[Federal Register Volume 78, Number 243 (Wednesday, December 18, 2013)]
[Notices]
[Pages 76665-76667]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-30043]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71059; File No. SR-EDGA-2013-37]
Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Amendments to the EDGA Exchange, Inc. Fee Schedule
December 12, 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 December 6, 2013, EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') 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 EDGA Rule 15.1(a) and (c)
(``Fee Schedule'') to exclude odd lot transactions from its definition
of Total Consolidated Volume (``TCV''), which is used to determine
whether a Member is eligible for certain pricing tiers. The text of the
proposed rule change is available on the Exchange's Web site at
www.directedge.com, at the Exchange's principal office, on the
Commission's Web site at www.sec.gov, 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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[[Page 76666]]
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, the Proposed Rule Change
1. Purpose
The Exchange currently defines TCV as ``the volume reported by all
exchanges and trade reporting facilities to the consolidated
transaction reporting plans for Tapes A, B and C securities for the
month in which the fees are calculated.'' \4\ An odd lot transaction,
which is generally an execution of less than 100 shares,\5\ is
currently not reported to the consolidated tape, and therefore, not
included in the Exchange's calculation of TCV. Beginning December 9,
2013, odd lot transactions will be reported to the consolidated
tape.\6\ The Exchange, therefore, proposes to amend its Fee Schedule to
exclude odd lot transactions from its definition of TCV, which is used
to determine whether a Member is eligible for certain pricing tiers,
through January 31, 2014. The proposal would allow Members additional
time to adjust to the potential impact of including odd lot
transactions within consolidated volumes. Odd lots will continue to be
included in each Member's average daily trading volume (``ADV'') as
they are today.
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\4\ See Exchange Fee Schedule available at http://www.directedge.com/Trading/EDGAFeeSchedule.aspx (December 2, 2013).
\5\ See Exchange Rule 11.6.
\6\ See Securities Exchange Act Release No. 70794 (October 31,
2013), 78 FR 66789 (November 6, 2013) (SR-CTA-2013-05) (Order
Approving the Eighteenth Substantive Amendment to the Second
Restatement of the CTA Plan). See also Securities Exchange Act
Release No. 70793 (October 31, 2013), 78 FR 66788 (November 6, 2013)
(File No. S7-24-89) (Order Approving Amendment No. 30 to the Joint
Self-Regulatory Organization Plan Governing the Collection,
Consolidation and Dissemination of Quotation and Transaction
Information for Nasdaq-Listed Securities Traded on Exchanges on an
Unlisted Trading Privileges Basis). See also Securities Exchange Act
Release No. 70898 (November 19, 2013) (SR-NYSE-2013-75). See also
announcements regarding December 9, 2013 implementation date,
available at https://cta.nyxdata.com/cta/popup/news/2385 and http://www.nasdaqtrader.com/TraderNews.aspx?id=uva2013-11. If the inclusion
of odd lot transactions in the consolidated tape is delayed to a
date after December 9, 2013, the manner of inclusion or exclusion of
odd lot transactions described in this proposal for purposes of
billing on the Exchange would similarly take effect on such later
date.
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The Exchange provides Members with the opportunity to qualify for
an Add Volume pricing tier based on its [sic] level of activity during
a particular month. Each tier provides a Member with lower pricing to
add liquidity on the Exchange. Each tier uses a specific percentage of
TCV during the billing cycle as a threshold that a Member must meet or
exceed to qualify for a particular tier. For example, to qualify for
the Volume Tier 1 and be charged a reduced fee of $0.0003 per share, a
Member must add more than 1% of the TCV in ADV on EDGA, including non-
displayed orders that add liquidity on a daily basis, measured monthly.
To qualify for Volume Tier 2 and also be charged a reduced fee of
$0.0003 per share, a Member must add more than 0.25% of the TCV on
EDGA, including non-displayed orders that add liquidity; and remove
more than 0.25% of the TCV in ADV on a daily basis, measured monthly.
The proposal to exclude odd lot transactions from the TCV
calculation is intended to allow Members additional time to adjust to
the potential impact of including odd lot transactions within
consolidated volumes. The proposed rule change is not intended to
address any other issues and the Exchange is not aware of any problems
that Members would have in complying with the proposed rule change.
Implementation Date
The Exchange proposes to implement these amendments to its Fee
Schedule on December 9, 2013. The amendments would be effective through
January 31, 2014.
2. Statutory Basis
The Exchange believes that the proposed rule change is 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 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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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(4).
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The Exchange believes its proposal to exclude odd lot transactions
from its TCV calculation is reasonable because it allows the Exchange
to maintain, albeit temporarily, the status quo when measuring a
Member's activity and whether they [sic] satisfy the criteria necessary
to achieve preferred pricing under each pricing tier. Absent this
change, the denominator of tier threshold calculation (i.e., TCV) would
increase immediately when odd lot transactions begin to be reported to
the consolidated tape and a Member would need to immediately increase
their [sic] own activity (i.e., the numerator) to continue to qualify
for the tier. However, such an increase in the Member's activity would
not result in a corresponding benefit to the Member because the
Exchange is not proposing to change the tier rates. The Exchange
anticipates that the eventual impact on determining tier qualifications
would be minimal when odd lot transactions begin to be included in the
TCV. Nonetheless, the Exchange believes that it is reasonable to
provide Members with a limited transition period to adapt to such
impact.
The proposed rule change is also equitable and not unfairly
discriminatory because it would apply to all Members uniformly. In
addition, the inclusion of odd lots in the TCV calculation would occur
for all Members on February 1, 2014, after the same nearly two month
transition period.
B. Self-Regulatory Organization's Statement on Burden on Competition
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 this change represent [sic]
a significant departure from previous pricing offered by the Exchange
or pricing offered by the Exchange's competitors. The proposed rule
change is designed to provide consistency to Members by allowing the
Exchange to maintain, albeit temporarily, the status quo when measuring
a Member's activity and whether they [sic] satisfy the criteria
necessary to achieve preferred pricing under each pricing tier. The
proposal to exclude odd lot transactions from the TCV calculation is
intended to allow Members additional time to adjust to the potential
impact of including odd lot transactions within consolidated volumes.
Accordingly, the Exchange does not believe that the proposed change
will impair the ability of Members or competing venues to maintain
their competitive standing in the financial markets.
This proposed rule change is also designed to maintain intermarket
competition by eliminating the potential for Members to immediately
fail to qualify for a tier due to the inclusion of
[[Page 76667]]
odd lot transactions in the consolidated tape beginning December 9,
2013. Other exchanges have also announced their intention of [sic]
filed proposed rule changes to exclude odd lot transactions from the
consolidated volume calculations from December 9, 2013 thru [sic]
January 31, 2014.\9\ The proposal is also designed to maintain
intramarket completion by maintaining consistent calculations amongst
exchanges.
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\9\ See File No. SR-NYSE-2013-78 (proposal by the New York Stock
Exchange, Inc. (``NYSE'') to amend its price list to exclude odd lot
transactions from its consolidated average daily trading volume
calculations thru January 31, 2014); see also, BATS Exchange, Inc.
and BATS-Y Exchange, Inc. Tier Calculation Update available at
http://cdn.batstrading.com/resources/fee_schedule/BATS-BZX-Exchange-and-BYX-Exchange-Tier-Calculation-Update-Effective-December-9-2013.pdf (announcing intention to exclude odd lot
transactions from its consolidated average daily trading volume
calculations thru [sic] January 31, 2014).
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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 \10\ and Rule 19b-4(f)(2) \11\ 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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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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 proposal 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-EDGA-2013-37 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-EDGA-2013-37. 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-EDGA-2013-37 and should be
submitted on or before January 8, 2014.
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\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-30043 Filed 12-17-13; 8:45 am]
BILLING CODE 8011-01-P