Document ID: SEC-2013-1910-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGX Exchange, Inc.
Posted Date: 2013-11-12T05:00Z

[Federal Register Volume 78, Number 218 (Tuesday, November 12, 2013)]
[Notices]
[Pages 67420-67421]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-26955]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70808; File No. SR-EDGX-2013-41]

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

November 5, 2013.
    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 31, 2013, EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') 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 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) 
(``Fee Schedule'') to decrease the rebate to add liquidity under the 
Market Depth Tier 1 from $0.0033 per share to $0.0032 per share. The 
text of the proposed rule change is available on the Exchange's 
Internet Web site at www.directedge.com, at the Exchange's principal 
office, and at the Public Reference Room of the Commission.
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    \3\ The term ``Member'' is defined as ``any registered broker or 
dealer, or any person associated with a registered broker or dealer, 
that has been admitted to membership in the Exchange. A Member will 
have the status of a ``member'' of the Exchange as that term is 
defined in Section 3(a)(3) of the Act.'' See Exchange Rule 1.5(n).
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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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedule to decrease the 
rebate to add liquidity under the Market Depth Tier 1 from $0.0033 per 
share to $0.0032 per share. Footnote 1 of the Fee Schedule currently 
provides that Members may qualify for the Market Depth Tier 1 and 
receive a rebate of $0.0033 per share for displayed liquidity added on 
EDGX if they post greater than or equal to 0.50% of the TCV in average 
daily trading volume (``ADV'') on EDGX in total, where at least 
1,800,000 shares are non-displayed orders that yield Flag HA. The 
Exchange proposes to amend Footnote 1 of its Fee Schedule to decrease 
the rebate of the Market Depth Tier 1 from $0.0033 per share to $0.0032 
per share. The remainder of the footnote as it pertains to the Market 
Depth Tier 1 would remain unchanged.
Implementation Date
    The Exchange proposes to implement this amendment to its Fee 
Schedule on November 1, 2013.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\4\ in general, and 
furthers the objectives of Section 6(b)(4),\5\ 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 Exchange believes that the reduced rebate of $0.0032 
per share for adding liquidity on EDGX is an equitable allocation of 
reasonable dues, fees, and other charges as the additional revenue that 
results from the lower rebate enables the Exchange to cover increased 
infrastructure and administrative expenses.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4).
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    The Exchange also believes that the decreased rebate for the Market 
Depth Tier 1 represents an equitable allocation of reasonable dues, 
fees, and other charges because the lower rebate is directly correlated 
with this tier's criteria. The Exchange recently decreased the ADV 
requirement of the Market Depth Tier 1 from 2,000,000 shares of ADV to 
1,800,000 shares of

[[Page 67421]]

ADV.\6\ The Exchange believes that the lower volume requirement 
necessary to achieve the Market Depth Tier 1 justifies its lower 
rebate. For example, for a Member to qualify for the tier most similar 
to the Market Depth Tier 1, the Market Depth Tier 2 and receive a 
rebate of $0.0029 per share, a Member needs to add 10,000,000 shares or 
more of ADV on a daily basis, measured monthly, and add at least 
1,000,000 shares as non-displayed orders that yield Flag HA. For a 
Member to qualify for the Market Depth Tier 1, a Member must post at 
least 0.50% of the TCV in ADV on EDGX in total, where at least 1.8 
million shares are non-displayed orders that add liquidity to EDGX 
yielding Flag HA. Based on a TCV of six (6) billion shares, this would 
amount to 30,000,000 shares for the Market Depth Tier 1 while the 
Market Depth Tier 2 would require an ADV of 10,000,000 shares. Members 
seeking to achieve the Market Depth Tier 1 would also be required to 
post at least 1.8 million shares of non-displayed orders that add 
liquidity to EDGX yielding Flag HA, whereas the Market Depth Tier 2 
would require that Members post 1,000,000 shares of non-displayed 
orders that add liquidity to EDGX yielding Flag HA.
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    \6\ See Securities Exchange Act Release No. 69911 (July 2, 
2013), 78 FR 41132 (July 9, 2013) (SR-EDGX-2013-25).
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    Lastly, the Exchange believes that its proposal to decrease the 
rebate offered by the Market Depth Tier 1 is non-discriminatory because 
the proposed rate would continue to apply uniformly to all Members.

B. Self-Regulatory Organization's Statement on Burden on Competition

    These proposed rule changes do not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. The Exchange does not believe that any of these changes 
represent a significant departure from previous pricing offered by the 
Exchange or pricing offered by the Exchange's competitors. 
Additionally, Members may opt to disfavor EDGX's pricing if they 
believe that alternatives offer them better value. Accordingly, the 
Exchange does not believe that the proposed changes will increase of 
[sic] decrease4 [sic] intermarket competition or impair the ability of 
Members or competing venues to maintain their competitive standing in 
the financial markets.
    The Exchange believes that its proposal would neither increase or 
decrease intramarket competition because the rate for the Market Depth 
Tier 1 would continue to apply uniformly to all Members and the ability 
of some Members to meet the tier would only benefit other Members by 
contributing to increased price discovery and better market quality at 
the Exchange.

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) of the Act \7\ and Rule 19b-4(f)(2) \8\ thereunder. At any 
time within 60 days of the filing of such 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-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 email to rule-comments@sec.gov. Please include 
File Number SR-EDGX-2013-41 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-2013-41. 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-EDGX-2013-41 and should be 
submitted on or before December 3, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-26955 Filed 11-8-13; 8:45 am]
BILLING CODE 8011-01-P