80 FR 28742 - Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of EDGX Exchange, Inc.
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 96 (May 19, 2015)
Federal Register Volume 80, Issue 96 (May 19, 2015)
| Page Range | 28742-28745 | |
| FR Document | 2015-12027 |
[Federal Register Volume 80, Number 96 (Tuesday, May 19, 2015)] [Notices] [Pages 28742-28745] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-12027] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74950; File No. SR-EDGX-2015-22] Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of EDGX Exchange, Inc. May 13, 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 April 30, 2015, EDGX Exchange, Inc. (the ``Exchange'' or ``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 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. --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a 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: (i) decrease the rebate for orders yielding fee code BY, which routes to the BATS Y-Exchange, Inc. (``BYX'') and removes liquidity using routing strategies Destination Specific (``DIRC''), ROUC, or ROUE; \6\ (ii) decrease the standard rate charged for removing liquidity from the Exchange from $0.0030 per share to $0.0029 per share; and (iii) make a few non-substantive clarifying changes. Changes to the fee schedule pursuant to this proposal are effective upon filing. --------------------------------------------------------------------------- \5\ The term ``Member'' is defined as ``any registered broker or dealer, or any person associated with a registered broker or dealer [sic], 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). \6\ The DIRC, ROUC, and ROUE routing strategies are set forth in Exchange Rule 11.11(g). --------------------------------------------------------------------------- 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 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: (i) Decrease the rebate for orders yielding fee code BY, which routes to BYX and removes liquidity using routing strategies DIRC, ROUC, or ROUE; (ii) decrease the standard rate charged for removing liquidity from the Exchange from $0.0030 per share to $0.0029 per share; and (iii) make a few non-substantive clarifying changes. Fee Code BY In securities priced at or above $1.00, the Exchange currently provides a rebate of $0.00160 per share for Members' orders that yield fee code BY, which routes to BYX and removes liquidity using routing strategies DIRC, ROUC, or ROUE. The Exchange proposes to amend its Fee Schedule to decrease the rebate for orders that yield fee code BY to $0.00150 per share in securities priced at or above $1.00.\7\ The proposed change represents a pass through of the rate BATS Trading, Inc. (``BATS Trading''), the Exchange's affiliated routing broker- dealer, is provided for routing orders to BYX that remove liquidity. The proposed change is in response to BYX's May 2015 fee change where BYX decreased its rebate from $0.00160 per share to $0.00150 per share for orders in securities priced at or above $1.00.\8\ When BATS Trading routes to and removes liquidity from BYX, it will now receive a standard rebate of $0.00150 per share. BATS Trading will pass through the rebate provided by BYX to the Exchange and the Exchange, in turn, will pass through this rate to its Members. --------------------------------------------------------------------------- \7\ The Exchange does not propose to amend its fee for orders that yield fee code BY in securities priced below $1.00. \8\ See BYX Exchange Fee Schedule Changes Effective May 1, 2015 available at http://cdn.batstrading.com/resources/fee_schedule/2015/BATS-BYX-Exchange-BZX-Exchange-EDGA-Exchange-and-EDGX-Exchange-Fee-Schedule-Changes-Effective-May-1-2015.pdf. --------------------------------------------------------------------------- Standard Removal Rate Change In securities priced at or above $1.00, the Exchange currently charges a fee or $0.0030 per share when removing liquidity. The Exchange now proposes to decrease the standard rate charged for removing liquidity from the Exchange from $0.0030 per share to $0.0029 per share in securities priced at or above $1.00.\9\ The standard removal rate applies unless a Member's transaction is assigned a fee code other than a standard fee code. If a Member's transaction is assigned a fee code other than a standard fee code, the rates listed in the Fee Codes table of the Fee Schedule will apply. --------------------------------------------------------------------------- \9\ The Exchange does not propose to amend its standard rate for orders in securities priced below $1.00. --------------------------------------------------------------------------- The standard rate for removing liquidity from the Exchange will be $0.0029 per share and no lower fees will be available if a Member qualifies for a tier included in footnote 1 of the Fee Schedule. Therefore, the Exchange proposes to make a series of changes to the Fee Schedule as a result of decreasing the standard rate to $0.0029 per share. First, the Exchange proposes to amend footnote 1 to remove references to reduced fees for removing or routing liquidity from the Exchange. Under footnote 1, if a Member satisfies the respective tier's criteria, they would be charged a reduced fee of: (i) $0.0029 per share under Mega Tier 1; (ii) $0.0029 per share under Mega Tier 2; or (iii) $$0.00295 per share under Mega [[Page 28743]] Tier 3.\10\ Going forward, Members will be charged the standard removal rate of $0.0029 per share regardless of whether they satisfy the criteria for Mega Tier 1 or Mega Tier 2. Members will also be charged the reduced standard removal rate of $0.0029 per share, rather than $0.00295 per share, if they satisfy the criteria for Mega Tier 3. Therefore, the Exchange proposes to delete the references under footnote 1 to reduced fees for removing of routing liquidity from the Exchange as Members will be charged the reduced standard removal rate regardless of whether they meet any of the above referenced tiers' criteria. As a result of the above changes, the Exchange also proposes to remove language from footnote 1 listing the fee codes eligible for reduced removal fees provided by the add volume tiers included in footnote 1 as this language would be no longer necessary. --------------------------------------------------------------------------- \10\ The Exchange does not propose to amend the rebates provide by or the criteria necessary to satisfy Mega Tier 1, Mega Tier 2, or Mega Tier 3. --------------------------------------------------------------------------- Second, the Exchange proposes to delete references to footnote 1 from: (i) the standard rate for removing liquidity in securities priced above $1.00; and (ii) standard fee codes 6, 7, BB, N, RT, and W. These fee codes provide for the standard removal rate when removing liquidity from the Exchange. Footnote 1 references reduced fees charged for removing liquidity if the criteria included in the tiers within footnote 1 are satisfied. The Exchange believes references to footnote 1 discussed above are no longer necessary as the standard rate for removing liquidity from the Exchange will be $0.0029 per share and no lower fees will be available if a Member qualifies for a tier included in footnote 1. Lastly, as a result of reducing the standard rate, the Exchange proposes to amend fee codes 5, EA, and ER to reduce the fee charged for internalized trades executed on the Exchange from $0.0005 per share to $0.00045 per share. For customer internalization, which occurs when two orders presented to the Exchange from the same Member (i.e., MPID) are presented separately and not in a paired manner, but nonetheless inadvertently match with one another,\11\ the Exchange currently charges $0.00050 per share per side of an execution (for adding liquidity and for removing liquidity) for fee codes 5, EA, and ER.\12\ This charge occurs in lieu of the standard or tiered rebate/removal rates. Therefore, Members currently incur a total transaction cost of $0.0010 per share for both sides of an execution for customer internalization. --------------------------------------------------------------------------- \11\ Members are advised to consult Exchange Rule 12.2 respecting fictitious trading. \12\ Fee codes 5 provides for a fee of $0.0005 per share per each side of an internalized trade executed on the Exchange during the Pre-Market Trading Session and Post-Market Trading Session. Fee code EA also provides for a fee of $0.0005 per share for an internalized trade executed on the Exchange that adds liquidity during Regular Trading Hours. Fee code ER provides for a fee of $0.0005 per share for an internalized trade executed on the Exchange that removes liquidity during Regular Trading Hours. --------------------------------------------------------------------------- Prior to the proposed reduction of the standard removal rate proposed herein, the Exchange charged a standard rate of $0.0030 per share for orders that remove liquidity and a standard rebate of $0.0020 per share for orders that add liquidity resulting in a maker/taker spread of $0.0010 per share, equal to the total transaction cost of $0.0010 per share for both sides of an execution for customer internalization. Going forward, the Exchange proposes to charge a standard rate of $0.0029 per share for orders that remove liquidity and will continue to provide a standard rebate of $0.0020 per share for orders that add liquidity resulting in a maker/taker spread of $0.0009 per share. In order to ensure that the internalization fee is in line with the proposed maker/taker spread of $0.0009 for the standard add rate (rebate of $0.0020) and standard removal rate (proposed $0.0029 fee per share), the Exchange proposes to reduce the fee charged for internalized trades executed on the Exchange from $0.00050 per share to $0.00045 per share under fee codes 5, EA, and ER. The amended fee of $0.00045 per share for fee codes 5, EA, and ER would result in total transaction cost of $0.0009 per share for both sides of an execution for customer internalization, equal to the maker/taker spread of $0.0009 for the standard add and removal rates discussed above. For both tiered and standard rates, the charge for Members inadvertently matching with themselves will continue to be no more favorable than each maker/taker spread.\13\ The applicable rate for customer internalization thus allows the Exchange to continue to discourage potential wash sales. --------------------------------------------------------------------------- \13\ In addition, the Exchange notes that under footnote 7 of the Fee Schedule, a Member that adds 10,000,000 shares or more of average daily volume (``ADV'') would be charged a rate of $0.0001 per share per side for customer internalization. The Exchange has a variety of tiered rebates ranging from $0.0025-$0.0034 per share, which makes its maker/taker spreads range from $0.0006 (standard removal rate--Mega Tier 1 rebate), $0.00035 (standard removal rate-- Market Depth Tier 1 rebate), $0.0003 (standard removal rate--Mega Tier 2, Mega Tier 3, Mega-Step-Up Tier 1,and Investor Tier rebate),), $0.0002 (standard removal rate--Ultra Tier rebate), $0.0001 (standard removal rate--Mega Step-Up Tier 2 rebate), $0 (standard removal rate--Market Depth Tier 2 rebate), -$0.0001 (standard removal rate--Mega Step-Up Tier 3 and Super Tier), - $0.0002 (standard removal rate--Tape B Step Up Tier), and -$0.0004 (standard removal rate--Growth Tier rebate). As a result of the customer internalization charge, Members who internalized would be charged $0.0001 per share per side of an execution (total of $0.0002 per share) or $0.0045 per share per side (total of $0.0009 per share) instead of capturing the maker/taker spreads resulting from achieving the tiered rebates. --------------------------------------------------------------------------- Non-Substantive Changes The Exchange also proposes to make the below non-substantive clarifying changes to its Fee Schedule. First, the Exchange proposes to remove ``, Inc.'' from the reference to the Exchange in the heading of the Fee Schedule. This non-substantive change is intended to make the reference to the Exchange in the heading of the Fee Schedule consistent with the manner in which its affiliated exchanges \14\ are referenced in their respective fee schedules. Second, the Exchange proposes to remove an incorrect reference to footnote 4 under the standard removal rate as footnote 4 provides for a rebate of $0.0034 per share for Members meeting criteria under the Exchange's Retail Order tier. Footnote 4 is, therefore, inapplicable to the standard removal rate. Third, the Exchange proposes to remove a reference to fee code PI from the Standard Rates table as fee code PI was previously removed from the Fee Codes and Associated Fees section of the Fee Schedule on January 16, 2015 and is no longer available.\15\ Lastly, the Exchange proposes to add a reference to footnote 1 to fee code ZA, which provides for a rebate of $0.0032 per share for Retail Orders \16\ that add liquidity. Footnote 1 states that the rebates to add liquidity provided by the add volume tiers listed in the footnote are applicable to various fee codes, including fee code ZA. Therefore, the Exchange believes that adding a reference to footnote 1 following fee code ZA will improve the understandability of the Exchange's Fee Schedule because footnote 1 does expressly apply to that fee code. --------------------------------------------------------------------------- \14\ The Exchange's affiliated exchanges are BATS Exchange, Inc., BATS Y-Exchange, Inc., and EDGA Exchange, Inc. (``EDGA''). The Exchange understands that EDGX also intends to file a proposed rule change with the Commission making a similar change to how EDGA is referenced in the heading of its fee schedule. \15\ See Securities Exchange Act Release No. 74165 (January 28, 2015), 80 FR 5854 (February 3, 2015) (SR-EDGX-2015-04) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Make Non-Substantive Amendments and Clarifications to the Fee Schedule). \16\ ``Retail Order'' is defined under Exchange Rule 11.21(a). --------------------------------------------------------------------------- Implementation Date The Exchange proposes to implement these amendments to its Fee Schedule immediately. [[Page 28744]] 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,\17\ in general, and furthers the objectives of Section 6(b)(4),\18\ 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 also 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 [sic] market participants to direct their order flow to the Exchange. The Exchange believes that the proposed rates are equitable and non-discriminatory 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 Members. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78f. \18\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- Fee Code BY The Exchange believes that its proposal to decrease the rebate for orders that yield fee code BY represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities. Prior to the BYX's May 2015 fee change, BYX provided BATS Trading a rebate of $0.00160 per share to remove liquidity in securities priced at or above $1.00, which BATS Trading passed through to the Exchange and the Exchange provided its Members. When BATS Trading routes to BYX, it will now be provided a rebate of $0.00150 per share. The Exchange does not levy additional fees or offer additional rebates for orders that it routes to BYX through BATS Trading. Therefore, the Exchange believes that the proposed change to fee code BY is equitable and reasonable because it accounts for the pricing changes on BYX, which enables the Exchange to provide its Members the applicable pass-through rebate. Lastly, the Exchange notes that routing through BATS Trading is voluntary and believes that the proposed change is non-discriminatory because it applies uniformly to all Members. Standard Removal Rate Change The Exchange believes that its proposal to lower the standard removal rate from $0.0030 per share to $0.0029 per share, as well as related changes made throughout the Fee Schedule, represent an equitable allocation of reasonable dues, fees and other charges as it will enable the Exchange to decrease trading cost for Members who remove liquidity from the Exchange. Decreasing the standard removal rate is designed to attract additional liquidity to the Exchange, thereby increasing depth of the Exchange's order book, resulting in improved price discovery for all investors. The rate is also equitable and reasonable as compared to the fees for removing liquidity charged by The Nasdaq Stock Market LLC (``Nasdaq'') (removal rate of $0.0030 per share) and NYSE Arca, Inc. (``NYSE Arca'') (removal rate of $0.0030 per share for Tape A and Tape C securities).\19\ The Exchange believes references to footnote 1 as well as removing the fees to remove liquidity from Mega Tier 1, Mega Tier 2, and Mega Tier 3, as referenced above, are also equitable and reasonable because such provisions are no longer necessary as the standard rate for removing all liquidity from the Exchange will be $0.0029 per share, which is equal to or lower than the current removal rated provided for in those tiers. The proposed standard removal rate is also non-discriminatory in that it applies uniformly to all Members. --------------------------------------------------------------------------- \19\ See Nasdaq, Price List--Trading & Connectivity, available at http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2. See also the NYSE Arca Schedule of Fees and Charges for Exchange Services, dated April 20, 2015 available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf. --------------------------------------------------------------------------- The Exchange believes that decreasing the fee for customer internalization from $0.00050 to $0.00045 per share per side of an execution for fee codes EA, ER, and 5 represents an equitable allocation of reasonable dues, fees, and other charges as it is designed to discourage Members from inadvertently matching with one another and potential wash sales. The revised fee also allows the Exchange to offset its administrative, clearing, and other operating costs incurred in executing such trades. Finally, the fee is equitable and reasonable because it total transaction cost of for both sides of an execution for customer internalization will continue to be equal to the maker/taker spread of $0.0009 for the standard add and removal rates discussed above.\20\ The Exchange believes that the proposed rate is non-discriminatory in that it applies uniformly to all Members. --------------------------------------------------------------------------- \20\ In each case, the internalization fee is no more favorable to the Member than each prevailing maker/taker spread. The Exchange will continue to ensure that the internalization fee is no more favorable than each prevailing maker/taker spread. --------------------------------------------------------------------------- Non-Substantive Changes The Exchange believes that the non-substantive clarifying changes to its Fee Schedule are reasonable because they are not designed to amend any fee, nor alter the manner in which it assesses fees or calculates rebates. These proposed changes to the Fee Schedule are intended to make the reference to the Exchange in the heading of the Fee Schedule consistent with the manner in which its affiliated exchanges are referenced in their respective fee schedules, while the clarifying changes to remove reference to footnote 4 under the standard removal rate and add a reference to footnote 1 to fee code ZA are intended to add clarity to the Fee Schedule and avoid investor confusion. Therefore, the Exchange believes these changes will remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, protect investors and the public interest. (B) Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes its proposed amendments to its Fee Schedule would 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 the proposed change represents a significant departure from previous pricing offered by the Exchange or pricing offered by the Exchange's competitors. Additionally, Members may opt to disfavor the Exchange's pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed change will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. Fee Code BY The Exchange believes that its proposal to pass through the amended rebate for orders that yield fee code BY would increase intermarket competition because it offers customers an alternative means to route to BYX for the same rebate that they would be provided if they entered orders on that trading center directly. The Exchange believes that its proposal would not burden intramarket competition because the proposed rebate would apply uniformly to all Members. Standard Removal Rate Change The Exchange believes that its proposal to lower the standard removal [[Page 28745]] rate from $0.0030 per share to $0.0029 per share will also assist in increasing competition in that its proposed rebate is lower than the standard fees for removing liquidity offered by Nasdaq (removal rate of $0.0030 per share) and NYSE Arca (removal rate of $0.0030 per share for Tape A and Tape C securities).\21\ --------------------------------------------------------------------------- \21\ See supra note 19. --------------------------------------------------------------------------- The Exchange believes that its internalization rates for securities priced $1.00 and above will also not burden intermarket or intramarket competition as the proposed rates are no more favorable than Members achieving the maker/taker spreads between the standard add and remove rates on the Exchange. Non-Substantive Changes The Exchange believes that the proposed non-substantive clarifying changes to the Fee Schedule will not affect intermarket nor intramarket competition because these changes are not designed to amend any fee or alter the manner in which the Exchange assesses fees or calculates rebates. (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 \22\ and paragraph (f) of Rule 19b-4 thereunder.\23\ 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. --------------------------------------------------------------------------- \22\ 15 U.S.C. 78s(b)(3)(A). \23\ 17 CFR 240.19b-4(f). --------------------------------------------------------------------------- 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 CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-EDGX-2015-22 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 Number SR-EDGX-2015-22. 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 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 Number SR-EDGX-2015-22 and should be submitted on or before June 9, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\24\ --------------------------------------------------------------------------- \24\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-12027 Filed 5-18-15; 8:45 am] BILLING CODE 8011-01-P
![28742 Federal Register / Vol. 80, No. 96 / Tuesday, May 19, 2015 / Notices
will be posted without change; the the Exchange pursuant to EDGX Rule fee code BY to $0.00150 per share in
Commission does not edit personal 15.1(a) and (c) (‘‘Fee Schedule’’) to: (i) securities priced at or above $1.00.7 The
identifying information from decrease the rebate for orders yielding proposed change represents a pass
submissions. You should submit only fee code BY, which routes to the BATS through of the rate BATS Trading, Inc.
information that you wish to make Y-Exchange, Inc. (‘‘BYX’’) and removes (‘‘BATS Trading’’), the Exchange’s
available publicly. All submissions liquidity using routing strategies affiliated routing broker-dealer, is
should refer to File Number SR–FINRA– Destination Specific (‘‘DIRC’’), ROUC, or provided for routing orders to BYX that
2015–011 and should be submitted on ROUE; 6 (ii) decrease the standard rate remove liquidity. The proposed change
or before June 9, 2015. charged for removing liquidity from the is in response to BYX’s May 2015 fee
For the Commission, by the Division of Exchange from $0.0030 per share to change where BYX decreased its rebate
Trading and Markets, pursuant to delegated $0.0029 per share; and (iii) make a few from $0.00160 per share to $0.00150 per
authority.13 non-substantive clarifying changes. share for orders in securities priced at
Robert W. Errett, Changes to the fee schedule pursuant to or above $1.00.8 When BATS Trading
Deputy Secretary. this proposal are effective upon filing. routes to and removes liquidity from
The text of the proposed rule change BYX, it will now receive a standard
[FR Doc. 2015–12030 Filed 5–18–15; 8:45 am]
is available at the Exchange’s Web site rebate of $0.00150 per share. BATS
BILLING CODE 8011–01–P
at www.batstrading.com, at the Trading will pass through the rebate
principal office of the Exchange, and at provided by BYX to the Exchange and
the Commission’s Public Reference the Exchange, in turn, will pass through
SECURITIES AND EXCHANGE
Room. this rate to its Members.
COMMISSION
II. Self-Regulatory Organization’s Standard Removal Rate Change
[Release No. 34–74950; File No. SR–EDGX– Statement of the Purpose of, and
2015–22] Statutory Basis for, the Proposed Rule In securities priced at or above $1.00,
Change the Exchange currently charges a fee or
Self-Regulatory Organizations; EDGX $0.0030 per share when removing
Exchange, Inc.; Notice of Filing and In its filing with the Commission, the liquidity. The Exchange now proposes
Immediate Effectiveness of a Proposed Exchange included statements to decrease the standard rate charged for
Rule Change Related to Fees for Use concerning the purpose of and basis for removing liquidity from the Exchange
of EDGX Exchange, Inc. the proposed rule change and discussed from $0.0030 per share to $0.0029 per
any comments it received on the share in securities priced at or above
May 13, 2015. proposed rule change. The text of these $1.00.9 The standard removal rate
Pursuant to Section 19(b)(1) of the statements may be examined at the applies unless a Member’s transaction is
Securities Exchange Act of 1934 (the places specified in Item IV below. The assigned a fee code other than a
‘‘Act’’),1 and Rule 19b–4 thereunder,2 Exchange has prepared summaries, set standard fee code. If a Member’s
notice is hereby given that on April 30, forth in Sections A, B, and C below, of transaction is assigned a fee code other
2015, EDGX Exchange, Inc. (the the most significant parts of such than a standard fee code, the rates listed
‘‘Exchange’’ or ‘‘EDGX’’) filed with the statements. in the Fee Codes table of the Fee
Securities and Exchange Commission (A) Self-Regulatory Organization’s Schedule will apply.
(‘‘Commission’’) the proposed rule Statement of the Purpose of, and The standard rate for removing
change as described in Items I, II and III Statutory Basis for, the Proposed Rule liquidity from the Exchange will be
below, which Items have been prepared Change $0.0029 per share and no lower fees will
by the Exchange. The Exchange has be available if a Member qualifies for a
designated the proposed rule change as 1. Purpose
tier included in footnote 1 of the Fee
one establishing or changing a member The Exchange proposes to: (i) Schedule. Therefore, the Exchange
due, fee, or other charge imposed by the Decrease the rebate for orders yielding proposes to make a series of changes to
Exchange under Section 19(b)(3)(A)(ii) fee code BY, which routes to BYX and the Fee Schedule as a result of
of the Act 3 and Rule 19b–4(f)(2) removes liquidity using routing decreasing the standard rate to $0.0029
thereunder,4 which renders the strategies DIRC, ROUC, or ROUE; (ii) per share. First, the Exchange proposes
proposed rule change effective upon decrease the standard rate charged for to amend footnote 1 to remove
filing with the Commission. The removing liquidity from the Exchange references to reduced fees for removing
Commission is publishing this notice to from $0.0030 per share to $0.0029 per or routing liquidity from the Exchange.
solicit comments on the proposed rule share; and (iii) make a few non- Under footnote 1, if a Member satisfies
change from interested persons. substantive clarifying changes. the respective tier’s criteria, they would
I. Self-Regulatory Organization’s Fee Code BY be charged a reduced fee of: (i) $0.0029
Statement of the Terms of Substance of per share under Mega Tier 1; (ii)
In securities priced at or above $1.00, $0.0029 per share under Mega Tier 2; or
the Proposed Rule Change
the Exchange currently provides a (iii) $$0.00295 per share under Mega
The Exchange filed a to amend its fees rebate of $0.00160 per share for
and rebates applicable to Members 5 of Members’ orders that yield fee code BY, 7 The Exchange does not propose to amend its fee
which routes to BYX and removes for orders that yield fee code BY in securities priced
13 17 CFR 200.30–3(a)(12). liquidity using routing strategies DIRC, below $1.00.
1 15 U.S.C. 78s(b)(1).
ROUC, or ROUE. The Exchange 8 See BYX Exchange Fee Schedule Changes
tkelley on DSK3SPTVN1PROD with NOTICES
2 17 CFR 240.19b–4.
proposes to amend its Fee Schedule to Effective May 1, 2015 available at http://
3 15 U.S.C. 78s(b)(3)(A)(ii).
cdn.batstrading.com/resources/fee_schedule/2015/
4 17 CFR 240.19b–4(f)(2). decrease the rebate for orders that yield BATS-BYX-Exchange-BZX-Exchange-EDGA-
5 The term ‘‘Member’’ is defined as ‘‘any Exchange-and-EDGX-Exchange-Fee-Schedule-
registered broker or dealer, or any person associated Exchange as that term is defined in Section 3(a)(3) Changes-Effective-May-1-2015.pdf.
with a registered broker or dealer [sic], that has of the Act.’’ See Exchange Rule 1.5(n). 9 The Exchange does not propose to amend its
been admitted to membership in the Exchange. A 6 The DIRC, ROUC, and ROUE routing strategies standard rate for orders in securities priced below
Member will have the status of a ‘‘member’’ of the are set forth in Exchange Rule 11.11(g). $1.00.
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![28744 Federal Register / Vol. 80, No. 96 / Tuesday, May 19, 2015 / Notices
2. Statutory Basis made throughout the Fee Schedule, rate is non-discriminatory in that it
The Exchange believes that the represent an equitable allocation of applies uniformly to all Members.
proposed rule change is consistent with reasonable dues, fees and other charges Non-Substantive Changes
the objectives of Section 6 of the Act,17 as it will enable the Exchange to
decrease trading cost for Members who The Exchange believes that the non-
in general, and furthers the objectives of
remove liquidity from the Exchange. substantive clarifying changes to its Fee
Section 6(b)(4),18 in particular, as it is
Decreasing the standard removal rate is Schedule are reasonable because they
designed to provide for the equitable
designed to attract additional liquidity are not designed to amend any fee, nor
allocation of reasonable dues, fees and
to the Exchange, thereby increasing alter the manner in which it assesses
other charges among its Members and
other persons using its facilities. The depth of the Exchange’s order book, fees or calculates rebates. These
Exchange also notes that it operates in resulting in improved price discovery proposed changes to the Fee Schedule
a highly-competitive market in which for all investors. The rate is also are intended to make the reference to
market participants can readily direct the Exchange in the heading of the Fee
equitable and reasonable as compared to
order flow to competing venues if they Schedule consistent with the manner in
the fees for removing liquidity charged
deem fee levels at a particular venue to which its affiliated exchanges are
by The Nasdaq Stock Market LLC
be excessive. The proposed rule change referenced in their respective fee
(‘‘Nasdaq’’) (removal rate of $0.0030 per
reflects a competitive pricing structure schedules, while the clarifying changes
share) and NYSE Arca, Inc. (‘‘NYSE
designed to incent [sic] market to remove reference to footnote 4 under
Arca’’) (removal rate of $0.0030 per the standard removal rate and add a
participants to direct their order flow to share for Tape A and Tape C
the Exchange. The Exchange believes reference to footnote 1 to fee code ZA
securities).19 The Exchange believes are intended to add clarity to the Fee
that the proposed rates are equitable and references to footnote 1 as well as
non-discriminatory in that they apply Schedule and avoid investor confusion.
removing the fees to remove liquidity Therefore, the Exchange believes these
uniformly to all Members. The from Mega Tier 1, Mega Tier 2, and
Exchange believes the fees and credits changes will remove impediments to
Mega Tier 3, as referenced above, are and perfect the mechanism of a free and
remain competitive with those charged also equitable and reasonable because
by other venues and therefore continue open market and a national market
such provisions are no longer necessary system, and, in general, protect
to be reasonable and equitably allocated
as the standard rate for removing all investors and the public interest.
to Members.
liquidity from the Exchange will be
Fee Code BY $0.0029 per share, which is equal to or (B) Self-Regulatory Organization’s
lower than the current removal rated Statement on Burden on Competition
The Exchange believes that its
proposal to decrease the rebate for provided for in those tiers. The The Exchange believes its proposed
orders that yield fee code BY represents proposed standard removal rate is also amendments to its Fee Schedule would
an equitable allocation of reasonable non-discriminatory in that it applies not impose any burden on competition
dues, fees, and other charges among uniformly to all Members. that is not necessary or appropriate in
Members and other persons using its The Exchange believes that decreasing furtherance of the purposes of the Act.
facilities. Prior to the BYX’s May 2015 the fee for customer internalization from The Exchange does not believe that the
fee change, BYX provided BATS $0.00050 to $0.00045 per share per side proposed change represents a significant
Trading a rebate of $0.00160 per share departure from previous pricing offered
of an execution for fee codes EA, ER,
to remove liquidity in securities priced by the Exchange or pricing offered by
and 5 represents an equitable allocation
at or above $1.00, which BATS Trading the Exchange’s competitors.
of reasonable dues, fees, and other
passed through to the Exchange and the Additionally, Members may opt to
charges as it is designed to discourage
Exchange provided its Members. When disfavor the Exchange’s pricing if they
Members from inadvertently matching
BATS Trading routes to BYX, it will believe that alternatives offer them
with one another and potential wash better value. Accordingly, the Exchange
now be provided a rebate of $0.00150
sales. The revised fee also allows the does not believe that the proposed
per share. The Exchange does not levy
Exchange to offset its administrative, change will impair the ability of
additional fees or offer additional
clearing, and other operating costs Members or competing venues to
rebates for orders that it routes to BYX
through BATS Trading. Therefore, the incurred in executing such trades. maintain their competitive standing in
Exchange believes that the proposed Finally, the fee is equitable and the financial markets.
change to fee code BY is equitable and reasonable because it total transaction
cost of for both sides of an execution for Fee Code BY
reasonable because it accounts for the
pricing changes on BYX, which enables customer internalization will continue The Exchange believes that its
the Exchange to provide its Members to be equal to the maker/taker spread of proposal to pass through the amended
the applicable pass-through rebate. $0.0009 for the standard add and rebate for orders that yield fee code BY
Lastly, the Exchange notes that routing removal rates discussed above.20 The would increase intermarket competition
through BATS Trading is voluntary and Exchange believes that the proposed because it offers customers an
believes that the proposed change is alternative means to route to BYX for
non-discriminatory because it applies 19 See Nasdaq, Price List—Trading & the same rebate that they would be
uniformly to all Members. Connectivity, available at http:// provided if they entered orders on that
www.nasdaqtrader.com/ trading center directly. The Exchange
Standard Removal Rate Change Trader.aspx?id=PriceListTrading2. See also the
NYSE Arca Schedule of Fees and Charges for believes that its proposal would not
tkelley on DSK3SPTVN1PROD with NOTICES
The Exchange believes that its Exchange Services, dated April 20, 2015 available burden intramarket competition because
proposal to lower the standard removal at https://www.nyse.com/publicdocs/nyse/markets/ the proposed rebate would apply
rate from $0.0030 per share to $0.0029 nyse-arca/NYSE_Arca_Marketplace_Fees.pdf. uniformly to all Members.
20 In each case, the internalization fee is no more
per share, as well as related changes favorable to the Member than each prevailing Standard Removal Rate Change
maker/taker spread. The Exchange will continue to
17 15 U.S.C. 78f. ensure that the internalization fee is no more The Exchange believes that its
18 15 U.S.C. 78f(b)(4). favorable than each prevailing maker/taker spread. proposal to lower the standard removal
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![Federal Register / Vol. 80, No. 96 / Tuesday, May 19, 2015 / Notices 28745
rate from $0.0030 per share to $0.0029 Electronic Comments SECURITIES AND EXCHANGE
per share will also assist in increasing COMMISSION
competition in that its proposed rebate • Use the Commission’s Internet
comment form (http://www.sec.gov/ [Release No. 34–74949; File No. SR–EDGX–
is lower than the standard fees for 2015–18]
removing liquidity offered by Nasdaq rules/sro.shtml); or
(removal rate of $0.0030 per share) and • Send an email to rule-comments@ Self-Regulatory Organizations; EDGX
NYSE Arca (removal rate of $0.0030 per sec.gov. Please include File Number SR– Exchange, Inc.; Notice of Filing of
share for Tape A and Tape C EDGX–2015–22 on the subject line. Proposed Rule Change To Establish
securities).21 Rules Governing the Trading of
The Exchange believes that its Paper Comments Options on the EDGX Options
internalization rates for securities priced • Send paper comments in triplicate Exchange
$1.00 and above will also not burden to Brent J. Fields, Secretary, Securities
intermarket or intramarket competition May 13, 2015.
and Exchange Commission, 100 F Street Pursuant to Section 19(b)(1) of the
as the proposed rates are no more
NE., Washington, DC 20549–1090. Securities Exchange Act of 1934
favorable than Members achieving the
maker/taker spreads between the All submissions should refer to File (‘‘Act’’),1 and Rule 19b–4 thereunder,2
standard add and remove rates on the Number SR–EDGX–2015–22. This file notice is hereby given that, on April 30,
Exchange. number should be included on the 2015, EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) filed with the
Non-Substantive Changes subject line if email is used. To help the
Securities and Exchange Commission
Commission process and review your
The Exchange believes that the (‘‘SEC’’ or ‘‘Commission’’) the proposed
comments more efficiently, please use
proposed non-substantive clarifying rule change as described in Items I, II,
only one method. The Commission will and III below, which Items have been
changes to the Fee Schedule will not post all comments on the Commission’s
affect intermarket nor intramarket prepared by the Exchange. The
Internet Web site (http://www.sec.gov/ Commission is publishing this notice to
competition because these changes are rules/sro.shtml). Copies of the
not designed to amend any fee or alter solicit comments on the proposed rule
submission, all subsequent change from interested persons.
the manner in which the Exchange amendments, all written statements
assesses fees or calculates rebates. with respect to the proposed rule I. Self-Regulatory Organization’s
(C) Self-Regulatory Organization’s change that are filed with the Statement of the Terms of Substance of
Statement on Comments on the Commission, and all written the Proposed Rule Change
Proposed Rule Change Received From communications relating to the The Exchange filed a proposal to
Members, Participants or Others proposed rule change between the adopt rules to govern the trading of
Commission and any person, other than options on the Exchange (referred to
The Exchange has not solicited, and herein as ‘‘EDGX Options Exchange’’ or
does not intend to solicit, comments on those that may be withheld from the
public in accordance with the ‘‘EDGX Options’’). As described more
this proposed rule change. The fully below, the EDGX Options
Exchange has not received any provisions of 5 U.S.C. 552, will be
available for Web site viewing and Exchange will operate a fully
unsolicited written comments from automated, Customer priority/pro rata
Members or other interested parties. printing in the Commission’s Public
allocation model. The fundamental
Reference Room, 100 F Street NE.,
III. Date of Effectiveness of the premise of the proposal is that the
Washington, DC 20549, on official
Proposed Rule Change and Timing for Exchange will operate its options
business days between the hours of
Commission Action market in a similar manner to the
10:00 a.m. and 3:00 p.m. Copies of the options exchange operated by the
The foregoing rule change has become filing will also be available for Exchange’s affiliate, BATS Exchange,
effective pursuant to Section 19(b)(3)(A) inspection and copying at the principal Inc. (‘‘BZX Options’’), with the
of the Act 22 and paragraph (f) of Rule office of the Exchange. All comments exception of the proposed priority
19b–4 thereunder.23 At any time within received will be posted without change; model and certain other limited
60 days of the filing of the proposed rule the Commission does not edit personal differences.
change, the Commission summarily may identifying information from The text of the proposed rule change
temporarily suspend such rule change if submissions. You should submit only is available at the Exchange’s Web site
it appears to the Commission that such information that you wish to make at www.batstrading.com, at the
action is necessary or appropriate in the available publicly. All submissions principal office of the Exchange, and at
public interest, for the protection of should refer to File Number SR–EDGX– the Commission’s Public Reference
investors, or otherwise in furtherance of 2015–22 and should be submitted on or Room.
the purposes of the Act. before June 9, 2015. II. Self-Regulatory Organization’s
IV. Solicitation of Comments For the Commission, by the Division of Statement of the Purpose of, and
Interested persons are invited to Trading and Markets, pursuant to delegated Statutory Basis for, the Proposed Rule
submit written data, views, and authority.24 Change
arguments concerning the foregoing, Robert W. Errett, In its filing with the Commission, the
including whether the proposed rule Deputy Secretary. Exchange included statements
tkelley on DSK3SPTVN1PROD with NOTICES
change is consistent with the Act. [FR Doc. 2015–12027 Filed 5–18–15; 8:45 am] concerning the purpose of and basis for
Comments may be submitted by any of BILLING CODE 8011–01–P the proposed rule change and discussed
the following methods: any comments it received on the
proposed rule change. The text of these
21 See supra note 19.
22 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1).
23 17 CFR 240.19b–4(f). 24 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
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Document Created: 2015-12-15 15:29:54
Document Modified: 2015-12-15 15:29:54
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 28742 |
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