Document ID: SEC-2014-0068-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Topaz Exchange, LLC
Posted Date: 2014-01-14T05:00Z

[Federal Register Volume 79, Number 9 (Tuesday, January 14, 2014)]
[Notices]
[Pages 2496-2498]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-00508]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71259; File No. SR-Topaz-2014-01]

Self-Regulatory Organizations; Topaz Exchange, LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the 
Schedule of Fees

January 8, 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 January 2, 2014, the Topaz Exchange, LLC (d/b/a ISE Gemini) 
(the ``Exchange'' or ``Topaz'') 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 the 
Substance of the Proposed Rule Change

    Topaz is proposing to amend its Schedule of Fees to amend and 
clarify its API session fees for Electronic Access Members. The text of 
the proposed rule change is available on the

[[Page 2497]]

Exchange's Internet Web site at http://www.ise.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 the 
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 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 purpose of the proposed rule change is to amend the Schedule of 
Fees to amend and clarify the Exchange's API session fees for 
Electronic Access Members (``EAMs'').\3\ On December 16, 2013 the 
Exchange filed an immediately effective rule change that established 
various non-transaction fees, including fees for Market Makers and EAMs 
that connect to Topaz via an Application Programming Interface 
(``API'') or Financial Information eXchange (``FIX'') session.\4\ In 
that filing the Exchange established a framework for EAMs to connect to 
both Topaz and the International Securities Exchange, LLC (``ISE'') 
through a single FIX session for a single fee.\5\ While the Exchange 
also established fees for EAM and Market Maker API sessions, the 
Exchange did not propose to allow Members that connect to the Exchange 
via API to be able to also connect to the ISE through the same 
connectivity offering. For EAM API sessions only, the Exchange is now 
proposing a similar framework to the framework adopted for FIX 
sessions. In particular, the Exchange now proposes to allow EAMs to 
connect to both Topaz and the ISE through a single API session. For 
EAMs that are also members of the ISE and wish to connect to both 
exchanges, the Exchange will charge a monthly fee of $250 per session 
for the first five sessions and $100 per session for the sixth and 
additional sessions. This is consistent with the tiered pricing and 
level of fees on the ISE.\6\ Similar to the current pricing for FIX 
sessions, the Exchange is proposing to charge a higher fee for the 
first five sessions for EAMs that connect to both Topaz and the ISE as 
these Members will be allowed to access both exchanges through a single 
API session. As previously proposed, EAMS [sic] that choose to connect 
only to Topaz via API will be continue to be charged a monthly API 
session fee of $100 per session, which is equal to the incremental fee 
for the sixth and additional sessions for EAMs that connect to both 
Topaz and the ISE. The Exchange is not proposing to alter how it 
charges for Market Maker API sessions as Topaz has opted for a simpler 
framework for Market Maker API fees than is currently in place on the 
ISE.\7\
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    \3\ The Exchange uses an open API which Members program to in 
order to develop applications that send trading commands and/or 
queries to, and receive broadcasts and/or transactions from, the 
trading system. The EAM API receives orders from Members, tracks 
activity in the underlying markets, when applicable, executes trades 
in the matching engine, and broadcasts trade details to the 
participating Members. Each login allows the user to enter orders 
and perform other miscellaneous functions.
    \4\ See Exchange Act Release No. 71149 (December 19, 2013), 78 
FR 78447 (December 26, 2013) (Topaz-2013-16).
    \5\ The Exchange notes that Market Makers, i.e., PMMs and CMMs, 
must connect to the Exchange via API as the FIX connection does not 
supporting quoting. Both Market Makers and EAMs have the option to 
connect to the Exchange via API.
    \6\ See ISE Schedule of Fees, Section VII, Trading Application 
Software, FIX Session/API Session Fees.
    \7\ For example, the ISE charges different fees depending on the 
functionality used by a Market Maker, such as quoting, order entry, 
or ``listening'' to system broadcasts, and provides for limits on 
the numbers of quotes per day that may be submitted without 
incurring an additional session fee.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Section 
6(b)(4) of the Act,\9\ in particular, in that it provides for an 
equitable allocation of reasonable fees and other charges among 
Exchange Members and other persons using its facilities. The Exchange 
believes that the proposed modifications to its EAM API session fees 
are reasonable as they will result in lower overall fees being charged 
to Topaz members that are also members of the ISE. The Exchange 
believes that the proposed API session fees are equitable in that they 
apply equally to all EAMs that wish to connect to both Topaz and the 
ISE via API. The Exchange notes that, while EAMs that connect to both 
exchanges will be charged a higher rate than Members that only connect 
to Topaz, this rate is lower than the combined rate that would be 
applicable if EAMs were forced to pay separate fees to connect to each 
market. Moreover, the Exchange believes that it is fair and equitable 
to charge a higher fee to EAMs that wish to connect to both Topaz and 
the ISE as such Members will benefit from access to both exchanges. 
Furthermore, the Exchange does not believe that it is unfairly 
discriminatory to allow EAMs to connect to both Topaz and the ISE 
through a single API session while not affording the same treatment to 
Market Makers. The Exchange notes that its Market Maker API fees are 
structured to be simpler, and lower than, the corresponding fees of the 
ISE.\10\ The Exchange believes that its rates for Market Maker API 
sessions are favorable to Topaz Market Makers as currently structured.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
    \10\ On the ISE, fees for Market Maker API sessions range from 
$175 per month for listening only, to $750 per month for order entry 
and listening, and $1,000 per month for quoting, order entry and 
listening. Market Makers are also charged for an additional session 
if they submit more than 1,500,000 quotes per day. See ISE Schedule 
of Fees, VII. Trading Application Software, C. FIX Session/API 
Session Fees.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\11\ the Exchange 
does not believe that the proposed rule change will impose any burden 
on intramarket or intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. To the contrary, 
the Exchange believes that the proposed rule change is pro-competitive 
as it effectively reduces the fees for EAMs that connect to both Topaz 
and the ISE via API. The Exchange operates in a highly competitive 
market in which market participants can readily direct their order flow 
to competing venues. In such an environment, the Exchange must 
continually review, and consider adjusting, its fees to remain 
competitive with other exchanges. For the reasons described above, the 
Exchange believes that the proposed fee changes reflect this 
competitive environment.
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    \11\ 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 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.

[[Page 2498]]

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)(ii) of the Act,\12\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\13\ because it establishes a due, fee, or other charge 
imposed by Topaz.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 17 CFR 240.19b-4(f)(2).
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    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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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 No. SR-Topaz-2014-01 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 No. SR-Topaz-2014-01. 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 such filing also will be available for inspection 
and copying at the principal offices 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-Topaz-2014-01, and should be 
submitted on or before February 4, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-00508 Filed 1-13-14; 8:45 am]
BILLING CODE 8011-01-P