Document ID: SEC-2013-1631-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2013-09-19T04:00Z

[Federal Register Volume 78, Number 182 (Thursday, September 19, 2013)]
[Notices]
[Pages 57669-57671]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-22788]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70389; File No. SR-NYSEArca-2013-87]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Proposing To Modify 
the Manner in Which It Calculates Volume, Liquidity and Quoting 
Thresholds Applicable to Billing on the Exchange in Relation to a 
Systems Issue Experienced by the NASDAQ UTP Securities Information 
Processor on August 22, 2013, Which Impacted Trading Across All Markets

September 13, 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 September 4, 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 and II 
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 modify the manner in which it calculates 
volume, liquidity and quoting thresholds applicable to billing on the 
Exchange in relation to a systems issue experienced by the NASDAQ UTP 
Securities Information Processor (``NASDAQ UTP SIP'') on August 22, 
2013, which impacted trading across all markets (the ``August 22, 2013 
systems issue''). 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 modify the manner in which it calculates 
volume, liquidity and quoting thresholds applicable to billing on the 
Exchange in relation to the August 22, 2013 systems issue, which 
impacted trading across all markets.
    As a result of the August 22, 2013 systems issue, the NASDAQ Stock 
Market LLC (``NASDAQ'') halted trading in Tape C securities (i.e., 
NASDAQ-listed securities) for more than three hours, resulting in a 
more than 40% decrease in trading volume in Tape C securities and a 
more than 20% decrease in trading volume across all listed equity 
securities (i.e., Tape A, B and C securities) as compared to U.S. 
consolidated average daily volume (``CADV'') for the previous trading 
days in August 2013.\4\ The Exchange also

[[Page 57670]]

believes that the trading halt impacted the ability of ETP Holders, 
including Market Makers, to demonstrate typical trading, quoting and 
liquidity in their assigned securities, leading to decreased quoting 
and trading volume compared to average daily volume (``ADV'') and CADV 
for the previous trading days in August 2013.
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    \4\ See NASDAQ press release, available at http://globenewswire.com/news-release/2013/08/22/568741/10045917/en/UPDATE-NASDAQ-OMX-Issues-Statement-on-the-Securities-Information-Processor.html. For purposes of this proposal, ``NASDAQ'' refers to 
all NASDAQ OMX U.S. equity and option markets, including NASDAQ, 
NASDAQ OMX PHLX LLC (``Phlx''), and NASDAQ OMX BX, Inc. (``BX'').
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    As provided in the Exchange's Schedule of Fees and Charges for 
Exchange Services (``Equities Fee Schedule''), several of the 
Exchange's transaction fees and credits are based on trading, quoting 
and liquidity thresholds that ETP Holders must satisfy in order to 
qualify for the particular rates (i.e., percentage of CADV and ADV 
thresholds). The Exchange believes that the halting of trading that 
resulted from the August 22, 2013 systems issue may impact the ability 
of ETP Holders to meet these thresholds during August 2013.\5\ The 
Exchange therefore proposes to exclude August 22, 2013 from any CADV or 
ADV calculation described in the Equities Fee Schedule in order to 
reasonably ensure that an ETP Holder that would otherwise qualify for a 
particular threshold during August 2013, and the corresponding 
transaction rate, would not be negatively impacted by the August 22, 
2013 systems issue.
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    \5\ The Exchange notes that it does not perform the calculations 
necessary to determine whether these thresholds have been met until 
after the particular billing month has ended.
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    The proposed change is not otherwise intended to address any other 
issues relating to fees and the Exchange is not aware of any problems 
that ETP Holders would have in complying with the proposed change. The 
Exchange notes that NASDAQ is similarly excluding August 22, 2013 
trading volume from pricing tier calculations.\6\
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    \6\ See NASDAQ Equity Trader Alert 2013-78, available 
at http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2013-78.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\8\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed rule change is reasonable 
because excluding August 22, 2013 from any CADV or ADV calculation 
described in the Equities Fee Schedule would reasonably ensure that an 
ETP Holder that would otherwise qualify for a particular threshold 
during August 2013, and the corresponding transaction rate, would not 
be negatively impacted by the August 22, 2013 systems issue. The 
Exchange also believes that the proposed rule change is equitable and 
not unfairly discriminatory because the trading halt on NASDAQ, which 
lasted more than three hours, resulted in significant decreases in 
trading volume and also impacted the ability of ETP Holders on the 
Exchange, including Market Makers, to demonstrate typical trading, 
quoting and liquidity in their assigned securities, leading to 
decreased quoting and trading volume compared to ADVs and CADVs for the 
previous trading days in August 2013. Therefore, excluding August 22, 
2013 from any CADV or ADV calculation described in the Equities Fee 
Schedule would reasonably ensure than any market participant on the 
Exchange would not be negatively impacted by the August 22, 2013 
systems issue with respect to billing on the Exchange. The proposed 
rule change is also equitable and not unfairly discriminatory because 
it would result in all market participants on the Exchange being 
treated equally by excluding August 22, 2013 from any CADV or ADV 
calculation described in the Equities Fee Schedule.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition. For these reasons, the Exchange 
believes that the proposal is consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\9\ the Exchange 
believes that the proposed rule change will not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The proposed rule change would treat all market 
participants on the Exchange equally by excluding August 22, 2013 from 
any CADV or ADV calculation described in the Equities Fee Schedule. 
Moreover, the Exchange believes that the proposed change would enhance 
competition between competing marketplaces by enabling the Exchange to 
exclude August 22, 2013 from any CADV or ADV calculation described in 
the Equities Fee Schedule, which is consistent with the manner by which 
NASDAQ has announced that it will be treating trading volumes from 
August 22, 2013 in pricing tier calculations.\10\
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    \9\ 15 U.S.C. 78f(b)(8).
    \10\ See supra note 5.
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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 Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative delay so that 
the proposed rule change may become operative upon filing. The 
Commission believes that waiver of the operative delay is consistent 
with the protection of investors and the public interest because the 
proposal will allow the Exchange to immediately implement the proposed 
change, thereby reducing the potential for confusion among member 
organizations and the public about how the Exchange will calculate 
certain volume, liquidity and quoting thresholds related to billing for 
activity on the Exchange during August 22, 2013. The Commission 
believes that the requested waiver will also assist the

[[Page 57671]]

Exchange in determining transaction fees and credits for member 
organizations in a timely manner after the end of the billing month of 
August 2013. Therefore, the Commission designates the proposal 
operative upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-say operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition and capital formation. See 15 U.S.C. 78c(f).
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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) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 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-2013-87 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-2013-87. 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-NYSEArca-2013-87, and should 
be submitted on or before October 10, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-22788 Filed 9-18-13; 8:45 am]
BILLING CODE 8011-01-P