Daily Rules, Proposed Rules, and Notices of the Federal Government
The Exchange proposes certain changes to the transaction fees within its Price List for its facility, the New York Block Exchange
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.
The Exchange is proposing to reduce certain transaction fees within its Price List for NYBX transactions and that such reductions become operative on November 1, 2012.
NYBX is the electronic facility of the Exchange that provides for the continuous matching and execution of all non-displayed NYBX orders with the aggregate of liquidity in the NYBX facility, the Exchange's Display Book(r) ("DBK") as provided in NYSE Rule 1600, and considers the protected quotations of all automated trading centers for securities listed on the Exchange.
The Exchange currently offers a per share charge of $0.0030 for the execution of all orders entered into NYBX regardless of whether the order executes in NYBX, DBK, or in another market center, such as NYSE Arca,
1. The Exchange proposes to reduce the per share charge from $0.0030 to $0.0005 for all orders executing in NYBX.
2. The Exchange proposes to reduce the per share charge from $0.0030 to $0.0005 for all executions of Midpoint Pegging Orders
3. The Exchange proposes to reduce the per share charge from $0.0030 to $0.0025 for all orders executing in DBK other than Midpoint Pegging Orders entered into NYBX.
All other executions of orders entered into NYBX will maintain a per share charge of $0.0030.
The Exchange believes that the proposed reduction of charges for NYBX orders executing in NYBX and DBK and executions of Midpoint Pegging Orders entered into NYBX, as specified, will reduce transaction costs for and potentially offer additional block trading liquidity to NYBX participants. In addition, the scope of the reduction generally aligns with costs associated with NYBX's routing orders to other market centers to access more favorable prices. When an NYBX order executes outside of NYBX, the market center on which the order executes charges NYBX, with the per share charge being as high as $0.0030.
The Exchange believes that the lower per share charge of $0.0005 should also be applied to an NYBX execution of a Midpoint Pegging Order, regardless of whether the order is executed in NYBX, in DBK, or in another market center. While Midpoint Pegging Orders could potentially execute outside of NYBX, such an execution outside of NYBX is uncommon. Reducing the transaction fee for all NYBX executions of Midpoint Pegging Orders affords pricing certainty for such orders. Midpoint Pegging Orders provide price improvement for both sides of the transaction between the quoted spread, and therefore, the lower charges will facilitate price improvement.
Finally, the Exchange proposes to reduce the charges for all executions in
The proposed change is not otherwise intended to address any other matter, and the Exchange is not aware of any significant problem that the affected market participants would have in complying with the proposed change.
The Exchange believes that the proposed rule change is consistent with the requirements of Section 6(b) of the Act,
Specifically, the Exchange believes that reducing transaction charges for NYBX executions is reasonable because it will lower participants' trading costs and the Exchange expects that it will enhance trading liquidity available to NYBX participants. The Exchange believes that the limitation of the reduction to those orders occurring inside NYBX is equitable and not unfairly discriminatory because it is aligned with the costs experienced by NYBX, in that when two orders are matched in NYBX, NYBX does not incur a fee from another market, while when an order is routed to other market centers the other market center on which the order executes charges NYBX.
The Exchange believes that reducing the per share charge for all executions of Midpoint Pegging Orders entered into NYBX is reasonable because it will incentivize Midpoint Pegging Orders by lowering participants' trading costs and providing pricing certainty for such orders. The Exchange believes that limiting the proposed change to Midpoint Pegging Orders is equitable and not unfairly discriminatory because, unlike other types of orders, Midpoint Pegging Orders execute at the midpoint of the NBBO, and therefore encouraging Midpoint Pegging Orders will further the Exchange's goal to facilitate price improvement on both sides of a trade.
The Exchange believes that reducing the charges for all executions in DBK of orders entered into NYBX, excepting Midpoint Pegging Orders, is reasonable because as a result of the change members will be charged the same fee for an NYBX order executed in DBK as the fee charged to non-Floor broker members entering orders into DBK directly, with the exception of orders in stocks with a per share stock price lower than $1.00,
Additionally, the proposed changes to the fee schedule allows NYBX to compete with other market centers for block liquidity and to deliver the benefits of competition in the form of reduced transaction costs to investors utilizing block trading venues.
Finally, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues. In such an environment, the Exchange continually reviews, and considers adjusting its fees to remain competitive with other market centers. For the reasons described above, the Exchange believes that the proposed rule change both meets the needs of NYBX and benefits the users of NYBX.
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.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
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.
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:
* Use the Commission's Internet comment form (
* Send an email to
* Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
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 (