Document ID: SEC-2010-0579-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2010-04-19T04:00Z

[Federal Register: April 19, 2010 (Volume 75, Number 74)]
[Notices]               
[Page 20413-20415]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19ap10-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61894; File No. SR-NYSEArca-2010-24]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change, as Modified by 
Amendment No. 1, Amending Its Fee Schedule

April 13, 2010.
    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 April 1, 2010, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') 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. On April 9, 2010, NYSE Arca 
filed Amendment No. 1 to this filing. NYSE Arca has designated this 
proposal as one establishing or changing a member due, fee, or other 
charge imposed under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 
19b-4(f)(2) thereunder,\4\ which renders the proposal 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 proposes to amend its Schedule of Fees and Charges for 
Exchange Services (the ``Schedule''). While changes to the Schedule 
pursuant to this proposal will be effective upon filing, the changes 
will become operative on April 1, 2010. The amended section of the 
Schedule is included as Exhibit 5 hereto. A copy of this filing is 
available on the Exchange's Web site at http://www.nyse.com, at the 
Exchange's principal office, at the Commission's Public Reference Room, 
and on the Commission's Web site at http://www.sec.gov.

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 is proposing changes to certain fees to improve 
competitiveness and encourage participation and liquidity by Customer, 
Firms, Broker Dealers, and Market Makers.
Lead Market Maker Rights Fee
    Presently, the Exchange charges Lead Market Makers (``LMMs'') a 
monthly rights fee for each appointed issue. Effective April 1, 2010, 
the Exchange will reduce the rights fee by 50% in each tier as shown 
below.

------------------------------------------------------------------------
    Average national daily customer
          contracts per issue                   Monthly base rate
------------------------------------------------------------------------
0 to 2,000.............................  [$150] $75
2,001 to 5,000.........................  [$400] $200
5,001 to 15,000........................  [$750] $375
15,001 to 100,000......................  [$1,500] $750
Over 100,000...........................  [$3,000] $1,500
------------------------------------------------------------------------

Transaction Fee Changes
    The Exchange proposes to restructure certain trade related charges 
for non-electronic trades. These trades are executed in the Firm range 
(clearance account ``F'') and are currently billed either the Firm 
Facilitation rate or the Broker Dealer & Firm rate. Under the current 
rate schedule trades by a firm that facilitate a customer, or Firm 
Facilitation trades, are subject to a $0.00 rate per contract. Firm 
transactions not facilitating a customer are subject to a $0.25 Broker/
Dealer & Firm Manual rate. Under the revised rate schedule all manual 
trades clearing in the Firm range will be subject to a rate of $0.18 
per contract and further capped at $2,000 per issue per day, per 
trading participant. Firm Proprietary electronic trades will continue 
to be charged $0.50 per contract in non-Penny Pilot issues, $0.45 per 
contract for taking liquidity in Penny Pilot issues, and receive a 
credit of $0.25 per contract for posting liquidity in Penny Pilot 
issues, consistent with the current rates, but now a separate line in 
the Schedule.
    The Exchange also proposes to introduce a Premium Tier for 
electronic transactions in certain Penny Pilot Issues. Electronic 
executions in options overlying SPY, C, BAC, QQQQ, AAPL, IWM, XLF, GLD, 
EEM, GE, UNG, FAZ, DIA, GDX, and USO will qualify for the Premium Tier, 
and will receive an additional $.05 per contract credit above the 
stated Post Liquidity credit. This is consistent with similar billing 
treatment of select symbols currently in place at Nasdaq OMX PHLX.\5\
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    \5\ See Nasdaq OMX PHLX Fee Schedule dated March 26, 2010.
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    NYSE Arca also proposes to introduce Tiered Pricing for certain 
high monthly volume levels in non-Premium Tier Penny Pilot issues. This 
new tiered pricing structure will replace the current Market Maker Post 
Liquidity Incentive Credit that provided Market Makers with an 
additional $0.01 credit

[[Page 20414]]

for posting liquidity of greater than 1,000,000 executed contracts per 
month and $0.05 for posting liquidity greater than 5,000,000 executed 
contracts per month. The Exchange also proposes to delete the 
accompanying footnote eight in its entirety. For each Electronic 
Transaction contract in these issues above 999,999 contracts per month 
up to 1,999,999 per month, the Customer Take Fee will be reduced by 
$0.05 per contract, and the Market Maker Credit will be increased by 
$0.05 per contract. For each Electronic Transaction contract in these 
issues above 1,999,999 contracts per month up to 2,999,999 per month, 
the Customer Take Fee will be reduced by a total of $0.10 per contract, 
and the Market Maker Credit will be increased by $0.10 per contract. 
For each Electronic Transaction contract in these issues above 
2,999,999 contracts per month, the Customer Take Fee will be reduced by 
a total of $0.15 per contract, and the Market Maker Credit will be 
increased by $0.15 per contract.
Limit of Fees on Strategy Executions
    In addition, NYSE Arca also proposes to make permanent the pilot 
program for a cap on transaction fees for Strategy Executions 
associated with (a) Reversals and conversions, (b) dividend spreads, 
(c) box spreads, (d) short stock interest spreads, (e) merger spreads, 
and (f) jelly rolls. The Strategy Fee Cap pilot program expired on 
March 1, 2010. Under the program, transactions fees were capped at $750 
per transaction, and, in addition, such transaction fees for these 
strategies are further capped at $25,000 per month per initiating firm. 
This proposal is consistent with the Nasdaq OMX PHLX filing to make 
permanent a similar Strategy fee cap pilot program.\6\ The Exchange 
proposes to make the pilot permanent, effective upon filing of this 
proposed rule change.
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    \6\ See Securities Exchange Act Release No. 59566 (March 12, 
2009), 74 FR 11793 (March 19, 2009) (SR-PHLX-2009-18).
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    The Exchange also proposes, effective April 1, 2010, that Manual 
Broker Dealer and Firm Strategy Trades that do not reach the $750 cap 
be billed at a rate of $0.25 per contract. Further, the Exchange 
proposes to clarify that FLEX Option executions are not considered 
Strategy executions.
Report Fees
    Finally, the Exchange proposes to reduce the fee for User Activity 
extracts from $0.0075 per trade to $0.002 per trade, plus development 
and set-up costs.
    The changes are part of the Exchange's continued effort to attract 
and enhance participation on the NYSE Arca options marketplace. The 
Exchange believes these proposed fee changes are reasonable and 
equitable in that they apply uniformly to all similarly situated 
participants on the NYSE Arca options marketplace.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Securities Exchange Act of 1934 
(the ``Act''),\7\ in general, and Section 6(b)(4) of the Act,\8\ 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 proposed changes to 
the Schedule are part of the Exchange's continued effort to attract and 
enhance participation on the Exchange, by offering attractive rates for 
removing liquidity and rebates for providing liquidity to the Exchange. 
The proposed changes to the Schedule are equitable in that they apply 
uniformly to all similarly situated OTP Holders.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

    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 NYSE Arca on its members.
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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 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.

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 Number SR-NYSEArca-2010-24 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2010-24. 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 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 a.m. and 3 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 
publicly available. All submissions should refer to File Number SR-
NYSEArca-2010-24 and should be submitted on or before May 10, 2010.

[[Page 20415]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-8948 Filed 4-16-10; 8:45 am]
BILLING CODE 8011-01-P