[Federal Register Volume 80, Number 248 (Monday, December 28, 2015)]
[Notices]
[Pages 80851-80853]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32540]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76712; File No. SR-EDGA-2015-47]
Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to Rule
11.6(n)(1), Routing/Posting Instructions, To Amend the Aggressive
Instruction
December 21, 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 16, 2015, EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II
[[Page 80852]]
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 filed a proposal to amend the Aggressive instruction
under Exchange Rule 11.6(n)(1) to route such orders where that order
has been locked or crossed by other Trading Centers. The proposed rule
change is based on recently filed proposed rule changes by BATS
Exchange, Inc. (``BZX'') and BATS Y-Exchange, Inc. (``BYX'').\5\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release Nos. 76623 (December 11,
2015) (SR-BATS-2015-112), and 76625 (December 11, 2015) (SR-BYX-
2015-49) (amending the Aggressive Re-Route instruction under BYX and
BZX Rules 11.13(b)(4)(A) to route such orders where that order has
been locked or crossed by other Trading Centers).
---------------------------------------------------------------------------
The text of the proposed rule change is available at the Exchange's
Web site at www.batstrading.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
In early 2014, 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 BZX, EDGA and
EDGX, the ``BGM Affiliated Exchanges'').\6\ In the context of the
Merger, the BGM Affiliated Exchanges are working to align their rules
and functionality, retaining only intended differences between the BGM
Affiliated Exchanges. Thus, the Exchange proposes to amend the
Aggressive instruction under Exchange Rule 11.6(n)(1) in order to
conform with recently filed proposed rule changes by BYX and BZX \7\ to
provide a consistent rule set across each of the BGM Affiliated
Exchanges.\8\
---------------------------------------------------------------------------
\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.
\8\ The Exchange notes that EDGA intends to file an identical
proposal with the Commission.
---------------------------------------------------------------------------
Users \9\ may submit Limit Orders \10\ to the Exchange that are
processed pursuant to Exchange Rules 11.10(a) and 11.11, as set forth
below. Rule 11.10(a) describes the process by which an incoming order
would execute against the EDGA Book.\11\ To the extent an order has not
been executed in its entirety against the EDGA Book, Rule 11.11 then
describes the process of routing marketable Limit Orders to one or more
Trading Centers, including a description of how the Exchange treats any
unfilled balance that returns to the Exchange following the first
attempt to fill the order through the routing process. If not filled
through routing, and based on the order instructions, the unfilled
balance of the order may be posted to the EDGA Book.
---------------------------------------------------------------------------
\9\ The term ``User'' means ``any Member or Sponsored
Participant who is authorized to obtain access to the System
pursuant to Rule 11.3.'' See Exchange Rule 1.5(ee).
\10\ See Exchange Rule 11.8(b).
\11\ See Exchange Rule 1.5(d).
---------------------------------------------------------------------------
The Aggressive instruction subjects an order to the routing process
after being posted to the EDGA Book only if the order is subsequently
crossed by another Trading Center (rather than if the order is locked
or crossed). Further, a routable Limit Order with a Non-Displayed \12\
instruction posted to the EDGA Book that is crossed by another
accessible Trading Center will be automatically routed to the crossing
Trading Center. The Exchange proposes to modify the Aggressive
instruction to also provide that, where the order is locked by another
accessible Trading Center, it would be automatically routed to the
locking Trading Center. The proposed amendment would also apply to
orders with a Non-Displayed instruction and Aggressive instruction.\13\
---------------------------------------------------------------------------
\12\ See Exchange Rule 11.6(e)(2).
\13\ The Exchange also provides the Super Aggressive instruction
which directs the System to route the order if an away Trading
Center locks or crosses the limit price of the order resting on the
EDGA Book. See Exchange Rule 11.6(n)(2). When any order with a Super
Aggressive instruction is locked by an incoming order with a Post
Only instruction that does not remove liquidity pursuant to Rule
11.6(n)(4) below, the order with a Super Aggressive instruction is
converted to an executable order and will remove liquidity against
such incoming order (``liquidity swap functionality''). Id. Once
amended, the only difference between the Aggressive and Super
Aggressive instructions would be that the liquidity swap
functionality described above would be available to an order subject
to the Super Aggressive instruction and not available to an order
subject to the Aggressive instruction.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \14\ and furthers the objectives of
Section 6(b)(5) of the Act \15\ because it is 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. Specifically, the proposed changes
are designed to provide Users with additional control over their orders
in the context of a national market system where quotations may lock or
cross orders posted to the EDGA Book and to facilitate executions on
the Exchange consistent with User instructions. Thus, the proposals are
directly targeted at removing impediments to and perfecting the
mechanism of a free and open market and national market system. The
proposed rule change also is designed to support the principles of
Section 11A(a)(1) \16\ of the Act in that it seeks to assure fair
competition among brokers and dealers and among exchange markets.
Lastly, the Exchange notes that the proposed amendments to the
Aggressive instruction previously existed on BZX and BYX as the RECYCLE
routing option.\17\
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
\16\ 15 U.S.C. 78k-1(a)(1).
\17\ See Securities Exchange Act Release Nos. 59967 (May 21,
2009), 74 FR 25793 (May 29, 2009) (SR-BATS-2009-015) (proposing to
allow the designation of an order as eligible for re-routing after
being posted to the BATS Book if another Trading Center has locked
or crossed the posted order); 62404 (June 30, 2010), 75 FR 39303
(July 8, 2010) (SR-BATS-2010-017) (naming the designation of an
order as eligible for re-routing after being posted to the BATS Book
if another Trading Center has locked or crossed the posted order as
the RECYCLE routing option); and 63097 (October 13, 2010), 75 FR
64767 (October 20, 2010) (SR-BATS-2010-002) [sic] (naming the
designation of an order as eligible for re-routing after being
posted to the BATS Book if another Trading Center has locked or
crossed the posted order as the RECYCLE routing option).
---------------------------------------------------------------------------
[[Page 80853]]
Consistent with Section 6(b)(5) of the Act,\18\ the proposed rule
change, combined with the planned filing for EDGX, would allow the BGM
Affiliated Exchanges to provide a consistent set of rules as it relates
to the routing of orders that are locked or crossed by a Trading
Center. Consistent rules, in turn, will simplify the regulatory
requirements for Members of the Exchange that are also participants on
EDGA, BYZ and/or BZX. The proposed rule change would provide greater
harmonization between rules of similar purpose on the BGM Affiliated
Exchanges, resulting in greater uniformity and less burdensome and more
efficient regulatory compliance and understanding of Exchange Rules. 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.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78f(b)(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
believes that proposed amendment to the Aggressive functionality
encourages competition by increasing the likelihood of executions of
orders that have been posted to the Exchange. The increased likelihood
of an execution where the order is locked by a quotation on a Trading
Center should attract additional order flow to the Exchange
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 (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 \19\ and Rule 19b-4(f)(6) thereunder.\20\
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the 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.
---------------------------------------------------------------------------
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \21\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \22\ 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 so that
the proposal may become operative immediately upon filing. The Exchange
stated that waiver of the operative delay will allow the Exchange to
immediately provide Users with additional control over their orders in
the context of a national market system where quotations may lock or
cross orders posted to the EDGA Book and to facilitate executions on
the Exchange consistent with User instructions.\23\ The Commission
believes the waiver of the operative delay is consistent with the
protection of investors and the public interest. Therefore, the
Commission hereby waives the operative delay and designates the
proposal operative upon filing.\24\
---------------------------------------------------------------------------
\21\ 17 CFR 240.19b-4(f)(6).
\22\ 17 CFR 240.19b-4(f)(6)(iii).
\23\ The Exchange further stated that it will provide Members
with reasonable advance notice of the proposed rule change's
implementation date.
\24\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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 change 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-EDGA-2015-47 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-2015-47. 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-2015-47, and should be
submitted on or before January 19, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
---------------------------------------------------------------------------
\25\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Brent J. Fields,
Secretary.
[FR Doc. 2015-32540 Filed 12-24-15; 8:45 am]
BILLING CODE 8011-01-P