Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services To Raise the Fee and Fee Cap for Market and Auction-Only Orders Executed in an Opening, Market Order or Trading Halt Auction; Modify the Fees Charges for Routing Orders To The New York Stock Exchange LLC; and Modify Certain Credits in the Basic Rate Pricing
Federal Register, Volume 79 Issue 72 (Tuesday, April 15, 2014)
Federal Register Volume 79, Number 72 (Tuesday, April 15, 2014)
Notices
Pages 21308-21310
From the Federal Register Online via the Government Printing Office www.gpo.gov
FR Doc No: 2014-08415
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SECURITIES AND EXCHANGE COMMISSION
Release No. 34-71912; File No. SR-NYSEArca-2014-33
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services To Raise the Fee and Fee Cap for Market and Auction-Only Orders Executed in an Opening, Market Order or Trading Halt Auction; Modify the Fees Charges for Routing Orders To The New York Stock Exchange LLC; and Modify Certain Credits in the Basic Rate Pricing
April 9, 2014.
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 March 26, 2014, 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, 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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Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services (``Fee Schedule'') to (i) raise the fee and fee cap for Market and Auction-Only Orders executed in an Opening, Market Order or Trading Halt Auction; (ii) modify the fees that it charges for routing orders to the New York Stock Exchange LLC (``NYSE''); and (iii) modify certain credits in the Basic Rate pricing. The Exchange proposes to implement the changes on 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.
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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.
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Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
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Purpose
The Exchange proposes to amend the Fee Schedule to (i) raise the fee and fee cap for Market and Auction-Only Orders executed in an Opening, Market Order or Trading Halt Auction; (ii) modify the fees that it charges for routing orders to the NYSE; and (iii) modify certain credits in the Basic Rate pricing. The Exchange proposes to implement the changes on April 1, 2014.
The Exchange currently charges $0.0005 per share for Market and Auction-Only Orders executed in an Opening, Market Order or Trading Halt Auction. The Exchange proposes to raise this fee from $0.0005 to $0.0010 per share. The Exchange also proposes to raise the monthly fee cap for Market and Auction-Only Orders executed in an Opening, Market Order or Trading Halt Auction. Currently, the fees are capped at $15,000. The Exchange proposes to raise the fee cap to $20,000. These changes are consistent with changes proposed by the NYSE to become effective on April 1, 2014.\4\
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\4\ See SR-NYSE-2014-18.
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The NYSE introduced modifications to its transaction fee structures, including changes to the rates for taking liquidity, which became effective on March 1, 2014.\5\ In addition, the NYSE is proposing modifications to its at the opening or at the opening only orders to become effective on April 1, 2014.\6\ The Exchange's current fees for routing orders in securities with a per share price of $1.00 or more to the NYSE are closely related to the NYSE's fees for taking liquidity in such securities, and the Exchange is proposing an adjustment to its routing fees to maintain the existing relationship to the new fees in place at the NYSE.
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\5\ See Securities Exchange Act Release No. 71684 (March 11, 2014), 78 FR 14758 (March 17, 2014) (SR-NYSE-2014-09) (the ``NYSE Fee Filing'').
\6\ See supra note 4.
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Currently, the NYSE charges a transaction fee for certain transactions in securities with a per share price of $1.00 or more based on the characteristics of the transaction. Among other changes, the NYSE Fee Filing proposed to increase the charge for transactions that do not have a specified per share charge based on their characteristics (``all other'' transactions). The NYSE Fee Filing increased the per share charge for all other non-floor broker transactions (i.e., when taking liquidity from the Exchange) from $0.0025 to $0.0026 per transaction.
Currently, for the Exchange's Tier 1, Tier 2, Tier 3, Step Up Tier 1, and Step Up Tier 2 customers, the fee for routing orders in Tape A securities to the NYSE outside the book is equal to the previous NYSE fee of $0.0025 per share for all other non-floor broker transactions in securities with a per share price of $1.00 or more, and the fee for routing such orders to the NYSE for non-tier (i.e., Basic Rate) customers is $0.0027 per share.\7\ Consequently, the Exchange is proposing to increase each of those fees by $0.0001 to $0.0026 per share and $0.0028 per share, respectively, consistent with the $0.0001 increase in the NYSE fee for all other non-floor broker transactions.
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\7\ The other tiers in the Fee Schedule do not specify a fee for routing orders in Tape A securities to the NYSE outside the book. However, such tiers provide that if a fee (or credit) is not included in the tier, the relevant tiered or Basic Rate applies based on a firm's qualifying levels. Accordingly, for orders in Tape A securities routed to the NYSE outside the book, ETP Holders and Market Makers that qualify for another tier would default to the Tier 1, Tier 2, Tier 3, Step Up Tier 1, Step Up Tier 2 or Basic Rate that applied to them based on their qualifying levels.
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In addition, the Exchange currently charges $0.0023 per share for Primary Sweep Orders \8\ in Tape A securities that
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are routed outside the book to the NYSE that remove liquidity from the NYSE.\9\ In order to maintain the existing relationship to the other Exchange routing fees that are being adjusted upward, the Exchange is also proposing to increase this fee by $0.0001, to $0.0024 per share.
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\8\ A Primary Sweep Order is a Primary Only (``PO'') Order (i.e., a market or limit order that is to be routed to the primary market) that first sweeps the NYSE Arca book. See NYSE Arca Equities Rules 7.31(x) and (kk).
\9\ This charge is included in the provisions for Tier 1, Tier 2, and the Basic Rate. The other tiers in the Fee Schedule do not specify a fee for Primary Sweep Orders in Tape A securities that are routed outside the book to the NYSE that remove liquidity from the NYSE. Accordingly, for such orders ETP Holders and Market Makers that qualify for another tier would default to the Tier 1, Tier 2 or Basic Rate that applied to them based on their qualifying levels. See supra note 7.
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For Primary Only Plus (``PO+'') orders,\10\ the current Exchange fee for orders routed to the NYSE that remove liquidity from the NYSE is $0.0025 per share, which is equal to the current NYSE fee for all other non-floor broker transactions in securities with a per share price of $1.00 or more.\11\ Consequently, the Exchange is proposing to increase its fees for routing PO+ orders to the NYSE that remove liquidity by the same amount ($0.0001) as the increase in the corresponding NYSE fees. The proposed new fee for PO+ orders routed to the NYSE that remove liquidity is $0.0026 per share. This change would maintain the current relationship with the NYSE rates.
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\10\ A PO+ Order is a PO Order that is entered for participation in the primary market, other than for participation in the primary market opening or primary market re-opening. See NYSE Arca Equities Rule 7.31(x)(3).
\11\ This charge is included in the provisions for Tier 1, Tier 2, and the Basic Rate. The other tiers in the Fee Schedule do not specify a fee for PO+ orders routed outside the book to the NYSE that remove liquidity. Accordingly, for such orders ETP Holders and Market Makers that qualify for another tier would default to the Tier 1, Tier 2 or Basic Rate that applied to them based on their qualifying levels. See supra note 7.
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Consistent with the fee change proposed by the NYSE,\12\ the Exchange proposes to amend the Fee Schedule to increase the Tier 1, Tier 2, Tier 3, and Basic Rate fee for PO and PO+ Orders in Tape A securities that are routed to the NYSE that execute in the opening or closing auction, from $0.00095 to $0.0010 per share.
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\12\ See supra note 4.
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Under the current Basic Rate pricing, the credit for adding liquidity in Tape A and Tape C securities is set at $0.0021 per share, and the credit for adding liquidity in Tape B securities is set at $0.0022 per share. The Exchange proposes to lower the credit for adding liquidity in Tape A, Tape B, and Tape C securities to $0.0020 per share.
The proposed changes are not otherwise intended to address any other issues, and the Exchange is not aware of any problems that ETP Holders would have in complying with the proposed changes.
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Statutory Basis
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,\13\ in general, and furthers the objectives of Sections 6(b)(4) and (5) of the Act,\14\ 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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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the proposed fee and fee cap increases for Market and Auction-Only Orders executed in an Opening, Market Order or Trading Halt Auction are reasonable because they are the same as the fees and fee caps imposed by at least one other exchange and proposed by the Exchange's affiliate, the NYSE.\15\ In addition, the proposed fee changes are equitable and not unfairly discriminatory because they apply uniformly to all similarly situated ETP Holders.
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\15\ See NASDAQ Rule 7018 and supra note 4.
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The Exchange believes that the proposed changes to routing fees are reasonable because the Exchange's fees for routing orders to the NYSE are closely related to the NYSE's fees for its members for taking liquidity, and the fee increases are consistent with the changes in effect and proposed by the NYSE to increase its fees for taking liquidity. The proposed changes will result in maintaining the existing relationship between the two sets of fees. In addition, the Exchange believes that the proposed rule change is reasonable, equitable, and not unfairly discriminatory because it would result in an increase in the per share fee for orders, Primary Sweep Orders, and PO+ Orders routed to the NYSE, thereby aligning the rate that the Exchange charges to ETP Holders with the rate that the Exchange is charged by the NYSE. Accordingly, the Exchange is proposing this increase so that the rate it charges to ETP Holders reflects the rate that the Exchange is charged by the NYSE. In addition, the proposed changes are equitable and not unfairly discriminatory because the fee increases apply uniformly across pricing tiers and all similarly situated ETP Holders would be subject to the same fee structure.
The Exchange believes that the proposed changes to the Basic Rate pricing credits for providing liquidity in Tape A, Tape B, and Tape C securities are reasonable because the credits are consistent with the credits offered by at least two other exchanges.\16\ In addition, the proposed credits are equitable and not unfairly discriminatory because they apply uniformly to all similarly situated ETP Holders.
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\16\ See NASDAQ Rule 7018 and EDGX Exchange, Inc. Fee Schedule available at www.directedge.com/Portals/0/01Trading/EDGX%20Fee%20Schedule/2014/EDGX%20Fee%20Schedule%20-%2003.05.14.pdf.
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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.
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Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\17\ 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. In particular, the proposed routing fee changes would not place a burden on competition because the Exchange is seeking to align its fees with the fees charged by the NYSE.\18\ In addition, the proposed changes to the Exchange's fee and fee cap for Market and Auction-Only Orders executed in an Opening, Market Order or Trading Halt Auction and Basic Rate pricing credits are consistent with the fees and credits imposed by other exchanges.\19\
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\17\ 15 U.S.C. 78f(b)(8).
\18\ See supra notes 4-5.
\19\ See supra notes 15-16.
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The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change promotes a competitive environment.
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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.
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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) \20\ of the Act and subparagraph (f)(2) of Rule 19b-4 \21\ thereunder, because it establishes a due, fee, or other charge imposed by the Exchange.
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\20\ 15 U.S.C. 78s(b)(3)(A).
\21\ 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) \22\ of the Act to determine whether the proposed rule change should be approved or disapproved.
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\22\ 15 U.S.C. 78s(b)(2)(B).
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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-2014-33 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-2014-33. 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 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 offices of NYSE. 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-2014-33, and should be submitted on or before May 6, 2014.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Secretary.
FR Doc. 2014-08415 Filed 4-14-14; 8:45 am
BILLING CODE 8011-01-P
