Document ID: SEC-2010-1948-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGA Exchange, Inc.
Posted Date: 2010-12-16T05:00Z

[Federal Register Volume 75, Number 241 (Thursday, December 16, 2010)]
[Notices]
[Pages 78791-78792]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-31626]

[[Page 78791]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63519; File No. SR-EDGA-2010-22]

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

December 10, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 3, 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 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 EDGA 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 
logical ports used to enter orders into the Exchange's systems. The 
Exchange also proposes to amend its fees for physical ports. The text 
of the proposed rule change is available on the Exchange's Internet Web 
site at http://www.directedge.com.
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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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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 aspects 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 a 
monthly fee for logical ports used to enter orders in the Exchange's 
trading system. The Exchange recently began charging for ``physical'' 
ports, which are ports that are used by a Member or non-member to 
literally plug into the Exchange at the data centers where the 
Exchange's servers are located (i.e., either a cross-connection or an 
external telecommunication circuit). By contrast, a ``logical'' port 
(also commonly referred to as a TCP/IP port) represents a port 
established by the Exchange within the Exchange's system for trading 
and billing purposes. Each logical port established is specific to a 
Member or non-member and grants that Member or non-member the ability 
to operate a specific application, such as FIX or High Performance API 
for order entry, or to receive market data. Multiple logical ports can 
be created and exist over a single physical port. The Exchange proposes 
to charge $500 per month for any logical ports other than ports used to 
receive or request retransmission of market data. Thus, this proposed 
charge will apply to all Exchange FIX, High Performance API, and DROP 
ports for both accessing the Exchange directly (Direct) \4\ or through 
the ECN Translator.\5\ Members and non-members will receive the first 
ten (10) sessions free of charge for Direct Sessions only and 
thereafter be charged the $500 fee per month. Free sessions will not 
apply to ECN Translator sessions to incent members and non-members to 
use Direct Sessions.
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    \4\ Direct Sessions will consist on one port at the Exchange's 
primary data center and one port at the Exchange's secondary data 
center.
    \5\ The ECN translator allows a Member or non-member who 
previously connected to Direct Edge's ECN to be re-directed 
automatically to EDGA Exchange, Inc. It can only be accessed through 
a FIX port.
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    Based on the proposal, the change applies to Members that obtain 
ports for direct access to the Exchange and non-member service bureaus 
that act as conduit for orders entered by Exchange Members that are 
their customers. The Exchange believes that the imposition of logical 
port fees will help the Exchange to continue to maintain and improve 
its infrastructure, while also encouraging Exchange customers to 
request and enable only the ports that are necessary for their 
operations related to the Exchange.
    The Exchange notes that other market centers provide similar 
services to their Members and non-members.\6\
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    \6\ See, e.g., Rule 7015 of The NASDAQ Stock Market LLC 
(``NASDAQ'') (setting forth, among other fees for access services, 
port fees charged to members and non-members used to enter orders 
into NASDAQ trading systems). See also Securities Exchange Act 
Release Nos. 60546 (August 20, 2009), 74 FR 43184 (August 26, 2009) 
(SR-NASDAQ-2009-058) (increasing the monthly fee for each port used 
to enter orders in NASDAQ trading systems from $400 per month to 
$500 per month); 59337 (February 2, 2009), 74 FR 6441 (February 9, 
2009) (SR-BX-2009-004) (establishing fees for ports used by members 
to enter orders). See Securities Exchange Act Release No. 60586 
(August 28, 2009), 74 FR 46256 (September 8, 2009) (SR-BATS-2009-
026) (establishing fees for ports used by members and non-members to 
enter orders).
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Physical Ports
    The Exchange currently charges Members and non-members the 
following annual fees for physical ports based on the connectivity 
service type:

------------------------------------------------------------------------
                                                              Annual fee
                                                                 per
                  Connection service type                      physical
                                                                 port
------------------------------------------------------------------------
1 Gb Copper................................................       $5,000
1 Gb Fiber.................................................        7,500
10 Gb Fiber................................................       10,000
------------------------------------------------------------------------

    Beginning January 1, 2011, the Exchange proposes to amend these 
physical port fees to offer Members and non-members the option of being 
charged month to month. The fees will be 20% higher on a monthly basis 
to offset increased administrative costs associated with processing 
monthly payments. The proposed monthly fees based on connectivity 
service type are as follows:

------------------------------------------------------------------------
                                                             Monthly fee
                                                                 per
                  Connection service type                      physical
                                                                 port
------------------------------------------------------------------------
1 Gb Copper................................................         $500
1 Gb Fiber.................................................          750
10 Gb Fiber................................................        1,000
------------------------------------------------------------------------

    The Exchange will implement the proposed rule change on January 1, 
2011.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives 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. The 
Exchange believes that its proposed logical and physical port fees are 
reasonable in light

[[Page 78792]]

of the benefits to members of direct market access. In addition, the 
Exchange believes that its fees are equitably allocated among its 
constituents based upon the number of access ports that they require to 
submit orders to the Exchange. Furthermore, the fees associated with 
logical and 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 logical and 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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    \7\ 15 U.S.C. 78f.
    \8\ 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3) of the Act \9\ and Rule 19b-4(f)(2) \10\ 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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    \9\ 15 U.S.C. 78s(b)(3).
    \10\ 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-EDGA-2010-22 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-2010-22. 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 will also 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 No. SR-EDGA-2010-22 and should be 
submitted on or before January 6, 2011.
    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31626 Filed 12-15-10; 8:45 am]
BILLING CODE 8011-01-P