
[Federal Register Volume 78, Number 191 (Wednesday, October 2, 2013)]
[Notices]
[Pages 60939-60941]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-24011]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70520; File No. SR-NYSEARCA-2013-94]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Arca Equities Schedule of Fees and Charges for Exchange Services 
Regarding Calculation of the Mid-Point Passive Liquidity Order Tier

September 26, 2013.
    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 September 17, 2013, 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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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to proposes to amend the NYSE Arca Equities 
Schedule of Fees and Charges for Exchange Services (the ``Fee 
Schedule'') regarding calculation of the Mid-Point Passive Liquidity 
(``MPL'') Order Tier. The Exchange proposes to implement the fee change 
on October 1, 2013. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule regarding 
calculation of the MPL Order Tier.\4\ The Exchange proposes to 
implement the fee change on October 1, 2013.
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    \4\ See Securities Exchange Act Release No. 69926 (July 3, 
2013), 78 FR 41154 (July 9, 2013) (SR-NYSEArca-2013-67). A Passive 
Liquidity (``PL'') Order is an order to buy or sell a stated amount 
of a security at a specified, undisplayed price. See Rule 
7.31(h)(4). An MPL Order is a PL Order executable only at the 
midpoint of the Protected Best Bid and Offer. See Rule 7.31(h)(5).
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    Under the MPL Order Tier, MPL Orders that provide liquidity to the 
Exchange receive a credit of $0.0020 per share for Tape A, B and C 
Securities. As specified in the Fee Schedule, the MPL

[[Page 60940]]

Order Tier currently applies to ETP Holders, including Market Makers, 
that execute an average daily volume (``ADV'') of MPL Orders during the 
month that is 0.0775% or more of U.S. consolidated ADV (``CADV'').\5\ 
For all other fees and credits, Tiered or Basic Rates apply based on a 
firm's qualifying levels.\6\
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    \5\ U.S. CADV means United States Consolidated Average Daily 
Volume for transactions reported to the Consolidated Tape and 
excludes volume on days when the market closes early.
    \6\ For ETP Holders that do not satisfy the MPL Order Tier 
threshold, an MPL Order that provides liquidity receives a credit of 
$0.0015 per share for Tape A, B and C Securities. A $0.0030 fee 
applies to MPL Orders in Tape A, B and C Securities that remove 
liquidity.
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    The Exchange proposes to specify that the 0.0775% threshold 
includes only MPL Orders that provide liquidity, whereas the Fee 
Schedule currently specifies that it includes executed MPL Orders, 
which could also include MPL Orders that remove liquidity. For example, 
if U.S. CADV during a month is 6.5 billion shares across Tapes A, B and 
C, an ETP Holder would need to execute an ADV of at least 5,037,500 
shares of providing MPL Orders during the month in order to qualify for 
the applicable MPL Order Tier credit of $0.0020 per share, in which 
case the ETP Holder's executions of MPL Orders that provided liquidity 
would receive a credit of $0.0020 per share for Tape A, B and C 
Securities. Under this example, an ETP Holder that executed an ADV of 
less than 5,037,500 shares of providing MPL Orders during the month 
would not qualify for the MPL Order Tier and, therefore, the ETP 
Holder's executions of MPL Orders that provided liquidity would receive 
a credit of $0.0015 per share for Tape A, B and C Securities.
    The proposed change is 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 change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\8\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed change is reasonable 
because the proposed specification would result in the MPL Order Tier 
threshold relating only to volume that provides liquidity, which would 
be identical to the type of volume to which the corresponding credit 
would apply. The Exchange also believes that the proposed change is 
reasonable because the MPL Order Tier and corresponding credit of 
$0.0020 per share would continue to incentivize ETP Holders to submit 
additional MPL Orders that provide liquidity on the Exchange. This 
would continue to increase the liquidity available on the Exchange and, 
therefore, potential price improvement to incoming marketable orders 
submitted to the Exchange. In this regard, MPL Orders allow for 
additional opportunities for passive interaction with trading interest 
on the Exchange and are designed to offer potential price improvement 
to incoming marketable orders submitted to the Exchange.\9\ The 
Exchange also believes that the proposed change is equitable and not 
unfairly discriminatory because the MPL Order Tier would continue to be 
available to all ETP Holders to qualify for and would apply equally to 
providing MPL Orders from all ETP Holders in all Tape A, B and C 
Securities traded on the Exchange.
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    \9\ See, e.g., Securities Exchange Act Release No. 54511 
(September 26, 2006), 71 FR 58460, 58461 (October 3, 2006) (SR-PCX-
2005-53).
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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,\10\ 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. Instead, the Exchange believes that the 
proposed change would continue to encourage competition, including by 
attracting additional liquidity to the Exchange, which would continue 
to make the Exchange a more competitive venue for, among other things, 
order execution and price discovery. All ETP Holders have the ability 
to submit MPL Orders, and ETP Holders could readily choose to submit 
additional liquidity-providing MPL Orders in order to qualify for the 
MPL Order Tier. The Exchange does not believe that the proposed change 
will impair the ability of ETP Holders or competing order execution 
venues to maintain their competitive standing in the financial markets.
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    \10\ 15 U.S.C. 78f(b)(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. 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 reflects this 
competitive environment.

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) \11\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \12\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \13\ 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

[[Page 60941]]

     Send an email to rule-comments@sec.gov. Please 
include File Number SR-NYSEARCA-2013-94 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-NYSEARCA-2013-94. 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 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-NYSEARCA-2013-94 and should 
be submitted on or before October 23, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24011 Filed 10-1-13; 8:45 am]
BILLING CODE 8011-01-P


