[Federal Register Volume 76, Number 147 (Monday, August 1, 2011)]
[Notices]
[Pages 45896-45898]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-19326]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64962; File No. SR-EDGA-2011-21]


Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of 
Filing And Immediate Effectiveness of Proposed Rule Change To Amend 
EDGA Rule 11.5(c)(8) Regarding the Description of the Non-Displayed 
Order Type

July 26, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 15, 2011, EDGA Exchange, Inc. (``EDGA'' or the ``Exchange'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by EDGA. 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.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend EDGA Rule 11.5(c)(8) regarding the 
description of the Non-Displayed order type. The text of the proposed 
rule change is available on the Exchange's Web site at http://www.directedge.com, at the Exchange's principal office, at the Public 
Reference Room of the Commission, and at the Commission's Web site at 
http://www.sec.gov.

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

[[Page 45897]]

places specified in Item IV below. The self-regulatory organization has 
prepared summaries, set forth in Sections A, B and C below, of the most 
significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 11.5(c)(8) to correct an 
inadvertent error in the definition of ``Non-Displayed Orders.''
    Exchange Rule 11.5(c)(8) states, in part, that for a Non-Displayed 
order, ``the System \3\ shall not accept a Non-Displayed Order that is 
priced better than the midpoint of the NBBO.''
---------------------------------------------------------------------------

    \3\ As defined in Rule 1.5(aa).
---------------------------------------------------------------------------

    However, currently, on EDGA, Non-Displayed orders are accepted and 
posted on the EDGA Book (``Book'' or ``EDGA Book'') \4\ at their 
specified limit price for limit orders or executed immediately for 
market orders. This occurs regardless of whether the Non-Displayed 
Orders are priced better than the midpoint of the NBBO.
---------------------------------------------------------------------------

    \4\ As defined in Rule 1.5(d).
---------------------------------------------------------------------------

    The following examples illustrate the operation of Non-Displayed 
Orders:
    Assume the NBBO is 1.00 x 1.10, and a Non-Displayed Order is 
entered to sell 100 shares at $1.03. Such Non-Displayed Order will be 
posted to the EDGA Book at $1.03 or executed if there is contra-side 
trading interest at $1.03 or higher.\5\
---------------------------------------------------------------------------

    \5\ This could include a Non-Displayed buy order or displayed 
buy order.
---------------------------------------------------------------------------

    Assume the NBBO changes and is now 1.04 x 1.10 and a Non-Displayed 
Order is entered to sell 100 shares at $1.07. Such Non-Displayed Order 
will be posted to the EDGA Book at $1.07 or executed if there is 
contra-side trading interest at $1.07 or higher.
    Assume the NBBO remains at 1.04 x 1.10 and a Non-Displayed Order is 
entered to sell 100 shares at $1.04. Such Non-Displayed Order will be 
posted to the EDGA Book at $1.04, executed if there is contra-side 
trading interest at $1.04 or higher, or routed to an away market if the 
order is marked eligible for routing.
    The Exchange believes that this proposed amendment provides more 
transparency regarding the System's processing of this order type by 
correcting an inadvertent error in the rule text of Non-Displayed 
Orders.
2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Act,\6\ which requires the rules of an exchange to promote just 
and equitable principles of trade, to remove impediments to and perfect 
the mechanism of a free and open market and a national market system 
and, in general, to protect investors and the public interest. The 
Exchange believes that providing that Non-Displayed orders may be 
accepted and posted on the Book regardless of whether they are priced 
better than the midpoint encourages liquidity and potential price 
improvement for transactions without arbitrarily restricting liquidity 
from being executed at the Exchange. The Exchange also believes that by 
correcting an inadvertent error in the definition of ``Non-Displayed 
Orders'' in EDGA Rule 11.5(c)(8), the proposed rule promotes the 
efficient execution of investor transactions, and thus investor 
confidence, over the long term.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) does not become 
operative for 30 days after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest, the proposed rule change has 
become effective pursuant to Section 19(b)(3)(A) of the Act \7\ and 
Rule 19b-4(f)(6) thereunder.\8\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires that a self-regulatory organization submit to the 
Commission written notice of its intent to file the proposed rule 
change, along with a brief description and text of the proposed rule 
change, at least five business days prior to the date of filing of 
the proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest because other national securities exchanges have 
adopted similar Non-displayed order types,\9\ and this proposal does 
not raise any novel issues. Therefore, the Commission designates the 
proposed rule change to be operative upon filing with the 
Commission.\10\
---------------------------------------------------------------------------

    \9\ See, e.g., BATS Rule 11.9(c)(11) and Nasdaq Rule 4751(e)(3).
    \10\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-EDGA-2011-21 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-EDGA-2011-21. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written

[[Page 45898]]

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 
such filing also will be available for inspection and copying at the 
principal office of EDGA. 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 publicly available. All submissions should refer to File Number 
SR-EDGA-2011-21 and should be submitted on or before August 22, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-19326 Filed 7-29-11; 8:45 am]
BILLING CODE 8011-01-P