[Federal Register Volume 78, Number 218 (Tuesday, November 12, 2013)]
[Notices]
[Pages 67420-67421]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-26955]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70808; File No. SR-EDGX-2013-41]
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
November 5, 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 31, 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\ of the Exchange pursuant to EDGX Rule 15.1(a) and (c)
(``Fee Schedule'') to decrease the rebate to add liquidity under the
Market Depth Tier 1 from $0.0033 per share to $0.0032 per share. 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 decrease the
rebate to add liquidity under the Market Depth Tier 1 from $0.0033 per
share to $0.0032 per share. Footnote 1 of the Fee Schedule currently
provides that Members may qualify for the Market Depth Tier 1 and
receive a rebate of $0.0033 per share for displayed liquidity added on
EDGX if they post greater than or equal to 0.50% of the TCV in average
daily trading volume (``ADV'') on EDGX in total, where at least
1,800,000 shares are non-displayed orders that yield Flag HA. The
Exchange proposes to amend Footnote 1 of its Fee Schedule to decrease
the rebate of the Market Depth Tier 1 from $0.0033 per share to $0.0032
per share. The remainder of the footnote as it pertains to the Market
Depth Tier 1 would remain unchanged.
Implementation Date
The Exchange proposes to implement this amendment to its Fee
Schedule on November 1, 2013.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\4\ in general, and
furthers the objectives of Section 6(b)(4),\5\ 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. The Exchange believes that the reduced rebate of $0.0032
per share for adding liquidity on EDGX is an equitable allocation of
reasonable dues, fees, and other charges as the additional revenue that
results from the lower rebate enables the Exchange to cover increased
infrastructure and administrative expenses.
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\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(4).
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The Exchange also believes that the decreased rebate for the Market
Depth Tier 1 represents an equitable allocation of reasonable dues,
fees, and other charges because the lower rebate is directly correlated
with this tier's criteria. The Exchange recently decreased the ADV
requirement of the Market Depth Tier 1 from 2,000,000 shares of ADV to
1,800,000 shares of
[[Page 67421]]
ADV.\6\ The Exchange believes that the lower volume requirement
necessary to achieve the Market Depth Tier 1 justifies its lower
rebate. For example, for a Member to qualify for the tier most similar
to the Market Depth Tier 1, the Market Depth Tier 2 and receive a
rebate of $0.0029 per share, a Member needs to add 10,000,000 shares or
more of ADV on a daily basis, measured monthly, and add at least
1,000,000 shares as non-displayed orders that yield Flag HA. For a
Member to qualify for the Market Depth Tier 1, a Member must post at
least 0.50% of the TCV in ADV on EDGX in total, where at least 1.8
million shares are non-displayed orders that add liquidity to EDGX
yielding Flag HA. Based on a TCV of six (6) billion shares, this would
amount to 30,000,000 shares for the Market Depth Tier 1 while the
Market Depth Tier 2 would require an ADV of 10,000,000 shares. Members
seeking to achieve the Market Depth Tier 1 would also be required to
post at least 1.8 million shares of non-displayed orders that add
liquidity to EDGX yielding Flag HA, whereas the Market Depth Tier 2
would require that Members post 1,000,000 shares of non-displayed
orders that add liquidity to EDGX yielding Flag HA.
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\6\ See Securities Exchange Act Release No. 69911 (July 2,
2013), 78 FR 41132 (July 9, 2013) (SR-EDGX-2013-25).
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Lastly, the Exchange believes that its proposal to decrease the
rebate offered by the Market Depth Tier 1 is non-discriminatory because
the proposed rate would continue to apply uniformly to all Members.
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 increase of
[sic] decrease4 [sic] intermarket competition or impair the ability of
Members or competing venues to maintain their competitive standing in
the financial markets.
The Exchange believes that its proposal would neither increase or
decrease intramarket competition because the rate for the Market Depth
Tier 1 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 price discovery 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 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 \7\ and Rule 19b-4(f)(2) \8\ 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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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 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-2013-41 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-2013-41. 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-2013-41 and should be
submitted on or before December 3, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-26955 Filed 11-8-13; 8:45 am]
BILLING CODE 8011-01-P