SIFMA Submits Comments Regarding NYSE's Proposed Institutional Liquidity Program

SIFMA submitted comments to the SEC regarding a rule proposed by the New York Stock Exchange, LLC ("NYSE") to establish an institutional liquidity program on a one-year pilot basis.

Under the proposal, as a one-year pilot program, NYSE would add the new NYSE Rule 107D to establish an Institutional Liquidity Program ("ILP") to attract buying and selling interest to NYSE for NYSE-listed securities by facilitating interactions between institutional customers and providers of liquidity exceeding minimum size requirements. In the comment letter, SIFMA stated its support for competition in the securities industry and encouraged all market participants, including NYSE, to develop and provide innovative products to investors.

SIFMA asserted, however, that the ILP raises broader policy issues that would reflect a policy change by the SEC, since exchanges and broker-dealers are subject to differing statutory and regulatory requirements. Specifically, SIFMA stated that the SEC should address how permitting an exchange to segment order flow is consistent with NYSE's obligation under Exchange Act Section 6(b)(5) ("National Securities Exchanges") to prevent unfair discrimination among market participants. SIFMA asserted that this raises an additional fundamental issue of distinguishing between the commercial offerings of a national securities exchange and the functions that an exchange carries out in its role as an SRO with regard to regulatory immunity. SIFMA requested that any final disposition by the SEC on the proposed rule change explicitly recognize the distinction between regulatory and commercial functions of an exchange.

See:Comment Letter.