Document ID: SEC-2006-1212-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca, Inc.
Posted Date: 2006-09-20T04:00Z

[Federal Register: September 20, 2006 (Volume 71, Number 182)]
[Notices]               
[Page 55044-55046]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20se06-94]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54438; File No. SR-NYSEArca-2006-43]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change and Amendment Nos. 
1 and 2 Thereto Relating to Fees for Tracking Orders Submitted and 
Executed on NYSE Arca, Inc., Regulatory Filing and Registration Fees 
for Equity Trading Permit Holders, and Drop Copy Processing Fees for 
Certain Trades in Listed and Nasdaq Securities

September 13, 2006.
    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 June 30, 2006, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange''), 
through its wholly owned subsidiary NYSE Arca Equities, Inc. (``NYSE 
Arca Equities''), filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by NYSE Arca 
Equities. On August 16, 2006, the Exchange amended the proposed rule 
change.\3\ On September 8, 2006, the Exchange again amended the 
proposed rule change.\4\ The Commission is publishing this notice to 
solicit comments on the proposed rule change, as amended, from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Amendment No. 1.
    \4\ See Amendment No. 2.

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[[Page 55045]]

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

    The Exchange proposes to amend NYSE Arca Equities Schedule of Fees 
and Charges (``Equities Schedule'') to (i) clarify the description of 
the Equity Trading Permit (``ETP'') Holder transaction credit 
applicable to round lots in Nasdaq securities; (ii) remove rebates 
applicable to Tracking Orders; (iii) move regulatory fees from NYSE 
Arca's Schedule of Fees and Charges to the Equities Schedule; and (iv) 
remove drop copy processing fees. The text of the proposed rule change 
is available at the Commission's Public Reference Room, at the 
Exchange, and on the Exchange's Web site at http://www.nysearca.com.

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 Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change, as 
amended. The text of these 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 aspects 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 proposes to amend the Schedule, effective July 1, 
2006, to reflect (i) clarification of the description of the ETP Holder 
transaction credit applicable to round lots in Nasdaq securities; (ii) 
removal of the current eligible rebates for Tracking Orders; (iii) 
addition of the regulatory fees applicable to Equity Trading Permit 
(``ETP'') Holders and their registered representatives currently only 
listed within NYSE Arca's Schedule of Fees and Charges; and (iv) 
removal of the processing fee listed for drop copies for transactions 
of off-board trades in listed and Nasdaq securities.

ETP Holder Transaction Credits and Tracking Order Rebates

    The Exchange proposes to amend the description of the ETP Holder 
transaction credit applicable to round lots in Nasdaq securities so 
that the description is consistent with the description of the credit 
applicable to round lots in listed securities (except NYSE non-ETF 
listed securities). Specifically, the Exchange wishes to amend the 
Schedule to clarify that the credit for round lots in Nasdaq securities 
applies to limit orders residing in the Book that execute against 
inbound marketable orders. Such language was inadvertently omitted from 
the Schedule.\5\
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    \5\ This is the only change made to the Schedule in Amendment 
No. 1 as compared to the Exchange's original proposed rule change.
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    Currently, Tracking Orders (in addition to all limit orders that 
provide liquidity for the NYSE Arca Equities Book as noted above), are 
eligible for this ETP Holder transaction credit applicable to round 
lots. Because the Exchange no longer wishes to provide an incentive to 
attract Tracking Orders to the Exchange, the Exchange has amended the 
Schedule so that the Exchange no longer provides this ETP Holder 
transaction credit to Tracking Orders.
    In addition, the Exchange has amended the Schedule to state that 
Tracking Orders will no longer be eligible for a type of market data 
revenue sharing credit referred to as the liquidity provider credit. 
Specifically, the Exchange has amended the Schedule to eliminate the 
liquidity provider credit for Tracking Orders in over-the-counter 
securities on Tape B (previously only exchange-listed securities were 
ineligible to receive the liquidity provider credit).

Regulatory Fees for ETP Holders

    Regulatory fees that are applicable to both Options and Equity 
Permit holders have been listed on NYSE Arca's Schedule of Fees and 
Charges. To more clearly identify all regulatory fees that are assessed 
to ETP Firms in one place, the Exchange is adding the list of 
regulatory fees applicable to ETPs that was formerly listed in the NYSE 
Arca Schedule of Fees and Charges to the NYSE Arca Equities' Schedule.
    In so doing, the Exchange changed the term ``Registered Options 
Principal'' to ``Registered Principal'' to make clear that all 
Registered Principals, not just Registered Options Principals, are 
subject to the registration fees listed on the Schedule. Such change is 
proposed in order to make the Schedule consistent with the general 
registration requirements of NYSE Arca Equities Rules.

Drop Copy Processing Fee

    Currently, the Schedule identifies a ``Drop Copy Processing Fee'' 
of $0.001 per share, applicable to off-board trades in listed and 
Nasdaq securities. The Exchange believes that such fees were introduced 
years ago as a means to cover any additional costs associated in 
providing drop copies. The Exchange's practice over the years, however, 
has been to supply drop copies to those ETP Holders that request them 
without assessing any fees. Therefore, in order to make the Schedule 
consistent with Exchange practice, the Exchange is amending the 
Schedule to eliminate this fee.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and Section 6(b)(4) of the 
Act,\7\ in particular, in that it provides for the equitable allocation 
of reasonable dues, fees and other charges among its ETP Holders, 
issuers, and other persons using its facilities.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq 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

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing proposed rule change, as amended, has become 
effective pursuant to Section 19(b)(3)(A)(ii) of the Act \8\ and 
subparagraph (f)(2) of Rule 19b-4 thereunder \9\ because it establishes 
or changes a due, fee, or other charge applicable only to a member 
imposed by the self-regulatory organization. Accordingly, the proposal 
is effective upon receipt of the filing by the Commission. At any time 
within 60 days of the filing of the proposed rule change, the 
Commission may summarily abrogate the rule change if it appears to the 
Commission that such action is necessary or appropriate in the public 
interest, for the protection of investors,

[[Page 55046]]

or otherwise in furtherance of the purposes of the Act.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
    \10\ 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-
day period within which the Commission may summarily abrogate the 
proposal, the Commission considers the period to commence on 
September 8, 2006, the date on which the Exchange filed Amendment 
No. 2.
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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, as amended, 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 No. SR-NYSEArca-2006-43 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-NYSEArca-2006-43. 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 inspection and 
copying in the Commission's Public Reference Room. 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 No. SR-NYSEArca-2006-43 and should be submitted on or before 
October 11, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-15587 Filed 9-19-06; 8:45 am]

BILLING CODE 8010-01-P