Document ID: SEC-2014-1542-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2014-09-15T04:00Z

[Federal Register Volume 79, Number 178 (Monday, September 15, 2014)]
[Notices]
[Pages 55047-55048]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-21867]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73021; File No. SR-NYSE-2014-47]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending the New York Stock Exchange LLC Price List To Provide That the 
Monthly DMM Credit for Certain Securities Be Prorated to the Number of 
Trading Days in a Month That a Security Is Assigned to a DMM

September 9, 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 August 25, 2014, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Price List to provide that the 
monthly DMM credit for certain securities will be prorated to the 
number of trading days in a month that a security is assigned to a DMM. 
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 proposes to amend its Price List to provide that the 
monthly DMM credit for certain securities will be prorated to the 
number of trading days in a month that a security is assigned to a DMM.
    On March 2, 2014, the Exchange adopted a new monthly credit for 
DMMs for each security that has a consolidated average daily volume 
(``ADV'') of less than 250,000 shares during the billing month in any 
month in which the DMM meets the Less Active Securities Quoting 
Requirement.\4\ The flat dollar credit supplements the DMM credit in 
securities that do not trade actively and is applicable to all 
Exchange-listed securities regardless of price.\5\
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    \4\ The DMM meets the ``Less Active Securities Quoting 
Requirement'' when a security has a consolidated ADV of less than 
1,000,000 shares per month in the previous month and a stock price 
of $1.00 or more, and the DMM quotes at the NBBO in the applicable 
security at least 15% of the time in the applicable month.
    \5\ See Securities Exchange Act Release No. 71684 (March 11, 
2014), 79 FR 14758 (March 17, 2014).
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    The Exchange proposes to revise the Price List to provide that the 
rebate would be prorated to the number of trading days in a month that 
a stock is assigned to a DMM. The Exchange believes it is appropriate 
to prorate the rebate to the number of trading days that a stock is 
assigned to a DMM to ensure that the monthly rebate has a nexus to the 
time for which a DMM has affirmative obligations for that stock 
pursuant to Rule 104. For example, if a stock is assigned to more than 
one DMM unit within a month, such as when a stock is transferred 
temporarily from one DMM to another and then returned to the original 
DMM, the Exchange does not believe that it is appropriate that both 
DMMs that were assigned that stock in a given month should both be 
eligible for the full monthly rebate. Similarly, if a stock begins 
trading at the Exchange mid-month, such as because of an initial public 
offering or transfer of a listed security from another exchange, the 
Exchange does not believe

[[Page 55048]]

it is appropriate for a DMM to receive a full monthly credit. For 
example, in a month with 20 trading days, assume a less active security 
transfers from DMM 1 to DMM 2 after the 15th trading day. The DMM 
monthly rebate would be prorated for the two DMM firms as follows: DMM 
1 would be rebated $150 (15 assigned trading days/20 trading days in 
the month x $200) and DMM 2 would be rebated $50 (5 assigned trading 
days/20 trading days in the month x $200). The Exchange believes that 
prorating the rebate for the number of trading days in a month that a 
stock is assigned to a DMM will ensure that the DMM with responsibility 
for the stock receives the appropriate rebate for the responsibilities 
performed for that symbol in the month.
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 6(b)(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.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed prorating of the DMM 
monthly rebate is reasonable because it would provide a nexus between 
the rebate paid to a DMM and the number of days that a DMM has been 
assigned a stock. The Exchange therefore believes that the proposed 
prorating of the monthly DMM rebate is equitable and not unfairly 
discriminatory because it directly ties the monthly rebate to the 
number of trading days for which a DMM has regulatory responsibility 
for a stock pursuant to Rule 104. The Exchange also believes that the 
proposed prorating is equitable and not unfairly discriminatory because 
all DMMs would be treated the same.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition. For these reasons, the Exchange 
believes that the proposal is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\8\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, the Exchange believes that the proposed 
change would not burden competition because it would be applicable to 
DMMs only and ensures that an existing rebate is associated more 
closely with when a DMM is assigned a stock, which may be shorter than 
a full month.
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    \8\ 15 U.S.C. 78f(b)(8).
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    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues if they 
deem fee levels at a particular venue to be excessive or rebate 
opportunities available at other venues to be more favorable. In such 
an environment, the Exchange must continually adjust its fees and 
rebates to remain competitive with other exchanges. For these reasons, 
the Exchange believes that the proposed rule change reflects the 
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) \9\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \10\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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) \11\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \11\ 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-NYSE-2014-47 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-NYSE-2014-47. 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 Section, 100 F Street 
NE., Washington, DC 20549-1090, on official business days between the 
hours of 10:00 a.m. and 3:00 p.m. Copies of the filing will also be 
available for Web site viewing and printing at the NYSE's principal 
office and on its Internet Web site at www.nyse.com. 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-2014-47 and should be 
submitted on or before October 6, 2014.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-21867 Filed 9-12-14; 8:45 am]
BILLING CODE 8011-01-P