[Federal Register Volume 79, Number 239 (Friday, December 12, 2014)]
[Notices]
[Pages 73925-73927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29107]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73781; File No. SR-EDGA-2014-31]
Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Related to
Fees for Use of EDGA Exchange, Inc.
December 8, 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, 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 Exchange. The
Exchange has designated the proposed rule change as one establishing or
changing a member due, fee, or other charge imposed by the Exchange
under Section 19(b)(3)(A)(ii) of the Act\3\ and Rule 19b-4(f)(2)
thereunder,\4\ which renders the proposed rule change effective upon
filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposal to amend the fee schedule applicable
to Members \5\ of the Exchange pursuant to EDGA Rules 15.1(a) and (c)
(``Fee Schedule''). Changes to the fee schedule pursuant to this
proposal are effective upon filing.
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\5\ 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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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
[[Page 73926]]
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 amend its Fee Schedule to amend the first
two bullets regarding added and removal flags under the General Notes
section to include Flags EA, ER, and 5, which include in [sic]
internalized volume. The General Notes section of the Fee Schedule
includes two bullets that contain the list of applicable ``added
flags'' and ``removal flags'' that may be considered when calculating
whether a Member satisfied a certain pricing tier. The Exchange appends
Flags EA, ER, and 5 to orders that inadvertently match against each
other and share the same MPID (Member shares both sides of the trade).
The Exchange proposes to amend the first bullet regarding added flags
to include Flag EA, which covers internalized trades that add
liquidity. The Exchange also proposes to amend the second bullet
regarding removal flags to include Flag ER, which covers internalized
trades that remove liquidity. The Exchange believes that Members orders
that yield Flags EA, ER, or 5 should be included in the calculation of
the Average Daily Volume \6\ (``ADV'') threshold as added or removal
flags for purposes of determining whether a tier's criteria has been
met.
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\6\ ADV is defined in the Exchange's Fee Schedule ``as the
average daily volume of shares that a Member executed on, or routed
by, the Exchange for the month in which the fees are calculated. ADV
is calculated on a monthly basis, excluding shares on any day that
the Exchange's system experiences a disruption that lasts for more
than 60 minutes during Regular Trading Hours (`Exchange System
Disruption'), on any day with a scheduled early market close and on
the last Friday in June (the `Russell Reconstitution Day').''
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Lastly, the Exchange proposes to amend both the first and second
bullets to include Flag 5, which covers internalized trades that add or
remove liquidity during the pre and post market sessions. The Exchange
also proposes to add Footnote 13 to state that a Member's monthly
volume attributed to Flag 5 will be divided evenly between the added
flags and removal flags when determining whether that Member satisfied
a certain tier. The Exchange proposes to divide a Member's Flag 5
volume as such because the Exchange's systems cannot currently
delineate orders yielding Flag 5 that added from those that removed
liquidity for purposes of determining whether a Member satisfies a
certain tier.
Implementation Date
The Exchange proposes to implement these amendments to its Fee
Schedule on December 1, 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. The Exchange also notes that it operates in a highly-
competitive market in which market participants can readily direct
order flow to competing venues if they deem fee levels at a particular
venue to be excessive. The proposed rule change reflects a competitive
pricing structure designed to incent market participants to direct
their order flow to the Exchange. The Exchange believes that the
proposed rates are equitable and non-discriminatory in that they apply
uniformly to all Members. The Exchange believes the fees and credits
remain competitive with those charged by other venues and therefore
continue to be reasonable and equitably allocated to Members.
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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 that its proposal to amend two bullets under
the General Notes section of the Fee Schedule that contain the list of
applicable ``added flags'' and ``removal flags'' are [sic] represents
an equitable allocation of reasonable dues, fees, and other charges
among Members and other persons using its facilities. The Exchange
appends Flag EA, ER, and 5 to buy and sell orders that inadvertently
match against each other and share the same MPID (Member shares both
sides of the trade). The Exchange also believes proposed Footnote 13
stating that a Member's monthly volume attributed to Flag 5 will be
divided evenly between the added flags and removal flags when
determining whether that Member satisfied a certain tier represents an
equitable allocation of reasonable dues, fees, and other charges. The
Exchange proposes to divide a Member's Flag 5 volume as such because
Flag 5 includes both added and removed liquidity because the Exchange's
systems cannot currently delineate orders yielding Flag 5 that added
from those that removed liquidity purposes of determining whether a
Member satisfies a certain tier. The Exchange believes that Members
orders that yield Flags EA, ER, or 5 should be included in the
calculation of the ADV threshold as added or removal flags for purposes
of determining whether a tier's criteria has been met. Including such
Flags would be a reasonable means to encourage Members to direct their
orders to the Exchange because they would have certainty that certain
orders will not be excluded from their ADV calculations because it
inadvertently matched against an order sharing the same MPID. Lastly,
the Exchange also believes that the proposed amendment is non-
discriminatory because it applies 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 EDGA'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 Flags EA, ER, and
5 to the ``added flags'' and ``removal flags'' would increase
intermarket competition because it would encourage Members to direct
their orders to the Exchange because they would have certainty that
their orders will not be excluded from their ADV calculations because
it inadvertently matched against an order sharing the same MPID. The
Exchange believes that its proposal would neither increase nor decrease
intramarket competition because the added and removal flags would
continue to apply
[[Page 73927]]
uniformly to all Members and the ability of some Members to meet the
tiers would only benefit other Members by contributing to increased
liquidity and improve 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 \9\ and paragraph (f) of Rule 19b-4
thereunder.\10\ At any time within 60 days of the filing of the
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).
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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-EDGA-2014-31 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-EDGA-2014-31. 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-2014-31, and should be
submitted on or before January 2, 2015.
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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29107 Filed 12-11-14; 8:45 am]
BILLING CODE 8011-01-P