Document ID: SEC-2011-0789-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGX Exchange, Inc.
Posted Date: 2011-06-08T04:00Z

[Federal Register Volume 76, Number 110 (Wednesday, June 8, 2011)]
[Notices]
[Pages 33392-33393]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-14037]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64586; File No. SR-EDGX-2011-16]

Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Amendments to the EDGX Exchange, Inc. Fee Schedule

June 2, 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 May 27, 2011, the EDGX Exchange, Inc. (the ``Exchange'' or the 
``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 self-regulatory 
organization. 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.
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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 EDGX Rule 15.1(a) and (c). All 
of the changes described herein are applicable to EDGX Members. The 
text of the proposed rule change is available on the Exchange's 
Internet Web site at http://www.directedge.com.
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    \3\ A 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.
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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
    In SR-EDGX-2011-15,\4\ the Exchange filed for immediate 
effectiveness a rule filing to amend Rule 11.9 to introduce the SWPC 
routing strategy to Rule 11.9(b)(3)(q).
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    \4\ See SR-EDGX-2011-15 (May 5, 2011).
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    SWPC is a routing option under which an order checks the System for 
available shares and then is sent to only Protected Quotations and only 
for displayed size. To the extent that any portion of the order is 
unexecuted, the remainder is posted on the book at the order's limit 
price. The entire SWPC order will not be cancelled back to the User 
immediately if at the time of entry there is an insufficient share 
quantity in the SWPC order to fulfill the displayed size of all 
Protected Quotations. This routing option is similar to the strategies 
set forth in NASDAQ Rule 4758(a)(1)(A)(vi) (``NASDAQ's ``MOPP'' 
strategy) and BATS BZX/BYX Exchange,

[[Page 33393]]

Inc. (``BATS'') Rule 11.13(a)(3)(D) (``Parallel T'').\5\
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    \5\ See, e.g., NASDAQ Rule 4758, BATS Rule 11.13(a)(3)(D).
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    Additionally, the Exchange proposes to add the SWPC routing 
strategy to Flag SW and assign it a fee of $0.0031 per share for 
removal of liquidity from all market centers except from the New York 
Stock Exchange (NYSE). For any orders that use the SWPC strategy that 
remove liquidity from the NYSE, the Exchange will continue to assign 
them a Flag D and charge a fee of $0.0023 per share. This is further 
clarified in footnote 8 to the EDGX fee schedule.
    The Exchange proposes to implement this amendment to its fee 
schedule on May 27, 2011.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the 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 fee of $0.0031 per share for the SWPC routing strategy 
is an equitable allocation of reasonable dues, fees, and other charges 
in that the SWPC routing strategy is limited in its interaction with 
other Member orders as it only executes to the extent a Member order is 
at the Protected Quotation. As a result, compared to other routing 
strategies that always sweep the EDGX book before routing out, such as 
ROBA (fee of $0.0025 per share), the SWPC fee is higher. Secondly, the 
fee is equitable when compared to other similar type strategies of 
EDGX's competitors. As noted in SR-EDGX-2011-15 (May 5, 2011), the SWPC 
routing strategy is based on Nasdaq's MOPP strategy and BATS Parallel T 
routing strategy.\8\ Specifically, Nasdaq charges $0.0035 per share for 
the MOPP strategy and BATS charges $0.0033 per share for the Parallel T 
strategy. EDGX's rate is even more competitive than these. Finally, the 
SWPC routing strategy is similar in functionality to SWPA/SWPB, both of 
which are charged $0.0031 per share.\9\ The lower fee charged for 
removing liquidity from the NYSE ($0.0023 per share) is consistent with 
the processing of similar routing strategies by EDGX's competitors. 
Secondly, of the major market centers, the NYSE fees for removing 
liquidity itself are lower, and EDGX is thus able to pass back such 
lower rates to its Members. The Exchange believes that the proposed 
rate is non-discriminatory in that it applies uniformly to all Members.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ See, e.g., NASDAQ Rule 4758 and BATS Rule 11.13.
    \9\ See Securities Exchange Act Release No. 63821, 76 FR 7607 
(SR-EDGX-2011-02).
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    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 that the proposed rates are 
equitable in that they apply uniformly to all Members. 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)(A)(ii) of the Act \10\ and Rule 19b-4(f)(2) \11\ 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. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 19b-4(f)(2).
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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 rule-comments@sec.gov. Please include 
File Number SR-EDGX-2011-16 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-EDGX-2011-16. 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, 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 on official business 
days between the hours of 10 a.m. and 3 p.m. Copies of such 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-2011-16 and should be submitted on or before June 29, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-14037 Filed 6-7-11; 8:45 am]
BILLING CODE 8011-01-P