Document ID: SEC-2011-0058-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGX Exchange, Inc.
Posted Date: 2011-01-12T05:00Z

[Federal Register Volume 76, Number 8 (Wednesday, January 12, 2011)]
[Notices]
[Pages 2168-2170]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-430]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63638; File No. SR-EDGX-2010-25]

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

January 4, 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 December 28, 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.

[[Page 2169]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Currently, for orders routed to Nasdaq BX that remove liquidity, a 
rebate of $0.0002 per share is provided to Members (yielding Flag 
``C''). The Exchange proposes to increase this rebate to $0.0014 per 
share to reflect an increase in rebate provided by Nasdaq BX, effective 
January 3, 2011.
    In addition, for orders routed or re-routed to NYSE that remove 
liquidity, a fee of $0.0021 is charged to Members (yielding Flag 
``D''). The Exchange proposes to increase this fee to $0.0023 to 
reflect an increase in fee assessed by NYSE, effective January 3, 2011. 
Similarly, for orders routed to NYSE that add liquidity, a rebate of 
$0.0013 per share is provided to Members (yielding Flag ``F''). The 
Exchange proposes to increase this rebate to $0.0015 per share to 
reflect an increase in rebate provided by NYSE, effective January 3, 
2011.
    Currently, Members can qualify for the Mega Tier and be provided a 
rebate of $0.0032 per share for all liquidity posted on EDGX 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, 
including during both market hours and pre and post-trading hours. The 
Exchange proposes to increase this rebate to $0.0033 per share to 
incent Members to add liquidity to EDGX during both market hours and 
pre and post-trading hours. As fewer Members generally trade during pre 
and post-trading hours because of the time parameters associated with 
these trading sessions, the Exchanges believes that this proposed 
increase in rebate would incent liquidity during these trading 
sessions. The rebate associated with the other method to qualify for 
the Mega Tier (if the Member posts on a daily basis, measured monthly, 
0.75% of the Total Consolidated Volume in average daily volume) remains 
unchanged at $0.0032 per share.
    The Exchange believes that the above pricing is appropriate since 
higher rebates are directly correlated with more stringent criteria. 
The Mega Tier rebate (proposed at $0.0033 per share, otherwise set at 
$0.0032 per share) has the most stringent criteria, and is $0.0002/
$0.0001 greater than the Ultra Tier rebate ($0.0031 per share) and 
$0.0003/$0.0002 greater than the Super Tier rebate ($0.0030 per share). 
For example, based on average TCV for November 2010 (8.0 billion), in 
order for a Member to qualify for the proposed Mega Tier rebate of 
$0.0033, the Member would have to 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, including during both market 
hours and pre and post-trading hours. Another way a Member can qualify 
for the Mega Tier (with a rebate of $0.0032 per share) would be to post 
60 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 40 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.
    EDGX Exchange proposes to implement these amendments to the 
Exchange fee schedule on January 1, 2011.
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. The Exchange believes that the proposed rates are 
equitable in that they apply uniformly to all Members. In addition, the 
rebates provided result, in part, from lower administrative costs 
associated with higher volume. 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-2010-25 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-2010-25. 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

[[Page 2170]]

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-2010-25 and should be submitted on 
or before February 2, 2011.
---------------------------------------------------------------------------

    \8\ 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 EDGX, and at the 
Commission's Public Reference Room.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-430 Filed 1-11-11; 8:45 am]
BILLING CODE 8011-01-P