[Federal Register Volume 75, Number 175 (Friday, September 10, 2010)]
[Notices]
[Pages 55385-55386]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-22598]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62846; File No. SR-EDGX-2010-12]
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
September 3, 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 August 31, 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.
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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 the
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) to
(i) add a price guarantee to footnote 1 of its fee schedule; and (ii)
make other technical amendments to its fee schedule.
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\3\ A Member is any registered broker or dealer that has been
admitted to membership in the Exchange.
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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, on the Commission's Web
site at http://www.sec.gov, 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 Exchange proposes to make several amendments to its fee
schedule. First, it proposes to add a price guarantee to footnote 1 of
the schedule. This guarantee would state that ``Any Member meeting the
following criteria: (i) Adding 10,000,000 shares or more of liquidity
to EDGX, (ii) where such added liquidity on EDGX is at least 5,000,000
shares greater than the previous calendar month; and (iii) but for the
liquidity added on EDGX, such Member would have qualified for a better
rebate with respect to liquidity added on another exchange or ECN that
the Member previously qualified for in the three calendar months prior
to meeting the above-described criteria in (i) and (ii), shall be
reimbursed the difference between the rebate received and the rebate
potentially received, so long as source documentation evidencing the
above is provided to the Exchange within fifteen (15) calendar days
from the end of the relevant month. A Member can only receive
reimbursement with respect to two consecutive calendar months. With
respect to the second calendar month's reimbursement, the relevant
period in determining whether criteria (iii) is satisfied is the period
three calendar months prior to the first of the two consecutive
calendar months the Member meets the above-described criteria in (i)
and (ii).''
The Exchange believes that the price guarantee, as described above,
is equitable in that it is available to all Members migrating volumes
to the Exchange. Furthermore, the price guarantee limits the increase
in a Members' execution costs associating with failing to meet the
volume thresholds of other exchanges and ECNs while a Member is in the
process of migrating volumes from one exchange to another. The Exchange
believes that the difficulty in transitioning volume has incentivized
Members to leave volume on certain exchanges and ECNs rather than
incurring the costs of migrating volumes to the Exchange. By
facilitating
[[Page 55386]]
the migration of volumes in the short term through this guarantee, the
Exchange minimizes the cost of Members pursuing the most economic
execution cost model. The resulting migration of Members' volumes to
the Exchange will reduce the fixed costs associated with the Exchange
supporting its overall volumes and reduce costs on a per share basis.
This will, in turn, facilitate the Exchange's ability to maintain lower
transactional costs for all Members.
Secondly, the Exchange proposes to make a technical amendment to
the schedule. The Exchange proposes to delete references in footnote 1
that describe how certain volume thresholds were pro-rated for the
month of July 2010 as these descriptions are no longer relevant.
EDGX Exchange proposes to implement these amendments to the
Exchange fee schedule on September 1, 2010.
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. Specifically, the Exchange believes that the
price guarantee, as described above, facilitates the migration of
volumes to the Exchange by subsidizing the cost of migrating volumes to
the Exchange. Finally, the Exchange believes that the proposed rates
are equitable 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 those members that opt to direct orders to the Exchange
rather than competing venues.
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\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(4).
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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 Regarding 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.
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\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 19b-4(f)(2).
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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:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-EDGX-2010-12 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-2010-12. 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 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
a.m. and 3 p.m. 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 publicly available. All
submissions should refer to File Number SR-EDGX-2010-12 and should be
submitted on or before October 1, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-22598 Filed 9-9-10; 8:45 am]
BILLING CODE 8010-01-P