Document ID: SEC-2009-1815-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Extending the Pilot Program That Offers Liquidity Takers a Reduced Transaction Fee Structure for Certain Bond Trades Executed on the NYSE Bonds System and Retiring the Liquidity Provider Credit Pilot Program
Posted Date: 2009-12-28T05:00Z

[Federal Register: December 28, 2009 (Volume 74, Number 247)]
[Notices]               
[Page 68651-68653]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28de09-102]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61201; File No. SR-NYSE-2009-127]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Extending the Pilot Program That Offers Liquidity Takers a Reduced 
Transaction Fee Structure for Certain Bond Trades Executed on the NYSE 
Bonds System and Retiring the Liquidity Provider Credit Pilot Program

December 18, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 17, 2009, the New York Stock Exchange LLC (``NYSE'' or the 
``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 Exchange. The 
Exchange has designated this proposal as one establishing or changing a 
due, fee, or other charge imposed by the Exchange under Section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
which renders the proposal effective upon filing with the Commission. 
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\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the pilot program that offers 
liquidity takers a reduced transaction fee structure for certain bond 
trades executed on the NYSE BondsSM system (``NYSE Bonds'') 
to June 30, 2010, and retire the pilot program that issues liquidity 
providers a $20 credit for certain bond trades executed on NYSE Bonds 
with an execution size of less than 20 bonds that is due to expire on 
December 31, 2009. The text of the proposed rule change is available on 
the NYSE's Web site (http://www.nyx.com), on the Commission's Web site 
(http://www.sec.gov), at the Exchange's principal office, and at the 
Commission's Public Reference Room.

[[Page 68652]]

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 these 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 aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The New York Stock Exchange LLC (the ``Exchange'' or the ``NYSE'') 
proposes to: (1) Extend the pilot program that offers liquidity takers 
a reduced transaction fee structure for certain bond trades executed on 
the NYSE BondsSM system (``NYSE Bonds'') to June 30, 2010, 
and (2) retire the pilot program that issues liquidity providers a $20 
credit for certain bond trades executed on NYSE Bonds with an execution 
size of less than 20 bonds that is due to expire on December 31, 2009.

Liquidity Taker Pilot Program

    The Exchange's pilot program reduces transaction fees charged to 
liquidity takers for transactions executed on NYSE Bonds with a 
staggered transaction fee schedule based on the number of bonds 
purchased or sold in excess of ten (10) bonds. Currently, the 
transaction fee for orders that take liquidity from the market is $.50 
per bond. This fee remains unchanged for orders up to ten (10) bonds. 
The extended fee filing pilot program provides for the following 
transaction fee schedule: (1) When the liquidity taker purchases or 
sells from one to ten (10) bonds, the Exchange will charge an execution 
fee of $0.50 per bond; (2) when the liquidity taker purchases or sells 
from eleven (11) to twenty-five (25) bonds, the Exchange will charge an 
execution fee of $0.20 per bond, and (3) when the liquidity taker 
purchases or sells twenty-six (26) bonds or more, the Exchange will 
charge an execution fee of $0.10 per bond.
    For example, if a liquidity taker purchases or sells five (5) 
bonds, the Exchange will charge $.50 per bond, or a total of $2.50 for 
execution fees. If a liquidity taker purchases or sells twenty (20) 
bonds, the Exchange will charge $.20 per bond or a total of $4.00 for 
execution fees. If a liquidity taker purchases or sells thirty (30) 
bonds, the Exchange will charge $.10 per bond or a total of $3.00 for 
execution fees.
    The Exchange will continue to impose a $100 execution fee cap per 
transaction.
    The Exchange seeks to file with the Commission, a proposal to make 
this liquidity taker program permanent. Accordingly, the Exchange 
proposes to extend the pilot program for an additional six (6) months 
in order to give the Exchange the necessary time to complete the 19b-4 
process regarding the program permanency filing.

Liquidity Taker Pilot Program

    In December 2007, the Exchange initiated a four-month pilot program 
that issued liquidity providers a $20 credit for certain bond trades 
executed on the NYSE Bonds with an execution size of less than 20 
bonds.\5\ This pilot program was extended twice with the most recent 
expiration date of December 31, 2009.\6\
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    \5\ See Securities Exchange Act Release No. 56894 (December 7, 
2007), 72 FR 70362 (December 11, 2007) (SR-NYSE-2007-107).
    \6\ See Securities Exchange Act Release Nos. 57617 (April 4, 
2008), 73 FR 19542 (April 10, 2008) (SR-NYSE-2008-25) and 59177 
(December 30, 2008), 74 FR 747 (January 7, 2009) (SR-NYSE-2008-136).
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    The purpose of establishing a $20 credit program for liquidity 
providers was to incentivize them to display the best price available 
on NYSE Bonds. However, during the operation of this pilot, no 
significant liquidity was generated. This is not the case with the 
pilot program for liquidity takers. Accordingly, the Exchange proposes 
that the pilot program for liquidity providers be retired on its 
expiration date of December 31, 2009, and be removed from the NYSE 
Price List.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act \7\ in general and Section 
6(b)(4) of the Act \8\ 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.
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    \7\ 15 U.S.C. 78f.
    \8\ 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

    Because the foregoing rule change establishes or changes a due, 
fee, or other charge imposed by the Exchange, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act \9\ and subparagraph (f)(2) 
of Rule 19b-4 thereunder.\10\ At any time within 60 days of the filing 
of the proposed rule change, the Commission may summarily abrogate 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(2).
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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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-20098-127 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-NYSE-2009-127. This file 
number should be included on the subject line if e-mail 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

[[Page 68653]]

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 inspection and copying in the Commission's Public 
Reference Room, 100 F Street, NE., Washington, DC 20549, on official 
business days between the hours of 10 a.m. and 3 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal office of NYSE. 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-2009-127 and should be submitted on or before January 19, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-30616 Filed 12-24-09; 8:45 am]

BILLING CODE 8011-01-P