Document ID: SEC-2011-0037-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2011-01-11T05:00Z

[Federal Register: January 11, 2011 (Volume 76, Number 7)]
[Notices]               
[Page 1653-1655]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11ja11-92]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63642; File No. SR-NYSE-2010-87]

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

January 4, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 1654]]

(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on December 22, 2010, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
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 2011 Price List (``Price List'') 
for equity transactions to (i) Increase the credits to customers and 
floor brokers for transactions when adding liquidity in NYSE-listed 
securities, (ii) increase the fees charged to customers, floor brokers 
and Designated Market Makers (``DMMs'') for transactions when taking 
liquidity in NYSE-listed securities, (iii) create a second tier of 
charges for executions of Market-On-Close (``MOC'') and Limit-On-Close 
(``LOC'') orders in NYSE-listed securities, with a reduced charge per 
share for member organizations that execute an average daily trading 
volume (``ADV'') of greater than 14 million shares of MOC/LOC activity 
on the Exchange in the current month, (iv) create a tiered structure of 
credits to Supplemental Liquidity Providers (``SLPs'') for adding 
liquidity to the Exchange in NYSE-listed securities, based on an SLP's 
ADV in added liquidity in the applicable month, and (v) adopt a trading 
license fee for calendar year 2011. All of the foregoing changes will 
only apply to those NYSE-listed securities with a per share stock price 
of $1.00 or more. The amended pricing will take effect on January 3, 
2011. The text of the proposed rule change is available at the 
Exchange, at http://www.nyse.com, at the Commission's Public Reference 
Room, and on the Commission's Web site at http://www.sec.gov.

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 for equity 
transactions to increase the credits to customers and floor brokers for 
transactions when adding liquidity in NYSE-listed securities. Under the 
proposed new pricing for the trading of NYSE-listed securities, 
customers will receive a credit of $0.0015 per share for adding 
liquidity, and floor brokers will receive a credit of $0.0017 per share 
for adding liquidity. In each case, this is an increase of $0.0002 per 
share from the currently applicable rate.
    The Exchange proposes to further amend its Price List for equity 
transactions to increase the fees charged to customers, floor brokers 
and DMMs for transactions when taking liquidity in NYSE-listed 
securities. Under the proposed new pricing for the trading of NYSE-
listed securities, customers and floor brokers will be charged a fee of 
$0.0023 per share for taking liquidity, and DMMs will be charged a fee 
of $0.0015 per share for taking liquidity. In each case, this is an 
increase of $0.0002 per share from the currently applicable rate.
    In addition, the Exchange is proposing to create a second tier of 
charges for executions of MOC and LOC orders in NYSE-listed securities, 
with a reduced charge of $0.00055 per share for member organizations 
that execute an ADV of greater than 14 million shares of MOC/LOC 
activity on the Exchange in the current month. Otherwise, the current 
rate of $0.00085 per share for executed MOC/LOC orders will be 
applicable. The Exchange notes that it has, in the past, had a tiered 
structure of charges for MOC/LOC orders based on ADV parameters.\3\ The 
proposed second tier of charges for executions of MOC and LOC orders 
will reduce charges for those member organizations executing greater 
volume at the NYSE close, thereby encouraging market participants to 
increase their MOC/LOC activity on the NYSE and facilitating greater 
liquidity and improved pricing at the close.\4\
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    \3\ See Securities Exchange Act Release No. 60436 (August 5, 
2009), 74 FR 40252 (August 11, 2009) (File No. SR-NYSE-2009-77) 
(notice of filing and immediate effectiveness of proposed rule 
change by NYSE adding a second MOC/LOC tier).
    \4\ See e-mail from William Love, Chief Counsel, NYSE Euronext, 
to Nathan Saunders, Special Counsel, and Andrew Madar, Special 
Counsel, Commission, dated January 3, 2011 (``NYSE e-mail'').
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    The Exchange further proposes to create a tiered structure of 
credits to SLPs for adding liquidity to the Exchange in NYSE-listed 
securities, based on an SLP's ADV in added liquidity in the applicable 
month. Under the proposal, SLPs that meet the SLP 10% quoting 
requirement will receive a credit per share per transaction for adding 
liquidity, based on total ADV of added liquidity in the applicable 
month for all assigned SLP securities, as follows:
     $0.0022 credit per share per transaction if total ADV of 
added liquidity is more than 50 million shares
     $0.0021 credit per share per transaction if total ADV of 
added liquidity is more than 20 million shares but not more than 50 
million shares
     $0.0020 credit per share per transaction if total ADV of 
added liquidity is more than 10 million shares but not more than 20 
million shares
    For all other SLP transactions that add liquidity to the Exchange 
but do not qualify for any of the foregoing credits, the credit will be 
$0.0015 per share per transaction, representing an increased credit of 
$0.0002 per share from the current rate for that lowest tier.
    The Exchange is also adding a new footnote 4 to the Price List 
stating that the ADV calculations described above will exclude early 
closing days. The Exchange notes that it had this same footnote in its 
Price List in the recent past,\5\ but it was inadvertently eliminated 
when a paragraph containing it was deleted.
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    \5\ See, e.g., Exhibit 5, footnote 9, in File No. SR-NYSE-2010-
34.
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    These changes are intended to be effective immediately for all 
transactions beginning January 3, 2011 and are only applicable to those 
NYSE-listed securities with a per share stock price of $1.00 or more.
    Finally, NYSE Rule 300(b) provides that, in each annual offering, 
up to 1366 trading licenses for the following calendar year will be 
sold annually at a price per trading license to be established each 
year by the Exchange pursuant to a rule filing submitted to the 
Commission and that the price per trading license will be published 
each year in the Exchange's price list. The Exchange proposes to 
establish a trading license fee for calendar year 2011 of $40,000. This 
is the same as the trading

[[Page 1655]]

license fee charged in calendar years 2009 and 2010.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Securities Exchange Act of 1934 
(the ``Act''),\6\ in general, and Section 6(b)(4) of the Act,\7\ in 
particular, in that 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. The Exchange believes 
that the proposal does not constitute an inequitable allocation of 
fees, as all similarly situated member organizations will be subject to 
the same fee structure and access to the Exchange's market is offered 
on fair and non-discriminatory terms. The Exchange believes that the 
proposed amendments to the Price List represent an equitable allocation 
of dues and fees in that the increase in the credit to customers and 
floor brokers when adding liquidity is the same ($0.0002 per share) and 
such credits are intended to encourage greater liquidity at the NYSE 
quote and narrower spreads.\8\ The proposed increase in the charge for 
transactions taking liquidity from the NYSE is the same for customers, 
floor brokers and DMMs ($0.0002 per share) and corresponds to the 
increase in credits for providing liquidity.\9\
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ See NYSE e-mail, supra note 4. The Exchange notes that the 
reasons for the difference between floor broker and customer credits 
on the NYSE (the floor broker credit is currently $0.0002 higher and 
will remain $0.0002 higher after the proposed fee changes are 
effective) were originally discussed in a 2008 filing by the 
Exchange, SR-NYSE-2008-15. In that filing, which established a 
credit of $0.0004 per share for execution of orders sent directly to 
the floor broker for representation on the NYSE when adding 
liquidity to the NYSE Display Book system, the Exchange stated: 
``Technological limitations make it impossible for floor brokers to 
post orders on other markets while at the point of sale on the 
Exchange. Therefore, unlike other Exchange users, they are unable to 
benefit from the incentives certain other markets provide to 
customers who provide liquidity. The time that would elapse if a 
floor broker sent the order to his booth or upstairs trading desk 
for execution on another market means that, if the floor broker 
utilized this alternative, the trade would likely not get executed 
at the desired price. The Exchange believes this disparity places 
floor brokers at a competitive disadvantage to other Exchange 
customers and believes that the proposed credit will mitigate the 
effects of that disadvantage while also attracting additional 
liquidity to the Exchange.'' The Statutory Basis section of that 
2008 filing further stated that, ``The Exchange believes that the 
proposed credit represents an equitable allocation of reasonable 
dues, fees, and other charges because floor brokers are integral to 
the Exchange's market model and the proposed credit lessens the 
impact on floor brokers of the competitive disadvantage arising out 
of the difficulty they experience in availing themselves or their 
customers of liquidity credits on other markets.'' See Securities 
Exchange Act Release No. 57433 (March 5, 2008), 73 FR 13064 (March 
11, 2008) (File No. SR-NYSE-2008-15). The Exchange believes that the 
rationale stated in the 2008 filing applies equally to the current 
situation in which floor broker credits for adding liquidity are 
slightly higher than customer credits for adding liquidity. See NYSE 
e-mail, supra note 4.
    \9\ See NYSE e-mail, supra note 4.
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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) \10\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \11\ thereunder, because it establishes a due, fee, or other 
charge imposed on its members by the NYSE.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of the 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 to 
determine whether the proposed rule change should be approved or 
disapproved.

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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2010-87 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-2010-87. This 
file number should be included on the subject line if e-mail 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 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-
NYSE-2010-87 and should be submitted on or before February 1, 2011.

    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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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-321 Filed 1-10-11; 8:45 am]
BILLING CODE 8011-01-P