Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendments to the EDGA Exchange, Inc. Fee Schedule
Federal Register, Volume 79 Issue 91 (Monday, May 12, 2014)
Federal Register Volume 79, Number 91 (Monday, May 12, 2014)
Notices
Pages 27021-27023
From the Federal Register Online via the Government Printing Office www.gpo.gov
FR Doc No: 2014-10773
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SECURITIES AND EXCHANGE COMMISSION
Release No. 34-72100; File No. SR-EDGA-2014-13
Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendments to the EDGA Exchange, Inc. Fee Schedule
May 6, 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 May 1, 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 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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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 EDGA Rule 15.1(a) and (c) (``Fee Schedule'') to: (i) Amend Flag RC, which routes to the National Stock Exchange, Inc. (``NSX'') and adds liquidity; and (ii) delete Flag RW, which routes to the CBOE Stock Exchange, LLC (``CBSX'') and adds liquidity. 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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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
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prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements.
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Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change
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Purpose
The Exchange proposes to amend its Fee Schedule to: (i) Amend Flag RC, which routes to the NSX and adds liquidity; and (ii) delete Flag RW, which routes to the CBSX and adds liquidity.
Flag RC
In securities priced at or above $1.00, the Exchange currently charges a fee of $0.0018 per share for Members' orders that yield Flag RC, which routes to the NSX and adds liquidity. The Exchange proposes to amend its Fee Schedule to decrease the fee to $0.0001 per share for Members' orders that yield Flag RC. The proposed change is in response to NSX's May 2014 fee change where the NSX decreased its fee to $0.0001 per share for orders that add liquidity on the NSX.\4\ The fee for orders that yield Flag RC 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 that add liquidity to NSX when it does not qualify for a volume tiered reduced fee. When DE Route routes to and adds liquidity on the NSX, it will be charged a standard rate of $0.0001 per share.\5\ DE Route will pass through this rate on NSX to the Exchange and the Exchange, in turn, will pass through this rate to its Members.
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\4\ See NSX, Information Circular 14-043 dated April 25, 2014, available at http://www.nsx.com/resources/content/7/documents/InformationCircular14-043.pdf.
\5\ The Exchange notes that to the extent DE Route does or does not achieve any volume tiered reduced fee on NSX, its rate for Flag RC will not change.
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Flag RW
The Exchange proposes to amend its Fee Schedule to delete Flag RW in response to CBSX's announcement that it will cease market operations and its last day of trading will be Wednesday, April 30, 2014.\6\ In securities priced at or above $1.00, the Exchange currently charges a fee of $0.0030 per share in securities priced at or above $1.00 and 0.30% of the trade's dollar value in securities priced below $1.00 for Members' orders that yield Flag RW, which routes to the CBSX and adds liquidity. The fee for orders that yield Flag RW represents a pass through of the rate that DE Route, the Exchange's affiliated routing broker-dealer, is charged for routing orders that add liquidity to CBSX. As of May 1, 2014, the Exchange, via DE Route, will no longer be able to route orders to CBSX because it ceased operations, and, therefore, proposes to remove Flag RW from its Fee Schedule.
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\6\ See CBSX, Regulatory Circular RG14-046 dated April 2, 2014, available at http://www.cbsx.com/publish/RegCir/RG14-046.pdf.
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Implementation Date
The Exchange proposes to implement these amendments to its Fee Schedule on May 1, 2014.
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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.
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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(4).
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Flag RC
The Exchange believes that its proposal to decrease the fee to $0.0001 per share for Members' orders that yield Flag RC represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities because the Exchange does not levy additional fees or offer additional rebates for orders that it routes to NSX through DE Route. In May 2014, NSX decreased its fee to $0.0001 per share for Members' orders that add liquidity.\9\ Therefore, the Exchange believes that the proposed change to Flag RC to decrease its fee to $0.0001 per share for orders that yield Flag RC is equitable and reasonable because it accounts for the pricing change on the NSX. In addition, the proposal allows the Exchange to charge its Members a pass-through rate for orders that are routed to the NSX and add liquidity. 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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\9\ See NSX, Information Circular 14-043 dated April 25, 2014, available at http://www.nsx.com/resources/content/7/documents/InformationCircular14-043.pdf.
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Flag RW
The Exchange believes that its proposal to delete Flag RW in its Fee Schedule represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities. The proposed change is in response to CBSX's announcement that it will cease market operations and its last day of trading will Wednesday, April 30, 2014.\10\ As of May 1, 2014, the Exchange, via DE Route, will no longer be able to route orders to CBSX and, therefore, proposes to remove Flag RW from its Fee Schedule. The Exchange believes that the proposed amendment is intended to make the Fee Schedule clearer and less confusing for investors and eliminate potential investor confusion, 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.
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\10\ See CBSX, Regulatory Circular RG14-046 dated April 2, 2014, available at http://www.cbsx.com/publish/RegCir/RG14-046.pdf.
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Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes its proposed amendments to its Fee Schedule would 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 the proposed change represents 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 change will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets.
Flag RC
The Exchange believes that its proposal to pass through a fee of $0.0001 per share for Members' orders that yield Flag RC would increase intermarket competition because it offers customers an alternative means to route to NSX for the same price as entering orders on NSX directly. The Exchange believes that its proposal would not burden intramarket competition because the proposed rate would apply uniformly to all Members.
Flag RW
The Exchange believes that its proposal to delete Flag RW in its Fee Schedule would not affect intermarket nor intramarket competition because this change is not designed to amend any fee or rebate or alter the manner in
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which the Exchange assesses fees or calculates rebates. It is simply proposed in response to CBSX ceasing market operations trading on May 1, 2014.
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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.
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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 \11\ and Rule 19b-4(f)(2) \12\ 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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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4 (f)(2).
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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 rule-comments@sec.gov. Please include File Number SR-EDGA-2014-13 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-2014-13. 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-2014-13, and should be submitted on or before June 2, 2014.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
FR Doc. 2014-10773 Filed 5-9-14; 8:45 am
BILLING CODE 8011-01-P
