Document ID: SEC-2015-1346-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2015-08-13T04:00Z

[Federal Register Volume 80, Number 156 (Thursday, August 13, 2015)]
[Notices]
[Pages 48588-48590]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19877]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75649; File No. SR-NYSEMKT-2015-60]

Self-Regulatory Organizations; NYSE MKT, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Modifying the 
Manner in Which It Calculates Certain Volume and Quoting Thresholds 
Applicable to Billing on the Exchange in Relation to a Suspension of 
Trading on the Exchange on July 8, 2015

August 7, 2015.
    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 July 30, 2015, NYSE MKT LLC (Exchange'' or ``NYSE MKT'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II 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 modify the manner in which it calculates 
certain volume and quoting thresholds applicable to billing on the 
Exchange in relation to a suspension of trading on the Exchange on July 
8, 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.

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 is proposing to modify the manner in which it 
calculates certain volume and quoting thresholds applicable to billing 
on the Exchange in relation to a suspension of trading on the Exchange 
on July 8, 2015 (``trading suspension'').\4\
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    \4\ See NYSE MKT Informational Message, ``NYSE/NYSE MKT--Outage 
Description'' July 9, 2015, available at https://www.nyse.com/market-status/history. Trading at the Exchange's affiliate, New York 
Stock Exchange LLC, was also suspended.
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    The trading suspension resulted in a more than 40% decrease in 
trading volume on the Exchange on July 8, 2015 for that day as compared 
to average daily volume (``ADV'') on the Exchange for the prior trading 
days in July 2015. The Exchange believes that the trading suspension 
prevented member organizations on the Exchange, including Designated 
Market Makers (``DMMs''), Supplemental Liquidity Providers (``SLPs'') 
and Retail Liquidity Providers (``RLPs''), from engaging in normal 
trading and quoting in their assigned securities, leading to decreased 
quoting and trading volume compared to ADV.
    As provided in the Exchange's Price List, certain of the Exchange's 
transaction fees and credits are based on trading and quoting 
thresholds that member organizations must satisfy in order to qualify 
for the particular rates. The Exchange believes that the trading 
suspension may affect the ability of member organizations to meet 
certain of these thresholds during July 2015.\5\ Accordingly, the 
Exchange proposes to exclude July 8, 2015 from such calculations, in 
order to reasonably ensure that a member organization that would 
otherwise qualify for a particular threshold during July 2015, and the 
corresponding transaction rate, would not be negatively impacted by the 
trading suspension.
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    \5\ The Exchange notes that it does not perform the calculations 
necessary to determine whether these thresholds have been met until 
after the particular billing month has ended.
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    First, the Exchange proposes to exclude July 8, 2015 for purposes 
of determining transaction fees and credits that are based on quoting 
levels of DMMs, SLPs and RLPs. The calculations of such quoting levels 
include the amount of time that the relevant DMM, SLP or RLP quoted at 
the National Best Bid or Offer (``NBBO'').\6\ If the Exchange did not 
exclude July 8, 2015 when calculating these quoting levels for July, 
the numerator for the calculation (e.g., time during which the DMM, SLP 
or RLP quoted at the NBBO) would be lower as a result of the decreased 
trading volume on July 8, 2015, but the denominator (e.g., total time 
that the U.S. equity markets quote during regular trading hours) would 
not be decreased. Excluding July 8, 2015 from the calculation of these 
quoting levels for the month of July would reasonably ensure that a 
member organization that would otherwise qualify for a particular 
threshold during July 2015, and the corresponding transaction rate, 
would not be negatively impacted by the trading suspension on July 8, 
2015.
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    \6\ See Rules 107B(g) and 107C(f).
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    Second, the Exchange proposes to exclude July 8, 2015 for purposes 
of determining transaction credits applicable to executions in the 
Retail Liquidity Program that are based on ADV executed by a non-RLP 
member organization during the billing month. If the Exchange did not 
exclude July 8, 2015 when calculating ADV for July, the numerator for 
the calculation (e.g., trading volume) would be lower as a result of 
the decreased trading volume on July 8, 2015, but the denominator for 
the threshold calculations (e.g., the number of trading days) would not 
be smaller. Excluding July 8, 2015 from the calculation of ADV for the 
month of July would reasonably ensure that a non-RLP member 
organization that would otherwise qualify for that would otherwise 
qualify for the applicable credit for July 2015, would not be 
negatively impacted by the trading suspension on July 8, 2015. The 
Exchange notes that the proposed exclusions would be similar to the 
current provision in the Price List whereby, for purposes of these non-
RLP member organization credits, the calculation of the average daily 
volume during the month excludes early closing days. Generally, this 
applies to certain days before or after a holiday observed by the 
Exchange.\7\
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    \7\ For example, the Exchange is closed on Thanksgiving Day and 
closes early on the Friday immediately following Thanksgiving Day 
(e.g., Friday, November 28, 2014).
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    Finally, the Exchange does not propose to exclude July 8, 2015 from 
the calculation of consolidated average daily volume (``CADV'') for 
purposes of determining the qualification for certain

[[Page 48589]]

DMM thresholds in the Price List.\8\ The thresholds that are based on 
CADV consider volume across all markets, not only the Exchange's, and 
therefore the trading suspension would not be expected to significantly 
impact CADV.
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    \8\ CADV includes all volume reported to the Consolidated Tape 
Association Plan for Tapes A, B and C securities.
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    The Exchange notes that the proposed change is not otherwise 
intended to address any other issues surrounding billing for activity 
on the Exchange and the Exchange is not aware of any negative impact on 
member organizations that would result from the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed change is consistent with 
Section 6(b) of the Securities Exchange Act of 1934 (the ``Act''),\9\ 
in general, and furthers the objectives of Section 6(b)(4) 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).
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    The Exchange believes that excluding July 8, 2015 for purposes of 
determining transaction fees and credits that are based on quoting 
levels of DMMs, SLPs and RLPs is reasonable because the calculations of 
such quoting levels include the amount of time that the relevant DMM, 
SLP or RLP quoted at the NBBO. In this regard, excluding July 8, 2015 
from these quoting calculations is reasonable because, without this 
exclusion, the numerator for the calculations (e.g., time during which 
the DMM, SLP or RLP quoted at the NBBO) would be lower as a result of 
the decreased trading volume on July 8, 2015, but the denominator for 
the threshold calculations (e.g., total time that the U.S. equity 
markets quote during regular trading hours) would not be decreased. As 
a result, without this exclusion, a member organization that would 
otherwise qualify for a particular threshold for July 2015, and the 
corresponding transaction rate, may be negatively impacted by the 
trading suspension. This is equitable and not unfairly discriminatory 
because DMMs, SLPs and RLPs have specific performance metrics that must 
be satisfied for assigned securities in order to qualify for the 
particular rates in the Price List.
    The Exchange also believes that excluding July 8, 2015 for purposes 
of determining transaction fees and credits applicable to executions in 
the Retail Liquidity Program that are based on ADV executed by a non-
RLP member organization during the billing month, is reasonable because 
trading suspension resulted in a significant decrease in trading volume 
on the Exchange. This proposed change is reasonable because, without 
this exclusion, the numerator for the calculations of ADV (e.g., 
trading volume) would be lower as a result of the decreased trading 
volume on July 8, 2015, but the denominator for the calculations (e.g., 
the number of trading days) would not be smaller. The Exchange believes 
that excluding activity on July 8, 2015 for purposes of determining 
transaction fees and credits that are based on ADV during the billing 
month is equitable and not unfairly discriminatory because it would 
apply equally to all market participants on the Exchange. In this 
regard, excluding July 8, 2015 from such ADV calculations is equitable 
and not unfairly discriminatory because the exclusion would reasonably 
ensure that a non-RLP member organization that would otherwise qualify 
for the applicable credit for July 2015 would not be negatively 
impacted by the trading suspension.
    Finally, the Exchange believes that not excluding activity on July 
8, 2015 from the calculation of CADV for purposes of determining the 
qualification for certain DMM thresholds in the Price List is 
reasonable. This is because the thresholds that are based on CADV 
consider volume across all markets, not only the Exchange's, and 
therefore the trading suspension would not be expected to significantly 
impact CADV. This is equitable and not unfairly discriminatory because, 
in addition to applying to all DMMs on the Exchange, the Exchange 
believes that the trading suspension did not have a significant impact 
on these thresholds and, therefore, including activity on July 8, 2015 
will have an equal impact for all DMMs.
    The Exchange also believes that the proposed rule change furthers 
the objectives of Section 6(b)(5) of the Act,\11\ in particular, 
because it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to, and 
perfect the mechanisms of, a free and open market and a national market 
system and, in general, to protect investors and the public interest 
and because it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \11\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed exclusions would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because they would reasonably ensure that a 
member organization that would otherwise qualify for a particular 
threshold during the month, and the corresponding transaction rate, 
would not be negatively impacted by the trading suspension. In 
particular, the Exchange believes that the proposed exclusions promote 
just and equitable principles of trade because they account for the 
impact on trading volume and quoting that resulted from the trading 
suspension for all securities traded on the Exchange. The Exchange 
further believes that the proposed exclusions remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system because they provide transparency for member organizations and 
the public regarding the manner in which the Exchange will calculate 
certain volume and quoting thresholds related to billing for activity 
on the Exchange on July 8, 2015 and for the month of July 2015. In this 
regard, the Exchange believes that the proposed exclusions are 
consistent with the Act because they address inquiries from member 
organizations regarding how the Exchange will treat July 8, 2015 for 
purposes of billing. Also, the proposed exclusions are not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers, but are instead designed to provide transparency for all 
member organizations and the public regarding the manner in which the 
Exchange will calculate certain volume and quoting thresholds in 
relation to the trading suspension. The Exchange is not aware of any 
negative impact on member organizations that would result from the 
proposed change.

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

    In accordance with Section 6(b)(8) of the Act,\12\ the Exchange 
believes that the proposed rule change will not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The proposed rule change would treat all market 
participants on the Exchange equally by excluding July 8, 2015 from

[[Page 48590]]

quoting level and ADV calculations described in the Price List. 
Moreover, the Exchange believes that the proposed change would enhance 
competition between competing marketplaces by enabling the Exchange to 
exclude July 8, 2015 for the purposes of determining transaction fees 
and credits based on volume and quoting levels as set forth in the 
Price List.
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    \12\ 15 U.S.C. 78f(b)(8).
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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 has become effective pursuant to Section 
19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) \14\ thereunder 
because the proposal does not: (i) Significantly affect the protection 
of investors or the public interest; (ii) impose any significant burden 
on competition; and (iii) by its terms, become operative for 30 days 
from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest.\15\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to 
give the Commission written notice of the Exchange's intent to file 
the proposed rule change, along with a brief description and text of 
the proposed rule change, at least five business days prior to the 
date of filing of the proposed rule change, or such shorter time as 
designated by the Commission. The Exchange has satisfied this 
requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \16\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay period. The Commission 
believes that waiver of the 30-day operative delay period is consistent 
with the protection of investors and the public interest. Specifically, 
the Commission believes that the proposal would allow the Exchange to 
immediately implement the calculation related to the trading 
suspension, thereby reducing the potential for confusion among member 
organizations regarding the volume, liquidity, and quoting thresholds 
applicable to billing in July 2015. The Commission believes that the 
waiver would also assist the Exchange in determining transaction fees 
and credits for member organizations in a timely manner after the end 
of the billing month of July 2015. For these reasons, the Commission 
believes that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest, and designates the 
proposed rule change to be operative upon filing with the 
Commission.\17\
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    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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.\18\
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    \18\ 15 U.S.C. 78s(b)(3)(C).
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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-NYSEMKT-2015-60 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-NYSEMKT-2015-60. 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 
a.m. and 3 p.m. Copies of such 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-2015-60 and should 
be submitted on or before September 3, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-19877 Filed 8-12-15; 8:45 am]
BILLING CODE 8011-01-P