor 
changes simply serve to offer clarity as to how this fee is assessed, 
and makes no change to the fee itself.
Technical and Formatting Changes
    The Exchange proposes making minor changes to the schedule in order 
correct certain typographical and grammatical errors and to make 
certain formatting changes. These changes will have no effect on 
existing fees or the application of the existing fees.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) \6\ of the Act, in general, and Section 6(b)(4),\7\ in particular, 
in that it provides for the equitable allocation of dues, fees and 
other charges among its members.
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    \6\ 15 U.S.C. 78f(b).
    \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 purpose of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change is subject to Section 19(b)(3)(A)(ii) of 
the Act \8\ and Rule 19b-4(f)(2) thereunder \9\ because it establishes 
or changes a due, fee, or other charge applicable only to a member 
imposed by the self-regulatory organization. Accordingly, the proposal 
is effective upon Commission receipt of the filing. 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.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
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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 e-mail to rule-comments@sec.gov. Please include File 

Number SR-NYSEArca-2007-35 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-2007-35. 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. Copies of such 
filings will also 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-2007-35 and should be submitted by May 29, 
2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-8732 Filed 5-7-07; 8:45 am]

BILLING CODE 8010-01-P