[Federal Register Volume 78, Number 130 (Monday, July 8, 2013)]
[Notices]
[Pages 40781-40782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-16226]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69899; File No. SR-EDGX-2013-24]
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
July 1, 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 June 26, 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. 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\ A Member is any registered broker or dealer, or any person
associated with a registered broker or dealer that has been admitted
to membership in the Exchange.
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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
The Exchange maintains logical ports for order entry (FIX, HP-API),
drop copies (DROP), EdgeRisk and market data (collectively, ``Direct
Logical Ports'').\4\ In SR-EDGX-2012-36, the Exchange reduced the
number of free Direct Logical Ports from ten (10) sessions to five (5)
sessions.\5\ The Exchange proposes to reduce the quantity of free
Direct Logical Ports from five (5) sessions to two (2) sessions. The
Exchange would assess a monthly fee per logical port for Members and
non-Members that maintain three or more Direct Logical Ports. In
addition, the Exchange, pursuant to an information circular dated June
4, 2013, communicated to Members and non-Members that the Exchange
would propose these changes in a subsequent filing with the Securities
and Exchange Commission.\6\
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\4\ See Securities Exchange Act Release No. 69670 (May 30, 2013)
78 FR 33871 (June 5, 2013) (SR-EDGX-2013-18) (adding EdgeRisk ports
to the list of logical ports offered by the Exchange); Securities
and Exchange Act Release No. 64963 (July 26, 2011), 76 FR 45895
(August 1, 2011) (SR-EDGX-2011-21) (discussing the Exchange's
proposal to include logical ports that receive market data among the
types of logical ports that the Exchange assesses a monthly fee to
Members and non-Members).
\5\ See Securities and Exchange Act Release No. 67741 (August
28, 2012), 77 FR 53950 (September 4, 2012) (SR-EDGX-2012-36)
(discussing the Exchange's proposal to reduce its number of free
logical ports from ten (10) to five (5)).
\6\ See Direct Edge Trading Notice 13-23: Logical Port
Fee Changes Effective July 1, 2013, http://www.directedge.com/About/Announcements/ViewNewsletterDetail.aspx?NewsletterID=1010.
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The Exchange further proposes to make a ministerial change to its
fee schedule by changing the name of its HP-API logical ports from
``HP-API'' to ``Edge XPRS (HP-API).''
The Exchange proposes to implement these amendments to its fee
schedule on July 1, 2013.
2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent
with the objectives of Section 6 of the Act,\7\ in general, and
furthers the objectives of Section 6(b)(4),\8\ in particular, as the
proposed rule changes are designed to provide for the equitable
allocation of reasonable dues, fees and other charges among Members and
other persons using the Exchange's facilities.
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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(4).
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The Exchange believes its proposal to amend its fee schedule to
reduce the quantity of free Direct Logical Ports from five sessions to
two sessions represents an equitable allocation of reasonable dues,
fees and other charges because the Exchange has recently implemented
several infrastructure enhancements that optimized processing speed and
capacity per port, thereby requiring fewer ports to communicate the
same information. In addition, the proposal to reduce the number of
logical ports from five to two will offset the costs of necessary
hardware, infrastructure expenses, maintenance fees and staff support
costs in operating a national securities exchange. The revenue
generated from its proposal will also pay for the technical
infrastructure and operating expenses of logical ports along with
administrative and infrastructure costs associated with allowing
Members and non-Members to establish logical ports to connect to the
Exchange's systems. The Exchange also believes that reducing the
quantity of free Direct Logical Ports from five to two sessions
[[Page 40782]]
will promote efficient use of the ports by market participants, not
only helping the Exchange to continue to maintain and improve its
infrastructure, market technology, and services, but also encourage
Members and non-Members to request and enable only the ports that are
necessary for their operations related to the Exchange.
The Exchange believes that it is reasonable to reduce the number of
free logical ports available to Members and non-Members because such
practice is consistent with that of other exchanges, such as BATS
Exchange, Inc., BATS Y-Exchange, Inc. and the NASDAQ Stock Exchange
LLC.\9\ Additionally, Members and non-Members may opt to disfavor the
Exchange's pricing if they believe that alternative venues offer them
better value. Accordingly, if the Exchange were to charge excessive
fees, the Exchange 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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\9\ See BATS, BATS BZX & BYX Exchange Fee Schedules, http://batstrading.com/FeeSchedule/(charging a monthly fee of $400 per
logical port other than a Multicast PITCH Spin Server Port or GRP
Port). See also NASDAQ, Price List-Trading & Connectivity, http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2 (charging a
monthly fee of $500 per logical port pair for FIX/OUCH/RASHPort/DROP
connectivity to NY-Metro and Mid-Atlantic Datacenters).
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Lastly, the Exchange believes that the proposed reduction in
quantity of free ports is non-discriminatory because it applies
uniformly to Members and non-Members.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that 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. The Exchange does not believe
that the proposed amendment to its fee schedule represents a
significant departure from previous Exchange fees or such fees offered
by the Exchange's competitors.\10\ Accordingly, the Exchange believes
that reducing the quantity of free Direct Logical Ports from five
sessions to two sessions would allow the Exchange to remain competitive
with other market centers and thus would not burden intermarket
competition.
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\10\ See BATS, BATS BZX & BYX Exchange Fee Schedules, http://batstrading.com/FeeSchedule/(charging a monthly fee of $400 per
logical port other than a Multicast PITCH Spin Server Port or GRP
Port). See also NASDAQ, Price List-Trading & Connectivity, http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2 (charging a
monthly fee of $500 per logical port pair for FIX/OUCH/RASHPort/DROP
connectivity to NY-Metro and Mid-Atlantic Datacenters).
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The Exchange believes its proposal would not burden intramarket
competition because the proposed rule change would apply uniformly to
all 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 \11\ and Rule 19b-4(f)(2) \12\ 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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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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 Number SR-EDGX-2013-24 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-2013-24. 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-2013-24 and should be
submitted on or before July 29, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-16226 Filed 7-5-13; 8:45 am]
BILLING CODE 8011-01-P