80 FR 12660 - Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule To Increase the Fee for Orders Yielding Fee Code K

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 46 (March 10, 2015)

[Federal Register Volume 80, Number 46 (Tuesday, March 10, 2015)]
[Notices]
[Pages 12660-12661]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-05478]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74431; File No. SR-EDGX-2015-05]


Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Fee Schedule To Increase the Fee for Orders Yielding Fee Code K

March 4, 2015.
    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 January 28, 2015, EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the Exchange. The 
Exchange has designated the proposed rule change as one establishing or 
changing a member due, fee, or other charge imposed by the Exchange 
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders the proposed rule change effective upon 
filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend its fees and rebates 
applicable to Members \5\ of the Exchange pursuant to EDGX Rule 15.1(a) 
and (c) (``Fee Schedule'') to increase the fee for orders yielding fee 
code K, which routes to NASDAQ OMX PSX (``PSX'') using ROUC or ROUE 
routing strategy.
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    \5\ The term ``Member'' is defined as ``any registered broker or 
dealer, or any person associated with a registered broker or dealer, 
that has been admitted to membership in the Exchange. A Member will 
have the status of a ``member'' of the Exchange as that term is 
defined in Section 3(a)(3) of the Act.'' See Exchange Rule 1.5(n).
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    The text of the proposed rule change is available at the Exchange's 
Web site at www.batstrading.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and the 
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 parts 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 increase the fee for orders yielding fee 
code K, which routes to PSX using ROUC or ROUE routing strategy. In 
securities priced at or above $1.00, the Exchange currently assesses a 
fee of $0.0024 per share for Members' orders that yield fee code K. The 
Exchange proposes to amend its Fee Schedule to increase this fee to 
$0.0026 per share. The proposed change represents a pass through of the 
rate that BATS Trading, Inc. (``BATS Trading''), the Exchange's 
affiliated routing broker-dealer, is charged for routing orders to PSX 
when it does not qualify for a volume tiered reduced fee. The proposed 
change is in response to PSX's February 2015 fee change where PSX 
increased the fee to remove liquidity via routable order types it 
charges its customers, from a fee of $0.0024 per share to a fee of 
$0.0025 per share for Tape A securities and $0.0026 per share for Tapes 
B and C securities.\6\ When BATS Trading routes to PSX, it will now be 
charged a standard rate of $0.0025 per share for Tape A securities and 
$0.0026 per share for Tapes B and C securities.\7\ BATS Trading will 
pass through this rate to the Exchange and the Exchange, in turn, will 
pass through of a rate of $0.0026 per share to its Members. The 
proposed increase to the

[[Page 12661]]

fee under fee code K would enable the Exchange to equitably allocate 
its costs among all Members utilizing fee code K.
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    \6\ See PSX, Equity Trader Alert 2014-95, Updates to PSX and BX 
Pricing for November 2014, dated October 27, 2014 [sic], available 
at http://www.nasdaqtrader.com/MicroNews.aspx?id=ETA2014-95.
    \7\ The Exchange notes that to the extent BATS Trading does or 
does not achieve any volume tiered reduced fee on PSX, its rate for 
fee code K will not change.
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    The Exchange proposes to implement these amendments to its Fee 
Schedule on February 2, 2015.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\8\ in general, and 
furthers the objectives of Section 6(b)(4),\9\ 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 proposal to increase the 
pass through fee for Members' orders that yield Flag K from $0.0024 per 
share to $0.0026 per share represents an equitable allocation of 
reasonable dues, fees, and other charges among Members and other 
persons using its facilities because the Exchange does not levy 
additional fees or offer additional rebates for orders that it routes 
to PSX through BATS Trading. Prior to PSX's February 2015 fee change, 
PSX charged its members, which includes BATS Trading, a fee of $0.0024 
per share to remove liquidity using non-routable order types, which 
BATS Trading passed through to the Exchange and the Exchange charged to 
its Members. In February 2015, PSX increased the fee to remove 
liquidity via routable order types it charges its customers, from a fee 
of $0.0024 per share to a fee of $0.0025 per share for Tape A 
securities and $0.0026 per share for Tapes B and C securities.\10\ 
Therefore, the Exchange believes that its proposal to pass through a 
fee of $0.0026 per share for orders that yield Flag K is equitable and 
reasonable because it accounts for the pricing changes on PSX. In 
addition, the proposal allows the Exchange to charge its Members a 
pass-through rate for orders that are routed to PSX. Furthermore, the 
Exchange notes that routing through BATS Trading is voluntary. Lastly, 
the Exchange also believes that the proposed amendment is non-
discriminatory because it applies uniformly to all Members.


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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
    \10\ See supra note 6.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    These proposed rule changes do not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. The Exchange does not believe that any of these changes 
represent [sic] a significant departure from previous pricing offered 
by the Exchange or pricing offered by the Exchange's competitors. 
Additionally, Members may opt to disfavor EDGX's pricing if they 
believe that alternatives offer them better value. Accordingly, the 
Exchange does not believe that the proposed changes will impair the 
ability of Members or competing venues to maintain their competitive 
standing in the financial markets. The Exchange believes that its 
proposal to pass through a fee of $0.0026 per share for Members' orders 
that yield Flag K would increase intermarket competition because it 
offers customers an alternative means to route to PSX. The Exchange 
believes that its proposal would not burden intramarket competition 
because the proposed rate would apply uniformly to all Members.

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)(A) of the Act \11\ and paragraph (f) of Rule 19b-4 
thereunder.\12\ At any time within 60 days of the filing of the 
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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f).
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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 email to [email protected]. Please include 
File No. SR-EDGX-2015-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File No. SR-EDGX-2015-05. This file 
number should be included on the subject line if email 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 
10:00 a.m. and 3:00 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 No. SR-EDGX-2015-05 and should be 
submitted on or before March 31, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-05478 Filed 3-9-15; 8:45 am]
 BILLING CODE 8011-01-P