Document ID: SEC-2013-1252-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2013-07-09T04:00Z

[Federal Register Volume 78, Number 131 (Tuesday, July 9, 2013)]
[Notices]
[Pages 41166-41168]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-16480]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69927; File No. SR-NYSE-2013-46]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Its Price List To Add Greater Specificity Related to the 
Applicable ``Tier 3'' Supplemental Liquidity Provider Rate and the 
Member Organization Tier 1 and Tier 2 Adding Credit Rates

July 3, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b4 thereunder,\2\ notice is hereby given that, 
on June 20, 2013, New York Stock Exchange LLC (the ``Exchange'' or 
``NYSE'') 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 
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.
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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 add greater 
specificity related to (i) the applicable ``tier 3'' Supplemental 
Liquidity Provider (``SLP'') rate and (ii) the member organization Tier 
1 and Tier 2 Adding Credit rates. The Exchange proposes to implement 
the fee change effective July 1, 2013. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Price List to add greater 
specificity related to (i) the applicable ``tier 3'' SLP rate and (ii) 
the member organization Tier 1 and Tier 2 Adding Credit rates. The 
Exchange proposes to implement the fee change effective July 1, 2013.
SLP Credits \3\
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    \3\ The SLP program provides incentives for quoting and adds 
competition to the existing group of liquidity providers. An SLP can 
either be a proprietary trading unit of a member organization (an 
``SLP-Prop'') or a registered market maker at the Exchange (an 
``SLMM''). See Rule 107B.
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    SLPs are eligible for certain credits when adding liquidity to the 
Exchange. The amount of the credit is determined by the ``tier'' that 
the SLP qualifies for, which is generally based on the SLP's level of 
quoting and the average daily volume (``ADV'') of liquidity added by 
the SLP in assigned securities, excluding early closing days. Since 
October 1, 2012, a $0.0025 credit has been available under ``tier 3'' 
for an SLP that adds liquidity to the NYSE in securities with a per 
share price of $1.00 or more if the SLP (i) meets the 10% average or 
more quoting requirement in an assigned security pursuant to Rule 107B 
(quotes of an SLP-Prop and an SLMM of the same member organization are 
not aggregated), (ii) adds liquidity for all assigned SLP securities in 
the aggregate (including shares of both an SLP-Prop and an SLMM of the 
same member organization) of an ADV of more than 0.22% of NYSE 
consolidated ADV (``CADV''), (iii) adds liquidity for all assigned SLP 
securities in the aggregate (including shares of both an SLP-Prop and 
an SLMM of the same member organization) of an ADV during the billing 
month that is at least an 0.18% increase over the SLP's

[[Page 41167]]

September 2012 Adding ADV \4\ (``SLP Baseline ADV''), and (iv) has a 
minimum provide ADV for all assigned SLP securities of 12 million 
shares.\5\
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    \4\ Adding ADV is ADV that adds liquidity to the NYSE during the 
billing month. Adding ADV excludes any liquidity added by a 
Designated Market Maker.
    \5\ See Securities Exchange Act Release No. 68021 (October 9, 
2012), 77 FR 63406 (October 16, 2012) (SR-NYSE-2012-50).
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    Unlike the other SLP tiers, the Price List does not currently 
specify the applicable tier 3 rate for a Non-Displayed Reserve Order 
that adds liquidity to the Exchange.\6\ The Exchange hereby proposes to 
specify that the rate for a Non-Displayed Reserve Order that adds 
liquidity to the Exchange for an SLP that qualifies for tier 3 is a 
credit of $0.0020. The Exchange notes that, as is currently the case 
for the other SLP tiers, the proposed rate of $0.0020 for Non-Displayed 
Reserve Orders would be $0.0005 less than the otherwise applicable rate 
of $0.0025.
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    \6\ A Non-Displayed Reserve Order is a limit order that is not 
displayed, but remains available for potential execution against all 
incoming automatically executing orders until executed in full or 
cancelled. See NYSE Rule 13 (Definitions of Orders).
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Member Organization Tier 1 and 2 Adding Credits
    Member organizations are currently eligible for the Non-Tier Adding 
Credit when adding liquidity to the Exchange, including both displayed 
and non-displayed. The applicable rate for the Non-Tier Adding Credit 
is $0.0015 per share, or $0.0010 if a Non-Displayed Reserve Order. 
Executions of displayed liquidity of certain member organizations may 
instead be eligible for the Tier 1 \7\ or Tier 2 \8\ Adding Credit 
based on the member organization's level of activity during a month.\9\ 
The Price List currently specifies that the rate for the Tier 1 Adding 
Credit is $0.0018 and that the rate for the Tier 2 Adding Credit is 
$0.0017. The Exchange proposes a technical change to add the $0.0010 
per share rate for Non-Displayed Reserve Orders to the Tier 1 and Tier 
2 Adding Credits. In this regard, a member organization that qualifies 
for the Tier 1 or Tier 2 Adding Credit currently receives a credit of 
$0.0010 per share for Non-Displayed Reserve Orders pursuant to the Non-
Tier Adding Credit. The Exchange also proposes a conforming change to 
remove the existing reference to ``displayed'' from the Tier 1 and Tier 
2 Adding Credit descriptions.
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    \7\ A member organization currently qualifies for the Tier 1 
Adding Credit by adding displayed liquidity to the Exchange if (i) 
the member organization has ADV Adding ADV (which excludes any 
liquidity added by a Designated Market Maker) that is at least 1.5% 
of NYSE CADV, and executes market at-the-close (``MOC'') and limit 
at-the-close (``LOC'') orders of at least 0.375% of NYSE CADV, (ii) 
the member organization has Adding ADV 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-Prop 
and an SLMM of the same member organization) of more than 0.15% of 
NYSE CADV, or (iii) the member organization has ADV that adds 
liquidity in customer electronic orders to the NYSE (``Customer 
Electronic Adding ADV,'' which excludes any liquidity added by a 
Floor broker, Designated Market Maker, or SLP) 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 CADV 
in NYSE-listed securities during September 2012 plus 15%.
    \8\ A member organization currently qualifies for the Tier 2 
Adding Credit by adding displayed liquidity to the NYSE if the 
member organization has Adding ADV that is at least 0.20% of NYSE 
CADV and executes MOC and LOC orders of at least 0.10% of NYSE CADV.
    \9\ The Tier 1 and Tier 2 Adding Credits became effective 
October 1, 2012 pursuant to the same proposed rule change that 
implemented SLP tier 3. See supra note 6. The criteria applicable to 
the Tier 1 Adding credit was subsequently changed effective November 
1, 2012. See Securities Exchange Act Release No. 68150 (November 5, 
2012), 77 FR 67431 (November 9, 2012) (SR-NYSE-2012-56).
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    The Exchange believes that the proposed changes would result in 
greater specificity in the Price List. The Exchange notes that the 
proposed change is not otherwise intended to address any other issues, 
and the Exchange is not aware of any problems that member 
organizations, including SLPs, would have in complying with the 
proposed change.
    The Exchange believes that it is subject to significant competitive 
forces, as described below in the Exchange's statement regarding the 
burden on competition.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\10\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\11\ 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed change is reasonable 
because, unlike the other SLP tiers, the Price List does not specify 
the applicable tier 3 rate for Non-Displayed Reserve Orders that add 
liquidity to the Exchange. The proposed change is also reasonable 
because, as is currently the case for the other SLP tiers, the proposed 
rate for Non-Displayed Reserve Orders would be $0.0005 less than the 
otherwise applicable rate of $0.0025.
    The Exchange believes that this proposed change is also equitable 
and not unfairly discriminatory because it would apply to any SLP that 
qualifies for tier 3. The proposed change is also equitable and not 
unfairly discriminatory because it would add specificity to the Price 
List regarding the applicable rate for Non-Displayed Reserve Orders.
    The Exchange also believes that the proposed change is reasonable 
because the technical change to add the $0.0010 per share rate for Non-
Displayed Reserve Orders to the Tier 1 and Tier 2 Adding Credits would 
result in greater specificity regarding the applicable rate for 
qualifying member organizations. The Exchange believes that this 
proposed change is also equitable and not unfairly discriminatory 
because such greater specificity would benefit all readers of the Price 
List, including member organizations that qualify for the Tier 1 or 
Tier 2 Adding Credit.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    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,\12\ 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. Instead, the Exchange believes that the 
proposed change will add greater specificity within the Price List. 
Specifically, the proposed change related to SLP tier 3 would add 
specificity to the Price List regarding the applicable rate for Non-
Displayed Reserve Orders. In this regard, the Exchange notes that, as 
is currently the case for the other SLP tiers, the proposed rate of 
$0.0020 for Non-Displayed Reserve Orders would be $0.0005 less than the 
otherwise applicable rate of $0.0025. Additionally, the proposed change 
related to the Tier 1 and Tier 2 Adding Credits would be a technical 
change, and such greater specificity would benefit all readers of

[[Page 41168]]

the Price List, including member organizations that qualify for the 
Tier 1 or Tier 2 Adding Credit.
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    \12\ 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. In such an environment, the Exchange must continually 
review, and consider adjusting, its fees and credits to remain 
competitive with other exchanges. For the reasons described above, the 
Exchange believes that the proposed rule change reflects this 
competitive environment.

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) \13\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \14\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \15\ 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-2013-46 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-2013-46. 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-NYSE-2013-46 and should be 
submitted on or before July 30, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-16480 Filed 7-8-13; 8:45 am]
BILLING CODE 8011-01-P