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The Programme’s stated objective is to attract additional retail order flow to the NYSE for NYSE-listed securities and to the NYSE Amex for NYSE Amex-listed securities, while also providing price improvement through sub-penny pricing. The Programme would create two new classes of market participants: Retail Member Organisations (“RMO”) and Retail Liquidity Providers (“RLP”).
In addition, the Programme also implicates issues concerning: (i) firms’ best execution and Order Protection Rule (“OPR”) obligations, and (ii) the potential interplay of sub-penny quoting and venues’ access fees/rebates, which is complex and should be fully considered. Further, it is not even clear that “true” retail orders will benefit from the Exchanges’ proposals. While SIFMA supports and encourages the exchanges to provide innovative products to investors, given these outstanding issues, SIFMA does not believe that the Commission can conclude that the Programme, as presently contemplated, is consistent with the Exchange Act.
SIFMA believes that the Programme is inconsistent with certain provisions of the Exchange Act, and the SEC should therefore disapprove the Exchanges’ proposed rule changes. SIFMA maintains that the Programme and related request for an exemption from the prohibitions against sub-penny accepting and ranking under Regulation NMS raise significant market structure concerns that the SEC itself has raised in recent releases.