Document ID: SEC-2015-0407-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2015-03-06T05:00Z

[Federal Register Volume 80, Number 44 (Friday, March 6, 2015)]
[Notices]
[Pages 12228-12232]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-05159]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74405; File No. SR-NYSE-2015-08]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Its Price List

March 2, 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 February 26, 2015, 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, 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 its Price List to (1) revise credits 
applicable to certain Designated Market Maker transactions, and (2) 
revise the credits for Supplemental Liquidity Providers. The Exchange 
also proposes to amend its Price List to remove certain trading license 
fees that expire on February 27, 2015. The Exchange proposes to 
implement the fee change 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,

[[Page 12229]]

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 (1) revise credits 
for certain Designated Market Makers (``DMMs'') transactions, and (2) 
revise the credits for Supplemental Liquidity Providers (``SLPs''). The 
Exchange also proposes to amend its Price List to remove certain 
trading license fees that expire on February 27, 2015.
    The Exchange proposes to implement these fee changes effective 
March 1, 2015.
Credits for Certain DMM Transactions
    Currently, for securities with an ADV of less than 1 million per 
month in the previous month (``Less Active Securities''), DMMs receive 
all of the market data quote revenue (the ``Quoting Share'') received 
by the Exchange from the Consolidated Tape Association under the 
Revenue Allocation Formula of Regulation NMS (regardless of whether the 
stock price exceeds $1.00) in any month in which the DMM quotes at the 
National Best Bid or Offer (``NBBO'') in the applicable security at 
least 15% of the time (the ``Less Active Securities Quoting 
Requirement'').
    The Exchange proposes to increase the DMM's quoting requirement at 
the NBBO to 20% in each applicable security in order for the DMM to 
receive 100% of the Quoting Share. The Exchange also proposes that if 
the DMM meets the Less Active Securities Quoting Requirement but quotes 
less than 20% of the time in an applicable month, the DMM would receive 
50% of the Quoting Share. The Exchange also proposes to re-locate the 
text describing Quoting Share allocation to a stand-alone paragraph.
    The current monthly rebate payable to DMMs for securities with an 
ADV of less than 250,000 shares during the billing month (regardless of 
whether the stock price exceeds $1.00) in any month in which the DMM 
meets the Less Active Securities Quoting Requirement is $200.
    The Exchange proposes to introduce different rebate amounts 
depending on the ADV of the security and the DMM quoting percentage. In 
particular, for securities with an ADV of 100,000 up to 250,000 shares 
in the previous month, the Exchange proposes a monthly rebate of $250 
when the DMM quotes at the NBBO 20% of the time or more in an 
applicable security in any month in which the DMM meets the Less Active 
Securities Quoting Requirement. If the DMM quotes at the NBBO at least 
15% and up to 20% of the time in an applicable month in an applicable 
security, the Exchange proposes a $200 rebate.
    For securities with an ADV of less than 100,000 shares in the 
previous month, the Exchange proposes a monthly rebate of $175 when the 
DMM quotes at the NBBO 20% of the time or more in an applicable 
security in any month in which the DMM meets the Less Active Securities 
Quoting Requirement. If the DMM quotes at the NBBO at least 15% and up 
to 20% of the time in an applicable month in an applicable security, 
the Exchange proposes a $125 rebate.
    The Exchange proposes to specify that the ADV would be calculated 
based on the previous month in order to make the ADV calculation 
consistent with how ADV is calculated for Less Active Securities for 
purposes of the Quoting Share rebate.
    No other changes to the DMM Tier or the corresponding credits would 
result from this proposed change.
Credits Applicable to SLPs
    Currently, when adding liquidity to the NYSE in securities with a 
share price of $1.00 or more, if an SLP (1) meets the 10% average or 
more quoting requirement in assigned securities pursuant to Rule 107B 
and (2) adds liquidity for assigned SLP securities in the aggregate \4\ 
of an ADV of more than 0.20% of NYSE CADV,\5\ the SLP is eligible for a 
per share credit of $.0023. In the case of Non-Displayed Reserve 
Orders, the SLP credit is $0.0018 and in the case of MPL Orders, the 
credit is $0.0020.
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    \4\ Under Rule 107B, an SLP can be either a proprietary trading 
unit of a member organization (``SLP-Prop'') or a registered market 
maker at the Exchange (``SLMM''). For purposes of the 10% average or 
more quoting requirement in assigned securities pursuant to Rule 
107B, quotes of an SLP-Prop and an SLMM of the same member 
organization are not aggregated. However, for purposes of adding 
liquidity for assigned SLP securities in the aggregate, shares of 
both an SLP-Prop and an SLMM of the same member organization are 
included.
    \5\ NYSE CADV is defined in the Price List as the consolidated 
average daily volume of NYSE-listed securities.
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    Similarly, a SLP adding liquidity for assigned SLP securities in 
the aggregate of an ADV of more than 0.35% of NYSE CADV is eligible for 
a per share credit of $.0026. In the case of Non-Displayed Reserve 
Orders, the credit is $0.0021 and in the case of MPL Orders, the credit 
is $0.0020.
    Finally, a SLP adding liquidity for assigned SLP securities in the 
aggregate of an ADV of more than 0.55% of NYSE CADV is eligible for a 
per share credit of $.0029. In the case of Non-Displayed Reserve 
Orders, the credit is $0.0024 and in the case of MPL Orders, the credit 
is $0.0020.
    The Exchange proposes to lower the ADV percentage requirement for 
SLPs that are also DMMs and subject to Rule 107B(i)(2)(A) \6\ for the 
above-three described credits applicable to SLPs from 0.20% to 0.15%, 
0.35% to 0.30%, and 0.55% to 0.50%, respectively. The Exchange does not 
propose to change the ADV percentage requirement of NYSE ADV for SLPs 
that are not subject to Rule 107B(i)(2)(A), which will remain at 0.20%, 
0.35% and 0.55%, respectively.
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    \6\ Rule 107B(i)(2)(A) prohibits a DMM from acting as a SLP in 
the same securities in which it is a DMM.
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    For each of these three categories of SLP credits, the Exchange 
also proposes to increase the credit for securities with an ADV in the 
previous month of 500,000 shares or less per month (``Less Active SLP 
Securities'') by $.0005, as follows:
     For assigned SLP securities in the aggregate of an ADV of 
more than 0.20% of NYSE CADV or, if also a DMM and subject to Rule 
107B(i)(2)(A), more than 0.15% of NYSE CADV, increase the credit from 
$.0023 to $.0028 and increase the credit for Non-Displayed Reserve 
Orders from $0.0018 to $.0023. The credit applicable for MPL Orders 
would not change.
     for assigned SLP securities in the aggregate of an ADV of 
more than 0.35% of NYSE CADV or, if also a DMM and subject to Rule 
107B(i)(2)(A), more than 0.30% of NYSE CADV, increase the credit from 
$.0026 to $.0031 and increase the credit for Non-Displayed Reserve 
Orders from $0.0021 to $.0026. The credit applicable for MPL Orders 
would not change.

[[Page 12230]]

     for assigned SLP securities in the aggregate of an ADV of 
more than 0.55% of NYSE CADV or, if also a DMM and subject to Rule 
107B(i)(2)(A), more than 0.050% of NYSE ADV, increase the credit from 
$.0029 to $.0034 and increase the credit for Non-Displayed Reserve 
Orders from $0.0024 to $.0029. The credit applicable for MPL Orders 
would not change.
    No other changes to SLP Tier or the corresponding credits would 
result from this proposed change.
Trading License Fees
    On December 23, 2014, the Exchange filed to amend its Price List 
related to fees for trading licenses to extend the fee schedule to 
February 27, 2015 and to implement new trading license fees effective 
March 1, 2015.\7\
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    \7\ See Securities Exchange Act Release No. 34-73996 (January 6, 
2015), 80 FR 1534 (January 12, 2015) (SR-NYSE-2014-74).
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    In particular, for the period between January 2, 2015 and February 
27, 2015, the Exchange retained 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. The Exchange also retained 
a fee relief scheme whereby fees for trading licenses issued after July 
1, 2013 were prorated for the portion of the calendar year that the 
trading license was outstanding but if a member organization was issued 
additional trading licenses between July 1, 2013 and February 27, 2015, 
and the total number of trading licenses held by the member during that 
time was 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 February 
27, 2015 for those additional trading licenses above the number the 
member organization held on July 1, 2013.\8\
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    \8\ See id.
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    The Exchange's filing also proposed that, effective March 1, 2015, 
the Exchange would 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 also proposed to eliminate the existing fee 
relief for additional licenses and delete the relevant text from 
current footnote 15 effective March 1, 2015.
    The Exchange accordingly proposes to amend the Price List to 
reflect the elimination of the fees in effect through February 27, 2015 
and the fee relief for additional licenses by deleting the text 
describing those fees and corresponding footnote 15 from the Price 
List. The Exchange also proposes to delete the ``A'' from footnote 15A 
in the current Price List so that footnote 15A would become footnote 15 
to the new annual fee and regulated only member annual administration 
fee effective March 1, 2015.
    Finally, the Exchange proposes to amend current footnote 15A to the 
Price List (proposed footnote 15) to change the number of calendar days 
a trading license is charged a flat fee. Currently, footnote 15A 
provides that for a trading license in place for 15 calendar days or 
less in a calendar month, proration for that month is at a flat rate of 
$100 per day with no tier pricing involved. For a trading license in 
place for 16 calendar days or more in a calendar month, proration for 
that month is computed based on the number of days as applied to the 
applicable annual fee for the trading license.
    The Exchange proposes to lower the number of calendar days charged 
the flat rate of $100 per day with no tier pricing from 15 to 10 and 
make a corresponding change from 16 to 11 calendar days for licenses 
that would be held beyond the period subject to the flat rate and that 
would be prorated based on the number of days as applied to the 
applicable annual fee for the trading license. The Exchange has 
determined this change is necessary once the fee for additional 
licenses becomes $15,000 effective March 1, 2015 in order to avoid 
charging a fee to license holders at a flat rate ($1500/$100 per day 
for 15 calendar days) that would exceed the monthly cost of the license 
($1,250/$15,000 divided by 12). The Exchange believes that lowering the 
calendar days during which license holders are charged the flat rate to 
10 days ($1,000/$100 per day for 10 calendar days) would avoid this 
result and be more equitable for license holders.
    The above proposed changes are 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,\9\ in general, and furthers the 
objectives of sections 6(b)(4) and 6(b)(5) of the Act,\10\ 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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed higher monthly credit of 
$250 for each security that has a consolidated ADV of more than 100,000 
and less than 250,000 shares during the month when the DMM quotes at 
the NBBO in the applicable security at least 20% of the time in the 
applicable month is reasonable because of the proposed higher quoting 
requirement associated with this increase in the credit. The Exchange 
also believes that it is reasonable to retain a $200 credit for each 
security that has a consolidated ADV of more than 100,000 and less than 
250,000 shares during the month when the DMM quotes at the NBBO in the 
applicable security at least 15% and up to 20% of the time in the 
applicable month as this is the rate currently charged and it would 
apply equally to all DMM firms. The Exchange believes that the proposal 
would increase the incentive to add liquidity across thinly-traded 
securities where there may be fewer liquidity providers.
    The Exchange also believes that the proposed lower monthly credits 
of $175 for each security that has a consolidated ADV 100,000 shares or 
less during the month when the DMM quotes at the NBBO in the applicable 
security at least 20% of the time in the applicable month is reasonable 
in light of lower trading volumes in the applicable securities 
relatively to those securities that have a consolidated ADV of more 
than 100,000 and less than 250,000 shares. The Exchange further 
believes it is reasonable to provide a lower rebate of $125.00 for each 
security that has a consolidated ADV of 100,000 shares or less if the 
DMM does not meet the proposed 20% quoting requirement. Moreover, the 
requirement is equitable and not unfairly discriminatory because it 
would apply equally to all DMM firms.
    Further, the Exchange believes that the proposed higher DMM quoting 
requirement at the NBBO of 20% in order to receive in each applicable 
security 100% of the Quoting Share is reasonable because the higher 
proposed requirement would improve quoting and increase adding 
liquidity across thinly-traded securities where there may be fewer 
liquidity providers. Under the proposal, DMMs that do not meet the 
proposed quoting requirement of 20% but still meet the Less Active 
Securities Quoting Requirement of 15% would still receive 50% of the 
Quoting Share. Moreover, the requirement is equitable and not unfairly 
discriminatory because it would apply equally to all DMM

[[Page 12231]]

firms. The Exchange notes that the Quoting Share in Less Active 
Securities the DMMs receive is in addition to the DMM rebate for 
providing liquidity and the monthly rebate payable to DMMs for 
securities with an ADV of less than 250,000 shares during the billing 
month.
    In addition, the Exchange believes that proposal to lower the ADV 
percentage requirement for SLPs that are also DMMs and subject to Rule 
107B(i)(2)(A) is reasonable because the current ADV requirement is more 
difficult for such market participants to meet given that the pool of 
stocks they are allowed to trade is smaller. Pursuant to Rule 
107B(i)(2)(A), a DMM unit may not act as an SLP in the same securities 
in which it is a DMM. Accordingly, a SLP that is also a DMM subject to 
Rule 107B(i)(2)(A) would not be eligible to be assigned securities in 
which the affiliated DMM is registered, thereby reducing the number of 
securities available to such an SLP to meet the adding liquidity 
requirement, which is expressed as a percentage of NYSE CADV. The 
Exchange further believes that the proposed lower ADV percentage for 
such SLPs is equitable and not unfairly discriminatory because it would 
be applied equally to all SLPs that are also DMMs subject to Rule 
107B(i)(2)(A). SLPs that are not DMMs do not have the same restrictions 
on which securities they may be assigned as a SLP and would not be 
harmed by the proposal for those firms that are also DMMs.
    Further, increasing the credit for SLP transactions providing 
liquidity in Less Active SLP Securities by $0.0005 is reasonable 
because it will encourage greater liquidity and competition in such 
securities on the Exchange. The Exchange also believes that increasing 
the SLP credit is reasonable because it will increase the incentive to 
add liquidity across thinly traded securities where there may be fewer 
liquidity providers. Once again, the Exchange believes that the 
proposed higher credit is equitable and not unfairly discriminatory 
because it would apply equally to all SLPs.
    Finally, amending the Price List to remove fees that are expiring 
on February 27, 2015 provides greater clarity and transparency to the 
Price List and avoids confusion as to what trading license fees would 
apply after that date. Further, amending the Price List to change the 
number of calendar days a trading license is charged a flat fee is 
reasonable because it would avoid charging a fee to license holders at 
a flat rate that would exceed the monthly cost of the license, which is 
scheduled to begin on March 1, 2015. This proposal is equitable and not 
unfairly discriminatory because it would apply the unchanged flat rate 
equally to all license holders over the same number of days.
    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 the foregoing 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,\11\ 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 proposed 
change would contribute to the Exchange's market quality by promoting 
price discovery and ultimately increased competition. For the same 
reasons, the proposed change also would not impose any burden on 
competition among market participants. Pricing for executions at the 
opening would remain at the same relatively low levels and would 
continue to reflect the benefit that market participants receive 
through the ability to have their orders interact with other liquidity 
at the opening.
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    \11\ 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) \12\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \13\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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) \14\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \14\ 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-2015-08 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2015-08. 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/

[[Page 12232]]

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 will also be 
available for inspection and copying 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-2015-08 and should be submitted on 
or before March 27, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-05159 Filed 3-5-15; 8:45 am]
BILLING CODE 8011-01-P