[Federal Register Volume 75, Number 241 (Thursday, December 16, 2010)]
[Notices]
[Pages 78794-78795]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31627]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63520; File No. SR-EDGX-2010-21]
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
December 10, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 3, 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 Exchange. 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 Substance
of the Proposed Rule Change
The Exchange proposes to amend its fee schedule applicable to
Members \3\ and non-members of the Exchange pursuant to EDGX Rule
15.1(a) and (c). Pursuant to the proposed rule change, the Exchange
will commence charging fees for Members and non-members for certain
logical ports used to enter orders into the Exchange's systems. The
Exchange also proposes to amend its fees for physical ports. The text
of the proposed rule change is available on the Exchange's Internet Web
site at http://www.directedge.com.
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\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.
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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 Exchange 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 Exchange 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 begin charging a
monthly fee for logical ports used to enter orders in the Exchange's
trading system. The Exchange recently began charging for ``physical''
ports, which are ports that are used by a Member or non-member to
literally plug into the Exchange at the data centers where the
Exchange's servers are located (i.e., either a cross-connection or an
external telecommunication circuit). By contrast, a ``logical'' port
(also commonly referred to as a TCP/IP port) represents a port
established by the Exchange within the Exchange's system for trading
and billing purposes. Each logical port established is specific to a
Member or non-member and grants that Member or non-member the ability
to operate a specific application, such as FIX or High Performance API
for order entry, or to receive market data. Multiple logical ports can
be created and exist over a single physical port. The Exchange proposes
to charge $500 per month for any logical ports other than ports used to
receive or request retransmission of market data. Thus, this proposed
charge will apply to all Exchange FIX, High Performance API, and DROP
ports for both accessing the Exchange directly (Direct) \4\ or through
the ECN Translator.\5\ Members and non-members will receive the first
ten (10) sessions free of charge for Direct Sessions only and
thereafter be charged the $500 fee per month. Free sessions will not
apply to ECN Translator sessions to incent members and non-members to
use Direct Sessions.
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\4\ Direct Sessions will consist on one port at the Exchange's
primary data center and one port at the Exchange's secondary data
center.
\5\ The ECN translator allows a Member or non-member who
previously connected to Direct Edge's ECN to be re-directed
automatically to EDGX Exchange, Inc. It can only be accessed through
a FIX port.
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Based on the proposal, the change applies to Members that obtain
ports for direct access to the Exchange and non-member service bureaus
that act as conduit for orders entered by Exchange Members that are
their customers. The Exchange believes that the imposition of logical
port fees will help the Exchange to continue to maintain and improve
its infrastructure, while also encouraging Exchange customers to
request and enable only the ports that are necessary for their
operations related to the Exchange.
The Exchange notes that other market centers provide similar
services to their Members and non-members.\6\
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\6\ See, e.g., Rule 7015 of The NASDAQ Stock Market LLC
(``NASDAQ'') (setting forth, among other fees for access services,
port fees charged to members and non-members used to enter orders
into NASDAQ trading systems). See also Securities Exchange Act
Release Nos. 60546 (August 20, 2009), 74 FR 43184 (August 26, 2009)
(SR-NASDAQ-2009-058) (increasing the monthly fee for each port used
to enter orders in NASDAQ trading systems from $400 per month to
$500 per month); 59337 (February 2, 2009), 74 FR 6441 (February 9,
2009) (SR-BX-2009-004) (establishing fees for ports used by members
to enter orders). See Securities Exchange Act Release No. 60586
(August 28, 2009), 74 FR 46256 (September 8, 2009) (SR-BATS-2009-
026) (establishing fees for ports used by members and non-members to
enter orders).
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Physical Ports
The Exchange currently charges Members and non-members the
following annual fees for physical ports based on the connectivity
service type:
[[Page 78795]]
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Annual fee per
Connection service type physical port
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1 Gb Copper............................................. $5,000
1 Gb Fiber.............................................. 7,500
10 Gb Fiber............................................. 10,000
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Beginning January 1, 2011, the Exchange proposes to amend these
physical port fees to offer Members and non-members the option of being
charged month to month. The fees will be 20% higher on a monthly basis
to offset increased administrative costs associated with processing
monthly payments. The proposed monthly fees based on connectivity
service type are as follows:
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Annual fee per
Connection service type physical port
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1 Gb Copper............................................. $500
1 Gb Fiber.............................................. 750
10 Gb Fiber............................................. 1,000
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The Exchange will implement the proposed rule change on January 1,
2011.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of the Act,\7\ in general, and furthers the
objectives of Section 6(b)(4),\8\ 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 believes that its proposed logical and physical port fees are
reasonable in light of the benefits to members and non-members. In
addition, the Exchange believes that its fees are equitably allocated
among its constituents based upon the number of access ports that they
require to submit orders to the Exchange. Furthermore, the fees
associated with logical and physical ports will be equitably allocated
to all constituents as the fees will be uniform in application to all
Members and non-members. Finally, the Exchange believes that the fees
obtained will enable it to cover its infrastructure costs associated
with allowing Members and non-members to establish logical and physical
ports to connect to the Exchange's systems and continue to maintain and
improve its infrastructure, market technology, and services.
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\7\ 15 U.S.C. 78f.
\8\ 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 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 \9\ and Rule 19b-4(f)(2) \10\ 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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\9\ 15 U.S.C. 78s(b)(3).
\10\ 17 CFR 240.19b-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-2010-21 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-2010-21. 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 will also 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 No. SR-EDGX-2010-21 and should be
submitted on or before January 6, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31627 Filed 12-15-10; 8:45 am]
BILLING CODE 8011-01-P