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Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the New York Stock Exchange, Inc., Relating to the Adoption of Transaction Fees

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Start Preamble Start Printed Page 78522 December 8, 2000.

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 December 7, 2000, the New York Stock Exchange, Inc. (“NYSE” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The Exchange proposes to adopt a specific transaction fee schedule to apply to investment company units listed under Section 703.16 of the Exchange's Listed Company Manual. The text of the proposed rule change is available upon request from the Office of the Secretary, the NYSE or the Commission.

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 Exchange 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. The Exchange 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 anticipants that it will shortly list investment company units (more generally known as an exchange traded fund or ETF) based on the S&P Global 100 Index. The Exchange expects to list additional ETFs thereafter. Given that it is the practice in the industry to charge relatively nominal listing fees for ETFs, it is important for the Exchange to realize revenue from transaction fees on ETFs to support its entry into this market. Accordingly, the Exchange will impose a specific transaction fee schedule on ETFs, as follows:

On-Floor proprietary transactions (specialist and other)—$0.63 per 100 shares, capped at $300 per trade.

Off-Floor transactions (customer and broker/dealer)—$0.60 per 100 shares, capped at $100 per trade.

In addition, it should be noted that the Exchange's transaction charge exemption for system orders, currently covering orders up to 2,099 shares, will be extended to orders up to 5,099 shares in ETFs.

The NYSE Constitution provides that transaction fees on stocks and bonds will not exceed 2% of a member firm's commissions.[3]  ETFs are a unique form of derivative security and therefore not subject to this Constitutional limitation. This is consistent with treatment afforded to standardized options when they were listed on the Exchange, and to other unique products such as the Exchange Stock Portfolios, a basket trading mechanism offered approximately a decade ago.

2. Statutory Basis

The Exchange believes the proposed rule change is consistent with Section 6(b) of the Act [4] in general, and furthers the objectives of Section 6(b)(4) of the Act[5] in particular, in that it provides for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities.

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

The Exchange believes that the proposed fee change will not impose any burden on competition that is not necessary or appropriate in the 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

The Exchange has not solicited, and does not intend to solicit, comments regarding the proposed rule change. The Exchange has not received any unsolicited written comments from members of other interested parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

The foregoing rule change establishes or changes a due, fee, or other charge imposed by the Exchange and, therefore, has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act [6] and Rule 19b-4(e) thereunder.[7] 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 purpose 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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 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. Copies of such filing will also be available for inspection and copying at the principal office of the NYSE. All submissions should refer to File No. SR-NYSE-00-56 and should be submitted by January 5, 2001.

Start Signature
Start Printed Page 78523

For the Commission by the Division of Market Regulation, pursuant to delegated authority.[8]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble


3.  The NYSE reconfirmed its Board's discretion under Article X, Section 4 of the NYSE Constitution to impose transaction fees on its members. Telephone conversation between James Duffy, Senior Vice President and Deputy General Counsel, NYSE, and Deborah Flynn, Senior Special Counsel, Division of Market Regulation, Commission, December 7, 2000.

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6.  15 U.S.C. 78s(b)(3)(A)(ii).

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[FR Doc. 00-31996 Filed 12-14-00; 8:45 am]