Document ID: SEC-2011-1053-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGX Exchange, Inc.
Posted Date: 2011-07-22T04:00Z

[Federal Register Volume 76, Number 141 (Friday, July 22, 2011)]
[Notices]
[Pages 44078-44079]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-18504]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64911; File No. SR-EDGX-2011-20]

Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Amendment to EDGX Rule 11.9

 July 18, 2011.
    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 July 13, 2011, EDGX Exchange, Inc. (the ``Exchange'' or 
``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 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 Rule 11.9 to make certain changes 
consistent with the upcoming implementation of the adoption of Rule 
15c3-5 under the Act (the ``Market Access Rule'').\3\ The text of the 
proposed rule change is available on the Exchange's Web site at http://www.directedge.com, at the Exchange's principal office, and at the 
Public Reference Room of the Commission.
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    \3\ 17 CFR 15c3-5.
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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 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

Purpose
    On November 3, 2010, the Commission adopted the Market Access 
Rule,\4\ pursuant to which, among other things, broker-dealers 
providing market access are required to implement certain pre-order 
entry checks in order to manage the financial, regulatory, and other 
risks associated with providing its customers with market access. In 
anticipation of the upcoming July 14, 2011 compliance date for the 
Market Access Rule, the Exchange is proposing to amend EDGX Rule 11.9 
to describe the manner in which the Exchange's affiliated routing 
broker-dealer, Direct Edge ECN, LLC d/b/a DE Route (``DE Route'') will 
handle routable orders consistent with the Market Access Rule.
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    \4\ See Securities Exchange Act Release No. 63241 (November 3, 
2010), 75 FR 69792 (November 15, 2010).
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    In order to comply with the Market Access Rule, DE Route proposes 
to implement, as part of the procedures of DE Route, certain tests, on 
both an order-by-order basis and over a short period of time, that are 
designed to limit the financial exposure that could arise as a result 
of market access and to ensure compliance with all regulatory 
requirements that are applicable in connection with market access. 
Consistent with the requirements of the Market Access Rule, these tests 
are designed to reject orders that DE Route deems to be erroneous or 
duplicative, would cause the entering Member's credit exposure to 
exceed a preset credit threshold, or are non-compliant with applicable 
pre-trade regulatory requirements (as defined in the Market Access 
Rule). To the extent DE Route determines, based on its procedures, that 
an order should be rejected, DE Route may also seek to cancel orders 
that have already been routed away.
Basis
    The Exchange believes that its proposal is consistent with the 
requirements of the Act and the rules and regulations thereunder that 
are applicable to a national securities exchange, and, in particular, 
with the requirements of Section 6(b) of the Act.\5\ In particular, the 
proposed change is consistent with Section 6(b)(5) of the Act,\6\ 
because it would promote just and equitable principles of trade, and, 
in general, protect investors and the public interest. The proposed 
rule is consistent with the requirements of the Act because the change 
is necessary for the Exchange's affiliated broker-dealer, DE Route, to 
comply with the Market Access Rule. The Exchange also believes that the 
proposed changes will benefit Members of the Exchange because it 
provides clarity on the procedures employed by DE Route consistent with 
the Market Access Rule.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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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.

[[Page 44079]]

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \7\ and Rule 19b-
4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of filing.\9\ However, 
Rule 19b-4(f)(6)(iii) \10\ permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has asked the 
Commission to waive the 30-day operative delay so that the proposal may 
become operative immediately upon filing. The Exchange notes that 
waiving the 30-day operative delay will allow DE Route to comply with 
Rule 15c3-5 under the Act by July 14, 2011; \11\ the compliance date 
for Rule 15c3-5. For this reason, the Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest, and designates the proposed rule 
change to be operative upon filing with the Commission.\12\
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    \9\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to 
the Commission 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 satisfied this requirement.
    \10\ Id.
    \11\ 17 CFR 240.15c3-5.
    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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.

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 No. SR-EDGX-2011-20 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-2011-20. 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 Commissions 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. Copies of such 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-2011-20 and should be submitted by August 12, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-18504 Filed 7-21-11; 8:45 am]
BILLING CODE 8011-01-P