Document ID: SEC-2015-1198-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2015-07-17T04:00Z

[Federal Register Volume 80, Number 137 (Friday, July 17, 2015)]
[Notices]
[Pages 42584-42587]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17489]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75434; File No. SR-NYSEArca-2015-57]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Adding a Pricing 
Tier Applicable to Orders of ETP Holders for Tape A, Tape B and Tape C 
Securities That Are Eligible To Be Routed Away From the Exchange

July 13, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that, on June 30, 2015, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission (``SEC'' or 
``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 add a pricing tier applicable to orders of 
ETP Holders for Tape A, Tape B and Tape C Securities that are eligible 
to be routed away from the Exchange. The Exchange proposes to implement 
the changes on July 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.

[[Page 42585]]

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 add a pricing tier applicable to orders of 
ETP Holders for Tape A, Tape B and Tape C Securities that are eligible 
to be routed away from the Exchange (``Routable Orders'').\3\ The 
Exchange proposes to implement the fee change on July 1, 2015.
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    \3\ ETP Holders are able to include an instruction with their 
orders to determine whether the order will be eligible to route to 
an away exchange (e.g., to execute against trading interest with a 
better price than on the Exchange) or, for example, be cancelled if 
routing would otherwise occur.
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    The Exchange proposes a new pricing tier called Routable Retail 
Order Tier pursuant to which ETP Holders would receive a credit of 
$0.0032 per share for their Routable and non-Routable Orders in Tape A 
and Tape C Securities that provide liquidity on the Exchange, and a 
credit of $0.0030 per share for their Routable and non-Routable Orders 
in Tape B Securities that provide liquidity on the Exchange, if such 
ETP Holders, including Market Makers, (1) provide liquidity of 0.20% or 
more of U.S. consolidated average daily volume (``U.S. CADV'') during 
the billing month across all Tapes, (2) maintain a ratio during the 
billing month across all Tapes of executed Routable Orders that provide 
liquidity to total executed provide liquidity of 55% or more, and (3) 
execute an average daily volume (``ADV'') of Retail Orders \4\ that 
provide liquidity during the billing month that is 0.10% or more of the 
U.S. CADV. For all other fees and credits, Tiered or Basic Rates apply 
based on a firm's qualifying levels.
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    \4\ Retail Orders are defined in the Fee Schedule as orders 
designated as retail orders and that meet the requirements of Rule 
7.44(a)(3), but that are not executed in the Retail Liquidity 
Program. The Retail Liquidity Program is a pilot program designed to 
attract additional retail order flow to the Exchange for NYSE Arca-
listed securities and securities traded pursuant to unlisted trading 
privileges while also providing the potential for price improvement 
to such order flow. See Rule 7.44. See Securities Exchange Act 
Release No. 71176 (December 23, 2013), 78 FR 79524 (December 30, 
2013) (SR-NYSEArca-2013-107).
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    For example, if U.S. CADV during the month is 6.45 billion shares, 
the ETP Holder would need to provide liquidity of at least 12.9 million 
shares to satisfy the first threshold (i.e., providing liquidity of 
0.20% or more of U.S. CADV during the month), which can include Retail 
Orders, as well as non-Retail Orders. Additionally, based on a minimum 
of 12.9 million shares of required provide liquidity, the ETP Holder 
would need to execute at least 7.095 million Routable Orders that 
provide liquidity during the month (i.e., maintaining a ratio of 
executed Routable Orders that provide liquidity to total executed 
orders of 55% or more). Finally, the ETP Holder would need to execute 
an ADV of at least 6.45 million Retail Orders that provide liquidity 
during the month (i.e., executing an ADV of Retail Orders that provide 
liquidity during the billing month that is 0.10% or more of U.S. CADV).
    In connection with the adoption of the Routable Retail Order Tier, 
the Exchange proposes to revise the Tape B Step Up Tier, Tape C Step Up 
Tier and Tape C Step Up Tier 2.
    Currently, ETP Holders and Market Makers, that, on a daily basis, 
measured monthly, directly execute providing volume in Tape B 
Securities during a billing month (``Tape B Adding ADV'') that is equal 
to at least 0.275% of the U.S. Tape B Consolidated Average Daily Volume 
(``Tape B CADV'') for the billing month over the ETP Holder's or Market 
Maker's May 2013 Tape B Adding ADV taken as a percentage of Tape B CADV 
(``Tape B Baseline % CADV'') receive a credit of $0.0004 per share for 
orders that provide liquidity to the Exchange in Tape B Securities, 
which is in addition to the ETP Holder's Tiered or Basic Rate 
credit(s). The Exchange proposes to specify in the Fee Schedule that 
ETP Holders that qualify for the Routable Retail Order Tier would not 
be eligible to qualify for the Tape B Step Up Tier. The Exchange 
believes that the credit of $0.0030 per share is sufficient that an ETP 
Holder that qualifies for the Routable Retail Order Tier should not 
also receive the increased credits applicable to the Tape B Step Up 
Tier. Similar to Retail Order Tier ETP Holders, Cross-Asset Tier ETP 
Holders \5\ and Market Makers, who are currently ineligible to qualify 
for the Tape B Step Up Tier, the Exchange proposes to exclude Routable 
Retail Order Tier ETP Holders from also qualifying for the Tape B Step 
Up Tier.
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    \5\ The restriction for Cross-Asset Tier ETP Holders from 
qualifying for the Tape B Step Up Credit is scheduled to be 
implemented on July 1, 2015, subject to the Commission's publication 
of the notice for immediate effectiveness of SR-NYSE Arca-2015-55, 
filed by the Exchange on June 24, 2015 (``July Fee Filing''). 
Exhibit 5 of the instant filing reflects the rule text proposed in 
the July Fee Filing.
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    Additionally, ETP Holders and Market Makers, that, on a daily 
basis, measured monthly, directly execute providing volume in Tape C 
Securities during the billing month (``Tape C Adding ADV'') that is at 
least the greater of (a) the ETP Holder's or Market Maker's January 
2012 Tape C Adding ADV (``Tape C Baseline ADV'') plus 0.10% of US Tape 
C CADV3 for the billing month or (b) the ETP Holder's or Market Maker's 
Tape C Baseline ADV plus 20%, subject to the ETP Holders' and Market 
Makers' total providing liquidity in Tape A, Tape B, and Tape C 
Securities increasing in an amount no less than 0.03% of US CADV over 
their January 2012 providing liquidity receive a lower fee of $0.0029 
per share for orders that take liquidity from the Book in Tape C 
Securities. The Exchange proposes to specify in the Fee Schedule that 
ETP Holders that qualify for the Routable Retail Order Tier would not 
be eligible to qualify for the Tape C Step Up Tier. The Exchange 
believes that the credit of $0.0032 per share is sufficient that an ETP 
Holder that qualifies for the Routable Retail Order Tier should not 
also receive the reduced fee applicable to the Tape C Step Up Tier. 
Similar to Retail Order Tier ETP Holders, Routable Order Tier ETP 
Holders and Market Makers, who are currently ineligible to qualify for 
the Tape C Step Up Tier, the Exchange proposes to exclude Routable 
Retail Order Tier ETP Holders from also qualifying for the Tape C Step 
Up Tier.
    Finally, ETP Holders and Market Makers, that, on a daily basis, 
measured monthly, directly execute Tape C Adding ADV during the billing 
month that is at least 2 million shares greater than the ETP Holder's 
or Market Maker's Tape C Adding ADV during Q2 2012, subject to the ETP 
Holder's or Market Maker's combined providing ADV in Tape A, Tape B, 
and Tape C Securities during the billing month as a percentage of CADV3 
being no less than during Q2 2012 receive a credit of $0.0002 per 
share, which is in addition to the ETP Holder's Tiered or Basic Rate 
credit(s). The Exchange proposes to specify in the Fee Schedule that 
ETP Holders that qualify for the Routable Retail Order Tier would not 
be eligible to qualify for the Tape C Step Up Tier 2. The Exchange 
believes that the credit

[[Page 42586]]

of $0.0030 per share is sufficient that an ETP Holder that qualifies 
for the Routable Retail Order Tier should not also receive the 
increased credits applicable to the Tape C Step Up Tier 2. Similar to 
Retail Order Tier ETP Holders, Routable Order Tier ETP Holders and 
Market Makers, who are currently ineligible to qualify for the Tape C 
Step Up Tier 2, the Exchange proposes to exclude Routable Retail Order 
Tier ETP Holders from also qualifying for the Tape C Step Up Tier 2.
    The Exchange believes that the proposal would create an added 
incentive for ETP Holders to bring additional order flow to a public 
market.
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any problems that ETP 
Holders would have in complying with the proposed changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\7\ 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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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed fee change is reasonable 
because the proposed Routable Retail Order Tier would contribute to 
incentivizing ETP Holders to submit additional orders on the Exchange 
that are eligible to be routed away from the Exchange. The Exchange 
believes the proposed fee change would increase the liquidity available 
on the Exchange because, if a Routable Order were routed and returned 
unexecuted, the order would be available for execution on the Exchange. 
Therefore, the Exchange believes that Routable Orders add to the 
quality of the Exchange's market because they may provide liquidity on 
the Exchange of a longer duration. The Routable Retail Order Tier 
therefore would support the quality of price discovery and promote 
market transparency, thereby benefiting all market participants. In 
this regard, the Exchange believes that the rate proposed for the 
Routable Retail Order Tier is reasonable because it takes into account 
the amount of Routable Orders that an ETP Holder would be required to 
execute on the Exchange during a month. The Exchange believes the 
proposed fee change is reasonable, equitable and not unfairly 
discriminatory because the Routable Retail Order Tier pricing would 
apply to executions of Tape A, Tape B and Tape C Securities, and the 
Exchange notes that these credits are available on other tiers (e.g., 
$.0.0032 credit for Tape A and C Securities with Arca's Routable Tier, 
and $0.0030 credit for Tape B Securities with Cross-Asset Tier). 
Furthermore, the Exchange believes it is reasonable and equitable to 
apply the Routable Retail Order Tier to Routable and non-Routable 
Orders of a qualifying ETP Holder because this would create a further 
incentive for ETP Holders to submit Routable Orders to the Exchange. 
This is also true because the thresholds applicable to the Routable 
Retail Order Tier pertain to liquidity that consists of Routable Orders 
as well as the overall liquidity of an ETP Holder, including non-
Routable Orders.
    Furthermore, the Exchange believes that the proposed Routable 
Retail Order Tier is equitable and not unfairly discriminatory because 
all ETP Holders have the ability to designate their orders as Routable 
Orders. Additionally, the proposed credit of $0.0032 per share in Tape 
A and Tape C Securities, and $0.0030 per share in Tape B Securities, 
for Routable Orders that provide liquidity to the Exchange would be 
available to all ETP Holders that qualify for the Routable Retail Order 
Tier. The proposed thresholds are also equitable and not unfairly 
discriminatory because they are based on objective criteria and the 
same criteria would be applicable to all ETP Holders.
    The Exchange believes that prohibiting Routable Retail Order Tier 
ETP Holders from qualifying for the Tape B Step Up Tier is reasonable, 
equitable and not unfairly discriminatory because ETP Holders that 
qualify for the Routable Retail Order Tier would already receive a 
higher credit of $0.0030 before the Tape B Step Up Credit, which is 
higher than other tiers with the Tape B Step Up credit. For example, 
Tier 1 ETP Holders that qualify for Tape B Step Up Tier would receive a 
Tier 1 credit of $0.0023 plus a Tape B Step Up credit of $0.0004 for a 
total credit of $0.0027, compared with the standalone Routable Retail 
Order Tier credit of $0.0030. The Exchange notes that Retail Order ETP 
Holders, Cross-Asset Tier ETP Holders and Market Makers currently do 
not qualify for Tape B Step Up Tier credit.
    The Exchange further believes that prohibiting Routable Retail 
Order Tier ETP Holders from qualifying for the Tape C Step Up Tier is 
reasonable, equitable and not unfairly discriminatory because ETP 
Holders that qualify for the Routable Retail Order Tier would already 
receive a higher credit of $0.0032 before the Tape C Step Up Credit, 
which is higher than other tiers that can qualify for the Tape C Step 
Up credit. For example, Tier 1 ETP Holders that qualify for Tape C Step 
Up Tier would receive a Tier 1 credit of $0.0030 for orders that 
provide liquidity, plus a lower Tape C Step Up fee of $0.0029 for 
orders that take liquidity from the Book in Tape C Securities, compared 
with the standalone Routable Retail Order Tier credit of $0.0032 for 
orders that provide liquidity and a fee of $0.0030 share for orders 
that take liquidity from the Book in Tape C Securities. The Exchange 
notes that Retail Order ETP Holders, Routable Order Tier ETP Holders 
and Market Makers currently do not qualify for Tape C Step Up Tier 
credit.
    Finally, the Exchange believes that prohibiting Routable Retail 
Order Tier ETP Holders from qualifying for the Tape C Step Up Tier 2 is 
reasonable, equitable and not unfairly discriminatory because ETP 
Holders that qualify for the Routable Retail Order Tier would already 
receive a higher credit of $0.0032 before the Tape C Step Up 2 Credit, 
which is higher than other tiers with the Tape C Step Up 2 credit. For 
example, Tier 1 ETP Holders that qualify for Tape C Step Up 2 Tier 
would receive a Tier 1 credit of $0.0030 plus a Tape C Step Up 2 credit 
of $0.0002 for a total credit of $0.0032, which is comparable to the 
standalone Routable Retail Order Tier credit of $0.0032. The Exchange 
notes that Retail Order ETP Holders, Routable Order Tier ETP Holders 
and Market Makers currently do not qualify for Tape C Step Up Tier 2 
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,\8\ 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 
fee change will encourage competition, including by attracting 
additional

[[Page 42587]]

liquidity to the Exchange, which will make the Exchange a more 
competitive venue for, among other things, order execution and price 
discovery. In general, ETP Holders impacted by the proposed change may 
readily adjust their trading behavior to maintain or increase their 
credits or decrease their fees in a favorable manner, and will 
therefore not be disadvantaged in their ability to compete. 
Specifically, an ETP Holder could qualify for the proposed new Routable 
Retail Order Type by providing sufficient liquidity to satisfy the 
applicable proposed volume requirements. Additionally, all ETP Holders 
have the ability to designate their orders as Routable Orders and 
therefore any ETP Holder could qualify for the proposed Routable Retail 
Order Tier by satisfying the proposed liquidity thresholds.
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    \8\ 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. 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 promotes a 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) \9\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \10\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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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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    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) \11\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \11\ 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-NYSEArca-2015-57 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-NYSEArca-2015-57. 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-NYSEArca-2015-57 and should 
be submitted on or before August 7, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-17489 Filed 7-16-15; 8:45 am]
 BILLING CODE 8011-01-P