81 FR 72842 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List To Eliminate Take Fees for Bonds Executed on the NYSE BondsSM

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 204 (October 21, 2016)

[Federal Register Volume 81, Number 204 (Friday, October 21, 2016)]
[Notices]
[Pages 72842-72844]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-25466]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79106; File No. SR-NYSE-2016-65]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Price List To Eliminate Take Fees for Bonds Executed on the 
NYSE Bonds\SM\ System

October 17, 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 October 3, 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.
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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 eliminate take 
fees for bonds executed on the NYSE Bonds\SM\ system. 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.

[[Page 72843]]

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 eliminate take 
fees for bonds executed on the NYSE Bonds system. The Exchange 
currently charges transaction fees to liquidity takers for transactions 
executed on NYSE Bonds with a staggered fee schedule based on the 
number of bonds purchased or sold. Currently, the transaction fee for 
orders that take liquidity from the NYSE Bonds Book is $0.50 per bond 
for executions of one to ten (10) bonds; $0.20 per bond for executions 
of eleven (11) to twenty-five (25) bonds; and $0.10 per bond for 
executions of twenty-six (26) bonds or more. The Exchange also 
currently has a fee cap of $100 per execution.
    The Exchange proposes to eliminate the take fee for all bonds 
executed on NYSE Bonds. The Exchange also proposes to remove text from 
the fee schedule regarding the maximum fee per execution because that 
text would no longer be applicable once the take fee is eliminated.
    Additionally, the Exchange recently adopted the Liquidity Provider 
Incentive Program, a voluntary rebate program that pays Users \4\ of 
NYSE Bonds a monthly rebate provided Users who opt into the rebate 
program meet specified quoting requirements.\5\ Users who opt in to the 
Liquidity Provider Incentive Program are subject to a transaction fee 
for orders that provide liquidity to the NYSE Bonds Book of $0.50 per 
bond.\6\ For orders that take liquidity from the NYSE Bonds Book, the 
current tiered fees noted above apply. However, with this proposed rule 
change, Users who opt into the Liquidity Provider Incentive Program 
would no longer be subject to fees for orders that take liquidity. To 
reflect the elimination of take fees as proposed herein, the Exchange 
proposes to delete text from the fee schedule regarding the 
applicability of standard execution fees under the Liquidity Provider 
Incentive Program for orders that take liquidity from the NYSE Bonds 
Book because that text would no longer be applicable.
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    \4\ Rule 86(b)(2)(M) defines a User as any Member or Member 
Organization, Sponsored Participant, or Authorized Trader that is 
authorized to access NYSE Bonds.
    \5\ See Securities Exchange Act Release Nos. 77591 (April 12, 
2016), 81 FR 22656 (April 18, 2016) (SR-NYSE-2016-26); and 77812 
(May 11, 2016), 81 FR 30594 May 17, 2016) (SR-NYSE-2016-34).
    \6\ The Exchange recently adopted a fee waiver applicable to 
Users that provide liquidity in 800 or more qualifying CUSIPs quoted 
on the NYSE Bonds Book, and a fee cap of $5,000 per month applicable 
to all Users that do not attain the fee waiver. See Securities 
Exchange Act Release No. 78108 (June 21, 2016), 81 FR 41636 (June 
27, 2016) (SR-NYSE-2016-42).
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    The proposed rule change is intended to provide Users with a 
greater incentive to transact on the NYSE Bonds system.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\8\ in 
particular, because it provides for the equitable allocation of 
reasonable dues, fees, and other charges among its members, issuers and 
other persons using its facilities and does not unfairly discriminate 
between customers, issuers, brokers or dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4), (5).
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    The Exchange believes that the proposed changes to eliminate the 
transaction fee for orders that take liquidity from the NYSE bonds Book 
is reasonable and equitable as it is designed to incentivize the 
submission of such orders and increase order volume on the Exchange. 
The proposed fee change is a reasonable amendment to the Exchange's fee 
schedule and is equitably allocated and does not unfairly discriminate 
between customers, issuers, and brokers or dealers because all Users 
are eligible to submit (or not submit) displayed liquidity taking 
orders in bonds traded on the Exchange. The Exchange believes that the 
proposed fee change is a reasonable method to incentivize the 
submission of such orders, which the Exchange believes will result in a 
greater number of bonds transacted on the Exchange, thereby increasing 
displayed liquidity and traded volume on the Exchange.
    The Exchange is proposing to adopt a pricing model whereby Users 
that take liquidity from the NYSE Bonds system would not pay a fee. The 
proposed rule change will therefore benefit all Users that take 
liquidity from the NYSE Bonds system.
    The Exchange further believes that the proposed rule change is 
equitable and not unfairly discriminatory in that it will apply 
uniformly to all Users accessing the NYSE Bonds system. All similarly 
situated Users would be subject to the same fee structure, and each 
User would have the ability to determine the extent to which the 
Exchange's proposed structure will provide it with an economic 
incentive to use the NYSE Bonds system, and model its business 
accordingly.

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

    In accordance with Section 6(b)(8) of the Act,\9\ 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. Debt securities typically trade in a decentralized 
OTC dealer market that is less liquid and transparent than the equities 
markets. The Exchange believes that the proposed change would increase 
competition with these OTC venues by creating additional incentives to 
engage in bonds transactions on the Exchange and rewarding market 
participants for actively quoting and providing liquidity in the only 
transparent bond market, which the Exchange believes will enhance 
market quality.
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    \9\ 15 U.S.C. 78f(b)(8).
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    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues that 
are not transparent. In such an environment, the Exchange must 
continually review, and consider adjusting its fees and rebates to 
remain competitive with other exchanges as well as with alternative 
trading systems and other venues that are not required to comply 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 change will impair the ability of member 
organizations or competing order execution venues to maintain their 
competitive standing in the financial markets.

[[Page 72844]]

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) \10\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \11\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \12\ 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 [email protected]. Please include 
File Number SR-NYSE-2016-65 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-2016-65. 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 such 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-2016-65, and should be 
submitted on or before November 14, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-25466 Filed 10-20-16; 8:45 am]
 BILLING CODE 8011-01-P