Document ID: SEC-2012-0751-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2012-05-14T04:00Z

[Federal Register Volume 77, Number 93 (Monday, May 14, 2012)]
[Notices]
[Pages 28411-28413]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-11583]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66946; File No. SR-NYSEArca-2012-36]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE 
Arca Equities Fee Schedule To Make Correction to the Tape A, Tape B, 
and Tape C Step Up Tiers

May 8, 2012.
    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 27, 2012, 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 the NYSE Arca Equities Fee Schedule 
(``Fee Schedule'') to make a correction to the Tape A, Tape B, and Tape 
C Step Up Tiers. The proposed change will be operative on May 1, 2012. 
The text of the proposed rule change is available at the Exchange, 
www.nyse.com, and 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 amend the Fee Schedule to make a 
correction to the Tape A, Tape B, and Tape C Step Up Tiers. These fees 
were adopted as of March 1, 2012.\4\ As described in more detail below, 
in certain provisions of the Fee Schedule, the Exchange inadvertently 
made a reference to ``Baseline Month'' when it should have instead 
referred to ``billing month.''
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    \4\ See Securities Exchange Act Release No. 66568 (March 9, 
2012), 77 FR 15819 (March 16, 2012) (SR-NYSEArca-2012-17) (the 
``Release'').
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Tape A Step Up Tier
    Currently, the Tape A Step Up Tier allows ETP Holders and Market 
Makers that take liquidity from the Book to pay a reduced fee of 
$0.0029 per share if they directly execute providing volume in Tape A 
Securities during the billing month (``Tape A Adding ADV'') that is at 
least the greater of (a) the ETP Holder's or Market Maker's January 
2012 (``Baseline Month'') Tape A Adding ADV (``Tape A Baseline ADV'') 
plus 0.075% of US Tape A Consolidated Average Daily Share Volume 
(``CADV'') for the Baseline Month or (b) the ETP Holder's or Market 
Maker's Tape A Baseline ADV plus 20%, subject to the ETP Holders' and 
Market Makers' total providing liquidity in Tape A, Tape B, and Tape C 
Securities increasing in an amount no less than 0.03% of US CADV over 
their Baseline Month providing liquidity.
    Additionally, if a firm's ratio of Tape A Baseline ADV to its total 
Tape A average daily volume (``ADV'') during the Baseline Month is less 
than 30%, the $0.0029 rate would only apply to the ETP Holder's or 
Market Maker's shares that are executed in an amount up to and 
including 0.75% of the US Tape A CADV during the billing month. The 
rate of $0.0030 per share would apply to the ETP Holder's or Market 
Maker's remaining shares that are executed, unless the ETP Holder's or 
Market Maker's Tape A Adding ADV is greater than its Tape A Baseline 
ADV by at least 0.25% of the US Tape A CADV during the billing month. 
Investor Tier ETP Holders or Investor Tier Market Makers cannot qualify 
for the Tape A Step Up Tier.

[[Page 28412]]

    The Exchange proposes to amend the Fee Schedule so that ETP Holders 
and Market Makers that take liquidity from the Book to pay a reduced 
fee of $0.0029 per share if they directly execute providing volume in 
Tape A Securities during the billing month (``Tape A Adding ADV'') that 
is at least the greater of (a) the ETP Holder's or Market Maker's 
Baseline Month Tape A Adding ADV (``Tape A Baseline ADV'') plus 0.075% 
of US Tape A Consolidated Average Daily Share Volume (``CADV'') for the 
billing month or (b) the ETP Holder's or Market Maker's Tape A Baseline 
ADV plus 20%, subject to the ETP Holders' and Market Makers' total 
providing liquidity in Tape A, Tape B, and Tape C Securities increasing 
in an amount no less than 0.03% of US CADV over their Baseline Month 
providing liquidity. The Exchange does not propose to make any 
additional changes to the Tape A Step Up Tier.
Tape B Step Up Tier
    Currently, the Tape B Step Up Tier allows ETP Holders and Market 
Makers that take liquidity from the Book to pay a reduced fee of 
$0.0026 per share if they directly execute providing volume in Tape B 
Securities during the billing month (``Tape B Adding ADV'') that is at 
least the greater of (a) the ETP Holder's or Market Maker's Baseline 
Month Tape B Adding ADV (``Tape B Baseline ADV'') plus 0.25% of US Tape 
B CADV for the Baseline Month or (b) the ETP Holder's or Market Maker's 
Tape B Baseline ADV plus 20%, subject to the ETP Holders' and Market 
Makers' total providing liquidity in Tape A, Tape B, and Tape C 
Securities increasing in an amount no less than 0.03% of US CADV over 
their Baseline Month providing liquidity.
    Additionally, if a firm's ratio of Tape B Baseline ADV to its total 
Tape B ADV during the Baseline Month is less than 30%, the $0.0026 rate 
would only apply to the ETP Holder's or Market Maker's shares that are 
executed in an amount up to and including 1.5% of the US Tape B CADV 
during the billing month. The rate of $0.0028 or $0.0030 per share, as 
applicable, would apply to the ETP Holder's or Market Maker's remaining 
shares that are executed, unless the ETP Holder's or Market Maker's 
Tape B Adding ADV is greater than its Tape B Baseline ADV by at least 
0.45% of the US Tape B CADV during the billing month. Investor Tier ETP 
Holders, Investor Tier Market Makers, and Lead Market Makers (``LMMs'') 
cannot qualify for the Tape B Step Up Tier. In addition, LMM provide 
volume cannot apply to the Tape B Step Up Tier volume requirements.
    The Exchange proposes to amend the Fee Schedule so that ETP Holders 
and Market Makers that take liquidity from the Book to pay a reduced 
fee of $0.0026 per share if they directly execute providing volume in 
Tape B Securities during the billing month (``Tape B Adding ADV'') that 
is at least the greater of (a) the ETP Holder's or Market Maker's 
Baseline Month Tape B Adding ADV (``Tape B Baseline ADV'') plus 0.25% 
of US Tape B CADV for the billing month or (b) the ETP Holder's or 
Market Maker's Tape B Baseline ADV plus 20%, subject to the ETP 
Holders' and Market Makers' total providing liquidity in Tape A, Tape 
B, and Tape C Securities increasing in an amount no less than 0.03% of 
US CADV over their Baseline Month providing liquidity. The Exchange 
does not propose to make any additional changes to the Tape B Step Up 
Tier.
Tape C Step Up Tier
    Currently, the Tape C Step Up Tier allows ETP Holders and Market 
Makers that take liquidity from the Book to pay a reduced fee of 
$0.0029 per share if they directly execute providing volume in Tape C 
Securities during the billing month (``Tape C Adding ADV'') that is at 
least the greater of (a) the ETP Holder's or Market Maker's Baseline 
Month Tape C Adding ADV (``Tape C Baseline ADV'') plus 0.10% of US Tape 
C CADV for the Baseline Month or (b) the ETP Holder's or Market Maker's 
Tape C Baseline ADV plus 20%, subject to the ETP Holders' and Market 
Makers' total providing liquidity in Tape A, Tape B, and Tape C 
Securities increasing in an amount no less than 0.03% of US CADV over 
their Baseline Month providing liquidity.
    Additionally, if a firm's ratio of Tape C Baseline ADV to its total 
Tape C ADV during the Baseline Month is less than 30%, the $0.0029 rate 
would only apply to the ETP Holder's or Market Maker's shares that are 
executed in an amount up to and including 1.1% of the US Tape C CADV 
during the billing month. The rate of $0.0030 per share would apply to 
the ETP Holder's or Market Maker's remaining shares that are executed, 
unless the ETP Holder's or Market Maker's Tape C Adding ADV is greater 
than its Tape C Baseline ADV by at least 0.33% of the US Tape C CADV 
during the billing month. Investor Tier ETP Holders or Investor Tier 
Market Makers cannot qualify for the Tape C Step Up Tier.
    The Exchange proposes to amend the Fee Schedule so that ETP Holders 
and Market Makers that take liquidity from the Book to pay a reduced 
fee of $0.0029 per share if they directly execute providing volume in 
Tape C Securities during the billing month (``Tape C Adding ADV'') that 
is at least the greater of (a) the ETP Holder's or Market Maker's 
Baseline Month Tape C Adding ADV (``Tape C Baseline ADV'') plus 0.10% 
of US Tape C CADV for the billing month or (b) the ETP Holder's or 
Market Maker's Tape C Baseline ADV plus 20%, subject to the ETP 
Holders' and Market Makers' total providing liquidity in Tape A, Tape 
B, and Tape C Securities increasing in an amount no less than 0.03% of 
US CADV over their Baseline Month providing liquidity. The Exchange 
does not propose to make any additional changes to the Tape C Step Up 
Tier.
    The Exchange notes that the discrepancy did not have an adverse 
effect on ETP Holders with respect to March and April 2012 billing 
because the total market volume reported to the Consolidated Tape in 
January 2012, March 2012, and April 2012 was not significantly 
different.\5\ However, going forward, the Exchange believes that, as 
intended in its original filing, the threshold should move in 
proportion to volume in the billing month in order to properly 
incentivize ETP Holders to post more volume on the Exchange. For 
example, if overall volume doubles in the current billing month, ETP 
Holders volume also may double in terms of shares, although their 
volumes relative to the entire market remain unchanged. The Exchange 
did not intend to offer the more favorable Step Up Tier rates in these 
circumstances, and as such, the correction to the calculation to 
reflect the billing month is necessary.
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    \5\ The Exchange further notes that each of the examples in the 
footnotes of the Release correctly reflected the Exchange's 
intention to reference the billing month.
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    The proposed change will be operative on May 1, 2012.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and Section 6(b)(4) of the 
Act,\7\ in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members and other persons using its facilities. The Exchange 
further believes that the correction to the Fee Schedule is reasonable, 
equitable and not unfairly discriminatory because all similarly 
situated ETP Holders will be subject to the same fee structure. In 
particular, the Exchange intended to provide an option to qualify for 
the Step Up Tiers that would be based on a calculation of both

[[Page 28413]]

the ETP Holder's providing volume in the Baseline Month and the billing 
month. The Exchange also believes the proposed amendments to the Tape 
A, Tape B, and Tape C Step Up Tiers will continue to incentivize 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.
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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 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) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge 
imposed by the NYSE Arca.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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-NYSEArca-2012-36 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-2012-36. 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-2012-36 and should 
be submitted on or before June 4, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-11583 Filed 5-11-12; 8:45 am]
BILLING CODE 8011-01-P