[Federal Register Volume 75, Number 198 (Thursday, October 14, 2010)]
[Notices]
[Pages 63227-63228]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-25744]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63054; File No. SR-EDGX-2010-13]
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
October 6, 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 September 30, 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 and
II 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
EDGX Exchange, Inc. (``Exchange'' or ``EDGX'') 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.
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 increase the fee for removing liquidity
from $0.0029 per share to $0.0030 per share. Conforming amendments have
been made to the B, V, Y, 3, and 4 Flags (``add liquidity'' flags) to
reflect this change. Secondly, it proposes to decrease the rebate for
adding liquidity from $0.0029 per share to $0.0026 per share.
Conforming amendments have been made to the N, W, and 6 flags (``remove
liquidity'' flags) to reflect this change. The Exchange believes that
these rate changes will enable it to maintain a competitive position
with regards to other away market centers.
Secondly, the Exchange proposes to incorporate a three tier rebate
structure. The Exchange proposes to introduce the Mega Tier, which
modifies the rebate incorporated in footnote 1 of the fee schedule.
There are two alternative ways a Member can qualify for the Mega Tier
rebate. First, footnote 1 of the fee schedule currently provides that
Members can qualify for 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 AM or after 4:00 PM (includes all
flags except 6) AND add a minimum of 50,000,000 shares of average daily
volume on EDGX in total. The Exchange proposes to amend the 50,000,000
share minimum to 25,000,000 shares. Secondly, footnote 1 further
provides that Members will be provided a $0.0031 rebate per share for
liquidity added on EDGX if the Member on a daily basis, measured
monthly, posts 0.75% of the Total Consolidated Volume (``TCV'') in
average daily volume. TCV is defined as volume reported by all
exchanges and trade reporting facilities to the consolidated
transaction reporting plans for Tapes A, B and C securities. The
Exchange proposes to increase this rebate to $0.0032 per share.
Next, the Exchange proposes to introduce the Ultra Tier, in which a
Member will be provided a $0.0031 rebate per share for liquidity added
on EDGX if the Member posts 0.50% of TCV in average daily volume to
EDGX, as measured on a monthly basis.
Finally, the Exchange propose to introduce the Super Tier, in which
a Member will be provided a $0.0030 rebate per share for liquidity
added on EDGX if the Member posts 10,000,000 shares or more of average
daily volume to EDGX, as measured on a monthly basis.
The Exchange believes that the above pricing is appropriate since
higher rebates are directly correlated with more stringent criteria.
The Mega Tier rebate ($0.0032 per share) has the most stringent
criteria, and is $0.0001 greater than the Ultra Tier rebate ($0.0031
per share) and $0.0002 greater than the Super Tier rebate ($0.0030 per
share). For example, based on average TCV for August 2010 (7.2
billion), in order for a Member to qualify for the Mega Tier, the
Member would have to post 54 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 36 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.
Finally, the Exchange proposes to make a clarifying amendment to
the price guarantee language found in footnote 1 of the schedule to
clarify that the share amounts are based upon average daily volume.
EDGX Exchange proposes to implement these amendments to the
Exchange fee schedule on October 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
[[Page 63228]]
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. Finally, 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 those
members that opt to direct orders to the Exchange rather than competing
venues.
---------------------------------------------------------------------------
\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 [email protected]. Please include
File Number SR-EDGX-2010-13 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-2010-13. 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,\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-2010-13 and should be
submitted on or before November 4, 2010.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-25744 Filed 10-13-10; 8:45 am]
BILLING CODE 8011-01-P