Document ID: SEC-2015-0066-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2015-01-12T05:00Z

[Federal Register Volume 80, Number 7 (Monday, January 12, 2015)]
[Notices]
[Pages 1534-1537]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-00215]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73996; File No. SR-NYSE-2014-74]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Its Price List Related to Fees for Trading Licenses To Extend 
the Current Fee Schedule to February 27, 2015 and To Implement New 
Trading License Fees Effective March 1, 2015

January 6, 2015.
    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 December 23, 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, 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 amend its Price List related to fees for 
trading licenses to extend the current fee schedule to February 27, 
2015 and to implement new trading license fees effective March 1, 2015. 
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 extend the current 
fee schedule to February 27, 2015 and to implement new trading license 
fees effective March 1, 2015.
    NYSE Rule 300(b) provides that, in each annual offering, up to 
1,366 trading licenses for the following calendar year will be sold 
annually at a price per trading license to be established each year by 
the Exchange pursuant to a rule filing submitted to the Securities and 
Exchange Commission (``Commission'') and that the price per trading 
license will be published each year in the Exchange's Price List. 
Currently, the Exchange charges an annual fee of $40,000 per license 
for the first two trading licenses held by a member organization and 
$25,000 for each additional trading license. For trading licenses 
issued after July 1, 2013, fees are prorated for the portion of the 
calendar year that the trading license is outstanding.\4\ However, if a 
member organization is issued additional trading licenses between July 
1, 2013 and December 31, 2014, and the total number of trading licenses 
held by the member organization between July 1, 2013 and December 31, 
2014 is greater than the total number of trading licenses held by the 
member organization on July 1, 2013, the member organization would not 
be charged a prorated fee for the period from July 3, 2013 to December 
31, 2014 for those additional trading licenses above the number the

[[Page 1535]]

member organization held on July 1, 2013.\5\
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    \4\ For a trading license that is in place for 15 calendar days 
or less in a calendar month, proration for that month would be at a 
flat rate of $100 per day with no tier pricing involved. For a 
trading license that is in place for 16 calendar days or more in a 
calendar month, proration for that month would be computed based on 
the number of days as applied to the applicable annual fee for the 
trading license. See Price List at current n. 16.
    \5\ See Securities Exchange Act Release No. 71215 (December 31, 
2013), 79 FR 885 (January 7, 2014) (SR-NYSE-2013-82). See also Price 
List at current n. 15. If a firm becomes a member organization after 
July 1, 2013, the firm is assigned a baseline of one trading license 
and charged a prorated fee for that license. Any trading licenses in 
addition to the first trading license are not charged a prorated fee 
for the period from July 3, 2013 to December 31, 2014. If a member 
organization merges with another member organization on or after 
July 1, 2013, the total combined number of trading licenses held by 
each member organization on July 1, 2013 is considered the baseline 
number of trading licenses for the successor member organization as 
of the date of the merger. See generally id.
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    For 2015, the Exchange proposes to extend the current fee schedule 
relating to trading license fees through February 27, 2015 and amend 
the trading license fees effective March 1, 2015.
    For the period between January 2, 2015 and February 27, 2015, the 
Exchange proposes to retain the current fee schedule relating to 
trading licenses, including the fee relief for additional licenses. As 
a result, an annual fee would not apply to the number of trading 
licenses issued to a member organization between July 3, 2013 and 
February 27, 2015 that exceeds the total number of trading licenses 
held by the member organization on July 1, 2013. The Exchange proposes 
to maintain July 1, 2013 as the baseline date so that a consistent 
point in time would be used to determine how many trading licenses for 
which a member organization would be charged. The fee calculation for 
new or merged member organizations would also be extended. Thus, for 
any firm that becomes a member organization after July 1, 2013, the 
firm would be considered to have one trading license as of July 1, 2013 
and charged a fee for that one license through February 27, 2015. The 
Exchange proposes to extend the current fee schedule for the first two 
months of 2015 in order to maintain the existing fee schedule relating 
to trading licenses and provide member organizations with advance 
notice of the trading license fee changes that the Exchange proposes to 
introduce on March 1, 2015.
    Effective March 1, 2015, the Exchange proposes to charge an annual 
fee of $50,000 for the first license held by a member organization and 
$15,000 for each additional license. The Exchange proposes to eliminate 
the existing fee relief for additional licenses and delete the relevant 
text from current footnote 15.
    The Exchange also proposes to introduce a $25,000 annual 
administrative fee for member organizations that do not own a trading 
license and agree to be regulated by the Exchange pursuant to Rule 
2(b)(ii) (``Regulated Only Members'') to offset the costs of this 
membership category.\6\
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    \6\ Rule 2(b)(ii) recognizes as ``member organizations'' any 
registered broker or dealer that is a member of the Financial 
Industry Regulatory Authority (``FINRA'') or a registered securities 
exchange consistent with the requirements of Rule 2(b)(i) and 
``which does not own a trading license and agrees to be regulated by 
the Exchange as a member organization and which the Exchange has 
agreed to regulate.'' Regulated Only Members cannot enters orders 
on, or clear through, the Exchange but are subject to regulation by 
the Exchange, including periodic examination by FINRA on the 
Exchange's behalf.
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    The Exchange proposes to continue prorating license fees for any 
portion of the year that a license may be outstanding, including the 
administrative fee for Regulated Only members.\7\
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    \7\ See note 4, supra. Firms becoming member organizations 
between January 2, 2015 and February 27, 2015 would pay a prorated 
fee for one license at the current rate of $40,000 until February 
27, 2015 and then pay a prorated amount of the new proposed fee of 
$50,000 for the remainder of 2015. Firms becoming Regulated Only 
Members between January 2, 2015 and February 27, 2015 would pay no 
fee and would pay a prorated fee beginning March 1, 2015 for the 
remainder of the year.
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    The Exchange also proposes to correct a typographical error in the 
heading of the Price List where the word ``Licenses'' is misspelled.
    The proposed change is not otherwise intended to address any other 
issues, and the Exchange is not aware of any problems that members and 
member organizations would have in complying with the proposed change.
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 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 change is reasonable 
because maintaining the current fee structure through February 27, 
2014[sic], including fee relief for the number of trading licenses that 
exceeds the total number of trading licenses held by the member 
organization on July 1, 2013, would maintain the existing fee schedule 
relating to trading licenses while at the same time providing member 
organizations with a reasonable period to assess the impact of the new 
permanent fees the Exchange proposes for March 1, 2015 and effectuate 
an orderly transition to the new fee schedule. The Exchange believes 
that maintaining the current fee structure for the first two months of 
2015 would also continue to encourage member organizations to hold 
additional trading licenses during that time, which would increase the 
number of market participants trading on the floor of the Exchange, 
thereby promoting liquidity, price discovery and the opportunity for 
price improvement for the benefit of all market participants. The 
Exchange also believes that it is reasonable to maintain July 1, 2013 
as the applicable baseline date so that a consistent point in time 
would be used to determine how many trading licenses for which a member 
organization would be charged, which would continue to provide member 
organizations with greater flexibility in managing their personnel.
    The Exchange further believes that the proposal to maintain the 
current fee schedule through February 27, 2015 is equitable and not 
unfairly discriminatory because all similarly situated member 
organizations would continue to be subject to the same trading license 
fee structure and because access to the Exchange's market would 
continue to be offered on fair and nondiscriminatory terms. The 
Exchange also believes that the proposal to maintain the current fee 
schedule is equitable and not unfairly discriminatory because all 
member organizations would continue to have the opportunity to enjoy 
the benefits of the fee relief with respect to additional trading 
licenses. The Exchange believes that it is equitable and not unfairly 
discriminatory to continue to assign new member organizations a 
baseline of one trading license because this will continue to encourage 
firms to become member organizations, thereby encouraging trading 
activity on the Exchange, which benefits all market participants.
    The Exchange believes that the proposal to institute a new fee 
structure on March 1, 2015, which would eliminate fee relief for 
additional licenses and introduce a simpler model, is reasonable 
because member organizations would be able to purchase the initial 
license for slightly more than the current rate and add unlimited 
additional licenses at a significantly lower rate. The Exchange 
believes that the proposed trading license change would encourage 
additional firms to become member organizations on the Exchange, which 
would contribute to the quality of the Exchange's market and increase 
the number of market participants trading on the floor of the

[[Page 1536]]

Exchange, thereby also promoting liquidity, price discovery and the 
opportunity for price improvement for the benefit of all market 
participants. The Exchange believes that the proposal would increase 
the number of market participants trading on the floor of the Exchange 
and continue to provide member organizations with greater flexibility 
in managing their personnel.
    The Exchange further believes that the proposed new fee schedule is 
equitable and not unfairly discriminatory because all similarly 
situated member organizations would continue to be subject to the same 
trading license fee structure and because access to the Exchange's 
market would continue to be offered on fair and nondiscriminatory 
terms. The Exchange further believes that the proposal to introduce a 
$25,000 annual administrative fee for Regulated Only Members is 
reasonable, equitable and not unfairly discriminatory because all 
member organizations that seek this status under Rule 2(b)(ii) would be 
subject to the same fee. The Exchange also believes that it is 
equitable and not unfairly discriminatory to subject Regulated Only 
Members to an administrative fee because such member organizations are 
subject to the same membership costs as non-Regulated Only Members.
    The Exchange also believes that correcting a typographical error on 
the Price List is consistent with the Act because it would add greater 
clarity for member organizations.
    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,\10\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, the Exchange believes that the proposal 
to maintain the current fee schedule through February 27, 2015 would 
help to remove a potential burden on competition by making it easier 
for member organizations to appropriately staff the floor of the 
Exchange, which is a key feature of the Exchange's structure for 
offering a fair and orderly market and competing with other exchanges. 
Further, the Exchange believes that the proposed new fee schedule would 
also contribute to making membership on the Exchange as a member 
organization more economical and could therefore lead to increased 
competition on the Exchange between member organizations.
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    \10\ 15 U.S.C. 78f(b)(8).
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    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 levels at a particular venue to be 
excessive or rebate opportunities available at other venues to be more 
favorable. In such an environment, the Exchange must continually adjust 
its fees and rebates to remain competitive with other exchanges and 
with alternative trading systems that have been exempted from 
compliance with the statutory standards applicable to exchanges. 
Because competitors are free to modify their own fees and credits in 
response, and because market participants may readily adjust their 
order routing practices, the Exchange believes that the degree to which 
fee changes in this market may impose any burden on competition is 
extremely limited. As a result of all of these considerations, the 
Exchange does not believe that the proposed changes will impair the 
ability of member organizations or competing order execution venues to 
maintain their competitive standing in the financial markets.

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-NYSE-2014-74 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-2014-74. 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-2014-74 and should be 
submitted on or before February 2, 2015.

[[Page 1537]]

    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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Brent J. Fields,
Secretary.
[FR Doc. 2015-00215 Filed 1-9-15; 8:45 am]
BILLING CODE 8011-01-P