[Federal Register: September 15, 2008 (Volume 73, Number 179)]
[Notices]
[Page 53312-53314]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15se08-127]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58473; File No. SR-NYSEArca-2008-97]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Rule Change by NYSE Arca, Inc. Amending Its Schedule
of Fees and Charges for Exchange Services in Order To Establish a New
Fee for Electronically Executed Complex Orders
September 8, 2008.
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 September 5, 2008, NYSE Arca, Inc. (``NYSE Arca'' 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 Schedule of Fees and Charges for
Exchange Services (``Schedule'') in order to establish certain
Transaction Fees.
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 purpose of this filing is to amend the existing Schedule in
order to create a new fee structure covering electronically executed
Complex Orders.\4\
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\4\ NYSE Arca Rule 6.62(e) defines a ``Complex Order'' as any
order involving the simultaneous purchase and/or sale of two or more
different option series in the same underlying security, for the
same account, in a ratio that is equal to or greater than one-to-
three (.333) and less than or equal to three-to-one (3.00) and for
the purpose of executing a particular investment strategy.
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Pursuant to a recent rule filing \5\ the Exchange will be
introducing automated complex order trading for all market participants
on NYSE Arca. In conjunction with this new functionality, the Exchange
proposes to introduce two new transaction fees specific to Complex
Order executions. Pursuant to this proposal, electronically entered and
executed Complex Orders when executed against similar contra-side
Complex Orders will be subject to a reduced transaction fee.
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\5\ See Securities Exchange Act Release No. 58174 (July 16,
2008), 73 FR 42640 (July 22, 2008) (order approving SR-NYSEArca-
2008-54, establishing rules pertaining to automated electronic
trading of Complex Orders).
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Complex Orders that are executed against other similar Complex
Orders will be subject to a transaction fee of $0.10 per contract. For
example, if a Complex Order, comprised of two legs, executes against a
similar two-legged Complex Order, each market participant will be
charged $0.20 ($0.10 per contract). To expand on this example, if the
same strategy is executed a total of ten (10) times, each participant
would be charged $2.00. If a Complex Order comprised of three legs
executes against a similar three-legged Complex Order, then each
participant would be charged $0.30 for the transaction. To expand on
this example, if the same three-legged Complex Order is executed a
total of ten (10) times, each participant would be changed $3.00. All
electronically executed Complex Orders, regardless of whether they are
entered by Market Makers, Brokers Dealers, or OTP Firms representing
Public Customers, will be billed this same rate when their order is
executed against another Complex Order.
[[Page 53313]]
The Exchange proposes a separate fee for electronically executed
Complex Orders when the same member firm represents both sides of the
transaction. Complex Orders, entered by a firm that trade against a
similar Complex Order represented by the same firm, will be subject to
a transaction fee of $0.05 per contract. For example, if a Complex
Order comprised of two legs is entered by Firm A and executes against a
similar two-legged Complex Order also for Firm A, the firm will be
charged a total of $0.20 (four contracts at $.05 per contract) for each
time the complex order strategy is executed. To expand on this example,
if the same two-legged Complex Order is executed a total of ten (10)
times, the transaction would be subject to a $1.00 fee per Complex
Order, and since the same firm is a party to both sides of the
transaction, they would be charged a total of $2.00. If a Complex Order
entered by Firm A, which is comprised of three legs, executes against a
similar three-legged Complex Order entered by Firm A, then the firm
would be charged a total of $0.30 for each time the three-legged
Complex Order is executed. To expand on this example, if the same
three-legged Complex Order is executed a total of ten (10) times, the
transaction would be subject to a $1.50 fee per Complex Order, and
since the firm represents both sides of the transaction, they would be
charged a total of $3.00.
There may be occasions where a Complex Order will not execute
against a similar contra-side Complex Order, but instead will execute
against the individual leg markets represented by quotes and/or orders
in the Consolidated Book. This scenario will occur when the best price
for the Complex Order strategy is actually represented by a combination
of individual quotes and/or orders, resting in the Consolidated Book.
In situations where Complex Orders are executed utilizing two or more
individual quotes or orders from the Consolidated Book, standard
transaction fees, as shown on the Schedule, will apply to all
participants on the trade. For Complex Order transactions in Penny
Pilot issues, when the Complex Order is executed against individual
quotes and/or orders represented in the Consolidated Book, the Complex
Order will be deemed to be taking liquidity from the Consolidated Book
and therefore will be subject to the ``Take Liquidity'' rates, as shown
on the Schedule.
NYSE Arca plans to implement these fees in conjunction with the
planned introduction of the initial phase of automated electronic
Complex Order trading on September 15, 2008.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\6\ in general, and Section
6(b)(4) of the Act,\7\ in particular, in that it is designed to provide
for the equitable allocation of reasonable dues, fees, and other
charges among its members and other persons using its facilities. in
that it provides for the equitable allocation of reasonable dues, fees
and other charges among its members and other market participants on
NYSE Arca. [sic] The Exchange believes that the proposed rates are
reasonable. The proposed rate structure is part of the Exchange's
efforts to attract and enhance participation on the Exchange, with
respect to the implementation of electronic complex order trading. The
Exchange also believes that the proposed changes to the Fee Schedule
are equitable in that they apply uniformly to all market participants
on NYSE Arca.
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\6\ 15 U.S.C. 78f.
\7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
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) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge
imposed by NYSE Arca.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate 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.
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 e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2008-97 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-NYSEArca-2008-97. This
file number should be included on the subject line if e-mail 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 inspection
and copying in the Commission's Public Reference Room, 100 F Street,
NE., Washington, DC 20549, on official business days between the hours
of 10 a.m. and 3 p.m. Copies of the filing will also be available for
inspection and copying at the principal office of the self-regulatory
organization. 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-
NYSEArca-2008-97 and should be submitted on or before October 6, 2008.
[[Page 53314]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-21330 Filed 9-12-08; 8:45 am]
BILLING CODE 8010-01-P