SEC Extends Exemptive Relief from Rule 612 of Regulation NMS to New York Stock Exchange LLC and NYSE MKT LLC in Connection with the Exchanges' Retail Liquidity Programs

On July 31, 2014, the SEC issued an order extending exemptive relief from the requirements of Rule 612 of Regulation NMS (the "Sub-Penny Rule") to New York Stock Exchange LLC ("NYSE") and NYSE MKT LLC ("NYSE MKT" and together with the NYSE, the "Exchanges"), in connection with the Exchanges' Retail Liquidity Programs (the "Programs").

The exemptive relief extends to March 15, 2014, which coincides with the Exchanges' immediately effective filings that extended the Programs through the same date. The Exchanges cited recent increased participation in the Programs and the need for additional time to analyze data concerning the Programs, which the Exchanges committed to provide to the SEC.

The Exchanges established the Programs in order to attract retail order flow to the Exchanges. The Programs allow designated market participants, known as Retail Liquidity Providers, to provide price improvement to retail orders in sub-penny increments and subsequently receive priority over the Exchanges' otherwise protected best bid or offer. The Sub-Penny Rule prohibits national security exchanges (such as NYSE and NYSE MKT), among other trading venues, from accepting bids or offers in sub-penny increments in any NMS stock priced equal to or greater than $1.00. Therefore, by offering the Programs, the Exchanges would be in violation of the Sub-Penny Rule without the SEC's exemptive relief.

See: Order Granting Extension of Exemptive Relief from NMS Rule 612; Effective Immediately - Rule Change Extending the Pilot Period for the Exchange's Retail Liquidity Program for NYSE; Effective Immediately - Rule Change Extending the Pilot Period for the Exchange's Retail Liquidity Program for NYSE MKT; Order Granting Approval of the Retail Liquidity Program.