Document ID: SEC-2013-1453-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGA Exchange, Inc.
Posted Date: 2013-08-14T04:00Z

[Federal Register Volume 78, Number 157 (Wednesday, August 14, 2013)]
[Notices]
[Pages 49568-49569]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-19740]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70135; File No. SR-EDGA-2013-19]

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

August 8, 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 July 30, 2013, EDGA Exchange, Inc. (the ``Exchange'' or 
``EDGA'') 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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\ pursuant to EDGA Rule 15.1(a) and (c) (``Fee Schedule'') to 
increase the fee charged from $0.0017 per share to $0.0050 per share 
for orders that yield Flag RW, which routes to CBOE Stock Exchange, LLC 
(``CBSX'') and adds liquidity. All of the changes described herein are 
applicable to EDGA Members. 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.
---------------------------------------------------------------------------

    \3\ ``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.'' EDGA Rule 1.5(n).
---------------------------------------------------------------------------

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 increase the fee 
charged from $0.0017 per share to $0.0050 per share for orders that 
yield Flag RW, which routes to CBSX and adds liquidity.
    In securities priced at or above $1.00, the Exchange currently 
assesses a fee of $0.0017 per share for Members' orders that yield Flag 
RW. The Exchange proposes to amend its Fee Schedule to increase this 
fee to $0.0050 per share for Members' orders that yield Flag RW. The 
proposed change represents a pass through of the rate of $0.0050 that 
Direct Edge ECN LLC (d/b/a DE Route) (``DE Route''), the Exchange's 
affiliated routing broker-dealer, is charged for routing orders in 
select symbols to CBSX when it does not qualify for a volume tiered 
discount.\4\ DE Route passes through this rate on CBSX to the Exchange 
and the Exchange, in turn, passes through this rate to its Members.
---------------------------------------------------------------------------

    \4\ The Exchange notes that to the extent DE Route does or does 
not achieve any volume tiered discount on CBSX, its rate for Flag RW 
will not change.
---------------------------------------------------------------------------

    The Exchange notes that the proposed change is in response to 
CBSX's July 2013 fee change where CBSX exempted select symbols out of 
its standard fee structure.\5\ Instead, CBSX amended its fee schedule 
to assess a fee of $0.0050 per share for maker transactions in such 
symbols and a rebate of $0.0045 per share for taker transactions in 
such symbols.\6\ The Exchange notes that its internal billing system is 
unable to assign different rates by symbols. Therefore, due to internal 
system limitations and to protect the Exchange from potentially 
significant financial loss for orders routed to CBSX in the select 
symbols, it is necessary that the Exchange assess a flat fee of $0.0050 
per share for all orders that yield Flag RW. The Exchange further notes 
that routing through DE Route is voluntary and that Members would 
continue to be able to send orders in symbols that CBSX does not 
subject to the $0.0050 per share fee directly to CBSX if they so 
choose.
---------------------------------------------------------------------------

    \5\ Securities Exchange Act Release No. 69916 (July 2, 2013), 78 
FR 41158 (July 9, 2013) (SR-CBOE-2013-065). CBSX lists these select 
symbols in footnote 6 to its fee schedule. CBSX, CBOE Stock Exchange 
Fees Schedule, available at, http://www.cboe.com/publish/cbsxfeeschedule/cbsxfeeschedule.pdf (last visited July 23, 2013).
    \6\ CBSX, CBOE Stock Exchange Fees Schedule, available at, 
http://www.cboe.com/publish/cbsxfeeschedule/cbsxfeeschedule.pdf 
(last visited July 23, 2013).
---------------------------------------------------------------------------

Implementation Date
    The Exchange proposes to implement these amendments to its Fee 
Schedule on August 1, 2013.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\7\ in general, and 
furthers the objectives of Section 6(b)(4),\8\ 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.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

Fee Change for Flag RW
    The Exchange believes that its proposal to increase the charge for 
Members' orders that yield Flag RW from $0.0017 to $0.0050 per share 
represents an equitable allocation of reasonable dues, fees, and other 
charges among Members and other persons using its facilities because 
the Exchange is passing through the higher add charge levied by CBSX 
for orders that the Exchange routes to CBSX through DE Route. Prior to 
CBSX's July 2013 fee change, CBSX charged DE Route a fee of $0.0017 per 
share for orders yielding Flag RW, which DE Route passed through to the 
Exchange and the Exchange passed through to its Members. In July 2013, 
CBSX increased the rate it charges its customers, such as DE Route, 
from a charge of $0.0017 per share to a charge of $0.0050 per share for 
orders in select symbols that are routed to CBSX.\9\ Therefore, the 
Exchange believes that the proposed change in Flag RW from a fee of 
$0.0017

[[Page 49569]]

per share to a fee of $0.0050 per share is equitable and reasonable 
because it accounts for the pricing changes on CBSX.
---------------------------------------------------------------------------

    \9\ Securities Exchange Act Release No. 69916 (July 2, 2013), 78 
FR 41158 (July 9, 2013) (SR-CBOE-2013-065).
---------------------------------------------------------------------------

    In addition, the proposal allows the Exchange to continue to charge 
its Members a pass-through rate for orders that are routed to CBSX and 
add liquidity using DE Route. The Exchange notes that its internal 
billing system is unable assign different rates by symbols. Therefore, 
due to internal system limitations and to protect the Exchange from 
potentially significant financial loss for the select symbols, it is 
necessary that the Exchange assess a flat fee of $0.0050 per share for 
all orders that yield Flag RW. Further, the Exchange notes that routing 
through DE Route is voluntary and that Members would continue to be 
able to send orders in symbols that CBSX does not subject to the 
$0.0050 per share fee directly to CBSX if they so choose. Lastly, the 
Exchange believes that the proposed amendment is non-discriminatory 
because it applies 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 any of the Exchange's competitors. 
Additionally, Members may opt to disfavor the Exchange's pricing if 
they believe that alternatives offer them better value. Accordingly, 
the Exchange believes that the proposed changes would not impair the 
ability of Members or competing venues to maintain their competitive 
standing in the financial markets.
    The Exchange believes that its proposal to pass through a charge of 
$0.0050 per share for Members' orders that yield Flag RW would increase 
intermarket competition because it offers customers an alternative 
means to route to CBSX for the same price as entering orders in select 
symbols on CBSX directly. The Exchange notes that routing through DE 
Route is voluntary and that Members would continue to be able to send 
orders in symbols that CBSX does not subject to the $0.0050 per share 
fee directly to CBSX if they so choose. The Exchange believes that its 
proposal would not burden intramarket competition because the proposed 
rate would apply uniformly to all Members.

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 its Members or other interested 
parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The The foregoing rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(2) \11\ 
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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2013-19 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-EDGA-2013-19. 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-EDGA-2013-19 and should be 
submitted on or before September 4, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-19740 Filed 8-13-13; 8:45 am]
BILLING CODE 8011-01-P