Document ID: SEC-2011-1942-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2011-12-14T05:00Z

[Federal Register Volume 76, Number 240 (Wednesday, December 14, 2011)]
[Notices]
[Pages 77859-77861]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31968]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65906; File No. SR-NYSEArca-2011-92]

 Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE 
Arca Equities Schedule of Fees and Charges for Exchange Services

December 7, 2011.
    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 1, 2011, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE 
Arca'') 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 the NYSE Arca Equities Schedule of 
Fees and Charges for Exchange Services (``Fee Schedule''). The text of 
the proposed rule change is available at the Exchange, the Commission's 
Public Reference Room, and http://www.nyse.com.

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 the Fee Schedule, as described 
below, and implement the fee changes on December 1, 2011.
Auctions
Opening and Market Order Auctions--Securities $1.00 and Greater
    The Fee Schedule currently provides that a fee of $0.0005 per share 
is charged for orders executed in the Opening or Market Order 
Auction.\3\ The order types that may execute in the Opening or Market 
Order Auction are Limit Orders, Market Orders and Auction-Only Orders, 
which are Limit and Market Orders that are only to be executed within 
an Auction.\4\ The Exchange currently charges the $0.0005 fee for an 
Auction-Only Order but not a Limit or Market Order executed in the 
Opening or Market Order Auction. The Exchange proposes to amend the Fee 
Schedule to provide that during an Opening or Market Order Auction, the 
$0.0005 per share fee will apply to executions of Auction-Only Orders 
and Market Orders. Limit Order executions in the Opening or Market 
Order Auction will continue to be free.\5\
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    \3\ This fee is currently referenced within the Tier 1, Tier 2 
and Basic Rates sections of the Fee Schedule and will be amended, as 
discussed herein, in each instance. Auctions are described under 
NYSE Arca Equities Rule 7.35.
    \4\ See NYSE Arca Equities Rule 7.31(t). An Auction-Only order 
is executable during the next auction following entry of the order. 
If the Auction-Only Order is not executed in the auction, the 
balance is cancelled. Auction-Only orders are only available for 
auctions that take place on the Exchange and are not routed to other 
exchanges.
    \5\ The Exchange also proposes to remove the text from Footnote 
2 of the Fee Schedule that provides that transaction fees do not 
apply to orders executed in the Opening Auction and Market Order 
Auction. This text inadvertently was not removed in 2010 when the 
Exchange implemented the $0.0005 fee for orders executed in the 
Opening or Market Order Auction. See Securities Exchange Act Release 
No. 63056 (October 6, 2010), 75 FR 63233 (October 14, 2010) (SR-
NYSEArca-2010-87).
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Trading Halt Auction--Securities $1.00 and Greater
    The Exchange does not currently charge a fee for executions of 
orders in Trading Halt Auctions.\6\ The Exchange proposes to amend the 
Fee Schedule to provide that during a Trading Halt Auction, a $0.0005 
per share fee will apply to the execution of Auction-Only Orders and 
Market Orders. Limit Order executions in the Trading Halt Auction will 
continue to be free.
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    \6\ As noted above for Opening and Market Order Auctions, the 
order types that may execute in a Trading Halt Auction are Limit 
Orders, Market Orders and Auction-Only Orders.
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Closing Auction--Securities $1.00 and Greater
    The Fee Schedule currently provides that a fee of $0.0010 per share 
is charged for Market-On-Close (``MOC'') and Limit-On-Close (``LOC'') 
\7\ Orders executed in the Closing Auction.\8\ The Exchange also 
currently charges this $0.0010 fee for Auction-Only Orders that are 
executed in the Closing Auction, which are effectively equivalent to a 
MOC Order or LOC Order, but does not charge for Market Orders or Limit 
Orders that are executed in the Closing Auction. The Exchange proposes 
to amend the Fee Schedule to provide that, in addition to MOC and LOC 
Orders, Auction-Only and Market Orders that are executed in the Closing 
Auction will be charged the $0.0010 fee. Limit Order executions in the 
Closing Auction will continue to be free.
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    \7\ See NYSE Arca Equities Rule 7.31(dd) and (ee). MOC Orders 
are Market Orders and LOC Orders are Limit Orders that are to be 
executed only during the Closing Auction, except that the Exchange 
rejects MOC and LOC Orders in securities for which the Exchange is 
not the primary market or when the auction is suspended pursuant to 
NYSE Arca Equities Rule 7.35(g).
    \8\ The Closing Auction MOC and LOC fees are currently 
referenced within the Tier 1, Tier 2 and Basic Rates sections of the 
Fee Schedule and will be amended, as discussed herein, in each 
instance. However, the Exchange notes that when it implemented the 
Closing Auction MOC and LOC fee in October 2009, it stated that the 
fee would apply for all pricing levels, including tiered and basic 
rate pricing, but inadvertently did not reflect this particular fee 
for Tape A securities in the Basic Rates section of the Fee 
Schedule. See Securities Exchange Act Release No. 60834 (October 16, 
2009), 74 FR 54612 (October 22, 2009) (SR-NYSEArca-2009-88). The 
Exchange notes that Closing Auctions in Tape A securities are rarely 
conducted on the Exchange, if at all, but instead are conducted on 
the primary market for the particular security. The proposed rule 
change will correct this inadvertent omission and ensure that the 
Fee Schedule will provide for the appropriate fee if a Closing 
Auction is conducted on the Exchange in a Tape A security.
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All Auctions--Securities Less Than $1.00
    The Fee Schedule does not currently provide for a fee for 
executions during auctions on the Exchange in securities priced below 
$1.00.\9\ The Exchange proposes to amend the Fee Schedule to reflect 
that a fee of 0.1% of the total dollar value of the order will be 
charged for round lot and odd lot executions of securities priced below 
$1.00 that take place during an Opening, Market Order, Trading Halt or 
Closing Auction. The

[[Page 77860]]

proposed fee of 0.1% would be consistent with the fee that is currently 
charged for round lot and odd lot executions of securities priced below 
$1.00 that take place outside of an auction.
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    \9\ In limited circumstances the Exchange inadvertently has 
charged for executions during auctions on the Exchange in securities 
priced below $1.00, but has since rebated ETP Holders for any such 
charges.
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    Additionally, the text of Footnote 3 of the Fee Schedule states 
that rebates will not be paid for executions in securities priced under 
$1.00. The Exchange believes that this text is more appropriate within 
Footnote 5 of the Fee Schedule because it would be located closer to 
the section of the Fee Schedule describing fees for securities priced 
below $1.00 per share. Accordingly, the Exchange proposes to re-locate 
this text from Footnote 3 to Footnote 5 and reflect Footnote 3 as 
``Reserved'' for possible use at a later time.
Primary Sweep Orders
    The Fee Schedule currently provides for a fee of $0.0021 per share 
for Primary Sweep Orders (``PSOs'') \10\ in Tape A securities that are 
routed outside the Book to the New York Stock Exchange (``NYSE''). The 
Exchange proposes to amend the Fee Schedule to reflect that the $0.0021 
per share fee will only be applicable to PSOs that remove liquidity 
from the NYSE and that a PSO that provides liquidity to the NYSE will 
not be charged a fee or provided a credit.\11\
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    \10\ See NYSE Arca Equities Rule 7.31(kk). A PSO is a Primary 
Only (``PO'') Order that initially sweeps the Exchange's Book before 
being routed to the security's primary market.
    \11\ In limited circumstances where a PSO in a Tape A security 
is routed to the NYSE and provides liquidity to the NYSE, the 
Exchange has provided the ETP Holder that submitted the PSO with a 
credit of $0.0015, which corresponds to the credit applicable on the 
NYSE.
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    The Exchange proposes to implement all of the changes discussed 
herein on December 1, 2011.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Securities Exchange Act of 1934 (the 
``Act''),\12\ in general, and Section 6(b)(4) of the Act,\13\ in 
particular, because 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. Specifically, the 
Exchange believes that the proposed rule change will add greater 
specificity to the Fee Schedule for securities priced at $1.00 or more 
by identifying the particular types of orders that will be charged a 
fee during auctions and those that will not be charged a fee. This will 
include fees applicable to executions during Trading Halt Auctions, 
which are similar in process and function to Opening and Market Order 
Auctions. The Exchange believes that it is appropriate to exclude Limit 
Orders from such fees because Limit Orders that are available to 
execute at any time during the trading day contribute valuable price 
discovery information to the market for securities priced at $1.00 and 
above, which are more actively traded, and as such the Exchange wishes 
to encourage the submission of such Limit Orders, which will benefit 
all market participants.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is equitable and reasonable to charge 
the same round and odd lot execution fees for securities priced below 
$1.00, whether inside or outside the auction. Because such securities 
are more thinly traded, the Exchange does not believe that differential 
pricing for Limit Orders would have a significant impact on the number 
of such orders submitted, and as such proposes to charge all orders the 
same fees.
    The Exchange believes that it is equitable and reasonable to impose 
the $0.0021 per share fee for PSOs that remove liquidity from the NYSE 
and to not charge a fee or provide a credit to PSOs that provides 
liquidity because PSOs are designed to remove liquidity and are not 
designed to provide liquidity.\14\ An ETP Holder that intends to 
provide liquidity in a Tape A security should instead utilize the PO+ 
order type, which receives a credit of $0.0015 per share when providing 
liquidity to the NYSE.\15\
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    \14\ See Securities Exchange Act Release No. 55896 (June 11, 
2007), 72 FR 33795 (June 19, 2007) (SR-NYSEArca-2007-50).
    \15\ See NYSE Arca Equities Rule 7.31(x)(3). A PO+ Order is a PO 
Order entered for participation in the primary market, other than 
for participation in the primary market opening or primary market 
re-opening.
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    The proposed rule change will also remove obsolete text that does 
not belong in the Fee Schedule and move certain text to a more 
appropriate location.

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \16\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \17\ thereunder, because it establishes a due, fee, or other 
charge imposed by the NYSE Arca.
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 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.

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-2011-92 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-NYSEArca-2011-92. 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

[[Page 77861]]

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 a.m. and 3 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-2011-92 and should be submitted on or before 
January 4, 2012.
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    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-31968 Filed 12-13-11; 8:45 am]
BILLING CODE 8011-01-P