Supplemental Liquidity Providers - NYSE exchange rule 107 B

Discussion in 'Trading' started by ASusilovic, May 3, 2009.

  1. SECURITIES AND EXCHANGE COMMISSION (Release No. 34-58877; File No. SR-NYSE-2008-108)
    October 29, 2008 Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change for a Six-Month Pilot Program to Establish a New Class of NYSE Market Participants That Will Be Referred to as “Supplemental Liquidity Providers” (“SLPs”) and Will Be Designated as Exchange Rule 107B
    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 24, 2008, 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 and II 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.

    I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes a six-month pilot program (“Pilot” or “program”) to establish a new class of NYSE market participants that will be referred to as “Supplemental Liquidity Providers” (“SLPs”) and will be designated as Exchange Rule 107B.

    The text of the proposed rule change is available at NYSE,, 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, 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 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

    With this rule filing, the “NYSE is proposing a six-month pilot program to establish a new class of market participants: Supplemental Liquidity Providers (“SLP”). SLPs will supplement the liquidity provided by Designated Market Makers (“DMMs”) when the NYSE “New Market Model” is approved by the SEC.

    SLPs may only enter orders electronically from off the Floor of the Exchange and may only enter such orders directly into Exchange systems and facilities designated for this purpose. All SLP orders must only be for the proprietary account of the SLP member organization. Thus, an SLP will not handle orders from public customers or otherwise act on an agency basis. They will have a 5% average quoting requirement per assigned security.

    Additionally, if an SLP posts displayed or non-displayed liquidity in its assigned securities that results in an execution, the Exchange will pay the SLP a financial rebate.

    By establishing this new class of market participant, the NYSE is seeking to provide incentives for quoting and to add competition to the existing group of liquidity providers. By requiring SLPs to quote at the National Best Bid (“NBB”) or the National Best Offer (“NBO”) a percentage of the regular trading day in their assigned securities, and by paying a rebate when the SLP’s interest results in an execution, the Exchange is rewarding aggressive liquidity providers in the market. The Exchange believes that this rebate program will encourage the additional utilization of, and interaction with, the NYSE and provide customers with the premier venue for price discovery, liquidity, competitive quotes and price improvement.
  2. sounds like nasdaq to me.
  3. bellman


    Like the Nasdaq, but instead of favoring the entire trading public it provides the incentives for a select few. I am against it.