Document ID: SEC-2010-1709-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGA Exchange, Inc.
Posted Date: 2010-11-08T05:00Z

[Federal Register Volume 75, Number 215 (Monday, November 8, 2010)]
[Notices]
[Pages 68659-68660]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-28182]

[[Page 68659]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63227; File No. SR-EDGA-2010-17]

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

November 2, 2010.
    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 29, 2010, the EDGA Exchange, Inc. (the ``Exchange'' or 
the ``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.
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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 EDGA Rule 15.1(a) and (c) by 
making an amendment to its fee schedule.
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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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    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 http://www.directedge.com.

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
    Currently, for Non-Displayed Orders, Members are charged $0.0010 
per share. However, this rate is contingent upon a Member adding 
greater than 1,000,000 shares on a daily basis, measured monthly. 
Members not meeting this minimum are currently charged $0.0030 per 
share.
    First, the Exchange proposes to add clarifying language in footnote 
2 to state that a Flag H would be yielded in this situation. Next, the 
Exchange proposes to add an additional way for Members to be charged 
the reduced rate of $0.0010 per share. This additional method would 
allow Members to qualify for the reduced rate if they post on EDGA 
greater than 8,000,000 shares on a daily basis, measured monthly 
(yielding Flags B, V, Y, 3 or 4). The Exchange proposes to make a 
conforming amendment to change the word ``this'' to ``either'' in 
footnote 2 to clarify that a Member can receive the rate of $0.0010 per 
share by satisfying either condition.
    Finally, the Exchange proposes to provide a reduced rate for non-
displayed (``Flag H'') executions for a non-aggregated MPID 
representing the volume of a Member and meeting certain criteria. For 
executions in stocks priced $1.00 and over, if the average daily volume 
(``ADV'') of Flag H executions for a non-aggregated MPID is increased 
such that its ADV is 1,000,000 greater than its ADV of Flag H 
executions averaged across the month of October 2010, then the non-
aggregated MPID would qualify for a rate of $0.00025 per share. For 
executions in stocks priced below $1.00, if the ADV of Flag H 
executions for a non-aggregated MPID is increased such that its ADV is 
1,000,000 greater than its ADV of Flag H executions averaged across the 
month of October 2010, then the non-aggregated MPID would qualify for a 
rate of .025% of the total dollar volume of the Flag H executions. The 
Exchange believes that these reduced rates for Flag H executions will 
incent Members to add liquidity to EDGA.
    The Exchange believes that the above pricing is appropriate since 
lower rates for Flag H executions are directly correlated with more 
stringent criteria. The lowest rate of $0.00025 per share for Flag H 
executions has the most stringent criteria associated with it and is a 
lower rate than the next best rate of $0.0010 per share, which in turn 
is a better rate than the default rate of $0.0030 per share for Flag H 
executions. For example, assuming an average ADV for the month of 
October 2010 of 500,000, a non-aggregated MPID would need 1.5 million 
in Flag H executions to qualify for the rate of $0.00025 per share. In 
order to qualify for the next best rate of $0.0010, a Member would have 
to add greater than 1 million shares or post greater than 8 million 
shares on a daily basis, measured monthly. If none of these criteria 
are met, the Member would receive the highest rate of $0.0030 per share 
for Flag H executions. In addition, these lower rates for Flag H 
executions also result, in part, from lower administrative costs 
associated with higher volume.
    EDGA Exchange proposes to implement these amendments to the 
Exchange fee schedule on November 1, 2010.
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 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. In addition, the lower rates for Flag H 
executions also result, in part, from lower administrative costs 
associated with higher volume. Finally, 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.
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    \4\ 15 U.S.C. 78f.
    \5\ 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.

[[Page 68660]]

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) of the Act \6\ and Rule 19b-4(f)(2) \7\ 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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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 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-EDGA-2010-17 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-2010-17. 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,\8\ 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 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-2010-17 and should be 
submitted on or before November 29, 2010.
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    \8\ 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 EDGA, and at the 
Commission's Public Reference Room.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Florence E. Harmon,
Deputy Secretary.
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    \9\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2010-28182 Filed 11-5-10; 8:45 am]
BILLING CODE 8011-01-P