Document ID: SEC-2010-1044-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGX Exchange, Inc.
Posted Date: 2010-07-09T04:00Z

[Federal Register: July 9, 2010 (Volume 75, Number 131)]
[Notices]               
[Page 39599-39600]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09jy10-106]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62437; File No. SR-EDGX-2010-06]

 
Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing of Proposed Rule Change To Amend EDGX Fee Schedule To Impose 
Fees for Physical Ports Used To Connect to EDGX Exchange

July 1, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on July 1, 2010, EDGX Exchange, Inc. (``EDGX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. 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 fee schedule applicable to 
Members \3\ and non-members of the Exchange pursuant to EDGX Rule 
15.1(a) and (c). Pursuant to the proposed rule change, the Exchange 
will commence charging fees for Members and non-members for certain 
physical ports used to connect to the Exchange's systems. The Exchange 
intends to implement this rule proposal effective upon Securities and 
Exchange Commission (``Commission'') approval.
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    \3\ A Member is any registered broker or dealer that has been 
admitted to membership in the Exchange.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.directedge.com, on the Commission's Web site at 
http://www.sec.gov, 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 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 those 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
    The purpose of the proposed rule change is to begin charging an 
annual fee to Members and non-members for physical ports used to 
connect to the Exchange's systems for purposes including order entry 
and the receipt of Exchange data. A physical port is a port used by a 
Member or non-member \4\ to connect into the Exchange at the data 
centers where Exchange servers are located. Physical port connections 
can occur either through an external telecommunication circuit or a 
cross-connection. Currently, Members and non-members have a number of 
alternative methods available to them for connecting to the Exchange 
without the need to obtain an independent physical connection, 
including the use of financial extranets or service bureaus. However, 
some Members and non-members may wish to connect directly with their 
own dedicated circuit connection. In order to support their 
requirements and the associated infrastructure costs related to direct 
circuit connectivity, EDGX proposes to charge Members and non-members 
the following annual fees based on the connectivity service type:
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    \4\ Non-members can include non-member service bureaus that act 
as a conduit for orders entered by Exchange Members that are their 
customers as well as sponsored participants and market data 
recipients.

------------------------------------------------------------------------
                                                         Annual fee per
               Connection  service type                  physical port
------------------------------------------------------------------------
1 Gb Copper..........................................             $5,000
1 Gb Fiber...........................................              7,500
10 Gb Fiber..........................................             10,000
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    Only one physical port is required to access all services for EDGX. 
However, Members and non-members may choose more than one physical port 
and

[[Page 39600]]

different connection service types based on their needs. The Exchange 
notes that other market centers provide similar services to their 
Members and non-members.\5\
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    \5\ See Securities Exchange Act Release Nos. 61545 (February 19, 
2010), 75 FR 8769 (February 25, 2010) (order approving file no. SR-
BATS-2009-032); and 62392 (June 28, 2010) (notice of filing file no. 
SR-Nasdaq-2010-077).
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    The Exchange believes that the service will offer market 
participants additional EDGX connectivity choices, providing for 
greater access into the market while allowing the market participant to 
choose the method of connectivity based on their specific needs.
    The Exchange will implement the proposed rule change following 
Commission approval.
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. Members and other persons using the Exchange facilities 
also have the ability to obtain access to these services without the 
need for an independent physical port connection, such as through 
alternative means of financial extranets and service bureaus, as 
described above. In addition, Members and non-members also have the 
ability to choose lower cost connection service types and still obtain 
access to all EDGX services. Furthermore, the fees associated with 
physical ports will be equitably allocated to all constituents as the 
fees will be uniform in application to all Members and non-members. 
Finally, the Exchange believes that the fees obtained will enable it to 
cover its infrastructure costs associated with allowing Members and 
non-members to establish physical ports to connect to the Exchange's 
systems and continue to maintain and improve its infrastructure, market 
technology, and services.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
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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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be 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 e-mail to rule-comments@sec.gov. Please include 
File No. SR-EDGX-2010-06 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-EDGX-2010-06. 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, 100 F Street, NE., 
Washington, DC 20549, 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-2010-06 and should be 
submitted on or before July 30, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-16747 Filed 7-8-10; 8:45 am]
BILLING CODE 8011-01-P