Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Federal Register: April 22, 2010 (Volume 75, Number 77)
Notices
Page 21080-21083
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DOCID:fr22ap10-131
SECURITIES AND EXCHANGE COMMISSION
Release No. 34-61913; File No. SR-NYSE-2010-29
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Implementing an Equity Transaction Fee Schedule for Shares Executed on the NYSE MatchPoint\SM\ System
April 15, 2010.
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 April 12, 2010, New York Stock Exchange LLC (``NYSE'' or the ``Exchange'') 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.
\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 Substance of the Proposed Rule Change
The Exchange proposes an equity transaction fee schedule for shares executed on the NYSE MatchPointSM(``NYSE MatchPoint'' or
``MatchPoint'') system, effective upon filing with the Securities
Exchange Commission (the ``SEC'' or the ``Commission''), which will replace the current transaction fee waiver for all MatchPoint executions.\4\ The proposed transaction fee will include criteria that will permit all users a per share fee reduction for entering specified levels of volume in addition to a scaled fee schedule for shares executed on MatchPoint. The text of the proposed rule change is available at the Exchange, the Commission's Public Reference Room, and http://www.nyse.com.
\4\ Currently, MatchPoint charges no transaction fees for
MatchPoint executions. See Securities Exchange Act Release No. 61350
(January 14, 2010), 75 FR 3767 (January 22, 2010) (SR-NYSE-2010-01); see also Securities Exchange Act Release No. 61520 (February 16, 2010), 75 FR 8163, (February 23, 2010) (SR-NYSE-2010-06).
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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
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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 1. Purpose
The Exchange proposes to amend the NYSE's 2010 Price List by adding an equity transaction fee schedule for shares executed on the NYSE
MatchPoint system, effective upon filing with the Commission, which will replace the current transaction fee waiver for all MatchPoint executions.\5\ The proposed transaction fee will include criteria that will permit all users to obtain a per share fee reduction for
MatchPoint executions by entering specified levels of volume into
MatchPoint in addition to a scaled per share fee for shares executed on
MatchPoint, which is described in more detail below. The proposed fee reduction will only apply when MatchPoint orders are executed.
\5\ Ibid. footnote 1.[sic]
Background: On January 7, 2009, the Exchange filed with the
Securities and Exchange Commission a proposed rule change to adopt a temporary equity transaction fee for shares executed on the NYSE
MatchPoint system that was effective until February 28, 2009.\6\ This temporary equity transaction fee was extended numerous times since the original filing and was scheduled to terminate on January 31, 2010.\7\
Each such filing was effective upon filing pursuant to Section 19(b)(3)(A) \8\ of the Act and subparagraph (f)(2) of Rule 19b-4.\9\
\6\ See Securities Exchange Act Release No. 59229 (January 12, 2009) 74 FR 3119 (January 16, 2009) (SR-NYSE-2009-01).
\7\ See Securities Exchange Act Release No. 59491 (March 3, 2009) 74 FR 10107 (March 9, 2009) (SR-NYSE-2009-20); see Securities
Exchange Act Release No. 59864 (May 5, 2009) 74 FR 22194 (May 12, 2009) (SR-NYSE-2009-44); see Securities Exchange Act Release No. 60278 (July 10, 2009) 74 FR 34615 (July 16, 2009) (SR-NYSE-2009-67); see Securities Exchange Act Release No. 60439 (August 5, 2009) 74 FR 40270 (August 11, 2009) (SR-NYSE-2009-78) and see also Securities
Exchange Act Release No. 60949 (November 6, 2009) 74 FR 58665
(November 13, 2009) (SR-NYSE-2009-110).
\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(2).
The temporary equity transaction fee was a scaled fee for
MatchPoint users based on the average daily volume of shares executed during a calendar month through the MatchPoint system as follows:
Average daily volume of shares executed
Rate
50,000 shares or less................. $.0015 per share.
Over 50,000 to 499,999................ .0010 per share. 500,000 and greater................... .0005 per share.
On January 7, 2010, the Exchange proposed a transaction fee holiday waiving all MatchPoint transaction fees under the temporary equity transaction fee schedule until January 29, 2010.\10\ The temporary waiver of fees was extended until March 31, 2010.\11\ Waiver of
MatchPoint transaction fees is currently in effect and will terminate when this proposed rule filing is filed with the Commission. The
Exchange believed that the temporary waiver of the transaction fee would induce users to enter more single-sided volume \12\ into the
MatchPoint system. The Exchange intends that the proposed transaction fee schedule will be in effect upon filing with the Commission.
\10\ See Securities Exchange Act Release No. 61350 (January 14, 2010), 75 FR 3767 (January 22, 2010) (SR-NYSE-2010-01).
\11\ See Securities Exchange Act release No. 61520 (February 16, 2010), 75 FR 8163, (February 23, 2010) (SR-NYSE-2010-06).
\12\ Executions in the MatchPoint system occur when buy and sell interest in a security is entered on a matched basis (both buy and sell sides submitted together) or when interest submitted in the system by one user matches against contra side interest submitted by another user.
Proposed Transaction Fee Schedule: The Exchange proposes to re- establish the scaled fees that were temporarily effective from January 7, 2009 until January 7, 2010 with an additional criterion: to permit fee reductions for MatchPoint executions when users enter certain volume levels into MatchPoint matching sessions. The Exchange believes that the new fee schedule will continue to reward those who have been using the MatchPoint system for share execution, and will provide an additional incentive for users that can add share volume to MatchPoint as described below.
``Shares Entered'': By this filing, the Exchange proposes to provide an incentive for users to enter share volume into the
MatchPoint system because by adding volume, even if such volume is added only to one side of the market (i.e., buy side or sell side), the likelihood of obtaining executions will increase. The proposed fee schedule rewards those users who obtain executions of their orders and who add volume at the specified share levels into any MatchPoint matching sessions (i.e., intra day and after hours sessions). However, no user can obtain the proposed fee reductions unless their MatchPoint orders execute. To be clear, the Exchange is not charging users to enter volume into MatchPoint. Rather, the proposed fee schedule adds a criterion that will permit a fee reduction for MatchPoint users who enter certain levels of volume when their orders execute on MatchPoint.
As the proposed fee schedule provides, a user can have a minimum amount of executions that do not reach the ``shares executed'' threshold on
MatchPoint and still obtain a fee reduction if the user ``enters'' the specified share levels into the MatchPoint system.
The Exchange will calculate the proposed transaction fees based on whichever criterion (shares ``executed'' or ``entered'') achieves the lowest rate on a monthly basis. The date of effectiveness for the proposed fee schedule will be the date of filing. Therefore, the
Exchange will calculate a user's transaction fees for April 2010 based on the threshold criteria during the trading days remaining from the date of effectiveness to April 30, 2010. Thereafter, the Exchange will calculate the transaction fees on a monthly basis.
To be eligible for the proposed ``shares entered'' fee reduction schedule, shares entered into the MatchPoint system must participate in a matching session (i.e., intra day sessions or after hours session) and execute. Shares entered into MatchPoint and cancelled by the user before a matching session commences will not be eligible for the proposed fee reduction. Shares entered into MatchPoint and cancelled due to a system malfunction, or some other Exchange-driven event, will still be eligible for the proposed ``entered share'' fee reduction.
As the chart below demonstrates, the proposed fee schedule will provide the following rates based on the average daily volume of shares executed and ``entered'' into the MatchPoint system:
(1) 50,000 shares or less executed or 499,999 shares or less entered into MatchPoint that participate in a matching session will be charged $.0015 per share; and
(2) Over 50,000 to 499,999 shares executed or 500,000 up to and including 4,999,999 shares entered into MatchPoint that participate in a matching session will be charged $.0010 per share; and
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(3) 500,000 shares and greater executed or over 5,000,000 shares entered into MatchPoint that participate in a matching session will be charged $.0005 per share.
Threshold Criteria
Average daily volume of shares executed/ entered per month
Rate per share executed
50,000 shares or less executed or 499,999
$.0015 per share. shares or less entered.
Over 50,000 to 499,999 shares executed or
$.0010 per share. 500,000 to 4,999,999 shares entered. 500,000 and greater shares executed or over $.0005 per share. 5,000,000 shares entered.
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Statutory Basis
The basis under the Securities Exchange Act of 1934 (the ``Act'')
\13\ for the proposed rule change is the requirement under Section 6(b)(4) that an exchange have rules that provide for the equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. The Exchange believes the proposed fee schedule is reasonable in that it carries forward a reduction in fees that was established in the former temporary scaled fee (effective January 7, 2009 until January 7, 2010) and adds another criterion; ``entered shares,'' which also provides a per share reduction in fees when orders are executed in the MatchPoint. In this way, a MatchPoint user will be able to obtain a reduction in transaction fees if the user reaches the scaled thresholds for executions or the scaled thresholds for shares entered. The proposed fee schedule is designed to make the system more competitive through the entering of specified share levels into the MatchPoint system. The proposed fee schedule, which will be effective upon filing, rewards all
MatchPoint users who not only obtain executions but who enter certain levels of volume. Finally, the fees are equitable in that they are available to all members who access the MatchPoint system.
\13\ 15 U.S.C. 78a.
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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.
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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) \14\ of the Act and subparagraph (f)(2) of Rule 19b-4 \15\ thereunder, because it establishes or changes a due, fee, or other charge imposed on its members by the NYSE.
\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(2).
At any time within 60 days of the filing of such 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.
The Exchange believes the proposed fee schedule is reasonable and provides incentives to users to reduce their MatchPoint transaction fees. In addition, the proposed transaction fee schedule is designed to make the system more competitive through the entering of specified share levels into the MatchPoint system. As such, the proposed transaction fee schedule rewards those MatchPoint users who not only obtain executions, but who enter certain levels of volume. Finally, the fees are equitable in that they are available to all members who access the MatchPoint system.
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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 e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSE-2010-29 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2010-29. 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 the 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-NYSE-2010-29 and should be submitted on or before May 13, 2010.
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For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\16\
\16\ 17 CFR 200.30-3(a)(12).
Florence E. Harmon,
Deputy Secretary.
FR Doc. 2010-9273 Filed 4-21-10; 8:45 am
BILLING CODE 8011-01-P
