[Federal Register Volume 78, Number 25 (Wednesday, February 6, 2013)]
[Notices]
[Pages 8650-8652]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-02622]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68782; File No. SR-EDGX-2013-02]
Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Amendment to EDGX Rule 13.9
January 31, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 22, 2013 the EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes a rule change to amend Rule 13.9 to allow
Members the option to opt-out their routed orders from inclusion in the
Edge Routed Liquidity Report\SM\ on a market participant identifier(s)
(``MPID(s)'') basis. All of the changes described herein are applicable
to EDGX Members. The text of the proposed rule change is available on
the Exchange's Internet Web site at www.directedge.com, at the
Exchange's principal office, and at the Public Reference Room of the
Commission.
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 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, Proposed Rule Change
1. Purpose
In SR-EDGX-2012-37 (the ``Filing''),\3\ the Exchange introduced a
new market data product, Edge Routed Liquidity Report (``Edge Routed
Liquidity Report'' or the ``Service'') to Members \4\ and non-Members
of the Exchange (collectively referred to as ``Subscribers''). The Edge
Routed Liquidity Report is a data feed
[[Page 8651]]
that contains all historical order information for orders routed to
away destinations by the Exchange. The Filing stated that Edge Routed
Liquidity Report is offered as either a standard report (the ``Standard
Report'') or a premium report (the ``Premium Report'') (the Standard
Report and the Premium Report shall be collectively referred to as the
``Reports''). In SR-EDGX-2012-42,\5\ the Exchange amended Rule 13.9 to
provide additional information regarding the features of the Standard
Report and the Premium Report.
---------------------------------------------------------------------------
\3\ Securities Exchange Act Release No. 67766 (August 31, 2012),
77 FR 55251 (September 7, 2012) (SR-EDGX-2012-37).
\4\ A Member is any registered broker or dealer that has been
admitted to membership in the Exchange.
\5\ See Securities Exchange Act Release No. 67910 (September 21,
2012), 77 FR 59429 (September 27, 2012) (SR-EDGX-2012-42).
---------------------------------------------------------------------------
The Exchange proposes to amend Rule 13.9 to state that Members will
have the ability to request, on a MPID basis, and in a form prescribed
by the Exchange, that their routed orders will not be included in the
Edge Routed Liquidity Report.
If a Member wishes to opt-out their routed orders from inclusion in
the Service, such Member must submit a request to the Exchange in a
form prescribed by the Exchange. Such request will prevent the display
of the Member's routed orders in the Service effective as of the day
the request was submitted. Members can notify the Exchange via email if
they wish to revoke their election. Such request will be effective as
of the day the request was submitted.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\6\ in general, and with
Section 6(b)(5) of the Act \7\ in particular, which requires, among
other things, that the Exchange's rules are not designed to unfairly
discriminate between customers, issuers, brokers or dealers and are
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, 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.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f.
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed amendment is consistent
with those principles as Members' election to be included or excluded
in the Service is completely voluntary at any time. Providing Members
the ability to opt-out their routed orders from inclusion in the
Service makes available an additional choice that previously did not
exist. Members that do not wish to represent their orders in the
Service for any reason will be allowed to opt-out their routed orders
(on an MPID basis) from being included in the Service and any Member
may cancel their subscription to the Service at any time.
The Exchange also believes that the proposed amendment is
consistent with the principles of Section 6(b)(5) of the Act because
allowing Members the ability to opt-out their routed order data from
inclusion in the Service does not implicate any concerns related to
manipulation or fraud. Because all data in the Service is displayed on
an anonymous basis, Subscribers will be unaware of which Members have
chosen to opt-out their routed order data from the Service.
Lastly, the proposal is nondiscriminatory because it applies
uniformly to all Members. The Exchange believes that it is important to
make this feature transparent to Subscribers of the Service by
proposing to codify this principle in Rule 13.9.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As the Service
is similar to those historical data products already provided by other
exchanges, the Exchange believes the Service increases competition in
the market for historical data products.\8\ In addition, the Exchange
believes that the ability of Members to exclude their routed orders
from the Service will help to maintain the competitiveness of the
Service. This is because the Exchange believes that this additional
feature will attract greater order flow to the Exchange as certain
Members that do not wish their routed order information from being
provisioned within the Service will simply exclude their routed orders
from the Service as opposed to taking that additional order flow to
other competing exchanges. Accordingly, allowing Members the option to
exclude their routed order flow from the Service enables the Exchange
to remain competitive with other exchanges.
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 61885 (April 9,
2010), 75 FR 20018 (April 16, 2010) (SR-BATS-2010-002) (adopting
BATS market data products, including BATS Historical Data Products);
see also, NYSE Technologies, Market Data, www.nyxdata.com (providing
information regarding historical data products offered by the NYSE;
see also, NASDAQ Rules 7022 and 7023 (establishing fees for
Historical Research and Administrative Reports and NASDAQ Depth-of-
Book Data); see also, Securities Exchange Act Release No. 61416
(January 25, 2010), 75 FR 5821 (February 4, 2010) (SR-NASDAQ-2010-
010) (relating to NASDAQ rule governing Historical ModelView
product); see also, Securities Exchange Act Release No. 66403
(February 15, 2012), 77 FR 10593 (February 22, 2012) (SR-EDGA-2012-
05) (adopting EdgeBook Cloud service); see also, Securities Exchange
Act Release No. 66402 (February 15, 2012), 77 FR 10595 (February 22,
2012) (SR-EDGX-2012-05) (adopting EdgeBook Cloud service).
---------------------------------------------------------------------------
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 its Members or other interested
parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) \9\ of the Act and Rule 19b-4(f)(6) thereunder.\10\
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
A proposed rule change filed under 19b-4(f)(6) normally may not
become operative prior to 30 days after the date of filing.\11\
However, Rule 19b-4(f)(6)(iii) \12\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative delay. The Exchange notes that
waiver of the 30-day operative delay will allow Members who wish to
opt-out their routed orders from inclusion in the Service to do so
immediately without further delay. The Exchange notes that, without the
ability to opt-out their
[[Page 8652]]
routed orders from inclusion in the Service, Members may elect to
redirect their routed order flow to the Exchange's competitors.
Accordingly, the Exchange believes that this additional feature should
not be delayed as it will allow the Exchange to remain competitive with
other market centers. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest because such waiver would allow Members who wish to
maintain order flow to the Exchange but who do not want their routed
orders included in the Service to opt-out immediately. For this reason,
the Commission designates the proposed rule change to be operative upon
the operative date of the Filing.\13\
---------------------------------------------------------------------------
\11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
\12\ Id.
\13\ For the purposes only of waiving the 30-day operative
delay, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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 Number SR-EDGX-2013-02 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.
All submissions should refer to File Number SR-EDGX-2013-02. 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, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of EDGX. 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-EDGX-2013-02 and should be
submitted on or before February 27, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-02622 Filed 2-5-13; 8:45 am]
BILLING CODE 8011-01-P