Document ID: SEC-2014-2083-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGA Exchange, Inc.
Posted Date: 2014-12-11T05:00Z

[Federal Register Volume 79, Number 238 (Thursday, December 11, 2014)]
[Notices]
[Pages 73656-73658]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-29009]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73760; File No. SR-EDGX-2014-29]

Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Eliminate Reference to the EdgeRisk Gateway in Rule 13.10 of EDGX 
Exchange, Inc.

December 5, 2014.
    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 November 25, 2014, EDGX Exchange, Inc. (the ``Exchange'' or 
``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 Exchange. The Exchange 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with 
the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to eliminate reference in Rule 13.10 to 
the EdgeRisk Gateway\SM\, which is a risk management tool that is to be 
discontinued by the Exchange. The Exchange also proposes to delete the 
fees related to EdgeRisk Gateway\SM\ from its fee schedule.
    The text of the proposed rule change is available at the Exchange's 
Web site at http://www.directedge.com/, 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 Exchange 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 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to delete reference to the EdgeRisk 
Gateway\SM\ in Rule 13.10 as well as its related fees from the 
Exchange's fee schedule. In sum, the EdgeRisk Gateway\SM\ is an 
optional fee-based risk management tool that provides Members and non-
Members the option to obtain dedicated primary and backup access 
gateways \5\ in addition to, or in place of, a shared access 
gateway.\6\ The tool was intended to assist subscribers' efforts to 
mitigate the risks associated with disruptions caused by excessive 
message traffic or programming mistakes experienced via

[[Page 73657]]

a shared access gateway because the subscriber's order flow on its 
dedicated access gateways would be insulated from such external 
disruptions.
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    \5\ The Exchange currently offers logical ports through which 
orders are submitted to the Exchange, receive drop copies of orders 
and execution messages, and receive transmission of depth of book 
data (``Logical Ports''). Each Logical Port is assigned an access 
gateway that performs order validations and manages the cycle of a 
submitted order's flow of information back to the Member. The access 
gateway performs functions such as message validation, 
acknowledgement messaging, risk checks, matching engine routing and 
execution messaging. The Exchange currently assigns Members' and 
non-Members' Logical Ports to the access gateways through a standard 
method that accounts for the relative message traffic expected over 
the Logical Port as well as redundancy requirements, where an access 
gateway contains assigned Logical Ports for a number of firms. The 
Exchange assigns Member and non-Member sessions to multiple access 
gateways so that the failure of one gateway may not result in the 
loss of access.
    \6\ See Securities Exchange Act Release No. 69855 (June 25, 
2013), 78 FR 39386 (SR-EDGX-2013-21) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change to Offer and Establish Fees 
for a New Exchange Service, EdgeRisk Gateways).
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    Earlier this year, the Exchange and its affiliate EDGA Exchange, 
Inc. (``EDGA'') received approval to effect a merger (the ``Merger'') 
of the Exchange's parent company, Direct Edge Holdings LLC, with BATS 
Global Markets, Inc., the parent of BATS Exchange, Inc. (``BATS'') and 
BATS Y-Exchange, Inc. (``BYX'', together with BATS, BYX, EDGA and EDGX, 
the ``BGM Affiliated Exchanges'').\7\ In the context of the Merger, the 
BGM Affiliated Exchanges are assessing certain system functionality, 
retaining only intended differences between the BGM Affiliated 
Exchanges. As part of this effort, the Exchange proposes to: delete 
reference to EdgeRisk Gateway\SM\ in Rule 13.10 as well as its related 
fees from the Exchange's fee schedule because it intends to discontinue 
offering this product. Therefore, reference to the product within 
Exchange's rules and applicable fees in its fee schedule would no 
longer serve any legitimate purpose upon the product being retired by 
the Exchange. The Exchange has few subscribers to the EdgeRisk 
Gateway\SM\ and has determined that the current customer demand does 
not warrant the infrastructure and ongoing maintenance expense required 
to support the product within the new Exchange environment. Therefore, 
the Exchange will terminate the product on January 12, 2015.
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    \7\ See Securities Exchange Act Release No. 71449 (January 30, 
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013-
34).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with the 
requirements of Section 6(b) of the Act,\8\ in general, and Section 
6(b)(5) of the Act,\9\ in particular, in that is promotes just and 
equitable principles of trade, removes impediments to, and perfects the 
mechanism of, a free and open market and a national market system, and, 
in general, protects investors and the public interest. The Exchange 
also believes that its proposal is consistent with Section 6(b)(4) of 
the Act,\10\ in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among members and other persons 
using its facilities.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ 15 U.S.C. 78f(b)(4).
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    Specifically, the proposal is consistent with Section 6(b)(5) of 
the Act,\11\ in that it eliminates any investor confusion by deleting 
references to a product, and its related fees, that is to be 
discontinued by the Exchange, thereby removing impediments to and 
perfecting the mechanism of a free and open market and a national 
market system, and, in general, protecting investors and the public 
interest. In addition, the Exchange has very few subscribers to 
EdgeRisk Gateway\SM\ and has determined that the current customer 
demand does not warrant the infrastructure and ongoing maintenance 
expense required to support the product within the new Exchange 
environment. In addition, EdgeRisk Gateway\SM\ is not a core product 
offering by the Exchange, nor is the Exchange required by the Act to 
offer such a product. The proposed rule change will not permit unfair 
discrimination among customers, brokers, or dealers because the 
EdgeRisk Gateway\SM\ will no longer be offered by the Exchange.
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    \11\ 15 U.S.C. 78f(b)(5).
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    In addition, the Exchange believes that the proposed removal of the 
fees for the EdgeRisk Gateway\SM\ from its fee schedule is consistent 
with Section 6(b)(4) of the Act \12\ because it would delete fees for a 
product that is to be discontinued by the Exchange, thereby eliminating 
investor confusion. Lastly, the Exchange also believes that the 
proposed amendment to its fee schedule is reasonable and non-
discriminatory because it will apply uniformly to all members.
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    \12\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes the proposal is consistent with Section 
6(b)(8) of the Act \13\ in that it does not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The proposed rule change will discontinue 
ConenctEdge [sic] by removing references to the service from its rules, 
and its related fees from the fee schedule, and is not designed to have 
a competitive impact. Therefore, the Exchange does not believe the 
proposed rule change will have any effect on competition.
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    \13\ 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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

    Because the proposed rule change does not: (1) Significantly affect 
the protection of investors or the public interest; (2) impose any 
significant burden on competition; and (3) by its terms does not become 
operative for 30 days after the date of this filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest, the proposed rule change has 
become effective pursuant to Section 19(b)(3)(A) of the Act \14\ and 
Rule 19b-4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its intent to file the proposed rule change, 
along with a brief description and text of the proposed rule change, 
at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has met this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily 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.

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-2014-29 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-EDGX-2014-29. 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

[[Page 73658]]

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-2014-29, and should be 
submitted on or before January 2, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29009 Filed 12-10-14; 8:45 am]
BILLING CODE 8011-01-P