Document ID: SEC-2015-0575-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2015-04-03T04:00Z

[Federal Register Volume 80, Number 64 (Friday, April 3, 2015)]
[Notices]
[Pages 18270-18272]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-07619]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74604; File No. SR-NYSEArca-2015-20]

Self-Regulatory Organizations; Proposed Rule Chanages; NYSE Arca, 
Inc.

 March 30, 2015.
    Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the

[[Page 18271]]

``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that, 
on March 18, 2015, 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 and II 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 Schedule of Fees and Charges for 
Exchange Services (``Fee Schedule'') to specify that affiliated 
Exchange ETP Holders (or ``members'') may request that the Exchange 
aggregate its eligible activity with activity of the ETP Holder's 
affiliates for purposes of charges or credits based on volume. 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 Fee Schedule to specify that 
affiliated ETP Holders may request that the Exchange aggregate their 
eligible activity with activity of its ETP Holder affiliates for 
purposes of charges or credits based on volume. The proposed rule 
change is based on NASDAQ Stock Market LLC (``NASDAQ'') Rule 7027, 
NASDAQ Options Market LLC (``NOM'') Rules at chapter XV, and the NASDAQ 
OMX PHLX LLC (``PHLX'') Pricing Schedule.\4\
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    \4\ Effective December 1, 2014, NASDAQ amended Rule 7027 to 
harmonize the treatment of aggregation of affiliate activity of 
affiliated members to be consistent with the rules governing NOM and 
PHLX. See Securities Exchange Act Release No. 72966 (Sept. 3, 2014), 
79 FR 53473 (Sept. 9, 2014) (SR-NASDAQ-2014-083). NOM and PHLX also 
amended their respective rules to harmonize the process by which it 
collects information from its members for purposes of aggregating 
member activity between its equity and options markets. See 
Securities Exchange Act Release Nos. 72967 (Sept. 2, 2014), 79 FR 
53471 (Sept. 9, 2014) (SR-NASDAQ-2014-082) and 72969 (Sept. 3, 
2014), 79 FR 53485 (Sept. 9, 2014) (SR-PHLX-2014-56).
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    As proposed, for purposes of applying any provision of the 
Exchange's Price List where the charge assessed, or credit provided, by 
the Exchange depends on the volume of a member organization's activity, 
an ETP Holder may request that the Exchange aggregate its eligible 
activity with activity of such ETP Holder's affiliates.\5\ The Exchange 
further proposes that an ETP Holder requesting aggregation of eligible 
affiliate activity would be required to (1) certify to the Exchange the 
affiliate status of ETP Holders whose activity it seeks to aggregate 
prior to receiving approval for aggregation, and (2) inform the 
Exchange immediately of any event that causes an entity to cease being 
an affiliate. The Exchange would review available information regarding 
the entities and reserves the right to request additional information 
to verify the affiliate status of an entity. As further proposed, the 
Exchange would approve a request, unless it determines that the 
certificate is not accurate.\6\
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    \5\ See Exhibit 5 for proposed language to be added to the Fee 
Schedule. The Exchange notes that this language is similar to that 
found in NASDAQ Rule 7027.
    \6\ See NASDAQ Rule 7027(a)(1).
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    The Exchange also proposes that if two or more ETP Holders become 
affiliated on or prior to the sixteenth day of a month, and submit the 
required request for aggregation on or prior to the twenty-second day 
of the month, an approval of the request would be deemed to be 
effective as of the first day of that month. If two or more ETP Holders 
become affiliated after the sixteenth day of a month, or submit a 
request for aggregation after the twenty-second day of the month, an 
approval of the request would be deemed to be effective as of the first 
day of the next calendar month.\7\ The Exchange believes that this 
requirement, which is also similar to requirements of other 
exchanges,\8\ would be a fair and objective way to apply the 
aggregation rule to fees and streamline the billing process.
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    \7\ See NASDAQ Rule 7027(a)(2).
    \8\ See supra note 7.
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    The Exchange further proposes to provide that for purposes of 
applying any provision of the Price List where the charge assessed, or 
credit provided, by the Exchange depends upon the volume of a ETP 
Holder's activity, references to an entity would be deemed to include 
the entity and its affiliates that have been approved for 
aggregation.\9\ In addition, the Exchange proposes to provide that ETP 
Holders may not aggregate volume where the Price List specifies that 
aggregation is not permitted.\10\
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    \9\ See supra note 5.
    \10\ For example, the Price List specifies whether quoting and 
trading activity relating to Supplemental Liquidity Provider 
activity may be aggregated.
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    Finally, the Exchange proposes that for purposes of the Fee 
Schedule, the term ``affiliate'' would mean any member organization 
under 75% common ownership or control of that member organization.\11\
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    \11\ See supra note 5.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\12\ in general, and furthers the 
objectives of sections 6(b)(4) and 6(b)(5) of the Act,\13\ in 
particular, because it provides for the equitable allocation of 
reasonable dues, fees, and other charges among ETP Holders and issuers 
and other persons using any facility or system with the Exchange 
operates or controls and because it is designed to prevent fraudulent 
and manipulative acts and practices, promote just and equitable 
principles of trade, remove impediments to and perfect the mechanism of 
a free and open market and a national market system, and protect 
investors and the public interest.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange further believes that the proposed rule change is 
reasonable because it establishes a manner for the Exchange to treat 
affiliated ETP Holders for purposes of assessing charges or credits 
that are based on volume. The provision is equitable because all ETP 
Holders seeking to aggregate their activity are subject to the same 
parameters, in accordance with a standard that recognizes an 
affiliation as of the month's beginning or close in time to when the 
affiliation occurs, provided the member organization submits a timely 
request. Moreover, the proposed billing aggregation language, which 
would lower the Exchange's administrative burden, is substantially

[[Page 18272]]

similar to aggregation language adopted by other exchanges.\14\
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    \14\ See supra note 4.
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    The Exchange further notes that the proposal would serve to reduce 
disparity of treatment between ETP Holders with regard to the pricing 
of different services and reduce any potential for confusion on how 
activity can be aggregated. The Exchange believes that the proposed 
rule change avoids disparate treatment of ETP Holders that have divided 
their various business activities between separate corporate entities 
as compared to ETP Holders that operate those business activities 
within a single corporate entity. The Exchange further notes that the 
proposed rule change is reasonable and is designed to remove 
impediments to and perfect the mechanism of a free and open market by 
harmonizing the manner by which the Exchanges permits ETP Holders to 
aggregate volume with other exchanges. In particular, the Exchange 
notes that NASDAQ, PHLX and BX all have the same standard that the 
Exchange is proposing to adopt.

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

    In accordance with section 6(b)(8) of the Act,\15\ the Exchange 
does not believe that the proposed rule change will impose any burden 
on intermarket or intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. As stated above, 
the proposed rule change, which applies equally to all ETP Holders, is 
intended to reduce the Exchange's administrative burden in applying 
volume price discounts for firms which have requested aggregation with 
that of an affiliate ETP Holder, and is substantially similar to rules 
adopted by other exchanges. Because the market for order execution and 
routing is extremely competitive, ETP Holders may readily opt to 
disfavor the Exchange if they believe that alternatives offer them 
better value. The Exchange does not believe the proposed changes will 
impair the ability of ETP Holders or competing order execution venues 
to maintain their competitive standing in the financial markets.
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    \15\ 15 U.S.C. 78f(b)(8).
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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 Exchange has filed the proposed rule change pursuant to section 
19(b)(3)(A)(iii) of the Act \16\ and Rule 19b-4(f)(6) thereunder.\17\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\18\
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    \16\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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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 to 
determine whether the proposed rule change should be approved or 
disapproved.

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-2015-20 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-2015-20. 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 will also 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-2015-20 and should 
be submitted on or before April 24, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-07619 Filed 4-2-15; 8:45 am]
 BILLING CODE 8011-01-P