[Federal Register Volume 76, Number 240 (Wednesday, December 14, 2011)]
[Notices]
[Pages 77877-77878]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32066]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65911; File No. SR-EDGA-2011-40]
Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of
Filing of Proposed Rule Change To Amend EDGA Rule 11.9
December 8, 2011.
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 2, 2011, the EDGA Exchange, Inc. (``Exchange'' or ``EDGA'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend certain existing routing options
contained in Rule 11.9 to provide Users \3\ with more flexible routing
options. The text of the proposed rule change is available on the
Exchange's Web site at http://www.directedge.com, at the Exchange's
principal office and at the Public Reference Room of the Commission.
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\3\ As defined in Rule 1.5(cc).
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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 self-regulatory organization 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's current list of routing options are codified in Rule
11.9(b)(3). In this filing, the Exchange proposes to amend several
routing options contained in Rule 11.9(b)(3) to allow Users more
discretion if shares remain unexecuted after routing. In particular,
Rule 11.9(b)(3) is proposed to be amended to provide that Users may
elect that any remainder of an order be posted to the EDGX Exchange,
Inc. (``EDGX'') for any of the routing options listed in the rule,
except those in paragraphs (a) and (n)-(q) \4\.
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\4\ Routing options listed in Rules 11.9(b)(3)(a) and (n)-(q)
are not altered as a result of this amendment. The routing option in
Rule 11.9(b)(3)(a) already posts to EDGX and no amendment to the
rule is needed as no discretion is provided to the User. The routing
options in Rules 11.9(b)(3)(n)-(q) do not have the option to post
the remainder of an order to EDGX.
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Currently, Rule 11.9(b)(3)(d) provides that the INET routing
strategy checks the System for available shares and then is sent to
Nasdaq. If shares remain unexecuted after routing, they are posted on
the Nasdaq book. The Exchange proposes to modify this language to
subject this posting to Nasdaq to a User instruction as proposed in the
introductory paragraph of Rule 11.9(b)(3). This User instruction would
thus enable the remainder to post to EDGX instead of Nasdaq.
Currently, Rule 11.9(b)(3)(j) provides that the ROLF routing
strategy checks the System for available shares and then is sent to
LavaFlow ECN. The Exchange proposes to modify this strategy to state
that any remainder will be posted to LavaFlow ECN, unless otherwise
instructed by the User. This User instruction would thus enable the
User to direct the remainder to post to EDGX instead of LavaFlow ECN.
Rule 11.9(b)(3)(m) provides that the IOCT routing option checks the
System for available shares and then is sent sequentially to
destinations on the System routing table. If shares remain unexecuted
after routing, they are sent as an immediate or cancel (IOC) \5\ order
to EDGX. If shares further remain unexecuted, they are posted on the
EDGA Book, unless otherwise instructed by the User. The Exchange
proposes to modify this strategy to delete the phrase ``sent as an IOC
order'' since a Day Order \6\ or an IOC order could be sent to EDGX.
This change would thus enable
[[Page 77878]]
the User to direct the remainder to post to EDGX instead of EDGA.
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\5\ As defined in Rule 11.5(b)(1).
\6\ As defined in Rule 11.5(b)(2).
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The Exchange also proposes to amend Rule 11.9(b)(3)(a), which
currently states that any shares that remain unexecuted after routing
are posted to ``the EDGX Exchange book'', to eliminate the word
``Exchange''. In light of the routing options modifications proposed
herein, paragraph 11.9(b)(3) would also be modified to define EDGX at
the outset and state that except for the routing options provided in
paragraphs (a) and (n)-(q), Users can post any remainder of an order to
EDGX. Accordingly, the reference to the word ``Exchange'' in Rule
11.9(b)(3)(a) would be redundant.
The Exchange believes the proposed modification of the routing
options described above will provide market participants with greater
flexibility in routing orders without having to develop their own
complicated routing strategies. In addition, the varied routing options
allow Users to take primary advantage of EDGA's low cost fee structure
to remove liquidity on EDGA and if applicable, other destinations. Yet,
the User retains the option of posting the remainder of the order to
EDGX.
Assuming the Commission approves the proposed rule change, the
Exchange will notify its Members in an information circular of the
exact implementation date(s) of this rule change, which will be no
later than March 31, 2012.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b)(5) of the Act,\7\ which requires the rules of an
exchange to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, to protect investors and the
public interest. The proposed change to introduce the routing options
described above will provide market participants with greater
flexibility in routing orders without having to develop their own order
routing strategies. In addition, it will provide additional clarity and
specificity to the Exchange's rulebook regarding routing strategies and
will further enhance transparency with respect to Exchange routing
offerings. Finally, the varied routing options allow Users to take
primary advantage of EDGA's low cost fee structure to remove liquidity
on EDGA and if applicable, other destinations. Yet, the User retains
the option of posting the remainder of the order to EDGX.
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\7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in 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 on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(a) By order approve or disapprove the proposed rule change, or
(b) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File No. SR-EDGA-2011-40 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-EDGA-2011-40. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 Web site viewing and
printing in the Commission's Public Reference Room on official business
days between 10 a.m. and 3 p.m. Copies of the filing will also be
available for inspection and copying at the principal office of the
Exchange. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
EDGA-2011-40 and should be submitted on or before January 4, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-32066 Filed 12-13-11; 8:45 am]
BILLING CODE 8011-01-P