Document ID: SEC-2014-0615-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2014-04-11T04:00Z

[Federal Register Volume 79, Number 70 (Friday, April 11, 2014)]
[Notices]
[Pages 20281-20283]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-08124]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71889; File No. SR-NYSEMKT-2014-29]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Its Price List 
for Certain Executions at the Opening

April 7, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on March 26, 2014, NYSE MKT LLC (``Exchange'' or ``NYSE MKT'') 
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 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 Price List for certain 
executions at the opening. The Exchange proposes to implement the fee 
change effective April 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

[[Page 20282]]

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 Price List for certain 
executions at the opening.\4\ The Exchange proposes to implement the 
fee change effective April 1, 2014.
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    \4\ The proposed pricing would only apply to securities priced 
$1.00 or greater. The existing pricing for executions at the opening 
in securities priced below $1.00 would remain unchanged (i.e., 0.3% 
of the total dollar value of the transaction). Designated Market 
Maker (``DMM'') executions at the opening would continue to not be 
charged.
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    The Exchange currently charges a fee of $0.0005 per share for 
executions of at the opening or at the opening only orders, subject to 
a monthly fee cap of $15,000 per member organization for such 
executions. The Exchange proposes to raise the fee to $0.0010 per share 
and decrease the monthly fee cap to $10,000 per member organization.
    The proposed change is not otherwise intended to address any other 
issues, and the Exchange is not aware of any problems that members and 
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.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that it is reasonable to increase the fee for 
executions at the opening because members and member organizations 
benefit from the substantial amounts of liquidity that are present on 
the Exchange during such time. The proposed new rate of $0.0010 for the 
fee is reasonable because it will strike a more appropriate balance 
between encouraging liquidity at the opening and generating adequate 
revenues for the Exchange. The Exchange notes that it has not increased 
the fee in nearly two years.\7\ The proposed new rate for the fee is 
also reasonable because it is comparable to the rate for executions at 
the opening on other markets.\8\
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    \7\ See Securities Exchange Act Release No. 66959 (May 10, 
2012), 77 FR 28912 (May 16, 2012) (SR-NYSEAmex-2012-28).
    \8\ For example, the Nasdaq Stock Market, LLC (``NASDAQ'') 
similarly charges $0.0010 per share for certain orders executed in 
the NASDAQ Opening Cross. See NASDAQ Rule 7018(e). The Exchange's 
affiliate, New York Stock Exchange LLC (``NYSE'') has also proposed 
an increase for its fee at the opening from $0.0005 to $0.0010 per 
share. See SR-NYSE-2014-18.
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    The pricing at the opening is only applicable to NYSE MKT-listed 
securities, and the fee cap was implemented on the Exchange nearly two 
years ago.\9\ Based on a review of such time period the Exchange has 
determined that the current fee cap level of $15,000 may be too high 
for certain member organizations to reach. A decreased fee cap is 
therefore reasonable because it would be set at a level that is more 
representative of the volume during the opening on the Exchange, which 
is significantly lower than, for example, the opening on the Exchange's 
affiliate NYSE.\10\ The decrease to the fee cap is also reasonable 
because it would incentivize member organizations to submit additional 
liquidity at the open so that they may reach the fee cap as quickly as 
possible. In this regard, a member organization that reaches the fee 
cap would continue to be charged a marginal [sic] rate for its 
transactions at the opening that is lower than the $0.0010 rate that 
would be applicable without the cap (i.e., once a member organization 
reaches the cap, its per-transaction rate thereafter will be zero and 
its marginal [sic] rate will decrease for each additional transaction 
at the open thereafter). It is also reasonable to increase the fee and 
decrease the fee cap because member organizations would pay a higher 
per-transaction fee for opening executions than they currently do, but 
could benefit over the course of the month by potentially reaching the 
lower fee cap quicker.
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    \9\ See supra note 7.
    \10\ The Exchange notes that, while NYSE has similarly proposed 
to increase its fee for executions at the opening from $0.0005 to 
$0.0010 per share, NYSE has proposed to increase the corresponding 
fee cap from $15,000 to $20,000 rather than the decrease that is 
proposed herein. See SR-NYSE-2014-18, supra note 8.
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    The proposed new rate of $0.0010 for the fee and the decreased fee 
cap of $10,000 are equitable and not unfairly discriminatory because 
this pricing would continue to encourage robust levels of liquidity at 
the opening, which benefits all market participants. This pricing is 
also equitable and not unfairly discriminatory because it would apply 
equally to all similarly situated member organizations.\11\
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    \11\ As noted in note 4 above, DMM executions at the opening 
would continue to not be charged. The Exchange believes that this is 
reasonable because of the liquidity-providing function that DMMs 
serve. This is also equitable and not unfairly discriminatory 
because DMMs are subject to certain obligations to which other 
members and member organizations are not.
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    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,\12\ 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 
change would contribute to the Exchange's market quality and ultimately 
competition. The proposed change would also lead to increased 
competition among execution venues, including by permitting the 
Exchange to compete with other markets that apply comparable pricing 
for executions at the opening.\13\ The proposed change also would not 
impose any burden on competition among market participants. Instead, 
the pricing for executions at the opening 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. The decreased fee cap would also 
be set at a level that would make it easier to reach for all member 
organizations and could therefore contribute to competition between 
member organizations with varying levels of liquidity and executions at 
the opening.
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    \12\ 15 U.S.C. 78f(b)(8).
    \13\ See supra note 8.
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    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

[[Page 20283]]

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) \14\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \15\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 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-NYSEMKT-2014-29 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-NYSEMKT-2014-29. 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 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-NYSEMKT-2014-29 and should 
be submitted on or before May 2, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-08124 Filed 4-10-14; 8:45 am]
BILLING CODE 8011-01-P