Document ID: SEC-2014-0967-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2014-06-10T04:00Z

[Federal Register Volume 79, Number 111 (Tuesday, June 10, 2014)]
[Notices]
[Pages 33247-33249]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-13456]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72312; File No. SR-NYSEArca-2014-63]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE 
Arca Options Fee Schedule Relating to Lead Market Maker Rights Fees

June 4, 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 May 23, 2014, 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'') relating to Lead Market Maker (``LMM'') Rights fees. 
The Exchange proposes to implement the fee change effective June 1, 
2014. 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.

[[Page 33248]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to modify the Exchange's fees so as 
to provide a discount to LMMs that have a large number of issues in 
their LMM Allocation.
    Currently, LMMs pay a Lead Market Maker Rights fee on each issue in 
their allocation, ranging from $45 per month to $1,500 per month, 
depending on the activity level in the issue. The Monthly Issue Fee is 
based on the Average National Daily Customer Contracts.
    The Exchange is proposing that LMMs that have been allocated 400 or 
more issues receive a 50% discount in total Lead Market Maker Rights 
fees, from June 1, 2014 through December 31, 2014.
    At the present time, there are approximately 2,600 different 
underlying issues listed on NYSE Arca Options. The Exchange regularly 
receives five to 10 requests to list new issues each week. The Exchange 
then surveys the LMM community to invite applications for allocation. 
At present, most surveys only receive one or two responses per issue, 
and a key factor in applying for allocation is the profitability of 
trading in an issue given the anticipated rights fee.
    The Exchange believes that by providing a discount to LMM firms 
that have a large number of issues allocated to them will encourage LMM 
firms to apply for additional allocations. NYSE Arca proposes to have 
this discount in effect for the balance of the year, reverting back to 
the current total amount for all firms in January 2015.
    NYSE Arca is not proposing any additional changes to Floor and 
Equipment Fees with this filing.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\4\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\5\ 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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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed discount on Lead Market 
Maker Rights fees is reasonable as it will reduce the overhead costs of 
LMM firms with a large number of issues in their allocation. In 
addition, the proposed discount is reasonable because it will help some 
LMMs meet their obligation to provide liquidity in a diverse selection 
of issues. The increased number of issues in their allocation will 
allow LMM firms to spread their risk across different industry sectors.
    It is also not unfairly discriminatory to provide a discount to LMM 
firms because the reduced overhead costs will enhance the ability of 
LMMs to provide liquidity which will benefit all market participants.
    The discount is also not unfairly discriminatory because it is 
available to any LMM firm that wishes to apply for appointment in a 
large number of issues.
    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,\6\ 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 Exchange believes that the proposed discount 
reduces the burden on competition because it will enhance the ability 
for LMM firms to quote competitively in more issues.
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    \6\ 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, and 
providing a discount on LMM Rights fees will allow LMM Firms to both 
expand the number of issues allocated to them and to reduce the 
overhead, which, in turn, encourages liquidity to compete for business. 
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.

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) \7\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \8\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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) \9\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \9\ 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-2014-63 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-NYSEArca-2014-63. 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/

[[Page 33249]]

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-2014-63, and should be submitted on or before July 1, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-13456 Filed 6-9-14; 8:45 am]
BILLING CODE 8011-01-P