81 FR 35406 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Its Price List
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 106 (June 2, 2016)
Federal Register Volume 81, Issue 106 (June 2, 2016)
| Page Range | 35406-35409 | |
| FR Document | 2016-12876 |
[Federal Register Volume 81, Number 106 (Thursday, June 2, 2016)] [Notices] [Pages 35406-35409] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-12876] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77929; File No. SR-NYSE-2016-36] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Its Price List May 26, 2016. 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 May 11, 2016, New York Stock Exchange LLC (``NYSE'' or the ``Exchange'') 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. --------------------------------------------------------------------------- \1\ 15 U.S.C.78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its Price List for equity transactions in stocks with a per share stock price more than $1.00 to: (1) Add a new fee for verbal executions by Floor brokers at the close; (2) revise the fees for Midpoint Passive Liquidity (``MPL'') orders that remove liquidity from the Exchange and that are not designated with a ``retail'' [[Page 35407]] modifier as defined in Rule 13; (3) revise the requirements and credits for MPL orders that provide liquidity to the Exchange; and (4) make certain changes in the footnotes and tiers applicable to Supplemental Liquidity Providers (``SLPs'') on the Exchange. The Exchange proposes to implement these changes to its Price List effective May 11, 2016.\4\ 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. --------------------------------------------------------------------------- \4\ The Exchange originally filed to amend the Fee Schedule on May 2, 2016 (SR-NYSE-2016-32) and withdrew such filing on May 11, 2016. --------------------------------------------------------------------------- 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: (1) Add a new fee for verbal interest by Floor brokers at the close; (2) revise the fees for MPL orders that remove liquidity from the Exchange and that are not designated with a ``retail'' modifier as defined in Rule 13; (3) revise the requirements and credits for MPL orders that provide liquidity to the Exchange; and (4) make certain changes in the footnotes and tiers applicable to SLPs. The proposed changes would only apply to credits in transactions in securities priced $1.00 or more. The Exchange proposes to implement these changes effective May 11, 2016. Verbal Interest at the Close Currently, the Exchange does not charge a fee for verbal executions by Floor brokers at the close.\5\ The Exchange proposes a fee of $0.0010 per share for verbal executions by Floor brokers at the close. The Exchange notes that the proposed fee is the same as the current fee (charged to both sides) for MOC and LOC orders (the Non-Tier MOC/LOC fee).\6\ --------------------------------------------------------------------------- \5\ The Exchange charges member organizations a fee for market at-the-close (``MOC'') and limit at-the-close (``LOC'') orders at the close and for Floor broker executions swept into the close. Member organizations that execute during the billing month average daily volume (``ADV'') in excess of 750,000 shares through orders executed at the close (except MOC and LOC orders) and Floor broker orders swept into the close, are charged $0.00035 per share per transaction (charged to both sides). Such executions are not charged if the member organization executes an ADV on the Exchange during the billing month of fewer than 750,000 shares ADV. \6\ See note 5, supra. --------------------------------------------------------------------------- The Exchange would also add the phrase ``excluding verbal interest'' to clarify that verbal interest at the close would not be counted for purposes of Floor Broker executions swept into the close that are subject to a charge of $0.00035 per share for shares executed in excess of an ADV \7\ of 750,000 shares. --------------------------------------------------------------------------- \7\ The defined term, ``ADV,'' is used here as defined in footnote 2 to the Price List. --------------------------------------------------------------------------- MPL Orders An MPL Order is defined in Rule 13 as an undisplayed limit order that automatically executes at the mid-point of the best protected bid (``PBB'') or [sic] best protected offer (``PBO''), as such terms are defined in Regulation NMS Rule 600(b)(57) (together, ``PBBO'').\8\ --------------------------------------------------------------------------- \8\ See Rule 14. See also 17 CFR 242.600(b)(57). --------------------------------------------------------------------------- MPL Orders That Remove Liquidity The Exchange currently charges a fee of $0.00275 per share per transaction for MPL Orders that remove liquidity from the NYSE and that are not designated with a ``retail'' modifier as defined in Rule 13.\9\ Floor brokers are currently charged the same price for MPL Orders that remove liquidity from the Exchange. The Exchange proposes to revise the fee for all MPL Orders that remove liquidity from the Exchange and that are not designated with a ``retail'' modifier as defined in Rule 13, including MPL Orders entered by Floor brokers, from $0.00275 to $0.0030. The Exchange will continue not to charge a fee for MPL Orders that remove liquidity from the Exchange and that are designated with a ``retail'' modifier as defined in Rule 13. --------------------------------------------------------------------------- \9\ MPL Orders that take liquidity do not count toward a member's or member organization's overall level of providing volume for purposes of other pricing on the Exchange that is based on such levels (e.g., the Tier 1, Tier 2 and Tier 3 Adding Credits). --------------------------------------------------------------------------- MPL Orders That Add Liquidity The Exchange currently provides a credit of $0.0030 per share credit for MPL Orders that provide liquidity from a member organization that has Adding ADV \10\ in MPL Orders that is at least 1.5 million shares, excluding any liquidity added by a Designated Market Maker (``DMM''). The Exchange provides a $0.0015 per share transaction credit for MPL Orders that provide liquidity from a member organization that does not meet the Adding ADV threshold. --------------------------------------------------------------------------- \10\ ``Adding ADV'' is when a member organization has ADV that adds liquidity to the Exchange during the billing month. Adding ADV excludes any liquidity added by a Designated Market Maker. --------------------------------------------------------------------------- The Exchange proposes that member organizations qualifying for the $0.0030 credit have an Adding ADV in MPL orders of at least 0.04% of NYSE consolidated ADV (``CADV''),\11\ excluding liquidity added by a DMM. The Exchange also proposes to reduce the credit from $0.0030 to $0.00275. --------------------------------------------------------------------------- \11\ NYSE CADV is defined in the Price List as the consolidated average daily volume of NYSE-listed securities. --------------------------------------------------------------------------- Changes to Footnotes and Tiers Applicable to SLPs Current footnote 8 applies to SLP Tiers 1, 1A, 2 and 3 and provides that in its first calendar month as an SLP, an SLP qualifies for the relevant credit regardless of whether it meets the requirement to provide liquidity with an ADV of more than the applicable threshold percentage of NYSE CADV in the applicable month. The Exchange proposes to delete footnote 8 and move the text of the footnote into the body of the Price List for SLP Tier 3, where an SLP is eligible for a credit of $0.0023 per share traded if the SLP (1) meets the 10% average or more quoting requirement in assigned securities pursuant to Rule 107B, and (2) adds liquidity for assigned SLP securities in the aggregate of an ADV of more than 0.20% of NYSE CADV or, with respect to an SLP that is also a DMM and subject to Rule 107B(i)(2)(a),\12\ more than the current 0.20% requirement after a discount of the percentage for the prior quarter of NYSE CADV in DMM assigned securities as of the last business day of the prior month. The Exchange does not propose to move the text of current footnote 8 into the body of the Price List for SLP Tier 2, SLP Tier 1 or SLP Tier 1A. Current footnote 8 would thus no longer apply to those tiers. --------------------------------------------------------------------------- \12\ Rule 107B(i)(2)(A) prohibits a DMM from acting as a SLP in the same securities in which it is a DMM. --------------------------------------------------------------------------- The Exchange also proposes that current footnote ** would become new footnote 8. Accordingly, each reference in the Price List to footnote ** would be replaced with a reference to footnote 8. The substance of footnote ** would remain unchanged. The Exchange [[Page 35408]] believes that this change will add greater specificity and clarity to the Exchange's Price List. * * * * * The proposed changes are not otherwise intended to address any other issues, and the Exchange is not aware of any problems that 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,\13\ in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\14\ 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. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78f(b). \14\ 15 U.S.C. 78f(b)(4) & (5). --------------------------------------------------------------------------- Verbal Interest at the Close The Exchange believes that charging a fee for verbal executions at the close is reasonable. The Exchange's closing auction is a recognized industry benchmark,\15\ and member organizations receive a substantial benefit from the Exchange in obtaining high levels of executions at the Exchange's closing price on a daily basis. The proposed fee is also reasonable, equitable and not unfairly discriminatory because it would be the same as the current fee (charged to both sides) for MOC and LOC orders (the Non-Tier MOC/LOC fee). Further, the proposed fee change is also equitable and not unfairly discriminatory because it will apply uniformly to all Floor brokers, who are the only market participants that can enter verbal interest at the close. --------------------------------------------------------------------------- \15\ For example, the pricing and valuation of certain indices, funds, and derivative products require primary market prints. --------------------------------------------------------------------------- MPL Orders The Exchange believes that (1) increasing the fee for MPL Orders that remove liquidity from the Exchange and that are not designated as ``retail,'' and (2) requiring Adding ADV in MPL orders of at least 0.04% of NYSE CADV rather than a fixed share number and offering a credit of $0.00275 for MPL Orders that add liquidity to the NYSE is reasonable. MPL Orders provide opportunities for market participants to interact with orders priced at the midpoint of the PBBO, thus providing price improving liquidity to market participants and increasing the quality of order execution on the Exchange's market, which benefits all market participants. The new credit is also reasonable because it would be similar or higher than the rates on the NASDAQ Stock Market, LLC (``NASDAQ''). For example, on NASDAQ, firms that average 1 million or more shares of midpoint liquidity receive a credit of $0.0010 per share in Tape C securities and $0.0018 in Tape A and B securities to execute against resting midpoint liquidity, which is lower than the proposed $0.00275 per share rate for MPL orders that is at least 0.04% of NYSE CADV, excluding any liquidity added by a DMM.\16\ --------------------------------------------------------------------------- \16\ See NASDAQ Price List, available at http://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2. --------------------------------------------------------------------------- The proposed change is equitable and not unfairly discriminatory because MPL Orders increase the quality of order execution on the Exchange's market, which benefits all market participants. The Exchange also believes that the proposed changes are equitable and not unfairly discriminatory because all market participants--customers, Floor brokers, DMMs, and SLPs--may use MPL Orders on the Exchange and because all market participants that use MPL Orders may receive credits for MPL Orders, as is currently the case. Changes to Footnotes Applicable to SLPs The Exchange believes it is reasonable to (1) eliminate current footnote 8 and the related Tier 1, Tier 1A, and Tier 2 credits for SLPs during their first calendar month as a SLP irrespective of whether the SLP meets the requirement to provide liquidity with an ADV of more than the applicable threshold percentage of NYSE CADV, and (2) retain the Tier 3 credit for SLPs during their first calendar month irrespective of whether the the [sic] SLP meets the requirement to provide liquidity with an ADV of more than the applicable threshold percentage of NYSE CADV by moving the text of current footnote 8 to the body of the Price List in Tier 3. The Exchange believes that eliminating the higher tiers during a SLP's first calendar month without regard to the applicable requirement is reasonable because SLPs have not increased their activity to qualify for these tiers as significantly as the Exchange anticipated that they would. The Exchange notes that new SLPs can still qualify for the higher rates during their first calendar month of operation as a SLP by meeting the applicable tier volume requirements. The Exchange also believes that retaining the $0.0023 credit for SLP Tier 3 for SLPs in their first calendar month as an SLP is reasonable because the $0.0023 credit is equal to or higher than the applicable non-Tier Adding Credit, Tier 3 Adding Credit, Tier 2 Adding Credit or Tier 1 Adding Credit for SLPs that don't meet the requirements of SLP Tier 3. The Exchange believes that the proposed changes are equitable and not unfairly discriminatory because they would apply uniformly to all SLPs during their first calendar month. The Exchange notes that there are currently no SLPs in the first calendar month of operation. Further, the Exchange believes that the proposed change to its Price List whereby current footnote ** would become new footnote 8 is reasonable because it is designed to provide greater specificity and clarity to the Price List, thereby removing impediments to and perfecting the mechanism of a free and open market and a national market system, and, in general, protecting investors and the public interest. 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 the foregoing 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,\17\ 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 changes would encourage the submission of additional liquidity to a public exchange, thereby promoting price discovery and transparency and enhancing order execution opportunities for member organizations. The Exchange believes that this could promote competition between the Exchange and other execution venues, including those that currently offer similar order types and comparable transaction pricing, by encouraging additional orders to be sent to the Exchange for execution. Further, the Exchange believes that the proposed non-substantive change relating to footnote ** applicable to SLPs would not affect intermarket nor intramarket competition because the proposed change is not designed to amend any fee or rebate or alter the manner in which [[Page 35409]] the Exchange assesses fees or calculates rebates. Instead, this change is intended to provide greater specificity and clarity to the Exchange's Price List for the benefit of member organizations and investors. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- 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) \18\ of the Act and subparagraph (f)(2) of Rule 19b-4 \19\ thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. --------------------------------------------------------------------------- \18\ 15 U.S.C. 78s(b)(3)(A). \19\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- 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) \20\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- 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 CommentsUse 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-NYSE-2016-36 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-NYSE-2016-36. 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-NYSE-2016-36 and should be submitted on or before June 23, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\21\ --------------------------------------------------------------------------- \21\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2016-12876 Filed 6-1-16; 8:45 am] BILLING CODE 8011-01-P
![35406 Federal Register / Vol. 81, No. 106 / Thursday, June 2, 2016 / Notices
notifies the Exchange to enable the the time period values, members will and orderly markets, including whether
acceptance of new orders.15 have discretion to set the threshold the default values and minimum and
values for the order entry and order maximum permissible parameters for
III. Discussion and Commission
execution parameters.21 If members do the applicable time period established
Findings
not independently set such parameters, by ISE Mercury continue to be
After careful review, the Commission they will be subject to the default appropriate and operate in a manner
finds that the proposed rule change is parameters established by ISE consistent with the Act and the rules
consistent with the requirements of Mercury.22 While the Commission thereunder.
Section 6 of the Act 16 and rules and believes that the Exchange’s proposed
regulations thereunder applicable to a rule provides members flexibility to IV. Conclusion
national securities exchange.17 In tailor the Market Wide Risk Protection It is therefore ordered, pursuant to
particular, the Commission finds that to their respective risk management Section 19(b)(2) of the Act,25 that the
the proposed rule change is consistent needs, the Commission reminds proposed rule change (SR–ISEMercury–
with the requirements of Section 6(b)(5) members to be mindful of their 2016–07) be, and hereby is, approved.
of the Act, which requires, among other obligations to, among other things, seek For the Commission, by the Division of
things, that the rules of a national best execution of orders they handle on Trading and Markets, pursuant to delegated
securities exchange be designed to an agency basis and consider their best authority.26
promote just and equitable principles of execution obligations when establishing Brent J. Fields,
trade, to remove impediments to and parameters for the Market Wide Risk Secretary.
perfect the mechanisms of a free and Protection or utilizing the default [FR Doc. 2016–12890 Filed 6–1–16; 8:45 am]
open market and a national market parameters set by ISE Mercury.23 For BILLING CODE 8011–01–P
system, and, in general, to protect example, an abnormally low order entry
investors and the public interest.18 parameter, set over an abnormally long
The Commission believes that the specified time period should be
Exchange’s proposed activity-based SECURITIES AND EXCHANGE
carefully scrutinized, particularly if a COMMISSION
order protections will provide an member’s order flow to ISE Mercury
additional tool to members to assist contains agency orders. To the extent [Release No. 34–77929; File No. SR–NYSE–
them in managing their risk exposure.19 that a member chooses sensitive 2016–36]
Specifically, the Commission believes parameters, a member should consider
that the Market Wide Risk Protection Self-Regulatory Organizations; New
the effect of its chosen settings on its
functionality may help members to York Stock Exchange LLC; Notice of
ability to receive a timely execution on
mitigate the potential risks associated Filing and Immediate Effectiveness of
marketable agency orders that it sends
with entering and/or executing a level of Proposed Rule Change Amending Its
to ISE Mercury in various market
orders that exceeds their risk Price List
conditions. The Commission cautions
management thresholds that may result brokers considering their best execution May 26, 2016.
from, for example, technology issues obligations to be aware that the agency Pursuant to Section 19(b)(1) 1 of the
with electronic trading systems. Further, orders they represent may be rejected as Securities Exchange Act of 1934 (the
the Commission notes that other a result of the Market Wide Risk ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
exchanges have established risk Protection functionality. notice is hereby given that, on May 11,
protection mechanisms for members As discussed above, ISE Mercury 2016, New York Stock Exchange LLC
and market makers that are similar in determined not to establish minimum (‘‘NYSE’’ or the ‘‘Exchange’’) filed with
many respects to ISE Mercury’s and maximum permissible settings for the Securities and Exchange
proposal.20 the order entry and order execution
Proposed Rule 714(d) imposes a Commission (the ‘‘Commission’’) the
parameters in its rule and indicated its proposed rule change as described in
mandatory obligation on ISE Mercury intent to set a minimum and maximum
members to utilize the Market Wide Items I, II, and III below, which Items
for the time period parameters that have been prepared by the self-
Risk Protection functionality. The provide broad discretion to members
Commission notes that, although the regulatory organization. The
(i.e., one second and a full trading day, Commission is publishing this notice to
Exchange will establish minimum and respectively).24 In light of these broad
maximum permissible parameters for solicit comments on the proposed rule
limits, the Commission expects ISE change from interested persons.
Mercury to periodically assess whether
15 Proposed Rule 714(d)(3). Members who have
the Market Wide Risk Protection I. Self-Regulatory Organization’s
not opted to cancel all existing orders under
proposed Rule 714(d)(2), however, will still be able measures are operating in a manner that Statement of the Terms of Substance of
to interact with their existing orders entered before is consistent with the promotion of fair the Proposed Rule Change
the Market Wide Risk Protection was triggered. For
instance, such members may send cancel order
The Exchange proposes to amend its
21 The Exchange has represented that it
messages and/or receive trade executions for those Price List for equity transactions in
anticipates that the minimum and maximum values
orders. Id.; see also Notice, supra note 3, at 22141. for the applicable time period will be initially set stocks with a per share stock price more
16 15 U.S.C. 78f(b).
at one second and a full trading day, respectively, than $1.00 to: (1) Add a new fee for
17 In approving these proposed rule changes, the
which the Commission believes gives members verbal executions by Floor brokers at the
Commission has considered the proposed rules’ wide latitude in establishing the applicable time
impact on efficiency, competition, and capital periods. See Notice, supra note 3, at 22141 n.9.
close; (2) revise the fees for Midpoint
asabaliauskas on DSK3SPTVN1PROD with NOTICES
formation. See 15 U.S.C. 78c(f). 22 Proposed Rule 714(d). Passive Liquidity (‘‘MPL’’) orders that
18 15 U.S.C. 78f(b)(5). 23 See Securities Exchange Act Release No. remove liquidity from the Exchange and
19 The Exchange currently provides members 37619A (Sept. 6, 1996), 61 FR 48290, at 48323 that are not designated with a ‘‘retail’’
with limit order price protections that reject orders (Sept. 12, 1996) (Order Execution Obligations
priced too far outside of the Exchange’s best bid or adopting release); see also Securities Exchange Act 25 15
offer. See ISE Mercury Rule 714(b)(2). Release No. 51808 (June 9, 2005), 70 FR 37496, U.S.C. 78s(b)(2).
26 17 CFR 200.30–3(a)(12).
20 See, e.g., Miami International Securities 37537–8 (June 29, 2005) (Regulation NMS adopting
1 15 U.S.C.78s(b)(1).
Exchange, LLC Rule 519A (‘‘Risk Protection release).
2 15 U.S.C. 78a.
Monitor’’); BATS BZX Exchange, Inc. Rule 21.16 24 See Notice, supra note 3, at 22141 n.9; see also
(‘‘Risk Monitor Mechanism’’). supra note 21. 3 17 CFR 240.19b–4.
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![Federal Register / Vol. 81, No. 106 / Thursday, June 2, 2016 / Notices 35407
modifier as defined in Rule 13; (3) Exchange proposes a fee of $0.0010 per ADV 10 in MPL Orders that is at least 1.5
revise the requirements and credits for share for verbal executions by Floor million shares, excluding any liquidity
MPL orders that provide liquidity to the brokers at the close. The Exchange notes added by a Designated Market Maker
Exchange; and (4) make certain changes that the proposed fee is the same as the (‘‘DMM’’). The Exchange provides a
in the footnotes and tiers applicable to current fee (charged to both sides) for $0.0015 per share transaction credit for
Supplemental Liquidity Providers MOC and LOC orders (the Non-Tier MPL Orders that provide liquidity from
(‘‘SLPs’’) on the Exchange. The MOC/LOC fee).6 a member organization that does not
Exchange proposes to implement these The Exchange would also add the meet the Adding ADV threshold.
changes to its Price List effective May phrase ‘‘excluding verbal interest’’ to The Exchange proposes that member
11, 2016.4 The proposed rule change is clarify that verbal interest at the close organizations qualifying for the $0.0030
available on the Exchange’s Web site at would not be counted for purposes of credit have an Adding ADV in MPL
www.nyse.com, at the principal office of Floor Broker executions swept into the orders of at least 0.04% of NYSE
the Exchange, and at the Commission’s close that are subject to a charge of consolidated ADV (‘‘CADV’’),11
Public Reference Room. $0.00035 per share for shares executed excluding liquidity added by a DMM.
in excess of an ADV 7 of 750,000 shares. The Exchange also proposes to reduce
II. Self-Regulatory Organization’s
the credit from $0.0030 to $0.00275.
Statement of the Purpose of, and MPL Orders
Statutory Basis for, the Proposed Rule Changes to Footnotes and Tiers
Change An MPL Order is defined in Rule 13 Applicable to SLPs
In its filing with the Commission, the as an undisplayed limit order that Current footnote 8 applies to SLP
self-regulatory organization included automatically executes at the mid-point Tiers 1, 1A, 2 and 3 and provides that
statements concerning the purpose of, of the best protected bid (‘‘PBB’’) or [sic] in its first calendar month as an SLP, an
and basis for, the proposed rule change best protected offer (‘‘PBO’’), as such SLP qualifies for the relevant credit
and discussed any comments it received terms are defined in Regulation NMS regardless of whether it meets the
on the proposed rule change. The text Rule 600(b)(57) (together, ‘‘PBBO’’).8 requirement to provide liquidity with an
of those statements may be examined at MPL Orders That Remove Liquidity ADV of more than the applicable
the places specified in Item IV below. threshold percentage of NYSE CADV in
The Exchange has prepared summaries, The Exchange currently charges a fee the applicable month. The Exchange
set forth in sections A, B, and C below, of $0.00275 per share per transaction for proposes to delete footnote 8 and move
of the most significant parts of such MPL Orders that remove liquidity from the text of the footnote into the body of
statements. the NYSE and that are not designated the Price List for SLP Tier 3, where an
with a ‘‘retail’’ modifier as defined in SLP is eligible for a credit of $0.0023 per
A. Self-Regulatory Organization’s Rule 13.9 Floor brokers are currently share traded if the SLP (1) meets the
Statement of the Purpose of, and the charged the same price for MPL Orders 10% average or more quoting
Statutory Basis for, the Proposed Rule that remove liquidity from the requirement in assigned securities
Change Exchange. The Exchange proposes to pursuant to Rule 107B, and (2) adds
1. Purpose revise the fee for all MPL Orders that liquidity for assigned SLP securities in
remove liquidity from the Exchange and the aggregate of an ADV of more than
The Exchange proposes to amend its
that are not designated with a ‘‘retail’’ 0.20% of NYSE CADV or, with respect
Price List to: (1) Add a new fee for
modifier as defined in Rule 13, to an SLP that is also a DMM and
verbal interest by Floor brokers at the
including MPL Orders entered by Floor subject to Rule 107B(i)(2)(a),12 more
close; (2) revise the fees for MPL orders
brokers, from $0.00275 to $0.0030. The than the current 0.20% requirement
that remove liquidity from the Exchange
Exchange will continue not to charge a after a discount of the percentage for the
and that are not designated with a
fee for MPL Orders that remove prior quarter of NYSE CADV in DMM
‘‘retail’’ modifier as defined in Rule 13;
liquidity from the Exchange and that are assigned securities as of the last
(3) revise the requirements and credits
designated with a ‘‘retail’’ modifier as business day of the prior month. The
for MPL orders that provide liquidity to
defined in Rule 13. Exchange does not propose to move the
the Exchange; and (4) make certain
changes in the footnotes and tiers MPL Orders That Add Liquidity text of current footnote 8 into the body
applicable to SLPs. of the Price List for SLP Tier 2, SLP Tier
The proposed changes would only The Exchange currently provides a 1 or SLP Tier 1A. Current footnote 8
apply to credits in transactions in credit of $0.0030 per share credit for would thus no longer apply to those
securities priced $1.00 or more. MPL Orders that provide liquidity from tiers.
The Exchange proposes to implement a member organization that has Adding The Exchange also proposes that
these changes effective May 11, 2016. current footnote ** would become new
MOC and LOC orders) and Floor broker orders footnote 8. Accordingly, each reference
Verbal Interest at the Close swept into the close, are charged $0.00035 per share in the Price List to footnote ** would be
per transaction (charged to both sides). Such replaced with a reference to footnote 8.
Currently, the Exchange does not executions are not charged if the member
charge a fee for verbal executions by organization executes an ADV on the Exchange The substance of footnote ** would
Floor brokers at the close.5 The during the billing month of fewer than 750,000 remain unchanged. The Exchange
shares ADV.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
4 The Exchange originally filed to amend the Fee 6 See note 5, supra. 10 ‘‘Adding ADV’’ is when a member organization
7 The defined term, ‘‘ADV,’’ is used here as has ADV that adds liquidity to the Exchange during
Schedule on May 2, 2016 (SR–NYSE–2016–32) and
withdrew such filing on May 11, 2016. defined in footnote 2 to the Price List. the billing month. Adding ADV excludes any
5 The Exchange charges member organizations a 8 See Rule 14. See also 17 CFR 242.600(b)(57). liquidity added by a Designated Market Maker.
11 NYSE CADV is defined in the Price List as the
fee for market at-the-close (‘‘MOC’’) and limit at- 9 MPL Orders that take liquidity do not count
the-close (‘‘LOC’’) orders at the close and for Floor toward a member’s or member organization’s consolidated average daily volume of NYSE-listed
broker executions swept into the close. Member overall level of providing volume for purposes of securities.
organizations that execute during the billing month other pricing on the Exchange that is based on such 12 Rule 107B(i)(2)(A) prohibits a DMM from
average daily volume (‘‘ADV’’) in excess of 750,000 levels (e.g., the Tier 1, Tier 2 and Tier 3 Adding acting as a SLP in the same securities in which it
shares through orders executed at the close (except Credits). is a DMM.
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![35408 Federal Register / Vol. 81, No. 106 / Thursday, June 2, 2016 / Notices
believes that this change will add participants and increasing the quality The Exchange also believes that
greater specificity and clarity to the of order execution on the Exchange’s retaining the $0.0023 credit for SLP Tier
Exchange’s Price List. market, which benefits all market 3 for SLPs in their first calendar month
* * * * * participants. as an SLP is reasonable because the
The proposed changes are not The new credit is also reasonable $0.0023 credit is equal to or higher than
otherwise intended to address any other because it would be similar or higher the applicable non-Tier Adding Credit,
issues, and the Exchange is not aware of than the rates on the NASDAQ Stock Tier 3 Adding Credit, Tier 2 Adding
any problems that member Market, LLC (‘‘NASDAQ’’). For Credit or Tier 1 Adding Credit for SLPs
organizations would have in complying example, on NASDAQ, firms that that don’t meet the requirements of SLP
with the proposed change. average 1 million or more shares of Tier 3. The Exchange believes that the
midpoint liquidity receive a credit of proposed changes are equitable and not
2. Statutory Basis $0.0010 per share in Tape C securities unfairly discriminatory because they
The Exchange believes that the and $0.0018 in Tape A and B securities would apply uniformly to all SLPs
proposed rule change is consistent with to execute against resting midpoint during their first calendar month. The
Section 6(b) of the Act,13 in general, and liquidity, which is lower than the Exchange notes that there are currently
furthers the objectives of Sections proposed $0.00275 per share rate for no SLPs in the first calendar month of
6(b)(4) and 6(b)(5) of the Act,14 in MPL orders that is at least 0.04% of operation.
particular, because it provides for the NYSE CADV, excluding any liquidity Further, the Exchange believes that
equitable allocation of reasonable dues, added by a DMM.16 the proposed change to its Price List
fees, and other charges among its The proposed change is equitable and whereby current footnote ** would
members, issuers and other persons not unfairly discriminatory because become new footnote 8 is reasonable
using its facilities and does not unfairly MPL Orders increase the quality of because it is designed to provide greater
discriminate between customers, order execution on the Exchange’s specificity and clarity to the Price List,
issuers, brokers or dealers. market, which benefits all market thereby removing impediments to and
participants. The Exchange also believes perfecting the mechanism of a free and
Verbal Interest at the Close that the proposed changes are equitable open market and a national market
The Exchange believes that charging a and not unfairly discriminatory because system, and, in general, protecting
fee for verbal executions at the close is all market participants—customers, investors and the public interest.
reasonable. The Exchange’s closing Floor brokers, DMMs, and SLPs—may Finally, the Exchange believes that it
auction is a recognized industry use MPL Orders on the Exchange and is subject to significant competitive
benchmark,15 and member because all market participants that use forces, as described below in the
MPL Orders may receive credits for Exchange’s statement regarding the
organizations receive a substantial
MPL Orders, as is currently the case. burden on competition.
benefit from the Exchange in obtaining
For the foregoing reasons, the
high levels of executions at the Changes to Footnotes Applicable to Exchange believes that the proposal is
Exchange’s closing price on a daily SLPs consistent with the Act.
basis. The proposed fee is also
reasonable, equitable and not unfairly The Exchange believes it is reasonable B. Self-Regulatory Organization’s
discriminatory because it would be the to (1) eliminate current footnote 8 and Statement on Burden on Competition
same as the current fee (charged to both the related Tier 1, Tier 1A, and Tier 2
credits for SLPs during their first In accordance with Section 6(b)(8) of
sides) for MOC and LOC orders (the the Act,17 the Exchange believes that the
Non-Tier MOC/LOC fee). Further, the calendar month as a SLP irrespective of
whether the SLP meets the requirement proposed rule change would not impose
proposed fee change is also equitable any burden on competition that is not
and not unfairly discriminatory because to provide liquidity with an ADV of
more than the applicable threshold necessary or appropriate in furtherance
it will apply uniformly to all Floor of the purposes of the Act. Instead, the
brokers, who are the only market percentage of NYSE CADV, and (2)
retain the Tier 3 credit for SLPs during Exchange believes that the proposed
participants that can enter verbal changes would encourage the
interest at the close. their first calendar month irrespective of
whether the the [sic] SLP meets the submission of additional liquidity to a
MPL Orders requirement to provide liquidity with an public exchange, thereby promoting
ADV of more than the applicable price discovery and transparency and
The Exchange believes that (1) enhancing order execution
increasing the fee for MPL Orders that threshold percentage of NYSE CADV by
moving the text of current footnote 8 to opportunities for member organizations.
remove liquidity from the Exchange and The Exchange believes that this could
that are not designated as ‘‘retail,’’ and the body of the Price List in Tier 3. The
Exchange believes that eliminating the promote competition between the
(2) requiring Adding ADV in MPL Exchange and other execution venues,
orders of at least 0.04% of NYSE CADV higher tiers during a SLP’s first calendar
month without regard to the applicable including those that currently offer
rather than a fixed share number and similar order types and comparable
offering a credit of $0.00275 for MPL requirement is reasonable because SLPs
have not increased their activity to transaction pricing, by encouraging
Orders that add liquidity to the NYSE is additional orders to be sent to the
reasonable. MPL Orders provide qualify for these tiers as significantly as
the Exchange anticipated that they Exchange for execution. Further, the
opportunities for market participants to Exchange believes that the proposed
asabaliauskas on DSK3SPTVN1PROD with NOTICES
interact with orders priced at the would. The Exchange notes that new
SLPs can still qualify for the higher rates non-substantive change relating to
midpoint of the PBBO, thus providing footnote ** applicable to SLPs would
price improving liquidity to market during their first calendar month of
operation as a SLP by meeting the not affect intermarket nor intramarket
13 15 applicable tier volume requirements. competition because the proposed
U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(4) & (5).
change is not designed to amend any fee
15 For example, the pricing and valuation of 16 See NASDAQ Price List, available at http:// or rebate or alter the manner in which
certain indices, funds, and derivative products nasdaqtrader.com/
require primary market prints. Trader.aspx?id=PriceListTrading2. 17 15 U.S.C. 78f(b)(8).
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![Federal Register / Vol. 81, No. 106 / Thursday, June 2, 2016 / Notices 35409
the Exchange assesses fees or calculates under Section 19(b)(2)(B) 20 of the Act to should be submitted on or before June
rebates. Instead, this change is intended determine whether the proposed rule 23, 2016.
to provide greater specificity and clarity change should be approved or For the Commission, by the Division of
to the Exchange’s Price List for the disapproved. Trading and Markets, pursuant to delegated
benefit of member organizations and authority.21
IV. Solicitation of Comments
investors. Brent J. Fields,
Finally, the Exchange notes that it Interested persons are invited to Secretary.
operates in a highly competitive market submit written data, views, and [FR Doc. 2016–12876 Filed 6–1–16; 8:45 am]
in which market participants can arguments concerning the foregoing, BILLING CODE 8011–01–P
readily favor competing venues if they including whether the proposed rule
deem fee levels at a particular venue to change is consistent with the Act.
be excessive or rebate opportunities Comments may be submitted by any of SECURITIES AND EXCHANGE
available at other venues to be more the following methods: COMMISSION
favorable. In such an environment, the
Exchange must continually adjust its Electronic Comments [Release No. 34–77928; File No. SR–ISE–
fees and rebates to remain competitive • Use the Commission’s Internet 2015–30]
with other exchanges and with comment form (http://www.sec.gov/
alternative trading systems that have Self-Regulatory Organizations;
rules/sro.shtml); or International Securities Exchange,
been exempted from compliance with
the statutory standards applicable to • Send an email to rule-comments@ LLC; Notice of Designation of Longer
exchanges. Because competitors are free sec.gov. Please include File Number SR– Period for Commission Action on
to modify their own fees and credits in NYSE–2016–36 on the subject line. Proceedings To Determine Whether To
response, and because market Paper Comments Approve or Disapprove a Proposed
participants may readily adjust their Rule Change To Amend Rule 804(g)
order routing practices, the Exchange • Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities May 26, 2016.
believes that the degree to which fee
and Exchange Commission, 100 F Street On November 10, 2015, International
changes in this market may impose any
NE., Washington, DC 20549–1090. Securities Exchange, LLC (‘‘Exchange’’)
burden on competition is extremely
filed with the Securities and Exchange
limited. As a result of all of these All submissions should refer to File Commission (‘‘Commission’’), pursuant
considerations, the Exchange does not Number SR–NYSE–2016–36. This file to Section 19(b)(1) of the Securities
believe that the proposed changes will number should be included on the Exchange Act of 1934 (‘‘Act’’) 1 and Rule
impair the ability of member subject line if email is used. To help the 19b–4 thereunder,2 a proposed rule
organizations or competing order Commission process and review your change to require clearing member
execution venues to maintain their comments more efficiently, please use approval before a market maker could
competitive standing in the financial only one method. The Commission will resume trading after the activation of a
markets. post all comments on the Commission’s market-wide speed bump under
C. Self-Regulatory Organization’s Internet Web site (http://www.sec.gov/ Exchange Rule 804(g). The proposed
Statement on Comments on the rules/sro.shtml). Copies of the rule change was published for comment
Proposed Rule Change Received From submission, all subsequent in the Federal Register on November 30,
Members, Participants, or Others amendments, all written statements 2015.3 On January 13, 2016, the
with respect to the proposed rule Commission extended the time period
No written comments were solicited change that are filed with the
or received with respect to the proposed within which to approve the proposed
Commission, and all written rule change, disapprove the proposed
rule change. communications relating to the rule change, or institute proceedings to
III. Date of Effectiveness of the proposed rule change between the determine whether to disapprove the
Proposed Rule Change and Timing for Commission and any person, other than proposed rule change, to February 28,
Commission Action those that may be withheld from the 2016.4 On February 26, 2016, the
public in accordance with the Commission instituted proceedings
The foregoing rule change is effective
provisions of 5 U.S.C. 552, will be under Section 19(b)(2)(B) of the Act 5 to
upon filing pursuant to Section
available for Web site viewing and determine whether to approve or
19(b)(3)(A) 18 of the Act and
printing in the Commission’s Public disapprove the proposed rule change.6
subparagraph (f)(2) of Rule 19b–4 19
Reference Room, 100 F Street NE., The Commission has received no
thereunder, because it establishes a due,
Washington, DC 20549 on official comment letters on the proposal.
fee, or other charge imposed by the
business days between the hours of Section 19(b)(2) of the Act provides
Exchange.
10:00 a.m. and 3:00 p.m. Copies of the that proceedings to determine whether
At any time within 60 days of the
filing also will be available for to disapprove a proposed rule change
filing of such proposed rule change, the
inspection and copying at the principal must be concluded within 180 days of
Commission summarily may
office of the Exchange. All comments the date of publication of notice of the
temporarily suspend such rule change if
received will be posted without change;
it appears to the Commission that such
the Commission does not edit personal
asabaliauskas on DSK3SPTVN1PROD with NOTICES
action is necessary or appropriate in the 21 17 CFR 200.30–3(a)(12).
identifying information from
public interest, for the protection of 1 15 U.S.C. 78s(b)(1).
submissions. 2 17 CFR 240.19b–4.
investors, or otherwise in furtherance of
the purposes of the Act. If the You should submit only information 3 See Securities Exchange Act Release No. 76506
that you wish to make available (November 23, 2015), 80 FR 74829.
Commission takes such action, the 4 See Securities Exchange Act Release No. 76893
Commission shall institute proceedings publicly. All submissions should refer
(January 13, 2016), 81 FR 3217 (January 20, 2016).
to File Number SR–NYSE–2016–36 and 5 15 U.S.C. 78s(b)(2)(B).
18 15 U.S.C. 78s(b)(3)(A). 6 See Securities Exchange Act Release No. 77246
19 17 CFR 240.19b–4(f)(2). 20 15 U.S.C. 78s(b)(2)(B). (February 26, 2016), 81 FR 11305 (March 3, 2016).
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Document Created: 2016-06-02 01:22:56
Document Modified: 2016-06-02 01:22:56
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 35406 |
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