80 FR 8380 - Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of the Exchange
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 31 (February 17, 2015)
Federal Register Volume 80, Issue 31 (February 17, 2015)
| Page Range | 8380-8383 | |
| FR Document | 2015-03078 |
[Federal Register Volume 80, Number 31 (Tuesday, February 17, 2015)] [Notices] [Pages 8380-8383] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-03078] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74238; File No. SR-EDGA-2015-07] Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of the Exchange February 10, 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 30, 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. --------------------------------------------------------------------------- \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 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: (i) Amend the definitions of ADV and TCV to remove a provision to exclude shares on each day from January 12, 2015 up to and including January 16, 2015; (ii) update the description of fee code D to include routing using the RDOT routing strategy; (iii) delete fee codes M and U, as well as remove the ROLF routing strategy from Footnote 7, all of which route to LavaFlow; and (iv) make a number of non-substantive and organizational amendments. --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to: (i) Amend the definitions of ADV and TCV to remove a provision to exclude shares on each day from January 12, 2015 up to and including January 16, 2015; (ii) update the description of fee code D to include routing using the RDOT routing strategy; (iii) delete fee codes M and U, as well as remove the ROLF routing strategy from Footnote 7, all of which route to LavaFlow; and (iv) make a number of non-substantive and organizational amendments. ADV and TCV Definitions Earlier this year, the Exchange and its affiliate, EDGX Exchange, Inc. (``EDGX'') received approval to effect a merger (the ``Merger'') of the Exchange's parent company, Direct Edge Holdings LLC, with BATS Global Markets, Inc., the parent of BATS (together with BATS, EDGA and EDGX, the ``BGM Affiliated Exchanges'').\6\ In the context of the Merger, the BGM Affiliated Exchanges worked to migrate EDGX and EDGA onto the BATS technology platform, and align certain system functionality, retaining only intended differences between the BGM Affiliated Exchanges. The migration of EDGX and EDGA onto the BATS technology platform occurred during the week of January 12, 2015. --------------------------------------------------------------------------- \6\ See Securities Exchange Act Release No. 71449 (January 30, 2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013- 34). --------------------------------------------------------------------------- Currently, the Exchange determines the tiered pricing that it will provide to Members according to the Exchange's tiered pricing structure, which is based on the calculation of ADV \7\ and/or average daily TCV.\8\ The Exchange currently excludes from its calculation of ADV and TCV those shares traded on each day from January 12, 2015 up to and including January 16, 2015 in order to avoid penalizing Members that, because of the technology migration that occurred during the week of January 12, 2015, did not participate on the Exchange during that week to the extent that they might have otherwise participated.\9\ As described above, such exclusion only applied to tier calculations in January, meaning that the language has no effect moving forward. As such, the Exchange proposes to remove the provisions from the definitions of ADV and TCV that exclude trading activity that occurred on each day from January 12, 2015 up [[Page 8381]] to and including January 16, 2015 as the exclusion period has passed and these provisions are no longer necessary. --------------------------------------------------------------------------- \7\ As provided in the Fee Schedule, ``ADV'' is currently defined as ``average daily volume calculated as the number of shares added to, removed from, or routed by, the Exchange, or any combination or subset thereof, per day. ADV is calculated on a monthly basis.'' \8\ As provided in the Fee Schedule, ``TCV'' is currently defined as ``total consolidated volume calculated as the volume reported by all exchanges and trade reporting facilities to a consolidated transaction reporting plan for the month for which the fees apply.'' \9\ See Securities Exchange Act Release Nos. 74025 (January 9, 2015), 80 FR 2154 (January 15, 2015) (SR-EDGA-2014-36); and 74021 [sic] (January 9, 2015), 80 FR 2142 (January 15, 2015) (SR-EDGX- 2014-37). --------------------------------------------------------------------------- Fee Code D Currently, fee code D is appended to orders routed to the NYSE. Orders yielding fee code D are charged a fee of $0.0027 per share in securities priced at or above $1 and 0.30% of the dollar value of the trade in securities priced below $1. The Exchange proposes to amend the description of fee code D to include routing using the RDOT routing strategy, in addition to orders routed to the NYSE. RDOT is a routing option under which an order checks the System \10\ for available shares and then is sent to destinations on the System routing table,\11\ which may include non-exchange destinations. If shares remain unexecuted after routing, they are sent to the New York Stock Exchange, Inc. (``NYSE'') and can be re-routed by the NYSE. Any remainder will be posted to the NYSE, unless otherwise instructed by the User.\12\ Historically, fee code D is appended by the System to orders routed using the RDOT routing strategy that are executed on a destination on the System routing table prior to reaching the NYSE as well as to those RDOT orders that remove liquidity from the NYSE. Therefore, the Exchange proposes to update the description of fee code D to make clear that it also includes orders routed using the RDOT routing strategy. The Exchange notes that fee code F is and will remain appended to orders routed using the RDOT routing strategy that add liquidity to NYSE. --------------------------------------------------------------------------- \10\ The term ``System'' is defined as ``the electronic communications and trading facility designated by the Board through which securities orders of Users are consolidated for ranking, execution and, when applicable, routing away.'' \11\ The term ``System routing table'' refers to ``the proprietary process for determining the specific trading venues to which the System routes orders and the order in which it routes them.'' See Exchange Rule 11.11(g). \12\ See Exchange Rule 11.11(g)(5). --------------------------------------------------------------------------- Fee Codes M and U, Footnote 7 The Exchange proposes to amend its Fee Schedule to delete fee code M, which routes to LavaFlow and adds liquidity, as well as fee code U, which routes to LavaFlow. The Exchange also proposes to amend Footnote 7 to remove references to the ROLF routing strategy, under which an order will check the Exchange for available shares and then will be sent to LavaFlow. These changes are being proposed in response to LavaFlow's announcement that it will cease market operations and its last day of trading will be Friday, January 30, 2015. For orders yielding fee code M, the Exchange currently provides a rebate of $0.0024 per share in securities priced at or above $1.00 and no rebate in securities priced below $1.00. For orders yielding fee code U, the Exchange currently charges a fee of $0.0028 per share in securities priced at or above $1.00 and no fee in securities priced below $1.00. The rates for orders that yield fee codes M or U represent a pass through of the rate that BATS Trading, the Exchange's affiliated routing broker-dealer, is subject to for routing orders to LavaFlow. As of February 2, 2015, the Exchange, via BATS Trading, will no longer be able to route orders to LavaFlow because it ceased operations, and, therefore, proposes to delete fee codes M and U, as well as references to the ROLF routing strategy in Footnote 7. Non-Substantive and Organizational Changes to Fee Code and Associated Fees The Exchange also proposes to make two non-substantive and organizational changes to its Fee Schedule to provide greater clarity to Members on how the Exchange assesses fees and calculates rebates. The Exchange proposes to reorder the fee codes under the section entitled, Fee Codes and Associated Fees, as well as indicate the amount of the fees and rebates as five decimal points, rather than four decimal points, by adding a zero to the end of each fee and rebate, to reflect the order pricing format on the Exchange's Web site. The Exchange notes that none of these changes amend any fee or rebate, nor do they alter the manner in which it assesses fees or calculates rebates. Implementation Date 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,\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. 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 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. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78f. \14\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- ADV and TCV Definitions The Exchange believes that its proposed amendments to the definitions of ADV and TCV to remove a provision to exclude shares during the week the Exchange is migrated onto BATS technology is reasonable because, as explained above, it is no longer necessary as the exclusion period has passed. The Exchange is not proposing to amend the thresholds a Member must achieve to become eligible for, or the dollar value associated with, the tiered rebates or fees. The initial proposal to exclude these trading days from the calculation of ADV and TCV was designed to provide Members additional time to monitor the migration of the Exchange onto BATS technology. In addition, the Exchange believes that the proposed changes to its Fee Schedule are equitably allocated among Exchange constituents and not unfairly discriminatory as the methodology for calculating ADV and TCV will apply equally to all Members. Fee Code D The Exchange believes that its proposal to update fee code D to also include order routed using the RDOT routing strategy represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities. Historically, fee code D has been appended by the System to orders routed using the RDOT routing strategy that are executed on a destination on the System routing table prior to reaching the NYSE as well as to orders that that remove liquidity from NYSE. Therefore, the Exchange believes that updating fee code to specifically state that fee code D is appended to orders using the RDOT routing strategy would benefit Members by providing clear guidance in its Fee Schedule regarding which orders fee code D would be appended to. In addition, the Exchange believes that the proposed change to its Fee Schedule is equitably allocated among Exchange constituents and not unfairly discriminatory as the application of fee code D will apply equally to all Members who use the RDOT routing strategy. [[Page 8382]] Fee Codes M and U, Footnote 7 The Exchange believes that its proposal to delete fee codes M and U in its Fee Schedule as well as remove references to the ROLF routing strategy from Footnote 7 represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities. The proposed change is in response to LavaFlow's announcement that it will cease market operations and its last day of trading will Friday, January 30, 2015. As of February 2, 2015, the Exchange, via BATS Trading, will no longer be able to route orders to LavaFlow and, therefore, proposes to remove fee codes M and U as well as a reference to the ROLF routing strategy in Footnote 7. The Exchange believes that the proposed amendments are intended to make the Fee Schedule clearer and less confusing for investors and eliminate potential investor confusion, thereby removing impediments to and perfecting the mechanism of a free and open market and a national market system, and, in general, protecting investors and the public interest. Non-Substantive and Organizational Changes to Fee Code and Associated Fees The Exchange believes that the non-substantive clarifying changes to its Fee Schedule are reasonable because they are designed to provide greater transparency to Members with regard to how the Exchange assesses fees and calculates rebates. The Exchange notes that none of the proposed non-substantive clarifying changes are designed to amend any fee, nor alter the manner in which it assesses fees or calculates rebates. These non-substantive and organizational changes to the Fee Schedule as intended to make the Fee Schedule clearer and less confusing for investors and eliminate potential investor confusion, thereby removing impediments to and perfecting the mechanism of a free and open market and a national market system, and, in general, protecting 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. ADV and TCV Definitions The proposal to remove a provision to exclude shares from January 12, 2015 up to and including January 16, 2015 from the ADV and TCV calculations would not affect intermarket nor intramarket competition because it is no longer necessary as the exclusion period has passed. Fee Code D The Exchange believes that its proposal to update fee code D to also include order routed using the RDOT routing strategy would not affect intermarket nor intramarket competition because this change is not designed to amend any fee or rebate or alter the manner in which the Exchange assesses fees for orders yielding fee code D amend the orders to which fee code D applies. It is simply proposed to update the description of fee code D to make clear that it also includes orders routed using the RDOT routing strategy, in addition to orders routed to the NYSE. Fee Codes M and U, Footnote 7 The Exchange believes that its proposal to delete fee codes M and U and amend Footnote 7 would not affect intermarket nor intramarket competition because this change is not designed to amend any fee or rebate or alter the manner in which the Exchange assesses fees or calculates rebates. It is simply proposed in response to LavaFlow's announcement that it will cease market operations and its last day of trading will be Friday, January 30, 2015. Non-Substantive and Organizational Changes to Fee Code and Associated Fees The Exchange believes that non-substantive and organizational changes to the Fee Schedule would not affect intermarket nor intramarket competition because none of these changes are designed to amend any fee or alter the manner in which the Exchange assesses fees or calculates rebates. These changes are intended to provide greater clarity to Members with regard to how the Exchange access fees and 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 \15\ and paragraph (f) of Rule 19b-4 thereunder.\16\ 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. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(3)(A). \16\ 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-EDGA-2015-07 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-EDGA-2015-07. 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 [[Page 8383]] 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 Number SR-EDGA-2015-07, and should be submitted on or before March 10, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\17\ --------------------------------------------------------------------------- \17\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2015-03078 Filed 2-13-15; 8:45 am] BILLING CODE 8011-01-P
![8380 Federal Register / Vol. 80, No. 31 / Tuesday, February 17, 2015 / Notices
Commission, and all written proposed rule change effective upon strategy; (iii) delete fee codes M and U,
communications relating to the filing with the Commission. The as well as remove the ROLF routing
proposed rule change between the Commission is publishing this notice to strategy from Footnote 7, all of which
Commission and any person, other than solicit comments on the proposed rule route to LavaFlow; and (iv) make a
those that may be withheld from the change from interested persons. number of non-substantive and
public in accordance with the organizational amendments.
I. Self-Regulatory Organization’s
provisions of 5 U.S.C. 552, will be
Statement of the Terms of Substance of ADV and TCV Definitions
available for Web site viewing and
the Proposed Rule Change Earlier this year, the Exchange and its
printing in the Commission’s Public
Reference Room, 100 F Street NE., The Exchange filed a proposal to affiliate, EDGX Exchange, Inc. (‘‘EDGX’’)
Washington, DC 20549, on official amend its fees and rebates applicable to received approval to effect a merger (the
business days between the hours of Members 5 of the Exchange pursuant to ‘‘Merger’’) of the Exchange’s parent
10:00 a.m. and 3:00 p.m. Copies of the EDGA Rule 15.1(a) and (c) (‘‘Fee company, Direct Edge Holdings LLC,
filing also will be available for Schedule’’) to: (i) Amend the definitions with BATS Global Markets, Inc., the
inspection and copying at the principal of ADV and TCV to remove a provision parent of BATS (together with BATS,
office of the Exchange. All comments to exclude shares on each day from EDGA and EDGX, the ‘‘BGM Affiliated
received will be posted without change; January 12, 2015 up to and including Exchanges’’).6 In the context of the
the Commission does not edit personal January 16, 2015; (ii) update the Merger, the BGM Affiliated Exchanges
identifying information from description of fee code D to include worked to migrate EDGX and EDGA
submissions. You should submit only routing using the RDOT routing strategy; onto the BATS technology platform, and
information that you wish to make (iii) delete fee codes M and U, as well align certain system functionality,
available publicly. All submissions as remove the ROLF routing strategy retaining only intended differences
should refer to File Number SR–EDGA– from Footnote 7, all of which route to between the BGM Affiliated Exchanges.
2015–05, and should be submitted on or LavaFlow; and (iv) make a number of The migration of EDGX and EDGA onto
before March 10, 2015. non-substantive and organizational the BATS technology platform occurred
amendments. during the week of January 12, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
The text of the proposed rule change Currently, the Exchange determines
authority.13 is available at the Exchange’s Web site the tiered pricing that it will provide to
Brent J. Fields,
at www.batstrading.com, at the Members according to the Exchange’s
principal office of the Exchange, and at tiered pricing structure, which is based
Secretary.
the Commission’s Public Reference on the calculation of ADV 7 and/or
[FR Doc. 2015–03077 Filed 2–13–15; 8:45 am]
Room. average daily TCV.8 The Exchange
BILLING CODE 8011–01–P
II. Self-Regulatory Organization’s currently excludes from its calculation
Statement of the Purpose of, and of ADV and TCV those shares traded on
SECURITIES AND EXCHANGE Statutory Basis for, the Proposed Rule each day from January 12, 2015 up to
COMMISSION Change and including January 16, 2015 in order
to avoid penalizing Members that,
[Release No. 34–74238; File No. SR–EDGA– In its filing with the Commission, the
because of the technology migration that
2015–07] Exchange included statements
occurred during the week of January 12,
concerning the purpose of and basis for
Self-Regulatory Organizations; EDGA the proposed rule change and discussed 2015, did not participate on the
Exchange, Inc.; Notice of Filing and any comments it received on the Exchange during that week to the extent
Immediate Effectiveness of a Proposed proposed rule change. The text of these that they might have otherwise
Rule Change Related to Fees for Use statements may be examined at the participated.9 As described above, such
of the Exchange places specified in Item IV below. The exclusion only applied to tier
Exchange has prepared summaries, set calculations in January, meaning that
February 10, 2015. the language has no effect moving
forth in Sections A, B, and C below, of
Pursuant to Section 19(b)(1) of the forward. As such, the Exchange
the most significant parts of such
Securities Exchange Act of 1934 (the proposes to remove the provisions from
statements.
‘‘Act’’),1 and Rule 19b–4 thereunder,2 the definitions of ADV and TCV that
notice is hereby given that on January A. Self-Regulatory Organization’s exclude trading activity that occurred
30, 2015, EDGA Exchange, Inc. (the Statement of the Purpose of, and the on each day from January 12, 2015 up
‘‘Exchange’’ or ‘‘EDGA’’) filed with the Statutory Basis for, the Proposed Rule
Securities and Exchange Commission Change 6 See Securities Exchange Act Release No. 71449
(‘‘Commission’’) the proposed rule (January 30, 2014), 79 FR 6961 (February 5, 2014)
1. Purpose (SR–EDGX–2013–43; SR–EDGA–2013–34).
change as described in Items I, II and III 7 As provided in the Fee Schedule, ‘‘ADV’’ is
below, which Items have been prepared The Exchange proposes to: (i) Amend
currently defined as ‘‘average daily volume
by the Exchange. The Exchange has the definitions of ADV and TCV to calculated as the number of shares added to,
designated the proposed rule change as remove a provision to exclude shares on removed from, or routed by, the Exchange, or any
one establishing or changing a member each day from January 12, 2015 up to combination or subset thereof, per day. ADV is
and including January 16, 2015; (ii) calculated on a monthly basis.’’
due, fee, or other charge imposed by the 8 As provided in the Fee Schedule, ‘‘TCV’’ is
Exchange under Section 19(b)(3)(A)(ii) update the description of fee code D to currently defined as ‘‘total consolidated volume
of the Act 3 and Rule 19b–4(f)(2) include routing using the RDOT routing calculated as the volume reported by all exchanges
tkelley on DSK3SPTVN1PROD with NOTICES
thereunder,4 which renders the and trade reporting facilities to a consolidated
5 The term ‘‘Member’’ is defined as ‘‘any transaction reporting plan for the month for which
13 17 registered broker or dealer, or any person associated the fees apply.’’
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
with a registered broker or dealer, that has been 9 See Securities Exchange Act Release Nos. 74025
admitted to membership in the Exchange. A (January 9, 2015), 80 FR 2154 (January 15, 2015)
2 17 CFR 240.19b–4.
Member will have the status of a ‘‘member’’ of the (SR–EDGA–2014–36); and 74021 [sic] (January 9,
3 15 U.S.C. 78s(b)(3)(A)(ii).
Exchange as that term is defined in Section 3(a)(3) 2015), 80 FR 2142 (January 15, 2015) (SR–EDGX–
4 17 CFR 240.19b–4(f)(2). of the Act.’’ See Exchange Rule 1.5(n). 2014–37).
VerDate Sep<11>2014 16:51 Feb 13, 2015 Jkt 235001 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 E:\FR\FM\17FEN1.SGM 17FEN1](https://thefederalregister.org/doc/80_FR_8411/page/1.svg)
![Federal Register / Vol. 80, No. 31 / Tuesday, February 17, 2015 / Notices 8383
proposed rule change between the 19b–4(n)(1)(i) under the Securities overnight trading sessions, (4)
Commission and any person, other than Exchange Act of 1934 (‘‘Exchange enhancements to OCC’s credit controls
those that may be withheld from the Act’’).3 The Advance Notice was with respect to monitoring clearing
public in accordance with the published for comment in the Federal members’ credit risk during overnight
provisions of 5 U.S.C. 552, will be Register on January 22, 2015.4 The trading sessions, including procedures
available for Web site viewing and Commission did not receive any for contacting an exchange offering
printing in the Commission’s Public comments on the Advance Notice. This overnight trading sessions in order to
Reference Room, 100 F Street NE., publication serves as a notice of no invoke use of the exchange’s kill switch,
Washington, DC 20549, on official objection to the Advance Notice. and (5) taking appropriate disciplinary
business days between the hours of action against clearing members who
I. Description of the Advance Notice
10:00 a.m. and 3:00 p.m. Copies of the attempt to clear during the overnight
filing also will be available for Description of Change trading session without first obtaining
inspection and copying at the principal This advance notice was filed in requisite approvals. These changes
office of the Exchange. All comments connection with OCC’s proposed change (described in greater detail below) are
received will be posted without change; to its operations concerning the designed to reduce and mitigate the
the Commission does not edit personal clearance of confirmed trades executed risks associated with clearing trades
identifying information from in overnight trading sessions offered by executed in overnight trading sessions.
submissions. You should submit only exchanges for which OCC provides In addition, the only products that will
information that you wish to make clearance and settlement services. OCC be eligible for clearing in overnight
available publicly. All submissions currently clears overnight trading trading sessions are index options and
should refer to File Number SR–EDGA– activity for CBOE Futures Exchange, index futures products.
2015–07, and should be submitted on or LLC (‘‘CFE’’).5 The total number of OCC’s framework for determining
before March 10, 2015. trades submitted to OCC from overnight whether to provide clearing services for
trading sessions is nominal, typically overnight trading sessions offered by an
For the Commission, by the Division of
Trading and Markets, pursuant to delegated less than 3,000 contracts per session. exchange is designed to work in
authority.17 However, OCC has recently observed an conjunction with the risk controls of the
Brent J. Fields, industry trend whereby exchanges are exchange that offers overnight trading
offering overnight trading sessions sessions. OCC will confirm an
Secretary.
beyond traditional hours. Exchanges exchange’s risk controls as well as its
[FR Doc. 2015–03078 Filed 2–13–15; 8:45 am]
offering overnight trading sessions have staffing levels as they relate to overnight
BILLING CODE 8011–01–P
indicated to OCC that such sessions trading sessions to determine if OCC
benefit market participants by providing may reasonably rely on such risk
additional price transparency and controls to reduce the risk presented to
SECURITIES AND EXCHANGE
hedging opportunities for products OCC by the exchange’s overnight
COMMISSION
traded in such sessions, which, in turn, trading sessions. Such exchange risk
[Release No. 34–74241; File No. SR–OCC– promotes market stability.6 In light of controls will consist of: (1) Price
2014–812]
this trend, OCC proposed to implement reasonability checks, (2) controls to
a framework for clearing trades executed prevent orders from being executed
Self-Regulatory Organizations; The beyond a certain percentage
Options Clearing Corporation; Notice in such sessions that includes: (1)
Qualification criteria used to approve (determined by the exchange) from the
of No Objection to Advance Notice initial execution price, (3) activity based
Concerning Extended and Overnight clearing members for overnight trading
sessions, (2) systemic controls to protections which focus on risk beyond
Trading Sessions price, such as a high number of trades
identify trades executed during
February 10, 2015. overnight trading sessions by clearing occurring in a set period of time, and (4)
members not approved for such kill switch capabilities, which may be
On December 12, 2014, The Options
sessions, (3) enhancements to OCC’s initiated by the exchange and can cancel
Clearing Corporation (‘‘OCC’’) filed with
overnight monitoring of trades all open quotes or all orders of a
the Securities and Exchange
submitted by exchanges during particular participant. OCC believes that
Commission (‘‘Commission’’) advance
confirming the existence of applicable
notice SR–OCC–2014–812 (‘‘Advance
pre-trade risk controls as well as
Notice’’) 1 pursuant to Section 806(e)(1) Act and file advance notices with the Commission.
See 12 U.S.C. 5465(e). overnight staffing at the relevant
of the Payment, Clearing, and 3 17 CFR 240.19b–4(n)(1)(i). exchanges is essential to mitigating risks
Settlement Supervision Act of 2010 4 See Securities Exchange Act Release No. 74073
presented to OCC from overnight
(‘‘Clearing Supervision Act’’) 2 and Rule (January 15, 2015), 80 FR 3287 (January 22, 2015) trading sessions.7 OCC believes that
(SR–OCC–2014–812). OCC also filed the proposal
17 17 CFR 200.30–3(a)(12). contained in this advance notice as a proposed rule providing clearing services to exchanges
1 OCC initially filed a similar advance notice on change under Section 19(b)(1) of the Act and Rule offering such sessions is consistent with
September 17, 2014. Securities Exchange Act 19b–4 thereunder, which was published for
Release No. 73343 (October 14, 2014), 79 FR 62684 comment in the Federal Register on December 30, 7 Comparable controls are applied to futures and
(October 20, 2014), (SR–OCC–2014–805). OCC 2014. 15 U.S.C. 78s(b)(1); 17 CFR 240.19b–4. See future option trades executed in overnight trading
withdrew that advance notice on October 28, 2104. Securities Exchange Act Release No. 73907 sessions currently cleared by OCC, although such
Securities Exchange Act Release No. 73710 (December 22, 2014), 79 FR 78543 (December 30, controls have been implemented by clearing futures
(December 1, 2014), 79 FR 72225 (December 5, 2014) (SR–OCC–2014–24). The Commission did not commission merchants (‘‘clearing FCMs’’) pursuant
2014), (SR–OCC–2014–805). receive any comments on the proposed rule change. to Commodity Futures Trading Commission
tkelley on DSK3SPTVN1PROD with NOTICES
2 12 U.S.C. 5465(e)(1). The Financial Stability (‘‘CFTC’’) Regulation 1.73. This requires clearing
5 ELX Futures LP (‘‘ELX’’) previously submitted
Oversight Council designated OCC a systemically FCMs to monitor for adherence to such controls
important financial market utility on July 18, 2012. overnight trading activity to OCC, but currently during regular and overnight trading sessions. Some
See Financial Stability Oversight Council 2012 does not submit such trades. OCC will re-evaluate of these risk control measures are similar to those
Annual Report, Appendix A, http:// ELX’s risk controls in the event ELX re-institutes its proposed by OCC for use in clearing securities
www.treasury.gov/initiatives/fsoc/Documents/ overnight trading sessions. trades in overnight trading sessions. For instance,
2012%20Annual%20Report.pdf. Therefore, OCC is 6 See CFE–2014–010 at http://cfe.cboe.com/ OCC confirmed that CFE maintains kill switch
required to comply with the Clearing Supervision publish/CFErulefilings/SR-CFE-2014-010.pdf. capabilities.
VerDate Sep<11>2014 16:51 Feb 13, 2015 Jkt 235001 PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 E:\FR\FM\17FEN1.SGM 17FEN1](https://thefederalregister.org/doc/80_FR_8411/page/4.svg)
Document Created: 2015-12-18 13:19:13
Document Modified: 2015-12-18 13:19:13
| 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 8380 |
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