[Federal Register Volume 79, Number 238 (Thursday, December 11, 2014)]
[Notices]
[Pages 73656-73658]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29009]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73760; File No. SR-EDGX-2014-29]
Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Eliminate Reference to the EdgeRisk Gateway in Rule 13.10 of EDGX
Exchange, Inc.
December 5, 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 November 25, 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 and
II below, which Items have been prepared by the Exchange. The Exchange
has designated this proposal as a ``non-controversial'' proposed rule
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with
the Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to eliminate reference in Rule 13.10 to
the EdgeRisk Gateway\SM\, which is a risk management tool that is to be
discontinued by the Exchange. The Exchange also proposes to delete the
fees related to EdgeRisk Gateway\SM\ from its fee schedule.
The text of the proposed rule change is available at the Exchange's
Web site at http://www.directedge.com/, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
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 Exchange 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 Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts 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 delete reference to the EdgeRisk
Gateway\SM\ in Rule 13.10 as well as its related fees from the
Exchange's fee schedule. In sum, the EdgeRisk Gateway\SM\ is an
optional fee-based risk management tool that provides Members and non-
Members the option to obtain dedicated primary and backup access
gateways \5\ in addition to, or in place of, a shared access
gateway.\6\ The tool was intended to assist subscribers' efforts to
mitigate the risks associated with disruptions caused by excessive
message traffic or programming mistakes experienced via
[[Page 73657]]
a shared access gateway because the subscriber's order flow on its
dedicated access gateways would be insulated from such external
disruptions.
---------------------------------------------------------------------------
\5\ The Exchange currently offers logical ports through which
orders are submitted to the Exchange, receive drop copies of orders
and execution messages, and receive transmission of depth of book
data (``Logical Ports''). Each Logical Port is assigned an access
gateway that performs order validations and manages the cycle of a
submitted order's flow of information back to the Member. The access
gateway performs functions such as message validation,
acknowledgement messaging, risk checks, matching engine routing and
execution messaging. The Exchange currently assigns Members' and
non-Members' Logical Ports to the access gateways through a standard
method that accounts for the relative message traffic expected over
the Logical Port as well as redundancy requirements, where an access
gateway contains assigned Logical Ports for a number of firms. The
Exchange assigns Member and non-Member sessions to multiple access
gateways so that the failure of one gateway may not result in the
loss of access.
\6\ See Securities Exchange Act Release No. 69855 (June 25,
2013), 78 FR 39386 (SR-EDGX-2013-21) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change to Offer and Establish Fees
for a New Exchange Service, EdgeRisk Gateways).
---------------------------------------------------------------------------
Earlier this year, the Exchange and its affiliate EDGA Exchange,
Inc. (``EDGA'') received approval to effect a merger (the ``Merger'')
of the Exchange's parent company, Direct Edge Holdings LLC, with BATS
Global Markets, Inc., the parent of BATS Exchange, Inc. (``BATS'') and
BATS Y-Exchange, Inc. (``BYX'', together with BATS, BYX, EDGA and EDGX,
the ``BGM Affiliated Exchanges'').\7\ In the context of the Merger, the
BGM Affiliated Exchanges are assessing certain system functionality,
retaining only intended differences between the BGM Affiliated
Exchanges. As part of this effort, the Exchange proposes to: delete
reference to EdgeRisk Gateway\SM\ in Rule 13.10 as well as its related
fees from the Exchange's fee schedule because it intends to discontinue
offering this product. Therefore, reference to the product within
Exchange's rules and applicable fees in its fee schedule would no
longer serve any legitimate purpose upon the product being retired by
the Exchange. The Exchange has few subscribers to the EdgeRisk
Gateway\SM\ and has determined that the current customer demand does
not warrant the infrastructure and ongoing maintenance expense required
to support the product within the new Exchange environment. Therefore,
the Exchange will terminate the product on January 12, 2015.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 71449 (January 30,
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013-
34).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with the
requirements of Section 6(b) of the Act,\8\ in general, and Section
6(b)(5) of the Act,\9\ in particular, in that is promotes just and
equitable principles of trade, removes impediments to, and perfects the
mechanism of, a free and open market and a national market system, and,
in general, protects investors and the public interest. The Exchange
also believes that its proposal is consistent with Section 6(b)(4) of
the Act,\10\ in that it provides for the equitable allocation of
reasonable dues, fees and other charges among members and other persons
using its facilities.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
Specifically, the proposal is consistent with Section 6(b)(5) of
the Act,\11\ in that it eliminates any investor confusion by deleting
references to a product, and its related fees, that is to be
discontinued by the Exchange, thereby removing impediments to and
perfecting the mechanism of a free and open market and a national
market system, and, in general, protecting investors and the public
interest. In addition, the Exchange has very few subscribers to
EdgeRisk Gateway\SM\ and has determined that the current customer
demand does not warrant the infrastructure and ongoing maintenance
expense required to support the product within the new Exchange
environment. In addition, EdgeRisk Gateway\SM\ is not a core product
offering by the Exchange, nor is the Exchange required by the Act to
offer such a product. The proposed rule change will not permit unfair
discrimination among customers, brokers, or dealers because the
EdgeRisk Gateway\SM\ will no longer be offered by the Exchange.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
In addition, the Exchange believes that the proposed removal of the
fees for the EdgeRisk Gateway\SM\ from its fee schedule is consistent
with Section 6(b)(4) of the Act \12\ because it would delete fees for a
product that is to be discontinued by the Exchange, thereby eliminating
investor confusion. Lastly, the Exchange also believes that the
proposed amendment to its fee schedule is reasonable and non-
discriminatory because it will apply uniformly to all members.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes the proposal is consistent with Section
6(b)(8) of the Act \13\ in that it does not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. The proposed rule change will discontinue
ConenctEdge [sic] by removing references to the service from its rules,
and its related fees from the fee schedule, and is not designed to have
a competitive impact. Therefore, the Exchange does not believe the
proposed rule change will have any effect on competition.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change does not: (1) Significantly affect
the protection of investors or the public interest; (2) impose any
significant burden on competition; and (3) by its terms does not become
operative for 30 days after the date of this filing, or such shorter
time as the Commission may designate if consistent with the protection
of investors and the public interest, the proposed rule change has
become effective pursuant to Section 19(b)(3)(A) of the Act \14\ and
Rule 19b-4(f)(6) thereunder.\15\
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with written notice of its intent to file the proposed rule change,
along with a brief description and text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Exchange has met this requirement.
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily 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.
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-2014-29 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-2014-29. 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
[[Page 73658]]
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-2014-29, and should be
submitted on or before January 2, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------
\16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29009 Filed 12-10-14; 8:45 am]
BILLING CODE 8011-01-P