Document ID: SEC-2015-1372-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGA Exchange, Inc.
Posted Date: 2015-08-18T04:00Z

[Federal Register Volume 80, Number 159 (Tuesday, August 18, 2015)]
[Notices]
[Pages 50053-50055]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-20282]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75685; File No. SR-EDGA-2015-30]

Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Operation of MidPoint Peg Orders Under Rule 11.8(d)

August 12, 2015.
    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 August 7, 2015, 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 ``non-controversial'' 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.
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    \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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend the operation of MidPoint 
Peg Orders under Rule 11.8(d) when a Locking Quotation exists.\5\ The 
proposed amendment is based on the operation of Mid-Point Peg Orders on 
EDGX, Exchange, Inc. (``EDGX''), BATS Exchange, Inc. (``BZX'') and BATS 
Y-Exchange, Inc. (``BYX'').\6\ The Exchange has designated the proposed 
rule change as non-controversial and provided the Commission with the 
notice required by Rule 19b-4(f)(6)(iii) under the Act.\7\
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    \5\ The term ``Locking Quotation'' is defined as ``[t]he display 
of a bid for an NMS stock at a price that equals the price of an 
offer for such NMS stock previously disseminated pursuant to an 
effective national market system plan, or the display of an offer 
for an NMS stock at a price that equals the price of a bid for such 
NMS stock previously disseminated pursuant to an effective national 
market system plan in violation of Rule 610(d) of Regulation NMS.'' 
See Exchange Rule 11.6(g).
    \6\ See EDGX Rule 11.8(d)(6); BZX and BYX Rule 11.9(c)(9).
    \7\ 17 CFR 240.19b-4(f)(6)(iii).
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    The text of the proposed rule change is available at the Exchange's 
Web site at www.batstrading.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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In early 2014, the Exchange and its affiliate, 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 BZX and BYX (together with BZX, EDGA and EDGX, the ``BGM 
Affiliated

[[Page 50054]]

Exchanges'').\8\ In order to provide consistent rules and system 
functionality amongst the BGM Affiliated Exchanges, the Exchange 
proposes to amend the operation of MidPoint Peg Orders under EDGA Rule 
11.8(d) when a Locking Quotation exists to align with the operation of 
Mid-Point Peg orders on EDGX, BZX and BYX.\9\
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    \8\ See Securities Exchange Act Release No. 71449 (January 30, 
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013-
34).
    \9\ See EDGX Rule 11.8(d); BZX and BYX Rule 11.9(c)(9).
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    In sum, a MidPoint Peg Order is a non-displayed Market Order or 
Limit Order with an instruction to execute at the midpoint of the NBBO, 
or, alternatively, be pegged to the less aggressive of the midpoint of 
the NBBO or one minimum price variation inside the same side of the 
NBBO as the order.\10\ Currently, a MidPoint Peg Order is not eligible 
for execution when a Locking Quotation or Crossing Quotation \11\ 
exists. In such cases, a MidPoint Peg Order rests on the EDGX Book and 
is not be eligible for execution in the System until the Locking 
Quotation or Crossing Quotation is cleared.
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    \10\ See Exchange Rule 11.8(d) for a complete description of the 
MidPoint Peg Orders.
    \11\ The term ``Crossing Quotation'' is defined as ``[t]he 
display of a bid (offer) for an NMS stock at a price that is higher 
(lower) than the price of an offer (bid) for such NMS stock 
previously disseminated pursuant to an effective national market 
system plan in violation of Rule 610(d) of Regulation NMS.'' See 
Exchange Rule 11.6(c).
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    The Exchange now proposes to amend the operation of MidPoint Peg 
Orders to provide Users \12\ the ability to elect that their MidPoint 
Peg Orders be eligible for execution when a Locking Quotation exists. 
As amended, Rule 11.8(d)(6) would state that, unless otherwise 
instructed by the User, a MidPoint Peg Order would not be eligible for 
execution when a Locking Quotation exists. Where a User does not 
instruct the Exchange to execute its MidPoint Peg Order in such cases, 
the order would be treated as it is today, and would rest on the EDGA 
Book and not be eligible for execution until the Locking Quotation is 
cleared.\13\ Like the operation of MidPoint Peg Orders when a Crossing 
Quotation exists, once the Locking Quotation is cleared, a new midpoint 
of the NBBO is established, and the MidPoint Peg Order becomes eligible 
for execution receiving a new time stamp. In such case, pursuant to 
Exchange Rule 11.9, all MidPoint Peg Orders that are ranked at the 
midpoint of the NBBO will retain their priority as compared to each 
other based upon the time such orders were initially received by the 
System,\14\ including MidPoint Peg Order received when a Locking 
Quotation exists. This behavior is consistent with operation of Mid-
Point Peg orders under EDGX Rule 11.8(d)(6) and BYX and BZX Rules 
11.9(c)(9). The Exchange is not proposing to amend the operation of 
Midpoint Peg Orders when a Crossing Quotation exists.
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    \12\ The term ``User'' is defined as ``any Member or Sponsored 
Participant who is authorized to obtain access to the System 
pursuant to Rule 11.3.'' See Exchange Rule 1.5(ee).
    \13\ Under Rule 11.8(d), a MidPoint Peg Order will receive a new 
time stamp when the Locking Quotation is cleared and a new midpoint 
of the NBBO is established.
    \14\ The term ``System'' is defined as ``the electronic 
communications and trading facility designated by the Board through 
which securities orders of Users are consolidated for ranking, 
execution and, when applicable, routing away.'' See Exchange Rule 
1.5(cc).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \15\ and furthers the objectives of 
Section 6(b)(5) of the Act \16\ because it is 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, 
to foster cooperation and coordination with persons engaged in 
facilitating transactions in securities, and, in general, to protect 
investors and the public interest. The proposed rule change also is 
designed to support the principles of Section 11A(a)(1) \17\ of the Act 
in that it seeks to assure fair competition among brokers and dealers 
and among exchange markets.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
    \17\ 15 U.S.C. 78k-1(a)(1).
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    The proposed rule change is intended to align the operation of 
MidPoint Peg Orders when a Locking Quotation exists with that of 
MidPoint Peg Orders under EDGX Rule 11.8(d) and BYX and BZX Rules 
11.9(c)(9) in order to provide a consistent functionality across the 
BGM Affiliated Exchanges. Consistent functionality between the 
exchanges will reduce complexity and streamline functionality, thereby 
resulting in simpler technology implementation, changes and maintenance 
by Users of the Exchange that are also participants on EDGX, BZX and 
BYX. The Exchange also believes the proposed rule change would provide 
Users with increased flexibility over their MidPoint Peg Orders when a 
Locking Quotation exists. For the reasons set forth above, the Exchange 
believes the proposal would 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.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
notes that the proposal will provide consistent functionality across 
the BGM Affiliated Exchanges, thereby reducing complexity and 
streamlining duplicative functionality, resulting in simpler technology 
implementation, changes and maintenance by Users of the Exchange that 
are also participants on EDGX, BZX and BYX. Thus, the Exchange believes 
this proposed rule change is necessary to permit fair competition among 
national securities exchanges. In addition, the Exchange believes the 
proposed rule change will benefit Exchange participants in that it is 
designed to achieve a consistent technology offering by 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

    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\
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    \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.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act normally does not become operative for 30 days after the date of 
its filing. However, Rule 19b-4(f)(6)(iii) permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the

[[Page 50055]]

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 allow the Exchange to harmonize its rules across 
BGM Affiliated Exchanges in a timely manner, thereby simplifying the 
rules available to Members of the Exchange that are also participants 
on EDGX, BZX and BYX. Based on the foregoing, the Commission believes 
the waiver of the operative delay is consistent with the protection of 
investors and the public interest.\19\ The Commission hereby grants the 
waiver and designates the proposal operative upon filing.
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    \19\ For 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).
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    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-2015-30 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-EDGA-2015-30. 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 will also 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-2015-30 and should be 
submitted on or before September 8, 2015.
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    \20\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
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pursuant to delegated authority.\20\

Brent J. Fields,
Secretary.
[FR Doc. 2015-20282 Filed 8-17-15; 8:45 am]
 BILLING CODE 8011-01-P