
[Federal Register Volume 77, Number 229 (Wednesday, November 28, 2012)]
[Notices]
[Pages 71026-71028]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-28799]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68283; File No. SR-NYSE-2012-45]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Its Price List To Specify Pricing That Is Currently Applicable 
to Certain Executions on the Exchange, but That Is Not Currently 
Included in the Price List

November 21, 2012.
    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 November 9, 2012, New York Stock Exchange LLC (the 
``Exchange'' or ``NYSE'') 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 
Exchange. 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\ 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 to specify pricing 
that is currently applicable to certain executions on the Exchange, but 
that is not currently included in the Price List. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to amend its Price List to specify 
pricing that is currently applicable to certain executions on the 
Exchange, but that is not currently included in the Price List. The 
Exchange proposes to make the changes immediately effective and 
operative.
    Specifically, the Exchange proposes to include the following 
changes to the Price List to reflect pricing that is currently being 
assessed for the following intraday transactions: (1) A $0.0005 fee for 
a Floor broker discretionary e-Quote (``d-Quote'') that takes liquidity 
in a security priced $1 or above; (2) no charge (i.e., free) for a non-
electronic agency transaction of a Floor broker that executes against 
the Book, both in a security priced $1 or above and in a security 
priced below $1; (3) no charge for a non-electronic agency transaction 
between Floor brokers in the crowd in a security priced below $1; and 
(4) no charge for an agency cross trade (i.e., a trade where a member 
organization has customer orders to buy and sell an equivalent amount 
of the same security) in a security priced below $1.
d-Quotes
    The Exchange proposes to specify in the Price List that a d-Quote 
that removes liquidity from the Book is charged $0.0005 per share if 
the security is priced $1 or above.\3\ A d-Quote that adds liquidity to 
the Book in a security priced $1 or above will continue to receive a 
credit of $0.0019 per share.\4\ Similarly, a d-Quote that adds 
liquidity to the Book in a security priced below $1 will continue to 
receive a credit of $0.0004 per share.\5\ Also, a d-Quote that removes 
liquidity from the Book in a security priced below $1 will continue to 
be charged a fee equal to 0.3% of the total dollar volume of the 
transaction.\6\
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    \3\ The Exchange has charged for d-Quotes that removed liquidity 
since October 2007.
    \4\ This is in accordance with the current Price List and 
therefore the Exchange is not proposing a new or separate line item 
therein for this type of transaction.
    \5\ Id.
    \6\ Id.
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Non-Electronic Agency Transactions
    The Exchange proposes to specify in the Price List that a non-
electronic agency transaction of a Floor broker that executes against 
the Book is not charged (i.e., it is free),\7\ both for a security 
priced $1 or above and for a security priced below $1.\8\ This is the 
same rate (i.e., free) that is currently specified in the Price List 
for non-electronic agency transactions between Floor brokers in the 
crowd in securities priced $1 or above. In this regard, the Exchange 
also proposes to specify in the Price List that there is no charge for 
a non-electronic agency transaction between Floor brokers in the crowd 
in a security priced below $1.\9\
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    \7\ Because of the nature of non-electronic trading interest 
(i.e., verbal/manual interest), the concept of adding and removing 
liquidity is not applicable.
    \8\ The Exchange began charging for a non-electronic agency 
transaction of a Floor broker that executed against the Book in 
October 2007. Beginning in March 2009, the Exchange no longer 
charged for this type of transaction.
    \9\ The Exchange has not charged for a non-electronic agency 
transaction between Floor brokers in the crowd in a security priced 
below $1 since October 2007, if the transaction was for 10,000 
shares or more, and since March 2009, if the transaction was for 
fewer than 10,000 shares.
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Agency Cross Trades
    The Price List currently specifies that an agency cross trade is 
not charged for a security priced $1 or above.\10\ Similarly, the 
Exchange proposes to specify in the Price List that there is no charge 
for an agency cross trade in a security priced below $1.\11\
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    \10\ Because of the nature of an agency cross trade (i.e., the 
member organization already has customer orders to buy and sell an 
equivalent amount of the same security), the concept of adding and 
removing liquidity is not applicable.
    \11\ The Exchange has not charged for an agency cross trade in a 
security priced below $1 since October 2007, if the transaction was 
for 10,000 shares or more, and since March 2009, if the transaction 
was for fewer than 10,000 shares.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Securities Exchange Act of 1934 (the 
``Act''),\12\ in general, and furthers the objectives of Section 
6(b)(4) of the Act,\13\ 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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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed d-Quote rate of $0.0005 per 
share for securities priced $1 or above is reasonable because, when 
compared to the rate that would otherwise apply (i.e., $0.0024 per 
share for all other Floor broker transactions that take liquidity from 
the Exchange) it may encourage additional liquidity during

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the trading day and may incentivize Floor brokers to provide additional 
intra-quote price improved trading, which would contribute to the 
quality of the Exchange's market. The Exchange also believes that the 
proposed rate of $0.0005 per share is equitable and not unfairly 
discriminatory because it may provide opportunities for Floor brokers 
to attract additional liquidity to the Floor and thereby increase the 
quality of order execution on the Exchange's market, which benefits all 
market participants.
    Additionally, the Exchange believes that not charging for a non-
electronic agency transaction of a Floor Broker that executes against 
the Book, in both securities priced $1 or above as well as securities 
priced below $1, is reasonable because it would be set at a level that 
would align the rate with certain other non-electronic agency Floor 
broker interest that is similarly not charged. In this regard, and as 
noted above, the Exchange does not charge for executions of non-
electronic agency transactions between Floor brokers in the crowd.\14\ 
Additionally, the Exchange believes that this is equitable and not 
unfairly discriminatory because a non-electronic agency transaction of 
a Floor broker would be used, for example, at a time of the trading day 
when a Floor broker is physically present at the point of sale and 
requires flexibility to represent customer interest, which is unique to 
a Floor broker, but which may also result in added opportunity cost and 
uncertainty for the Floor broker when compared to an electronic 
execution.
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    \14\ The Commission notes that the Exchange does not charge for 
executions of non-electronic agency transactions between Floor 
brokers in the crowd for transactions in stocks with a per share 
stock price of $1.00 or more.
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    The Exchange also believes that it is reasonable to specify that a 
non-electronic agency transaction between Floor brokers in the crowd is 
not charged for securities priced below $1 because doing so will add 
greater specificity to the Price List by reflecting that it is the same 
as the rate charged for such transactions in securities priced $1 or 
above. This is also equitable and not unfairly discriminatory because 
it would provide greater certainty regarding the applicable rates for 
transactions in securities priced below $1. The Exchange believes that 
not charging for these transactions is further reasonable because it 
may incentivize additional liquidity in these low-priced securities, 
which typically are more thinly-traded and less liquid than securities 
priced $1 or above. Accordingly, it is also equitable and not unfairly 
discriminatory to not charge for these transactions because the 
increased liquidity that may result in these securities would increase 
the quality of order execution on the Exchange's market, which benefits 
all market participants. Finally, and as described above for a non-
electronic agency transaction of a Floor broker that executes against 
the Book, the Exchange believes that this is equitable and not unfairly 
discriminatory because non-electronic agency transactions between Floor 
brokers in the crowd occur, for example, at a time of the trading day 
when a Floor broker is physically present at the point of sale and 
requires flexibility to represent customer interest, which is unique to 
a Floor broker, but which may also result in added opportunity cost and 
uncertainty for the Floor broker when compared to an electronic 
execution.
    The Exchange also believes that it is reasonable to specify that an 
agency cross trade is not charged for securities priced below $1 
because doing so will add greater specificity to the Price List by 
reflecting that it is the same as the rate charged for such 
transactions in securities priced $1 or above. This is also equitable 
and not unfairly discriminatory because it would provide greater 
certainty regarding the applicable rates for transactions in securities 
priced below $1. The Exchange believes that not charging for these 
transactions is further reasonable because of the nature of an agency 
cross trade, in that it is a trade where a member organization has 
customer orders to buy and sell an equivalent amount of the same 
security.\15\
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    \15\ See supra note 10.
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B. 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.

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) \16\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \17\ thereunder, because it establishes a due, fee, or other 
charge imposed by the NYSE.
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 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.

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-NYSE-2012-45 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-2012-45. 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 the filing also will be available 
for inspection and copying at the principal

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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-2012-45 and should be submitted on or before December 19, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-28799 Filed 11-27-12; 8:45 am]
BILLING CODE 8011-01-P


