Document ID: SEC-2014-1373-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2014-08-15T04:00Z

[Federal Register Volume 79, Number 158 (Friday, August 15, 2014)]
[Notices]
[Pages 48274-48276]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-19332]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72805; File No. SR-NYSE-2014-42]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Price List To Modify the Tier 2 Adding Credit

August 11, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on July 28, 2014, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') 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 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 Price List to modify the Tier 2 
Adding Credit. The proposed credit will be operative on August 1, 2014. 
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 Price List to modify the Tier 2 
Adding Credit. The proposed credit will be operative on August 1, 2014.
    Under the current Tier 2 Adding Credit,\4\ the Exchange provides an 
equity per share credit per transaction of $0.0020 ($0.0010 if a Non-
Displayed Reserve Order or $0.0015 if a Midpoint Passive Liquidity 
Order) when adding liquidity to the NYSE by one of the following three 
methods:
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    \4\ The credit applies to transactions in stocks with a per 
share stock price of $1.00 or more.
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    (1) The member organization has Customer Electronic Adding ADV \5\ 
that is at least 1.1% of NYSE consolidated ADV (``CADV'') and executes 
market-on-close (``MOC'') and limit-on-close (``LOC'') orders of at 
least 0.375% of NYSE CADV;
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    \5\ Customer Electronic Adding ADV is average daily trading 
volume (``ADV'') that adds liquidity in customer electronic orders 
to the NYSE, but excludes any liquidity added by a Floor broker, 
Designated Market Maker (``DMM''), or Supplemental Liquidity 
Provider (``SLP''). For purposes of transactions fees and SLP 
credits, ADV calculations exclude early closing days.
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    (2) The member organization has Adding ADV \6\ 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 NYSE as an SLP for all assigned 
SLP securities in the aggregate (including shares of both an SLP 
proprietary trading unit (``SLP-Prop'') and an SLP market maker 
(``SLMM'') of the same member organization) of more than 0.15% of NYSE 
CADV; or
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    \6\ Adding ADV adds liquidity to the NYSE during the billing 
month but excludes any liquidity added by a DMM.
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    (3) The member organization has Customer Electronic Adding ADV 
during the billing month that is at least 0.5% of NYSE CADV, executes 
MOC and LOC orders of at least 0.12% of NYSE CADV, and has Customer 
Electronic Adding ADV during the billing month that, taken as a 
percentage of NYSE CADV, is at least equal to the member organization's 
Customer Electronic Adding ADV during September 2012 as a percentage of 
consolidated average daily volume in NYSE-listed securities during 
September 2012 plus 15%.
    The Exchange proposes to amend the second method so that a member 
organization will be required either to execute MOC and LOC orders of 
at least 0.12% of NYSE CADV or alternatively

[[Page 48275]]

to execute an ADV during the billing month of at least one million 
shares in Retail Price Improvement Orders (``RPIs'').\7\ The other 
qualifications for the second method (Adding ADV that is at least 0.8% 
of NYSE CADV and adding liquidity to the NYSE as an SLP for all 
assigned SLP securities in the aggregate of more than 0.15% of NYSE 
CADV) will remain the same. The Exchange does not propose to change the 
qualifications for the first or third methods.
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    \7\ An RPI consists of non-displayed interest in NYSE-listed 
securities that is priced better than the best protected bid 
(``PBB'') or best protected offer (``PBO''), as such terms are 
defined in Regulation NMS Rule 600(b)(57), by at least $0.001 and 
that is identified as such. For securities to which it is assigned, 
a Retail Liquidity Provider (``RLP'') may only enter an RPI in its 
RLP capacity. An RLP is permitted, but not required, to submit RPIs 
for securities to which it is not assigned, and is treated as a non-
RLP member organization for those particular securities. Member 
organizations other than RLPs are permitted, but not required, to 
submit RPIs. See Rule 107C(a)(4).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\8\ in general, and furthers the 
objectives of Sections 6(b)(4) and (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 amending the second method of qualifying 
for the Tier 2 Adding Credit to consider the submission of RPIs is 
reasonable because it would provide member organizations with an 
alternative way in which to qualify for the credit, thereby encouraging 
member organizations to provide higher volumes of RPIs, which will 
contribute to the quality of the Exchange's market, particularly for 
retail investors. The one-million-share threshold for RPIs is 
reasonable because it is the same level set as part of a qualification 
for a previously offered credit.\10\ The Exchange believes that the 
proposed credit is equitable and not unfairly discriminatory because 
all member organizations are permitted to submit RPIs. Member 
organizations that choose not to submit RPIs can continue to qualify 
for the Tier 2 Adding Credit under the existing methods.
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    \10\ See Securities Exchange Act Release No. 71684 (March 11, 
2014), 78 FR 14758 (March 17, 2014) (SR-NYSE-2014-09) (establishing 
a $0.0019 per share credit per transaction for all non-Floor broker 
transactions that add liquidity to the Exchange if the member 
organization executes an ADV during the billing month of at least 
one million shares in RPIs and a Customer Electronic Adding ADV 
during the billing month of at least five million shares).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\11\ 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 Tier 2 
Adding Credit will not place a burden on competition because the 
Exchange is establishing an alternative way for member organizations to 
earn the credit, which would allow more member organizations to compete 
and qualify for the fee. The proposed change also will create an 
incentive to submit RPIs to the Exchange, thereby promoting competition 
for retail orders. Finally, the Exchange notes that it operates in a 
highly competitive market in which market participants can readily 
favor competing venues if they deem fee or credit levels at a 
particular venue to be unattractive. In such an environment, the 
Exchange must continually review, and consider adjusting, its fees and 
credits to remain competitive with other exchanges. For these reasons, 
the Exchange believes that the proposed rule change reflects this 
competitive environment and is therefore consistent with the Act.
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    \11\ 15 U.S.C. 78f(b)(8).
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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 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-NYSE-2014-42 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2014-42. 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 Section, 100 F Street 
NE., Washington, DC 20549-1090. Copies of the filing will also be 
available for Web site viewing and printing at the NYSE's principal 
office and on its Internet Web site at www.nyse.com. 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-

[[Page 48276]]

2014-42 and should be submitted on or before September 5, 2014.

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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-19332 Filed 8-14-14; 8:45 am]
BILLING CODE 8011-01-P