
[Federal Register Volume 79, Number 95 (Friday, May 16, 2014)]
[Notices]
[Pages 28583-28585]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-11297]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72148; File No. SR-NYSEMKT-2014-43]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Its Price List 
To Account for Recent Changes to the Securities Eligible To Be Traded 
on the Exchange Pursuant to a Grant of Unlisted Trading Privileges

May 12, 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 April 29, 2014, NYSE MKT LLC (the ``Exchange'' or ``NYSE 
MKT'') 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 amend its Price List to account for recent 
changes to the securities eligible to be traded on the Exchange 
pursuant to a grant of unlisted trading privileges (``UTP''). The 
Exchange proposes to implement the fee change effective May 5, 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, on the 
Commission's Web site at www.sec.gov, 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 proposes to amend its Price List to account for recent 
changes to the securities eligible to be traded on the Exchange 
pursuant to UTP. The Exchange proposes to implement the fee change 
effective May 5, 2014.
    Securities traded on the Exchange pursuant to UTP are subject to a 
pilot program (the ``UTP Pilot Program'') set forth in the 500 series 
rules.\4\ The current UTP Pilot Program is limited to securities listed 
on the Nasdaq Stock Market, LLC (``Nasdaq Securities'') and includes 
only a single Exchange Traded Fund (``ETF''), the Invesco PowerShares 
QQQTM (the ``QQQTM'').\5\
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    \4\ See Securities Exchange Act Release No. 62479 (July 9, 
2010), 75 FR 41264 (July 15, 2010) (SR-NYSEAmex-2010-31).
    \5\ The UTP Pilot Program is currently scheduled to expire on 
the earlier of Securities and Exchange Commission (``Commission'') 
approval to make the pilot permanent or July 31, 2014. See 
Securities Exchange Act Release No. 71363 (January 21, 2014), 79 FR 
4373 (January 27, 2014) (SR-NYSEMKT-2014-01).
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    The Exchange recently submitted a proposal for immediate 
effectiveness to expand the UTP Pilot Program to permit additional 
securities beyond Nasdaq Securities to be traded on the Exchange 
pursuant to UTP.\6\ In addition to Nasdaq Securities, the new 
definition of ``UTP Securities'' would include certain ``Exchange 
Traded Products'' (``ETPs''), including ETFs; \7\ Exchange Traded

[[Page 28584]]

Notes (``ETNs''); \8\ Exchange Traded Vehicles (``ETVs''); \9\ or any 
other security, other than a single equity option or a security futures 
product, whose value is based, in whole or in part, upon the 
performance of, or interest in, an underlying instrument.
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    \6\ See Securities Exchange Act Release No. 71952 (April 16, 
2014), 79 FR 22558 (April 22, 2014) (SR-NYSEMKT-2014-32).
    \7\ An ETF is an open-end management investment company under 
the Investment Company Act of 1940 that has received certain 
exemptive relief from the Commission to allow secondary market 
trading in the ETF shares. An ETF typically holds a portfolio of 
securities that is intended to provide results that, before fees and 
expenses, generally correspond to the price and yield performance of 
an underlying benchmark index or an investment objective, or that, 
rather than seek to track the performance of an underlying index, 
are managed according to the investment objective of the ETF's 
investment advisor.
    \8\ An ETN is a senior unsecured debt obligation designed to 
track the total return of an underlying index, benchmark or 
strategy, minus investor fees. ETNs are registered under the 
Securities Act of 1933 and are redeemable to the issuer.
    \9\ An ETV tracks the underlying performance of an asset or 
index, allowing the investors exposure to underlying assets such as 
futures contracts, commodities, and currencies without trading 
futures or taking physical delivery of the underlying asset. An ETV 
is traded intraday like an ETF. An ETV is an open-end trust or 
partnership unit that is registered under the Securities Act of 
1933.
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    The Exchange now proposes to amend its Price List to account for 
these changes. The Exchange proposes to add a new section to the Price 
List that would apply to transactions in ETPs traded on the Exchange 
pursuant to UTP, including QQQ. The rates in the existing section in 
the Price List for transactions in Nasdaq Securities would not change, 
but the section headings would be updated to reflect that such rates 
would only apply to non-ETPs traded on the Exchange pursuant to UTP. 
The proposed rates for ETPs would be identical to the existing rates in 
the Price List for Nasdaq Securities, except as follows:
     The fee for Mid-Point Passive Liquidity (``MPL'') orders 
that remove liquidity from the Exchange for securities priced $1 or 
more would be $0.0029 instead of the existing $0.0030 fee for Nasdaq 
Securities;
     The fee for ``all other'' transactions that remove 
liquidity from the Exchange for securities priced $1 or more would be 
$0.0029 instead of the existing $0.0030 fee for Nasdaq Securities;
     The existing credits for adding liquidity in orders that 
originally display a minimum of 2,000 shares with a trading price of at 
least $5.00 per share would not apply for ETPs;
     The credit for Designated Market Maker (``DMM'') 
transactions that add liquidity for securities priced $1 or more would 
be $0.0030 instead of the existing $0.0040 credit for Nasdaq 
Securities;
     The fee for ``all other'' DMM transactions that remove 
liquidity for securities priced $1 or more would be $0.0029 instead of 
the existing $0.0030 fee for Nasdaq Securities; and
     The credit for Supplemental Liquidity Provider (``SLP'') 
transactions that add liquidity for securities priced $1 or more, if 
the SLP meets its quoting requirement pursuant to Rule 107B--Equities, 
would be $0.0028 instead of the existing $0.0030 credit for Nasdaq 
Securities.
    The Exchange also proposes certain non-substantive changes to the 
Price List, such as updating subheadings and rule references.
    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,\10\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\11\ 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed change is reasonable 
because it would identify pricing applicable to ETPs traded on the 
Exchange pursuant to UTP, as a result of a recent, immediately 
effective proposal by the Exchange to expand the UTP Pilot Program to 
permit additional securities beyond Nasdaq Securities to be traded on 
the Exchange pursuant to UTP.\12\ The Exchange believes that the 
proposed rates are reasonable because many of them would be identical 
to the existing rates in the Price List for Nasdaq Securities traded on 
the Exchange pursuant to UTP. Certain of the proposed fees would be 
slightly lower than the existing corresponding fees for Nasdaq 
Securities, which is reasonable because it would incentivize increased 
activity in ETPs that would be newly-traded on the Exchange pursuant to 
UTP. Similarly, certain of the proposed credits for DMMs and SLPs would 
be slightly lower than the existing corresponding credits for Nasdaq 
Securities, which is reasonable because it would account for certain 
lower fees that DMMs and SLPs would be charged and because the lower 
credits would be more consistent with credits available to other market 
participants' transactions in ETPs that would trade on the Exchange 
pursuant to UTP.
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    \12\ See supra note 6.
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    An existing credit for transactions in Nasdaq Securities that 
originally display a minimum of 2,000 shares with a trading price of at 
least $5.00 per share would be eliminated for ETPs. The Exchange 
believes that this is reasonable because of the lower fees that would 
be available for transactions in ETPs traded on the Exchange pursuant 
to UTP, as compared to certain of the existing rates for Nasdaq 
Securities. The Exchange believes that these lower fees would act as an 
incentive for market participants to trade on the Exchange, such that 
this existing credit would not be needed to incentivize activity in the 
newly-traded ETPs. The Exchange also believes that it is reasonable for 
transactions in QQQ to be priced according the rates in the proposed 
new section of the Price List because it would result in transactions 
in QQQ being billed in the same manner as other ETPs traded on the 
Exchange pursuant to UTP.
    The Exchange believes that the proposed change is equitable and not 
unfairly discriminatory because it would identify transaction fees and 
credits applicable to an expanded number of securities available to be 
traded on the Exchange pursuant to UTP, thereby encouraging the 
additional utilization of, and interaction with, the Exchange. The 
proposed pricing is also equitable and not unfairly discriminatory 
because it would attract additional volume to the Exchange and thereby 
contribute to a more competitive market on the Exchange in the trading 
of securities pursuant to UTP.
    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,\13\ 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 increase competition by encouraging the additional 
utilization of, and interaction with, the Exchange, thereby providing 
market participants with additional price discovery, increased 
liquidity through additional market making, more competitive quotes, 
and potentially greater price improvement for UTP Securities.
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    \13\ 15 U.S.C. 78f(b)(8).
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    Finally, the Exchange notes that it operates in a highly 
competitive market

[[Page 28585]]

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 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 proposal 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-2014-43 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-2014-43. 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-NYSEMKT-2014-43 and should 
be submitted on or before June 6, 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. 2014-11297 Filed 5-15-14; 8:45 am]
BILLING CODE 8011-01-P


