[Federal Register Volume 75, Number 157 (Monday, August 16, 2010)]
[Notices]
[Pages 50020-50021]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-20102]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62681; File No. SR-EDGA-2010-06]
Self-Regulatory Organizations; EDGA Exchange, Inc.; Order
Approving Proposed Rule Change To Amend the EDGA Fee Schedule To Impose
Fees for Physical Ports Used To Connect to EDGA Exchange
August 10, 2010.
I. Introduction
On July 1, 2010, the EDGA Exchange, Inc. (``EDGA'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
amend its fee schedule to begin charging an annual fee to Members and
non-members for certain physical ports used to connect to the
Exchange's systems. The proposed rule change was published for comment
in the Federal Register on July 9, 2010.\3\ The Commission received no
comment letters regarding the proposal. This order approves the
proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 62436 (July 1,
2010), 75 FR 39600.
---------------------------------------------------------------------------
II. Description of the Proposal
The Exchange proposes to begin charging an annual fee to Members
and non-members for physical ports used to connect to the Exchange's
systems for purposes that include order entry and the receipt of
Exchange data. A physical port is a port used by a Member or non-member
to connect into the Exchange at the data centers where Exchange servers
are located.\4\ Physical port connections can occur either through an
external telecommunication circuit or a cross-connection. Currently,
Members and non-members have a number of alternative methods available
to them for connecting to the Exchange without the need to obtain an
independent physical connection, including the use of financial
extranets or service bureaus. The Exchange believes that some Members
and non-members may wish to connect directly to the Exchange's systems
with their own dedicated circuit connection. To support their
requirements and the associated infrastructure costs related to direct
circuit connectivity, EDGA proposes to charge Members and non-members
the following annual fees based on the connectivity service type:
---------------------------------------------------------------------------
\4\ Non-members may include non-member service bureaus that act
as a conduit for orders entered by Exchange Members that are their
customers, as well as sponsored participants and market data
recipients.
------------------------------------------------------------------------
Annual fee per
Connection service type physical port
------------------------------------------------------------------------
1 Gb Copper............................................. $5,000
1 Gb Fiber.............................................. 7,500
10 Gb Fiber............................................. 10,000
------------------------------------------------------------------------
Only one physical port is required to access all services for EDGA.
However, Members and non-members may choose more than one physical port
and different connection service types based on their needs. The
Exchange notes that other market centers provide similar services to
their Members and non-members.\5\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 61545 (February 19,
2010), 75 FR 8769 (February 25, 2010) (order approving File No. SR-
BATS-2009-032). See also Securities Exchange Act Release No. 62392
(June 28, 2010), 75 FR 38857 (July 6, 2010) (notice of filing of
File No. SR-Nasdaq-2010-077).
---------------------------------------------------------------------------
The Exchange believes that the proposal will offer market
participants additional EDGA connectivity choices, providing for
greater access to EDGA while allowing each market participant to choose
the method of connectivity based on its specific needs.
III. Discussion
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\6\
Specifically, the Commission finds that the proposal is consistent with
Section 6(b)(4) of the Act,\7\ which requires the equitable allocation
of reasonable dues, fees and other charges among its members and other
persons using its facilities, and Section 6(b)(5) of the Act,\8\ which
requires, among other things, that the rules of a national securities
exchange be designed 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, and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers. The
Commission also finds that the proposed rule change is consistent with
Section 6(b)(8) of the Act,\9\ which requires that the rules of an
exchange not impose a burden on competition not necessary or
appropriate in furtherance of the purpose of the Act. Finally, the
Commission finds that the proposed rule change is consistent with Rule
603(a) of Regulation NMS,\10\ which requires an exclusive processor
that distributes information with respect to quotations for or
transactions in an NMS stock to do so on terms that are fair and
reasonable and not unreasonably discriminatory.
---------------------------------------------------------------------------
\6\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\7\ 15 U.S.C. 78f(b)(4).
\8\ 15 U.S.C. 78f(b)(5).
\9\ 15 U.S.C. 78f(b)(8).
\10\ 17 CFR 242.603(a).
---------------------------------------------------------------------------
The Commission believes that the proposed physical port fees are
equitably allocated among Members and non-members and do not unfairly
or unreasonably discriminate between customers, issuers, brokers, or
dealers because the proposed physical port fees do not distinguish
among the type of participant but rather are the same for all Members
and non-members. The Commission also believes that EDGA was subject to
significant competitive pressure to act equitably, fairly, and
reasonably in setting the physical port fees, in light of the highly
competitive nature of the market for execution and routing
services.\11\
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770 (December 9, 2008) (File No. SR-NYSEArca-2006-
21).
---------------------------------------------------------------------------
[[Page 50021]]
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\12\ that the proposed rule change (SR-EDGA-2010-06) be, and hereby
is, approved.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-20102 Filed 8-13-10; 8:45 am]
BILLING CODE 8010-01-P