Document ID: SEC-2014-0226-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2014-02-06T05:00Z

[Federal Register Volume 79, Number 25 (Thursday, February 6, 2014)]
[Notices]
[Pages 7270-7271]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-02497]

[[Page 7270]]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71451; File No. SR-NYSEMKT-2014-11]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Its Price List 
To Introduce Fees and Credits for A New Order Type Called a Midpoint 
Passive Liquidity Order

January 31, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on January 22, 2014, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') filed with the Securities and Exchange Commission (the 
``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.
---------------------------------------------------------------------------

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

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 introduce fees for 
a new order type called a Midpoint Passive Liquidity (``MPL'') Order. 
The proposed fees would be operative on January 27, 2014. 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 introduce fees for 
a new order type called a MPL Order. The proposed fees would be 
operative on January 27, 2014.
    The Exchange recently introduced the MPL Order type,\4\ which is an 
undisplayed limit order that automatically executes at the mid-point of 
the protected best bid or offer (``PBBO''). An MPL Order is not 
eligible for manual executions, including openings, re-openings, or 
closing transactions. An MPL Order also is not eligible to trade if it 
would trade at a price below $1.00 or if the execution price would be 
out to five decimal places above $1.00. All market participants--
customers, Floor brokers, Designated Market Makers (``DMMs''), and 
Supplemental Liquidity Providers (``SLPs'')--may use the MPL order 
type.
---------------------------------------------------------------------------

    \4\ See Rule 13--Equities and Securities Exchange Act Release 
No. 71329 (January 16, 2014) (SR-NYSEMKT-2013-84).
---------------------------------------------------------------------------

    The Exchange proposes to charge $0.0028 for listed securities and 
$0.0030 for NASDAQ securities traded pursuant to Unlisted Trading 
Privileges (``UTP'') for all MPL Orders that remove liquidity from the 
Exchange if the security is priced $1.00 or more. The Exchange also 
proposes to offer a credit of $0.0016 for listed securities and $0.0025 
for NASDAQ securities traded pursuant to UTP for all MPL Orders that 
provide liquidity to the Exchange if the security is priced $1.00 or 
more.\5\ The fees and credits will apply to all market participants. 
MPL Orders that add liquidity will contribute to any adding liquidity 
requirements. However, the Exchange notes that MPL Orders will not be 
eligible for any additional credits or reduced fees even if the MPL 
Orders contribute to a member organization qualifying for an additional 
credit. For example, if a DMM qualified for the $0.0042 equity per 
share credit when adding liquidity to the Exchange because its 
consolidated average daily volume in all Exchange-listed stocks during 
the current month was equal to or greater than 135 million shares per 
day, the DMM will receive the proposed $0.0016 per share credit for MPL 
Orders, not $0.0042 per share credit for such order. Where the MPL 
Order fee or credit does not differ from the current fee or credit, the 
Exchange has not proposed a change to the Price List.
---------------------------------------------------------------------------

    \5\ The Exchange's current rates for transactions in securities 
with a per share price less of than $1.00 would continue to apply.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed fees of $0.0028 for listed 
securities and $0.0030 for NASDAQ securities traded pursuant to UTP for 
all MPL Orders that remove liquidity from the Exchange and the proposed 
credits of $0.0016 for listed securities and $0.0025 for NASDAQ 
securities traded pursuant to UTP for all MPL Orders that provide 
liquidity to the Exchange if the security is priced $1.00 or more are 
reasonable because the fees and credits would be the same as the fees 
and credits that would otherwise apply for all other transactions 
(i.e., $0.0028 or $0.0030 fee for taking liquidity from the Exchange 
and $0.0016 or $0.0025 credit when adding liquidity to the Exchange). 
The Exchange notes that the proposed credits and fees are within the 
same range as at least one other exchange for MPL Orders.\8\ The 
Exchange also believes that the proposed fees and credits are equitable 
and not unfairly discriminatory because they may provide opportunities 
for market participants to interact with orders priced at the midpoint 
of the PBBO, thus providing price improving liquidity to market 
participants and thereby increase the quality of order execution on the 
Exchange's market, which benefits all market participants. The Exchange 
also believes that providing the same fees and credits for MPL Orders 
that would otherwise apply is equitable and not unfairly 
discriminatory. Moreover, all market participants will be eligible for 
the proposed fees and credits. The Exchange believes that it is 
reasonable, equitable, and not unfairly

[[Page 7271]]

discriminatory to limit higher credits for MPL Orders for which market 
participants may otherwise qualify because it will ensure that all 
market participants pay the same fees and receive the same credits 
regardless of Floor broker, DMM, or SLP designation. The Exchange 
believes that it is reasonable to allow MPL Orders to count toward 
adding liquidity because it is consistent with the purpose of those 
credits. The Exchange also believes it is equitable and not unfairly 
discriminatory because all market participants that use the MPL Order 
type will pay the same fee and receive the same credit.
---------------------------------------------------------------------------

    \8\ For Tape A Securities under its Tier 1, Tier 2, and Basic 
Rate Tier, the Exchange's affiliate, NYSE Arca Equities, Inc., 
currently charges $0.0030 per share for all MPL Orders that remove 
liquidity and provides a credit of $0.0015 per share for all MPL 
Orders that provide liquidity. See NYSE Arca Equities, Inc. Schedule 
of Fees and Charges, available at https://usequities.nyx.com/sites/usequities.nyx.com/files/nyse_arca_marketplace_fees__for_1-2-14.pdf.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\9\ 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. The Exchange believes the proposed MPL Order fees 
and credits will enhance order execution opportunities for member 
organizations. Further, the Exchange believes that providing the same 
fees and credits for MPL Orders that would otherwise apply will enhance 
competition between the Exchange and other exchanges that currently 
offer similar order types by offering investors another option to 
access liquidity at the midpoint of the PBBO.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    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 or credit levels at a particular 
venue to be unattractive. In such an environment, the Exchange must 
continually review, and consider adjusting, its fees and credits to 
remain competitive with other exchanges. For these reasons, the 
Exchange believes that the proposed rule change reflects this 
competitive environment and is therefore consistent with 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) \10\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \11\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposal 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-NYSEMKT-2014-11 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-NYSEMKT-2014-11. 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-NYSEMKT-2014-11 and should 
be submitted on or before February 27, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-02497 Filed 2-5-14; 8:45 am]
BILLING CODE 8011-01-P