Document ID: SEC-2013-0248-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2013-02-06T05:00Z

[Federal Register Volume 78, Number 25 (Wednesday, February 6, 2013)]
[Notices]
[Pages 8642-8644]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-02555]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68776; File No. SR-NYSEArca-2013-05]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Arca Options Fee Schedule To Change the Monthly Cost for Option Trading 
Permits

January 31, 2013.
    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, 2013, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') 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.
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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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Options Fee Schedule 
(``Fee Schedule'') to change the monthly cost for Option Trading 
Permits (``OTPs''). 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 Fee Schedule to change the 
monthly cost for OTPs. The Exchange proposes to make the change 
operative on February 1, 2013.
    The Exchange requires that a Market Maker have an OTP in order to 
operate on the Exchange. For electronic Market Making, a Market Maker 
must have four OTPs in order to submit electronic quotations in every 
class on the Exchange. These four Market Maker OTPs also permit the 
firm to have at least one trader on the Floor of the Exchange as a 
Floor-based open outcry Market Maker. However, the manner in which 
those OTPs are assigned to individual traders may reduce the 
permissible number of issues in which electronic quotes are assigned. 
For instance, two associated Market Makers may assign OTP 1, 2, and 3 
to trader A, while the fourth is assigned to trader B. Trader A may now 
only stream quotes electronically in 750 issues, while trader B may 
submit quotes electronically in 100 issues. To retain the appointment 
in more than 750 issues, all four OTPs must be in the same name, and to 
have an additional individual Market Maker on the Floor, a fifth OTP 
must be acquired.
    To remain competitive in fixed fees among exchanges with trading 
floors, the Exchange is proposing to reduce the cost of additional 
Market Maker OTPs beyond the minimum of four that are required to 
submit electronic quotations

[[Page 8643]]

in all issues listed on the Exchange. Accordingly, while the existing 
fee of $4,000 per OTP per month would continue to apply to a Market 
Maker firm that has between one and four Market Maker OTPs, the 
Exchange proposes that the monthly OTP fee for Market Maker firms with 
more than four OTPs be reduced from $2,000 per month to $1,000 per 
month for each additional Market Maker OTP. As described above, each 
additional Market Maker OTP would permit a Market Maker firm, which 
already has the ability to make electronic markets in every class on 
the Exchange, to have an additional trader on the Floor of the Exchange 
as an open outcry Market Maker.
    The proposed changes are not otherwise intended to address any 
other problem, and the Exchange is not aware of any significant problem 
that the affected market participants would have in complying with the 
proposed changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\4\ in general, and Section 6(b)(4) of the 
Act,\5\ 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 proposed rule change is reasonable because it will 
result in cost savings for members with more than four Market Marker 
OTPs. Lowering the cost for Market Maker firms to acquire additional 
OTPs related to their Market Maker activity may allow them to price 
their services at a level that will enable them to attract higher 
levels of volume to the Exchange, which will enhance liquidity and 
price discovery on the Exchange to the benefit of investors. The 
Exchange believes that the proposal constitutes an equitable allocation 
of fees, as all similarly situated member organizations will be subject 
to the same reduced fee structure and access to the Exchange's market 
is offered on fair and non-discriminatory terms. In addition, for the 
reasons stated above, the proposed changes are not designed to permit 
unfair discrimination between members because all members will be 
charged the same fee amount for each additional Market Maker OTP beyond 
the initial four OTPs.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
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    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such an environment, the Exchange must continually 
review, and consider adjusting, its fees and credits to remain 
competitive with other exchanges. For the reasons described above, the 
Exchange believes that the proposed rule change reflects this 
competitive environment.

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. The proposed rule change 
will reduce each additional Market Maker OTP to $1,000 from $2,000, 
resulting in a cost savings to members who already have more than four 
Market Marker OTPs. In addition, the proposal will reduce a potential 
cost-based barrier for firms that do not have more than four Market 
Maker OTPs as their costs for any additional Market Maker OTPs will be 
reduced by one-half. As a result, the Exchange does not believe that 
the proposed rule change will place an unreasonable burden on current 
or prospective members because fees for additional Market Maker OTPs 
beyond four will be uniformly reduced across all members (current and 
prospective) and apply in a non-discriminatory manner.

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) \6\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \7\ thereunder, because it establishes a due, fee, or other charge 
imposed by NYSE Arca.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \8\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \8\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSEArca-2013-05 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-2013-05. 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 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-NYSEArca-2013-05, and should 
be

[[Page 8644]]

submitted on or before February 27, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-02555 Filed 2-5-13; 8:45 am]
BILLING CODE 8011-01-P