[Federal Register Volume 78, Number 204 (Tuesday, October 22, 2013)]
[Notices]
[Pages 62778-62780]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-24661]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70669; File No. SR-EDGX-2013-38]
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
October 11, 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 October 2, 2013, EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule
[[Page 62779]]
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\ of the Exchange pursuant to EDGX Rule 15.1(a) and (c)
(``Fee Schedule'') to add orders yielding Flag AA to the calculation of
the average daily trading (``ADV'') threshold required to meet the
MidPoint Match Volume Tier. 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\ The term ``Member'' is defined as ``any registered broker or
dealer, or any person associated with a registered broker or dealer,
that has been admitted to membership in the Exchange. A Member will
have the status of a ``member'' of the Exchange as that term is
defined in Section 3(a)(3) of the Act.'' See 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
The Exchange proposes to amend its Fee Schedule to add orders
yielding Flag AA to the calculation of the ADV threshold required to
meet the MidPoint Match Volume Tier. Footnote 3 of the Fee Schedule
currently provides that Members may qualify for the MidPoint Match
Volume Tier and not be charged a fee for orders that yield Flag MM on
EDGX if they add and/or remove an ADV of at least 2,500,000 shares on a
daily basis, measured monthly, on EDGX, yielding flags MM (adds
liquidity to MidPoint Match using the Midpoint Match order type \4\)
and/or MT (removes liquidity from MidPoint Match using MidPoint Match
order type). The Exchange proposes to add orders yielding Flag AA
(MidPoint Match Cross (same MPID)) to the calculation of the ADV
threshold required to meet the MidPoint Match Volume Tier. The Exchange
appends Flag AA to buy and sell MidPoint Match Orders that
inadvertently match against each other and share the same MPID (Member
shares both sides of the trade). MidPoint Match Orders yielding Flag AA
would continue to be charged a rate of $0.0012 per share. The remainder
of the criteria required to meet the tier as well as the rate offered
by the tier would remain unchanged.
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\4\ As defined in Exchange Rule 11.5(c)(7), the Midpoint Match
Order is an order with an instruction to execute it at the midpoint
of the NBBO.
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The Exchange proposes to implement these amendments to its Fee
Schedule on October 2, 2013.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\5\ in general, and
furthers the objectives of Section 6(b)(4),\6\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its Members and other persons using its
facilities.
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\5\ 15 U.S.C. 78f.
\6\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that adding orders yielding Flag AA to the
calculation of the ADV threshold required to meet the MidPoint Match
Volume Tier represents an equitable allocation of reasonable dues,
fees, and other charges because adding orders yielding Flag AA, like
Flags MM and MT, are designed to encourage Members to add liquidity at
the midpoint of the national best bid or offer (``NBBO'') to the EDGX
Book \7\ each month. The Exchange appends Flag AA to buy and sell
MidPoint Match Orders that inadvertently match against each other and
share the same MPID (Member shares both sides of the trade). MidPoint
Match Orders yielding Flag AA would continue to be charged a rate of
$0.0012 per share and only the liquidity added at the midpoint of the
NBBO (Flag MM) in this tier is not charged a fee. Both added and
removed liquidity in Flags AA, MM and MT would be counted towards
achieving the tier's ADV threshold. The Exchange believes that Members
utilizing MidPoint Match Orders that add liquidity at the midpoint of
the NBBO may receive the benefit of price improvement, and including
orders that yield Flag AA to the calculation of the ADV threshold of
the MidPoint Match Volume Tier would be a reasonable means by which to
further encourage the use of such orders. In addition, the Exchange
believes that by encouraging the use of MidPoint Match Orders, Members
seeking price improvement would be more motivated to direct their
orders to EDGX because they would have a heightened expectation of the
availability of liquidity at the midpoint of the NBBO. In addition, the
Exchange also believes that the proposed amendment to the MidPoint
Match Volume Tier is non-discriminatory because it applies uniformly to
all Members.
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\7\ The ``EDGX Book'' is defined as ``the System's electronic
file of orders.'' See Exchange Rule 1.5(d).
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B. Self-Regulatory Organization's Statement on Burden on Competition
These proposed rule changes do 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 any of these changes
represent a significant departure from previous pricing offered by the
Exchange or pricing offered by the Exchange's competitors.
Additionally, Members may opt to disfavor EDGX's pricing if they
believe that alternatives offer them better value. Accordingly, the
Exchange does not believe that the proposed changes will impair the
ability of Members or competing venues to maintain their competitive
standing in the financial markets.
The Exchange believes that adding orders yielding Flag AA to the
calculation of the ADV threshold required to meet the MidPoint Match
Volume Tier would increase intermarket competition because it would
lead to more competition for orders that seek liquidity at the midpoint
of the NBBO. The Exchange believes that its proposal would neither
increase nor decrease intramarket competition because the MidPoint
Match Volume Tier would continue to apply uniformly to all Members and
the ability of some Members to meet the tier would only benefit other
Members by contributing to increased liquidity at the midpoint of the
NBBO and better market quality at the Exchange.
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
[[Page 62780]]
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 \8\ and Rule 19b-4(f)(2) \9\ 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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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 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-2013-38 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-2013-38. 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-2013-38 and should be
submitted on or before November 12, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24661 Filed 10-21-13; 8:45 am]
BILLING CODE 8011-01-P