[Federal Register Volume 79, Number 132 (Thursday, July 10, 2014)]
[Notices]
[Pages 39424-39425]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16093]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72532; File No. SR-EDGX-2014-17]
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 3, 2014.
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 30, 2014, 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 fee for orders yielding Flag K,
which routes to NASDAQ OMX PSX (``PSX'') using ROUC or ROUE routing
strategies. 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 fee
for orders yielding Flag K, which routes to PSX using ROUC or ROUE
routing strategies. In securities priced at or above $1.00, the
Exchange currently assesses a fee of $0.0030 per share for Members'
orders that yield Flag K. The Exchange proposes to amend its Fee
Schedule to decrease this fee to $0.0026 per share from $0.0030 per
share. The proposed change represents a pass through of the rate that
Direct Edge ECN LLC (d/b/a DE Route) (``DE Route''), the Exchange's
affiliated routing broker-dealer, is charged for routing orders to PSX
when it does not qualify for a volume tiered reduced fee. The proposed
change is in response to PSX's July 2014 fee change where PSX decreased
the fee to remove liquidity via routable order types it charges its
customers, from a fee of $0.0030 per share to a fee of $0.0026 per
share.\4\ When DE Route routes to PSX, it will now be charged a
standard rate of $0.0026 per share.\5\ DE Route will pass through this
rate on PSX to the Exchange and the Exchange, in turn, will pass
through this rate to its Members. The Exchange proposes to implement
this amendment to its Fee Schedule on July 1, 2014.
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\4\ See PSX, Equity Trader Alert 2014-45, Modifications to PSX
Pricing Effective July 1, 2014, dated June 26, 2014, available at
http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2014-45.
\5\ The Exchange notes that to the extent DE Route does or does
not achieve any volume tiered reduced fee on PSX, its rate for Flag
K will not change.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\6\ in general, and
furthers the objectives of Section 6(b)(4),\7\ 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 its proposal to decrease the
pass through fee for Members' orders that yield Flag K from $0.0030 per
share to $0.0026 per share represents an equitable allocation of
reasonable dues, fees, and other charges among Members and other
persons
[[Page 39425]]
using its facilities because the Exchange does not levy additional fees
or offer additional rebates for orders that it routes to PSX through DE
Route. Prior to PSX's July 2014 fee change, PSX charged its members,
which includes DE Route, a fee of $0.0030 per share to remove liquidity
using non-routable order types, which DE Route passed through to the
Exchange and the Exchange charged to its Members. In July 2014, PSX
decreased this fee from $0.0030 per share to $0.0026 per share.\8\
Therefore, the Exchange believes that its proposal to pass through a
fee of $0.0026 per share for orders that yield Flag K is equitable and
reasonable because it accounts for the pricing changes on PSX. In
addition, the proposal allows the Exchange to charge its Members a
pass-through rate for orders that are routed to PSX. Furthermore, the
Exchange notes that routing through DE Route is voluntary. Lastly, the
Exchange also believes that the proposed amendment is non-
discriminatory because it applies uniformly to all Members.
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\6\ 15 U.S.C. 78f.
\7\ 15 U.S.C. 78f(b)(4).
\8\ See PSX, Equity Trader Alert 2014-45, Modifications to PSX
Pricing Effective July 1, 2014, dated June 26, 2014, available at
http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2014-45.
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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 its
proposal to pass through a fee of $0.0026 per share for Members' orders
that yield Flag K would increase intermarket competition because it
offers customers an alternative means to route to PSX for the same
price as entering orders on PSX directly. The Exchange believes that
its proposal would not burden intramarket competition because the
proposed rate would apply uniformly to all 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 \9\ and Rule 19b-4(f)(2) \10\ 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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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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-2014-17 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-EDGX-2014-17. 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-2014-17, and should be
submitted on or before July 31, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014-16093 Filed 7-9-14; 8:45 am]
BILLING CODE 8011-01-P