[Federal Register Volume 80, Number 6 (Friday, January 9, 2015)]
[Notices]
[Pages 1461-1464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-00135]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73989; File No. SR-EDGX-2014-36]
Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to Adopt
Top and Last Sale Data Feeds
January 5, 2015.
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 23, 2014, EDGX Exchange, Inc. (the ``Exchange'' or the
``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\ 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 filed a proposed rule change to amend Rule 13.8 to
establish two new market data products know as: (i) EDGX TOP; and (ii)
EDGX Last Sale. The proposed market data products are identical to the
existing Top and Last Sale data feeds available on the BATS Exchange,
Inc. (``BZX'') and the BATS Y-Exchange, Inc. (``BYX'', collectively
with BZX, ``BATS'').\5\ The Exchange also proposes to amend Rule
13.8(a) to rename the EDGX Book Feed as the EDGX Depth and align with
system functionality currently available on BATS.
---------------------------------------------------------------------------
\5\ See BATS Rule 11.22(d) and (g).
---------------------------------------------------------------------------
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 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
Earlier this year, the Exchange and its affiliate, EDGX Exchange,
Inc. (``EDGX'') 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 BZX and BYX (together with BYX,
BZX, EDGA and EDGX, the ``BGM Affiliated Exchanges'' or ``BATS
[[Page 1462]]
Exchange'').\6\ In the context of the Merger, the BGM Affiliated
Exchanges are working to migrate EDGX and EDGA onto the BATS technology
platform, and align certain system functionality, retaining only
intended differences between the BGM Affiliated Exchanges. As a result
of these efforts, the Exchange proposes to establish two new market
data products know as: (i) EDGX TOP; and (ii) EDGX Last Sale. The
proposed market data products are identical to the existing Top and
Last Sale data feeds available on BATS.\7\ The Exchange also proposes
to amend Rule 13.8(a) to rename the EDGX Book Feed as the EDGX Depth
and to align with system functionality currently available on BATS.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 71449 (January 30,
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013-
34).
\7\ See supra note 5.
---------------------------------------------------------------------------
EDGX Top and EDGX Last Sale
The Exchange is proposing to offer two new data feeds that are
identical to data feeds currently available on BATS: (i) EDGX Last
Sale; and (ii) EDGX Top. EDGX Last Sale will provide real-time,
intraday trade information, including price, volume and time of
executions based on orders entered into the System.\8\ EDGX Last Sale
will not include quotation information. EDGX Top will include top of
book quotations and last sale execution information based on orders
entered into the System. The quotations made available via EDGX Top
provide an aggregated size and do not indicate the size or number of
individual orders at the best bid or ask. With regard to cost, the
Exchange will file a separate rule filing with the Commission to
establish fees for both EDGX Last Sale and EDGX Top.
---------------------------------------------------------------------------
\8\ The term ``System'' is defined as ``the electronic
communications and trading facility designated by the Board through
which securities orders of Users are consolidated for ranking,
execution and, when applicable, routing away.'' See Exchange Rule
1.5(cc).
---------------------------------------------------------------------------
Various data recipients may wish to subscribe to and use EDGX Last
Sale or EDGX Top. For instance, data recipients that provide real-time
market information on public Web sites or offer dynamic stock tickers,
portfolio trackers, price/time graphs and other visual systems can use
EDGX Last Sale or EDGX Top in lieu of using the Exchange's existing
data feeds. Such data recipients may prefer EDGX Last Sale or EDGX Top
because the Exchange's existing data feeds contain a significant amount
of additional information that such data recipients may not need, which
may result in unnecessary technology costs (e.g., development,
telecommunications or storage costs).
Market participants can gain access to EDGX last sale prices and
top of book quotations that are integrated with the prices that other
markets make available through the Securities Information Processors
(``SIP''). Therefore, no market participant is required to subscribe to
EDGX Last Sale or EDGX Top because the same top of book quotations and
last sale prices are available elsewhere and in the Exchange's other
data products.\9\ The Exchange represents that it will not distribute
the proposed feeds on a more timely basis than it makes available the
data that is provided to the SIPs for consolidation and dissemination.
---------------------------------------------------------------------------
\9\ See Exchange Rule 13.8(a) and (b).
---------------------------------------------------------------------------
EDGX Book Feed, Rule 13.8(a)
Rule 13.8(a) describes the Exchanges depth of book data feed known
as the EDGX Book Feed as a data feed that contains all displayed orders
for listed securities trading on EDGX, order executions, order
cancellations, order modifications, order identification numbers, and
administrative messages. First, the Exchange proposes to rename the
EDGX Book Feed as EDGX Depth, as it believes this name more accurately
describes the book feed and aligns with the naming conventions proposed
above for EDGX Top and EDGX Last Sale.
Second, the Exchange proposes to amend Rule 13.8(a)(i) align with
system functionality currently available on BATS. Under Rule
13.8(a)(1), Members \10\ may obfuscate their unique order
identification numbers on EDGX Depth per Market Participant Identifier
for all logical ports or specific logical ports for subsequent
replenishments of an order with a Reserve Quantity,\11\ as designated
by the Member. In order to do so, the Member must contact the
Exchange's Member Services (``Member Services'') department. In such
case, a randomly generated order identification number would be applied
the next trading day by the Exchange for all subsequent replenishments
of orders with a Reserve Quantity until further instructions are
received by Member Services from the Member.
---------------------------------------------------------------------------
\10\ 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).
\11\ The term ``Reserve Quantity'' is defined as ``[t]he portion
of an order that includes a Non-Displayed instruction in which a
portion of that order is also displayed on the EDGX Book. Both the
portion of the order with a Displayed instruction and the Reserve
Quantity are available for execution against incoming orders.'' See
Exchange Rule 11.6(m).
---------------------------------------------------------------------------
As amended, Rule 13.8(a)(i) would state that, unless otherwise
instructed by the Member, the Exchange will obfuscate the Member's
unique order identification number on EDGX Depth for each replenishment
of an order with a Reserve Quantity. In order to opt out of the
Exchange's obfuscation functionality, the Member must contact the
Exchange's Trade Desk. As a result, Members will no longer be required
to elect obfuscation of their order identification numbers on EDGX
Depth. Rather, Members must instruct the Exchange when they chose to
not have their order identification number obfuscated and displayed on
EDGX Depth.
Implementation Date
The Exchange intends to implement the proposed rule change on or
about January 12, 2015, which is the anticipated date upon which the
migration of the Exchange to the BATS technology platform will be
complete and the proposed data feeds may be made available.
2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent
with Section 6(b) of the Act \12\ and further the objectives of Section
6(b)(5) of the Act\13\ because they are designed to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, to
foster cooperation and coordination with persons engaged in
facilitating transactions in securities, and, in general, to protect
investors and the public interest. The Exchange also believes this
proposal is consistent with Section 6(b)(5) of the Act \14\ because it
protects investors and the public interest and promotes just and
equitable principles of trade by providing investors with new options
for receiving market data. The proposed rule change also is designed to
support the principles of Section 11A(a)(1) \15\ of the Act in that it
seeks to assure fair competition among brokers and dealers and among
exchange markets.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ Id.
\15\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------
The proposed rule change would benefit investors by facilitating
their prompt access to last sale information and best-bid-and-offer
information contained in EDGX Last Sale and EDGX Top. The Exchange
believe adding
[[Page 1463]]
EDGX Last Sale and EDGX Top as well as the amendments to Rule
13.8(a)(i) would align the Exchange data feed offerings and
functionality with that available on BATS upon migration of the
Exchange to the BATS technology platform. Consistent technology
offering identical market data products by each of the BGM Affiliated
Exchange will, in turn, avoid investor confusion as well as simplify
the technology implementation, changes and maintenance by Users of the
Exchange that are also participants on BATS. The proposed rule change
would provide greater harmonization between the rules of the BGM
Affiliated Exchanges, resulting in greater uniformity and less
burdensome and more efficient regulatory compliance. The proposed
market data products are identical to the existing Top and Last Sale
data feeds available on BATS.\16\ The proposed amendments to Rule
13.8(a)(i) are also consistent with system functionality currently
available on BATS. As such, the proposed rule change would foster
cooperation and coordination with persons engaged in facilitating
transactions in securities and would remove impediments to and perfect
the mechanism of a free and open market and a national market system.
---------------------------------------------------------------------------
\16\ See supra note 5.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
reiterates that the proposed rule change is being proposed in the
context of the technology integration of the BGM Affiliated Exchanges.
Thus, the Exchange believes this proposed rule change is necessary to
permit fair competition among national securities exchanges. In
addition, the Exchange believes the proposed rule change will benefit
Exchange participants in that it is one of several changes necessary to
achieve a consistent technology offering by the BGM Affiliated
Exchanges.
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 foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \17\ and Rule 19b-
4(f)(6) thereunder.\18\
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
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 satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \19\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \20\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has asked the Commission to waive the 30-day operative delay in order
to permit the Exchange to implement the proposed rule change on January
12, 2015, which is the anticipated date upon which the migration of
EDGA and EDGX to the BATS technology platform will be complete. The
Exchange states that waiver of the operative delay is consistent with
the protection of investors and the public interest because it will
allow the Exchange to provide identical data products across the BGM
Affiliated Exchanges upon migration of the Exchange to the BATS
technology platform, thereby simplifying the technology integration for
Members of the Exchange that are also participants on EDGX, EDGA, and
BYX. In this regard, the Exchange notes that, since completion of the
Merger, both Members and the BGM Affiliated Exchanges have made
numerous systems changes in preparation for the technology migration
occurring on January 12, 2015, the Exchange has issued frequent updates
to Members informing them of the BGM Affiliated Exchange technology
migration as well as its anticipated time line so that Members may make
the requisite system changes. The Commission believes that waiving the
30-day operative delay is consistent with the protection of investors
and the public interest. Therefore, the Commission hereby waives the
operative delay and designates the proposed rule change operative upon
filing.\21\
---------------------------------------------------------------------------
\19\ 17 CFR 240.19b-4(f)(6).
\20\ 17 CFR 240.19b-4(f)(6)(iii).
\21\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
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-2014-36 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-2014-36. 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
[[Page 1464]]
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 EDGX. 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-2014-36 and should be submitted on or before January 30, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
---------------------------------------------------------------------------
\22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Brent J. Fields,
Secretary.
[FR Doc. 2015-00135 Filed 1-8-15; 8:45 am]
BILLING CODE 8011-01-P