Document ID: SEC-2013-0858-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2013-05-08T04:00Z

[Federal Register Volume 78, Number 89 (Wednesday, May 8, 2013)]
[Notices]
[Pages 26836-26837]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-10902]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69503; File No. SR-NYSEArca-2013-44]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending Its 
Schedule of Fees and Charges for Exchange Services To Amend Step Up 
Tier 2 to Reduce the Volume Threshold Requirements Needed To Be 
Eligible for The Tier

May 2, 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 22, 2013, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') 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 (``Fee Schedule'') to amend Step Up Tier 2 to reduce 
the volume threshold requirements needed to be eligible for the tier. 
The Exchange proposes to implement the changes on May 1, 2013. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedule to amend Step Up 
Tier 2 to reduce the volume threshold requirements needed to be 
eligible for the tier. The Exchange proposes to implement the changes 
on May 1, 2013.
    Currently, in order to qualify for Step Up Tier 2, an ETP Holder on 
a daily basis, measured monthly, must directly execute providing volume 
on NYSE Arca in an amount that is an increase of no less than 0.12% of 
U.S. consolidated average daily volume (``US CADV'') in Tape A, Tape B, 
and Tape C securities for that month over the ETP Holder's average 
daily providing volume in June 2011 (the ``Baseline Month''), subject 
to a minimum increase of 12 million average daily providing shares. The 
Exchange proposes to reduce the eligibility requirement for Step Up 
Tier 2 to no less than 0.10% of US CADV for the month over the ETP 
Holder's average daily providing volume in the Baseline Month, subject 
to a minimum increase of 10 million average daily providing shares. The 
Exchange does not propose to amend the credits for Step Up Tier 2.
    By way of example, if an ETP Holder executed an average daily 
providing volume of 5 million shares in the Baseline Month, then to 
qualify for Step Up Tier 2 in a month where US CADV is 11 billion 
shares, that ETP Holder would need to increase its average daily 
providing volume by at least 11 million shares, or 0.10% of that 
month's US CADV, for a total average daily providing volume of at least 
16 million shares.\4\
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    \4\ In addition, those ETP Holders that did not directly provide 
volume to NYSE Arca in the Baseline Month will be treated as having 
an average daily providing volume of zero for the Baseline Month. 
With respect to the increased percentage of US CADV, the volume 
requirements to reach Step Up Tier 2's pricing levels will adjust 
each calendar month based on the US CADV for that given month.
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    The Exchange notes that the proposed fee change will reverse the 
Step Up Tier 2 fee changes that became operative on April 1, 2013.\5\ 
The Exchange is proposing the Step Up Tier 2 fee change because the 
previous fee change did not result in the anticipated increase in 
orders sent to the Exchange. As previously explained,\6\ the goal of 
the Step Up Tiers is to incent ETP Holders to increase the orders sent 
directly to the Exchange and therefore provide liquidity that supports 
the quality of price discovery and promotes market transparency. In the 
Step Up Tiers Release, the Exchange explained that the Step Up Tiers 
were expected to benefit ETP Holders whose increased order flow 
provided added levels of liquidity (thereby contributing to the depth 
and market quality on the Exchange) but who are still not eligible for 
Tier 1, 2 or 3, or Investor Tier 1 or 2.\7\ For similar reasons, the 
Exchange believes that lowering the volume requirements needed to be 
eligible for Step Up Tier 2 will allow a greater number of ETP Holders 
to qualify for the tier, which will in turn incent ETP Holders to 
increase the orders sent directly to the Exchange and therefore provide 
liquidity that supports the quality of price discovery and promotes 
market transparency. The Exchange believes that this especially is the 
case given that the $0.0029 credit for providing liquidity in Tape A 
and Tape C securities under Step Up Tier 2 is substantially higher than 
the credits for Tape A and Tape C securities under the Basic Rates 
($0.0021) and Tier 3 ($0.0025).
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    \5\ See Securities Exchange Act Release No. 69305 (April 4, 
2013), 78 FR 21443 (April 10, 2013) (SR-NYSEArca-2013-32).
    \6\ See Securities Exchange Act Release No. 64820 (July 6, 
2011), 76 FR 40974 (July 12, 2011) (SR-NYSEArca-2011-41) (``Step Up 
Tiers Release'').
    \7\ Id. at 76 FR 40975.
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    The proposed changes are not otherwise intended to address any 
other problem, and the Exchange is not aware of any significant problem 
that the affected market participants would have in complying with the 
proposed changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with

[[Page 26837]]

Section 6(b) of the Act,\8\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\9\ in particular, because it 
provides for the equitable allocation of reasonable dues, fees, and 
other charges among its members, issuers and other persons using its 
facilities and does not unfairly discriminate between customers, 
issuers, brokers or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed amendment to Step Up Tier 2 
that lowers the volume requirements needed to be eligible for the tier 
is reasonable because the proposed change is designed to further incent 
ETP Holders to increase the orders sent directly to the Exchange and 
therefore provide liquidity that supports the quality of price 
discovery and promotes market transparency. The Exchange believes that 
this is especially the case given that the $0.0029 credit for providing 
liquidity in Tape A and Tape C securities is substantially higher than 
the credits for Tape A and Tape C securities under the Basic Rates 
($0.0021) and Tier 3 ($0.0025). In addition, the proposed change is 
reasonable because it is reverting to the volume thresholds that were 
previously in place at the Exchange.\10\ The Exchange further believes 
that the proposed amendment is equitable and not unfairly 
discriminatory because it will allow a greater number of ETP Holders to 
qualify for the tier, which will in turn incent ETP Holders to increase 
order flow and provide added levels of liquidity (thereby contributing 
to the depth and market quality on the Exchange), even if they may not 
be eligible for Tier 1, 2 or 3, or Investor Tier 1 or 2. Moreover, Step 
Up Tier 2 is available for all ETP Holders to satisfy.
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    \10\ See supra n.5.
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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. In particular, the proposed 
amendment to Step Up Tier 2 that lowers the volume requirement needed 
to be eligible for the tier is designed to incent ETP Holders and 
Market Makers to increase the volume of orders sent directly to the 
Exchange and therefore provide liquidity that supports the quality of 
price discovery and promotes market transparency.
    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues. 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 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) \11\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \12\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \13\ 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-NYSEArca-2013-44 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-NYSEArca-2013-44. 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 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 publicly available. All 
submissions should refer to File Number SR-NYSEArca-2013-44 and should 
be submitted on or before May 29, 2013.

    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. 2013-10902 Filed 5-7-13; 8:45 am]
BILLING CODE 8011-01-P