Document ID: SEC-2010-1650-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGA Exchange, Inc.
Posted Date: 2010-10-28T04:00Z

[Federal Register: October 28, 2010 (Volume 75, Number 208)]
[Notices]               
[Page 66405-66407]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28oc10-71]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63161; File No. SR-EDGA-2010-15]

 
Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
EDGA Rule 11.5

October 22, 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 20, 2010, the EDGA Exchange, Inc. (the ``Exchange'' or 
the ``EDGA'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit

[[Page 66406]]

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 EDGA Rule 11.5(a)(2) to provide 
system functionality that will cancel any portion of a market order 
submitted to the Exchange that would execute at a price that is more 
than $0.50 or 5 percent worse than last sale at the time the order 
initially reaches the Exchange, whichever is greater. The text of the 
proposed rule change is available on the Exchange's Internet Web site 
at http://www.directedge.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 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 purpose of the proposed rule change is to protect market 
participants from executions at prices that are significantly worse 
than the last sale at the time of order entry by providing Exchange 
system functionality that will cancel any portion of a market order (as 
defined in Rule 11.5(a)(2)) that would execute at a price that is 50 
cents or 5 percentage points worse than the consolidated last sale, 
whichever is greater. Any portion of a market order that would 
otherwise execute outside of these thresholds will be immediately 
cancelled back to the User.\3\ The Exchange believes that Users who 
submit market orders to the Exchange generally intend to receive 
executions for the full size of their orders at or near the 
consolidated last sale and are not always aware that there may not be 
enough liquidity at that price to fill the entire size of their orders. 
The Exchange believes that the market order thresholds proposed in this 
rule filing will help avoid executions of market orders at prices that 
are significantly worse than the consolidated last sale and avoid 
potentially creating clearly erroneous situations.
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    \3\ As defined in Exchange Rule 1.5(cc).
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    Those Users who intend to trade against liquidity at multiple price 
points from the consolidated last sale beyond the market order 
thresholds proposed in this rule filing can clearly and unambiguously 
specify that intent by submitting a marketable limit order to the 
Exchange.
2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Act,\4\ which requires the rules of an exchange to promote just 
and equitable principles of trade, to remove impediments to and perfect 
the mechanism of a free and open market and a national market system 
and, in general, to protect investors and the public interest. The 
proposed rule change also is designed to support the principles of 
Section 11A(a)(1) \5\ of the Act in that it seeks to assure fair 
competition among brokers and dealers and among exchange markets. The 
Exchange believes that the proposed rule meets these requirements in 
that it seeks to promote transparency for how order flow will be 
handled during a trading pause.
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    \4\ 15 U.S.C. 78f(b)(5).
    \5\ 15 U.S.C. 78k-1(a)(1).
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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.

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

    Because the foregoing proposed rule change does not: (1) 
Significantly affect the protection of investors or the public 
interest; (2) impose any significant burden on competition; and (3) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b-
4(f)(6) thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6). In addition, EDGA has given 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 on which the 
Exchange filed the proposed rule change, or such shorter time as 
designated by the Commission.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing.\8\ 
However, Rule 19b-4(f)(6) \9\ 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 requested that the 
Commission waive the 30-day operative delay so that the proposal may 
become operative upon filing. The Commission notes (i) the proposal is 
similar to existing thresholds on market orders adopted by The NASDAQ 
Stock Market LLC, NASDAQ OMX BX, Inc., BATS Exchange, Inc., and NYSE 
Arca, Inc; (ii) it presents no novel issues; and (iii) it may provide a 
benefit to market participants. For these reasons, the Commission 
believes it is consistent with the protection of investors and the 
public interest to waive the 30-day operative delay, and hereby grants 
such waiver.\10\
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    \8\ 17 CFR 240.19b-4(f)(6)(iii).
    \9\ Id.
    \10\ For the purposes only of waiving the operative date of this 
proposal, 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 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.

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

[[Page 66407]]

Number SR-EDGA-2010-15 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-EDGA-2010-15. 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 website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission,\11\ 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 website 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-EDGA-2010-15 and should be submitted on 
or before November 18, 2010.
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    \11\ The text of the proposed rule change is available on 
Exchange's Web site at http://www.directedge.com, on the 
Commission's Web site at http://www.sec.gov, at EDGA, and at the 
Commission's Public Reference Room.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-27243 Filed 10-27-10; 8:45 am]
BILLING CODE 8011-01-P