Document ID: SEC-2016-1187-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2016-07-12T04:00Z

[Federal Register Volume 81, Number 133 (Tuesday, July 12, 2016)]
[Notices]
[Pages 45190-45193]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16377]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78233; File No. SR-NYSE-2016-47]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Its Price List

July 6, 2016.
    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 June 27, 2016, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend its Price List for equity 
transactions in stocks with a per share stock price more than $1.00 to 
revise: (1) Certain fees for executions at the close; and (2) the 
requirements for credits related to executions of orders sent to Floor 
brokers that add liquidity on the Exchange. The Exchange also proposes 
to amend its Price List to revise its trading license fees. The 
Exchange proposes to implement these changes to its Price List 
effective July 1, 2016. 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,

[[Page 45191]]

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 revise: (1) 
Certain fees for executions at the close; (2) the requirements for 
credits related to executions of orders sent to Floor brokers that add 
liquidity on the Exchange; and (3) trading license fees.
    The proposed changes would only apply to credits in transactions in 
securities priced $1.00 or more.
    The Exchange proposes to implement these changes effective July 1, 
2016.
Executions at the Close
    Currently, member organizations that execute during the billing 
month average daily volume (``ADV'') of at least 750,000 shares through 
orders executed at the close (except for market at-the-close (``MOC'') 
and limit at-the-close (``LOC'') orders), and/or Floor broker 
executions swept into the close (excluding verbal interest), are 
charged $0.00035 per share for such orders.
    The Exchange proposes to increase this fee to $0.0005 per share. 
The fee would apply only to shares executed in excess of 750,000 ADV 
during the billing month. For example, a member organization that has 
an ADV of 3 million shares during a billing month consisting of 20 
trading days would pay $0.0005 per share fee on the 2.25 million shares 
that exceed 750,000 on average each day. For the 20 trading days, this 
would be a total of 45 million shares for that month, and a total fee 
of $22,500.
    Member organizations with execution volumes below an ADV of 750,000 
shares during the billing month would continue not to be charged for 
these trades.
    Further, for Non-Tier MOC/LOC, the Exchange currently charges 
member organizations $0.0010 per share for MOC and LOC orders, unless a 
member organization meets specified thresholds set forth in the Price 
List for MOC and LOC activity. The Exchange proposes to increase this 
fee to $0.0011 per share.
    For MOC/LOC Tier 2, the Exchange currently charges $0.00070 per 
share for all MOC and LOC orders from any member organization executing 
(i) an ADV of MOC and LOC activity on the Exchange in the month of at 
least 0.375% of consolidated ADV (``CADV'') in NYSE-listed securities 
during the billing month (``NYSE CADV''); or (ii) an ADV of MOC and LOC 
activity on the Exchange in that month of at least 0.300% of NYSE CADV 
plus an ADV of total close activity (i.e., MOC and LOC and other 
executions at the close) on the Exchange in that month of at least 
0.475% of NYSE CADV. The Exchange proposes to increase this fee to 
$0.0008 per share.
    For MOC/LOC Tier 1, the Exchange currently charges $0.00060 per 
share for all MOC and LOC orders from any member organization executing 
ADV of MOC and LOC activity on the NYSE in that month of at least 
0.575% of NYSE CADV. The Exchange proposes to increase this fee to 
$0.0007 per share.
Floor Broker Credits for Orders That Add Liquidity to the Exchange
    The Exchange currently provides a per share credit for executions 
of orders sent to a Floor broker for representation on the Exchange 
when adding liquidity to the Exchange if the member organization has an 
ADV that adds liquidity to the Exchange by a Floor broker during the 
billing month that is at least equal to certain thresholds. The first 
threshold is 2,500,000 shares ADV in order to qualify for the existing 
credit of $0.0020 per share. The second threshold is 12,000,000 shares 
ADV in order to qualify for the existing credit of $0.0022 per share.
    The Exchange proposes to replace the current share volume ADV 
thresholds for these credits with thresholds representing a percentage 
of CADV. More specifically, in order to qualify for the first credit of 
$0.0020 per share, the Exchange proposes that a member organization 
have an ADV that adds liquidity to the Exchange by a Floor broker 
during the billing month that is at least equal to .07% of CADV. 
Second, in order to qualify for the credit of $0.0022 per share, the 
Exchange proposes that a member organization have an ADV that a 1200dds 
liquidity to the Exchange by a Floor broker during the billing month 
that is at least equal to .33% of CADV. The Exchange believes 
thresholds representing a percentage of CADV rather than a fixed share 
volume requirement, is more appropriate because it would reasonably 
require that the monthly volume requirement is consistent relative to 
fluctuations in market volume over time.
Trading Licenses
    NYSE Rule 300(b) provides, among other things, that the price per 
trading license will be published each year in the Exchange's price 
list. The current trading license fee in place for 2016 \4\ is $50,000 
for the first license held by a member organization and $15,000 for 
each additional license held by a member organization. The Exchange 
proposes to eliminate the $15,000 additional license fee. To effectuate 
this change, the Exchange proposes to amend the Price List to delete 
the phrase ``$15,000.00 per license,'' add the words ``No charge'' 
before ``for additional licenses held by a member organization,'' and 
delete footnote 15 at the end of the sentence. The text of footnote 15 
would not be deleted, and would continue to apply to the first license 
held by a member organization described in the previous paragraph.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 76865 (January 11, 
2016), 81 FR 2264 (January 15, 2016) (SR-NYSE-2016-06).
---------------------------------------------------------------------------

* * * * *
    The proposed changes are not otherwise intended to address any 
other issues, and the Exchange is not aware of any problems that member 
organizations would have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\6\ 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.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) & (5).
---------------------------------------------------------------------------

Executions at the Close
    The Exchange believes that the proposed fee increases for certain 
executions at the close are reasonable. The Exchange's closing auction 
is a recognized industry benchmark,\7\ and member organizations receive 
a substantial benefit from the Exchange in obtaining high levels of 
executions at the Exchange's closing price on a daily basis.
---------------------------------------------------------------------------

    \7\ For example, the pricing and valuation of certain indices, 
funds, and derivative products require primary market prints.
---------------------------------------------------------------------------

    The Exchange believes that it is equitable and not unfairly 
discriminatory to modify fees for executions at the close (other than 
MOC and LOC orders) and Floor broker executions swept into the close 
(excluding Verbal Interest) for member organizations that execute an 
ADV of at least 750,000 of such executions on a combined basis, by 
increasing the

[[Page 45192]]

applicable fee but to apply that fee only to shares executed over 
750,000 ADV during the billing month, because member organizations that 
reach 750,000 ADV threshold are generally larger member organizations 
that are deriving a substantial benefit from this high volume of 
closing executions. Nonetheless, the Exchange must continue to 
encourage liquidity from multiple sources. Allowing member 
organizations with execution volumes of an ADV below 750,000 shares 
during the billing month to continue to obtain executions at the close 
at no charge, and to charge the fee only with respect to shares 
executed over 750,000 ADV during the billing month, continues to 
encourage member organizations to send orders to the Exchange for the 
closing auction. The Exchange believes that its proposal would 
equitably balance these interests and continue to encourage order flow 
from multiple sources, which helps to maintain the quality of the 
Exchange's closing auctions for the benefit of all market participants. 
The proposed fee is also reasonable, in that it is lower than 
applicable closing rates on the NASDAQ Stock Market, LLC 
(``NASDAQ'').\8\ For example, the default fee for executions in 
NASDAQ's ``Closing Cross'' is $0.0008 per share.
---------------------------------------------------------------------------

    \8\ See NASDAQ Rule 7018(d).
---------------------------------------------------------------------------

    The Exchange believes that increasing the MOC/LOC Non-Tier fee to 
$0.0011 is reasonable because this rate would be lower than the non-
tier rate, Tier F, for market-on-close and limit-on-close orders on 
NASDAQ, of $0.0015 per executed share.\9\ Similarly, the Exchange 
believes that increasing the MOC/LOC Tier 2 fee to $0.00080 per share 
and the MOC/LOC Tier 1 fee to $0.0007 is reasonable because the 
proposed MOC/LOC Tier 2 fee would be the same as the lowest fee for 
market-on-close and limit-on close orders on NASDAQ, of $0.0008 per 
executed share, and the proposed MOC/LOC Tier 1 fee would be lower than 
the lowest fee for market-on-close and limit-on close orders on NASDAQ.
---------------------------------------------------------------------------

    \9\ See id.
---------------------------------------------------------------------------

    The Exchange believes that maintaining the lowest comparable fee 
for the highest liquidity requirements would incentivize member 
organizations to send in more closing auction volume to the primary 
market, thereby deepening the Exchange's liquidity pool and supporting 
the quality of price discovery. The Exchange believes that it is 
equitable and not unfairly discriminatory to charge lower or equal fees 
to member organizations that make significant contributions to market 
quality by providing higher volumes of liquidity, which benefits all 
market participants. The Exchange believes the proposed fees are 
equitable and not unfairly discriminatory because all similarly 
situated member organizations would be subject to the same fee 
structure.
Floor Broker Credits for Orders That Add Liquidity to the Exchange
    The Exchange believes that the changes proposed to the tiered 
credits for executions of orders sent to a Floor broker for 
representation on the Exchange are reasonable because they would 
encourage additional displayed liquidity on the Exchange. The proposed 
change would also encourage the execution of such transactions on a 
public exchange, thereby promoting price discovery and transparency.
    The Exchange believes the proposed change is equitable and not 
unfairly discriminatory because it would continue to encourage member 
organizations to send orders to the Floor for execution, thereby 
contributing to robust levels of liquidity on the Floor, which benefits 
all market participants. The proposed change is also equitable and not 
unfairly discriminatory because those member organizations that make 
significant contributions to market quality and that contribute to 
price discovery by providing higher volumes of liquidity would continue 
to be allocated a higher credit. The Exchange believes that any member 
organizations that may currently be qualifying under the existing 
thresholds could qualify for the remaining two thresholds based on the 
levels of activity sent to Floor brokers. The proposed change also is 
equitable and not unfairly discriminatory because all similarly 
situated member organizations would pay the same rate, as is currently 
the case, and because all member organizations would be eligible to 
qualify for the rate by satisfying the related thresholds.
    Finally, the Exchange believes that the proposed change promotes 
just and equitable principles of trade because, by basing the monthly 
volume requirement on a percentage of NYSE CADV, the Floor broker 
requirement to add liquidity to the market would track actual 
consolidated trading volumes. Accordingly, in months with lower trading 
volumes, a monthly volume requirement that tracks the actual 
consolidated volume would reasonably require that Floor brokers add 
sufficient liquidity relative to the market, without the monthly volume 
requirement being too burdensome for them. Conversely, during months 
when trading volumes are generally higher across all markets, the 
proposed change would result in Floor brokers being required to 
increase the liquidity they add to the market, thereby reasonably 
requiring that Floor brokers are engaging in meaningful trading 
activity consistent with the purpose of the Floor broker credits for 
adding liquidity to the Exchange.
Trading Licenses
    The Exchange believes that the proposal to eliminate the $15,000 
fee for each additional license held by a member organization above the 
first license is reasonable because it will encourage member 
organizations to hold additional trading licenses, which will increase 
the number of market participants trading on the floor of the Exchange, 
which will promote liquidity, price discovery, and the opportunity for 
price improvement for the benefit of all market participants. The 
Exchange also believes it is reasonable to offer a fee reduction 
because it will provide member organizations with greater flexibility 
in managing their personnel, especially during times of increased 
volatility and in summer months when member organizations tend to 
experience greater staff rotation. The Exchange believes the proposed 
change is equitable and not unfairly discriminatory because all 
similarly situated member organizations would continue to be subject to 
the same trading license fee structure and because access to the 
Exchange's market would continue to be offered on fair and non-
discriminatory terms.
    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 the foregoing 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,\10\ 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 
changes would contribute to the Exchange's market quality by promoting 
price discovery and ultimately increased competition. For the same 
reasons, the proposed change also would not impose any burden on 
competition among market participants. Pricing for executions at the 
opening

[[Page 45193]]

[sic] would remain at relatively low levels and would continue to 
reflect the benefit that market participants receive through the 
ability to have their orders interact with other liquidity at the 
opening [sic]. The Exchange also believes that the proposed changes 
would encourage the submission of additional liquidity to a public 
exchange, thereby promoting price discovery and transparency and 
enhancing order execution opportunities for member organizations. The 
Exchange believes that this could promote competition between the 
Exchange and other execution venues, including those that currently 
offer similar order types and comparable transaction pricing, by 
encouraging additional orders to be sent to the Exchange for execution.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    Finally, 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 and 
with alternative trading systems that have been exempted from 
compliance with the statutory standards applicable to exchanges. 
Because competitors are free to modify their own fees and credits in 
response, and because market participants may readily adjust their 
order routing practices, the Exchange believes that the degree to which 
fee changes in this market may impose any burden on competition is 
extremely limited. As a result of all of these considerations, the 
Exchange does not believe that the proposed changes will impair the 
ability of member organizations or competing order execution venues to 
maintain their competitive standing in the financial markets.

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) \11\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \12\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-2016-47 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2016-47. 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 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 the 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-NYSE-2016-47 and should be 
submitted on or before August 2, 2016.
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Brent J. Fields,
Secretary.
[FR Doc. 2016-16377 Filed 7-11-16; 8:45 am]
 BILLING CODE 8011-01-P