21076 Federal Register / Vol. 76, No. 72 / Thursday, April 14, 2011 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3A Member is any registered broker or dealer, or 

any person associated with a registered broker or 

dealer, that has been admitted to membership in the 

Exchange. 

4As defined in EDGA Rule 1.5(q). 

5As defined in EDGA Rule 1.5(p). 

6 15 U.S.C. 78f. 

7 15 U.S.C. 78f(b)(4). 

8See EDGX fee schedule, footnote 1. 

9 Id. 

10See footnote 6 of the EDGA fee schedule. 

11See footnote 7 of the EDGA fee schedule. See 

also BATS BZX fee schedule: Discounted 

Destination Specific Routing (‘‘One Under’’) to 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64267; File No. SR–EDGA– 

2011–10] 

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 

April 8, 2011. 

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 April 7, 

2011, the EDGA Exchange, Inc. (the 

‘‘Exchange’’ or the ‘‘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 selfregulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. 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). All of the changes 

described herein are applicable to EDGA 

Members. The text of the proposed rule 

change is available on the Exchange’s 

Internet Web site at http:// 

www.directedge.com. 

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 

The Exchange proposes to increase 

the rebate on Flag P from $0.0025 per 

share to $0.0027 per share for adding 

liquidity on EDGX via an EDGAoriginated ROUC routing strategy, as 

defined in Rule 11.9(b)(3)(a). 

The Exchange proposes to reduce the 

rate on Flag T from $0.0020 per share 

to $0.0012 per share for routing using 

the ROUD/ROUE routing strategies, as 

defined in Rules 11.9(b)(3)(b) and (c)(i). 

Currently, for orders routed during 

the Pre-Opening 4 and Post-Closing 

Sessions, 5 a charge of $0.0030 per share 

applies (yielding Flag ‘‘7’’). The 

Exchange proposes to reduce the rate to 

$0.0027 per share for routing during 

these trading sessions. 

Currently, when an order is routed 

using the ROUT routing strategy, (as 

defined in Rule 11.9(b)(3)(c)(ii), a flag 

‘‘RT’’ is yielded and a fee of $0.0025 per 

share is assessed. However, when an 

order routes to EDGX using the ROUT 

routing strategy, a Flag ‘‘I’’ is yielded, 

and a fee of $0.0030 per share is 

assessed. The Exchange proposes that 

when an order is routed using the ROUT 

routing strategy to EDGX Exchange, a 

Flag ‘‘RX’’ is yielded and a fee of $0.0027 

per share will be assessed. This 

proposed language is included in 

footnote 10 of the fee schedule. Thus, 

the Exchange notes that when an order 

is routed using the ROUT routing 

strategy, it can either yield either a Flag 

‘‘RT’’ or ‘‘RX.’’ The Exchange also notes 

that a Flag ‘‘RX’’ can also be yielded 

when an order is routed using the 

ROUX routing strategy, as defined in 

Rule 11.9(b)(3)(c)(iii). 

As a result of the insert of new 

language in footnote 10, conforming 

changes have been made to re-number 

existing footnotes 10–12 as footnotes 

11–13. New footnote 11 is also proposed 

to be clarified to insert ‘‘per share’’ after 

the fee of $0.0030 to conform it with 

other footnotes on the fee schedule. 

EDGA Exchange proposes to 

implement these amendments to the 

Exchange fee schedule on April 7, 2011. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the objectives of Section 6 of the 

Exchange Act,6 in general, and furthers 

the objectives of Section 6(b)(4),7 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 believes that the 

proposed increased rebate for Flag P 

from $0.0025 to $0.0027 per share is an 

equitable allocation of reasonable dues, 

fees, and other charges. The ROUC 

routing strategy, as defined in Rule 

11.9(b)(3)(a), checks the System for 

available shares and then is sent 

sequentially to destinations on the 

System routing table, Nasdaq OMX BX, 

and NYSE. If shares remain unexecuted 

after routing, they are posted to EDGX 

Exchange, Inc. (‘‘EDGX’’). The increased 

rebate is designed to incentivize 

Members to route through EDGA to 

reach multiple sources of liquidity 

before routing to other low cost 

destinations, and thereby potentially 

increases volume on EDGA to the extent 

an order using the ROUC routing 

strategy executes on EDGA. The 

increased rebate allows Members to 

reach multiple sources of liquidity by 

routing order flow through EDGA rather 

than going directly to various venues. 

The increased rebate also provides 

Members with superior economics as 

the $0.0027 per share rebate represents 

a flat rate if the ROUC routing strategy 

posts to EDGX, and thus allows EDGA 

Members to share in potential volume 

tier savings realized by the Exchange.8

If the Member had routed to EDGX 

directly and the order had added 

liquidity to EDGX, the Member could 

receive rebates ranging from $0.0023– 

$0.0033, depending on if a volume 

threshold were satisfied.9 The $0.0027 

per share rebate thus represents a rate in 

between these various tiered and nontiered rebates provided for adding 

liquidity to EDGX. This type of rate is 

also similar to EDGA’s rate for removing 

liquidity from LavaFlow (Flag M). The 

standard removal rate of $0.0029 per 

share is reduced to $0.0023 per share for 

orders routed to LavaFlow that achieve 

certain volume thresholds, as EDGA 

Members are able to share in potential 

volume tier savings realized by EDGA 

when routing to LavaFlow.10 This type 

of rate is also similar to other rates that 

EDGA charges, such as ‘‘one-under’’ 

pricing for routing to Nasdaq using the 

INET order type and is consistent with 

the processing of similar routing 

strategies by EDGA’s competitors.11 In 

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Federal Register / Vol. 76, No. 72 / Thursday, April 14, 2011 / Notices 21077 

NYSE, NYSE ARCA and NASDAQ. See Securities 

Exchange Act Release No. 62858, 75 FR 55838 

(September 14, 2010) (SR–BATS–2010–023) 

(modifying the BATS fee schedule in order to 

amend the fees for its BATS + NYSE Arca 

destination specific routing option to continue to 

offer a ‘‘one under’’ pricing model). 

12See SR–EDGA–2011–09 (April 1, 2011). 

13The Exchange notes that ROUD/ROUE routing 

strategies route to the identical number of low cost 

destinations. 

14See SR–EDGA–2011–09 (April 1, 2011). See 

Rule 11.9(b)(3)(c)(v). 

15See footnote 7 of the EDGA fee schedule. See 

also BATS BZX fee schedule: Discounted 

Destination Specific Routing (‘‘One Under’’) to 

NYSE, NYSE ARCA and NASDAQ. See Securities 

Exchange Act Release No. 62858, 75 FR 55838 

(September 14, 2010) (SR–BATS–2010–023) 

(modifying the BATS fee schedule in order to 

amend the fees for its BATS + NYSE Arca 

destination specific routing option to continue to 

offer a ‘‘one under’’ pricing model). 

this rate, EDGA takes into account the 

rates that it is charged or rebated when 

routing to other low cost destinations, 

such as EDGX. 

The Exchange believes that the rebate 

of $0.0027 is reasonable as it is 

consistent with how other exchanges 

pass through rebates for orders routed to 

a different exchange that add liquidity. 

For example, when Nasdaq routes to 

Nasdaq BX, Nasdaq passes back Nasdaq 

BX’s standard rebate of $0.0014 per 

share. When NYSE Arca routes to 

NYSE, NYSE Arca passes back the 

standard NYSE rebate of $0.0015 per 

share. These rebates generally 

approximate what the originating 

exchange receives from the exchange 

that is routed to plus or minus a certain 

differential. EDGA’s pricing is 

consistent with this premise. 

The Exchange believes that the 

proposed rebate is non-discriminatory 

in that it applies uniformly to all 

Members. 

The Exchange believes that the 

proposed reduced rate for Flag T 

(routing using ROUD/ROUE routing 

strategies) of $0.0012 per share is an 

equitable allocation of reasonable dues, 

fees, and other charges. Lower fees are 

directly correlated with a higher number 

of intermediate low cost destinations as 

the more intermediate low cost 

destinations that there are creates a 

greater potential for an execution at a 

lower cost destination before reaching a 

higher cost destination. For example, 

the ROUQ routing strategy, as defined in 

Rule 11.9(b)(3)(c)(iv),12 routes to the 

lowest number of low cost destinations 

compared to the ROUD/ROUE 13 and 

ROUZ14 routing strategies. As a result, 

the Exchange charges a higher fee for 

such strategy of $0.0020 per share (Flag 

Q). The ROUD/ROUE routing strategies 

route to a medium number of low cost 

destinations and the ROUZ routing 

strategy routes to the highest number of 

low costs destinations amongst these 

routing strategies. As a result, the 

Exchange will assess a proposed fee of 

$0.0012 per share for the ROUD/ROUE 

routing strategies and assesses the 

lowest fee for the ROUZ routing strategy 

of $0.0010 per share. The more low cost 

destinations that an order routes to 

allows the Exchange to pass on the 

savings it receives from such 

destinations to its members in lower 

fees. Therefore, it is equitable that 

ROUQ has the highest fee of $0.0020 per 

share, while ROUD/ROUE has an 

intermediate fee of $0.0012 per share, 

and ROUZ has the lowest fee of the 

three strategies of $0.0010 per share. 

The Exchange also notes that a 

difference between ROUQ and ROUZ 

routing strategies is that the additional 

routing destinations in the ROUZ 

routing strategy are intermediate 

between the routing destinations in 

ROUQ. This also accounts for the 

differences in fees. Therefore, for each 

additional intermediate low cost 

destination that an order routes to, the 

prices of the strategies mentioned above 

(ROUQ, ROUD/ROUE, ROUZ) decrease 

accordingly. 

The Exchange believes that the rate is 

reasonable when compared to other 

market centers using similar routing 

strategies. The comparable routing 

strategy to the ROUD/ROUE routing 

strategies is Parallel D or Parallel 2D 

with the DRT (Dark routing technique) 

option on BZX. BZX charges $0.0020 

per share for its DRT option. The 

Exchange believes that the proposed 

rebate is non-discriminatory in that it 

applies uniformly to all Members. 

The Exchange believes that the 

proposed reduced rate for Flag 7 

executions of $0.0027 per share is an 

equitable allocation of reasonable dues, 

fees, and other charges. The reduced 

rate is designed to incentivize Members 

to increase volume on EDGA during the 

Pre-Opening and Post-Closing Sessions, 

which have limited trading hours. In 

addition, it represents a blended flatrate for customers which EDGA has 

derived by taking into account its costs 

of routing to various destinations on its 

fee schedule. The blended, flat-rate 

provides simplicity for customers, 

instead of passing through the actual 

rates that EDGA receives from various 

destinations on its schedule. This type 

of rate is similar to other rates that 

EDGA charges, such as ‘‘one-under’’ 

pricing for routing to Nasdaq using the 

INET order type and is consistent with 

the processing of similar routing 

strategies by EDGA’s competitors.15

In addition, the Exchange notes that 

fewer Members generally trade during 

pre and post trading hours because of 

the limited time parameters associated 

with these trading sessions. The 

Exchange believes that the rate is 

equitable in that it is lower than 

comparable routing strategies that route 

during regular trading hours (i.e., Flag 

X, $0.0029 per share). The Exchange 

believes that the proposed rebate is nondiscriminatory in that it applies 

uniformly to all Members. 

Currently, when a Member uses the 

ROUT strategy, it is charged $0.0030 per 

share (Flag ‘‘I’’) when it routes to EDGX. 

The Exchange proposes to lower this fee 

to $0.0027 per share and yield Flag ‘‘RX’’ 

instead. The Exchange believes that the 

proposed decreased rate for orders that 

route to EDGX Exchange, Inc. using the 

ROUT routing strategy (as noted in 

footnote 10) represents an equitable 

allocation of reasonable dues, fees, and 

other charges since the decreased fee is 

designed to cap Member’s routed fees at 

$0.0027 per share. The decreased fee is 

also designed to incentivize Members to 

sweep liquidity through EDGA before 

going to other destinations while 

allowing Members to reach multiple 

source of liquidity by routing order flow 

through EDGA rather than going directly 

to various venues. 

The rate does not favor routing to 

EDGX as it is higher than the rate for 

routing to any other destination (i.e., 

Nasdaq) using the ROUT routing 

strategy, in which a fee of $0.0025 per 

share is assessed. For example, if a 

Member uses EDGA to route to Nasdaq 

using the ROUT routing strategy, the 

Member is charged $0.0025 per share 

(Flag RT). However, EDGA is charged 

Nasdaq’s standard removal rate of 

$0.0030 per share. Analogously, when a 

member uses EDGA to route to EDGX 

using the ROUT routing strategy, the 

member is proposed to be charged 

$0.0027 per share. However, EDGA is 

charged EDGX’s standard removal rate 

of $0.0030 per share. Therefore, a 

Member is more likely to use the ROUT 

routing strategy to route to Nasdaq 

rather than EDGX since the potential 

costs savings that is achieved by the 

Member is greater. ($0.0005 vs. 

$0.0003). 

The comparable routing strategy to 

the ROUT strategy is either Parallel D or 

Parallel 2D with the DRT (Dark routing 

technique) option on BZX or SCAN/ 

STGY on Nasdaq OMX Exchange 

(‘‘Nasdaq.’’) BATS BZX Exchange 

charges $0.0028 per share for its Parallel 

D and Parallel 2D routing strategies and 

$0.0020 per share for its DRT option. 

Nasdaq charges $0.0030 per share for its 

SCAN and STGY routing strategies. The 

Exchange believes that the proposed 

rebate is non-discriminatory in that it 

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21078 Federal Register / Vol. 76, No. 72 / Thursday, April 14, 2011 / Notices 

16 15 U.S.C. 78s(b)(3)(A). 17 17 CFR 19b–4(f)(2). 

18The text of the proposed rule change is 

available on Exchange’s Web site at http:// 

www.directedge.com, on the Commission’s Web site 

at http://www.sec.gov, at EDGA, and at the 

Commission’s Public Reference Room. 

19 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3RMN represents options on the one-tenth value 

Russell 2000® Index (the ‘‘Reduced Value Russell 

Index’’ or ‘‘RMN’’). 

applies uniformly to all Members. Based 

on these comparisons, the Exchange 

believes that the rate is reasonable as it 

is line with the fees assessed by BATS 

BZX Exchange. 

The Exchange 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 the 

fees and credits remain competitive 

with those charged by other venues and 

therefore continue to be reasonable and 

equitably allocated to Members. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change does not 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

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) of 

the Act 16 and Rule 19b–4(f)(2) 17

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. 

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–EDGA–2011–10 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–EDGA–2011–10. This file 

number should be included on the 

subject line if e-mail 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,18 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 

a.m. and 3 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– 

2011–10 and should be submitted on or 

before May 5, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–9045 Filed 4–13–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64286; File No. SR–Phlx– 

2011–50] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Singly Listed and Multiply Listed 

Indexes 

April 8, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 2 thereunder, 

notice is hereby given that on April 8, 

2011, NASDAQ OMX PHLX LLC (‘‘Phlx’’ 

or ‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Exchange’s Fee Schedule to discontinue 

assessing an Options Surcharge Fee for 

RMN.3

The Exchange also proposes to 

remove specific symbol references to 

certain indexes in the title of Section II 

of the Exchange’s Fee Schedule 

captioned, ‘‘Equity Options Fees 

(Includes options overlying equities, 

ETFs, ETNs, HOLDRS, BKX, RUT, RMN, 

MNX, NDX which are Multiply Listed)’’ 

and instead substitute the word 

‘‘indexes.’’ The Exchange proposes to 

make other conforming changes in the 

Fee Schedule. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://nasdaqtrader.com/ 

micro.aspx?id=PHLXfilings, 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 

mstockstill on DSKH9S0YB1PROD with NOTICES