Federal Register / Vol. 79, No. 214 / Wednesday, November 5, 2014 / Notices 65739 

6 15 U.S.C. 78s(b)(3)(A). 

7 17 CFR 240.19b–4(f). 8 17 CFR 200.30–3(a)(12). 

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). 

5See BATS Rule 11.16(d)(1)–(3); BYX Rule 

11.16(d)(1)–(3). 

different competing exchanges and 

alternative trading systems if they deem 

fee levels at a particular venue to be 

excessive, or rebate opportunities 

available at other venues to be more 

favorable. In such an environment, BX 

must continually adjust its fees to 

remain competitive with other 

exchanges. Because competitors are free 

to modify their own fees in response, 

and because market participants may 

readily adjust their order routing 

practices, BX believes that the degree to 

which fee changes in this market may 

impose any burden on competition is 

extremely limited. In this instance, the 

increase to the credit for an order that 

executes against a midpoint pegged 

order enhances the Exchange’s 

competitiveness by increasing a credit 

for a type of order activity that the 

Exchange seeks to encourage, thereby 

improving market liquidity and 

attracting market participants. 

Moreover, because there are numerous 

competitive alternatives to the use of the 

Exchange, it is likely that BX will lose 

market share as a result of the changes 

if they are unattractive to market 

participants. Accordingly, BX does not 

believe that the proposed rule changes 

will impair the ability of members or 

competing order execution venues to 

maintain their competitive standing in 

the financial markets. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 6 and paragraph (f) of Rule 

19b–4 7 thereunder. 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. 

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 rule-comments@

sec.gov. Please include File Number SR– 

BX–2014–053 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–BX–2014–053. 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 such 

filing also will be available for 

inspection and copying at the principal 

offices 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–BX– 

2014–053, and should be submitted on 

or before November 26, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–26228 Filed 11–4–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73477; File No. SR–EDGA– 

2014–24] 

Self-Regulatory Organizations; EDGA 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change to Rule 11.12, Limitation 

of Liability 

October 30, 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 October 

27, 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 and II 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated this proposal as a ‘‘noncontroversial’’ 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange filed a proposal to 

amend Rule 11.12, Limitation of 

Liability, to harmonize its liability caps 

with those set forth under BATS 

Exchange, Inc. (‘‘BATS’’) Rule 11.16 and 

BATS Y-Exchange, Inc. (‘‘BYX’’) Rule 

11.16.5

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 

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 

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65740 Federal Register / Vol. 79, No. 214 / Wednesday, November 5, 2014 / Notices 

6 Id. 

7See Securities Exchange Act Release No. 71449 

(January 30, 2014), 79 FR 6961 (February 5, 2014) 

(SR–EDGX–2013–43; SR–EDGA–2013–34). 

8See Securities Exchange Act Release Nos. 73356 

(October 15, 2014) (SR–BATS–2014–045); and 

73357 (October 15, 2014) (SR–BYX–2014–027). In 

sum, BATS and BYX amended Rule 11.16 to align 

with Exchange Rule 11.12 to provide members with 

additional time within which to submit a written 

claim for compensation for ‘‘losses resulting 

directly from the malfunction of the Exchange’s 

physical equipment, devices and/or programming 

or the negligent acts or omissions of its employees’’ 

and add a new paragraph (g) to Rule 11.16 to permit 

the Exchange, subject to certain conditions and 

limitations, to compensate Members for certain 

losses incurred in connection with orders or 

portions of orders routed by the Exchange through 

its affiliated routing broker-dealer, BATS Trading, 

Inc., to Trading Centers where such losses are 

claimed by the Member to have resulted directly 

from a malfunction of the physical equipment, 

devices and/or programming, or the negligent acts 

or omissions of the employees, of such Trading 

Centers. 

9The Exchange understands that EDGX is to file 

a proposed rule change with the Commission to 

adopt similar requirements. 

10See supra note 5. 

11The Exchange notes that under renumbered 

Rule 11.12(g)(4) any compensation paid to Members 

from reimbursement recovered from a Trading 

Center for a routed order will not count against the 

Exchange’s liability limits set forth in Rule 11.12(d), 

nor any applicable insurance maintained by the 

Exchange. Securities Exchange Act Release Nos. 

71061 (December 12, 2013), 78 FR 76685 (December 

18, 2013) (SR–EDGA–2013–36) (Notice of Filing 

and Immediate Effectiveness of Proposed Rule 

Change To Amend EDGA Rule 11.12, Limitations of 

Liability); and 71062 (December 12, 2013), 78 FR 

76693 (December 18, 2013) (SR–EDGX–2013–45) 

(Notice of Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend EDGX Rule 11.12, 

Limitations of Liability). 

12See supra note 8. 

13 15 U.S.C. 78f(b). 

14 15 U.S.C. 78f(b)(5). 

15See supra note 5. 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 11.12, Limitation of Liability, to 

harmonize its liability caps with those 

set forth under BATS Rule 11.16 and 

BYX Rule 11.16.6 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 BATS and BYX (together with 

BATS, BYX, EDGA and EDGX, the 

‘‘BGM Affiliated Exchanges’’).7 In the 

context of the Merger, the BGM 

Affiliated Exchanges are working to 

align certain rules, retaining only 

intended differences between the BGM 

Affiliated Exchanges. As part of this 

effort, BATS and BYX recently filed 

proposed rule changes with the 

Commission to amend paragraph (f) of 

Rule 11.16 to align with EDGA Rule 

11.12(d)(3) and (e) as well as EDGX Rule 

11.12(d)(3) and (e).8 Thus, the proposal 

set forth below harmonizes remaining 

sections of Exchange Rule 11.12 and 

BATS and BYX Rules 11.16 by aligning 

the liability caps in order to provide 

consistent member reimbursement 

requirements for users of the BGM 

Affiliated Exchanges.9

Rule 11.12 currently states that, 

except as provided in subsection (d) of 

the Rule, the Exchange and its affiliates 

shall not be liable for any losses, 

damages, or other claims arising out of 

the Exchange or its use. Exchange Rule 

11.16(d) provides a limited exception to 

its general limitation of liability that 

allows for the payment of compensation 

to Members for ‘‘losses resulting directly 

from the malfunction of the Exchange’s 

physical equipment, devices and/or 

programming or the negligent acts or 

omissions of its employees’’ (‘‘Exchange 

Systems Issues’’), subject to certain 

conditions. Subsection (d)(1) of Rule 

11.12 limits the aggregate limits of all 

claims made by all Members during a 

single calendar month to the larger of 

$500,000, or the amount of any recovery 

obtained by the Exchange under any 

applicable insurance maintained by the 

Exchange. 

The Exchange now proposes to 

renumber subsection (d)(1) of the Rule 

11.12 and adopt new subsections (d)(1) 

and (2) under Rule 11.12 to harmonize 

its liability caps with those set forth 

under existing rules of BATS and 

BYX.10 Under the proposed rule change, 

the Exchange would cap its liability for 

Exchange Systems Issues under 

proposed Rule 11.12(d)(1) and (2): (i) To 

a single Member at the greater of 

$100,000 or the amount recovered under 

any applicable insurance policy on a 

single trading day; (ii) to all Members at 

the greater of $250,000 or the amount 

recovered under any applicable 

insurance policy on a single trading day. 

Current Rule 11.12(d)(1) would be renumbered as subsection (d)(3) and 

continue to cap the Exchange’s liability 

to all Members at the greater of $500,000 

or the amount recovered under any 

applicable insurance policy in a single 

calendar month.11

The Exchange also proposes to amend 

Rule 11.12(d)(2) to align with the 

proposed liability caps for a single 

trading day. Specifically, proposed Rule 

11.12(d)(2) would be amended to clarify 

that, to the extent that all claims 

resulting from Exchange Systems Issues 

cannot be fully satisfied because in the 

aggregate they exceed the applicable 

maximum amount of liability provided 

for, then the Exchange proposes to 

allocate the maximum amount among 

all such claims arising on a single 

trading day or during a single calendar 

month, as applicable, based on the 

proportion that each such claim bears to 

the sum of all such claims. Rule 

11.12(d)(2) would also be renumbered 

as Rule 11.12(e). 

The Exchange also proposes to amend 

Rule 11.12(e)(4) to align with the 

amended liability caps as well as to 

renumber other sections within Rule 

11.12 to mirror BATS Rule 11.16 and 

BYX Rule 11.16. 

Implementation Date 

The Exchange intends to implement 

the proposed rule change on or about 

November 6, 2014, which is the 

anticipated operative date of recently 

filed BATS and BYX proposed rule 

changes to align BATS and BYX Rules 

11.16 with EDGA and EDGX Rules 

11.12(d)(3) and (e).12 The Exchange will 

announce the implementation of the 

proposed rule change via a trading 

notice to be posted on the Exchange’s 

Web site. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act 13 and furthers 

the objectives of Section 6(b)(5) of the 

Act,14 in that it is designed promote just 

and equitable principles of trade, 

remove impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest. The proposal, in effect, would 

allow the Exchange to ensure that 

compensation for a single incident did 

not exceed the monthly cap of $500,000, 

thereby providing [sic] enabling the 

Exchange to possibly compensate 

Members for instances on multiple 

trading days per month subject to Rule 

11.12(d)(3). The Exchange believes that 

the proposed rule change is not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers or dealers. The 

proposed rule change is substantially 

similar to the existing rules of BATS 

and BYX.15 The proposed rule change is 

intended to align the liability caps for 

Member reimbursements with that 

currently provided by BATS and BYX in 

order to provide a consistent rules 

across the BGM Affiliated Exchanges. 

Consistent rules, in turn, will simplify 

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Federal Register / Vol. 79, No. 214 / Wednesday, November 5, 2014 / Notices 65741 

16 15 U.S.C. 78s(b)(3)(A)(iii). 

17 17 CFR 240.19b–4(f)(6). 

18 In addition, Rule 19b–4(f)(6)(iii) requires the 

Exchange to give the Commission written notice of 

the Exchange’s 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. 

19 17 CFR 240.19b–4(f)(6)(iii). 

20For 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). 21 17 CFR 200.30–3(a)(12). 

the regulatory requirements for 

Members of the Exchange that are also 

participants on EDGA and EDGX. The 

proposed rule change would provide 

greater harmonization between EDGX 

and EDGA rules of similar purpose, 

resulting in greater uniformity and less 

burdensome and more efficient 

regulatory compliance. 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. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change would not 

impose any burden on competition. The 

Exchange believes that the proposed 

rule changes will not burden 

intramarket competition because all 

Members would be subject to the same 

liability caps for claims resulting from 

Exchange Systems Issues. The proposed 

rule change is not designed to address 

any competitive issues but rather is 

designed to provide greater 

harmonization among Exchange and 

BATS and BYX rules of similar purpose, 

resulting in less burdensome and more 

efficient regulatory compliance for 

common members of 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 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 16 and Rule 

19b–4(f)(6) thereunder.17 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, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act and Rule 19b–4(f)(6) 

thereunder.18

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),19 the 

Commission may 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. Waiver of the 30-day operative 

delay would provide consistent rules 

across the BGM Affiliated Exchanges 

which will simplify the regulatory 

requirements for Members of the 

Exchange that are also participants on 

EDGX, BATS and BYX. In addition, the 

Commission notes that the proposed 

rule change is identical to the existing 

rules of BATS and BYX. Based on the 

foregoing, the Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest.20 The 

Commission hereby grants the 

Exchange’s request and designates the 

proposal operative upon filing. 

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 rule-comments@

sec.gov. Please include File Number SR– 

EDGA–2014–24 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–2014–24. 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– 

2014–24 and should be submitted on or 

before November 26, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–26234 Filed 11–4–14; 8:45 am] 

BILLING CODE 8011–01–P 

mstockstill on DSK4VPTVN1PROD with NOTICES