Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Notices 58003 

7 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

8 15 U.S.C. 78f(b)(4). 

9 15 U.S.C. 78f(b)(5). 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 62682 

(August 10, 2010), 75 FR 50029. 

4The time that elapses from an order message’s 

receipt by an Exchange device until the time that 

a matching engine acknowledgement with respect 

to such order message is transmitted from the 

Exchange device back to the user. For market data, 

the time measurement will be from the time that the 

market data engine receives a market data update 

until the time that the market data update is 

transmitted from the Exchange device back to the 

user. 

5 In addition to the boundary-level Exchange 

latency information, match level information will 

also provide further elapsed time detail for 

messaging between Exchange internal systems. 

6According to EDGX, the product measures 

latency of orders regardless of whether the orders 

are rejected, executed, or partially executed. 

7 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

RaceTeam subscribers’ logins will 

restrict access to only their own latency 

data; and Correlix will not see specific 

information regarding the trading 

activity of non-subscribers. 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.7 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(4) of the Act,8 which requires that 

the rules of a national securities 

exchange provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its members and 

issuers and other persons using its 

facilities, and with Section 6(b)(5) of the 

Act,9 which requires, among other 

things, that that the rules of a national 

securities exchange be 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 and, in general, to protect 

investors and the public interest, and 

not be designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

Pursuant to the arrangement, EDGA 

makes the RaceTeam product uniformly 

available to all customers who 

voluntarily request it and pay the fees 

as detailed in the proposal, pursuant to 

a standard non-discriminatory pricing 

schedule. In addition, the Commission 

believes that the proposal will further 

the protection of investors and the 

public interest because: (1) Correlix will 

only be able to view data related to 

latency for Correlix RaceTeam 

subscriber firms; (2) Correlix will not 

see a subscriber’s individual order detail 

such as security, price or size; (3) 

individual RaceTeam subscribers’ logins 

will restrict access to only their own 

latency data; and (4) Correlix will not 

see specific information regarding the 

trading activity of non-subscribers. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,10 that the 

proposed rule change (SR–EDGA–2010– 

09) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–23753 Filed 9–22–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62929; File No. SR–EDGX– 

2010–09] 

Self-Regulatory Organizations; EDGX 

Exchange, Inc.; Order Approving a 

Proposed Rule Change Relating to a 

Revenue Sharing Program With 

Correlix, Inc. 

September 17, 2010. 

On July 28, 2010, EDGX Exchange, 

Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’),1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to establish a revenue sharing 

program with Correlix, Inc. (‘‘Correlix’’). 

The proposed rule change was 

published for comment in the Federal 

Register on August 13, 2010.3 The 

Commission received no comment 

letters on the proposal. This order 

approves the proposed rule change. 

In its proposal, EDGX described realtime analytical tools offered by Correlix 

to measure the latency of orders to and 

from the System, and also described the 

terms of the pricing and the revenue 

sharing agreement between Correlix and 

the Exchange. In addition, the Exchange 

represented that under the agreement, 

EDGX will receive 30% of the total 

monthly subscription fees received by 

Correlix from parties who have 

contracted directly with Correlix to use 

their RaceTeam latency measurement 

service for the Exchange. According to 

the Exchange, EDGX will not bill or 

contract with any Correlix RaceTeam 

customer directly. 

Pricing for the Correlix RaceTeam 

product for the Exchange varies 

depending on the depth of latency 

information requested, the number of 

unique MPIDs subscribed by the 

customer, and the number of ports 

available for monitoring by Correlix. For 

boundary-level Exchange latency 

information,4 the fee will be an initial 

$1,500 monthly base fee for the first 25 

ports associated in aggregate with any of 

the MPIDs selected by the Member for 

latency monitoring. For each additional 

25 ports associated in aggregate with 

any of the MPIDs selected by the 

Member for latency monitoring, an 

additional monthly charge of $750 will 

be assessed. For match-level Exchange 

latency information,5 the fee will be an 

initial $2,000 monthly base fee for the 

first 25 ports associated in aggregate 

with any of the MPIDs selected for 

latency monitoring, and an additional 

$1000 per month for each additional 25 

ports associated in aggregate with any of 

the MPIDs selected for latency 

monitoring. 

According to the Exchange, Correlix 

will see an individualized unique 

Exchange-generated identifier that will 

allow Correlix RaceTeam to determine 

round-trip order time,6 from the time 

the order reaches the Exchange extranet, 

through the Exchange matching engine, 

and back out of the Exchange extranet. 

In its proposal, the Exchange 

represented that the RaceTeam product 

offering does not measure latency 

outside of the Exchange extranet. 

Further, EDGX stated that the unique 

identifier serves as a technological 

information barrier so that the 

RaceTeam data collector will only be 

able to view data for Correlix RaceTeam 

subscriber firms related to latency. 

Accordingly, Correlix will not see 

subscriber’s individual order detail such 

as security, price or size; individual 

RaceTeam subscribers’ logins will 

restrict access to only their own latency 

data; and Correlix will not see specific 

information regarding the trading 

activity of non-subscribers. 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.7 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 


srobinson on DSKHWCL6B1PROD with NOTICES
58004 Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Notices 

8 15 U.S.C. 78f(b)(4). 

9 15 U.S.C. 78f(b)(5). 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See FINRA By-Laws, Schedule A, § 1(b). In 

addition to the TAF, the other member regulatory 

fees are the Gross Income Assessment and the 

Personnel Assessment. See id. §§ 1(c), (d). 4See Securities Exchange Act Release No. 46416 

(August 23, 2002), 67 FR 55901 (August 30, 2002) 

(Notice of Filing and Immediate Effectiveness of 

Proposed Rule Change and Amendment No. 1 by 

the National Association of Securities Dealers, Inc. 

to Eliminate the Regulatory Fee and Institute a New 

Transaction-Based Trading Activity Fee); see also 

NASD Notice to Members 02–63 (September 2002); 

NASD Notice to Members 02–41 (July 2002). The 

TAF was originally approved on a pilot basis; the 

SEC approved the TAF on a permanent basis in 

2003. See Securities Exchange Act Release No. 

47946 (May 30, 2003), 68 FR 34021 (June 6, 2003); 

see also NASD Notice to Members 03–30 (June 

2003). 

5See Securities Exchange Act Release No. 50485 

(October 1, 2004), 69 FR 60445 (October 8, 2004). 

6See FINRA By-Laws, Schedule A, § 1(b)(1). 

7See FINRA By-Laws, Schedule A, § 1(b)(2). 

8See FINRA By-Laws, Schedule A, § 1(b)(2)(K). 

9FINRA By-Laws, Schedule A, § 1(b)(2)(K). See 

Securities Exchange Act Release No. 47946 (May 

30, 2003), 68 FR 34021 (June 6, 2003). 

6(b)(4) of the Act,8 which requires that 

the rules of a national securities 

exchange provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its members and 

issuers and other persons using its 

facilities, and with Section 6(b)(5) of the 

Act,9 which requires, among other 

things, that that the rules of a national 

securities exchange be 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 and, in general, to protect 

investors and the public interest, and 

not be designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

Pursuant to the arrangement, EDGX 

makes the RaceTeam product uniformly 

available to all customers who 

voluntarily request it and pay the fees 

as detailed in the proposal, pursuant to 

a standard non-discriminatory pricing 

schedule. In addition, the Commission 

believes that the proposal will further 

the protection of investors and the 

public interest because: (1) Correlix will 

only be able to view data related to 

latency for Correlix RaceTeam 

subscriber firms; (2) Correlix will not 

see a subscriber’s individual order detail 

such as security, price or size; (3) 

individual RaceTeam subscribers’ logins 

will restrict access to only their own 

latency data; and (4) Correlix will not 

see specific information regarding the 

trading activity of non-subscribers. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,10 that the 

proposed rule change (SR–EDGX–2010– 

09) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–23755 Filed 9–22–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62927; File No. SR–FINRA– 

2010–046] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change Relating to 

Exemptions from the Trading Activity 

Fee 

September 17, 2010. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on 

September 7, 2010, Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) 

filed with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

the proposed rule change as described 

in Items I, II, and III below, which Items 

have been prepared by FINRA. 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 

FINRA is proposing to [sic] amend 

Section 1(b) of Schedule A to the FINRA 

By-Laws to remove the exemption from 

the trading activity fee (‘‘TAF’’) for 

transactions in exchange-listed options 

effected by a member when FINRA is 

not the designated options examining 

authority (‘‘DOEA’’) for that member. 

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA 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, 

FINRA 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. FINRA 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 TAF is one of three member 

regulatory fees FINRA uses to fund its 

member regulation activities, which 

include examinations, financial 

monitoring, and FINRA’s policymaking, 

rulemaking, and enforcement activities.3

FINRA initially adopted the TAF in 

2002 as a replacement for an earlier 

regulatory fee based on trades reported 

to Nasdaq’s Automated Confirmation 

Transaction system then in place.4

Because the TAF funds FINRA’s 

member regulation functions, it is 

intended to apply to transactions in a 

way that corresponds with FINRA’s 

regulatory responsibilities.5 In general, 

the TAF is assessed for the sale of all 

exchange registered securities wherever 

executed (except debt securities that are 

not TRACE-eligible), over-the-counter 

equity securities, security futures, 

TRACE–Eligible Securities (provided 

that the transaction is a Reportable 

TRACE Transaction), and all municipal 

securities subject to the reporting 

requirements of the Municipal 

Securities Rulemaking Board.6 The TAF 

rules also include numerous exemptions 

for certain types of transactions.7 The 

proposed rule change would eliminate 

the exemption from the TAF for 

transactions in exchange-listed options 

when FINRA is not the DOEA for that 

member.8

In 2003, FINRA exempted from the 

TAF ‘‘[t]ransactions in exchange listed 

options effected by a member when 

FINRA is not the designated options 

examining authority for that member.’’ 9

The exemption was added to reflect the 


srobinson on DSKHWCL6B1PROD with NOTICES