[Federal Register: March 11, 2008 (Volume 73, Number 48)]
[Notices]
[Page 13064-13065]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11mr08-117]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57433; File No. SR-NYSE-2008-15]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Provide a Credit to Members for Execution of Orders Sent Directly to a
Floor Broker that Adds Liquidity to the Exchange
March 5, 2008.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 28, 2008, the New York Stock Exchange LLC (``NYSE'' or
``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 substantially prepared by the
Exchange. The Exchange filed the proposed rule change pursuant to
section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\
which renders it effective upon filing with the Commission. 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\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(2).
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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 equity transaction fees, for
implementation on March 1, 2008. Member Organizations will receive a
$.0004 per share credit for execution of orders sent directly to the
floor broker for representation on the NYSE when adding liquidity to
the NYSE Display Book[supreg] system (including Percentage Orders). The
text of the proposed rule change is available at http://www.nyse.com,
the Exchange, and 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, NYSE 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 these statements may be examined at the places specified in
Item IV below. NYSE has prepared summaries, set forth in sections A, B,
and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its equity transaction fees, for
implementation on March 1, 2008. Member organizations will receive a
$.0004 per share credit for execution of orders sent directly to the
floor broker for representation on the NYSE when adding liquidity to
the NYSE Display Book system \5\ (including Percentage Orders).\6\
Technological limitations \7\ make it impossible for floor brokers to
post orders on other markets while at the point of sale on the
Exchange. Therefore, unlike other Exchange users, they are unable to
benefit from the incentives certain other markets provide to customers
who provide liquidity. The time that would elapse if a floor broker
sent the order to his booth or upstairs trading desk for execution on
another market means that, if the floor broker utilized this
alternative, the trade would likely not get executed at the desired
price. The Exchange believes this disparity places floor brokers at a
competitive disadvantage to other Exchange customers and believes that
the proposed credit will mitigate the effects of that disadvantage
while also attracting additional liquidity to the Exchange.
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\5\ The Display Book system is an order management and execution
facility. The Display Book system receives and displays orders to
the specialists, contains the Book, and provides a mechanism to
execute and report transactions and publish the results to the
Consolidated Tape. The Display Book system is connected to a number
of other Exchange systems for the purposes of comparison,
surveillance, and reporting information to customers and other
market data and national market systems.
\6\ An order adds liquidity to the market if it is posted on the
book for execution against incoming orders on the contra side.
Generally, Exchange customers are able to send their orders to other
markets to avail themselves of incentives those markets provide to
customers who provide liquidity. Floor brokers add liquidity to the
market by posting orders either as e-Quotes or as DOT or Percentage
Orders. Non-electronic trades on the Exchange floor do not add
liquidity to the book and are either charged a fee of $.0004 per
share (if they are non-electronic agency transactions of less than
10,000 shares between brokers in the crowd) or are free (if they are
non-electronic trades of 10,000 shares or more).
\7\ The Exchange's order management system on the floor, the
Broker Booth Support System[supreg] (BBSS), is not configured to
route orders away from the floor to another market.
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The Exchange believes the credit is justified because of the
importance of the floor brokers to the continuation of the floor as an
integral part of the Exchange's market model. The Exchange's market
model integrates the auction market with automated trading. Essential
to this model is the interaction between the specialists, floor
brokers, and orders in the Display Book system, which creates
opportunities for price improvement, provides information about
changing market conditions, and serves as a catalyst to trading. The
Exchange believes that this incentive will allow floor brokers to
remain competitive.
The Exchange's 2008 Price List is also being modified to reflect
the fact that it is no longer necessary to note that Percentage Orders
adding liquidity to the NYSE are free of charge, as Percentage Orders
can only be accepted by Exchange systems if sent through a floor
broker's hand-held device, and thus all Percentage Orders that were
formerly free will now receive the $.0004 per share credit.
[[Page 13065]]
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of section 6 of the Act \8\ in general, and
furthers the objectives of section 6(b)(4) of the Act \9\ 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. The Exchange believes
that the proposed credit represents an equitable allocation of
reasonable dues, fees, and other charges because floor brokers are
integral to the Exchange's market model and the proposed credit lessens
the impact on floor brokers of the competitive disadvantage arising out
of the difficulty they experience in availing themselves or their
customers of liquidity credits on other markets.
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\8\ 15 U.S.C. 78f
\9\ 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 purpose of the Exchange Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change is filed pursuant to section
19(b)(3)(A)(ii) of the Act \10\ and subparagraph (f)(2) of Rule 19b-4
thereunder \11\ because it establishes or changes a due, fee, or other
charge applicable only to a member imposed by a self-regulatory
organization. Accordingly, the proposal is effective upon Commission
receipt of the filing. 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.
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4(f)(2).
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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 e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSE-2008-15 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2008-15. 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
theprovisions 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 such filing also will be available for
inspection and copying at the principal office of NYSE. 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-2008-15 and should be
submitted on or before April 1, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-4747 Filed 3-10-08; 8:45 am]
BILLING CODE 8011-01-P