Document ID: SEC-2008-0525-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2008-04-07T04:00Z

[Federal Register: April 7, 2008 (Volume 73, Number 67)]
[Notices]               
[Page 18841-18842]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07ap08-110]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57585; File No. SR-NYSEArca-2008-36]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending Certain 
Transaction Fees and To Establish a New Fee, the Market Maker Post 
Liquidity Incentive Credit

March 31, 2008.
    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 March 28, 2008, NYSE Arca, Inc. (``NYSE Arca'' 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 substantially by the Exchange. NYSE Arca 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),\3\ and 
Rule 19b-4(f)(2) thereunder,\4\ which renders the proposed rule change 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NYSE Arca proposes to amend its Schedule of Fees and Charges for 
Exchange Services (``Schedule'') in order to revise certain Transaction 
Fees and establish a new fee, the Market Maker Post Liquidity Incentive 
Credit. The text of the proposed rule change is available on the 
Exchange's Web site (http://www.nysearca.com), at NYSE Arca's principal 
office, 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, NYSE Arca included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposal. The text of these 
statements may be examined at the places specified in Item IV below. 
NYSE Arca 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 purpose of this filing is to amend the existing Schedule in 
order to: (i) Make changes to Transaction Fees assessed on certain 
executions in issues that trade as part of the Penny Pilot,\5\ and (ii) 
introduce a new fee to be called the Market Maker Post Liquidity 
Incentive Credit (``Incentive Credit''). The Exchange plans to 
implement these fees on April 1, 2008. A description of each proposed 
change is explained below.
---------------------------------------------------------------------------

    \5\ The Exchange may trade option contracts in one cent 
increments in certain approved issues as part of the Penny Pilot, 
through March 27, 2009. See Securities Exchange Act Release No. 
56568 (September 27, 2007), 72 FR 56422 (October 3, 2007) (approval 
order for SR-NYSEArca-2007-88).
---------------------------------------------------------------------------

Transaction Fees
    NYSE Arca offers market participants a Post/Take pricing model for 
electronically executed transactions in issues that are included in the 
Penny Pilot. Under the present rate schedule, all electronic orders 
that ``take'' liquidity from the Consolidated Book (incoming electronic 
quotes and orders that are executed upon receipt) are charged a fee of 
$0.50 per contract. As part of its ongoing effort to provide 
competitive rates, the Exchange now proposes to offer reduced pricing 
for certain Post/Take transactions in issues that are included in the 
Penny Pilot. Specifically the Exchange will lower the Take Liquidity 
rate from $0.50 to $0.45 per contract for all market participants.

[[Page 18842]]

Market Maker Post Liquidity Incentive Credit
    NYSE Arca proposes to add a new fee credit, which will be available 
to Market Makers and Lead Market Makers (``LMMs'') who reach a certain 
level of monthly contact volume in Penny Pilot Issues. Market Makers 
and LMMs that achieve specific posting volume thresholds for quotes and 
orders in Penny Pilot issues will receive additional credits as 
follows:

------------------------------------------------------------------------
 Post liquidity incentive thresholds                Credit
------------------------------------------------------------------------
> 1,000,000 posting contracts/month.  $.01/contract.
> 5,000,000 posting contracts/month.  $.05/contract.
------------------------------------------------------------------------

    The incentive credit is incremental and will apply to the posting 
volumes executed within each tier, and this credit is earned in 
addition to the standard Post Liquidity fee credit. For example, if a 
Market Maker trades 6,000,000 contracts in one month, the Post 
Liquidity fee credit would be $0.30 for the first 1 million contracts, 
for contracts 1,000,001 to 5,000,000 the credit would be $0.30 plus a 
one-cent incentive credit for a marginal credit rate of $0.31, and for 
contracts 5,000,001 to 6,000,000, the credit would be $0.30 plus a 
five-cent incentive credit for a marginal credit rate of $0.35.
    The Incentive Credit will be calculated on a monthly basis, and 
will be reflected on OTP Holders' bills on a quarterly basis.
    By offering the Market Maker Post Liquidity Incentive Credit, NYSE 
Arca hopes to attract additional Market Makers and LMM quotes and 
orders to the Exchange, which in turn should lead to tighter spreads 
and deeper liquidity, which will benefit all market participants.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Section 
6(b)(4) of the Act,\7\ in particular, in that it provides for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

    Written comments on the proposed rule change were neither solicited 
nor received.

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\8\ and subparagraph (f)(2) 
of Rule 19b-4\9\ thereunder. 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-NYSEArca-2008-36 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2008-36. 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 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 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 No. SR-NYSEArca-2008-36 and should be 
submitted on or before April 28, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-7112 Filed 4-4-08; 8:45 am]

BILLING CODE 8011-01-P