[Federal Register Volume 78, Number 88 (Tuesday, May 7, 2013)]
[Notices]
[Pages 26669-26671]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-10704]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69482; File No. SR-EDGX-2013-14]
Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Amendments to the EDGX Exchange, Inc. Fee Schedule
April 30, 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 April 23, 2013, EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, 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.
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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 its fees and rebates applicable to
Members \3\ and non-Members of the Exchange pursuant to EDGX Rule
15.1(a) and (c). All of the changes described herein are applicable to
EDGX Members and non-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.
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\3\ As defined in Exchange Rule 1.5(n).
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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 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
In SR-EDGX-2010-06,\4\ the Exchange adopted an annual fee per
physical port utilized by Members and non-Members to connect to the
Exchange's System \5\ for order entry and the receipt of Exchange data,
among other reasons. A physical port is a port used by a Member or non-
Member to connect into the Exchange at the data centers where Exchange
servers are located. Physical port connections can occur either through
an external telecommunication circuit or a cross-connection. The
Exchange noted at the time of filing that
[[Page 26670]]
other market centers provided similar services.\6\ In SR-EDGX-2013-
03,\7\ the Exchange amended its fee schedule, effective February 1,
2013, to eliminate the option for Members and non-Members to pay for
physical ports on an annual basis.
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\4\ See Securities Exchange Act Release No. 62437 (July 1,
2010), 75 FR 39599 (July 9, 2010) (SR-EDGX-2010-06).
\5\ As defined in Exchange Rule 1.5(cc).
\6\ See Securities Exchange Act Release No. 62437 (July 1,
2010), 75 FR 39599 (July 9, 2010) (SR-EDGX-2010-06) (citing
Securities Exchange Act Release No. 61545 (February 19, 2010), 75 FR
8769 (February 25, 2010) (SR-BATS-2009-032) and Securities Exchange
Act Release No. 62392 (June 28, 2010), 75 FR 38857 (July 6, 2010)
(SR-NASDAQ-2010-077)).
\7\ See Securities Exchange Act Release No. 68831 (February 5,
2013), 78 FR 9763 (February 11, 2013) (SR-EDGX-2013-03).
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The Exchange currently assesses the following physical port fees
for Members and non-Members on a monthly basis: $500 per physical port
that connects to the System via a 1 gigabyte Copper circuit; $750 per
physical port that connects to the System via a 1 gigabyte Fiber
circuit; and $1,000 per physical port that connects to the System via a
10 gigabyte Fiber circuit.
The Exchange proposes to amend its fee schedule to account for
increased infrastructure costs associated with providing physical
ports. As such, the Exchange proposes to amend its fee schedule,
effective May 1, 2013, to assess the following physical port fees for
Members and non-Members: (i) Increase the monthly fee per physical port
that connects to the System via a 1 gigabyte Fiber circuit from $750 to
$1,000; (ii) increase the monthly fee per 10 gigabyte Fiber circuit
from $1,000 to $2,000. The Exchange notes that the fee charged per 1
gigabyte Copper circuit will remain unchanged.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\8\ in general, and
furthers the objectives of Section 6(b)(4),\9\ in particular, as it
provides for the equitable allocation of reasonable dues, fees and
other charges among its Members and other persons using its facilities.
The Exchange believes that the proposal represents an equitable
allocation of reasonable dues, fees, and other charges as its billing
for port fees is reasonably constrained by competitive
alternatives.\10\ If a particular exchange charges excessive fees for
connectivity, affected Members and non-Members will opt to terminate
their connectivity arrangements with that exchange, and adopt a
possible range of alternative strategies, including routing to the
applicable exchange through another participant or market center or
taking that exchange's data indirectly. Accordingly, if the Exchange
charges excessive fees, it would stand to lose not only connectivity
revenues but also revenues associated with the execution of orders
routed to it, and, to the extent applicable, market data revenues. The
Exchange believes that this competitive dynamic imposes powerful
restraints on the ability of any exchange to charge unreasonable fees
for connectivity.
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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(4).
\10\ See Securities Exchange Act Release No. 69226 (March 25,
2013), 78 FR 19350 (March 29, 2013) (SR-BATS-2013-018). See, e.g.,
Nasdaq Rule 7034(b); BATS BZX & BYX Exchange Fee Schedules,http://cdn.batstrading.com/resources/regulation/rule_book/BATS-Exchanges_Fee_Schedules.pdf.
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Furthermore, the proposed rule change is also an equitable
allocation of reasonable dues, fees, and other charges as the Exchange
believes that the increased fees obtained will enable it to cover its
increased infrastructure costs associated with establishing physical
ports to connect to the Exchange's systems at the Exchange's primary
and secondary data centers. The additional revenue from the increased
fees will also enable the Exchange to continue to maintain and improve
its market technology and services. The Exchange believes that the
proposed fees for 1 gigabyte Fiber circuit of $1,000 per month and for
10 gigabyte Fiber circuit of $2,000 per month are reasonable in that
they are in the same range as analogous fees charged by other
exchanges, which are $1000 per month for 1 gigabyte connectivity and
range from $2,500-$5,000 per month for 10 gigabyte circuits.\11\
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\11\ See, e.g., Nasdaq Rule 7034(b); BATS BZX & BYX Exchange Fee
Schedules, http://cdn.batstrading.com/resources/regulation/rule_book/BATS-Exchanges_Fee_Schedules.pdf.
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Finally, the Exchange believes that the proposed rates are
equitable and non-discriminatory in that they apply uniformly to all
Members and non-Members. Members and non-Members will continue to
choose whether they want more than one physical port and choose the
method of connectivity based on their specific needs.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. As discussed above, the
Exchange believes that fees for connectivity are constrained by the
robust competition for order flow among exchanges and non-exchange
markets. Further, excessive fees for connectivity, including port fee
access, would serve to impair an exchange's ability to compete for
order flow rather than burdening competition. The proposal to increase
the fees for physical connectivity would bring the fees charged by the
Exchange closer to similar fees charged for physical connectivity by
other exchanges.\12\
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\12\ Id.
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In addition, the proposed rule change does not impose any burden on
intramarket competition as the fees are uniform for all Members and
non-Members. The Exchange notes that Members and non-Members also have
the ability to obtain access to these services without the need for an
independent physical port connection, such as through alternative means
of financial extranets and service bureaus that act as a conduit for
orders entered by Members and non-Members.
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(2) \14\ thereunder. 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.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(2).
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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
[[Page 26671]]
Number SR-EDGX-2013-14 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-EDGX-2013-14. 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 the filing also will 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-EDGX-2013-14 and should be
submitted on or before May 28, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-10704 Filed 5-6-13; 8:45 am]
BILLING CODE 8011-01-P