Document ID: SEC-2015-0857-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGA Exchange, Inc.
Posted Date: 2015-05-19T04:00Z

[Federal Register Volume 80, Number 96 (Tuesday, May 19, 2015)]
[Notices]
[Pages 28719-28721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12016]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74948; File No. SR-EDGA-2015-18]

 Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Related To 
Fees for Use of EDGA Exchange, Inc.

May 13, 2015.
    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 April 30, 2015, 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 Exchange. The 
Exchange has designated the proposed rule change as one establishing or 
changing a member due, fee, or other charge imposed by the Exchange 
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders the proposed rule change 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)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend its fees and rebates 
applicable to Members \5\ of the Exchange pursuant to EDGA Rule 15.1(a) 
and (c) (``Fee Schedule'') to: (i) Decrease the rebate for orders 
yielding Flag BY, which routes to the BATS Y-Exchange, Inc. (``BYX'') 
and removes liquidity using routing strategies Destination Specific 
(``DIRC''), ROUC, ROUE, ROBB, or ROCO; \6\ (ii) amend the criteria for 
the MidPoint Discretionary Order Add Volume Tier; and (iii) make an 
immaterial, non-substantive change. Changes to the fee schedule 
pursuant to this proposal are effective upon filing.
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    \5\ The term ``Member'' is defined as ``any registered broker or 
dealer, or any person associated with a registered broker or dealer 
[sic], 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).
    \6\ The DIRC, ROUC, ROUE, ROBB, or ROCO routing strategies are 
set forth in Exchange Rule 11.11(g).
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    The text of the proposed rule change is available at the Exchange's 
Web site at www.batstrading.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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to: (i) Decrease the rebate for orders 
yielding Flag BY, which routes to BYX and removes liquidity using 
routing strategies DIRC, ROUC, ROUE, ROBB, or ROCO; (ii) amend the 
criteria for the MidPoint Discretionary Order Add Volume Tier; and 
(iii) make an immaterial, non-substantive change.
Flag BY
    In securities priced at or above $1.00, the Exchange currently 
provides a rebate of $0.00160 per share for Members' orders that yield 
Flag BY, which routes to BYX and removes

[[Page 28720]]

liquidity using routing strategies DIRC, ROUC, ROUE, ROBB, or ROCO. The 
Exchange proposes to amend its Fee Schedule to decrease the rebate for 
orders that yield Flag BY to $0.00150 per share in securities priced at 
or above $1.00.\7\ The proposed change represents a pass through of the 
rate BATS Trading, Inc. (``BATS Trading''), the Exchange's affiliated 
routing broker-dealer, is provided for routing orders to BYX that 
remove liquidity. The proposed change is in response to BYX's May 2015 
fee change where BYX decreased its rebate from $0.00160 per share to 
$0.00150 per share for orders in securities priced at or above 
$1.00.\8\ When BATS Trading routes to and removes liquidity from BYX, 
it will now receive a standard rebate of $0.00150 per share. BATS 
Trading will pass through the rebate provided by BYX to the Exchange 
and the Exchange, in turn, will pass through this rate to its Members.
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    \7\ The Exchange does not propose to amend its fee for orders 
that yield Flag BY in securities priced below $1.00.
    \8\ See BYX Exchange Fee Schedule Changes Effective May 1, 2015 
available at http://cdn.batstrading.com/resources/fee_schedule/2015/BATS-BYX-Exchange-BZX-Exchange-EDGA-Exchange-and-EDGX-Exchange-Fee-Schedule-Changes-Effective-May-1-2015.pdf.
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MidPoint Discretionary Order Add Volume Tier
    The Exchange proposes to amend the criteria for the MidPoint 
Discretionary Order Add Volume Tier. Under the tier, a Member qualifies 
for a reduced fee of $0.0003 per share where that Member: (i) Adds an 
ADV of at least 0.25% of the TCV including non-displayed orders that 
add liquidity; and (ii) adds or removes an ADV of at least 1,500,000 
shares yielding fee codes DM or DT. Fee code DM is applied to Non-
Displayed orders that add liquidity using MidPoint Discretionary orders 
\9\ and fee code DT is applied to Non-Displayed orders that remove 
liquidity using MidPoint Discretionary Orders. Orders that yield fee 
code DM or fee code DT that do not meet to the criteria of the MidPoint 
Discretionary Order Add Volume Tier are charged a fee of $0.00050 per 
share. The Exchange now proposes to decrease the ADV requirement to 
require that a Member add or remove an ADV of at least 500,000 shares 
yielding fee codes DM or DT. Easing the criteria of the MidPoint 
Discretionary Order Add Volume Tier is intended to further incentive 
Members to submit an increased number of MidPoint Discretionary orders 
to the Exchange, thereby increasing the liquidity on the Exchange at 
the midpoint of the National Best Bid or Offer (``NBBO'').
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    \9\ See Exchange Rule 11.8(e) for a description of MidPoint 
Discretionary orders.
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Non-Substantive Changes
    The Exchange also proposes to make an immaterial, non-substantive 
change to its Fee Schedule by removing ``, Inc.'' from the reference to 
the Exchange in the heading of the Fee Schedule. This non-substantive 
change is intended to make the reference to the Exchange in the heading 
of the Fee Schedule consistent with the manner in which its affiliated 
exchanges \10\ are referenced in their respective fee schedules.
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    \10\ The Exchange's affiliated exchanges are BATS Exchange, 
Inc., BATS Y-Exchange, Inc., and EDGX Exchange, Inc. (``EDGX''). The 
Exchange understands that EDGX also intends to file a proposed rule 
change with the Commission making a similar change to how EDGX is 
referenced in the heading of its fee schedule.
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Implementation Date
    The Exchange proposes to implement these amendments to its Fee 
Schedule on May 1, 2015.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\11\ in general, and 
furthers the objectives of Section 6(b)(4),\12\ 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 also 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 [sic] market participants to 
direct their order flow to the Exchange. The Exchange believes that the 
proposed rates are equitable and non-discriminatory 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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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4).
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Flag BY
    The Exchange believes that its proposal to decrease the rebate for 
orders that yield Flag BY represents an equitable allocation of 
reasonable dues, fees, and other charges among Members and other 
persons using its facilities. Prior to the BYX's May 2015 fee change, 
BYX provided BATS Trading a rebate of $0.00160 per share to remove 
liquidity in securities priced at or above $1.00, which BATS Trading 
passed through to the Exchange and the Exchange provided its Members. 
When BATS Trading routes to BYX, it will now be provided a rebate of 
$0.00150 per share. The Exchange does not levy additional fees or offer 
additional rebates for orders that it routes to BYX through BATS 
Trading. Therefore, the Exchange believes that the proposed change to 
Flag BY is equitable and reasonable because it accounts for the pricing 
changes on BYX, which enables the Exchange to provide its Members the 
applicable pass-through rebate. Lastly, the Exchange notes that routing 
through BATS Trading is voluntary and believes that the proposed change 
is non-discriminatory because it applies uniformly to all Members.
MidPoint Discretionary Order Add Volume Tier
    The Exchange believes amending the criteria for the MidPoint 
Discretionary Order Add Volume Tier represents an equitable allocation 
of reasonable dues, fees, and other charges among Members and other 
persons using its facilities because it is designed to further 
incentivize Members to increase their use of MidPoint Discretionary 
orders on EDGA. MidPoint Discretionary Orders increase displayed 
liquidity on the Exchange while also enhancing execution opportunities 
at the mid-point of the NBBO. Promotion of displayed liquidity at the 
NBBO enhances market quality for all Members. Members utilizing 
MidPoint Discretionary orders provide liquidity at the midpoint of the 
NBBO increasing the potential for an order to receive price 
improvement, and easing the tier's criteria so that Members may be 
eligible for a decreased fee is a reasonable means by which to 
encourage the use of such orders. In addition, the Exchange believes 
that by encouraging the use of MidPoint Discretionary orders by easing 
the tier's criteria, Members seeking price improvement would be more 
motivated to direct their orders to EDGA because they would have a 
heightened expectation of the availability of liquidity at the midpoint 
of the NBBO. The Exchange also believes that the proposed addition of 
the MidPoint Discretionary Order Add Volume Tier is non-discriminatory 
because it will be available to all Members.
Non-Substantive Changes
    The Exchange believes that the non-substantive change to its Fee 
Schedule is reasonable because it is not designed to amend any fee, nor 
alter the manner in which it assesses fees or calculates rebates. This 
non-substantive change to

[[Page 28721]]

the Fee Schedule is intended to make the reference to the Exchange in 
the heading of the Fee Schedule consistent with the manner in which its 
affiliated exchanges are referenced in their respective fee schedules, 
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.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes its proposed amendments to its Fee Schedule 
would 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 the proposed change represents a significant 
departure from previous pricing offered by the Exchange or pricing 
offered by 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 does not believe that the 
proposed change will impair the ability of Members or competing venues 
to maintain their competitive standing in the financial markets.
Fee Code BY
    The Exchange believes that its proposal to pass through the amended 
rebate for orders that yield Flags BY would increase intermarket 
competition because it offers customers an alternative means to route 
to BYX for the same rebate that they would be provided if they entered 
orders on that trading center directly. The Exchange believes that its 
proposal would not burden intramarket competition because the proposed 
rebate would apply uniformly to all Members.
MidPoint Discretionary Order Add Volume Tier
    The Exchange believes that its proposal to ease the criteria for 
the MidPoint Discretionary Order Add Volume Tier would increase 
intermarket competition because it would further incentivize Members to 
send an increased amount MidPoint Discretionary orders to the Exchange 
in order to qualify for the tier's decreased fee. The Exchange believes 
that its proposal would neither increase nor decrease intramarket 
competition because the MidPoint Discretionary Order Add Volume Tier 
would apply uniformly to all Members and the ability of some Members to 
meet the tier would only benefit other Members by contributing to 
increased liquidity at the midpoint of the NBBO and better market 
quality at the Exchange.
Non-Substantive Changes
    The Exchange believes that the non-substantive change to the Fee 
Schedule will not affect intermarket nor intramarket competition 
because the change is not designed to amend any fee or alter the manner 
in which the Exchange assesses fees or calculates rebates.

(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 \13\ and paragraph (f) of Rule 19b-4 
thereunder.\14\ At any time within 60 days of the filing of the 
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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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f).
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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-EDGA-2015-18 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-EDGA-2015-18. 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 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 Number SR-EDGA-2015-18 and should be 
submitted on or before June 9, 2015.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-12016 Filed 5-18-15; 8:45 am]
 BILLING CODE 8011-01-P