
[Federal Register Volume 79, Number 155 (Tuesday, August 12, 2014)]
[Notices]
[Pages 47163-47165]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-18979]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72778; File No. SR-NYSE-2014-41]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Its Price List Relating to Certain Transactions Involving 
Floor Brokers

August 6, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on July 23, 2014, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') 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 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 related to certain 
transactions involving Floor brokers. The Exchange proposes to 
implement the fee change effective July 23, 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.

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 its Price List related to certain 
transactions involving Floor brokers. The Exchange proposes to 
implement the fee change effective July 23, 2014.
Cross Trades
    The Price List currently provides that an agency cross trade (i.e., 
where a member organization has customer orders to buy and sell an 
equivalent amount of the same security) receives a $0.0006 credit per 
share, per transaction, which is credited to both sides of the 
transaction. The rate applies to cross trades effected on the Exchange, 
which are effected only by Floor brokers. The Exchange proposes a non-
substantive change to the description to (i) eliminate the existing 
reference to ``agency,'' which is intended to refer to the agency 
capacity in which the Floor broker represents the crossed trade (i.e., 
not as principal), and (ii) replace the term ``member organization'' 
with the term ``Floor broker,'' as only Floor brokers are able to 
execute a cross trade. The resulting transaction description would be a 
Floor broker cross trade (i.e., a trade where a Floor broker executes 
customer orders to buy and sell an equivalent amount of the same 
security).\4\ The existing credit of $0.0006 would not change. This 
proposed change is designed to avoid potential confusion with an 
``agency cross,'' which, under NYSE Rule 72(d), has a specific meaning 
and may be entitled to priority at the cross price, irrespective of 
pre-existing displayed bids or offers on the Exchange at that price. 
Replacing ``member organization'' with ``Floor broker'' would also add 
greater precision to the Price List, as only Floor brokers are able to 
execute cross trades on the Exchange.
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    \4\ The Exchange proposes the same non-substantive changes to 
the corresponding description for transactions in securities priced 
below $1.00. The existing rate for such transactions in securities 
priced below $1.00 would remain unchanged.
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Non-Electronic Agency Transactions Between Floor Brokers
    The Price List currently provides that non-electronic agency 
transactions between Floor brokers in the crowd are not charged. The 
Exchange proposes to provide a $0.0006 credit for these transactions, 
which would be identical to the rate described above for Floor broker 
cross trades. The Exchange also proposes a non-substantive change to 
this transaction description to specify that the pricing is a per share 
credit, per transaction, and applies to both sides of the 
transaction.\5\
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    \5\ The corresponding description for transactions in securities 
priced below $1.00 would remain unchanged, as would the existing 
rate for such transactions.
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Non-Electronic Agency Transactions Against the Book
    The Price List currently provides that non-electronic agency 
transactions of Floor brokers that execute against the Book are not 
charged. The Exchange proposes that this no charge rate would only 
apply to non-electronic agency transactions of Floor brokers that 
execute at the close.\6\ Non-electronic agency transactions of Floor 
brokers at the close could be against other trading interest in the 
crowd or against the Book, which is why ``against the Book'' would be 
removed from the description. The Price List already includes a 
separate transaction description for Floor broker executions swept into 
the close (i.e., electronic Floor broker transactions), which are 
similarly not charged.\7\ In conjunction with this aspect of the 
proposed change, and to fill the gap created by the change described 
above, the Exchange also proposes to introduce a credit of $0.0006 per 
share, per transaction applicable to non-electronic agency transactions 
of Floor brokers that execute against the Book intraday (i.e., other 
than at the open or close).\8\
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    \6\ The Exchange proposes the same change to the corresponding 
description for transactions in securities priced below $1.00. The 
existing rate for such transactions in securities priced below $1.00 
would remain unchanged.
    \7\ The Price List also provides a charge of $0.0002 per share 
for executions at the close (except market at-the-close (``MOC'') 
and limit at-the-close (``LOC'') orders) and Floor broker executions 
swept into the close for a member organization that executes an 
average daily trading volume (``ADV'') of at least 1,000,000 shares 
in such transactions on the Exchange during the billing month. This 
existing $0.0002 charge would not apply to non-electronic agency 
transactions of Floor brokers that execute at the close, because 
they cannot be ``swept into the close.''
    \8\ The Exchange proposes to introduce a corresponding 
description for transactions in securities priced below $1.00, at 
the ``no charge'' rate that currently applies to several other 
transactions in securities priced below $1.00.
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At the Opening or at the Opening Only Orders
    The Price List currently provides that at the opening or at the 
opening only orders are charged $0.0010 per share. The Exchange 
proposes a non-substantive change to this transaction description to 
specify that the pricing is

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a per share charge, per transaction, and applies to both sides of the 
transaction.\9\
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    \9\ The Exchange proposes the same non-substantive change to the 
corresponding description for transactions in securities priced 
below $1.00. The existing rate for such transactions in securities 
priced below $1.00 would remain unchanged.
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    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 non-substantive change to 
the description of the Floor broker cross trade in the Price List is 
reasonable because it would add greater specificity regarding the type 
of transaction to which the corresponding rate applies. This is 
equitable and not unfairly discriminatory because it would avoid 
confusion with an ``agency cross,'' which, under NYSE Rule 72(d), may 
be entitled to priority at the cross price, irrespective of pre-
existing displayed bids or offers on the Exchange at that price, and is 
a subset of Floor broker cross trades eligible for the credit. The 
reference to the term ``agency'' in the current description merely 
refers to the capacity in which a Floor broker is serving (i.e., not as 
principal), but it is not intended to refer to an ``agency cross'' for 
purposes of NYSE Rule 72(d). Additionally, only Floor brokers are able 
to execute cross trades.
    The Exchange believes it is reasonable to provide a $0.0006 credit 
for non-electronic agency transactions between Floor brokers in the 
crowd and non-electronic agency transactions of Floor brokers that 
execute against the Book intraday because, like Floor broker cross 
trades for which the same $0.0006 credit currently applies, these non-
electronic agency transactions of Floor brokers are typically large 
block orders. This is equitable and not unfairly discriminatory because 
providing the same credit would encourage the execution of such 
transactions on a public exchange, thereby promoting price discovery 
and transparency. The Exchange also believes that the proposed credit 
is equitable and not unfairly discriminatory because all non-electronic 
agency transactions between Floor brokers in the crowd and non-
electronic agency transactions of Floor brokers that execute against 
the Book intraday would be eligible to receive the credit and all 
market participants would benefit from the price discovery and 
transparency provided by such large block orders. The proposed non-
substantive change to the description of non-electronic agency 
transactions between Floor brokers in the crowd would have no effect on 
the applicable pricing, but would instead conform this description to 
the descriptions in the Price List for other transactions.
    The Exchange believes that maintaining no charge as the applicable 
rate for non-electronic agency transactions of Floor brokers that 
execute at the close is reasonable because this would be the same rate 
that currently applies to these transactions, and is also the same rate 
that applies to Floor broker executions swept into the close. This is 
equitable and not unfairly discriminatory because it would encourage 
Floor brokers to continue to send orders to the Exchange for the 
closing auction, thereby contributing to robust levels of liquidity 
during such period, which benefits all market participants.
    The Exchange believes that the proposed non-substantive change to 
the description of at the opening or at the opening only orders is 
reasonable because it would have no effect on the applicable pricing, 
but would instead conform this description to the descriptions in the 
Price List for other transactions. In this regard, the proposed change 
would have no effect on the $20,000 cap per month per member 
organization that currently applies to this pricing, as described in 
footnote 2 in the Price List.
    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,\12\ 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 
substantive aspects of the proposed change would encourage the 
submission of additional liquidity to a public exchange, thereby 
promoting price discovery and transparency and increasing competition 
among execution venues. The rates proposed herein would apply only to 
Floor broker transactions and are consistent with existing rates in the 
Price List for similar types of Floor broker-only transactions. The 
Exchange therefore believes that the proposed change would further 
contribute to competition among member organizations, generally, and 
Floor brokers, specifically, by encouraging additional orders to be 
sent to the Exchange for execution.
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    \12\ 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 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) \13\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \14\

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thereunder, because it establishes a due, fee, or other charge imposed 
by the Exchange.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \15\ 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
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2014-41 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-NYSE-2014-41. 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 Section, 100 F Street 
NE., Washington, DC 20549-1090. Copies of the filing will also be 
available for Web site viewing and printing at the NYSE's principal 
office and on its Internet Web site at www.nyse.com. 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-2014-41 and should be 
submitted on or before September 2, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-18979 Filed 8-11-14; 8:45 am]
BILLING CODE 8011-01-P


