80 FR 18896 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Its Price List To Specify That a Member Organization May Request That the Exchange Aggregate Its Eligible Activity With Activity of the Member Organization's Affiliates for Purposes of Charges or Credits Based on Volume

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 67 (April 8, 2015)

[Federal Register Volume 80, Number 67 (Wednesday, April 8, 2015)]
[Notices]
[Pages 18896-18898]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-07969]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74641; File No. SR-NYSEMKT-2015-20]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Its Price List 
To Specify That a Member Organization May Request That the Exchange 
Aggregate Its Eligible Activity With Activity of the Member 
Organization's Affiliates for Purposes of Charges or Credits Based on 
Volume

April 2, 2015.
    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 March 25, 2015, NYSE MKT LLC (``NYSE MKT'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
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 specify that a 
member organization may request that the Exchange aggregate its 
eligible activity with activity of the member organization's affiliates 
for purposes of charges or credits based on volume. 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 to specify that 
member organizations may request that the Exchange aggregate their 
eligible activity with activity of member organization's affiliates for 
purposes of charges or credits based on volume. The proposed rule 
change is based on NASDAQ Stock Market LLC (``NASDAQ'') Rule 7027, 
NASDAQ Options Market LLC (``NOM'') Rules at Chapter XV, and the NASDAQ 
OMX PHLX LLC (``PHLX'') Pricing Schedule.\4\
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    \4\ Effective December 1, 2014, NASDAQ amended Rule 7027 to 
harmonize the treatment of aggregation of affiliate activity of 
affiliated members to be consistent with the rules governing NOM and 
PHLX. See Securities Exchange Act Release No. 72966 (Sept. 3, 2014), 
79 FR 53473 (Sept. 9, 2014) (SR-NASDAQ-2014-083). NOM and PHLX also 
amended their respective rules to harmonize the process by which it 
collects information from its members for purposes of aggregating 
member activity between its equity and options markets. See 
Securities Exchange Act Release Nos. 72967 (Sept. 2, 2014), 79 FR 
53471 (Sept. 9, 2014) (SR-NASDAQ-2014-082) and 72969 (Sept. 3, 
2014), 79 FR 53485 (Sept. 9, 2014) (SR-PHLX-2014-56).
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    As proposed, for purposes of applying any provision of the 
Exchange's Price List where the charge assessed, or credit provided, by 
the Exchange depends on the volume of a member organization's activity, 
a member organization may request that the Exchange aggregate its 
eligible activity with activity of such member organization's 
affiliates. The Exchange further proposes that a member organization 
requesting aggregation of eligible affiliate activity would be required 
to (1) certify to the Exchange the affiliate status of member 
organizations whose activity it seeks to aggregate prior to receiving 
approval for aggregation, and (2) inform the Exchange immediately of 
any event that causes an entity to cease being an affiliate. The 
Exchange would review available information regarding the entities and 
reserves the right to request additional information to verify the 
affiliate status of an entity. As further proposed, the Exchange would 
approve a request, unless it determines that the certificate is not 
accurate.\5\
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    \5\ See NASDAQ Rule 7027(a)(1).
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    The Exchange also proposes that if two or more member organizations 
become affiliated on or prior to the sixteenth day of a month, and 
submit the required request for aggregation on or prior to the twenty-
second day of the month, an approval of the request would be deemed to 
be effective as of the first day of that month. If two or more member 
organizations become affiliated after the sixteenth day of a month, or 
submit a request for aggregation after the twenty second day of the 
month, an approval of the request would be deemed to be effective as of 
the first day of the next calendar month.\6\ The Exchange believes that 
this requirement, which is also similar to requirements of other 
exchanges,\7\ would be a fair and objective way to apply the 
aggregation rule to fees and streamline the billing process.
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    \6\ See NASDAQ Rule 7027(a)(2).
    \7\ See supra note 4.
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    The Exchange further proposes to provide that for purposes of 
applying any provision of the Price List where the charge assessed, or 
credit provided, by the Exchange depends upon the volume of a member 
organization's activity, references to an entity would be deemed to 
include the entity and its affiliates that have been approved for 
aggregation.\8\ The Exchange notes that its designated market makers 
(``DMM'') are subject to specified pricing on the Price List. For 
purposes of the Price List, a DMM may not aggregate its volume either 
with other units within the same member organization or affiliates of 
the member organization operating the DMM unit. In addition, the 
Exchange proposes to provide that member organizations may not 
aggregate volume where the Price List specifies that aggregation is not 
permitted.\9\
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    \8\ See supra note 5.
    \9\ For example, the Price List specifies whether quoting and 
trading activity relating to Supplemental Liquidity Provider 
activity may be aggregated.

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[[Page 18897]]

    Finally, the Exchange proposes that for purposes of the Price List, 
the term ``affiliate'' would mean any member organization under 75% 
common ownership or control of that member organization.\10\
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    \10\ See NASDAQ Rule 7027(c).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\11\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\12\ in 
particular, because it provides for the equitable allocation of 
reasonable dues, fees, and other charges among member organizations and 
issuers and other persons using any facility or system with [sic] the 
Exchange operates or controls and because it is designed to prevent 
fraudulent and manipulative acts and practices, promote just and 
equitable principles of trade, remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and 
protect investors and the public interest.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange further believes that the proposed rule change is 
reasonable because it establishes a manner for the Exchange to treat 
affiliated member organizations for purposes of assessing charges or 
credits that are based on volume. The provision is equitable because 
all member organizations seeking to aggregate their activity are 
subject to the same parameters, in accordance with a standard that 
recognizes an affiliation as of the month's beginning or close in time 
to when the affiliation occurs, provided the member organization 
submits a timely request. Moreover, the proposed billing aggregation 
language, which would lower the Exchange's administrative burden, is 
substantially similar to aggregation language adopted by other 
exchanges.\13\
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    \13\ See supra note 4.
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    The Exchange further notes that the proposal would serve to reduce 
disparity of treatment between member organizations with regard to the 
pricing of different services and reduce any potential for confusion on 
how activity can be aggregated. The Exchange believes that the proposed 
rule change avoids disparate treatment of member organizations that 
have divided their various business activities between separate 
corporate entities as compared to member organizations that operate 
those business activities within a single corporate entity. The 
Exchange further notes that the proposed rule change is reasonable and 
is designed to remove impediments to and perfect the mechanism of a 
free and open market by harmonizing the manner by which the Exchanges 
permits member organizations to aggregate volume with other exchanges. 
In particular, the Exchange notes that NASDAQ, PHLX and BX all have the 
same standard that the Exchange is proposing to adopt.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\14\ the Exchange 
does not believe that the proposed rule change will impose any burden 
on intermarket or intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. As stated above, 
the proposed rule change, which applies equally to all member 
organizations, is intended to reduce the Exchange's administrative 
burden in applying volume price discounts for firms which have 
requested aggregation with that of an affiliate member organization, 
and is substantially similar to rules adopted by other exchanges. 
Because the market for order execution and routing is extremely 
competitive, member organizations may readily opt to disfavor the 
Exchange if they believe that alternatives offer them better value. The 
Exchange does not believe the proposed changes will impair the ability 
of member organizations or competing order execution venues to maintain 
their competitive standing in the financial markets.
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    \14\ 15 U.S.C. 78f(b)(8).
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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

    Because the foregoing rule does not (i) significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, provided that the self-regulatory organization 
has given the Commission written notice of its intent to file the 
proposed rule change at least five business days prior to the date of 
filing of the proposed rule change or such shorter time as designated 
by the Commission,\15\ the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-4(f)(6) 
thereunder.\17\
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    \15\ The Exchange has fulfilled this requirement.
    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the 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 will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

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 [email protected]. Please include 
File Number SR-NYSEMKT-2015-20 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2015-20. 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

[[Page 18898]]

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 will also be available 
for inspection and copying 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-NYSEMKT-2015-20 and should be submitted on or before 
April 29, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
 Brent J. Fields,
 Secretary.
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    \18\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-07969 Filed 4-7-15; 8:45 am]
 BILLING CODE 8011-01-P