Document ID: SEC-2008-1177-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2008-08-26T04:00Z

[Federal Register: August 26, 2008 (Volume 73, Number 166)]
[
Notices]               
[Page 50389-50390]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26au08-107]                         

[[Page 50389]]

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SECURITIES AND EXCHANGE COMMISSION

Release No. 34-58397; File No. SR-NYSEArca-2008-83]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 

and Immediate Effectiveness of Proposed Rule Change Amending the 

Schedule of Fees and Charges for Exchange Services To Add a Credit That 

Applies to Indications of Interest That Result in Routed and Executed 

Orders

August 20, 2008.

    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 August 4, 2008, NYSE Arca, Inc. (the ``Exchange''), through 

its wholly-owned subsidiary NYSE Arca Equities, Inc. (``NYSE Arca 

Equities''), 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 

Exchange has designated this proposal as one establishing or changing a 

due, fee, credit, or other charge imposed by the Exchange under Section 

19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 

which renders the proposed rule change effective upon filing with the 

Commission. 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.

    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).

    \4\ 17 CFR 240.19b-4(f)(2).

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I. Self-Regulatory Organization's Statement of the Terms of Substance 

of the Proposed Rule Change

    The Exchange, through its wholly-owned subsidiary NYSE Arca 

Equities, proposes to add a new credit to the Schedule of Fees and 

Charges for Exchange Services (the ``Schedule'') that applies to 

indications of interest (``IOIs'') submitted by ETP Holders \5\ that 

result in routed and executed orders. While changes to the Schedule 

pursuant to this proposal will be effective upon filing, the credit 

will be applied retroactively to August 1, 2008. The text of the 

proposed rule change is available on the Exchange's Web site at 

www.nyse.com, at the Exchange's Office of the Corporate Secretary, and 

at the Commission.

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    \5\ See NYSE Arca Equities Rule 1.1(n).

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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 Exchange 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 these statements may be examined at the places specified in 

Item IV below. The self-regulatory organization has prepared summaries, 

set forth in Sections A, B, and C below, of the most significant 

aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule Change

1. Purpose

    In an effort to enhance participation on the Exchange and to offer 

increased liquidity to its Users,\6\ the Exchange proposes to add a new 

credit to the Schedule concerning orders routed and executed based on 

the Exchange's receipt of IOIs. The proposal establishes two volume-

based tiers. Tier 1 offers ETP Holders a credit of $0.10 per 100 shares 

where: (1) The ETP Holder submits an IOI to the Exchange; (2) the 

Exchange routes an order to access the ETP Holder's un-displayed 

liquidity in response to the IOI; and (3) those routed orders are 

executed by the ETP Holder with an average daily IOI-related share 

volume per month greater than 5 million shares. Tier 2 offers ETP 

Holders a credit of $0.05 per 100 shares where: (1) The ETP Holder 

submits an IOI to the Exchange; (2) the Exchange routes an order to 

access the ETP Holder's un-displayed liquidity in response to the IOI; 

and (3) those routed orders are executed by the ETP Holder with an 

average daily IOI-related share volume per month between 2.5 million 

and 5 million shares. The proposed IOI tiers and credits apply to 

volume aggregated across Tape A, Tape B, and Tape C securities.\7\

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    \6\ See NYSE Arca Equities Rule 1.1(yy).

    \7\ Trade activity on days when the market closes early does not 

count toward volume tiers.

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    IOIs are non-displayed indications of symbol, size and side, which 

do not interact with the NYSE Arca Book.\8\ At their discretion, 

participating ETP Holders may send an IOI to the Exchange, which in 

turn will consider the IOI when determining potential destinations for 

outbound routes. IOIs offer Exchange customers access to pools of 

liquidity that were previously inaccessible, thereby reducing market 

fragmentation. By introducing this tiered credit, the Exchange is 

enhancing the incentive to participate in the Exchange's IOI program 

and provide additional liquidity to the marketplace.

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    \8\ Regarding IOIs, the Commission notes its previous statement 

that, ``the term `order' is defined as `any firm indication of a 

willingness to buy or sell a security. * * *' Whether or not an 

indication of interest is `firm' will depend on what actually takes 

place between the buyer and seller. The label put on an order--

`firm' or `not firm'--is not dispositive. For example, a system 

claiming it displays only `indications of interest' that are not 

orders, may be [displaying orders] if these indications are, in 

fact, firm in practice. Securities Exchange Act Release No. 40780 

(December 8, 1998), 63 FR 70844, 70850 (December 22, 1998) (quoting 

17 CFR 240.3b-16(c)).

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    While changes to the Schedule pursuant to this proposal will be 

effective upon filing, the credit will be applied retroactively to 

August 1, 2008.

2. Statutory Basis

    The Exchange believes the proposed rule change is consistent with 

Section 6(b) of Act,\9\ in general, and furthers the objectives of 

Section 6(b)(4),\10\ in particular, in that it is intended 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 proposed credit is reasonable. The proposed 

rates are part of the Exchange's effort to attract and enhance 

participation on the Exchange, by offering volume-based incentives. The 

Exchange also believes that the proposed changes to the Schedule are 

equitable in that they apply uniformly to our Users.

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

    \10\ 15 U.S.C. 78f(b)(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

    Written comments on the proposed rule change were neither solicited 

nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 

Commission Action

    The foregoing proposed rule change has become effective upon filing 

pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(2) 

\12\ thereunder

[[Page 50390]]

because it establishes or changes a due, fee, or other charge imposed 

by the Exchange. At any time within 60 days of the filing of the 

proposed rule change, the Commission may summarily abrogate 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.

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    \11\ 15 U.S.C. 78s(b)(3)(A).

    \12\ 17 CFR 19b-4(f)(2).

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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 e-mail to rule-comments@sec.gov. Please include 

File No. SR-NYSEArca-2008-83 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 No. SR-NYSEArca-2008-83. 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 inspection and 

copying in the Commission's Public Reference Room, 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 offices 

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 No. SR-

NYSEArca-2008-83 and should be submitted on or before September 16, 

2008.

    For the Commission, by the Division of Trading and Markets, 

pursuant to delegated authority.\13\

Florence E. Harmon,

Acting Secretary.

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

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 [FR Doc. E8-19743 Filed 8-25-08; 8:45 am]

BILLING CODE 8010-01-P