80 FR 42582 - Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of EDGA Exchange, Inc.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 137 (July 17, 2015)

[Federal Register Volume 80, Number 137 (Friday, July 17, 2015)]
[Notices]
[Pages 42582-42584]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-17488]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75433; File No. SR-EDGA-2015-27]


Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Related to 
Fees for Use of EDGA Exchange, Inc.

July 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 July 2, 2015, EDGA Exchange, Inc. (the ``Exchange'' or 
``EDGA'') 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.
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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 EDGA Rule 15.1(a) 
and (c) (``Fee Schedule'') to amend fee code MT, which routes to EDGX 
Exchange, Inc. (``EDGX'') using the ICMT, IOCM, ROCO or ROUC routing 
strategy and removes liquidity against MidPoint Match Orders \6\ on 
EDGX by: (i) Revising the description of the orders eligible to yield 
fee code MT; and (ii) increasing the fee for orders yielding fee code 
MT.
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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).
    \6\ See Exchange Rule 11.8(d).
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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.

[[Page 42583]]

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 amend fee code MT, which routes to EDGX using 
the ICMT, IOCM, ROCO or ROUC routing strategy and removes liquidity 
against MidPoint Match Orders on EDGX by: (i) Revising the description 
of the orders eligible to yield fee code MT; and (ii) increasing the 
fee for orders yielding fee code MT.
Description of Fee Code MT
    The Exchange proposes to amend the description of fee code MT in 
two ways. First, the Exchange proposes to replace references to 
MidPoint Match Orders with MidPoint Peg Orders. This change is in 
response to a proposed rule change filed with the Commission by EDGX to 
align certain EDGX functionality with BATS Exchange, Inc. (``BZX'').\7\ 
The EDGX proposed rules change includes replacing MidPoint Match Orders 
on EDGX with a MidPoint Peg Order type. Therefore, the Exchange 
proposes to amend the description of fee code MT to replace the 
reference to MidPoint Match Orders with MidPoint Peg Orders.
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    \7\ See SR-EDGX-2015-30 [sic] available at www.batstrading.com/regulation/rule_filings/edgx. A description of the changes proposed 
in this filing may be found in BATS EDGX Exchange Modifications, 
Effective July 6, 2015, available at http://cdn.batstrading.com/resources/release_notes/2015/BATS-EDGX-Exchange-Modifications-Effective-July-6-2015.pdf. [sic]
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    Second, the Exchange proposes to remove references to the ROCO and 
ROUC routing strategies \8\ from the description of fee code MT. In 
sum, both the ROCO and ROUC are routing strategies that check the 
System \9\ for available shares and are then sent to low cost 
destinations on the System routing table, which currently includes EDGX 
for these routing strategies. Due to the EDGX fee increase discussed 
below, both the ROCO and ROUC routing strategies will no longer be 
routed to EDGX as of July 6, 2015. Therefore, the Exchange proposes to 
remove references to the ROCO and ROUC routing strategies from the 
description of fee code MT.
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    \8\ See Exchange Rule 11.11(g).
    \9\ See Exchange Rule 1.5(cc).
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    As a result of these two proposed changes, the description of fee 
code MT will be amended to reflect that it will be appended to orders 
that are that routed to EDGX using the ICMT or IOCM routing strategy 
and remove liquidity against MidPoint Peg Orders resting on EDGX.
Fee Code MT Fee Change
    In securities priced at or above $1.00, the Exchange currently 
assesses a fee of $0.00120 per share for Members' orders that yield fee 
code MT. The Exchange proposes to amend its Fee Schedule to increase 
this fee to $0.00290 per share. The proposed change would enable the 
Exchange to pass through the rate that BATS Trading, Inc. (``BATS 
Trading''), the Exchange's affiliated routing broker-dealer, is charged 
for routing orders to EDGX when it does not qualify for a reduced fee. 
The proposed change is in response to EDGX's proposed July 6, 2015 fee 
change where EDGX has announced that it will delete fee code MT, under 
which orders that remove liquidity against MidPoint Match Orders were 
charged a fee of $0.00120 per share.\10\ As a result of EDGX deleting 
its fee code MT, orders that remove liquidity at the midpoint of the 
NBBO will now be charged EDGX's standard removal rate of $0.00290 per 
share.\11\ When BATS Trading routes to EDGX and removes liquidity 
against MidPoint Peg Orders resting on EDGX, it will now be charged a 
standard rate of $0.00290 per share.\12\ BATS Trading will pass through 
this rate to the Exchange and the Exchange, in turn, will pass through 
to its Members.
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    \10\ See Update: BATS EDGX and EDGA Exchange Pricing Updates 
Effective July 2015, available at http://cdn.batstrading.com/resources/fee_schedule/2015/BATS-EDGX-and-EDGA-Exchange-Pricing-Updates-Effective-July-2015.pdf.
    \11\ Id.
    \12\ The Exchange notes that to the extent BATS Trading does or 
does not achieve any reduced fee on EDGX, its rate for fee code MT 
will not change.
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Implementation Date
    The Exchange proposes to implement these amendments to its Fee 
Schedule on July 6, 2015.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of section 6 of the Act,\13\ in general, and 
furthers the objectives of section 6(b)(4),\14\ 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.
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    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(4).
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Description of Fee Code MT
    The Exchange believes that its proposal to amend the description of 
fee code MT represents an equitable allocation of reasonable dues, 
fees, and other charges among Members and other persons using its 
facilities because it updates the description of fee code MT to reflect 
the scenarios under which fee code MT will be appended to an order. The 
proposed changes are in response to a proposed rule change filed by 
EDGX with the Commission to replace MidPoint Match Orders on EDGX with 
the MidPoint Peg Order type.\15\ In addition, due to the EDGX July 6, 
2015 fee change increase herein,\16\ both the ROCO and ROUC routing 
strategies will no longer be routed to EDGX as of that date. The 
proposal is reasonable because the updated description would reflect 
the scenarios under which orders may yield fee code MT as a result of 
the proposed rule and fee changes proposed by EDGX.\17\ 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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    \15\ See supra note 7.
    \16\ See supra note 10.
    \17\ See supra notes 7 and 10.
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Fee Code MT Fee Change
    The Exchange believes that its proposal to increase the fee for 
Members' orders that yield fee code MT from $0.00120 per share to 
$0.00290 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 EDGX through BATS 
Trading. As of July 6, 2015, EDGX will delete its fee to remove 
liquidity against MidPoint Match Orders of $0.00120 per share, thereby 
charging orders that remove liquidity at the midpoint of the NBBO its 
standard removal rate of $0.00290 per share.\18\ Therefore, the 
Exchange believes that its proposal to pass through a fee of $0.00290 
per share for orders that yield fee code MT is

[[Page 42584]]

equitable and reasonable because it accounts for the pricing changes on 
EDGX. In addition, the proposal allows the Exchange to charge its 
Members a pass-through rate for orders that are routed to EDGX. 
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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    \18\ Id.
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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 a significant departure from previous pricing offered by the 
Exchange or pricing offered by the Exchange's competitors. 
Additionally, Members may opt to disfavor EDGA'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 $0.00290 per share for Members' 
orders that yield fee code MT would increase intermarket competition 
because it offers customers an alternative means to route to EDGX. The 
Exchange believes that its proposal would not burden intramarket 
competition because the proposed rate would apply uniformly to all 
Members. Lastly, the Exchange does not believe the updated description 
of fee code MT imposes any burden on competition as it is not designed 
to have a competitive impact. Rather, it is intended to update the 
description of fee code MT to reflect the scenarios under which an 
order would be eligible to yield fee code MT as a result of the 
proposed rule and fee changes proposed by EDGX discussed herein.\19\
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    \19\ Id.
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(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 \20\ and paragraph (f) of Rule 19b-4 
thereunder.\21\ 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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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 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 Number SR-EDGA-2015-27 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-EDGA-2015-27. 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-EDGA-2015-27 and should be 
submitted on or before August 7, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-17488 Filed 7-16-15; 8:45 am]
 BILLING CODE 8011-01-P