Document ID: SEC-2010-1708-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGX Exchange, Inc.
Posted Date: 2010-11-08T05:00Z

[Federal Register Volume 75, Number 215 (Monday, November 8, 2010)]
[Notices]
[Pages 68660-68661]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-28181]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63226; File No. SR-EDGX-2010-16]

 Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Amendments to the EDGX 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 EDGX Exchange, Inc. (the ``Exchange'' or 
the ``EDGX'') 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 EDGX Rule 15.1(a) and (c).
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    All of the changes described herein are applicable to EDGX 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
    The Exchange's Mega Tier provides a rebate of $0.0032 per share for 
adding liquidity for securities priced at or above $1.00 and is 
incorporated in footnote 1 of the fee schedule. As provided in footnote 
1, a Member can qualify for the Mega Tier rebate in one of two ways. 
The first way by which Members can qualify for the Mega Tier rebate is 
if they add or route at least 5,000,000 shares of average daily volume 
prior to 9:30 a.m. or after 4 p.m. (includes all flags except 6) AND 
add a minimum of 25,000,000 shares of average daily volume on EDGX in 
total. With respect to Members qualifying for the Mega Tier rebate 
pursuant to this first method, the Exchange proposes to add language to 
footnote 1 to state that such Members will pay a reduced rate for 
removing liquidity of $0.0029 per share for Flags N, W, and 6.
    The Exchange believes that the above pricing is appropriate since 
higher rebates are directly correlated with more stringent criteria. 
The Mega Tier rebate

[[Page 68661]]

($ 0.0032 per share) has the most stringent criteria, and is $0.0001 
greater than the Ultra Tier rebate ($0.0031 per share) and $0.0002 
greater than the Super Tier rebate. ($0.0030 per share) For example, 
based on average TCV for September 2010 (7.2 billion), in order for a 
Member to qualify for the Mega Tier, the Member would have to post 54 
million shares on EDGX. In order to qualify for the Ultra Tier, which 
has less stringent criteria than the Mega Tier, the Member would have 
to post 36 million shares on EDGX. Finally, the Super Tier has the 
least stringent criteria. In order for a Member to qualify for this 
rebate, the Member would have to post 10 million shares on EDGX. In 
addition, these rebates also result, in part, from lower administrative 
costs associated with higher volume.
    In addition, conforming amendments have been made to place 
references to footnote ``1'' on Flags N, W, and 6 since this amendment 
qualifies these flags by proposing an exception to the $0.0030 per 
share charge for each flag. A reference to footnote 1 has also been 
placed on the $0.0030 per share default rate for removing liquidity at 
the table on the top of the fee schedule to signify this exception.
    EDGX 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. 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.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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 \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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 19b-4(f)(2).
---------------------------------------------------------------------------

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-EDGX-2010-16 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-EDGX-2010-16. 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-EDGX-2010-16 and should be 
submitted on or before November 29, 2010.
---------------------------------------------------------------------------

    \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 EDGX, and at the 
Commission's Public Reference Room.
    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28181 Filed 11-5-10; 8:45 am]
BILLING CODE 8011-01-P