73656 Federal Register / Vol. 79, No. 238 / Thursday, December 11, 2014 / Notices 

11 15 U.S.C. 78s(b)(3)(A)(ii). 

12 17 CFR 240.19b–4(f)(2). 

13 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). 

5The Exchange currently offers logical ports 

through which orders are submitted to the 

Exchange, receive drop copies of orders and 

execution messages, and receive transmission of 

depth of book data (‘‘Logical Ports’’). Each Logical 

Port is assigned an access gateway that performs 

order validations and manages the cycle of a 

submitted order’s flow of information back to the 

Member. The access gateway performs functions 

such as message validation, acknowledgement 

messaging, risk checks, matching engine routing 

and execution messaging. The Exchange currently 

assigns Members’ and non-Members’ Logical Ports 

to the access gateways through a standard method 

that accounts for the relative message traffic 

expected over the Logical Port as well as 

redundancy requirements, where an access gateway 

contains assigned Logical Ports for a number of 

firms. The Exchange assigns Member and nonMember sessions to multiple access gateways so 

that the failure of one gateway may not result in the 

loss of access. 

6See Securities Exchange Act Release No. 69855 

(June 25, 2013), 78 FR 39386 (SR–EDGX–2013–21) 

(Notice of Filing and Immediate Effectiveness of 

Proposed Rule Change to Offer and Establish Fees 

for a New Exchange Service, EdgeRisk Gateways). 

19(b)(3)(A)(ii) 11 of the Act and Rule 

19b–4(f)(2) 12 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– 

CME–2014–55 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–CME–2014–55. 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 

filings will also be available for 

inspection and copying at the principal 

office of CME and on CME’s Web site at 

http://www.cmegroup.com/marketregulation/rule-filings.html. 

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–CME–2014–55 and should 

be submitted on or before January 2, 

2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–29003 Filed 12–10–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73760; File No. SR–EDGX– 

2014–29] 

Self-Regulatory Organizations; EDGX 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Eliminate Reference to 

the EdgeRisk Gateway in Rule 13.10 of 

EDGX Exchange, Inc. 

December 5, 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 November 

25, 2014, EDGX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGX’’) 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 is proposing to 

eliminate reference in Rule 13.10 to the 

EdgeRisk GatewaySM, which is a risk 

management tool that is to be 

discontinued by the Exchange. The 

Exchange also proposes to delete the 

fees related to EdgeRisk GatewaySM

from its fee schedule. 

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 

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 

The Exchange proposes to delete 

reference to the EdgeRisk GatewaySM in 

Rule 13.10 as well as its related fees 

from the Exchange’s fee schedule. In 

sum, the EdgeRisk GatewaySM is an 

optional fee-based risk management tool 

that provides Members and nonMembers the option to obtain dedicated 

primary and backup access gateways 5

in addition to, or in place of, a shared 

access gateway.6 The tool was intended 

to assist subscribers’ efforts to mitigate 

the risks associated with disruptions 

caused by excessive message traffic or 

programming mistakes experienced via 

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Federal Register / Vol. 79, No. 238 / Thursday, December 11, 2014 / Notices 73657 

7See Securities Exchange Act Release No. 71449 

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

(SR–EDGX–2013–43; SR–EDGA–2013–34). 

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

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

10 15 U.S.C. 78f(b)(4). 

11 15 U.S.C. 78f(b)(5). 

12 15 U.S.C. 78f(b)(4). 

13 15 U.S.C. 78f(b)(8). 

14 15 U.S.C. 78s(b)(3)(A). 

15 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

provide the Commission with written notice of its 

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 met this requirement. 

a shared access gateway because the 

subscriber’s order flow on its dedicated 

access gateways would be insulated 

from such external disruptions. 

Earlier this year, the Exchange and its 

affiliate EDGA Exchange, Inc. (‘‘EDGA’’) 

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 Exchange, Inc. 

(‘‘BATS’’) and BATS Y-Exchange, Inc. 

(‘‘BYX’’, together with BATS, BYX, 

EDGA and EDGX, the ‘‘BGM Affiliated 

Exchanges’’).7 In the context of the 

Merger, the BGM Affiliated Exchanges 

are assessing certain system 

functionality, retaining only intended 

differences between the BGM Affiliated 

Exchanges. As part of this effort, the 

Exchange proposes to: delete reference 

to EdgeRisk GatewaySM in Rule 13.10 as 

well as its related fees from the 

Exchange’s fee schedule because it 

intends to discontinue offering this 

product. Therefore, reference to the 

product within Exchange’s rules and 

applicable fees in its fee schedule would 

no longer serve any legitimate purpose 

upon the product being retired by the 

Exchange. The Exchange has few 

subscribers to the EdgeRisk GatewaySM

and has determined that the current 

customer demand does not warrant the 

infrastructure and ongoing maintenance 

expense required to support the product 

within the new Exchange environment. 

Therefore, the Exchange will terminate 

the product on January 12, 2015. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with the 

requirements of Section 6(b) of the Act,8

in general, and Section 6(b)(5) of the 

Act,9 in particular, in that is promotes 

just and equitable principles of trade, 

removes impediments to, and perfects 

the mechanism of, a free and open 

market and a national market system, 

and, in general, protects investors and 

the public interest. The Exchange also 

believes that its proposal is consistent 

with Section 6(b)(4) of the Act,10 in that 

it provides for the equitable allocation 

of reasonable dues, fees and other 

charges among members and other 

persons using its facilities. 

Specifically, the proposal is 

consistent with Section 6(b)(5) of the 

Act,11 in that it eliminates any investor 

confusion by deleting references to a 

product, and its related fees, that is to 

be discontinued by the Exchange, 

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. In 

addition, the Exchange has very few 

subscribers to EdgeRisk GatewaySM and 

has determined that the current 

customer demand does not warrant the 

infrastructure and ongoing maintenance 

expense required to support the product 

within the new Exchange environment. 

In addition, EdgeRisk GatewaySM is not 

a core product offering by the Exchange, 

nor is the Exchange required by the Act 

to offer such a product. The proposed 

rule change will not permit unfair 

discrimination among customers, 

brokers, or dealers because the EdgeRisk 

GatewaySM will no longer be offered by 

the Exchange. 

In addition, the Exchange believes 

that the proposed removal of the fees for 

the EdgeRisk GatewaySM from its fee 

schedule is consistent with Section 

6(b)(4) of the Act 12 because it would 

delete fees for a product that is to be 

discontinued by the Exchange, thereby 

eliminating investor confusion. Lastly, 

the Exchange also believes that the 

proposed amendment to its fee schedule 

is reasonable and non-discriminatory 

because it will apply uniformly to all 

members. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange believes the proposal is 

consistent with Section 6(b)(8) of the 

Act 13 in that it does not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed rule change will discontinue 

ConenctEdge [sic] by removing 

references to the service from its rules, 

and its related fees from the fee 

schedule, and is not designed to have a 

competitive impact. Therefore, the 

Exchange does not believe the proposed 

rule change will have any effect on 

competition. 

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: (1) Significantly affect the 

protection of investors or the public 

interest; (2) impose any significant 

burden on competition; and (3) by its 

terms does not become operative for 30 

days after the date of this filing, or such 

shorter time as the Commission may 

designate if consistent with the 

protection of investors and the public 

interest, the proposed rule change has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 14 and Rule 19b– 

4(f)(6) thereunder.15

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily 

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– 

EDGX–2014–29 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–EDGX–2014–29. 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 

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73658 Federal Register / Vol. 79, No. 238 / Thursday, December 11, 2014 / Notices 

16 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 72956 

(September 2, 2014), 79 FR 53236 (September 8, 

2014) (the ‘‘Proposing Release’’). 

4See Letters from David L. Cohen, Managing 

Director and Associate General Counsel, Securities 

Industry and Financial Markets Association 

(‘‘SIFMA’’), dated September 29, 2014 (‘‘SIFMA 

Letter’’); Michael Nicholas, Chief Executive Officer, 

Bond Dealers of America (‘‘BDA’’), dated September 

29, 2014 (‘‘BDA Letter No. 1’’) and October 30, 2014 

(‘‘BDA Letter No. 2’’); Chris Melton, Executive Vice 

President, Coastal Securities (‘‘Coastal’’), dated 

September 29, 2014 (‘‘Coastal Letter’’); David T. 

Bellaire, Esq., Executive Vice President & General 

Counsel, Financial Services Institute (‘‘FSI’’), dated 

September 29, 2014 (‘‘FSI Letter’’); and Robert J. 

McCarthy, Director of Regulatory Policy, Wells 

Fargo Advisors, LLC (‘‘Wells Fargo’’), dated 

September 29, 2014 (‘‘Wells Letter’’). Staff from the 

Office of Municipal Securities met with 

representatives from BDA on October 23, 2014, and 

had a telephonic meeting with a representative from 

SIFMA on December 3, 2014, to discuss the 

proposed rule change. 

5See Letter to Secretary, Commission, from 

Michael L. Post, Deputy General 

Counsel, MSRB, dated November 21, 2014 

(‘‘MSRB Response Letter’’). 

6See supra note 3 at 2. 

7 Id. at 7. 

8 Id. 

9 Id. 

10See proposed Rule G–18(a). 

11 Id. 

12See proposed Rule G–18(b). 

13See supra note 3 at 10. 

14See proposed Rule G–18(c). 

15 Id. 

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–EDGX– 

2014–29, and should be submitted on or 

before January 2, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–29009 Filed 12–10–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73764; File No. SR–MSRB– 

2014–07] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Order Granting Approval of a 

Proposed Rule Change Consisting of 

Rule G–18, on Best Execution of 

Transactions in Municipal Securities, 

and Amendments to Rule G–48, on 

Transactions With Sophisticated 

Municipal Market Professionals 

(‘‘SMMP’’), and Rule D–15, on the 

Definition of SMMP 

December 5, 2014. 

I. Introduction 

On August 20, 2014, the Municipal 

Securities Rulemaking Board (the 

‘‘MSRB’’ or ‘‘Board’’) filed with the 

Securities and Exchange Commission 

(the ‘‘SEC’’ or ‘‘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 consisting of Rule G–18, on best 

execution of transactions in municipal 

securities, and amendments to Rule G– 

48, on transactions with SMMPs, and 

Rule D–15, on the definition of SMMP 

(the ‘‘proposed rule change’’). The 

proposed rule change was published for 

comment in the Federal Register on 

September 8, 2014.3

The Commission received six 

comment letters on the proposed rule 

change.4 On November 21, 2014, the 

MSRB submitted a response to these 

comments.5 This order approves the 

proposed rule change. 

II. Description of the Proposed Rule 

Change 

According to the MSRB, the 

establishment of a requirement that 

brokers, dealers and municipal 

securities dealers (‘‘dealers’’) seek best 

execution of retail customer transactions 

in municipal securities will have 

benefits for investors, promote fair 

competition among dealers, and 

improve market efficiency.6 The MSRB 

stated that the proposed rule change 

reflects the MSRB’s belief that a best 

execution rule should be generally 

harmonized with the Financial Industry 

Regulatory Authority’s (‘‘FINRA’’) bestexecution rule, FINRA Rule 5310 (Best 

Execution and Interpositioning), for 

purposes of regulatory efficiency but 

appropriately tailored to the 

characteristics of the municipal 

securities market.7 The MSRB further 

believes that, unlike FINRA Rule 5310, 

it is appropriate to provide an exception 

from the requirements of the bestexecution rule for all transactions with 

SMMPs.8 The MSRB represented that 

the proposed best-execution 

requirement generally would target the 

process by which dealers handle orders 

and execute transactions, and would 

complement and buttress the MSRB’s 

existing fair-pricing rules.9

1. Proposed Rule G–18 

Proposed Rule G–18(a) requires that, 

in any transaction in a municipal 

security for or with a customer or a 

customer of another dealer, a dealer 

must use reasonable diligence to 

ascertain the best market for the subject 

security and buy or sell in that market 

so that the resultant price to the 

customer is as favorable as possible 

under prevailing market conditions.10

Paragraph (a) provides the following 

factors among the factors that will be 

considered in determining whether a 

dealer has used ‘‘reasonable diligence,’’ 

with no single factor being 

determinative: the character of the 

market for the security, the size and 

type of transaction, the number of 

markets checked, the information 

reviewed to determine the current 

market for the subject security or similar 

securities, the accessibility of 

quotations, and the terms and 

conditions of the customer’s inquiry or 

order, including any bids or offers, that 

result in the transaction, as 

communicated to the dealer.11

Proposed Rule G–18(b) prohibits a 

dealer from interjecting a third party 

between itself and the best market for 

the subject security in a manner 

inconsistent with paragraph (a).12 The 

MSRB stated that paragraph (b) would 

not prohibit the use of a broker’s broker, 

unless it was inconsistent with the bestexecution obligation in paragraph (a).13

Proposed Rule G–18(c) specifies that 

the obligations described in paragraphs 

(a) and (b) apply to transactions in 

which the dealer is acting as agent and 

transactions in which the dealer is 

acting as principal.14 Paragraph (c) 

expressly states that the best-execution 

obligations are distinct from the fairness 

and reasonableness of commissions, 

markups or markdowns, which are 

governed by Rule G–30.15

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