Document ID: SEC-2015-1011-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGX Exchange, Inc.
Posted Date: 2015-06-17T04:00Z

[Federal Register Volume 80, Number 116 (Wednesday, June 17, 2015)]
[Notices]
[Pages 34772-34776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14824]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75150; File No. SR-EDGX-2015-27]

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

June 11, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the

[[Page 34773]]

``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 9, 2015, 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.\3\ 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 \4\ and Rule 19b-4(f)(2) thereunder,\5\ 
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\ The Commission notes that a previous version of the proposal 
was filed as SR-EDGX-2015-24. The proposal was withdrawn on June 9, 
2015.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 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 \6\ of the Exchange pursuant to EDGX Rule 15.1(a) 
and (c) (``Fee Schedule'') to: (i) increase the rebate from $0.00040 
per share to $0.00150 per share for orders that yield fee code A, which 
routes to the Nasdaq Stock Market LLC (``Nasdaq'') and adds liquidity; 
and (ii) amend fees related to the use of BATS Connect.
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    \6\ The term ``Member'' is defined as ``any registered broker or 
dealer, or any person associated with a registered broker or dealer, 
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).
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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) increase the rebate from $0.00040 per 
share to $0.00150 per share for orders that yield fee code A, which 
routes to Nasdaq and adds liquidity; and (ii) amend fees related to the 
use of BATS Connect.

Fee Code A

    In securities priced at or above $1.00, the Exchange currently 
provides a rebate of $0.00040 per share for Members' orders that yield 
fee code A, which routes to Nasdaq and adds liquidity. The Exchange 
proposes to amend its Fee Schedule to increase this rebate to $0.00150 
per share for Members' orders that yield fee code A. The proposed 
change represents a pass through of the rate that BATS Trading, Inc. 
(``BATS Trading''), the Exchange's affiliated routing broker-dealer, is 
rebated for routing orders to Nasdaq when it does not qualify for a 
volume tiered rebate. When BATS Trading routes to Nasdaq, it is rebated 
a standard rate of $0.00150 per share.\7\ BATS Trading will pass 
through this rate on Nasdaq to the Exchange and the Exchange, in turn, 
will pass through this rate to its Members. The Exchange notes that the 
proposed change is in response to Nasdaq's June 2015 fee change where 
Nasdaq will no longer offer a rebate of $0.00040 per share for orders 
in select symbols (``Nasdaq's Select Symbol Program'') to its 
customers, such as BATS Trading, and such orders will be subject to the 
regular Nasdaq Pricing Schedule.\8\
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    \7\ The Exchange notes that to the extent BATS Trading does or 
does not achieve any volume tiered discount on Nasdaq or routes an 
order to Nasdaq in a symbol that is not included in Nasdaq's Select 
Symbol Program to receive a rebate of $0.00150 per share, its rate 
for fee code A will not change. The Exchange further notes that, due 
to billing system limitations that do not allow for separate rates 
by tape, it will pass through the lesser rebate of $0.00150 per 
share for all Tapes A, B & C securities.
    \8\ See Nasdaq Equity Trader Alert #2015-70, Nasdaq Ends Access 
Fee Experiment, available at http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2015-70.
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BATS Connect
    The Exchange proposes to amend the fees related to the use of BATS 
Connect by: (i) adopting a fee of $11,500 per month for receipt of the 
NYSE Integrated data feed; (ii) adopt a fee of $1,000 per month for the 
NYSE MKT Trades data feed; (iii) adopt a discounted fee of $4,160 per 
month for subscribers who purchase a bundle of select U.S. equity 
market data products; and (iv) make a series of ministerial changes to 
the description of each market data product available through BATS 
Connect. BATS Connect is a communication and routing service that 
provides subscribers an additional means to receive market data from 
and route orders to any destination connected to the Exchange's 
network. BATS Connect does not affect trade executions and would not 
report trades to the relevant Securities Information Processor. The 
servers of the subscriber need not be located in the same facilities as 
the Exchange in order to subscribe to BATS Connect. Subscribers may 
also seek to utilize BATS Connect in the event of a market disruption 
where other alternative connection methods become unavailable.\9\
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    \9\ This service is an alternative to a service that the 
Exchange already provides to its Members--current order-sending 
Members route orders through access provided by the Exchange to the 
Exchange that either check the Exchange for available liquidity and 
then route to other destinations or, in certain circumstances, 
bypass the Exchange and route to other destinations. See Exchange 
Rule 11.11(g) (setting forth routing options whereby Members may 
select their orders be routed to other market centers).
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    BATS Connect allows subscribers to receive market data feeds from 
exchanges connected to the Exchange's network. In such case, the 
subscriber would pay the Exchange a connectivity fee, which varies and 
is based solely on the amount of bandwidth required to transmit the 
selected data product to the subscriber. The current connectivity fees 
range from no charge to $3,500 based on the market data product the 
subscriber selects. The Exchange now proposes to offer connectivity to 
the NYSE Integrated and NYSE MKT Trades data feeds through BATS 
Connect. As result, the Exchange proposes to adopt a fee of $11,500 per 
month for connectivity to the NYSE Integrated data feed and $1,000 per 
month for connectivity to the NYSE MKT Trades data feed. NYSE 
Integrated is a data feed that provides market data in a unified view 
of events, in sequence, as they appear on the New York Stock Exchange, 
Inc. (``NYSE'') matching engines and includes depth of book order data, 
last sale data, and opening and closing imbalance data.\10\ NYSE MKT 
Trades is a data feed providing last sale information for all 
securities traded on the NYSE MKT LLC (``NYSE

[[Page 34774]]

MKT'').\11\ The proposed fees are designed to reflect the amount of 
bandwidth required to transmit the NYSE Integrated and NYSE MKT Trades 
data feeds to the subscriber. Subscribers would pay any fees charged by 
NYSE for NYSE Integrated or NYSE MKT Trades directly to the NYSE.
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    \10\ See Securities Exchange Act Release No. 74128 (January 23, 
2015), 80 FR 4951 (January 29, 2015) (SR-NYSE-2015-03).
    \11\ See http://www.nyxdata.com/Data-Products/NYSE-MKT-Trades 
for a description of NYSE MKT Trades.
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    The Exchange also proposes to adopt a discounted fee of $4,160 per 
month for subscribers who purchase connectivity to a bundle of select 
market data products. The following market data products would be 
included in the bundle: UQDF/UTDF/OMDF, CQS/CTS, Nasdaq TotalView, 
Nasdaq BX TotalView, Nasdaq PSX TotalView, NYSE ArcaBook, NYSE MKT 
OpenBook Ultra, and BBS/TTDS. Currently, a subscriber purchasing 
connectivity through BATS Connect for each of these market data 
products would pay a total monthly fee of $5,200. As proposed, a 
subscriber who purchases connectivity to each of the above market data 
products would be charged a monthly fee of $4,160, which represents a 
20% discount from the current rates.
    The Exchange also proposes to make the following ministerial 
changes to the description of each market data product set forth in the 
BATS Connect fee table:
     Remove ``Level 1 0'' from the description of UQDF/UTDF/
OMDF;
     Remove ``4.1'' from the descriptions of Nasdaq TotalView; 
Nasdaq BX TotalView; and Nasdaq PSX TotalView as well as correct a 
typographical error in the spelling of Nasdaq BX TotalView; and Nasdaq 
PSX TotalView;
     Rename ``Arca Book XDP'' as ``NYSE ArcaBook'';
     Rename ``Arca Book Refresh'' as ``NYSE ArcaBook Refresh'';
     Rename ``NYSE MKT OpenBook'' as ``NYSE MKT OpenBook 
Ultra'';
     Consolidate references to each BATS market data product 
with EDGX and EDGA;
     Relocate reference to OPRA to earlier in the fee table; 
and
     Rename ``Arca Trades'' as ``NYSE Arca Trades''.
    None of these changes alter the market data products that 
connectivity is available to through BATS Connect. Nor do any of these 
changes alter the fees charged for connectivity to each product. These 
changes are simply intended to amend the descriptions of each product 
to more closely align with that market data product's name.
Implementation Date
    The Exchange proposes to implement these amendments to its Fee 
Schedule immediately.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\12\ in general, and 
furthers the objectives of Section 6(b)(4),\13\ 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 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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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4).
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Fee Code A
    The Exchange believes that its proposal to increase the pass 
through rebate for Members' orders that yield fee code A from $0.00040 
to $0.00150 per share represents an equitable allocation of reasonable 
dues, fees, and other charges among Members and other persons using its 
facilities. Prior to Nasdaq's Select Symbol Program, Nasdaq provided 
BATS Trading a rebate of $0.00150 per share for orders yielding fee 
code A, which BATS Trading passed through to the Exchange and the 
Exchange passed through to its Members. In June 2015, Nasdaq terminated 
its Select Symbol Program, thereby increasing the rebate it provides 
its customers, such as BATS Trading, from a rebate of $0.00040 per 
share to its standard rebate of $0.00150 per share for orders that are 
routed to Nasdaq in symbols included in its Select Symbol Program.\14\ 
Therefore, the Exchange believes that the proposed change in fee code A 
from a rebate of $0.00040 per share to a rebate of $0.00150 per share 
is equitable and reasonable because it accounts for the pricing changes 
on Nasdaq. In addition, the proposal allows the Exchange to continue to 
charge its Members a pass-through rate for orders that are routed to 
Nasdaq. The Exchange notes that routing through BATS Trading is 
voluntary. Lastly, the Exchange also believes that the proposed 
amendment is non-discriminatory because it applies uniformly to all 
Members.
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    \14\ See supra note 6.
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BATS Connect
    The Exchange believes its proposal to amend fees for the use of 
BATS Connect is consistent with Section 6(b)(4) of the Act,\15\ in that 
it provides for the equitable allocation of reasonable dues, fees and 
other charges among members and other persons using its facilities. The 
Exchange charges a connectivity fee to Members utilizing BATS Connect 
to route orders to or receive market data from other exchanges and 
market centers that are connected to the Exchange's network, the 
amounts of which vary based solely on the amount of bandwidth selected 
by the Member or required to transmit the market data.
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    \15\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed connectivity fees for 
market data connectivity to the NYSE Integrated and MYSE MKT Trades 
data feeds are consistent with Section 6(b)(4) of the Act,\16\ in that 
they provide for the equitable allocation of reasonable dues, fees and 
other charges among members and other persons using its facilities. 
BATS Connect is offered and purchased on a voluntary basis, in that 
neither the Exchange nor subscribers are required by any rule or 
regulation to make this product available. Accordingly, subscribers can 
discontinue use at any time and for any reason, including due to an 
assessment of the reasonableness of fees charged. Moreover, the 
Exchange believes the proposed fees are reasonable and equitable 
because they are based on the Exchange's costs to cover the amount of 
bandwidth required to provide connectivity to the NYSE Integrated and 
MYSE MKT Trades data feeds. The proposed fees allow the Exchange to 
recoup this cost, while providing subscribers with an alternative means 
to connect to the NYSE Integrated and MYSE MKT Trades data feeds. The 
Exchange believes that the proposed fees are reasonable and equitable 
in that they reflect the costs and the benefit of providing alternative 
connectivity.
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    \16\ 15 U.S.C. 78f(b)(4).
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    The Exchange also believes that the proposed discounted fee of 
$4,160 per month for subscribers who purchase connectivity to a bundle 
of select market data products is consistent with Section

[[Page 34775]]

6(b)(4) of the Act,\17\ in that it also provides for the equitable 
allocation of reasonable dues, fees and other charges among members and 
other persons using its facilities. As proposed, subscribers who 
purchase connectivity to each of the included market data products 
would be charged a monthly fee of $4,160, which represents a 20% 
discount from the current rates. The Exchange believes it is reasonable 
to offer such discounted pricing to subscribers who purchase 
connectivity to a bundle of market data products as it would enable 
them to reduce their overall connectivity costs for the receipt of 
market data. As stated above, BATS Connect is offered and purchased on 
a voluntary basis and subscribers can discontinue use at any time and 
for any reason, including due to an assessment of the reasonableness of 
fees charged. Moreover, the Exchange believes the proposed fees are 
reasonable and equitable because they continue to be based on the 
Exchange's costs to cover the amount of bandwidth required to provide 
connectivity to the select bundle of data feeds. The proposed fees will 
continue to allow the Exchange to recoup this cost, while providing 
subscribers with an alternative means to connect to the select bundle 
of data feeds at a discounted rate.
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    \17\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the ministerial changes to the 
description of certain market data products in the BATS Connect fee 
table are reasonable because they are not designed to amend the types 
of market data products that connectivity is available to through BATS 
Connect. Nor do any of these changes alter the fees charged for 
connectivity to each product. These changes are simply intended to 
amend the descriptions of each product to more closely align with that 
market data product's name. Therefore, the Exchange believes these 
changes will remove impediments to and perfect the mechanism of a free 
and open market and a national market system, and, in general, protect 
investors and the public interest.
    Lastly, the Exchange also believes that the proposed amendments to 
its fee schedule are non-discriminatory because they will apply 
uniformly to all subscribers. All subscribers that voluntarily select 
various service options will be charged the same amount for the same 
services. All subscribers have the option to select any connectivity 
option, and there is no differentiation among Members with regard to 
the fees charged for the service.

(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 A
    The Exchange believes that its proposal to pass through a rebate of 
$0.00150 per share for Members' orders that yield fee code A would 
increase intermarket competition because it offers customers an 
alternative means to route to Nasdaq for a similar rate as entering 
orders in certain symbols on Nasdaq directly. The Exchange believes 
that its proposal would not burden intramarket competition because the 
proposed rate would apply uniformly to all Members.
BATS Connect
    The Exchange believes the proposed connectivity fee for the NYSE 
Integrated and MYSE MKT Trades data feeds will not result in any burden 
on competition. The proposed rule change is designed to provide 
subscribers with an alternative means to access the NYSE Integrated and 
MYSE MKT Trades data feeds if they choose or in the event of a market 
disruption where other alternative connection methods become 
unavailable. BATS Connect is not the exclusive method to connect to the 
NYSE Integrated and MYSE MKT Trades data feeds and subscribers may 
utilize alternative methods to connect to the product if they believe 
the Exchange's proposed pricing is unreasonable or otherwise. 
Therefore, the Exchange does not believe the proposed rule change will 
have any effect on competition.
    The Exchange believes that the proposed discounted fee of $4,160 
per month for subscribers who purchase connectivity to a bundle of 
select market data products will not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. In fact, the Exchange believes that he proposed discounted fee 
would help increase competition because it will offer subscribers an 
alternative means to connect to the selected market data products for a 
reduced fee, thereby simulating price competition between the various 
connectivity services. The Exchange reiterates that BATS Connect is 
offered and purchased on a voluntary basis, and subscribers can 
discontinue use at any time and for any reason, including choosing to 
purchase an alternate means to connect to those market data products 
should if find the proposed fees unreasonable.
    The Exchange believes that the proposed the ministerial changes to 
its to description of certain market data products in the BATS Connect 
fee table will not affect intermarket nor intramarket competition 
because these changes do not alter the market data products that 
connectivity is available to through BATS Connect or their related 
fees.

(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 \18\ and paragraph (f) of Rule 19b-4 
thereunder.\19\ 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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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 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:

[[Page 34776]]

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-EDGX-2015-27 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-EDGX-2015-27. 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-EDGX-2015-27 and should be 
submitted on or before July 8, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-14824 Filed 6-16-15; 8:45 am]
 BILLING CODE 8011-01-P